Can Ethereum reclaim its dominance?

Transcript

GM good morning welcome to the milk Road show The Daily crypto show where we break down crypto like a guy bluffing you confidently in poker with nothing but Vibes I'm your host Jay Hamilton it's Wednesday March 26 and we are live so if you're here on Twitter on YouTube ask your questions and we will answer them at the end now there's a few questions that I'm getting a lot right now one is have we bottom and where are we going from here and the other is will the US and China and Europe and Japan and other leading economies print money this year are we still going to see the liquidity Surge from the macro side to answer these questions and so much more we are joined today by H managing

partner at dragonfly now if you don't know H hey you got to follow him on Twitter this guy's got some of the best takes but he also has an incredible story which I'm gonna tell really quickly at 16 he started playing poker with $50 at 19 he had turned that into to a million dollars and he was a professional poker player on tour he then donated most of this money to charity and decided to give up poker he went into coding he worked at Airbnb he's written a bestselling book and now he is at dragonfly Capital where he is investing full-time in blockchain Ai and the future of technology before I invite HB up on stage if you guys are trading throughout this Market which I know you

guys are you are guys want to use milroad Swap this is our decks where you can swap ethereum base ARB and salana on all those chains with some of the best rates in the space only 15 bips on eth so check it out if you are making swaps today's episode is brought to you by definitive Advanced trading on every chain it's also brought to you by coin shift powering top crypto treasuries with their yield bearing stable coin CS usdl without further Ado haseb welcome to the milroad show thanks for having me Jay appreciate the uh overly generous introduction you are a fascinating fascinating individual so I had I had to share a little bit of the story uh okay first question that I I have to ask

right now uh is where are we in this cycle we've talked a lot about are we in a bull market are we in a bearer Market where are we heading next have we bottomed what's your take so what's clear right now is that uh crypto goes through periods where it's very very highly correlated to external markets and then other times where it decorrelates and kind of does its own thing based on endogenous factors right now we are in a period of very high correlation with traditional market so you see whatever the NASDAQ is doing is whatever is crypto doing that includes Bitcoin there are times when Bitcoin untethers from the broader Market this is not one of those times so there's so much macro overlay over everything going on that basically predicting what's going to happen in

crypto is essentially predicting what's going to happen in macro so to the extent you have a view on macro which at this point you kind of have to given how crazy everything is and uh how volatile the entire space has been um it's very difficult to predict macro on any kind of you know sort of clean time Horizon um you can you can make a longer term prediction I think reasonably well but uh over the short to medium term so much is dependent on what Trump is basically going to do on trade policy and then of course on foreign policy and that seems to be mostly what's causing markets to gate the way that it is okay let me just ask you the direct question of do you think we have bottomed uh in in our pricing or do you think and and let's

just talk about Bitcoin because it's easier than I don't need to talk about every or you could talk about the NASDAQ too or S&P 500 if you would prefer that because that correlation makes sense sure so the question of whether we bottomed is essentially the same thing as do you think we're going to go into stagflation because if we're going into stagflation then more pain is coming and things are going to get a lot worse from here um if we get a an ordinary recession then I think it's very likely what you're going to see is that the FED Cuts rates and at at an accelerated Pace or they begin QE and If the Fed does that it's actually likely to stimulate risk assets even though it's going to be very bad for the real economy um and so I think crypto is likely to benefit even

if the real economy is going to do poorly um then on the other side you've got like really kind of weird cases where you know what if Trump I mean again nobody's contemplating this kind of thing right now but what if Trump basically decides hey we are going to go to war with Russia or just some crazy [ __ ] that just Trump decides to do um that's going to be really bad for everything so I think there's uh if if you take like a total geopolitical shock then I think it's very likely that we're going to get a new bottom and that you know we're not really there yet I think on the macro side for the most part it seems like markets are one starting to get adapted to this new picture of what a post Trump trade policy world is going to look like and I think that's giving

markets more confidence second uh I think it's it's it's also true that Trump is moderating a bit before he was speaking very brazenly about you know doge is going to just totally take a chainsaw to the federal government and just wildly cut things that has really moderated now we're seeing things come at a much slower Pace than what they were doing in the first month um you see the same thing on trade policy is that Trump has now moderated the number of countries with which they're going to do reciprocal tariffs uh there's there's you know every single one of these tariffs uh he's pulled back on and again not gone all the way to what he threatened to do and instead you can see okay he's he's listening to the stock market he's not listening to the stock market to the extent he did in the first

term but he still cares and you can see he's getting rewarded by showing more and more moderation and I think he's likely to lean into that and that the more the market rewards him the more he's going to continue going in this direction so so my base case probably is that we've bottomed I don't think things are going to move very quickly through Q2 and Q3 I think it's pretty clear that Trump has a limited period of time through which he can do some of this crazy disruptive stuff that he's doing with respect to upending trade policy and upending some foreign policy but it once you go to like Q4 that's when okay now you really got to line of sight to the midterms and voters are going to be much more punishing right Trump has already got the border under control

he's already got the fenel stuff on loock right with all the concessions he's gotten out of Mexico and Canada um so if you keep going and you keep torching the economy and eventually you start to raise unemployment people start losing their jobs there's layoffs and people you know the value of their 401ks have gone down they are going to absolutely destroy you in the midterms if if that's if that's what you're left with so Trump has a limited period of time to do this which is why I think by Q4 would be my guess you're going to see markets recover whether Trump has accomplished his policy goals or not right basically he has no choice because he wants to continue to be in office and that is his end goal also well Trump stays in office either way right but whether or not they have control over

Congress is the big thing that gets determined in the midterms and if we if we look at the the next like Q2 Q3 do you just think that we just sideways chop then like just continue with this volatility throughout that period and and and I also let let me ask you that question first and then I want to touch on some of the other economies China uh and Europe yeah so I mean to be clear I'm not a macro expert I'm not not giving Financial advice but I think probably my base case most likely outcome is that yes going going until probably Q4 things are going to be range bound we might go up we might go down things you know are kind of going to

jump around but I don't think we're going to hit real escape volocity on risk assets until something fundamentally changes from this Administration okay um let's uh do do you have any thoughts on uh on China Europe and and them from the macro side I don't we don't need to talk about it if we we can skip that I mean it's clear what's going on in Europe is good in a way like pushing them to care more about doing more deficit spending and basically being stimulative where before they've actually been pretty you know relatively auster uh that's good for Europe and it's going to stimulate the European economy and it's also going to push Europe to to decouple more from the US which is bad for the us but you know probably good for Europe and and will

likely be a boon to some of their economies so getting real deficit spending there is is good for them and you can see it's happening and European stocks are doing well um so all of a sudden Europe has signs of life and we may have sort of inadvertently awakened them out of a slumber economically of making them realize that they they kind of can't just sit around and do whatever they have to get uh more aggressive with their government spending and and being more stimulative um China is in a very very difficult spot so they're they're really struggling right now um consumption domestically is pretty low they're really dependent on trade and their biggest trading partner which is the us right now is trying to turn the screws on them and so they're already facing deflation uh which means they

have very low demand and that's likely to get worse if you see that you know the market really potentially goes into recession they already have very high youth unemployment things are things are rough in China uh real estate prices have been getting getting hit so I I think uh China has has again they' like Europe they've held back on doing any kind of stimulus because they don't want to reinl a bubble um they might have no choice to just to be forced to have to stimulate because of the fact that there's going to be such a shortfall in demand for Chinese Goods um so I I I think one of the places where I mean clearly Trump can put a lot of pressure on Mexico he can also put a lot of pressure on China and uh China like the things going significantly worse on

China is going to make it very difficult for China to govern aggressively and you can already see they've really turned a corner on their anti-corporate messaging um you know in the past a couple years ago the whole story within China was common prosperity these big tech companies have to pay the piper um in order to have the right to sell their goods and you know make so much money as they're making in the Chinese economy uh that message is now reversed right now suddenly Jack ma is back in the room he's being invited to things you know all the CEOs are getting together and doing appearances with uh with xiin ping and what that signals is that xiin ping realizes that his econom is in trouble and he's got to take business friendly policies so I think you know Trump is really rattling the entire world and uh

it's not it's America first but everybody in the world has to react to What America does just because we're such a juggernaut in the world stage mhm and and like you said he has a limited time to do this and so he is taking his he's firing his bullets now uh while he still can to try to make the most change he can it does feel though like the markets have found a little bit of stability after a really rough period uh through end of February into the beginning of March which is great to see uh yeah I W I want to touch on um I I want to talk about a few different things I want to talk about ethereum because you've had a lot of conversations recently about etherum talking a lot about that I also want to

touch on your heated debate with Mike dudas at Das uh because that was that was definitely one of the highlights I wasn't at Das but I I saw that and it was definitely seemed to be one of the highlights especially the room got quite heated it seemed like not just you guys on stage so we'll touch on that for those who haven't seen that we'll talk about that let's just back up for a second though before we jump into these different like ethereum and memecoins and these different areas of crypto um what's your long-term thesis for how blockchains play out five 10 years from now right now we have hundreds of blockchains and we have feels like a new blockchain new L1 coming out every week uh feels like we have a lot of infra in the space

what's your thought in five 10 years you pick the time Horizon what is what is the future of blockchain look like in terms of how many blockchains do we have and is there one controlling most of it are we gonna have this um modular or monolithic model I know I'm asking a deep question but if you could just give us a high level of your thoughts of the the long-term thesis so high level I think the answer is that it's probably going to look pretty similar to what we have today I think the numbers will all be larger but the idea is is probably that this is going to follow follow a distribution much like Z's law so Z's law is a power law distribution that describes a lot of natural phenomenon especially that arve in markets um actually the one very

obvious example of Zsa is the size of cities so I have this analogy that I that I give about how blockchains L ones are like cities and you can sort of think of okay ethereum is kind of like New York City Super populous but very congested very expensive hard to change uh very Antiquated but a lot of people are starting these new cities being these new l1s uh because okay they're kind of Green Field prices are lower uh it's easier to build stuff uh and so you can sort of see this Dynamic playing out which is that even though ethereum has taken a back seat it's not necessarily as Dynamic anymore the biggest you know the new hot startups aren't necessarily launching on ethereum but ethereum still has the most tvl still has you know a huge number of users and and obviously it's it's distributed everywhere right

so I I think your mental model should be that this this distribution this Z Sol like distribution will probably still be true in five to 10 years um now if you look at most of these other blockchains uh the reality of course is that a lot of these blockchains are you nominally you look at them you say oh look at this FTV it's so high this you know why is there so much demand for this blockchain that nobody's using um I think it's a little bit of an illusion because of the fact that a lot of these assets don't really have the liquidity that one might otherwise think they do right so you might look at this thing and say oh this is like a two billion dollar blockchain but if you actually go try to liquidate you know $100 million of this thing it would crater the price

by 50 60 70% right which tells you that actually you know the the um the liquidity the price sensitivity of these assets is is a lot less than you than it might appear at first glance um and this is just part of the crypto Market structure that's important to understand is that you know it's not like a company where there's somebody in the background just doing a DCF and saying oh well clearly this thing should be worth this so if you're selling into me you know I'll just acquire this uh acquire these shares because clearly you're selling them below below the fair market value there really isn't something like that for most blockchains and so I think the um the the the sense that we have that oh wow there's so much market cap sitting in alts especially these alts that are far down the list is is a

little bit of Illusion because they're much less liquid than they appear to be so so all that is to say um I I I think many people think that there's too much infrastructure and too much infrastructure is getting funded by VCS and there needs to be a massive ShakeOut I think this is not really correct now why is this not correct so one you can't really do a ShakeOut in crypto why can't you do a shake out on crypto you can't do a shake out on crypto because lir ones or blockchains can't go bankrupt companies can go bankrupt right so there can be a ShakeOut of like oh there's too many self-driving car companies uh a bunch of them will go under or get acquired that that in fact has happened uh but self-driving car companies cost a lot of money to maintain if you don't

have a team and you don't have an office and you don't have you know you're not paying the bills then the self-driving car company will go to zero it will disappear blockchains do not do that there is no uh you know there's a DI Minimus fixed cost to or operating cost of running a blockchain so even if the team basically folds or there's you know a skeleton crew that's still running this blockchain it can still exist and it can still trade at whatever the marginal price somebody's willing to trade a token at uh so that's that's one thing is that you shouldn't expect blockchains to disappear the second thing is that um you know people think for the most part like well it's kind of too late now to build a new layer one like do we really need a new one we already have you know ethereum and bass

and salana and apos and like why would we want more you know we we pretty much have figured out the constellation of these are the blockchains that are going to be valuable and I think this is just obviously wrong I mean it's obviously wrong now why is this obviously wrong for one um the idea that okay we spent about you know ethereum was launched in 2015 right just been 10 years we basically spent 10 years building blockchains and then we were done there were no more new blockchains to build we did not need to make anything faster or smarter or have new technological breakthroughs right if you just think about technology there is no technology that just we worked on it for 10 years and we stopped we said ah we are we have the final form we just take you know oracle servers from 2015 or we take gpus

from 2015 or we take you know a RAM sticks from 2015 and we say this is good enough you know Sony Walkman from 2015 no of course not every [ __ ] technology that matters you keep improving it and improving it and improving it and sometimes you improve them in place but sometimes you need a new generation a fundamental shift in that technology in order to create the new better version right like we have this perception that're like wow they at this point who how could you possibly believe that anybody's going to unseat salana for example you know I I think this is just incredibly naive salana two years ago two years ago was a ghost town there was nothing happening on salana two years ago right everything that has happened on salana took place basically

within the last 20 months so the idea that like well that well clearly it's done you know now we have the final form of these are the blockchains that matter and nothing else is ever going to matter I think that's obviously wrong right the the market is still incredibly Dynamic and changing quickly and if it changed that much in this period of time what that tells you is that it's likely to continue changing now how you know how is it going to change I don't know and it's impossible to know xanti but it does mean that your prior should be that things change new uh new products new Chains new technologies uh they enable new things they create new communities they come up with new ideas uh and probably this is not the final form that block will take now I think it's going to look similar

to what it looks like now in 5 to 10 years right it's not going to be like oh a total everybody turned over and now there's a a new top 10 um in the same way that that wasn't true 10 years ago either 10 years ago actually we had you know Bitcoin and ethereum and xrp and a lot of these names still in the top 10 um so not everything will turn over but a lot will and I think as a VC I'm acutely aware of that because this is what I study is I noticed the way in which this stuff has changed and the way in which people often underestimate well so the the saying goes people often overestimate what can be done in two years and they underestimate what can be done in 10 years yeah that saying is uh it could not be more true in crypto and and even

even as an investor it is important to remember that saying because we are so shortsighted and so impatient and our expectations can just totally take us down the wrong path okay I want to shift gears to ethereum and then I want to get your your thoughts on Meme coins good or bad and kind of get into your your debate that you had with uh Mike dudess before we do we just need to take a quick moment to hear from our sponsors who make this show possible if you're only trading on centralized exchanges you're not going to make it the best Traders know the alpha is onchain founded by coinbase alums definitive lets you trade any token on salana base and every major chain all on a single platform what

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stable coins earn yields all without compromising security backed by real world assets and institutional grade risk management by our friends at Steakhouse Financial put your treasury cast to work earning native yield and protocol rewards built by the team by behind coin shift which is trusted to manage over 1 billion in business treasuries on chain including a gitcoin and hundreds of leading institutions cycs USL is gaining traction at milro docomo SHI all right HB ethereum has been the downbad I mean it's just had a rough four-year period here we were looking at the chart on on

Monday with Kyle and just it was it not an enjoyable chart to look at uh what is ethereum dead or is ethereum just becoming a con a non-consensus trade that might have asymmetric returns now so ethereum is in a rough spot and I think a lot of this comes from the fact that ethereum has not had the dynamism that people once expected from this community uh ethereum Once Upon a Time people thought like well ethereum is just kind of it's kind baked into the bread of crypto you can't not have ethereum go up you can't not have ethereum do well when alts do well because it's just you know it's the Granddaddy and the reality is that uh a

lot I feel like a lot of the a lot of the enthusiasm for ethereum has waned in large part not just because of salana people I think try to attribute a little bit too much of it to salana um I think a large part of the reason why ethereum enthusiasm has waned is because of the rollup Centric road map so if you if you rewind the clock back to when the rollup Centric road map was first proposed originally the the the road map for ethereum involved ethereum launching charting and going toward multi- Shard execution so it was going to look something more like what near protocol looks today where you have you know arbitrarily scalable like you know sort of segments of block space that are all working side by side with each other and this was a very ambitious Vision right this was like hey this is

how ethereum is going to scale to be able to support the world's demand for this chain and basically what happened was that the ethereum Foundation was so behind and so slow at actually being able to ship upgrades that falic announced that we are going to be pivoting away from actually implementing this very ambitious road map toward what's now called the rollup Centric road map and the rollup Centric road map is this idea that look ethereum's too slow we're not going to get there in time the Roll-Ups are going to get there first so let's try to scale through rollups instead of trying to scale ethereum itself and those rollups will sort of be like proxy scaling for ethereum this was a theory and many people at the time were very excited by this Theory it sounded really great it's

like oh the rups are going to be like your uh essentially like your colonies and they're going to help expand the interests of you know the British Empire in this case being ethereum um and everyone's going to win that was the original Theory I think what's happened is that that theory has proven to be incorrect it's proven to be a bad mental model of how the economics of rollups play out which is that today we have a bunch of Roll-Ups they have a lot of demand actually bases you know one of the most used blockchains in the world which is an ethereum rollup um but what you see is that Bas is paying almost nothing to ethereum now before uh dank sharting before blobs started to get U uh before blobs were were introduced onto ethereum

actually the rups are paying pretty significant fees to ethereum but with the Advent of blobs which are basically a separate data Lane where you can post rollup data that's not priced the same way as any other data on the layer one um those costs basically went to near zero it's extremely cheap now to post stuff on blob storage and that means that the robs are paying almost nothing to ethereum now in addition to that you see two other Trends one is the rise of people defecting away from being rollup so for example movement which has been in the news recently uh originally was going to be an ethereum rollup and they decided to not be an ethereum rollup and to sort of become their own layer one and so you're seeing now some defections of things that were originally Roll-Ups

that are no longer wanting to be Roll-Ups and then second you're seeing the rise of alt da so da for data availability it's basically when people are storing the data they need for the rollup directly on ethereum um platforms like Celestia and Avil are these alternative places where you can store your da now so you don't even have to pay ethereum anything like now you have rollups that literally have no economic connection at all to ethereum and so I I sort of analogize this to you know this is like the British Empire but the colonies are breaking off they're deciding you know what I don't want to pay taxes to you anymore and also you don't even have a military so how are you going to forc me to pay taxes uh I'm just going to break away I'm very far away from you so you can't really do

anything about it um and um yeah we're going to have our own government now and now this you know this was an important lesson for to see like oh [ __ ] colonialism doesn't really work right like economically we can't hold on to these things okay so what did ethereum do in response to this the answer is nothing ethereum has done nothing in response to this and basically they've just continued on this trajectory of assuming that the RO Centric road map is the right choice and now there are some mumblings of oh maybe we'll tax the rollups in some way which is obviously absurd because you can't tax there's no mechanism by which you can tax Roll-Ups you know you can't force rollups unless they're unless they're so committed to settling da on ethereum that you just

jack up the blob storage prices on them uh but beyond that you cannot force rollups to pay you higher fees um so what what you have in essence is that the British Empire took on this you know Colony first strategy and this Colony first strategy this rollup Centric road map fell apart the rollups all defected they're no longer paying tithings to Great Britain and instead of Great Britain saying oh [ __ ] okay time to wake up and pursue our own scaling strategy and understand and like acknowledge the fact that the RO C grat was a mistake and we have to move away from it and become a financial center in the way that Great Britain did um etherum has not done that in fact ethereum has not acknowledged that any of this stuff was a mistake and now to be clear it wasn't

a foreseeable mistake I don't think it was obvious or you could have known at the time that this was how it was going to play out but we certainly know now that this is how it's playing out um and so my my sense is that if you saw from the ethereum foundation a real acknowledgement that this was a mistake and we now need to Pivot our economics in order to be able to scale ethereum and capture more of the value that we have created that the colonies are freew writing on now that being said it doesn't mean you have to [ __ ] over the l2s doesn't mean that they're bad they are still you know they're they're um they're they're they're allies now right so sort of like commonwealth countries that you're nice to them you guys share you know legal structure and maybe

they're even piggybacking on your institutions a little bit that's okay it's not it's not it's not a problem that they exist but it does mean that like look uh strong parents make for strong children right you got to take care of yourself first ethereum you got to scale yourself first and just because you scale yourself doesn't invalidate the Roll-Ups you're never going to scale as much as you know having 20 Roll-Ups on top of you um but it is important for ethereum to have an answer to how it's going to scale if it remains being overly expensive static and never really changing people are going to lose confidence and that is that is the one risk that ethereum does have I think of actually potentially losing the mantle over a long enough period of time now I think what we see from the new ethereum

leadership the new uh ethereum Foundation leadership that's come in uh the the two co-executive directors uh sewe sewe one I think and then uh Tomas stanzo I'm glad you said his name not mine I I I probably P the names um but better I think they I think they see that things need to change I think there's a real mandate for change now from the from the EF and so I think what we will see and I'm actually quite bullish now that ethereum is going to be able to turn the corner and a lot of that turning the corner is not even necessarily they're going to ship something this year that's going to change the narrative but rather that they are going to change the message that's coming from the etherum foundation that no no no no we are not about um you know we're not just about

giving grants for cryptography researchers or you know trying to elevate the global South and say oh you know how can we have more events in in in um you know southeast Asia you know we want to we want to you know highlight different parts of the ethereum community uh I think look that's fine it's not that you shouldn't do that but there's even more fundamental stuff like the sort of the meat and potatoes of governing that you need to do which is make sure that ethereum has a strong economy and that strong economy the foundation of that is having strong economics and also you know taking a page from salon's Playbook and making sure that you're encouraging Capital formation within ethereum making sure that startups in ethereum have support right you go to any other layer one you know we work with a lot of Founders we

see this process firsthand when they go to Bas they go to salana they go to you know Avalanche they get offered incentives they they say hey we're going to partner with you we're going to help you go to market we're going to help you get introduced to investors we're going to make you we're going to do our best to make you successful the only ecosystem that does not do that is ethereum and why you know and on a certain level it's because they didn't have to well they have to now and I think the ethereum foundation realizes that yeah it's interesting that you say go to market because there's so when if if you're launching on base you get so much support from Jesse Pollock their whole team all this noise is made and then over on salana same thing with

super team all this noise is made and on ethereum it's never it's never been that and now we do we have a goto Market problem in crypto more so than a tech problem now right that's where Founders need the most support right we're ready to go to market we're ready for Mass adoption but it's difficult right it's not easy to go to market and to say here's my product and hey jump on so you need support in that and I think I I hope that ethereum can do that as well what will what will you be watching for that would make you continue to be bullish on ethereum or would make you sort of change your mind what are the what are maybe the red flags that you're a little bit worried about I mean it's been less than a month since this change over so so you you know you want to be

you want to give them some rope you want to be patient but you also want to be watching closely because the few things that I expect to see one is a change in messaging if you're not seeing that in the near future I think that would make me less positive that actually change is can be done um I'd want to see what's happening with ethereal Li ethereal Li is this new arm of the ethereum foundation that's more focused on institutional adoption and the sense is that etherealized so you notice you know in the um the the crypto Summit that took place in DC there was no representative of ethereum there right a lot of other chains a lot of other projects lot of other but ethereum wasn't in the room right and so etherealized is meant to be that more institutional actor that can be in the

room and be a party to those conversations now that politics is driving a lot of what's happening in the crypto industry so what I'd want to see is is ethereal doing its job are they making ethereum more of a force in some of these important conversations happening with institutions and happening within politics um and I I think that's as much as you can hope for this year um and then lastly of course seeing entrepreneurs telling us that they're getting more support from the EF if I if I see those three things then I'm very bullish and so far have you met with ethereum's leadership or anybody at EF recently that I met with uh yeah I met with Tomas and um I got and a few other people at the EF and I I came away

feeling very positive um now that being said you know it's it's it's still early it's like the first few weeks for them I think technically the time I met him he hadn't even formally started yet so it's still a very big transition that needs to take place and and the EF is a very old institution you know it's hard to change things that have been around for this long um but I think the the Mandate is there and I think vitalic is listening he knows he's been he's been reading everything that people have been saying he knows that um ethereum has a lot to lose here and I think they're very sensitive that they need to get this right okay so let's shift from ethereum to salana a salana is now feeling a very different negative vibe from mcoins

basically really they're they're now being labeled as the memec coin chain mem coins have a very polarizing view in crypto uh what's your thoughts on salana memecoins and feel free to share some of the takeaways from the debate that you had with Mike dudas may maybe just give that that story quickly you and Mike dudas for those who don't know Mike dud is another VC and uh hi and Mike had a great debate at Das which led to basically you guys asking the audience which sides they were on and some people walked out right yeah yeah that's right um so so we had a we had a big debate um not necessarily about salana itself because of course me coins are a multi-chain phenomenon right they're on base they're on BNB chain now um but

salana is probably the most indexed on mcoins in that it it it really comprises the majority of the economic energy that you see on salana today so um so I don't I don't consider any of this to be an indictment against salana but I do think that the mcoin cycle it feels like it's already on its last legs now last legs can mean a lot in crypto because it takes a while for some of these things to die so but I think we've already crested right the you can see I mean the first sign that a movement is ending is that there are no more True Believers anymore people are still doing it you know sort of people still um you know kind of following the Catholic church but they don't really believe right they're sort of doing the rituals and they're sort of like okay but all the

people who are professing Financial nihilism all these people who are saying like oh you know these VC coins these Tech coins they're extractive they're [ __ ] like everything's a meme coin those people aren't saying that anymore right they're they're a lot of their their um rallying cries lost steam because the fact that actually the quote unquote VC coins and Tech coins are now outperforming the meme coins the mem coins are down badly badly badly you know a lot of these things are down 90% plus from the top uh whereas you know altcoins obviously they're not doing great uh since TR Trump's trade War but they're doing a lot better than all the mean coin stuff so now all that being said it's important to also understand if you go look at pump. funds volumes or revenues they've Fallen a lot from the peak but they're still nowhere near

where they were before this cycle started right so it's kind of like uh I think if you if you pull up the chart what you'll see on Dune is that pump. fund revenues are basically where they were last summer now last summer was still the meme coin cycle so uh it it things have crested but they've not gone anywhere near zero and you still see that there's a lot of uh speculation still happening a lot of new mem corn launches a lot of things still graduating but the the the sense I think for many people in the market is that it doesn't feel the same anymore after what happened with Libra after what happened with Melania after all the kelse or Venture stuff people kind of got a glimpse at how the sausage is actually made on mean coins and they got to see all the the you know the grimy

characters that are involved in sending the stuff to them and it's kind of like you my my my my sense a little bit is that it's kind of like we just did an expose on how processed foods are made and everybody kind of got a little bit of like yeah you know it's it's just kind of gross to see it and once you see it it's like you know what maybe I should start eating healthier you know like maybe maybe look I've been losing money on mean coins because of course we know that the median user loses money on mem coins that's been true since the beginning right I think it's something like 60% of users lose money on Meme coins and this was in the middle of the market boom 60% of users were losing money right now it's probably much more than that um so the the the reality

median users losing money but why were they continuing to play they were continuing to play because they believed the stuff that people were telling them and what they were telling them is that Meme coins are the game that favors retail if you're a retail Trader like you can't win on alt coins VCS are dumping on you um you know all the markets are manipulated all this stuff is fake it's all going to go to zero except for meme coins mem coins are the one way you're going to make money and all these influencers were telling them that and they believed it well they don't believe it anymore or not not nobody but many many fewer users believe it you can see it in the numbers is that these these numbers are coming down now the game is not over and the game the mean coin trading game is a good game uh

it's very Dynamic it's fun it's addictive and I think a lot of people will continue to play it until the the cycle really does end but at the end of the day if you're not making money if you're not actually seeing things go vertical anymore then the game loses a lot of its appeal because so much of what animated people towards mem coins was this idea that there are these crazy asymmetric returns you know you buy one random low cap [ __ ] and maybe that thing is going to be the next you know fart coin and you're going to become you know you're going to 100 extra money if that's not happening anymore and there aren't people 100x in their money which requires a steady stream of retail coming into this Market if that stream dies up and you're not seeing the 100x anymore that's where I think this trend

will ultimately start to capitulate so the big meme coins like you know Doge and and things like this they'll exist forever I'm not talking about those things I'm talking about the mecoin game which is what salana is of course Very indexed on so so if if memecoins are cooked and if mem coins are over or never going to come back to what they were what happens with salana I think salana well so I don't think salana is going anywhere I think it's going to remain to be one of the most important chains in crypto um probably the me or the Rev on salana is going to decrease dramatically if you see mem coins really start to start to capitulate but the reality is that there's a lot of non-mo activity happening on salana now and that's going to kind of become the backbone of what

going to drive salana so whether it's the the defi the um the consumer apps that are that are increasingly popular on salana uh that's going to be the real energy there and salana still is the winner among high performance chains so if you want something that's super high performance super low latency salana is right now the front runner by far so uh it's it's on them to hold on to that every one of these speculative Cycles in crypto whether it's icos whether it's nfts now meme coins they eventually end no that doesn't mean they go away entirely none of these have gone away entirely right they are still icos they are still nft mens but they're much smaller than they were in the he of the market the same thing will be true of mcoins the mcoin game will never there'll be some number of people who

will always play the mcoin game basically forever because they just like it they just you know they they they remember it fondly from their 20s that this was the way that I initially made my bank roll and it was so much fun it was the highlight of my life and they just keep doing it and that's fine it's totally uh normal for there to be a cord of people who continue playing this game that the rest of the world moves on for from uh but salana is going to have to diversify away from it and I think salana knows that I don't think U I don't think people are are delusional about the fact that Meme coins in their current manifestation will not continue forever so okay last question before we we wrap here uh when you look at the the market right now A lot of people are talking about

this shift from uh meme coins or pumpamentals to fundamentals do you think that that is what's the next big narrative that you think and I let's not touch on AI uh because I know that you have lots of thoughts on AI we could do a whole other episode on that so uh yeah do you think that where do you think the next narrative is that comes uh and I'm not talking about the next Casino I don't expect you to predict what the next nfts or meme coins is the honest answer is I have no idea I I do think there's going to be a lot more energy around real world assets and tokenization and stable coins those are probably going to be the really really big stories as you start to see you know much more stalwart institutions GBS

Global Banks coming into the space and starting to do stuff alongside crypto onchain I think that's going to drive a lot of uh excitement in the industry um but I've never been very good at predicting narratives so take all that with the grand of salt um what I tell people on our team and what I tell people generally about Venture is that our job as VCS is actually not to predict the future because nobody can predict the future uh I've I've been in the space for a long time and I've seen I know all the investors in the space none of them knew how it was going to play out everybody had a guess even though they even though they might say they do right even though they might say they do I guarantee you no nobody got it right of how this industry was going to

play out um but the things that great investors do well is not predict the future but to notice the present right can you actually see what's really going on can you actually see even when it's a small number of people doing this thing ah this this little Community whether is you know us investing to defi in 2019 back when defi was Tiny you know was 2030 million in tvl on these projects and say oh this little experiment here I think this is going to be really big someday um that's the job of a VC but predicting the future I think is a Fool's erand so I don't know what the next narrative is going to be but I do know that uh whatever it is it's probably already here you just have to pay enough attention to see it and coming out of Das what I've heard is

there was a lot of momentum for rwas and stable coins is that is that why you're feeling that that could be the next big thing that maybe not even big thing might be the wrong words but the next thing that a lot of gets a lot of attention I I think it's already happening right I me you can see it from all the institutional adoption but you know if we see that macro is kind of choppy and things are things are kind of range Bound for a while what is really going to animate markets the answer is you know what's going to be the marginal change if it's not retail investors coming back into the space because macro remains very mediocre it's going to be institutional adoption and that is the trend that's going to continue regardless of what's happening on the macro side not to mention the setup in the

legislation that's coming in the US at quite a rapid speed I think faster than any of us really expected I mean we'll see it hasn't come yet but it seems like they are moving very quickly and really pushing especially on the stable coin legislation side with the genius act and other Z absolute pleasure to get you on the show today thank you so much for your time greatly appreciate it thanks for having me man thanks for listening in everybody have a wicked awesome day I have to remind you all this should go without saying but none of today's episode was Financial advice this was for entertainment and educational purposes only if you are investing you should only invest what you're prepared to lose investing is risky stay safe out there do your own research before I let

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