Bitcoin and Ethereum’s Market Dominance | Analyst Round Table

Transcript

you know ethereum for all the haat that it's gotten has also done pretty well I mean like 40 something percent in a year and I mean this is what happens when you're in crypto your your idea of good returns gets skewed this episode is sponsored by scale scale has differentiated itself from other layer ones by offering users a network of gas-free interoperable evml ones where the user experience comes first explore the gas-free ecosystem at scale. Spacey and follow their Journey on X at scale Network to learn more about the gas free architecture and growth of the scale ecosystem visit the scale research Hub at scale. space resesarch this episode is brought to you by Ledger the global leader in digital asset security celebrating 10 years of innovation

Ledger Remains the most secure Hardware wallet for your crypto and logins trusted by 7 million users and securing 20% of the world's digital assets follow the link in today's show notes to grab your Ledger now nothing said on zerox Research is a recommendation to buy or sell secure or tokens this podcast is for informational purposes only and any views expressed by anyone on the show are solely our opinions not Financial advice Pacho Ryan and our guests May hold positions in the companies funds or projects discussed hey guys welcome back to another episode of ox research today I'm joined by uh Ryan cash flows Conor uh we've got Mark and Dan Smith our resident rev um promoter preacher and lover how are you

guys doing today our just descendants will sing songs of rev doing fantastic well good to man do we have um maybe just to comment briefly on the markets um we had some green and excitement the other day now we're seeing some red and disappointment today seems like just a little bit of volatility here in the beginning of the year um does anyone have thoughts on maybe this week next next couple of weeks or are we just sorting through some kind of early year repositioning and uncertainty about what's ahead it's all trad's fault right they had this like hot ISM prices paid print and everyone kind of went nuts and now

Trump is tweeting that um the FED needs to cut rates or something like that um I I think people are overly fixated on interest rate levels given the pain that they experienced in 2022 um I think that's largely irrelevant going forward like clearly like rates being high did not cause the like massive like sell off and junk bonds that people predicted or like kind of like these uh like challenges in the refi market so I think uh it's like just like classic knee-jerk reaction from trashy folks I think uh I think James Kristoff said something bearish in the

ZX research telegram group so I'm officially bullish from here same the inverse James Kristoff index uh we might need to start running that one up Strays I'm sorry James but hey that's a shout out call to action little CTA here for the folks join the telegram group uh subtle subtle pat on the back here to all of us I think it's the most active walk Works research podcast telegram group um I don't even know if that's true but I'm put the stake in the ground anyways yeah there's a lot of chatter uh it's hard to keep up uh but that's a good thing um there's there's always um there's always good discuss a good Al in that group yep a lot of conversation from from us but also from the community

I think you know a combination of things going on in the trenches but also you know ideas and and you know things being built that people are interested in which is great to see good mix of uh of topics um all right let's jump past the markets then uh let's I want to call back to our last episode we talked about a few things that I think maybe need some updates one was we actually briefly mentioned um the miror mem coin and the um recipient of such um you know a little bit of like a you know Christmas happiness event and then it turned out that this particular individual ended up creating um some meme coins and endorsing them and selling them um supposedly unwittingly but I think um

his upon deeper investigation it was you know revealed that uh he's been in the space for a while has maybe done things with nfts in the prior cycle so um our kind of nice story turned out to be maybe not so nice um I guess once you get some some you know you get some attention and people find out that it's pretty easy to to launch a meme coin and rug your followers um we've not found a cure for that one yet I think uh many people are still just too easily tempted it I I was the one who was bullish on that launch right in that yeah so my bad that was also like minutes after we closed down the recording it was like oh we just said he's like I mostly did something nice

but then boom I actually got ha I got slandered in the YouTube comments of that one too for saying it was a good thing um or no so I said I was skeptical and someone was like you're an idiot this you shouldn't be skeptical well I'll put Pat myself on the back one there Mr you YouTube commentor yeah I think like I think it's a good idea in practice it did not work um but it's like I don't know you're stepping out into the battlefield like is it a good idea should we be doing donations with meme coins is that a good idea I don't know I don't know that that counterfactual of like how much would they have raised had he not done a done a meme coin or or I mean I don't fully know the story he accidentally burnt it was that

real I think based on the stories and his you know knowledge of the space having you know been in crypto for several years it seems unlikely that he did any of this unwittingly um it he made it sound like publicly initially that um you know he had created some tokens and then burned them and then bought them back and then resold or reburned them Etc um that seems very hard to believe given just the history um you know being an eth nft Trader Etc I I think you'd have to be quite a bit of novice and that that seems unlikely does it make a difference that he said he's going to try and return some of the funds to people who lost money I guess at the end of the day if you like raise the funds to go to this

cancer research like then it's probably a positive like again if if you're into the trenches at that point you know what you're getting your hands on like it's that's on that's on the trader I really do think that at this point he's not bringing in my mother into trading this coin as thinking it was a donation like that didn't happen yeah I think in practice this one didn't work but still Pro gameification I think it amplifies usage and could could do some good on some fronts it seems like the best at that is vitalic I mean he got with the um even in his latest thing with the mudang he got those coins and then adopted mudang and for those who don't know mudang is a

pudy hippo in China and and you know vitalic has done this with other mem coins that he's being donated as well he just sends them to char charitable causes so you know that gamification he seems to be the one like maybe leading it the best but it's not a that's that's more of a relying on good nature of one human versus any kind of like real game theory yeah I think I will say at least to not to necessarily give him any credit but it for people you know interacting in the space like I think you should know what you're getting into like I mean it it's clear their meme coins whether it's going to a charity or not like you're you're playing the game of you know is this thing going to go up

some amount or go to zero um so you have that expectation of potential total loss regardless now his actions like yeah it's I think it's hard to anyone like going on this tiate of making new coins and and dumping them onto the followers that they just gained from the event but uh I think we'll we'll probably there'll probably always be some semblance of that in the same way that celebrities you know try to milk a couple extra dollars from their followers in the same way um another one though we've got another topic from last time that we wanted to jump back to um virtuals we had looked at some uh circulating Revenue numbers um that seemed a bit High um an initial glance on the Pod was not

enough to ascertain the actual Revenue numbers but I know Dan Smith took a deeper look um along with some others on the team Dan if you want to jump into that um and I'll pull up some data yeah perfect perfect so virtuals got brought up and uh I fell trapped to just paring something I saw on the internet uh usually a bad call confirmed this time was also a bad call so there was that popular Dune query for virtuals that was circulating around that is uh excites its revenue and interestingly enough it takes the current virtuals price and multiplies it by any virtual tokens received historically that is not how you calculate Revenue that is how you calculate something like a treasury value right you have the total amount

you multiply it by the current price um and so is vastly overstating the amount of revenue generated by this application given the insane price runup that the token has had and the revenue is captured in the token itself um so we reworked a bit of this that I think Danny's throwing up on the screen here and uh it it's the revenue numbers are still fantastic uh if you so there's like basically two metrics here that we're looking at gross revenue and then net revenue so virtuals charges a 1% fee on all trading volume as their source of Revenue and they also have like a smaller launch fee associated with that but but largely the swap fees are the bulk of the revenue um once a protocol or once a virtual agent has launched so

it's in the bonding curve and then launched we call that like a graduated uh token once it has graduated the swap fees actually go to the agent Creator itself because there are costs with like keeping this agent alive and like that's the subsidization of it so I think a lot of the other public dashboards have included this as Revenue as well it's like a pretty good argument to make if whether or not it is revenue right now in this query we just counted it uh but are also including it in gross revenue rather than net revenue um so basically the net revenue is all of the money kept by the protocol generated and maintained and kept by the protocol uh net revenue is fantastic you know it's doing roughly two to four million a week in that revenue and you we start annualizing

these numbers like you're you're somewhere in the ballpark of $100 million a year it's a fantastic business um so they are doing very very well but the $55 Million number that was circulating around or virtuals has run up since that last podcast as well so it's probably even higher now given the incorrect calculation uh that number is not correct uh again their their weekly volume or weekly net revenue is somewhere in the ballpark of like two to four million which is fantastic there's there's no there's no shame to be had around the discrepancy there but yeah we just did want to follow up on that um since we discussed it in the last pod and we're going to build out a dashboard around this we'll host it on the blockworks research website uh that really walks through the activity in the financial side of of the virtuals

protocol itself so Dan tldr the the the the public number with the incorrect calculation today is around 75 million and the actual number is around 15 million cumulative or 14 million yeah I think it was like 17 so right it's a pretty significant discrepancy from the circulating number but again nothing it's like a fantastic number still from a growth perspective it's interesting we also just uh so I've been tracking the percentage of Dex volume on base driven by virtuals tokens uh which has been steadily increasing up and to the right I don't have anything Avail on my screen right now but if you go to optimism.

block retre research.com uh SLB you can see our base dashboard and one of the tabs there is the Dex activity tab um and within this there is a at the very bottom of that dashboard there's like a section on virtuals itself and the amount of volume has just been up and to the right on these tokens which is unsurprising as the attention has been up into to the right and people are actively trading these AI agent tokens uh so we also did the same thing for salana now salon's AI scene is is a little bit different like everything on bass launches through virtuals for the most part um whereas tokens on salana actually tend to launch through pump fund so one that's been a very interesting pivot of pump fund going from like these pure you know animal meme coins to actually like

you know air quotes around real but real projects trying to build AI agents um using pump fund token launches which has been fascinating to see but we actually broke out the salonex volume driven by a AI agents as well uh it's about 2x the dollar value and roughly 10% twox a dollar value that we see on base through virtuals tokens and roughly 10% of salana total volume for dexes so also seeing the same trend on salana which is no surprise that's where like zerob bro or AI 16z or a series of other ones have all launched from um so yeah just been interesting to kind of quantify the impact of the AI token narrative because you obviously see it on Twitter uh

sources like kaido that look at market share of Mind market share of Mind share uh have ai like 60% of CT mind share and again you're also seeing that in what's happening on chain so interesting to just kind of like take a holistic View at this narrative yeah I think the point and it was I think we mentioned it briefly last time as well but um it is interesting at least that virtuals is has been able to capture and like maintain a greater portion of the volume of these tokens like on their platform rather than that migrating to the other like base ecosystem dexes whereas for like pump fun I think you know the sort of ultimate effect of AI agent trading while still beneficial to you know to their fee revenues is a bit different

since you know once they get large enough they graduate go to radium Etc um they lose that that fee on on volumes traded so um there is sort of like this continuing revenue for virtuals assuming they can kind of keep that kind of maintain these agent tokens like within their own um ecosystem if you want to call it that I think one more interesting point on the the pump fund side of things is I just think this is a ridiculous stat but pump fund tokens have now hit a collective market cap of over10 billion uh which is nuts and if you look at let's see the top six one two three four five six seven eight all right let's look at the top eight seven of the top eight are AI

related one of which is fcoin which is Loosely related I would say but there is AI lore attached to fcoin so definitely six of the eight but arguably seven of the eight are all AI related with one exception being peanut which is fascinating um to see that pump fund really is the Launchpad of the salana AI narrative I don't know if pump fund's going to launch a token but like that's a crazy one to think about $370 million in Revenue actually cash flow generating it's continuing to stay in the narrative it's been well over a year now um yeah I don't know what their plans are but that's one that I think about on a daily basis it it says something um about the stickiness of the platform which I think a lot of people weren't prepared for um yeah you can still debate on whether or

not there's longevity in meme coins um I'm on the side of longevity but you know you can also argue that um pump funds Service is like a commodity um but there is like this like liquidity Network effect and for a while there there was like this social network effect too with the with the with the streaming platform which I think they'll bring back so it's going to be hard to like pick apart that business I think or at least empirically we're seeing that it's hard um theoretically could binance like do some Launchpad thing or coinbase or another competitor like yeah but um I don't know if I want to take risk I can you know it's um habitual where I just pump

in I just type in PP in my browser and it comes up and like that's where all the risk is um so so they they they have that Network effect now it seems yeah which is crazy because I was certainly in the camp that's it's like okay like this is interesting or whatever but it can be on any chain and now it is on every chain every single chain has a pump fun clone and not the rest of them combined don't even like show up on a chart if you put pump fun activity next to everything else uh which is fascinating there there really is no second player in that space right now so that definitely caught me off guard I certainly faded the stickiness of it because you're right like there is no real motor around it it just has this like weird cultural lore that crypto

loves on the discussion of longevity I think it's an interesting one um I don't think the game as is really has a ton of longevity in it you know if we think zoom out and and look at the evolution of this game through time again it started with nfts and that game kind of burned out and it's like yeah it's still sort of alive it's still around obviously teams like pudgy penguins are still doing a good job of executing on that nft based Vision uh but the that's still really the same game that's being played as in like pump fun meme coins it's just a different form factor and I think you're already starting to see that the form factor of the earlier part of 2024 versus now shift a little bit where it's like okay they're not just

pure meme coins about some fictional animal they're now like you sort of have to pretend like there's something there with an AI agent to like you know I think we're just seeing the rotation of the game or the evolution of the game a little bit so the question is like is pump fun in a position to keep adapting to that and so far the answer there is Yes again as we just walked through they're now an AI launching an AI token launching platform that's really interesting seven of be top eight coming AI coming from pum fun that I didn't see that coming and so what I might take away from that instantly my thought was okay so the play is because they're graduating to radium this benefits radium as well so like instead of virtuals capturing it all on base like radium is actually

benefiting a lot from from the AI meta as well so okay good to know yeah that's also another interesting one because there's always the people saying you know like they can just internalize that they should have built that the amm function themselves and kept all that swap Revenue which is you know largely that that like makes sense but it also not doing that enabled them to launch with little to no effort at all right they built two programs to launch the bonding curve tokens and to create the actual tokens themselves like that's literally it um and so it's almost like if you internalize that piece of it do you like break that sacred lore and that cultural dominance that you have so it's almost like if it ain't broke don't fix

it type thing right now it's like yeah sure they could generate more money but like $370 million in like 16 months is nuts so it's almost like do you even risk touching any of that yeah I mean apart from time to Market it just also made it seem more fair to you know radium was an existing pool and you just plug in with defi all in one chain and it just you know the bonding curve first aspect was fair and then it gets graduated to radium made it also seem like okay I this is a a platform that's trying to do right by me so yeah and last piece on this is orca actually recently launched like a permission permissionless token launching engine if you will um you know they probably looked at radium getting

the the pump fun blessing and we like wow that's that's fantastic like we we would obviously love that level of activity as well um so maybe that's the response I haven't looked too deeply into it but I do find that interesting as well I will I will push back on one point and I don't I don't know that it necessarily is the case that nft trading of last cycle has morphed into mcoin trading of this cycle I think even prior to nfts I mean mem coins had already existed Doge had been around since 2014 2013 um and even on eth and binance smart chain and these other chains like there were quote unquote meme coins popping up you had your baby doge coins and your like all the spin-offs um at that time as well in this like similar attention Market um I

think a lot of the maybe more recognized meme coins from last cycle were probably more like Ponzi ponz anomic tokens where it's like your safe moon or your you know tax on trading volume type tokens where you know you just need to buy in early enough so that when you you know if you're able to sell out and take the hit on the tax you enough uh people have followed you in that you still make some money on it um I think that that captured a lot of the kind of similar like in the trenches um you know D gen attention from last cycle maybe prior leading into the kind of nft craze but I think this overall theme of like trading attention um which is certainly like what these pure memes are with no fundamentals is um that's definitely just been like a gradual up and to the

right as we've moved along and I think the reason the key reason that pump fun has been so successful is just simplifying the like assumed rules of the game you know you you used to have to create the contract write it up deploy it people had to look at it like you know rug Checker check for mint functions Etc and I think just the standardization of of token contracts you know taking out the risks associated with buying these tokens has has simplified that for participants and and just made it easier to participate um and that's really just been like the biggest key to their success yeah I think that's a totally fair take you're you're definitely taking a more intellectual view I'm certainly being way too reductive there and just saying the the who's holding the the crown of attention trading is really my point but

I agree yeah and and and I think but I think your point is correct that like it might be Ponzi tokens or nfts or meme coins or AI but like ultimately I think that like this idea of people trading the attention that will continue on it just you know it might be a different flavor in another year we'll just have to see um cool let's uh let's move on from memes and AI um we've talked about them at length um Mark you recently um wrote a couple of reports reports or notes um updating some thoughts um around Bitcoin and eth I guess we haven't talked generally about just Bitcoin and eth as assets um on on Ox in maybe a while hey everyone

we'd like to give a special shout out to the sponsors of today's episode scale scale is built different unlike other layer ones scale is offering users a network of gas-free interoperable evml ones where user experience comes first scale operates like the AWS infrastructure model where developers pay for space in the network in skl tokens to validators essentially scale has chain fees and not gas fees this allows for free transactions on scale and has saved 46 million users over 9 billion in gas fees explore the gas free ecosystem at scale. space ecosystem and follow their Journey on X at scale Network visit the scale research Hub to learn more about the gas free architecture and growth of the ecosystem that's scale dospace research Ledger is the global leader in digital asset security trusted

by 7 million users and securing 20% of the world's digital Assets in recent years Ledger has built a comprehensive ecosystem of products and services making digital ownership more secure and accessible for everyone Ledger's newest devices Ledger stacks and Ledger Flex introduce the world's first secure touch screens making it easier and safer to manage your transactions and assets alongside Ledger stacks and Ledger Flex they have also launched The Ledger security key app offering a safer alternative to traditional passwords and enhancing your digital security follow the link into Today's Show notes to get started with Ledger today I want to kind of recenter us and I guess looking into 2025 like let's kind of go back down to the you know thoughts and fundamentals around around these two assets maybe starting with Bitcoin um if you want to

kind of go in on some of your high level takes and I've got some some data and CH and charts ready from uh your reports to to pull up as well um yeah so bitcoin's had a great year 2024 obviously up like 120 125% um I think it was the you know if you were to like group it best perform asset it was among the top four I think Nvidia was one of them and then micro strategy was another one I can't remember the fourth but basically two of the best performing Assets in 2024 were Bitcoin related um you know ethereum for all the hate that it's gotten has also done pretty well I mean like 40 something percent in a year and I mean this is what happens when you're in

crypto your your idea of good returns get skewed um but you know 40 something per in the Years outperforming you know even the S&P 500 which also had a great year right so I think um and especially for ethereum to are such a large you know it's a $400 billion market cap so I mean 40 something percent is is pretty good for that and then you know for Bitcoin you know some Quant are pushing back you know saying like you know on a sharp ratio risk adjusted measure that you know gold and Bitcoin you know had a similar shock ratio and so you know in in terms of portfolio it you know they've got you know similar gains and

gold has also had a great year but I think one thing that they miss out on by just looking at shops in a portfolio is the skewness of the returns so if you look at like bitcoin's skew distribution versus gold you can see it's much more positively skewed and that what that tends to me for an asset is that there's greater chance in the future of you know those High outperforming days um so yeah and then apart from that apart from the price if you just look at fundamentals uh it's been a bit mixed so uh bitcoin's RV for example um it's been like mostly flat for the past like three

months um you know and transactions are down on the network you know Bitcoin doesn't really have a proper way to capture me tips and stuff so all that goes to the miners that's why you know I think some of the miners are a great play to capture M especially if things like ordinals and stuff start to pick back up which we are kind of starting to see right now um I don't know if if this is a blip like you would say that The nft Comebacks have been a blip um but all you know last month you know it's been increasing for a few days there a little bit of a trend um I'm not sure what to make of it maybe January

will give us a little bit more clearer guidance on it but you know December was pretty good and on the next slide here I kind of wanted to do like daily data to get like a little bit more in depth into like it and like the last day here I think it was the fifth of Jan 40 something perent of the transactions on the Bitcoin Network were ordinal related so that's like nearly half and I mean this is why I think this is why the number transactions on bitcoin has fallen because I think this ordinal activity has increased the transaction fees on the network that couple with you know Bitcoin going to close to 100K um and you know it might be seen as

like bearish Bitcoin block space but it's it's just being taken up by much more expensive ineffective you know ordinal gen one transactions um I I don't know if anybody has any thoughts on whether we're going to see a resurgence and this so even rues or BRC 20s but yeah I mean just just glancing at it um and thinking back to the beginning of 2024 when um I think you know ordinals and and Bitcoin nfts and inscriptions like had become quite a a loud sort of bang on the time on you know in people's minds um I mean it does seem like there's been quite a strong Resurgence here I think you know jumping up back to nearly 50% of of the sort of transaction share um I mean we're we're

closing in on levels um around the kind of peak excitement that we saw early on in in 24 um so I don't know that I would necessarily you know on the maybe on the weekly and the monthly basis right it might still look like a a blip um from the you know the fee revenues that um get passed along but at least in terms of the activity that's interesting but I I think maybe the one point would be are we really just looking at like some price reflex of activity here where you know Bitcoin has had a good good another good run at the end of 24 you know around the ction and and people you know they jump to the what they think are the beta plays right they want to go and buy Bitcoin nfts Etc on chain um they're hoping for additional outperformance

maybe or some additional beta to to Bitcoin now that it's kind of had a move I've been a certified hater of runes and orinal since day one and it's not going to change um I think uh the most interesting thing is if they can get ZK robes to work on bitcoin then that's going to solve all of the problems they're looking for and I don't know know I mean I think we're pretty far out like I don't think that's going to be a this cycle thing from what I can tell and and reading in that area but Mark you'll certainly know better than I there but um that seems to be the answer that they're looking for um you know Bitcoin wants to generate just enough fees to maintain minor profitability and like not a dollar more uh runes and ordinals are just stupid like they're

not even fun to trade it's a pain in the ass it's a horrible experience from the wallet to the front end to the product and um everyone kept telling me I was an idiot and that we were just early and those things would improve but like they fundamentally can't improve so I I also don't see how that's going to happen as well now will people gamble on these yeah absolutely um but I don't expect it to be like a meaningful or sustaining full sustainable amount of of activity uh I think the ux has kind of improved like Magik Eden makes it a little bit easier it's kind of like trading any nft but uh I also think I think they're as dumb as most nfts are and I'm not really involved in that space but again I think most physical art is dumb so who I'm

high to say so I mean to each their own and on that note of um yeah of zko and Bitcoin I mean just like just like with bit vmx and bit VM and all the iterations trying to bring like optimistic um rollups and bridging to bitcoin there is seemingly some kind of um breakthrough to do ZK natively on it but it just seems very farfetched and if it happens very expensive and it requires a little bit of a trust assumption on the client side and so I 100% agree I I don't think that's happening this cycle and I don't think there's a push for this up code called opcat um operation concatenate uh not to get too much into the details but

if this code which we used to exist on bitcoin back in the day until Satoshi removed it for for dos Spector reason um if this upod were to come back then we could actually see some some ZK rollups like proper ones on on the Bitcoin Network which I think would be very useful and probably a little bit bearish for ethereum because what's the point of ethereum when the hardest most secure asset is is doing it at least that's the that's the counterargument it but I don't think any of that is happening this cycle they you know the Bitcoin Community moves very slow it's kind of ified and you know segwit 2017 that was very controversial after the

Block Wars four years later we got tap rot and then three years later that became controversial because of things like ordinals and runes so I don't think I don't think we're we're seeing this anytime soon but I I really hope to be proven wrong I have a question on U Bitcoin Capital Bitcoin native Capital um thinking about this ecosystem a lot it seems like it's a no brainer that to consider it seriously from an investment perspective because there's so much Capital that's not doing anything there um I think the problem though is that there's a risk that the capital doesn't want to do much at all um having

now met some Bitcoin whales they don't they love not moving their coins uh so you have a holder base um that's very unlike the DJ native holder or like the Crypton native degens on ethereum and salana and all the other chains so um you know let's let's assume that these l2s and wallet providers can get things to start working and like some of the pain can be abstracted away um I don't know what do you think about the actual Tam of this ecosystem given that like very ideological holder base yeah I mean first I think you're right the amount of capital I mean I did

this like rough calculation ethereum's market cap to tvl or tvl to market cap I should say and I think it's like 15% and then maybe it's like I don't know around 70 billion um of of assets and for for Bitcoin which is like five times the size means it needs five times less to match the number one tvl chain by far so that's like if 3% of Bitcoin move to these l and move to these like T5 projects that would be as much as ethereum and 1% would make it the second largest tvl chain in the world so and can we get 1% 3% five I think so I mean if you look at

last cycle it might not be the old OG Bitcoin Wales but you know last cycle people were putting it into like centralized entities and getting rug the hard way with not your keys not your coins right and then you know some of these l2s we we've seen Capital we've seen Bitcoin move across some of these staking and raking um projects like Babylon and Lombard we've seen a lot of Bitcoin move over in the past few months so you know I think there is demand for people to do things with their Bitcoin like people want to do something with their Bitcoin and I think initially it's not going to be The Cypher punks the ogs who do it it's going to probably be

people like from the ethereum landscape people are used to bridging between l1s and l2s who decide to buy some Bitcoin and you know try it out and experiment with it and put it into these different um these different platforms and you know some of these a lot of these l2s actually are evm based these Bitcoin l2s are evm based so it's going to be something that they're very familiar with and comfortable doing so I do think there's an opportunity for that and I don't even think it necessarily needs the security of a true you know ZK proper rollup stage whatever you want to call it whatever the Bitcoin analogy for that is is you know we saw Capital move over to the to the ethereum l2s be and

even now they're still basically at the end of the day it's a security multi-sig Council right like people have been moving money to these centralized sequence of things with without the full stage two property centralization so I don't even think um we need that to to see that much Capital move but I think the Bitcoin l2s still need a lot of work to even like compare to like ethereum l2s cuz you know ethereum L2 is are four years in the making like seriously since like the full acceptance of the ethereum rollup Centric road map and you know like there's two of them on stage one and and I stage two maybe coming out

next year so that's five years for for something that the entire Community pivoted to and bitcoin's even slower moving so you know I think it's it's still going to be some time but you know maybe we maybe we see some of that the beginnings of that in five I I I want to just highlight the one point you made Mark um around moving just like 3% of some Bitcoin over I I would imagine like when we think about these ordinal transaction count shares of of overall Bitcoin transactions for example we're probably looking at like maybe another similar ratio there where maybe you know 1% of of people who have or use Bitcoin are basically driving that activity so I guess it is it at least interesting to see that such a small group can actually have a pretty

strong impact on the sort of network Dynamics the fees paid um Etc so you know even if it's a small fraction and the you know the largest whales aren't aren't doing anything with their Bitcoin there's um it's like a it's a benefit to the to the network from a fee perspective at the very least if that activity continues um regardless of anything else um does anyone else have maybe any last takeaways on bitcoin or we can uh pivot and jump to talking about ethereum Marco let you take it away yeah so last report Road and ethereum um you know this is a a big asset the momentum

is not with it like with SOI or Bas or Solana obviously which was kind of surprising when I saw that December had um ethereum broke a record for the most transfer volume ever recorded in a single month and I think it it was something like SE over $740 billion do of stable coins transferred and you know for something that the entire Community touts as you know one of the best use cases of crypto I.E payments and especially with stable coins like you know this this was kind of surprising to see and this is coming from a chain that everybody say nobody uses this chain it's slow like

every activity is going away but it's still it's doing record volumes in transfers and where it comes from I don't think it really matters that much like if this is Sexes you know moving money on chain or between their wallets like what what does it matter the point is the Sexes are there the Sexes did this amount of transfer volume on another chain it would be bigger deal but this kind of stuff doesn't even make you know let's just say news or makes you know anybody's attention which kind of also shows how mature the protocol is at the stage like this is almost expected for ethereum to be doing these kind of these kinds of stable coin transfer volumes um I don't know if

anybody has any countert takes on that yeah it's super interesting another thing I would add to the stable coin front is when you look at market cap of stable coins issued across the industry ethereum's dominance is like breathtaking to to some degree I mean it is they're night and day ahead of the rest of the industry they're at about 110 million Tron comes in at about 50 and then everybody else basically sums to 50 maybe uh it's it's impressive so that's another piece I'd add here I probably push back a little on like the relevancy of transfer volumes I think it's most useful for ethereum because it is so expensive to use uh so therefore you see the extreme optimization and how the chain is used and like just General

wash trading type activity is extremely unprofitable um so I think it is actually a pretty good signal for ethereum but I wouldn't really extrapolate that much further Beyond ethereum uh some examples of that so salana has like some wash trading that is going on related to zero fee Dex pools right if there's no Dex fee on the Dex swap the transactions are extremely cheap then you can what's happening is someone is taking out a flash loan shoving like a $10 million swap through it and just like looping that it's like literally a volume but it's all targeted towards like advertising meme coins um it's very easy to filter that activity out of Dex volume right if there's no fees on the pool it's probably not a real pool anyways um however it's not as straightforward to filter that out of um

like transfer volume so right now like us included pretty much every data provider is going to give you the full amount of usdc or usdt or whatever stable coins that moved on the Chain um you can filter that deeper to get like richer insights but that's just like a whole different ball game and because of that you do see a lot of noise right like if you look at the salana chart like this exact chart there like two days last week where there was over 800 900 billion dollars of transfer volume again this is just taking out a flash loan and re running a deck Swap and then repaying it that like one activity that's like relatively useless massively extrapolates this number um and like I don't know that's not super super useful to me another

example is like incentive programs so ZK sync just kicked one off and they uh it's like their ignite program I believe it's called and now you see like aggressive lending usage uh literally day of and so lending programs that are on that incentive program there's now like a a you know value to capture by shoving usdc through that protocol um so it's like this and active addresses I think are both useful metrics but like your first reaction at least mine my first reaction when I look at these things is like it's not like oh wow look at this growth it's like okay like what's driving this because that's where you get super interesting right like I just looked at the ZK sync one you know an hour ago and I was like oh okay huge Spike so like what's the driver here

it's like oh it's like the ignite program through lending markets super interesting like I wonder how the two lending markets that are involved here are going to Faire like are they actually good products strong businesses and will be sustainable can like Leverage this incent a program to to be useful products um that's obviously useful back to the chain as well so yeah that's kind of how I look at these metrics is like first reaction when there's a is like oh why like what's driving that yeah I have um thoughts as well um Mark I totally agree I think it's like this a lot of this is centralized exchange volume I think Dan you have some numbers on that where it's like I don't know 40 to 60% of stable coins across chains are are held on centralized exchanges I don't think that that's a bad thing but it is like a

qualitatively meaningful thing like if you're just like clearing trades with Stables like that's cool it's a big win but like the historical path dependency like makes this number a lot less relevant for me and two when I look at like the slow moving nature of stable coin balances across chains like I know it doesn't predict rev right like Salon like it was very much like a lagging indicator for the rise of salana um it was a lagging indicator for the rise of Base so like it is useful from from first principles and I think that there is a future state where like you know I think uh the vanc team tweeted this out where

like they're seeing app downloads for like Western Union like declin like pretty dramatically so like there is some future state where like payments like the the nature of payments do shift um but I think just given the historical path dependency and where these things have been issued like I don't know it doesn't it's useful but I'm not changing my like investment decisions based on um uh changes in in stable coin transfer volumes yeah I think that you touched on something pretty interesting there with like the centralized exchange piece both Mark and Ryan on that one I was looking at the data the other day and I think it was about 60% of uh usdc on base is like coinbase

seemingly just parking user funds they announced that they were going to be doing this I'm not saying there's anything nefarious there it's just like an interesting observation uh because when I historically used to look at this uh the stable coin Supply number I was like oh that's like a great you know indicator of the amount of capital that's like ready to be injected into the economy um where now realizing that over half of like arbitrum in base specifically uh the usdc parked there is or stable coins more broadly is on centralized exchanges I'm like not even on exchanges it's like reflective of user funds being deposited on this exchange and like they run their own risk management strategy of like where those chains are or where those funds are allocated um so when I now look at

this number I'm like okay like you kind of do need to Discount the total amount for like what is actually you know sitting in eoas like ready to be deployed into the to the economy because it really isn't this like holistically large number um and even like another piece on this that I've been looking at is uh Artemis does a really really good job with Bridge flows and obviously you count as many bridges as possible cctp from Circle being one of those um but that is actually how coinbase like mints user funds onto the chain as well so there probably is some clouding of that inflows metric based on you know coinbase just bringing U users usdc there and then parking it there um haven't looked too too deeply into that

one but it's like another place that could be affected by the same sort of analysis this this is somewhat related but like as we're getting like you mentioned earlier how like these numbers are much much more trustworthy on ethereum because the fees are higher are high it's less scalable washing is unprofitable like when when all these blockchains like figure out how to do the 500,000 million TPS like how hard it's going to be to sift through all this data like Dan your job is gonna get so much harder I do not envy you at all yeah also the whole 1 million TPS thing that sounds great until you try to run a damn Dune query over 1 million TPS that's just yeah we're already we're already thinking about that and taking action ahead of time my queries time out

so often in on like the most basic stuff on Dune like there are problems there are Bott next to solve at 1 million TPS that sounds like good problems true yes 100% yeah I think we'll just have to scale our data analytics capabilities at that point as well um as difficult as it might seem now um I think that was a pretty good maybe dive into this topic uh I know we have more on eth but uh I think we might have to call it here do we have any maybe last big takeaways on ethereum and let me pull up I think it was mentioned let's just jump to the Rev chart um The Rev chart um any less big

takeaways now that the you know stable coin transfer volumes discussion and caveats are out of the way you either got to beat Bitcoin at being mimic money which is going to be incredibly challenging or you have to make a lot of money um those are sort of the two paths and to be fair uh ethereum returned about 500 not about $57 million uh to token holders in Q4 of last year which is fantastic uh Solana was 508 million in the same period uh so it's still like a huge number it's just you know when I look at this chart I see a cyclical Decline and the question is what's going to catalyze a change there um I'm not totally convinced the

proposed changes to the L1 are going to be enough but I think they're like continued marginal improvements but um yeah I'm uh I'm not super excited about the prospects of this chart taking a turn and blob fees are doing great right now they're like actually influencing rev um of course yeah they're great look at that dude's ready with the charts uh yeah they're at seven about 10% now which is fantastic but pectra is going to scale The Blob count and uh capacity so this goes back to zero is I guess the tldr okay yeah it it seems like going ahead we're at a kind of an unanswered question of whether we can continue to

scale rev or if Towing this line on growth expanding blobs um keeping the cost of those low um keeps us at some kind of leveled Point um for the time being I think we'll just have to see yeah I think they've done everything right on the world on the supply side as well like supply side I ecomics are fantastic I wouldn't change a thing it's like what are you going to do to drive demand side and like the L2 red map can work right like that's if you look at Bitcoin that's like what you would want it to do um the question is like how do you back into that like mic money thing and I think that's infinitely harder yeah ba Bas has been the one you know key massive demand driver at this point um we' I think we'd hope to see more

bases for ethereum's sake um expanding in that same fashion uh and maybe we'll get that but uh I think we can call it there unless anyone has a a big takeaway for the episode um I think maybe my key call to action for people that get into the trenches is to not ruin your credibility launching and then dumping a fresh meme coin onto your follower base um my takeaway is join the telegram chat I think I end every um xerx episode of this but study the TFS the best Bas trade of all time cash flows Conor I got I got

nothing uh don't um don't sell into Trad fear on on on uh on Rising rates rates don't matter rates aren't real you heard it here first folks never die I love it rates aren't real says cash flows Conor uh we will see you all again next time thanks for coming on guys thanks for a great app thanks again to scale for sponsoring today's episode if you weren't already planning to make sure to go check out scales ecosystem explore the gas-free ecosystem at scale.png [Music]