Are Institutions Buying SOL Right Now? With Mert & Armani

Transcript

Do I actually get any of that back? Right? Like if I stake on Ethereum or Salana, like what happens? Do I actually make money? What's kind of the upside? So censorship resistant is a very clear like very important property. It would be remiss to not talk about the elephant in the room today, which is Mert's prolific [ __ ] posting over the last three to four days. I mean, with the market in the gutter, you joined Solana because it had this mission of trying to be the world's computer. Like I thought that was the Ethereum vision. What happened? Welcome back to the rollup, your home for technical talks and open conversations that shape the modular future. Nothing on today's show is to be construed as financial advice. You can see our full disclosures list at the rollup.co/ventures. What's going on

guys? Welcome back to the rollup. Today we have our friends Mert and Armani to discuss the impossible growth of Backpack, the story of the fat wallet thesis, updates on Salana macro, um, and what's going on in the space. So guys, welcome on Armani Mer. Good to have you guys. Yeah, thanks for having us. Yes, sir. It's your first time. Uh Mer's been on once, so would love to just get an understanding of your intricate background uh through some of the interesting characters that you've worked with in the past uh that led you to build backpacks. So um yeah, man, welcome.

Yeah, sure thing. So I suppose on the one hand I have kind of a normal journey. Uh on the other hand, I have a bit of an abnormal or quite an abnormal journey. So yeah, I got into crypto in 2017. basically, you know, Ethereum bull market was uh uh uh, you know, the price was going up and up. Um, I was sitting in my kind of job, you know, office at Apple. People were trading. Uh, I read the Ethereum white paper, got nerd, sniped, and I suppose kind of, uh, jumped ship and kind of the rest is history. Um, my first job actually, you know, I wanted to work on smart contracts on Ethereum in like 2017, 2018 purely by accident. I ended up at this little trading firm in in Berkeley, California called Alamita Research. Um,

this is before FDX and uh uh basically kind of ended up there by accident. Worked on the trading systems for about three months. Uh pretty quickly knew I did not want to work there surprisingly. Um uh and then left. Um uh so this is kind of before the whole FTX uh uh uh story. um when you know Sam and and you know a bunch of folks from Jane Street basically were just you know doing a bunch of you know trades through you know Korea and uh on all the early exchanges back in the day but um I basically kind of went through uh kind of Ethereum you know worked on um some L2 tech worked on state channels uh uh for a bit worked on some other L1s I got really kind of interested and inspired

at the whole kind of scaling problem like a lot of people did back in the day um and kind of had this windy path working on a bunch of open source tech and in 2020 once FTX and Alama started investing in a Salana they basically called me up again and they were like hey you know um I know you don't want to kind of work on the exchange or on the trading systems or whatever but what if you know we just paid you to kind of uh uh work on you know Salana stuff. Um and so that's kind of how I got introduced into Salana. I kind of, you know, started taking a look at it. Uh, and yeah, you know, met a bunch of folks there. Got really excited. Thought it was kind of the coolest, um, crypto project at the time. Kind of the first

people to actually start genuinely fulfilling, I think, the the dream of of of the world computer that I think brought a lot of us into the space. And I mean, there's a ton of stuff, you know, that we can talk about. Uh, uh, but that's kind of that was my introduction to Salana. And I suppose uh uh some of the back background context with uh me and crypto we all got and you created anchor by the way. I don't know if you guys know what Anchor is but that's the what's the equivalent on EVM Armani? It's some weird it's there's no like one to one mapping because there's just a bunch of other tools. It's kind of like the equivalent of like Solidity and Foundry and and kind of these you know the early

like you know truffle if you want to go back way back in the day. Um yeah worked on a bunch of the early Salana stuff a lot of early wallet tooling a lot of early DeFi a lot of developer tooling uh you know been in deep NFT land. Yeah. Yeah man. And did you ever meet Caroline Ellison or uh Sam Trabuko? Yeah. Yeah. met I met both of them. Oh yeah. What was your initial reaction like first impressions? Um I mean Caroline seemed pretty normal when I first met her to be honest. Um uh I mean I never really worked closely with either of them so I I wouldn't say I intimately knew them. I kind of met them more through social settings.

Um, yeah, Tribuko kind of always felt uh uh like uh uh uh uh I don't know, a very a lot very uh uh like extra for lack of a better word. Like, you know, he liked, you know, stuff, you know, buying boats and having nice, you know, things and spending money and things like that. Um I don't know, they were traders. I didn't really have like a ton of insight into them as individuals, to be honest. We we won't be on FTX this whole time, but what you said like early on you could there was something or you felt something that was like okay I don't want to work here for you know an extended period of time. What what was that? I mean, look, look, Sam was a trader, right? I'm an engineer. I I I

you know, when you work at a company run by traders, you know, traders are kind of, it's through the lens of trading, right? It's through the lens of of how do I make the maximum amount of money um uh uh uh by any means possible. And I that just like wasn't kind of my thing, right? I left my job at Apple because I wanted to work on like open source tech. Um I want I I think like an engineer. I'm an engineer. backpacks kind of built uh uh kind of like a traditional kind of a engineering driven company. Um you know I think it just you know the culture is very much about product and and building great things for users. Um uh uh uh and you know I think uh that was kind of you know really what what it

is right I always kind of viewed Alamita um and FTX as having I mean I don't want to be like too disrespectful or anything like that but you know it was it felt like a sloppy engineering culture and and that just wasn't something I wanted to be a part of. Yeah that's very much like the two sides here of cryptos the financial and then also and the technological. So, switching gears a little bit to the technological, you joined Solana because it had this mission of trying to be the world computer. Like, I thought that was the Ethereum vision. What happened? Yeah. Yeah. I mean, I think there's so many different ways you can slice this. Um, I think for me, um, so I was working on on estate channels and L2 stuff like back in like 2018, 2019. Um, this was when Ethereum was really kind of gung-ho

around the whole like sharding serenity design. Um and I very quickly saw that and thought this is not going to work like this is a terrible idea. um like charting isn't scaling by any like traditional sense of like the def definition of scaling like really the technical property that you want is linear like horizontal scaling with respect to some resource you know like you had more traditional databases like you know Dynamo DB or you know Cassandra like the kind of the innovative like NoSQL databases where you just throw more machines at the problem and the thing like infinitely scales right that's like what you learn uh when you get first introduced in like more advanced like you know uh database kind of uh uh research Um and then you know with Salana they were really the first ones to do that

with respect to kind of like machine resources. Um so you throw more cores at the problem you know Mor's law uh at the problem uh as kind of you know these machines get bigger stronger faster whatever um you get more and more throughput uh uh in the system right you have you have parallelism um parallelism pipelining all these all these techniques um and and as an engineer I mean this was MR probably had the exact same thought process this is so obvious like it is so painfully obvious that you cannot have a single threaded virtual machine. Um, like if you go to like ask any engineer in San Francisco this, they'll all tell you the exact same thing. And and and this was really what people were chasing kind of out of that

2017 2018 bull cycle where you basically had, you know, every professor coin get funded. You had, you know, uh, uh, uh, uh, you know, all these people that were, you know, a lot of really smart people, um, that were looking to solve the scaling problem or whatever. you had you know later you had you know Sui and and Aptos and um now you have you know uh SE and and Monad and all these folks uh but it really was you know about applying very sensible relatively well understood uh modern systems techniques to the context of blockchain um uh and so it was like pretty obvious honestly at the time it was just a function of execution and who actually had the you know the engineering chops to pull it

off and Salana was really the first one to do it at scale. Um, you know, Ethereum was kind of like obviously slowed down by the fact that it was had a bunch of path dependency, right? A bunch of technical debt. They couldn't rebuild the whole thing from scratch. And so, I think there was like a bunch of nuance in that story. But, uh, yeah, Solana was just like the first set of folks to pull it off and that got me really excited. Yep. Yep. Uh, no doubt the market has been rewarding the um, composable kind of web 3 idea, right? like like we've seen a lot of these uh fast, cheap, really well designed chains that have had a lot of a lot of success.

Um we are still extremely excited about the uh idea of spreading this ecosystem to thousands of chains whether rollups, network extensions, um individual L1s, etc. um purpose-built, niche built, etc. So very excited to kind of see this uh roll out in in addition to the scaling that's coming from Fire Dancer that's coming from updated clients and uh we just had Max on there. Uh him and Logan are very focused on some of the uh multiple proposal work. So a lot of really really cool stuff and again great and interesting background Armani. Um, guys, it would be the it would be remiss to not talk about the elephant in the room today, which is Mert's prolific [ __ ]

posting over the last three to four days. I mean, with the market in the gutter, the absolute chuckles that I've been having from reading Mert's macro takes have just been it's just been too good. Um, so Mer, what's going on in the market, man? Are we uh are we [ __ ] Um, is Salana still going to 500? And how do you how are you such a good [ __ ] poster man? Jesus. Okay. Well, few things there. What's happening? I think what's happening now is relatively clear. Probably stupid, but clear. Which is to say that Mr. Trump wants other countries to pay them more.

And then the other countries say, "No, no, no. We're also big and scary and tough, so you have to pay us more, too." So, everybody raises all the tariffs. And then the only people actually doing the work which are the businesses get [ __ ] um temporarily it seems. Um and so as a result uh you know people take money out of the markets. And what's funny about this is like there's been macro wins like this for a while and like Salana has been going down and ETH has been going down and Bitcoin has been going down. I mean you know it hasn't been 100k in some time now. Uh but then people would blame it on the silliest [ __ ] like pumpf fun like it would be like oh well salon is now below like 150

this is all because pumpf fun sells their tokens uh instead of you know holding them for whatever reason and so I've just been saying like now every time the economy goes down like thank you pumpf fun uh or like Nvidia and and so there's not I think macro is like relatively suited for astrology types but I don't think I have too too many meaningful things to say about it except for yesterday uh of course the contrast in memecoins is very interesting in that somebody just tweeted just one tweet about how Trump allegedly said that the tariffs on other countries couldn't stop

but the ones on China will stay and within four minutes five minutes something like this. The the markets added roughly 2.5 trillion in in 5 minutes. That is for reference that is more than the entire market cap of crypto. So just to give you some some some idea of scale. And then it was fake. And so 5 minutes later everything tanks back again. And so then I was like, "Okay, so this is basically just meme coins but with suits." And that went viral for some reason. I'm not too sure why it's I the thing with tweeting is you just never know which ones are going to hit. So I just say everything. Um and yeah, that's where we're at today. Uh in terms of what that

means for crypto, I mean this doesn't feel like any of the last cycles in any way to me. Um when FDA like roughly all the past crypto things have been due to some implosion within crypto. Uh maybe at first it was just like there was no use cases and it was all ponzies. perhaps not not so different, but certainly an improvement. Um, and then then it was just blowups, you know, some exchange got [ __ ] or the other one was a scam or both. Uh, so like when FTX happened, for example, I had no concerns, but everybody else did. Um, I had no concerns just because if you just look at it the world as as the way it is still nothing really scaled or or worked

as well as Salana, especially like two and a half years ago. Now you can make the argument that there's viable alternatives definitely, but back then you really couldn't. Uh, but so okay now, so I was just in New York and now the sentiment is completely different. Like this is why it's it's a mistake to conflate your thinking with like too much historical overfitting and saying like well you know past cycle did that past cycle did this. There's been like three cycles. So crypto is still quite early but more than that not just crypto but smart contract platforms at scale are extremely early. I mean they're like what three years old maybe. Um, and so now because the institutions are so slow and have very long sales

cycles, they already started the process a few months ago and now they're kind of in full force. And so we this is roughly the highest amount of inbound we've had from institutions and exchanges and all sorts of fintech companies, financial institutions, like more than actually in the bull. So there's like the sentiment that oh, you know, there's a red thing on my screen and it's a candle and it looks kind of gross, but then there's like the reality of it, which is these companies are actually basically all coming on chain. And even though Trump nuked everything, which I suppose would be relatively temporary, he did still do a lot of good work for crypto in that, you know, all these lawsuits against these exchanges

start being dropped. Um, and there's like a cryptos are now. Now, I'm not going to comment on how you get on that list cuz you know, Ripple and whatnot is on it as well. Um, but overall, I think this is extremely good time to buckle down and start building again. Yeah, it it seems like this is the biggest like bifurcation of reality in terms of fundamentals versus price action that I've seen in a long while. The removal of a lot of the investigations was particularly bullish.

Um the the ETF news has been insane. I've never seen so many uh filings from legitimate companies like Pangu got an ETF filed which is just you know now we'll see how these kind of play out. But there's just this constant institutional pressure. I'm moving to New York as of like I have a flight out of Brazil today. I'll be in New York in a week. So, I'm just trying to take advantage of that atmosphere and just kind of be in that headsp space because I feel like there's a large there's a large there's just a huge difference, right, in between what's going on on Twitter as well as in the market versus the way that these guys think. And I mean, I kind of feel like we finally have like this like career risk

neutralization. Like in the last seven years of working in crypto, it's been like a consistent like especially after 2017 bare market. I was like, "Holy [ __ ] like is this going to come back? Like am I gonna have to find something else?" And I did I I went and kind of did some other online marketing work and then came back in like 2018 2019 uh into 2020 when Rob and I started this. But you know even in the last bear was like it was like are we going to make it through? And so now it just feels like there's a bit of this kind of like career risk neutralization and just generally the longer term thinkers will win. But I also think that the institutions bring a sense of legitimacy which then also makes the power law strike harder in terms of which projects

win, which projects execute and who kind of survives. So I think there's like both this positive pressure from this kind of okay guys like it's safe to build in crypto. You can actually be kind of public presentable go out there and kind of do the thing. And you know shout out to all the people who've been doing this for the last 10 years, you know, without this kind of neutralization. But then it also feels like there's this aura of like the market is much more uh sophisticated, right? In terms of new token launches, in terms of uh what people are expecting, in terms of what people are aware of with VCs or with uh this and that and you know, so um lots of interesting factors at play. Um, Arman, I just want to kind of anything on that point on the macro side from Merch's

perspective, uh, or what I added on there and then we'll kind of drill into some of the into some of the nitty-gritty around Backpack and Salana. I think one of the notes that you're hitting is this kind of um convergence of of worlds where I think you have this very large group of very cryptonative people that have built all of this incredible technology. Um and ultimately what we're building here I mean you can look at you know the metaverse you can look at NFTTS you can look at kind of social stuff but ultimately like what most of us are building is is financial technology. That's ultimately like why Bitcoin is created. Um uh uh that's ultimately I think like what a lot of

DeFi is, right? It's new market structure that exists um uh uh simultaneously everywhere but uh controlled by by no one and and in no you know individual kind of um uh uh uh place. Um uh but you know the thing about finance that's a bit odd is that it's not useful uh uh by itself. Um uh and you kind of had this before all this like in the institutions are coming meme like really came uh uh uh to kind of life over the past couple months. you had this, you know, very opposite sentiment where there was this, uh, almost like depression around DeFi. Um, uh, where you had, you know, folks like Vitalic or even like, you know, Anatoli or whatever, um, like commenting on like

the Orus Boris, uh, uh, uh, where, or, you know, the snake eating its tail thing where it's, you know, you have, you know, all this DeFi tech, but ultimately like why does it exist? Like why are we doing this? Uh, uh, why are we exchanging all these meme tokens? Why are we like building yield farms uh for you know go going back to 2020 like vegetable tokens that emit more vegetable tokens that go back into the vegetable token protocol. It's just like circular and there's nothing real actually being built here. And it's because it's finance tech, right? And finance isn't useful because it's just an accounting system to like move like you know uh uh representative bits around. What actually matters is like the atoms in the physical world, right?

the goods and services that like you know the people that made the lights in this room or that like you know go and farm the crops or that build you know our homes like that's actually what matters. It's the it's the real world. Um uh uh a and and so now kind of you know we all know how to build markets and and one of my views of of not only what's happening but just like one of the most valuable things to do in the industry right now is well we need to bring more and more value kind of kind of onchain and you know Mertz said this incredible statistic you know earlier where we kind of uh more value than all crypto like went up and down in the blink of an eye uh because of one person's tweet but I like to give the

statistic where all of the value in crypto is less than all of Nvidia's market cap. It's meaningless. Like it's it's genuinely a meaningless drop in the bucket relative to everything else in the world. And I don't think any of us think that it's going to stay that way. I think we all think that it's it's one of the most important like technologies that's going to underpin kind of the global financial system. But that's the world that we're heading towards and we're a long ways away. Um, and one of the really big leaps to getting there is not just like the technical problems of like how do we scale blockchains, how how do we build, you know, you know, decentralized exchanges, how do we do like on and off ramps or whatever. Um, but it's about bringing assets on chain.

Um, uh, and like stable coins are like, you know, the first like really strong very like obvious example of this. Um, but I think it's just going to continue to happen. And I think that's ultimately I think how we've positioned ourselves in Backpack and why we've made a lot of the decisions that we've made is because you need you can't just pretend like the real world doesn't exist. um where you have all these different countries with all these different rules and all these different regulations and all these different assets whether it's equities uh in the US whether it's you know bonds by un municipalities whether it's retirement accounts whether it's different currencies around the world whether it's real estate in in different places around the world like you need to go get all of that value and put it on chain so that we can breathe life into

kind of all this incredible kind of stuff that we built over the past several years um and And I think that convergence is like really what you're starting to see and really I think why I'm so excited about the institutions are coming me. Um and and as this happens more and more as like you know the the real world if you want to put it in those terms kind of converges with the crypto world um you know it becomes more and more normalized and cryptos you know starts genuinely telling the story of actually upgrading the financial system. Um and it's only with the real world can you do that. Um, and so I think that's kind of maybe some added color on on on what's happening. And I think one of the things that gets me really excited.

Yeah, I I think you're absolutely correct. And I think just to kind of like illustrate like why this value ought to come on chain, it's not just because we built it. Like yeah, we built it. We want to see people use our stuff, but it's because it's actually better than the old stuff. Like I like to say that blockchains are the best coordination tool that exists. That's for robots. That's for AIdriven economics. That's for human-driven economics. And and generally coordination goes for risk management.

Goes for staking and slashing the allocation of scarce resources. All of this can be made more efficient and more transparent and more visible. And and we can do that through blockchain. I think right now we're seeing this flight to safety on a macro macro scale and that flight to safety, you know, goes towards cash, bonds, uh, gold and then digital gold and Bitcoin gets swept up into that. But then on the other side, you have basically tech stocks which goes for like the entire rest of our industry, right? That's where like ETH, Salana, all the rest gets gets bott bottled in.

So, Bitcoin is kind of like the bridge from like the colliding of these two worlds. We're seeing crypto get grown up like it's reaching this level of maturity where it is becoming integrated into the rest of traditional finance. And we're seeing that bridge between the DeFi world and the Trady world. Bitcoin is that bridge. Ultimately, Bitcoin dominance is rising and the way that these cycles at least have gone in the past, maybe this time is different, but it always goes through Bitcoin and then and then from Bitcoin to the rest of the the crypto and blockchain onchain world.

So, I guess my question is, is this time different? Like do you guys think that with the institutional adoption on chain and all the value being put on chain we will start to circumvent Bitcoin and we won't see like Bitcoin dominance rise we'll just see it go directly into these like tech platforms being the ETH the Salana the Monet like all all of these you know L1's L2s basically asking when alt season well it's a very packed question I would say. But so if if the question is something like will will it be the case that the alts like Salana and you know all the

others will they need Bitcoin to lead some sort of rally for them to come back or can they do it on their own? And it's it's an interesting question. I think I personally think they can do it on their own and I I think there's a few there's a there's a few different ways of looking at that. One is that if you okay so historically speaking let's say for the past eight years Bitcoin it was supposed to be digital cash P2P cash payment system right something like this and then lightning and all that I mean that's on the white paper but then it's like okay that's actually not really working

however it does turn out to be a pretty solid like digital gold alternative which is what even you know uh Bessant uh literally the secretary of the treasury he said that uh like two days ago which is so I mean job is kind of not done but it's certainly found PMF within that segment where people value it as gold in some sense now it's still a risk asset so it's not completely decoupled so you know the other day everybody was like how come Bitcoin and crypto is uh decoupled from this and then like 10 minutes later it just all nuked uh so it's certainly not completely decoupled that being said my my point here is in the past that's kind of been the main

use case of crypto which is like this store of value thing that's relatively detached from or you know let's say like 20% detached from existing markets uh and plus a lot of belief required for it to for for someone to make the case that it will completely decouple in some 10 years or something. But if you now look at the integrations that are coming with stable coins and payments and even you know things like going public onchain you know internet capital markets um even ZK all these things then those don't require Bitcoin uh and they're kind of directly they directly work with the underlying tech company let's say you know I'm sure some people will take

that out of context and be like oh you think blockchains are tech companies but like fundamentally that's probably how most people think of them on the macro. Um and and so in that case then I think this is the best shot there's ever been where they can decouple themselves to an extent. Um I don't think that happens this you know quote unquote cycle. I think that takes a long time to really meme into existence. Like I was just in New York and people were maybe that's actually a useful anecdote. people already knew what Bitcoin was, but then they would ask me something like why should I invest in Salana over Bitcoin or Ethereum. So like to in their mind it's something like Bitcoin is one thing and then Ethereum

versus Salana is another thing and then maybe they like bundle Coinbase in there with like actually the public stock Coinbase uh but also base which might have like a synthetic version of it soon. Um, so it seems like it's already happened and like just pure physics of this Salana's market cap is like 55 billion, right? So it's it's really not much. So really all you need is a few relatively heavy-handed institutions to like do things with them and hold capital on those chains for them to really, you know, do a rally. Uh, so I I don't think it's necessary at all that Bitcoin needs to lead the charge anymore. Uh, because I just don't think they were the same thing. like it's

they're all blockchains, but Bitcoin is just super different now. Um, now you can make the argument that there's these new L2s that tap into Bitcoin. Um, and like that's that's correct, but I'm not sure how those L2s benefit from it more than Bitcoin, which is fascinating because on the Ethereum side, it's actually kind of the opposite. Whereas like the L2s benefit maybe slightly more than Ethereum itself. Yeah. Yeah. It's a it's an interesting paradox. And then when the when the institutions are looking at at Salana and I think a lot of crypto uh participants have been feeling this and this is why ETH underperformed so much in the last 18 months was you if you're going to buy BTC it's very it's the lowest risk it's the best risk to reward

in crypto effectively especially if you're just looking to get allocated but if you're looking to allocate to a smart contract platform buying ETH in the last bull was clearly not the right idea because well it's already you know a couple you you know, a couple hundred trillion dollar market cap and Salana is just faster, better, cheaper, and has way more use cases for this current iteration of crypto, right? For all the memes, all the DeFi, all the fast transactions, it absolutely crushed. And so, ETH is kind of stuck in this in between a rock and a hard place there for the last 18 months trying to kind of figure out where it's at. I do think the institutions are going to help a lot with Ethereum and I think Ethereum is gonna make a really really big

comeback price-wise. Um we spoke we we were speaking to Arthur Hayes last night but about Ethereum and about these L1s and smart contract platforms and we spoke about how I mean it's it's got the worst sentiment in in its history. it's going down to like 2017 levels. And he he made a bold prediction that he thinks that Ethereum is going to be uh after kind of Bitcoin makes its big run then and you know Rob perhaps this answers your question. He said this time isn't going to be different. He thinks Ethereum will lead the next uh part of the rally due to the hate from others and just the institutional uh kind of adoption that it could get. But that being said, I still think institutions

will look at Ethereum and be like, look, it's worth what 300 uh um billion now. Um I may have slipped up and said trillion earlier, whereas Salana is worth 55 billion. Hyperlid's around 12 and Celestia is trading around like three. Like where is the where is the the long-term kind of perception of making this like feel like institutions are early or they can get some value out of this? I just think it's a lot harder to see Ethereum to, you know, 1.5 trillion than it is to see Salana to 500 billion, Celestia to 100 billion, Hyperlid to 100 billion, etc. So, um, yeah, that's just kind of my my two

cents. I curious what you guys think. Um, I maybe this can help answer your question, Andy. I I'm thinking more on the on the technical angle, you know, helping institutions realize that they are still early to the technology, but it is resilient. Um, and that they almost, you know, if if they're choosing to adopt a particular L1, they're getting the entire ecosystem. So Mert, I think you you pointed out this dynamic between a a a network and its rollups or its network extensions like Bitcoin roll-ups are currently getting like more than they're delivering back to Bitcoin.

You could argue the same thing for Ethereum roll-ups. Ultimately, there are these naturally occurring symbiotic relationships, mutualistic relation, like relationships that exist in the wild. The only I'm not a fisher, but the only fish I ever caught was one of the ones that swims next to the shark and it eats the little like bugs or stuff off of the shark. And like the shark gets a good deal out of it. Like it gets like the stuff cleaned from its and then the the little fish gets to eat. So like this is a very mutualistic relationship between the shark and the and the fish that exists in nature. I think this mutualism could occur on chain with respect to L1's and L2s, but we're just not really seeing it play out. So I think like Andy your question is like you know why is it

why is this still a valuable bet for institutions and I think it's because they get this entire bundle like if someone buys Ethereum they think they're getting Ethereum and all of its roll-ups they kind of put aside that a lot of these roll-ups also have their own governance tokens but that from what I understand about the sentiment like the institutional sentiment is that when someone thinks about Ethereum they think about all of Ethereum and its roll-ups that is all Ethereum. Um, regardless of the value transfer and the and the value acrruel methods there, same thing that they're not there for Bitcoin certainly and and I'm curious what what you guys are seeing as a perception of Salana and its network extensions. I would imagine it's more similar to Ethereum and its

ecosystem than Bitcoin in the in the sense that when someone thinks about Salana, they think about all the network extensions as Solana. So, I guess two-parted question. What is the sentiment with respect to Solana and its network extensions and then how do these network extensions and the Solana L1 make sure to enable this mutualistic relationship between them. Redstone is DeFi's modular oracle supporting over 100 clients on over 50 chains and offering 1,000 assets. Redstone is the leader for Bitcoin staking and yieldbearing assets. They offer the most robust customizable price feeds

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I I I I think I would go back to like the heart of this question which you know was kind of rooted in Bitcoin leading rallies and can the al can the alts lead themselves. Um I think it's really simple. Anybody can lead any rally. It's just a function of like who who reaches escape velocity uh uh with respect to getting product market fit in some specific niche. The reality is is that everything is a memecoin right now. Um uh and Bitcoin is the first and the original and like really the only true genuine memecoin um in the most like pure sense. Um and that's why it is the store of value. Um and so as long as everything is a memecoin, Bitcoin will

always be the upper bound for value uh for all these crypto tokens. Um uh uh and so you know uh uh you know when you're analyzing you know you made this like relative valuation analysis between Ethereum and Salana and it's like well Ethereum is already so high you know Salana and Celestia and these other things are already so low like obviously you're going to bet for the lower ones because they can get to the they have more room for growth relative to Bitcoin and it's because you're capped at Bitcoin. Um and then the question is well like actually how do you get around that and what's the story for Ethereum or any other chain for kind of having this enormous uh growth potential and the answer it's really simple you know product market fit real use cases um and that is I think uh uh uh uh has to be

the story for for for any smart contract platform. Um and it really only takes one company, one use case, one protocol to reach escape velocity. It's why I'm like always so bullish on like literally any L1 founder that's crazy enough to create an L1 is because you literally just need one app. You just need one Instagram moment. Um one kind of unis swap moment um uh and that can create the growth that that you need. Um and you know it's like really trite to say that like we're early or whatever. Uh but but but the reality is is that if you want to have that type of you know breakout altled growth I think it's going to come down to do you actually have a global worldwide use case that

everybody on the planet is using um uh uh uh uh whether it's you know institutional DeFi or or stable coins or whatever it might be but it but it comes down to product market fit which is like not surprising at all. Yeah. I mean, I kind of think that the network extension thing is is kind of orthogonal to the thesis. Uh, but Mer, maybe you can kind of fill me in there. Um, and I think the more institutional pitch for Salana has got to be around this global data synchronization at at the speed of light concept like this kind of idea. Um, yeah. Have you been having quite a few conversations with institutions around Salana and Helas and what has been the kind of uh what has been what they have liked that you said and maybe like

didn't understand or what are they kind of catching on to? Sure. Well, there's there's a few angles. One is that fundamentally and of course it depends on the institution and their competence but fundamentally they're trying to move money from point A to point B or they want to enable some if there's an existing fintech app something like Robin Hood and they want to capture some new user base or expand within that which is you know you saw them expand into prediction markets for one example but so it's generally something like we want to work with stable coins or IWAS or we are some fintech app that's maybe a bit more maverick like a CLA or like a Robin Hood or um you know a fintex in

the US or Brazil something like this and so in the in the in the former case of asset issuance they generally actually all have a multi-chain strategy from what I've seen um which is to say like so for example you saw the black rockck stuff you know they obviously are on Ethereum but the actual issue was behind that. Securitize just announced that they're expanding to Salana. And that's not the first time like Visa did this, PayPal did this, Mastercard did this, uh I think Stripe did this as well, Google, like all these institutions. They basically don't want to do take this risk of just doubling down on one chain because it doesn't

make sense for them. And so then they just look at like the top two, top three. So this generally ends up being Salana and Ethereum. Um and you can also see this with the institutional investors like a Vanac or Franklin Templeton you know their investments are generally something like Bitcoin and then Salan Ethereum and then maybe like one wild card uh like a SU or something uh so that's the RWA in in issuer side and but for them fundamentally they need the product to work like they need compliance controls they need the payment fees to be predictable and stable they need to have some guarantee of security um and that's generally what they ask questions about. And then you have the guys who are a bit more, you know, they're like web 2.5, let's say.

And those guys care about basically who courts them is what in my experience like they will, as long as you have a good B2B sales team, you can basically close them. You can kind of see why Ripple and Stellar and all these guys, they have a lot of these deals, by the way. And and if you look at their structure, so classic it's like 60 BD guys and like one engineer on those teams and it's like hm okay I wonder what's Armani's worst nightmare literal worst nightmare and uh so it's it's a combination of that but like fundamentally you can only do so much with BD before physics catches up to you like it needs to work uh because your users will just not use

it like if it sucks right so then it becomes Um so so for those I think there's some asymmetric upside for the and and this is why base is important for Ethereum because they have that B2B team right they do sales they know sales very well um this is why Salana has teams like Helios but also um JTO who is putting in a lot of work uh at the top down level right policy governance uh but also like chief commercial officer just hired from Jane Street yesterday. Uh so those are the and that that uh that uh Nikita I think is his name um just joined the foundation as an adviser. So Salana's doing some uh ripple style BD too, you know, if you

know what I mean. Just a little bit of just a little bit, you know what I mean? BD, but uh with with actual talent. Uh so uh I know some guys from Ripple. They're probably gonna [ __ ] destroy me after this, but um it's what it is. Uh but okay. So then the interesting part I think Armani kind of pointed at this which is like in a in a world where everything is a memecoin which is probably the case today then bitcoin is a ceiling obviously like that is you know it's not like a pure memecoin but you know it requires a lot of social elements for it to actually function. Um but interestingly I think if you you know if you accept the premise that these are maybe a bit more like tech stocks uh the L1's or alt alts um then people actually

do start to look at some traditional things like how much money does the chain make and then as a stockholder let's say of this chain like a token holder I hold the token do I actually get any of that back right like if I stake on Ethereum or Salana like what happens do I actually make money. What's kind of the upside? And that's actually turns out to be really important. You might have seen there was some discussion around this proposal on Salana called SIMD228 which basically said we're going to reduce issuance on the chain by quite a bit. But one of the objections from the president of Salana Foundation and of quite a few institutions was that actually wait we kind of like the high staking yield even though it's from issuance right of like

you know 8 to 9%. Um, and so they do start, and this is why like I think Rev, which some people don't like, but it's clearly at least an okay metric, especially compared to all the other ones that can be easily be faked. Rev is a little hard to fake. Um, and especially if it's sustained, and it's it's some sort of a proxy for demand, but also some sort of a proxy for like economic acrruel to people in that network. And so you can then start to be like okay uh, you can actually glimpse at some fundamentals. I think that's probably still some time away. And then that's perhaps where the network extension stuff comes in, right?

The roughly the biggest difference in my view versus, you know, when when when when people launch an L2 on Salana or something, there isn't much, but there's like different flavors of it um because it's just a different architecture. So it might be for storage, right? or it might be like, you know, something called an ephemeral roll up where you just do you spin it up for like one thing, do the execution and then roll it back up. Um, the biggest difference is that Salana the L1 doesn't care. It basically says IBRL, increase bandwidth, reduce latency. We don't give a [ __ ] what you do on top of this block space at all.

All we care about is doing as much stuff as possible on this one thing because that is very clear incentives for people on that network in economic incentives but technical incentives and so it just makes a lot of sense. Now, if you think it's not technologically sufficient for some use case, that's okay. You can do a network extension if you want and that you benefit from those assets being on the L1. Cuz you know, me and John Sh or John Shar wrote a piece on this and I was one of the editors. Basically, one of the main uh benefits of an L2 is that there's already a valuable ecosystem on the L1 and now you can extend it, which is why Bitcoin L2s are interesting because Bitcoin is super useful. Um, same with Ethereum. it has all those assets on the

L1. Um, versus Ethereum doesn't say whatever, just do whatever the hell you want. We're just going to scale the L1. Ethereum actually kind of says we're going to change the L1 to cater to L2s. And so, you know, that rollup centric, but like you got to be careful that fundamentally when you say something like the world rollup centric, it it sounds like it should be centered around roll-ups, but the roll-ups still need to work with the L1. And so it doesn't mean forget the L1 which is probably where you're seeing all the problems today. Um I think you know one of my hottest is that if you take care of the L1 then everything else will kind of take care of itself um in the long run because like even if you do what

Ethereum is doing then over sufficient time I think you do get viable alternatives to people who've already shown they don't care to use something like Celestia right they don't they can just do a sovereign rollup or or something like this like they don't care too much and then that's when the incentives and the economic let's the fundamentals become a little blurry. Um, so with regards to network extensions, the final I'll say on this is like the biggest difference within Salon and all the other ecosystems is that Salana core doesn't care. Like it just says if you're going to build them, build them.

We're going to focus on what we're doing the whole time versus other ecosystems might be like we're going to tailor our solution so that you as a rollup can benefit from it, right? So it's much more like uh uh it's it's much more opinionated. Yeah, I think generally we are on the on a on a page of of being bullish on opin on opinionated design. I think again I I was speaking about the dynamic between uh BTC ETH solo in terms of uh investing uh appeal to people and I think similarly if you look at the technical designs you can also see the direct uh you know like low-level focus on a

single tradeoff and just fully maxing that out. I think that that the market um has been has been basically seeing that as something that has been improving the performance UX and just general appeal of Soul the token as well as you using and building on so on on Salana the chain I'm a little bit tired of the funds I think the fun may be a little bit overdone by now but we can talk about that a little later um what I do think is interesting and this ties into what you're doing at Backpack Armani and what Mer is touching on is that the Salana ecosystem appears to be growing in such a way of many super apps

per se. So when we think about this idea of what is the best products in crypto, a lot of people think about wallets, exchanges, stable coins, and some sort of like mixture of of these, whether it be on your own chain, on a really fast cheap chain like Solana. And so Jupiter obviously has been the massive trading venue for all of Salona. But recently pumpf fun they actually moved off of radium. They moved pump swap. Jupiter has added different product suites.

Camino has just added a uh aggregator onto their platform. And so we're kind of entering this world in the Salana ecosystem where it feels like there's a lot of of uh competition to be the super app. Um so I'm curious like what is the backpack thesis for why you built out this platform where you own the enduser distribution right and the wallet level kind of fat wallet thesis if you will. you can funnel these users into your exchange, right, where they trade, earn fees, use that for buybacks, use that for um kind of other financial incentives, and then kind of how do you see this flywheel picking up um and yeah, just, you know, talk to us about

your success as of recently because you guys have been cooking. Yeah. Yeah, sure thing. So, I mean, I think the backpack thesis is uh uh a bit of a counterintuitive one, especially for folks that are kind of uh uh maybe even deep into crypto. So, I kind of mentioned this pretty uh uh you know, you know, catchy, you know, head you know, headline uh uh earlier where all the value in crypto is less than Nvidia's market cap, right? Um and I think you know there's two versions of the future of this industry. Um in my view um one version is we more or less stay where we are today. We're more or less kind of an unregulated offshore

speculative gambling casino where the predominant use case is basically you know uh uh trading useless assets on chain and uh you can make a great business. Gambling is consumption. and it brings people kind of, you know, happiness, sadness, depending on kind of your your view of of gambling. But but gambling is like a real thing. Uh and and that's kind of um uh where we kind of get capped at. Um I don't think any of us believe that. Um I I I think we all are kind of uh I think all four of us on this call probably if that were the case, we'd all pick it up pick up and and and move like you know our businesses into AI or something or you we'd go work on something else. Um uh a and I think for me personally, I kind of

have this very fundamental view that you know this is finance tech and and crypto is going to bleed into finance and be ubiquitous with every major financial institution in the world and it doesn't matter what country you're from. It doesn't matter um uh what religion you are. It doesn't matter what your politics are. Um ultimately we can use these like trust minimized computing machines to transact uh and exchange value um uh uh uh and you know all around the world. Um and then you might ask the question okay well what are the companies and protocols that you build in that world where the trillions of dollars um in traditional finance is being kind of you know tokenized and transacted upon on chain. Um and where I land with is is you

ultimately have one of two properties. Um either you are fully decentralized, fully censorship resistant, you represent everything that you know is the best of the space, you know, the unis swaps of the world, the ethereums of the world, you know, the Salanas of the world. Uh where you're so geographically distributed, you are so you have so many people operating this thing. um it's simultaneously used by everyone and owned by no one that the whole concept of like compliance. It's just like an undefined problem. It's like dividing by zero. Uh it like doesn't make any sense. Like how is the US going to impose a compliance regime when you know you have people running something some servers in China which have a completely different compliance regime which is you know completely you

know uh uh the opposite of you know what's happening in uh the UAE or in Africa or in you know South America or whatever right like this is censorship resistance. It's like the metaphor I like to give, not to get too philosophical, is that of like an ocean, right? The Pacific Ocean is like such a powerful medium for exchange. You know, the US can send boats and shipping containers uh uh to Japan. Taiwan can send ships to to to kind of the US. China can transact uh uh uh with Japan. And and nobody thinks that anyone country is going to like, you know, all of a sudden blow up a ship or whatever because it controls the Pacific Ocean.

The Pacific Ocean works because nobody controls it. uh and that's what how you can create like amazing kind of uh uh human coordination. Um and so I kind of have this fundamental view of of blockchains as being these kind of um uh uh new like natural mediums that kind of just exists and are kind of omnipresent uh uh for financial transaction processing. So censorship resistant is a very clear like very important property. Um the other very clear very important property if we want this industry to actually be meaningful in our day-to-day lives um is compliance where okay if you are centralized um if you do control something if you can turn the thing off

um if you can you know uh uh control you know people's money even if you can you know maybe reorder their transactions you can shut down uh uh uh uh uh you know the the matching engine or whatever Um, turns out you're going to have to you you are physically located um in a country and there's a government and there's a nation state and there's an army and there's a rule of law and you will have to follow the rules and the regulations um that are imposed upon upon, you know, that country or whatever, right? And and it sounds like such a silly thing to say if you're like coming from outside of crypto. It's like, yeah, duh, like you follow the law or whatever. But I I don't think this is something that most people have wrapped their heads around um that are very

cryptonative because we've we've grown up so to speak, professionally speaking, in this industry that has had no concept of clear rules. Um and so we've all kind of been trained in this like uh very kind of a counterproductive way where like you know rules don't matter. Uh uh uh you know uh that's all kind of fake or whatever. Uh uh but it turns out there's like ramifications, right? if you you know go like serve you know maybe CZ is like maybe the best example of this. um you know you serve North Koreans you know uh you go to jail right if or maybe uh that Ethereum developer uh uh uh I forgot his name uh Virgil um is like another great example of this right like there's real consequences of this stuff right um uh uh and so I think

compliance is like the other really important thing where if you're going to actually have the trillions of dollars of value that exists in the world um uh running on chains um that is rooted IRL right that's rooted uh you know Apple exists in California, right? They they have to follow, you know, whatever rules are happening there. Um, and so you have to have one of these two things. Um, you either have to be censorship resistant or you have to be compliant. And anybody in the middle is kind of on a road to nowhere. And I kind of like strongly believe this with every bone in my body. Um, and and so kind of, you know, the backpack thesis is ultimately well, you know, there's no there's not a lot of cryptonative people that are going the compliance route. There's a ton of incredible builders. You named a bunch

of them. you know, you know, the Uniswaps Jupiter um uh Commamino you name it, that are building great censorship resistant tech. There's not a lot of cryptonative folks that genuinely care about like, you know, what we're all building here that are cryptonative, that are great at product and really want to build kind of a cryptonative version of of finance. Um, there's really not that many of them uh, uh, going the compliance route. Um, and so that's kind of where we're trying to position and and there's a lot of really kind of great product that unlocks uh that I think we can, you know, contribute to the broader crypto ecosystem at large. But I think that's like really the foundational moral context for, you know, why we're building the company in the way that we're building it.

Anything to add there, Mer? Nope. Cool. um what when it comes to actually implementing the vision with regards to compliance or or with regards to effectively opening up your technology to a new audience, what's the strategy there? Yeah. So, I mean like tech and business strategy. Yeah. So, there's there's a couple things. So I think the single most important thing for us is liquidity because once you get liquidity then everything else follows ultimately like what exchanges are these liquidity hubs where you know you're connected not just to one chain but you're connected to every chain and you're not just connected to every chain but you're connected to fiat on and off ramps but not just fiat on and off ramps

in one country fiat on and off ramps in every country. Um and it's it really is this very special product that sits between two economies where you have you know the traditional economy on one side you know the bank traditional banking system um and you have the crypto economy kind of on the other side. Um and so like the first order goal if you want to actually you know you know achieve what we're trying to achieve is like climb this liquidity mountain because once you kind of can build and spin this ball of liquidity you know whether you're trading per whether you have you know spot assets whether you have just dollars going on and off you know straight to wallets um you can then use that position to build really great product. You might ask the question like you know stable coins for example how do

you build a stable coin? It's no surprise that every big stable coin had a centralized exchange. You know, uh USC had Coinbase, uh USDT had Bitfinex, um uh uh uh and and that is not a surprise at all. And and stable coins are the first example of of a real world asset, uh where you have, you know, Circle doesn't call themselves a centralized exchange, but they're a centralized exchange for all intents and purposes, putting Coinbase aside, right? Hey, you you you deposit a token in from from one chain, whether it's Salana or Ethereum, and and and you can withdraw to and from fiat or whatever. Uh you're basically converting one currency to another currency or wrapping an asset. It's an it's an exchange. Um uh uh and and that kind of liquidity is what allowed them

to get distribution on USDC and actually created one of the most important products um uh in the industry today. Um, and I think we will see this play out with more and more RWAS as we go along. And you might ask the question, well, like, you know, Armani, there's all these RWA companies that have been created. Why don't any of them work, right? Why why why aren't we all using tokenized securities on chain right now? Is because nobody has the distribution element. Nobody's built that like the what Coinbase did for Circle, nobody has done that for RWAs yet. Um, and so the first like order goal is like spin that ball of liquidity and build a really kind of very deep uh uh uh uh uh uh exchange. Um because from there kind of

everything follows and and then you can start talking about wallet tech, you can start talking about RWAS, uh you can start talking about remittances and payments um and all these other really compelling use cases, but it all starts at the exchange and it all starts with liquidity. I think the idea of having this user userfacing aspect, right, wallet and just this place where people come in, exchange stablecoin is like this trifecta of of bu of effectively building a crypto business um from a real revenue perspective. And I mean, frankly, that's where we're headed. And teams that don't have that distribution are going to struggle. Teams that that that don't have a consistent way to use this liquidity are going to struggle.

And I mean ultimately whether you need your own stable coin or your own kind of uh form of of currency is is also you know a question. Um but I I personally have been very very impressed by just the last 3 to six months of what you guys have done on the on the user side and um am excited to continue using and just scaling that user base for institutions for Salana and you know for the rest of the space. So, um, we're about out of time, guys. I I think I'm out of questions. Rob, do you have anything else for uh for for the guys here? No, this this has been great, guys. Thanks for uh thanks for joining.

Um, I I I think that we're ultimately headed in the right direction. Like there's a lot of undercurrents that are happening that are just adding to the conviction that I think we've all we've all had for the last, you know, several years. um despite some of the macro headwinds as we get a little bit more integrated into traditional finance. Um keep building like you said Armani like Backpack hit its all-time high in terms of volume yesterday. So congrats like volatility is great for exchanges. This is this is ultimately where we're headed.

Yeah, boys. Thanks for uh entertaining the more speculative style podcast today. We're uh we're we're we're you know we're going into the tech and then in and out of the tech and into some of the more mass market stuff. So um stay tuned and uh thanks for joining us. Cheers. Thanks for having us. If you guys