Did Memecoins Ruin This Cycle? | Haseeb & Avichal

Transcript

I think the idea that okay we're going to get the motherload of all bubbles I actually think what you're going to see net net is that things in crypto are going to get less violent because we just understand it a lot better and Wall Street understands it better right and certainly when you saw the crazy internet bubble nobody on Wall Street understood the internet we're in like defi summer where people are saying oh this is really fun let me go do this and everybody understands the game they're playing but what it's creating is a bunch of noise so I think what you see next are in part because of what's happening on pump. fun the the media cycle kicks in scale is the blockchain that is Simply Built different other L1 networks have costly transaction fees clunky user experiences and lack true adoption in Ai and onchain gaming

explore the gas-free ecosystem at scale dospace ecosystem and follow their Journey on X at scale Network that is scale with AK hit the link in the show notes to get started hey everyone Jason here wanted to talk about something that's been on my mind a lot recently if we should not be just recreating the trafi industry that's why I'm excited to share with you that today's sponsor magic Eden is getting into token trading and their vision is to become onchain binance and then much more as the entire world moves onchain stay up to date with magic Eden's journey by giving them a follow on X at Magic Eden tired of losing track of all your tokens Unis

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a classic I think hasib and aich been our favorite not only is it a classic it's the the fans favorite so we'll be a flies in the wall because people want to hear about you guys they don't want to hear about what we have to say so yeah I'm I'm gonna start this the way that we started the last episode which was nine months ago um where we said hey I think the context for for nine months ago is hey look it seems like the Market's kind of coming back like we're just kicking off the year like things are doing pretty well maybe we're going into this actual bull market and yeah sure enough we're in a bull market um and a lot of the things that both of you guys called that would happen in 24 sure enough came came right uh you guys nailed a lot of

your predictions for the year um and I'd love to maybe start this episode by by just actually reintroducing that question of where are we in the cycle and how do you guys think about like what this cycle looks like as we turn the corner on 24 so whoever wants to take that first we can turn this into a conversation first as the as the AI expert why don't you why don't you predict the future for us yeah what I should have said is aichel thank you for joining us and gracing us with your presence after appearing on the on the Ben Shapiro show that's Ben Ben's actually become a good friend of mine um he's uh yeah he's his platform is unbelievable I was telling we were talking about it before it's just the the range of people that watch his his

material it's just unbelievable um okay but to crypto your question um what happens where are we in the cycle what happens um I think we're still pretty early I don't think we've really seen like the the media frenzy and the the sort of retell and all that stuff and um I think maybe to take it a slightly different way I'm kind of curious what his thinks but my my concern for years at this point I think I think I probably told you about this like three years ago or something like when we're in the the mega part of the last cycle is my concern is that this cycle is actually too big like I went back at some point and looked at the 99 2000 like internet bubble and if you go look at that it was if you add up the NASDAQ and the S&P it was something like

16 16 17 trillion it's like 16 and a half trillion in market cap and if you look at where crypto is today like three three and a half trillion something like that it it's very POS actually that we get to something like 15 to 20 trillion in market cap it's not Financial advice obviously but I don't think it's out of the realm of possibility um and and I think historically if you look at um uh like proper bubbles like I I would I would assert we haven't actually had a crypto bubble because you can't really have a bubble without Wall Street and so now we have Wall Street involved in the mix like all the rails are ready to go and they're all bought in um and so I think the potential for this to be like a NASDAQ S&P 2000 kind of setup is is

actually a little bit frightening to me because I think that could really Poison the Well um and so like getting too big too fast and then coming back 80% well if it's a bunch of crypto Deens that have been doing this for for years and years people don't really care when it's people's retirement accounts and people can like borrow against their homes and they take out leverage to do this and it's you know Grandma losing her retirement savings that's really bad um and I'm I'm a little worried that that this might be the cycle where that happens and I think that doesn't kill crypto by any means I think like the tech survives it does great like like some of the best years of the internet were post 2001 but it like the next Market I worry the cycle might actually be like a pretty brutal cycle so before

we go to a aich on that point what's more dangerous um people punting meme coins or people punting micro uh micro strategy at that premium yeah that's a good question I I think it's actually the micro strategy uh setup and the reason is that it's a little bit it feels because it's blessed by Wall Street because it's a stock because you can buy it in Schwab it somehow feels more safe you know like that people are used to that um but it's really like a rapper for just a tremendous amount of volatility and I don't I I worry that people don't really know what they're getting into I mean even even with things like gme at least the people that are on Wall Street bets like look at that and they know what's going on they they understand the game that they're

playing and I think the the concern is if if people don't understand the game that they're playing those are the people who get wrecked I'm pretty sure right now if you're going to Pumped out fun like you know the game that you're um and so you know it's like if you get burned you know you kind of knew what you're doing um and so yeah that that that's I think that's a really good way to put it on is like the the leap that you see in the later parts of the bull market where it just goes into frenzy is people thinking this is the new paradigm this is like the new the new normal and all of this stuff is worth what it's actually worth and and most of it's actually vaporware that that leap before it was just degens and now it's going to

be like people on Wall Street and people in their 401ks and stuff and that's that's a little bit scary how do you think about we're at right now I so okay I totally disagree with the story um so let's let's let's break down let's break down everything that just got wrong there so okay uh so so starting from the top um I think the likelihood that we see another crazy retail cycle uh or a crazy A crazy bubble to the same extent that we saw in 2017 or to some extent in 2021 I think that's I think that's just actually very unlikely and the reason why is that I don't actually see that much unrealistic expectations about crypto anymore I don't see a lot of people saying oh this is the future everything is going to be on chain um everybody's going to be using this for everything I see people

actually having much more tempered expectations of what this stuff is like there was you know there's a little bit of a gamei rally that we saw just a couple days ago but for the most part like the gamei tokens are still tiny the AI tokens are tiny the deepin tokens are tiny most of what crypto market cap is is just Bitcoin a bunch of lay ones that sling around stable coins and that's that's like actually most of it right and then there's some Defi and there's some other stuff happening on chain and I think people are actually pretty sober about it I think the things that people are really bullish on one Bitcoin can become like gold I think it's very hard to imagine that the increasing amount of consensus around Bitcoin is going to result in some massive um you know value disruptive event I think it's just going

to be this it's going to be volatile but it's going to be this gradual accumulation of more and more consensus and more of a shelling Point around Bitcoin and then for everything else like the reality is that the metrics Bell reality in a way that it's it's hard to be diluted anymore about where crypto is going right what you see is a lot of Fairly linear charts is that stable coins are going up uh onchain addresses are going up transaction volumes are going up Dex volumes are going up but nothing is really exponential and I think that's good I think it's good because it gives people this healthy sense of reality that I don't think that it's very likely unless you're talking about Bitcoin that we're going to get like a$1 15 trillion dollar insane bubble that just like everybody in Wall Street starts pouring all their

money into crypto I think that's much more likely for AI because with AI there's a real coherent story you can tell about how this completely changes the world right that's what you need in order for a bubble to to form to the extent that it did in the bubble as well as the way it did in 2017 is that people didn't really have a clear picture of what blockchains were going to do who was going to use them it was all a story today it's not really a story there are a few things that are story like of you know some of the AI tokens and some of the some some of the stuff that hasn't really proven it's uh product Market fit yet but the core use cases of blockchains are pretty much here it's it's less about talking about what's going to happen so much as it is just

measuring the growth rates and looking at hey what do we think this thing is going to become in 5 or 10 years but it's not you know wildly gesticulating in in you know without data now we actually have quite a lot of data to point at and I think that is making markets a lot more rational like I think it's basically correct that everything should have gone up I think it's pretty obvious that a lot of what was holding back this stuff is regulation you know if you look at some of these stable coin businesses if you look at lirer ones um if you look at the people who are transacting on chain a lot of the reason why they weren't was because they were scared was because they worried about regulation they were worried about hey is this stuff illegal is it going to be

taxed out of existence is it going to be shut down and now they know okay for at least four years I can I I I know that this stuff is going to be there and potentially it's going to be even regulated in such a way that I can rely on it um all of that is resulting in a huge growth rate you know if you look at snbs adopting stable coins if you look at the total amount of transaction volumes on chain Dex volumes all those things are going up some of that are speculative but I think the idea that okay we're going to get the motherload of all bubbles think what you're going to see net net is that things in crypto are going to get less violent because we just understand it a lot better and Wall Street understands it better right like

you got Banks writing research reports about you know salana transaction volatility and um you know the protocol upgrades that wasn't happening four years ago and certainly when you saw the crazy internet bubble nobody on Wall Street understood the internet that I think is the big difference between now and and uh you know previous massive bubbles that we've seen I'm I'm trying to think through whether H has more faith in markets than I do or way less like I'm trying to I'm trying to like on the one hand you're like okay the market should be efficient and like look at the data and figure these things out on the other hand you sort of expect the people to take ADV like the market to take advantage of the information asymmetries and do things like meme coins I mean how do you think about things like um the

the dii pump that's happening right now or crypto plus AI or like I I don't mean we have like we're very big fans of salana obviously but like I mean you look at salana and say yes this should be worth $136 billion like how I'm just how do you think about that yeah I I I think it's very hard to describe any of those things as bubbles uh I think like okay salana has flipped ethereum on a massive number of metrics over the last month right if you look at uh total fees paid you look at Mev you look at transaction obviously transaction volume and Dex volume and all that stuff it's been it's been you know flipping back and forth for a while now uh so I I think it's pretty hard to argue that like okay people are making a fundamental mistake when they're valuing

salana at third of ethereum you might say that okay maybe it should be a fourth maybe it should be half maybe it should be something but that's that's clearly not the wrong order of magnitude for what Solana could be 3 to five but then do you think how do you think I mean I'm I'm not trying to P you in a corner with like a financial you know um from from like the SEC perspective or anything right it's just like but you look at things like ethereum at 400 and are you like you know they should actually be worth 400 or do you like how do you I'm just curious how you think about that so I I don't know if you measure it right now on a function of what is the total amount of M or what is the total amount of paid you get some crazy large

multiple um I think it's pretty clear that uh eth is not just being valued as a function of the fees generated on ethereum it's being valued at like this sort of sum of parts and one part is the commodity demand for eth as a as a you know uh as gas another part is the total fee Revenue by burning and you know sort of buyback thing uh and the third is eth as a currency and the sort of Digital Silver you know that used to be the story for Litecoin in reality that's now the story for ethereum whether we like it or not that's how ethereum is treated um and so uh I I I don't know I think it's really hard to from first principles look at that thing and decompose it and say Here's how much each of the parts are contributing on

some level you kind of have to take Bitcoin and ethereum at face value is that these things are really a function of supply and demand and everything else Downstream is being valued on a relative basis to those two things um I think if you're trying to back into a fundamental value for ethereum you're wasting your time right I I just think you're doing the wrong kind of thing for for an asset that is so immature and so poorly understood I I'm curious if you apply that framework like very simplistically these networks are based on supply and demand right now not fundamentals nothing and and there's very little to grasp on and everything is anchored on bitcoin and then you go down from there salana is a third of the valuation of eth how do you think about from the demand side of the house whether it's

retail or institutional we had Eric Peters here before he obviously like historically Venture funds have Legacy portfol in ethereum newcomers new funds we don't have a sole ETF but how how do you think about the demand side of the house and as you underwrite like okay on a relative base is salana ethereum I know we keep talking about this but I'm curious updated views on salana as an asset relative to ethereum well so the fundamentals salana are are obviously very strong as I just mentioned in terms of the onchain metrics that being said salana has a huge dependency on the mcoin economy and in that sense it's very Tethered to um it's sort of like a you know a business that has one gigantic customer and there's just a lot of customer risk if like if this customer goes bad or turns

or you know let's say pump. fun launches its own chain and sucks up a bunch of the um onchain liquidity that's taking place on salana um that could end up being very risky for the overall picture of where the fees are coming from um and I think markets are pricing that accordingly right they sort of know that hey defi is very very sticky memecoins we don't know how sticky m coins are right it's kind of too early to say because they just showed up like you know 10 months ago basically as as being this huge Force in crypto trading so I think markets are being thoughtful about it um at the same time you know the the question of incremental demand I mean Trump getting elected has clearly been extremely good for soul because of the fact that Soul was such an enormous Target of the SEC right ethereum in in a

sense like uh was was kind of the the least of a beneficiary from Trump getting elected because the fact that ethereum even under the Biden administration had cleared the bar to basically have that exit veloc that yes you are sufficiently decentralized you get to be accepted into the mainstream Financial ecosystem and everything else was too short to ride and Trump has basically said okay [ __ ] it everybody gets to ride you know obviously we haven't actually seen it yet but in principle the way a direct quot that is a direct quote that is a direct quote in principle it's PVE the way to a soul ETF a a ripple ETF right if I mean the logic is obvious is that look if ethereum which is a decentralized layer one with a bunch of nodes and blah blah blah like why can't we

look from ostensibly I look the same now uh salana obviously has a more muscular team than ethereum does also younger than ethereum is um but I think they'll probably Prevail in being able to to make the case to the new SEC and the new Administration that hey we should be treated the same and if and when they are I think you should see like I I think that's a big part of the reason also why uh you've seen altel ones do so well post election uh relative to ether is that they should because they were the ones with this big regulatory drag and a lack of access to you know these larger pools of capital that that eth has been benefiting from for the last uh couple years man I'm still I'm still I'm still hung up on this you don't think there's

going to be people are not going to get crazy I'm still trying to reconcile that look I I mean people always are getting crazy somewhere right there's always Cycles there's always ups and downs right but what you're describing of like a.com level you know flushing of massive amounts of capital and just complete pandemonium yeah I actually I I just don't think it's going to be that likely I think it's probably going to be concentrated in meme coins it's going to be concentrated in certain asset San you're asking about dii and you know gaming tokens are pumping like these things are actually really small right like if you look at the mcoin complex it's uh I don't know what it is like maybe 100 billion of uh total meme coins um if you look at dii I don't know I would guess it's probably less than 10 billion um maybe five

billion even is a is a a right order of magnitude for it gaming tokens are probably 15 billion I would guess like these things are tiny compared to crypto crypto is 3.5 trillion so you will see speculative Cycles popping up here and there in individual um narratives but you know RIT large I don't think you're going to see like you know two to three billion dollars of value destruction um I I I maybe over a long enough time Horizon but I don't think you're gonna see anything violent the way that we did in 2017 I really hope soel does this does your you know super cycle with quotes around super cycle mean that it's a longer cycle or just a more violent cycle right because I think just more violent because I think a lot of people's framework is like this cycle

tops out somewhere between like summer 2025 to the end of 2025 yeah and so like a I'm curious if you guys agree with that timeline or disagree and B it sounds like hi probably says sounds like you guys actually kind of agree on the timeline but as just kind of thinks it's more like maybe like the last cycle like up and to the right there's kind of craziness at the end of each you think it's like a cycle to end all Cycles potentially I yeah I think well well so a couple things there so one I think that the thing that's different to me about this cycle again is that like Wall Street is on board and institutions are on board like you have sovereigns that are on board like the real deep pools of liquidity have sort of gotten their heads around what Bitcoin is and and

sort of kind of conceptually understand ethereum they haven't worked their way down the tail but but that's enough that you could have like real dollars coming in and that creates a wealth effect and and a lot of this is as anybody who's in the mcoin ecosystem knows it's mostly paper gains right it's not it's not like you actually have the money it's like you try to exit any of these positions and you just get crushed on the way out right you just have massive slippage so it's all paper gains but the reality is the way that most people think about their assets is through these paper gains um and so that's where these numbers like oh the stock market lost10 trillion dollar comes from it's like well people didn't actually like cash out and then lose 10 trillion it's like they went up a bunch and then they went

down they might still be up but psychologically they feel like they're way down that that's kind of the effect that I'm talking about is a lot of people will feel like they they bought in at you know 100K Bitcoin and then it went to like 200 you know and then it's back down to 120 and they're going to say that they lost 40% right that's how you feel psychologically um and so but I think that matters because I think what it does is it puts a it's a it it's a a huge overhang on the space like I think people you if you go back to the internet just as an analogy right like Market crashed um there were some real valuable things in there they were everything was just overvalued but even when like Google was iping in 2005 people didn't understand it was real

like people didn't think the internet was real and when when Mark andreon wrote that um software is eating the world uh article in like 2008 that was a that was a contentious article right people still didn't believe six years later that the internet was real these business models could be real and that software was going to eat everything um which in HDs side you're just like oh that that was that's obvious like that of course that's the way the world works but in when he wrote that thing it was like a very contentious assertion that software was going to eat everything and the internet was going to be 10x bigger than anybody thought um and so I think this is you know the fundamental drivers of that I don't think we're technological they were human nature and the fundamental drivers where people get greedy people stop ignoring the you know

they ignore the fundamentals they stop paying attention to what actually you know matters they get over their skis in terms of what's possible um and this time it's just at at a larger scale so I think like the the crash just crushes that many more people so I think the the the sort of the cycle thing is like if that were to happen I think the next bare Market is a much longer bare Market because I think it's extremely sobering because there's no there's no next pool of capital right like if if like the pensions and and the sovereigns are are all you know buying micro strategy or something like and they all get crushed who who's like the next pool of capital come in right so then you do have to Value it on fundamentals I mean we say the same thing about FTX and here we are

right like like everyone in their mother like the top top guys got burned with FTX sequ of the world to be fair they're not they're not back they're like to this day I think they very much don't want to hear the word ushered crypto in the investment committee but we're here I I wouldn't have thought we would have covered this quickly I mean that's still I mean Venture Capital relative to like the pension markets is still tiny though or the bond markets right and and so like now that you have Michael sailor tapping into like the the corporate bond markets and the Pension funds and potentially Sovereign MTH funds um because they they they want the exposure but they can't go by the underlying it's like a proxy for them to go buy it um like I I think you're just talking about

like the an entirely higher you it's like two orders of magnitude more Capital that can come in um now not I'm not saying this is definitely definitely definitely going to happen this is this is my concern my concern is actually that this is the this this is a setup for really really crazy Capital to start coming in and the consequence of that on the other side should that happen would be actually a much longer bare Market I think you end up with not like a classic two-year bare Market I think you might have to just like suffer through four five five and and then because everything has to be valued on fundamentals I want to go back to I want to put which by the way as an investor is like the best time to invest like if you were investing from like 02 to like

12 on the internet you crushed right so actually it's a huge opportunity in the wake of that but it's it's kind of brutal to go through I want to go back to and this hopefully inspires some more discussion we go we always compare against bubbles so let's take a look at bubbles um Ico bubble 2017 2018 just slice the numbers 18 billion was raised in icos 18 billion um I haven't looked at pump. fun that's the next figure I want to figure out but it's nowhere near that NASDAQ like the uh I doc bubble um per day VC's invested $500 billion do each day so that was 300 billion in 2000 Venture Capital

Investments peaked at 300 billion in 2000 equivalent to 500 billion uh okay that's wrong perplexity that sounds completely wrong is wrong were much smaller back then that is definitely wrong so okay this is a data point perplexity I'll blame it on you when the Bubble Burst when the bubble burst approximately five trillion in market value is wiped out so that's uh crypto what is it crypto n 3 um right I'll come back that's in like 20 right that's corre to 10 today yeah but I'm trying to just like put it in perspective of how crazy things can get because when I was sitting there 2017

2018 I'm like this could go run much much harder and then it stopped um what do we have different here today onboarding is vastly more like it's 100 times easier right people can go straight on chain and go to Pumped up fun um but you also don't have the Ico mechanisms You could argue pumped up fun is kind of like the deao but I'm curious how you guys like just think about going back to this idea you you disagree on how far we can go and where we are just kind of curious like look I I think one of the fundamental inputs to a bubble is unrealistic expectations right you kind of you kind of have to be able to believe that this thing will just take over the world and be infinitely valuable or arbitrarily valuable and I think the reality is that um people just

have a lot more understanding of blockchains today than they did 10 years ago and I think that makes it a lot harder to have these kind of crazy bubbles right the re it's a little bit like um you know mobile phones in that once you see the mobile phone and you see okay I can see smartphones are going to change things is going to be a really interesting technology um but you can kind of you can feel it you can touch it like there's not this like kind of crazy intensity about it and you see the numbers climbing but climbing in this sort of gradual and and kind of very understandable way um it doesn't really drive the same level of mania that it would at a time when you didn't understand what the internet was and people imagine the internet could be basically anything um I mean we're we're

fixating a lot is this uh um what is this oh the NASDAQ uh this is a Nasdaq all I'm trying to show here is that you it ran up and then it took 15 years I think this is what maybe a Vil is trying to show is like it took 15 years to recover to the high yeah sure um yes and but I think the the key missing ingredient there is like that that lack of understanding um yeah the reality now is that blockchains are a lot less exotic they don't make people crazy excited they don't make people think like oh my God this thing could take over the world like even the people in the show are not talking about it like that anymore we understand what blockchains are we understand what they're used for we understand the kinds of people that are going to use them I

think we have a pretty good ability to draw the line out 5 to 10 years from now the same way we did with early smartphones and say this is a useful technology here are the kinds of things you can do with it more people will have it and it will get bigger and more useful but fundamentally in the same way that it already is at in the first generation of it right in 2017 nobody [ __ ] knew what any of this stuff was going to be used for right we had such wild crazy ideas about oh you know we're GNA we're going to securitize all the stock markets in the world and we're going to you know every single business is going to launch their own token and every you know you'll have a thousand tokens in your wallet for every business you interact with on a day-to-day basis

right iot devices are all going to be talking to each other using their own token that's what we thought at that time we had no [ __ ] clue what people are going to be using any of this for and then we invented Defi and then we invented stable coins then we had you know uh faster blockchains and all this stuff that we have today now of course there is a lot of speculation of course there is you know and but the thing that the self the speculation that's happening in crypto is much more self-conscious today than it was in 2017 in 2017 people who are wildly speculating didn't think that's what they were doing they thought they were investing in technology right today people who are buying things on pump.

fun they are not duded about what they're doing they have they have a very good idea that like hey I'm playing a game I'm hoping to get that 100x and you know I'll probably lose most of them and one of them hopefully will pay for the pay for the rest of them uh that I think is the big difference that is is just puts us into a different phase of the technology deployment and investment cycle than where we were at you know 5 10 years ago man I really hope you're right yeah I uh let me move us into the next kind of phase of this conversation which is the dynamic of this cycle is different than past Cycles because there's actually return dispersion so all the last Cycles everything went up and some things were high higher beta than others but everything either went

up together or down together and this is the first cycle ever in crypto where you're seeing where it's where it's not that right so the winners of the cycle are what Bitcoin salana mem coins everything else not not a winner there's like little little booms like you know a goes up and you know maybe Unis swap goes up or something but like you know they're kind of like little micro booms how do you think about what happens in 2025 is this just the cycle that's like dominated by Bitcoin salana and mem coins or does this roll over into the second half into you know the whole rest of the industry basically I mean of reflexive I I think it rolls I this to me is very uh this Rhymes a lot with um with defi summer there's sort of this

like corner of people remember remember all like the the Vegetable Farms and like you know all the like crazy dot finances and and everybody knew it was a it was a giant sort of thing and then you know Meme coins are just that everybody sort of understands the game that they're playing um but it does create like this this frenzy and it creates this sort of like momentum and then there is some degree of nonzero wealth effect like some people are big winners in that and it creates um sort of an echo boom and then people start paying attention and then because people pay attention they say oh that thing over there is actually valuable bitcoin's actually valuable um I want that and so money starts to flow so I think we're kind of in that which is I think we're we're in like defi

summer where people are saying oh this is really fun let me go do this and everybody understands the game they're playing but what it's creating is a bunch of noise so I think what you see next are in part because of what's happening on pump. fun the the media cycle kicks in right and so now reporters start writing these stories about like look at all these crazy you know pump. fun people like walking themselves in cages and doing crazy stuff and and and then somebody writes a story about like oh look at this meme coin Trader you know it's like some 16year old that's now A Millionaire but then of course what that does is the opposite of of what they think it's going to do which is now like all of the other 16-year-olds and college kids are like oh [ __ ] maybe I could be

millionaire and so then they start paying attention so it has like the opposite of the intended effect it's not it's not like a cautionary tale it's like oh pay attention and then the whole thing starts over again like you know it's a this is why I I really personally I love reading sci-fi right because like even though the technology has changed we now have different l1s and we have def5 that actually works and we have stable coins that actually works like the technology is all different but the human nature hasn't changed right and so for like the last 10 a thousand years right like human nature is basically so I don't I don't see why that's not going to play out the same way it's just like I this to me just feels like def summer all over again and and and actually the parallel there too is like

there's some really interesting stuff coming out of the mcoin ecosystem right from from like an infrastructure perspective or technology perspective or culture perspective it's like really interesting stuff there even if 90% of it is garbage what what is the really interesting stuff well I think I mean definitely stress testing um uh the the infrastructure I think is really really interesting um and so like how much throughput can you actually get and how do these things work concurrently um I do think the um like this is what I always liked about nfts too is just sort of like this notion of micr communities um and so like all the stuff that that Iggy was kind of playing around with igy zelia um which is effectively a meme coin but it's sort of like this this Affinity thing and I feel like that's kind of um like like we haven't quite

seen what social looks like in crypto and I think meme coins are like the closest that we have right now which is like a group of people coordinating to do a thing it's like a real money game SL social thing where there a lot of like small groups of people talking about these things um so I don't know what that becomes it's sort it's sort of reminiscent maybe another analogy is like it reminds me a little bit of fcoin back in the day where if you saw fcoin you're like what the f is this do you remember this in like 2017 they invented liquidity mining right how is this like fcoin because they invented liquidity mining but if you saw it at the time you're like this is this feels like a weird like Ponzi thing what the f is this but then that that sort of spilled

into defi like that was actually a critical unlock where people looked at that and like oh that's really clever I can use that to bootstrap liquidity um and so I think some of these like mechanics that the that the uh meme coin people are using around like how does onboarding work how do you like you know explain to people what's happening how do you like even the notion of like the pump. fund feed is like a pretty interesting concept it's so different than what you see on coinbase right so for the first time like the visual expression of what these things are is so different than like a price ticker uh which all of a sudden to me is like way more interesting right so like some of these sort of like observations about how the ux patterns work or how to onboard people or how Community Dynamics

work I think spill over into real social um in the same way that fcoin I just wouldn't have predicted that it would have kicked off like liquidity mining for defi as a mechanic well well so fcoin uh invented trade mining liquidity mining was was compound but yes U yeah I I I think the the point about social I agree I think it's very orthogonal from everything else happening in crypto though like I I don't see a lot of spillover from the mcoin people into other stuff happening in crypto because what they're doing is just just a fundamentally different project than what most of the people who are actually building stuff are trying to do um like like people in like everybody who's who's doing mem coins is trying to make money there's nobody who's in it for the spirit or

like trying to advance some bigger agenda um like the whole Spirit behind it is like this financial nihilism that nothing matters and it's all about just making money and getting yours and like yeah I'm sure there are some subcultures that don't have that exact Vibe but you just see it with the rise and fall of these communities is that they rise and fall in price um and so I think it's fine it's very clear that this game the game of trading meme coins is a really good game it's probably you know we talk about gamey it's the best game that crypto's invented totally is this like trading simulator but with extremely high volatility very you know extremely easy to understand names you know I remember um on the NES there was this game um called like stock stock stock Wiz or stock do you guys know the game

I'm talking about it's like really crappy NES game it was super shitty um but it was like a stock trading simulator I remember playing it as a kid and you could buy shares of companies that like resembled real companies so like there was a there was company like PanAm but it was called like maam uh and you buy Yapple um and so like it was it was like a it was a trading simulator but it was so bad it was just so not fun um like I compare that like what people think trading is like to like meme coins and mcoins it's just such a good game it's so welld designed you know it's so engaging the ideas are so simple instead of like learning a stock and looking at balance sheets you're just looking at a funny picture and like some skitso arguing on Twitter um and like that it's

so much easier for people to play that game and it's so much more engaging um so I think like that is the best game the crypto's invented and that game has gone Mega viral I think that's the right way to understand mem coins is that it is actually the big success story of gamey and the form factor was not oh you build anpg or a mooba and it's like an analogy to this these other games that you like to play the game that it's simulating is crypto trading the game that it's simulating is like buying Bitcoin and ether and Avalanche and soul like that game is too much work now it's not fun the volatility is too low you're going to lose money um but this other game is just like super high octane fun version of it um and demonstrably it's like way it's way more engaging for for

people was it called Wall Street kid yeah Wall Street kid that's the one that's the one it's really bad yeah I I think that's a good take actually I've I've not I mean one thing that I've noticed from blockworks employees is you know maybe maybe half the company is like does things on chain and half doesn't um now it's probably 90% of the company is doing things are basically trading these meme coins like just like yeah almost after hour I mean probably during hours too whatever but like uh you know just like dur during the day they're just like talking about these meme coins and what it's actually forced them to do they're all they've all got a phantom wallet right they've all they they've all got comfortable very quickly doing things on chain we're like we've

actually tried to get people to the whole company to do things on chain for years and it just doesn't really work it's like everyone's got a mandatory start a wallet like no you can't do that now this has pulled a massive amount of people who otherwise would to been on chain on chain um actually example right like the the like um the the second order effect of these things and I agree it's it's basically a game and by the way it it is a real money game but a huge part of the utility which I don't think can be um written off is that games are fun and there is some value that humans put on having fun so even if people lose money you know like I think people understand they're playing a game by and large eventually people won't but but y your your point like you know this

this very likely gets like I don't know I'm GNA pick a number 250 million people to on board into like self custodial wallets like it's going to be like an astronomical number of people end up on um you know metamask and Phantom and Magic Eden and and and like the bootstrapping which then opens the door to the real productive stuff I I don't think can'd be understated which is which is what I was getting at before is like I think there's real spillover in ter like driving infrastructure um with these things which is why I don't think it's like the the way I would describe that is it broadens the install base right in the same way that nfts got millions of people to chew glass install metamask get eth into their wallet figure out how to sign a transaction do an approval you know all the stuff you

have to do to get onto openc was so complicated and millions of people did it and they were you being advised by like Tik Tok tutorials and all this stuff right now obviously Phantom has massively lowered that barriered entry it's a lot easier now to get into the memec coin trading game whether it's on whether it's on Solano or on bass or wherever it is that you're trading Your Meme coins uh it's a it's a lot more user friendly um the the the the downside I would give though is that although I think it is the best designed game that crypto has made and obviously the ugc element of it just makes it you know kind of par self-sustaining right compared to most games um the big problem with it is that I I I do think that it is too extractive and the thing that most games do and

this this is a thing I've said over and over I think I said this on our last show as well um the thing that most games do is they balance the economy right a game designer makes sure that you know you you're sort of controlling the rate of like gold emission or you're controlling the rate of bad guys popping up in or dungeons or whatever so that everyone's having a good time and nobody's getting over harvested right you're like sort of Designing the whole game to maximize you know net player retention over time or net net dollar retention basically in terms of their the the amount that they're they're spending and mcoins don't do that because of the fact that it's all ugc everything you know it's like this game that every single um you know every single tile of the game is owned by a

different person who's trying to extract as much value as they can or the analogy I like to give it's like a casino where every single slot machine is owned by some different person and as a result anytime somebody comes and sits on your slot machine you want to get as much value as you can from them before they move to the next slot machine or like go play game of craps um so the casino because it internalizes the entire um the spending pattern of a person there it's like well I want you to leave some money left over after you're done playing slots you can come play craps and then have a drink and then go do this thing over here and you end up maximizing the net dollar retention um or the net the net spend for your users who are in the casino um and you only

really get that if there's a single quote unquote Central planner for the casino um and memec coins don't have that which is why I think the mcoin game is going to end being too extractive to be actually self-sustaining I I actually I'll I'll take the other side of that I think the market has solved this in a very elegant way um how's that I've talked to I've talked to um some more portfolio companies about this I think the pattern actually because this happens with every cycle it's happened with like um you know namecoin happened with icos it happened with like defi I think what happens is you get some sort of speculative thing where people are like playing this Zero Sum game and it's not real net value creation um and they put money into it they go up some people lose 60% of their money or

80% of their money and the base the base thing that you have to go back to historically it's been either you know Bitcoin or eth because you're on the exchange and that was sort of like the base pair and it might now be sole with um with the mcoins as well um and because those things are fundamentally valuable um then what happens is you like leave your dust you leave like the 10% of money that you have sitting in Bitcoin or e or soul and you come back three years later four years later um and you're actually up and so you kind of like didn't lose money because like Bitcoin saved your butt or eth saved your butt because you know you just like kind of hung on to it and so I think for a lot of people it actually is like an even better bootstrapping mechanism into

like don't do the stupid [ __ ] don't go play in the casino or if you do like understand the game that you're playing and and leave some of your stack in this thing that actually has like real long-term utility and so it's actually like a bootstrapping mechanism I think for people to learn to hold um especially the things that are truly truly high value and there's like a very very small number of those so think of it this way like I think binance and coinbase get their butts saved because the base pairs are BTC and eth right like all those people that lost a bunch of money on a bunch of stuff like maybe you hit it on some some Ico or something but I think a lot of people basically like ended up with some amount left in there and they're like okay whatever and

I think a bunch of those people get saved uh when the market comes back um you just sort of have this like 10 or 20% of theack left in Bitcoin and now you know sitting there and now you're like basically break even and so I think it's actually a really interesting bootstrapping mechanism I'd be really curious to see the data from any of those exchanges on like it's it's kind of like the um have you guys ever seen the Schwab data um or the Vanguard data which is like the people who perform the best or the people who forgot their passwords yeah yeah they just never sell and I bet you there's a huge percentage of these accounts on these exchanges that like did a bunch of stupid stuff lost a bunch of money had like 20% left over and they're like [ __ ] it and then

they just like left for three years and now they're coming back and BTC is at 100 and they're like oh [ __ ] I should have just I shouldn't have done all the stupid stuff I should have just done the high utility stuff hopefully at least well it's a it's it's a very sweet story I I I'm a little skeptical that that's true I mean at least anecdotally I know a bunch of people who bought nfts and I I don't know any of them who are like man I'm so glad I had 10% in E like I feel like I really really paid for everything I I bet you a lot of those people that are doing nft stuff were buying nfts when eth was like 1,200 1400 you know back in 17 no and they end vast majority of people came in when the market was

crazy that's why the market was crazy uh yes um and I bet if eth works if eth goes to like 10K they'll be like pretty close to break I bet a lot of them will be pretty close to break even if you bought e to 4K and you have you know let's say 10% of your sack in there you've got to get eth to 10x eth has got to get to 40K if you to break even or or your nfts in USD terms have to like be some of them have to be worth something right sure sure my I'm looking at the punk that I bought for 125 eth at the Pico top and did you did you really buy that when

s just hold just hold dud I I I topped I was tick top the the punk floor I was like [ __ ] it no but but in eth terms or or in USD terms 125 eth and and in USD terms it was like 500k dollars oh okay yeah uh eth was at 4,000 and change and um you know I have it as soon as I walk into my house I have it there and it at me and and Whispering me at me like you're an idiot you have you have a you have a hoodie right oh no I'm not talking about that no that no the the hoodie I bought for uh 79 eth when eth was like 2000 before like the Mania before 6529 Santi okay so we we have you here as what do you feel what is your

lesson what is your lesson when you look at that when you look at that framed Crypt punk what do you feel like the lesson is when you when you think about that I bought I bought it I'm a collector not an investor no but but here's someone who here's someone who I'll tell you I'll tell you I'll tell I'll I'll I'll frame it in the current context of why meme coins are just a better mechanism to what nfts tried to do um it just you don't have the unit bias you don't have the sticker shock uh nfts are ERC or like just tokens and stocks in one end and then then you have nfts on the far other Spectrum I would

argue meme coins are like closer like this is the middle they're they have emotional cach a uh but they have a ton of liquidity and they have like the unit bu like it's sents right and so anyone can buy it not everyone can buy unless you're fractionalizing an nft but it further has issues with liquidity fragmentation for that reason um look clearly people want to punt things and I I just think meme coins are here to stay I would I want to believe that nfts come back I think they're going to come back super late in the cycle when you have the wealth effect of as soon as people make money they do a couple things they open Zillow they open krono 24 and then they open Magic Eden openc

tenser and I think it's going to be a very still very Niche kind of I don't think that the newcomers are gonna like want to punt nfts as much as like old school crypto wealth uh that that um wants to buy punks you know what I mean like that's actually a very interesting point Santi because I think what happens is that so the new money right now if if if the new money like the people who made their fortunes on memec coins right they're the sort of the new generation of wealth in crypto those people if they go buy a crypto Punk and make that their wallet they're almost like it's almost like they look like their parents and it's just it's just like the cringiest thing you could possibly do is like have your parents dress you but two generations from now then it's going to

be retro then it's going to be like you're signaling that you're a true OG because you know that two generations ago this is what people were buying so my guess is going to be the mcoin cycle is going to be like yeah nfts are cringe like these are stupid there's no way we're going spend our money on this and this generation you know four years from now in the next cycle is going to be all about the meme all about the nfts you know but you invert to today hi and you're like God I mean that's uh the compounding effect of you holding that nft like I guess if you have the nft now do you sell now if there's a Mater let me ask you a question if there's like a slight pickup in the floor uh you have to clear a lot of people

that are in the red which is another component to this Dimension and if everyone thinks like you then you almost like want to sell almost immediately to then rotate into the meta which is AI coins uh and you know memes and the whole different derivatives and types of memes and then just like other stuff you know what I mean like the scar tissue of of the people that bought the nfts is is very strong and you get and like gaming token have this issue too right like these narratives of the it maybe a broader conversation of like as you think about narratives like the gaming narrative challenging man like a lot of people got burned with axi the guilds the pl to

earns you know people love punting new shiny toys at some point the market overcorrects and totally you know it's just a price thing uh but uh yeah I even look at like in my portfolio like tokens that are launching in in verticals that are really out of favor no there's zero demand for them like zero scale is the blockchain that is Simply Built different let's face it other L1 networks have costly transaction fees that increase as the network gets busier scale has solved this problem with a gas-free scalable infrastructure where users never pay gas fees scale was awarded the most active gaming chain in 2023 by coin Gecko and

host five of the top 25 games on dap radar you should definitely check out scale I was using it the other day it really is incredible to use that's scale spell with a K hit the link in the show notes or head on over to scale dospace ecosystem to get started today hey everyone Jason here I wanted to take a second to break down why magic Eden is getting into token trading their team is extremely concerned that crypto is still Consolidated in the hands of a few centralized exchanges who act as Gatekeepers ultimately recreating the tra VI space they believe that crypto is still missing an onchain binance and their aim is to move trading completely onchain fully decentralized they've done $6 billion do in nft volume in the last

3 years and have had more than 1.4 million users visit their platform in the past year making them the number one nft platform in the market today they are the ones that can do it stay up to date with magic Eden's journey by giving them a follow on X at Magic Eden Unis swap wallet is is designed to easily manage store and swap your crypto all in one place access thousands of tokens across ethereum and 10 plus chains including Bas arbitrum optimism and more Unis sw's wallet has built in me protection and zero gas fees with swaps that go through Unis swap X you can also swap with the peace of mind that the code is completely open source and

independently audited download it today it's available on Chrome IOS and Android hey everyone Jason here wanted to uh just take a quick break and highlight everything that's been going on in the mantle ecosystem in just one year mantle has seen its tvl surge by over 1,100% now reaching 1.69 billion that's just such a crazy amount to think about more than 225 protocols have made mantle their home while the platform's Eco fund has invested $38.5 million in 50 1 pioneering projects through strategic Partnerships with bybit including MNT as collateral supporting Athena to scale

and the first ethereum L2 to integrate Ono Finance they just continue to be on the bleeding edge of l2s be sure to stay up to date with what's going on by giving them a follow on X at ZX mantle special thanks to the incredible mantle team for sponsoring today's episode earlier in today's episode I mentioned Ledger latest products the stacks and and flex and I wanted to take a few seconds to tell you more about them for Black Friday only Ledger is offering $70 in Bitcoin if you upgrade to The Ledger Flex you can also save up to 40% on selected Ledger Nano wallets and accessories these wallets are virtually impenetrable to online attacks because they store your private key in a secure

offline chip you can manage more than 5,500 tokens and install up to 100 apps offer is only valid until December 5th or while supplies last so be sure to hit the link in the description of today's episode so you don't miss out on this really good deal wait let me let me ask something about that then which is related to these meme coins but more about how it impacts the this D okay the dynamic in both Tech and Venture where it's like or in Tech and crypto where it's it's okay you got the Venture back model uh G you know big LPS give the GPS the money Venture invests in all these new Founders they go build things they launch tokens it works some of their employees go build new things they raise

seed rounds and it's this like beautiful cycle that builds technology for the last 30 years and memec coins are kind of breaking that right like uh you know Santi mentioned the AI cycle it's like it's not render and aosh and benser that are ripping which are like these venture-backed businesses that have great Founders and have launched you know launched tokens and have employees it's like these random AI meme coins or I mean AC basically it's sucked all the juice out of honestly a lot of so okay like a lot I totally do not buy the story complely don't buy this yes well you guys don't but you don't buy it because it's your I mean your your I I would argue your business is being hurt

by these meme coins like Venture absolutely I mean so I clearly we're not being hurt right like if you look at just the amount of people who are coming on chain because of memec coins right it's like arguing you know again if you think of memec coins as this game that has gotten TR yes yes yeah it like it's bringing demand for blockchains on chain right now there's this there's this argument that many people have made of oh it's like this Revolt of the public and you know it's like this kind of uh we're throwing off the shackles that the VCS have placed on us and we're now we're buying our own tokens um I think this is just complete nonsense it's just complete [ __ ] nonsense right a game we hear it every cycle right just for context 100% 100% right like every every

yeah totally um same thing we heard with the food coin same thing you know every [ __ ] time we the same story um it's not about VCS it's really about technology the question is is crypto about technology or is it about just trading Specta of tokens seeing the prices go up and down um mem coins are about that because mem coins are this very fun simulacrum of trading that is you know this frenetic high energy thing and of course retail loves it because it's designed to be lovable it's designed to be fun um if you look at what what is what are most people doing when they're trading on binance are they mostly trading mem coins or are they mostly trading like other stuff like what we think of as Tech the answer is that uh about two months ago before you know before Trump

won about 15% of binance volume was Mee points okay now that's gone up a lot do you know what it is today it's about 23% it's not the majority of what people are doing what most people do when they buy crypto is what they think they're doing is they think they're investing in technology like you know people are obviously investing a lot into xrp into cardano into stuff that you know I don't necessarily think is the most exciting technology in the world but when they do that what what are they doing what are they telling themselves they think that okay this is a the founder co-founder of ethereum this has great technology stack they're going to build this new stuff they think they're investing in technology that is their lived experience of how they understand the Enterprise they're engaged in that most people don't want to invest in me coins

most people don't want to do this nihilistic thing of I'm just betting that this thing is going to go up and down because they don't actually think they're gambling they think that they're investing in the future that's what they've been told that's what we're telling them that's what you're telling is that you know that this Stu is that's what Donald Trump is telling them and they believe it so that's the first thing the second thing is that um you know this claim that this is somehow bad for our business uh so obviously there's the the downstream effect is that okay well this increases the bid for every single layer one for every piece of infrastructure has to get bigger in order to accommodate all the mcoin demand um but second is that I also like I don't see any way in which it's zero sum um you know if you look at the coins

that were pumping over the last week obviously you know some meme coins have done well xrp Stellar did well um grass is doing well there's you know near is doing well avac is doing well which we're investors into um a bunch of stuff is doing well it's just not the case that only meme coins are pumping now what is pumped the most if you go you know sort by 30-day performance yeah you're going to get you know Peanut um and some other random stuff that just like you know rock it to the top of page one but has can you I'm gonna have to drop in a minute but like can you guys just talk about when we say pump it's like okay in absolute terms but talk about like the the weighted like the volume behind the pump like you I mean like the amount of money the flows into

it is far more interesting to me like I understand that an asset can go from like 50 like 15 million to like a billion and a half but like let's talk about ripple at a150 like cardano like Doge like putting Doge aside like the 5% increase in these assets is like vastly more from a flows perspective that I would argue it's like who's buying that I that's what I want to know it's like and how is it that some assets have transcended into this God tier of like to your point around how the how the internet like captivates the imagination cardano hasn't shipped and will never ship because once it does it no longer captivates the imagination well this goes back to my earlier point

is like I don't think people um I don't think the market is is actually well educated on these on these things yet right like I think most of the money that comes in to's point actually comes from people who think they're investing in technology but are not able to actually underwrite the fundamentals on that technology and they end up in these situations where they then are are pouring money into things that that will have you know price movements but but like the fundamentals won't support it and then that has to correct at some point um which goes back to kind of the earlier conversation we're having um Jason to your to your question around the mem coin stuff yeah I I I think um I I I think I'm I've been pretty consistent on this is like I I actually just tweeted about this like there I

think about crypto as having like three very distinct stages and a lot of the technologists actually jump to the third one the first stage is the casino the second stage is the capital markets and the third is the computer and a lot of technologists that are here in the space are here to build this like decentralized permissionless computer um that anybody can write code on and ship and we can run all these apps and all that stuff but I think the path to getting there is through the casino and through the capital markets like the casinos you know the icos and and the um and the meme coins like bootstrap all the infrastructure that's what creates the demand that's what gets people to the wallets that get some comfortable with smart contracts and then people realize actually the utility of this stuff is capital formation like the

thing I can cool money and pursue opportunities in ways that I couldn't before and that's you know Bitcoin or ethereum icos or or defi liquidity mining or dpin it's like these are bootstrapping mechanisms using Global Capital to get real fundamental utility off the ground and once that's working we can use that to actually go build fundamental computational infrastructure which we've already started to do and and then that that's like the final stage and I think a lot of technologists are operating at level three right now and we're actually you know somewhere between one and two we got to get through like the casino and bootstrapping of the capital markets with like stable coins and we'll eventually get to number three which is why I I continue to think we're not at the point of like valuing things on fundamentals like I think we're still in

the casino uh and and I think that persists for a few more years I don't think that's that's like a short-term thing it'll take us a few years to get through that yeah yeah um what do you guys think about eth right now um I I you know we we're actually working on our developer report right now you know the annual Electro Capital developer report that we do and um and I I won't um I won't I won't you know blow any of the surprises but you know eth um and sort of eth plus I think we're going to call it which is sort of the broader eth ecosystem when you look at op and arbitrum and and igen lay and like all these things that are sort of like components of this this whole stack um continues to have a lot of developers

you know it's been it's been the the number one ecosystem from a developer perspective for a long time and if you're looking at fundamentals like we we have long held that um looking at where the developers are actually spending their time uh is is a the best leading indicator for where value is going to get created um which is why we do that report and try to do this analysis um and and eth continues to perform phenomenally from that Dimension like it continues to have such such developer mind share salana for for Earth is also doing exceptionally well on this this is one of the things that gave us a lot of conviction in salana in the bare Market um um in like you know 22 and 23 um kind of like after the FTX crash you could just look you could look at the developer numbers and you could

see that they're actually very engaged long-term developers that were not going anywhere um which then I think turned out to be phenomenal signal actually that there was real value that was going to get created there um so when I look at that fundamental signal which which is one of my favorites to look at it it continues to to do quite well actually um and and for all it's you know there all sorts of challenges there's all sorts of flaws there's all sorts of messiness with it but but it does feel like there's some sort of network effect there at this Point around evm and solidity and that infrastructure um you know everything from custodians to exchanges to Auditors to like there there's just so much infrastructure there now I think it's it's it's gonna be quite hard to displace yeah the the the point that I

make here and I think aichel alluded to this when he mentioned the eth ecosystem um or the I don't know what the word you put but you know sort of this broader um family of you know lirer twos and you know things like bass and everything that's evm based that rolls up into the ethereum world I think what we're seeing it's something we used to talk about a lot but we didn't take that seriously um but now increasingly you have to take seriously is the distinction between ethereum and eth the asset and it feels like that is the biggest um dagger in the heart of eth holders this cycle is that the ethereum ecosystem has never been doing better and eth the asset has never been doing worse on a relative basis so I don't know that this is likely to change anytime soon like if I

had to bet um I don't know many people who are actually bullish on eth Soul this cycle um I think eth almost certainly is going to go up over the course of the cycle but it feels very difficult to imagine how it outperformed salana given that salana has caught up in so many metrics that I thought were just going to be ins superably large ins superably large gap for for salana to make up and salana just keeps outperforming just keeps getting better and stronger and in previous Cycles etherum didn't really have a plausible competitor the question was not is ethereum um the question for ethereum's valuation was mostly how big can smart contracts be that's fundamentally what ethereum was being valued on was like how big is this story uh and ethereum

was the sort of proxy for all smart contract demand but now that's no longer true and I think markets are starting to wake up to the fact that um l2s are in a large way obviously parasitic to ethereum in that many of the fees that would otherwise be attributed to ethereum are getting displaced by l2s um I think it's not completely parasitic that there's some degree of mutualism where both of them benefit from each other but clearly if you think of the alternate universe where ethereum had eventually shipped its charting road map and you imagine that today we had many different shards of ethereum that all interoperated with each other all of which ran the evm or ewm for that matter um and all had this kind of redesigned execution environment we'd be living in

a very different world with respect to how ethereum would be capturing value and the relationship of rollups to ethereum right ethereum would not be there would not be so much insecurity and so much anxiety in the ethereum universe there wouldn't even be you know this whole thing about the beam chain this new ethereum 3.0 quote unquote redesign in a way is a concession of the fact that the ethereum uh rollup Centric road map was a mistake that it it caused a huge amount of value leakage away from eth the asset and eth now has to compete on some degree with the rollups right like why are we now moving to massively increasing the scalability of the layer one um when in reality if you want to extract more revenue from rollups the way you do that is actually by constraining block space not by making

more so the the overall picture that I get is that is one where you know ethereum the thing about ethereum and I think it's it's not just salana that is putting this pressure on ethereum it's not just the rollups it's also things like uni chain you know where you see this almost uh you know this this defection where Unis swap of course huge contributor to all the tvl and the centrality of defi on ethereum if uni chain succeeds in its ambition right what uni chain is described is that eventually they want to get all the Unis swap trading volume or as much of it as they can onto their own chain and internalize the me and give it back to UNI token holders right makes total sense very rational for UNIS swap to want to do this given what a huge contributor they are to the M on

ethereum well if they succeed you can imagine it's not implausible that uni chain could successfully move over enough of the demand side that the liquidity starts migrating away from ethereum over into uni chain and pretty soon you sort of get this big gigantic sucking just this vacuum that pulls the tvl off ethereum onto Unis swap or onto uni chain and if that happens I have no idea how ethereum could recover right it's like this gigantic super tanker that is designed to move very very slowly because of all the assets that's inside and it's rational for it to be very cautious and meticulous and careful with how and when it moves but we see how fast liquidity moves in crypto um and if the incentives flip uh you could see a very very

violent downturn to e the asset now again I'm not saying that this is likely I think it's actually very unlikely I think most likely uni chain is not going to have the uh the sheer force of will to work that hard to try to suck up all the liquidity from mayet I think they're going to be too risk averse um but I think what this thought experiment illustrates is that that there are so many ways in which ethereum can lose the mantle that really were just completely unimaginable two three years ago um and that's I think why you're going to see ethereum have a much harder time outperforming other assets that are that are in the same tax bracket like those risks are not going to go away I think they're probably only going to get bigger as the cycle gets more and more um more and more

crazy I mean in some sense it had to be that way right they were just so dominant on every metric that that there was no so much market share it's just like there was no alternative so I think this this was in some sense inevitable the other thing I I'll throw out there which I think most people no I think is is a really really hard thing to replicate like even if uni chain were to go down this path which I agree they probably won't the the thing that ethereum has right now which I think is very hard to replicate is credible neutrality at a global scale um and and the resulting regulatory Clarity and so if you're thinking about businesses that need to clear stable coins if you're thinking about crossb anything if you're um India or turkey or Brazil um you know any country in Europe

and and you're like look I'm I'm a little worried about the US system like do I really want to be subject to US Banks and do I really want to be subject to US law and I don't love the Chinese system like do I really want to be subject to Chinese Banks and Chinese currency risk what do I do and what you really want I think what the world really wants is a US dollar denominated system that the US government cannot unilaterally kick you out of and that's really what ethereum is um and it's the only thing that right now has the claim to that I don't know how that gets valued why is it US dollar denominated say it again you said it's a US dollar denominated system yeah e e I mean like currency pair is is fundamentally dollar like the stable stable coins dominate

everything but I mean but stable coins are under the the the domain of the US sort of I mean like tether is offshore right so it's sort of like arms length it's yeah like the US government could go to tether but there's like some hops there and then you could also take your you could take your tether or usdc you could put it into a wrapper effectively right like a fra or a maker um and so there are ways to get like layers of indirection there that it's it's not it's not so unilateral um and if you think about like what a lot of the world wants that that's actually I think what the world wants and so I think what you end up with is this sort of third credibly neutral place for the world to settle trade and settle business and do business in a US dollar denominated

system which I don't think we're moving off the dollar as the unit of account of the world that the only thing that that currently has a real shot at that I think is ethereum um uh and in part it's it it's sort of like it's snuck through that window right it got through that regulatory Clarity in 2018 and established itself as credible neutral that I think is the thing that that is like very Lindy and very very hard to replicate um and so I think everything I I think that argument was more true before Trump um I think Trump creating thiso this door that all the other lir ones can walk through to basically share the same status with ethereum of having this like hey this thing is a commodity it's going to be treated fairly it's going to get access

to the same Capital markets that ethereum has I think it just makes it that you know as time goes on you talk about Lindy right um the reality is that the distance between these assets shrinks over time as they get older so what I mean by that is that okay salana is what is salana four years old five years old um four years old right okay it's four-year old asset ethereum right now is N9 years old in five years ethereum will be 14 years old slana will be 9 years old in 10 years slana will be uh 14 years old etherum will be 19 years old right and like the differences between these two shrink over time they just become less Salient of like oh this one is like the real Indie one and the other one is like this new fangled thing all these things diminish in their

veence as as the whole Space gets more mature um and so I'm again like I think the the period for which that was true was the last three years for the last three years everything was brand new everything was broken nothing was really stable besides ethereum um but the longer we go the less that the less true that is and the more markets are just going to say look I mean the other thing that that I think also gives me pause about the story is that we've just seen it more and more over time most people's interface to crypto is not salana it's not Phantom it's not ethereum it's not metamask it's binance and coinbase right that is most people's experience of interacting with crypto so if that's true like most people who are paying each other with stable coins you know I mean okay yeah they're using Tron

whatever but they're not even using Tron they're using trust wallet y they're using binance Pay they're using these other things that to them represent the crypto front endend that they actually trust and if if binance pay is basically like Hey we're going to start settling things on salana now because it's faster and cheaper and it's more liquidity or whatever it is I don't think most users will care I think like the whole goal is to abstract all these details away from users so that they don't have to care about this stuff anymore and and I I suspect they probably won't as this stuff gets bigger and bigger and more world scale so I think the Trump argument is I think that's a good point actually that like that that might change the window and I I agree with you sort of over time like the the sort of

resolution changes between these things I don't think it's so easy to move off of some of these things I I do think liquidity Network effects it's it's sort of the same reason that I think um the the Legacy banking rails just have so much so much lock in it's like once businesses start integrating here once once you get like a multitude of front ends then you removing yourself uh like in the early days binance or coinbase might have so much market share that they can just say oh I'm going to move off and I'll switch to Salo or I'll switch to Tron or whatever else and my users don't care over time I think that gets harder and harder and harder as the ecosystem gets more and more robust um that's not to say has definitely won that but I think I think that's a thing

that the market doesn't quite understand as tremendously valuable because it's not really an end retail thing this is like how do banks move money around how do governments move money around how do how does like international trade and finance work how do the um you know how do the the black rocks and and the Goldman of the world operate um and I think that that Network effect is is a behind the scenes infrastructure Network effect I I I'm not saying that means eth is worth 40K or anything like that it's just like I think there is something really valuable and unique about that um which I don't think the average like retail buyer of crypto assets really sort of appreciates or understands like how how many of those people understand how like the euro dollar system works or like you know how swift really works

like nobody right but that that's like that kind of stuff is like the backbone of the entire GDP of the world right that that stuff is super critical infrastructure um again no commentary worth but I just I think it's underap appreciated completely agree with you and and I think the modal outcome still is that ethereum maintains its lead as being the number one chain you know three four years from now but I I think if you if you asked me two years ago you'd say you know what is the likelihood that ethereum is not the most important chain in five years yeah I'd say the chance of that was like less than 5% today I'd say the chance is probably at least 20 30% if not more um and that that should really affect the valuation of of an asset well I think the the other thing we which um we've

talked about I think in the past is I think people don't appreciate there's like this this set of cognitive biases um that get in the way which is why I think venture capital is both a hard business but why we get Professionals in the business which is like these are low probability outcomes like what is the what is the likelihood that something can actually displace eth or or that eth wins ultimately two is you're talking about such large Tams right total addressable markets so when you're talking about five billion people in every business in the world doing a thing you're talking about trillions and trillions of dollars and and and our our monkey brains are not wired to handle these large numbers and then the third is exponential growth right and so we we're not wired to think about what happens we're so early and the evolution

of these things and so I think like the market structure at the end of this as well is not you know like salana wins and eth loses it's it it probably looks a lot more like social networking where like Facebook can be worth a trillion dollars but Tik Tok can be really really successful and Linkedin can be worth you know hundred billion dollars and you get caca talk and you get um you know International Regional winners and you get Telegram and you get Twitter and so like it's also not zero sumon in in in that way either like I think there's there's actually an outcome here where um where where these things actually Cod coexist and they're they're all actually significantly more valuable than they are today just because the way the markets work um it's like not zero someon the same way yeah I think the biggest risk to

ethereum is that ethereum really risks becoming Intel you know like if you think about like Intel versus AMD right once upon a time it it was you know Intel might have acquired AMD today AMD might acquire Intel it's it's like this complete reversal and it's it's in large part you know Intel Once Upon a Time was the only option like there there was no alternative to Intel and over time the big weakness and I think you see this in ethereum blockchains are still too Dynamic for ethereum to be done for them to put down the pencils and say we made the perfect thing we have all the tvl we like all we need to do is be even more credibly neutral we need to pile on the credible neutrality and just like innovate in culture and innovate in like how how great stewards we are of the

tremendous ecosystem that we've built and I think that works when you are the Monopoly but if your Monopoly starts to even be slight threatened then I think um everything depends on you being able to out execute your your adversaries and ethereum very clearly does not have this psychology um and this is part of the reason why social media you know is full of people kind of trying to diagnose what's wrong with the ethereum uh road map ecosystem whatever marketing um I think it's even more fundamental than that which is just that ethereum had this like Intel mindset which is that we've won all we got to do is keep doing what we're doing and the the landscape has shifted it's very clearly shifted and when the landscape shifts if you do not remember

how to like roll up your sleeves and write code and to innovate and move fast and potentially disrupt yourself um somebody else will eventually disrupt you now it's not guaranteed and it could take 20 years but uh it does feel like that's the path that ethereum is risking being on like if ethereum had just said you know what we're going to go back to the to the sharding road map and we're going to ship execution environments and we're going to do all that stuff we said that we're going to not do right why did they say they're going to not do that the reason why they said they're not not do that was because they said we are too slow we're not going to get there in time the Roll-Ups will get there faster so let's just embrace the Roll-Ups right it was an admission that hey it's not

even worth trying we're just too slow we're just too we're too much of a behemoth it's like you know Intel just basically saying look we're not going to bother doing gpus because you know whatever it's too hard also it's a small market like who cares we'll let other people do that we're just going to be Intel we're going to own the processor because you know that that's where all the value really is made and at a certain point the world shifted now again I'm not saying that that for sure has happened but I'm saying that there's definitely much more of a risk that we'll look back in five years and that's how we'll write the history books and I think ethereum the DNA of ethereum is such that it's very difficult for them to change that mindset and clearly people in ethereum you know if if you tell ethereum cor

deficit it's it's kind of Blasphemous still to to claim this because they're like no no no that's not what etherum is about ethereum is not about the eth price ethereum is not about competing with salana ethereum is about creating this very specific thing that we all agreed to create this World War II resistant um you know trustless decentralized Ledger that's that's all that ethereum is trying to do you want it to be this you know big competition for price with salana but that's not what we're trying to do if you want that go buy another asset right that I think is largely the answer that ethereum has given um and I get that and I and I respect it but it also has to then acknowledge that like hey all this price sock about hey you know ethereum down bad and people being despondent about

the price of the asset um they can't then be surprised that that's the reaction that they're getting maybe as we think about uh wrapping this up I'd love to get your guys' take I know this is your your professional job is making you know five to 10 year bets but as you think about the next three to six months um one one thing I've been thinking about is uh these events in time that pull forward growth so you know how the market should go maybe is like this right like a slope of one but something like the Bitcoin ETFs caus the price of Bitcoin to go from 25k to 75k in six months um so it pulls forward this growth and then what it you know the ETFs you know when you pull forward growth you have to get this long consolidation period on the back

end which is what we saw actually most of the year I think people forget um and I think actually my take is that the Trump election is a similar moment to the Bitcoin ETFs where it pulled forward a lot of that growth and then outside of some like you know outsized event like uh you know the a b bit coin strategic Reserve being announced I actually think you could see just consolidation for the next like three to four to five months um and then and then back into another big bu bull leg higher uh maybe in Q2 but curious if uh I know I know none of the three of us are really Traders here and this isn't the game that we really play but yeah just curious how you guys think about the next like three to six months see we should go first so I can

disagree with you yeah I I honestly I have very low confidence as to what happens from here yeah um I think it's very likely that you know prices are going to go up more I think clearly 100K Bitcoin is like this kind of magical barrier that the market needs to cross um once it gets there I don't really know what happens um I I can see two worlds this is kind of useless commentary but one world is that we've kind of overestimated how exciting it is that Trump got elected and that like when you actually see the real policies not the imagined policies when you actually see okay real new SEC commissioner not the imagined SEC commissioner it's like okay well you know these people are still politicians they're still responsive to the banks

they're still responsive to Treasury and finsen and all this stuff and and the rules are not perfect they're better but they're not perfect um and you just end up with this thing of like okay well crypto's up but it's not like okay you know everything's going going to melt up indefinitely for the next uh you know Millennium um so I think there there may be a little bit of ere exuberance about Trump at the same time like the other thing that just is kind of obvious is that so much of crypto uh in the short term is oriented around Spotlight effects and the spotlight effect is just when everybody is looking at this thing the price goes up so if there's a mcoin that's making the headlines price goes up if there's a any token that people start paying attention to price goes up so there will be a lot of Spotlight on

bitcoin for the next six months as there is a talk of strategic Bitcoin reserve and like you know other um countries starting to think about their own Bitcoin strategy China having conversations about hey maybe we should soften a little bit on bitcoin um just even the rumors of these things is going to drive more headlines and more attention and then just Bitcoin being over 100k a lot of people will talk about that for a very long time um and all these conversations that people have had of reboots of conversations they had in 2021 um will all have to happen again and that will cause more people to just buy Bitcoin um eventually that ends and I think that probably ends after the Strategic Bitcoin Reserve stuff is done right so my guess is like that's the big um Milestone then the other big thing is

Doge which is that you know the department of government efficiency is going to be extremely controversial it's you know literally the most you know one of the most famous men on Earth uh trying to cut down the biggest government on Earth and fighting against the Deep State and like all this stuff that he's he's obviously going to play all this out in social media and in the front page of the New York Times so this is going to cause huge amounts of attention on Doge for at least you know a year or two so I think all of that stuff is going to mean more attention and more attention probably means more dollars but where does it go where does it top out what's the shape of the cycle I I honestly have just absolutely no idea yeah I have no idea I it's it's um

it's so hard to know because it's so it's so event driven and so news- driven and and who knows um and and I think in particular that the sorts of people that are really driving the news Cycles right now are themselves so unpredictable um and so all all you can really imagine is that there will be a a whole host of unpredictable events and that that that's just like that moves you you know violently in One Direction or the other like I I I don't I don't think this is my my only my only sort of Base belief is I don't think it's it's very slow and steady I don't think it's like very linear even if you have like a consolidation period I think like the movements on the way up and the way down are just going to be like pretty pretty

volatile given Who's involved and what how um there's a debate there's an Empire telegram Channel um and there's a debate last night about how impactful new SEC without Gary gansler is and how impactful Trump instead of Biden actually is um and people were talking about like value acrel to Defi and turning on the fee switch and you know other people were arguing like hey look you know we made it out of FTX like you know coinbase's stock is doing well and black rocks and Bitcoin like actually like the old guys weren't as bad as people thought and just curious how you guys maybe from the lens of like you talk to Founders all day long and they make decisions all day long about what products to build and do they build them in Dubai or do they build them in New York City like how impactful do you

really think this is and like what is possible under this new regime like is the impact about tokens is about product decisions about location of where they build like maybe maybe as we probably the last question here like just curious to get your guys's take on that oh I I I'll take that one first it was huge we we we talked to about a dozen Founders immediately afterwards uh you know in the week after and it was it was like night and day um you know literally Founders that had moved to Dubai were like okay I'll move back um there was a sense of oh maybe I could offer my product to us customers um there definitely was this like okay maybe token models might make sense here again and and that's like worth exploring and I think that's been that that sort of search space of how do we create value

and then capture it and distribute it back to people that whole search space which I think is fascinating because we have this like very narrow definition of how Equity works in the world today I think that whole search space opens up um you know I think I think it's really hard to overstate the importance of what the backdrop of a regulatory environment does to an industry or to to Founders um and I it's you know if you're constantly living in fear that that some person some agency is going to show up at your door and then like threaten to shut down your business the cascading effects are like well now I have to go get three lawyers and I really shouldn't do this thing and it just sort of pushes you subtly in a particular direction and in a risk averse Direction um and you just

don't do things um and and as soon as you remove that friction I think it opens up the the floodgates in terms of of what people will do and I think I think on balance that's that's really good um so I I think it's it's um even if the even if the next let's say the next SEC commissioner is roughly in terms of beliefs you know like moderate let's say they're not like Mega Crypt bull they're just like look we should we should be smart about this and we should embrace it that alone is a huge win because knowing that the SEC will actually engage with you and have a conversation with you um and wants to try to figure how to make it work is such a win um in terms of actually making Innovation happen like I I I don't think I don't think the effect can

be overstated I think it's actually pretty dramatic so in the spirit of um ending the show I will disagree with aichel which is that uh so you can sort of separate it into the micro and the macro right and the micro is what aichel was talking about of like what's the effect on Founders what's the effect on products what's the effect on the individual decisions that people are making and you know whether to offer Things To Us customer or to turn on fee switches um I think actually that stuff matters very little um so like you know Founders coming back to the US it's like whatever they were building their startups just fine in Dubai um a lot of Founders are still in the US they were even during this under the realm of this SEC um and if you look at Fe switches I mean Fe switch is a

perfect example right when when a D5 project turns on a fe switch token goes up like 15 20% right this is not a like oh my God now fundamentally this thing has value and before it didn't um it's it's good like markets like it when you turn on a fee switch but it's not it's not it's not a two xer right it's not like the fundamental difference between being valuable and not being valuable um and and the other thing I say is that I think for Americans I don't think that many Americans have that much to gain from using defi products right Americans already have extremely open financial markets and they can basically buy whatever the hell they want and most of what they want to buy is Investments they want to invest in the stuff they don't actually necessarily want to use these products I think it's outside the

US that the vast majority of actual demand for this stuff is right of people who do want to use defi because they don't have Financial Freedom right most human beings in the world do not live under conditions of Financial Freedom you know like the just take China and India are the two largest countries in the world both of them have very restrictive uh Capital controls very restrictive Financial controls like you can't just go buy whatever you want and have whatever Investment Portfolio you want if you live in either of those two countries so so now on the macro side so the micro is like okay what individual decisions are founders making differently my guess would be that if you fast forward to a year from now you'll see Founders being more aggressive you'll see Founders opening up to you you know giving airdrops to Americans and marketing in the US and

putting taking out ads in the US and stuff like that but I don't think it's actually going to change that much of what are the core things that crypto is doing um I think what does change a lot is that crypto is fundamentally about shelling points it's about getting everybody to agree that like hey we should all use Bitcoin instead of gold how does that happen it happens from people coming to consensus right it it comes of saying hey we should be using stable coins instead of Swift or instead of Euro dollars right how does that Happ it comes from people coming to consensus and deciding to use the same thing and so much of why that happens at the scale that we're now talking about is just people believing that if I do this it won't get shut down I won't go to jail I

won't become a political enemy I won't you know it's like just risk committees and and you know just people who are who are scared or skeptical because they see what's happening in the news and they see the front page of uh you know every newspaper in the world talking about FTX collapsing and how Biden is trying to you know get these people shut down and get them uh you know Criminal and and scam artists and blah blah blah all this stuff helps tremendously in making crypto feel less weird more normal easier to adopt easier to integrate into your accounting systems and your erps and to use for crossb payments and you know Financial settlement blah blah blah you just will see the stuff all getting baked into the bread because it's just it's just not a big deal anymore to use it whereas two years ago it was very

weird for you to be using crypto you just saw it from the the the cratering of willingness from the from The Fortune 500 to do anything related to crypto um I think what you'll see is over the next year that's going to Skyrocket and these companies very often are the intermediaries that actually put the stuff into the hands of users so that's the thing I think that's probably gonna have the biggest knock on effect not you know people in America directly using crypto products to to a bigger degree than they were before Jens another good one good to see you having us thanks Vel thanks to see hey everyone thanks thanks for watching today's episode just wanted to quickly thank today's title sponsor scale scale really is one of the best chain

experiences out there today and I've used so many different chains there's a reason they are gaining so much adoption in both gaming and AI use cases hit the link in the show notes to explore the scale ecosystem [Music]