10 Predictions About Crypto in 2022 with Ryan Selkis

Transcript

hey bangles nation welcome to another state of the nation episode this is the episode where we update you on something relevant going on in crypto we do a deep dive today we're super excited to talk about the 2022 theses brought to you by missouri we've got ryan selkis on david i love this time of year because uh it's it's a time of reflection right you finally get to like take a deep breath and look at the past 12 months all of the craziness that happened we always joke when we say like one year is like 10 in uh one year in kryptos like 10 in the regular world and so december late december in particular is a time to kind of reflect and that's what we're doing with ryan selkis he wrote this fantastic theses he's written this every year

since i've been in crypto i've read these front to back every single year this year is no exception uh and we're going to dive into it with him david uh what what are some of your thoughts coming to this conversation this is a it's a ceremonious time at this point the consistency and robustness of ryan selkis's theses is just always something that the industry collectively points its attention towards at the end of the year and it's just it's a nice way to end the year so i definitely appreciate ryan taking so much time out of his just daily life i think he said something like 10 percent of his yearly labor goes into writing these theses uh and it's just a nice way to like recap the year especially when crypto moves so fast like some of these things and that are in the the theses

for 2022 you'll you'll forget that the context started in like this year right like uh so many things happening crypto is just a nice way to wrap up the year and kind of understand it holistically uh to really get that context before we move into what is probably going to be another crazy year in crypto in 2022. so absolutely so we're going to dive into that with ryan we're going to recap the year extrapolate on what's coming next year and have a conversation about how this all plays out david we've got some predictions of our own coming to bank list that is going to be published in the bankless newsletter next week so stay tuned it's definitely not as robust as ryan selkis theses but we've got some ideas some predictions and kind of a recap that we're doing so check that out on the bankless newsletter that's

newsletter.banklesshq.com to subscribe also david gotta talk about metamask uh we had ledger on the podcast this morning actually on our youtube show we're talking a lot about this meta pass plus ledger partnership and i know metamask wanted us to tell the bankless community that it is doing big things when it comes to hardware wallet support you want to talk a little bit about that david yeah brand new to support with metamask is the loudest one which is what i've been calling like the fort knox of crypto wallets uh it's a it's a desktop type thing it's a kind of you would put it next to your amazon alexa or your your uh whatever your home smart lady person is uh and it just stays

physically in your home and it's super super secure super tamper resistant and that is now supported by metamask along with um other hardware wallets as well there's the keystone which is an air gapped qr code wallet bunch of hardware wallet support coming to metamask as well as them ironing out the the issues with chromium uh so overall the user experience is uh getting new getting into new heights thankfully and we've all been waiting for that so uh tapped off to metamask if you have not downloaded metamask what are you doing go to metamask dot io slash download and get that installed in your browser absolutely and don't forget to use uh use protection with your metamask wallet right it's hardware protection uh you don't wanna save those private keys in

software that's for sure david let's start with the question i ask you to be in every single state of the nation that is this what is the state of the nation today sir the state of the nation today is reflecting it was such a long year in crypto and i think if we go and zoom all the way back back to q1 people will forget how recent some of these things that we are going to talk about actually happened uh so much happened in 2021 i think it was it was the year that crypto people really really wanted to see uh super high inflation pushed people into the concept of digital scarcity uh you know just poor performance by banks pushing people to go more bankless you know capture and in my mind corruption of web 2 platforms pushing

people into the world of web 3 is kind of the year that we all dreamt of as crypto people going into it and so it's just a nice time to sit back and reflect and so we shall go ahead and get right into those reflections with ryan selkis right after a moment to talk about some of these fantastic sponsors that make the show possible bankless is proud to be supported by uniswap uniswap is a new paradigm in asset exchange infrastructure instead of a cumbersome order book system where trades are matched with other humans uniswap is an autonomous piece of software on ethereum which is what ryan and i call a money robot no human counterparties or centralized intermediaries just autonomous code on ethereum input the token you want to sell and receive the token you want to

buy something brand new in the uni-swap ecosystem is the uniswap grants program is now accepting applications for grants we have been saying this for a while and we'll say it again dows have money and they are in need of labor if you think that you have something to contribute to the uniswap dao apply for a grant to uniswap just look at the size of the uniswap treasury it's almost 3 billion this mountain of capital is looking for labor do you have something of value to contribute to the uniswap dao no matter how big or small your idea is you can apply for a uni grant at unigrants.org and help steer unit swap in the direction that you think it should go that's exactly what we did to get uniswop to be a sponsor for bankless and

you can do the same for your project thank you uniswap for sponsoring bankless the era of proof-of-stake is upon us proof-of-stake systems like ethereum terra and solana allow the industry to move away from the hot loud and wasteful proof of work systems and return back to a cottage industry of individual stakers and individual validators and that is what we need to make this industry stay decentralized individuals must play their part in crypto network validation and that is what lido is here to do lido makes sticking accessible to everyone at the click of a button by delegating your stake to lido's network of nodes you can access the yield offered by proof of safe systems and claim your share of the network transaction rewards do you have 32 eth and want to stake it to ethereum

but running a node sounds intimidating or maybe you have less than 32 eth and you need to pool your eth with others so you can access staking yields lido offers a solution for both simply go to lido.fi choose which assets you want to stake and deposit them to the leido validating network lido is working to make sure proof of stake stays as decentralized as possible and is committed to decentralizing its own validating network to eventually become a completely permissionless protocol so if you want to stake your eth terra or soul and get liquidity on your stake go to lydo.fi to get started hey guys we are back here with ryan selkis the founder of massari ryan has been writing a year-end crypto theses for as long as i can remember in kryptos

at least four years maybe longer it's become something of a ceremony at this point something i read every year i like that it's objective right and it's got a lot of the takes that ryan and the team at missouri have been compiling throughout the year we pulled out some of those themes we're going to discuss them today with ryan you've seen him on the podcast before i think last had you on in august welcome back ryan celcus it's always a pleasure excited to be back hey you guys are just a lot of punishment yeah well you know what you you brought us some material you brought us a lot how many pages is this uh is this theses ryan it's like a 105 it's 165 but that's including all of the uh table of contents and everything so

yeah that's cheating i i don't know i mean if this was book form this is uh this is pdf form so there's a lot of words per page so this is uh this is basically a full book i didn't do the full word count but it's it's hefty yeah it's definitely hefty and as a content producer in this space like uh color us impressed this is a lot of work that went into this and this is a synthesis of i think a lot of ideas a lot of things that that went on in 2021 and i think that's maybe where we'll start is sort of a lot of this is going to be kind of a recap of things and extrapolation moving forward but let's start with um i guess the first page of substance in the thesis and that is this idea of the collapse of

institutional trust that's the tiding that that's the title heading it's got this very compelling graphic it's like a quadrant based graphic uh and the axes are from ethical to unethical less competent to competent and it maps different i guess institutions on the score and you see government and this is from uh you know i guess the way the people see these sorts of institutions government is to many people in the bottom left quadrant of being very incompetent and not not very ethical you don't want to be in that quadrant that's the best yeah it's the quadrant of pain quadrant of doom where you're like incompetent and unethical media is there too

we see some other institutions traditional institutions like ngos and businesses businesses are maybe a little unethical but the perception-wide perception is that they are also more competent than government but i think this entire section speaks to the collapse of institutional trust that we've seen can you talk a little bit about that trend was like 2021 the year that we lost trust in our institutions well i mean i think this has been building for a very long time and i don't think mistrust in government is anything new uh in the west if you look at kind of congress's approval rating for decades now

um it's been a slow and steady decline if you think about kind of trust in media i'd say the same thing it's gotten increasingly bifurcated between um just extensions of you know the democratic and and republican party depending on which source you're you're looking at so i don't think those are new i think what is interesting is the fact that ngos and business are also not included in that upper right quadrant which is ethical and competent and one of the things by the way i think andreessen horowitz this entire presentation that they prepared for policymakers called how to win the future and that is linked to right below this graphic i think it's a terrific

plain english explanation for someone that's trying to grapple with the challenges of um of crypto and and think about the potential that it has for good and you know moving some of these institutions both into the competent uh and ethical spectrum i think it really comes down to incentive alignment between users employees owners and and basically all the stakeholders within an organization regardless of how it's structured um and then ultimately you know if you can encode values in into those businesses or protocols uh then then you can actually have something that's viewed as ethical as well so both effective efficient and you know kind of incentive aligned i think is is an

important thing that crypto brings to the table and we're starting to see that you know in terms of first with money right you remove money from the government uh because they're the least competent and least ethical um i think we've seen a lot in decentralized media that's not necessarily crypto related maybe crypto adjacent where you've seen a progressive decentralization of media the rise in podcasts verizon sub stack and medium and of course twitter being you know one of the originals and social media in general its impact on the mainstream media um i think with dao's you're starting to see what we might be able to do with um ngos and and bringing you know public goods into a more competent management structure that's arguable of

course because of how nascent tools are within crypto and then obviously a business i would argue um yes they're competent i think that the reason they're viewed maybe is unethical is is less about their um them being evil and more about incentive misalignment and that's what i think we get really excited about in terms of how well web3 could could fix some of those issues with incentive alignment in terms of you know the end users and customers of these businesses so um you know first off you know i'd say you know hopefully you can read it or at least skim some of the thesis um but i think a16z you know this this is kind of required reading for anyone that's going from zero to one on like why bitcoin why web3 period that has no prior

knowledge and is you know just trying to grapple with the why not necessarily like all the specifics of how this wild west is operating and for the podcast listeners out there it's really important to know that the there's again four four quadrants ethical to unethical less competent to competent the competent and ethical quadrant is empty there's nothing there and this is a this is again a perception of the people that that took this survey and the people are saying that they do not see both a an ethical and uh something that is simultaneously both ethical and competent out there they can't find anything any institution out there that they view to be both good and and and

actually good at being good uh and and so ryan just go ahead yeah and this was edelman that ran the survey this was not an internal a16z survey this is just kind of cited from their from their presentation so it is an independent survey um that uh that had quite a bit of uh foolproof uh you know kind of stress testing and and kind of establish you know survey methodology not just something that's kind of crypto native and uh you put this as this is your first big point in a in a document that you know hundreds of thousands of people are going to read so you wanted to put this very very first as in letting everyone know that no one no one really thinks of any other institution out there that can

be good and also be good at being good and then you also added in the second thesis which i think we want to go to now uh saying that crypto and web 3 is inevitable uh and uh so is is the idea here is that like crypto and web3 is going to hope the idea is hopefully that they fill the missing niche fill the missing quadrant of both good and ethical uh uh institutions out there can you and you elaborated it on a little bit but can you just keep on going is why why what about crypto and what about web3 is really doing a good job or hopefully aspiring to fill that that ethical and competent niche i think it's a little bit too early to say that we're going to fill that quadrant

when it comes to public perception but the point of number one is to show that crypto doesn't explode in a vacuum right there there is a reason that something like crypto can take off and it has oxygen so all the developments all of the institutional capital that's basically you know fire and and the early kindling but at the end of the day it means oxygen needs end users and i think number one is really about how do you fan the flames um once the fire is started which we've seen you know kind of over the last 10 years that infrastructure has been built the zero to one innovations in bitcoin and ethereum and d5 in non-fungible token

ownership and digital assets ownership um and and now you know some other kind of emerging areas like decentralized social media you you have the mvp but the only way that those mvp actually catch fire and and become something that can really eat large swaths of the economy or you know our society in general is as if something else is broken out of the incumbent uh system uh i do think it's a good pairing and and i think the the reason i'd say that um crypto's inevitable at this point it's um it's really comes down to the fact that there's many different uh avenues that people can take if they're if they want to participate in

crypto and in some cases we're getting closer to that state of the world where they might not necessarily know or care that they're actually using crypto as rails right um the important thing is that uh we've got you know aligned end user incentives and you know for many of these networks the end users are also the owners and governors um so uh that comes with it you know financial incentives there are you know governance rights and basically a say in how things are managed and i think that's a pretty transformative zero to one understanding that that people are gonna like at some point you know everybody talks in crypto about going down the

rabbit hole and having the uh the red pill moment right when did you get red red pill or when did you fall down the rabbit hole and and it really is like something that clicks sometimes it takes a little while sometimes you know i don't really understand bitcoin or i don't understand eath because it's kind of turtles all the way down or i don't you know d5 there's no real economic activity there but then someone will look at you know an nft and say okay digital art and providence i believe that we're spending more of our time online so i believe that like some provable digital scarcity for a painting or an avatar that's going to be relatively easy to enforce and i can see that being important a wall street type might have gone from zero to one on d5 right because now

there's all the stable coin infrastructure and i understand you know i understand yield farming because there's some you know uh favorable economics in terms of lending or in terms of decentralized exchange you know kind of market maker earnings but also because you're early you're basically getting effectively equity in some of these emerging protocols i i think for everybody it's a little bit different and the fact that there's so many discrete sectors now that have all crossed the chasm and there's so much institutional capital that's been raised to deploy into the next round of infrastructure and also to potentially backstop some catastrophic kind of market breakdown that we might see in the next

you know six to 12 months i think it's a a good you know one-two combination that um might prevent the uh the industry from from taking you know basically years off or or years where we're sucking wind that's not to say that prices won't correct i think that's you know that's overblown that hey we're never going to see a bear market again but um there's a difference between a bear market and token prices and a bear market where teams fire fifty percent of their of their workforce right or eighty percent of their workforce just because the token prices went down um and when you when you take that into consideration you take the five year play into consideration and then you just see the the talent

that's entering the market day in day out it's hard to bet against that um and i think it's unwise to bet against that is this the first time you would say something you would use that phrase ryan this is the inevitable right because i you know look some believers would have used this phrase in you know 2012 and just said look bitcoin is inevitable right um but uh i'm wondering if this year was unique from your perspective in crypto's ability to hit uh escape velocity i would say so so everybody should panic because maybe that's the sign of the market top and then and things are going to completely unravel all throughout next year

i would say inevitable with the one important caveat that crypto's success and medium-term viability depends on some measured proportionate response from western regulators and i do go into it later in the morning i know we'll probably talk about but i think as the us goes so goes crypto and in the medium term um i think uh bitcoin is kind of in its own completely different universe right now i think um ethereum is the highest potential asset out there but it's also still not without risk um and i think that you know where i disagree with you guys on kind of the ethos money stuff as we've

gone over in prior podcasts um i don't view its success as inevitable um from a regulatory perspective just because so much of the activity that rides ethereum's rails is in the crosshairs throughout the west right now so in the worst case scenarios which i think fortunately we're starting to to dial back from but in the worst case scenarios the um the layer 1 networks and all the applications i i think are for those that are most at risk so um the question remains is you know have we gotten too big as a community to uh basically force into non-existence and i think we're close

i i i think 2022 will be interesting to see if there is a a large sell-out sell-off and and we have a bear market on par with the 2018 do we lose all of our user momentum and then does that kind of turn the tide of public opinion so you know people start clamoring for regulation or basically don't really care to fight you know for crypto um basically the polar opposite of what we saw this summer right so how much how much of the outcry this summer uh will persist in a 80 down market um i think that's the one thing that um that i'm still keeping an eye on last thing before we move from this idea of institutional distrust and crypto kind of occupying this upper right

quadrant of ethical and incompetent because i think that's a really core thesis but you also said this and this is maybe one of your first predictions in the report is and you're talking about inflation inflation the money system the dollar being an institution in and of itself right you said this things will get worse before they get better in the real world inflation will remain above 5 throughout 2022 above 5 we're at 6.8 now while late year interest rate hikes uh stall the stock market's momentum and hurt growth stocks it's an interesting prediction uh this is good for crypto in the short term but risky in the medium term as more crypto companies than users get de-platformed and censorship from

western tech and banking platforms accelerates admits the biden administration's crypto crackdown so a few predictions you're starting to to make here is that we're gonna have persistent inflation not transitory inflation persistent inflation next year uh that will lead to the fed raising interest rates which will lead to some decrease in the stock market momentum all of this might be good short term for crypto but then you also see sort of a a crypto unfriendly biden administration executive branch kind of cracking down anything you want to say about these predictions before we move on i think the only thing that i would note is that we're recording this on december

14th and keep in mind that this was written you know pencils down about a month ago uh and it was published uh a couple of weeks ago now so uh so this happened you know i think it was written that you know bitcoin at 65 000 or or so and then you'll find a fully polished and edited when we were at 58 so we've already kind of seen a 20 correction we've seen the correction in the s p and and we've seen a bit more fear in the market um along with you know some of these uh cpi prints that that were way ahead of forecast so um i think you know some of this is already starting to hold up well um and yeah the question is always you know from white what height do you

fall or or from from what florida you rally so i i think i don't really have a directional sense of of where the stock market or where crypto is going but there are you know a few different scenarios and at this point i would say most of crypto's momentum is going to be tied to the stock market unless we start to see some really um nasty inflation and uh there's you know kind of a breakdown in the narrative of bitcoin in particular and to lesser extent heath as a risk on asset and instead you know the inflation hedge narrative really does take hold and people start to you know flood to bitcoin and ethan's as kind of safe

assets the last narrative that we want to touch on in this uh section of the the narratives to watch is uh on page 11 ryan where ryan you said uh ryan celcus ron sean adams ryan selkiss you said that uh this is the cycle where crypto use cases unrelated to bitcoin were finally validated and achieved meaningful adoption and for those that came into crypto in 2020 or 2021 this this narrative this take might not land with um as much as some of the old-timers can you just unpack the significance for people that may have come just recently into the industry why is uh use cases unrelated to bitcoin finally being validated and adopted and

adopted why is that a big deal i think it happened to a lesser extent in 2017 as well with the ico boom um became the reserve currency for uh all the new tokens that were raising capital right all the rc20s um i think this year it's a little bit different because last year was all about the macro trade paul tudor jones getting in michael saylor getting in uh you know and kind of corporates and nation states alike think about bitcoin as a store of value and something that would um be a uh a hedge on the fact that 40 of the dollars uh that have ever been you know put into existence were printed

in the last you know year and a half and if you look at the kind of throughput on the ethereum blockchain and all the demand last summer for d5 and then this year for nfts and uh what we're i think starting to see in gaming it's it's now not imperative that anyone comes through bitcoin in order to get their first crypto exposure right you know you could go on open c and not really even understand that you're using eth you might just want to buy you know digital art but you're going to create an ethereum wallet in order to you know constitute that um and i think that's a pretty big change now the question becomes um and i'm particularly interested to

see how coinbase handles it when they roll out their nft marketplace um will the same thing happen with nfts that happened previously with erc20 tokens and with d5 where ultimately everything gets dollarized right everything ties back to stable coins and the volatile cryptos are basically extracted from from the process i think that's probably likely because most normal people are not going to denominate jpegs and eth but we'll see the important thing is that the use cases that i think have really gotten people excited are not tied to bitcoin the asset now you could argue that bitcoin is going to be

bridged to other uh other blockchains and and you'll you'll have like a settlement there that is a bitcoin blockchain but ultimately you'll have bitcoin equivalence trading on all other sorts of you know layer one and layer twos um i think uh that's kind of a coin flip for me whether that actually takes hold or or whether we see a proliferation of a number of other like layer one assets that kind of almost represent the gdp as i've referred to uh from from some folks uh of those native chains um and i think that's you know that there's pros and cons um to that happening for ethereum right because uh you know in ethereum's case it's got to ward off all these other

ones and then you have a question of how much value for ethereum-based settlement goes to the primary chain versus all three of those twos that are securing all these set of transactions um so there's uh i i think this is probably the greatest environment that you could imagine for an activist specialist crypto investor particularly on the kind of liquid side of things because things are so fluid and there is such um incredible information asymmetry um i would imagine um [Music] next year is going gonna be a good time for for folks like that uh this year was already a great year for that but i'd say for for like the smart fundamental oriented speculator next year is

probably gonna be even better it's because of this theme where uh cryptos are decoupling so everything isn't just moving completely lockstep yeah would you go as far as to say ryan that 2021 kind of marked the death of bitcoin maximalism and what i mean by that is there was this idea that was kind of popularized after the 2017 sort of crash right hype crash ico mania craziness everything sort of died off that okay we're back to bitcoin bitcoin is the only use case of this whole blockchain thing see we told you so and that was very popular sentiment in 2018 in 2019 the purpose of blockchain is bitcoin that's kind of it now we've seen sort of a resurgence of

lots of different use cases defy took took on life and nfts and all of these things so that that old notion of bitcoin maximalism bitcoin as the only use case is that dead now do you think that's dead gone and buried or do you think it's going to come back at some point i think any type of maximalism uh any type of coin maximalism um those are your in cells right um anyone that is just a like complete mercenary you know that's probably your more promiscuous types and then you've got folks in between that are just really passionate about like the community that they're in for different reasons they they could you know have terrific you know fundamentals driven reasons um you know those are the

nice boys that you want to marry so like as long as you know as long as you don't go like too far down you know either side there i i think you want to split the up rates and look at the end of the day these are investments so i think it would be crazy to think that you're going to have um people that are excited about crypto that are not also going to have intrinsic biases based on what they're holding right because what they're holding usually matches where they're spending time where they're spending time tends to match the network they're building so i think that only becomes a problem if um if you are you know over levered or or kind of over indexed to one particular community and and you're doing so

blindly and essentially you're writing off everything else i think that's true for you know ethereum folks that just you know think that bitcoin is going to die i think that's that's true for you know bitcoin maximalist that you know it's getting so tired just hearing that everything else is a scam when all the data is just it it just flies right in your face and and you can argue i think semantics about what constitutes crypto and decentralization but it doesn't change the fact that there's a spectrum um of networks and and and protocols and their underlying assets that are interesting to people for different reasons and it's not always about decentralization it's not always about money it's not always about you know speed um

every everybody's making different trade-offs and i think that's true for the all the ones uh that's true for you know the the various layer twos that are going to connect into ethereum or inner operate between other chains um and it's you know it's arguably even true for like the meme coins uh like like dogen and sheba that's just people going for game stop into you know another fun community and kind of playing a lottery-like game where they don't really care about uh what what money is going in or what's happening on the way out so they're just in it for the lulls i think um i am anti-maximalist in all forms so guys that has been three of ryan's top 10 narratives to watch in 2021 and

2022. there are i believe seven more in this section and also like six other sections we're going to leave this section behind and go into uh a new section which is the top people to watch uh and interestingly top 10 top 10 people to watch there's a bunch of familiar names in here devon finzer from open c kyle semani cms and suzu jiho from axi paradigm lots of family familiar names also the beloved hester purse but i wanted to touch on number one which interestingly you have named the the person to watch in 2022 is we all going to make it the slogan and you say in the past i've avoided the urge to give everyone a spot on the list and so i think you're using the we all

going to make it slogan as like a placeholder for just everyone to watch in 2022. uh because and because you said it feels like a cop-out to just say everyone it's a sign of a market top uh but then you also say that uh this we all gonna make it slogan is is different than some of the slogans that the crypto community has chanted before why is we all going to make it something to watch in 2022 what what about that slogan do you really really like well i like it because it's um it's kind of a nice spin on on something that biology uh shernivasan says that that i like and i've kind of co-opted which is the the whole concept of win and help win um and it kind of speaks to the fact that crypto is not zero sum and most of these applications i think will

be successful in some form whether the specific smart contract platform or the specific cross-chain bridge or the specific decks you know is is ultimately the winner is kind of beside the point i think you know as a as a market as a sector um there's uh there's basically just unlimited upside right um and the last 18 months kind of felt like that scene in vegas vacation where like the the sun comes out it's like the very end of the movie it's like you know i put a quarter and i want a car i put a quarter and i want a car put a quarter and i want you know like every single sector is kind of exploded at the same time and and the sequence i think mattered too

because a lot of them were building blocks for for the rest but um the thing that i think makes this important to watch as a trend for next year is what happens when things start to go a little sideways right does everyone catch their collective breath um do we start to see actual uh you know pretty intense wars break out or or you know vampire attacks at scale or you know different you know kind of aggressive competitive tactics um we'll see but i i you know we talked about like if killers for a long time and um we haven't really seen things get that aggressive instead what you've seen is

now salon is a 60 billion dollar network and now polka dot's a 50 billion dollar network and tara is a 20 billion dollar network an avalanche is a 20 billion dollar network so yeah and at the same time you know ethan's half a trillion so do you think that there's going to be a shuffling in market share probably but does that mean that it's all going to be at the expense of ethereum right or that ethereum's growth is going to be at the expense of bitcoin i don't i don't know if that's the the right way to look at it um if anything i'd say that's probably more true at the application layer level um but you know even then it's it's it's difficult to imagine that

decentralized lending platforms are not going to look like decentralized banks um and i think that's true if for no other reason then there's going to be a new user group that feels left out of the early rewards that the incumbents were able to generate from using a specific decentralized lending protocol so you'll basically have upstarts that get built out over time maybe you know sequentially or you know one per year or something like that until you have some equilibrium over time where there's ten big decentralized banks just like there are you know ten big global banks and of course one will be the largest and you'll have a pecking order but um

i don't think that those are um i don't think it's necessarily fixed and watching everybody compete uh next year will look more like the real business world and less like uh the knives are out 2018 you're gonna die or i'm gonna die so i'm gonna stab you type of mentality that i think we we kind of lived through uh in the last bear market my version of this trope is if you want to go fast go alone but if you want to go far go together basically just saying hey we're all better together and that i think is a great segue into our next conversation which is how china is not coming along with us uh china is d bitcoinizing uh it kicked out all of

its bitcoin hash power and overall is also following uh through with kicking out the rest of all crypto financial services uh and you're saying that this is one of the big themes of 2021 was what you are calling the great fall of china's bitcoin industry uh can you just talk about why you think that this is this is so significant what do you think this is going to mean for 2022 and beyond i think this is huge on a few different axes first and foremost china was never going to embrace crypto um like the it's become a meme to insiders china bans bitcoin for the 300th time it still gets picked up by the media but i think

most people that understand crypto and have followed the market know that there was never any chance that china was actually going to embrace decentralized protocols and and decentralized finance um that includes bitcoin ethereum everything kind of straight on down they are building their own in-house digital currency system and blockchain-based system in an attempt to replace the dollar as the world's reserve currency and i think honestly if we keep shooting ourselves in a foot they're probably going to win because they're the dominant trading partner with most countries in the world at this point if they beat the us to uh issuing a blockchain based money at scale and if they're basically able

to gate um privacy at the border right so like everything is surveilled within mainland china but the yuan is somehow exportable and private um internationally so people get over the concern of the ccp basically surveilling every single transaction that happens you know outside of their own chinese borders um i think um i think you know it's it's by far the kind of theme to watch uh i think from a macro perspective in um in 2022 but when it comes to crypto and decentralized currencies and assets it was one of the greatest de-risking

events of the year as well because it finally kind of put this narrative to bed that you know what happens if china bans mining right what happens if china seizes all the bitcoin you know within its borders or you know shuts down all the speculation uh domestically and we saw exactly what happened you know there was a 50 sell-off um in uh in you know a couple months from uh from may to june and of course things got overheated so this is only you know one reason i think that the market's correct so much over the summer but um it did uh kind of clean the market out of any remaining speculation that that china was going to be a meaningful part or kind of meaningful

source of demand um for crypto and at the same time it uh at once crippled two of the critics greatest uh concerns about uh bitcoin in particular and that was uh number one do we really want to be promoting an asset that is you know dominated by china and and ultimately is highly volatile and is going to be at the whims of the ccp if they ever do decide to shut it down well they did shut it down so we kind of saw what the what the aftermath looked like um and then two was you know it is the fact that miners in proof-of-work systems

um predominantly sit behind the great firewall a systemic threat to bitcoin and ethereum because you know until the merge ethereum is still proof before currency right so i think um again the uh that security risk was put to bed and then the 2a there is or 2b i guess all the critics that kind of came out of the woodwork in like a two-week span in the spring that were concerned about you know bitcoin's esg narrative and ethereum's kind of temporary esg narrative and an impact on climate that was basically completely put to bed because you know that the mix of energy that's

being used in the west versus mainland china is predominantly clean and so the mix is not only you know not only got cleaner overnight but it's going to progressively get cleaner for for the longer that um mining shifts to uh to the western countries and and you know different jurisdictions that are actually prioritizing clean energy um so i think uh i i i mean i don't really understand the the policy choice in general particularly on the like wide band mining but it's um yeah we'll uh we'll see if they double back on i think it was one of the most important you know kind of macro events of the year that's positive for um for crypto in the us and

europe brian can we uh maybe talk about um how that relates to to america's opportunity in the us's opportunity here right there's so there's got the section i'll flip to it a minute um called the american battleground and you said this so we just talked about china but what is the us's opportunity and it's almost like an opportunity for the for the us to um uh you know to lose if it does nothing and you said this the us is either going to embrace crypto and win or ban crypto and disintegrate those are the two options embrace crypto and win or ban crypto and disintegrate let's talk about that what did you mean by that well i i think we've got some real

structural problems uh in the us particularly down in dc and when we talk about federal leadership but the at the end of the day i think if china doesn't ban bitcoin mining and we don't see the exodus of that um that whole kind of sub sector to the west i doubt ted cruz for instance or you know any of the american politicians really kind of picked this up um as quickly as they did for two reasons one there's a real state level impact that the shift of mining resources from sichuan and mainland china to texas for instance will have on that state's

economy and two it's kind of a unifying narrative that you know whatever china does we should do the opposite almost that is is maybe the gut reaction from politicians in dc and i i think uh that was a powerful one-two punch and it also it doesn't take a lot to get momentum behind uh different issues particularly once a politician sees that it's popular right so you combine the timing of the chinese mining ban with the infrastructure bill over the summer and all of a sudden this becomes a bipartisan uh movement that one side of the aisle the republicans um picked up on pretty quickly and and

it was because they saw how much moderate and uh and left-leaning support they'd be able to to get pretty much overnight by being on the right side of the issue it's kind of a truism every single time a politician or some policy maker tweets or speaks favorably about crypto good things happen uh in terms of their you know social media and and their kind of public persona and the reverse is true right uh the those that are on the wrong side are basically completely decimated their replies are ruined uh they're they're memed out of existence or you know they're they're uh basically penalized in the harshest way possible they get attacked by the cyberpunk social signaling mm-hmm yep so um

i i think you know the the steps uh and and the kind of path to being taken seriously and having this become a really important issue not only for republicans but i think for democrats now in the last couple of months um i think that puts us in a good position because we can kind of paint this as something that is completely opposite and counter to china's approach not only to tech but but specifically to um financial services and and you know reserve currencies um and i think uh you know we'll be in a good place if we just have slightly lighter touch and

we don't try to out china china when it comes to surveillance and um and the centralization of of tech and tech development which would be i think an unmitigated disaster um for uh for anyone that's even anecdotally familiar with how dc operates and and how up to speed they are uh on the tech learning curve well and so here's the thing ryan is you mentioned in your theses that we do have some monsters in the closet here right and you know two of them are the fsoc to the financial services oversight council with its 10 members the fed cftc basically fdic occ all of our regulators and then also the sec

dominance here and so you contrast that fsoc and sec kind of are the the primary i guess regulators that are taking a harsh stance on crypto versus the crypto coalition right where we have our own uh coalition that has started to form i mean missouri is doing great work here but also uh coin center the blockchain association the crypto council for innovation the a16z policy team the chamber of digital commerce even public goods like git coin are giving to the cause i would say the bankless nation has played a role in propagating messages and getting that sort of out there so we've got some of these regulators who want a bit more control over crypto and are pushing back against

the agenda that you just laid out versus the crypto coalition uh you know and david has talked about this is like it's like we got chess pieces on the board right we got the you know the the black versus the white here and now the two sides are playing this epic game of of crypto chess can you talk about those contrast points and who's well positioned going into 2022 who's who's well positioned uh from a sector or from a uh which side i know who you're betting on and i know whose team you're on but like is the crypto side are we still the underdogs are we actually you know able to marshal some strength against this opposing coalition that's formed against us

yeah so i i won't take for granted that that uh all your listeners are gonna read the report and then listen to this as kind of a follow-up so i'll try to quickly go through um who the the players are and i think you did a good job as a starting point um but the only thing i would add is like who's actually taking the ball here right um so historically out of uh f-sock which is very important um structurally that basically they're they're responsible for maintaining the stability of the financial system and averting another 2008 like financial crisis right f-stock was created as you know kind of a supra regulatory agency that was going to align

all those members that you just mentioned and try to identify systemically important institutions with uh with the passage of dodd-frank so this is um what they do is not trivial and if they identify something as systemically important and you know basically worthy of cross-agency coordination then it gets addressed and they have you know kind of sweeping mandate to um to take on those challenges uh now we we had a i'd say an across-the-board downgrade in uh leadership across fsoc uh in the transition of the biden administration uh brian brooks who is the former head of the occ um he was chief legal officer

at coinbase and then he went to finance us now he's at bit fury and just was a i think a rock star uh in his testimony last week even um when uh when uh some of the crypto executives took the hill and and it was probably the friendliest uh hearing that i think we've seen to date in the house um but um he's obviously no longer there uh we almost had a replacement that was an avowed communist and fortunately crypto and wall street were able to agree that um amarova who is the woman who was up for nomination was just completely unpalatable and kind of unworkable as a regulatory head for the economy that commands the

largest financial system in the world so crisis narrowly averted crisis narrowly averted with uh jerome powell getting reimport reappointed instead of someone like uh brainerd at the fed who's much more uh critical and and i think um cynical about bitcoin and crypto and its position in the financial system um and then uh you know you've got uh other agencies like the ftic who's you know traditionally been you know favorable and then cftc who's been traditionally favorable uh with crypto so it kind of leaves two um that are most important and there's a handful of others like you know insurance agencies and like federal housing and stuff they're not really as relevant to crypto but the other two that are relevant are

treasury and sec um and you know in the treasury uh it's important for people to remember that during this infrastructure bill it was janet yellen who explicitly pushed back on the amendments that were proposed by the crypto industry right so there was this bipartisan coalition of senators they got together and said you know we need to clarify this broker language and you know we know what the intention is or we think we know what the intention is this is supposed to apply to groups like coinbase for instance and i don't think there's any debate there you know they've even applied for broker dealer licenses they look and feel and act like that so of course this makes sense

um and trey should push back on um the exclusion of defy and individuals and kind of modifications to the language and of course that's now law of the land um so you understand that they do want a broad brush uh and and sweeping authority and flexibility um on their end to um to to regulate you know things like defy and stable coins and um and and everything that isn't necessarily just trading on coinbase or kraken right so that's number one now the issue is that the person the treasury is also delegating to the most is the sec and sheriff genzler's of course you know openly hostile to um to

the entire crypto industry um and i've obviously you know had many different things to say about cher gensler but it's strategic and i think there's a reason for it i think he's an enemy to the industry i think he's on the wrong side at the end of the issue and i think he's been dishonest and he's acted in bad faith pretty much at every step along the way um and what's most concerning is he knows better because he does understand how crypto works uh he did teach about it at mit he knows that washington works because this is not his first rodeo as a regulator and if you think about him as a political animal that's essentially doing whatever he can to continue to advance his career uh it gets even worse because you know that janet yellen was

on the side of keeping the broker language as written in the broker uh debate over the summer in the infrastructure bill debate over the summer um and you know that's elizabeth warren who's arguably the most powerful democrat that's anti-crypto right now is uh basically coordinating with with him and uh and and you know they're giving each other alley-oops during different hearings uh in in terms of how crypto should be regulated and what authority the securities should have uh over uh over the token economy so that's where the attention is now now that sounds really negative but there is kind of one silver lining here and you know this is not really a red or blue thing but i think um

approval rating being where it is um has been maybe one of the primary uh reasons that things are starting to get a little bit better and the rhetoric is starting to get dialed back if you look just kind of month over month or quarter of a quarter the difference in rhetoric on the left versus like what we saw last week in the house financial services hearing which was probably the best hearing that i think the industry has ever had and the most thoughtful and kind of engaging with you know brad sherman aside who's always been a clown um but i don't think that happens if um if the democrats don't watch what just happened with a couple of governor

races and they are petrified of what i think is going to be a [Music] catastrophic series of losses in midterms why would you continue to go on the offensive to an entire community of young and i think majority progressive um builders that that constitute crypto right we always talk about crypto being pre-political or bipartisan or whatever and one way to turn that against you is to attack attack attack a bunch of progressive leaning voters and builders and and call them things like tax evaders and and

you know sympathizers with terrorists and shadowy super quarters and you know all that um that's you know politically red pilling people uh at scale is is a pretty dangerous game and so i think the politicians between the kickback over the summer and then kind of the declining poll uh ratings and kind of what they've seen in terms of pushback to some of the more liberal potential appointees all of that seems like the worst might be over in general now it's just about this kind of targeted issue that we have with that with the chair counselor at the sec that was long-winded but i think it's you know there's a lot to unpack there and a lot to understand so that's like that side of things right but are you seeing

as well the crypto side getting stronger in the face of this as well like are cryptos political forces lobbying organizational forces strengthening uh you know how would you evaluate that so far yeah i i think they're uh they're definitely strengthening i mean there's a heck of a lot more money going into it um i know uh for a while you know cci the crypto council which is one of the newer uh trade associations it was basically just the corporates and and the entities that were backing it it didn't actually have a staff right i believe that's that's changed only very recently in terms of having some

leadership in place um the blockchain association was a handful of people the beginning of the year right they're adding head count and obviously they've added a number of new numbers coin center is uh i have to imagine is that a record here in terms of donations um and every single major crypto company is starting to think seriously about policy and and how they're engaging and and you know what role they're playing either with the trade associations or um or you know kind of direct engagement um and i also think you are going to start to see more super pacs and pacs formed that um get more active in electoral politics right so there's a lot of lobbying money that's coming in off the

sidelines um because people are are finally awake to it so you know almost the best case scenario that could happen is like the summer scared everybody a ton of money is now going into this but tensions are getting dialed back at least a little bit so we've got this narrow window where i think we can make some real progress over the course of the next couple years but remember dc does not move in crypto uh at crypto speed right so this is going to play out from now through you know 2030 really but certainly through the end of biden's first term and um it doesn't really matter what happens in the midterms i i think you know even if republicans take uh to control the house and senate um you still have the

leadership in place that you have at the sec uh and treasury potentially so there's there's a lot that's gonna be um it's gonna have to play out on you know kind of legal side in terms of court challenges on the electoral side uh in terms of getting pro crypto candidates through primaries and and actually into congress so that you have more knowledgeable people um that can even think about crafting sane policy um and then of course you know court of public opinion which is really the only way that you're going to see um any type of movement on the on the regulatory side because they're unelected positions they're appointed and um the person that appoints them is still got three years uh in his term i think we are going to see a lot of

progress on this front in 2022 i think that the battle in the in capitol hill is only getting started ryan there's a number of other topics that we want to get into such as nfts nfts had a blow up year in 2021 also ethereum's q3 earnings report and also layer 1 alternative layer 1 relative valuations as well as the solana summer and then ryan you have said that the bankless boys were right for the wrong reasons when it came to ether so we definitely want to unpack that as well but first before we get to all those conversations we want to take a moment to talk about some of these fantastic sponsors that make the show possible gemini is the world's most trusted cryptocurrency exchange i've been a customer of gemiini since i first got into crypto in 2017 and it's been my

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seamless transaction saving you time and gas costs check out the power of ave ave dot com that's aave dot com hey guys we are back with ryan sulcus going through the crypto theses for 2022 we're gonna we're gonna start here okay so like uh as we come back um let's talk about nfts it nfts had an absolutely like blowout year i feel like it was almost maybe the year of nfts and i'm wondering if you would go so far as to say this but this is your entire section on nft's and web 3 plumbing it's got things like a 69 million dollar mona lisa jpeg

i remember that as the people thing uh nfts as a you know defining them pfps that whole thing punks versus apes those went mainstream we have fan tokens we have this loot phenomenon a bottom-up game axi infinity had this crazy amazing year where they went from like 30 million market cap to 8 billion dollar market cap that doesn't happen anywhere else except crypto uh we saw the financialization of nft's open c absolutely crushing it in real numbers like revenue this is like an incredible year for open c uh the cryptoverse metaverse became a a phrase that jumped into popular vernacular facebook even changed their whole name

to meta as partially as a result of this uh non-fungible credentials you talk about namespaces you know the dot eth and ens went um did sort of a token drop as well there's so much more we can talk about with respect to nfts and your theses do that uh so can i ask you this question is it is it fair to call 2021 the year of nfts were they the big breakout use case for crypto in your mind uh certainly one of two yeah i i think uh i would argue that it was the year of nfts it's tough to overlook their ones uh outside of ethereum and kind of

how much demand there was for block space period but nfts were one of the largest drivers of that for sure so i think um i think that's right and for for me it was always difficult thinking about how nfts would cross the chasm it i was definitely surprised by how fast uh and furious that the rally was and how fast they came into vogue this year because if you think about it you know people i think in the mainstream associate nfts with images now but nfts the original nfts are some of the ones that we thought might be most interesting were things like

tokenized securities um if you think about harbor if some of your listeners might remember like david sacks like company harbor that was tokenizing securities and and you know ultimately putting real estate on on public blockchain trade and they've kind of created a standard around that it was basically there's a whole whole idea right like where you you just basically tokenize all of these houses and all of this real estate and then you could go along certain neighborhoods in in san francisco and short other neighborhoods this was a very popular concept in 2017. and it's it's an amazing idea and i think we will get there but i think we'll get there last right so i i think i was under the impression and and i think i definitely uh appreciated and thought that

things like you know images uh and digital art would probably be the toys that got adoption first but the rip your face off rally and how fast that happened i i think it definitely took me by surprise it you know basically uh paved the way for a number of other innovative projects the mental model that i have going forward with nfts and why i think this is somewhat sustainable and importantly why that sustainability will lead to the build out of the infrastructure layer is because i have the benefit of going back to 2013 which when i first got into bitcoin and experiencing that first kind of vertical run-up at its height bitcoin got to about 10 billion dollars in market cap so about 1

1000th of digital gold or sorry of physical gold digital gold got to you know one tenth of one percent um and in this nft run up i'd say it's equally crazy and equally unsustainable and most of these things are going to correct viciously probably down to zero because there's not going to be a bid for digital images that aren't seen as as scarce or any more valuable what's interesting is the height that they hit was about one tenth of one percent of the art market right so it kind of parallels bitcoin in that way right bitcoin was gold versus digital gold now we're talking about art versus

digital art as the first nft use case even if things correct you could have a 100x increase in market cap just for that sliver of the nft market and so knowing that i think it paves the way for you know all types of interesting developments and all types of experiments that are actually going to stick um and one of the easiest ways you can imagine some of these things sticking is is by using nfts as a digital avatar basically a digital proof of reputation right so digital art and visual uh interpretations of nfts i think were the toy that we needed to get into something that's much more interesting which i'd say is like

community oriented nfts this could be things like punks and apes that represent your full self or more likely they could be virtual badges that you start earning and become modular parts of your of your digital identity over time so you know an nft would be one you know packet or one credential that you have or you know one set of your your data ip and your wallet would be like your kind of universal identifier so where nfcs go from here um i think the sky is the limit but you know importantly you have the wallet infrastructure you have now conditioned people to think about you know the

visual nature of nfts and process rarity just by looking at things right so you can basically take a resume or take a set of experiences in the completely pseudonymous world and you can visualize that using something like an avatar with a gold chain or you know if my south park avatar with the chalice starts shimmering because i've been around for a while and i'm considered a hashtag influencer right that's real and you're going to be able to actually visually process that even in the digital realm so i i think um yeah the amount of innovation that's going to unlock is is tremendous and and because it will unlock so much value you'll have more infrastructure that's

built you'll have all the services that help with things like the illiquidity of nfts or how do you price them or how do they actually become composable across different services or different blockchains i think all that gets solved because of the potential market size and then you know 10 years in the future you will see nfts that represent real estate but you're probably going to see nfts for digital real estate first and all the services that go around those the metaphors always comes first doesn't it uh and part of ethereum's big story is the rise of nft so much of ethereum's just activity was nft denominated and that brings us to what we want to talk to next which is ethereum's q3 earnings

report uh which is this looks familiar uh this does look familiar this does look familiar yeah so you started off this section saying i loved bankless's q3 update on ethereum shout out to ben the author who wrote it uh and you say it's so freaking cool that we can produce earning reports for any crypto community without the need for any central corporate investor relations team and we can do it over any arbitrary time period and update it in real time we're talking about a 1 000 x improvement in investor information symmetry here and then you also uh end with this rhetorical question how would you value a company with this growth growth profile and we've got the growth profile for q3 ethereum on screen uh just network revenue up 511 percent uh value settled up 400 percent uh ether

issuance down 30 since eip1559 active addresses up 24 d5 tvl up 1200 dex volume up 300 stable coin issued up 400 percent uh and then i could go on openc sales just absolutely broke the metric clocking in at 141 000 basically going from from zero to where it is uh and so ryan i'm gonna ask you two things can you can you just elaborate on uh just the oh what you said about the 100 the thousand x improvement in investor information asymmetry here and then i'm going to ask you can you answer your own rhetorical question which is how do you value a company with this growth profile

uh so i'll uh well i'll answer them in the order you asked you know i think um what's interesting is this is not just about ethereum we actually produced a report like this for compound as well and are starting to work with more communities on basically completely decentralized quarterly reporting and financial reporting and what's important about this is we don't need permission to do it but we are prioritizing which communities we work with based on which communities are going to value this type of information symmetry right so you're basically a competitive bidder in like an open economy where you know we're essentially serving as missouri as like one of the big four accounting firms almost um you

don't need any cooperation from the community now if you have key influencers or key developers that are going to sanity check your work and and answer questions like that's great we want to be able to coordinate that but the fact that we can do this all ourselves and be the primary author not just the auditor of the primary authors claims is something that's fundamentally different about crypto and i think um something that we need to highlight much more of in the new year us as a company because it's a valuable service uh for missouri but i think also just in general when we're talking to policymakers and trying to educate the masses yeah i mean you can't do this in private markets you can't this is the definition of investor protection right it's like crypto

provides investor protection how transparency anyone can audit this anyone can find out like the financial statements of any protocol out there right it's not siphoned off in silos like wrapped in closed doors only executives know this is invec investor protection gary gensler if you're listening this is how we do it around here okay and then uh ryan let's go to with a rhetorical question how do you value a company with this kind of growth profile highly and that's why ethereum is a half trillion dollar asset but here's the thing this is not happening in a vacuum right and and so this is i think the big question of this year of next year you

know um where is value ultimately going to get captured in um smart contract or kind of virtual machine platforms um is it going to be at the lower one is it going to be a combination of the layer 1 and layer 2. ultimately um is everything going to tie back to like the bare minimum that you're willing to spend on security and then you're going to settle on one or two what would be considered like the most secured chains i think it's too early to tell um exactly how much value is going to get siphoned off or like what the real long-term multiple should be right so you look at some of the metrics for ethereum and the value that's settled might continue to skyrocket but if those are

happening in like if if you have massive settlements that are like layer two to layer one and they're happening you know in single blocks um i'm not convinced that the transaction fee there needs to be more than you know a basis point or a couple of basis points and that's great if you're comparing it to the legacy so you capture you know how what's the what's the equilibrium gonna be right um where the miners and the stakers are properly incentivized in the you know spend is high enough that um that yeah the the system works whether it's ethereum or or you know some sub chain

um and i think the growth in transactions might skyrocket the fees might continue to compress both due to competition and more you know available available resources i haven't really seen anyone do a good job of thinking about like what the scalable lower bound is on fees um because everybody is is you know i think getting a little fat and happy right now on inflated fees that we know are not going to persist forever right because their their life will find a way and people will find a way to route to lower cost alternatives um so i think um look i'm i'm a buyer and a holder of of you know ethereum at these levels and uh

continue to be bullish on ether uh and uh some of the other layer ones the question for me is really it's it's really always one of dominance right so bitcoin dominance versus their ones and then ether dominance versus other layer ones um and you know i i certainly have not written off any of the other competitive chains because i think different users are gonna make different trade-offs and i can tell you as an entrepreneur and someone that's like signing off on on expensive ethereum transactions something like solana you can actually test a product on right like we can't even really economically test new products on ethereum right now

given where things are that will change i know that some of those throughput constraints are temporary but um i think uh you know any any discussion about valuation it's a multi-dimensional matrix that you're uh you're dealing with um on a relative evaluation and a kind of fundamental evaluation standpoint so let's talk about that because you have a section in your report around relative valuations of um other layer ones right and so if there were as you said earlier maybe two big breakouts for 2021 the first is nfts as you said the second is block space people buy in block space we had chris dixon on the podcast not too long ago he said i am in the market for block space i'm a net buyer bullish on

block space okay and so we saw you've got this section about solana summer and then you get into polka dot you talk about that a little bit and cosmos uh and uh tara with with luna and all of these alternative layer ones and there's really i think this question that we're almost ending 2021 uh with that's kind of a question mark it's like a tbd right so bullish block space but what does the future world look like does it look look like a multi-chain layer one world where you have all of these different layer ones and i think you you call this a little bit maybe the the technology platform argument right so in the same way we have like a microsoft we have you

know linux we have a bunch of big not linux but we have like google's we have a bunch of big fang tech companies right um that's one way of looking at it versus maybe a sound money argument which basically says hey there's some network effect power law rules and sound money is the basic um asset valuation of these things and the asset valuation forms the economic security there's going to be big power law winners and so you might have some big dominant layer ones and then a smaller tail of smaller alternative layer ones if you will what's your take on this because this is very much the big question of 2022 and you know i think bankless listeners will kind of

know the bankless take already but what's your what's your take that you provide in the thesis ryan i think about it in terms of operating systems and uh and ryan watkins and our team i think laid this out pretty pretty nicely that there aren't very frequently three or four or five you know half dozen winning operating systems it's usually a couple right um and there are um economies of scale and just in terms of like developing uh new ecosystems and and new kind of full-text stacks um that i think it's tough to fragment across like three or four or five different

standards now you don't want one because then everything is very fragile so maybe it's two or three and the question becomes um i think not whether ethereum is going to win but you know whether like basically who else is going to be important out of the other ones and then will those ultimately become um you know the ios or android to the others you know whichever right so i don't know if i don't know if ethereum is ios right now or uh solana's android or something like that but i think over time uh there will be a couple of those standards it's probably premature to call the race just yet and um and

ethereum is not without its risks right now i think it has a massive head start but as other ecosystems begin to catch up because they're making different trade-offs um that's when we'll kind of start to understand where the where things will study long term in which ecosystems have the same the strongest stink power i tend to think that the dvm is going to be one of the operating systems because so much has just already been built there it would take something um massively negative to um to displace ethereum and and the evm in particular is one of the standards so ryan we want to close out this conversation with our age old spat of ether and you gave us a shout out in

your top 10 people to watch has an honorable mention saying a special shout out is an order to the bankless duo ryan and david so thank you for that who have been right about eth but we do not make the cut because you think that we have been right for the wrong reasons what are those reasons ryan what what what reasons are we wrong about at this point i think it's kind of a semantic argument and the the the the eat this bunny meme and the ultrasound money meme um you know i think uh look you guys have been on the mark uh and i'm glad that in december of last year i uh i reversed some of my z cash thesis and kind of redeployed it into ethereum um i i still am long z cash and

uh and and i think it's just a massively important project but um it was pretty clear you know towards the end of last year that um that this is going to be a big year for ethereum and i underestimated how big it was going to be for some of the other ones um i you know should have indiscriminately bought all of them but you know right now i at the end of last year was bullish on luna uh terra and and ethereum and so that certainly is played out but um you know i think um i think the ethereum community uh in general um could learn something from uh from from uh suzu's rant about uh you know i've abandoned ethereum and

i know this was like the the the big story like a couple weeks ago and everyone was you know going back and forth until it still feels like the big story that's it i i don't know you guys hold a grudge so um but i think um i mean he's right right you know uh i think the it's important that people don't get satisfied when they're in build mode and recognize that when something is is structurally broken speed to fix is not something that should be taken lightly or or not treated seriously and that's not to say that the ethereum developers and all the folks that are spending so much time on the

merge and layer 2 scaling and interoperability of these different shards like that they're not like working fast enough or trying hard enough but i do think it is something that should keep people humble and questioning the assumptions because he is right in the sense that new people do not give a about decentralization by and large right like the the religious zealots the libertarian crowd the anarchist like the world is going to end crowd like we've been in for 10 years locked into this because it makes a lot of sense and it kind of fits our worldview and thesis the people that are coming in for nfts the people that are

going to play in the metaverse and the people that are going to want this as an alternative to financial services for whatever reason they're under banked or think they can get a better deal they do not care about the back end so if they see the headline fees and they're too high they're going to go elsewhere and i think that's a problem and i think you want sustainability in both directions and you want a secure system that that you know is uh is going to operate in that upper right quadrant ryan uh at risk of being considered a religious zealot do you know what i have to say to people that don't care about decentralization there we go wait did that just come through on the zoom good okay cool i actually think so uh

this is a whole nother podcast we could have and we probably should have uh in the future ryan about sort of um ethereum's path forward but but one thing i think to look for to see if to validate the bankless thesis in 2022 is this whole idea around modular blockchains and what we call ultra scalable ethereum so this year is maybe the year people figured out that eth is ultra sound money okay as a meme again right so like not unpacking all that that means i don't think we've seen the last word from ethereum on scalability in fact uh i think ethereum is taking the the patient approach but also the right approach with its modular design and layer twos coming on board so

we'll see i feel like we're kind of kind of somewhat between like empire strikes back and return of the jedi all right so like we'll see and then maybe we'll we'll talk and evaluate this in another year and then maybe we uh maybe we make your top 10 list next year of people to watch if we're right about ultra-scalable ethereum and uh our thesis around layer twos or maybe not this industry always surprises and there's definitely a lot to learn uh what i will say ryan is we definitely appreciate you guys being in the space i think massari is just a voice of reason a voice of of a truth in an industry with so much bag bias i think you guys do a great job staying uh neutral and uh just you know reporting things and analyzing things with a lot of integrity so we we

definitely appreciate it and thank you for putting this thesis together once again it's great to have you on bankless ryan thank you guys for having me and i guess uh if i'm going to see you before a year it's probably going to be for the flipping episode where i imagine i'm going to have to rent a dunk tank for right before uh just just something off chance the 20 chance that you guys are right i'm not banking on it i will personally fly out to throw the balls of the dunk tank yeah and make sure udi's there too anyway guys crypto is always fun of course and ryan thank you thank you for joining us we hope you learned a bit about the uh the thesis today action item for you today is download

ryan's crypto thesis for 2022. we'll include a link in the show notes that's you can find that at missouri.io crypto hyphen thesis hyphen 4 hyphen 2022 if that sounds too complicated just click the link in the show notes risk and disclaimers guys of course crypto is risky bitcoin is risk eat is risky we legitimately don't know what's going to happen in 2022 okay this is our best guess but we don't know you could lose what you put in but we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bankless journey thanks a lot hey we hope you enjoyed the video if you did head over to bankless hq right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial

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