2024: Ethereum Back in the Narrative? | Analyst Round Table

Transcript

what does it start as and then grow into that end state of everything having these very unique features that can only happen on a high throughput blockchain to me it kind of feels like where we're at right now where you see Jupiter doing cool and you see order books coming online through Phoenix and you see dpin applications like teleport actually having a thesis on how you could build Uber on the blockchain and you see HIV mapper existing on salana and you see helium offering their 5G plan for $20 built on salana like we're in the early early early stages of having applications that are doing that can only happen on these high three foot chains what's up everyone welcome back to another episode of zerx research if you're listening to this podcast there's

a good chance that like Dan and I you believe the future of Finance is on the blockchain and we're excited that London is becoming a global hub for blockchain Innovation and institutional adoption of digital assets that's why we're pumped to host the 2024 digital asset Summit in London this March don't miss your chance to get ahead of the curve later in this episode we'll tell you how you can save 20% off off on your ticket all right everyone welcome back to another episode of zerx research I'm your host this week Dan Smith and I'm joined by a few of our fellow blockworks research analysts Matt wesy and effort Capital uh we are here to give you an exciting EP uh analyst Roundtable episode this week uh so we're recording this on December 26th day after Christmas hope everybody had a great holiday enjoyed some much needed

time off going into the new year uh if it really is the start of the bull market we're going to need the the extra rest to stay on top of all these these Market happenings uh looking at the charts definitely wears you out there's no doubt about that uh whoever was responsible for that Soul bid over Christmas you're a sick person enjoy some time with your family uh but yeah guys thanks for joining we're doing a little bit of a change up this week for our every week listeners on the roundups we're going to do more of a traditional Roundup if you listen to any of the other block Works podcasts um they do more of like a question-based uh Roundup where we always play a game of Hot Seat cool own so just changing it up this week given that there's a few open-ended

questions that are really fun to jam on and uh in our analyst morning calls we we honestly talk mostly about these things uh so we figured why not bring it to the podcast so the first we're going to jam on is really just what a successful 2024 will look like for both ethereum and salana obviously salana has been very much so the Talk of the Town on crypto Twitter um and really even just like on the research side of things as well they're doing a lot of cool stuff and they survived a very pival moment for the chain and that really hardened the community uh as well as the developer Community which ultimately is very very important in the success of a chain um so they deservedly so are are kind of in this this Limelight in a lot of different ways so uh that's kind of

brought a lot of negative attention in a kind of a strange way onto ethereum as it it sort of highlighted a lot of the things ethereum maybe was doing wrong or not as well um as some of these other new alternative chains that are kind of hitting their Apex at this point in time so I really kind of forced me to think about what are they doing right and what are they really really good at and there are definitely some very key things here so wesy maybe I'll toss it over to you how would you define success for ethereum going into next year yeah I mean you brought up a really good point if we were doing like a hot seat cool Throne eth would definitely be in the hot seat especially as of recent but also like on the year as a whole like if you look at the sole eth chart

or the Bitcoin eth chart or really any coin versus eth it's definitely underperforming relative to the market and I think like you said that's sort of come from a fractionalization of narratives or like a lack of real like big narrative versus something like salana that like you said had sort of like this comeback story as a clear improved user experience with low fees and lower latency versus like the ethereum L1 and you know ethereum is obviously focused on this rollup Centric road map but as a result you sort of fragments uh the narrative between different rollups that are optimizing for different things and so far this year like there really hasn't been a reason to bid eth whereas with Bitcoin you have this sort of institutional narrative you have

inscriptions that have really taken off um ethereum kind of sits in the Middle where yeah it's going after this like really really robust security layer it has a very large market cap but it hasn't really gotten the institutional bid as well as it's not low enough like salana to have sort of like it's its comeback story or to have some sort of trade where you can trade sort of parity between the relative valuations right so it's definitely lacked but in terms of what a successful 2024 will look like I do think once the Bitcoin ETF is approved the next thing down the line for the institutions would be the eth ETF and I think it definitely needs that institutional bid given it just its its

size um for it to to do well in 2024 but I do think you know given eth as an asset its fundamentals given it deflationary nature it's it's inherent yield versus Bitcoin that does not have that I do think it's definitely possible can get that that institutional narrative attached to it um but yeah I definitely do think it's necessary and then when you look at more of like the Crypton native things that maybe the institutions aren't really paying attention to right now you have 4844 on the horizon so it looks pretty clear right now that that's going to hit main net around March uh which is only a few months away and with that you're going to see a reduction and fees for rollups to post to the L1 by the current numbers

are roughly around 80 to 90% which is definitely a big reduction and you know how that translates to transaction fees on the l2s uh that that cost the post data to the L1 is roughly 80% of that fee so if you take let's say 80% reduction in cost and then 80% of that is the fee on the L2 then you're going to have around 65% to 80% depending on what what that number actually looks like in savings so it's definitely going to be improved user experience the question is will will that bring about any new user Behavior or maybe any new you know applications you wouldn't see otherwise that's sort of a different question but at the very least I think people are going to be very happy transaction

transacting on these rollups um and then it also has another narrative in reaking where I layer hopefully is going live within I think uh Q2 Q3 of 2024 looks like the current timeline and with that you're going to get a whole reaking narrative you're going to get many abss pop up and eth sort of as this security asset security blanket around many different applications I think could cause a Resurgence in narrative as well so I think holistically that's what 2024 looks like for eth I'm gonna push back a bit against the institutional bid perspective and give a full agree to the latter two points you brought up there which would

be like kind of the uh infrastructure narrative that could come with reaking and potentially even DVT and then also of course like Proto Dan sharting I think the institutional bid narrative is kind of like it's not going to make it's not going to set ethereum apart if we see Solana continue to outperform with retail users and you know with with us over the coming year I think that you know there's just as much of a chance that Soul could have that institutional bit as eth not that I foresee either you know being heavily bought by institutions in the near future but I definitely do agree with the Denon and Proto starting point so like denune is the actual upgrade that you know 4844 will come with and right now it's supposedly according to the latest ethereum all core Dev calls coming you know sometime late February March like

wesy said so there's three scheduled test net um launches for you know this upgrade which I believe are January and early February so I think for ethereum to succeed Step One is like that needs to happen on time because obviously ethereum has been notoriously bad at you know getting things out when they say they're going to but Step One is okay like we need to get ethereum back in the narrative and this upgrade would be a huge help in that regard I actually think that you know in itself denune could have pretty big impact on ethereum and its ecosystem not necessarily sure about the price of eth specifically I still you know happen to be like I personally am pretty positioned that eth could do better than everyone thinks especially not its most hated coin but I think particularly for UNIS Swap and l2s denon's this huge Catalyst um it'll

allow Unis swap V4 to launch which is obviously like a you know huge initiative and I've heard like Rumblings in some of the governance group chats that there's you know another fee switch discussion although obviously there's always a fee switch discussion and then for the l2s of course the cost savings that Westy alluded to you know that's that's massive at least in the in the common perception that this could be like something that drives a lot of eyeballs to the l2s and Unis swap um as far as DVT and raking like that is so poised to be a narrative and so I agree with that but I have a feeling that that might not come until later in the year but otherwise fully agreed you know they got to hit the timeline with tenun and then then these apps need to deliver like we need to see I deliver we need to

see Unis swap V4 be better than V3 and things of that nature so what I'm kind of hearing is over the last three to six months there was really a lack of narrative I think that really stems around just other other uh chains and ecosystems have been like really grinding away at the same thing for a long time right if you're salana you're doing the Single Shard High throughput Global shared State that's that's what you're going for and you're not going to stop all pedal to the metal um but now they've hit a point where a lot of the optimizations that they've done are kind of coming through they're hitting High TPS they meaningfully survived the inscription uh wave and or attack however you want to describe it which I think is actually a very meaningful

signal that took down a couple l2s um and it's not like that it's a bit at the end of the day it's silly like you're just Mass inscribing things in Mass uh into the the data of transactions but what it did was push the TPS limits to their Max and I think it's was a net positive for the entire industry because it came uh at a bit of an interesting time where it's like yeah it's like the early Innings of probably the start of a new cycle but uh it's not like we're you know crypto is not sitting in in uh the Limelight of CNBC right now and arbitrum having to put a push a ZK sing an arbit from having to fix their sequencers isn't like hitting the headline so honestly I really loved the timing of that I think we kind of did some extra

hardening heading into the start of this cycle which is pretty exciting um but where I guess where I'm going with that is it it was interesting to see the lack of narrative and then Wes you just you nailed three upcoming narratives that I think will be huge and reaking is like sort of this weird circle jerk thing that I'm not like overly thrilled about personally but at the end of the day you got to take your own bias out of it and if you think about the beginning of this year maybe q1 time frame liquid staking was all anybody could talk about everybody was fired up for it the because it wasn't just the the tokens had already been around and come online and and scaled but it was now that we're building an industry around that and I think you're going to get the same type

of feeling with the reaking narrative um specifically with abs is coming online through igen layer kind of doing some interesting things that couldn't exist on ethereum before so I do think that's a huge Catalyst but I think there's you know there's definitely question marks with igen layer just given it's new Cutting Edge Tech it's not just like a layup that this is going to work on day one yeah I think the biggest thing that I think worries me I'm not an eth holder but I think what worries me is like the lack of narrative it's also that ethereum ether for ethereum to see succeed it's now dependent on third party teams executing it's dependent on the rollup teams executing well it's dependent on Igan lay and Igan da out competing Celestia which already has a first mover Advantage you're seeing a

bunch of rollups now deploying like even eth base rollups you saw arbitrum uh say that I think um I could be wrong Nitro maybe rollups or uh it wasn't arbitrum one one of the rollup stacks for arbitrum now is g to be leveraging or has the option to leverage Celestia for da um you know I think we're kind of at this point point of like the s-curve adoption of crypto that we're beyond the innovators we're kind of we're Beyond like this religious cult following uh you know of crypto we're starting to like reach somewhat of mass adoption or at least we're potential on the verge of mass adoption and I think the problem is like ethereum doesn't do anything well today just because it's the most valued Market CA uh non-bitcoin related asset today like that does not mean that it's

forever going to be the smart contract platform of the future like salana obviously has got an insane bid it can there's a I would say there's a really good chance it could pass ethereum but if the sole asset surpasses ethereum what does eth the asset do or what do ethereum the network do that salana doesn't besides have like maybe a more decentralized validator set which I think is obviously extremely subjective depending on how you measure that um but like outside of having a higher market cap asset that what does ethereum actually have that salana doesn't and I think that's the problem I like that you brought up Celestia because this conversation started as you know like salana is encroaching on ethereum and like I don't

really see it that way I love salana don't get me wrong I use it all the time I've using it way more than ethereum recently but at the same time like it's still a more nent Network that faces a lot of issues it's fee mechanism has plenty of issues it's multi-threaded you know uh the way it's multi-threaded has problems of its own I think even toly tweeted himself like there's long way to go before we kind of achieve a lot of what ethereum has already succeeded in and then additionally it's kind of obviously it's a SM they're both smart contract platforms but really they're going for completely different things like the idea of A Single Shard versus modular scaling are kind of different markets to some extent um so I actually think ethereum still has a huge leg up over I think ethereum still has a

huge leg up over saana at the current moment could change in five years but you know today it's just a more mature technology that has a lot of problems fixed that uh salana will still face into the future like it wasn't even that long ago in February when salana went down for an entire day that said I think Celestia to me is like the real you know in 2024 could this be looked at as a competitor that could you know uh beat eth at its value proposition that I could see happening I don't think you know I don't necessarily think it's my base case but I could see rollup saying why would we use ethereum for da when we can get cheaper da on Celestia and at this point you know that's ethereum's main value proposition uh so I guess like that's a bigger threat to me to

ethereum's you know dominance than salana even not quite a full day 18 hours and 50 minutes but no I'm kidding I I want to get into some of the stuff you said on salana a little bit later I let's I'm gonna bring it back to eth real quick before we jump into that uh but David I loved your point on E ethereum needing other L2 or other thirdparty teams to execute in order to kind of like achieve its goal I've never really put it in that context uh and that is actually pretty interesting um you have one party to really worry about from salana it's a decentralized network because there's validators running the network but like salana Labs is the major core development team of salana as long as they execute salana will succeed ethereum is no longer in charge of its

own destiny and it's like the Nar the new narrative which I wouldn't say it's new because everyone knew Ro alls are going to be like this the the future for for ethereum over time but like ethereum the base layer is not in charge of its own narrative anymore it's literally dependent on the execution of these fragmented rollup teams um you know and you know Ian lay with Igan da uh and I would argue like you know talking about the ncy of salon's Tex stack like that is extremely true salana is much more nent than ethereum but salana is probably less nent than the l2s and like we've seen them go down uh where Salon has had you know a full year of not going down at all um so it's like it's tough they're obviously trying to

do two different things one's being more B Toc one's more B2B but like I don't know I'm not really seeing what outside of reaking I think is the only narrative I Can See For value for eth and like eth kind of being this uh leverage security asset but that's really dependent on Igan ler actually coming out soon and finding product Market fit which I'm personally bearish on on Igan ler but that's a whole other topic I mean to put my eth hat on with what you just said like you could look at that as a benefit right because if you're only betting on the a team to benefit the salana network that's like a single point of failure whereas ethereum when it's focused on rollups you have a

bunch of different third party teams trying different things experimenting and eventually the winners will win and they will be using ethereum in some way shape or form I also like what Mt brought up though in that like ethereum is in many ways not really competing with salana it's competing with other da layers like Celestia that'll have multiple rollups posting to it but at the same time to me even though they kind of are competing as a DA layer like to me ethereum is a settlement layer first and foremost in its value prop like the ability to have eth liquidity eth as an asset and basically deploy that to any rollup that settles to ethereum I think it's a superpower granted obviously over time if enough

rollups start to use Celestia or Ian da and maybe you see networks like salana or other L1 start to increase their liquidity then maybe you know ethereum is not the only place they settle to or not the only place they have a trust minimized bridge to right so it's definitely a possible future where that's not okay but at the same time like I think ethereum is somewhat future proof and is really like causing value to eat the asset by having it deployed on so many different chains uh throughout the different rollups yeah settlement three times in the mirror John Sharp comes and tries to kill you it's a madeup word he he even admitted it on a recent podcast it is a madeup word um but to so on the salana labs piece this is actually a really

interesting time because there are more teams building on core salana than probably ever before with the jump team building out fire dancer the goo guys building out their their client and I think with that you're actually kind of getting a little bit more diversity on that front which is super important um because ultimately the more developer talent you have focused on your core layer your base layer and the the more eyes probably the better product you're going to end up getting uh so I think that's a pretty important Point here uh but on the wesy what you said I I am kind of like I I feel like that narrative is coming alive I I've seen a couple tweets were like semi- related to like calling ethereum the root of trust which is kind of interesting having your

Bridge contact on that train you know you are the source of Truth for that rollup um so that that is kind of an interesting route my question there is like you know if you're a worse execution environment than some of these high throughput blockchains like salana and and some of the other like say maybe Sayes coming in line with their parallel evm or manad or um aptoi Etc there's a lot of high throughput chains now if you're worse exec execution environment than them a worse da layer than Celestia you know then you kind of get in this like yeah we're doing everything but we're the best at nothing uh which that's a little bit of a nerve-wracking position to be in but they are currently the best place to have a bridge contact on because there's been all this liquidity uh and people are just

comfortable using that but like to me that's not like a sticky moat an at all like that's just a product of it was the biggest and best defi Hub last cycle because it was really the only place you could get that traction going now that developer tooling and viable Alternatives exist I'm just a little less comfortable sitting here saying like yes that will continue to be true into perpetuity it's it's kind of hard to rationalize and justify that and then lastly on the teams front that's a good point because if you think about who's building these l2s it's probably some of the best teams in crypto with the zkc sync team the scroll team the polygon team the arbitrum team the optimism team like that's a lot of the smartest Minds that we have in crypto so yeah that's

that's a good Counterpoint I think to the point you made about like you know ethereum can't have this Mo I kind of disagree like if you look at you know traditional coding languages I think Java is still like a top three most used language might even be like the second or third most used language and I guess the question I have is you know why and the answer is because there's so many available resources for learning it there are so many public you know repos for going and grabbing code so it actually does build this Moe even if maybe new coding languages come out that are more efficient for a specific use case uh you know someone might go still implemented in Java because of the resources available developer tooling Etc and I think ethereum actually has achieved this you know will this mean that it's

forever the long-term incumbent does it'll dominate the market no I don't believe that but I do believe it'll always have its place at least you know way longer than on a way longer time frame than uh we can imagine so I don't think that that you know ethereum's losing that uh that dominance anytime soon it's just a lot easier as a smart contract developer to go deploy to the evm than it is even if you're familiar with rust because you know there's all these evm implementations that already exist for amm or lending or whatever it might be yeah I'll give you that for sure developer tooling is a real Moe uh even just like talking to some uh some developers building various applications across different sectors def5 stable coins um social applications like it it really is it does matter about the

develop tooling you know they already have a hard enough job the last thing they want to go do is build on a chain where they have to work even harder because you ultimately end up with less security and when you're securing value that's not something that you feel comfortable with kind of seems to be the general consensus there um so I guess we can put a bow on to in order to put a bow on the what does ethereum need to do for 2024 uh feel free to chime in here but to me it kind of sounds like the summary would be it is next on the institutional pecking order if it if that comes sooner rather than later and then I think that's in a very good position to bring some positive light towards the the network it's got key upgrades with like with Denon coming

bringing EIP 4844 U and some other eips online that again improve what it does what ethereum serves as a base layer to l2s um yeah any anything else that you really just like put a nail in and be like if this happens ethereum is continuing on on the on the right path yeah I mean I'd say Obviously roll up teams continuing to build out their products and experimenting as well as reaking I think a lot of people are going to be surprised that like the new innovations that come as a result of the the ABS is built I know effort is pretty uh pretty bearish but I feel like every week I hear of a new solution being created using I layers like even I'm shocked as the stuff being built so I

think those are two things I would add let's kind of move that on to salana and talk about salana for a bit and what they need to do to have a successful year for me it feels like it kind of lumps into two buckets well the first being optimizing the Bas layer uh and the second being attracting developers to build useful apps because to Matt's point on the second bucket it's hard to build and you don't want it to be harder to build and uh big fan of Buffalo from jeto the jto labs team co-founder over there uh he's always tweeting about like things that I do not understand when it comes to like rust programming and every now and then I'll see him tweet out like a oh like I just figured out how to do x y and z if you're going to do this here's what you

should do because it make your life significantly easier and I'm I just like love seeing things like that because that is just really kind of hammering away at making things easier to do which is super important and so if you continue to attract developers make that ecosystem easier to build in obviously that brings in users and kind of helps spin that flywheel and so you people talk about like the defi Renaissance I I was actually re listening to a podcast we did on bell curve in July and we kind of brought brought up the idea of this Salon defi Renaissance and it's kind of interesting because if you look back at ethereum's defi summer in uh let's see 2020 then it was really the only thing going on on chain for the most part right there wasn't like stable coins

were coming online of course the nfts started to heat up a little bit after defi summer um and there wasn't like this dpin narrative by any means social apps were were just like a pipe dream Uber on the blockchain seemed like a cool idea no way to do it and so that's like one key difference I think salana has is it doesn't necessarily need to have a defi 2.0 or defi summer 2.0 it can just have like this onchain explosion right where there's uh stable coins are flowing through the ecosystem it's being used as payment rails you have nfts and defi already happening pretty vibrantly on salana and you have deep in applications like helium And Hive mapper coming online and really bringing that narrative as well so it's

like this multi-cored approach which I do find pretty interesting so continuing to capture those develop Vel opers and bring them into the ecosystem and make their lives easier I think is essential uh to the salon ecosystem as a whole but rolling back to that first point on optimizing the base layer Matt you kind of alluded to this uh in the ethereum side and the fee markets are not great today right they're kind of a V1 uh implementation where I would call it like functional but far from optimized and so there is a lot of research that needs to go in and work on the implementation side of like actually getting these new fee markets live and really first of all deciding um what we want in these fee markets so it was a brief overview but not to go too in depth here it's not really the purpose

of this episode on salana you pay a fixed flat fee based on the number of signers for your transaction uh and then you can play a variable priority fee on top of that to kind of increase the likelihood of your transaction being included and so this you know conceptually works well and there's just like a few small bugs in that it's like if I pay more I don't necessarily go first it's because there's still a bit of a Time timing game going on uh and so in the 1.18 upgrade that's coming to salana soon there is an improving they're specifically improving the scheduler to reduce Jitter which is basically um some uh Randomness in some ways of where your transaction will land on one one of the four threads and that will help improve some of this so again

just the the idea overarching idea for what salana needs to continue doing is optimizing what it already has it has parallel uh parallel processing it has isolated fee markets um but it needs to really just improve the quality of how those systems are running and then one thing I needs to one like key issue is sort of like the the known unknowns right is is uh me that's becoming very increasing the me activity is rapidly increasing on salana and this was a huge problem for ethereum they've basically when they during the uh migration from proof of work to proof of stake bringing in uh the Mev boost system you know that solved a lot of the issues that they were trying to do but it also in some ways created new ones right we basically

have two to three builders that build every ethereum block and there's what like three relays Now with an increasing adoption of the yac sanction list like it it's yes it solved a lot of the problems they said out to solve but again it kind of created this these new issues that the community is now spending a lot of time thinking about so getting ahead of the M problem I think is huge um but that's like a borderline impossible impossible problem to just like come up with a solution with overnight and it's also a slowburn problem like it's not just going to become a problem overnight either um but as activity picks up and with the increased adoption of the goo client there will be more meev and you're already seeing that in the numbers so uh kind of some things that I just think salana needs to focus on and work on but

again it's more of like optimizing what they have rather than creating whole new systems or like changing their narrative or focusing on something new which I think is a key distinction here I think it's a bit of an optimistic way of looking at it like just to play Devil's Advocate um you know isolated fee Market markets have a ton of problems in the way they work in salana like you could probably just send a transaction that calls a function on I don't know um whatever the latest hottest ordinal and Salon Min is and then also call it on take your pick of popular D5 protocol whether it be like a you know Jupiter or an oracle or whatever and now all of a sudden that other uh you know that other protocol is is looped in with with this other one of

course there are ways to get around that like I I forget where I was reading this but someone was talking about and it's super complex like Merkel tree type stuff but there's a similar like you know you can build a tree around it and be like okay this this transaction doesn't actually shouldn't actually count but now we're talking about like intense cryptography that very few people can probably achieve although hopefully salana does have those people working on it it's just I don't think it's like this super simple solution to get around that um same with the fee markets you know can you go ahead and just copy ethereum or something like ethereum yeah but now we're talking about something that's very different than the way Sal of work today so I do think that it's possible and I love what Sal is doing it's just I think it's a

little bit more difficult than kind of just yeah like we can just keep iterating and optimizing what we have today there's some like pretty fundamental flaws in the way that it's built yeah I mean there there's there's definitely some good points in there like when you're locking state for a specific transaction you can just like name arbitrary State you're not even touching um and your transaction doesn't touch and you would still be impacting the fee markets uh if you do that and so there are some like strange things there was a there's like an ongoing discussion about how you could theoretically enable like an oracle attack right like if I'm just start spamming transactions to that claim to touch like an oracle update contract then you could probably do some like long r or short range attack where you make it super super expensive or you

attempt to make it expensive uh to kind of pull that attack off by claim or like touching the state or even saying you're going to touch the state of this Oracle contract uh and so we'll be interesting to see how that kind of shakes out but again I mean yeah you're right it it is more complicated than just like saying you need to optimize your fees right there's a huge like uh spiral of things that need to be done in order to make that actually work all right zerox research listeners we're calling on you to join us for the premier institutional crypto conference in Europe's crypto Capital London this March 2024 you're going to get to hear exclusive insights from industry Trailblazers on things like leveraging D5 protocols for institutional yield tokenizing real world assets with instant settlement

navigating the evolving Global regulatory landscape in integrating digital assets into Banking and payments or crafting institutional investment mandates with digital assets as the key Focus we'll also be featuring some big keynote speakers including Melvin Deng the CEO at qcp Capital Mark yuso the CEO and managing partner of Morgan Creek capital and stonnie kuchin the founder and CEO of a companies this is not an event you're going to want to miss seats are limited so be sure to register today by hitting the link in the description and using promo code 0x20 to save 20% on your tickets see you in London the land of tasty pastries and be sure to hit up Dan and I for a beer to to Pivot from the nerd speak here I think one narrative that you didn't really touch

on was the amount of air drops we can expect within the Sal ecosystem within q1 uh from many different D5 projects Etc um I think you know this will obviously be huge catalysts kind of like Cheeto was for creating a wealth effect within the ecosystem but one thing we've definitely been And discussing is okay once we have a lot of different tokens within the network not just Cheeto that people can bet on does that dilute the soul value and another interesting thing I'm thinking about is sort of the Dynamics uh of sort of like a def5 summer if there were to be one of these tokens getting bit up one problem that eth had during its def5 summer is that

when people were speculating tokens were going up there's almost this uh like dampening effect as a result of gas fees and then Whenever there was a spike in speculation gas fees also spiked which then dampened the volatility caused people to sort of sell off stuff to like calm down for a bit before another spective bounce I wonder if because salana won't have the spike and gas fees whether we'll see the same dampen volatility or rather than you know a spiking gas fees causing it it's it comes from people maybe exiting their D5 positions into Soul you sort of see rotations between Soul like we're seeing now or Soul runs the nfts and the other all coins don't run and there's sort of rotation between the two or if or Soul

sort of gets diluted from all these other tokens um so yeah I'm interested interested to see how things play out in this realm I think there's like one thing that salana needs to do like in my opinion it already has a narrative it already captured the Mind share um crypto is still like generally non-consensus it's not on CNBC mostly right now like it's still kind of under the radar Souls flying there could just not be one major defi hack in salana and I think salana just like continues to succeed it's easy to use and also one other thing I think we I'd really like to see is like Tron has been like the payments plat the payments chain uh in emerging markets and what have you

because it's cheap and because it really good distribution with binance pay um salana is technically a better payment chain than any other I don't know L1 or L2 out there uh so I think if salana pay like I think the most bullish thing salana can do is get salana pay integrated everywhere Shopify I'm I think it's already on Shopify actually um but like Amazon if possible like that's might sound crazy but like hey Visa literally wrote up a whole report about salana earlier this year obviously they took like really uh careful like research or did careful analysis on why Sol is a really good payment uh chain um so I think getting stable coin volumes uh and stable coin

usage on salana getting it used in Latin America and other Emerging Markets like and potentially overtaking Tron as like the go-to uh payments provider or payments chain like that is probably like how salana becomes like a top two chain honestly like overtakes ethereum as if it can actually fine product Market fit there um but I think really like the the biggest thing that's can't have is like a really major hack but obviously that's like the case for every ecosystem but like ethereum at this point like there's a new hack like I feel like every weak and it's kind of impervious to or at least the capital on ethereum is kind of impervious to hacks at this point because there're it just has happened so frequently throughout history um but we

haven't really seen something like major on salana at least in a while to my knowledge um so that's the one thing I'm worried about the most but outside of something catastrophic like is most likely going to succeed for 24 I like your point that it's sana's game to lose like right now they're so entrenched in the narrative that you know as long as they don't screw up they probably will stay there but I'd also like to see some apps on Sal like apps that can only be made on salana so for instance like you go use Jupiter for a swap and it just feels so much better than any router on ethereum I want to see that same thing for order book exchanges I want to see Phoenix and I want to see drift I want to see them really show that you can build something on salana that you can't

build on ethereum mainnet and then at that point I'm like okay well there you go now this is now this is really a competitor um and I think to facilitate that a lot of the the things that we're speaking about earlier on the more technical protocol side need to probably be fixed first but that said like you know if Phoenix manages to create an order Book Exchange on all on chain that actually uh has high throughput can function at the levels of Unis Swap and you know whatever else um then to me that's like okay here we go maybe the same thing will happen in sectors that we haven't even seen on ethereum because it's too gas intensive to do so things like dpin and whatever else might pop up yeah for sure man I totally agree and you mentioned Jupiter there if anyone hasn't used Jupiter's DCA feature go use

it and you'll feel you'll feel better about salana I promise but uh I I made this tweet earlier today semi jokingly but I'm curious so for the listeners rather than the viewers we have a chart of defi applications built on ethereum through time and if you plot that out all I did here was take the defile on data downloaded to CSV and basically just charted you know times when the a protocol had a tvl above zero obviously meaning it exists so defi or ethereum as a whole really had sub 100 protocols built on it until about the summer of 2021 and if you pull up this chart you really start to feel like that's kind of where it feels like

salana is today yes salana had this past life where it was riddled with the macalino brothers and FTX but if you pretend that that didn't happen here just close your mind here and I I can already see Matt losing his mind because that most indeed did happen but if you pretend that didn't it for a second it kind of does in a lot of ways feel like we are at the very tail end of or the very very very early Innings of of this chart for salana but let me explain why because Matt you just asked for a bunch of applications that are doing things that are only possible on salana if you fast forward to that end state in X number of years doesn't matter when it was that is an end state where everyone's building these things but what does the beginning State look like

for that that end state right like what is the what does it start as and then grow into that end state of everything having these very unique features that can only happen on a high throughput blockchain to me it kind of feels like where we're at right now where you see Jupiter doing cool and you see order books coming online through Phoenix and you see dpin applications like teleport actually having a thesis on how you could build Uber on the blockchain and you see Hive mapper exist on salana and you see helium offering their 5G plan for $20 built on salana like you're seeing these very early Innings of that and to me that is sort of how I'm viewing this is like we are we in the early early early stages of having applications that are doing that can only happen on these high

throughput change so I don't know Matt I'd love to get your take because I feel like you definitely have some thoughts on why I'm an idiot no I actually tend to agree I just think that we can be the early Innings and further out with more problems to face on the way to you know this end goal this success and long-term vision of like seeing these apps that can only exist on salana I think only on salana I like that it's a good narrative they should the salana lab should take that um but yeah at the end of the day I fully agree I think that it's well positioned to achieve that in the high throughput uh smart contract platform sector but at the same time I just don't think we're there yet and I think that we see things move so slow maybe salana

will change my mind and prove me wrong but I think that it might be a while before we see like applications that don't look pretty similar to the same things that we see going on in evm Fair takes all around so let's summarize that a successful year for salana probably looks like something along the lines of optimizing its base layer so improving its fee markets and its parallel processing units uh which comes down to like transaction scheduling and isolated fewe markets get ahead of the Mev issue before it really turns into an issue we kind of saw how this worked for ethereum and I think there's probably some learnings to be had there uh look into the pay side of things I think that's a huge narrative I'm I appreciate you bringing that up effort uh and then of course make things easier for developers to build if you

want things that are only possible on salana you need to make it easy to be built and one huge Catalyst I think salana has in that is that it's not just defi that sounds create on salana it's defi consumer applications stable coins nfts uh dpin AI social application there's there's a Litany of different sectors that you kind of have which is a really cool narrative um so yeah things I think look quite good anything to add there should we move on to the our next topic I see headshake so let's get into the Bitcoin side of things I think this is another exciting angle to hit because we don't normally talk about Bitcoin miners uh so effort I know you've been kind of in the weeds checking out some

different Miners and some have some thoughts on the situation so let's hear about the Bitcoin miners man yeah sure would love to um so this month Bitcoin miners are on an absolute tear um obviously Bitcoin has gotten a great bid this entire year um I mean over the past month Bitcoin is up what approximately 12% which is you know decent for a what a trillion dollar asset I'm not exactly sure what the value is currently but miners have been really I think with the upcoming ETF uh hopefully in the next month or so we're going to know whether or not the ETF is approved um also with inscriptions or ordinals whatever the you know the exact terminology is um Bitcoin miners are just like making hand

over fist in terms of fees um and I think the market is starting to catch on like the trafi market is starting to catch on to not just like the ETF bid but the inscriptions like the the amount of fees that Bitcoin MERS are actually starting to generate it's not just the block subsidy anymore and like the historical low uh transaction fees that miners have historically gotten so I mean just to Rattle off some of the miners marathon's up 125% this month so on the back of they just announced about a week ago that they purchased two Bitcoin mining sites uh and almost doubled their mining capacity uh I think the two mining sites had almost 400 megaw of of new capacity coming online for Marathon uh in either sometime in q1 I want to say January or

February so they're currently at like 910 megawatts and they're Far and Away like the largest publicly uh traded minor uh in crypto or at least that's like the growing consensus and I'm going to explain why that's actually not the case um uh clean spark I believe they're called is up 88% % Riot's up 38% and then my like favorite Bitcoin minor stock today and this is not Financial advice but I do have a uh sizable position in right now is bit Deere and they're up 154% so bit Deere is a company owned by Jihan wo who is like a giga BTC whale he was the first person to translate the Bitcoin white paper in Mandarin back in 2011 um I know that he had like a whole

bunch of uh things going with Bitcoin cash back in the today um he's also one of the co-founders or maybe he was like the silk founder and Matt I think you know a little bit about bitm too but he was like the co-founder of of bitm uh which is obviously like a large mining entity um you know historically uh but I know recently over the past like couple years him and like I think a co-founder or like the other executive chairman of of bitm they had kind of a falling out Jihan left started this like mining company called bit deer they went public via spaa about eight months ago and almost everywhere on crypto Twitter you're seeing how like people are trying to find like the under uh value Bitcoin miner as like a high beta play to

bitcoin with the spot ETF obviously and everyone's talking about like the other miners out there uh I saw Iris energy being brought up Riot clean spark and obviously marathons the king um but nobody was really talking about bit deer so just like explain I guess why I think bider is probably in my opinion the best mining play right now um they are valued at 1.27 billion so if you look at Marathon marathon's just shy of six billion today and I think marathon and R really like the two Market leaders I would say Riot's at like 3.3 billion approximately so bit deer needs to 5x hit marathon's market cap and needs a 3X approximately to hit Riot's market cap and if you

actually look at the fundamentals of bit deer it's really impressive and I think the reason why the market really doesn't know about it is because it just went went public earlier this year has never seen a crypto bull market as a publicly traded entity um and it's really not covered on the street I think there's like one analyst in all the street that's actually covering it like it's not like a major Analyst at all like I wanted like JP Morgan or like the larger Trad five firms they have the same mining capacity or very similar mining capacity to Marathon even with Marathon recently acquiring 390 megawatts so marathon's complete mining capacity is G be 910 megawatts bit deer has 895 megawatts online today they M the same amount of Bitcoin last quarter as Riot I

think they like mined like three or five more or less Bitcoin but they're essentially in the same order of magnitude of mining Bitcoin as Riot they have cheaper they have about 10% cheaper electricity cost than RI and Marathon um and on top of that they recently announced a partnership with Nvidia to offer some of their excess uh capacity to um offer like AI cloud Solutions um and bit deer has most of their mining facilities in the United States they're setting up a very large Mining facility in bhan but they're headquartered in Singapore and they're going to be offering like they're pretty much like an Asia AI play on top of already being one of the largest like Bitcoin Miners and having one of the largest hash rate

uh uh market market share today uh and they're sitting again at like a third of the price of Riot and a a 20% the price of marathon and I'm looking at this and in my opinion like fundamentally it looks like the best mining play today uh but it's still kind of under the radar so like not Mike Alfred and a couple other people on crypto Twitter bring it up but for the most part everyone's talking about like clean spark and Riot and less so bit deer what's the uh with the with the parody in fundamentals yet the lack in valuation or the I should say the I guess the Gap inv valuation like what's the other side of this what's the hole what's the why why the Gap is a Street just mispricing this or

what's the deal I mean I think so like today most of the miners were red or break even even with Bitcoin down like 3% Plus on the day um I'm not sure where it is at currently but it was down as like much as three three and a half percent at one point um Marathon was like essentially Break Even most of the other large like miners like Riot was Break Even but I mean bit deer is catching up it was up 12% today at one point it was up as high as 20% again it's up 154% this month um while obviously the other Miners did well but I think the street is starting to catch on it just I think a true information asymmetry they just went public eight months ago this year uh they had a really large selloff they went down as

low as um what like sub3 which at that point I think was uh like less than $300 million Mark cap so they are like there's risk I guess as being a a newer publicly traded company but if you actually look at like the heritage of Jihan wo his history in the Bitcoin community and the Bitcoin cash Community like the guy clearly knows he's he's an OG he's a giga BTC whale I'm assuming um he probably knows how to um get like a good pipeline of Bitcoin miners uh probably has like again like a really good distribution and is well known uh and also you know they they are more they're they're based in Singapore but like they are also like a a Bitcoin

China Asia play whereas like almost the other the other Bitcoin miners are based in the United States predominantly so I think like there's potentially some of this like regulatory um concern maybe the market might be pricing in but in my opinion I think it's mostly just information asymmetry nobody's looking at it nobody on the street is covering it but they're covering the other players in the space yeah with the havening lining as well I I want to go ahead and share some stats around just the the fee revenue of Bitcoin I've been historically quite critical on bitcoin's security model because obviously with perpetually decreasing block rewards um you know you have to the the other side of that is is it has to be an increase in fee revenue

and we just hadn't seen anything kind of give the inkling of like hey this could be the this could be the answer but ordinals popped up and the fee Revenue these things are generating is crazy I personally think they're a bit gimmicky but at the end of the day I feel the same way about nfts and that's a huge expanding market so you kind of have to rip your bias out of there at some point and just kind of observe what the Market's telling you and the market absolutely loves ordinals if you look at the P so if you say the total minor revenue is block sub block subsidy plus transaction fees um the current breakdown of how transaction fees are impacting that is hitting an all-time high and so or I shouldn't say alltime it's it's about a twoyear high uh during

the last cycle there's a couple peak days where we kind of are slightly higher than we are today but about 25% of total Min revenue is coming from transaction fees and again if you're trying to like explain this to somebody who doesn't spend all day on the crypto side of things like these ordinals coming to bitcoin creating this massive increase in transaction speed or transaction fees you know that's like a a hard Mount de climb and there I could see there being some like Market lagging in in pricing in the adoption of ordinals uh into some of these minor stocks because again like this is this is new and something we haven't seen before and materially impacting minor Revenue uh so again like we're seeing alltime highs in on a bit in Bitcoin

terms so if I flip over to the monthly uh and in the Bitcoin terms there's been about 4,000 of fees so this this last bar you see here is just total transaction fees but this is going to be the last completed month which recording on December 26 we're not quite done December so on January 1 this month will update but we've already eclipsed the minor revenue from transaction fees uh for this month I think we're about at about 4,000 which is we're flirting with alltime highs here and again like it's insane to see the adoption mostly being driven by ordinals given that they're largely just like nfts and people love them at the end of the day one interesting thing on the ordinal front that I've seen recently is you

know there's been this dichotomy among bitcoiners I mean calling them all bitcoiners um because they all like Bitcoin but you know on one side you have like the udy and Eric Wall who are fully embracing inscriptions have their own inscription project tap rot Wizard and then on the other side you have people like Luke Dash Jr and Jimmy song who absolutely hate it they despise it they think it's terrible for the network and from my perspective over the last I don't know six months eight months since ordinals have been in existence it's kind of been like a dichotomy it's been like an even battle but over the recent months and actually really over the last week or two we've seen a few other large influential bitcoiners come out in support of ordinals particularly for the exact same reason you got to Dan which is that it gives them a vision at

longterm sustainability um just from transaction fees for the network they think that you know at the end of the day that if it can be included in the Bitcoin chain it's a valid transaction Bitcoin has rules if you know it follows the rules that's a valid Bitcoin transaction and you know we're seeing people like even like Jameson Lop who I've always looked at as like the hyper bitcoiner I mean this dude literally disappeared off the face of the Earth like there's a New York Times article about it if you're ever feeling uh so inclined but yeah he literally disappeared off the face of the Earth because he was getting swatted so much for being so influential in the Bitcoin community and he's you know tweeting against lukee Dash Jr right there along with udy and Eric Wall so it seems like that uptick is actually going to shut

out the haters of the inscription soon which is something I was worried about I was worried that you know they might uh create a Max data size or something that would then make these these ordinals not possible to create so it's really good to see that and effort I totally agree with you like Bitcoin miners seem like a good play you tap into it like I think you maybe came across a really good one um I probably plan on getting a position in in this definitely not Financial advice but Jihan wo prior to like the big block debate was one of the most influential people in the Bitcoin Community as well he was a big big big blocker so after you know uh after whatever 2017 when that was a big controversy he kind of lost some of his his clout but at the same time he is an

OG has to be a billionaire I don't actually know that but has to be billionaire and um yeah super exciting stuff the big blockers were right anyways so it's maybe that's bullish and it's a bit dear reindeer Christmas time I like the you know some meme meme power there maybe that's fundamentals right there but the other thing that's interesting is bitcoin's obviously had the huge Narrative of the ETF Market definitely thinks that I would I would my opinion is the market definitely thinks that that is still on Pace to happen we just saw Barry step down from uh dcg which is an rip to another main character but uh there's been some speculation that that was kind of like all right I'll step down get this gbtc

through to an ETF and kind of like let the let my child live on without me overseeing it I guess I don't know I'm not too attached to dcg uh and kind of how their ETF narrative or their Pursuit is going um so that's kind of again just how the market kind of was generally viewing this event uh but nonetheless Ark and 21 Shares are the first ETF to hit a deadline or final deadline for decision uh so just as a reminder the general consensus view is that on the first deadline there will be a decision for majority of the applicants because they don't really want to favor one participant over the other and give someone a first mover Advantage uh so that is January 10th right around the corner you'd have to imagine that there

was a a lumpsum decision coming that day uh so again I think it'll kind of remain in the narrative and we'll see how the market reacts to the actual news event you know whether it's a buy the news sell the news is TBD I like your point about buy the news versus sell the news some of the more sophisticated people I talk to are bearish the actual event you know they are hyper bullish everything buy whatever you can hold whatever you can until you know ETF approved but to them you know the ETF is a sell the news event for me I see it as you know almost guaranteed inflows into crypto you know these high netw worth individuals who otherwise are are left out and not able to buy Bitcoin maybe they think that you know holding money on coinbase as exchange risk after they saw FTX and

prior to that mount gox and plenty of other exchanges they don't want to deal with the you know the hassle that is self- custody self custody really is a pain in the ass um so this will give people of that nature the ability to onboard and Bitcoin that didn't have it before so I don't see it as a sell the news event but it's interesting that there are so many and I'm talking about like some of the smarter traders in our industry who are who are not so bullish on the actual news when it comes out yeah you just mentioned something interesting which is like I so for me I hate bridging between two blockchains if there's like a it's got to be a really good reason to drag me over there and that's kind of like switching from a coinbase account or from a brokerage account and moving

funds into a a coinbase account it's kind of the same thing like if you you just got to make it easier for people and this is very much so doing that if it's just two clicks away from selling something and buying something or buying this Bitcoin ETF it's just objectively going to bring in inflows in my view uh so I think I largely agree with what your thoughts there Matt I also think people underestimate the amount of marketing that's going to go into these things because like you sort of mentioned like this is definitely a first mover Advantage kind of Market where the person that's able to capture you know a huge market share the number of inflows quickly that usually they usually regain a huge large size of that Network and we've seen that with other

ETFs in the past such as the gold ETFs where there's one major provider that has 80% of the liquidity and inflows and so I think you're going to see a huge marketing battle between all the different ETF providers I know that there's like rumors about a deal between Black Rock and Google to start advertising their their Bitcoin ETF through Google whereas previously Google sort of had a rule uh they couldn't take ad money from financial institutions um so I think there's definitely some stuff going on in the background where there's going to be a huge marketing battle battle for retention with that I think you know people are sort of underestimating what that'll do to inflows as a whole yeah I don't know if you guys saw

the uh the bitwise ads already but they brought in the doi's most interesting man in the world for it which was was pretty awesome to see and uh Matt Hogan who's been a regular on this show as well got to got some air time as well so shout out to Matt for that uh but guys thanks a ton for coming and joining and having a good episode today appreciate you all for listening and we will see you all next week cheers happy New Year happy New Year see you next year classic joke hey everyone thanks so much for tuning into today's episode we hope you really enjoyed it wanted to take one more moment to remind you guys about our upcoming 2024 digital asset Summit in London this March see are limited so be sure to hit the link in the description and use promo code 0x20 to save 20% off

on your ticket we'll see you in London be sure to hit us up if you plan on [Music] attending