The Final Bell Curve: What Does Crypto Look Like in 1 and 5 Years?

Transcript

looking at the one-year verse fiveyear framing all roads to me point back to Coinbase, Kraken, Binance, you know, Robin Hood at the moment because their distribution, but at the same time as on a short-term time horizon, I see all roads pointing towards the brokerages. On the flip side, you're sort of starting to see the brokerage unbundled. Basically, I think my overall framework is that crypto as an industry gets smaller before it gets bigger. Hey [snorts] everyone, quick disclaimer before we get into today's episode. Nothing said on bell curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds or

projects discussed. Hello everyone. Welcome, welcome. Um, welcome back to another episode of Bel. We got me, Miles, and Ze. Gentlemen, how we doing? >> Fantastic. Good to see you both again. Yeah, >> it's been a little while. Are you in a Are you in a a wooden cabin up there, Nepo? [laughter] >> Where's Where's your Where's your flannel and hat? >> Uh, it's too hot for a flannel and hat. It is still summer.

>> It's nice. [snorts] >> I could put it on for the aesthetic, but I don't think it would be very comfortable. But yeah, I'm up at this. You know what? I uh Are you guys familiar with Mskoka as an area? You know around >> um Toronto heard of it. Sounds sounds better. >> People call it the Hamptons of the North. [laughter] >> Slightly more down to earth. >> Actually, it's funny because when I started coming up here, people people do call this the Hamptons of the North and I was always like, "Oh, Hampton's of the North." And then I I recently went out to a we did a leadership offsite in New Buffalo. Um, which is if you want to take a guess at how that got named and the it's because some guy from Buffalo, the old Buffalo went out there and found

it and named it. They're like, "Oh yeah, it's the Hamptons of the Midwest." And I was like, "Oh [ __ ] [laughter] maybe this is more common from a naming perspective." >> Well, I mean, Michael, we did go to the Harvard of the South. [laughter] Emory University, one of like seven Harvard of the South. So, yeah. That's not even the best dad joke in that lore. It Emory was one of these schools you went in uh and you go to the the gift shop and you could buy a sweatshirt that said Emory football undefeated since >> Oh, yeah.

>> 1905 because there's no football team. >> Yeah. >> Good stuff. Good stuff. >> Uh guys, uh so for those listening, uh this is a little bit of a bittersweet episode. Um, so it's sweet um in the sense that uh we're going to have a lot of fun. Uh we're going to be unpacking what's happening in crypto over the next 1 to five years. Uh but it's bitter in the sense that uh this is unfortunately the last episode of Bell Curve. Um it's been an amazing run. Um no one that I would rather do it with than you guys and also the framework guys for the first half of the show. Um but uh it is a bare market which means we're all doubling down. Everyone's got a day job and also just from a Blockworks kind of

suite of podcast standpoint. Um we have I think enough shows to cover the space. But so guys, bittersweet because this has been a ton of fun and I feel really proud of the uh the episodes that we've produced in the past. It's been a ton of fun. >> Yeah, absolutely. Thanks to you, Mike, for having us on and of course it was already a great show with the framework guys before we even joined. So yeah, it's been a really nice podcast. I know I was a regular listener before I I joined the show. I'm sure many others are also regular listeners and you know Beler for so long was known as a great crypton native podcast and I think maybe even right now one of the very few last ones remaining. So yeah, unfortunately will be another one that yeah potentially won't be around much longer

in its current form. But yeah, I think it's been a terrific podcast throughout. So hats off to to you Mike for for building it. >> You know what they say, if you love something, you set it free. >> [laughter] >> Yeah, I echo that. It's been it's been a lot of fun. Um, me and Mike, we started doing this in like the app chain season, I think. Uh, what was that like two or two or three years ago? I think I think a lot of those episodes have held up really well. Um, and sure, like the app chain thesis is not a bunch of Cosmos chains winning, but it's a bunch of corp corp chains that obviously like this idea of control resonated with them. Um, and yeah, I would just uh I think it's a

it's been a fun journey. Um, I'd say we nailed everything apart from maybe the liquid staking season. Uh, I don't think turns out economic security not that important. Nobody really cares. Um, but yeah, let's [snorts] go out with a bang. >> Let's go out with a bang. I I that that season of the show I think is one of the the best bits of content that we've put out. Um, and I think I'll give ourselves a pat on the back. I think that was a that was a pretty preient preient season of content and we're looking to duplicate that same feat today. Uh because we also want to look out into [snorts] the future um to the future and try to get a sense of what is just what

what what you guys see happening. And I'd love to divide this on a one-year time horizon and a fiveyear time horizon because I think at least for me I think it's a little bit easier to look out into the one year. But actually the fiveyear seems pretty clear at this point um to me as well. But and I think we're all on the same page, but also there's usually a fun kind of push and pull here. So Miles, why don't you talk to us? Why don't you dust off the old crystal ball vision cast for us a little bit? >> Sure. >> Where where does that noggin see this essentially? >> Um so I Yeah, I've got a couple perspectives. Um, we'll start with one that goes back to the smile curve, which I I cannot remember when we talked about this, but um, in one of those past

seasons, we were talking about where value occurs. And I think it's still like um, you know, uh, holds up pretty well, except we now can have like a little bit more clarity on where where things are winning. And so I think the first thesis is more like okay um now that we're in a more mature industry in these like regulated markets right like we're all growing up whether it's payments or tokenization or something like that um I think you you'll see like two winners um so the distribution winners on the app side will just continue to consolidate and I think it's going to be increasingly hard to compete as a startup there. Um I can talk about in another thesis like where you know

how what what playbooks you know are still viable but I think that like you know the incumbent let's call it tradfi orgs or payment orgs like stripe uh ramp um like they're just super well positioned to keep eating up market share of things like that that touch crypto and blockchains like like stable coin payments um custody of let's say tokenized securities and trading of that. Um I think where we've seen the biggest winners for crypto startups um in the past you know like 2 years it's going to continue which is on the scarce infrastructure side. So things that these um basically can you catch like a

wave of adoption momentum and power it be like the infrastructure powering it underneath right. So I would like call out you know common wear as like um kind of what like Cosmos like atom should have been right like actually you know I think they have got a big deal with tempo and tempo you know looked at them and said okay these guys are worldclass like you know blockchain infrastructure builders we don't have that in house um I mean actually they they have some like serious infrastructure chops in house and they still chose to go with common wear right Um, and so if you can just catch that wave, like I'd say like Canton is another one that's like benefiting on the tokenization side of

just like powering, you know, all of the tokenization initiatives that these Wall Street firms are like finally putting out and like they do a good job of just speaking their language and they can be like, "Okay, I trust these guys. They've been doing it for a very long time, right?" Similar to Commonwe wave, right? and they started off as a BTOC or like a yeah more of a B toC product. Uh and they said okay no we can just power this for like you know the hundreds of neo banks that are coming in to try to like compete right and so you want to be on either side of that touching like something quite sensitive that you know you are world class at and that these like uh distribution winners or like a wave of adoption is going to

want to use to accelerate like their path to market. Um, and I think, you know, it's going to be more challenging just to compete as some sort of like generic, you know, crypto app that's going that's trying to win a slice of market share with end users. >> You know what I think also? I think that we really confused ourselves with some of the lexicon in crypto thus far. And one of the original sins is just over extrapolate. What does a crypto app mean? Literally, what does that even I think DAP really can I think the the word DAP really confused people. It's just an app. It's just an app like >> I mean DAP back in the day when more apps were hosted let's say on

decentralized networks nowadays apps or DAPs are more like protocols that live on chain I guess like in Moro etc. And then the application which is where probably a lot of people longterm will access morpho is more like it's hosted in some centralized place and I guess they're >> no longer a DAP and just a regular app but um yeah great points Miles I think Mike you have some similar views around some of those products and projects as well and yeah I think we all share I guess the things in crypto now that are working are kind of obviously going to work I think in the next one one year like this is kind of like predict prediction markets, stable coins, um, and and the like with things that

are already working. Um, I think it's unclear like I guess we were talking about it pre-show as well after the obvious things mature and consolidate as they already are right now and and more rewarded assets of course come on chain etc. stable coins all that um like what happens after that I guess is the question. I think crypto is in a very interesting period right now because it is in a period of you know growth over time without being like massively exciting and obviously probably not growing as fast as in terms of revenues and business and compared to some AI companies right now. That's pretty clear but it is still growing. It's not like we're like going down over time and nothing's working and we we should all

lead the space. Uh it's a very important time I think in crypto right now that like you know the market is consolidating. you know, podcasts are closing up shop. People are focusing on on important things that are already working. And I guess after that is where it's going to get interesting. I think Miles one point you made which I totally agree with is like at the application layer, you know, like in regular tech, I think we all know now in crypto that distribution is really important. Uh so I think that will continue to be the case in the next one year. If you zoom out in the next like five years, I think this is where distribution gets really interesting. And I think we spoke about it once on a on a show, but it's like we don't really know how products will be accessed or used by agents in future. If

that's agents being run by a person or by a business or even an agent running themselves as a so- sovereign agent, like what are they going to go for? And like how do you get in front of them and get their attention? Is it just pure economics and efficiency or is there some other ad network that pops up in crypto like what rails are used there? Is it X42 something like I think that is very unclear and I think that would be a massive opportunity for a startup actually at some stage to get out in front and be that distribution layer for agents long term in crypto. When I think about like apps themselves as well in crypto today, what I'm finding interesting is like an app is I go on like Poly Market, I place a trade and that's an app and it's quite like clicky

in the sense of like I'm using a mouse and I'm clicking buttons etc. Like probably that's not how we're going to use Poly Market in 5 years time. Like again going back to the agent point, I think that apps if I had to guess apps will turn into like skills within like a harness or something like that. So all of us if it's a wallet that is a harness if it's Heromies that's a harness or whatever it is you'll use your harness as kind of like your basic operating system with all context around you and then I think you add skills to whatever the harness can't do you know for example if you want access to some bank uh and you know you need to ka your agent or something like that and some skill which is aka an app gives you you know the right to be able to verify your

agent so therefore the bank can transact with that agent like counterparties can trust each versus like if you didn't use that skill, there'd be no way for you to get in front of that bank because they wouldn't trust you in the first place. So I think like naturally in a few years time apps could transition into becoming more skills and we're already seeing that actually in some portfolio companies we work with. Again that's like a fiveyear view of like the application layer. In terms of like the infrastructure layer again one year is very clear. I think like Tempo, corp chains, base, [snorts] even Salana, I think like more assets are coming on chain very clearly and they're going to very clearly Ethereum, Salana, Hyperlquid, maybe Tempo, maybe Bass.

Like these will continue to grow like somewhat I think long term. I'm quite bullish on infrastructure again that actually is like potentially this is kind of maybe non- consensus but I think you know right now and I'm curious to hear Mike's take on this in a second but right now I saw even Mike put a tweet out about it yesterday that you know cryptos for financial applications and we've done a great job and everything is financial and you know the world's coming on chain and it's mainly used for that. I actually think that blockchain as a technology is more of like trust infrastructure as opposed to like just use for and obviously finance is a massive part of information where we need trust or data where we need trust but I think also in other industries

like healthcare, government, things like this like now that blockchain is credible and can be regulated and also in the age of AI etc. I can actually see like new infrastructure being built that is not like a layer one generic blockchain but actually like some infrastructure that evaluates certain work being done in some way or some you know information being stored in some way that is then coordinated across jurisdictions where you have permission etc. Like very clearly to me this is where blockchain infrastructure can be used. I haven't seen it done like yet but for me in terms of the five-year vision like I think that makes sense to me and it's also differentiated from like generic platforms today. So I think in terms of the five-year on the infrastructure layer, I think we can go through a new rebuild of the

infrastructure layer for use cases outside finance in the next year or two as the space becomes more credible and that will be abstracted from the end user. thing. >> So, just to respond to that, I think this is why I wanted to organize it in like one year versus five years because to me on the one-year time horizon, this is what's working. And I think it's interesting to just think about what is the foundational unlock or innovation that was introduced by blockchains and it's the ability to move value around with less friction, right? Like less friction, fewer intermediaries. So you already have businesses which would be um I think there are actually if you look at it

through that lens um we've improved the infrastructure and scaling around that innovation quite a bit already um and you have businesses that would be impossible to exist if it wasn't for you know blockchain technology. Hyperlid's an example. Morpho a is an example. Stable coins are an example. these are juggernaut businesses based off of that first most obvious application and use case. Um, and I just think that's what's working right now. Um, so you know, same thing with the internet, right? Like you need there was kind of that first generation of internet businesses. Um, and then they built up an enormous amount of fiber which was like 98% was going unused. It was like this big dark fiber problem. And then, you know, a

couple of entrepreneurs, you know, took a look at all that fiber that had been laid and, you know, they tweaked the form factor and figured out that you don't need to mail DVDs actually. Um, you can just stream them directly to, you know, people's computers and that's what it takes. But the So, I think that we're in the the first iteration phase here and this part of crypto and finance is all about scaling. Um, and I think there will be big beneficiaries of that. Some will be like look at what's happening with Robin Hood right now. I think they're going to be a business which is a massive beneficiary of using blockchains to drive more create more value for their own incumbent business.

But we're in the early stages of looking at businesses that are going to benefit from that in the onchain world. Like this will be a boost for Ethereum. It'll be a boost for arbitum you know um that but that's the kind of phase that I think that we're in right now. I think over the next year, what I would guess is like all roads lead back to the brokerages, the sexes, and I think the DeFi mullet thing is going to work unbelievably well. Um, I think you're going to have basically a bunch of asset management, onchain asset management, and uh kind of financial um like structured products get created that slot into you should think about like Robin Hood or Coinbase as like a an app store for financial products.

>> That's what that's where I think we're going on a one-year time horizon. Yeah, I that's like that's basically along the lines of maybe my second perspective which is like um this is both short and and like shortterm very very bullish maybe 5 years like it's a little bit unclear like I think um so when I was at Fidelity I'll just do this little analogy like Robin Hood broke into the market as a trading app right that was going after millennials um Gen Z hadn't even like arrived at that point uh and they became the the go-to provider for like most people my age that wanted to like trade, right? And trade trading for them was like CAC like that was the

customer acquisition hack, right? With the real goal is to transition into AUM and right be like a an investment and a savings platform because that's the real long-term like LTV, right? And that's the sup that's what makes all the incumbents like all of their money basically, right? Trading fees went from $5 to $0 while I was there. It was a big deal, but it like really was a drop in the bucket for for Fidelity because they make all their money on, let's say, like 401k packages that get, you know, allocated into their asset management business. They make, you know, they have like what share do you have of that really sticky like direct deposit money um and long-term savings, right? So this

is happening with Coinbase and Robin Hood as well like they have and Revolute I would put in that same bucket have successfully expanded especially with the millennial like wallet share into like savings products um and we're seeing the same playbook you know um attempted right now pretty successfully by Hyperlid by Kshi and uh even more recently by FOMO right it's like the wedge is the speculative product or the ability to the access to make speculative bets, right? And over time, the goal is just to keep more and more of that money there, right? Instead of trading and then pulling it out to your brokerage or to your bank account or actually getting like your direct

deposit sent there. Um, and I think that like the obvious trend that's happening that could play into this is that um, you know, priv private markets and public markets are kind of broken right now. like there's massive dysfunction, right? >> Uh you have the most valuable companies in the world are staying private for for much longer and this is creating like two really, you know, uh intense pressures. One is that there's just so much latent demand and I would say like dissatisfaction of people my age and even younger than me that we don't have access to invest in the most valuable companies in the world, right? they're

not we can't buy the stocks until they're [ __ ] a trillion dollars, right? Um and the other side is that the LPS of these uh of all the funds that hold these private assets are like enormously illquid right now and they they cannot invest in the next vintages of funds because there's no DPI coming back to them, right? So the secondary markets for privates is going crazy. um it's up 40 40 or 50% in the past year just the volume of privates being sold on the secondary market. Uh and you've got all this latent demand for access to these assets and we're starting to see like the early innings of of what the products that try to address this look like right with like preipo per on

Coinbase. Um, I think Robin Hood launched Robin Hood Ventures, which is a public vehicle that just gets access into like a basket of of like very large privates. I can't even call these startups, right? These are like Stripe, Anthropic, like talking about, you know, tens of billions of dollars valuation like at the very lowest, right? So, like I I I just feel like there's going to be a tipping point that we're approaching here. Um, and it would be very within the brands of Coinbase and Robin Hood, which have always been like democratizing access to finance, to be super aggressive, and go after actually like, you know, IPO listings or something like that. Like I think, you

know, the the tipping point is when a major distributor like one of these guys um can get act can basically get exclusive access to like a really high quality issue or some sort of supply, right? >> Yeah. And now it becomes the only place where I can get access to those things. Like [ __ ] yeah, I'm going to like move my money out of Fidelity into one of those things. So, um, anyways, it's a bit of rambling, but I just see there something's got to give here. >> Something's got to give. And also maybe focusing on especially the like Coinbase is such an interesting bellweather of this trend because again looking at the one-year verse 5year framing all roads to me point back to Coinbase Kraken Binance you know Robin Hood at the moment because they're distribution

they're distribution if you're a token they're also distribution if you have a yield product right the earn programs of exchanges are you know kind of the end all like the holy grail for anyone building in that space but at the same time as on a short-term time horizon I see all roads pointing towards the brokerages. On the flip side, you're sort of starting to see the brokerage unbundle. Like one of the one of the very unique things about brokerages in the crypto space is how vertically integrated they are. This doesn't happen in finance, right? Like you don't have custody um you know happening at the same place as brokerage happening at the same place as the exchange. It's super vertically integrated in crypto. And I think part of the reason, the unspoken reason that

you see Robin Hood and Coinbase pushing into their own chains is because they see the writing on the wall and the amount of trading that happens on DEX's as opposed to sexes is going is exploding in one direction. So it it's just interesting. Um and and I think on a one-year time basically I think my overall framework is that crypto as an industry gets smaller before it gets bigger. By smaller, I mean fewer companies, fewer things that work, but some things work unbelievably well. And I would guess it's this combination. It's like the DeFi mullet superpowered.

>> Yeah. >> Robin Hood as a Robin Hood, Kraken, Coinbase, Binance as brokerage, kind of these investment stores for financial products where all sorts of and we do have some novel stuff already. I mean, crypto's really recreated, you know, prediction markets. Um, that's totally new, easier payments. And then they hook everyone on this better UX. They hook everyone on the access to financial products that you you would have to be a family office or some, you know, high paid VIP sort of client at a traditional brokerage. It's going to get everyone on that. But then over time, these brokerages are going to get slowly unbundled by what the rails underneath, which is a super interesting dynamic.

>> The the chain, like if we're just talking about Bass and Robin Hood chain, like that's mainly just an open custody platform, right? like those are those are assets that could be held within custody of like through Coinbase like um or they could be non-custodial >> or they give you know a way for like Coinbase and Robin Hood to get a slice of moni or to monetize a slice of activity that's actually coming in from different entry points right because like you're not if you're at Fidelity and you want to hold some asset right that's on base like you're not Fidelity is not going to use Coinbase's custody to let you access that asset. but they would actually hold it on base for you and they let you trade on it, right? So that's now like basically, you know, um

I don't know, it's kind of uh opening up broader access to something that they actually monetize. Um I could just see them pushing more and more of activity from like wherever it actually sits today, be that Ethereum L1, Salana, etc. Just push it all into base, push it all into Robinet chain. Yeah, I think um from my perspective if you think about what's hard to do in crypto today and like what's actually scarce, I guess building a chain is no longer hard. Like any of us probably in this cool if we spent enough time could build a blockchain with with AI tools right now, which obviously wasn't the case like a year or two ago when we had like monad and these kinds of chains going live.

>> An L2 we could build no problem. >> Okay, L2, L1. I think with enough resources the the challenge is now even if like we let's say we build a semi-a L1 or L2 um and we had the resources to do that obviously the problem then is like liquidity and distribution which it always has been and I think we've just learned this lesson over and over in crypto but I think right now more interestingly which I agree with you Mike in terms of consolidation this trend of corp chains Robin Hood etc they have the resources they have the distribution they have liquidity then they just build an execution ution layer like a layer 2 or something like that.

It's pretty I mean they might argue there's some complexities to it but I don't think it's like the biggest technical achievement ever anymore to build a layer 2 to capture you know some more of the value and I think at the end of the day if you think about Robin Hood Coinbase even Coinbase is like the OG of crypto apps like that is still if not one of the biggest apps out there in crypto even today and I think that will just continue you know this year next year five years time why is that because they built a great app that abstracted blockchain from the very very start and that was always where a lot of value was was being captured. Now Robin Hood, I think what's really changed is is obviously regulation. And now Robin Hood's coming in and saying, "Hey, like, okay, now it's a bit clearer. Why don't

we build our own chain and capture some of the value ourselves?" And so you're seeing competitors kind of flood for the first time at the incumbent level, which is probably good for crypto in terms of competition and in terms of execution, liquidity, distribution, apps available, etc. I think it's actually a net positive for all of us. But I think at the same time, this really hurts obviously OG crypto. So you're seeing like I I can't think of any successful infrastructure launch in crypto in the last 24 months that has done like even potentially remotely well. I think it's really challenging right now because you're versing incumbents for the first time ever. And I think 2026 for both builders and investors has been really like I've said several times in this podcast kind of bizarre because we've had like a 10 year time in crypto of

everyone building, making money like you know good vibes GM. Then we've gone like the exact reverse of big incumbents coming in capturing as much value as possible and then the question there after that is like what's left after that and I think we don't know what's left after that just yet. We're still working it out. I think we still have another 3 six months of this and I don't think we're going to work it out until base and tempo are alive which isn't even right now. Robin Hood chain obviously first good example of what it looks like when an incumbent launches a chain and does well. we have several more to go and then I think after that we'll be like all right now we have all these chains and and we realize that there's actually more competition than ever not just from incumbents from but

actually incumbents competing against each other which we're just in the very early days of right now and then again I think value will be captured at the app layer andor some other completely different infrastructure layer that isn't just sort of hosting dexes and amm etc which we have today in crypto which we don't really know in a few years time what we can host what like so I think if you looked at it as three layers as the base L1 layer which provides the movement of value the infrastructure that bridges the gap because it's difficult to interface with the the base layer itself and then apps those are the three layers that exist to me the barrier to entry on the L1's has

never been higher I don't think you're going to get many to potentially any other new ones um from here and >> I can speak to that. It's [ __ ] awful [laughter] out there. Yeah. And every every like project and you know by the way Delta is like completely pivoted in the past nine months like we have basically shelved the element layer for now. Um because it is just extremely like no one's looking there's no market for a new chain right unless you are like the chain itself and you don't want to be you know you can just grab commonware or grab arbitrum or something like that right so that so commonware and arbitum are the the middle it's the

infrastructure layer and I think what's confu people we just overbuilt it we just overbuilt it because the whole industry lared as infraaxis for a long time and there were all these companies that were just features. Um, we just poured too much money in but that doesn't mean it's useless. Like people want to build on Ethereum and Salana. It is difficult. There's a ton of frictions around building on Ethereum and Salana. There's it's there's fertile ground for you know someone to bridge the gap and make it easier. That's what that's what these infrastructure companies do super well. And then there will be apps and like we in the past have been too semantic. Is it an app or an app chain?

Who cares? It's an application that has the backend abstracted. I'm I'm I'm really not very bullish on the amount of vertical integration, which is an app all the way down to its own L1. I'm not bullish. I'm honestly not bullish on that. I think that the thing that makes the most sense is these three layers. And where you will see integration, vertical integration that makes sense to me is in between the infrastructure layer and the app layer. But beyond that, >> I guess my I have two questions for you both actually. Uh Miles, for you, I'm curious talking about one year visions.

If you had a vision last year at Delta and you know where it is today, was that vision sort of accurate how you saw it internally or was it different? And then how is it different now looking one year in the future? I'll ask you that question first. >> Yeah. Um so like there was two paths for original like settlement layer delta state-of-the-art disruptive new L1. Uh one was either like bootstrapping an ecosystem of let's say very early stage startups right that are like searching for a new home or like want to like be part of your your cohort for XYZ reasons. that path was largely I mean that was more possible but the challenge is that there just wasn't that many good

teams out there and two like the ones that were good just wanted to deploy quickly on chains where like you know lots of users already were right the other path was you go after like you become like a you know basically Canton or something like that right you're like this is the best place for institutions to launch blockchains because of XYZ and again the problem with that is just like as a startup with no existing brand like they're not going to be the first ones on your new chain. And so that's why you really had to say, okay, what is like the one thing that we can, you know, if the settlement layer is going to like be a thing at some point, we have to lead with a product that addresses a need that people have today that our software can uniquely solve, right? And so we

found that with Delta Mandate as folks are basically trying to figure out how to ensure agents don't do the wrong thing or buy the wrong thing or like, you know, go off the rails. Um, and then over time you can basically decide if it makes sense to integrate this with the settlement layer that we built. Um, and and then like rep prioritize that, right? But yeah, I mean I've talked to a bunch of teams that were in similar positions to us. Tons got funded. Almost, you know, none of them have launched, right? Or like if they launch, you just haven't really heard about it because nothing's happening. So I think it's very very real. I think you know if you are like arbitrum or optimism and

you've had time being out there like you're much better positioned because like you have an existing brand the tech has been somewhat derisked and you can then get like a flagship customer like you know optimism got base arbitrum got got Robin Hood common lawyer got tempo right and then that derisks the decision for the next cohort of institutional adopters that would rather accelerate you know their go to market by using your tech versus building it themselves. So like that's really the only the only choices right now I think. Um and yeah I'll pause there if that answer your question.

>> Yeah. Yeah. No it's uh definitely wellreceived and then I guess somewhat related but not completely. It sounds like Miles you know you went from a sort of more generic settlement layer to now more something specific policy layer for agents which is more defined I guess. And then I guess Mike my my question to you from what you just said before was that you're less bullish on vertically integrated applications whereas I would make the argument that if you think about the best applications in crypto or the best successes we've had in the last 12 24 months not saying this will continue forever but at least right now Hyperlid really was actually just an app on on an L3 of all things and then they vertically integrated into a chain and seems like that was probably one of the

most successful things they could have done and great position to make back then and now they own full stack like user to obviously chain itself. Do you think that trend will continue Mike or do you think it'll go back to just like staying on a certain chain and not verticalizing? >> Well, so before I get to the hyperlquid example because that's a I would actually argue that um Hyperlquid has to go in one of two directions here. um it's actually going more towards the example of a vertically integrated piece of infrastructure than an application itself. Um I think it'd be very hard to have they have a strategy right now which is comprised of them doing both but I think that that's a challenged one over time. It's kind of like unis swap

in their own front end but uh the the original let me let me just point out what I view as a contradiction. Um, people who are bearish on L1's are like, "Look, Ethereum generates no fees or no fees generated at the L1, but they're also simultaneously extremely convinced that every corporate will launch their own vertically integrated chain to get all those fees. Can't have it both ways. Like either the L1 generates not very many fees or it generates a ton of fees. Like I personally think the L1 is a the L1's really the only net new thing that we've done in crypto. I think that is the only net new you can't point to anything that was like really like it before. It

solved a couple of very difficult tradeoffs in computer science and um incentives of open source networks. And what makes it super interesting is it's a very unique, very neutral, very efficient way of moving value. And there's a bunch of businesses that have gotten built on top of that fundamental innovation. But I think it's really hard. Um, like I just don't think from a riskreward standpoint, something like tempo just makes that much sense. Like I I'm very bull like to go back to one and fiveyear time horizon. Super bullish on tempo on a one-year time horizon.

Bearish on a fiveyear time horizon. I guess we got to stamp this and look back in five years. But I I just I just don't think consortiums are a good way to organize. Like I look at these POA L1s and it's like I just think this would go like even on the DRW stuff. I just feel like this would have gone further if this was just an L2. You simplified the whole arch. You don't have to ship a whole freaking chain. Um, and then DRW could, you know, like I just think there was a more elegant way of doing this. Um, and it's it's just you could get 90% of the reward for 10% of the work. Like I just I don't see it. I mean, everyone keeps trying to reinvent Visa. It's like Visa exists. It's Ethereum. Like that's it's Ethereum and Salana. That's what I

think. That's what I think it is. It's the exact model, right? It's like this neutral layer that skims a tiny bit, but it's neutral. Everyone can build on it without entrenching the interests of their competitors. >> But look, I think that we're going to try. I think I think that people are going to try. Um, they're going to try to build their own chains and then I think over a period of time they're just going to say, you know, juice isn't worth the squeeze. Too much of a pain in the ass. not my core competency to maintain like this network and this layer here, not very much reward. You're telling me I could get 90 to 95% of the the value with none of the work? I >> We've kind of done this twice already though, right? Like we had this big

explosion of chains and I'd say this around like 2021, right? like, >> oh, you go for Near, you go for AVAC, you know, Cosmos, um there's a whole ecosystem and then just kind of consolidated. And then we had a a [ __ ] ton of L2s come out. Um very few of them are left, right, doing anything. Um and now we're in wave three, which is like the explosion of corpo chains. And the question is just like how big is that pullback, you know, again in I don't know, it took probably two years for each of these little like mini cycles of of invert to like kind of reconsolidate back. Um, so I can see that happening. Like does

Air Wallix need its own chain? You know, like that's like the, you know, they don't like Stripe, so they're not going to be on Tempo. Um, but they could have just, you know, done something on Salana, too. So it's just kind of like those where it's like h probably not. >> There are these like silly reasons though to do it in the short term. It's like valuation like relative. >> I do I do think a few few of these are going to be big and there is a good reason like if Coinbase and Robin Hood want to compete for IPOs um and they issued them as an asset on base or Robin Hood chain, right? That still enables access to that asset for users coming through different brokerages, right? Whereas like if they had listed it as a you know I don't know

exclusively accessible through like the Coinbase sex like front end like I think that's like you know less bullish or like that's going to be that's going to make it harder for them to attract actually high quality issuers who don't want to put all their eggs in like one brokerages basket. So >> I mean I do find it interesting in terms of another view to look at the next one year versus the next five years. So interestingly with Robin Hood chain right now I think the CEO tweeted this week or last week saying hey we're looking forward to rural assets or something like that. And then you know two or three days later he said that doesn't mean that we don't want a bunch of meme coins. And then you look at

Robin Hood chain right now and I think a lot of it is like speculative memecoin trading. So I guess what does that say and what am I trying to say in terms of Robin Hood chain and these maybe base as well to some extent. I think tempo is different and I think we've mentioned that many times in this season but base and Robin Hood okay maybe they're competing etc. But what is it actually proving long term? If you think about where the space is now even versus like 2023 you know you think about a chain like Salana Salana kind of came back. socially. I think a lot of crypto is social obviously and that's why Salana did so well in the last you know one or two cycles because there was a lot of belief that Salana would matter long term and then they brought back retail

memecoin trading you know sharing stuff um this cycle if you run that same playbook the social side of crypto I think is like not really there as much anymore to be to be honest obviously like FOMO etc is different that's more like social trading I'm talking about like community of crypto like the social side of crypto like we don't really go to the same crypto do events anymore, took our bags and believe in assets. It's like now we look for like cash flows, you know, we're wearing suits. So that the game has changed. But why I'm saying that is because like Canton, I think we mentioned it before. We've spoken about it a few times on this podcast. But I do think that, you know, DeFi summer was kind of like economic cycle and I think like kind of memecoin is more like a social cycle. I think now

it's a bit more like regulatory cycle like obviously I guess like genius, clarity, etc. I don't necessarily think that we've seen yet like the infrastructure winner for these new regulations. Like I think Canton is trying to work with institutions, but we don't really know the efficiency gains you can get from building like an infrastructure layer which like really truly enables these changes and like really empowers, you know, institutions, builders, users on top of it. And I it could actually be grassroots like we don't know. I don't think you necessarily need to partner with a consortium, have a PA chain like Mike said. Like I think there is value in incredibly neutral rails and trust long term. And I think if you build in a direction assuming regulation now that in like 5 years time if you had like a battle tested liable regulated chain

that was like used worldwide that like for whatever reason Ethereum and Salana couldn't regulate in the same way. I think that actually could pop up and be very very interesting. Next to another chain which I also feel pretty strongly about in the next few years is like an AI driven sort of chain like self- sovereign run by agents. Humans also in the network as well but like agents are really dominating it. New use cases, new ways of governing, new ways of organizing, new ways of coordinating. I think that's too early like right now. I'm excited to see it in a few years time. But um and then yeah longer term like I was saying at the start of the podcast maybe from a legal perspective like how do we actually not just manage value but also manage information and communicate that and make that interoperate across borders and do we

tokenize an information that data like I think tokenization as the topic like it's kind of we've been talking about it for 10 years so it's not as inspiring for us like talk about tokenization but it is actually happening right now. We don't really know what what is going to be tokenized, how that's traded, like how that moves across borders from any perspective economic legal political. So, uh I think that in five years time, yeah, it's a good time to dream about what it could look like because it's like 10 years ago, we had no idea what crypto use cases would be super popular and now we kind of do. So, it's like I think we can just rethink that now from first principles. The one thing I'd like to push back on, there is a uh I know this an open question, but my and we talked a little bit about on this

podcast before about how now crypto has become so big that if you're kind of in the weeds of DeFi, it's very different than being in the trenches of, you know, trading infrastructure, yada yada. But I do think that there's just still a social fabric that holds together crypto as an industry and I think it will be distinct from other industries. Like tech is the same way. You can kind of look at tech and the you know what Mark Beni off does at Salesforce on a daily basis is very different than what Evan Spiegel does at Snapchat. like social is very different from you know cloud but I would guess they run in the same circles probably go to the same conferences maybe like I just think there's a social fabric and the you know the litmus test

that I always have for this because you know we host conferences and every once in a while I'll be like you know what I should go to a finance conference like we're breaking out of crypto we're going to finance [snorts] good luck like try going to try going to finance conference trying to talk to people about crypto it's like you got to do you got to a crypto conference to talk about crypto. It's just what it is. Um it's just the social bonds. >> Yeah. No, I I agree. Like I think uh I I guess on the social side, you know, all of us have had friends probably at this stage has been many years come and go and there's definitely still a social side in crypto. I mean, in many ways, as we talked about on the last podcast, what's changed a lot in the last few

years. Well, a lot of the social side is in US, which wasn't actually the case two or three years ago. like you kind of have to be in New York chatting with people on the ground about like what's happening in the space now which wasn't the case a few years ago and a lot of these people have like connections into traditional finance itself which also back in the day it was like a bunch of hobbyists technologists building tech in Berlin you know going to parties on the weekend like it was a different scene obviously so I think the scene has changed I think obviously there are crossovers and I think there are crypto ideals and philosophies that bring all of us into the space you know when we first got to the technology all those years ago which still exists today. And I think by the way more important than

ever with the way the world looks like today and I think that a lot of entrepreneurs will come back not necessarily to launch like a cryptonative token chain but build products in some way and use crypto primitives in some way that like maybe a traditional entrepreneur who didn't come from a crypto background wouldn't do. So yeah, I think in general it's it's definitely we're all philosophically aligned. maybe not in present anymore in terms of how often we see each other and chat and what we talk about I think is different but in terms of like why we're here in the first place I think that remains and will continue for a long time.

>> Yeah. You know what I think the on the one-year time horizon I think this is one of those things where you don't get paid to overthink. I feel like the trend is the trend. The stuff that looks like it's going to work is going to keep working and consolidation is the main theme. But what's very difficult to predict is what is the dark fiber moment equivalent for crypto and which savvy entrepreneur to your point Z probably from another industry I would bet outside of crypto looking in decides to get all like grab up all this block space or whatever the analogy is and build something really unique like you know what's the what's the Netflix equivalent here? I'm

not I'm not 100% sure. Um, I'm not ready to throw the towel in and just say it's all about finance. I am ready to throw the towel in and say it's all about finance for the next one to two years, but after that, you know, finance and especially decreasing frictions in finance enables new forms of commerce and businesses. I think that's what comes next. I think a lot of the web 3 stuff that we talked about and everyone was all bullish on it, it's all going to be I think that's going to be largely right. >> Yeah, I think that's right. Um, I mean, we did an episode a couple weeks ago on FOMO and you know, like the the card trading games and it's just like they have like a separate hook, right? It's not just like, you know, here's a financial app, use it, right? It's like

a social network. It's got a component to it. It's got some entertainment component to it. So, if you're going on the app side, that's what you should do. If you're like um you know a unis swap, I think unis swap probably made the wrong decision in hindsight to build the wallet and to try to go up the stack because like the big winners I think for smart contracts are, you know, protocols are just like DeFi mulleting, right? They're white labeled, you know, and leveraging the distribution of other apps to like to grow. And I think like Morpho has gone that route um and has done really well. I think, you know, that's that's more when I'm talking about like the smile curve. Like the winners that that win on the left side are going to be um you know doing stuff

that's pretty scary and you know hard to replicate um and has significant like lindy effects by just continuing to work right. I was going to this is taking me back to Hyperlquid but this is such an interesting example of market forces working which is you know you think of Hyperlid as an app but I think trade XYZ just flipped Hyperlquid in terms of but like the revenue that they're producing from their builder codes so being a piece of infrastructure um flipped the amount that they were doing from their front end and unis swap it's interesting is now trying to go back I think they killed all the fees on their front end and they're routing everything through the protocol

So >> yeah, >> that's where that's absolutely where I would take that. Um, I have kind of a random question for you guys. What would you focus on if you were Salano right now? Because I do think Salana is going to stand to benefit from maybe the overinvestment in infrastructure like the corp chain stuff. It's going to be like when they realize that this is not worth it, where are they going to go? like, okay, good old trusty Salana like is cheap and it works and it has roughly the same sort of like, you know, respect or like lindy of of Ethereum L1. Um, but for theirs, they're they're they're like in the they're trying to compete with like four different really like high

growth spaces, whether that's like RWAs, uh, like let's say like front-end like per trading, uh, payments, um, and AI, right? Like being like the AI rail for for for or the, uh, the rail for agents to do things. maybe like and it seems like they're kind of like equally spreading their bets across each of those things. Like it's hard to that's just from like following their socials and like obviously that's not much insight but like what would you guys would you guys like continue to just kind of like try to touch everything and stand there to benefit once you know infrastructure like people come back to like you know a regular chain or would you try to like go all go

all in on I don't know like the agent side maybe that's where you save. >> Yeah. Uh I mean I can briefly chip in. I think that RWA's make the most sense for Salana right now. Actually I think they should be targeting as many assets as possible on their chain. I think trading is really still especially spot is obviously what people come to the chain for the most right now. And I think that' be curious to hear Mike's take but like RWA and Ethereum. I think, you know, private funds and stuff like that, stable coins, obviously there's, you know, a bunch of those on on Ethereum obviously, but I think early days of RWA have been on Ethereum.

I wonder if they should be targeting like future RWAs, which makes sense, like your private kind of funds, private assets that you know, can you innovate around that and have people trade them and hedge and different things you can do obviously on a fast cheap chain like Salana? that makes the most sense to me. In terms of like agents, I think it's too early still to like focus there. I feel like we don't really know right now how agents are going to be using these things. And again, I I I genuinely believe that I I don't think it'll be Ethereum or Salana that actually wins infrastructure that agents run on that actually transact and use crypto the most. Maybe it's base like there's some chance, but this it's a single

sequencer. It's a single server. Like I think there is room for incredibly neutral layer focused on operating AI agents, you know, that might be self- sovereign. Whereas Salana, I think it's just a great fast cheap chain that should just get a bunch of assets on the chain into their capital markets. And I'm actually like for the first time I was thinking today, I'm actually relatively bullish on Salana now. Actually, for the first time in some time, I think uh they're surviving. They're bringing assets on chain. And I think if you look at all the chains right now, you know, even Hyperlid, I think you Mike just said it before, but you know, Trade XYZ, etc., um, you know, it's highly competitive. They're losing value to both the app layer and other per decks. It's like lighter and it's like really competitive per Salana, I

think similar to Ethereum, but I think Salana does a better job of it. uh is like their trust and state and decentralized ecosystem and network effects and composability and everything you get the properties you get with Salana. All they really need is is is assets and more and more assets and tokenizing these assets as fast as possible. Like I don't know if there are many startups working on like bringing and scaling assets on chain that are like credible, but I guess that's kind of the foundation's job and that's what I would be focusing on if I was the foundation right now. >> [sighs] >> It's such a hard job for the foundation.

I think >> do you need like a distri like like a marquee distribution partner for to execute on that successfully for them, right? because they're just going to be competing against bass and Robinet chain and it's like okay those guys have some sort of like you know demand sides semibuilt in right um who's >> I mean interestingly though I want to take it back literally I was just reading a coin article a minute after mentioning that Robin Hood is attracting retail memecoin flows like I don't know if Robin Hood or base are actually that attractive for institutions to launch RWAS on right now especially if they bring in a bunch of retail how flows and meme coins and stuff like that like do you really want your RWA being traded with like meme coins? It kind of like

loses credibility of of what you're doing in the first place. Whereas like Salana, I have a sense that they're position positioning themselves right now in this institutional wave. Like they're sort of deliberately moving away from this memecoin trading cycle which they've already gone through and maybe they're one cycle ahead of the rest of these chains are about to launch like BA and Robin Hood wherever other chain like airwex in terms of trust and credibility there. I almost wonder though if we are uh I feel like the risk actually of the foundation in a sense could be trying to be too top down about what the use case is versus it's probably going to be emergent and bottom up and the role of the foundation probably should just be

to ship as many improve like I think you set the high level strategy of IBRL right like I would just keep doing that. And then I think it's like shipping stuff as fast as you can. One thing that I think honestly I mean Ethereum is just such an interesting beast. But um and and I do think that they're going to end up winning the rollup market. I think a bunch of these corpo chains are going to become roll-ups on Ethereum so hard. Like there's a part of me which is like that's got to be valuable. But then there's a part of me which is like base and Robin Hood are sucking kind of the last use case of borrow lend off of mainet. I just it's in a too hard bucket for me. I don't know how it's going to play. I feel like it should be able to

generate a lot of fees, but it's unclear if Vitalik wants it to do that. I don't know. But anyway, it's it's this it's this useful thing. Um the one thing that they that I really think was probably pretty negative for them is that they outsourced the the technical roadmap. I think that outsourcing the technical roadmap to the development of teams that have their own incentives was net negative um for the for the chain and I think that Salana hasn't done that. Um it's kind of what they they get some flak for being too centralized but I think it's probably good to keep that within a smaller group. Um, and so if I were them, I would just keep making the chain as technically good as possible and listen to making it the UX super

easy to build. And I wouldn't try to be like, we're going to we're getting agents or we're getting this or we're getting that. I would just educate the general market about the benefits. And I think you have to Yeah, I think you kind of have to I think the risk actually would be to be too prescriptive um on what the chain could be. I know that's kind of a wishy-washy answer, but that's what No, it's >> I I think because I I think that a lot of these chains get themselves in trouble when they try to go out and dump a ton of ins. I This would be there's got to be a balance you strike, right, between like what you outwardly say you want to attract, what you actually develop in house from like a technology

standpoint, and then like where you build versus partner um for this. Whereas like I'd say like Ethereum probably, you know, has always leaned way too passive in terms of what it wants on its maybe way too passive in terms of its development. Uh way too fragmented in terms of like or just unclear in terms of like what it wants on its chain. I mean, Fatal has come out many times and actually been pretty antagonistic to [ __ ] that's on the chain. Uh whereas like Tuli has never done that, right? Um, and then I think like you see with Tempo like um, a lot of the guys that were building I think like Optimism joined Tempo and now they're launching Tempo zones, right? So like zones are basically like a payments

channel rollup like thing. Um, and they vertically integrated that. Salana could do that. They have the mindset to do that but they don't want to. And in fact, they've like told prediction markets teams and, you know, per teams that like unless you're like executing onchain, not like just offchain and settling to Solana, like we don't really care about you because you're not driving any revenue to to like the actual chain itself and the L1. Um, so yeah, they're in an interesting position. Um, it does feel like, you know, they should do continue to do like aggressive BD to find somebody out there that wants to counter position to Robin

Hood and Coinbase and get them to basically be like, we're also we're all in on Salana. I see no downside of that. Um but I think we're you know it will become interesting is if Salana Foundation decides okay should we just like screw it like we'll build the auction infrastructure like the trading like the the enshrined to AMM ourselves uh or we'll build something ourselves that's actually an app um I think that's a big decision that they have to make in the next like year or two >> you know what it's so I'm trying to think through I mean this is impossible data to gather But this is also only not directly related to what you were saying, Miles, but like it's kind of

we're suffering through a tragedy of the commons in that crypto tokens are so liquid. Like if you were to do the ROI calculation on grants, even like the big ones that you know about, I bet it would be horrendous. And there's a there's a there's a sort of infrastructure which is set up to just dump tokens in this industry. I think one of the bigger failures of crypto, you know, what what what I was describing before is that this what crypto should be like finance built on these new global rails with fewer intermediaries. I think maybe to end on from my perspective about where I hope we are in 5 years. Right now we are

doing far worse on right now we're doing far worse than Tradfi is on a number of levels in the sense that uh there's less information about the assets that are being listed. There are intermediaries and I think they are more extractive and because you can go liquid so much earlier a whole set of infrastructure has been set up to harvest and dump those supplies as a stream of revenue and it's making the tokens go down only even the good projects are are set up to go down only. So that's the big failure. So, look, I'm kind of if this like imagine we were sitting on the board of a big imaginary

company and they were just spending handover fist on token based or on um stockbased compensation, they would just say, "Guys, stop the spending." Like, I don't know. I don't know how good it is, but geez, just stop. Because I I have a lot of sympathy for these projects that are like, hey, I'm competing with everyone else that's spending tens or even hundreds of millions of dollars on these incentives, and if I don't do that, I'm going to lose. And I get it in the moment, but I think in in retrospect, a company that just spent no money would have been in a far better position from a token standpoint.

Like that's kind of what I think. >> Yeah. No, I I think there's hopefully in this era of consolidation and maturity, many of the glaring problems that still exist in crypto should and will be solved in the next year or two in particular, hopefully before institutions truly adopt the tech and the asset class. I mean it's very obvious that you know I mean let alone the centralized exchanges which you know now don't list anything these days because they moved on to RWAS and all that but I'm not really sure that we ever solve that massive problem in the space. I mean I guess Hyperlquid somewhat solved some of it but I think it's obvious when crypto is growing and there's momentum that there's still

massive problems that exist. right now it's doesn't have as much momentum so you can't see the problems as much but there's still many more problems that need to be solved in the space some of them quite large actually and and will be great outcomes if solved well so yeah I think in general like definitely if you're still listening to this you're still in the space you've been in the space for many years uh hats off to you there's there's only a few of us still in that bracket I think there's many people interested but maybe not necessarily working in it full-time anymore So yeah, it's a it's a good time to think hard about where you want to spend time, I think, in the next few years and position yourself in a way where you feel like you're riding the trend and where the value will be

captured hopefully by either a company you're working for and or if you're an investor, you're in the right companies from today. Um, and yeah, and then wish everyone listening to this good luck. I think uh it's it's fun. It's the industry's changed and I think we've covered a bunch of topics that are actually very necessary and relevant to where the industry is moving and I'm looking forward to listening to these podcasts in one or two years to the next bull cycle to to hear about what we talked about and to see how right or wrong we were.

>> Me too. >> Amen. >> Amen. All right, fellas. Fun um fun last episode. And to everyone who's been listening to Bel over the years, thank you very much. So appreciate it. Um, and you know, who knows? Might not be goodbye forever, but goodbye for now. And thanks for everyone for tuning in. Appreciate you all.