ESG ETH, Cosmos Hype & Starbucks NFTs | Roundup

Transcript

did you see the uh the legend The Ledger memes of what people were watching in the chat Ledger definitely closed drawers with his hips did I listen to a podcast where he defended it he's like everyone does that right I was like I do that too yeah for sure man it's like Ledger's the kind of guy who says after rain the plants really needed this [Music] before we jump into the app quick reminder that nothing on bell curve is financial advice everything is just a meme hope you guys enjoy all right everyone welcome back to another Roundup of uh bell curve here we

got Michael's one and two Yano and Vance what's going on fellas how's it going all right big night just uh yeah stand up watch the merge hit the tub after uh hot tub after you know all the festivities the tub we're honored that you dragged yourself out of the tub just for a little old us listen no better way to celebrate you know some of the boys in the hot tub but uh but yeah it's been an awesome 24 hours I was also saying I thought it was the most like anticlimactic thing you could possibly celebrate where everybody's huddled around a laptop waiting for the first block to finalize and then it does and everyone's like cool high five they both kind of like slap their knees

I'm like all right but isn't that kind of what all like is that kind of all celebrate it's like New Year's think about New Year's it's like all right it's it's like 11 59 all right it's midnight at least there's fireworks for New Year's that's true yeah yeah you get a nice visual of the ball drop um speaking they're speaking of balls dropping they actually were some there were some fireworks post merge all right that's the last time [Laughter] all right let me pull this straight up all right so what do you guys I mean there was a lot of speculation going

into the merge about what was going to happen um obviously obviously uh things are lower uh Vance I know you said in our chat leading up to this we've seen a couple more liquidations then it's up only from here what do you what do you guys think about like price heading into the merge here I mean that was Kyle's uh Kyle Davies tweet a couple more liquidations than up only so it's kind of like oh really oh [ __ ] yeah I mean I miss that wasn't correct but I mean I think you know without commenting on like the specific price of ethereum and more of kind of like all of the positioning changes that happened overnight where the funding rate went from like heavily negative to basically you know flat or in contango now if you watch futures

um you had a bunch of people uh shorting eth like you had kind of all these unwinding of all these positions and now I think you know going forward is really this is so much flow kind of wrapping up in the last 20 or 12 hours that like now we have kind of like the Tactical people out of the market for better for worse and now it's like you can really assess the long-term impact of the structural change of ethereum's proof stake Dynamics so it's kind of like you know we're gonna need to wait and see in the effect compounds over time and uh yeah I mean proof of stake is not something that you know the switch flips and everything changes overnight it's more of something where it has a time-based impact if you're removing you know 800 to a billion dollars of net issuance or cell

pressure within a month uh with the combined burn and issue introduction like the more months that occur like the higher that impact gets and so it's kind of like a wait and see game but the biggest thing is that the chain didn't go down like maybe it was boring but like you know Michael and I there's like a picture of us last night um we're like just looking at our phones and it's like pretty it's like not super intense but like all of our net worth is on one chain uh and if it goes down like what happens um and so just the absence of a loss I think is a pretty big win the other thing I'd say which has been interesting to track is just like what's happened with eth pow and I was gonna ask you guys what has happened there I haven't

even heard anything and that I think is kind of what's happened there hasn't been really any news there hasn't been any activity um or you know very much at all uh 71 I'm just pulling up the chart right now 71 72 million of 24-hour daily volume it's down 60 percent over the last 24 hours I think a lot of this was people wanting to hold on to eth the bar rates on Ave yesterday were up to like 360 percent annualized people wanted to hold the ethon base layer to try to go after this fork and you know now that trade is over um so things kind of settle naturally because of that and I think to Vance's point this will just all kind of settle out in a little while what is this though do you see this announcement on

the renaming of the ethereum fork token eth W as ETF poloniex has decided to choose the fork chain ethereum fair I can't tell if there's a joke or not which is supported by the community's majority and more proof of work computing power as the main chain is this a joke or is like is this are these just the is this the click on the pie chart yeah I think this is something different all right so yeah so look so this is not a fork this is like Justin's son just like doing funny money things where he's like okay the Bitcoin people get this much the Doge people get that much

I don't know why this is called ethereum fair this just seems like kind of absurd and like a sideshow Justin's son just like always delivers Justin doing things like this so not not super surprised um yeah good luck to everyone who holds Theory and fair hmm I know I like things that are fair sounds good to me sounds nice I like The Branding it sounds nice big middle that's fair who better than yeah make things Fair okay I will say it's it's kind of funny that poloniex is doing this I think we've talked about this on past roundups but they were the ones you know their kind of History around each classic and everything because this was the exact same thing right when there was a hard Fork back then and actually very similar thing it kind of just trended down to nothing except for like

three days and then poloniex listed each classic at like 12 p.m on a Saturday just sent it on this huge epic run and they uh they prepared for it better than the other exchanges and they kind of they kind of [ __ ] a bunch of their competitions it's a pretty Savvy move I I don't think that they're doing the same thing but it's just kind of funny that this is coming from Polonia there's also been a huge speaking of ethereum classic there's been a huge ramp up in uh hash rate on on the eat I saw that yeah I don't know if that Matt it doesn't seem like that matters at all um it just feels like the monitors are figuring out what the kind of next thing that they're doing is um but good luck this is my favorite part of the of the

merge I'm going to share the screen again is if you're watching on YouTube you can see this is like the stories from mainstream media about Green eth um this has just been it like didn't hit me I would say uh I think I think going into the merch a lot of people are talking about like structural differences and like supply and demand and like the differences and just like proof of stake versus proof of work and like it didn't I think the narrative didn't really at least for me I didn't realize how strong and impactful the green eth merge would be a green Ethan narrative would be and it was just interesting I was looking at like how mainstream Publications cover this you have CNN the world's second biggest crypto just got a lot Greener you have the Verge eth will use a lot less energy

now Forbes here's what you need to know about the hotly anticipated upgrade turning the crypto player green Politico right the list just kind of goes on like green crypto ethereum wins Applause in Washington uh and this is just like this has got to be one of the best narratives I've ever seen not just for each but for crypto totally agree I mean think about this narrative with the backdrop of everything that's going on to the anti-proof of work perspective as well you know just earlier this week you had the I think it was the treasury Department had to respond to the presidential order to uh to assess cryptocurrencies and one of their big takeaways was we should potentially look into regulation of proof of four chains

that doesn't mean that they're going to it doesn't mean that proof of work is is not going to be favorable or at least looked favorably in the U.S but it does mean that they're going to start looking into it and this at the exact same time is as the merge and this 99 plus percent flipping uh of uh ESG and environmental concerns I think it's just the the dichotomy in the juxtaposition of the two is huge I actually can't really I I will say like I don't love that narrative getting pushed because again just like fundamentally I don't think it's a negative thing necessarily that Bitcoin uses proof of work like I actually would prefer them to use the proof work because because I view them as this like money and they're not really supposed to have utility I think that's that's fine for Bitcoin so I

don't really want to get like brandish like a stick and use to beat Bitcoin but I will say like we just did our Das conference which we've been doing for the last like four years and one thing that struck me is like kind of I kind of like remember different points of time you know from like when we've been doing it in past years and I was just kind of remembering when we initially did it back in 2019 that was like rolling off of that bear Market in the consensus view very much at that point was all right all these icos were like you know something that was either way ahead or the market was way ahead of its skis or like fraud or like not great activity and like Bitcoin was the only thing that was like sure and there was like this consensus rallying around Bitcoin

basically and now that we're in a bear Market you like couldn't be further from that right like no one's really rallying around Bitcoin at the current time there's a market difference from how it's felt in the past I don't know how you guys respond to that I'm trying to just remember how it felt last time like what was the really like the wrong BTC I guess there was like eth had like a really weak consensus like there almost wasn't like a group around each that was like distinguishable from the other l1s like in retrospect you could probably see the differences but at the time like it felt like eth was just like another chain um and we kind of have this like Collective instinct to like group around one thing when things get harder and like when things just need to kind of be more fundamentally Justified but

it felt like in the last bear market like we didn't know like what Bitcoin you know could be justified based on uh what narratives like we could explore with it and I think in the last bull run like we really explored a lot of those narratives we explored it as kind of like a medium exchange like okay there's no fees on the Chain like we've had enough Cycles to tell that that's probably not going to materialize we explored it as like this inflation hedge through like the Michael Saylor Saga and like you know all the super cyclers um and I think like now it's just kind of like we've learned that it probably doesn't work on a store value basis just like it's not rallying when inflation is high we've learned that it doesn't really work on a medium exchange basis there's no fees on the network

um and I think this is the first bear cycle where people have been like okay cool we now know these things so my process of elimination like we should probably go look for something else and that's reflected in the quality of the people who are in the communities right now uh the the other thing too in the in the last bear cycle uh eth obviously was being used basically as a fundraising mechanism for for all the token sales that were going on in 2017 but there weren't really any applications built on top of it you didn't have a single real stable coin that was built on ethereum or built on a Basel or blockchain the application categories really didn't exist in a way that was scalable or frankly usable by the mainstream consumer base and you had to kind of choose Bitcoin as the one prevailing

narrative because you know this stuff was supposed to be money and you could use it as a medium exchange you could use it as a store of value to be even like a balance sheet Capital asset that companies would be able to put on their on their balance sheet eventually as Vance said all those things have been tested but that that period of time 2017 2018 2019 was when all the funding rounds for the alter alternative base layers happen so you had you know once again the juxtaposition of ethereum not really working no applications are built on top of it we've got stuff in the works where we're going to have other application categories but they're going to take years to mature and get to the point of usability and Bitcoin kind of is the remaining thing uh whereas now I think that narrative is completely

shifted you have applications you have stable coins you have D5 you have games um yeah I mean it kind of does leave the Bitcoin narrative in the dust yeah the last thing I'll say on that is like the ESG and climate change stuff is super important whether you agree with it or not like that's generally the way like if you believe in climate change or not or yesterday or not like doesn't really matter like the world is gradually Gathering evidence it suggests it's real and the rest of the world is reacting by going distinctly in this direction and like if you're not moving with the crowd you're kind of moving against the crowd and hearing that the White House might like ban proof of work technology is like the first shot across the bow of what I think will be many um and to your point well like you have

to pick what is valuable like you can spend energy and you know put carbon in the atmosphere for you know some reasonable thing that everybody wants um but it has to be justified if ethereum can do a better job with less emissions you know there's just going to be a natural consensus that converges around that I mean that was exactly what I was going to say Nash is is um nobody really talks about the energy consumption of the internet but it's because you have this this value to it that is just inherent in in the usage you know YouTube probably I don't even know what the actual number of uh you know megawatts per hour but I would imagine it's probably more than the Bitcoin Network and but nobody ever talks about that I've tried to find that yeah it's actually hard to find

statistical information on it and I assume it's because no one even like questioned it right like no one was like we should probably figure out how much energy this shit's consuming I'm just like yeah this is clearly useful exactly yeah I wrote this thread on like green and on green eth and like brought up like the Bitcoin narrative and how the Bitcoin narrative really turned and how that was detrimental last year and a bunch of Bitcoin Maxes like piled on the tweet and I think the consensus of the their argument was the like let me actually just read one that got like the most likes it was like every time you use ethereum you're giving eth voting power to those who already hold the most eth every time you use Bitcoin you're giving Bitcoin to those that put in the most work uh you're basically

like driving centralization by supporting this eath proof of stake um it's like it's basically just like the anti-proof proof of stake argument um which I'm just curious how you guys would how you think about something when you read that like you know what else has centralizing Tendencies like running large uh proof of work electricity miners that are hooked up to an electricity grid like you can't just like do that in your backyard and realize any sort of uh economic efficiency where like the cost of the Bitcoin will be less than what you can actually sell it for on the market it's naturally going to go to these places like China like these big industrial Farms Michael and I one of our first Investments out of framework and like this is something that we obviously pivoted away from like with retrospect was coin mine and you know farb's great

like shout out to the team you know it's just like an idea that didn't really work you can't do at home Mining and have the same distribution of Economics as you can with the proof of stake system it's just like much more costly and much more computationally intensive so I don't know like who do people think or like you know running the Bitcoin chain is it like a bunch of people with like hydroelectric dams in their backyard it's just like not happening um so I just don't find that to be like very logical I remember uh we had a coin mine in our office throwback coins yeah it's a good idea I think those are some pretty pretty looking rigs I've got one in my closet they look like an Xbox if you've never seen it it's uh I got it might look great for Christmas

rcol Julie is actually a helium whale I always make that joke but she bought a minor like super early I'm sorry like a bunch yeah yeah I was there I was there when she bought it and I was like I can't believe your body I made like I don't know if you can see this one on me this guy down there I've got a helium I've got a hot spot I've made like 27 cents from it I was gonna say oh yeah one of uh one of the people on our team uh bought a helium Miner started mining it and made three times uh his money by selling the miner not by actually mining the helium Network yeah I've made like a whopping 27 cents I'm like are you yeah yeah chilly to better than that um I don't know I have to defend I I

hear all the arguments about it I still do I guess I kind of feel the way about it like almost like um you know you I look at some of the libertarian uh Type move like uh political spaces in the US and even though it's not necessarily my cup of tea I am kind of glad that it exists as a counterbalance and I do I do see the value in it I don't think it's totally useless it's counterbalance for sure yeah yeah yeah um I I want to actually get your guys opinion on Cosmos actually uh there's like a whole bunch of different ways that we could take this like actually uh kind of you know depending on how you look at I know it's only you know less than 24 hours but sort of disappointing price action post merge for eth but Cosmos has just like been on a tear

recently there's a lot of excitement around atom 2.0 which there's kind of an adjustment around the monetary policy there and a whole bunch of they've kind of teased what's going to go on there and I guess they're gonna lay out their whole master plan at um Cosmo verse or whatever that is down in down in Colombia in the next two weeks but um I I thought actually Delphi uh you laid out something pretty interesting because they basically marked that as the next ecosystem that they're really going to invest in um you just want to like I know Vance you had some thoughts on just what they wrote about and like how you kind of view the the trade-offs of like building and investing in youth versus maybe Cosmos and IBC yeah I think the first part is like kind of the nature of of tokens and and both

kind of like their economic and Regulatory implications so um on the regulatory side like we have actually pretty decent precedent that something can become as a base layer sufficiently decentralized to the point where you know that token you know in the past week this came out where Gary gensler's you know allegedly open to having this regulated by The cftc Ether that is um like you can get to a point where you're kind of like beyond the regulatory apparatus and you can operate as this decentralized network and so that same concept doesn't exist for dapps it doesn't exist for like derivatives exchanges or like money markets that you slap a token on but if you have a token that secures the fun like the fundamental security of the chain that seems to be some sort of like carve out or some sort of area where you

have degrees of freedom to issue a token and have it be valuable in accrue fees from the network and So within that context like it's not surprising to see dydx a token which like doesn't have any you know real value girl right now all the trading fees go to a company like shift its model to being a base layer chain so that it can actually have the fees that it generates flow through the token in a regulatory compliant way I think that's one part of it um and I think the other part of is like you know from a tam standpoint like if you're building a base layer Chain versus a defy app it's probably arguably larger in the former category if you're really successful so those are kind of the two things that I see right now um I think Delphi did a really good job

of describing kind of like all the things that they want to have within like the superpower defy app and like why it should be built on Cosmos um for me I have a little bit of trouble you know like seeing that fundamental case like their whole argument is like you know it's going to be one big D5 super app it's gonna be a universal credit account where you have derivatives and borrow end and spot Trading to me like I kind of can't see that versus just like an aggregator on an L2 with cheap fees like rolling up all the existing protocols like why are those two things fundamentally different so I don't see that argument is clearly but I do understand the power of Cosmos um but it doesn't have to do directly with like you can do things here which you really can't do other places I don't

think that's necessarily true so one of the other Tates that I I don't I think Vance probably shares some of the same perspective but um to kind of Riff Off of what he was saying on D5 I actually don't think that their argument should be focused on T5 for having Cosmos be the the central uh application category um or sorry having D5 be the central application category built on Cosmos I actually think a better model might be games and you know basically the the argument here is um well I I agree I don't think that we need individual blockchains for individual uh uh applications for D5 but I do think that having individual blockchains for games

allow you to have the transaction throughput to where you'd be able to actually have millions of concurrent players playing on that blockchain and you can control the economics you control the security model you control it can control the token economics to the point where you know Damien actually has the the necessary throughput or the requirements for throughput where this model actually might be the best use case for that concept and yeah I think having an aggregator on existing protocols versus a single monolith is probably the way that D5 goes whereas games I think is actually completely separate super important Point um just just I want to I want to add to what Michael just said so right now if you look at all the games they're launching on like polygon and immutable

and Solana and like first time first time game developers like trying to pick a chain they don't really know which one they're kind of just going whatever way the wind blows wherever they get like more incentives but a lot of these chains have like fundamental scaling thresholds so they can't really get past like uh immutable X is 9k transactions per second if you get one like Dark Forest blew out the X diagnosis chain and like completely used up all the block space and halted the chain like there's a really good chance that not all games can actually live on the same base layer like they're gonna actually just like need to be on their different app layers and so right now all these games you're building on these base layers but it feels like it's going to be a short hop from like we're a successful game we

have a token we don't know how to cruise value okay cool we're gonna go build a map chain I think that's like more of the bullish Cosmos thesis than the d51 but yeah or Delphi lab says that they're like only focused on D5 so it kind of makes it easier to focus on that they kind of mentioned gaming in their post but they definitely didn't go into it whereas I think it should have been their Converse well I think the reason they they focus on D5 specifically there is because like a big point that they kind of made is that when you have a generalized blockchain you have all sorts of different sectors or applications there's like nfts and D5 and gaming to your point and it really really sucks especially for like Financial infrastructure if something clogs up the chain and then the financial infrastructure can't work

because uh you know board Apes doing their land sale right uh and like to your point gaming if they bring on an order or two orders of magnitude more users than currently exist uh you know you're you're kind of constantly no matter how fast you scale gonna be dealing with this issue of like clogging up block space um and so I think you know one of the advantages that Cosmos offers is like okay you get to go launch your own app chain and there there's definitely like drawbacks to that right it's more expensive and time consuming up front because you need to like bootstrap your own network of validators and do all that kind of stuff uh but you do have kind of the advantage of okay then you can kind of customized different things within that app chain as well like dydx they have more

um you know when they're when they're building their own chain they'll have the ability to like change transaction fees and I think they'll get more they'll get more ability to like they'll be able to do more with Mev on their own chain as well which I actually think is a critical point because it seems like Mev is going to be the way that block space is monetized like it seems like that's going to be the dominant model so if you have more transparency or like more ability direct and and Order Mev within your own ecosystem I feel like that's an enormous Advantage frankly but once I wonder if that's why actually that yeah the Mev is a huge component but but once again I mean it isn't aren't all those examples just even more important for an ecosystem like gaming versus D5 D5 has already existed on chain at

pretty decent scale for a while in the ethereum ecosystem and it's just getting cheaper I mean everything with D5 is going to be just their cost trade-off and and usability is going to get better over time aggregators can get better over time but the other thing that's implicit within having your own you know base layer of chains is that you have to have transportability cross-chain uh bridging and cross chain swapping of assets and and that is at least so far and we'll we'll see I mean ibc's is nice and we haven't really seen any issues with it so if that if that becomes the dominant solution across the board maybe maybe this is not as important of a point but I I don't trust to put my financial Assets in a bridge period end of story and and I think right uh you

know gaming is going to be a different story because it's a game asset it's worth five bucks it's worth ten bucks you know I I feel much more comfortable swapping that versus you know an eth token yeah is this gonna enable the next generation of D5 probably not is this going to be a model that people move towards like once they're super successful and want to get more more monetization I would say probably that or an L2 but like yeah it's easy to like say like ooh this new thing like we're just missing like this piece and it's like well like maybe it wasn't that actually like transformative um there's this small piece of history that I do wonder if it would have changed things which is um compound's decision to build on polka dot um so if you guys I don't know if you

guys read that Delphi piece but there's a screenshot of Rob lechner um so basically compound and I think earlier it was either last year like the beginning of this year I was like yeah we should instead of building Compound on a bunch of different l1s we should build the compound chain and they decided to use they're basically I think it came down to either building on Cosmos or polka dot and they chose polka dot is my understanding of the story and it just like completely flopped and they hated polka dots so they pulled out of the plan but if compound had built an app chain on Cosmos then dydx did it like I feel like history could look just like that one decision like things could look a little different maybe I I agree you know the other one that was built on

Cosmos is Luna and Terra and and I think you know you do have some history there as well I I don't think that that will pervade and I think you have to control your own chain essentially uh but I I do think that you know it is an interesting revisionist history if compound would have chosen Cosmos would that have moved more of kind of like D5 1.0 over to Cosmos as well we we've had a couple of portfolio companies have really bad like you know like having to Pivot away from polka dot and like not trying to dunk on polka dot or whatever but I just think it's been it was the first to kind of conceptualize this app chain model like at like scale and like raise a bunch of money and really Bang the Drum but it feels like the developer experience is

is you know like tender mint versus um polka dot like totally different developer experiences but also the pair chain model just doesn't really seem to really resonate with people if you're building something that's supposed to last forever why am I having to re-up my rent every six or 12 months I I have another reason why uh polka dot might not have taken off because it never pumped and made anyone Rich which is like really what you kind of like I heard I'm borrowing this theory that I heard from other people but like really if you think about the model of blockchains like the distribution mechanism like you want that base of like really early adopters who like Buy in early they get wealthy off of buying Bitcoin or eth or Salon or whatever it is and they become these

die-hard evangelists that just like pump it from here to the moon and I I do think and like there are a lot of they're like the common theme of these like kind of VC ghost changes like they set the price way too high they got all the gains and they never got any of those evangelists even though the tech might have actually been really good like it's that's why that's why nfts on Solana are

booming that's why nfts on Solana Boomin and it's with uh it's with the Gen Z crowd no I'm not even kidding like the Gen Z's go crazy for Solana nfts sure that rhymed you're a poet you know I uh uh I'd be curious to like get a sense of how you guys think about the model like the even the revenue model for even like an L1 blockchain uh because I think it actually plays into the the like generalized blockchain versus app chains because I think if if what like eth is trying to do is sell block space if we can agree that that's kind of the business model for ethereum or other layer ones then the other question is like how do you monetize that or what is the correct fee structure for monetizing

or what is the market going to accept so like like to give you guys an example of kind of what I'm trying to get at here is in you know traditional Finance right the the way that fees get extracted from connecting buyers and sellers has gone from just like hey pay five dollars or pay like a hundred dollars or whatever to like buy or sell this stock down to zero and now it's ostensibly zero trading fees but a similar amount of money is still getting extracted from doing that it's just kind of hidden in payment for order flow so I kind of feel like some the model of blockchains is you're selling block space but the way that that's ultimately going to get monetized is this like sort of known like sort of hidden Mev right because that's the ability to like order

transactions within that block space do you do you agree with that overall model or no so generally agree with the overall model I'd say one of the discussions that we have all the time is it's not really sort of what's the business of the base order blockchain I'd say what's the user experience is sort of the bigger question when you're talking about payment for order flow you know Robinhood versus uh commission fees for for a traditional brokerage uh you know that feels like probably the right direction for where retail flow will go you're still getting paid or the blockchain is still getting paid for those transactions it's just getting paid through an indirect model and you know for things that are higher value higher are tossing you're probably going to have some fee associated with it just

like you would expect if you're doing any other type of transaction that was high value or complex or you know of the like and and so I think generally you know you're going to see fees go down Revenue go up because of that because you're also going to have new application categories that just become viable when you have lower transaction fees you know if you decrease the dollar transaction fee on ethereum from one dollar to 10 cents to one cent I I would assume that at each one of those break points you would have more than a 10x increase in the number of transactions and therefore Revenue would be higher at each one of those price points yeah have we talked about the arbitrum and optimism MAV models I feel like we might have I was actually gonna I don't

really understand how it works no can we can we get into that yeah I'll explain that so they kind of like they take uh opposing ideological positions on Mev uh the optimism Camp basically says they kind of phrase uh map like this Mev is like a small tax on every user transaction um we take that small tax we put it into a communal pot which we manage and we use it to fund public goods we use it to fund development for the chain it's kind of just like attacks that we put it's like kind of like how the government just taxes you um and we're going to use this to build all the infrastructure and make the chain better so like that's the optimism perspective the arbiting perspective is the polar opposite map is bad taxes on users are bad we should do everything in

our power to avoid this happening and so they have this Fair ordering Fair sequencing model where they basically try to eliminate all of Mev and you know that's not going to be their their model and like kind of begs question like what is their model especially when their token isn't being used for gas um and that's kind of like a TBD but I think the thing also too so like those are the two differing you know ideological positions the East position is like even more nuanced with Mev the East position is basically like Mev is bad um you should optimize your apps to basically not have quite as much of it but if there is Mev we're just going to give it people give it back to people who are aligned with the community AKA those people holding and staking ease and so that's like yet another position

I think the things that we think about when we think about Mev are um apps were so poorly designed in 2020 2021 that like we've learned lessons and they're going to get a lot more efficient specifically on the map side um and you know you have Meb is kind of like a category um and that kind of really directly relates to like things like amms and and just like higher latency transactions that happen on chain you also have models that are coming in kind of like above the amms things like payment for order flow and D flow is a protocol that does this that basically just like sells order flow ahead of time to whoever wants it market makers Dows and they monetize and fill the the volume that's going through it and there's no Meb in

that model and so it kind of remains to be seen and it depends on what the you know the dominant Dex model is whether Mev is a really big factor in the future or not and there's certainly some models which don't have that in it but here's my understanding of it is like so then you but what arbitrim is inherently saying if you're pulling Mev out of the system is that they know the fairness of the blocks it's it's like up to arbitrum to tell tell people like what the fairness of the blocks is But but so then you're taking the auction system out yeah I guess I just don't get that I think you need a way to extra like I don't think like even the way you were positioning that Michael like I think ethereum should charge a lot for its block space

it's got arguably the most valuable block space out there I feel like what it's saying is like it's got these l2s right that that's where it's really cheap to transact so you can spread a whole bunch of transactions on the l2s across the expensive block space and then that's what makes that model kind of work right but ideally you would like to see ethereum and ethereum stakeholders find a way to like value that's block space properly at a relatively expensive rate and then extract that value through validators but if that's the if that's the dominant model for for blockchains writ large then I can see the value of like moving onto your own app chain where you know if you're an app building on top of uh like either eth or like a layer one or a layer two then it's not

flowing to your validators it's flowing to ethalidators basically and I kind of think that's the different the two business models that are emerging here so I think it's more of a game of Leverage yeah and app chains don't have to be Cosmos right like you have things like Boba and metis that have forked l2s and kind of what you do with an L2 as far as a business model is you just say all right you know there's one person who's the sequencer who's sequencing the transactions and you get to decide basically how much MAV is there and how much do you extract you're auctioning that role off and you're basically saying like Okay stake your you know whatever your app chain token is on the L2 and you know every once in a while you're gonna get it selected to play the sequencer role and you're gonna get mad

from that and so like you can kind of have you can this is a concept that works both on eth and on Cosmos app chains I think the concept that's important is like you're now allowed to be like more opinionated on this on this idea is meth bad or is it good should we give it to the community or should we give it to the user should we use it to bootstrap things or should we just you know deny it as basically like a regressive tax um and that's like an interesting design space do you have a take on what's the best model I think they're like really unique like the I generally think that if you gave someone a dollar or if you gave like you know

some really high quality capital allocator a dollar that could make their lives Better Lives better by investing that they'd probably realize more value out of like the latter situation where someone is like kind of like taking money from them a little bit and using it to plan and execute long-term term strategic goals that could make their lives better like that's the model that I feel like I'm most philosophically aligned with the the last point about Meb and this is like orthogonal to what you just asked me is like I feel like there's a strike price at which MAV turns back on and so like if you've ever traded in coins on crypto exchangers like you know like below a certain price the liquidity gets worse just because like the market makers kind of turn off and just say like I don't want to do this anymore um with Mev it's

kind of like the same thing if we have enough volume if the prices are high enough like these Meb shops turn back on they start competing against each other you know like they're sending all these super high gas value transactions that are failing they're adding fees to the network even though they're not really subtracting anything like there is a strike price above which MAV turns on a lot more and I feel like we're like below that right now so that's a that's a take I guess I think the market whether it's good or bad the market will just decide basically like I think that's what I kind of think I don't know I think people will display like you could right like you could recognize like you could just the network etholders could basically just decide I actually don't mind there being inflation and people

who stake and validate they will get that inflation right and everyone who's a part of eth could be like okay that's fine um and I'll just get deluded but what they're saying is I don't want that to happen I don't want it to get to to get it diluted but validators are still saying like I got to get paid for what I'm doing then a way that they're going to get paid is through Mev and like I think that choice has already been made so I I don't think it's even it's bad or it's good it's just the way that people are gonna prefer if you've if you've looked at the yields on on uh or just like the estimates of yields I forget who put this paper out but you know right now it's about six percent with transaction fees and inflation but if you turn on

map boost and you're in a validator set that has that that's probably another three or four or five percent like they're you know to your point Michael like there's an argument that this is like you know 40 50 of yields and and is like structurally important um and it's crazy to think about because like last year it was so much crazier and like Mev was so much higher and like you know you probably would be yielding like 20 30 probably more than that percent when that was like at its height so it can become really meaningful um and yeah like we didn't even really know we've existed until like a year ago like it was kind of this thing that like people talked about but like no one really knew what the deal was um and then flashbots in that dashboard just like blew the door open all right I

wanna I wanna pivot away actually to talk about uh there was an announcement uh there were a couple couple big pieces of news this week actually um one was uh came from Rob Rob leschner over at compound treasury um so I actually want to connect this to a story that we covered a couple of weeks ago uh but compound treasury just launched the ability to borrow um they've already uh so last year they launched this institutional cash management solution and that's powered by compound protocol so treasury is the thing that's building on compound the protocol which offers four uh four percent APR on USD and usdc um starting today what they or I guess yesterday when they rolled this out was the ability to actually borrow from compound at like a six percent APR and

you can borrow USD or usdc they've got a partnership with circle on the back end as well that they help them Source the U USD if need be the way that this kind of rolls into they're sourcing liquidity either from other clients on compound treasury or they're actually going to the three billion dollars locked in compound protocol so the reason this kind of flows into compound three is remember compound kind of rolled out this thing where actually they really simplified their protocol right where instead of basically being able to post any collateral right to borrow uh any other type of asset what they said is like hey you can still post a smaller range of collateral and the only thing that you can borrow is usdc and the reason for that I actually caught up with Rob

yesterday to talk about this was he's like look we started five years ago we thought people are going to want to borrow all sorts of things now what we believe in what we've seen over the last couple years everyone just wants to borrow dollars so basically the way that it works on their back end is like if ninety percent of the demand is just to borrow dollars then if you're trying to collateralize lending right if you're basically you you're trying to establish a ratio right so if you have some collateral that's really volatile and you're trying to borrow something else that's very volatile that's really tricky to maintain that ratio it's much simpler if you have volatile collateral but you're borrowing something that stays the same so basically they're trying to do really Capital efficient borrowing so you can basically do much more leverage at a much cheaper rate and

they're trying to basically just simplify and attack that barring usdc use case and then that feeds right into the announcement from compound treasury I actually this kind of gives me like Circle you know we shouted out Jeremy lair on the last one where they really just like simplified their product I've I really like what they're doing I think they're just attacking a big use case and being like this is the only thing that we're gonna do but I don't know what what tastes you guys have on what they've rolled out I I generally think that um what this does and we've talked about this on on previous spell curves is uh adds more institutional Firepower to the ins in into the London and borrowing ecosystem for crypto writ large and I I

also was checking out compoundreasury.com and you you can basically borrow USD usdc against Bitcoin eth and other erc20s up to 90 percent it's it's just open term you can pay back whenever you want um this is a new construct that frankly just hasn't exist existed in the space yet and having more of these products and product categories will institutionalize and having to be on chain which is going to be a really really important component you know talk about this versus the centralized lending uh platforms that have gone bust over the last few months um you know this is a this is just a step in the right direction generally but but broadly I mean this is going to be a big uh bid driver for growth in the space I think in the next cycle

Michael why is this something that hasn't existed before I think I'm missing something the exact product of open term on-chain fixed rate lending um just is not something that you've had an open term uh variable rate and you've had some fixed rate but not really in at scale and and really kind of as an Institutional product I mean Ave you've obviously been able to to do fish rate for a while um but I think the the scale is kind of the just the the Difference Maker here got it I I think the question that um and this is one that I can't really wrap my head around because they were like we talked about this uh on last week's episode two was just that the short term I'm sure this will reverse but like short-term headwinds of tradfi yields

being higher than yields that you can get in D5 I think that's a really tough problem to overcome and I don't really I don't know what they're gonna do in the short term there because that was supposed to be like the Trojan Horse right that was supposed to like lure capital in because you could chase a higher yield and it didn't really work honestly um it brought a [ __ ] ton of money and it just like there's like this sorry sorry it brought degenerate yielding right which like caused crypto Equity prices to explode there weren't like Banks being like Oh yeah I'm only getting three percent here I see eight percent in crypto like let me earn yield in this like safe way because they were all like these yields aren't real and

they were all kind of right about that so like yeah it attracted a lot of people but it didn't there weren't like institutions and big hedge funds and like fixed income like money market type things that are like let me take advantage of the spread in yields being offered in crypto versus Chad fi don't make me the bear here no I didn't do that like like come on don't like stare at me like that uh I mean bull market um like you know a race to see who can import Capital into crypto feels like bear markets are kind of like who can export Capital faster through like coin chairs or like you know coinbase it's it's uh yeah like if USD yields are lower on chain than a t-bill um that's going to be difficult but you know if you think about East like the

yield's nice like we'll take that but the thing that's interesting is that you get paid to hold an asset that has a potential Venture scale return um and that's just something that tradify could never offer and you know for better for worse same with a lot of these uh call them like longer tail coins um you know like sure the yield is nice but like a lot of people are just buying because of the lottery ticket yeah and the extra four percent on Lido is just a little a little kicker right yeah um what do you guys so uh all right so Bravo again to to Rob that's really exciting what you guys are doing um I get the you know in terms of governance proposals a super light super light week actually but there was there

was actually an update too so we talked about this you know uh coinbase institutional rewards they submitted a proposal on maker to actually take some of their PSM some of the usdc that's just sitting in the PSM and basically custody it with coinbase um and earn 1.5 on that so one thing that I I didn't understand we were talking about it last week but like looking deeply into it like the what they're actually doing is there's Center Consortium that's the issue of usdc that's a partnership in between coinbase and circle and there's a revenue split there so the 1.5 people we pointed out that that was below uh like what you could get like fed funds is going to four percent we were kind of like how is one point five percent where are they getting that so circles earning uh usdc's earning whatever they're earning

right it's like probably around three or four percent because they're putting it in government short-term government Security short-term corporate bonds that kind of thing and then there's a REV split in between Circle and coinbase and it depends on where they're custodied so if the usdc is custody at coinbase then they get a bigger percentage of the split so basically what coinbase is saying is hey if you guys move that that usdc over to coinbase in custody or with us we're going to get a higher percentage of that yield we're just going to share some of that with you and the advantage there is that they're not even that's why they're able to not even unwrap the usdc so it's still super liquid for maker and then there's this new proposal from coin shares which is

they're saying hey all right that that's a good move for you guys uh take a smaller amount 500 million usdc give it to us we're actually going to unwrap it and invest it basically in this portfolio of you know different really short-term Securities um and the way they structured is they're going to give them sofa which is like a now 2.25 plus some upside so whatever they outperform on sofa it's like one-third goes to maker so they get some upside on the 2.25 uh uh coin shares gets the other third and then the other third coin shares is allowed to buy mkr from maker so it's kind of like a it's just a more variable fee structure um and I think the trade-off is it less liquid because it's not you don't have

like interblock liquidity there because you're unwrapping it you'd have to like unwind that position but you do get more yield and it's frankly it's variable yield which is probably pretty good uh they probably want that because like if yields go up then probably their token is going down so it's my pretty good Edge honestly um so I kind of like it actually I shout out to coin chairs I thought it was a good proposal cd5 is back that's my take I remember when you had that narrative like a year ago and uh yeah I forgot what happened to that but it feels like this like you pair one corporate entity with one protocol like you know coinbase and maker you have compound Treasury and compound um like it feels like that's gonna be a real lever especially in a world where

you know like the protocols you don't have access to the outside world are just like going to be less able to generate real cash flow if that's where the yields are at least um but it's cool to see everyone kind of like it felt like in the bull market we didn't have like the proper time to kind of like introduce everyone to each other like you know coinbase meet maker okay like you should get to know each other start working together like you know build the muscle memory of like taking usdc or die and letting it off into the tradify markets and I think that makes the crypto ecosystem stronger and more resilient as a result so I like that this is kind of back as an idea um and I think it's an interesting growth alley for for Avenue for for D5 anecdotally as well I mean we've been

seeing a lot of pitches recently in the direction of what I what we've called before you know public permission D5 where you have some uh regulated institution that uh you know or set of Institutions that are going to be wanting to build into the defy ecosystem they don't really know how yet or they don't know how to integrate so maybe they're going through a custody provider or maybe they're going through electric coinbase and they're trying to get in but now they want access and and now they're going to start interacting in ways that they just haven't been able to thus far and I think that you know we're also going to start to see new layer twos pop up regionally which are focused on these different ecosystems because you know Latin America EU us all different rules and you have to abide by

those when you're a regulated Financial intuition and so I think you're going to have to also have regulated uh regionalized chains as well and and so I think cd5 whatever we want to call it public permissions defy you know I think this this combinatorial effect of having institution with large customer base large balance sheet whatever it may be interacting on chain now is going to be The Narrative of a lot of what D5 is for the next couple of years the last thing I'll say is like it's good to see these like all the default protocols basically have business models that are endogenous to the on-chain world and they work really well when the on-chain world is popping off and really bullish but like having another you know tool in your toolkit for when the

markets are bearish and you can start exporting instead of like importing you know it just helps build like a counter cyclical business model which is what a lot of crypto needs right now and building the countercycle cyclical business model just like helps you integrate everything with tradfi and just make it more sticky which is good I would say um I think one of the other benefits of this in general is like they probably should have been doing this stuff from but it's like during the bull market right I mean who has time right like why are you trying to eke out three percent on your treasury you know like the whole world is at your fingertips so now I think it's probably you put and you'll probably get some Financial Professionals in there as well that manage this stuff for them um which which I think is good I think

this eventually becomes a service I think there's a I think there's a unicorn company built here where like instead of just going to a coin chairs or like like with these one-off it almost feels like coin yeah I I just think that there's um it won't it won't look like this in like a year or two or three years from now where like the you know maker sends it to coin shares then they send some other stuff to coinbase then another protocol sends it here basically whoever's winning the sales deals uh it's like someone's going gonna end up winning like building a business just to manage these treasuries or or it goes in-house although it probably doesn't go in-house actually it's too much capital no that's going house I bet I bet Circle launches either Circle launches or someone else launches tokenized treasuries we told this to

circle's product team like a year ago right like we Circle should definitely do this because that's what you want you would rather have that like you'd rather actually have uh you know because this is all like indirect right like circles like internalizing they're managing that like off-world and on-world connection but really what you'd rather just do and they're earning all of the yield for that which is like amazing for Circle but people are going to look at that and be like I want some of that so basically what someone's going to do is either launch a competitor Circle or if Circle could get out ahead of it they should just do what they're doing with stable coins but for treasuries and then they should just manage the liquidity in between that and that would be like an amazing business I feel like for them if

I were them but would that need to be a regulated product I would imagine I but that's where this is all going right like this is all going towards permissioned D5 totally I would guess or at least a large swath of permission D5 but yep but I don't think it would need to be would it need to be any more regulated than what they're doing at the usdc because they're just providing a portal for dollars once you get into money management money markets like that's like extra extra bonus points regulation um do those guys get regulated a lot money market funds they pay attention to that the people you meet who do that stuff they talk about regulations it's just like they hate it it takes up like

60 70 of their day um yeah but yeah there's also a huge difference between I mean who is regulating dollars versus who is regulating treasuries you know you're talking about the office of the Comptroller or the currency versus the SEC two very different conversations yeah it's a really good point all right I've got actually the the last two stories basically on the agenda are Fidelity uh potentially launching Bitcoin and their brokerages and then um polygon partnering with Starbucks I don't know do you guys have a preference between the two of us I mean the the Fidelity potentially launching retail crypto I think we talked to someone on you know their product team or something in like 2019 and they were like oh yeah next year we're going to be able to have a retail

crypto it's like I feel like this product has been years away it has been a year away four years uh and it's great to see you come to fruition but um yeah tough to have it come to fruition in in the in the bear Market but it's hilarious how this all got leaked which is a little birdie dude this party is saying Ram [ __ ] to people yeah seriously getting tattoos blowing up people's spots on stage like oh my God but he so he said this on on stage at Salt he's like a little birdie told me that Fidelity is potentially

launching crypto on their brokerages it's like and then he tries to back it out back out of it where he's like well I hope the Birdie's right but I don't know the birdie could run to this Birdie's highly unreliable um but I what what do you guys I mean that would be a pretty big deal I mean I'd like to give uh Fidelity a little bit of credit like I know they move super slowly but they also I mean in terms of like a big regulated Institute like they manage over a trillion dollars worth of assets like they've done a lot I think for advancing the legitimacy of this entire space in the minds of the greater world but certainly Finance in general would be a huge it'd be a huge deal if they rolled Bitcoin out

what I think it is Bitcoin by the way is it crypto or is it bigger no no it's just Bitcoin that big of it it's just because they're very yeah yeah I think they will do each stuff later but um they are just pick one uh yeah Ethan's uh a decade from now um I don't know I don't think this is as big of a deal as you're making it out to be Mike I mean I guess it just like I'll take the other side of that I'll take the other side because in terms of like retail brokerages in the US it's like E-Trade fidelity I'm missing one of them it's enormous distribution basically what you're saying is like this is like the third biggest distribution pipe and you're going to put Bitcoin smack in the middle of it and that's I think that's an

enormous I think it's an enormous deal because that's basically the way Bitcoin has to scale you basically Bitcoin isn't going to scale through utility in crypto you have to get people outside of crypto to like no no you have to ask the question of like what is the percentage of people who use TD Ameritrade and E-Trade and Charles Schwab and Fidelity who want to own Bitcoin but haven't bought Bitcoin yet because they're not comfortable opening a coinbase or Kraken or Gemini account look at the premium look at the premium on gbtc that is like kind of what [ __ ] everything up right that's like the whole that that's the whole thing now there's a big discount it's like yeah this is like a product for like my uncle it's like for the literally thought of

my uncle as well like you know a guy my uncle will eat this up no yeah I've tried to get him to set up a coin discount for like four years he refuses to do anything that isn't through like the Morgan Stanley wealth management platform actually you know what if Mike was 20 years later this product would be I was gonna say that's why I yeah yeah because I also don't love figuring this [ __ ] out man Mike yeah yeah one thousand percent this is me in five years but like I think that's how most people are I think you should be judging it based on my channel out of coinbase and putting it on Fidelity you know I am thinking I am thinking about my dear old dad honestly like my my like whatever he has to like make a transfer you know on

his account he's like messaging me like am I doing this right and it's like you know that's how most people are I think the local bank the local like town bank because he's able to because he's able to get on a call a call with them when he wants to do something that's awesome yeah I mean I my visual reaction to any announcement of like oh this institution is coming into crypto like his just historically been a nothing Burger when it all said and done I'm hopeful that this is not that uh this was probably one of if not the biggest potential Financial providers uh or potentially getting into the space but yeah just historically like my baseball retall is

you know great you know the uh what was it called the Enterprise ethereum Alliance you know and uh all the institutions that were coming in yeah it just is uh it's tough to see sometimes I mean I'm with you on that like I mean it's never one thing it's ever one thing in a silo right it's all these things just end up compounding on each other I have a question I actually have a question for the two of you guys when someone you know comes up and you probably get a lot of pitches like this right like hey I've got this idea you know real estate on the blockchain I mean how do you guys respond to stuff like that do you think that like first do you think that eventually ends up happening but the reason I'm asking is again just because we had this

conference yesterday and I was getting almost like this visceral sense of like deja vu where you know all the stuff that I hadn't heard in like the past two or three years uh but it was basically like new iterations on blockchain not Bitcoin or Enterprise blockchain or whatever it is and it always kind of resonates with with new people who haven't been around and heard that before so I'm just curious like how you guys respond to when those sorts of ideas get brought up so I I don't think it's not going to happen I think just a question of when and how you know we have the whole security token concept whenever that was 2018 securitize Harbor uh you know that model definitely was tried but I don't think you have the capital nor

the scale to pull that off and and frankly that was also at the time when you're talking about securitizing as we're talking about like mortgages and Commercial loans that were going to yield you four or five six percent when you've got Wi-Fi and you know all these crazy D5 summer token economics happening in the background and you can get thousands of percent apy right and so you kind of have to choose the right Market cycle and the right customer base and it was I think at the time it was just a mismatch of of customers and and product um whether that's you know we're talking about getting 2.28 so far plus a third of the variable on top of that like it maybe now is the right time I don't know mm-hmm yeah I think the other thing is like you know if you see a hundred

pitches now our job is probably like the first thing we do is disqualifying 80. just based on like you haven't really thought through idea this idea is you haven't really thought through like how complex the regulatory implications are you haven't really thought throughout like how competitive the vertical is um and I would say like most of the disqualified pitches that we see are things like neobanks or things like uh you know uh like we do see a lot of like real estate on on the blockchain style pitches but you know real estate is one of the most regulated uh sub industries of the financial sector that exists today and so I think a lot of this stuff is just like easier to build endogenous on chain um where like everything sits on chain

and it's not connected to the real world but hopefully we get to a point where the regulations are easier enough that we can actually make those pitches viable but right now I would say that they're pretty far away yeah fair enough um all right let's talk about uh Starbucks and nfts on polygon yeah you want to take us through this I feel like you've been looking at it you love Starbucks uh this Monday Starbucks announced a uh a partnership with polygon um and they created a new Rewards program I actually honestly don't know too much about this I don't know why I'm taking it but they here's what I know they announced this new Rewards program Starbucks Odyssey um Starbucks rewards loyalty program members and Starbucks partner employees

are going to be able to earn and purchase these nfts which Starbucks is calling Journey stamps um I think like and it's built on polygon that's that's what I know about it but I think the important thing to like think about here is just um I think it's fascinating that Starbucks is doing this Starbucks is not just a coffee brand they are one of the biggest financial institutions in the US they have more they have 1.6 billion dollars in deposits just sitting around that is they use that to like they don't have to go borrow when they want to go build a new place and like they want to like do a huge ad campaign or like upgrade equipment they don't go borrow from from a bank at two percent or now five percent or whatever it is they dip into their 1.6 billion dollars in in deposits

and the deposits come from uh the deposits come from their Rewards program so their Rewards program is really interesting like they were they rolled out basically a in 2008 a loyalty program with physical cards and then in 2014 they rolled out the mobile app and they put the and they put the the gift cards onto the mobile app and you get one star if you purchase something if you like I think I don't go to really go to Starbucks actually but I think it's if you if you purchase something at Starbucks you get one star and if you purchase something with with royalty points you get two stars and then the stars get you things so then you're heavily incentivized to use your royalty points so then it's like hey just dump 100 bucks into Starbucks you know you're

gonna spend 100 bucks this month on Starbucks you should you'll get double the points if you're spending your royalty dollars essentially uh it's like susd right you get double that double the rewards if you spend susd what that has caused is there's over 10 billion dollars in rewards in rewards dollars that are added to Starbucks every single year and right now they have an excess of 1.6 billion so that that's just like Star prepaid right it's like the perfect stuff yeah okay every single year rewards members load 10 billion dollars onto Starbucks cards over half of Starbucks that's bought in the US is done from this program 25 million people in the rewards program it's pretty nuts it's a huge I I because

I first heard this well I before I what did you guys think about this because I first kind of heard this I was like I'm not really sure but it's interesting I I'm I'm not a huge like Starbucks loyalty user although I I probably if I pulled up my app right now I probably have like 20 bucks sitting in there because I just you know forgot about it or something which is I think you know where that 1.6 comes from um but I I think you know this sounds kind of like a Pokemon Go game for Starbucks users customers and I think having an nft that you can earn and you know you can sell like it's an interesting component but once again it kind of goes back to the question of like what's the overlap of Starbucks customers and nft fans maybe it's a bunch of nit fans you know

gen Z Gen Y Gen a on on Solana or or maybe now it's gonna be polygon um so it does kind of feel like it'll be interesting to see what the overlap is of those two customer bases it's funny you're I mean this is a good segue from the from the real estate on the blockchain conversation because this is the same group of Converse this is the same you're you know you're at a party in 2017 guy number one says to you hey I'm putting real estate on the blockchain guy number two says to you hey we're putting loyalty points on the blockchain and like we're putting Starbucks rewards on the blockchain yeah yeah so I I think it's I mean like if you the number spine Starbucks are staggering but even when I was at Netflix like the

gift card program was kind of like this thing that was run by you know people who weren't like you know core entertainment industry veterans but like he drove so much of the business that everyone had like all this reference for them and like it works on the US it works even better in South America in Emerging Markets um where the financial ecosystem isn't quite as stable and you can earn and basically acquire a ton of customers through this and sure maybe you're giving them three or four bucks in these imaginary rewards points that um you have them spend but like that's far lower than the CAC to acquire a new custom and keep them oil and buying stuff in general so you know you bring on people on the blockchain like you're cool with me uh I think the rest of polygon is basically that you kind of

have all of these like dead experiments that just like live on your chain and like you know slowly get wound down but you know you have to take swings and they're going for it and we definitely respect that so you know we're we're definitely on board with it one of the interesting questions that I I think will be fun to see um is just canned polygon keep up with it let's assume this is really successful or frankly just like one percent of Starbucks customers end up using this that's going to be probably the largest application on a blockchain period and can polygon keep up with that scale we there's a game that did a uh an nft drop to its um to its Twitter followers and they had to Mint 400 000 nfts on polygon that was about 40 of the

entire activity for like a month period on polydon at the time you know the the numbers uh that are going to be an interesting mismatch just like can can the scale of Starbucks be put on a blockchain right now you've seen pretty deep reorgs in polygon already happening um and like I'm gonna feel a lot more confident in polygon when they switch to whatever the ZK technology is that they're building out but what they have right now just feels like like yeah you've scaled for the number of users that are on a blockchain today but if it gets 10x bigger like you have real problems and I think that's not just them by the way it's it's a lot of people probably other than like Ethan the l2s but um it is concerning I would say let me do a thought here here's a maybe uh

unintended here would be like best case scenario of the Starbucks thing I think is that um if you look at all loyalty programs they're in these like closed systems so it's like if I get Airline points or something like I just they just sit until I end up using them and like Starbucks points you can't really do anything with them maybe there's like a cash out thing but you can't really do anything with them I do wonder if this like because you've got the 800 pound gorilla in loyalty programs which is Starbucks there's probably like who are the other big players and loyalties it's like I know h m has a big program with like 100 million people like Amazon Prime is a huge like Amazon's obviously one uh like Sephora has a big one but like I feel like Starbucks is really the 800 pound gorilla in like the consumer

side of things uh this could drive like what if what if this sparked like moving loyalty programs into like an open system brands are not incentivized to do that but like maybe consumers start demanding it I'm trying to think there are other options here but the benefit of it being a closed system is that if somebody forgets about their points um it's just like deleted basically you know nobody's you know like Mike to Michael's point he's probably got 20 bucks on his phone that he's never gonna use um but if you establish market for that there's a clearing price and there's more incentives to sell it there's more incentives to use it like your gift card program gets less effective rather than more effective and so like I think you have to go back to like

what are the first principles reasons to do this and um blockchains being cool is I think a valid reason um but like what economic value does it either you know ascribe or subtract to this whole process the subtraction side seems pretty visible the nft stuff kind of seems like the linchpin like if those nfts are actually cool and you're creating something of like real value that does not just like allow your customers to draw more on your inventory for free like that feels like you know you're creating value and and like that could create an ecosystem um but it can't just be the loyalty points I don't think I I agree though it's got to be consumer demanded it can't be you know supplier

pushed a brand would never yeah a brand would never do that right but if you can if you can pull one on uh in the same way that Fidelity is probably going to have the same effect here in their own ecosystem if Fidelity has it then Schwab is probably you know thinking about this working on this e-trades probably doing the same uh if Starbucks is successful with this and Starbucks customers like this you're I think 100 right you're gonna have to start considering this as as a strategy for if you have a large loyalty program and customer base that wants this yeah did you guys um I did you guys listen to that um the all-in where yeah I forget friedberger was like all brands are gonna die in 30 years do you hear that explanation I actually thought it

was kind of an interesting exercise I'm not sure if that is like that's a pretty hot take but like it did kind of make me think you know because I was also thinking I think all of it comes down to like the nfts you know um and you know if you actually read the text on like Starbucks press release they're like people users can go through fun quests to like learn more about coffee and Starbucks history and it's like like nobody wants to do that exactly you know but but you know maybe it could work for Nike honestly and you know what actually you know who's actually basically trying this at like there's another Odyssey that's going on right now that's the arbitral Odyssey um and like that or like that's about to

get restarted that's a really interesting example of like old world and new world right they're kind of trying the same thing right they're trying to engage a user base and like get them to go and do all of these different things using nfts I bet one is going to be way more successful than the other tote wall I know they're trying to do a different scale yeah yeah I mean the first Odyssey for arbitrum literally broke because of lack of you know scale so they had to go back and fix it and make it better to be able to keep public scale I I I just once again question do you have a product customer mismatch and with arbitrum obviously you don't because you're talking to web3 Native potential customers and users with Starbucks you might have some overlap but it I it it does feel like you know

you're you're 2T on and on until being like hey I'm cool you know I'm not blockchain and it's kind of like trying too hard sometimes if they can do it in a cool way and consumers are enjoying it and like the nfts I I think you know it'll be interesting and could have massive effects pulling in other brands but yeah it's just a question of can they pull it off for this this customer base do you guys see the uh coinbase launched uh they basically took a page out of Uber's Playbook and they made it extremely transparent they're like hey here's basically a map and you can see how politicians in your area think about crypto just gonna throw that out there you know that was a genius move I love

that move it's awesome hats off to Brian and the team for for pulling that off hats off yeah I think they're the good guys you know I wouldn't say they haven't done anything cool too I might generally conceive of them as like good guys um I mean they're definitely fighting the good fight yeah there's doing the tornado cash people they're doing this they're you know putting money behind political efforts like all right well now I'm feeling bad now I'm feeling bad about my my statement I resend it I'm ashamed can I say tornado cash is cool actually too that's good we do can we do memes of the week yeah games of the week I I just have a picture that I thought was really really funny you guys see the Avalanche KKR news

yeah yeah Avalanche is uh helping KKR put things on the blockchain this was just like KKR makes history we're preparing and building towards the future in which Securities are traded on public blockchains web 3's ability to manage digital identities that's not even a meme it's literally just an ad asset ownership these guys are a meme this is hilarious this is like the most antithetical web3 crypto image I've ever seen I just love this this is making me crack up so interesting selection yeah I don't yeah they're that's an interesting shot I'm trying to think of what the best meme of the week has been um Leo got a new girlfriend she's 27 so

inflation affects everyone including Leonardo that was literally that was literally gonna be my main background good for him yeah back on his feet I do think actually met Ledger that's big Kobe Kobe Matt Ledger when you move in person um yeah he's good for the space too even when he throws bombs on Twitter I'm like if Kobe ever comes free on Twitter just move to a different country and change your name I agree I thought that was kind of a heartwarming picture actually I thought that was really nice I was like they're meeting in person you know Ledger just looks like the nicest guy on the face of

the planet honestly they're both great looks like yeah did you see the uh the legend The Ledger memes of what people were yeah in the chat Leisure definitely closes with his hips dude I listen to a podcast where he defended it he's like everyone does that right I was like I do that too yeah for sure man it's like Ledger's the kind of guy who says after a rain the plants really needed this yeah there are a lot of good ones um I do I do actually just to return to the coinbase thing for a second I actually I mean that's just like a Savvy move and everything but I do think that's like a move really in the right space because like if we do want to move the ecosystem forward and everything I

mean you have to get politics involved right I don't think it's a particularly smart strategy to just like flip the bird to everyone and be like I don't need you and I can go live in the metaverse like I do I'll advocate for what I said a couple weeks ago like I live in America and I like living in America and I don't I think just engaging politicians and like it sucks nobody likes to do this but like playing the game is like the right way to to move the space forward I don't think the industry is is flipping the burdens and you know we're going to live in the middle I think the industry is knives out right now and you know ever since the um whatever that bill was last summer or maybe two summers ago I can't even remember now where you know the uh

the industry basically got out the vote and started calling everybody at least in California like you couldn't leave messages on our Senators phones anymore because literally the the inbox was full uh and yeah you know like that type of stuff I think was a rallying cry for for what we need and and now you've got Pac setting up being set up left and right for going after these opportunities we like it it's a movement you gotta you gotta behind it you know you can't just be flipping [ __ ] coins there's there's more to it than that speaking of flipping [ __ ] coins you see that board ape is coming out with another nft collection do you guys so so G money told me this do you know how many different individual pieces of of uh nftip that board apas right a sec I

think two did you mentioned yeah did you mention it's like 250. oh ridiculous maybe I said this before that's a lot of like that's a lot of like do we need more yeah like is now the right time these are questions that I would be asking um but yeah I don't know I don't know if more land is what we need now more metaverse land more land I mean the other side the other Deeds were just sold for like a million bucks last week it's like it's who's buying other others space land that's a it's a it's a good place should I try there's so many times when I ask myself who is doing this like the East

proof of work trade you're telling me like tens of billions of dollars of like National exposure thoughts they were gonna make like a billion dollars from youth proof of work that's unbelievably silly I can't figure out who that is like who's buying other Deeds for a million dollars each like is it like a fund like it doesn't really seem like it could be one of our contemporaries like is it like a rich retail whale it's like that doesn't seem right either a lot of these things just like maybe they're just like from China and like we just like a different participant set but I don't get it blame it on China wow looks ugly on You Vince looks really ugly last all right last last question for

you guys do you guys see Doodles raised this week too I don't know congrats like happy yeah it's gonna be like hats off to raise in this market is the only Center that I have I think he was like a 750 million dollar valuation which implies that there was some sort of bidding war which implies that like there were multiple parties who thought this was a good idea maybe maybe it is maybe I'm just wrong but it seems kind of silly that was like the kindest way to say that you don't think this is a good idea

I mean listen we didn't invest in it nor were we offering applications so like you know let's not get it twisted but you know we didn't try to get it either I have a I have a question for you guys actually just on nfts in general do you think there was some there was some pushback to this which was like Hey if these VCS want to exposure this project they should have just bought the nft right they didn't actually need to raise like Equity capital I've heard that before yeah so I actually don't I I don't know who did this deal I think one so messed up I got a bag you know you don't like this bag right here I mean here here's some of the some of

the inside track of what probably These funds had to go through many of these funds literally can't hold on to tokens unless you're a registered investment advisor you can't buy tokens or token you know nfts and hold them in your fund so you have to buy the equity of the company behind it and I wouldn't be surprised if that's the case here and I I don't know who actually did the raise but depending on who it is you know anyone can go on finra and look up whether or not they're in Ria and and uh yeah it that's probably more of the backstory this this like my take on this is that uh like uh on what you just said Mike of people being like buy my bag like they should have bought the nfts is people are Miss um understanding what they're getting when they get an nft they they are

thinking that it is an asset that they are investing in and assets should go up it is a consumer product it is a collectible like when you buy a watch you're like I buy this watch because I like the watch you're like if if it also goes up that's nice like if you buy a Rollie and it goes up that's nice but like at the end of the day it's a consumer product and it's a collectible and that's what that's what nfts are are just consumer products uh they're they're not these assets that should go up and they definitely don't represent equity in the company no let's say that Rolex raised a huge round and you own Rolex are you gonna be like why did nobody buy my Rolex for 1.5 x with some of them it doesn't make any sense and so I don't

think that that makes sense for people to think in this context um I think the promise is that if Rolex raises a billion dollars um it'll up the brand profile it'll up the lindiness it'll make in time what you hold more valuable but it won't be through direct purchase so I kind of don't have a lot of sympathy for for that perspective um because if you think this is a long-term asset you know you're not like why are you buying why are you not buying my bag tomorrow um and that's really how you should be investing at the end of the day yeah there's a concept in crypto that seems like kind of flipped to me which is the opposite of like what you guys do early stage Equity investing which is like you buy and you have like you're very concentrated at the beginning but

then you basically get like a smaller part of a larger Pie as things go on and I kind of feel like there's this uh pervasive idea in crypto specifically where it's like I should be rewarded for being very very early and like keep getting a larger part of the pie and I I don't not necessarily a larger part of the pie but that like reward should continue accrue to me passively and I don't I fundamentally like don't uh think that's necessarily true to be honest and employment forever my money it's just like I just don't understand that perspective um for us it's always like you know when you buy equity in a company every single round that you raise after that round

you get diluted or you have a chance to put in more money if you want and re-up but you don't get anything for free and generally like everyone is lined with you have a smaller piece a larger prize time goes on and you monetize through that um having the larger piece of a smaller pie is just like cool you own 100 of zero you know at the most extreme case um and it feels like that's where a lot of these things go where if you can't think communally and build things from a value perspective on a community basis like nothing's really going to happen anyways so I don't I don't understand that perspective yeah all right guys boys some spicy takes around this week enjoy the rest of them we'll let you get back to the top side all right now let's get back to you

guys peace [Music]