Joseph Chalom: The Institutional Ethereum Bull Run Is Here (What Comes Next)

Transcript

Why is Ethereum the best way to express the bullish thesis on the three mega trends of perps, tokenization, and stablecoins? >> Sure. So, first, the thesis we laid out is that there is an institutional supercycle not coming, it's here. >> Yeah. >> And we're not talking about going from the middle innings to the late innings of a technology transformation. You can make an argument that stablecoins are probably in the third inning. They're the first and most successful case study on tokenizing, and this is money. It's over $300 billion. I would argue that we're in the bottom of the first inning, and for non-US investors or people who don't follow

baseball, it's like the early part of a match or a session. We're probably in the bottom of the first inning on tokenization. It is so small relative to its potential. Um DeFi would be the execution layer. DeFi's gone through some hiccups, but look at these projects that are being successful, the Morphos, the Aaves, Compound is back. This is going to be the execution layer of what's coming. And Ethereum is dominating in terms of market share, in terms of real transactions.

We're starting to see competition from the the corporate stablecoin chains, from new L1s. We're starting to see competition. Obviously, there's always been competition from Solana, but also from Canton. And I think there's room for all of these players to win, but the bullish thesis on Ethereum is that it is winning, it has the market share. We've had um uh I I would actually say the news has gotten ahead of the price, and the price has been lagging across crypto in general, but particularly in ETH. And if you believe that there's going to be not hundreds of billions, but trillions of dollars of stablecoins and tokenized assets and DeFi activity even before a

gen tick, you want to own ETH. ETH is the a trust commodity, it is the gas payment uh mechanism. And there's no ETH without Ethereum and there's no Ethereum without ETH. It secures what's going on. I'll give you a case study. The announcement that Robinhood chose to build on an Ethereum L2, Arbitrum. And the activity we've seen only in the first week has been tremendous. I think over 500 million dollars of activity just in the first week. That's about a third of all the activity in in this space, almost like an on-chain DEX that you see in Solana. And they're using ETH

to pay the gas fees. So, um I think that's how I would express my view on the institutional supercycle. Um I believe when it comes to perps, there is a number one uh out there. When it comes to prediction markets, there's a number one and number two. I think you're going to start seeing many of these uh migrate and leverage Ethereum more, but it's not going to be a monopoly. There'll be other winners. But that's how I would express my view. That said, I want to caution if you're a trader or if you're a sentiment speculator, this doesn't happen in a day and it certainly doesn't happen within a trading session. But you're if you're a holder, which is how people make money in crypto, now is a great entry point into ETH. The risk reward has never been

better. >> Yeah, I do agree that we find ourselves again in an asymmetric opportunity. It's my third bear market. And Joe, I'll tell you what, every every bear market we're early again. Uh it just keep Time passes, but we get but but we somehow are early again. And so I I do agree that the fundamentals across several crypto assets, including Ethereum, have not or have outpaced the price. And and I think it's mostly a sentiment thing. It's mostly a four-year cycle thing. And so, just kind of like over over the next 5 to 10 years, I think we have a possibility of onboarding about 10 to 20 trillion dollars or more of real-world assets and and tokenized assets on chain. I think there's you know, up to 200 to 300 to 400 trillion dollars of available potential.

You know, in this case, in in the case that this happens, right? We we've simultaneously in that time period, we've we've seen the launch of Ethereum Institutional as well as Eth Labs. I'm curious on the this offensive, right? When you when you're talking about capturing a lot of value, deals, integrations partnerships launches from the perspective of tokenized assets on Ethereum, how do these new nonprofits that are almost like auxiliaries to the Ethereum Foundation, how do they contribute to the value capture, to the growth of Ethereum in this tokenization kind of mega trend?

>> So, I think we have to start with just a basic agreement, which is Bitcoin doesn't have a treasury, Bitcoin doesn't have a foundation. It's singular, you know, it has a narrative, it has stewards. Michael Saylor, you can argue is the biggest voice for Bitcoin. On the other hand, you have the Solanas of the world who have a strong foundation, they have a BD group, they have a token value. Ethereum actually has something that's more important, but it's below the radar, which is it has the longest history of trust, building, security, uptime, and it has the principles that you need for institutions to onboard.

Unfortunately, you know, the Ethereum Foundation has chosen, and it's not unfortunate, the Ethereum Foundation has chosen to go narrow, to build multi decades of consistency around censorship resistance, around privacy, and the like. They've They've essentially taken the point that there should be no controller of Ethereum, there should be no one person, there should be no one foundation. And what that's required is to make sure that some of the most talented people from the Ethereum Foundation who are focused on the protocol scaling quantum um all the capabilities that institutions are waiting for, that there be a talent magnet where they can live outside the

foundation. And that was Eth Labs. We announced it 2 weeks ago. Bitmain and Tom Lee, Sharplink and Joe Lubin personally funded this group of initially five very senior talented engineers who are focused on Eth as well as Ethereum. And that is just the starting point. And we gave them a runway, we gave them a foundation. They're hiring significantly, and you're going to start seeing concentration of builders and deliverables coming out of Eth Labs. The second thing was uh what's called Ethereum Institutional.

It was the five-person go-to-market team that Tomasz had brought on uh at the Ethereum Foundation. The Ethereum Foundation has chosen not to be that front door go-to-market for the use cases. So, we needed to make sure that this group of people who are very talented, who spent over a year building 500-plus relationships with institutional, who had who have forward engineering capabilities, can be a standalone not-for-profit, not to favor one L1 versus the L2s or within the L2s, but to be that voice piece to help institutions as they're going from education to experimentation to proof of concepts to production, to be that front door. And I believe that

the stewards and the largest holders of Eth have an obligation and an interest in funding these groups. And that's why you saw Tom Lee, myself, and Joe Lubin be intentional, strategic, and forward that we needed to add uh nodes around the Ethereum Foundation who can bring this to market? Because again, it's Ethereum's to lose. We have the license to win. We just need it to be a little bit more organized and be louder. And when you're organized and loud, that's called offense.