The Bull Case For Ethereum | Ryan Berckmans & Tom Dunleavy

Transcript

world is ready to come on chain. The gold rush has started. It's consumer. It's institutional. It's global. And it's not okay for Ethereum to, you know, operate in its ivory tower. It's kind of university anymore. We got to open the doors and build connections. And that's what's happening now. And I think that that's our big opportunity. This episode is brought to you by ZKSYNC. Join the Elastic Network today at zksync.io/mpire. Thanks to ZKSync for making today's episode possible. I wanted to take a moment to tell you about Focal by Falcon X. The AI powered insights engine built for institutional crypto. By leveraging AI, Focal empowers institutional investors to streamline research, anticipate market shifts, and make sharper investment decisions.

You'll hear more about Focal later in the show. Hey guys, Jason here. Just to let you know, we have Permissionless 4 coming up in June from the 24th to the 26th at Industry City in Brooklyn. This is a conference for the developers and builders where we'll be focusing on the DeFi Renaissance, applications, token design, and much more. Click the link in the show notes to grab your ticket today and use code Empire 10 for 10% off. All right, everyone. Are you nervous? Like, I could do this, too. Like, I know it's been a while. You've been rusty. I can jump in here if you want. All right, everyone. Welcome back. Uh, we got the smiles going. We got a good episode coming. ETH just had a nice God candle.

So obviously, you know, we have to do we're doing a bullcase for Ethereum podcast. We got two of the best people to do that. We got Tom Dunlevy who is head of venture at Varies Capital and we got Ryan Burkeman's who is uh ETH OG community member, ETH investor um and has some some good takes uh on the timeline that I've been reading and enjoying. So Ryan, Tom, welcome to Empire. Thanks for having us. Thanks, man. Yeah. All right. All right. So, I think we can't talk about so obviously ETH is going through this pivot and we'll talk about that and we'll talk about what it means for the L2s and and and the future of ETH and ETH price and how to value ETH and all that kind of good stuff. But I think actually maybe the best place to start this conversation is what went wrong for

Ethereum and ETH over the past few years and just kind of address kind of the criticism headon. Um and and maybe Tom or Ryan, whoever wants to take this like what are the things there's the Ethereum pivot and all this kind of stuff. What are the things that we I guess maybe talking colloally about Ethereum are trying to address here? What are the problems for Ethereum and what went wrong over the past couple of years? Yeah. Yeah. I'm happy to to take that. So, Ethereum has had an incredible strategy for the last four or five years, which is the uh so-called rollup ccentric roadmap, which is really more of a hub and spokes model of L1 plus L2 scaling. And there were some significant growing pains in bringing this model to

maturity. And what we saw was sort of this uh layer cake of issues around both uh a set of unforced errors from within the Ethereum community around narrative communication and uh starting crucial initiatives like Interop and L1 business development a little late in the game. For example, Etherealize, very exciting uh business development group uh run by uh Vivec uh Danny, Zach, and Grant. Great team. They're out there crushing it. You know, they started really just this year operating in earnest. So, uh there were some things that could have happened earlier. And then the the L1 plus L2 model itself is is is complicated and it took some time to get

all those pieces firing on all cylinders. And now we're seeing incredible success stories like uh World Chain L2 has over uh uh 12 million verified humans now. Uh Base uh is growing, Coinbase's L2 base is growing like an absolute uh uh just unstoppable force in nature. It's wild. Uh and then also uh Robin Hood, the just recently bought a Canadian company whose own Ethereum L2 has launched today actually uh couple few hours ago. Wonderful. So I think that I think the counter um that folks would say is look yeah base is doing phenomenally phenomenal and world chain is is doing great and you know Robin Hood might launch an L2 or just

acquired this company who has an ETH L2. However, that has not actually helped Ethereum uh or ETH the asset right you know I think a lot of us were all four of us were in the industry back in 2017 um I I think and uh you know if you bought Ethereum in 2017 it was the same price that Ethereum was a couple months ago. So Tom, how do you think about that? Let's think about the framework here. So I entered the industry in 2021 and the thing that excited me as a traditional finance investor was doing really stupid analysis on ETH revenues, growth rates, and I think that's exactly the wrong way to think about L1's. All of the transaction fees, all the execution fees, all the other individual fees up and down the stack are effectively going to zero. And Solana

showcased this. Even if we think about the one area that may not and me as we have faster blockch times on these chains if we have lower latency the opportunity for me M me actually goes even closer to zero. So then you get down to these chains effectively have no fees. So how do you do some sort of DCF or some revenue multiple or whatever? And I I I think we have to think about this sort of next order effect and kind of what these chains actually build and um you know have open the opportunity for. So the way I like to think about L1's is effectively how much value are they securing on the underlying base chain. And for Ethereum that's become fragmented across L1's and L2s. But

should that really matter if ETH is the native base asset we're all all settling to right? So if Ethereum in aggregate is securing you know a trillion dollars in the future Ethereum because of its attack vectors and the opportunity to attack that $1 trillion has to be worth some order of magnitude close to that. Right? So you know today that um you know that order of magnitude has been 2 to 3x versus what the base value is on the TVL. I think you know in the future it's going to grow precipitously and you know unfortunately the right Tom you're saying ETH the asset the market cap of ETH will be correlated to the total value that the chain is securing correct so we're securing something like 70

billion X stable coins today stable coins added on top of that is I think closer to 200 billion on ETH um ETH in terms of market cap 3 350 something like that so if you are actively securing that amount amount of value, the asset needs to be worth higher than that to actually secure that as an attack vector, right? It's going to be hard to secure a huge amount of Ethereum to attack it, but theoretically you could do that. So there's 150 uh so sorry 250 trillion assets in the world today. If we assume Ethereum as the most um you know censorship resistant chain that's never gone down assumes even some one two three four 5% of that you can

see a pretty high um multiple of where we are today in terms of market cap versus you know where we've been in the past and that's I like to think about these because you know at the end of the day again all of these fees are going to compress to zero. So then what do we value these assets on? Yeah. Okay. Okay. So, so we'll touch on uh fund like the valuation side in a second. I want to come back to this what Ryan was mentioning with the rollup ccentric roadmap and I'm curious if you guys would say the rollup ccentric roadmap was a s this the timeline at which they built the rollup ccentric roadmap was a was the right decision or not. There's uh actually it was uh Ongar at the Ethereum Foundation. I heard him uh the two quotes from from Ongar at at the EF who

said a Ethereum has rejected growth and b Ethereum built for 10 years out not today. And I think the idea there is that uh maybe the right model wasn't building for this rollup ccentric maybe rollup ccentric future is 10 years out and that's in 2035. But really we should have just been making Ethereum the L1 better and faster over the last couple years instead of optimizing for all these L2s. Uh Ryan, I'm curious what you think about that. It's really the confidence in these platforms that drives valuation.

99.999, however many 9%s of Bitcoin activity happens on centralized exchanges. Do we refer to Bitcoin as having an exchangecentric roadmap? And so when you think about did Ethereum start the L2centric road map early, no, it didn't. We started it at exactly the right time. And and the issue was that there were key supporting activities that would have rounded out the whole picture. You know, you're going to the restaurant, they make you the best steak you've ever had in your life, but if the the room you're sitting in is is dirty or they give you this nasty glass of water, you know, or or the wine is sour, it just detracts from the whole meal.

And Ethereum started the rollup ccentric L2 ccentric roadmap, you know, the L1 plus L2 hub and spokes model at exactly the right time. But these these key supporting activities of interop and attention to UX across all of Ethereum and attention to the network of L2s that they're greater than the sum of their parts and L1 business development and even just at a basic level narrative helping the community to align on what we're actually doing and why we're doing it so that there's not this void that everyone's arguing about you know why the L2s exist. Will there be DeFi on the L1 or are we, you know, there was a a very famous Ethereum person who famously

said, "Get off the L1, you know, leave the L1." And it's not uh that's actually not how it's supposed to work. It's really supposed to be L1 plus L2, not L1, you know, or L2 in some kind of blood dome. And so I think what we're seeing now is a greater attention to the detail of the holistic Ethereum economy across all the layers. And that that affects both the technical roadmap in terms of interop and L1 scaling plus L2 scaling uh and it also affects the narrative in terms of how we think about why Ethereum did these things and what it means for the world. So no uh I don't think that the the L2 the L2 road map was started too late. I think it was started exactly the right time and now we're really starting to see these

investments pay off including because we're kind of rescending and fixing these unforced errors around narrative and interop. Ryan, I want I want to ask one more question, then Sante, I want you to jump in as well. Um, you mentioned the restaurant that you go to with steak and stuff like that. What is the product that Ethereum is selling? Because I think I could there's one argument maybe that I would lay out that says there are three products that Ethereum sells. It sells Ethereum the asset ETH. It sells blockspace like execution and it sells blobsp space right and DA for for the L2s. How do you think about the the product that Ethereum is selling? Yeah. So, if you're at the gym and uh you have your iPhone

or maybe maybe it's 20 years ago and Steve Jobs just announced a thousand songs in your pocket, you buy your first iPod, you know, you've been going to the gym 5 days a week for most of your career and and you know, all of a sudden your your gym experience has just been turbocharged. You you have a thousand songs. You you can it gives you peace. It gives you happiness. It kind of fills your soul. So, is is Steve Jobs selling is he selling that feeling? Is he selling that experience? Is he selling a thousand songs in your pocket? Or is he selling, you know, kind of the the silicon and metal in the iPod? Right.

And in Ethereum, Ether, the asset, Blockspace and Blobs are the raw materials. That's that's our beef and potatoes in kind of the McDonald's the McDonald's analogy, you know. But Ethereum doesn't sell Blockspace and Blobspace, you know. It doesn't it doesn't sell L2s or or anything technical. What Ethereum sells is freedom and global prosperity by giving folks self-s sovereign access to the global economic hub. And it's going to be that that Ethereum economy across all the L2s and L1 of trust minimized bridging and L2s offering organizations like like you know Coinbase, Robin Hood, the city of Buenoseras the the control and customization to come on chain on

their own terms while remaining interoperable with the broader you know distribution of the global the global economic hub. It's going to be that overall value prop that really drives the the again like the whole being greater than the sum of the parts. And so that's what Ethereum sells. Ethereum sells the opportunity to take all of our economic systems and level them up in a way that is risk minimized and and free and and that's really the value prop that's driving all this institutional adoption and and you know the kind of growth we're seeing this season. Yeah.

Yeah. Just just to add to that briefly, I think that was very well said. You know, speed is a commodity. If we're competing on speed, centralized servers will always win, right? We've had high frequency trading that has traded at sub milliseconds for over a decade now and we're just at you know two 300 milliseconds on the fastest blockchains. So what the commodity that we have is censorship resistance distributed world ledgers and that's and Ethereum has proved they're the most secure over time. Now, can they be usurped? Because the important part here is uh to a lot of the points you mentioned, Ryan, is there are other chains who are trying to fight for exactly the same thing. And you know, that sovereignty and that history is immensely important to folks who are bringing assets on chain,

particularly folks from traditional finance who are going to drive TVL and other things going forward. Uh Tom, how do you Okay, so let's get into the pivot, the the ETH L the ETH pivot, which is basically scale the L1, scale the blobs. um uh improve the UX um scale by inc like right now scale by increasing block size not the block times and then maybe get get block times later on. Um what do you guys think about this pivot? Yeah, so the the ETH pivot it was more of a a pivot at the social layer than the technical roadmap layer. You can look at these very complicated and you know perhaps poorly poorly narrated diagrams that Vitalik has published you know year-over-year where he shows he

said all right here's the plan that that plan really speaks to experts it's more of an internal facing plan it doesn't explain why we're doing it or what the expectation is and if you drill into the details of these tech plans it was always the plan to scale the L1 but the reason that it's mostly correct to characterize the last few months of Ethereum community as a pivot It is because uh Vitalik gave a talk in Taipei a couple months ago where he said the L1 to paraphrase is not just a security vending machine. It's not just selling the L2's security and then washing its hands and and stepping clear with that armslength security relationship. He said the L1 is a broadspectctrum hub. It

provides bridging, governance, liquidity, escape hatches and much much more over time. And so he said that we we have to think of it as not just only L2s and L1 providing security in the background. It's going to be both. And the community loved this talk and uh a famous community member who's highly regarded sort of took that uh and you know there's Liam and he said uh hey the L1 is really the economic headquarters is the economic HQ and and that galvanized and aligned the community around this idea that it's not the roll of centric roadmap. We never should have called it that. It's the L1 plus L2 road map. It's both. And so the

pivot was was almost more in our hearts and minds than it was at the technical level. And then after everybody really fully appreciated that the L1 is this headquarters that needs investment, you know, and attention across the stack, including in business development. That's what really started the focus on. All right, so if the L1's the HQ, we can't scale the we can't just scale the L1 5 10 years from now. We got to be doing it now. And so it was that social layer pivot that helped to kind of rep prioritize some of these technical items that were always planned. Yeah. So I don't want to gloss over the problems. I think Brian a lot of the things you said are really important but there was a dramatic pivot and I think it was really important that that pivot happened

because we were focusing on the L2s which if we look today 80% of the volume on Ethereum is on base. So that is effectively capturing all of that L2centric volume. And then you have all these other assets that are, you know, people like to say vampiring tech ETH, but you know, every dollar that goes into Arbitum or Optimism or ZKYNC or whatever is a dollar that is not going to into Ethereum. So you know, and Tom, sorry before you get into why is that a problem in your mind? There are only so many dollars in crypto today and the reality is we're doing a lot of PVP trading. So for you could say hey ETFs are coming great you know institutional adoption will come through um you know folks who are investing in

the ecosystem then want to invest in the uh the asset ETH or you know I want to bet on ETH as a tech play as a native investor whatever but the reality is today there's only so much capital to go around and if capital is buying other Ethereum related assets that are not ETH they're not buying the native asset Ethereum not building the blockchain security and not helping the ecosystem move forward so I put out a pretty controversial point a few weeks ago and I Honestly, all L2s should retire their tokens because today I they're not really serving any purpose. You know, if if 80% of the volume is on base, base does not have a token. The purpose of L2s today to me is for customization.

So, if you're going to have these customized L2s, fantastic. You can do whatever you want on them. You know, Santi's doing a great thing on Avalanche, doing his own customized um you know, chain there. So like you can do all of these things but then you settle back on the credibly neutral layer of Ethereum and you should pay a tax for that in Ethereum. This episode is brought to you by ZKY Sync. In 2024 ZKYNC took a step toward a multi-chain future by transforming from a single L2 into an everexpanding network of ZK chains, the elastic network. To onboard the whole world into crypto, many specialized chains must be able to coexist, work together, and share liquidity. Institutions and global financial leaders choose ZKYNC for

unmatched security, scalable infrastructure, better onboarding, gasless transactions, and privacy first design. Join over 20 chains, including Abstract, Sofon, and Kronos in the elastic network. Today, behind ZKYNC is the ZK stack. It is a one-stop platform for building private blockchains on Ethereum. The stack solves all the typical privacy, regulatory, user experience, and deployment concerns of blockchain without compromising performance or security. Join the Elastic Network today at zksync.io/mpire. Thanks to zksync for making today's episode possible. I wanted to take a moment to tell you about today's sponsor, Zenrock. The permissionless decentralized custody

network backed by one roundt partners 10T, Maven 11, and Spartan. Now available on Jupiter. Rock is the native token for transactions within the Zenrock ecosystem and secures Zenrock's decentralized custody network. The first application launching on Zenrock is ZenBTC yieldbearing Bitcoin on Salana. ZenBTC will be live in April 2025. To find out more, you can follow Zenrock on X or click the link in the show notes. Where I think we need more research in crypto is how do we effectively tax? How do you price that? What is the appropriate tax for using this security?

Uh like a security Ryan to your point, yeah, like security is really important. Ethereum has by far the most robust security out there. Um and and that that's valuable. The question is how do you appropriately price that? like how do you price block space? How do you tax economic security? How do you rent it out? Like I know it's like a very broad question, but I'm curious like to me that feels like the the ongoing tension. And by the way, I'm not suggesting we're ever going to fix that, but I do think that like that's where a lot of the perhaps mistakes or just realizations come about. Where I think about the L1 L2 road map, I agree with your point, Tom, around customization, super powerful. Um where a lot of the nuance comes is like hey are

L2s bringing enough value back to Ethereum ETH as a substrate for economic security is Cosmos had the same issue right and Avalanche and other ecosystems have this issue of course like ver like a monolithic ecosystem like Salana doesn't have this issue as much but I am curious how you think about a is it fair to say this like do you believe that this incredible tension and how do think about like optimizing that tax so to speak that you talk about Tom. Yeah, I think this is the um the million-dollar question, right? How do you actually price block space effectively and how do you charge a tax for it? And this is going to, you know, how do I how do I effectively look at

whether I want to pay that tax on Celestia or do I want to pay it on Ethereum or do I want to pay it on Salana? And I I I think the only way that you can look at it today is where my assets can have more velocity, so be used within that ecosystem more effectively. And then what are the native security benefits I could have from settling on your blockchain versus others. And in terms of pricing that, it's somewhat unknowable, which is the challenge here. And folks have railed against like monetary premium and other ways to kind of value these assets, but I think they're inherently important because, you know, all these things are not going to be based on a direct cash flow number or a direct multiple of some number.

They're slightly unknowable and they're very much based on the opportunities that you have versus other chains. I think one of the most impressive things about the Ethereum ecosystem is like the ability to coordinate like the migration from proof of work to proof of stake. And now the Pectra upgrade is like I think one of the most amazing things about Ethereum and what makes Ethereum great. Um I'm curious like a lot of the commentary recently has been look Ethereum finally got its act together. We we hear that a lot recently which is they've sort of like now feel a sense of urgency and it's like new energy coming into the Ethereum ecosystem. Obviously last year you have you've always had

like consensus and other factions within the Ethereum ecosystem, but maybe Ryan more of a question for you like walk us through like from your vantage point like how how are the is it fair to say there are competing factions and interests within the Ethereum ecosystem? What do you see as the biggest challenge for future like prioritizations of the road map and getting everyone aligned both at the L1 at the L2? like how do you how do you think about all of that? Yeah. No, it's such a great question. Uh it's fair to say there was a low-grade civil war in Ethereum over the last 18 months and it had been brewing for several years. And uh you know I think I think it was ultimately uglier on the

inside than a lot of what was shown uh through public channels. And uh you know when I say the inside I mean you know the loose federation of cuz it's decentralized even on the inside right there's not like you know a single a single place or a single single watering hole. And the greatest challenge for coordination in the Ethereum community was just to agree what we're doing here at a 60,000 foot view. There was such stark disagreement over why we were doing L2s and if L2s were a good idea at all and what the expectation is for L1 versus L2 interplay and that

relationship and that you know to Tom's point where do the dollars flow why do they flow there who is that good for what's the value acrruel story and so for me seeing consensus social consensus develop around these topics. You know that that that what we're what we're doing here is providing an overall economy with many disperate participants that can kind of choose their own adventure and that value acrew will happen yes through fees in the long term but especially through confidence in the long term. Ultimately the reason why Ethereum suffered in price action is because people lost confidence in it.

They felt like Ethereum, both the L1 and Ethereum at large, was not going to be a big slice of the future. There was this sense that it was this sort of dinosaur that had had its moment and that these newer competitors were coming to do a better job and eat the lunch and and uh you know that has never been the case in my view but it has been closest to being the case over approximately you know I would say ending about 3 months ago going back a year and a half because there just wasn't a lot of recognition in certain parts of the Ethereum political diversity that recognized, you know, there wasn't a recognition of the actual problems, you know, the the lack

of alignment around strategy, the lack of narrative, cohesive narrative, the lack of business development, and ultimately the lack of getting out in the real world and meeting our customers where they're at because the world is changing. And there was this great early period in Ethereum where we got to be be a a community of mad scientists and but the world came knocking at the door. The world is ready to come on chain. The gold rush has started. It's consumer, it's institutional, it's global, and it's not okay for Ethereum to just uh, you know, operate in its ivory tower, its kind of university anymore. We got to open the doors and build connections.

And that's what's happening now. And I think that that's our big opportunity. I think we forget these are effectively early stage startups that went live pre-product, pre-revenue, all that stuff. And one of the most important components of a startup is business development. And you need that to actually grow what you're trying to do. So I was in DC a few weeks ago chatting and I was meeting with a big policymaking organization and one of the big things they were talking about was hey we have representatives here from Stellar and Polka Dot and you know all these other chains Cardano across the board and we don't and I was like oh what about Ethereum have you guys met with anyone and they said well don't know who to meet with right so like now you have etherealized and the EF more coordinated so maybe there's a there's a

chance there but if you don't have an effective advocate or an advocating body, you're going to fall behind and you're trying to fight for customers who you need business development, which I, you know, I think this quote unquote pivot is is a huge um that's a huge part of it. Absolutely, Tom. And a few years back, I traveled to Wyoming in a personal capacity just as an independent community member because Wyoming stable token commission had announced that they were beginning the bid process for the uh technology provider for the world's first stateback stable coin. And uh I was like the only Ethereum person in the state, you know, who was really like plugged in uh I couldn't believe it. Meanwhile, there are all these other organizations

that sent professional representatives to these meetings. And so uh for me that was a bit of a wakeup moment where you realize, wow, what is Ethereum doing that we have all this great work going on, but it's nobody's job to go and speak with Wyoming and say, hey, you should choose Ethereum. Here's why you should choose Ethereum. Yeah. And so that's fixed now. Do you guys think that So there's two two big like people changes that have happened. We have Etherealize which is essentially the like what go to market team for Ethereum now. And then you you you I don't know if that's the right description but then you also have a a lot of changes at the uh at the EF like old people out new people in new leadership obviously. Do you u is that the perfect plan? Like do we do we think that like all right new

people at the EF combined with etherealize is the solution? Absolutely. And we need 10 times more etherealizes. We need uh you know b business development and grassroots talent cultivation all across the world. There needs to be a more scalable kind of human capital strategy on the go to market front and etherealize is certainly one of the keystones of that. But Ethereum is a decentralized community and Etherealiz will uh be while very important and and doing like crushing it, they're going to be one of many efforts to bring Ethereum to the world.

Tom, do do you like the strategy? Um it's better. It's better than it was because compare this to like uh maybe the Salana's BD arm which is ex you know we've had folks like uh Ben I guess Ben's no longer there but Ben and uh yeah I mean they've they have a phenomenal BD arm which has done a lot for them uh Avalanche obviously Morgan and like John and that whole team phenomenal so is etherealized enough if you think about you know all of these organizations have like really effective labs organizations that are incentivizing development um advocating for the ecosystem. Ethereum had that through consensus and I'm sure consensus is still very involved but they're not

vocally involved like they used to be. So I feel like you need an actual labs organization that is doing that. So Ethereum the foundation is working on the development of the ecosystem. You need a real labs arm to say like hey we're going to conferences we're talking to people. We're going to Wyoming. We're going to the US government. We're actually we're actually out there advocating for Ethereum. So like Etherealiz could be that and it's a step in that direction, but in terms of where they're going, I'm excited to see, but it probably massively understaffed versus all of these other competitors. And that's what they are. They're competitors, right? You're competing against Salana for Blockspace. You're competing against Celestia, Celestia, Blockspace. So, you know, it's really important that you have that. So, I'm excited to see where they go, but they I think we need to beef it up and really

accelerate. This episode is brought to you by ZKYNC. In 2024, ZKSync took a step toward a multi-chain future by transforming from a single L2 into an everexpanding network of ZK chains, the elastic network. To onboard the whole world into crypto, many specialized chains must be able to coexist, work together, and share liquidity. Institutions and global financial leaders choose ZKSync for unmatched security, scalable infrastructure, better onboarding, gasless transactions, and privacy first design. Join over 20 chains, including Abstract, Sofon, and Kronos in the elastic network. Today, behind ZKSYNC is

the ZK stack. It is a one-stop platform for building private blockchains on Ethereum. The stack solves all the typical privacy, regulatory, user experience, and deployment concerns of blockchain without compromising performance or security. Join the Elastic Network today at zksync.io/mpire. Thanks to ZKSync for making today's episode possible. I wanted to take a moment to tell you about today's sponsor, Zenrock, the permissionless decentralized custody network backed by one roundt partners, 10T, Maven 11, and Spartan. Now available on Jupiter, Rock is the native token for transactions within the Zenrock ecosystem and secures Zenrock's decentralized custody network. The first

application launching on Zenrock is ZenBTC yieldbearing Bitcoin on Salana. ZenBTC will be live in April 2025. To find out more, you can follow Zenrock on X or click the link in the show notes. Can we talk about the impact on all of the L2s and the roll-ups? Because I think there was basically my summary of what h what happened was all right rollup centric future and then all these all these L2s launched and we had arbitum and optimism and polygon and zkync and then base and world chain and everyone's like oh my god look it's so amazing we have all these L2s and then we woke up two two years later and people said crap actually uh all the activity actually moved to the L2s it's not happening on the L L1 anymore maybe that's not that good of a thing boom

let's scale the L1 and that's what's happening and I think I actually I think it's going to go pretty well for Ethereum scaling the L1 But Ryan, what is the uh impact on on the L2s? Um, and and maybe actually I'd be curious like is it um is scaling the L1 net good or net bad for the L2s and really what's going to happen with them? Yeah, it's absolutely net good. Uh Ryan, is there anything that Ethereum is doing that is net bad for Ethereum? Is there anything that Ethereum's I mean I just spent the last three years of my life watching the price crater and and fighting like a jolly good war on the inside to try to solve some of these issues. You know Vivec and I tried to

co-ound a precursor to Etherealize in Q122 uh which which at the time was not wellreceived because nobody cared about that stuff back then. So uh yeah I mean uh you asked me that question five months ago. Yeah. What Ethereum is not doing well is a lot of stuff. a lot of stuff. Yeah. But uh really uh the ship the you know the big ship is turning and we're really starting to fire on all cylinders. So you know I think uh if I had to if I had to flag something I would I would agree with Tom that Etherealiz is so high quality but insufficient bench depth to go to market across the world you know even across America. So we need more Etherealizes stat. Uh there's a lot of talk about scaling the L1 and one thing that's

generally underappreciated is scaling is blockbased supply. What about scaling L1 demand? Why are L2s crushing it? Because they get out and they grow their onchain economies through the lens of their own business models. And so that you know the the L1 needs block space demand growth. And that's something we're not doing a a great job at today. Starting to get better. So, so I guess going to the L2 question like beneficial to rollups or competitive to roll-ups or differently asked is scaling the L1 net good or net bad for the L2s? It's massively net good and and the reason for that is that the there's this very popular but incorrect idea that the whole point of L2s is technical scaling. And it's true

that the fact that the L1 was not scalable on a technical level was the the impetus the the original reason to launch the L2 enterprise. But technical scaling is not the most important form of scaling provided by the L2 ecosystem. The most important form of scaling provided by L2s is political diversity. It's scaling the way the world actually works. It allows the world's many very serious organizations, governments corporations institutions banks tech companies, states, cities. It it allows them to control and customize their layer 2 chains to benefit from being

part of the overall Ethereum economy while expressing their own business models. The L2 marketplace represents business model diversity and business model innovation. It is inventive primarily and technical scalability is an input and requirement into that, but it's not the whole thing in and of itself. So e even if the L1 was perfectly scalable and had, you know, in some fantasy world infinite TPS, you're still going to have all these large players that want to create their own walled gardens that are, you know, their embassy in the major city. It's it's their hotel that they they control it and own it and they customize a business model, but they benefit from this dense web of economic connections to to other

L2s, to the L1, to other apps, importing and exporting assets and services, you know, in the overall Ethereum security zone. And so and so if the L1 was infinitely scalable, they're still going to build application frameworks that give them permissioning that give them a a certain level of controlled access that give them customized block space that are specialized towards their use case, their business model. And when they finish that exercise, those like institutional SDKs on this hypothetically infinitely scalable L1, what are they going to look like? What are those SDKs, those development kits

going to look like? They're going to look a lot like L2s look today. So L2s are just a fantastic vehicle for the world to come on chchain. And so L1 scalability is not in opposition to L2 scaling because the L1 could never hope could never hope to be as customizable or uh controllable personalizable as the inventive Cabrian explosion of all these wild business models going on in the L2 ecosystem. Okay. So it's really perfectly complimentary and it's not at all in contention. I I think the problem is the problem is UX. Like people want a seamless easy experience and the latest upgrade to Ethereum is working towards

that with account abstraction. Great. Fantastic. I can pay in other tokens. My wallet you know immediately signs things for me in terms of uh you know transacting across chains and and things like that. But you know if I have to you know make a swap from arbitum to Ethereum to do a transaction it's confusing. It takes time. Like think about, you know, back to Amazon, the whole like innovation that really moved their business is that one click. They want to eliminate as many buttons as possible. And right now on Ethereum, too many buttons, too confusing, too hard to do things. Like if I want to tell someone to go trade on Hyperlid right now is like a friend. Oh wait, you got to bridge arbitrum. And then it's like, okay, you got to deposit and then you

got it's just like it takes too many steps. It's way too hard. Like we're moving there. And I've been saying this since 22, but it's Solana's opportunity. I always thought was the Ethereum road map is going to take way too long to deliver than the user is willing to wait for. And that has proven to be true and I think will continue to be true until we accelerate the Ethereum road map. Like eventually, yes, I think we're going to get there like 10 years. The vision is amazing, but people don't care about 10 years from now, right? Like they care about next year. So Tom, what do you think? Um I is there uh would you take the other side of Ryan then? Would you say that the this this pivot of making the L1 better, maybe thinking about the L2 specifically as this kind

of cohort of the original L2s of like ZKSync and Polygon and Optimism and Arbitum, uh would you argue that this pivot to make the L1 better is beneficial to them or net bad for them? So I would argue we're not actually focusing on the L1. So if you look at the upgrade path right now, Fusaka um pectra you know going forward all these things we're talking about scaling L2s larger blobs um you know things like that that are scaling at the L2 layer there's effectively no one looking at the L1 until later 26 I think on Ethereum road map right now which in my view is far too late right I think we have but isn't that on the road map that was shared is that that's on the updated

road map on the updated road map late 26 is when we're actually going to be starting. Well, then why why are f why are all these EF folks tweeting out we got to make the L1 better if it's not on the if it's not on the road map for another you know almost two years. Great question. Yeah. So, so Fusaka's uh expected to launch later this year and uh Tom's absolutely correct that this is an L2 focused a blob scaling focused upgrade. The big the big feature in Fusaka is uh peer-to-peer data availability sampling which is a mouthful. That means that my validator doesn't have to download 100% of all the blobs. I can download some of the blobs uh and then the overall system keeps track of all of

the blobs. kind of like Bit Torrent where you're sort of sending and receiving small parts uh between the the whole network of computers and and and and it's able to achieve kind of better behavior as a whole. And so that Fusaka upgrade is going to approximately 6x or pardon me uh uh 8x the blob capacity uh which was doubled in Pekra. So we went from 3 to six in Pekra a couple weeks ago or last week whenever it's been you know kind of a week where decades happened. Uh and then uh in Fusaka we're going to go from six. Current target is up to 48. And it's true that there's not currently planned any L1 scaling in Fusaka in terms of specific EIPs. Uh the

and what the core dev community is working towards now is the hard fork after Fusaka Glamsterdam. They're looking at uh finding the right set of L1 plus L2 changes to go in that. and it's kind of TBD and very much still still on the whiteboard. You know, a lot of lot of ideas in the backlog and finding the right set of those to deliver. So, it is true that there's not going to be any explicit L1 scaling upgrades landing until at least later in in 2026. Uh but it's also true that there's efforts ongoing today to raise the gas limit uh on uh on the L1 uh which has sort of been heavily studied and and there's this thought that you know we could we could double capacity

today uh and they're working through that for example by uh shipping clients with higher default gas limits because uh the bandwidth of the Ethereum L1 is one of the few key economic parameters and technical parameters that's controlled by the decentralized set of validators that are proposing the blocks uh and not by the protocol uh process of you know the researchers determining the upgrades that go into the the big PDF that describes Ethereum you know like like at the white paper level and so uh all that's needed to scale the L1 uh in terms of gas limit specifically is that the validators have to update their config to raise the gas limit so there's a big push now to to go up to 60 million which is about double so uh yeah Tom's

right there's no there's no specific L1 L1 upgrade shipping in the hard fork process until at least later on in 2026, but it's also the case that we're scaling the L1 gas limit kind of today with that drive to to increase the client settings. Yeah, I don't know. I was Sant and I talked about this on a podcast the other day. So, so on L2B, right, you've obviously got like the the Pi. And if what Ethereum is talking about is really taking more chunks of that pie inhouse um and doing more offering more and more chunks of those pies, uh yeah, I mean it's part of the Ethereum offering essentially. So, uh when I was in Dubai at at token, you talked to some of these

founders and they're like, look, if if ETH is offering more and more and more of these things that are what we think of as unique to us and then Ethereum starts offering them, they're now competing with us. Why are we why are we doing this whole ETH alignment dance when like ETH alignment used to be really really important and now ETH alignment means I get a a nice tweet from Vitalic once a month. So that might be the I don't know Tom I'm curious how you think like maybe that's the counterargument. Yeah. Um, so yeah, just to touch on that and Ryan's point, I think it's a very obvious problem that like so the gas limit upgrade is a social consensus thing which right folks have to do across the validator set like there needs to be native upgrade changes to an L1. This is competition and we are when

you're saying I'm going to have a software road map effectively two years from now to meet the competition where they are today. I mean that's certainly a problem in my in my mind. So I think you know the L2 centric road map's important. you know, blobs are full today. Fantastic. But like we need to we need to move things here. We need to move things along. Um and and that should excite people, right? Like even if you start to put those things first and foremost and saying I want speed, I want faster execution, etc. on the on the native L1, you know, you're going to get builders excited. You're going to get, you know, VCs excited because, you know, right now in the space, especi especially as an active investor, people are investing and actively looking outside of Ethereum because they just see like this road map

and they're like, "All right, they'll get there in two years, like great, let me we'll come back in a few years as things kind of uh proliferate, right?" So, you know, I think just indicating the commitment to scale the L1 outside of just sending a few tweets like you said, Yano is immensely important. It needs to be on the road map. We need to accelerate. I wanted to take a moment to tell you about Focal by Falcon X, the AI powered insights engine built for institutional crypto. With Focal, you can create charts and generate answers to questions in seconds. used by over 80 funds with more than $10 billion in assets under management. You'll feel like you have a team of analysts at your fingertips. Ask vocal questions like, "What's causing the uptick in liquidations? How much

Bitcoin did Michael Sailor buy last year? And what is crypto's correlation to traditional markets?" Focal pulls data from trusted sources like Coin Gecko, Token Terminal, and the tie with enterprisegrade privacy and security. Learn more at askvocal.com or check the link in the show notes. Thanks to Focal for making today's episode possible. AO, the hyperparallel computer, is here. A decentralized supercomputer built on top of Arweave's permanent data storage. AO offers infinite parallel processing and leverages web infrastructure HTTP for unprecedented scalability, addressing limitations of existing blockchains. AO smart contracts support large programs

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the network effect of the Ethereum economy across L2s. So, we don't need to charge L2s today. What we need to do is take over the economic world and then you know explicit and in direct and indirect value acral will follow through fees through confidence through total value secured app capital. So yeah not not at all worried about this tariff argument of the L2s taking advantage of Ethereum. It's an absurd concept. Yeah. I I kind of like it honestly to Why do you like it? Why do you like it though?

Um, so there's there's a few schools of thought. So if you're thinking about Ethereum in the asset and we're trying to bring incremental capital in the space, there are going to be folks who think about it in the direct revenue cash flow generative sense that I said is exactly the incorrect way to think about it. Um, but we can't directly argue with those people all the time. So I think having incremental revenue on Ethereum, especially when these L2s are making something like a 90 95% profit margin on their sequencer revenue, is immensely important. And it's actually on the road map today, right? We're looking towards base rollups in the future which are going to directly enshrine a lot of these the sequencing revenue that L2s are getting today in Ethereum the the main chain. So like we're we're kind of on the road map

there. I I I still again go back to my earlier point. I'm not sure why these L2 tokens exist at this point. They're not serving a purpose. They should be denominated in Ethereum. And if a tax is a way to do that, great. Ryan, I see you're shaking your head. Is that in in agreement or in disapproval? Yeah, I I think that I I I agree with Tom through the lens of uh like we need to hustle to like Ethereum. It's time to hustle and I think the whole community feels that and I think I think we've been living that for at least a few months. So, you know, give us give us a few months longer uh you know and and in the quarters quarters and years to come. But the the beauty the beauty of the L2 marketplace ultimately is its is its diversity is it

is is its inventiveness and based roll-ups are an incredible tool in the toolbox. They're going to be fantastic. You know, as Tom said, this is a technology that increases decentralization of roll-ups while simultaneously causing their fee revenue and MEV to more directly acrude to L1. It's beautiful, but it's not going to be the right solution for all people. It's going to have trade-offs. And there is a growing bench depth of technical approaches to L2 design that provides the the raw materials the kind of Legos for the actual goal which is business model design which is as the very serious folks all across the world come on chain what is it they want to

get out of that what are their goals and the L2 roadmap meets them where they're at and so when we think about this value acrruel and this this tariffing the L2s the reason I'm deeply unconcerned about that is because it is so unbelievably early for the onchain story and in the years and decades to come like Ethereum is going to be 10 years old in in about two months. Ethereum mainet. It's very exciting, you know, great milestone. It's been a it's been a great decade, but the next decade the next decade is going to be extraordinary. Like we're going to look back at today and say, okay, there is uh uh about 60% of all stable coins are on Ethereum. Uh it's over it's about 90% if you exclude Tron, which Tron's very successful, but uh so

centralized that it's going to limit its growth opportunities. And so, all right, 60% about 140 billion stable coins issued across Ethereum L1 plus L2 uh o you know o about over 90% of those on the L1. What's that going to look like in 10 years? And it's really that growth story that I'm interested in. I'm not worried about today's fee numbers. I'm not worried about about trying to split today's pie. I'm interested in onchain growth getting a thousandx larger. And it's going to be so big and so impactful to the global economy. It's gonna it's going to affect so many parts of, you know, not just the sovereign wealth funds and the royals and and the institutions, but all the way down to the peer-to-peer transactions among, you

know, rural folks in developing countries, you know, both among themselves and across borders. You know, it it is going to be this incredible level up for the whole economic system. And the lion share of that is going to happen on Ethereum L1 plus L2. And when the dust settles on that, people are going to realize that Ethereum was much more special and valuable than they thought. And they're not going to be quibbling about, you know, tariffs or they're going to say, "Oh my god, this thing's a global phenomenon. And it's going to make alt L1s look and be less important than today. It's going to make Bitcoin look and be less important than today. And that's going to drive the value acrruel to Ethereum through confidence and through this big economic picture. So, it's really that long-term

growth story that I'm playing for, you know, as as a long-term Ethereum investor and participant. Well, I'd say like uh look, I mean, the the the timeline of course has been, you know, riddled with like these vocal factions, but I mean, it's still a $300 billion asset. like yeah with with uh with over 10 times the amount of capital that Salana has for example putting aside other other systems u I mean it is by far the second largest crypto network uh it is a $300 billion asset um I would as an investor look at that and say there's a lot of baked in expectations to what you're talking about which is when you think about okay what is the value acrruel for ETH as that substrate um And

how do you get to that valuation? I would say not just Ethereum, but every other crypto project needs to, you know, over the next 10 years, if not sooner, start proving that we can break this self-referential aspect that we have, which is there's like 10 active users on chain and they're all doing recursive leverage. So, how do we how do we grow into this valuation? I mean, I I can't tell you with a straight face that these networks should be worth what they are by any semblance of fundamental analysis. I can't get to a $300 billion valuation. Help me understand that. What do you need to believe for that to be the case? Yeah, Santi. So, this is this is exactly what I was talking about

earlier. Like, how do you actually with a straight face value these assets if you're not looking at cash flow and you assume a lot of these revenues are going to go to zero at the L1 layer? like the app layer I think totally justified to look at revenue users all those things that are really important to individual companies and the only way that I could really justify it is like if we're effectively building like the new Linux the new substrate of the whole internet you really have to value these things on the amount that is secured for the current infrastructure and all projected future infrastructure that's applications assets users etc because that is the base layer of all of these things and I think each individual investor needs to look at that and say like okay do Do I think do I think crypto is going to grow precipitously?

Do I think a huge amount of assets are going on chain? Yes. Yes. Yes. What chain do I think that's going to happen on and why? And then you can actually value that based on the percentage of assets you think are going to eventually come on chain at some point in the future. And just to double click on that, so you're saying say there's a trillion to five trillion of assets that are secured by Ethereum. Um there is some proportion by which the fully diluted market cap of ETH should grow in some relationship to that and and and that's just like a abs like that just puts aside like cash flow me fees. It's really just there is some

proportionate amount that needs to grow in lock step with that as you secure more assets. Exactly. So, and it's probably because of the amount of ETH that's staked. I haven't done the calculations, but it's effectively like if you have say 5 trillion like you said, right? If there was some theoretical value I could acquire for Ethereum to attack that $5 trillion vector of assets, then that should theoretically be the value of ETH the asset. Now whether or not it's going to trade at that theoretical value, whether or not there's some incumbrances to actually acquiring that amount of ETH to to utilize that attack vector is, you know, sort of certain, you know, secondary, I think, you know, you can

ascribe whatever value you want to that, but theoretically that should be in my mind some level of value based on that asset. And it's the only thing you could really tie these network values to at the end of the day in my mind. Ryan, I want to get to you in a minute, but I guess the analogy would be like the United States, the world's sovereign, you know, the the, you know, hedgemony of the world, okay? The dollar and its military presence and social capital and culture that has been exported. Okay? You look at the US tax revenue that the government collects is only a very small sliver of what you could, you know, start to think about what is the social currency or whatever the US. But like the tax revenue is actually quite small relative to the amount of economic activity that is happening. It's sort of

a fraction whether it's 10% 20% 30% right. Um and that tax fluctuates but it's still a fraction of it. Um so like I was just trying to think about as you were saying that like economic security is something that we talk about a lot. Um, but I guess like I don't know maybe we should bring in like a tunes of the world like so think about this if you if sorry to interrupt if you acquired more US dollars right like or if you could you pose an attack vector to any one individual area of the government and the answer is no right so you could be China and accumulate all these treasuries and then you know like have a pretty good say in the negotiation table but yeah yeah effectively but you know

presumably China could dump all their treasuries, the you know yields go higher and then someone else buys those things at a certain market price right like but Ethereum is directly effectively tied to network consensus so you can affect consensus by holding more Ethereum right so you can't do that with dollars you can't do that with other governments which is why inherently these assets directly have to be tied to the amount of total value they're securing I want to talk about just like bullcase for ETH here like you know ETH ETH is at 2,000 or 2500 today or two I haven't actually should check the price before for this episode, but somewhere around 200. It's, you know, had this big god candle in the past week. It's been ripping as an asset finally. Tommy, you were I saw a tweet from you. It was like 10 10K ETH. I forget when you sent this

or maybe it was in a group chat. Maybe it was in a group chat, but um lay out the bullcase as you see it. Yeah. Yeah. I I sent that tweet. Um some people were really excited and then other people like Kyle Smani wanted to bet me a million dollars that it was not going to be true. the classic money public public bet amazing um yeah so so I think it's going to happen you know at some point in the next you know call 18 to 24 months and and the reason why is I think assets back to my fundamental case that I talked about before assets are coming on chain faster than people think right we just saw the Maldivian government the other day announced they're tokenizing $9 billion worth of real estate and bring that on chain there are a number of those types of announcements coming

and when They're looking for where they're going to put their assets on chain. Where do you think they're going to actively want to secure those places like Ethereum? I mean, we could talk about stable coin growth all day. Another vector. I mean, there there are just huge amounts of assets coming through not only sovereigns, not only through stable coins, but also through corporates and others who are who are actively deploying. And, you know, I'm just really excited for Ethereum in that regard. It in my mind still has the biggest level of network effects, biggest level of security, and will continue to drive demand. Um and that's not to say that that cannot be that that cannot be eroded, right? You know, personally and for our fund structures, we we hold ETH and bit sorry, ETH and Salana in about the same proportion just

because you know, Salana is about a fifth of the value of ETH right now. Um and there are there is a lot of room for appreciation to grow and Ethereum really cannot sit on uh you know rest on its laurels here. It really has to continue accelerate. I think, you know, folks are seeing that, recognizing the opportunity, and I think a lot of the TVL is going to to go to Ethereum and going to continue to accelerate that growth. Uh, is there if you're sitting down with someone and they said, Tom, what's what's the big catalyst for this, right? ETH is the same price it was seven years ago, what's what's the catalyst? Is it the pivot? Is it the is it RWAS and tokenization and institutional capital?

The only place they're going to play is on ETH? Is it something else? Ryan, I'm also curious to get your take on that as well. But yeah, so for me, um, you know, I think it's a number of small catalysts that are going to come across the board, and that's going to happen with an assets that's already so big. It's not going to be, you know, we all think back to the merge, right? The merger is going to be the big catalyst that sent ETH to 10K, but it was just an incremental step on the journey. And I think there's going to be a lot of incremental steps on the journey uh that we talked about here today. So yes, it's etherealized. It's more business development capabilities. Yes, it's scaling the L1. Yes, it's integrating more and more uh you know, specific L2s for what they're good for

in terms of actually customization at the L2 level. Uh it's all of these things in coordination together and coordination is the key there that are actively going to accelerate the ETH price. you know, we're at such a level, as Santi mentioned, you know, 300 billion plus ETH that it's not just going to be one thing that sends ETH that doubles or triples. Um, because the asset's so big already, you know, you need to make those incremental changes across the board that effectively move this huge technology company forward. Ryan, what do you think about that? Any any anything that Tom missed in terms of just like the mega bullcase for ETH and how you would lay that out? Yeah, I don't know. I don't know if Tom missed anything. I mean, I absolutely agree.

It's going to be an incremental journey. Uh, the merge, uh, ended up being a huge sell the news event. Um, you know, uh, uh, a lot of that has nothing to do with the merge's fault. It was these other issues we talked about on the show around, uh, the transition to L1 plus L2. And so, I think I think if I disagree with Tom on anything, it's that it's that I I I'm an Ethereum megabull. Uh, I I think Ethereum is going to eat the economic world. I think it's going to be a multi- trillion dollar asset. You know, I first picked up Salana at $2.75. I've made a lot of money on Salana, and they've had a fantastic window of opportunity. They they uh they had a fundamentally different strategy which they executed masterfully where they they combined a relatively

centralized and high-scale physical architecture with a relatively centralized and aggressive uh business development architect you know business development design where a lot of the same leaders who are calling the technical shots in Salana are also the ones who are selling into apps and selling into government and that's been a really really great strategy for them and you know they also have timeless strengths such as they have a particularly uh great app layer for net new innovation and they're very curious and they genuinely help builders and that's something Ethereum's trying to do more of and you know their their ability to help builders has created success stories such as their their deep pin you know their their project Helium just announced you know like yet another big

new uh uh you know milestone uh like they're building real apps on Salana if you if you took Ethereum and you just Thanos Ethereum and it was totally gone. Solano would be like 95% of what's left over in the programmatic app layer. But Ethereum's not getting Thanos. And the fact is that Ethereum's decision to scale with the modular road map and the L1 plus L2 scales the way the world actually works. And Salana's running into uh political scaling challenges. They're running into monolithic scaling challenges. you know, they sell the same, you know, whatever their TPS is.

You know, they're they're there's the fire dancer theoretical TPS about shipping it. Like, you know, I offered to, you know, I I I on a on a Twitter spaces with Mert last year offered to bet Mert quite a bit of money that Fire Dancer wouldn't launch on a particular schedule since past because it's very hard for Salana to launch a new client because their current client is optimized for what it does. It's relatively low level. They don't have a protocol spec. There's no like PDF that describes Salana. the client is the chain and that has big implications for risk and decentralization and growth and so like Salana is doing a great job but Ethereum Ethereum is now through the woods through through kind of this swamp of this troubled growing period and it

scales the way the world actually works and it offers the world what it actually needs in terms of that choice of L1 for risk minimization and capital capital density or L2 for choose your own adventure. control and customization and business model. This this is this model is going to really take over the world. And so, yeah, I I think Ethereum is going to be a multi- trillion dollar asset. I think we're going to enjoy the lion share of the coming gold rush of onchain growth that was kind of unlocked by this new administration. So, uh yeah, the future's extremely bright and uh yeah, I'm very very happy with my ETH baggs. Yeah, maybe as we think about bringing this episode home, Tom, you mentioned you guys have equal roughly equal exposure to ETH and Soul. I'm

curious what the the rest of the portfolio looks like right now. Yeah. So, um just to clarify that's personal portfolio. On our other sort of hedge fund side of our business, we um discretionary traders. So, you know, so personal whatever portfolio that is portfolio. Yeah. So, for me um primarily those two assets and then some longer tale plays that I like uh you know terms of upside potential. So, Kaido, Godzilla, a few others that I think are really really big. Um, but I think if you're in this asset class, you really you want to do two things. You you want to not miss the beta of the asset class. And I think capturing that through Ethan Solana is is very clear in my mind. Um, and then you want to

allocate for home runs, whether that be through venture or through some of these other bets that I mentioned. So that's that's that's how I've really thought about it. But um, you know, I think you want to probability weight those base level bets in terms of whether you think Ethereum is going to do better or Salana. And you know, I think the coordination challenges in Ethereum are really getting me um there were there were challenges in the past and they're getting me excited going forward and how we're solving them. But you know, if you're a reasonable investor in the past kind of year and you've looked at Ethereum and your probability waiting the success going forward, you've had to had some Solana exposure or other L1 exposure because you weren't as sure as you were in 2021, 2022 that Ethereum could really execute. Today, I feel a

lot better about that. And if we were to rebalance the portfolio today, I'd be um a little more heavy on ETH. So, um I think ETH ETH's future is enormous. It's bright and it's because of the you know a lot of the things we talked about in this episode on this on this click. Um just want to What about L2s? L2 tokens optimism arbit. That's yeah I I think they're I I don't understand the value of them. Doesn't make any sense to me. They're going to be natively in the L1 at some point through base rolloffs and others like and not to you know there are great teams that are building there. They're scaling the L1. Fantastic. Like I just don't understand why these things individually need tokens when effectively all the value of cruel at the end of the day is going to be Ryan.

Do you agree with that? I I in a word no. However, I think there's a great truth to what Tom's saying in that every L2 token needs to justify its existence. And each individual L2 token will succeed or fail on its own merits based on its own unique circumstances of how the L2 is doing, what the tokconomics are, uh what, you know, it has to justify its existence. And you know, Tom's right that similar to DeFi tokens and app tokens and meme tokens, many L2 tokens probably shouldn't exist and will result in, you know, the marginal buyer losing a lot of capital.

But, you know, I think the best ones will be very very good because their L2s and their tokconomics and that that whole that whole that how they tie it together in a big picture will be very strong. So, uh, yeah, and I think I think the ability for L2s to compete in the token marketplace and and show that inventiveness is a big strength of the model. So, I'm not bearish L2 tokens in total. I just I just think they're tokens. Some will do well and some will do poorly. Yeah. Ryan, what's your second biggest holding outside of ETH right now? Yeah. So, I uh I'm a I've become a mega bowl of World Chain. And the reason is that I think if you look at the at the crypto platforms that are uh high growth and have a

token and put this token front and center in their own design of their values and their organization and their tokconomics and their users. and they're not like kind of burying the token as almost like is the token going to play a big role. I think if you look at the ven diagram of high growth has a token puts the token front and center I think world's at the direct center of that. I think has Sam Alman associated with them. Yeah. I mean right like there's a lot of there's a lot of great things about world and and they're really posting the numbers like uh their new miniapp framework has uh it's unbelievably successful. I was talking to a guy a couple weeks ago who vibe coded an app and he uh he's getting

like 50,000 unique humans using it per day just because their app store is so small right now. It's like it's like a new iPhone kind of app store gold rush. So uh yeah, I mean I'm I'm here to talk about how Ethereum is going to be a multi- trillion dollar asset, but I think that World Chain is doing something very special and it's not the only, you know, there's a lot of other really great layer 2s uh uh in Ethereum. Uh, for example, Bass is extremely high growth, but you know, I I'm not an equity investor. Like, I don't own coin just because it's not my world. Uh, and Bass doesn't have a token. So, uh, for for me, world is kind of like the growth of Bass with a token, you know, and volume doesn't have a token. Seems like it's not doing well. I don't get it.

Yeah. Well, you know, they just got Coinbase got in uh in introdu uh included in the S&P 500 and they're already ranked like I think number 176. So super super excited for them and their growth, but you know, equities aren't my world. Yeah. Yeah. I So I know we're wrapping up. So I guess the last thing I'll leave users with, I've probably been more critical than folks would think of the Ethereum road map uh in a bull case episode, but I think this is like the exact right time to be critical of this enormous asset that has all of this potential because like I feel like we're 98% of the way there and that last 2% is where we just need to like get together as a community and fix some of these things that we've been having issues with. And it's like if you

don't actively say the problems and address them, they're just going to continue to exist. So enormously bullish Ethereum, but like there are certain things we just got to really double click on as community. Yeah, Tom, Ryan, I appreciate you guys. Yeah, so you know, just to kind of give a bit of a closing remark here, uh, Ethereum is 15% of the market cap of Bitcoin and 1.5% the market cap of gold. And as onchain grows a,000x in the coming years and the line share of it is on Ethereum, it's going to become obvious to folks that in the store value landscape in like this this you know Ethereum is going to end up being much more important than people think relative to Bitcoin and gold. Good closing thought. Ryan, thanks for the

time. Tom, thanks for the time. Sherman, thank you so much for the time. Cheers, guys. [Music]