Are L1s Converging on the Same Design? | Roundup

Transcript

I guess zooming out to a perspective that's going to frustrate everyone my macro view on this on a long-term time Horizon is that all of these l1s for the most part are going to converge on an extremely similar design and become relatively commoditized and value is going to move up the stack and so maybe a take that would frustrate everyone from Every ecosystem is that I I think the L1 trade is going to go for longer than everyone thinks but eventually it's going to trade sideways into eternity hey everyone this episode is brought to you by namada the shielded asset Hub rewarding you to protect the multichain so not only can you protect your own data across any asset and any chain but you also get shielding rewards for strengthening data privacy protections

for everyone so you can check them out at n.net and follow the domain net launch stick around you're going to be hearing all about them later in the program hey everyone this episode is brought to you by real a new permissionless L2 built on the arbitrum orbit stack bu Define natives for Define natives for tokenized real world assets it's very very cool chain highly recommend that you go check it out and they just started their Rewards program so you can type in re. al/ rewards you can use the code in the show notes below all right thanks everyone home with the show all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with nothing

in the episode is construed or relied upon as fin Financial technical taxx legal or other advice you know the deal now let's jump into the episode all right everyone welcome back to another episode of bell curve today is a special episode and when I say special I mean you are stuck with just me today uh the framework guys celebrated their fifth anniversary of framework last night cheers fellows welcome they had to travel and a bunch of folks are at SBC this week and so it's just going to be me because I couldn't leave you guys with without a week of content uh and we got a bunch of new stories this week so I'm going to try out this new format um I'm just going to listen to myself monologue for a little bit and hopefully it is entertaining uh for for folks as well

who want to stick around but I want to start out with the the first story of this week which is because this is basically half a political podcast at this point uh the headlines this week is that Camala Harris has briefly flipped Donald Trump in prediction markets so if you look at Poly Market the the absolute PCO top of Donald Trump's odds were north of 74% right after has failed assassination attempt um then since Joe Biden dropped out of the race Kamala has been skyrocketing and she just recently flipped Trump not only in overall odds but in a couple of key swing States so that's uh Pennsylvania Michigan and Wisconsin and leading by different percentages in each one of those States

additionally she selected Tim Walls who is the governor of Minnesota and so we're going to go through a little bit of the profile of Tim and try to get a sense of where he stands but I I think overall and I'm going to cave out here this is the old saying right that you might not be interested in politics but politics is interested in you clearly politics is interested in crypto these days we find ourselves on the national stage in as a key issue within this US presidential election and so you know I don't haven't historically loved talking about politics especially publicly but I want to talk about it in so far as it affects the industry that we all work in and obviously there's an impact here to our industry and so we talked about this last week when we had Michael and and

Vance on but I think overall my take is still to wait and see uh as to as to what the policies and the cabinet members and the stances are coming out of the new Harris Administration so in the same way that I think that uh the Trump enjoyed a little bit of a honeymoon period after his assassination attempt which was obviously dark and very scary and sad thing that that even can happen nowadays but there was this kind of sense of unity and if you look at the odds on poly Market easty rocked it up to something like 74% I think there's probably some element of renewed hope and optimism that is coming out of the democratic party here at the same time um because there was such there was such pessimism around Biden and his ability to compete

with Trump that now that there's any any shot at at at Hope here and a a younger candidate as well I think people are really excited about that the reason I still think we don't know anything and I still think we should wait is we haven't really heard many declarative stances around uh uh the Harris cabinet or her policies uh since she became the presumptive nominee and so I think there's you know use the sports analogy which I I always struggle with there's a lot of golf left to play in this game and you know to be clear I do think that there's an implication a really important implication for uh crypto in the US here um depending on who gets elected I think if you zoom out on a long enough time Horizon It ultimately doesn't matter quite as much as it feels

like it does in this particular moment I think if you look at through the long Arc of History it's very much the technology that ends up dictating politics and not the other way around but that's not to say that bad policy couldn't severely impact an industry for you know a period of time as long as a decade or something like that so I think you know if you're working in this industry it probably does behoove you to pay attention um to not only the presidential race that's happening right now but also who some of the incredibly important actors that are uh you know not just the president themselves and you I've been seeing a lot of takes recently on Twitter that um you know some of it has to do with substantive policy but I think a lot actually has to

do with what I would refer more along the lines of political theater and you know this this sort of frame of mind where hey if if we're gonna listen to Kamala then you know I need her to fire Gary gendler and free Ross and while I understand that people want those things I think that there are what I would be looking towards personally is who she puts in her cabinet I think that says a lot more about where you know what the the principles of her Administration really are going to be and I think it's going to have a much bigger impact on our industry on a four-year time Horizon and I would draw everyone's attention actually to a couple of key positions here so I'm going to pull up this axios article I'm G to share my

screen where uh these are it's the title of this article is a peak behind the curtain the Harris cabinet and there are a couple of different positions that I would call your attention to so treasury so I'm reading here from maxos Commerce Secretary Gina rimondo is popular with business and would be considered for treasury Wally Ado now dep Deputy treasury secretary is one of the Biden officials most likely to get promoted in a Harris Administration Blair Efron an investment banking partner who's very active in DC in New York is another name to watch now it seems to me that Gina rundo and Wally are the Front Runners for who could potentially become our new treasury

secretary and I think the outcome for the crypto industry it would be very different so Gina Rondo has been called she's actually been relatively criticized um from some insiders within the Biden Administration including Liz Warren um for being you know quote Tech's best friend so she's largely been in charge of AI regulation and again I'm going a little bit outside of my my depth here all I know is what I've you know read in articles recently but it seems like within the Democratic party she is more on the side of tech and Innovation um and frankly the fact that Elizabeth Warren criticized her is basically all you need to know about how friendly she might be towards new and advancing Tech although I will say that the current posturing around AI in the

United States is not super great and there's a lot of talk about basically kyc um uh data centers and things like that for companies that are or or limiting the amount of compute uh that some of these AI models would have access to which I think is not particularly friendly however I do think she would be much more friendly here the a a very bad outcome to just be really blunt would be an appointment by Wall-E or appointment to Wally I think who has been uh pretty pretty negative uh towards towards the industry in general and again I'm not going to speak from my own opinion here I'm just going to pull up uh this article from Politico about um who is uh very close with Elizabeth

Warren and I want to go through some of the things that historically he said um about crypto and the industry so again I'm just reading here from this political article uh and this was written back in April of this year so you know not super recent but only a couple of months ago uh Ado set to testify today before Warren and other members of the Senate Banking Committee on crypto's role in financial crime and sanctions evasion it's an issue that's become top of mind for policymakers in in the wake of the Hamas attack on Israel in recent reporting that digital currency is helping Russia fund its war in Ukraine Ado is urging Senate banking chair sherid Brown and other key lawmakers to give the treasury Department greater authority to police crypto transactions and entities that the administration

sees as a growing threat in the world of moneya laundering in an interview said here's the quote my goal is to talk with Senators about the importance of giving us tools we need to prevent cryptocurrency from becoming a place where terrorists and other groups that look to harm us go to escape the formal fin Cal sector continuing here it's not only a challenge to our national security but also to our economy more broadly and there's a bunch of quotes here that I'm not going to read word for word yeah but he talks all about crypto's role in recent ransomware related attacks and things like that and so uh reading on here the thing that I've been encouraged by is that I've talked to a bipartisan group of senators that represent the entire Senate ideological Spectrum who are

interested in taking action we have a number of bills that are bipartisan that cover parts of the term I know that Senator Brown has been working to look at ways to comprehensively cover a number of issues that we raised in the term sheet and so yeah it kind of goes on and on here and there's a lot of verbiage about Russia and North Korea and Hamas and cyber criminals um there's talk about tether and then I I think where this is particularly concerning to me is when there's talk of a stable coin deal it starts to get into Elizabeth Warren um and her quote is as your committee has recognized stable coins and stable coin related activities May undermine consumer protection and the safety and soundness of the banking system but efforts to create new

regulatory Frameworks around the 157 billion Doll stablecoin Market including those that aim to fold stable coins deeper into the banking sector could amplify and entrench these risks rather than mitigate them and so to me this is deeply concerning because one I'm just sick and tired in the year of ourl 2024 listening to people talk about crypto as a money for criminals it's just not an intelligent criticism and I just really really strongly push back on that um and there's a lot of great data that has been produced uh frankly by reporting even from the mainstream media um although the Wall Street Journal recently reported on this and got the facts extremely wrong but guys like Nick Carter have done a really great job championing uh and showing data that on

both an absolute and relative basis the US dollar is much much much more used to launder money than something like Bitcoin which is frankly much more transparent and so the fact that these arguments keep getting recycled by these people it indicates at least to me that they might not be acting in good faith and I think it makes a lot of sense to push back on that and the fact that Elizabeth Warren is trying to undermine the stable coin deal which to me is such a no-brainer not only from the national interest of the United States you know we're running two trillion dollar deficits per year and stable coin issuers you know

including tether tether is in the top 20 Sovereign owners if you ranked sovereigns by their ownership of us treasuries they're in the top 20 you know this is an entirely New Market of Treasury buyers so it makes sense I think from both a national interest standpoint but also it strengthens the position of the dollar globally you know you have an entirely uh separate Financial system which has opted to leverage the dollar and you're trying to shut that down before it even gets started it just and the way that you would actually regulate stable coins as well seems pretty straightforward to me because you know the two dominant issuers Circle and tether are both centralized and the rules of the road are pretty clear again it seems to me in just my

opinion to be arguing in bad faith and so I would be relatively concerned um and I I would be watching you know as a as an industry participant who it seems like the Herod Administration is going to put forward there now I think another really important position to watch would be uh the SEC chair so we all know or it seems that uh Gary gendler's tenure as SEC chairman is coming to an end and typically what happens is that there's an Nom there's a nomination from an existing SEC commissioner and so there are a couple of different choices here the obviously most favorable SEC commissioner would be

someone like Hester p there is another option um for who the Harris Administration might be looking at and that would be Caroline Crenshaw now Caroline krenshaw has been serving on the as as commissioner for a while um the Biden Administration just uh reup her term and she might be the commissioner uh the SEC commissioner who is even less favorable towards crypto as an industry than Gary gendler she voted against even the coin ETFs and so I think this is a really important position to pay attention to because I think the common perception is that Gary is about as bad as it possibly

could be for SEC SEC chair I just want to remind everyone that actually it it could actually be worse there could be people who are even less favorable towards the industry and I want to zoom out of this by saying again this is these are all my opinions but I think that if we care about crypto moving forward in a positive way and if we want to get an assessment of where this har Harris Administration really falls on the issue of crypto as an industry I think that we should look towards these key cabinet appointments as an indication of that and I'm not a big fan of again this engaging in political theater and pressuring the administration to make

these big declarative acts because I think we all know in our heart of hearts that they're not going to do that there's a big difference between Trump who doesn't have an incumbent position and a sitting Administration breaking you know Decades of protocol it's obviously just not going to happen and so I I think that again I would focus Less on what I would call the political theater and I would look towards I think these two appointments treasury secretary and SEC commissioner like that's going to be very indicative um of how the Harris Administration feels about crypto and our industry in general so I think that's really important to pay attention to hey everyone this episode is brought to you by NADA the shielded asset Hub protecting the future of the multichain NADA is a chain that's

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about what the folks over at NADA are doing I highly recommend that you go and check them out at n.net you can follow their mainnet launch which is soon TM very exciting tell them that I sent you click the link bottom of the show notes hey everyone this episode is brought to you by by real re. they're a new permissionless L2 built on arbitrum orbit for tokenized rwas so basically they've got this portfolio of real world assets that actually exist out there that generate yields they import them onchain and find ways to reward their users very creatively uh so one of the cool things about real is that it's the first L2 where 100% of profits from transaction fees and fees from protocols deployed onto the chain acrew back to the L2 governance token and currently I mentioned this at the top of the episode

but they have a reward prayer program going on for early users of the chain where 10% of the RDW tokens are being distributed which is very cool so you as a user can go over there and provide concentrated liquidity trade borrow and leverage tokenize rwas including T bills real estate and tokenized basis trades so again head over to re. rewards and you can use the code found in the show notes here tell them that I sent you thanks real for making this possible the other big Landmark win that happened this week is we finally got a settlement for ripple so Ripple has been ordered to pay a $125 million civil penalty in its lawsuit with the SEC the SEC had sought a remittance

payments of $2 billion U while Ripple asked for a maximum penalty of $10 million so that is a hilariously wide window and I think the the way the SEC has come out and and postured about this is that they view this as a win but you know this is a what they ended up getting in civil penalties is a 94% uh is 94% less than what they ultimately ended up asking for and you know it's hard to not look at this and this is actually before I go any further it's looking like this is final this came from Judge uh Analisa Torres she issued her final judgment yesterday but both parties the SEC and rippel are

still able to appeal the Judgment um but yeah it uh you know this was this is a long-going lawsuit here there were a couple of different elements to it originally um one of the big distinctions was uh Pro between programmatic sales and institutional sales of xrp um and judge Torres argued last year or issued a judgment last year that the programmatic sales of xrp did not constitute a Securities offering and the personal uh lawsuits that were brought against um Brad Garling housing Chris Larson were eventually dropped and so it feels like this is a really big win for not only Ripple and xrp the token but generally for altcoins um in

general because I think people were looking towards this as a little bit of a bellweather or precedent in terms of how the courts were going to respond by respond to the sec's tactic of Regulation by enforcement and so this seems like really positive precedent again for tokens that are launching based here out of the United States and there was actually there was a really good take I thought from uh Gabriel Shapiro formerly of deli and now the founder of metalx labs and I'm just going to read from his tweet here really can't think of a worst case for the SEC to lose from the sec's POV than Ripple they did quote everything wrong tying their business to token price hiring market makers to

massage the price Etc you can literally look on Old charts and see how Ripple Corp announcements pumped xrp the tech itself is also highly centralized with no cryptoeconomic mechanism to incentiv valid incentivize validators and dependents on a ripple maintained list to get consistency point being if the SEC lost this one imagine how it will Faire in all the cases where the project team was much much more careful so again legal precedent is really important here it's actually hilarious to me now everyone looks at Ripple as kind of this industry savior whereas if you go back in the day and you look at some of the fights that guys like Ryan celus and Brad Garling house were getting in um they were I think the industry looked a

little bit less favorably on them but this extremely unfair treatment by the SEC has really gotten everyone to Rally around them and sentiment has completely flipped uh on the entire company and you know it's kind of like hey those guys are our guys and uh and we support them and and we don't we don't like the way that the SEC is treating us generally so I think it's an extremely significant case not only for ripple and xrp but also just for uh token based projects that are operating out of the United States I do think you know as this as always happens people like well does this mean that we're getting an xrp ETF anytime soon I think the I think the answer to that question is it certainly opens the door to that but there are all

these things that need to happen first and specifically there needs to be a Futures Market that trades for a long enough period of time and it needs to be correlated to the spot price and all that stuff just takes time again that might change depending on which Administration we have next year a republican one or democrat one but yeah I think probably the door is open to a bunch of ETFs and I I'm personally of the opinion that the ETFs that come out are gonna kind of make people laugh and cry at the same time you if you look at the the assets that are probably most likely to get ETF obviously there's salana which I would be I think the rest of the industry would be super supportive of and and makes a lot of sense but then it's kind of the it's it's the assets from 2017 that are at

the top of the Bloomberg terminal you know it's Litecoin and it's xrp and assets like that uh Dogecoin to be honest I know that's going to break a lot of brains if you're going off the Elon Musk idea that the funniest thing is the most likely one to happen then yeah we're maybe gonna get a doge ETF at some point in the future and things could certainly get very very weird but uh also pretty entertaining at the same time and and honestly why not why not a do gtf so congratulations to uh the Ripple team team and hopefully this is a uh a win in the column of US based teams to want to issue tokens and a win for the courts in general all right I want to talk a little bit about ethereum here as well

so there's a couple of things I think to touch on which is just an update on the eth ETF and talk a little bit about flows and I I want to address uh what I view as a pretty interesting divide in terms of what the future road map should be for ethereum so before we get there I'm actually just going to pull up this is uh from far side and this is sure many of you probably know this but this is kind of the definitive way to track both Bitcoin and ethereum ETF flows and if you look at the eth ETF flows here when it first launched there was I think a lot of selling from E which is the sister product of gbtc on the Bitcoin side of things this was kind

of the closed end uh grayscale product which got converted into an ETF F and I think there we've talked about it on this program before but I think that there was kind of a speedr running of outflows so we saw an enormous amount of outflows from gbtc if you remember in those first weeks after the Bitcoin ETFs went live which were a drag on Flows In general going into the newborn 9 and I think we saw if anything that there was a front running of that when it came to the eth ETFs so you can look at these first couple days outflows of 484 million 326 million 346 million uh which I think concerned some people but if you look at what the flows have looked like since August I think you see actually a

much more positive picture so the outflows from eth have slowed you know to the range of kind of between you know 60 and 30 million per day and the inflows especially from the Black Rock product eth a have really picked up and I actually went back and just looked at if you normalized out the outflows from gbtc and e for the days of August so August 1st since August 7th I'm recording this on the 8th the there have actually been $29 Million worth of outflows from the Bitcoin ETF products and $353 Million worth of inflows into the eth products and so obviously that's just one week that's you know you could

definitely accuse me of cherry-picking there um and just looking at one very specific period of time but you know I think that maybe there was a little bit of disa appointment from the crypto Community about what the inflow situation looked like for eth and institutional demand and all that type of thing and what I would just point point folks to is I I point them to the the Bloomberg guys as well as Nate garach who's been really bull posting and saying hey guys you know within the context of the greater ETF world this has been a phenomenal success and I think quietly under the hood you're starting to see inflows actually pick up into the eth ETFs here and so you know I think a lot of this um um this concern around eth is is pretty overblown here you know I know

people have been drawing these soth charts and these eth you know eth BTC charts I would point out that and it's it's definitely true if you look at the charts of salana eth Soul e it's kind of there's pretty nice um up only coup and handle pattern that looks that looks pretty good and it looks a little bit less good for um e BTC but if you look at Soul BTC that chart doesn't look you know particularly well either and I think the framework uh I still have this framework that traditionally how a crypto cycle goes is Bitcoin runs first and you see you know eth BTC is down only Bitcoin dominance is up only and then there's a rotation into sort of eth and then you know altcoins or nfts or mem coins or what

just you're moving out along the risk spectrum and I think what is continuing to confuse people a little bit is the strength of salana and you know you got to give the salon Community some credit they are executing like Matt over there and I think they are being uccessful at stealing mind share but I do think that's kind of the idiosyncratic things thing that is messing people up from a framework perspective and that a lot of this concern around eth is is frankly pretty overblown so you know the other thing and this is uh and I am oh last note on that I am interested in terms of what the narrative coming out of the institutional sellers of eth is going to be I've been an advocate for a very long time I've never liked ultrasound money as a meme he predicted I had a list of

predictions going to this year and I said that was going to die death I'm glad that it did I think it was trying to play the game that Bitcoin is trying to play and was just being slightly worse at it but the the narrative that I think is right there for the taking for eth is eth is a productive uh yield bearing asset because I think the market for something like that is much much larger actually than even the store value sort of Market uh for Bitcoin because there's just a really large percentage of people that are never going to be able to wrap their minds around an asset that doesn't generate cash flow they can't model out what the returns are going to be and so this is this is the problem that people have had with gold and you always get these gold

guys that are boning you know the institutional holder base and why people don't have more gold in the portfolio and I think there's just a limit to the amount of people that are comfortable holding an asset that doesn't produce cash or have any type of return stream and eth has that and so you know I know there's a debate around minimum viable issuance versus maximum viable security that's actually going to happen at permissionless this year Well plug for permissionless I'm very interested in that debate because I think that um you know real yield decide I do think if you can have an asset like eth that actually generates a return stream it's a super super powerful narrative that's going to sell really well within the institutional Community but there's there's another debate that's happening around ethereum which is if I had to summarize there's people that are

questioning the rollup Centric road map and there's this push coming from I guess sort of the unaligned corner and sort of Paradigm in a sense which is if I had to summarize it the make eth L1 great again and a questioning of the rollup Centric road map and I'm gonna list I'm gonna actually read out this this quote here from cow over at Alliance who I really enjoy his takes and I think he sums up uh how a group of people and I'm going to say I think it's a loud minority but certainly a group of people are feeling within um about eth at the moment

okay here share my screen here's here's the quote if you could go back in time and change one thing about ethereum what would it be for me it's the rollup Centric road map they should have prioritized scaling to L1 instead to be clear I'm not saying that they should never do l2s l2s will happen permissionless with or without them I'm saying going l2s before fully exploring the potential of the L1 is proven to be premature and it has led to all the uxdx problems Tech debt and VC Mal Mal Investments that we have today I remember distinctively watching a vitalic presentation in eth Berlin 2019 in the front row we had a giant slide that said ethereum needs to scale at the L1 before scaling the l2s shortly after they pivoted to the rup Centric road map

to this date I still don't know what happened internally and what led to this pivot so I think that's one frame of mind and in inherent to this as well is where what layer of the stack is are we going to be able to capture cash flows and because everything is still integrated or bundled within salana and there's this idea that that's actually going to happen at the execution layer that maybe salana is going to be able to capture more cash flows more real yield that type of thing and I think that there is the the vast majority again um I guess zooming out to a perspective that's going to frustrate everyone my

macro view on this on a long-term time Horizon is that all of these l1s for the most part are going to converge on an extremely similar design and become relatively commoditized and value is going to move up the stack and so I think we're basically in this long-term commodity boom which is similar to different periods of time in the 80s and and 2000s when Commodities got financialized um by you know by folks like Goldman Sachs where there was this big kind of long sustained boom in Commodities before they rolled over and I think that's basically this long-term trade that we're seeing with l1s and so maybe a take that would frustrate

everyone from Every ecosystem is that I I think the L1 trade is going to go for longer than everyone thinks but eventually it's going to trade sideways into eternity and there's a lot of debate right now around you know Ceno just I've seen Ceno post about this a lot on Twitter but you know if one more person asks where is value going to be captured in the modular stack uh you know it's it's kind of the idea that launched a thousand podcasts and I think my take would be probably nowhere I I don't actually think that right right now I think that you're you're going to do a better job of holding on to those cash flows at the execution layer But ultimately I see it all migrating up and going towards apps at the end of the day which is why

I know that there's a lot of uh heated feelings about this and debate around how much value should or or how much activity should we want on eth the L1 but I'm not actually sure on a really longterm time Horizon that it matters all that much because I view all these things as all the l1's as being relatively commoditized in in the interim though I am sympathetic to the view that it doesn't make sense to completely stop developing the L1 and I think there's one some pretty sensible uh push back and seen balik talk about this as well is that you know Moors law is a real thing and so even though we want to keep hardware and bandwidth requirements for validators on the L1 really low I do

think it makes sense to increase them a bit relatively in keeping with Moors law and so that might enable you to have shorter block times which I understand is is a topic of conversation in the ethereum community today and there's this push for multiple concurrent proposers um from both the ethereum and the salana community so I think this is an old idea from toly we're actually going to have toly and Max Resnik on the Pod to discuss the ethereum angle and the salana angle I do think that there be the something that's kind of funny around mCP in general is that even though both ethereum and Salon is interested in it I think they're interested in it for different reasons I think Max sees this from the perspective of censorship resistance and being able

to break the Monopoly that proposers have whereas I think toally sees this as a way to get around this very pesky uh 200 millisecond requirement that it takes to send an atom around the world and have even shorter block times and I think again whatever the spec or implementation details end up being you're going to have to make some trade-offs on on you know what you're really optimizing for but yeah I think in the short term it's probably very difficult for it's probably very difficult to put the genie back in the bottle of the rollup Centric road map and I ultimately think if you let the rollup Centric road map play out it's going to end up being just fine although one idea that I would push back on in general is you often hear people say you

know I've only got so many hours in the day and I'm just going to focus on my one ecosystem I think that when ethereum adopted the rollup Centric road map they didn't take some of the lessons of Cosmos and one of the things that Cosmos got deeply right is they prioritized interop from the start and they actually had a philosophy and a culture around interoperability and and I think that they maybe missed some of the downside of Cosmos which has been this fragmentation um which has been extremely real um in the cosmos community and it's it's really interesting to look at Cosmos as an example because there are a lot of successful Cosmos full stack chains Celestia is a

great example bar chain is a great example dydx is a great example osmosis and so even though you know there's this question I've seen floating around is Cosmos dead I think the cosmos as a as a design philosophy is alive and well and actually succeeding it's really The Hub that is struggling and value ACU for Adam the token and so I think that maybe if ethereum had looked at that with a little bit more of a critical eye in the beginning we could have seen ahead to some of these challenges but I think it's a I think it's as as you start to see these different l1s converge in their architecture and their road maps I think it's a really good lesson for other communities and now that there are Bitcoin l2s that are developing I I I

don't think that because these communities have been so siloed from each other over the course of the last couple years having talked to a couple of the Bitcoin L2 teams I'm not sure they've fully internalized a lot of the lessons that eth l2s have learned and I would say the same thing for salana as well it seems like we're going to get salana l2s and there's a lot of lessons that you could learn from the eth uh from the eth L2 and rollup rollup Centric road map and so I think it makes a lot of sense for each of these communities to pay attention because each like be it salana or Bitcoin or ethereum or Cosmos they've all optimized for different different parts of the stack and I think there are good lessons to be learned um from paying attention to each one and finally this isn't really a big

story but I thought it was interesting I saw this tweet um today which where people were talking about you know the relative opportunity set and the ease of investing in crypto in 2016 versus today and the original tweet was a a great account and I you know I don't mean to call anyone out here um at all because a lot of people actually frankly agreed with him but it's uh trade but why and I'm just gonna share my screen here and read this out I have a strong I have a very strong feeling of my job here is done after my last 50k Bitcoin buys somehow I think

the Easy Money Paradigm in crypto's over not saying won't be opportunities anymore but I think of the 2017 through 2021 as parallel to the poker boom of 20 2007 to 2010 when there was just such a crazy influx of new participants it was ridiculously easy to extract money from the player pool after new money dried up and people stopped playing the space became more and more tough as average skill increased and tools became more advanced an endless vicious cycle the result being people are just forced to play uh the result being people are just being forced to stop playing online poker competitively and only the best of the best survive and have enough Edge on the remaining player pool basically I see this exact thing playing out in crypto and I feel right about now as the Tipping Point where an obvious Easy

Money Paradigm turns into a really hard Market to beat as there's consistently less new Dumb capital and consistently more professional institutional type players entering the space even the Traders with an incredible uh track record of timing cycle tops and bottoms were mostly capable of it because overlying old cycle patterns and curvefitting charts I think that kind of stuff will no longer be as useful going forward and hence my own Edge will also take massive hit okay so I think there's a lot of stuff to unpack here and I'm just going to share a a true story actually when Jason and I were thinking about starting blockworks before we even started blockworks uh this was 2017 and I went to a buddy of mine apartment and I floated this ridiculous idea of

Hosting crypto conferences by him and he actually got to crypto before me he bought a little bit of ethereum and his response was dude I just feel like we missed it just feel like we missed it look at Bitcoin and E look at how much they've already run ah I think I think we're behind and that sentiment I have seen crop up again and again and again in crypto and I think there's a really strong human urge here to engage in some revisionist history and to just say look if I could just go back in time all I had to do is buy Bitcoin and E you know what this reminds me of is those you know those like hodal memes that crop up every now and again when bit coin is going down and it's this is how it looks like to

Hodel and it's just walking up a hill and this is how it actually felt and you know there's like a pit of fire and and lions and like a moat that you have to swim across with sharks and I think it's true you know and if you go back to 2015 or 2016 Bitcoin did not feel like an obvious bet first of all the idea was just really disproven second of all we were going up to you know these Civil Wars and we were really uncertain about how that was going to turn out although that was uh that was well before that actually took shape you didn't even know if this idea of non-sovereign money made any sense you know it was crazy volatile is is 80 some percent off the highs it didn't feel like an obvious thing at all the only thing you ever heard about it was

that it was negative and drug money you didn't have any of the proponents that you have today you didn't have Larry fin going on CNBC and saying this is going to be great ethereum was I mean ethereum was not a consensus bet until 2021 you know for the first you know six years of its existence it was an Ico remember icos were a bad word back then it it ran up to 1,400 bucks and then it dropped to $85 all of the intellectual Capital my memory of the 2018 through 2020 period was that there was this reconsolidation of intellectual Capital around Bitcoin it was a really popular thing to say you know at conferences that it was only going to be Bitcoin from here and nothing else was going to matter you know we were programming

conferences back then I remember I remember this is how people felt and you were kind of laughed out of the room or looked at a little funny if you were you know doing anything other than that and so again I just think there's this really strong and look at how uh nonconsensus Solana was even 12 months ago 12 months ago and you could have easily just said well you could have just bought soul and then held it I don't know I think there's a really strong urge to engage in some revisionist history there now some of these points here were specifically written from the perspective of a Traer and some of the edge that is going to erode is more sophisticated participants move into the market that's where look there may be some amount of Truth to that and if you were a retail Trader

that was trying to that had some Edge over your other retail Traders then yeah that edge is probably going to evaporate yeah and you either need to up your game by starting a more sophisticated hedge fund or joining a more sophisticated hedge fund and upping your infrastructure and and all that type of thing well yeah you're probably going to be you know the rest of retail but something that's happened to traditional financial markets is basically the same thing it used to be you know in the 60s and 70s and 80s it was mostly a retail driven market today it's vast majority institutional imagine saying you know in the 60s and 70s that there was going to be no more opportunity in financial markets that's think about the wealth that's been created uh since that period of time as it's a much more

sophisticated institutional market and I kind of think today that saying that there's no more opportunity in crypto where that the easy money has been made would also be like looking at Google when it ipoed in 2004 and saying well you know these guys already made about 10,000% that was the Easy Money uh okay I'm out and I think it's actually the opposite of that yes there's more dispersion right you have more sectors to choose from that type of thing but I think there's they're going to be separate eras in crypto same way that there was in the internet age and there was kind of the original kind of cowboy and wild west

era where yes there were huge gains to be made but also massive losses the risk was extremely high we know that it has knock on wood largely worked out in a in a relatively positive way but there were no guarantees of that at the time I think at many points in crypto's history it could have just been squashed out by the US government if they had wanted to and so yeah you look at that now and say hey look at these crazy returns there's not going to be any opportunity for me in the future I think I really think it's the opposite of that I think that we are on the verge of sovereigns some large sovereigns accepting crypto and maybe possibly knock on wood actually creating some rules of the road which will allow you know allow companies to take risks and

to for more traditional forms of capital formation to emerge and for you to be able to return you know profits to token holders that type of thing I don't know I think we're I think we're just on the cusp actually of maybe the market structure has changed and there aren't going to be this like yep I just buy at the bottom of the four cycle and sell the top but a longer slower grind upwards where real value is created and if you're operating a business in this space you know this is just one man's opinion but I just think it's better I think those are much better conditions for business operators and for sustained value creation and so you know I this was just one small argument that was going on on my feed but I thought it was worth addressing because this is something that periodically people worry

about either uh Folks at block works or things that I hear uh banded around and if you're out there thinking hey I might have missed the boat there's not going to be a ton of opportunity if your mindset is that I'm just going to trade against you know dumb retail coming in and buying meme coins then probably you're right but also probably that's not a good for society in general and I'm not really rooting for you to be able to keep your Edge there not trying to be a hater here but you know I think we can all agree that's probably not the Super even if it's neutral it's not like a great thing right it's not why a lot of us are here um but I think building new business models and you know innovating on on and creating a new you

know parallel Financial system like that stuff is we're just on the doorstep of that and so I think there's so much reason to be optimistic operating in this space and yeah I think I think the best times are are still ahead of us honestly so anyway guys that's my that's my rant I appreciate for those of you who have stuck around and listen to me talk to myself for this long uh framework miss you guys um we'll see you next week uh I got a plug uh permissionless here again we've got a phenomenal agenda for everyone and yeah I think this year there's going to be more of a focus on politics than there than there ever has been I think that this election is going to matter quite a bit I think that the cabinet members that you know each of these nominees you know put in positions

of power going to matter quite a bit uh and I'm really optimistic about crypto in the United States and we're going to be talking all about that at permission list this year and have a bunch of prominent politicians uh names TBD so you know if you if you care about that and also if you just want to um listen to some nerds talk about crypto and have a great time I would highly suggest you come out and uh and hang with us so yeah thanks for let me see if there's anything else that I didn't cover here but thanks for listening to me Yammer guys I appreciate you all okay yeah I think that's about it all right team cheers see you next week hey everyone hope you all enjoyed today's episode wanted to give a final shout out to namada again a team that is near dear to

my heart they are building the shielded asset Hub which is protecting the future multichain talked a little bit about how that works in the mid roll but for now what I would highly recommend that you do is go check them out they're in their main net launch phase you can follow along with everything at n.net you can start rewarding Yourself by shielding your actions and strengthening data privacy for all across the multi chain so thanks again toada for all the great work that you're doing