Why Crypto Changed Forever | Roundup

Transcript

What does it mean for crypto to win? Are we I think it's all of the above. It is businesses adopting crypto rails, the adoption of non-s sovereign money and L1s as bonafide financial assets. But also, I think when it comes to tokens, people have a really difficult idea like what does it mean for token? You know, they know what it feels like when tokens on coin gecko rip. But what are we describing here? I think that what tokens enable are an earlier, less regulated stage of the stock market. Hey everyone, quick disclaimer before we get into today's episode. Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and the views expressed by anyone on the show

are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds, or projects discussed. >> All right, everyone. Welcome back to another episode of Bell Curve. You got me, Miles, and Zave. Fellas, how are we all doing? >> What's up, guys? Hi guys. It's >> game day, baby. I got my USA gear on. >> That was a big one. >> My towel seen you wearing the >> I know I've known you. >> I um you know, I rely on my little sister to get me my cool guy my cool guy outfits.

>> I thought you were going to say you're you're a fiance, but yeah, [laughter] >> of honesty I didn't know was going to come across on the podcast. >> She hopes to. She hopes to. It takes a village. >> It takes a village to Yeah. Why are we good at soccer out of the gates here? I mean, I have I have not been following this. I I thought >> we have trash. >> We have like an amazing coach at Ken Griffith paid for out of pocket uh self and he's like, you know, like a top 10 coach of the world. normally would have no interest in coaching the United States, but uh yeah, he's got he's uh he drained the swamp of uh bad US men's

national team politics. Um it's got got the boys going boys. >> Well, speaking of structural changes, >> yeah, there you go. >> That's what that's what we're going to be talking about today. And so basically what we want to this is a um this episode is on the the game on the field in crypto and how it's changed um over the last 5 years. And what we want to be working back from is this question of what does it look like and what does it mean for crypto to succeed? Does that mean that tokens go up? Does it mean that people uh companies adopt crypto tech and build on those rails? what does the future look like of quote crypto

succeeding? And the way that we're going to get there is we're going to talk about what are what's changed in the last five years? Like what are the big market forces that have changed um how crypto has played out? Um what are the mental models that need to get updated in the industry of which there are a lot and then who are the companies, protocols tokens whatever that benefit from this and who's going to do well. And that's how we're going to back our way into this question. But I guess maybe Miles and Po get you first here. What's changed in the last five years? And you know, five years ago is 2021. So this was peak, you know, this was right in the teeth of a bull market post very dire, you know, 2019 uh

2020 COVID era. Everything was ripping up and to the right. Every coin you could possibly think of, millions of different ideas. What's changed in between now and then? biggest thing is that I think you know the way that people interact with with crypto products or products that are built on chain is just largely through like regular companies now. Um and it is much more invisible on the back end. Like I remember five years ago all of our friends from outside of crypto were like a what should I buy? What should I try? And like even a few of them were like you know like trying to buy near right like or like trying trying new protocols trying like actually like onboarding to random

like cosmos chains. Um and that doesn't really like that's not how that the primary mode of interaction anymore and thus you know there's like uh far fewer let's say like investable opportunities for tokens. Um but yeah, I saw like the Airwallix founder um post the other day who is Airwalk is like a you know a massive fintech uh payments processor. Um historically has been extremely anti- crypto, anti-stable coins and everything and has done like a total 180 over the past let's say year and last week they announced that they're launching a chain. Um, and the founder is like posting on Twitter and doing like mental

gymnastics around how he still sees absolutely no use case for crypto. Uh, but blockchain, oh, very useful, right? Stable coin, very, very useful. And it's like, what what are we what are we talking about here? Um and so I think there is just like a weird repeat of this um let's say you know the old like debate was Bitcoin or like Bitcoin not blockchain right when that was like the private chain era and people were actually saying like these things need to be neutral credibly neutral and decentralized in order to be you know valuable and like public and open open access right um and now we're kind of we kind of have sped speedrun back to that debate and it's now looking more and

more like you know the consensus is around the stupid like you know blockchain not Bitcoin. Um and so yeah I think like there's um now a weird delineation between like crypto and blockchain which people peg to like tokens and if tokens are doing well. >> Yes. Um, and it just seems kind of silly to me, right? Like if you were, you know, unfortunately not everybody can do this, but if you were like a good investor over the past five years, it shouldn't really matter that tokens are down because if you were investing well, you were investing across like equities and tokens like um, you know, just say like startups that don't have a token.

Um and so yeah, there's a big disconnect I think if even between like um you know invest like private investor sentiment that does have exposure to the stuff that's working right now and then public market you know sentiment that only has exposure to tokens which have just been kind of you know um down into the right price-wise. So yeah, I'll pause there. It's not like there's it's a loaded question. There's a lot more that's changed, but um I don't know. That's just an initial reaction. >> Zave, what do you think?

>> Yeah, I think uh well said by by Miles. Um yeah, I think one thing which you've mentioned quite a few times, Mike, which I totally agree with over the course of us having this podcast together is really around different players trying to move up and down the stack. I think that's been the biggest kind of thing that's happened so far. Um that's changed a lot in the last year or two in particular, especially postregulation actually. Um I think regulation made it a lot easier for people to move up and down the stack. So you have someone like Coinbase which owned the end user was arguably the best app maybe alongside Binance and both

Binance and Coinbase of course now kind of have their own chains. You have B&B chain, you have you have base chain. So really everyone now including Miles, you just mentioned Airwex. what what is airwocks? It's just a good fintech app essentially. And what are they trying to do now? Well, they're trying to move into the execution land. And you know, beyond that, there are other things probably in crypto they look to do as well. So build their own infrastructure, etc. So I think everyone is basically siloing the value themselves, which was maybe a bit different to what it was back in the day. Where it's going to get interesting in the next few years is we speak about teams like Hyperlid and Moro etc. And I think Hyperlid came out as a very good app actually if you think

about it was just an app on on arbitum and they did such a good job that it was actually pretty much better than even existing apps that were very successful. For example, Binance and then they turned it into a chain. And so Binance never really turned their actual primary app with product market fit into like a great app on chain or execution layer built around that. I think that was the decision that Hyperlid made that Binance never did. But I think ultimately the conclusion here would be that everyone is moving up and down the stack. So if you're an app, you're going to try and verticalize and own the infrastructure or the execution layer. And I think you just have to think harder now about what's actually really hard to do. And I think one of the things that's really

hard to do is find users and build a good app that actually finds PMF in the first place. Like we've discussed many times on this show. Um, one of the things that's not as hard to do anymore is just build a chain, especially in the era of AI. So, I think the three of us with some maybe moderate support with enough funding could probably build a blockchain, but like block space is really commodity now. So, that's no longer valuable, but that was valuable once upon a time, you know, before Salana and stuff like that. So, that's also changed a lot in the last few years. Yeah, I I I go >> I was also going to say like maybe just um going back to the speedrunning of like past events um look at like OSD that was announced yesterday like this

is basically DM like 2.0 you know, right? Um, and one of those I I saw like the M0 founder, you know, posted about it and like M0 has basically had the far more like thoughtful version of like what OSD like wants to be and has built it out like really from the ground up from like a governance protocol, you know, everything structure. Um, and the challenge for crypto startups today is that like the incumbents, you know, see the space as derisked and they don't want to play with your startup infrastructure, right? Like unless they own a good amount of it. Um, and so that's that's I think if unless you're positioned to basically be like powering

their initiatives like you know like like look at commonware, right? It's kind of like the the foundation of tempo, right? and like Doppler has been yeah I think like you know powering these like auctions for tons of different apps right it's kind of difficult um and that's and that's also part of part of like the the maybe like the frustration that we feel like within this you know crypto community because for the most part we are just like hearing from the other startups that they're still startups even if they've been around for a while but >> yeah I think just to um in terms of like the catalyst for this change. I think it's two things that are overlapping that I know we've talked about this era

being confusing. I I'd push back on that. I'd still say I think this era makes arguably much more sense than an era that I found very confusing as we were living it. Um I think the two things that are happening is that the US has thrown the doors open for crypto. They've gone from trying to push crypto offshore to creating a regulated route. At the same time, people mostly understood maybe in the future this will change. I I'd be in this camp. But for now, the things that work on crypto are financial applications, yield, borrow, lend, trading, payments, all finance.

Um, and so now for the first time the all the the the groups of people that are distribution for financial assets, the money that the actual like raw material for creating financial products, all that's allowed to play. So your customer has totally changed. like the customer has changed, the requirements for those customers have changed, everything has shifted on the field because of these things. I think actually I was going to say there's another thing that I think is is changing here too. But if you only that is 90% of what's happening right now at the same time crypto is just going through a classic um boom bus consolidation in terms of infrastructure. So, you know, when

crypto got started, a million different ideas got funded, a million different teams got funded. You know, investors that were in the right place at the right time made a ton of money and you had a bunch of different bets going out in different directions. And it was a really interesting time because it felt like anything was possible. We're going to run all these different experiments. And now we've run all those experiments. And we found that 10% of those experiments are unbelievably worldchanging, huge outcomes. Unfortunately, 90% were failures, which is I I think that's still a pretty good pretty good rate. Um, but now we're going through a natural industry consolidation at the same time that the customer has changed. So, I I think where that's producing the most confusion is in the teams themselves.

It's in the investors and the teams. And on the investor side of things, it's kind of like, well, hey, the way I've set my fund up doesn't work anymore. I can't just take an early stage bet on a founder that's tweaked one bit of the I'm I'm painting with an overly broad brush here. Um but a lot of funds were set up to do that invest in the early stage and make money largely on the basis of like narrative and like Twitter RZ. Um and that's changed. At the same time, the crypto teams themselves have changed. And what you needed to do to attract talent and build an incredible team largely from 2020 to 2025 was be gigabrain, be big on Twitter, be really like smart and have do what Daario is

doing for the AI people right now. Talk about beautiful machines, you know, taking control of that. It's like say the right things to the right people that are buying into this vision. And that's what you largely needed to do. you can focus on things like mechanism design, you know, decentralization, all these very ideologically driven things that produce no business outcome. So now the the hard work is actually reorienting everyone. Everyone bought into the even though the ideas were wrong, there was unity around the wrongness and now you need to push people in the opposite direction at a time when it's not super clear what the right direction is. All we know is what's wrong. So I think that's what's happening at the m like the two things

that are happening is this natural boom bust and and consolidation which is good. It paves the it paves the way it creates a bottom for the next leg up but then at the same time it's a regulated market now it's becoming a regulated market or you need to play in a regulated market if you want to be successful. Those are the two things. Yeah, I just think to touch on a few of those points I mean absolutely and to draw a parallel with AI which we have done in the past a bit as well but I think it's true an interesting parallel is actually if you think about crypto funding over the years and a lot of the ideas actually didn't work and okay so there's no value there that's just because no one wants to pay for it in AI I think the difference is that there's quite a few

good ideas actually and people are building this super fast using AI but I think the their risk is obviously that the frontier labs just eat their lunch especially application layer and what they have isn't durable enough long term to actually build like a great business and I think a lot of funding unfortunately we'll find that out the hard way and that's at all layers like that's just one example with the application layer like going back to your point Mike around the use cases we already know today that work in crypto like I I agree I think the hard part this is just from a BC hat right now but um A lot of the use cases you mentioned Mike I guess because we now know the use cases they're a bit more obvious in terms of like trading yield and etc. So

if you're an entrepreneur for example it's more competitive and I think defensibility in general with any business matters way more now than it did 12 months ago pre-regulation preai and I think in AI itself you need to think very deeply about what you're building and make sure that no one else can build it to make sure you can charge for it. I think in crypto people are still really working out defensibility even still and I think occasionally you'll hear a good pitch around why something actually makes sense and is durable long term but this is like very much the minority. I would also make the argument across even existing protocols today like we are still learning as an industry like crypto is a new asset class. It's not like software itself. We're still learning about the most important pieces

when it comes to defensibility. And I think you're seeing now we see with Ethereum for example, we've had several podcast episodes about it as well about like what makes Ethereum valuable itself. Everyone still has different opinions on that as like a valuable asset. So I think as we continue learning as an industry and asset class what defensibility actually means and I think we'll have some takeways from AI as well because that's really putting the microscope on on why defensibility is important. I think we'll understand better long term I guess of the opportunities that still exist because I guess all of us wear different hats. Um from a startup perspective I think there are still opportunities but you have to think very precisely about your go to market and and why it's durable and and other competitors can't catch it versus

the other more out there ideas which we've spoken about in the podcast as well like you know for example quantum coming and how that impacts crypto etc. there is obviously value there which is a lot earlier uh in terms of if you're a startup can you build right now and try and get in front of the incumbents and then maybe create something vertical after that. So there's still a lot of interesting ideas and opportunities. I just think that from a startup perspective founders thinking more about this from the the get-go is super important. Like Mike, I'm sure you've done your whole life with Block Works and Miles, I'm sure you're doing every day right now at Deltit. Yeah, I mean like to your point on defensibility um crypto maybe the difference between crypto and AI is that crypto had like um I don't know between a five and

sevenyear period where we the question if you're looking at a startup the question of like hey why wouldn't Fidelity just beat you or why wouldn't Black Rockck just beat you or why wouldn't NY just beat you like the like the the equivalent of basically like why wouldn't Frontier Labs, if they release this as a feature, just crush you. Uh, didn't really exist because those um big incumbents didn't want it was too risky, right? They did not like they were willing to do PC's and be like, "Yeah, this this technology is really promising." And stuff like that, but it you were not worried about Stripe coming in and and eating your lunch like 5 years ago, right? Um because they just

it was too thorny. Um, and if you did like the really hard, you know, regulatory like, you know, uh, dance and hurdles, then you were willing to like like you could actually have an opportunity to, um, carve out like a a big chunk of market share in a really strong position before the regulatory clarity like came in. And now, Mike, to your original point, like the US is open for business, like the floodgates are open that everything about the space is derisked to play in. And so now we do have a it is actually like a lot harder to to launch a startup in crypto that is defendable or like has you know you you want to be positioned to actually like

benefit from all of these big players coming in right by like powering their infrastructure rather than like trying to compete for market share with their customers. Um, so yeah, that's that I think has gotten made has made things like quite a lot harder and like you know M0 versus like OSD is a good example of this, right? Um, they were early but like and they will be right I think. Um, but yeah, anyways, we'll pause there. Mike, go for it. Well, you know, I was going to say, I mean, one of the it's something that I mean, this field is evolving in real time and there was a lot of quest there were a lot of questions that we just didn't have our answers to in the moment and some of these were around business models and I

think you were trying to map a couple of things. You were trying to always map the amount of demand that was coming online and then the supply that was needed to meet it. And one of the things that I think I I think there's a there's a there's an analog that's playing out in AI in real time with the LLMs right now as we go from token maxing to token optimizing. Um you know one thing is infrastructure. So how much infrastructure is needed to support mostly trading activity of crypto and there's a there's this idea of Javon's paradox which is totally right but I think people forget that the devil's in the details and there's a gap right and if you look at Ethereum you know rev what happened over time was the fees you know they they went from

you know I don't know what the average fee gas fee was in 2021 it was probably like 50 bucks or something and it went to >> to to to you know sub $1. Yeah, eventually that has if you look at the actual amount of transactions that take place on Ethereum it is way up but you would need to 50x it to get back to where you were. So there's a gap in between these these and then at the same time we built all these general purpose L2s which sorry they didn't need to exist and so this is the this is and we had weird mental model about them. So or we not that many needed to exist I should say rather so we way overbuilt um and then I think that opportunity of

building for the fidelities of the world you know what is a really uh optimistic exercise go talk to them go talk to all the things that they want to do understand what their problem how many problems they have there's a ton there's a million opportunities for founders that want to go do that um and then pivot your business like I I think one of the the other, you know, game on the field and what's happened in the meantime as well is that, you know, we talked about second versus first versus second mover advantage on this podcast a lot. This is probably the best single time for second mover advantage in all of crypto because the incumbents who you probably once viewed as being uncatchable are catchable because they're dealing with the hangover of

setting up the wrong what you'd call operating structure, reporting structure, legal setup, cap table. There are huge overhangs that these founders are going to have to deal with. And if you're if you're a new startup, you don't have to do any of that stuff. And I think there's a huge advantage. Um >> that was I mean that was the double-edged sword with not having any incumbent competition for those seven years, right? Like you didn't you just had to do stupid things because there was >> a risk of going to jail. >> Yeah, exactly. And that's that's for the most part >> gone, which is a which is a good thing.

Um >> but yeah, you have to be a little bit more creative about finding problems that desperately need to be solved. Um but the good news is as adoption comes online new problems begin to exist right. Um as you know like AI gets better and better that created lots of new problems that you need now need to manage like your token you know like spend and now we have like smart routers that are like crushing it right there's lots of equivalents of of that on our side too. >> Yeah. And another point, I guess an optimistic point is there are still opportunities that emerge as assets do mature and categories within crypto. For example, prediction markets. I forgot

the name of this company, but I was looking at it today and there's some kind of prime brokerage prediction market company. I think it's YC back that's doing quite well right now, which of course probably 12 24 months ago wouldn't have existed as prediction markets were a lot less popular back then. And of course, a prime brokerage for such a thing does make sense. And you can imagine this actually existing of course so there are definitely still opportunities I think what Miles was saying around it just being a lot harder which is true you know like it's really hard to find a problem that hasn't been solved already because even the the stable coin yesterday open USD I think it's called that was announced um like what is that well that's really just all the big institutions saying hey like we can also issue stable coins now and

capture some value there like it's not just circle and tether whereas circle and tether was so early in crypto where it's Could they foresee regulations and these institutions coming in years later after they build a business? Like probably not. But at the end of the day, value capture does actually change when these things happen and even stable coin infrastructure itself, which I know Mike has some points on and stable coins, you know, that is also commoditizing right now. Just bringing dollars on chain like is that still a great business? Maybe. But probably what's actually happening now is value is being captured elsewhere. I know Mike likes Moro for example. Of course, Moro is a great example of this of, you know, stable coins are now coming on chain. It used to be a great business for Tether and Circle and maybe it is a okay business

for all these incumbents that are bringing dollars on chain. Realistically, it's just dollars coming on chain. These dollars are going to flow somewhere. probably they're going to flow to you know various chains as well as also applications and the applications that control that you know order flow whatever ends up being trading hyperlquid lending borrowing they moro of course stand to benefit and that's also changing I guess growth catalysts for different kinds of protocols within crypto and again there are definitely startup opportunities there as well as this changes value capture across the stack can you build an application now that stable coins are far more abundant that required a lot more liquidity that we didn't have before in the past. So, still is an interesting type of building, I think.

>> All right. Can we talk a little bit about mental models that might be updating or changing? And I I think this stable coin one is really topical. So, I think it'd be really interesting to start on this. And there's there's a bunch there's an old idea here of is there going to be very modular tech which is interoperable or are there going to be larger ecosystems where a centralized party just coordinates everything internally. I think this was the Cosmos thesis, right? The Cosmos thesis was always this tech enables this is a big upgrade to finance and it's going to make interoperability so easy that you're going to have many many assets um that just coordinate very well with one another. Wrong. Didn't happen.

Um I would bet that it's the same thing in stable coins as well. Um just to just to have some fun, throw a stake in the ground and get my opinion out there. I I don't see I see a world I think that actually the same thing is happening with the corpo chains and the stable coins. I think here's here's what I would imagine it's like to sit in a in a boardroom and be like head of product engine like a founder at Robin Hood Stripe one of these business like hey we have all the leverage here we got all the leverage I don't want to I don't want to adopt this other stable coin.

Why would I why would I do that? That doesn't make any sense. I'm going to own the whole thing. I'm going to own the platform and then and then you see but I think where this ends up converging is the cost and difficulty of doing that is quite high and there's an option where you could just get 90% of the revenue with 0% of the the headache and so like one thing that you could do is spin up your own consortium and your own stable coin and try to create your own Visa model yada yada or you could just say hey USDC I'm going to negotiate 90% of the the uh >> the yield here and USDC is probably like you know what fine that's what it's

going to converge to maybe it's 8020 maybe it's 9010 but it's just going to converge to that and you'll just use this thing I've built everything else out don't worry about it um and and and you're like you know what I don't have to think about this at all I'm getting most of the profits none of the none of the headache this is good and I think that that's where we're going to end up I I I still think people are really underestimating the network effects the asset network effects of USD USDC and look at we did the same thing on these chains, right? Like there was just too much money, too much incentive, too too much like, hey, I can win this. And turns out it's really really really really hard. And that's yeah, I'm not a big fan of these things. I don't think they're going to

work. >> I mean, I would also like kind of poke at the stable coin chains too, right? for the same sort of reasons that you know it's like does every single stable coin or like fintech need their own chain and their own stable coin like no we're going to overbuild the crap out of this. Um and then yeah we'll pull back into like what what actually makes sense which I do think Mike like you're you're probably right there. Um, I think people do underestimate like the network effects that USDC and and Tether have and the like years of operating experience that they have and figuring out like how to do things and how to move quickly. Um, but then again on the topic of like second mover

advantages, you know, maybe there are folks that know all of the lessons of DM, uh, and they know all the pitfalls of consortiums in the past and I'm sure they're not blind to that, you know, like they are thinking about that. I just when when like the again, I know we've talked about this before, but people need to go back to the Visa deal and what Dehawk did. It's such an improbable story. I think that with consortiums it always looks like oh my god look at who they got this this but it's hard to coordinate those none of those none of those players have the same set of incentives none of them and it's just really hard to coordinate all of that and there going to be multiple it just feels like a mess I I also on

the circle side of things you know circle sold off also I'm going to disclaim uh first of all I own no circle coinbase is an investor in block works so just keep that in mind but Uh, it was interesting that Coinbase was in there and I think that coin that was signaled as Coinbase was trying to extract more leverage on Circle, but I think the the opposite could be just as true and it could be Circle's It feels like those there's a breakup that's destined here. Um, and it could be just as probable that Coinbase is trying to find an alternative stable coin play if they were to lose Circle.

So, what would lose Circle though? They're not going to lose Circle. I think Circle like doesn't want to lose Coinbase, you know, to some extent. I don't I I think they have a like a very symbiotic like relationship as it relates to like the actual issuance of the of USDC and like the revshare. um you know but they're also going to compete at the chain level with Arkinbase uh and I think >> uh I mean I think it's interesting these companies Coinbase uh AR etc the great divergence of these companies and trying to control various parts of the stack in terms of like the valuable parts of the stack to own if I had to

guess off the top of my head I would predict that base chain will be more valuable than ARC at least right now because I think again going back to regulations they've just made it so easy for anyone to launch stable coin and I think there is some merit of course to existing stable coins that already have liquidity and network effects on the asset itself however with distribution of some of these incumbents like if they have billions of dollars they just bring on chain like super easily at almost no extra cost to them I mean I guess like issuing stable coins itself is commoditizing and and they can easily get as much asset network effects in a short amount of time on the liquidity of OpenUSD with like the 200 names that are involved in the project and what where

does that leave ARC? I don't know like if they have apps that are just okay and the stable coin USDC running through it. I guess the question there is like is that still valuable? It's probably more valuable to have an ecosystem of applications within a chain itself. And I think actually chain network effects are getting a lot more interesting. Again, actually going back to the defensibility question on what actually matters the most in crypto and is it different to AI. I think network effects within the chain itself, like Mike rightly mentioned before, one of the reasons why I think Cosmos didn't work is because if you have too many chains, there's just so much block space and no one's paying for it. No one cares. And it's like, and actually, we also realized that liquidity fragmented across chains is still it's getting a

lot better now, to be fair. But back in the day, it was asynchronous. like it was very ineffective actually having assets across multiple chains was just more annoying than it was valuable. Then we worked out okay actually having assets on one chain is really valuable. And then we worked out okay Ethereum was a bit too expensive so Salana could make more sense. And then we worked out that applications on Salana actually if you think about it why Salana rose back up in the last cycle was actually the applications and the network effects abroad and the distribution and and the composability I think is another thing that we also really underrate within crypto. And so I think bass going back to base you know if circle leaves them and a stable coin goes elsewhere and they end up competing I'd probably have my money on on base. itself like

Coinbase already has the users the end user relationship. It has the execution layer and it also has potentially some great apps coming out in the next few years as they keep targeting crypto and AI and the standard X42 itself like let's not forget they're also working on that standard. So I think again they're going to capture a lot of value at the chain level and the application maybe not the application level but the network level and the and the sort of company level let's say and that also I think allows for unique opportunities to build applications there and I if I had to think about this next cycle which I still think is probably being underrated I'm still bullish on Salana and Ethereum but I think base as a chain and with everything they've done so far could get

very interesting especially for application builders to build on top of other primitives and standards and stuff that exists there. You're seeing volume as early for X42, but it is actually growing now for the first time. So yeah, it's quite interesting to think about. Yeah. Um I agree with all of that. I think one thing though that I would go that I would like I not that one has to be better than the other, but I do think that the like when I look at the stable coin space, again, these are just my opinions. I don't take these super seriously, but I don't like ARC for Circle. um that feels like the it the network effects to me of Circle are on the asset layer. They've done an unbelievable job creating network effects at the layer of USDC. And even

when you look at something like an RWA, right? Like RWA is moving on chain. The first thing that people are going to want to do, trade them, lever them up. The pairs are all USDC because it's regulated, it's based in the US, can't use Tether, can't use USDT. um some of those properties that held them back from being able to be more aggressive like Tether has been um I think USDC is really going to benefit from. But where I really agree with Tether's strategy is they've been so small for so long because they don't try to build all this tech. They they realize that that's not where their network effect and their leverage is. Circle keeps trying to build all this stuff that no one uses always and it's just like just focus on the one thing. just focus on the thing

that you are murdering it on and I think that if they were to signal that the market would really really appreciate it and like it. The story just has to be told the right way. Um and I don't know I I think that the asset level look at Bitcoin. >> Yeah. And that's the problem, right? like the chains are successful and and develop modes based off of um you know the quality of like the the venues and the quality of the assets, right? And how do you get high quality assets? You basically uh you capture you have like basic demand ready for them, right? And so like Coinbase is, you know, I think going to compete for the launch of

tokenized equities. Um, and like if you're circle and you're also trying to compete for RWAs and you're saying like, yeah, issue them on ARC, it's like, well, where are the buyers? Where's the demand side? Right? That's actually that's that's a very very hard cold start problem to get over. And so I think we'll see like um people I think a lot of these like whether they're the stable coin chains or whether they're these new like stable stable coins like OSD I think like we'll see just how challenging the cold start problem is for them. Um in the past it's been incredibly challenging. That's why the number of chains that like have been

funded you know versus what exists now is like quite quite low right. Um, and so yeah, I think that will be it will be maybe like a a sober wakeup call or maybe we're wrong, right? Maybe they do have the leverage and maybe there's just so much like so many assets coming on chain that there's, you know, like um, you know, more opportunity than than we think um, for them for them to at least like capture a small slice. Yeah, I think that, you know, honestly, I think the best episode we've ever done is that value chain episode. Um, you know, where in a mature value chain, there's a lot of um PE companies are

very strategic about where they want to play. And I I would encourage the my mental model um that I would encourage others to look at it is like that logic hasn't kicked in yet. And I think that everyone's just trying to own everything. And I don't see a world where that happens long term. It's not clear what the left side of the smiley curve is for crypto yet. You know, like I think we all we all know the right side, right? That's just distribution and and proximity to like users and and demand. Um >> it's the L1's.

>> Yeah. >> And Hyperlid like maybe I don't know. Here here's just just >> but what about the other ones? Is it is it the Lindy? Is it the >> Lindy? >> Okay, here's just just just like let's play a situation out here in a couple years. Let's say these consortiums um they start and they start with a bang. Let's say they get a bunch of traction, but then there's infighting. there's like Black Rockck is not aligned and they don't want to keep entrenching the business of Stripe because the the the lines in between where they all play are starting to blur and it's like hey this consortium might be helping you more than it helps me and suddenly the market narrative changes to these consortiums don't work where are these things going to settle to and keep in mind the thing that broke the consortiums up is

misaligned incentives within the consortium I think they're going to land at the neutral parties that have been building at this layer for 10 to 15 10 at this point 20 years you know at some point in the future and they're just going to say enough headache I I I don't want any of this infighting I want to just capture my portion of the fees and never think about what happens below the stack >> y >> that is and and that lock in that layer is the Ethereum Salana maybe maybe like hyperlquid's kind of trending towards this this maybe as well I don't know but that's that's why I think these assets are incred incredible buys. I wish and also I know that there's always this the

at least Anatoli part of the reason I like Salana as an asset at the current moment better than I like ETH as an asset is because whenever Anatoli talks I agree with him like yes doesn't matter what you build on here it has to remain neutral or we need to generate reev we need to generate fees and off talking about crops and this doesn't need to generate fees and we want to be Linux I just can't own an asset where the founder is saying that I just I can't own it. As soon as he's like, "Yes, we need to generate fees." Boom. I think ETH is a great asset. But I gota I think I think I think you're I think you're right.

>> I think you're right. And I think there's that you know what was the another Ethereum like uh EF alternatives announcement last week with like all the people that left the EF that are like all you know banding up and trying to do something about it. Yeah, >> I'm hopeful that that works. I'm hoping >> I don't know what they're doing, but something, you know, like >> I think I think there's a realization there's a realization from folks that have been at that like this is the missing thing. It's not I think people have identified the the problem. >> I mean I mean I think we've spoken about this several times on the podcast. I'm pretty sure Ethereum is like three or four years behind Cosmos. I am also pretty sure that

>> Cosmos had a privately like a private segue off from the main mission of the co-founders of you know Cosmos itself and that went nowhere. I'd put my money unfortunately to bring the bare case here. I'm a bit bearish on that initiative actually working and I don't know if that's controversial or not but I've seen it happen in Cosmos and it didn't end up working and I guess Mike I agree with your point around being more profit motivated makes a lot of sense. Then I guess you have to question like why are people actually touching Ethereum and like why are they paying for it in the first place. I think actually still underrated. I don't know if anyone's come up with a good thesis or metrics on how to actually evaluate this, but the trust of Ethereum itself and like how counterparties come together, all the protocols, like how

much you trust your assets on Ethereum, the base layer, there is like value in that in itself, I think. And actually, Salana, I feel like has always tried building more of this trust over the years. And I think it gets better and better every year. Of course, with this great team, great tech. And that's goes back to Mike's Lindy point. It's kind of somewhat lindy but somewhat just trust being built over several years of not breaking as well and having like value in that in itself I think is is actually valuable and you know having all this state and all these assets and all this liquidity and all these wallets and all the infrastructure built around it and like that is like clearly valuable uh in in my eyes but yeah I also think it's interesting going from the other side so going back to the smiley point Mars

brought up which I quite like. So, one thing I wonder and I've brought this up as well several times and over the podcast is like so you've seen a protocol like Moro and this is not throwing any shade on Moro itself. Um, but it is interesting to think about of like you have base layers like Ethereum where like huge trust is built. Then you have like end user apps like even Coinbase which is actually not even a crypto app. It's just like a off-chain kind of thing that allows people to on board. I think if I zoom out, I think these are still valuable in like five to 10 years time. Defi I think is very interesting of like something like Morpho will fintech apps and Coinbase and you know will they continue to partner with

Morpho and these kind of defy protocols or are they going to start eating into that layer as well which we've seen with like stable coins moving up to base layers and vice versa maybe. And also if you think about uh circle my question with circle is like okay you know for example a fund holds a bunch of USDC like does it actually make more sense to build an application that's valuable for them to access certain new opportunities or something like that where you're actually providing value and it's super hard to do unless you own the asset itself or is it more valuable to build a chain that anyone can kind of do and I'm already using USC on Ethereum so it's providing no extra value to me in itself. So, I think we're still working out who and what is moving up and down the stack. I don't think we've quite

seen it yet in DeFi. I can see Morpho ultimately building an awesome app actually, a bit like a Coinbase where like kind of the chain side is completely abstracted and maybe the token captures the app, not just the protocol. But, um, yeah, this middle DeFi segment is what I keep coming back to. And it's also related to Ethereum as a base layer. Like, why is Morpho valuable? probably because it's on Ethereum like there's some value in and of that in itself I think so yeah I guess interesting to think about across those different layers. Yeah, I mean it's the lindy contracts, right? Like even if it's on arc, it's still like we know this thing works, right? Um and I think for the same reasons that like Mike was saying what people will just negotiate with circle, you'll just do

that with Morpho, right? Like smart contracts are [ __ ] scary. >> People don't want to build like people like even um incumbents that have are usually reticent to like outsource things like Fidelity just insists building everything themselves. like you should not you don't need to you can move faster and it's safer right for like your users and so that's the bullcase I think for these like you know headless protocols that um will serve as the end of the back end for like yield or for trading or for something else right >> so here's my like my uh I think that we're just at a nater in sentiment here and I think ETH's going to work um I

think honestly one point or another. I don't know if it's Vitalic changes his mind or ETH Labs is really successful. It has such a head start in such a valuable space. I can't see it not I I think I am bullish on a long-term time horizon. Maybe it's the case that for people that are building on top of it, but the the unique properties of Salana or Soul and Salana and ETH and Ethereum are that it's a very onetoone in that the more economic activity you generate, the more your fees go up. And like you've never really seen that. It's a pretty unique financial asset in the sense that bond the price of a bond and its yield are inversely correlated. You you very rarely see something an asset that it's a commodity where the yield

goes up and the price goes up at the same time. It's a freaking cool asset and it's very scalable. We haven't proven that out because there hasn't we just haven't been able to execute on that yet. But I think that story is very compelling on the Morpho side of things and fin like maybe to get into we have 10 more minutes here. So, I want to just get into what does it mean for crypto to win? And just to just to here's the I have a definition of what I think for it means for crypto to win. But to bull people up a little bit, I think there's been this attitude that you know what, we built all this stuff, but Tradfi is going to come in here and use the rails and that's it. First of all, I would say it's a good thing for Tradfy to come in

and use crypto rails. The idea of blockchain businesses leveraging blockchains to generate more revenue or decrease costs is a very noble good outcome for crypto. We should all be celebrating that. I think it's awesome when trad blockchain rails. Awesome. Um, at the same time, I think it would be a historical anomaly for the incumb a new technology to get created that is a step function difference and improvement and have all of the incumbents win the entire new space. I don't know if you could point to a single time in history when that's happened. I don't think it's going to happen here. And part of the reason for that is Tradfi has h has had the luxury of operating in a space which

is not technically forward. And Miles, exactly what you just described, smart contracts are hard. The biggest difference between finance teams with the exception of, you know, the high frequency traders and DeFi teams are DeFi is a very difficult combination of dangerously technically savvy and finance savvy. That's and that's the DNA that you need to win. And I think overall that DNA is going to continue to win out um over time. But I also I want to introduce another like what does it mean to what does it mean for crypto to win? Are we I think it's all of the above. It is businesses adopting crypto rails the adoption of non-s sovereign money and L1s as bonafide financial

assets. But also I think when it comes to tokens people have a really difficult idea like what does it mean for token? You know they know what it feels like when tokens on coin gecko rip. But what are we describing here? I think that what tokens enable are an earlier less regulated stage of the stock market. I think what people want and are sick of generally is that the the burden of becoming a public company is localized to certain jurisdictions is primarily in the US today and the barrier to entry is too high. I think what people want is the ability to buy equity of promising companies at an earlier stage. This is my fundamental belief and I think tokens deliver this. That's what I That's what

I think we're that's what I think success looks like. I think 10 years crypto will have succeeded if these onchain businesses are able to launch tokenized representations of themselves at an earlier stage. Now I think we've gone too far in in actually in crypto so far. There have been no rules about what you get as an investor. No one's had to disclose any information and there isn't an understanding of the bar that is required for investors to be interested. Everyone launched their tokens too early, but that's going to change. That's what I think winning looks like, dude. Yeah, that fixing the IPO is my definition of winning, too. Um, I would just say that like if the assets are actually just tokenized equity, like we

win, too. Um I think ideally tokenized equity is like more like the let's say like more accessible and we do come up with some sort of like you know equity light you know framework that allows it to do this. All of that's super unclear. What is clear is that the cost of issuing these things is you know like a fraction or it's an order of magnitude higher to do an IPO than it could be to like issue tokenized equity. Um you've got you know basically all the cost that comes with like counterparty trust goes away right because the assets are onchain um all the cost that go comes with like distribution goes away because anybody with an internet

connection and like the ability to KYC for compliance can you know hypothetically buy these assets and so even if they're not like token tokens right they're governance tokens maybe they're equity tokens like that that's winning um and I think we're already seeing not on the payment side like it's a little bit ahead but >> yeah I think uh my vision for winning and yeah think you guys made good points as well I think crypto just gives you better access and I think it's always been about that like my 10 years of being in the industry like why did I join crypto what was for access and also opportunity as well I think crypto actually to a large extent has provided access and opportunity I think we're

like maybe 50% of the way there we just mentioned you know maybe preipo stocks and and one flavor is tokenizing the company itself and actually launching a token and that being treated as equity and you're getting access to that even earlier. Another flavor which is obviously also doing well in crypto right now is just like trading preo stocks on like hyperlid or whatever where you kind of are able to trade that without holding the asset itself. Of course, if you go one better, you actually have rights which would be great at some point in time. But yeah, I think all these assets coming on chain. This is actually interesting to think about how you compose them, how you give access to different can I buy real estate in Latin America, like I can't really do that right now unless probably I have some crypto rails that allow me

to actually do that in the first place. You know, these ideas are actually still kind of early and what assets we bring on chain and what people want to invest in and what we can also pay for like even with agents and all this kind of stuff. It's just access and opportunity at the end of the day. It's like can we compile a bunch of APIs that we pay for to help us get on with our daily lives and our daily work and crypto rails are obviously just the most practical way of us being able to do that in the first place because the efficiency gain. So I think we still have we've done a lot. we can access a lot and there are a lot of things we can do and I think you know rates are high you know even economically right now like crypto and

defi is like maybe looks a little bit more boring than the traditional economy but if rates ever come down again which in our lifetime I could guarantee you they will then I think crypto all of a sudden innovation etc composibility all these assets all the opportunity what you can access it gets really really interesting and I think we're just building a lot of blocks right now to get us to that stage when when things come back in a big I agree. Um, and I think, by the way, I think like I think the two things that are I think a couple things that are standing in the way of this like glorious future or like things that confuse people and I think need to be fixed are one I tweeted about this the other day. I no longer think dual equity token structures are workable. I think

it's a fundamentally broken concept. Um, and even in the set, you could do a lot of stuff to make it kind of work, but it will, it's an inferior model. I think that needs to change. Um, I also think that one of the big challenges for founders and founder psychology is you got to make your token go up. When you launch that thing, you now have two products and you have to treat it like that. It's not okay or acceptable to just focus on your business and not focus on the token. And you have to do different things to make the token go up than you would to make can't just build a great product and expect people to come. It's not how it works. Look, Elon Musk is arguably building the most exciting company of all time with

SpaceX. And what's he doing? He's talking to the index providers. He's getting them to change their rules. He's trying to he's working with the Trump accounts. She's trying to stuff it into and you know I I think that that's viewed and I understand why as as uh a little weird. It's not what you should be doing. Well, it's the game, you know, and you got to play the game on the field and if you launch a token, that's the game. That's the game that you need to play. Um so also have one bugaboo here just while we're just talking about this stuff. people need to disclose incentive uh incentives that get paid.

Like that actually is one of the bigger, you know, I'm speaking to this as, you know, we have our TTF, but it's something I'm thinking about. It's like the amount of token. I actually like some projects out there that I they're winning big contracts because of this. They're dumping out huge incentives, and that's okay, but I think you got to disclose that because the market cap's going up and the price is going down. And I would encourage founders out there who are doing this not going to listen to me, but like I don't know. I don't know what the right trade-off is here. Um, and there's also there's a whole, you know, the whole system, the whole edifice of the system. If you want to get listed, if you want to get in included in earn programs, if you want to do all this stuff, you kind of got to

play the game. And that means giving up a bunch of your tokens that's going to get dumped. like the whole if we want the tokens to go up, there's something that needs to change about the infrastructure that powers crypto right now. Um I mean that's the that's just like the tension though, right? Like the um you want to be able to lower the cost of like going public. You want to offer access to earlier stage stuff, but you also don't want to push uh projects into acting like a public company before they really should and before it's in their best long-term interests to do so. And even if crypto didn't exist, uh we see that the incentives to stay private are strong for reasons that are outside of

just cost, right? And like, you know, Stripe announces that they're doing like I don't know, respiratory like re illness research. uh the other week and it's like they're dumping $500 million into that and doing all sorts of like weird R&D experiments that like the public market like would puke on, you know, if they were like, you know, announcing that in their quarterly like results is like like what the [ __ ] are we doing, right? And so there's stuff that like we can solve. There's stuff that we can't solve. I think that there's just like, you know, um a nice balance that is going to make sense for folks to like to to issue assets like or go public, you know, in some sort of light way um soon. And you know, I don't think it needs to be like I think you're

right like there's a right level of transparency and where transparency is like very very bullish, but you know, Blockworks could go public and that doesn't mean all your revenue needs to be on chain, right? It's like you just need to report it. Um, and if people like are long-term holders, then they'll have confidence that you guys can like, you know, would be able to navigate stuff even if a public market company like public market investors typically would, >> you know, that is to I mean, it's a huge advantage if you're building an onchain business that your revenue is just there onchain real time like for block works that means gathering a gajillion invoices, uniting disperate, you know, invoicing systems and payment platforms

and all this stuff, submitting it to an auditor, blah blah blah. I mean, the gift >> I will I will I will contend that all you would need to do really is just convert all that revenue to stable coins and put it in into an account. Um, and then you could be like, "This is the this is the account." But like, yeah, they're trusting you, right? Like, >> well, no, but then everyone would need to pay us in stable coins, right? >> No, no, no. You just receive dollars and then just on ramp it and put it in an account and let people track a bank account that you hold on chain like an address a bank, right? Yeah. I mean, but it's different. It's different.

>> I mean, this is this is the stuff that we're going to have to >> This is like some companies would pay via a more traditional bank wire and invoice. Some of it goes through a payment processor like Stripe that would never interface with something like that. A lot of this gets tracked with imag like I'm imagining trying to speak to the software platform that we use that aggregates you know our Cayman entity with the US entity with the stripe and this it's like hey can you just like dump this into a state >> it it's it doesn't work uh or sorry the juice is not worth the squeeze um it's it's amazing business it's an amazing >> attribute of a business for that to be the default >> anyway anyway um guys this was a really fun one I know we got to jump here Um,

but tons of fun. Appreciate you both and we'll see you next time. >> Go USA. >> Go USA.