Why Ethereum is a strong treasury asset compared with Bitcoin and Solana

Transcript

Why employ Ethereumbased treasury strategy? Why not a Bitcoin or a Salana or another token? >> I believe Ethereum to be the next generation of the internet. And it is the only available substrate that nation states, Fortune 500 corporates, and regular people like you and me will be able to trustlessly interact on a global scale. and and and it is experiencing parallel dynamics similar to Google with search where with Google 90% of searches happen there and 1% happens on Bing 1% happens on ask Jeves 1% happens on Yahoo and 90% of highquality liquid assets

which is a defined term by the financial accounting standards body HQLA are settled on top of Ethereum and and basically the the the next largest competitor has about 9% and then the the it it continues to kind of fall off uh the the beaten path. So basically a liquidity begets liquidity. B uh it is the only one that has and there's a point of client diversity. So there are 12 implementations of Ethereum now. uh there's a Java client, a net client, a HA hasll client and all of these clients have to form consensus with each other uh every six seconds as a block uh propagates. To give you an

idea, Bitcoin has one, Bitcoin core and Salana has one. Just to give you kind of an idea there, it is the most decentralized the the it has the most validators around the world that are forming consensus and has had 100% uptime uh since inception. And and so basically we've gotten this platform that works that is attracted the most amount of capital that has decentralized client diversity. And lastly, it's it's kind of a historic technology lesson. Java became J2E, Java 2 Enterprise Edition. Uh, and it became

the most permeated software language in the world when it converted from Java to J2E. And what that basically was is it created standards and and it had clean web APIs and clean database APIs. So if you were a developer in Mumbai, Paris, San Francisco, New York, Houston, wherever you were, you were using the same standards and what we've seen is the modularity uh of standards that are created. So basically one example is the ERC20 token standard and that ERC20 can go into the wallet standard. So basically anyone in the world could create a token that

represents some type of asset and that asset would fit safely into a wallet. And because of this we've been able to build different types of tools that all work together. And that's created this zeitgeist, Cambrian explosion, whatever cliche you want to use, and and and has propagated Ethereum to kind of the most used developer ecosystem with the most distributed validator set uh and and and and I guess most importantly, the most amount of assets by a factor of 9x.

>> Yeah. And if and if you're listening and you don't know the different standards within Ethereum, don't worry about that. If ERC20 isn't necessarily mean anything to you, you don't need to know that. What you need to know is you need these standards in order to achieve mass adoption because you need millions of developers around the world building in your ecosystem and these standards exist very strongly and we're really a part of the initial building of Ethereum. These standards were very well thought out by the team in the early days which >> Yeah, exactly. And it it shows how earlier I mean you use the JavaScript example. What is there 16 million JavaScript developers in the world and there's about uh 20,000 Ethereum developers like you know the we're so

early so early. Uh okay I want to I want to shift gears for a second to uh to DATS. So um I want our audience to understand the difference between different DATs. And this is going to get a little bit nuanced because I think you can really get into the weeds of the differences. Uh but let's start by talking about the Ether machine and the way you're building the Ether machine and then we can talk about the other DATs and how they're built differently. >> Sure. So, so, so I I I I guess I'll I'll I'll talk about this from kind of being patient zero and I'll and I'll let Andrea chime in and I'll shut up. But but basically I was going to commit capital to this endeavor because it was

my uh strong opinion that this was the best way for public market investors to have access to Ethereum and Ethereum's yield generation and and and basically we've talked about the onchain yield generation uh and then that there are other things that one can do when one has a public company uh and and and that is let's call it offchain ability to increase one's ether concentration per share. And that I think is an important topic for us to understand. Our northstar metric is if we have an investor that purchases a thousand shares for example and that

thousand shares equals one ether we have to be able to increase the amount of ether they have per those thousand shares. So the goal would be to increase that you know one ether to two ether and we can do this onchain by uh participating in staking restaking and defy and we can do it offchain by using the public equity and debt markets to uh basically acquire more ether. And this is really what Michael Micro Michael Sailor with Micro Strategy uh pioneered and and he should be given credit. And basically what he was able to do was he was able to issue

bonds and and with those bonds there were uh bond holders that wanted to acquire volatility and then with the dollars he received for from those bonds uh he was able to purchase additional shares of or excuse me additional e uh bitcoin for the shareholders that wanted additional bitcoin concentration per their shares. So I thought that this was the right vehicle because we ether has double the volatility of Bitcoin and it has the ability to generate yield which Bitcoin doesn't have. So when I went down the rabbit hole I said well Ether

is a better mousetrap than Bitcoin because it's a prod productive asset that has double the volatility which would be more valuable to bond holders. uh and then I went down the path and broadly speaking there are two paths one can go one can do what's called a reverse takeover of a shell company or they can create a denovo or a brand new entity and and do a merger with a specialurpose acquisition company and and and uh and Draica can is is is the subject matter expert of special purpose acquisition companies and I had a few conversations with a few shell companies is and I knew that I wouldn't feel comfortable putting my capital there.

And as patient zero that deployed 170,000 ether into this vehicle be uh to lead by example as I wouldn't suggest someone else do something that I wouldn't do. Uh I I learned very quickly I didn't I wasn't comfortable with with what I would call contingent liabilities. And I'll just give you a quick anecdote on on on some of these types of contingent liabilities. I talked to one which was a dying biotech uh where the uh the the drug didn't make it through clinical trials and then and so basically the company was going to go bankrupt and the CEO would have to stay on the board due to uh control provisions. You can't just if you have a

publicly traded company just change the management, you know, willy-nilly. and and and the CEO wanted $5 million a year and couldn't spell Ethereum and and and basically I didn't want to deal with a pre-existing operating business. Another one was a Bitcoin mining company that had a data center lease for 10 years. They were in year four of 10 and it cost $10 million a year for this data center. And with Ethereum, you don't need the data center because they don't do proofof work mining. And so that would have been a $10 million year leakage, you know, ongoing. There are other ones that uh are are are are basically saving capital that are invested in these treasuries to potentially settle

lawsuits because, you know, you basically are inheriting a company that has a four-year statute of limitations. So what they've done for the last four years maybe while their micro cap or their market cap is you know effectively zero um isn't worth uh a a a lawsuit but once a billion dollars is put in of of of digital assets that becomes kind of a honeypot for class action lawyers. So very quickly I I I I said I didn't want to inherit an existing operating business, an existing management team, uh existing potential liabilities in these, you know, the these lawsuits that have statutes of limitations of the last four years that I don't know. Um and so

what we've done is we formed a denovo brand new LLC and we merged that with a special purpose acquisition company. And maybe Andrea would be best to explain kind of what a special purpose acquisition company is and kind of the value uh that that a special purpose acquisition company provides. >> That's great. I'm going to exit the interview. Actually, you guys can interview each other. Perfect. That was my next question, Andrew. I love it. Okay, thanks for watching. Make sure you subscribe to the Milkro Daily YouTube channel. And if you enjoyed this clip, you can watch the full episode here.

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