MEV Wars: The Rise of Vertically Integrated Relays | Analyst Round Table

Transcript

W is going to be one of the biggest air drops of all time definitely one of the biggest this cycle and so it's going to be a lot a lot of value being dropped to salana users that they're definitely going to go and use to speculate on other things so I'm curious to see how these airdrops affect the ecosystem what people are going to be bidding with their new found Capital how well these assets trade um yeah I'm pretty excited overall before we get into today's though just a quick disclaimer the views expressed on this podcast by either myself or any guests are their personal views and do not represent the views of any Associated organization nothing in this episode should be construed or relied upon as Financial technical tax

legal or other advice all right let's jump into the episode what's up everyone welcome back to another episode of zerox research the blockworks research team is back again to bring you another episode of an analyst round table today is Monday April 1st and we are joined by wesy and effort capital from the blockworks research team to jam on the latest Market happenings as always you can use code0x research10 at app. blockworks research.com for 10% off your annual block Works research subscription ren do you want to kick us off this week with some news and governance updates yeah of course I think the first big news of last week was that CCTV goes live on salana or sorry went live on March 26 I think traditionally ring to salana from evm or any chain really

hasn't been the best experience I think most people either have to use like some shitty Bridge or they need a route through a centralized exchange so CCTV going live on salana feels like a relatively big unlock to be honest and cctp has done a whole lot for the cosmos EOS system more specifically dydx to Novo and maybe we'll see the same but it also does feel like that most people that wanted a reason to be on salana had one already they weren't waiting for CCTV to bridge there but yeah there's been a few early integrators notably Cube and drift and I'm sure cctp money will have salana integrated if it hasn't already so that's super exciting for salana congratulations to them something else on the study more governance side

of things is that arbitrum foundation's grand program is moving to phase three this is going to open on April 15th it's focusing on daps and has like 40 different tracks whether that's like rwa def toting defi dpin infa nft social basically anything that's ad to be honest so if you want to go build an arbit you know you should probably check it out I'm not sure how much money is being given out but it does seem like a relatively big grants program um the next news and governance update is that Sonic svm which is basically they're going to launch like a modular svm chain built to enable Sovereign game economies on salana it really feels like their focus on the whole gaming thing whether

they'll be able to compete with like AUM since it seems like gaming is kind of arbit thing at this point will remain to be seen they have this thing called hyper grid you're free to use any game engine of choice and it's a multi-m ecosystem powered by the hyper grid interpreter but I'm going to take a pause there anyone have any thoughts on cctp arbitrum grants or this Sonic svm yeah touching on the arbitrum grants piece I think we're really going to start to see a lot of these l2s begin to focus on specific niches and I think this is sort of a good way for arum to feel out which niches are probably best suited for that chain I know they've

been really focusing on gaming recently they also are pretty big in the per space so I think those are two that I think we know arbitrum is really good at maybe they find another Niche they didn't know about but I really think like a lot of these l2s are be going to begin to narrow their focus and be less general purpose and have specific niches that they nail down and this is one I guess step towards that for arbitrum yeah I'll just be interested to see like how effective some of these spends are because like obviously you know you need structure you need kpi reporting like there's just a lot that goes into it and when you have like a very large sum of money it's it's almost difficult to

deploy that amount of money like you even see it with optimism they have I think it's $750 million of op incentives they're handing out over the next you know season of rgpf so um definitely a lot of work left to be done here but nonetheless I think using these tokens to actually incentivize development is is a 10 out of 10 idea I think it's interesting I feel like at this point of like arbitr and optimism uh adap developer shouldn't need any external incentives or funding to build women an ecosystem like hopefully at this point I know like we're so in the grand scheme of things so early to everything um but it feels like for arbitr and optimism like you shouldn't have to rely on like these ground programs or external

incentives to get developers to build in your ecosystem and I think that partially shows in optimism's decision to rename their thing from like retroactive public goods funding to just retroactive funding um instead of like just public goods um but yeah we'll see and like arbit also has that 400 million gaming fund that's going through like the D proposal process and in the forums I don't know whether that pass or not but I I don't feel like you should be doing too many grants to be honest this seems more so like a bd/ branding game at this point for arbitr and optimism specifically yeah that's definitely one thing they need to be careful of is arbitrum like foundation and DOW is

seeming to spend a lot of money recently and especially with the first uh S tips as part of the Dow they didn't really do a great job in like figuring out kpis and what kind of spin worked and we're going into I guess the the ltips the long-term incentive program and I hope that you know they don't continue overspending on certain things they figure out where money is best spent um so yeah that's just one thing they need to keep an eye on yeah moving on to a few other news and governance updates one notable one from last week is rituals partnership with Celestia basically same as everything else vual is going to plan on using Celestia as a DA layer for the

rual super chain um another thing which I might get for capital in here to explain a bit more is partial set security in the cosmos basically I there in the cosmos land which sets the stage for permission to share security whereby validators can opt into any consumer chain to validate and then just a few small minor ones to close us off fisma Finance under when an exploit last week I don't know how fisma has been doing to be honest for the past God knows how long but I'm sure the token price was down only since it launched um and then one intro which is a liquidity boot strapping protocol on salana I think this one's relatively interesting sure I get that a lot of dabs ERS whoever don't want a huge amount of liquidity for the token given that it results in token

pric is pumping easier or faster but I mean like just looking at like slurf and whatever ridiculous amount of liquidity it has probably north of 100 million today it's like pretty crazy seeing something with that much liquidity on chain um and yeah I think there's argument if you made for some protocols like you should have increased liquidity on chain because if you don't it borrows some like large holders or institutional holders from like allocating towards your token but that's a super long discussion and the last news and governance update of the week is that unisoft has a proposal for deploying on say and a v alive for funding a treasury management council with 6,000 uni but I'll stop there anyone have thoughts on

all of those I'd like to get efforts take on the uh partial set security it seems like IC 2.0 for the Hub is it yeah uh so I guess the best way I can explain it is Cosmos Hub launched interchain security last year it was like the long awaited feature upgrade for the Hub pretty much like the the entire purpose of the Hub from day one was really supposed to be the shared security network or provider for the entire Cosmos ecosystem and then IC V1 launch which is replicated security and it put the burden on governance token holders and the validators as well to decide what consumer chains which are effectively like avss in IG layer world um what consumer chains that the Hub want to you

know uh provide security for uh the problem is it creates like adverse selection the governance token the token holders yeah token holders really don't know exactly like what is a good ABS or good consumer trainer what isn't and once a uh consumer chain got approved pass through governance to be secured it forces all 180 validators in the active set big and small to support a consumer chain some consu some uh validators are making hand over fist in terms of from inflation so they they'd be happy to support new chains there's validator lower in the active set that just like don't have the uh you're not getting enough Commission in order to actually support an extra chain it adds additional Opex got to run a new binary maybe you have to hire additional devops

uh so it kind of created like this permission shared security feature that I think was a good V1 but it limited I think the potential for what the Hub could be when you look at I layer like one of the beautiful things about IG layer that everyone's so bullish on to creat this permissionless shared security Marketplace validators and abss are competing for really like e security which you can say is like this uh this scarce commodity um what this ICS 2.0 is this par set security it it's the exact same thing it's actually the first version of reaking permissionless reaking out in the wild that we're going to see prior Di and layer launching I'm assuming sometime in Q2 so validators get to decide what consumer chains they want to secure a consumer chain pretty much submits a transaction to the hub

and then I think I don't know the exact uh mechanics yet it isn't live but I know that obviously the government's proposal that is being voted on right now um but validators get to opt in or opt out to secure consumer chain uh so you know theoretically you could see a bunch of current Cosmos chains start leveraging the Hub security they can lower their their overall security budget by you know 25 to I'm sorry lower by like 85 to 75% depending um it's just going to create like a competitive Marketplace for the Hub security offering and I think it's going to be interesting to see how much demand is there for Adam as like the security back stop for the cosmos ecosystem so really bullish on this I think the you know leaning getting away from the Hub

leaning on onchain governance even though onchain governance I think is its one you know one of its strongest suits and there's certain areas where governance is probably needed I think letting the Hub letting the free market decide like what the demand there is for Adam security is a really B big bullish Catalyst for the Hub so I'm really excited to see that launch there's a couple you know uh things going on in the background to start bundling other services on top of shared security because shared security by itself is going to be commoditized uh service offering in the long run so I think a lot of people are really understanding how far ahead in terms of like thinking about the shared security Marketplace that Cosmos have is compared to a lot of the hot new topics like Ian later um but yeah I mean longwinded aners say that it

really just is as a permissionless shared security offering I have a quick question for everyone here something I just like randomly thought about over the weekend um basically I think you've seen tweets that say like stuff like share security iire um or whatever decreases the opportunity cost of reaking right because you already have that like negative Eve staking yield and so like whatever else you're providing security to doesn't need like as much yield as you would have had to like admit had there like been no native e free sing and I thought about it like sure I kind of get that but then I

thought about a bit more I was like wait a minute that makes like zero sense you are taking say like an additional like 20% of your collateral like slashing risk why why is the fact that you're having native Eve staking yield like decrease the amount of compensation you need for that extra amount of like 20% stashing risk you take it should still be the same whether you there's like native e staking or not no preach I I feel like I feel like I've been speaking Yelling to the void about this like I think that's the biggest meme that's being propagated all throughout like crypto space to that because eth is already a yield bearing asset that it's going to lower the security cost or all abss if if I'm an eth Staker which I'm not today but if I was an E3 Staker and

I was putting up my like Blue Chip yield bearing asset that might about to launch like an e EF and become like this next uh institutional grade crypto asset like I am not going to be resta my e to get like 0.001% yield on that for reaking you know an ABS that um probably doesn't find product Market fit uh it's it's not worth the risk and the this re this slashing risk is actually some of the issues that Cosmos Hub community has already gone through because it was almost a major slashing event for two validators with the cosmos Hub but governance kind of stepped in and uh removed that that slashing risk because it was like a very specific Niche uh issue um but I 100% agree with you Ron I I think that's like a big meme that's

being said I don't believe that that's the case I think that there's going to be there's a lot more E capital that's trying to chase yield and there's a lot of ABS they're not be able to offer that yield what's end up happening is liquidity mining but security mining uh abss are going to pay a [ __ ] ton of money to attract E3 staking and then the moment that well dries up operators and those delegates are going to move on to the next ABS I'm very I'm not bearish on aics I'm fundamentally bullish on this idea of fair security um but think like that specific meme is probably not um true even though it's been propagated a lot by like very big brains in the space yeah I completely agree with everything effort said you need to evaluate each AVS on its own set of

risks and return because it doesn't matter that there's like a back stop of yield because each ABS gives you a certain percentage basically of you getting your entire eth slashed and so that should be like you basically need to calculate on an individual basis because let's say one person is taking just regular eth and then reaking and there's another world in which you're just reaking to one ABS they're still subject to the same exact slashing conditions on that ABS despite one of them having a back stop and the other not so if they are both basically under the conditions where they get slashed and they both get slashed the same amount so for me yeah it doesn't make

sense at all you need to evaluate each based on their own individual risk characteristics I agree but at the same time like on the other hand I would be incredibly surprised if we see even a single slashing incidence on an ABS over the course of the next 12 to 24 months like I think you're going to see validators try and cover as many different abss as they possibly can in order to increase their yield which ultimately is probably bad for the health of the ethereum network but at the end of the day like you're going to chase that yield so I see both I I see both sides although I do agree like at the end of the day like you should be compensated accordingly for the risk you're taking of being slashed yeah I just had another random

thought too like why is the amount of like attributable security I get denominated in E like if e like 5x is then I need to like assuming my token price doesn't move I need to like 5x the amount of tokens that I need to pay out for aaker to receive like the same like percentage yield and similarly like in the bare market right like e and Bitcoin are probably the two assets that have the smallest draw down but my token's going to like draw down like 90% while e draw Downs like 50% or whatever and that means I need like double my emissions like that seems slightly problematic but that's not like a fully thought out thought yet just do what Thor chain does and assume that your token is GNA outperform Bitcoin or eth a bu Market

great tokenomics I've got one more thing on the the news and governance updates that we just don't have written down here but I did want to mention it Ekko launched uh last week by like invite code only which is Kobe's new project that is basically just democratizing access to like seed round investing essentially so very cool platform it's like all smart contract enabled so you just send like you know usdc from from your address and then you get paid back the tokens and the address you sent and there's festing and stuff all on chain so cool initiative I don't know a ton about it all I know is I try to do the kyc stuff that they go through and I think Kobe's on his laptop somewhere around the world trying to figure out why my kyc didn't

go through so thank you Kobe for doing that um but yeah I thought that was pretty cool I don't know if you guys have any thoughts on on Ekko as a whole he should be on the cool Throne I think my man's got banned from angelist and was like screw that I'm making a web three for crypto version of this and who else better to do it than Kobe he's probably on like the crypto Mount Rush more of best CT influencers or best CT uh uh Personnel ever um no like specific en typle thoughts on it I mean I'm really bullish on this idea of like democratizing Capital allocation of getting like private round allocation from Norm normal people um that was one of the reasons why I personally got into crypto like back in 2017 like I love this idea of lowering the barriers of

Entry get anyone the opportunity like obviously we're seeing this play out like the meme coin space but would anyone can kind of hit on a lotto ticket and become a millionaire but would love to see this uh in getting you know uh giving people actually to invest in like legitimate projects early on we got the Ico boom was the entire like that was the right way we should have been doing this all along and now we went the complete opposite way with projects going live at like10 billion valuations or something ridiculous and little people that don't have access to those private rounds are obviously getting shafted in the public in the liquid markets once those token goes live um so overall I mean I commend Kobe for doing this I I hope it succeeds I'm gonna be a bit go here from like a builder or like

a developer perspective right if I had the choice to raise between like just like retail and like democratizing that opportunity for retail versus raising from like KS or like VCS I feel like I would actually still prefer to raise from like VCS or kl's because obviously those do provide like a pretty significant benefit at the end of the day just from like a even like just branding alignment or like amplification perspective but like if you're thinking about like raising from retail for like oh you know like I'll get retail like financially aligned from like day one because they're going to be in my seed round like I don't think you need that because if your project is exciting like retail is going to come and F your points um anyway even if

they're not like invested in like your seed series a preed whatever round and sure I like the idea of like democratizing access and like investment opportunities to everyone but I'm just trying to think from like a builder perspective why I would do it and I'm not sure I have a fantastic answer yet to be honest to me I would say like why not both right like today you kind of have to go you have to go the VC route but obviously that's a lot what people do VCS and K's but I feel like this this allows people to this allows Builders to to do both at the same time get the big names on your cap table that are value add from the gecko while also giving potentially democratizing the access to give smaller people the opportunity to get in as well and I think having that

like foundational bottoms up it's like top down and Bottoms Up Capital uh ra raising methodology like I think that it's G be really interesting to see how like how it plays out and how projects do once they launch off of like an echo uh round yeah I should also add to like the platform once you go in there it has like like you can join different groups so I don't know what would be stopping a large VC from like you know making a little group potentially with like five other top quality VCS and then that's a a close group and that's like an elite group you'd Source funding from or maybe it's anom and he's a key you know K obviously which by the way I learned like literally a week ago that's key opinion leader I didn't know that that's

there's like a new term in this week or in this space like every single week but I think it'd be good for him to be able to have like his top 10,000 followers who are involved with him and interact with him on Twitter and then like instead of him just going and Shilling the product to people once it's on Main net they actually were in with him at the same exact price as they were prior so I think think the the Gated groups creates an interesting Dynamic one quick thing I actually thought K was the specific crypto term my wife's in the pharmaceutical industry and she used it like two weeks into her new job and she said kol I was like wait where did you hear that term before she's like that's what they call it in my industry I was like oh wow that's

completely new to me like I always thought that was specifically like a crypto term for you know professional Shiller but apparently that is funny it's yeah I actually I had a similar experience for tldr like a year or two ago my mom is in law and she said tldr and I was like have you been listening to my podcast and she was like No just too long didn't read we use it in law all the time I was like oh how about that we got hot seat cool Throne set up Ren why don't I K you kick it over to you for uh for your hot seater cool Throne I guess yeah uh this week a little nerdy a little technical some me ethereum or stuff um so first things first this Titan integrated reday um so for those who that familiar of what a

relay a relay is it sort of sits between the proposer and the Builder um the most famous relay is probably MV boost but Titan is the largest non- sensoring Builder and they just launched the relay um but it's it's a little different from other existing relays it only accepts blocks from their own builder and it doesn't send most of these blocks to other relays so if that sounds like vertical integration to you that's because it is vertical integration when the Vay is also the builder then effectively is no proposal Builder separation which was I think what a lot of flash Bots work was basically trying to get rid of um and truth be told I think someone would have done it sooner or later especially in the face of blobs

the additional timing games that I think P2P started playing probably a few months ago and like blobs introduced additional latency into the blocks and so having this like vertically integrated Builder where you're able to decrease the time between block Construction and rock production is just like such an advantage especially heading into like a bull market with increased onchain activity um but yeah this is about as vertically integrated as you can get all you need is like some exclusive orderflow some like private rpcn it's just like complete vertical integration I don't think it's a great look um for the ecosystem to be honest and data always has some great tweets so definitely go check them out if you want a better

rundown of what happened but yeah this Titan V has an insane share of exclusive blocko for example Titan is at 84% this past week versus 49% for bloxel 31% for Flash Bots 23% for ultrasound and I think one really interesting takeaway from this that it was like an opinion that I saw people had on Twitter was that ethereum researchers and ethereum Foundation don't talk to like the MV people at all and the M people don't talk to the Ean people at all they're like both kind of building in their own world and this has resulted like in some significant problems like just like different job functions doing like the

opposite of their job functions you know um I don't know like longterm where this goes to or maybe like ethereum has to break some form of like credibil neutrality but it'll be interesting to see how the community tackles this Wes do you want to go as our MV Quant yeah I'll give it a go but yeah like to me the sort of centralization of Builders has been inevitable since the construction of the me boost and Flash bots in general I we're already seeing this on like the Builder Searcher side of things where Builders can see all the same transactions Searchers can so there's nothing stopping them from also becoming the best Searchers in

integrating and we've seen that across the biggest Builders they have their own integrated Searchers they're either directly or teaming up with market makers themselves um so there's a lot of Partnerships on that set of things and now we're seeing sort of the other side of the coin where there's Partnerships between Builders and proposers um one of the reasons why like people argue this sort of breaks down PBS is that the whole point is that you're trusting a relay and not an individual Builder because the relay is able to get a bunch of different blocks figure out which is the highest value and give that to the proposer so it just it also like minimizes trust in general and so as a result the proposer now has

to trust the individual Builder but I would argue that that in this current case may actually be a bigger benefit to the producer uh specifically because one they have a pretty like steady steam stream of income or yield in this case because they're probably getting paid directly from Titan um they're also like trusting in Titan's sophisticated ability to get to build the highest value block and a block that gets to them in time because we're seeing a lot of failed blocks on the network currently and in the past there have been bugs Etc so it may actually be better for them to trust a highly sophisticated builder for for a couple of reasons there um and yeah I mean I

guess what flash Bots M boost and PBS does is it at least showcases what's going on so we we can talk about it on a podcast and figure out why this maybe this is wrong or maybe it's good maybe it's bad at least it's you know clarifying and making things transparent but at the same time you're sort of seeing things break down um and it's super interesting there's a lot of cool conversations happening in the mbv space along these lines and then you have completely opposite situation uh with Cheeto and what's going on in salana ETC so if you're an M nerd like I am you're definitely like living right now there's a lot to digest and learn about um but yeah this is to me and itable that

you're going to see centralization at the Builder level wesy do you think it'd be fair to like point out like it feels like the me pie on ethereum is more so like honestly shrinking than it is growing like yes we we're kind of in a bull market and like onchain activities returning but if you look at like the past three or four months like I don't think me is like skyrocketed or anything because it feels like a lot of this meme coin trading is happening on salana or maybe other activities going to l2s like do you think the fact that the meev pi seems to be kind of going the wrong direction in terms of growth like makes the centralization problem worse because the incentive to extract the me isn't really growing like I I don't know that's kind of a weird question

but I think it is a fair question of like what is the future of me on the L1 given that a lot of transactions value we're already seeing going to l2s there has been a push from the ethereum foundation specifically Justin Drake for base rollups where the L1 is actually sequencing for these rollups and if that kind of feature takes off you're going to see I think M value come back to the base layer because it will be the sequencer for a lot of these rollups but at the same time that's a lot of value that the l2s themselves are going to want to capture so I doubt that they just hand that off willingly although that a lot of these ethereums are you

know completely aligned with ethereum and if a lot of rollups start to buy in again we've talked about Shar sequencing in the past if you get a lot of Buy in from a lot of rollups then it becomes more valuable for the next rollup to join Etc so if they're gain traction you could see that but the way things are currently going it does look like the value of MV on L1 is shrinking but then you're going to see more sophisticated games at the L2 level depending on how the rollup like integrates its sequencer whether it's first come first serve or they have some sort of PBS auction it's going to be interesting to see the different Dynamics across different rollups but that's definitely a trend I'm looking at yeah I think just following up on the L2 discussion I think M eventually comes to

l2s even if it hasn't I just saw an interesting tweet this morning uh which was that base had one of the nodes running like a old version of a client and it had it like P2P mempo like public for like a few weeks which is honestly pretty ridiculous to be honest I feel like there was some other version of this like half a year ago but I forgot which L2 it was um but it just sounded really familiar and so I mean like m is definitely happening and with like arum's time boost I don't know when that's going live but that kind of feels like kind of like priority transaction inclusion uh if you like pay a bit more there's like a bit like there's a bit of nuance to it like it's a bit like Fair

than just like the Whoever has the highest priority fee gets faster transaction inclusion but I feel like it's inevitable that MV like appears everywhere it's just like what route do you want to take to mitigate it I think even if you like make a decision that like just kills like M opportunities out there like eventually the market will find a way if it gets big enough yeah I think that's a good take run but I think uh another quick hot seat oh not really a hot seat for me to be honest uh more like a a neutral seat um is me blocker um so M blocker is cop sort of like private RPC product they

launch this with a few other partners I'm can't remember off the top of my head I think it was like Beaver build maybe um and then basically they're they're going to turn on the fearch for this um it's going to be a fixed amount per block wand the amount is updated monthly and it's a fraction of the average per block value of MV blocker transactions during the previous month as of right now the initial fee will be roughly 20% of the value of the average per block value of exclusive muv blocker transactions and then that's going to be split 5050 between the Dow and MV blocker Partners so blocker MV blocker users won't be affected by the fee the fee is very much more so for any

builders that are connected to M blocker and it's freay um and like so far just from the numbers and Analysis that they've done it seems like a relatively low fee there are some nuances there there though because it's like an average fee it's not calculated on a per block basis and I think that makes sense just given that will introduce too much like latency uh within the Reay um but yeah this only really becomes a problem when all Builders have blocks of very low value so imposing a fe turns the value of winning negative and I think it'll be interesting to see like there's this right which is like monetizing and turning on a fe for like some me mitigation solution and on the other hand you have like G which just killed this meu and like kind of quote

unquote like turned off like a fe switch generator from the meu they still make money from like Atomic mles and the other components of this block engine but it'll be interesting to just watch and monitor like the social reaction I guess to like monetizing like any me component or like me me info I I think and I'm not 100% sure but last I was checking in on this uh on cow Swap and and the cow protocol and General I believe this fee is paid at the end of each month like Ren said based on the trailing month's average per block value of me blocker transactions and it's actually paid by the builders retroactively in cow so they use the eth rewards by cow which

has absolutely horrendous liquidity on chain and then that's you know 50% return to the Builder and or sorry the partners of me blocker which is essentially the builders and then 50% to the Dow is like pretty much protocol call in liquidity so I think it's interesting from the perspective of the cow token because historically they just haven't focused on value cruel there at all and even just like a fixed bid of five to 10 e a day could actually go like a very long way on uh on those liquidity pools yeah I agree there uh but I think that's a good point to kick it over to you Sam for your hoto Cru drone yes I have got air drops in the cool Throne now this is going to air on Wednesday so

unfortunately we will miss like the the fun PA after we get W and Ena on uh Wednesday and Tuesday respectively but Ena is trading it around A9 billion fdv and W is trading at around a17 billion fdv in pre-launch Futures markets but there's very minimal volume on these and open interest so take those with a grain of salt as usual um but nonetheless that's no matter how you slice it going to be a multi-billion dollar stimulus package hit hitting uh various eoas on ethereum so athe Athena as well as starting a SATs campaign in Le of introducing Bitcoin as a collateral type um and they noted in the announcement that on average there's been about 25 billion dollars of open interest at an average of 22% positive funding rates

throughout 2024 thus far so that's about3 billion doll paid out to shorts which is pretty pretty wild and uh they currently have 15% of eth per Global open interest and funding has remained north of you know 40 50% for most of the year so safe to say they're absolutely print on that one and are very eager to get more collateral um but yeah so big aird drops coming and then on top of that you have dgen which I know pretty much everyone on the team fumbled a bag at one point of that and they have airdrop to Checker live which basically rewards people who are posting on uh warcast and other farter uh I guess client front ends uh and that thing's run to over a$2 billion dollar valuation

so that air drop started out as pretty irrelevant but now is actually becoming quite relevant and just a fun caveat on that one too one confirmation I believe it was uh bought a million dollars of dgen like two months ago and that is now worth like hundred million so they hit a nice 100x in about two months on this one so hot tip to those guys over there I wish uh wish I had that kind of conviction another interesting caveat on DJ is foraster set an all-time high in daily active users yesterday with over 70,000 daily active users which honestly I'm just rooting for foraster in general I like to centralized social I think it's a cool primitive within crypto so I was happy to see that but on the same topic of air drops we've got parcel which is coming soon maybe Randy can

share some information about that when I'm done talking here and then tenzer I believe is coming soon as well couldn't locate the actual Hard dates for those but I I believe those are expected in April ordinals enjoyers got uh air dropped they've gotten plenty of stuff but most recently they got the runstone which is that Community Driven ordinal project that will eventually deliver runes and those are trading at .05 Bitcoin or about three four $5,000 dollar floor depending on the day of where bitcoin's trading at and uh it's becoming more common to nft or sorry airdrop to nft projects so we've seen bad kids uh maladies Penguins mad Lads Etc get aird dropped uh different things throughout the course of 2024 which is a

bit of a new meta but um interesting nonetheless so yeah I mean airdrop farmers in 2023 definitely had a good year between I think it was ARB blast or sorry blur as well as uh vertex was another good one probably missing a few here but regardless 2024 looks to be shaping up to be even bigger for airdrop Farmers which is something I wouldn't have predicted um I guess I missed jeto there I think jeto is at the the end of 2023 so that one was pretty huge but nevertheless it just never ceases to amaze me how much money just gets like dropped to people in this in this market it's it's absolutely Bonkers so cool Throne is definitely the aird drop

farmer but not sure if you guys have any thoughts here uh just super quickly on parcel 7.5% of the supply is going to be distributed across par points holders 0.4% of that is going to the nft members and 0.1% of the token Supply is going to madlads I wonder if for protocols with like a nft collection like parcel tenser how much they're going to give to the nft collection because you know to be honest like if I bought an nft for a protocol that gives me like a points boost or something I don't think I would have expected to like get any of the token Supply like specifically for the NFD collection so I think that's

something interesting to see and I think another interesting thing is like with parcel um blast Athena you're like you're seeing a lot more or like maybe even Edy like you're seeing a lot more attention and focus being placed on the season that's post the tge rather than like basically like of like the air job happening like prtg which I think makes sense uh just given like a b market and opportunities available and like a you know like that six week period from starting the air job like program to TG is like pretty electric and I do think that timelines will compress as we head into a bll market like just people will want more instant gratification um another thing about farcaster I think they announced something super cool over

the weekend I'm blanking on the name but it was like Dynamic frames or something like you can interact with a frame and then like depending on how you interact with it like the UI of the frame will actually change so it's not like a static frame uh and I think like once again that opens up like a bunch of opportunities and possibilities I'm not too in teun with the faras ecosystem but I'm sure there's like a lot of cool apps being built there right now yeah I think a lot of these teams are looking at success of recent air drops ether 5 being one of those Jupiter being another which is about to flip Celestia value like they're seeing how well these new tokens are doing and I think they finally see like it's time to

drop the token because we're in a very positive environment people like the new and shiny thing um and so yeah we're going to see a lot of them lined up uh you mentioned a bunch of them um but like in particular salana is get going to get a very big like stimulus check basically to a lot of their users in the same way that jeto in the fall uh sort of was a catalyst for a lot of growth within I guess like the meme coin sector and other AI defi coins within salana like w is g to be one of the biggest air drops of all time definitely one of the biggest this cycle and so it's going to be a lot a lot of value being dropped to salana users that they're definitely

going to go and use to speculate on other things so I'm curious to see how these airdrops affect the ecosystem what people are going to be bidding with the new found Capital how well these assets trade um yeah I'm pretty excited overall yeah I'm just it's mindboggling quite honestly like I I can't wrap my head around the fact that it's multi-billion dollar airdrop season just it's it's super crazy so and I also find like the valuations really interesting like we've seen Jew perform incredibly well since getting launched and people were dancing on the G grave like two months ago and same goes with jto I think jto is like pretty close to

all-time highs right now so like the post tge airdrop price action has actually been surprisingly strong so it definitely makes you like think you know is this something we should actually dump or is this something you should hold like Ena in particular is interesting to me um just because like the the sheer amount of Revenue they generate I know that's like a complete meme in a bull run but like we're talking like you know hundreds of millions of dollars of Revenue at a player from two asset carry Bas basis trades is like basically what we're looking at here by the end of 2024 so definitely a cool time to be in crypto at the dappler all right I think that's a good point to throw to wesy for his hot SE

Kone and as a side note holy [ __ ] I did not realize Jupiter was trading at $6.5 billion what but sorry wesy go ahead yeah it's insane um but yeah I've I've blast on the hot seat um so basically there's a nft collection called munchables that was seeing exponential grow growth on blast and they suffered an exploit to the tune of roughly $62 million at the time Zach xpt alongside some use of vulgar language against the exploiter um uncovered how it happened basically the team hired four Developers that all referred each

other found out that it's actually just one Dev in North Korea um who was able to basically siphon the funds to himself uh Zach and some other security researchers were able to somehow recover the private Keys containing the funds and return it back to the protocol so in the end everything turned out fine but prior to that happening there was a huge discussion within the blast Community encrypted Twitter as a whole of whether or not blast should roll back the chain um to per the hack um and you basically had two camps one would argue you should never compromise the bridge or roll back the chain at all because you remove all credibility any pretense of decentralizations out the window um but

you retain user funds yeah on the other hand you have like the other camp that saw okay you have a bunch of huge investors that are bought into the ecosystem obviously you need to get their money back so they can continue to stimulate growth and obviously like the decentralization decentralization theater is just that it's it's theater like every every sophisticated actor using blast already knows that it's not decentralized whatsoever it's governed by a small multisig Etc so you're not really saving anything you might as well get the money back Etc and I definitely saw a lot of points from both camps here to ask me like I definitely think they at least at

the time should have rolled back the chain like that should have been the move if they were choosing between these two options simply based on the fact that um yeah like again it the decentralization theater um doesn't really matter like what really matters is the the users that you retain them and you might lose some credibility on that front but you're if you don't get the funds back you lose credibility on making sure your users are whole and okay Etc so I don't know if you guys have any views on this situation or blast as a whole yeah I saw some good takes on this on Twitter last week and I think that it can basically be summarized with you

don't want to fund North Korea's missile program and I know like people were talking at one point about maybe this was like a actual like a French citizen so I don't know actually if it was proven to be a North Korean but with that being said like like Pac-Man would probably be held liable directly in court for like funding North Korea so I I really don't think this was ever actually a conversation I think at the end of the day this chain was getting rolled back if the keys weren't recovered so I'm glad to see the keys were recovered and we didn't actually have to see this get played out to be completely honest but with that being said I think we all know how this would have gone had it not I just can't take anything that's launching on blast seriously to be

honest like that's really My overall take uh and it's not even just Blast 2 it's like the newest amm that launched on DJ chain uh over the weekend it's like I'm not touching that with a 10- foot pole like maybe I'll like throw like a couple bucks in and try to gamble but I mean people that are willing to throw like Risk to caution to the wind and just like ape into something without really knowing what what it is I guess it kind of is the market right now it's like eight first ask questions later and I can definitely sympathize with that I've done that a little bit myself but I I think as it refers to blast like why why why are we building there what are you doing like there's so many other good opportunities if you were actually a true Builder that cares about

distribution of your product you be launching on base optimism or or arbitrum today like there's really no other option I think if you're building on blast I think you're doing it for the clout for a get-rich quick scheme um so I you know not the [ __ ] on developers that are truly trying to build unique Innovative products on blast but it's like I I'm never going to be using your product just for like the the location that you're building your application on that's my personal take and um yeah that's really how I feel I'll be excited to get a renewed take after that token launches I bet that narrative changes [Laughter] drastically it'll be a hated rally for

sure like it'll pump in my face I'm still not going to touch it but yeah yeah Blast has been in terms of like what was expected like one of the the worst launches of l2s because there's seemingly a big rug every every day of like the first week of the chain launching and I think we had a lot of takes before launch of they were able to attract so much capital and we're giving them props and like if you're a developer you obviously want to see traction before you build anywhere and like with that you're probably going to attract good developers but I think in hindsight like looking back I think a lot of the the builders that were enticed by the big numbers were like

opportunists and people looking to exploit as opposed to people looking to like actually build good products um and yeah me shocked yeah I mean obviously in hindsight it looks pretty obvious and I tried to warn that like like developers are going to see that number and you're going to see a lot of like rugs Etc I didn't think they'd be the amount that there was were basically every big token ended up rugging um but yeah I mean like Sam said once the token launches and the fact that we've sort of gotten all the I guess the bad news and bad actors out of the way that blast may start to come into its own you're going to start to

see the developers that are here for the long term uh stick around and there's still a bunch of capital over there you know ready to play with applications they're a little more cautious now and yeah ready to play with apps that can actually use so like hopefully we see a comeback from blast especially as the token launches but again with effort I'm not touching that stuff until I see some confirmation of like good stuff going on to be honest I think that they're getting a bit too much [ __ ] actually like if you think about the early days of like ethereum like there had to be like so many like nine fig rugs and like even salana today there's probably like five tokens being launched the second

that are like immediately rugged for like a few K here and there I don't think like it's any different from like in any other like blockchain today they're just getting a lot of Spotlight because they launched like the whole like you know like or like a casino sort of like marketing and that's where their branding came from but you know like every other ecosystem will have like a huge amount of bugs especially in the early day and like as far as like the trust assumptions for blast itself like it really isn't that different from like half of the l2s out there today but obviously like if you're bridging into blast like you should know like kind of what you're bridging into whereas for like other chains like slightly more like obis skated yeah and like on that topic like if if I was someone looking to do like a

like a malicious protocol SL like token launch and like rug people like I'd be going to Bass everyone is signing anything over there like everyone's on farcast or just minting different stuff like no one's looking or thinking twice there's a million things to do and it's actually a lot of fun to go play over there but I just kind of wonder if that centralized sequence are operated by a us entity really is like kind of what's keeping people away because as we just discussed we think they would have rolled back the chain if need be or at least like gated funds from exiting the bridge but all right enough about blast last but not least E capital we got the hyu throne yeah I actually think I put it on

the hot seat like month or so ago uh at at the peak uh price but uh bit tensor is on the hot seat so it's about it's down about 40% from all-time highs uh granted the market is is down like decent amount depending uh on you know I guess overall markets most things are down 10 20 percenti specifically over the past week but potential took like a pretty hard fall um I'm just going to repeat what I said last time which is I still think I've read every single Paper out there by no means I'm I'm you know am I an AI expert I far from it I I'm still trying to learn like all about like the entire space but I just collectively I keep thinking like it's all just mumbo jumbo I read every single

document out there I've read people's understanding of what bit tenser and how to works and its distribution mechanism of of its inflation to generate like better uh uh inference and and better uh training and pre-training of models it's going to like eat the world it's going to be open AI at at uh its own game um and I'm just convinced that like nobody knows how it works and that it's really just an AI narrative on top of ve tokenomics um I know they're trying to create like a new Dynamic to like token model that changes how it distributes to inflation but uh I I still think it's like a fundamentally broken mechanism um the reason why I really on the hot I think is not just the price action but Eric Wall um posted like this really lengthy

bear post effectively saying like it should go to zero it's a bunch of hot garbage it's really like there's nothing AI or there's no like you know magic dust that Ben benser does specifically like this decentralized AI narrative um pretty much called like a a THX less efficient chat GP T bot which is like for specifically from one of the largest subnets I think subnet one on on benser um and he really summarized it like it doesn't really necessarily necessarily incentivize competition or optimize model output it's effectively just like incentivizing people to come up with the exact same responses um and really copy one another's responses and it's really just like effectively like it's a

wrapper on top of open Ai and chat GPT and like other open source models out there um I mean that's really like the only thing I really wanted to talk about it I think in general uh that doesn't that doesn't mean to say like it's not going to hit all-time highs again I'm sure it will I do think that decentralized AI in narrative still really early on obviously this is not Financial advice uh it is still like considered one of like the blue chip AI tokens I think I'm really excited to like ritual and other um AI related plays like launch and become liquid assets to trade in the coming quarters but um I'm personally very bearish on bit tenser in the long run um I really just think it's it's paying out like one and a half to two billion dollars a year

at this point in new tokens and you gotta ask yourself like out a 10 billion fdv or whatever it is now like is there actually G be net demand for this benter blls will say there is because there's like huge demand to to uh grow new sub or build new subnet architecture um but like if you listen to there's a Twitter space that Martin scy hosted over the weekend or I think might have actually been Friday uh const who's the founder of bit tenser came on to tried to explain to Martin who's also a pretty big like bit tenser bear I guess you you could say uh explain like why bit tenser is better why uh Martin who's actually building a uh AI startup supposedly like why he should leverage bit tensor uh to like lower his operating cost to

fine-tune and train and like provide inference for his model um and to me and I think to a lot of other people on this Bas it was really like again a bunch of mumbo jumbo that really didn't make sense it went over a lot of people's heads um um just you know I'm not bearish on decentralized AI far from it I just don't think that benter is anything that's cracked up to be but again I'm sure the narrative will stick and it'll still do well but it was really interesting seeing like a lot of non web3 Focus VCS uh kind of jump on the bandwagon to this AI narrative probably because they missed Nvidia and then they saw crypto being like this High beta play on traditional equities and they like f the first thing they jumped into was like bit tenser and how

T was going to like revolutionize the world but I don't even think they fully understand like what it does um so yeah that's that's my hot seat yeah I mean likewise I'm not going to pretend to be an a expert very very far from it I know like the correct words to say to sound smart just say like verifiable inference Providence and like zkl and you sound like you really know your [ __ ] in AI I mean like I do think in the end state that there is a lot of like utility in building like AI systems on like distributed like blockchains um but there are also some projects which like did not need to be a bit subnet and you see them like say hey we're going to launch a b subnet and

like it's pretty obvious that the financial incentives are there like I don't really blame anyone for trying to make money um but does it really need to be a bendal something for like some of these like latest sub like probably not um but yeah I mean like long term I'm still like a crypto X AI bll okay now it's my turn to lar as an AI expert um so the way that a lot of these models like learn or get better is through like uh reinforcement learn like I forget the the term for it but basically rhf yeah exactly rhf we're all aring today I love it it's great uh where basically you have humans

come in and say whether a response was good bad Etc and you actually give it feedback back um and the way that bit tensor tries to do this is in a decentralized way where you have each basically validate or run their own llm and how close they are to the response they either get like positive or negative feedback um I believe in the form of rewards and that model is obviously like way less uh performant than the other one because basically what you're incentivizing is for each validator to be as close to the average or they think everyone else is going to say not what the actual real response is because if they give the real response and everyone else gives some sort of uh

like response that's adjacent well then they're going to get penalized so they it's not the right basically incentive mechanism to actually have rhf like type models where you're actually learning and getting better um so that's like the one thing I do know about bit tensor and that like it's underperforming in that way but I don't know enough to talk about like other subnets like what's going on uh on The Cutting Edge and weather that comp compete with open source but on that specific metric like I'm definitely a bear but I need to learn more for sure speaking about rlf we've said that acronym a lot already in the past five minutes but um Ryan Connor new blocks

research analyst order like a banger report on HIV mapper and said that like it kind of is like a AI adjacent play because they use rhf to optimize um I guess how the camera is able to map certain street signs and what have you um so really good report hopefully blockers resarch subcrib already seen it um if you haven't read it but want to read like probably the best uh report on high mapper in the space suggest you subscribe Ryan is uh G be like our deepin and an AI expert for the foreseeable future so really excited to see what content he puts out but uh really never thought about like that because I you know I vaguely understand like how Hive mapper worked prior to that but seeing his report open up my eyes like the potential of what they're trying to

achieve yep big agree on that I read the report edited it it's very good highly recommend you check it out um on top of that we have a podcast coming out next Thursday with ritual which is an AI project uh it's really interesting actually I'm like an AI skeptic so I'm going to save you guys the the uh I guess Spiel on bit tenser specifically because I I think I've given it here before but nonetheless stay tuned for that one coming out next week but I think that's a good spot to stop R unless you have anything else nope NADA all right wesy effort thanks for coming on we will see you here next [Music] week