Bitcoin's Renaissance: Inside Runes, Ordinals, and Transaction Revenue | Roundup

Transcript

I think there's an ending point to each protocol where you just call it a day and then you have the l2s or whatever just you know build whatever they they want and continue to building the network effects there is nothing to reinvest into if it's a true protocol the things I like about crypto are like you know eth is like look there's there's a base burn there's a fee that I get I stake my yeld I earn you know three three and a half% whatever it is that's a very streamlined form of capitalism versus most companies in the S&P which don't pay out a dividend hey everyone wanted to give a quick shout out to the wormhole Foundation if you're a bell curve listener you know that transferring across chains can be a massive pain I certainly do I complain about it on this program all the time

that's why we are super pumped to have partnered with the Wormhole Foundation the stewards of the Wormhole protocol the Wormhole protocol connects over 30 blockchains and six different run times including salana sooie ethereum layer twos and more and the coolest part about this particular partnership is that they have made custom bell curve nfts which you can get and mint for free you can claim that by just going down into the show notes and clicking on the link all right guys on with the show hey everyone wanted to give a quick shout out to this episode sponsor flood protocol the optimal decks aggregator now if you are a listener of bell curve you know that me is a massive problem which is why we are so pumped to partner up with flood on this season flood is the only gasless and me free aggregator that not only

gets you the best execution but also gives you back all the extra Surplus that you create every single time you swap now this is relevant for both swappers and developers but you're going to be hearing all about about them later in the program so for now thank you flood and back to the show hey everyone this episode is brought to you by Unis swap delivering the best onchain trading experience in crypto period Bar None one thing I want to call out is the Unis swap extension so say goodbye these days of these annoying asort popup wallet extensions you lose your place trading you have to open it back up unisoft now has a nice Sleek sidebar that prist no matter where you are in the web it's much easier to use if you click the link at the bottom of this episode you can join the waiting list and I'll see what

I can do to get you moved up that waiting list but definitely go click the link check it out all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax legal or other advice you know the deal now let's jump into the episode all right everyone welcome back to another bell curve round up you got me and Vance this week me and Vance holding down the fort what's up buddy how are you what's going on how we doing we're doing good we're doing good man we just did a uh I was just telling

you off the air but we just did a little blockworks analytics on site New York so our a small But Mighty analytics team feeling fired up here we got big plans for 2024 2025 and you're in uh you're in Miami this week I'm Miami Miami too little birthday thing for a friend and uh yeah Michael's about to join me so we let's get it going oh boy you guys got to come back next week with some stories we're expecting B no we've got we've gotten Tamers we've gotten older yeah well there's a rumor that you guys have a boat did I ever tell you uh my boat story with Yo's bachelor party in you this dude honestly this was the worst money I've ever spent on anything

in my life it was it was it was the third day of his bachelor party down in I think it was Cabo and they rented this like crazy boat and this was originally when there were 15 guys so we were going to spread the Coster on all of them but eight people bailed on the last day so immediately goes down all right and then there were hurricanes before so there were it was safe but there were a bunch of waves and within going on there immediately yo and I got seasick and just tried not to puke for like four hours it's like two grand two grand wor money ever spent so wish you better VI for this week last time I was here I caught a shark fishing so let's see like bare hands he dove in and wrapped armor I was reeling it in was big big fighting

fish you know nice nice very good uh well speaking of reeling in before we get into the actual stories of the week we got to pour one out for our friends that are in Dubai right now who are also potentially wrangling sharks except it's in the streets so I didn't realize that you could actually this is sort of a cool thing about Dubai and just desert countries in general but they actually create fake rain so they inject something up into the clouds and it actually creates rain but I guess it's not a super exact science it looks like they just flooded the entire city and they've got token 2049 going out there uh right now so yeah hearts out for folks who made it out to duai and like waiting around the show floor but tough

look this is this is a crypto conference classic uh 2020 uh KBW it was like torrential Street flooding raid as well so you know all all part of the process I guess but yeah good good luck out there dude it's also it's just an event organizers nightmare like my heart goes out I don't even know what the reaction on our team would be if that was us to so yeah token 29 20 2049 organizers I'm sorry man that is it's just a rough go but tough one tough bid tough bid tough bid but moving on to act like real stories this week so feel like the last couple weeks we've seen a pretty I mean I'll use the word standard but I'd love

to get your take correction in markets so as we're recording this I think Bitcoin is trading right around 60k maybe it's back oh it's back up to 64 all right that's a nice little rebound but we kissed we kissed 60k uh down from 74 and this retracement has now been going on for the last month or so and uh definitely like all Bitcoin is fine but alts have definitely taken a bath and some of the frothier sections of like the AI coin sort of bags like dpin bags uh some of the all l1s like they've just gotten absolutely smoked I think salana went down to 130 or something like that from over 200 so what's your prognosis for you know why correction and where do we go from here do you

think um so it's first thing I would say it's not just a crypto correction it's General markets the S&P is catching a bounce today but I think it's been down for the past four days which is pretty rare um and so I think there's two narratives that are happening right now globally one which is interest rate cuts are not coming um which like I I personally think is a fade M Michael disagrees with with that he thinks there's no cuts on on the horizon but I think the economy is probably weaker than expected and you probably still get one and no matter what you get it's kind of like an acknowledgement of the process starting versus like you know like the

market kind of tends to price in all the rate cuts at once just like you know it does on on the rate hikes also it it immediately prices whatever the terminal rate thinks it they they think it should be at least um so so I think that's going on definitely and and inflation is higher than people expect the other thing that I pay honestly closer attention to because I think it's bigger than interest rates is just you know politics and and the polls and the narrative there has been um basically that the race was tightening I think there's probably some truth to that but if you look at the Battleground States Trump's winning six out of seven um you know

he's up by like three in Michigan and Wisconsin and it's it's hard to understand the election in the abstract especially when you look at things like the vote but if you look at the Battleground States and the way the Battleground States work is basically like Trump needs to pick up one of either Wisconsin Michigan Pennsylvania um or or Minnesota frankly um and so you know if he's leaving and you know three three out of four of those like I kind of think the case for him not to win is pretty weak and the market will start repricing his winning odds higher which will kind of Drive everything higher in an election year that's kind of what I think is going on um I think there's definitely some

aspect of like Ethan Bitcoin taking a breather which is healthy like there's like 11 20% Corrections in the last run um but then I think the alts have just really gotten crushed uh you know like most of all like you're saying like the AI coins and things like that um and I think that's just because you know people who start meme coins or VCS who fund coins like they're very good at replicating things that are working in the market and you know meeting Demand with that supply and I think on that front this is kind of like the first leveling that will take us to a different probably Paradigm for alts where you know fundamentals aren't easily replicable uh new categories and platforms aren't

either um and so kind of just like more of a a move to even if it's mean coins like like we get one or we get two mean coins we don't get like a thousand um and same with you know Defi and same with games and with um you know infrastructure and like some of these things just reach such crazy ftvs like worldcoin was 114 billion at the top yeah the emissions of that just to put in perspective are the size of maker over the next year so like if you really think about it like that um I think you kind of know where the market is going to go but also you know there's there's a pretty good case for this is probably just a garden variety correction

yeah the this is one of these classic charts that just gets trotted out every now and again but Chris berinsky tweeted this uh the caption in case the lettuce hands need a reminder this is the class just looking at the 2011 2015 2018 you know 2020 cycle and then charting where we are today and this is this is uh I guess trough to Peak basically and yeah I mean if you look there's obviously no guarantee that the the current trend is going to play out like it has in the past you know past performance is not indicative of future results Etc but this is pretty typical price action and I do feel like we ran up really really hot um leading into the Bitcoin ETFs

which ended up being a massive Catalyst as many many thought they would be I think maybe a bit of this story is also on bitcoin ETF flows so yeah we've seen relatively consistent outflows for the last week or so um you know nothing crazy but something in the realm of about $ million per day something like that so yeah I think and look I mean to your point about it being a broader macro correction like the S&P has been on a tear so far this year right like nothing goes up forever in a straight line and it's actually pretty healthy for there to be shakeouts like this and it's nothing that shouldn't be expected right so like the more you shake this kind of stuff out maybe the more legs there are long term in the in the rally

yep yeah I mean I think that's that's basically the chart um and like I went to a dinner where people were talking about kind of what you described like what happens when the ETFs work in Reverse where there's outflows um and that's kind of like this existential fear that I think a lot of people have and like rarely do markets let you get away with like not addressing whatever the existential fear is and like I think there's going to be probably a couple of weeks of outflows um but you know at the same time the fact that binance sold a billion dollars of PTC I think over the past 24 hours along with the outflows um and we still didn't you know really meaningfully breach 60 or you know 60k or whatever it is it

just kind of shows you how how resilient the market is um you know like I think of it also in kind of the the converse way like do do you think the the Bitcoin eth story is over probably not you know like there's just a lot more to play out like the ecosystems are developing the ETFs are getting improved there's really use cases so honestly we're not really too concerned I think this is a pretty Garden variety correction but like I do really think you know a general rule of thumb is it's hard for alts to breach a 100 billion if you're like an L1 you know an all L1 like a bunch of them got kind of roughly there last cycle and if you're kind of like

middleware it's it's hard for you to reach 20 billion just like the financial gravity of what the market is willing to price is like is tough at that level and so you know I think this is just like a a more metap point of like you know if you're thinking about doing a tge and like you know the float is such that the coin will Spike to 20 billion you six months after launch like you're not doing yourself any favors over the long term um because that's just is frankly selling pressure before the project is really ready for for prime time so here's another thing that's coming up is we've talked a little bit about this but we're also like just a couple of days out

actually from the having and having is traditionally this sort of folen point that these fouryear Cycles have swung around and I know coindesk put out something recently just looking at what the price action looked like around the uh you know before and after the first second and third having so that was in 2012 2016 and 2020 so just the having I'm sure folks listening would be familiar but that's just when the block reward for Bitcoin gets cut in half I think it's at 6.125 or something like that right now and it's going to get cut to three something and you know you can see that it's not I mean mostly the price appreciation actually tends to to happen post having you know around uh you know

six to nine months or something like that and I think the honestly I think the story of this entire cycle so far is maybe it feels a little bit like an abnormal cycle in a couple of ways but it's really just it actually is exactly how past Cycles have played out just with a couple a couple of changes so I think again one of the things that just really stumped people is salana just outperforming pretty aggressively very early in the cycle usually what happens is Bitcoin runs first then eth run second and then kind of like blue chips and then meme coins and what happened this cycle is salana ran really hard really fast and that was just because I think there was a crazy dislocation post the FTX blow up and so of made everyone

say hey is this is something weird happening here is eth like lagging and I just think it was a idiosyncratic salana thing and then the other thing that was different this time was that we got the Bitcoin ETFs and maybe that pulled forward some of the growth um or some of the price appreciation a little bit sooner relative to the having than it would typically happen but overall I think this is you know pretty standard cycle stuff here I I there there is a debate that's currently happening about how impactful the having really is is it more psychological than mechanical like it used we have we have this debate every single time I know it's I know empirically just even if you look at like you know these charts it it's not priced

in yeah even if it is thebo it doesn't matter the like you know the placebo affects the psychology affects the bidding Behavior ex like you know it's all tied together it's it's never you know one for one you can't really measure it at all so that's my thoughts at least Vance where do you sit on this argument that one of the things that also might be different this time and people have argued this in the past as well is that well these flows that are coming in Via Bitcoin are coming into an ETF now they're not you know typically what happens is people buy Bitcoin first the price appreciates you take some of your chips and you roll it into eth and alts and whatever and now it's going to be a

little bit different because while people are buying it in these vehicles that exist in Trad fry in your brokerage account it's not as easy to just take that and roll it into you know shitcoin XYZ do you are you a subscriber to that thought or do you think that's not a super meaningful distinction ultimately there's probably some truth to that I mean where's Bitcoin dominance right now hold up yeah I mean it's it's uh yeah I mean you you kind of have this like Cliff you know at the end of the last bar Market into this trough then it

goes back up usually tops at like 71% we're at 55% right now um here I'll just throw this chart up cool um or if you could throw it up we're we're at 55.7% right now the last cycle top was 71% so you know it's it's more a function of like it's like I wouldn't think of it as like one person in their brokerage account you know buying Bitcoin going up um and then bidding these other coins like I don't think that's going to happen maybe it'll be E when it has an ETF but it's more so like the aggregate wealth effect of the ecosystem because

like we're still at a point in crypto's history where we hold you know we the proverbial we the crypto natives hold most of these coins and so you know we all get wealthy and then it also becomes a function of pricing um you know I guess Bitcoin was a little bit higher like 69k at the top of last cycle you know you're looking at like eth at 4K at that point and you're like can this triple from here if Bitcoin goes up one and a half X or goes to 100K so it's also about relative value and kind of how the crypto natives part participate in that and also front run whatever you know the ETF situation is going forward which you know I I think all of us are believers

that if not in May it's happening probably in the next year maybe sooner you know maybe at the end of that year but like the market can kind of look through that so I agree with you that's I think even if you look at what's happening right now the you've seen this talked about the Bitcoin mem coin barbell where Bitcoin is doing well and mem coins and everything in the middle is kind of struggling a little bit and I think the reason for that is because not because there's a bunch of crypto natives that are holding Bitcoin and then rotating those gains into mem coins I think it's because they crypto natives know how this they've seen this movie before and they know how the sequin plays out and they're just trying to skip to the end so they know it goes

Bitcoin eth Blue Chip defi whatever altl ones memec coin then it ends on Meme coins and they're just like yep I've seen this I know when Bitcoin goes up eventually it's going to go to mem coins so I'm just going to skip skip right to the end and go into meme coins so again I think it's the maybe less about mechanically about wealth creation and more just pattern recognition in the same way that yeah the having could be a little bit of a placebo but at the end of the day that's still a really important effect right it's still going to have a huge impact on the price so yep it's also it's also about like total size like at what's what's Bitcoin at right now at 1.25 trillion that's a big asset like like your your your scale becomes

obviously like as your price goes up your market cap expands it gets harder to move the price um like you're probably even at a price right now where you need probably like 20 to $50 million of inflows per day to like maintain it on the ETF side to like maintain it at this price like you're going to need to see those ETF inflows get back to like the hundreds of millions per day like maybe even billions like when it's like super you know frothy and bullish but like I think these things are going to be taking a breather for you know until kind of the The Narrative on interest rates or the narrative on you know the presidential

race tightening goes away um but you know that could be a month it could be a few months but you know I think the longer term is what's more important to play for um and like you know uh both you know interested in Democratic politics and Republican politics but I think one side if that Administration changes and I think that the betting odds are certainly favoring Trump at the moment like that expands industry like 100x um and so I think it's even worth like the temporary economic malaise if uh if you see that play out to potentially get to that end point

so the other thing that I've always thought is that the price actually leads the narrative not the other way around if price ends up moving up people look for reasons for why the price is up and now the price is down a little bit and people are looking for reasons why and they oh it's the election fears or oh it's the interest rate stuff and honestly it could just it does it's not a great podcast sounding explanation but maybe it's just that crypto and equities have ripped so far this year there's naturally going to be every got long and then that's how these sort of counter Trends happen and this was what was always going to happen here and now we're all looking for some explanation but I feel like most of the stuff that that we've been talking about so far

this year hasn't really ultimately changed like it's still a super bullish environment for crypto I I I don't you know I I'm not even sure the interest rates really matter that much right now I'm not sure that's what's moving markets on the on the macro side it really feels like the deficit is much more important and the election is much more important this year I think interest rates they're always super important obviously but it's kind of last year's story and uh I'm just not sure three Cuts versus six cuts and is it July versus August is really what's moving the needle at the current moment you know yeah I think for the most part like when we were buying in 2022 it was like you know he's probably one to 2K this

year maybe two to 3K the next year maybe you know like you kind like that was like my simplistic framework and you know use that to keep myself honest in terms of you know if it's looking like a bearish day are we still kind of within the the long-term plan I I think so um but I mean the macro and the politics I think those are kind of like the Expos facto rationale for whatever happens with price but you know sentiment can flip on a dime people don't even remember when they're bullish or when they were last bullish like people people can't even tell you what they were buying or what they were thinking about and so like the Market literally has the shortest memory uh of of any person that you know and it's kind of

like that's like where Mr Market comes from it's just like your rational friend who's kind of bipolar and you know stampedes either direction and it's just not worth really worrying about the the near term and if you're not playing the long term like you're probably playing the wrong game hey everyone wanted to give a quick shout out to the title sponsor of this season of bellur The Wormhole Foundation now if you are an onchain user which I bet you are if you're listening to belur you know that the cross chain experience in crypto still sucks let's just call a spade a spade we talk about it in this program all the time interop is still a big problem which is why we specifically wanted to team up with the Wormhole Foundation they are a decentralized interop platform that powers multi-chain applications and bridges so that could

be anything from defi to nfts governance oracles and more so if you were a developer and you're building uh cross chain assets apps or data or anything like that I highly recommend that you click the link at the bottom of this episode and go check out to see what you can build on Wormhole and Wormhole first of all this is a fun team they did something really cool with us you can actually go and click the link at the bottom of the screen which is going to send you to a landing page where you can claim your own unique Wormhole nft so we're doing this with me and we're doing this with Jason my co-founder so help a brother out it's a super cool nft I promise go click the link at the bottom of this episode and fill out your PO app get your free nft and if you're a Dev

head over to Wormhole and check out to see what cool cross chain stuff you can build hey everyone want to give a quick shout out to this episode sponsor flood protocol the optimal decks aggregator now flood is the perfect partner for this episode on the multi-chain future because flood is solving so many of the issues that we're going to be talking about this season and this is relevant for both Traders and devs so if you are a Trader you should definitely head over to flood Swap and start trading because they solve three massive problems one gasless trading no more pesky trading fees two you don't have to worry about getting front run me free and then three they have excellent order routing so that you know that you are getting the best price so head over to flood Swap and click the link in the bottom of the

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about something else that's happening on bitcoin the we are going to see the launch of runes this week so this is all this is another Casey rmore who is the the creator of ordinals this is another one of his projects but it's he's launching runes on the day of the habing which it looks like it's going to be uh in a couple of days so basically what the what runes allow you to do is to create some sort of token standard equivalent to sort of like a compe to BRC 20s which is kind of a poor form of ERC 20s that exist on ethereum um on bitcoin and it there it's not exactly inscriptions but it's close enough to

inscriptions that you know that's that's that's good enough uh you know for you to really understand Bitcoin has a different model than ethereum does which has a uh Bitcoin is just utxos and you can't use Smart contracts on it so it's extremely Limited in terms of what you can actually do so huge credit to Casey here with what he's done with ordinals um and runes are just kind of the latest version of that but it's just basically a very crude way to get around the limitations of the Bitcoin blockchain and do ethereum like things and people are really excited about ruins and frankly is driving an enormous amount of activity on the Bitcoin blockchain today so Bitcoin inscription nfts are even generally within the within the

global world of nfts are now 55% of nft Trades and you got to give credit to Magic Eden who they started on salana and they sort of pivoted over to bitcoin and they really capitalize on The ordinals Fad on and I'm sure they're going to do extremely well on Bruins Etc and it's actually led to a Resurgence in their market share on salana also so yeah I'm not really sure what your thoughts are our data guy over here Dan de Smith absolutely hates the idea of inscriptions basically just use it as spam and completely silly pretty meritless but what are your what are your general thoughts on I'm not sure how deep you've got into ruins I I would say this is another example of price driving narrative

driving use case um you know it's like it's like great that bitcoin's going up this like incentivizes all this new developer activity um I don't I mean some people on my team are super you know optimistic on what these could be I kind of like I don't know it's like is this more like an nft or is more like a mean coin like which side of that framework are we on are We like digging for like artifacts that are lost in like the chain or is it like pure Financial nihilism or is this in the middle of the curve like that's kind of where I go yeah I don't know how would you like

what how would you define the difference between nfts and meme coins in general this the whole Kobe thing is it just just the liquidity the liquidity nfts are such an inefficient form of speculating CU you got to find one guy to buy your whole like you know if even if it's a you know one of many like you got to find a very specific buyer for that um you can't price it on an amm you can't like sell it or buy it indiscriminantly so you know like I think that's the difference honestly and I I mean maybe I'm maybe I'm just a boomer but like you know the runes are cool I think it's an interesting experiment but what's the long-term longevity are these

like crypto punks or or or is this like an ephemeral Financial nihilism mcoin that goes up and down I don't know I don't know either honestly I think probably I think probably the dynamic is the same Dynamic that drives an enormous amount of speculation on crypto which is wealth gets created in L1 coin or token so BTC eth soul and people look to speculate on that and they look to turn those gains into other things and get more exposure and there's just an extremely limited Universe of assets out there I mean this is probably the rabbit hole that many crypto natives

end up going down where you know remember when you were getting into the space and it felt like Bitcoin and eth were super risky but then once you've been in the ecosystem for a couple years you're like I need to be taking some more risk than this like this stuff's obviously going up right this feels too safe and so the UN like the universe of stuff is just pretty limited when you're when you're looking at it through that lens when Bitcoin or eth are your are your safety bags and so that's how you end up going into the stuff that sort of kind of might work and maybe there's a future there and I mean there have also been tons of stuff like that that ended up working over the years like you guys were super early into you know chain link and a and how crazy did that seem

at the time I remember looking at that stuff and being like feels a little too risky for me at the time you got to be in that head space to to get that type of return where you're going on these Rabbit Hole Adventures like that that's what makes a market you know people who are early and you know then they bring in people and then it becomes popular um so I'm glad people are doing this um it's it's it's cool to see the Bitcoin ecosystem developing I've said this on um a couple of uh sorry just checking my mic was working I've said this on a a couple of different tweets but like it's pretty notable that the eth and Bitcoin

ecosystems are converging on the same model it's like I mean one is pry work one is prect stake obviously but it's like the L1 is for the sticky D5 the nfts the Grails you know the high value transactions um and then the l2s are for you know speculating mcoins runes inscriptions like you know whatever um and I think as they become closer and like people recognize that they're going to compare them on more Dimensions specifically like money fees Revenue like I I think that this is where a lot of crypto goes it's like if you think about the endgame of different protocols you know I think like this

this web of l2s is one endgame in in kind of a different way like reaking is like a different end game I see that as kind of like um and that's both on bitcoin and and eth reaking to me is kind of like m&a in crypto you're you're basically saying like come under my wing you know give tokens away to my community like we'll develop Primitives um and so like you know you're aggregating all these services and I think like you know maker is another good form of endgame and like their road map is literally titled endgame but it's like you know they're becoming this like kind of super structure with all these subd Dows and they're allocating you know die to the basis trade into crypto loans into rwas and like that's kind of like an endgame of defi like I think

generally like a lot of these end games are starting to play out there's obviously still huge incentiv like multi-billion dollar market cap to be around Stalone project but um I think kind of what we're seeing is like an aggregation of the ecosystems into this kind of like Universal either like reaking or L2 model I agree with that I agree with that and another another ecosystem that I would point to that actually looks very similar in terms of the architecture it is going the same way it is kind of a neat mix in between Bitcoin and different versions of Bitcoin and eth is Celestia I would put in that exact same camp because Celestia also has this actually Celestia is in a lot of ways what the big block vision for

Bitcoin could have been if some of the tech had existed at the time and they've they were able to obviate some of the negative trade-offs so they have super big blocks they've got a few chunky validators or like a 100 or something like that you chunky validators but then they have this thing called Data avail sampling and light nodes which basically negates all of the negative transactions that the the small blocker Camp used to Levy at the big blocker camp and what you're left with is this uh chain with very kind of dumb sort of nonfunctional uh but extremely large blocks um and that's kind of similar to to bitcoin which is uh pretty you know it's utxo model you can't do things like smart contracts on it but it's kind of small blocks and uh you know each one of those things there there's an incentive to

create rollups on top of that and in Celestia it's more for smart contract functionality and for Bitcoin it's more like well it's kind of like block space and functionality and then ethereum it's uh just um block space so yeah like if I think over time the especially the Celestia Bitcoin and ethereum they it's all converging on the same stuff probably even overtime Salon ends up looking like that too so and and I think what that means totally on a long time Horizon is I think these things these things are what what that really means on a long time Horizon is that these things end up getting commoditized and right now there are these religious communities around you know Bitcoin verus Sal versus eth and it's so different but I think at the

end of the day it's GNA be I think that's the only non- commoditized piece of it yeah like the the network effects like like like think about tether like I would argue tether is dominant because it's dominant it's like it's kind of circular but like there like when you have money like there's huge Network effects to that and so like I kind of think about it architecturally is one way but the other way is like how do the network affects a crew what are they powered by for eth I would say it's the asset for Bitcoin I would say it's the same for d for maker and I would say it's the the die stable coin it's like yeah you know if you if we've done some analysis it looks like d captures around 35 40% of all def5 profits just because like you

know like if you think about Athena too it's like okay this means maker can now get into trading without taking any risk because it's delta neutral obviously there's the exchange risk all that stuff but like you know that's a super structure e a superstructure bitcoin's a super structure um my question with da layers is like are you are your network effects 10 times more powerful if there's a community of people using your da layer like what's their relationship to that it it to me it kind of has to be about the underlying asset in some way and and that applies to reaking as well I think I think that too but I guess then the question would be if it's really about the network effects and the liquidity of the asset then it doesn't

even really matter so much what the underlying protocol is doing like I'm not sure because the the Bitcoin protocol is a really interesting example of this where dude the prior to ordinals transaction count had just been going down there had been very few legitimate upgrades since tap rout and even by the standards of an EIP like Taps wasn't a crazy change or anything like that but the but the asset price still kept going up and I I sort of view that's what Tia is as well they have a one of the challenges of celestial architecture is that you can't because you don't have Smart contract functionality and like Tia isn't a settlement layer you can't do the types of rollups uh you know like settlement contract uh very trustless bridging up from Main chain eth to rollups that you can do for Celestia

they have a solution to this which is just uh ZK um like a ZK account that basically instead of like a valid signature there's a proof and you kind of submit uh like proof uh or a a valid proof and then you can Bridge TOA up to their like their sort of sovereign rollups and stuff like that it's on the road map but I I view it as being all birds of a feather pretty pretty similar and I I've always looked at Tia as an asset in its own right and then there's the da sort of business model but I think the protocol has less to do with which assets are successful than just the liquidity and adoption and narrative that form around the assets themselves so you do have to have an underlying

cash flow driver like you know like eth and Bitcoin I think this approach has a lot of credibility like eth did like 400 million profits in q1 or whatever it was Bitcoin I think frankly has work to do with p and like it's so expensive and there's so much incentives and the fees seem to be growing Celestia and like we have Celestia bags but um you know just like the revenue of underlying da I don't think it has to be super high necessarily but like you need something that gives you credibility when people are like I'm using this as money because like you know there's a lot of different factors which impact people using this money I would say the reason why we why we're optimistic on the salon ecosystem is because we spend

a lot of time with the jeta people and you can see the use as money of Soul like you look at their tvl chart I'm just going to throw it up um you look at this tvl chart it's a hockey stick it's gone from 48k in December 22 to 10 million sold today yeah so I agree with you there needs to be some kind of lock in this is the whole you know not to go all macro and talking about money on this podcast but yeah this is the I mean the way that sovereigns have historically done this is you have to pay taxes in in this currency and that's the lock in and that creates the network effect and it's kind of the same thing in blockchains right

you know in order to to get access to this block space you have to pay in our unit of currency and that's actually why when when the burn was originally theorized as a mechanism they were trying to get around this thing that they called economic abstraction at the time which was people basically offchain contracts between a validator and uh someone who is trying to pay fees right it's like well I'll just I don't want to actually pay you you know how you know 100 eth or whatever it is like I want to pay you 50 I'm just going to pay you $50 off chain you can just wave my fee so by then you're essentially circumventing the tax lock in so that's why the burn initially got created but yeah the dude the jeto chart is I love the goo Lucas

was just on the Pod a couple weeks ago um he and he and Eugene are standing salana me guys but um but but like I think you know I didn't even know what we were talking about at first this good conversation but I think uh like generally this is how people should think about the long term like what does this look like in 10 years it is there's money based ecosystems that have Network effects via their native assets and then I think the maker that thesis is that maybe that native asset should be a stable coin that can internalize all the profits on all these Defi and you know frankly CI now activities and redirect it to Holders of

a stable coin and like that that is like a very different vision and maybe there are other visions um like you could think about like if Unis swap releases its own chain it started with the amm Primitive generated a ton of profits maybe gotten people to use Uni's I don't really see people using Uni's money though yeah you know like I don't know if that's a thing but like they'll they'll launch a sh maybe maybe you back into it same way the maker did where it's like you start with a stable coin then you launch a a blockchain um so yeah you should think about the use cases from the ground up in terms of like their initial profit generating Enterprise and then what they

do after that is like you know they're either creating their own form of money by allowing people to use it or it's frankly more like a SAS business where they're just like a protocol that's just on top of every other chain and you know tries to externalize whatever they do yeah let me let me ask you this so this is something I've been thinking about recently too so part of the lockin that these ecosystems that are built around base unit of currency as a money have is the social layer and a really clear narrative and this is what I've thought Bitcoin has kind of nailed from from day one is well not since day one they had the block siiz war but they're like we are a store of value digital gold type thing really clear at you know 21 million hard cap super that's changed

though the narratives have changed over time true but recently that's but recently that's what it's been and there's a there's an accompanying vibe to that it's kind of like a macro a Austrian economic gold loving uh you know keep the government out of my my propera sort of vibe and that works with with their whole thing so with now that they have most of the transactions on the base chain coming from well like now the fact that there is a base chain and they're going to be l2s and there are runes and there are nfts suddenly you've got people that are coming back and saying heyit Bitcoin should be innovating we should be pushing the envelope and this is the tech people versus money people uh t that has always existed in crypto a little bit and do

you think it's disrupting this kind of neat narrative and shelling point to build the community round do you think it's a positive thing what do you think about that because I think there's a lot of pretty spirited conversation that's happening right now in the Bitcoin Community I mean I don't even know the extent to which they're still infighting around like expansion of Bitcoin being bad but it will change the narrative because narratives are usually set by like people on the margins and at first it's a whisper and then it's like them shouting with a megaphone at you and then it's everyone saying it um and so like where this all naturally leads is do we have enough fees for the 21 million Supply cap to be real and so like you know at some point they'll have

that fight but it's going to be like a hundred years until that really matters but like you know I I think at a certain point that will steer you in the face maybe they'll talk about premium stake who knows it's kind of unclear who the like core devs are to me or what their values are other than like stopping more progress on these apps um but it will be it will look more like eth uh and I think eth will also look more like Bitcoin you know as it moves towards this like you know fees are or you know whatever I think Nick schack from Rivet did a presentation on East they he said like the fees were like you know Revenue was like six billion a year something like that you know there's like just enough deflation where it's like not too deflationary but like it's

not rising in Supply like I feel like everyone is just going to go like this is the end game end game for all this stuff is that The Branding and network effects of the assets are all that really matter and um I think if you read like maker endgame plan with this in mind it it feels very clear-headed in terms of like really nailing where this is all going and you know 99% of protocols will will probably die we've also launched a ton of protocols mcoins and all this stuff like the point is you get to those 10 you know there's the mag 7 is seven stocks it's not it's not 50 it's not 100 it's it's seven um and they

crew probably 80% of the profits of tech so like you think about the stuff over the long term what do you want to invest in whatever the Fang or mag 7 or what QQ is going to be of this industry because a lot of it you know especially when you look at like worldcoin and you know all the emission and like all the other tokens you're going to have emissions like you need to have something that's strong enough to basically stand against those emissions but also like well placed enough to really navigate the Strategic landscape of of crypto which is which is merging I would say maybe not collapsing but it's like I feel like we're going like this it's merging there's a lot of pro there's a lot of protocols launching but like we're going

like this so it is merging and here's an here's an example that I would give you so we're doing the third permission list that we've done and and we I don't think we've talked about Bitcoin at all in any of the previous conferences because really it's kind of a it's conference for people that are building on the frontier for the most part and uh but this year one of the big themes we're like yeah honestly where a lot of the Innovation is happening or where a lot of the Mind share is right now in like the Builder Crypton native Community is uh is Bitcoin and so we have like a whole theme like Bitcoin Renaissance and Casey rmore is going to be there and munib from Stacks like bunch of the Bitcoin l2s that's never been a thing before and and yeah we've never even

been like yeah this maybe make sense it's always been kind of Das is Bitcoin and permissionless is kind of E Salon Cosmos and yeah it's it's starting to emerge and I I do think it's an interesting I think ethereum is kind of going through a transition on from the other side which is ethereum counterposed against Bitcoin really nicely back in the day where you know if you didn't want to be like a Doomer and just like sit there and stack SATs and you know not do anything or take risks or innovate then there was this void and eum was like Hey we're a general smart Contracting platform come build apps you know we're very optimistic and that was the ethereum vibe and now that ethereum's kind of growing up and being like well now that we're a$ 300 billion dollar protocol uh you know and we we really see ourselves

as a money then you don't really want the people that are managing your money to be like oh optimistic dreamer right you need to be a little bit more serious right like if you if you have that much wealth that's being held or or secured by these these developers then you want to make sure that they're like serious conservative people and so ethereum is almost coming the other way a little bit being like okay we're grown up now we care about things like yield and and this is a money and so I I almost see Bitcoin and ethereum kind of coming closer together than they've been in in a Long Point so to your point on convergence I think the long the long-term question which we'll have to answer in the short term because like you can't have these things have no fundamentals forever is like we've

talked about this before but how do you create the best internet money what should it be based of what's the best economic architecture versus like um like the most scalable like is it better to have you know high value users doing enough transactions on your main chain where you can burn enough of the supply for it to be stable or is it better to charge everyone nothing and you know basically Drive fees to zero and make a play for the most users and I think like this this L1 L2 architecture is and it is admitting basically that um you need the L1 transactions at at a relatively high cost with a relatively small amount of users who do relatively few

transactions per year but then you want to make a play for everyone using your asset and being native to these chains with these l2s yeah and and like you know I mean I mean one way to think about it is um do you think you can be a trillion dollar protocol as a monolithic chain I would argue you need like a lot of different incentive camps r in your direction like you know how much should the op you know retroactive grants do for the eth community a ton like you know ARB same deal like all these you know air drops like those only happen if you have like this plurality of l2's approach so yeah you know maybe maybe the ceiling for alel ones is like 100 billion that wouldn't surprise me um but

maybe to get to a trillion plus you either need to be like the first mover or you need to have this like L2 you know based ecosystem where everyone's burning a little bit and you still got your L1 fees um and you know the economics flow upwards yeah I think well maybe it's relevant then that Salon has been strugg the the ux of Salon has been extremely challenged in the last I don't know couple weeks at least a month since mcoin started to take off and to your point um you know to your point Salon is the chain that has the most transactions right now it's something like 35 million transactions per day which is a pretty mind-blowing statistic now how many of those people are is it just repeated

kind of gamblers like clicking like this on uh you know whatever but but still usage is usage and I do think it's on the one hand it's bullish to have so much Demand on your chain that you break down but on the other hand this is a huge problem for for salana and I think they need a little something more than just I know they're working on a patch right now 1.18 and hopefully that's going to be live and they're going to fix some of these problems but I I still haven't really seen at least from my perspective a long-term road map or strategy towards solving this because even if they implement this successful patch then they're just gonna there's just you know what if okay they fix that and then it goes up to 60 million transactions per day right and at some point you kind of

have to either start charging more and I heard keone from monad make the make the statement that he thought Salon of transactions were just too high based on comp because eventually you have to price those compute resources appropriately or or yeah maybe you end up doing something like a layered approach like l2s I don't know I don't know what the solution is but I think I I think it's still a it's it's an open question you know so if I were to make the argument for salana I would say that basically the um so if you think about Bitcoin and E the the people who own Bitcoin and E and use Bitcoin and E on the l1s like they're going to use it there forever like you know maybe we'll grow that pie

by you know 10x over the next four years or whatever but like you know those are sticky L1 transactions that are not moving it'll bootstrap the chain um what what the market kind of hasn't figured out or explored is like who's going to have the most users who's gonna have the most users and and what is that sweet spot of fees versus throughput versus use case um and you know if you could make the chain free and charge everyone nothing like would you you probably wouldn't like that's not the optimal econom model so there is a sweet spot um but I think that's where the market is going to be most subject to disruption where it's like okay cool you know you launch an all

L1 um let's say you have 100,000 users let's say like immutable X or Ronin has like you know 10 million but they're all basically very low paying users they are monetized on you know the decks versus the actual B base underlying fees like is there a different economic model that has less to do with like the gas cost abstraction of a blockch and maybe more with like the defi underlying Primitives or like you know gameplay or things like that for you know the the blockchains that have like 10 million users because that economic model is going to be different and honestly probably so is the underlying asset it probably doesn't have that same call option to become money um and so like you'll need to find kind of like

different type of valuation framework or or or you know what have you so like I think there is um room for like these high throughput blockchains that charge people very little but like you need to have that that sweet spot so here's here's another thing that I've thought about that I haven't really seen discuss that much but one one thing that might end up being having a having a big impact here is on how performant the L1 is in terms of how good the L2 ecosystem is so to give you an example of that a huge huge issue on the eth L2 uh um Jesus uh roll up Road has been the interrup right and the the solution to this that Justin Drake has been

talking about is shared sequence or uh based sequencing where the ethereum ethereum still does the sequencing and basically just route all the transactions down there the reason why none of the rups were seriously considering that until you had something like pre-confirmation was it was still a 12 second block time and that the basically the whole point of moving to a layer two was that you could so you could have much shorter confirmations for users so you just surrender basically all the utility but on salana base sequencing would be super easy because you have 400 millisecond block times so all of a sudden like you could do something like base sequencing on salana tomorrow with a whole bunch of different rollups you wouldn't have like you basically solve 90% of the interop

challenge overnight because you wouldn't have to wait three years for you know reaking to get built out and pre-confirmation to get adopted and all that stuff so I do think the functionality of the L1 actually has a huge advantage and if Salena were to go down the L2 route which I'm not sure if they even are going to I think it would have some some legs up over some of the like Bitcoin like just think about the Bitcoin L2 functionality I I know nothing about it but I just have to imagine it's so limited compared to eth you know so maybe the L1 performance ends up being a big deal I think it does and I think um at the end of the day the apps have the

power right they do they do dude absolutely you know the the apps and the assets frankly um you know your assets are floating around on L1 or L2 and they're burning eth like that's not leaving your ecosystem um but like the apps are are the key thing here and I mean I'm pretty encouraged by what I see in gaming right now like pixels has 200,000 people in their VIP uh basically group and and those people have paid to be there and their real users and you know they think they've got a million monthly actives at this point and you know like what does that look like when it has 10 million users probably got a lot of Leverage over whatever chain they're built on um

and if those block space fees are valuable enough like that's a conversation that probably has to happen um so I think crypto is going to look a lot different in like you know three or four years uh in a good way um I think the majors are kind of the majors but I think all of this other stuff is like subject to to a lot of change um and things are just like there's so much dispersion in pricing that like I think that's going to drive a lot of um just like interesting Behavior over the next couple years yeah all right here's one final question for you because it came up during this analytics on site it always does but how do you think about the concept of profits or fees for L one

because here's something that I am struggling to wrap my head around which is when you think about profits from the perspective of a company why it's attract it's attractive for two reasons so one it can get returned to you that or two you can compound your capital gains by reinvesting those profits into more employees more R&D that's going to lead to even more profits in the future and in the case of these l1s you know I know we talk about base fees as being profits and in some way it is getting returned to you right it's getting burned so you it's kind of getting returned to you as a holder but you don't have that compounding effect that you do in a company right like there's no organized body which is directing those profits towards compounding the

advantage of ethereum it's almost like if it was a company you're just immediately dividing uh dividend that out which is good but I think the reason why equities like outperform every asset and it's not even close over a long period of time is that compounding effect so do you think that's a meaningful distinction do you think it's not like this is kind of why I I view that l1's as more commodity like than Equity like at least at least on a long time frame to me I view that Miss more commodity like as well um like you know there's I think there's an ending point to each protocol where you just call it a day and then you have the l2s or whatever just you know build whatever they they want and continue building the network effects there is nothing to

reinvest into if it's a true protocol like you know we're not going to improve x * yals K lab unof Labs might relas subsequent versions of that but like that will come from a different economic arrangement I think that's how it's intended to be the things I like about crypto are like you know eth is like look there's there's a base burn there's a fee that I get I stake my yeld I earn you know three three and a half percent whatever it is um that's a very streamlined form of capitalism versus most companies in the S&P which don't pay out a dividend they just tell you you know trust me bro and they and they you know invest into their own companies and it's kind of like the government taxing you it's like you know how what's your level of confidence in them as a capital

allocator I would say most companies pretty low um and that's what I like about you know generally like maker as well and smart contract based capitalism whatever you want to call it it's like I have programmatic guarantees about if you make a dollar of Revenue I can see the costs I can net out what earnings are and if I want I can get a chunk of it by staking SDI or or maker so like it's it's um yeah I think this is the way God intended it to be you know know very streamlined no middle what are we looking what are we looking at in terms of I'm pulling up defi llama right now but what are we looking at in terms of maker profit or Revenue these days uh maker at around 200 million uh earnings per year and those are all used

for the buyback um at the moment that that's like net of SII payments I mean the big thing with maker is that they've just opened this billion dooll uh Vault on waro where they can lend again usde so like they put in D people put in usde and there's kind of this positive carry trade where like usde yields like you know I think it's like 15% they lend it out at like 14% And there's this like 1% yield that you can Loop and assuming that D and USD stay on you know stable coin which they they do um you know that's like a a free basis trade um but as that yield spikes it's like the revenue of maker will go up as well

so I mean personally internally we think maker is going to get to probably 10 to 15 billion of D Supply at like 13 to 16% interest rates on average maybe if the theme is like crazy high forever it'll be you know 20% but that's a you know between a one1 and two billion doll earnings protocol at the end of the day and I think that speaks to like if you if you look at it on a chart next to eth and Tron like you would be generating more fees than than Tron uh and it would be second only e and and Bitcoin um so like like that's how profitable stuff is and that's why I think it could be the end game of a lot of crypto is this like weird stable coin thing that like we're in

creaded the have you seen the maker or the uh the Tron chart recently Adam actually Adam actually sent me this this week because we were talking about the uh the Justin Sun H Zimmer asking but look at look at this little chart that tron's got going on here I mean this is a I'm not a TA guy at all is a very It's a good-looking chart this is a cup and handle type chart if I've ever seen one so who knows maybe his Excellency has how all right I don't want at risk of asking a crude question here I would love to know the extent of Justin son's resources because that man I've heard I've heard some

rumors about the amount of money that he Chucks into some of these like reaking or Bitcoin L2 things and yeah I think his Excellency is doing pretty well on the on the Tron on the Tron dividends or back end or whatever but yeah I guess this is what this is what makes me a little bit more skeptical Bitcoin l2s is like the tvl dispersion is like three or four people um it is it is and and and like talking to the maker core team like whenever they see Justin deposited to sire so like oh we got we figure out a way to like get him out like like I don't think he's this farmer that's like particularly friendly to the underlying protocol with the tokens that it issues so you know yeah what one man's treder

so do you think that so I've sort of heard this as well it's not even from the Bitcoin l2s but eth l2s some of the reaking platforms they they do this kind of Road Show abroad and I think the reality is there are there's like 50 to 100 whales that kind live out east and they end up being the tvl that goes into a ton of these protocol and I don't know if this is early Chinese miners that's what I get the sense that's where I get the sense a lot of the money comes from but I do think it's a smaller number of whik individuals sometimes you see a protocol launch you're like I've never heard of this thing and it's got a billion in TBL like who is putting a billion in TBL in billion dollars worth of capital into one of these protocols

but maybe that's it the dev the dev the dev yeah the dev I mean yeah it's true it's dangerous out there well it's you know what it's a it's an early stage IND industry it's still very much Wild West people were saying it was Wild West six years ago at least when I got in and it's still pretty wild Westy and I mean even in the even in the reaking ecosystem I mean there's a ton of money getting thrown around there's a ton of lrts now a lot of them are great projects uh but yeah that also feels like a space that's like really heated up recently and and you know you were saying before about avss I mean that that's kind of the new L2 right you're if you're if you want a

narrative and you want to buy into you know be a part of this ecosystem that's growing there's a ton of attention around it like the abs abs feels like a good way to do that not that there's not really legitimate reasons to be an ABS that there are but I know it's a bit of a competition to be like you're kind of like selling part of your project to like I layer you know it's like the that to me is like as close to token m&a as we as we might get is just like this natural aggregation of of a lot of these abss or like lower level Primitives that like if you think about a stable coin or like a DEX those can stand on their own as business it' be the foundation for something more Y what else is there yeah you know maybe Bor land Bor L

kind of barland maybe you know pers maybe um but like when one of those structures a stable coin can subsume all others assume that on a long enough time frame it will yeah you know and and kind of same with like the eth asset as like the staking layer for all these abss it's just like you are basically you you're getting aggregated by the ABS or or by the uh the resing platform and and E the asset also I've got a question for you on the subject of Standalone businesses how would you look at these kind of like a deck screener or a pump. fund type business that's kind of sprung up they are they're selling pick and shovels to

meme coin Traders and to be honest they're probably raking it they have very different business models but a deck screener I think they pay they charge something like 300 bucks for a mem coin to link socials or something like that and pump. fund is more traditional sort of exchange model but I mean how would you like look at one of those businesses the long-term legs it you know what I mean like I I'm I'm not really sure for me to too early to tell I would say that like you know a good test for if something is a super structure is like can this happen somewhere else you know can like Unis swap get in this game can

maker get in this game you know there's a version of this where it's like maker can provide you know the base capital for you know like the liquidity for meme coins whatever there's like a version of this where it's like Unis swap is doing the stuff instead of Pumped off fun maybe the cultural lock in is strong enough where they can go off and spend money and you know acquire users and build a real moat but at the end of the day it's like you know do pump off fun launching on chain because like that's a real super structure at the end of the day and they can like kind of build more of a mo um like I could see that pretty much happening like we're definitely I think a said this on some podcast where it's like we're not in the kumbai on era

anymore kind of a cynical take I kind of agree with that in some ways but like over the long long term um like aggregation theory is going to play out here um and it'll be the people who have like for instance I used to work in Netflix and when I worked in Netflix um the DVD business was the Cash Cash Cow I know sounds crazy this was a good I was an early Netflix user right I did that I was a customer and I was there when you know streaming was was kind of getting going and we started launching our own originals and it was like you know the DVD business paid for all the originals it paid for all the streaming it paid for the international expansion and it allowed it to Leap Frog to like a real

super structure where it was like you know Netflix was buying movies to put on DVDs and then it was the entire industry and now it dictates term to the rest of Hollywood and like I think you're going to see some of that play out here but the key is like what are the businesses that can stay on their own stable coin is one money likee assets that are digital is another Ethan Bitcoin is it dex's is it PE off is it lending is it you know new mcoin paradig I don't know but like that's kind of what I think about and our fund we have 10 year fund so like that's the time scale we're we're on I think that's a good I that's a good mental model all right buddy I think um unless maybe we can we can ask our

editors here to send listeners off with uh the Tron Justin Justin son uh Han Zimmer little sound send you gently off into the night you can list honestly it kind of slaps so Credit Credit Justin Sun credit Hanmer yeah we can end there but B Budd later hey everyone Mike here if you're a bell curve listener you know that transferring assets across chains can be a massive pain I certainly do I complain about it on this program all the time that is why we are incredibly excited to have teamed up with the Wormhole Foundation the stewards of the Wormhole protocol and the coolest part about this particular partnership is that they have made custom bell curve nfts which you can get and mint for free click the link

at the bottom of this episode take you get your free nft [Music]