Crypto in 2023: Predictions Episode

Transcript

when you say it's one that does is is sort of like in juxtaposition with saying we all believe here that this industry is so small and is a speck of dust as a NASA class so you can't really say it's like won the battle like like you know I mean this is why I struggle with any sort of maximalism thinking here which is God like it is so hard to build in crypto because you don't understand the real user base God damn it there's like 10 people using D5 protocols and a couple maybe a million people using nfts like you know what I mean like it's nothing all right everyone welcome back to the inaugural uh cross episode of on the

Empire didn't really work so well but this is the mashup that we've been trying to do for a long time yeah I did we've got the debonaira Santiago Santiago I always give Mark an adjective uh so you're getting Debonair today and I'm gonna get the hopeful Marcus go because we've been doing Sunrise Saturdays and then we've got Yano hey buddy wow no no no no adjective and just to get it out of the way out of the way and usually I would get colorful but I'm wearing this this drab sweater why well when I wanted to match Mike um but I'm gonna do the reveal so the quick one yeah the orange pants but I have the on-chain monkeys rise uh bananas uh sock sock

game today and it's you know one because I love unchain monkeys and and two web three is a big a big topic uh but I do have the Bitcoin pants on because we are going to talk about predictions and certainly we're gonna probably talk about Bitcoin but I had on a purple sweater and my wife said no no you look like a Clemson fan no not in our house are you gonna look like a Clemson fan so I had to change my sweater so does she doesn't she know though Mark purple is the block Works color you gotta come rep the brand you know yeah I'm glad uh every week every week this year I've watched Mark stand on that chair on one foot and experience

anxiety so you know I'm in San Diego I'm glad you guys get to experience this with me here I want to put like a little bow on 2022 so we can move on to predictions for 2023. um if I had to summarize basically this year I think to use a phrase from one of our producers at blockworks we are sitting down to a banquet of consequences uh basically from the last two years previous so I think the story of crypto the story of macro broadly has been uh the FED has probably debatably over corrected to an enormous amount of liquidity that they injected into the system in starting in March of 2020 with the covet crisis they realized that inflation was more persistent and sticky than they otherwise realized and they've been trying to walk that back for the entire year to translate how that's

impacted crypto you basically saw a lot of the most frothy speculative excesses start to get start to crumble one by one and we've started to figure out that crypto was more systemically weak specifically around leverage in C5 than we thought so let me just trace this year basically everything everything peaked price wise in November of 2021 we've been on a steady decline ever since uh and that has led to ultimately the blow up of Tara but Terra Luna back in May of this year we found out that a lot of crypto systemic institutions both uh extremely leveraged hedge funds but also ultimate really FTX and Alameda were extremely exposed to that so we basically seen the implosion of C5 ever since and we've seen an enormous amount

of Leverage that was taken out of the system and so we're kind of sitting here in we're quoting this on December 23rd 2022 and it's been in some ways not a particularly great year for for crypto but honestly I'm going to sit here and say I'm very optimistic for this coming year so I I've got a couple predictions that I'd love to share but guys any other commentary on the year anything that that we might have missed because I was uh it's hard to summarize this entire year in just one paragraph like that I think uh the only thing I'd say is when I I've been around for since 2012 and I've seen two broad like really Cycles I guess in crypto um was 2014 and then 2017. and I think a

lot of times people want to get that perspective in terms of how this compares to Prior cycles and you know I think the the biggest thing here has been on one end it's very positive I agree with you Michael that we started to see like real use cases like when you crypto migrating from what has been largely institutional like infrastructure deployment into what is now felt more tangible use cases largely nfts uh because Depot is really hard for people to imagine like when you look a number of users um and I don't think that goes away I think there are a lot of bad problems that have been exposed in crypto largely recursive Leverage translating traditional Financial practices into crypto that have been largely rejected if you look at all the

collapses it's been you lack of transparency and a lot of things that led to the global financial crisis we've had kind of the global financial crisis moment of this industry the Lehman of the world collapsing this FTX and three arrows and a bunch of other funds and that Contagion um but you know you have D5 shining in many ways and reinforcing the need for decentralization so I agree with you I think but we're in a state where a lot of people have turned sour negative are leaving the industry and rightfully so I mean I think they'll come back at some point but uh but yeah I think this is I've been I've been very disappointed um and largely caught off guard you know with FTX really I mean I was

not expecting that uh the level of fraud that that was happening and and and it's been a bit of a disillusionment uh even though I continue to believe very much in this technology it is really hard to see the level of wealth destruction across millions of people uh because you know crypto continues to gain adoption and so I think we can all learn from this and and and hopefully avoid the same mistakes going forward I think we will I think I think my reflection on this year actually is a maybe a more optimistic one um we've had four we've had four this is the fourth bear Market in crypto so 2011 fell from 32 bucks to a dollar um 2014 falls from I think it was like a

thousand bucks to somewhere around 200. uh 2018 Falls from 20K to 3K and and now we've fallen from what is it 68k to whatever bitcoin's at today um this is the first bear Market in history where people have not thought that the industry is done so I remember 2018 2019 bear Market even sitting down with Mike and you know I hate to admit it but like occasionally after a couple of beers we would ask ourselves if crypto goes away what would we go do well Jason would I never did I was a True Believer the whole time yeah yeah exactly I'm sure yeah exactly uh but in every of every single one of the last bear markets people would ask themselves is is this is this industry

going away and no people are leaving santi's right the disheartened are walking away nobody's asking themselves is crypto here to stay nobody's saying like will nfts come back there's just an inherent understanding that the industry will recover and that is a really unique thing that's never happened before so I have a actually strangely optimistic view going into next year yeah I totally Echo that sentiment and I'm going to wrap it back to the macro piece Michael in that look the the mount gox thing in 2014.

way worse like orders of magnitude worse than than the FTX debacle and look I don't want to minimize the fact that that nine billion dollars is a meaningful amount of money but it's not relative to a trillion dollar industry first of all second it is not unusual to have centralized institutions fail we've had 523 I think is the number Banks fail since the global financial crisis forget the the things that happened in the global financial crisis but since then there's been 523 banks that have gone away

the other thing is when Mount Cox went under there was no really other viable options for exchanges and it was it now there are 499 other exchanges and look we can I don't want to go down the rabbit hole on this and and I would like to leave this you know this perpetrator in the rearview mirror and not even mention his name but the the issue for me is as as Yano said the the positivity of the technology has been acknowledged the flight of talent into the industry is here to stay that's all hugely positive the the wrapping it

back to the macro stuff is I agree that that the banquet of consequences is a really apt description because with the Fed created this mess the fed and all the other central banks around the world by having emergency policies long after the emergency and and why did they do that right well they did that to re-liquify the bank balance sheets the bank balance sheets were horrific right there's a reason the Genesis block has the you know Chancellor bailing out the banks for the second time there's a reason that Bitcoin was created right in the middle of the gold financial crisis it wasn't created on that day it was ready for some period of time a year two years

whatever it was it was released on that day for a reason and so if you think about the the destruction that's been caused by the withdrawal of that excess liquidity in terms of market cap right fang man alone has lost close to four trillion four trillion like just think about that we're talking seven stocks have wiped out four trillion dollars of wealth and you know someone's trying to make who was it it was um oh Wapner when he's picking on pop on on TV trying to say that you know people have lost so much money in crypto I'm like dude judge people lost more money in Amazon this

year than the entire crypto industry that's actually pretty not statistic okay this is a fact right Amazon went down fifty five zero percent and everybody owned it everybody owned it because it's in every Index Fund which everybody owns so I'm I'm gonna come back to to the macro which is we are likely in a recession be like no Mark we're not you know look at look at the number yesterday the GDP was so high 3.2 percent like no it wasn't GDP was negative the only reason we had a 3.2 print is because they released a bunch of oil from the spr and counted it again for the second time

they counted when they produced it now they're counting it again when they sell it as net exports that's just tomfoolery right that's that's not real same things happen in fourth quarter and this could be a positive number first quarter is going to be a Wipeout it's going to be a Wipeout bad number because we have seasonality we got polar vortexes we got Global growth slowing it's going to be a Wipeout earnings are going to be a Wipeout anyway so that's a that's a pressage of my my predictions can I actually I'd like to jump in here because I all everything that we've talked about so far actually kind of forms this uh this first prediction that that I laid out um and so I'd like to maybe just like

transition now from talking to 2022 about 2023 because I know we have all put thought into this I want to make sure we've got time to get through everyone's so I know this is going to sound like opium but I backed it up I actually put some slides together uh I think that the bottom is in for crypto but I don't think it's in for equities so uh this is what I basically I've got some slides here to back up two thumbs way up this this opium chart here let me see if I can share all right so uh this is basically what I think I think um to knit what the debate actually marked that you and and Santiago were having earlier this episode I think right now that you can make a pretty strong argument that crypto has been moving off the back of interest rates it's kind of

this whole thing this year everything is one trade what we're looking at right now is the correlation between liquidity and the S P 500 but if you looked at Bitcoin it looks like a very similar chart but I think an important thing to understand in this Dynamic is that crypto front runs expectations around liquidity so basically everything that ends up happening in the broader Market crypto experiences a couple months beforehand and if you actually I couldn't find a way to match these things up but if you actually went and looked at the price action basically Bitcoin and crypto will lead what ends up ultimately happening in the S P 500 NASDAQ which is driven by interest rates um I importantly I think one of the Dynamics that's changed here is that Dynamic has broken like if you look at the last squiggles basically August on

through this chart there's a very tight correlation between what's going on with liquidity and the S P 500 that breaks around post-may basically in crypto as two important Dynamics have taken hold which is a cryptos being driven by fundamental Dynamics in our space more than liquidity they're not great Dynamics everything's collapsing but they're still being driven more by crypto fundamental Dynamics and also this like macro holder base of crypto which was enforcing this relationship between liquidity and interest rates and crypto they've largely exited the space so right now what you have is a more uh retail kind of holder base of crypto which is evidenced by this great chart that coinmetrics put together which is mvrv so to just give you guys an

understanding of what this is mvrv is market value versus realized value market value is just market cap it's the current price times the circulating Supply realize values an interesting metric that is proprietary to coinmetrics basically what they're looking at is the on-chain price that Bitcoin last changed hands at times the circulating Supply so really what it is is basically a cost basis and the Assumption here is that the changes in crypto price or bitcoin's Price action is driven by speculators so when you have a high mbrv uh that's basically a an indication that speculators in control and it's probably marking a top and then when mvrv is low you're seeing mostly holders that are controlling the market and that is typically marking a

bottom as you can see here we are in a historically low uh period of this measure of mvrv the last time we basically bottomed in mvrv was uh late 2018 early 2019. if you want to look at what happened to bitcoin's price after that low of MVR being 2019 it's basically up only till the next bull market now I'm not necessarily predicting this but it is interesting to note that we kind of generally yes you are yes you are producing it that's your prediction I think this I think ultimately what happens to bitcoin and crypto prices over the next 12 months looks more like this chart than down only and one of the

things that Jason and I have talked about a lot is that a funny Dynamic people just kind of look back at 2018 and 2019 if you were in that bear Market as being this Bleak landscape but there were price fluctuations of up to literally you can see this chart you know five five thousand up to almost fifteen thousand right you know 200 you know 150 to 200 percent basically price moves and I think what we were sort of waiting for is look the market sentiment has to get so bad that Bitcoin could double and no one would be calling for a bull market I think we're almost there I think we are basically flirting with it that kind of uh negativity uh like disillusionment Santiago that you were talking about I think that sentiment broadly was necessary to find a market bottom so

basically I'm what I'm saying is Mark I agree with you on everything that you just said I think q1 is going to be horrendous for stocks everything that's reset in terms of the NASDAQ and the s p has been in valuation terms not in earnings terms but I think crypto is basically front ran that and I think the worst is basically in for crypto I'll caveat by saying if dcg blows up tomorrow or tether or binance we could see a leg lower but I don't think we sustainably see lows from here for much longer so that's my prediction for my first prediction now I want to Second That Emotion and and then throw it back to you guys on the Empire side uh to to to comment but I will Echo it with one caveat the the second caveat so the first caveat is clearly

if if dcg goes goes bust uh and Genesis tumbles and tether turns out to be a total fraud which it probably is um probably not total fraud but but probably bad guys doing bad stuff um I I I I heard a great line or saw a great line today uh fraudahamas um that the Bahamas are are basically the Haven for fraudsters uh always has been uh money laundering all kinds of good stuff but um the second caveat is we need an adoption mechanism to drive adoption right and in the early you know bull market in kind of 15 16 into 17

uh it was just the first introduction into a wallet and whether it was a hot wallet or in some cases a ledger or something like that um in 2019-20 was all about gbtc and in the absence of an adoption mechanism it's hard to get the Fulfillment of the the cycle so while I I've like I said crypto winner ended in June we're in crypto spring crypto spring lasts till you know April next year and then we get to crypto summer the the the angle of ascent of crypto summer has to do with the ability of the

masses to have adoption it ain't going to be gbtc at a 50 discount it's just not so we need something else to get the capital into Bitcoin Empire guys I want to turn it over to to you here because I've got like an additional list of stuff but what are you I'm curious like what do you guys just maybe I'll call you here to go first I'd love to hear what you're thinking about so I don't know if Santi it looked like Santi had a thought on that uh no all right cool um well first first off I really agree with your prediction Mike I think that uh one is just interesting to point out how it how it it leads the market um and leads equities I think that's a great point and the second thing is uh yeah I actually I really do think we'll

see these like I don't know like the price action you know whether it's like Bitcoin going from 15 to 30 or something and no one will blink an eye and no one will even really talk about the price and uh yeah these like big I think big big bear Market runs will will end up happening as well ultimately it kind of goes up comes down goes up comes down until it finds a big bottom but um my all right my first prediction is I think we see the kings of both trading and nfts lose market share so uh I would I would bucket this into like trading being like uh the exchanges and then nfts um so first off I think uniswap passes coinbase and volume in 2023.

um I have another thesis about like fat wallets and how like wallets will be the new they'll be the new wallet Wars but we can talk about that in a second I think C5 fail the C5 failure is going to drive a bunch of users into self-custody while it's uh and uh basically just off of exchanges and so if you actually look at the a ratio that I'm looking at is Dex uh like decentralized exchanges to centralized exchanges the ratio of volume to both of those back in uh D5 summer is that like 15 16 was the high today it's at around like eight to ten percent I think we ultimately hit about 25 in 2023 which would be roughly like two and a half times where we're at right now so I think unit swap volumes

today sometimes occasionally pass coinbase in 2023 I think they really do overtake them I think that is also driven by uniswap's uh push into nfts so first off you just like dexes and the passing the biggest U.S unit swap ends up passing the biggest U.S exchange that's the first one on that note I think openc ends up falling in market share so right now you have like in the in the Bull Run openc had like a 75 to roughly 80 market share today they have like a 40 to 50 market share I think that market share ends up coming down to like let's say 25 for a couple of reasons one introduction of professional trading experiences in nfts like blur uh unit

swap launching nfts they're all these like iterations and experiments and like I don't know if these things will end up making it but like pseudo swap for kind of the amm style floor trading nfts I think you'll see vertical specific uh vertical specific exchanges in nfts right like music uh gaming fashion I think these will all get actually their own um exchanges and steal market share from openc I think Brands will keep launching their own uh White labeled marketplaces using things like wearable kind of like what Nike did um and I think openc will just the last thing is I think they're going to continue to face this really difficult Challenge on the royalty side of things right where you have a direct trade-off between attracting trading volume and

then protecting artists and creators so I think there are some headwinds on on the open C side of things so that that's that's the first my first big predictions that the kind of the kings of trading and kings of nfts open C and coinbase lose market share yeah I think there's a I think there's a huge point in the market in terms of filling the liquidity that is evaporated from the market um you could argue it's going to come both from D5 and C5 uh D5 has been in Bear Market long before rates and inflation started to kick in in March of this year and uh you know in November where you sort of talked um a crypto topped um yeah I think uh the more interesting things that I'm looking at um you know I looked at my predictions

in 2022 and the things that I got right and then wrong the thing that was most exciting that continues to be exciting but didn't really took off as much as I thought it would was stable coin circulation um I think still stable coins continue to be the biggest customer acquisition and on-ramps in a crypto because it's just such a killer use case you don't have to sell anything other than people want to hold dollars I don't I don't buy this argument that the dollar is going to lose its like power in the world um as other currencies have in other prior empires of this set this rule of like 70 to 80 years I think dollars continue to be the preferred currency will continue to be that I think the U.S demographically will continue to be the strongest country um I don't buy this argument that's

going to collapse um and so for that reason like if you look at that stable kind of adoption it went from basically nothing in 2020 to like 5 billion in 2021 so 5x increase from 2021 to 2022. you saw those like 10x increase from 5 billion to like 180 billion and I would have thought that you would have reached a trillion this year and you didn't uh and there's a couple of reasons for that one I think this recursive leverage really dried up um a lot of people were borrowing in stables and using that so that wiped out and then obviously UST like you know terra's native algorithmic stable coin wiped off 20 billion off of that and so you you sort of like the value proposition of algorithmic sable coins is largely gone but I think it really puts um you know the uscc maybe Central

Bank digital currencies take us to a trillion and I think that's both highly positive for the space so I think I was off in terms of timing but as I look into next year I think stable coins will continue to be a primary driver for for growth in the industry uh and usability um largely will come from like highly regulated stable coins like uscc uh so I think that's going to drive a lot of um a lot of adoption and also probably stimuli I think D5 is set for a resurgence um insofar as you have regulatory Clarity that I think is coming and I think just Clarity alone retrospective of how bad or good like I

think just from my vantage point talking to a lot of institutions at this point to your point that you made at the very beginning Jason I think overwhelmingly more people are now a majority of people are now in the camp of yeah we kind of do believe that this is real and that this could credibly be the next rail of Finance uh understand there's a big distinction between FTX and this and the need for and under that underscoring the need for decentralization you see players like Visa actually building in the space JP Morgan's of the world um I think that doesn't go away I don't think this is pure marketing fluff that

you saw in 2018 I think there's real building on interest but everyone's on the sidelines like you look at our conversation with Eric Peters he said look I love I just have to stick to bitcoin Neath because I'm worried about the regular you know touching this stuff because I don't know what that has like implications to my business and so I think next year will be largely Guided by regulation and as soon as we get some regulation and just Clarity I think we'll open up the space for probably what would look like a permission Define the sense of like KY seed and just knowing your counterparty but making a very big distinction between what is custodial and non-custodial what is a protocol and what is a a a a

service if you will and I think Regulators I think the the blessing in disguise from the FDX Fallout is it is it will make it very clear what is centralized and what is decentralized and what is custodial and what is non-custodial and the places where you need a patch and create regulation and where you don't and I think when I listened to Bloomberg when I listen to the commentary of people assessing and diagnosing what went wrong with FTX surprisingly I think most people kind of really do under understand like yeah I think we do need to bring more transparency and decentralization and regulating certain pieces but not all of crypto and I think that is perhaps what makes me most excited about while the FTX thing is

very painful I think it has been and will be a key defining moment of One removing a bad actor in the space that was actually trying to introduce really bad regulation that would hurt decentralization actually he was a very toxic force in DC trying to buy influence and and introduce bills that were going to try to undermine and probably kill the value proposition and viability of defy and I think that opens up a very interesting Vector to to take back the Reigns of like really good organizations like the block by association that are actually trying to to educate but also introduce sensible policy

that is you know that can all the institutional players that are on the sidelines will finally able to interact in the space and I think that will hopefully come true in the next 12 months yeah look I I I don't want to shift because Michael you labeled me hopeful at the beginning so I don't want to shift all the way to Sinister but but I got I gotta add some Sinister here that was a quick mark that was a quick look yeah it it looked um what Santiago brings up is is at the core of of all of this and look I'm not going to go all the way into the complete Sinister but but we've talked about this from you know over and over that that we are in the then they fight

you stage and you know 2009 to 15 first day laugh at you no I mean I'm sorry first they ignore you right they just a bunch of nerds and Geeks playing through magic internet money who cares 16 to 21 then they laugh at you a bunch of nerves and Geeks playing with their magic internet money hahaha not real 2022 to 2027 unfortunately probably uh then they fight you and I I will take the other side SPF is The Mastermind of nothing Caroline Mastermind they are not masterminds they are useful idiots that legislation didn't come from him it came from the top that is the incumbents the banks and The Regulators trying to do

exactly as you said to cancel this this incredible technology that that replaces trust with truth and look that is a monster monster transition that is going to happen right we talked about the red flag law right no one's ever seen anyone walking in front of a car with a red flag no one listening to this podcast has ever seen that but that was the law at the turn of the century when the automobile was created the you know horse and buggy people went and paid big money to the New York Regulators to get them to pass a law this is yet to hire a human to carry a red flag in front of your car so you didn't you know run into anybody right yeah

that's actually wild oh really yeah um oh all right so that is where the term red flag comes from is wow they they paid The Regulators to get a and look the airlines when the airlines came out the train companies tried to do a similar thing when the internet was created they tried to pass a law that made voice over IP which we're all using right now illegal and you know Alcor did not invent the internet but he did kill that bill so he does get some credit for helping the internet be created and Central Bank digital currencies that is not positive for anything anywhere anyway it you know I I disagree Santiago says it's good for for adoption

even Libra would have been positive for the space because it just it would be great Libra's fine yeah but like you could argue that Libra is one flavor of of the centralized currency no no centralized is okay it's programmable look Augustin whatever his name is the bis guy who says yes we should have the ability to you get paid today it's Friday you get paid and you go out and have a few cocktails and drunk texts about the president and we can change the value of money to 70 cents on the dollar or Walmart pays us extra we can change your money so it doesn't work in attorneys like China you do have a surveillance state of like true or Willian like an Opticon of sorts where like yeah a social credit system if the

state doesn't agree with you then it freezes your your money they can do that with uscc today let's just call it Spate of spade but I think you ultimately need to rest your hands on the the crypto is it's sort of like you know when people start using digital money I mean you're gonna you're gonna have unfortunately unfortunately it's Central Bank digital currencies it's just gonna happen but it always comes down to the rule of law if you don't have a strong system it's kind of obviously not not work it might make it easier for Regulators to make your life difficult or like the government but ultimately you know you just have to believe that the US is Con you know has a strong democracy and different branches of power that have

checks and balances and the only reason why they like freeze your money is because you've done something that is unlawful but not necessarily you know something that is I love the opportunity obviously optimism what happened with the trucking no no look I I get your point we saw the dangers of that when the truckers in Canada started protesting and they got like their bank accounts Frozen I'm just like being more practical here that while that that is true today for for your bank account it will be true as well for Central Bank digital currencies but I do think it's still net positive for the space in the sense that people get

familiar and then say okay I have this thing called the Central Bank digital currency what else can I do I have a wallet already set up you get into this flow habitual of saying okay I I interact with digital money what else can I do in the space Oh well there's uniswap and then there's this whole ecosystem of D5 and I can and you start getting a better appreciation for what is and what isn't digital ownership it raises the level but that's why that's why the legislation wanted to kill defy that's that's actually my point right which is I'm gonna I'm gonna I'm gonna I just want to keep us moving here because again we've got I know we're we've got a hard stop here at the top of the house or that soon but uh I I want to share my next prediction because that we booked

like six hours for this we need at least three or whatever I mean spare me the difficult conversation of of the holidays with with family members of like you know you go from being the most popular guy in the party in a cup for a couple years and people like begging at you to like which NF team which asset they should buy to now like oh you're in crypto oh we feel really sorry it's the same tones how are you doing how are you doing yeah it's like guys everyone talks to you like you know what now family member just passed away it's like you know no seriously yeah yeah all right I'm taking us into the next mic I want to get your next I've got a prediction because it

actually dovetails with uh defy and what you're saying about exchanges so I've got one that I think is like slightly more obvious and then I wanna just take a stab at something so I think Mev is going to emerge as the dominant business model for defy and I think that's ultimately going to lead to exchanges vertically integrate and extracting profits from from Mev so basically um if you look back at like the internet all these different things that could have worked right there are three dominant business models that ended up emerging there was advertising vis-a-vis Google Facebook there was SAS which you get basically from like the Microsoft package in Salesforce and there were platforms like Airbnb and Uber e-commerce is kind of a distant fourth a lot of folks struggle to ultimately make

that work um I think something similar is going to happen in crypto and I think when you look at D5 protocols in general uh there's something that I think people Miss especially around like the uniswap debate is around like the fee switch is that's ultimately never how those Protocols are going to monetize there's a very strong stated fee preference in tradpy to have more variable fees like the AUM percentage that you pay uh to an Ria or wealth manager and fees that are hidden like payment for order flow as opposed to upfront trading right so Robinhood kind of put the final nail in that coffin and then a Fidelity you can trade whatever that doesn't mean that value isn't being extracted from financial markets and trading just means they're doing it in a more hidden way that the same thing is going to happen basically for Mev right so instead of an

upfront fee that you're going to have to pay to trade on uniswap ultimately what unit swap is going to do and this I'm borrowing a little bit here from Daniel alexer's like unit chain sort of idea is that at Eunice I'm just gonna say hey look we've got all these users that come to our platform ultimately we don't we got to find a way to monetize we're not going to charge a fee but being on ethereal is very costly so what we're going to do is we're going to create our own set of validators right we're big enough we're going to bootstrap that we're going to arrange and order the transition the transactions on the back end and that's how we're going to extract fees and I'm not necessarily making a prediction about like I think app chains ultimately end up winning I think ethereum and

Cosmos who knows maybe they'll follow the dydx route I think what's more likely is there's some sort of weird shared security model with layer twos or roll apps but that ultimately the dominant business model for all of these defy things and I think part of the reason they've been beaten up so badly is that business model hasn't been clear but now I think it is it's going to be I may be an extracting uh profits by transactions The Logical next step if you think about that for coinbase or Kraken or some of these other exchanges is also to say we also want to get in on this game because uniswap for as big as their volumes are Columbia has 60 million customers and the biggest thing that they get beat up

on their stock on is hey that uh fee that you're charging retail which is pretty notorious for that's eventually going to go away they're going to need to find something to replace it they their subscription Services line item is never going to grow I don't think to the point where their business is going to be valued on it instead they need to switch to a model where they get involved with Mev and they extract some of those profits that they're generating by all the customers that they have trading on their platform and that's either going to lead to Mev teams at exchanges or it's going to lead to maybe one exchange is actually going to launch their own chain I think and start extracting these profits that way that is my that's my prediction but I'd love to get your guys thoughts on that

a couple things in there I love that prediction I think um I think Mev is going is like the business model right now oh like if you look at a lot of the block building strategies in eth it's entirely focused on like arbitraging Mev um I do think one implication of this is that Mev extraction this is like an optimistic one but like Mev extraction actually starts to flow towards yeah the users and the broadcasters in like pass-through ways through things like uniswap or something like that fees go to zero and like uniswap takes takes the fees um for themselves I I like that prediction I do think because of things like Mev you will see an exponential increase in the percentage of

transactions that happen in on like private chains or like percentage the percentage of private transactions versus transactions in the public mempool will it's a so it like all transactions have usually happened in the in the pub in the public but I think in 2023 it will more and more will happen in uh private transactions but I don't even think that's gonna matter that's a good point Michael I think sorry just just one like manifold right who kind of does this right they've got to monetize somehow too so they're going to sell access to those private transactions someone's going to internalize it the same way that Citadel securities does it in public markets today yeah that's a good point yeah I was going to say that really I think when you look at defy I think the biggest criticism has

been what is going to be the modernization of these governance tokens like what is the and I think governance tokens have been a dance around the lack of like navigating this regulatory uncertainty again if you believe that there's going to be like we've discussed this in the past like maybe there is a pathway where things can be this hybrid kind of you just get comfortable around registration and information rights that a token issuer can do and there's a clear pathway that the SEC puts forth where hey look D5 protocols can actually be Securities or whatever you want to call this as long as you know you have two things Market integrity and fairness right and proper disclosures is what consumer protection is really all about and creating Fair transparent markets

where everyone has an equal footing in many ways everything is programmatically encoded so like a lot of this information is in the public you know if you read a smart contract the SEC has created an information Department that I think is is telling us that they're recognizing that maybe okay if things are securities I think we tend to like really be afraid of that and I think a lot of these D5 tokens have been governance tokens trying to say this there's no promise here of anything other than like voting but it sets the stage for monetization maybe through Mev and actually just thinking about uh you know these protocols having viable business models that I agree with you Mike with this I think is complementary to what you're saying which is Meb will be the number one source of profit for these for for viable D5 kind of a viable

business model for D5 protocols it has been time and time again put into question by people right like hospital and whatnot they just say hey these are worthless governance though because DJ Spartan who said over time and time again and I think largely D5 is underperformed because you're in that limbo of okay D5 creates a lot of value but it is leaking via Meb and you know the protocol itself is not really capturing anything it's sort of like a a yeah at the end of the day you're the we are moving from tradfi where there's this seven trillion dollars of of leakage and friction to C5 ultimately to defy there can't be zero

right there has to be money either you know Equity debt or claim on cash flow uh in order for there to be value right a token that simply exists so people can trade it back and forth isn't value and you know uniswap okay great it does all this this volume but if if the token itself doesn't give me a share of the cash flow generated by this decks then it doesn't really have the right function and the other piece that that needs to happen I believe is the the the

taking a portion of the transaction layer fees and friction and creating an insurance pool right the same way FDIC does for the banking system is you know there has to be some lender of Last Resort you know safety of Last Resort whatever it is and think about every industry in the world none of them would function without a viable and robust Insurance market right you could never get a home loan if you couldn't insure your house you would never drive a car if you couldn't insure it and yet we speculate in these assets with no promise of of insurance it just doesn't make any sense so

do you think so Mark do you think is that do you think 2023 is the year we finally get insurance in crypto or at least we start to see the backbone of insurance we're certainly trying we've made two Investments and that's not self-serving I mean we've made two real investments in companies trying to provide that but I I think it's a hard prediction to make in a year because what you what you need is a whole group of people to say yep okay we're in and to me it's like that that boy tweet in you know October November of 21 yes we've all lost our minds and we're

paying too much for these companies but you go first and you know adjust evaluation so on the insurance piece I've been really vocal about this too Mark I think that you'll be like historically even from like you know expiration times no industry is taken off without insurance you know when we looked at last year there have been roughly six billion of value that has been hacked Ronin was 600 billion and uh sorry 600 million and you know that a lot of people look at that and say you know come back to me when I can actually insure against this stuff I was thinking of actually I've been this has been an idea that I've had I think it needs to be off chain because of the correlation risk the problem is and this is what

surprised me perhaps the most this year has been defy yields are lower than treasuries that is irrational it will have to change there's three things that need to correct for insurance to be a viable model right because insurance I think you price it as if you're farming and you're clipping 20 apy fine charge me three four five percent makes it viable for the premium to be high enough given the risk but when D5 yields an Ave like we're just across D5 are like lower than treasuries this model this business model does not exist it's not economically viable to ensure

it's just it's just not right and so first of all it's shocking that D5 yields are lower than treasuries and the East staking yield it just tells you that the amount of like over correctedness that you had in wiping out the recursive leverage in the system but I think in a in a rational steady state Market which you know is is is what your economics professor tells you but crypto is neither rational or I guess steady ever what needs to be treasury should be lower then East should be treasuries plus some risk premium and that defy yield should be higher than the each staking yield otherwise none of this kind of works so that will have to

correct itself and it will in the sense that look we're teenagers the whole industry is a teenager well clearly you are Mark you have blue pants and purple sweater you can see yeah yeah yeah yeah yeah yeah no well exactly and I'm I'm just hanging out with young people to keep myself young it's it's the Dorian Gray approach and I sap your your youthful energy but none but here's my point and I talk about this and people get mad at me I used to I used to tweet out a picture of nine-year-old LeBron James and I would say how much would you pay for the future earnings of this kid they look like a normal nine-year-old

kid he wasn't actually really tall he wasn't really big people say oh that that's just terrible I'm like no no I'm saying that how much would you pay for the potential okay because you have the actual capability of anything versus its potential and when you're young your potential is higher than your actual right efficiency or Effectiveness and so we're I will argue a decade in because the first four years to me don't really count because it was kind of a science project and wasn't really robust but we're let's say we're 14.

if we're 14 years in to a multi-hundred year evolution then our capability today versus our potential of the future is is very low and I think that's okay and so it's yes it's frustrating that we can't like all realize that yes one pool is a huge advantage over lots of little bullets you think of Health Care insurance every company has to have their own pool that's ridiculous every state has their own pool that's ridiculous there should be one giant pool and that's when Insurance costs go

low the effectiveness goes up but that's not good for who it's not good for the people who process the claims which by the way best performing stock in the s p over the last decade United Healthcare a company that should not even exist all they are is a claims processor there's nothing to do with health or care they basically pay big money to the government to get a license to steal from all the participants that they get their insurance that way um that doesn't need to be the path for crypto but you need I I love I love your point about it needs to be off chain if you have a correlation composability is your worst

enemy when you're trying to ensure stuff now claims processing is just purely how the smart contract behaves it's quite predictable there's no ambiguity in terms of in terms of saying oh you know what you didn't read the Clause like if there was a hack it's very clearly the smart contract we all understand this technically practically two correlated next is never going to work this is never going to scale I want to go back to one point because people look let's make this exciting for people right we talk about smart contracts claims process people we're going to put people to sleep here which is maybe a good thing you know but uh free melatonin is what I tell people when you want to have free email Tony just listen to Empire so anyways I think people want to say okay have we bottomed people are going to ask

us this question time and time again I don't have I don't have a crystal ball I mean I I tend to look at rest my case on fundamentals the need for decentralization there's all these secular Trends over the next five ten years you start seeing great entry points but nonetheless my I've said this in Empire time again I thought the bottom was going to be a billion uh sorry a trillion market cap revise that down a trillion one one t i revised that down to 800 when Tara happened because I thought that was a huge blow secular specific to the industry that needed you know that I had to adjust and I said it's going to probably go down to 800. we're at 840 now it feels like we're consolidating

Michael I agree with your point uh I think there are a couple of things I think probabilistically a couple of things that are continued to be irrational are Luna still trades at a billion FDX still trades at 280 million Celsius trades at 360 million and Voyager at 90 million market cap that should all be zero I give it to you two much bigger ones right I've said over and over and I'm I'm regretting it now because like the bear Market can't end crypto winner can't end until Doge and Shiva are zero no I disagree oh yeah because I I largely disagree because there is value in memes

a lot oh explain come on bring It explain that to me I'm so on the fence about this well I I I I I I got I got so much criticism around this but I think when I tweeted look I think there's been this idea that in crypto we try to yes emphasize the pure pristine qualities from a technical standpoint is a huge breakthrough and somehow we feel really dirty when we say there is a lot of entertainment value when you deliver entertainment there is a lot of value Netflix is a very valuable company they produce they started producing killer content Las Vegas there's value there people want to be entertained

obviously gaming is a component of that but the value of just there is also the ability to speculate and humans always wanting to speculate and you're allowing that to happen it's not sex it's not nice but it is a big component of why people come to crypto let's just accept that and as long as we accept that and we're honest about that I think we'll just kind of move on I mean I'll actually no I'll actually accept that historical very powerful way to convey Tesla Shares are simply a speculative vehicle right the company like like they can't get their value 2008 the market has not traded rationally

like like let's just accept that people try to like make mental gymnastics of discounted casual terminal that it's all [ __ ] you're the gold seeking for something that it's like people are thrown away but actually what a stock is but but okay other than the fact that that's what an equity actually is okay okay I'll go with your definition of [ __ ] these huge P ratios of like just way out of whack and like Amazon has never turned a profit other than AWS but most of their like business lines have never the unit economics are terrible you just cannot justify in your right mind from a fundamental standpoint how things trade the only thing I want to say is I think we borrowed bottom at 700 to 800.

even though you might have dcg tether might be like a really big blow I think the other thing that I would just wanted to comment on was it does when people talk about the flipping of eth versus Bitcoin I think that Eve has been considerably stronger and and resilient the transition to proof of stake there are criticisms around censorship of the proof of stake model but the idea that it was successfully delivered on the merge is very powerful well layer twos are a huge setup for mainstream adoption I think alternative l1s are struggling not dead but struggling and I think uh ethereum is going to get much more love and you could probably credibly see of

Liberty with Bitcoin like like the value proposition of digital gold versus that's a good that's a good prediction it's a good creation and I I what I like about it is it it helps me with you know I I have voiced on many occasions my you know three scenario mental model right I mean I talk about the internet the internet yeah Inlet Internet Protocol and then that's the very base but then on top of that you got TCP then you got FTP to transfer files SMTP for email https for uh websites and then www.thetize it all together and I can't decide whether we have that model a stacked protocol stack

where Bitcoin is the base layer and then file coin sits on top of that like FTP then you got ethereum is the www dot and then something wins for SMTP HTTP is it cosmosis Solana is it Avalanche is it polka dot I don't know or are the Maxis right and it's bickeling lightning L3 L4 whatever or is it a bunch of l1s and bridges and what Santiago says to what I hear is it's it's scenario one that it's you know Bitcoin and ethereum why would you need Bitcoin when you the ethereum is a sediment layer like the same as Bitcoin

like like you're you're you just don't need Bitcoin understand like like I'm not saying the Bitcoin goes to zero I think again this idea of digital gold can oscify over some decades I guess but but I think like the the use case of the sediment layer and fabric of the internet doesn't it doesn't need to replace something it just sort of weaves in right into something that the internet never saw which was transacting and foreign like I don't want to get into this huge debate but I do think that look they as everything it depends

it depends and and it's a bit early to to call it a day but I do think that like the thing that ethereum just generally proves stake systems are gonna have to solve is this this this tendency to Cluster at the same with the proof of work can generally speaking distributed systems have a probably a natural tendency to centralize and so you have to counteract that um and and I think that the challenge for ethereum will have to be how do you how do you like remove this centralization uh and censorship and I do agree with you in that respect Bitcoin is stronger today can I make a Bitcoin argument because I always I

always I feel like I always come down on the side of ethereum but one thing that I wish I heard the Bitcoin people say that I just never hear enough is Bitcoin has decided to compete on a monetary angle and eth has decided to compete on a technological angle I don't hear anyone talking about that threat like Bitcoin is basically in a league of its own it's the original app chain it's the store value money app chain and it's the only one that does proof of work people like his proof of work or proof of stake better I think there are merits to both but Bitcoin is the only one doing proof of work and now everyone is doing proof of stake that so just in terms of the competition that you have out there Bitcoin is going to win Bitcoin also Santiago to your point has meme value

Bitcoin has won on the hard money store value meme sorry I think this whole thing that eth is trying to go down of deflationary money ultrasound money is a losing argument they're just never gonna win that it's already like I did the bank list thing money printer Gophers yeah I think no I just I I love I love the bank list guys and I I understand that Eve can become deflationary but I just think I think the mean value of it I think Bitcoin is going to have to break its hard cap and tail emissions and I still think it's gonna win the hard money use case I just think it's already cemented um because they've they've like recorded themselves off but they've won this use case okay well like can we just like can we just step back for a minute and say

when you say it's one that does is is sort of like in juxtaposition with saying we all believe here that this industry is so small and is a speck of dust as a NASA class so you can't really say it's like won the battle like like you know I mean this is why I struggle with any sort of maximalism thinking here which is God like it is so hard to build in crypto because you don't understand the real user base God damn it there's like 10 people using D5 protocols and a couple maybe a million people using nfts like you know I mean like it's nothing no but you're you're okay but but Santiago here here now here's the thing you said earlier that that you didn't

see the the dollar losing its Reserve status well let me let me posit something gold is the only money that exists in the world money is an asset that exists in the absence of a liability okay gold is the only thing to this point that that has survived time there have been a lot of things that have been money over time puka shells and stone Wheels Etc but gold has survived for 5 000 years everything else on top of it the things that we think of as money sits on top of gold gold is held by central banks central banks then create currency out of thin air used to be backed by

gold no longer backed by gold but they create fed wire money okay not money currency backed by debt each country has their own version of it green yellow red whatever here's the interesting thing I will argue that Bitcoin came along and solved the two shortcomings of gold portability and divisibility like if I had a bar gold and I were a strong guy I'm not a very strong guy but if I could break it into four pieces share it with y'all problem is I couldn't break it right physically I just couldn't do it second if I tried to stuff it in the computer it wouldn't go so with Bitcoin punch a couple buttons I could send you the equivalent of a

quarter bar gold in Bitcoin easy so I'll argue that the Bitcoin replaces gold as the base layer of money now what does that mean it means that other times central banks will adopt it means that then all the Fiat back to your point about cbdc's will occur I agree they will most of them will be Sinister but but they will occur and they will sit on top in the Fiat layer above the base layer now where's ethereum fit into this well I don't think it can displace Bitcoin as the base layer I think ethereum can be all of the things on top all of the transactional things that we use as currencies or payment rails

um but that's that's how I really think about the difference and the one subtlety is I actually think the dollar is going to lose the REM and B will become the next Reserve currency it won't be Bitcoin Bitcoin has got 70 80 100 years to go before it gets there but the remnb the Chinese want that to be the case it's already in the uh there's two great books I don't want to get into it I don't I don't want to get into a global Reserve currency no no we don't but yeah there's two good there's two you know what I mean like I I had that view mark I'll just encourage you if you haven't read the book um on it's called on China not Kissinger there's another book on when China rules the world by a French historian China's

never had imperialistic Ambitions it just wants to secure natural resources and the second one is this guy Peter zahan this book is the end I hate it well look I don't agree look Peter and I don't I mean we just have different it can be really radical and look I'm not American but I do think that he brings up purely the point on demographics over the next 20 years and how that informs your view of who China has a huge demographic problem and and the US doesn't and for that reason I think it does but it doesn't the thing that he doesn't talk about which is I think wrong he he rightfully talks about the Aging Boomers their Boomer population is bigger in our Boomer production but he doesn't mention the fact that we have 80 million

Millennials of which you three are part of that they have 330. they have 330 million Millennials most of them used to be in abject poverty now they're in the lower and upper middle class and he doesn't talk about that and that's the part that that I think is a little disingenuous but again back to yanna's point let's not let's not debate that but let's get back to a couple big yeah because I don't actually think you guys are disagreeing on bitcoin versus ethereum by the like crypto first of all is like a very technical space and I think people over index on technical arguments a lot like there's this proof of work or proof of stake better I'm approaching this from a brand standpoint I think every Big Brand of which Bitcoin and ethereum are both Brands you get one

word that is associated with you just one and the problem is what has served ethereum so well in part is this transition of proof of stake and faster transactions and blah blah blah they are Fang and Bitcoin is gold and you don't get to be both in people's minds that's just not how Brands work I just I just don't think eth will compete on its own separate scale and I actually if this is the same reason why I hate this whole argument about everything's going to be built on bitcoin that's not the brand the brand is safety security gold hard money and then the brand on eth is innovation new use cases smart contracts Fang and I I don't that so it's not like a I don't have a small I just think that those are the chosen markets and ways that they've decided to

position themselves and compete and I think those I don't think those trajectories are going to change I think those cement those trajectories nor are they mutually exclusive nor are they mutually I very much agree with that all right let's uh in the theme of like other big predictions you know I know you have you'd have a couple predictions here so do you the only thing that's gonna get the people to stand up you got any spicy ones for us here I have one or all right so I'll I mean I can just share a couple of mine I've got I think there's gonna be complete Bitcoin minor capitulation I don't think this is a unique take but I mean conditions for Bitcoin miners are just not to continue down the Bitcoin Rabbit Hole too much but like it's bad right now and it's just getting worse right we

have like higher Inc uh input costs we have lower output value we have elevated Energy prices we have just this like highly stressed economic environment um that's been really bad for Bitcoin Miners and it's going to continue that way and right if you look at the data right now I think this was from I think I saw this on glass node Bitcoin miners are selling 150 of their coin every day which means that they're not only liquidating their entire supply of newly mined coins but now they're having to dip into their Bitcoin reserves so uh I think that's that's one prediction I'd have I think another prediction would be um there every four years we see Wars in crypto so 2017 you had the exchange Wars like binance came onto the scene came

after coinbase like just these big you know big exchange Wars that was 2017 2021 we saw um in 2020 was the L1 Wars right like Solana avax obviously Luna blew up but like Luna like Terra ecosystem like that was the L1 war and I think we're gonna see the wallet War um and if you look at wallets today the wallet experience is so bad right now the and and the reason is because there's no competition there's only one player it's metamask right you have like like metamask is basically dominated wallets for the last several years but I think now we're gonna see these like big wallet Wars not in 2023 but like starting to emerge in 2023 but really

into 2024 and you have folks like Phantom uh Argent Brave uh the big players are launching their own wallets like Ledger launched a wallet coinbase launched a wallet I bet I bet uniswap launched his wallet and then there's new ones popping under the scene that are raising money that I'm seeing some like interesting pitches for so I think uh I think and then account abstraction I think like one of the big buzzwords of next year is going to be like smart contract wallets with like account abstraction I think that's gonna uh introduce like a really good user flow to wallets that we haven't seen so far so that'd be my other predictions that um yeah like just what wallets I don't pile on that I actually think it's the end of the hot wallet

um beginning at the end and that that we're moving to the browser slash iPhone moment and I actually think it it is the The Ledger Stacks but there are some competitors but look the internet was a horrible experience until Marc Andreessen created the browser the mobilenet was a horrible experience until Apple created this and now we're all going to have an HSM we're all going to carry it now it should be this right Apple should have an enclave and Andrew should have an enclave and it should be air gapped and all that stuff but they're not going to do it because they won't give up the good to go for the great so it's going to be a new entry and and I and I do think the wallet moment but I think hard wallet

rather than hot wallet is the bit the big Trend that we're all going to carry around on HSN yeah we we had a good discussion on the Solana phone and that kind of thinking I think will be very rewarded whether it's a Solana phone or you know um some other phone but I do think that uh that uh just I think the valley proposition most people naturally gravitate towards a hot wallet because this is so easy to set up but by default I think you're gonna have uh HSM in your phone and and I think that you know covers two-thirds of the world's population so um the other just to I think those are great predictions Jason which I largely agree with the other one

I think I was thinking a lot about you know putting macro to the side I think what what was a big you always I think need Catalyst to Spur the next run it was D5 uh and then nfts uh last cycle I think next cycle will be gaming um I think that is going to be you look at you know yoga Labs uh hiring the Activision Blizzard uh executive I think that is I think continue to see a lot of human capital and like really good developers really good gaming folks enter the space I think there's a lot of really cool stuff happening there again I think people have not been very patient because it takes time A lot of time to build Killer

games but they're gonna come they're really well capitalized teams um the second quick prediction that I'd make is I think there's going to be a lot of consolidation probably two-thirds of the startups are gonna die Aqua hired the other thing is coinbase probably gets acquired I mean it's sitting at 8 billion um maybe this is at some point a JPMorgan comes in and sweeps it I think it has regulatory modes it has Brand Power it's synonymous with buying crypto in the US I just think that at some point it's going to become an acquisition Target and people praying that not happen I really I hope yeah I mean it's just it's just trading at a pretty attractive place for I think an incumbent to

to get a leg up on and faster and and look it's you know it's trading at the same value as it is it's when it raised money privately uh last round in 2018. we've got five times as many users it's got you know almost 10 times as much revenue even though yeah I think U.S regulated exchanges are shining in this whole Fiasco of FTX and a couple other exchanges abroad I mean I think it has Kraken and coinbase uh probably cracking IPOs at some point uh Jesse's departure or moving into a chairman role and I think is setting up and setting the stage for an IPO at some point um but yeah I have a I have a prediction that sort

of dovetails I actually want to push back a little Jason on your minor prediction I think it's the bottom for miners already like I don't think it gets worse from here I think this is about as bad as it gets like also if you look at you can see bitcoinetreasuries.org you can see the amount that binders actually still have on their balance sheets um it's not ultimately even that much that they still have and uh was of course scientific the largest in North American Bitcoin miner just went bankrupt and part of this is the thing that traditionally happens usually when there's a bankruptcy of a big company like that that was marked those are the bottoms instead of like you know the what what's to come so I think it's the end of paying for Bitcoin Runners I really agree with your prediction on wallet Wars

um because if you think about like Ben Tom and Ben Thompson the strategory guy he talks about like aggregation theory that plays like plays an we haven't seen that play out much in crypto but I think that still applies to crypto basically like if you control the relationship with the customers ultimately I think you're that's a much more valuable thing than the the farther you are away from the customer the more your business is going to get commoditized and I think that leads actually into uh I think there's gonna be if there's going to be M A in crypto I think it's going to be vertical integration as opposed to horizontal integration like I think businesses because there's no new consumers entering into the space what they're going to do is say we're not going to get more consumers how can we

squeeze more margin out of the stack in companies that have a lot of uh like have big customer bases basically will try to vertically integrate other parts of their stack that sort of is like the app chain thesis but I actually think you might see like a big wallet provider make some acquisitions further Downstream well Michael I I I'm glad you brought that up because that was my last prediction you're already starting to see that to some extent dydx departing from ethereum and trying to build their own I think is is indicative of that the other one is step in right which is I think there will be this from a go to market standpoint if you're someone like step in had a lot of early traction became the number one app at Solana then it was breaking Solana then it and so what's to stop them from them

building their own chain and really owning the full user experience and capturing more value so they've now launched an nft Marketplace uh they started with a walleye but then have expanded and what's to stop them from building their own L1 I mean it there's really not much when you just fork and own really the user experience um because a lot of times it becomes difficult right when you're competing for Block space and that tension continues to exist um even though gas fees have come down dramatically right and you have l2s it can support that but there's always going to be I think a slightly higher skew and incentive for a project consumer-facing projects that are going to be the ones that really dominate

to go out and build their own chain and own and be vertically integrated and really be very tight in in managing the user experience end-to-end and so I think that's going to be something that uh is going to be a big Trend over the next couple years I'll I'll add one thing to that sorry to like the prediction around wallets there actually and and this vertical integration I think wallets in the past were only about holding crypto assets is like just the place that you held your crypto assets I think we are moving into a world with like what you guys are talking about with vertical integration and with wallets getting better and better account abstraction getting introduced where the wallet experience is going to feel more like your digital home instead

of just like the place you own your crypto assets um and Santa you mentioning step and broth like made me think about that like with the introduction of like ens Soul bound tokens poapps decentralized social um all these Brands actually one of my predictions for the year was also like all these Brands every brand is going to launch a digital collectible it's like the next era of the of the nft space um like with the introduction of brand nfts um I think the wall experience will just feel like your digital home instead of the place you hold your your eth yeah it's your digital identity completely agree and and it's everything right literally your identity your reputation will live inside the wallet yeah and you

know I think the big thing is is this idea that um nft is not a monkey jpeg right this is kind of what it got labeled as as this you know it's a collectible or digital art nft is simply a line item on a ledger and it is a way to own everything so it's digital property rights and it's going to eventually be everything right every asset every stock every bot every currency every commodity every piece of art every piece of real estate every collectible car every medical record right I mean the idea that today that we don't control our own medical record

it's just insane right why do these two big Behemoth companies that don't talk to each other and I tell the the story and my mom almost almost died because of the you know they couldn't get her medical record because the one system wouldn't talk to the other it's just ridiculous right and now there's even a more scary yes but you need um you need privacy which is 100 and and PRI that that is a prediction I will make is it privacy uh coins privacy tokens privacy Protocols are going to make a big move and they'll move out of the Shadows like I just said I I used to joke or I I mean I used to laugh when the the government types said oh you know crypto is only used by

terrorists and and money launderers I had no idea they had inside information and that they were the large money launderers so yes it was but now these privacy coins privacy tokens I think we'll we'll have much more important use cases because at the end of the day I I love the fact that I can transact T instant uh anywhere globally borderless fine but the idea that someone can then go into my uh wallet and look or into my entry and see everything I own like the the this company we invested in actually they do

data analysis on chain they went to the garyvee uh uh V con you know has a big event he had 24 000 people go to this thing and they all had to buy an nft to to get in well by putting your wallet to that nft you opened up all of your transactions in history and ownership and they could actually perfect uh it's a perfect cookie it's a perfect cookie because it you can't erase it and I mean there's no surprise why brands are coming into the space right I mean when Tiffany air drops you an nft when you enter the store and sees that you own all the you know a couple million dollars of nfts well they have a pretty good

understanding of your cut your who you are better than Google analytics amen amen and so web Works we've got the premise baby okay I think the the last thing the permes that's right yeah stable dovetailing on unstable and the only thing I want to say is I think one of the more unexplored but things that will really take off finally is payments uh you know Visa coming into account abstract I think payments really is one of those when you first come into crypto it always seems so obvious it's like wow what you just said Mark Borderlands frictionless all these kind of like the traditional Financial system is putting trying to stitch together a [ __ ]

of things that don't talk to each other really well 70 year old technology Visa runs on a Mainframe computer written in color so I think uh I think payments will really uh take up but again you need regulation I've got I've got one this one's pretty out I haven't heard anyone talk about anything like this but I think basically I think we're going to see the rise of professional like basically guilds essentially of skilled labor that organizes itself into distinct sections so let me tell you why I think this is going to happen basically what happened uh in 20 like D5 summer took off because of yield farming where people wanted to attract liquidity to their platform now there's a much bigger push towards labor yeah we don't really want this mercenary liquidity

where we got we we give you a bunch of our tokens and you just dump it on the open market that was like good for a while but it didn't ultimately work now what we want is people actually contributing because of the ways that dials are structured today they're what do they do you know we're seeing calls for a more professional class of delegates right and you also need skilled labor the problem with labor is it's not fungible like capital is someone needs to underwrite that labor and I think what you're ultimately going to see is either Dows or these big associations of people who do this sort of thing right they look sort of like a mix between like go look up guilds like the blacksmith skills or that or whatever I think you're all you're gonna see that in crypto and they're gonna

wield actually an enormous amount of power and there's going to be a balance between labor and capital that exists in more traditional markets between like unions and people who own and manage companies and equity and I think that same dynamic's going to crop up in crypto that pose really well for the current labor structure and what people don't want to go back to traditional work and working from home and certainly web3 open source systems really enable that yeah well look ultimately someone's gonna crack the nut that um your skill set has value your accomplishments have value your expertise has value and your auction activity has value yeah your own chain

activity actually and my big thing is like Twitter right if I like a tweet and it's on nutrition has no value there's no value in me liking that too because I have no expertise in nutrition um it's just my personal opinion if I like a tweet on asset allocation I would like to think I might be adding some value there and so but yet every like is the same right every user is the same it's like jobs right we count jobs by job well an IBM executive making 200 000 a year is different than a barista it just is don't I'm not saying it's good or bad just but they're different and they have different impact on on you

know the the economy and yet we look at the jobs number and we just count the number of jobs no there's a quality level of jobs there's a quality to a like there's a quality to a participant in a network there's a quality to expertise or or Guild membership and so and and communities in fact that's why I'm wearing my on-chan monkey Socks today right I value being part of that Community a community that rewards Good Karma right when we see a member of the community do something good we give them bananas and that's Mana to you know contribute to to a social project you know it's a small little thing but these communities these guilds these these associations and that intermingling of our physical life and

our Digital Life is right so that's why we're all here it's that it's the excitement of the digital age and this extract that Mark is why Dogecoin has value wow full circle oh Micah I'm signing off all right that's my contributions don't go none of this is Legal Financial advice for that matter I'm not endorsing coach I love it dude you know the Empire that was well played and on that note I I wanna look I we should do this obviously more often um I want to thank blockworks for the privilege of of doing this for the past

year I have is the best hour plus of my week I say every week uh I I'm really grateful that Mike and I have had the platform and Yano for you and Mike to to give me that that privilege um I admire what you guys are building I I love this community I love the fact that people give up time every Saturday to listen to us and drink their coffee and that means a lot so I wish all those those people who have like come up to me at crazy places airports and football games and said hey I listen to you guys every Saturday um I wish them all happy holidays uh uh and all the best for the new year um it is really a great privilege to be able to do this

yeah highlighted my year as well you know we started this project Empire a year ago and uh it's been I think especially in this time of Market where crypto genuinely just needs pure largely unbiased just education and awareness and and it's it's uh what you guys do here is very special and it is the highlight of my week too so thank you guys for that and happy holidays everyone go watch Harry Potter it's a great time to do it I I knew it would be an uh an end of year review with Santiago and plug Harry Potter but it was kind of a Debonair Harry Potter now they look at it keep talking like this I'll do it an

episode with you every week um guys Echo that sentiment you've given uh me I really appreciate the contentment mark from from you I've really enjoyed doing this with you and it's on terrible you guys produce great content as well appreciate you guys sharing your time with us and guys uh it's been a year um just to conclude no one has a crystal ball I go into 2023 firmly stating that I feel optimistic so I'll be ready to eat those words but uh guys thanks for spending your time with us and uh we'll see you in the new year all right thanks guys [Music]