Debating non-EVM Chains | Haseeb (Dragonfly) vs. Avichal (Electric)

Transcript

that's sort of where like I start to get a little bit paranoid where I'm like okay like what's happening is everybody's like not only am I optimistic about this now everybody's optimistic about this and therefore everybody's assuming a bunch of stuff is going to happen over two years that's actually going to take like five or six years and that starts to worry me a little bit because then that that means like the short okay I mean you're you're saying that this worries you you're saying that you're paranoid but you're also like megalong all of these things so in what sense in what sense are you that paranoid hey everyone if you have been listening to Empire you know that Santi and I are fed up with affordable fees and frustrating transaction speeds that make the onchain experience basically unusable so the arbitrum team reached out and they showed us the

platform they showed us what you can do on arbitrum whatever you're doing you can experience frictionless transactions at lightning speed on arbitrum so head over to portal. arbitrum doio and check it out what's up everyone before we jump into today's episode I'm excited to share Empire's First everever Security partner Harpy is the best tool to prevent your wallet from theft in real time Harpy is not just a security solution they are a peace of mind solution but don't just take our word for it Harpy is the only wallet security solution that protected 100% of its users from attacks like The Ledger one and Q4 which was an offchain signature attack to learn more about Harpy click the link in the show notes or visit Harpy doio Empire what's up everyone

before we jump into the episode little plug for digital asset Summit coming up in London March 18th to 20th tickets are pacing so far ahead of schedule that we had to decrease the discount codes so instead of Empire 20 it is now Empire 10 head over to the website digital asset Summit D London March 18th to 20th use code Empire 10 and get 10% off your ticket see you in London what's up everyone welcome back to Empire we have uh our our our two favorite guests on the show we've got a hi and a Vel we've got uh four guys in four different time zones here so um yeah welcome back to the show guys good to see see you thanks for having us yeah you going bring the energy I am going to try my best it is

early morning here in Singapore but you know whenever whenever I'm here with a beachel we always have something to fight about so I think it'll make it work good well I'm excited for some beef here I think uh all right so last time we I had you guys on um we were talking like kind of mental models for investing in crypto this about maybe seven or eight months ago hard of the bare market and you guys basically laid out your kind of bull case for why you guys were excited still excited and what what I would say is the heart of the bear and now I think consensus is that we're we're back on maybe beginning of the bull so I think maybe that's the best place to start has if you could maybe kick us off and then aich I'll ask the same question for you like what is your

framework today for where we're at in this cycle so you know bull market bare Market is is fairly difficult to quantify in crypto the reality is that if you look at the last year like 2023 I think the lived experience of most people in crypto is that 2023 was this year of Contrition it was a pretty difficult year like things were pretty slow and icy and not a lot of deals getting done and uh you know a lot of a lot of really challenging moments with you know the SEC coming after to the industry a lot of regulatory action uh the reality was that if you actually just go look at the chart of crypto market cap over 2023 we were up every single quarter basically things if you if you just look at the

line it just it basically is just up and to the right almost uninterrupted for all of last year now basically up up until Q4 everyone was calling it a bare market and I think the way in which they in their mind it was a bare Market was just the vibe was kind of bare markety and I think the totality of hey we just we're still feeling the FTX overhang we we're B getting put on public trial there's a lot of negative energy and attention on crypto and that feels bare market and there's not as much retail engagement right and that I think that's how people think about what it means to be in a bare Market as opposed to what are prices doing um Q4 really feels like when the sentiment shifted Q4 was when you saw you know the the crazy salana runup uh ordinals

activity all the retail engagements start to come back price actions start to come back and then basically q1 of course the Bitcoin ETF has has driven a lot of the story for uh January so far um so my my sense of where we are in the cycle like you said we're we're in a bull market now I mean if price isn't the indication the retail engagement and the the the positive sentiment that you're seeing from retail institutional investors exchange volumes flows all those things are there now so it's hard to argue that we're not in a bull market um I think the question is where are we in that bill cycle and I think most people I I more or less agree with the consensus I think last year I was probably a little bit more out of consensus now everyone pretty much agrees this year is going to be a good

year there's a lot of positive catalysts it's hard to really even see uh what there is to be worried about because it looks like all the regulatory risks that we were scared of are really getting put pushed back and minimized by just how much energy and consensus is being built from the institutional side and even the legal and Regulatory side around crypto so it feels like a really good year AEL maybe I I would assume you agree with h so I'll throw a slightly different question to you which is if we are let's assume we are okay back in this bull market I agree with the c we probably started at some point in 2023 and now it's like kind of consensus that we're back how do you position as as a fund for being back on uh I think you just get more paranoid

like I think what's going to happen like the best time to invest is when it looks like a bare market and everybody's scared and the founders that are coming in have some true conviction and they you know it's like hey I've been doing a PhD for five years and and I want to productionize my research like those are the best people to be investing in um the opportunists tend to come out when when it's clearly a bull market I don't think we're in like Peak bull yet and so you you start have to you know having to have your sort of you know spidey sense going a little a little bit more and like making sure people are here for the right reasons uh not to not to sort of milk it and you know you don't want to accidentally end up in the next FTX um

uh so you know I think you just have to be a little bit more cautious actually um I will I will add I think you know it's when everybody is on the same page that this is definitely a bull market that I also think the market has a tendency to inflict pain so I I while I agree that we're probably in a really positive sentiment and I think we're probably going to be in a good spot at the end of the year both in terms of you know market and also just building and shipping there just so much backlog of great stuff that's going to ship over the next three six nine months um which are really positive catalysts um I also think that it's entirely possible that we're just over our skis a little bit like the sentiment is too good relative to what's actually happened um you know

like I think that the ETF is a good example here it's like I think a lot of people's expectations is that the way that the first couple of days here have gone the first week which is got a couple billion dollars in that that's just going to scale linearly right it's just going to be now every week another billion dollars comes in and so you know we you know we should just be at $50 billion pretty soon and that's that's not really how these flows are going to work I think and so I think a lot of the sentiment when it gets too positive um people get over their skis a little bit and then it needs to sort of pull back and um that's that's my guess for kind of where we are right now actually which is which is pretty typical if you look

at prior cycles and stuff like in this part of the prehab cycle like it's it's very typical for people to get over their skis for some reason uh and then it pulls back so one of the things uh both of you traffic in private and public markets uh perhaps iive you guys more so on the public side but nonetheless um how do you think about like going back to what you said as Steve of the the indicators that you're paying attention to as it relates to where we are in the cycle and I appreciate you guys invest through multiple Cycles not just like a year Horizon but um from a relative allocation of dollars certainly has felt that private rounds have really ratcheted up you're back to like the valuations are are back up the size of the rounds are increasing the type of

Founders that are coming to the space are not just like the true crypto natives how do you think about the relative opportunity cost of taking more duration a liquidity risk versus putting it in the public markets um it's also been a rally of Have and Have Nots like salana is G up a ton ethereum not so much but still prices are down 50 60% from the highs so general question to both of you how you think about like allocating dollars in this current environment uh no the right question to ask um you know not all of our funds have the ability to just go buy Publix and say okay well you know I like Ethier versus uh doing a private round you do need to pick your spots in a situation like this where uh you're right there is a lot of catch-up

in the private Market valuations which had been lagging public I think if you look at like Q4 was probably the best time to be doing private just because privates had not caught up yet with publ now they've kind of raced back into line and so I think you know we're probably p the period where you're still going to be getting discounts going into the private markets um that being said like if you if you do take the view that we're early into this cycle and I think it seems pretty clear to me that we are um one of the indicators I look at is how much is retail really engaged we've seen a huge amount of institutional interest right the ETF has obviously driven a lot of institutional eyeballs and a lot of buying from folks who previously didn't have access to the space or just had too many hurdles to

actually uh get direct exposure but if you look at um you know the the barometer I like to use within the US is looking at coinbase so where is the coinbase app on the app store right now coinbase app last I checked ranks 30th for Finance in the finance category ranks 30th which means like we we are we are not anywhere right now this is not like if you if you go driving an Uber if you go see your Barber are they talking to you about tokens and you know what what coins to buy no at least not not my experience so to me I think I think we're we're very very early into retail really paying attention and getting engaged now it's not to say they they will anytime soon it could be a year two years who knows maybe the last retail cycle is over I kind of doubt that but

that you know it's something you have to take into account as a possibility but the the reality is that this is so far mostly institution driven mostly kind of smart money driven uh up till now and I think once you start to see the macro environment shift and once you start to see risk appetite really start to turn back on over the next year or two that's when I think you're going to see a more broad-based participation in crypto even the mcoin activity inscriptions uh you know all all the stuff that we're seeing around this huge engagement of meme coins especially on you know platforms like salana in absolute numbers is still pretty small right if you look at Daily actives on salana it's not we're not looking at you know five million people who are who are buying this stuff um and if you look at that compared to what's

happening on centralized exchanges it's still a far cry from what we saw in 2021 2022 which which I think speaks a little bit to this idea of um you know where where is sentiment relative to the underlying right fundamentals like who's actually using this stuff and how much real utility is there and so on and and I think this is part of what creates the Cycles in crypto is that the sentiment just gets so out of out of whack where we actually with where we actually are and everybody that has been paying attention is so excited about something like the ETF happening that took so long that I I I I just I worry a little bit that we're we're over our skis right now in terms of sentiment Rel to like actual progress I guess I'd push back there when have so I think what you're

saying there is sentiment it's like a ratio of sentiment to fundamentals basically but if you looked at the last cycle fundamentals didn't matter in the slightest right you have something like I don't know or even if you look right now like maker is spitting off I don't know what did maker do last year 100 million in revenue or something great fundamentals yeah hundreds right Co coin is not going up though so um a Vil how do you think about like whether or not the best invest ccle will come from fundamentals well I mean here's here's a question right if you look at Maker's a great example because you might be able to look at the cash flow I mean the the fully diluted valuation I maker right now is 2.1 billion so if you had a company that was making 100 million in Revenue not like

net profit out to shareholders would it be worth2 billion dollars today I would argue it wouldn't be actually um now there reasons I think you tral public markets yeah exactly right so so to me that actually suggests like that that there's some other reason that people are willing to Value it as such and and I have my theory on why um you know one one could be that that there's a there's a positive sentiment baked in people are like this is going to do so much more Revenue in the future and so the sort of you know growth rate that they're baking in could be that this thing's going to do a billion really soon because that's how crypto Works another could be that which is one thing I hold is like it's it's a longer conversation but I think there's an argument to be made that

Network values for token networks will always have an implicit PE ratio that's much higher than public equities and it's a side effect of who's particip I ating in the markets where you know if you have a bunch of people in Southeast Asia and Nigeria and West Africa and Latin America and in these places you're you're losing eight or 10 per per year to the dollar I mean that's that's like Zer on steroids right you thought like zero interest rates were bad where there's just a bunch of money like what happens if you're money's losing eight or 10 per a year like you need to get it out like you need to get it into something right and so the way that that manifests in a market then is essentially really really high PE ratios and so that could be what's happening but but I would argue actually like you

talk about like a scar City premium that will Contin to exist as long as people don't have easy access to traditional Capital markets in the US like Google correct yeah and so like one one way like it manifest in the public markets on the US side is like you get these crazy multiples on a Tesla or a Facebook or an Amazon because what you have is a cohort of people that are baking a really really high growth rate into the future projection of what this company or this entity this network can do that could create a really high multiple so 100 million from maker could result in a $2.1 billion Network value or the other Theory I have is that it's a bunch of people all over the world who don't really have access to the US financial markets and don't have access to any

good Financial products they don't even have access to Dollars and now all of a sudden they have an entity that is producing cash flow hundred million dollars right so there's any cash flow coming off of this thing in US dollar terms is better than them losing 10% in Argentinian Pesos or or 20% a year in naira or whatever you know their base currency is and so their willingness to pay a very high effectively PE for that cash flow is what then drives up these ratios um but but in either case right like I think that's relative to the other opportunities that you might have the sentiment is so far out stripped what you could do with that cash like if if you're not a crypto fund let's say let's say you're a family office or just a private investor do you want to pay those kinds of multiples for

that cash flow and I I would argue you don't unless you have a lot of positive sentiment right so unless you sort of believe that there's going to be a lot of growth here it's hard to justify those multiples um which is where I think the sentiment is sort of manifest so like I I look at those numbers actually and I I don't I look at that somewhat negatively like I know you're you're sort of saying that's like a a positive indication I sort of look at that as proof that sentiment has outstripped fundamentals I don't know if that's an indication that sentiment is abstra fundamentals so much is that uh you know if you look at let's let's look at maker specifically um in the case of maker and I should disclose it that we're long maker um I think the so so for one you know kind of actually a

point in favor of a vichel uh the the forward Revenue that you're looking at is probably overstated because of the fact that we know that interest rates are likely to come down so it's likely actually that the the true the the correct adjusted forward PE is going to be lower than what you're seeing on token terminal for example um that being said I think what people are baking in when they're looking at maker is the fact that I don't know anybody who's not bullish on this rwa story in the sense that uh it's very very clear that stable coin Supply right now you know it's kind of been stuck at about 130 billion 130 140 for the last call it like year and a half um and it's very clear like this this this is kind of a very temporary stopping point especially as interest

rates come down there's going to be more more and more cash that's find find its way on chain and it's going to get tokenized and stabilized especially if we get some kind of stable coin regulation passed that's going to make it easier for people to get more comfortable interacting with stable coins um within within the US much less internationally I I don't think I I don't think there's any reason to think that this is not going to continue as a trend um it's basically if you look over the last five years it went from what something like 800 million circulating in 2018 to now being like 140 billion that's an insane uh growth rate and I I think we had a temporary stopping point during a a pretty horrible bare market and historically High interest rates we're we're moving away from that pretty

rapidly and I expect stable coin Supply to to start expanding now that we're kind of getting back into a much healthier environment uh and I think Maker's going to be a beneficiary of that so I think there are good reasons to think like hey there's some positive Catalyst here and maker has a lot of downside protection compared to a lot of other things that you can be investing into that are a lot more ripe for disruption um maker at this point is is one of the lest things in defi um people argue that it's boring it doesn't really capture a lot of beta you know sometimes uh the rest of the Market's moving and maker just kind of sitting there standing in the middle of traffic kind of unfazed by all the other excitement that's going on um but I think there's uh there are very few things you can

invest into that actually really represent the rwa narrative and actually have real cash flow denominated exposures to what's happening with respect to that market uh Maker's kind of the biggest game in town in that regard and I think it's a it's it's a real Force so I I should also two thoughts one none of this is financial advice obviously from from any of us you should not listen to random people on the internet anybody that's listening right now so second second I should also disclose we're also long maker we also have you know we also own maker uh but I I I think what you're saying actually kind of proves my point right which is like the reason to invest is not because relative to today's cash flows the the price that you're paying is a great

price it's that there's this reason to believe that in the future it's going to do really really well which requires a sort of set of assumptions about tokenization about real world assets about things moving on chain about this being the beneficiary of all those Trends um and hence in in five years or 10 years some some long period of time that that you know you might have a good investment here um as as a venture fund right and so but but to believe all those things I think you have to have extremely positive sentiment like if you didn't if you weren't like extremely optimistic about the future here about these about these Trends then you just wouldn't make those Investments which kind of back at this point that like fundamentally it's it's like in the short term is sentiment driven not fundamentals driven and and that has a

tendency to kind of get over it skis and and when that happens we got to be really then as a as an investor you got to get really careful because then then the question you're asking is like am I being too optimistic about how quickly these things will happen because T the tendency especially for for investor types or technology types or Founders is to underestimate how long it will take for things to happen like you have a tendency to be too early rather than too late um right and so that that's sort of where like I start to get a little bit paranoid where I'm like okay like what's happening is everybody's like not only am I optimistic about this now everybody's optimistic about this and therefore everybody's assuming a bunch of stuff is going to happen over two years that's actually going to take like

five or six years and that starts to worry me a little bit because then that that means like the short okay I mean look you're you're you're saying that this worries you you're saying that you're paranoid but you're also like megalong all of these things so in what sense in what sense are you that well you gotta keep dancing while the music's on well no it's it's because goes back to I think the thing that Santi was talking about which I I I often say which is like people overestimate what's going to happen in two years but they underestimate what's going to happen in 10 years um and so if you have like a seven to 10 year time Horizon then then you can sort of tolerate that volatility in the short term um but I think you have to sort of to the investment question then you have

to be a little bit careful about like are you are you overpaying in the short term right like are are you actually paying you know like there's there's people out there that bought eth at, 1500 and they saw it go up a bunch and they came down a bunch and then it came back up you know like how much money have they made on their like $1,500 eth as of as of today or like at the end of you know q1 or Q2 right it's been kind of crazy so so there is an argument I think too that even if you think eth is worth a lot of money in in 10 years and who knows if it is that being disciplined about the point at which you decide to make that entry based on where you think the the market Cycles are and so on like you can you can sort of

factor that into your decision- making one of the things uh I want to get your thoughts on V obviously you guys put up and have produced for a number of years now this developer report which I think is one of the most important reports and pieces of information that I look at to make investment decisions um I would love to transition talk about like salana versus the evm Centric mindset me I think most fees are way overe exposed to ethereum uh and have been caught off sides with salana um I'm curious how you guys think about that the ethereum road map and your conviction on that working versus something clearly that we've seen consumer behavior in Sal and you can actually see a low fee environment so we love to get your thoughts on that and I think it touch us on modularity and a bunch of other

things that are hot now yeah uh another disclosure we also have a lot of salana uh and so you know don't listen to me about anything um yeah it's it's interesting I you know I think uh on the report there there's a couple sort of takeaways I think for me um one is that an increasing number of developers are developing across multiple chains and so I have to go back and look at the number I want to say it's like 30% of Dev uh are now writing code that will hit ultimately will will sort of straddle up you know more than two chains um which is pretty amazing um and you know when you zoom into that what's really interesting though is that um 80% of devs or so I'd have to go back and look at the number I want to say it's like 70

75 80% somewhere in that zone are actually writing code for at least one evm chain and so while you are seeing people write for more than one chain what you are seeing s simultaneously is a network effect around the evm um and and sort of convergence there um not that dissimilar I think a common analog that people will make is Javascript which is the evm is busted in all sorts of ways but these things tend to have a path dependency so the internet runs on JavaScript despite all of the challenges of JavaScript um and and that's kind of maybe where we are with evm it's like maybe maybe these ecosystems will just have to use evm in some form and that that has a real Network effect at the same time what you see is that these ecosystems like salana that are not evm um tend to have the most dedicated

developers like they have the developers that are only writing for those ecosystems and I think that's a really interesting sort of go to market strategy right for an ecosystem to essentially say we are we're gonna not have devs that then later take their code and deploy it somewhere else we're going to pick devs that only right for our ecosystem and yes that's a harder place to start but over time that might be a higher retention strategy so for example there's there are these really great um flow diagrams that we looked at where we actually looked at the code that's deployed on chain and where does that logic first show up and so you can fingerprint that and you kind of look at the flow of code across chains um it's it's a it's in the back of of the deck they're beautiful diagrams they like I

want to turn them into like prints or nfts or something but what you see is that actually most of the code that's on eth originated on eth but there is something you know like 10 20% of code that originated on B&B or originated on polygon um and actually like 80% of the code that's on uh BNB came from ethereum so you're seeing sort of this like cross-pollination right but but in effect what that means is that there's a a lot of people writing code in in the BNB ecosystem almost like a test net for eth right what they're doing is like taking some code putting it over there writing it and then bringing it over to eth later U which is kind of fascinating they're doing that so it's not just eth code being exported it's other people writing code and bring it back to eth

but you don't see that with salana it's not like people are writing code in the salana ecosystem and then porting it over to eth after they figured out if it works um or vice versa right and that that actually over time is is like an interesting Advantage um and so we tend to think these things are not going to be win or take all there's going to be some sort of power law um and if you think that the biggest winners are worth a lot of money then then even the second and third and fourth place winners could could do quite well and have their own ecosystems and there's a lot of precedent for this right if you look at um take something like social networking which I think people think of as like a pure Network effect kind of a business yes you have Facebook but at scale you

also got snap you also got Tik Tok uh you also have YouTube and then you also have Regional networks right you have caca talk in Asia um right you have V cont in in Russia and so at scale you can actually have networks that are Regional or B by communities um that that can also be really successful so I I tend to think that we're going to actually probably have way more alt l1s than most people would conceptualize today because of of sort of the way these Network effects will work over time C how do you think about that um it's a very interesting question it's one that you know we've had to Grapple with a lot so U you know we own some soul I it sounds like maybe we own less Soul

than he was had a big smile when he was talking about how much Soul he owned but you own more maker so we can count on that we do yeah we do okay that that maybe maybe the indication of who owns what on a relative basis is how Rel claiming we owned it yeah exactly um so uh yeah what's my look my view on salana is that uh I think we we may have crossed the period where you can start a new programming environment for your own blockchain uh I think we there may have been a critical period basically around like 2018 to 2021 where there was enough like the space was incoit enough that you could start from scratch and still

be competitive in terms of development environment auditing firms hiring all this stuff that has now increasingly solidified around a very small number of ecosystems uh it feels like basically there's evm which is you know by far the dominant uh Paradigm for programming you know something nine out of the top 10 chains by tvl and by users are evm based so vast majority of it is evm if you draw the pie chart um second is svm which is Sal's virtual machine uh then you have WM and then you have move and after that it's just basically non-existent now there are other there are other programming paradigms that people have put together um but they have basically a rounding error of adoption and I think we're at the point now where if you start a new

one it may have been true for salana in 2019 but it's not true anymore today if you start a new programming Paradigm nobody will join you the costs are too high only an idiot would uh constrain themselves if starting a new company starting a new paradigm hiring a bunch of uh Engineers trying to get you know super expensive audits for some program paradig nobody knows about hoping there are no bugs in the runtime like the the the enormous amount of commitment that someone would have to make yeah to betting that your new L1 Paradigm is going to work against everything else that's out there uh it's just too late so my sense is that um we're in the situation now where we've got sort of the the Android which is evm which you know I don't know this maybe a bad analogy because there's some uh

other connotations between Android and iOS but um we sort of have the Android which is uh which is evm which is basically everywhere and vast majority of people on Earth are using EVMS uh then you've got salana which is kind of this higher end super high performance thing but it's there's only one chain there's only one home for it maybe there will be other rollups or something that are going to use the svm but right now it really kind of seems like salana is the only game in town and if you're building on salana you're you're kind of pot committed and that's what you from a lot of the salon Builders is that obviously there's been a lot of churn through the bare Market of people who end up dropping out but there there was also no there was no new people who came into salana and started building over

the last you know year and a half right since the collapse of FTX nobody in the right mind started building on salana now you're starting to see people come back and some new renewed interest seeing the retail engagement seeing the price action seeing the the support in the ecosystem energy um but basically it's like you know if you look at the projects that are all successful in salot they're all people who started during the FDX era and were willing to stick it out out through the valley of darkness and that that's kind of what uh built the strength of that ecosystem was the the the belief and the confidence that people had during a time when no one else believed in them so they they really kind of had their Heroes journey in forging that that Collective identity for salana uh and I give a I give a lot

of credit to them for having having born through that uh but if you look at a lot of the other ecosystems that are trying to play for that spot that salana is playing for uh the reality is that it's it's really really hard for there to be multiple contenders for the non-m chain I really think that right now if you look at you know near you look at the the move chains and we're investors in many of them um salana is really pulling a lot of the air out of the room and it seems to me at equilibrium there's going to be probably one main nonm chain that sucks up a lot of the nonm use cases and everybody right now is fighting for that spot now to be clear Salon is the front runner right now but it's far from over

right very few of the non EVMS really have that much going on in absolute terms uh even even salana right now most of what's happening on salana is people trading meme coins you know there's some there's some defi stuff that's like starting to work there's obviously a lot of airdrop farming um there's some there's a lot of infrastructure that people are excited about like GTO and whatnot but in terms of real Mass Market applications most of what's happening right now is happening on EVMS whether it's uh binance smart chain or polygon or mayet or or you know some of these other platforms um and so I think the race is still very young price action Salon has raced ahead and there's a lot of consensus that's been built around them but there's a lot of game left to be played and so I think if you if you

draw the line out over five years I think there's still a lot of room for people to uh jockey for that position to be that dominant non- ethereum uh L1 so do do you think the market structure is going to be like 8020 like it's basically evm and one other big one and then everything else is ultimately rounding error or do you think it's it's more power law like 70 basically basically interest I think I think it is going to be 8020 is U with EVMS and then like the non- evm chain um and and the non evm chain it could even be bigger right it could even be like 30 30% or something but um I I think I I think of it actually a lot like operating systems so if you think in terms of operating systems I think in a way you can you can

analogize the evm to like Linux right and Linux is uh at this point the basis for the vast majority of computing you know Mac is based on the Unix uh Unix kernel and there's just almost everything is just compatible with this thing because it's just the easiest thing for everybody to coordinate on uh it's not high performance it's not really designed to go fast or be good it's just designed to be usable and everyone kind of knows how to use it um so the Paradigm is recognizable then you have now if you're doing robotics if you're if you're you know doing uh hardware for a car or for something that really requires high performance you will not use Linux you will use some kind of realtime operating system and a real-time operating system it it strips out all the nice affordances all the the

common paradigms everyone knows about user space and kernel space and all the security guarantees and all this other [ __ ] because it just needs to be really fast you cannot have a robot uh or a drone get stuck in you know some garbage collecting like oh we're sorry for switching from this Kel space to that konel space and blah blah blah um you need it to be super super high performance in the process of that you lose a lot of affordance it's not very nice to develop for a real-time operating system but it's the only way to get super high performance there's a class of applications that are going to want this it's not every application in fact the majority of the stuff that people seem to use crypto for um they don't really need 400 millisecond uh latency right one two seconds is is fine

you know if you're paying somebody you know one or two seconds is fine it's not really that big of a deal if you're trying to do NASDAQ on the blockchain yeah one two seconds is not going to cut it so there's a uh I think there are use cases just like there are with respect to operating systems that require a very different set of uh performance guarantees for which people are willing to eat the glass and take the trade-off uh that's I think what in the long run this this whole system is going to bifurcate into that's my thesis but why do you think it's operating systems and not programming languages or databases programing languages uh I think because you know with with programming languages it's not I mean you can you can you can make the same analogy it's just a little more

tortured because of the fact that programming languages don't divide as neatly across use cas um a lot of the times like you know someone who's doing payments you can do payments in Python you can do payment C++ sort of I mean like you don't want to render a web page and like C right like I mean I mean web pages are rendered in you know inl written in so you L1 you think l1's will divide across use cases so you think there'll be use cases that are basically strictly like like only possible on salana basically and then there's use cases on on on the evm essentially I I think at equilibrium you're going to see the vast majority of value if you think of it valuated not just you know are people trading nfts on Sal of course they are sure are people trading nfts on everything yes more or

less they're trading nfts on anything they can get they can trade them on but uh it's very clear like you don't need everything that Salon has built to trade nfts right it's it's obviously overkill for trading nfts you can trade nfts on [ __ ] anything NS don't require High I I disagree I mean like the history of the internet would would suggest that is I Computing would suggest that that's true like this is this this is sort of reminds me of the like Bill Gates who needs more than what is it 64k of Ram or whatever his quote was or 256k of ram it feel it feels like actually the history of computing is always like the more infrastructure you throw at it the more new use cases somebody figures out and hence it sucks up all the infrastructure like yeah you might like you I guess you

might be I might Grant you like it's not clear to me if you need like a true real-time operating system to trade nfts but as a side effect effect of there being a bunch of people who have seen a wealth effect on something like salana who then go and trade nfts you now have like saturate the network and therefore you have to like figure out how to get more and then somebody comes up and then somebody gets some new use case and therefore the new use case saturates the network you enter this like flywheel right so yeah so I completely agree with you with respect to saturation right so that's why I'm grouping the L the the EVMS as like a Big Blob right yeah it's clear the vision for how evm scale is not going to be we have salana and then we have the big evm right I I I I don't

think you know even even with something like monad which is a you know parallel EV implementation that I'm very excited about uh it's it's not going to be able to absorb every unit of demand that people have for for interacting with evm chains it's more that I believe over time there's going to be more and more um opacity to the end user of where their money is going and on what chain it's being settled and at the end of the day right now we are in the age of you are literally typing into your browser uh what protocol you want to use of like you fetch this using HTTP fetch this using FTP fetch this using go you know whatever like a gopher you the very very old uh internet client and that's where

we are right now in in crypto where human beings are manually specifying these things and dealing you know the reality is that like why is it that you as a human being are trying to figure out how to bridge across a protocol or like where your usdc is or all this stuff like it's it's not it doesn't require anywhere near your level of IQ to do this right arguably reques man I'm I'm always paranoid that I'm like yeah that's true that's true like the problem is actually the opposite it's like too it's there too hard like no matter how smart you are the paranoia does not go away that's what I'm saying it's like this feels like it should really be machine Le like this should not be human beings doing this but it is right now all of this is completely transparent to us as users of all the nitty-gritty

details of how money is moving around but people are doing it they're moving the money around but in this very mechanical way that is what I'm aru is going to go away wouldn't that then suggest that the the percentage that you think the evbm share is 80 80% let's call it is actually going to be materially lower yeah if there's chain abstraction you know right now you've seen let's consider the number of users in crypto why are we going to slice it it is a microcosm it is ba we're all beta testers chain loyalty is not going to be a thing people don't have bias when they're coming fresh into crypto the next 100 million people will care not even care about any of these chains we're talking about they will care about

am I able to do stuff faster better cheaper which is a threshold by which people start using this stuff and so when you think about I agree with you you don't need a Ferrari like salana to trade an nft or send a payment but you do care and I think salana may have a greater shot at attracting attention and if you're already doing one thing in salana then you may you're probably going to end up doing most most of your things like by virtue of just aggregation Theory I don't know if you would agree with that and so like my thesis is why wouldn't salana eat up way more into the evbm share today because you're you're you're seeing like defi has been challenged like the the number of like when fees are incredibly low it really has

unlocked like this nonlinear consumer Behavior already so wouldn't that dictate that salana could really become that like the imerse actually 8020 Well here here's what I'd say uh so when you actually have I mean this goes back to the the very age-old argument about horizontal scaling versus vertical scaling right and and salana is basically kind of Max long vertical scaling is if we just you know scale the [ __ ] out of this thing we be giant beefy boxes the history of Technology tells us eventually you have to go horizontal right doesn't matter how big you go vertical eventually if you want to serve world scale you always have to go horizontal eventually Facebook learned that Google learned that everybody eventually learns you have to go even sack overflow which is the the poster child for oh we were all running this on

one server and you know scaling is for losers uh now they have two servers right so like eventually you give up and you realize if you want to be internet scale you have to go horizontal right and I think salana recognizes this that yes we can scale the [ __ ] out of this relative to every other L1 but that does not mean there is infinite capacity for having a decentralized network of big beefy servers that can run all the compute that people want to on it eventually it will also get saturated just like everything will get saturated because blockchains are physically bound that is the way it works and so so so let's take that as a starting point that every network is physically bound um everybody's eventually going to have to go horizontal if if we believe that hey there is actually a mass Market use case

for this [ __ ] um in in that story where you are going massively horizontal if you look at Facebook right so Facebook how did they go massively horizontal the first thing they did is they basically just did MySQL just lots and lots of MySQL databases all talking to each other just like basically an off-the-shelf database just scale I mean eventually they did Cassandra and all this other fancy stuff that was like really really specialized but the easiest thing to do is to just get the thing that's easiest to use scale it out horizontally and effectively load balance between them right the the thing right now with salana and look I give a lot of credit to salana I think it's a very very interesting and dynamic ecosystem the reality is that salana does not have anywhere near the robustness of tooling and the safety

that the evm has right it's it's way better on performance performance it's like 11 out of 10 um on security the reality is that we have I don't think we've even seen a major Sal hack yet why have we not seen a major salana hack that seems really weird given that everybody in salana is writing in Rust they're writing in a super low-level unsafe language they all this stuff like how many Auditors are there for salana like three you know there there there's not that many um there's not the same level of Open Source uh battle tested contracts we don't have the same uh ecosystem of bug bounties and uh you know people who've been uh uh what What's it called um uh uh ctfs you know like we don't have that same ecosystem

of security around salana even the even the protocol itself right uh the protocol itself has never found a major bug there's been there's been things that fell over because of uh uh because of uh Demand right like basically the the rpcs got hit or there was just too much load and it it sort of fell over because of load but if you if you remember EVMS have been broken many times and the evm has existed for like seven years and there's still bugs in the major evm clients we just had uh what was it it Basu was a little while back and then we had nethermind which had a major bug in it as well um almost certainly the Sal salonic CL has bugs in it there's no [ __ ] way that a codebase writing something as complex as salana does not have bugs the question

is why haven't we seen any my theory of why we haven't seen anything happen yet is because most of the stuff is not open source and it's just so complicated so I would challenge that because that was my impression too two weeks ago I always felt like most of the projects were closed source and there's a stat now I think like the overwheling majority of salana projects are open source and this has changed drastically this if you look at I'm assuming you're referring to the defi llama dashboard which shows percent of Open Source versus closed Source right which has gone from 40% uh a year and a half ago to now 90% open source right I assume that's what you're referring to because that's the only that's the only sharable number I've seen anyone ever share that is a

tvl weighted number that is showing by tvl how much of the stuff on salana is open source versus closed Source that's in defi llama's database that basically is saying that there's a huge amount of liquid staking on salana and that stuff is open source I I think it's probably I mean based on the developer numbers we have relative to the developer numbers the salana foundation publishes I think we were off by about 2x that was like the Delta and and my theory is is that we track only the open source devs and the salana foundation is probably using like RPC calls or like they have they have like end points that they're looking at that are like accounts and so I think it might actually be pretty close to like 5050 at this point I I always I historically had the impression too that it was a lot more close Source

but given that the Delta between like the numbers we're seeing and what the salana foundation put out was like 2x that suggest to me we're like probably close to 5050 at this point I mean it might be like we don't yeah we don't I mean we don't have to debate like open source versus closed Source here because I don't know we all have different numbers here but H I think the next question I'd throw to you is okay let's say it is evm what is the evm landscape going to look like right because there's kind of the you know the the early F like arbitrum and optimism and kind of like the first l2s now there's this new wave of like folks trying to parallelize the evm and there's um who who' SE and monad and this kind of next wave of folks working on the evm so what does

that look like in your mind yeah so it's very clear that that uh part of the reason why salana has gained so much mind share is because of their Relentless pursuit of high performance and everyone realizes that this is you know every bull market we see that this is the problem is that we don't have enough performance we need more more scale more DACA more just more more more and in this case I think you know salana makes some really steep trade-offs in order to achieve that performance right and you know I alluded to some of them obviously we we can you know debate the particulars of how much open source Clos Source whatever but one of the things you get from salana because of its pursuit of performance is that the evm was really designed to be a smart contract platform from the

groundup right and and it made a lot of trade-offs I mean actually should take that back it was designed kind of in a hairbrain weekend but it has evolved to become more of of a focus on just smart contracts um you know if you look on salana for example just to just to kind of drill in the point and then I'll I'll bring it back to parm um you know in salana uh if you go on salana block explorers you can't see contract code why can't you see contract code right the whole point of blockchain is that you you know don't you don't need to verify you can trust or sorry other way around you don't need to trust you can verify you should know exactly what you're interacting with even for the things that are open source on salana how do you know that the thing you're

interacting with is the thing whose source is open seems like an obvious question well on on evm it's trivial to do that on salana it's not even the salana all the canonical block explorers you can't see the contract code you don't know what you're interacting with you kind of have to trust that you're interacting with the right thing now one of the reasons why that is is that uh most of the salana uh uh build process is not deterministic when you are compiling [ __ ] in Rust it's a it's a non-deterministic compiler it's not designed to be deterministic if you want deterministic builds they're slower and compilation in salana is already a paino it's slow it's annoying people don't want to people don't want to eat the cost of of doing that at least not right now and the culture doesn't demand it so

when you interact with things that are nominally open source on salana it's very difficult for you to actually even verify that the thing you're interacting with is the thing that supposedly is on GitHub um EVMS have solved this problem and it's very deeply baked into the culture of the evm that you you can't get one without the other it's claiming something is open source but not actually being able to verify in a block explorer that yes this is the B code that this solidity code produces um that is the only way to actually be confident that yes this is the the thing I'm interacting with evm gives you all of that it gives you the interoperability it gives you the guarantees about transparency and verifiability um not because of something intrinsic about the evm but because of all of the tool chain and the supply chain and the culture and

the and the you know the audited code and the contracts and blah blah blah all that [ __ ] it's all already there it's all already been built if we started with salana we started with svm we would probably all have have all that [ __ ] for the svm as well but we didn't we started with evm and so therefore the evm is just the most built out ecosystem for this um so so now I think there's this Relentless pursuit to okay if we take it for granted that the evm is Javascript look JavaScript sucks it was a horrible language that also was written in you know kind of a cocaine filled weekend by uh uh Brent and Ike basically trying to shift something out as a V1 and we got stuck with it we're just stuck it was horribly designed it was not really built for being the world

scale language but it's now the most used language in the world because most computers are basically glorified browsers now it's all we do is just sit in browsers and so JavaScript is basically most of what your computer does is just run [ __ ] JavaScript so JavaScript is super super super highly optimized it is probably the most optimized language in existence besides maybe C and C++ um and so because of that you know the the analogy you can draw is okay the same thing will probably happen to the evm and I've been waiting for a very long time for somebody to really seriously do this and it's more or less taken until this year for serious contenders to try to do to the evm what has long been done by uh Google and and Mozilla to JavaScript for

that same process to happen to the evm uh and so if you look at something like monad for example so monad it's not it's not currently live yet SE is also doing a parallel evm but you know my bags are in monad so I'm going to show monad um monad what what they're essentially doing is taking the you know sort of the modern blockchain design that has massively changed since when you know ethereum was first developed of you know separating execution and consensus uh using something like hot stuff or more pbft style more modern consensus mechanisms um totally rebuilding the storage system right now almost all the GU uh gu chains whether it's Finance smart chain or polygon or whatever that just for death they're bottleneck is storage uh almost almost all the time

because mer merel Patricia trees which are the data structure for ethereum just [ __ ] suck to read and write to uh efficiently from Storage um and so they're basically designing their own database that only is optimized for storing and retrieving Merle par trees and all of this stuff leads to really really massive throughput gains and then the last thing of course so you know we talk about parallel evm uh I didn't mention anything about paralyzation because paralyzation is actually a very small part of what leads to the performance gains in these new Next Generation uh evm implementations um but they're also paralyzing they're using block STM which was originally uh created by Libra and later by Aptos andu or co-opted by Aptos andu to basically do like kind of optimistic uh

concurrency or parallelization a little bit different from salana more similar to what Aptos and andu do in um assuming that hey we can kind of guess much more like what your uh processor does is guessing which uh uh transactions or which computations can be paralyzed and if we get it wrong okay we rewind and then we just do these things serially uh that's that's a very high level intuition for all the things that these new generation of EVMS are trying to do to massively increase performance and get you know they're they're never going to be salono likee performance uh because they're running evm and evm is just a big constraint um but they're getting massively more performance than you can get just doing a vanilla you know gu type implementation so can can I highlight a

couple places where I think I just disagree with a bunch of the stuff that he was thrown out there so I think one it's not clear to me that the right analogy is the operating system um I tend to think of these things much more like programming languages and databases because I think you're I don't know who said it maybe Santi but I don't think the enduser five years from now is going to care that it's running on salana or ethereum or near or monad or some L2 they just want to like do the thing they just want to solve a problem that they have and it reminds me a lot of what happened with like mobile or what happened with early internet like there a time with mobile where like as an angel investor or as a VC or even a Founder you would go in and you would

pitch and and you would pitch that I'm an iPhone app and I I like I look at all the new apis and I take advantage of the new camera apis and and and therefore I can do XYZ and at a certain point you just stop pitching that you were an iPhone app you just went in and you pitched and you were like I solved this problem and and you if you if at that point like today if you came into a VC's office and you're like we're a mobile app that does XYZ the VCS would look at you and be like well of course you are like what if you're not a mobile app like what are you doing right like that's where all the users are um and so I think we're we're kind of on a similar Arc here and so five years from now or

seven years from now or 10 years from now people just won't care what the database is that this thing runs on and if we get to that world it's not clear to me that um that these distinct that that a the market structure will be 80% evm uh one right like it's that's just you can have a lot of fragmentation because a lot of different developers can choose to plug these components in in different ways like you can use one execution environment and one data availability layer and some other for settlement and like you can plug these things together and the end user won't really care and that might break the network effects right that might mean that you don't get power laws anymore you get a high degree of fragmentation two it's interesting that we think of this as evm right like that just happens

to be sort of a the nature of the compatibility that we're talking about but actually underneath the evm or a lot you know arbitr is different than optimism is different than monab is different than ethal one like you know these are these are actually different chains in some sense um and that in some sense also breaks the network effects right it's it's different flavors of of a thing that happens to be compatible and and can talk to each other but they're not actually the same thing um I also think that if it's true that the the the network effects are sort of at the technology layer but not at the chain layer what that means is like the real power in the ecosystem is that is at the layer of whoever has the de has either the developers or has the users and I think it's going to be actually

towards the users um and I think if like from that perspective the the real sort of question the question that sort of in the back of my head is like in 10 years are any of these things even worth remotely what they're worth today right do you actually end up in a world where like actually all the value capture happens at like coinbase right because coinbase is the place where you have to like fat your money in onramp it interact with a bunch of stuff it's on a phone and like who cares what chain it's on I just need to do the thing I need to move my money around I need to get to my payroll I need to like pay my Creator friend like 10 bucks this month for whatever service and who cares like what service it's running on um and so I think I think there's

actually an argument here that this is not going to be 8020 I think there's an argument that actually even inside the evm it's going to be like a hundred different things and at the end user just won't care at all um okay so let's let's take that for granted let's assume that we're in that world where there's total chain abstraction as a user I you I just have a wallet I don't even know it's not a salono wallet it's not an ethereum wallet it's a crypto wallet yeah and the the wallet figures it all out it Bridges bridging is fat you know blah all theic's gone magic eeden is doing this now for example they just their new wallet just sort of like seamlessly switches between chains you don't have to think about where your like is it a salana nft or is it a

Bitcoin nft I don't have to think sure let's assume that let's assume that it's multi-chain it does all the bridging it's it's super smart okay it's like AI driven whatever who gives a [ __ ] um so we're we're already there okay we're already there it it does not sound plausible to me that okay because we're there because we're in that world where most consumers are interacting with this super smart wallet router app um that like let's take for granted that okay I want to tr trade I want to buy a crypto I want to move some usdc around right the way in which I move that usdc around I think you're right it's it's going to be you know it doesn't really matter it it's kind of like Swift right it figures out what rails to take the bank transfer to go from here to there it doesn't you

know that's totally opaque to me if my friend is on salana they'll get the USC on salana if my friend is on arbitrum they'll get on arbitrum right so there it doesn't seem to me like there's going to be a payments based Monopoly per se unless it's you know focused on liquidity in large size but for small size it can basically be anywhere right okay fine um now for the most part I'm going to want to interact with like a game an N platform blah blah blah right I want to interact with something and the thing that I want to interact with is it plausible that it's okay well every single thing is going to live on salana or every single thing is just going to be dispersed uniformly across blockchain such that everybody sort of has their own blockchain or do we expect there to be

some agglomeration where there's like yeah I want to I want to buy this nft and I go to I go to open SE or I go to magic Eden I go whatever ever and it just so happens that this nft is on salana or this nft is on ethereum and it's still on ethereum even 5 years later it's still on ethereum if we ask the question why five years later is it still on ethereum why is it not on okay everything is on its own chain and because it's all abstracted nobody ever has to worry about competing for blocks space ever again and all the all the blockchains have no network effects and all the fees have gone to zero why didn't that happen and to my mind the reason why that didn't happen is is twofold one is that there are real good reasons why you want atomic

composability and Tighter Integrations between certain ecosystems especially when it comes to like onchain liquidity there's a lot of stuff in Def that benefits from having the liquidity there on the same chain but the second thing in my mind is the intolerant minority this is a concept from Nasim Nicholas TB where he talks about I think the analogy he gives is kosher like kosher uh food in that most people don't give a [ __ ] about kosher they don't care if their food is kosher or isn't kosher if you tell me like oh these Cheetos are Kosher like I even if I even if I'm not Jewish I fine I'll just eat the Cheetos um but the people who are Jewish they really [ __ ] care whether this stuff is kosher or not and so they are basically going to dictate that every piece of uh of junk food is kosher

because you might as well just make it kosher so that Jewish people also eat it um so this this concept is known as the intolerant minority where a small number of people with very strong preferences end up Shifting the entire economy in a certain direction if the cost is relatively low in order to satisfy those preferences and this feels to me like the reason why nfts are not just going to you know Shard into a thousand different blockchains and be uniformly distributed over everything or over kajillion l2s instead I suspect the most valuable nfts will still live on ethereum why because they're probably going to be some hipsters in the year 2029 that are like yo I I just believe that ethereum nfts are more valuable than the ones on salana and like I still care about that and maybe most people don't and maybe most retail people yeah

they just know coinbase and you know they don't even know what chains are they just know crypto and they you know their wallet figures it all out for them but but I still know and I still really care and like there's something to me important about the ethereum culture religion salana culture salana religion Etc even if someone goes in fork salana and says oh salana is so expensive now there's all this competition for Block space it's too you know State rent is too expensive on salana you know salana is going to implement State rent it's going to be expensive to store State on salana um but eventually there will be another salana and somebody will Fork it and and he'll say why not launch your nft on salana 2 and the answer is going to be well because it's not it's not the real salana and some people will about

that even if most people don't all right I mentioned them in the pre-roll now I'm going to bring them up again it's arbitrum Santi and I are really fed up with these high fees and we're really excited to have teamed up with arbitrum for the next couple of months on Empire as the leading ethereum scaling solution arbitrum now Powers hundreds of decentralized apps across defi perss nfts gaming and a whole lot more the team has showed us everything in the ecosystem both now and what's to come and we're really really excited about it arbitr allows both daily users and developers to interact with ethereum at scale with low fees and faster transactions the way the team got me excited was through portal. arbitrum doio so my call to action to you is to

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happening in salana and I've constantly updated my thesis uh now I understand like the the question that I think is most important is like why haven't stre more hacks in salana I'm not sure it's because like I agree Russ is like move like move is like actually probably a language that you know we should be able to like we should probably like I would take it bet the move becomes a more prevalent language just P purely on a security basis and so if you're JP Morgan Visa like you know that matters to you um but still like I don't know like I'm not hearing a very convincing argument as to why salana can't like overtake evm um you know and you hear time and time again from Founders that are trying to like vampire attack in some capacity

evm and like you know the current liquidity and users are there and the culture is there but is it really like I don't know like you know I I still am of the mind is it really no no no like what I'm trying to say is as you think of like investing your capital and where the space is headed in in in a 10year Time Horizon is is where I'm looking and if you extend and and I know it's you extrapolate what's happening today I just think a lot like when you think about the scalability trilemma you know there is I think a threshold by which you reach in terms of sufficient security sufficient decentralization ation that I think salana is crossed that the most important thing at that

point is scalability and fees being as low as they are in Solana in my mind is the most important driver that gives me conviction that sana's share relative to the evm is going to grow by an order like but by meaningful share over the next five 10 years and I'm not hearing argument from you that it's not okay no no no I I I am not saying that salana is not going to continue growing and I'm also not saying that salana doesn't have a very important place in the ecosystem right to clear and let me let me re underscore this uh because I think I I may come across as though like I think Sal's going to die or something just just doesn't want the intolerant salana minority coming after him on Twitter no no no look yeah look they already mer has raised up his for many

times many times many times cardano people like the cardano's different card is different you learned your lesson with the cardano one no no no look the salon the salon team like they know I I dude I've been criticizing them for like [ __ ] two years and but we still invest in salana like we own soul we invest into a bunch of stuff in the salana ecosystem they know that I it one it comes from a place of love because like look we're long this [ __ ] because we believe that what they're doing is great like they're they're killing it um at the same time like uh look I think salana is going to continue to grow because of the fact that this Niche that they're going after is [ __ ] massive it's extremely important right what what are you going to be able

to do with super high performance um and I think in many ways Actually I don't even know if it's so much about scalability qu scalability in the sense of super low fees um I think actually low latency is the thing that's most important about Sal rather than the low fees um low fees are a function of demand when demand goes up fees go up that's just how it works like there's there's no magical we're the low fee chain right that that that means we are the uh capacity exceeds demand chain that's what it means to have low fees um when when demand goes up fees will go up period And if you're right that salana is on this Ascension which you know great we're long salana I'd love to see that um fees will go up that's normal every chain goes through that uh at the

end of the day what what I am arguing is that it is very hard for salana to play the same role that the EVMS play because they're optimizing for a different thing and to be clear anat is very clear about that he's always been very clear about that that like look I'm not trying to be what ethereum's trying to be I'm trying to be something very different I'm trying to build the NASDAQ on the blockchain and everything that he is doing from an architectural from a from a from a you know the point you making about security and decentralization I agree with you I you know in the very early days I criticize Solana for a lack of decentralization I think salana is very decentralized now um I think the development of salana is not decentralized and that's obvious to everybody but that's true for every alel

one no alel one has has decentralized development and that's fine you know whatever it's they're startups um my view on salana is not the problem with salana is that it's not decentralized or it's not real you know it's not a real blockchain or whatever there there are people who make all sorts of criticisms about you know the and and I've made some of them and I think they're real and and I do have real concerns about the auditability and verifiability of what's happening on salana you you can't let run a live client you can't verify the code blah blah blah all that [ __ ] is real they can eventually fix it they haven't fixed it yet um uh but these are all solvable problems right n nothing that I described is beyond the pale of solving but it is just true that that salana is optimizing for a different set

of things than ethereum and the EVMS are optimizing for and that's very likely to lead them winning in different sectors than the EVMS in which the EVMS are going to win and you see it like the market is telling you this that um you know although defi is making a comeback on salana it is not as much as defi has made a comeback everywhere else right so if you just look at the tvl recovery overall in crypto salana has recovered to something the you know one tenth of where it was in the FTX era whereas uh you know there's been tens of billions that have flowed into the rest of the uh the crypto EOS system and all the EVMS because evm EVMS are safer now obviously there are a lot more hacks that we've seen in the evm space large part of the reason for that is just's a lot more

[ __ ] to hack right like there's instead of having three Protocols of which you know the code is all poorly understood and it's all you know it's written in Russ and there's not as much tooling to be able to actually you know if you're if you're a black hat and you want to go hack salana you know we should we should more or less you know my view is that there's an efficient markets hypothesis around the stuff is that probably even if you do hack stuff on salana it's hard to monetize a hack on salana um you know not as much liquidity uh there's you know it's easier to to choke things off like I don't know I I more or less assume that there's there's if you're a black hat and you're thinking about how to spend your time um there's there's also just so much Ling fruit who wants

to learn a new language when there's already so many um you know fish in the barrel you can shoot in evm land but if salana really does become dominant which it hasn't yet and it may uh if salana really does become dominant there will be uh a reckoning for all of the tech debt that has been incurred on the salana side and and there's certainly a lot now they've been working on it but I think there's certainly a lot and and and and I say that with eyes wide open I'm investing in salana anyway because I believe its utility for the use cases they're targeting is there and I think that's one of the things in which we haven't Ted talked about which I think is is actually perhaps the most interesting thing about salana is that no other chain even Monet even a lot of

these other chains nobody is trying to do as low latency as salana a big part of the reason for that is that salana makes a lot of trade-offs around you know the P2P architecture the fact that there's one leader the leader rotates immediately there's no menol um you know there's there's no merization a lot of these things allow you to move much faster in rotating who the leader is so Salon is 400 millisecond block times nobody else is even close to that if you're talking about stable coin settlements especially for Traders that is one of the things that I'm surprised has not already migrated to salana where the fastest way to move stable coins from exchange a to exchange B if you're doing like high frequency [ __ ] is on salana now most people do it on Tron Tron is is the predominent way today

yeah that people actually move stable coins from exchange a to exchange B if they want to move things quickly because the only thing faster than than a decentralized system with 400 millisecond latency is a centralized system and so that sense Tron is slower Tron is like two second block I think it's like two or three second block time oh is it really Tron is actually Tron is actually an order of magnitude slower than Sal on the Chain it is I I actually don't know I haven't looked at this but on the Chain it certainly is but are the exchanges honoring that or are the exchanges doing stuff like you know presumptive you know uh closing of the block like no no no no no no no no no so actually you pull this up uh I think Kraken has their uh Kraken they they publish uh let me see here confirmation

I know I know the data I know data on uh on like all the volume is through Tron but you know this this might actually speak to like as you were talking through there one thing I was thinking was like you know I think part of the reason that I think it's not anywhere close to game over I mean it reminds me of like you know Facebook versus Myspace and some sense is which is an overdone analogy but I think there there's a lesson here which is MySpace had 80 million users when Facebook got started like and Facebook won right and and so like these Network effects even at 80 million users were not enough that that some of some something else couldn't overcome it and so we're just such in early days here that I actually think a lot of the network effects are going to

be driven by the killer apps and I think that you you could certainly imagine a situation where there's a killer app that emerges on salana maybe it's Visa because of stable coin settlement right they're they said that they're playing on salana now um such that all of a sudden you get the next hundred million real users coming into that chain and all of a sudden the network effects of like 25,000 developers on eth and you know a couple billion dollars just gets overtaken in in 12 months like I don't think that's out of the question here so like that it's part of what I mean to to um I think maybe San your original question but you know I think that's one of the really challenging things in investing in this space is we're so early that the network effects I think as they are I don't think they're

insurmountable by any means and so you know like one thing said earlier first of all like every blockchain has anti- Network effects perhaps Salon is the one that doesn't yeah I mean like that's the thing like I think Network effects are largely misunderstood here and I think someone like dydx Antonio will tell you very quickly yeah like this is why we move to Cosmos now we haven't talked about Cosmos but yeah to your point of each like where do you actually believe that we may achieve some degree of anti-et like of network effects because every chain today has anti- Network effects yeah so I don't know I dispute I dispute that that it's not anti- Network effects right it's bounded Network effects bounded Network effects right like but that's true for

salana too if salana gets like you know 100 million people to to impr Sal is going to need their version of 1559 they're going to end up needing salana l2s like this is GNA I'm I'm going to pull forward I'm going to pull us forward into the next topic because we spent an hour on this already and it's actually a uh [ __ ] that was only one topic it's Rel related it's related to this which is oh before before we move on just one thing I want to close a loop on I have it in front of me the cracken confirmation times per chain Tron usct on Tron is two minutes salana is two blocks so basically a second to get to have it show up in your Kraken account everyone thought this was going

to be the cycle this is the cycle where we put infrastructure behind us and we start talking about the big app and the consumer use case and millions of people and here we are and we're we just spent an hour talking about programming languages and the l1s again so my question to you maybe a Vil I'd throw this to you is uh is this actually the cycle where we get the big use case in the big consumer thing um or is this one more cycle which is probably actually totally fine maybe it's not fine but is this one more cycle of of infrastructure um just one more cycle bro just one more cycle but but also it's like the just keeps pumping his mon bags he like one more cycle with

infrastructure please bro bro just give me one more cycle one more ccle promise no hold on well think it's a relevant conversation has you guys spend a lot of time in Asia yeah the question is are we going to like nervos type that didn't live up to its expectation but are we going to see actually some sort of regional fragmentation or is this too lowlevel infra that it doesn't matter and we're just going to have kind of a this duopoly that you guys are both agreeing on no basically no and and why why is that like the tech depth just isn't there to like do the Innovation that you need to really win at the base layer yeah I look I think the if you're talking about ecosystems not right I mean you can look at binance

smart chain and say okay well this is like the China Emerging Market you know binance distribution chain which is true um you know polygon has huge penetration in India and Indonesia and so it is obviously the case that there are certain chains that have higher geographical penetration in certain places um the idea that at equilibrium we you know we're gonna have a chain for China that's written from the ground up to be for China I think we're we're way past that being a possibility I think that's obviously absurd and it's not going to happen um the the question of will there be sort of within the evm ecosystem will there be a layer two or a rollup or a application specific blockchain that is catered to a a local application that's maybe you know in Malaysia they have you

know this hot app and they are like oh we're going to roll it on L2 because you know it's too expensive for our users to be on uh mainnet or something yeah totally that that might happen in a sense that's what bance merchant is it's like hey binance has a lot of users that no one else has and and they're going to let them play in their you know little wall Garden um that is absolutely going to be a thing but is somebody going to rewrite from the ground up this new blockchain that's going to be for China no aich let me alter my question a little bit which is you guys sit in the in in the investment seat no matter how good a consumer app is most of them still don't have a token so you guys aren't actually incentivized at this stage of where we're at in crypto to

invest in that so what gets us to like get over that infrastructure home uh I I actually think we are incentivized um I I think that it kind of goes back to this idea of what is the Catalyst for this stuff actually working long term and I think if if we're like in this constant cycle of let's build the nextg infrastructure it just doesn't bring in enough people to actually use the thing and until there's like fundamental utility um the stuff doesn't work and so in some sense it's kind of like the the bitcoiners went through this I think where you realize that if you just hold Bitcoin it's that that's important but like there has to be lightning like you want the thing to like have flow there needs to be usage there needs to be like

businesses integrating with it you need to have square doing its thing and so this ecosystem matters you need have you need to incentivize the devs to keep working on it you can't just have a chain that's dead because the core devs don't want to work on it so like almost from like an ecosystem perspective if you think of it as a portfolio I think there's a strong argument that if investors are not investing in things Beyond infrastructure the infrastructure is useless like you have to be investing in the in the ecosystem if only and and this is not the reason to do it but I'm saying if only to make sure that your infrastructure Investments are actually used they have to be apps right now the way we think about it is actually beyond that which is that the real end case here the end state that we would like to

get to is that people don't even mention the word crypto right it's just the way we don't mention the word mobile you know it's just it's just an app it's just you solve a problem I'm taking a photo I need to like order groceries I need to get a car like you just think of the thing that you need to do and some of those things will use cryptography like I think the solution to a lot of the AI deep fake stuff is is a cryptographic solution it's like the White House needs to attest that they're ones who took this video they need to publish that cryptographic signature somewhere into an open uh database that anybody can read from that cannot be corrupted easily uh based on some standard that everybody agrees to like what do you know like that's literally what we've created here right or we have

um portfolio company will never have a token it's company called Spruce Spruce now Powers the California DMVs uh app so like your your California DMV your driver's license in the state of California on your phone is powered by Spruce Spruce originally started as sign in with ethereum so it's literally the same public private key cryptography ported for this like government use case and now your driver's license in California and actually another state is powered by that same technology that's real utility right and so I think like for this stuff to as a technology to get out into the market and power Healthcare use cases and government use cases and and real world use cases I think is really really important and then between that between sort of the infrastructure and these like apps that will never have a token and may never even write out to

a chain there's this huge white space of stuff that's kind of messy and in the middle and so you look at something like an nft Marketplace and you say well you know like that trades nfts that kind of has some nft L1 stuff maybe it could be its own L2 maybe it needs gas maybe it doesn't should it have its own loyalty points should it have its own token and so I think there's this like messy middle right now especially around things like nfts creators social um which I think we'll probably have both I think it will have like an enduser utility where people just want to use the thing for the thing but it's going to be crypto native it'll take advantage of things like cryptography l1s gas loyalty points um Marketplace Dynamics bonding curves like there are these like really interesting innovations that will

get baked into those applications it won't you won't call it a crypto application it'll just be a Marketplace that does a thing um and and and that middle ground I think is really interesting right now I think it's entirly possible that in this next cycle two or three people kind of into some really interesting stuff there and so you're starting to see the very early beginnings of that like so to me something like friend Tech um feels to me like the first sort of Proto social networ or forecaster working it stort of starting to feel like you know we're in that like 2002 era of social so like this is this is even a little bit before my time at Stanford but at Stanford there was a there was a social network that was launched um called Club Nexus it started by this guy Orit and then

orchit went onto Orit Google and started the social network called orchit that took off orcut that took off in like Brazil and India was I was bigger than Myspace and Facebook and some of these markets for a long time um but they were sort of like Proto networks they didn't have like a Newsfeed they didn't have like a lot of what we would look at as as a social network today um and it took a couple of years of exploration I think we're in that window now I think like somewhere in the next three years somebody will figure out like a social app for example that really takes advantage of the Native social breakthroughs the social Innovations here and that might be the thing that goes really viral or or gaming right there's how many like great teams that actually have gaming experience have have now entered the space and have been

hacking for the last two years like the last gen games that we had they were fine but they were kind of you know like the the play to earn stuff most of it was because people were grinding to get tokens not because they wanted to play the game and I think this cycle you might actually get some games that are fun to play um or you know nfts themselves like you know in this bare Market people I don't know how how closely people been paying attention but like Nike's been shipping uh lvmh did did a drop um like these big brands have been continuing to sort of push forward with their teams because the people who understand luxury goods and understand social signaling understand that this is actually digital social signaling and and that's a huge market like literally the richest man in the world is Elon

Musk the second richest man in the world uh Bernard arnal runs lvmh and and their business model if you look at it is to take capital and to turn it into Social Capital like that's literally when you buy you know Louis Vuitton handbag what are you doing you're buying Social Capital you're signaling to all the other primates that you have excess capital and that clearly has to be digital right like and this this is like a really deeply ingrained human human behavior and you know what it reminds me of is like um in the early days of the internet there there used to be these graphs that were like um amount of time spent on uh newspapers amount of time spent on the internet dollars spent on newspapers dollars spent on the internet and and you're like wait that just has to fix itself like the dollars have to

go where the people are and and I think we're in a similar state right now with digital Goods spending and luxury goods spending like all the luxury goods spending is offline and it has to move online and nfts are the vehicles to do that like right now we can't see our shoes why does it make sense for me to buy thousand shoes that makes no sense um right you can't see what's on my wrist like it doesn't make sense for me to buy a $20,000 watch um all of that spending all those billions of dollars to spend I think Move online so I think we have these like categories does that mean you have a $20,000 hat no that yeah Priceless took off his watch yeah yeah yeah no but that that's a really good Insight man you're talking about watches I like watches man what you talking

about we yeah I mean yeah yeah like point point being though I think like we have some really interesting candidates beyond the infrastructure now whether it's social and sort of Proto social networks nfts a social networks nfts for social signaling um you know these other applications that may or may not um actually have you know onchain influence like we're starting to I think I think see some Proto applications here that I think could actually break out um and you only really need one of them like you know you get one or two and all of a sudden everybody will start copying it and mimicking and and building on top of it and and you're Off to the Races I completely agree with you on the nft side uh I actually I love I love the point you brought up about uh Elon Musk

which is that which is also something that just occurred to me is that okay richest man in the world Elon Musk second richest man is the creator of lvmh uh lvmh is doing nft drops and surely he must recognize that the second richest man in the world must recognize that the richest man in the world does not wear lvmh doesn't signal that way yeah that's right doesn't signal in the way that like the old world and like the that massive Market into which he has locked in Elon Musk signals in a totally different kind of way Y and that is much more the way that crypto natives signal and think about social status and value um and that's why I'm also bullish on nfts uh and I think they they will come back and continue metamorphosing however I am uh not bullish generally on crypto

consumer and crypto social in a in a broader sense nfts I think I kind of uh bucket in more with financialization of status and you know I I think the further away you get into the outer reaches farther away from money the less crypto holds veilance and the less power it really has to actually um create new more interesting products or things um Theo the closer you are to that core and I think nfts are actually still pretty close to that core of being about money and value and Status um the more veillance I think crypto has and the more power it has to have real staying power I think we always want validation into our interests and you know if

you're collecting art wine watches whatever it is or digital translate that and include digital first then it doesn't really matter you want validation crypto is a really good mechanism to find price discovery on these tail end of things much better than the real world because you drive more liquidity the question I ask is um so music nfts in example or games as we saw D5 with a veneer gaming which was like farming Gams was better than playing axi and no one can tell me otherwise because I had a lot of fun farming in D5 summer until prices collaps or you had hack nonetheless um are there instances where as you talk about like moving outside of these like like concentric circles like the closer are your financialization the better does it are you guys like not investing

in things where you think that by introducing financialization or more of it in a more realtime manner it actually detracts from the user experience so like gaming is an example right if you're playing World of Warcraft hey maybe you played it and then like whoa I can actually sell these things but if it's constant real time it's distracting it's noise so it degrades from the user experience the same way that perhaps artists with music nfts realize which is like wait a minute my fan base all of a sudden might call me because the price of the H of tee collapsed 90% that's not good because it it introduces a vector that I don't like so I am curious if you if if one your views on gaming on music and like some of these other things that

are trying to overly perhaps financialized trct from the consumer experience um thoughts there there are a lot of things in the range of human experience that shouldn't be intertwined with money like if if you give me a gift and I give you back a gift and I point out to you they're like well my gift was worth slightly more than your gift um it it it somewhat destroys what we were doing with the gift giving right if I if I sit down with you and I'm like hey Santi I know you're going through a tough time uh I I really want to support you and look you know this means a lot to me because my time is extremely valuable I make you know whatever huge amounts of money per hour and I'm forgoing that to spend this time with you you would kind of be like wow what a

[ __ ] dick like that kind of ruined what I thought we were happening here um so even though these things might be facially true um it's it's actually important for a lot of the things that we do that they not be directly tied to money because there are different kinds of things that we do as human beings that are not about money um and I think it's obviously true that for a lot of games um it it it does cheapen the experience or contort the exper distort the experience if we start making something that's bad you know me uh building a community and bettering myself and like you know really building something and getting very excited about creativity with well how much more money am I making per hour if I uh keep leveling up my character or doing this or doing that like I actually I don't

want that to be the experience that I have when I'm you know playing El Elden ring or whatever um however there are a lot of games that are some of the oldest games in history that are directly about money right so some of the most popular games in the worlds are games that people you know people play Majong it's one of the most popular games in Asia I mean as right now right people play majang all day long and maang is played for money people gamble over majang you know people gamble over poker they gamble over all sorts of games that have very very deep veence but the way in which the game is played and the kind of game that it is is distorted by the gravitational field that money applies to what it touches and so I think it requires some thoughtfulness in order to

figure out how does a game interact with money in a way that makes both of them fun and doesn't cheapen the game and also doesn't you know kind of detract from the the the monetary game that is also happening underneath it um I think we're still very early in exploring that intersection of you know if you think about it poker poker poker's a good game I think obviously it's very popular it continues to be popular it's been popular for a very long time um there are very few games that have been invented in the last hundred years that are like poker it's kind of strange that there there's been so little kind of successful innovation in you know there variations of Poker but they're all still you know 52 cards people sitting around the table there's nothing internet native there's nothing like in a in a dig space there's nothing like we

haven't really figured out you know why is it there must be a richer intersection between money and risk and gaming and fun and worlds and there must be more there than we've currently explored and that's where I think the most fertile insection of crypto and gaming probably lives um I I don't think it's going to be oh well your sword can be exported from this game to that game like you that's a lot of what people talked about and these are V1 of when people thought about crypto and gaming um I think it's going to be something more complex than that that when crypto gaming really starts to work in a deep way um until then it's it's been a lot of just kind of Ponzi schemes disguises games uh where you kind of work through the game in order to play the Ponzi scheme and look Ponzi schemes are fun

right they're also one of the oldest forms of gaming in the world is you know Bubbles and Ponzi schemes are naturally I me that's what you could argue that's what a mem coin is a mem coin is a bubble as a game and we all play the game of you know when who when do you get in the bubble did you pick the right bubble did you exit at the right time it's a fun game um but uh it's it's a different kind of game that I think what's going to end up working in in in uh uh the intersection of Crypton gaming well I I will say I think that so from an investment perspective it's something we're very cognizant of I I think we don't want to create incentives for people to cheapen the thing it has to be additive I I agree with a lot of what H

was saying I think though and I I also agree that I think the intersection of what crypto can do natively and either games or nfts or social experiences is very underexplored right now and in part is just it is actually going back to the infrastructure thing I think the infrastructure just wasn't ready like you couldn't actually have high throughput you know like what what dyx had to do over the last two years to to get to the the app chain that they built like you know it just wasn't possible to do that in 2016 2017 it took a lot of infrastructure building over the last five years to get to this point um and and actually you know if you look at the history of Technology people talk about these kind of like 10year cycles and and there's this Turner phrase I think it might be a Bill Gates phrase that's you

know people overestimate was possible over two years and underestimate over 10 going back to what you saying before Santi and and we're like five years into the wave now right from if you think about the 17 Ico bubble to now like five or six years in and I think only now is the infrastructure Gotten Good Enough which is why I sort of think that if you think of these things on a roughly 10e cycle Somewhere over the next like two or three years somebody will stumble into some killer apps at the intersection of these things that will feel crypto native and really take advantage of the technology because it's now possible to do that like um who was it the Xerox Park guys that were doing the the ZK game was that who that was was it Park Labs yeah like that was a really

early example of like people trying to take ZK proofs and do something novel as a game uh with it uh and I think we're going to see a lot more experimentation now that the tooling has actually gotten good and useful and so we're just at the very beginning of that now I think that the unfortunate reality is that when you hand a bunch of people technology and tooling they will tap into these really uh negative potentially negative feedback loops that exist in the human brain um and so you could certainly get people that buil that build things that are um that take advantage of these loops and are net negative potentially NE negative on society even um but are extremely addictive and have extremely good feedback loops and and so I think like as an investor it's something we think about a lot like are we are we

actually building you don't want to invest in a thing that like you don't you don't want to invest in a literal Casino like we don't at least right and what we want to do is invest in in markets that are helping price discovery on real fundamental utility happening like if we can get the capital markets all over the world to have uh access to a better Financial product in the form of reinsurance now the reinsurer which is creating a really net productive thing in the GDP can actually go like fund that activity with a lower cost of capital because there's all these people that will give them money at a lower cost U because they don't otherwise have access to Good Financial products like that's a net positive use of of capital on chain right um but I think it's gonna it's gonna happen like it's unfortunate

and but it's inevitable like when you hand a bunch of people a bunch of Technology some of it some of is end up getting combined in a way that is going to take advantage of people and sort of exploit people so I I almost feel like at the market level it's unavoidable that that happens so what do you have against casinos um what's wrong with casinos I I think that well the the challenge with casinos is that there's like um there's a good way to run it and there's a not so great way to run it the good way to run it is that it's kind of as as sort of the similar to the meme coin thing right which is like if everybody knows the game game that they're playing it's all good like we're all playing this game of money chicken I put in 50 bucks

like let's play chicken and and like whoever takes the Muny out last loses right so um the problem comes I think when and and it's a form of entertainment right and it's like yeah I was gonna spend like I now have to spend 50 bucks at the movies it's you know great this is better um the problem comes when you have a bunch of Market participants that don't realize they're playing a game or are unable to play the game in a way that is net productive to their life um and that's the risk that you run when the motive for the existence of the entity is to create more money because the easiest path to creating more money is to take advantage of those people who are least likely able to understand that there there's actually there's a game and they shouldn't like put all their money into

the game because they're gonna it's like a it's a zero sum game and that's where I think like Bad actors can take advantage of that because there are a lot of people out there that don't understand what's happening um I mean something I wor about I was actually talking to a set of Founders just yesterday um about you have to be really you know like one of the really interesting things with with um exchanges is um the early people that come into this part of the market cycle often do understand that there's a game that's being played a lot of the people who come in like late cycle don't understand the game that's being played but the Saving Grace often has been that you've denominated these other games effectively like if you think of meme coins as a game you've often denominated

them in assets like BTC or eth and so you've inadvertently when you take any profit or you've ended up with gas or dust or whatever you've ended up with an asset that has actually store value kind of characteristics and has appreciated over time and so the Saving Grace for a lot of people is they like maybe they came for the game and then they ended up with a stack of chips at the end of it that was like they're down 80% and then they just ended up with some BTC which when they looked back three years later they're like oh whoa I'm up on my Bitcoin like what happened right and so there's this like weird Saving Grace where it's like a lot of people play the game they don't realize they're playing the game but then they end up getting their butts saved because the thing that

they not the game that they were playing the other thing kind of save their butt and that actually I think ended up saving the the exchanges in a lot of ways because that prevented the exchanges from burning all their users out like if you imagine a situation where like everybody plays the mem coin game and most people lose money because that's what's going to happen um you actually will just burn all your users like there's no reason for people to come back because they just like lose faith in the system Give me the give me the counter on me on mcoins are you Pro mem coins uh I I well I've been thinking about it a lot because we've been we've been digging into a lot of the data of what's happening on certain these super high engagement chains um like if you look on Deck screener and you just look

at you know where where are most of the meme coins trading vast majority of them are on salana and that's actually where a lot of the retail engagement look at what what are all the transactions in salana what are all these people doing mostly they're trading meme coins and you know when I talk to people who are like really young one one thing I always try to track is like basically what's the what's the current Young Person's hustle that they're like you know sort of one step ahead of older more esteemed people who have real careers but they're making a lot of money um what's the thing that they're doing so like Santi you know in uh 2020 it was def summer and it was like yield farming and all this other stuff then a year later it was nft trading and then it was

you know there was air drop farming and you know that's kind of getting competed out uh and so now it's trading mcoins and there's just like this insane churn of mem coins where basically every couple days there's a new meme coin and these guys who are like you know 17 18 19 who just like are building up their Bank role they're trading memec coins and they're looking at the alpha and they're looking at the signals they're seeing which one's coming up when and the turnover on these is crazy High um and activity on solada if it has a hat it has more more longevity yes that's that's right but um what's uh what what's interesting so the thing that I was asking myself looking at this because I'm a [ __ ] you know an old fart and I don't do any of this [ __ ] so

I'm like trying to philosophize about mcoins obviously um so the the question I'm asking myself is like okay this is the game this is the game on salana it's a game on obviously there mem coins everywhere but salana seems to be where most of them today are getting launched like people aren't launching them as much on ethereum these days and a large part of the reason why they're not is because Salon of fees are so low and so you know I was reading a Reddit post about this guy who deposited like he gave his little brother $10 to go trade on salana and brothers made like all these trades like an insane amount of mem coins he's been going in and out of and now he has $20 it's like wow he turned $10 20 like that's you know people are this is this is the game on

Sal you can't do this on any other chain right you can't you can't trade around $10 on any other chain so um now this this the thing I'm thinking about this game is that this game doesn't seem sustainable to have this High churn of meme coins right now why do I say that the reason why I say that is to a V's Point um this is a game that's rigged against you there was a story recently about Zack xbt you know talking about a [ __ ] about mem coins people got mad at him normally he's like the crypto Twitter hero but then he kind of became the villain because people are like oh why are you [ __ ] on mcoins and the thing he said is like look most mcoins are rug pulls and he's right is that anybody who's launching a Fly by Night

meme coin overnight they are giving themselves a little bit of Supply pumping it as a memec coin it dumps two days later and they move on to the next one everyone is fine with the with the creator of the mem coin basically taking a big tax in order for them to create the game the next casino game that we're all going to play to basically do the next Ponzi right or the next uh you know kind of game of chicken essentially as you described it each I think that's right I think that's a right mental model for what meme coins are is we're all kind of playing this game of chicken there's a new round that starts every couple days uh and you get to play the new mem coin and then we all move on to the next one and it's all it's all

function of what's doing the most volume and where you think you are in the hype cycle for this new mcoin if that's the game that's being played if you think about casinos right going back to casinos uh slot machines are the most popular things in casinos they make the most money by far they're insanely profitable and they are perhaps one of the most optimized computer programs in human existence what they are optimized for is to maximally extract money from people over unit time and how do you maximally extract money over unit time well you're there's there's kind of two things you're optimizing for one is how much much money you're getting per hour and churn you're minimizing churn maximizing money per hour and there's some complex function you're optimizing to make sure that you keep people there you have the right variable ratio reward function uh

but you're not taking too much money so they don't feel like they're losing enough bells and whistles in the meantime right that is what mcoins should be doing if they want to be sustainable they should be trying to optimize for long-term longevity and minimizing turn but obviously they're not going to do that because there's not a single actor in the mcoin game there's all these different people launching mcoins and trying to get their mein to be front page so they can make some money from you know getting in and out of their own mcoin uh and so it's just going to be too extractive people are going to lose too much money over over a long enough period of time such that now this is not true for memec coins with longevity so I think Dogecoin has infinite longevity people will be able to play that game forever because it's

not extractive at all there is nobody who's making money from you except maybe exchanges from you trading do and maybe with you know dog with hat you know there's nobody who's maybe making money from you at this point um but for this memein uh loop of there's a new memin coming out every other day this game doesn't feel like it's sustainable and I think this game if you think about this kind of uh random walk of like what's the fashion that people are doing where before a year and a half ago it was trading nfts there's a new nft collection every single day that people were jumping in and out of and now it's moved on to mem coins the question I was asking myself is is this going to stay and the answer to my mind if you look at this is probably no I think in two years

there will be a new thing that people will be doing that's not mem coins because meme coins as they are made today is not sustainable um I think the big mem coins Will Survive but this uh uh crazy uh rotation of mecoin into mcoin I don't think this will be the thing that people are still doing in two years for that reason that's my that's my mcoin thesis I was thinking about that a lot yesterday yeah I I generally agree though I think these things will have a lot of longevity I think I I suspect it's not two years because I think I like I basically agree with the the unit economic math there which is like it net Burns people out and it's it's net extractive um but I think there's a lot more people who have not yet been burned and so I think like the

the size of the the pool of people to come in to want to play the game uh is just so large that that I suspect the meme coin but this isn't unique to this cycle I mean like 2021 like I remember playing like I opted into the game like Goblin Town nfts or like Frank Frank nft like that that's no that was no different the point they making is not that other bubbles it's that the game will change the meta will change it won't beins anymore right last ccle it wasn't m coins it was meme nfts essentially well I mean there's like all was still me was like like was it Shiva Moon the way the no no no let's just put in perspective like in terms of

aggregate liquidity volume interest like mem coins have always been like at the center of every every cycle in crypto perhaps after you had like smart Contracting platforms that enabled this stuff but like the way I see it is you like you can invest in maker which is probably the extreme of boring not sexy doesn't move you know but and the Other Extreme like meme coins and then like NF or or nfts that are like really cool but not as a liquid and so there's attack that coming in and out and mem coins sit slightly more closer to nfts which is um and really financialized and so it's it's fun it has like emotional cache that but the Deep liquidity that like

perhaps an nft is not going to have so if you're going to buy something probably it's going to be a mem coin not necessarily an nft because there's like unit bias and like 10,000 collections like tend to be really pricing out a bunch of people in the market whereas you're not gonna buy maker because maker is just a pet rock that doesn't move yeah I I completely agree with you but I don't think that the operating variable there is liquidity I think it's volatility meme coins are super volatile when people buy mem coins what's psychology the answer to my mind is that they're buying lottery tickets yep and they see the Reddit post they see the Twitter they see whatever like the friend of a friend of a friend who turned you know $ th do into a million dollars that is what keeps them playing

and buying the next meme coin to think maybe this one is going to be the next Shibu or the next Dogecoin um and that Dynamic could very easily move to something else whatever is the next iteration and maybe something that right now we we can't quite imagine because maybe something we're going to think is so stupid that why want to imagine it um that but that will be the thing that has this crazy volatility and the ups and downs and the you know minc the Thousand X returns uh and then people will start doing that even if it has terrible liquidity or if it has super bad slippage they'll say whatever that's not why you know people are not buying lottery tickets based on their understanding of the payouts and the EV of doing that they have no idea they most people don't even check to see how

much they're losing the average time they pull a slot machine yeah they just feel it over time through their own churn yeah I do think I I one one the only thing I would add there I I generally agree with a lot of that I I think the I because I was I was also thinking about this this week is like I think it's turned out to be the case that the Saving Grace has been that the base units of account of these things which have been Bitcoin and eth historically have appreciated to such a degree that even if you lost a bunch of money on the mem coin side you you did okay because the the base unit that you held has appreciated so significantly which kept

you in the game which allowed you to sort of pay the tuition it's almost like a tuition cost that a lot of people pay and then they realize the game that they're paying playing and at some point I worry that that like that cycle can't hold anymore and that you you can actually like burn a lot of people who don't realize there's a game that's being played that they're not playing a game they think they're investing and that's a that's a real challenge I think I see it kind of different the worst the worst game that well the worst game that was played was Terra disguise is a stable coin people didn't know the game they were playing the size of the door stayed the same the number of people in the room increased by orders of magnitude when weone try to get out it

was a problem and that has burned and that's probably the biggest hurdle because if you go look at the r Reddit form Wall Street BS people still talking about that and really burned which leads us to we need to build a really beautiful consumer applications that are not as destructive just pure casinos to pull in these people in hopefully the cycle yeah know thought I I I actually like hb's framework for this which is um you can kind of opt in or opt out to these games it's it's actually kind of how I like how I think of casinos or like Vegas basically like I'm not a regular of Vegas but once in a blue moon I like to go with some friends to Vegas and I'm like I know I'm gonna lose a bunch of money but I'm gonna opt in for the entertainment basically and like

that's how I treated honestly like the meme nfts in 20121 that's how I treat like I was like I'm not opting into these meme coins and I saw like something like blur and I'm like okay let me let me get a little like uh you know shots of dopamine and like let me play this game for a little bit because it's fun and then I see like some other ones I'm like I'm not opting into this just because I don't have the time or something and uh I don't know I actually kind of like it's almost it's like sports betting or casinos it's like yeah I'll probably lose money on this but like I don't know it's kind of tokenized attention and tokenized fun and no they they definitely play a role and I think it's it's just entertainment and I think it's we shouldn't police how people want

to like spend their money in terms of entertainment um it's just that I think think that sort of as investors or as people who are trying to build the ecosystem the only way to make it sustainable is to make sure that there's enough High utility like if we ended up in a world where it's 100% meme coins and that's the only thing that happens on Sal or ethereum it's it's over like this is what I think is really bad for the industry is when actually folks maybe in like your guys' seat like some of the like leading investors or whatever you want to you know kind of title you want to put on you guys like there's some Venture folks who are like people who are deemed by the crypto Twitter to be like the good investors in crypto are pumping these meme coins then

they basically go from entertainment to like retail thinking they're a good investment and that's when people get burned so yeah um man you came to this episode saying you're were tired see didn't seem too tired AEL ail just gets me going when we start disagreeing on [ __ ] a couple of Sal and yeah actually salana salana really that's what did it it always does yeah no I look I guys this is I really enjoyed this conversation I got to run soon but s your point about Tera in that the thing that I I got to give respect to mcoins on is that they are honest and nobody goes into a mem coin thinking that they're making a sound financial investment they know they're playing a

game oh I totally disagree I'm glad we're ending on a disagreement as okay okay good good good but like I I think people who are I think people who are buying uh these meme coins they understand that they're buying lottery tickets because they see the thing happening around them and people come into casinos and they also understand that they're you know they're not going to be able to trick the the slot machine but they might think that they're going to win and they might think they're lucky and that's okay that is entertainment it's the oldest form of entertainment human beings have been doing this forever and even when you make it illegal they still do it because this is this is just a lot of what drives our psychology it kind of you can sort of back propagate what makes humans have fun and the answer is risk risk is

one of those things for a lot of people not everybody but for a lot of people that Taps into the deepest form of Engagement and excitement um and I think that's okay as long as people know what they're doing but teror was not an example of that and there are many cases where there are basically these kinds of games of games of chicken uh that are disguised as something else and I think those are very destructive and I think ax Infinity was one of these uh I think Tera was one of these and I think there there are others that you know I I'm sometimes in the habit of calling out uh but at the end of the day um you know it the the my issue with meme coins is not so much that they're uh bad for the world I think they're fine as long as

long as you know the people who are buying me coins or the people who want to buy mean coins um but rather that because like I said there there there aren't repeat players it's it's a new it's a new guy every day launching the next meme coin um it's better I think if you have repeat players which I I don't know how you would do that but maybe you know like fan coins or some of these other kinds of things are are more akin to that um or uh no players at all which is the case for something like Dogecoin or Shibu or some of these more like truly decentralized m coins that are out there yeah I think that's a good start shopping place I have a feeling this won't be the last a lot of things yeah I suspect this episode's also going to be one of the

most liked so if uh I I think there's so many things that we didn't get to cover that it was on my list like Bitcoin L2 activity Bitcoin you know and so many other things that I want to get your thoughts on always a treat having you guys on stuff yeah good see you guys thanks for coming on yeah guys all right guys take care bye hey everyone Jason here thank you so much for watching today's episode wanted to take a quick second to thank today's title sponsor arbitrum we know you are tired of onchain experiences that have unaffordable fees and frustrating transaction speeds and that's why we partnered with arbitrum you can experience frictionless trades lightening speed and LaGree transactions all for pennies per transaction explore arbitrum expanding ecosystem at portal.

arbitrum doio that's portal. arbitrum doio see you for the next episode hey everyone thank you than you so much for watching today's episode really hope you enjoyed it we wanted to take a second to just remind you about our upcoming digital asset Summit in London March 18th to 20th Santi and I got your back seats are limited if you heard it earlier in the podcast there's a little competition running a blockworks to see who can drive the most number of tickets so when you register for the digital asset Summit make sure you use our code see you in [Music] London [Music]