Why the outlook on Ethereum has turned bullish again

Transcript

I think ETHBTC is like maybe one of the best trades. I think Ethereum is going to be a behemoth. >> Bitcoin pumped yesterday for the first time in what feels like months. Is the bare market over? Or is this just a retest of resistance before more downside? Hello and welcome to the Milk Road Show, the podcast that knows that the cure for all of society's problems is a giant green candle on Bitcoin. I'm your host, John Gillan. Today is Thursday, August 20th, and today we are joined by Lucas Chen. Lucas is the vice president of research at Galaxy Digital and the host of the Galaxy Grid podcast where he focuses on areas including Salana, Ethereum, and the intersection of crypto and AI. Lucas is going to share a ton of crypto alpha with us today. So, if that sounds good to you, make sure you like and subscribe. Share

this episode with somebody who's going to enjoy it. As a reminder, our podcast today is free and that would not be possible without our wonderful partners at saber.money, the stablecoin payments platform built for Asia. So, keep an ear out for more information about them later in the show. But for now, welcome to the Milk Road Show, Lucas. How are you sir? >> Hey, John. Nice nice to meet you. Thanks for having me. Yeah, I'm doing well. I mean, yeah, like you said, big green candles tend to cure all ailments. >> Yeah, they do. I I just think that the the whole industry feels different today. The vibe shift is palpable. Um, let's just start with this though. So, just to recap on this, the whole market cap of crypto pumped almost 10% yesterday. Bitcoin is over 71k. Ethereum is testing 2,300. Salana 86. hyperlquid 72 which is a wild move. What's your

reaction to all this? Do you think we are now in a crypto bull market or or what's your read of this here? >> Yeah, I mean I listen I don't want to say we're in a crypto bull market yet, but I definitely think it's a trend shift. It's definitely a vibe shift. You know, I I think we were in a space where I think a lot of the smart money and people that have been around and through different crypto cycles recognized that the past, you know, five, six months were generally a good opportunity to, you know, accumulate assets that they thought were um positioned to do well in another crypto bull run. And I think they've been spending the time doing that. I don't think they're going to be selling on this move up, you know, but I I don't think that doesn't mean that

there's no sellers that might emerge. And so while I'm hopeful that this is just a straight up trend shift and the bull market has started, um I tend to in crypto like it's you never know what's what's driving price, you know, and so you you do to some extent, but you don't to some extent. And so I tend to respect the heristics of the cycle and you know, just I don't want to say anything that jinks the bull run if it if it is starting right now. But I'll definitely say that things are looking great. You know, I think the reaction yesterday, while it was caused by that headline, there's been some great posts on Twitter over the past 24 hours just looking at the amount of coins that have been absor absorbed on the Bitcoin side, looking at kind of the amount of uh like seller

slowdown that we've seen happen over the past few months. And so, I think all the conditions are right for crypto to start making that turnaround. Um, and I, you know, I'm hopeful that next year looks very positive. >> I'm in the same boat as you. I've been very hesitant to get too bullish on this because I'm just used to getting seeing pumps get sold off and and you know having hopes dashed. Um and you know to that point though there were around $3 billion of liquidations. I think some of the tallies are still coming in but uh it seems like a lot of this was forced buying by shorts getting liquidated as opposed to you know the market coming back maybe in size here. At the same time just like you said it seems like another one of those like 1010 vibe shift moments for the whole asset class.

How do you balance between these two things as as somebody who's navigating these markets? Do you just stay patient? Are you are you like looking at data? How are you thinking about this? >> Yeah, I mean so um you know so Galaxy ourselves, we have a very big OTC and trading desk and they are you know looking a lot more granularly on a day-to-day basis at how to think about trading this market. I you know myself on the research side I'm generally look taking trying to take a much longer term view and and so I'm trying to look at you know generally no matter what happens with price in the near term if you look at some of the fundamentals whether that's like traditional fundamentals for what you have in tradi or more like on the tech side community side in terms of what projects are doing

to remain relevant to pivot and to get themselves in the direction for when interest cryp when interest in crypto returns they're well positioned to see if that stuff is happening and I will say over the past 6 months, I think I this has reminded me a ton of post FTX, you know, mid 2023 where you had a lot of projects that people just stopped paying attention and if you just did look and do some deep dive, you saw teams that were very strong both from their capabilities and on a funding standpoint um and had figured out kind of how to reorient themselves and remain relevant so that when interest returned they do well. So for me like if I look at the big assets I I think like especially a name like Ethereum I think there's been a ton of that happening. I think if you look on the application

side which which is kind of a new phenomenon I think in in in this kind of upcoming bull run is that you do have a lot of applications that started last cycle have survived and you know on a fundamentals basis are still very attractive. If you look at them they've also kind of done a great job of firming up during the bare market and making sure they're positioned for the bulls. So from that perspective, I I think things are looking great. Um I do totally agree there was a lot of liquidation. So you know what we what we need to see is spot buying come in. ETFs looked good yesterday. I think you know I checked this morning. I think the Coinbase uh premium has not really surged quite as much as you'd want yet.

But I think people are just a little bit of in shock and that's kind of what you want for a move like that. You want people to be left behind and and you want them to be chasing. >> If you are not already a Milk Road Pro member, now is the time. On August 26th, the price of Milk Road Pro is going up. Monthly goes from 25 bucks a month to 39 bucks a month and annual goes from 250 to 299. And here's why. Milk Road Pro used to just be one paid newsletter and one portfolio. Now, it is a complete platform. There's proprietary analysis and a full panel of five analysts, each with their own portfolio, their own research, their own trades, and you get full access to it in real time. This is going to have all the information and notifications you need to stay up to

date up to the minute with their research and with their moves in the market. And the results have been insane. Melvin's portfolio alone launched in February. It's up over 45% since. If you'd put 10 grand in behind his moves, you'd be sitting on over four grand of gains today. 5 months of Milk Road Pro cost just $125 over that same period of time. The ROI on that investment speaks for itself. If you join before midnight on August 25th, you keep today's prices locked in for as long as you are a member. and we hope you will stay a member because we love our community. Uh, but that's it. After that, it's gone. So, get in on this today. Lock in this price on Milk Road Pro. Link is in the description. I'll see you there. Yeah, I I saw somebody on Twitter say it's going to take a few

days for the normies to figure out what happened. And I think that's kind of the the place we're in right now. Uh, Lucas, I want to talk to you more about Ethereum and Salana, but first I want to get more of sort of like a vibe check on on where Galaxy is right now. I think you all pumped like 15% on this news as well. Um, but talk to me about what the sentiment has been like over there and a little bit more about the role that you have in your seat and what your perspective is on all of this right now. >> Yeah, definitely. I mean, so Galaxy has been around for a long time. I've been at Galaxy for um almost about four and a half years now and um we've been through bare markets. It's a very experienced team and so, you know, they kind of know

how to handle the emotions during bare markets. Obviously, things get glooier. Obviously, you know, it's tough to kind of like find where the opportunities are and what's interesting during a bare market because all of the euphoria and hype goes out, but Galaxy, I would say, has a lot of experience in this space and is very well positioned to kind of like not only survive during the bare markets, but also like figure out kind of where the pockets of interest is and where they should be focusing their efforts. You know, research ourselves. um we are basically sit within Galaxy and we sit across all the businesses and we help all the businesses understand kind of what's happening in crypto at a much deeper le level whether that is on kind of the market side or on like the fundamentals and technical side. So you

know we we talk to clients a lot who are interested in you know specific projects in the space. Uh we publish a ton of research. We put out research every single week. It's all free and available on our website for anyone who wants it. And so, you know, we kind of just view ourselves as the subject matter experts on crypto um within Galaxy. You know, I'll also just mention Galaxy. We we also now have a very big AI business as well. You know, we have this massive data center, the Helio site down in Texas. So, um we also have been doing a lot more leaning a lot more into the AI side of things and you know, especially for someone like myself who's looking at the intersection of crypto AI. It's been a really fascinating area to dive into.

I'd love to just get a little bit more of the highlevel strategy that you you see from Galaxy on these two mega trends of AI and crypto and that intersection because I think differentiating Galaxy's business is something that I I'm always interested in hearing people try to do that because I think our audience and a lot of people have a pretty clear idea of what Coinbase is, what they do, what Robin Hood is, what they do and like an Nvidia or something. But where Galaxy fits into these two mega trends and the intersection of them, I think some people are a little hazy on. Could you just talk to me a little bit about that? Yeah. So, so actually um you know in the next few months and I think last month our CEO put out a letter basically talking about this idea of the economy

that runs on code. Um and basically that the fact is the economy is basically being rebuilt in code and there's two main forces that are driving it, right? There's finance that's moving on chain and so that's where the crypto and digital asset side comes into the business. And like you know we have a massive trading desk, we got asset management, we've got investment banking, uh we have a whole tech team that builds out solutions, settlement, custody, all these types of things. Um and then you also have artificial intelligence which is remaking every single industry, right? And you know intelligence requires a lot of physical inputs. It's got power, LAN, GPUs and so Galaxy is also you know has basically this large data center that helps feed that and drive that engine as well. And

so Galaxy really sits at the convergence of those two what we would think are mega trends that we think are going to kind of drive a lot of growth over the coming decades and also be a lot where most of the exciting innovation and action is on a go forward basis. >> Well, let's talk about the innovation and the action and the go forward basis. I did an interview on this podcast um about a month ago, two months ago maybe now at this point um with the co-founders of ETH Labs um and how they said that they're trying to make Ethereum the root of global finance. And that kind of fits right in with your thesis there about the whole economy being rebuilt in code. Um you I I've heard you say recently that you've become bullish on Ethereum for the first time in a very long time and I thought

it would be a great place to start the conversation. What made this pivot happen for you and and what's your updated outlook on ETH and Ethereum here? Yeah. So, um, you know, just as some context, I guess when I got into crypto, I like started out as a kind of like I was like a Polygon DGEN yield farmer in like the 2020 2021 and B&B stuff. Um, and then Salana came along and I was very early to Salana. I was very involved in the NFT space there. just I was constantly using these chains and Salana for me was kind of the first time I used the chain and I was like wow like this actually feels pretty buttery smooth and and I could see how this might get mass adoption over time. Um it was like I was like this is an Apple versus Microsoft thing for me with

Salana versus Ethereum and so I was instantly drawn into Salana. My primary coverage at Galaxy over the past few years has been Salana. So you could say I'm like a soul maxi, you know, I'm not actually, but it's where I spend most my time. But basically last year I started to get really interested in Ethereum because I started to see that there was real shifts happening across different layers of the stack, right? Um you had this fundamental shift in terms of the technical outlook. Um and that kind of culminated with the straw map that got published earlier this year. Um you had a lot of shifts in terms of the leadership, right? There's been all these mixups in terms of at the ETH foundation. A lot of people have issues with ETH Foundation, so people saw that as a negative. I actually saw it as a

positive. I was like, "All right, people want change. We're starting to see change." Um, and and for me, it actually started like, especially in January of this year, I really started to be like, this reminds me a lot of Salana in the post FTX era where people kind of it was a different reason why people had given up on it. You know, I think with with ETH, people have kind of just like lost patience whereas it wasn't like an FTX like collapse. But everyone I talked to about ETH just was like had the same line about like a ETH has lost its compass. It's no longer relevant. But they couldn't point to anything that had happened recently, which gave me kind of a better read that I don't think people are actually looking into what's happening under the ground. And so I spent a lot of time over the past year

diving deep. I've written um helping people understand what's happening at the technical level, what's happening in terms of at the leadership foundation, the launch of things like ETH Labs. Um, and it led me to believe it's a very similar setup to Salana. And that just coupled with what I think is a much broader like macro narrative. You know, Salana had kind of this meme narrative that took off that really like kind of like put it into the next level in late 2023, 2024. Um, I think the tokenization stuff is very real. Um, and you know, it's it's still early and a lot of it is pilots or stuff, but you know, at Galaxy, we've actually been running an internal tracker and we'll be publishing data on this later, but just looking at the amount of initiatives

that are being announced by some of the largest asset managers, um, some of the largest banks, critical market infrastructure, and if you look at it's just like a parabolic curve up and to the right. And if you look at where a lot of it's happening, a lot of it is happening on Ethereum. um you know, you you've got Black Rocks Builder, things like that. And I expect that to just continue to accelerate over the next two years. I I think we're in the very early stages of institutions figuring out how they're going to interact and operate on chain. And I think Salana will win some of that as well. There'll be other chains that win, but I think Ethereum is going to be a real winner of that. And I think that coupled with this new technical roadmap that they have which addresses issues like you know privacy

as you know default option on the layer one scaling the layer one instead of focusing outside of the layer 1 um the quantum resistance all that for me comes together into a very compelling narrative where I think it's going to drive a lot of flows over the coming years. >> That's a really helpful uh updated outlook on ETH and Ethereum there. uh you tweeted out recently I think about a week ago that the Ethereum road map road map has never been better oriented but the big question now is execution and you spoke about this a little bit so you don't have to rehash everything but I I'd be curious to hear what about the current Ethereum straw map which Vitalic is you know currently updating you know pretty regularly um what about that is is you know so exciting to you and what in terms of execution do you want to see

in order to maintain this bullish outlook on Ethereum >> yeah so so I think it yeah it's in terms of what's exciting You're right. It's what I just said. You know, it's I think it's focused on the right tenants. If you look at what their north stars are, they have kind of like five north stars that set the long-term view. It's it's exactly what you want. Scaling the L1, privacy, quantum resistance, um you know, making L2s very scalable and interactable with the L1. So those for me, I was like, all right, if we spent the past four years on Ethereum focusing on all of the wrong things, it looks like actually you're going to spend the next four to five years focusing on all the right things. Um the execution side I think is just like you know in crypto it's always a risk. These are really

large organizations and entities right and and they are decentralized so it's not always easy to build consensus you have fragmenting views and visions and so while you can have a really beautiful view of how you want the future to look for Ethereum to actually implement that to get consensus amongst the different developers and um the different validators can be very challenging. And so, um, I'm just always, you know, I always try and think, all right, what is the main risk? And in crypto, it's normally execution on the technical side. So far with Ethereum, they've done an all right job. I mean, Glamsterdam is the next big update that they're coming out with. And it's already been delayed a few times. I would very much hope to see that um deployed in the next few

months as a sign of confidence that they're on the right track. And based on tracking, you know, all developer calls and things like that, it does seem like they're getting there. And then after that they'll have the Hagod upgrade um which will come sometime in 2027. And so for me I just I continually want to see them shipping new updates. I think that's something that Salana has done very well and and why people have a lot of confidence in the Salana technical roadmap. Ethereum they've always been excellent researchers but you know execution has always been a little bit slower. >> Okay. So they're on the right track but you want to keep them see them keep shipping and keep going on this course.

Um, Lucas, I wanted to kind of pivot a little bit to Salana, as you said, you're one of the the best experts on that that ecosystem. And I thought a way to to kind of bridge between ETH and Salana here would be around this conversation that's been happening, these debates on issuance for um the native tokens of a lot of ecosystems, Ethereum, Salana, Neo Protocol, a lot of different um ecosystems are debating right now. Should they reduce their issuance and how? There's a debate going on in ETH which you know you can wade into if you want but that Salana is also I think right now was just voting on similar things. Talk to me about this and and just your views on this entire conversation here.

>> Yeah. Ultimately for me I I don't think this is like a super important issue over a like over a long term I think it is important right these are maturing ecosystems. If you look at like what the issuance schedule was originally for Salana and why it was set that way. It doesn't like it's not like there was a ton of deep thinking put into it. I think at the time that said do I think like doubling disinflation is going to be like a key driver of Salana value acral over the coming years. Maybe if we were an environment where there was so much demand for Salana that like marginal tweaks like that actually had an impact. I don't think we're there yet. Right. And I I we I wrote a piece about this a few weeks ago in the Galaxy Newsletter, which we do every week. And

you know, the demand side is what needs to really drive a lot of these ecosystems, right? Because that shows that they're being used and people want the native asset. And we're in the early stages, I think, of seeing a new demand start to emerge for both ecosystem. So I do think like proposals like this are going to be good over the long term. you know, issuance. If you're a validator on a chain, yes, there should be some subsidy for running your technology, but ultimately like you want to be running a validator on a chain because you are getting value from the activity that's happening on the chain, not that you're just earning subsidies that are coming from issuance, right? And so that can be in the form of me, it can be in the form of transaction fees, or maybe it's just

a loss leader, right? If if you look at like a lot of key businesses on Salana and Ethereum, no matter how much money they're making from their validators, they just need to run a validator, right? Because that is their business on that their business runs on that chain. And not having a validator is not responsible. Like it it puts them at a disadvantage. And so I think like for me ultimately I want to see the demand side expand quite a bit before I'm like super amped about these changes. But listen, I I think we're in this like bare market period and it's always good to be making these type of changes right now. If you look at Salana, this was brought up last year like at first like it was very controversial. It caused a lot of debate, didn't actually pass. It's

actually been brought up twice before and the second one didn't even go to a vote. This one is looking more promising and and I think that is kind of how governance works in these decentralized ecosystems. It's like one proposal comes up, it's not what people want, and then it's just incrementally improved, improved, improved until you get to kind of a middle ground that sat satisfies everyone. And so this is by far the least controversial Salana one that we've seen. The Ethereum one is extremely controversial. Like if you listen to all all developers call yesterday, like there's definitely no no consensus there. there's a huge split, but I think it'll probably in the long term turn out similar to the Salana stuff here where like it'll incrementally improve until everyone's satisfied and there will be some change.

I like the focus on increasing demand and utilization of the the ecosystem and of the asset as opposed to this fixated conversation on supply. However, I also agree it's good that you know people are debating these issues of monetary and economic policies for their ecosystems and trying to come to consensus. The Ethereum proposal is called EIP8363, but there are three different proposals uh that that Salana is going forward with. And I I don't know if they've passed yet. I think voting is open or or it'll be at the end of this month. Yeah. >> Yeah. So, okay, maybe this would be really good to cover. I think just for people who don't know, there's three different proposals. They're being voted on right now. Can you just tell me a little bit high level more about what happens to soul as an asset or and it's

the Salana ecosystem if these proposals go through and just like what investors or or Salana users should know about these things if they don't already. >> Yeah. So so I think only two of them is are actually important right now and and the first one is yes it's an SIMD Salana improvement document that is asking to double disinflation. So right now Salana disinflates its issuance by 15% every single year. This one would move it to 30% and would basically get Salana to its terminal. I think it's like 1.5% or so issuance um by 2029 or so instead of 2032. So it would significantly you know by 3 years increase the rate at which the amount of soul that's being issued goes down. you know, not necessarily a net benefit for a validator because it

means you're getting less issuance, but but again, like from my perspective, validators like you want the initial reason to have that issuance was to bootstrap an ecosystem where there was an activity. These are now moving to more mature chains. They're not fully mature. So, I understand why you still need issuance, but we want to see these move to, you know, ecosystems where issuance is not the main driver of revenue for a validator. Um, so so that's one of them. The the other one is actually a fee burn a new fee burn mechanism um and basically changes the way in which the amount of soul that you pay for a transaction is calculated and the and ultimately increases the amount that you're going to pay for some types of transactions. Um and and that would lead to a pretty material increase in

the amount of soul that's burned. It it's it's not going to offset the amount of issuance right now. Um but you know if if you expect a massive uptick in um onchain activity over the co coming years or so um it it could lead to quite a bit of soul burn. And so I I think like right now they're great proposals to get in place and get set up and make sure that start building that alignment. It's it's looking like both of them are going to pass right now. Um we won't be sure until the end of this month when they actually like the vote is completed. But they're great things to get in place cuz, you know, once these are voted on, you now actually have to go and build the tech underneath, you know, build the actual software to implement this and do it and and that'll

take a few months as well. So, um, it sets up well if you if you have a positive outlook for the space over the next few years. >> Okay, that's really helpful. So, thank you for that context. I want to talk about some of the other upgrades that are going on in the Salana ecosystem because they have been building and shipping all bare market. Um, the Alpenlow upgrade is still on the horizon. um what is the updated outlook on this? What should people know about that? When do you think that's going to actually happen? And just talk to me a little bit more about some of these upgrades here. >> Yeah, so um Albanglow will basically, you know, changes kind of like the consensus mechanism on Salana. It's it's a pretty massive update. Um it also really speeds up the finality on Salana to like milliseconds. It it's it it

improves Salana in terms of getting finality basically immediately when you send a transaction which which is which is definitely a huge huge positive based on like what we've heard. It looks like this is going to be happening by the end of the year. Um they just uh shipped Anza which is one of like the big developer shops on Salana and runs the largest validator software on Salana just shipped a major update uh this past month actually that includes basically like all the core software that's actually needed for openlow to be implemented. Um they're just kind of running I think a lot of bug testing, hack testing, make sure it's actually secure to deploy. And um you know Breakpoint comes I think I think Breakpoint is in November this year, maybe October. I can't remember the exact date, but I would expect around

then is when we get the firm date. If not, they fully announce its release. I would definitely expect it to come out by the end of this year. And and again, this is like for Salana like these type of upgrades like they're they're highly technical and it's it's like if if you're not deep in the weeds, you're kind of like feel like you're reading like just jargon. But what what the big takeaway is like we're talking about some of like the best developers in the world building really like increasingly making the chain more and more efficient with a view that this needs to handle like all of the transfer of value traffic in the world at one date. And that's what all these updates are building towards and and it's very positive to see. I would just say during a bare market like to see the type of

motivation and the cadence of shipping from some of these development labs is just impressive because it's like they're totally not deterred by price action and and they have very firm conviction in where this space is moving. >> You know, one thing we've talked about a lot on this show is that crypto is quickly becoming a huge part of the global payments infrastructure and nowhere is that more obvious than in Asia. But if you're actually running a remittance company or a payment business, you know that the hard part isn't moving the stable coins. It's dealing with local banking partners, compliance, liquidity, and all of the operational headaches that come with sending money into places like India and Southeast Asia. That's why today's partner is Saber. They give payment companies stable coinpowered infrastructure to collect and make payouts across Asia without having to build all of that complexity themselves.

They've already processed more than $3 billion in transactions across 40 different countries. So, this isn't just a concept. These guys are actually doing this for real. If you're building payment infrastructure or expanding into Asia, make sure you check out saber.money. Totally agree and that's been really encouraging to me and to a lot of people uh this entire bare market is that the the development, the work, the dedication hasn't slowed down at all. Um, can you give me your updated thoughts on the Salana ecosystem here in terms of where you see it situated and their success in terms of going after that goal like you said of trying to be this this hub for global trading because like obviously Hyperlid has risen gotten a lot of attention and competition there. As you said, Ethereum seems to be winning the lion share of some of these Wall Street things at the moment.

Obviously, these things all change a lot, but just talk to me about your updated thesis on Salana and how you differentiate it in the marketplace from some of these other competitors. >> Yeah. Um, all right. So, if I said that like Ethereum was having a Salana moment, like I kind of feel like Salana is having a little bit of an Ethereum moment. I'm I'm not like as negative on Salana as I was on Ethereum back then, but I think Salana is like going, you know, it's kind of like reorienting and figuring out like, all right, what are the core business drivers for us on a go forward basis? Um, yes, they they lost the per the perpetuals race. Um, hyperlid was a big blow there. I mean, the fact was Salana just did never really did have a very good perpetuals offering. They had Drift and Jupiter.

Jupiter's great, but it's basically got no assets. It's got three assets you can trade on it, and it's very expensive fees. It's kind of just like the most retail product you can ask for. It's not a super sophisticated mechanism. Drift, obviously, unfortunately, there was a hack. Um, and and also, they're building on a general purpose chain instead of a, you know, app specific chain like Hyper Core is that's purpose-built for um perpetual. So, so it's a little bit of a disadvantage. Um, I I publish a quarterly report on Salana. Um, you know, if you look at the stats, like volume and open interest in terms of perpetuals is ticking up quite a bit on Salana. But, you know, in the broader scheme of things, it's still only a few percentage points of all onchain perpetuals. So, it's very small. If you

think it's a grow the pie situation, that means there's a lot of opportunity for growth there, but they're competing with a lot of players. Um, they've done a big push in the prediction market side. again there like it's very early. We haven't seen like meaningful transaction volumes really take place. Well, what what I'm super optimistic about Salana is like one don't discount memes, right? Like yes, that cannot be the end- all beall for Salana, but Pump Fun is one of the most profitable and best businesses in all of crypto even during a bare market. Me and Salana continually has the most application fees, the highest DEX volumes, top five um chain fees every single quarter over the past few years, even during this bare market when everyone says memes are dead. memes continue to be a huge driver

of activity on Salana and they're very positive for the ecosystem over a longer term in terms of just driving user growth. I would expect they're doing a huge push into tokenized stocks that's working out very well. Um, they're also I would say like you want to see a lot of businesses I think emerge on Salon like people just running businesses and I I would say things like Metadow which is kind of like a way of creating a much better um token ownership relationship um is one of the best projects in all of crypto and highly overlooked. I would expect over the next few years especially with recent US regulation they get more traction. Um, you know, I think Jetto, which has historically been kind of like the MEV, like they provide a lot of the MEV software initially, um,

has and a lot of this liquid staking, sorry, a lot of liquid staking software as well. They've really pivoted to become a, uh, like a front end for trading. Um, and so like I'm I'm very happy to see all of these teams on Salana basically be like, "All right, how can we take the success we've already have and make sure to like pivot and use like the funds that we have to help continue to drive the growth and acceleration of Salana's adoption?" And I think they're doing that. Um, I just think it's going to take a little bit of time to play out. And so, you know, my mental framework for crypto this cycle to be honest is that like Ethereum will be like Bitcoin in terms of attracting flows and like Salana will be like Ethereum in terms of like it needs to kind of reorient and reshape. But I will

just caveat and say cuz like I do love Salana and I and I think some of the teams and just the user base you there besides Ethereum there is no ecosystem in crypto that has such a dense pool of developers and users like Salana does which is a huge moat in crypto right and so like I I think even myself have been getting a little bit too negative on Salana and I'm expect I'm expecting them to kind of like just blow me away. So, I would go to Breakpoint in in the fall. I'm going to be there as well. Like that. That's the only crypto conference I actually go to because I think it's full of high signal and it's the best way to see what's going on on Salana.

>> Lucas, I really appreciate the honest outlook there. But I totally agree with you. I think that Salana is defined by its resilience and I think that that is going to serve it well in the long run. And I'm just really encouraged by that, too. And I'm glad you see that as well, cuz even when you're bearish, you're still bullish. I I want to bring the conversation back to this intersection of crypto and AI. you talked about this just a little bit cuz Galaxy kind of sits at that intersection, but I'm curious your thoughts on how these things are coming together, if there's anything that's happening there that's gotten your attention and just what you see happening at that space because there's all this talk about agentic commerce and crypto and just what are you seeing happen there? Yeah. So, um, crypto and AI for me is like one of

those things that I think is going to start to really emerge over the next few years and like this bare market has been a good seeding ground for where there might be some product market fit, but I just think it's a little bit early in terms of like actual onchain demand and traction at the intersection from a product side, right? So, um, there's been a lot of focus on like the the agent side. You got like X42 and MPPP machine payments protocol which are like agentic payment standards, right? that are built to help a agents transact. There's been some good traction there, right? Cloudflare actually uses X42 as like their integration for agents to, you know, buy access to websites and things like that. But like if you talk to like, you know, Visa and stuff like that, like they also have agentic

payment standards, right? And like the argument that blockchain is the only place where an agent can get a wallet and transact, I think is not going to be an argument for much longer. And then you also talk to them about like what's demand and like it's clear everyone's just right now building for demand that doesn't really exist and will come down the road. So um I'm kind of just waiting to see how that evolves. I think over time like we wrote a big piece on X42 and just agentic payment standards. I do think like using blockchains as a way to pay with micro payments and stable coins for API access to unique data sources kind of as what we're seeing with Cloudfare Playout will be a huge area in the future. Um I I did a lot of work on decentralized training and also on

decentralized inference. Um decentralized training is one of those things where it's kind of a moonshot opportunity, but I think as like GPUs improve and the algorithms needed to like train these models improve, that's something that will pop up because everyone's going to be wanting to have their own model. Um, and that combined with the ability to like use token incentives um, as a way to incentivize people to contribute GPU power or just pay people over blockchain rails for contributing GPU GPU power makes a lot of sense to me. On the inference side, I think there's some very interesting developments that are happening in terms of like proofof work, new proofof work networks that basically incentivize people to provide inference with their GPUs and then gives them a block reward,

but instead of like Bitcoin where you're solving for a number, you're solving inference and you get the block reward by solving the inference and and that helps to kind of like push down the price of inference by providing a subsidy. Um, I I do think those are pretty interesting. I' I've been very impressed with like what Venice has done. And then I think finally for me it's like I think we're moving to a world where like with AI everything just moves a lot faster. You can build things a lot faster. You need to raise capital, deploy capital, enable people to transfer f value all a lot faster. And that's exactly what blockchains are really good at doing. So um I tend to think in the bare markets like the best thing to be looking at in crypto are like what are the new frontier markets,

right? like where is crypto experimenting with new types of markets that can't be easily replic rep replicated in tradfi because of regulation or just the way the software works and I think in AI is where we're seeing a lot of that experimentation happen in crypto and so I'm really excited to see what emerges over the next six months to a year >> 6 months to a year is is one thing I'm curious about your thoughts on like what 2030 looks like and I I'll ask this in two ways so Cloudflare their CTO said that by 2030 they think there's going to be trillions of AI agents operating and doing economic activity and that human usage of the internet will be relatively dimminimous. And then at the same time, Standard Charter, now they're notoriously bullish, but they said we'll see somewhere around $30 trillion of

tokenized assets by 2030 as well. And I'm just curious, you know, where do you see that world settling down, right? Like is this going to be like a winner take all type of thing? Like it's all on Salana or it's all on suite or it's all on Ethereum? Does it get distributed? What are your thoughts on that as we kind of move in that direction here? Yeah, I I wish I I wish I knew the answer because I would own only that asset. I would say because I do agree with that vision, right? Um I I think it'll have to be fragmented if if you just look at like where all these things are being built. It's not like everything is being built on one chain.

And so I do think there's going to be fragmentation. I think Ethereum is very well positioned. Salana I also think is well positioned on the AI front. They actually opened an office in San Francisco recently just to kind of like really dig in there. Um, so but but I do see like blockchain like I think what agents unlock right is like before like software was just like what humans used but there wasn't any value really without human intermediation. What we're going to start seeing with the rise of agents is like not only is it just software that like can do stuff but it can also transfer value on its own and blockchains are just so well positioned to capture value or to facilitate that. Um, and so I think ETH, I think Salon is well positioned. I

wouldn't be surprised to see like one of these new players like I mean a Manad, a Souie, like I'm I'm they have very strong tech teams. I I think they could be and then I think we're going to see a lot of like centralized chains or or maybe it's going to be people that are building on L2s that then settle to Ethereum that have their own solutions so they can retain control. Ultimately, what all this gets to is like you're going to still have to have a very robust kind of interchain commun communication system because I do think it's going to be fragmented for a long time. Um, I just think there's there's too much money to be made for like one person or one team to win it all, you know, like everyone's going to be deploying solutions.

>> I love that outlook and I agree. I don't think it has to be like you we win and you lose, especially in crypto. I'm rooting for everybody. Uh, so thank you for that, Lucas. I I could talk to you for another hour, but we we got to start wrapping this up here. I want to ask you what you're researching next, what's your focus on, what what reports you're working on next, and just what's got your interest and attention right now in crypto. >> Yeah. So, um I'm doing this kind of like big data dive right now that's just looking at institutional adoption of crypto and and what we're really trying to see is just like understand there's every day you see announcements, right?

like this standard HSBC is doing this, Galaxy and BNY are doing this, right? I don't think there's a really good central repository that has basically all of those announcements and a breakdown of like all right, is it a pilot? Is it a launched initiative? Is it an expand expansion of an existing initiative? And so, um, I'm basically working on like a really in-depth data, like I'm just collecting as much data as I can, looking at every single initiative that's been announced by all these different major financial institutions over time. Um, and kind of like providing the data there and and that should be coming out in the next month or two. Other than that, you know, I'm continuing to focus on um, what's happening on Ethereum and Salana always like I think if we are starting off a

new bull run, like it's just going to be impossible to keep. It's it's been nice being in the bare market. it's like things move a little slower and you can actually keep up with what's going on. It's going to be very hard to uh keep up with with what's going on there. Um and finally, you know, we we continue to kind of look at the AI uh world and and this idea of the economy that runs on code. So, you know, if you got AI and digital assets, how does that work together? And so, so we'll be continuing to do work on that. >> I feel like things have been moving too fast for me in the bare market. I'm going to collapse when the bull market starts, my friend. Uh final question here. Ethereum I well Ethereum led on this recent rally this pump right and I

think that surprised a lot of people a lot of people were expecting it would be you know hyperlquid or bitcoin or something else and I think that got a lot of people's attention going into the end of 2026 do you think Ethereum is going to lead in performance do you think Bitcoin will take that role back or or what is your outlook or maybe what's what are you most bullish on in crypto going into the end of the year >> I mean so just remember like this is just me talking this doesn't represent any this is not financial advice this doesn't represent anything from Galaxy at all this is just myself. Um, you know I I think ETHBTC is like maybe one of the best trades. Um, I think Ethereum is going to be a behemoth. Um, I think the idea that it is a credibly neutral

settlement layer. As much as that is a meme, I do think will become more important over the coming years with the rise of AI, with risks like quantum, and with a ton of banks moving on chain. Um, and I think that is really I don't think people appreciate that yet. Um, I don't think people appreciate the amount like how underowned Ethereum is relevant relative to where it's been in the past, right? Um, you know, like I think the Bank list host, like I I actually think David's a great guy and I appreciate everything he's done, but like him selling when he sold it, it was just like what like could there be a better signal of like how many people have just been completely washed out of Ethereum and just capitulated. So, I I love

Ethereum. I I do think names like Hyperlid um you know, in the per space, I think those I I don't know if Ethereum is such a big asset. It's hard to say that it could outperform them, but it's just like I when I have conviction, that's where I like to, you know, position myself and and Ethereum somewhere I have a lot of conviction. I'd also be really looking at like fundamental applications that have really good businesses. So, Hyperlquid, it's not a it's not an application, it's a chain, but I I think of it more of an application. Um, I think stuff like Pomp, you know, I I look at some of like the DeFi space and some of it I don't think is attractive. some of it I'm like wow the the TAM and the growth availability here is quite interesting and and then the last thing I would just

say is we've been operating in this paradigm where tokens are viewed as useless and basically they have no value capture or there's no link to the underlying equity I think you're going to see a lot of that shift over the coming year um and you've already seen kind of like the early stages of it whether it with unis swap or a stuff like that and that puts pressure on every other team to do it and so um I would be looking very closely at, you know, companies or applications that previously the token was uninvestable and trying to identify like, all right, what is management doing here? Is there a route to where like this token actually becomes a much better claim on on what the underlying project does?

>> Lucas Chan, VP of research, Galaxy Digital, thank you so much for being on the Milkro Show. Where can we send people to find more of you and your work online? >> Yeah, definitely. I mean, so my Twitter is up to date now. It's a very cringe name, I know. Um, and uh, you can also please, you know, go to the I post most of my stuff there. Go to Galaxy Research, our website. We post everything for free. We have a weekly newsletter. Um, we do, you know, weekly content alerts and things like that. Um, we also have a podcast every Monday called Galaxy Grid where it's just myself hosting it with our other analysts talking about relevant and topical events in crypto. But yeah, um, you know, thanks so much, John. This has been an awesome conversation.

>> Yeah, absolutely. I'm glad to have you on the show. And by the way, I do love your podcast. It's one of the most underrated sources of alpha in the industry. So, if anybody's not, definitely check out Lucas. Uh Lucas, I'm looking forward to catching up in the bull market, man. >> Yeah, me too. Thanks so much, John. >> And thank you all for joining us. I hope you all learned something today. So, until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of the Milkro Show. Thanks for being here, everyone. Bye. Thanks for listening to Milkro. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's exactly what Milkro Pro is built for. Our analysts have called some of the biggest winners early and

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