Memecoins, the EigenLayer Debacle, and Bootstrapping Sui | Analyst Round Table

Transcript

yeah I think memes are increasingly fair play spending my time at more and more crypto conferences I'm actually understanding like how many people hate this asset class um but in actuality like the longer they trade the more of a historical time series they have the more um palatable they are to quantitative Traders and hedge funds the more palatable they are to TA traders who look at support and resistance and things like that like um and the that that those norms compound uh until they are like actual risk management tools to some degree nothing said on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for

informational purposes only and any views expressed by anyone on the show are solely our opinions not Financial advice Pacho Ryan and our guests May hold positions in the company's funds or projects discussed owns any of them surely he owns a bit of some I own I own jto um but uh but I blockworks Financial disclosures form real quick also if you're in blockworks you have to own half of whatever Solana tokens there are or else you go to jail it's G be nice all right we are doing what are we talking about I lay

token launch Pi USD synthetics referendum is the topic notes that I have anything else or can we get started I think it's good I think it's good Ryan Connor anything that you specifically want to touch up on touch um did I I added something or no I didn't I think we did okay I will have to say if we don't mute ourselves and I'm saying this to everybody not just a particular person if we don't mute ourselves um Stefan gets quite upset

so just out in yeah okay yeah Brian yep just mute myself only when I'm not talking yeah where the kids daycare is gonna be on the audio just doesn't want to hear about me at all no we we definitely do um forget how to do these no it's always uh background New York noises that's my bad what's up guys welcome back to another episode of zerox research I haven't been with Ryan we got a mute butd there we go I haven't been with you guys in nearly two months now

so it's very good to be back um I missed everything that is happening in the markets so I'm going going to call upon Mr Dany to tell me what has been going up what has been going down and why this time is different um why this time is different that's fun uh as far as the markets in recent weeks I think you know Bitcoin and the general markets have seen some strength again so obviously everyone uh everyone in this space their their risk appetite has kind of come back in full force very quickly um you missed out on on some hippos some animals going crazy on the salana blockchain so I think we've just seen a

very drastic change in sentiment from a month ago where it was Doom and Gloom everywhere and now it's you know we get some some green candles on bitcoin and now everyone is very excited to uh you know ape into their favorite alts and memes again very quickly it's kind of crazy how quickly it shifts I feel like it wasn't this like memes have clearly become it used to be maybe like let say Bitcoin goes up Solana goes up um or like ethereum goes up Solana goes up and then you'd get like all l1s um and in the end it would be Cosmos and then everything would nuke now it feels like Bitcoin goes up ethereum does not go up Solana goes up and then every single meme that has ever existed goes up and now we're getting

old memes going up as well um Mr must mad has a 10 meme list that he's been flaun in around um I feel like that's definitely not going to end up very well but I mean at least it's just so difficult to talk about people like who are doing that because on the one hand I don't want to be like the Boomer who's like oh meme coins aren great but also like there has to be a limit to how much you can talk I think Murad is fine but I've seen other people catching Flack I don't want to name any names but for Shilling like actually really really low market cap stuff um curious how I guess like I don't know what you guys' spots are on that is like

do you think that's fair play and I know it's not like block Works research but what do you think how do you approach that yeah I think memes are increasingly fair play I don't I I can't say low capat memes are because such small amounts can uh really move meme coins but um or sorry low capat me meme coins but yeah so the thing about markets is that um the longer they trade like the more um quantitative data you have the more like um like Trader myths you have the more um Norms are established within markets so uh memes are really cementing themselves as like these high beta plays if you want to get

back into the market and like get some juice really quick kind of like call options on some upside so um you know for all the folks that are really like fading the mem coin Trend and I'm incre like now that I'm like spending my time at more and more crypto conferences I'm actually understanding like how many people hate this asset class um but in actuality like the longer they trade the more of a historical time series they have the more um palatable they are to quantitative Traders and hedge funds the more palatable they are to TA traders who look at support and resistance and things like that like um and that that those Norms compound uh until they are actual risk management tools to some

degree now I'm not saying that like they're going to be in model portfolios or they're going to be a large part of like hedge fund strategies um but like just look at someone like Joe mccan like he decided to participate in um meme coins um I assume through his fund more than just personally but certainly um he um he's been loud about it on Twitter and um other funds are going to see that and they're competing with him for Capital and they they want you know LP Capital just as much as he does so um there's a lot of um look people want to say it's illegitimate um every day that the volumes increase it becomes less and less legit illegitimate and and and yes like these volumes are going to plummet

90% um at some point in time but like the market volumes generally are also going to plummet like 50 to 70% so like that's going to be that's going to be beta and and these things are going to live on and who knows how big of a part of the market trading they'll be but like I think I think the evidence suggests that um it's more likely that the um memec coin stuff is here to say than it's um you know than it's Emeral yeah I have two things on this one is that I know anecdotally that funds are actually doing mem coin trades now and I feel like that wasn't really a thing that I was hearing about a few months back I'm sure there were others but now it at least seems like they're more comfortable talking about it um the second thing

is I feel like with memes it's they've always been a thing but this cycle they've just really obviously become like very very clearly beta um and like very how do I put this they've become more normalized um which I think is fine and that point you said about like if you're late to the market you can just enter at this point I feel like it's become obviously I'm not a great Trader but not obviously people don't know that but um I found that it's actually been relatively not that difficult to just play again um few month at least during the bear it was like a lot more difficult to pick memes um even like six eight months back I mean there were periods on Solana where

you could just Chuck like it was like every entry is Forgiven and you can just make money um before the conflict between Iran and Israel it was like the very recent one it was like that um again where it was like you could just play around and somehow your entry would be forgiven and you would be blessed actually have something that I want to talk about but Danny I know you have a lot of fuss but I want to bring up PVP trade after this as well because it's something that is actually really and I tried to get Ryan on it he did not want to get on it but I think it's something that we got to talk about as well yeah I just I want to add one thought here I saw some discussion um I mean there's always discussion about memes hating him loving them um I saw

toally weighin as well and he kind of had this opinion that you know as you're as we're seeing sort of like the tech centered to and plays um become more rooted to like actual values and and cash flows and what they can generate as as businesses um in his mind it's like becoming a bit more of like this dichotomy of you know you can see these like businesses essentially or or you know Tech and utility Focus like you know assets or protocols kind of become tied to like what they actually provide in value whereas memes can like live on and continue to grow as like these just pure speculative plays versus

in the past it was like you know if you're buying eth or whatever the asset is it's like you're paying some absurd markup on like virtually zero cash flow to the Token um and you're hoping that like the mtic power will fuel it to some valuation that you like one thing I will say is if memes are outperforming and they are very clearly outperforming all other classes within crypto how can you justify like if you're a fund analyst and you've under performed this entire cycle because you were mainly an e defi or like even Solana defi hasn't done particularly well compared to memes um how do you even justify that um like because I think that's the main issue that a lot of people have is that they

the same with Builders so they're building these protocols that are very clearly like focused on moving the space forward and they don't get any love and then it's the same with the fund guy who's doing all the cash flow analysis who's actually like talking to teams reading white paper doing whatever he has to do to like get a little bit of Alpha and then in the end either some random token Launches on pump. fun and it makes a lot of people a lot of money or it's like very cabal I don't like the word cabal but like obviously meme coins are an insiders game like nobody like everybody knows this and it's the same with most infrastructure tokens as well so how do you justify that as a fund analyst and be like you know what like I'm underperforming just because I can't pick the right tokens

you're shaking your head they're not they're not under they're not underperforming because their Benchmark does not include meme coins that's fair yeah so the premise I reject the premise um except for the biggest meme which is Bitcoin but otherwise yeah then how about this your I don't know how often you have to go back to your LPS but you have to there's fomo right like that analyst can participate and there is personal fomo but from a fun perspective Like These Guys these many many funds are barred from it um many funds like they Benchmark against Bitcoin the bitwise 10 um some mixture of Bitcoin and eth um so actually they're quite happy about eth going down

because they probably own something with a higher beta than eth um oh maybe not maybe that they own maybe they own a lot of eth beta and they're down too I don't know um but yeah so so the I don't think I don't think a lot of funds are seeing like there's not like direct fomo versus their mandate for certain but there is fomo like versus other funds that are outperforming them because they were allowed to participate in Bonk in like trade Bonk but versus their Benchmark um it's a different story yeah but I guess I didn't mean like versus your benchmark but I meant like your LPS you have to go back to them in a few years and say hey guys we made I don't know 60% um but like you can see these people who traded in-house money and they made

800% just because they bought popcat MOG and bonk at the right times but you don't think that matters you don't think anybody will be upset because they can be like I think they have this they're coming from the same Viewpoint right like those those same LPS are probably like you know if you had bet the house on Bonk and it had gone like you know the backlash in the other direction would have been so much worse right I mean obviously it might depend on what what your fund really looks like and who your LPS are um maybe you have a a degenerate fund I guess but um I would imagine that like the benchmarks that these people are used to and like the the things that they're they would be comfortable you know putting large amounts of capital in

maybe at this point in time you know maybe in a few years if if memes are 50 of the top 100 coins that story might be different but it is still like a relatively small part of the market it's not quite so normalized yet yeah it will be I think we'll see one other token that has been doing really well is SOI and and I still cannot find good SOI ecosystem tokens um do you guys know any pro like I know aftermath is supposed to be the next keto that's what we're all saying we've all convinced ourselves that aftermath is going to be the next keto and the air drop is going to save everybody's lives but it I feel like when we talk about s and apos we mostly say oh like what's

the marginal benefit that you get off another L1 um but I want to kind of talk more about how do you see these guys actually build out an ecosystem and compete not in the sense of like what are like is the tech better is the language better but more so like what approach do these guys need to take such that for example if you go on Aptos and you go on econia they we we just sent around this protocol like Conor protocol you can last time I checked on econia you could trade four assets that's just not good enough um it's like Solana 2020 not even Solana always had semi you could do stuff but on some of these chains that are funded crazily SOI was giving out $200 million

last year just for incentives and they have like free protocols where you can swap between four assets like how the how do you approach that what what do you guys think is like the change that they need to do get more assets on chain I mean I think if you look at Soul a year ago year and a half ago it's like it was the same they kind of had the same problem at that time there were lots of teams that were actively building but there were very few tokens on the chain to trade other than just like Soul maybe Bonk um and maybe a you know few you know dite projects from the prior cycles that had already you know released their tokens um this feels very similar like we're kind of these ecosystems are brand

new so you know there are some things that are out but it's like very limited in scope at this point in time are they brand new though it's been two years now and also God bless the broken Souls that bought the original Solana tokens that just underperformed Solana I feel like that was like 2021 they at least had tokens they went down and it was all by the same guy who like developed 13 protocols or something but at least there was stuff to buy and lose money on on Su you can't even lose money because there's nothing to buy um becoming increasingly convinced that everything going forward is all business development from the foundations and Labs or whoever is trying to make ecosystems happen but like more specifically it's

like and I think Danny you're right but more specifically it's like getting qualified or um legitimate asset issuers to put their token on the Chain um Ethan salana have this to a lesser degree Bas and arbitrum have this where there are like legitimate projects who decided to launch their token natively on those chains um when you when you think about what other ecosystems have done over the last say six years to get to jump start those ecosystems I think of something like like some ecosystems have done seemingly everything right and results have been

mixed to subpar um if you think of like can you give an example I just want to think of it with examples as well yeah I can think of um like look at um like polygon for example um with like every meaningful Enterprise partnership you could think of like everyone was so jazzed on polygon 24 months ago because they were crushing it on the BD front but none of them were like asset issuers issuing tokens like in a crude way to describe it like tokens that people want to trade that they have confidence in but like in like high contrast like salana focused on like they got geonet

to bridge their token to over and like people want to trade that token pith and Wormhole issued there um all these dpin projects are issuing on salana you look at the ethereum ecosystem where like you can argue about like the validity the the varying degrees of validity of these projects but like every single LST issuer like is getting like meaningful like press and they're issuing on E or whatever so um I think it's all a BD game and that's really hard as an analyst to figure out like you have to have a boots on the ground approach um you got to get out of your spreadsheet and like talk to folks um to figure out which of these changes is

doing BD the best so it's a different ball game yeah and it's also they kind of affect each other a lot like the more volume you get the more people want to come on your chain because they want their tokens to trade volum they want their tokens to get attention so it's the same as like that's one of the I don't want talk too much about Soul e but that's one of the only things that actually worries me about Soul e like I am relatively confident in ethereum just because we've been having these Chatters with Max Resnik and everybody else saying you know like I feel like for something to die I'm young so I don't know how corporations die but in my mind for something to die I feel like it needs to go the wrong way and then nobody cares like nobody actually

tries to affect change and I feel like with e we've been seeing a few eips that are one is to reduce block times recently I saw and one was to improve gas um improve block size and so that very clearly s signals to me that people are actually care about ethereum and they want to like they see that there's some Er inous ways and they want to fix it my only worry is that and Ryan this is something you brought up is that as a chain you want people to issue assets on your chain like you want tokens to launch on your chain and on ether it's just not like the last thing that I can think of that eum beat Solana in is Nao which I don't know if you guys remember like

the and that I don't even think that was like natural it was like very much affected by cabal Dynamics and like Insider so I can't remember the last time that somebody like went ahead not last time but I feel like most tokens are launching on Solana now which is the only thing that cons concerns me about aerium it's not like the tech side because I think realize their ways and they're going to fix it same with everything else in ethereum land the tokens that launch in the evm are on the l2s like you launch your liquidity on arbitrum or base or you know pick your favorite L2 they don't launch on Main net because it's not economical to do so for individuals to claim pay the gas swap Etc so it's just the same problem

as everything else the activity is moving there the tokens are moving over there and then they're getting you know fragmented more because it's like you got to pick which L2 or which l2s plural um to start jump start your liquidity on yeah if if you're an asset issu issuer you're very confused about what's going on on eth like do they want to accelerate this thing are they bringing defi back on chain the bank list guys really want like they just tweeted out maybe two weeks ago like defi should live on the Ethel one balic said the opposite he's like I wish that there was no defi on the Ethel one so you're very confused um that confusion needs to be cleared up for the market um and these protocols to kind of get

um um to figure out the direction of of eth and to see whether or not it makes sense to issue assets there there's a ton of liquidity there they just need to tell the market everything's going to be okay and unleash that and unleash that liquidity hey guys what's up I'm joined by Miguel uh the co-founder and chief scientific officer at neillian thanks for coming on Miguel you're welcome um so what is blind compute and why is it important for crypto and AI well you know you can we can encrypt data at rest and in transfer but when we want to process it you have to decrypt it first usually that's what happens in in web 2 and that's the mother of all problems

because then it means that the company running that service has to have access to your data so blind computation solves for that problem and it's a process where data is computed without revealing the actual data or the nodes uh to the nodes performing the computation so it actually is able to compute while your data remains protected or encrypted and I guess well it's important for crypto is is because without privacy enhancing Technologies crypto makes everything public right so it's it's a problem for AI where all information is very sensitive think about the user prompts the model weights and the training data sets so privacy or blind compute is actually the ingredient that is missing in the crypto

AI mixture if you really want to make it secure perfect and how do you see privacy Technologies keeping up with um increasing complexity in AI that's a very good question um so privacy does uh add some complexity and slows things down just like decentralization but we're seeing some um you know some um important changes in the market like for example models are becoming smaller so you have all the Lama series of models that are very performant and they're typically smaller than the equivalent um you have agentic flows so agents are very interesting because they provide um they Benchmark

you know in the same rank more or less with simpler models just because they're following these patterns where they you know the model just questions about it about the result and looks at it from different angles uh so that's also a very interesting Avenue and then there's also this interesting Avenue of binary and trary networks where where the model weights are just represented with bits or with three values and that makes it easier then and more efficient to be implemented on top of um a privacy preserving layer plus uh we think that you know AI is evolving towards more Independence um you can think of it right now as um you know an AI would be like a soldier and you give it you know

very lowlevel order but as it increases in intelligence it will move towards a relationship with a general so you just give some General High pattern you know command and then the general goes off and does its own thing so that will place less stringent requirements on timing um for for the underlying crypto and at the same time that's when it becomes more sensitive because the information you typically share with a general is way more sensitive than the one you exchange with a with a soldier that makes sense and how is million specifically approaching um blind compute and how will it adapt to increasing AI complexity so blind compute we're we're building what we call the orchestration

layer the main idea is that there's no Silver Bullet in the Privacy preserving in the privac enhancing Technologies world uh there's different um cryptographic protocols like zkp and FH and NPC and even Hardware based cryptographic Solutions like tees we're not prescriptive as as to which solution is the best because we really think they are different Tools in a tool set and it really depends on the problem that you're solving for so we're building this orchestration layer that enables the different elements to coexist and in you know gives the developers the tools to actually combine them um so that they can best um solve for the for any given problem or or use case that they're

interested in and specifically about AI um and the complexity we're targeting um a layer on top of privacy enhancing technology so there's there's like a major gap of um technology missing between privacy enhancing Technologies and the applications in this case AI that Gap has been filled traditionally in computer science with tons of Technology like you know uh binary trees algorithms algorithms about sorting algorithms about uh representation of of problems as graphs algorithms as greedy programming linear programming so there's like a ton of research that has been done over decades and Decades of computer science that is kind of missing

here so we're specifically targeting for that Gap in in the AI vertical and one thing that we've we've done is to innovate or pioner the use of some techniques taken from image processing which is a completely separate field from actually cryptography specifically targeting something called the discrete wavelet transform which is like a discrete cing of of the forer transform um it's called the DWT and we've ported those techniques into P so we can run them on top of FH we can run them on top of MPC and actually accelerate the bottlenecks that you typically found in AI those bottlenecks are mostly around the evaluation of nonlinear functions

that's you know the activations functions that you have or the normalization uh layers all of those are the the really tough questions or or or problems to to solve efficiently in in AI when you run them on top of PS and these DWT techniques are actually accelerating those significantly by as I said taking techniques from another field and porting them into into into AI on top of PS fantastic it sounds like you guys have some pretty big gaps to try and fill in but I'm excited to see where this goes thank you so much for joining us one token that did launch on etherium um IG layer igen which I think MOG just passed its market cap I think

either yesterday or the day before and it's out I think market cap wise it's out of the top 100 which is kind of crazy to think about because it was touted as the next big thing for so so long it is number 114 Mark cap wise FTB 6 bill which is still obviously very Hefty but I think this is like not really about it's a bit about appetite for Defi and like infro stuff but it's also a bit about I think the team really boted that launch like you made people wait four or five months you didn't build anything during that time like you had abss but people by that time people had already gotten shafted on LSD launches and abss that they were like yeah I don't care

and now it's it feels like it's a claim and dump Ina um did you guys look into first of all did you get did you even unstake your stuff yet or are you waiting uh didn't participate um but Egan is um or Ian it is more like a top 20 token I think if you're going by FTV I am not going by FTV because that doesn't fit my bias okay yeah so the the MOG stat was interesting but it's still like probably a top 20 thing if you're going by FTV uh and that's important for the folks to know because um valuation definitely matters um there's a lot of people that expected multiples on

Capital buying Celestia from $10 to $20 at an absolutely absurd valuation um so the folks need to know that um as far as the Egan stuff like yeah um I think they're a consequence of like the expect expectations are just far too high they were far too high from the beginning like I don't think that there's like this I don't think that there's like this cabal thing that like like does a narrative and like plans it and then the market takes it and takes it and runs with it I think it's a little bit more random um but the market definitely took this narrative to far and really inflated expectations beyond what they were like if you were to take

a um a very object if you were to do like a very objective description of what Egan was I might not be 100% right here but I think I'm directionally right like it's like it allows you to reh hypothecate your stake and gain leverage on it and like allows protocols to raise capital and it's like not the second coming of security and even if it was it's like cash flows kind of matter the Market's valuing this thing on tvl right now and like we found out a long time ago that tvl is not a valuation metric like it's kpi and it's like has varying degrees of utility depending on what you're looking at but tvls not the way to look at these things like black rock

is not valued on its AUM it's valued as a it's management fee on that AUM the cash flows that it produces so um yeah there's some Egan controversy um but I think that you know the controversy wouldn't be there if the market didn't have these like very inflated expectations of what it was capable of they also had that um they also had a wallet sell did you guys see that and they were like oh somebody there um somebody impersonated somebody else so they received these tokens and then they sold them which seems so ridiculous to me that like a team like Ian player can deal with these issues to like to me

it seems fake because it seems so stupid like you should definitely triple check something like that but what what's uh what actually happened there what's the prevailing narrative there the I I'll I'll look it up just to clarify soam doesn't well he doesn't watch this but if he did he would probably get upset but as far as I remember it was that somebody impersonated somebody else um and got access to certain tokens that were supposed to be vesting that was not supposed to be veting some something along the lines of somebody impersonated something and then there was a mixup which is stupid that should not have happened yeah classic bit of social engineering I think the community kind

of was outraged by the by the lack of the use of of onchain locks and vesting contracts you know just saying hey we're going to have a you know some Finance guy manage the the funds and make sure that everything vests properly is feels a bit silly when all of the like underlying you know chain infra and Tech is built around tokens and how to manage them so um it does seem a bit silly that if you're going to launch at six billion plus fdv that you wouldn't just like have this handled by onchain contracts but um yeah I don't know does it make you doubt the tech uh no I don't I don't think it makes me doubt like whatever igen you know their da Solutions and what they're building it's just more of

like I mean that's it seems like a bit of a silly oversight when the tools are available to do this the we have the dev Talent as well right when when these when when these like like public um mishaps happen it actually becomes really interesting from like an entry perspective typically if there's like bad press around a good thing you like uh like that's great as someone who needs an entry on a thing so if you wanted to trade Egan and get that entry like you hope that this news hits um but there's no margin of safety right so this is this is like one of those like we still have a ways to go on um margin of safety

for this thing buy the hack is my least favorite trade by the way it's like I feel like I always I don't know if it's it's you're not supposed to do it I know but it's like it's fun and but you always like you said you can always get a bit burnt by the hack has worked in trafi very well um I by the hack I don't know maybe it's just because I'm closer to crypto now but these things really like get some reputational reputational damage from hacks um you know losing user info in like losing an email list and addresses in trafi is like very benign to actually losing Capital

directly in crypto so I think that um it's it's just much scarier here so like when when they do have that when they do have those hacks um the reputational damage really lingers I think the time frames are more impactful here it's and you see this frequently I think as well with like smaller projects that get hacked you know there may be a buying opportunity of something if someone gets access to like the mint function and then they run out of tokens to dump you know and it can really like absolutely plummet a tokens price and that might open up an opportunity where it's like literally one cent on the dollar and you would not get that opportunity in trafi um but over the longer term it's like if if it

comes back up to any kind of meaningful you know relative valuation of its former self it might just be the slow decline to nothing versus you know I think in the trafi case it we don't see so drastic extremes so quickly in most cases unless unless a compan is actually going bankrupt so I think the edge with most of these are also kind of gone like what you just said Danny where you track the wallet to see like when the sales when the hacker sales are done it's people just front run so the whatever return you got the 40 50% is now like 15 20% but with igen I wanted to kind of bring up um two other rest I feel like reaking just hasn't done particularly

well and like a lot of people could have seen this coming I guess um but like apart from talking about is the yield going to be good like something that everybody was discussing six months ago but yes the execution has also just not been great iig ler had this uh mishap um apart from that they B I think they bought the um token launch like I think four months is way too long to wait to launch a token to give somebody like to just tell people we'll do it in September no vote nothing karac is obviously struggling people don't really talk about it and symbiotics Twitter has been hacked for three four days it's supposed to be like the second biggest reaking thing trying to compete against IG L and to me this

is so ridiculous because you can't go on their website because you're like if I wanted to restake or I can't I'm not gonna take that risk like their Twitter sacked I'm not even sure if their website's hacked I'm relying on some Discord server which often get hacked or with their telegram which might also get so it's like nobody can use your product what are you supposed to do it's just like a ridiculous thing I don't know and like this should never have been an ethereum narrative I think reaking is just not very sexy narrative um we could have come up with something better but even let's say it is the etherium narrative like it is whatever was touted for two years sham is the Golden Boy of um California he's going to save all of

eperium you nobody can use any of these things without either getting dumped on by some random guy who got an email because he like identified himself as an investor or you just can't use any of these I don't know what do you guys think uh yeah I mean I yeah it's Contin it's a continuation of of what we've said right just like poor execution like super inflated expectations um I mean look it didn't make sense from the beginning right like Egan ler was like oh we're going to re hypothecate each security and launch all these new things because there's a shortage of security out there and that's what everyone like really really wants they they want to reh hypothecate

this eth um it'll you know a thousand flowers will Bloom whatever um and I don't know I think that the smart Market participants were just like sitting there scratching their head like okay this is p rehypothecation like why use why not just use other things than eth and Egan ler raised like 160 170 million based on that narrative symbiotic came out and raised 6 million and said we'll let you re re hypothecate anything um so I don't know the narrative was like it was very very forced and I think anyone who was being objective at the time saw that um and look I mean it was it was a tough time I'll give folks the benefit of the doubt like this was like the emerging

narrative out of the bare market like people were looking for Hope perhaps um but look I just think that the industry needs to focus on being less impressionable uh these narratives they're mostly nonsense um at the end of the day like size up the [ __ ] cash flows um even like Celestia traded to like what a 20 billion doar valuation um people were pedling this modular money narrative it was nonsense for anyone looking out from the inside or sorry look looking in from the outside um was left scratching their head understanding how little how how um fees da would generate versus that valuation did not make sense um I think

that this will be a good cycle for like like for lack of a better term like the educa like the like the education of the crypto space um we're we're we're shifting from this um very like narrative Trader driven environment to like this more valuation focused environment I'm not saying that we're going to get there tomorrow but it's incumbent upon the um liquid marketed for partici participants to be less impressionable like it's all it's all on you like look at these valuations reason about them look look at them versus trafi comps right like why is your series a thing like raising at a$2 billion valuation when series a SAS products are raising at like like 100

million to 400 million like there's a there's a Delta there that you need to um seriously think about and adjust like your risk and margin of safety parameters accordingly I'm going to make a Counterpoint here and if you are trading based on like you can buy and sell based on cash flow it's very good but if you're not don't try and trade something that obviously is has very little cash flows and it's just like very overinflated and what I mean by this is if you're going to play The Narrative or whatever the speculation game do play with something that can't be valued really like actually you know to you can't value to because it's there's no cash flows nothing it's just mumbo jumbo AI mumbo jumbo it's the Bitcoin of AI or

whatever people said but you know what I mean like if you're gonna speculate and do something n don't do it on like Celestia which is making 30 grand a year on 20 Bill value like FTV do it on something that's you just can't value like play the game but play it seriously don't play it like on some thousand decks multiple on some dog [ __ ] that people are going to dump on you and I don't know like this NFA not find Financial advice but to me that's why the L1 trade has always been super exciting and has been lucrative because you can never like really do a proper cash flow model on it Ryan will for sure try he'll pull up his Excel and he'll he'll run the numbers but realistically like compared to a GPU

Marketplace Celestia IG lay you really can't value it as well as um like you can't value it an L1 the same way that you can value these other things are very clearly businesses Here Comes angry Ryan disagree no but you have okay I'm gonna you can value all of those things I think the reason that the L1 trade worked for so long is because they they probably should be in the billions if they generate any meaningful like like activity um a billion dollar valuation does make sense they are platforms and platform forms like acre value massively and they have like very

strong Network effects so if you were like like look there there was a there was a time in crypto where the platforms were very misvalued right think of anything trading in 2019 like I think Salan launched at a $200 million valuation very reasonable by traditional Financial standards like maybe a little Rich at the time given like no one really knew what these crypto things would be but like $200 million FD fantastic um the market over the subsequent like 24 months like understood how powerful these platforms would be um they UND they began to understand

that proof of stake acrise cash flows and that like even if they didn't want to Value them that way and they believe the money thing like they could um and now you're seeing kind of like an over correction there right where or sorry like you're seeing like some corrective forces there where like the marginal platform is not getting the same valuation because the market just can't handle it um there's not enough fees to go around so I think of something like blast that's like really rated and didn't get the valuation of its peers um so you have this like you have this like you know you have this classic hype cycle um but but the market is understanding how to Value these things is very very clear I I do think if you

look at something like Tia it is kind of the perfect example of this similar to to l1's where you know I think in this market in in crypto especially you have participants and investors who like their mindset for the future is that like these networks will power you know billions of of users transacting on them and so I think you know people they they pull up a Celestia and they they pontificate about what it can do and and they their thinking is like this thing is going to process like G gabes and terabytes and pedabytes of of data availability and be worth so much but then when you look at it today it's like you know the actual revenues and usage are nowhere near that they're they're they're basically zero um and so then

you just you end up in this in this game where you know you can play the valuation and it's basically nothing or you know you you fight over like the marketing team who's trying to angle this as like it it it can be so valuable because you know the asset will be used here and there it's you know it's modular money it's we've got all these meaningful things we'll be able to issue assets on different chains Etc um I think you're just in this space we've gone from like the full speculative angle to now it's like there's this this kind of War being waged um in between the ran of the world looking for real you know real cash flows and the people who are still clinging to the idea of like no but in 10 years it's like it's going to be decentralized NASDAQ so I

can value it up like on these future cash flows right okay but even if the the argument I guess is like this if Solana on boards a billion people it might actually go like 50x like in terms of fees and everything like it might make sense if Celestia onboards one billion people it will like it'll be at the FTV it's at right now because it makes no money it has no do you know what I mean it's like if you're going to tie your I I can't do English idioms but you know what I mean like if you're going to bet on a horse bet on something that is like silly don't and like that you can't really value don't bet on like the thing that's just never going to make sense

and yeah that's really and Ryan you know how you said you disagree this is the exact same response that Shon would give do you see this this is the funniest thing I've ever seen in my life it's him arguing with toly and then he says what sorry it makes no sense it's just so funny but that's not very relevant so you can't disagree with that point right that means saying if you're going to do speculation do speculation that might actually lead to something don't do it on something that's already BS yeah you should exit one part of the market and go to the other part of the market where people are playing a completely different game like that exists in cry crypto I think that's

going to exist forever given the permissionless nature there and like the the um like look retail has a revealed preference for like not valuing things they don't want to play the traditional Financial game they want to play the silly game and that's totally cool and that's going to exist forever it existed in com Soxs it existed on the internet forums of the.com bubble um it exists on crypto Twitter today um and there's always going to be a place in the market for that um so no doubt um how big is is it going to be versus everything else like I don't know pull up the what bubble chart that's how we're valuing these

things um I do I do want to comment on on on one thing that Danny paid lip service to very quickly it's the um this asset will be used everywhere like therefore it should have a higher valuation um it's like okay what does that mean when people say that they're like oh like it's going to like one it's used for gas I won't get into that it's a can of worms but then they're like oh like it'll be used in defi like it'll be a trading pair it'll be like locked in a smart contracts like okay Apple stock is the most probably used equity on the planet um it is available to margin across every custodian in the United States it's a very like um relatively

low V high cash flow earning Equity like there's a ton of market cap there if you are going to lever your stock portfolio you effectively like make that Apple stock like tvl uh people try to like justify this like okay I can put eth in a smart contract therefore it should have valuation premium like everyone effectively puts Apple in the smart contract every day in trafi to lever up their portfolio and to get margin and there's no valuation premium like Apple's trading in a meaningful range throughout its life cycle it does not look like piie in the sky valuation trading at like 500 times sales like eth does uh or sorry like 200 times sales rather for time sales

depending on the look back period um so I don't know it's it's one of these narratives that just like has to die like oh I can put in a smart contract therefore it deserves a premium like no that that Dynamic exists in trafi there's no observable observable valuation premium for things that people use to put in to effectively put in smart contracts yeah but there's no deflation pull up let's pull up to e burn chart there's no apple burn chart bud um no but in there's a buyback yield there's buyback I don't know if it's that deflationary but there is there are deflationary forces this is just the general like we're always kind of

fighting Equity versus currency like is this claims on cash flow um Gary gendler lock me up or is it like is it going to be the next currency of the United States of America obviously not but you know what I mean and that's why I'm saying these things can be valued silly because like you said it makes no sense that it's cool that ethereum can be used as a base pair um I'm not sure if it Demands a huge valuation multiple just because of that but it is like it it feeds into this currency narrative it feeds into this this is like ultrasound money narrative um at one point you want to be out of the ultrasound money because you might find out that it's not

as ultrasound um when liquidity dries up but until then I think it's a lot easier to I guess this is like I don't want to be the guy that clings on to the Past speculation thing um but on the other hand I also don't want to only trade cash flows or like buy into cash flows because I think crypto offers evaluation multiple um I don't know if it like requ like if it necessitates it but it does have it and some things have it as opposed to some things like they just don't generally don't have it like actual very cash flowy businesses harder to put valuation on especially like that's why they went with the modular money narrative like Celestia was pushing that really diff hard just

because they were like oh I want like this to have the valuation multiple it just didn't work out so it's kind of a tough balance to find I think like you don't want to midwit everything not to say cash flows are midwit but you know what I mean like you don't want to be like oh this doesn't have any cash flows I can't buy um maybe not for ethereum ethereum is not doing very well but it's kind of a tough balance do you get what I'm trying to say I didn't I I did not say this well at all like I I think if you look at certain periods it's and and assets it's like it's fair to discuss this point because like if you look at the interest around GMX for example and those types of designs back in 23 like there was a lot of focus around like

this real yield narrative and there there was you know like a cash flowing sort of business there but it's like you know it be the due to the nature of like how easy it is for competitors to spring up in this space it's like you could have a very like nicely cash flowing business but someone can copy your model and add a few features and like do a points program and then every all of your users move over there and then they have the cash flow and you lost it all and then you know your valuation Creator 10x it's like it can these these things can can be chugging along and just suddenly get get the bottom eaten out from them um and that can happen very quickly now obviously you can react to that right like if you see the activity going down in real time then you know

you can your thesis can change about you know where the cash flows are going but um you know a lot of these things are somewhat tied together not that um you know not that if a valuation is tied to their cash flows that it's you know purely fueled by speculation but the users and like the people that are using those applications and driving the valuation based on you know the fees and the metrics today you know they're speculating on like well what's the next step that I need to go use and if they're going to decide to you know come off of GMX and go to some other you know purpose location then um that it's going to change things how long does a narrative trade last three months I don't know depends six e has been going on for eight

years I don't know look at BTC um it launched in I don't know I you brought up the B thing I'm gonna ask our data team to do if they can do this how easy it would be to to to spin up this analysis I would imagine that eth as a um base asset in a trading pair um has gone down in volume terms over time as usdc and usdt have become more prevalent on chain certainly on Sexes um but also on chain I I would I would bet that that eth is a very low percentage of um of pair pair trades I guess you call

it I know we'll get back to you next episode on that uh we can pull it up right now I just need to find Dune um Danny can yeah Danny can you make some filler conversation while I look for this yeah so tulip Mania was actually followed by several other cycles of flowers I I wanted to I want to actually talk about this which was um willing prices into existence you saw that in the notes um this is also like a part of narrative trading which um which again like a lot of people got burned on um this cycle and past Cycles um like I think of jeto I think of Tia I think of like something like or as these like three categories of willing prices

into existence like a crowd Gets behind a thing and maybe even with like Phil the wick uh remember like eth traded up to four or two and then it was like fill the wick um like everyone was saying like jeto needs to be at $10 everyone was saying that like T is going to hit 50 um one or equals 1 TC is like this rally and cry um how many historical instances of like these rally and cries like narratives have actually worked out for folks um I think you want to fade that every single time um because why are people gonna wait if something's going to get to 100 and it's at 50 today

why are people going to wait until it gets to that number when they know everyone else is going to sell because like that's the price Target um like they I don't know um you see you see smart people kind of pedaling these narratives and it's a little disappointing no he's disappointed in me no it's always it's always a fade and I think the most famous example that even normies will know is Doge to a dollar and obviously it did not hit a dollar it peaked out around 70 cents with SN to hit a dollar to cycle for sure guys Doge to a dollar it just makes sense Ryan I I found the chart that you are interested in and yeah am I happy to say that I was right this is so this is just arbitrum

um obviously the usdc W Fair w we pair we I've never said that out loud actually um is has the highest volume I'll go through all of them but but it's but the but that's usdc yeah but like if you see this for example on base it's both usdc or the both are the highest pairs these are all um e pairs so like I mean I guess you can just ignore the first one but the rest are I mean it's not the highest but the first one has more volume than the sum of everything below it if you look at um on base it's a usdc pair it has more than the sum of

everything below it yeah on ethereum it's even worse if you see it's one bill for usdc we usdw same and the same for us like the second usdc e pool has triple the wbtc W like the right yeah so no so I so what I said was my was so I'm not happy I was wrong I'm gonna kill myself I think the first one was more to your point I don't think the volume disparity was that large on arbitrum but maybe I didn't you you you you closed the page so quickly I couldn't see well because we found out that I was wrong so I have to close the page as quickly as

possible who would have guessed that the US dollar is more valuable to people than ethereum or like that it's worth more trading that than um crypto has a revealed preference for dollars in every instance where people have you know had the choice to use eth or BTC or dollars for payments and remittances and trading pairs they have chosen crypto people have chosen uh e have chosen usdc and usdt not just crypto people all people ever who to have ever existed just except before where everybody was like oh we want gold now it's just very clearly we want the dollar I think there are very few people who are um you know making all their trades and denominating their

their portfolio value purely in eth I think it's you know if if I'm doing something in def5 sure I might have eth and then maybe I want to restake my eth Etc and like earn that yield but um if it's the question of you know swapping for another asset or doing something else trading in and out um then in my mind I'm you know we're we're thinking in in US dollar terms it's it's not how much am I trading in eth it always feels so forced when you see people on the timeline and they're like oh like they they treat epa's money I'm like do you you know I don't know do you but it's always like obviously Def ogs and stuff so I imagine they're just like goofing around a bit I feel like this is the type of like right now is when people do

denominate an Ethan so though they're just like oh like I'm just I trade something let's say I buy mudang sell it I'm going back into Solana um or on E whatever they're trading on E these days you buy sell go back into Eve but it's not the same as like what we're saying with like you're not denominating you're just trying to get to a certain e amount and soul amount and not like or have X soul that would be stupid I do think there are people I mean certainly during these like exciting bull market periods you certainly see people who are you know looking to increase their balance of like total eth or total Soul total BTC pick your favorite asset in the space um and kind of ride you know hope to ride

that thing up and and trade other assets like sort of into it and grow that balance but you know I think ultimately in their mind as well like when they want to cash out and go do things in the real world they're looking at you know USD or their local currencies so that they can buy a house by you know real world assets if you want to call them that um Etc I will say one thing if you're listening to the spot I don't think you will I hope that my the listeners are not this type of person but eventually please don't fall for that like I'm going to try and fall for the super cycle narrative and be like oh why would I denominate in Fiat man everything is BTC and E do not fall for it

because I don't know do whatever you want NFA it's your life live your life as you want to but um I think that's a good place to end it I've come on off wrong six times in a row I think that's a new um new record on the spot is there anything that you guys wanna you guys want to say uh go to permissionless oh yeah it's tomorrow we'll talk to we'll talk fundamentals at permissionless you can see heith vers Soul debate you can talk fundamentals with Ryan you can see some fights happen are they doing fights this

year yeah it's uh is it David Hoffman or is it yeah bankless and um guy from synthetics I think the other guy oh Kane is it Kane yeah a guy from I mean that should be interesting honestly you know a little it's it's like you're saying Bo people want to get silly on chain people want to get silly at permissionless so you know go see the fight go watch the eth you know l2s or salana Etc debates um get in on all the action I want to see Kyle Sani dunk on who who's on that pod Westy capital I want to see him dunk on Westy Capital Ryan what were you say uh crypto's pmf is uh online

debating and now fights clearly and conferences and getting on chain conferences and confrontation conferences um yeah I think that's good [Music]