Recapitalizing the Degens and Identifying Cycle Catalysts | Roundup

Transcript

all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax legal or other advice you know the deal now let's jump into the episode all right everyone we will be back to the program in just a moment but before we do I want to share something that blockworks has been cooking up for these last couple of months March of this coming year in London blockworks is hosting D London the largest institutionally Focus conference in all of crypto Goldman JP Morgan 72 all in one room so you can know what the big

money is doing so click the link at the bottom of this episode it'll take you right over to the homepage and use bell2 for 20% off I will see you in Sunny London Town in March all right everyone welcome back to another Roundup edition of bell curve you got Vance and Michael just the uh just separating the wheat from the chaff here what's going on buddy yeah what's up I got like a little bit of like a crazy lighting thing here so if I if I change colors Midway through the broadcast just know that I'm not fake tanning or anything adding some definition to the lettuce that you're that you're working with up there bull markets I usually grow it out so I think uh I think we're we're on the start of that and usually my front hair I can pull it down to my chin right now it's

like to my forehead so you know we're we're getting there slowly but surely we did a little our first like bull post about D London got these speakers locked in all the stuff trying to get the people riled up and there were I think most of the comments were about your hair so so I was like come on having baby ETF we got all the institutions in the room and it's like Vance's hair grow out your hair no shampoo next question the shampoo industry they're running a it's a it's a scam I that was a life-changing thing to not use as much I I shampooed every single day for most of my life yeah which is nuts yeah bleaching your hair every day is not not a great solution for hair longevity no

it is not no it is not don't do it I I did know a guy that would do like uh like a tablespoon of honey in his hair that was like the most unhinged that's where I got off the what that is oh no probably like the soul bra camp at this point but you know teach each his own I you know what I actually I've heard too is uh beer like a can beer in in the hair there's something weat it's like I don't know feels a little natural Suns up there in the shower yeah the last time I dumped a beer on my head was probably in college so I think I think we'll leave it there yeah this is why the people tune in to the BC for the uh for the Hair Care advice and products ha tips yeah yeah let's uh let's let's start with this

question Vance are we are we back are we back baby are we is it so over are we so back um joking aside last week I mean obviously very good price action for Bitcoin we got a little bit of a a teaser with the Bitcoin ETF the I shares ticker ibtc appeared on the dtcc registry then it was off and then suddenly it's been there since August but there was um felt like a little bit of fomo or potentially front running the Bitcoin ETF so what do you think I think I mean I think Beyond uh you know are we back are we not back whatever there's just been a lot of real work that's been done in crypto over the past 18 months since the Luna collapse

and I guess you know FTX is a year ago but you have t- bills coming on chain you have I think I think synthetics might hit a billion of of volume today uh you have dydx you know that change a shift as well makers you know reversed the decline in stable coins and now it's going back up Lio is GED a lot of market share um games are launching at the end of the year and then you have kind of like the institutions have finally adopted this with Larry fin on Fox News you know chilling Bitcoin so a lot of work has been done and I think it's laying the groundwork for us coming back and um like you know things things have like randomly doubled it felt felt like at least in the alts and you know a lot of that stuff just doesn't feel too out

of left field if these things are really generating revenue and and generating traction so I think you know in the next couple of years you're you're probably looking at bull market when it starts and and and you know when it stops like who knows it's anybody's guess but we're at the back end of a rate hiking cycle um and you know crypto is decorrelating exactly the time that you would hope it would amidst all this geopolitical uncertainty and it's all this you know high debt load the high deficits like the the narratives couldn't be much better for crypto and it's always about um it's not about whether you're at zero rates or 5% it's about what's the direction of travel and what's the rate of change and we just have a lot to work

with so I think it's time to be pretty optimistic and you know you're going to get we did uh we did a retrospective on 2021 there were eight pullbacks of 30% um and each of those was was a pretty incredible opportunity and so that's at least where our head is at um is just continuing to you know accumulate high quality assets yeah I think it's it's always tough to when that exact moment is the way I was thinking about it this week is you've had a lot of uh head wins shift to Tailwinds so I think one of the most difficult things when the market starts to turn like it did at the end of 2021 is all right crypto is still exciting obviously have a very long-term

perspective and mindset on it but man does it feel like a lot of stuff is going against us for a really long time so you had the regulatory stuff you have the fouryear cycle in the back of your head so you're like damn I got two years ahead of me you know like the next obvious Catalyst would be uh the having and rates uh rear rates are like just moving against me but I feel like a lot of that has changed with a now the having is within basically spitting distance you've got an i shares ET like a black rock ETF filing you've got Larry f going on CNBC like we've talked about quite a bit and actually I think real rates um are moving in the right direction so you know you've had a lot of people on the macro side of things

talking about you can get two and a half% real rates uh in tips which is a really really good deal now the thinking goes okay it's probably not going to get much better than this it's probably going to move in the opposite direction which is good for Bitcoin good for crypto so like a lot of those Tailwinds that we had have just shifted or headwinds have shifted to Tailwinds so I I had two funny anecdotes to your points walking around uh New York uh the past couple weeks the first was uh I was in the West Village and this guy was like okay so like he's on this phone he's on a phone call he's like all right so you download coinbase yeah and do you have money in there okay okay what do you think it's like you know he's trying to like on board

someone and it was the day that Bitcoin popped and so like you know there's like this like frantic like scr Scramble for you know get the app downloaded and get get on uh get on coinbase I thought that was pretty funny I just haven't heard that in I I guess it's been almost two years um wow can't believe it's been that long I know um the other one was I was at this dinner with this uh Wall Street um I think you were at this dinner and uh you know he was like um you know you should put the whole fund into long bonds I was like okay well um you know in like like how much would I make you know if I did that and he's like if

rates go from 5% to 3 to to 2% you're going to make 30% I was like that is just not not interesting at all he's like well like well you can lever it up I was like oh now we're talking he's like you could be liquidated so it just you know it doesn't really make a lot of sense in my mind for those trades you know you make 30% on the upside and you lose your shirt on the downside and sure you might be able to make 5% in t bills but we put that move in in a day for Bitcoin so like it's starting to become the point where you're getting attention from everyone and I think that's pretty cool yeah what do you think uh obviously this is just speculative and it's hard to know the exact reason but what do you

think is responsible for the recent price change because there have been actually some pretty obvious Catalyst there's obviously all of the ETF stuff which seems to be the most proximate one there's the rates story that's sort of happening in the background but the price action last week was really was pretty violent there was one candle for Bitcoin where printed like two or three thousand in you know the span of in a very short period of time that's that's the first time I've seen something like that happen in you know to your point years um so I mean is there a good feel nice does it does yeah I mean let let me just you know shout out to me for uh for posting about a lot of the causes or what could have happened

about this I mean we can throw the tweets up or not but like yeah for for several for several weeks I was like hey there's just like there's this guy uh and he's you know on darbid and there's all these rumors of who he is and who he's working with but like there's this guy who you know when eth went above 2K you know he was selling all these calls and he was selling them at like you know over 2,000 and you know suppressing the Vall of eth and and suppressing the ability for it to break out and then you know eth crashed and he sold you know like I think like almost 300 400,000 calls and most of them were at the 1650 and 1700 strike and the tweets that I put out were like you know I'm not really worried about binance but like if

there's a really big face ripping rally then this dude is going to be in trouble and he's either going to need to you know throw the keys back you know give all this give all because he's he's selling the right to buy eth at this price so he either has the eth or he needs to go buy the eth to give it to the person who's bought these options and sure enough as we approached those strikes it just started to squeeze and squeeze and squeeze and you know one morning darit changed the margin rules on the exchange for this one guy and they're basically trying to rain all right all right pretty cool um but uh you know it's like this this is kind of something that happens late in the uh be cycle

where selling options uh is considered something that's just you know risk-free passive income and you know it works until it doesn't and it works until people buy the calls with the price squeezes to where you could be in trouble and sure enough it did and so I think what we have now is a bit different where um this guy is probably out of you know ammunition on the E side um he's bought back some of the calls I'm sure he has to give up the collateral for you know a lot of the other ones but like you're no longer going to have that Force suppressing you know e fall specifically but also Bitcoin fall and and price action in the space as a whole so the market structure has changed dramatically over the past week is I think what what I would say is kind of the output of of this move the

inputs are like you know degens being Deens this guy runting too many calls dbit kind of being a little bit um I I don't know if Shady's the right word but kind of just like a little bit close to the chest on on who this guy was and if he actually had the collateral but it appears to have resolved which is good yeah and without without to exchange bankruptcy which you know cross our fingers but hopefully that's not coming yeah no more of those please they you know what you know what this reminds me of a little bit is I actually remember uh in the days before three Arrow was was sort of three arrows listening to Sue talk about this on uh like the very early days of Uncommon Core about buying volatility at the

beginning of the last bull market and there were a lot of option sellers which were caught off sides back then too um yeah he he was he was the guy that was buying those options and he I know the firms that he bought them off and and they got just steamrolled yeah and so you know shout out to sue who is currently incarcerated but hopefully he's here for the rest of the super cycle yeah that's it was just funny because he was the guy who's like don't get blown out so you can't be a part of the super cycle so there's a little bit of irony there but yeah I mean that's that's not to say that it's all going to play out exactly like that I was I was even we started to get into this a little bit last episode but I was

thinking I was just remembering it's like 2019 much worse time period but if you looked at like what the price action was doing it was sort of like drifting up it actually ended the year much higher and I think it like kissed 12K around or Bitcoin did around February of 2020 but then it got this huge hole blown in it with Co and then it like really spiked back up after that so obviously you can't do the counterfactual of what would have happened if coid hadn't been the case but maybe that's like what's going to happen now which is not this sort of violent drop and then something that feels much more like a steep Ascent but this kind of slow gradual kind of build and there's a really good there's a really good article by this guy Eddie aarin in who works at a16z the it's like

the price price cycle of innovation or something like that where you know he's reversed the sort of causal order that you might think this is how it works which is fundamentals Drive price and he says it I this is Rings true to me at least price moves first uh so maybe it's like people are off sides liquidity is really low people have to fomo but like something moves with the price then the price gets people to make the calls that you were describing in the West Village right like heyy get me on on coinbase like this Bitcoin thing is moving I got to get in right and then that price move be gets more more buying then the media starts covering it for the first time in a in a positive light then that begets actual fundamentals which is devs coming in people building products um and then

the VC funding cycle typically restarts and then you're sort of Off to the Races so it's hard to predict how and when that kicks in but I feel like that's the thing that has to kick in now absolutely and I think we are off to the races just like some a little bit of you know inside baseball on the interworkings of crypto markets additional to this is there is a cottage industry for OTC options for you know the major tokens uh definitely but also the smaller tokens as well and like um I'm not going to name any names but like when you get deep into a bare Market a lot of these projects are like man like we need money we don't want to sell our tokens but we do want income and so they'll structure these weird bilateral options agreements

with OTC desk where they're like can you write calls for us and you know how they hedge those calls on the longtail of tokens is they go into uh larger markets and so they they'll hedge the you know they'll hedge like the I'm not going to name any tokens they'll hedge XYZ token calls with uh eth positions or Bitcoin positions and so like you have this kind of like Chain Reaction where it's not just the big tokens that have these weird option structure on them like you'll have the alts do this as well and so like if someone starts getting blown out on like alt options that they've been overriding calls on like that's where you see the kind of violent squeezes um that were kind of the beginning of the 2020 cycle and I don't

think we've seen those yet which is kind of like why I'm still thinking that this might not be fully over um but yeah I mean it's it's just uh you know I tweeted out that you know the by walls of the future are built and paid for the Bears it's true um it's just like they don't actually want to do that but they're kind of just putting themselves in a position where eventually being short ball in crypto is always a bad idea um yeah don't fight the market no no man is that powerful so that's that's really good inside baseball I had no idea that was the case do you have like a checklist of things that you're looking at right now to be like okay there are some things that look positive but XYZ thing hasn't happened

yet um I think the main one is just the credit rebuild and we've talked about that but it credit seems to be re rebuilding onchain versus offchain it's still impossible and we're a borrower um you know it's still impossible for us to borrow collateral offchain um we have to post onchain collateral it's you know over collateralized by 3x but I think that's a healthy more steady build of credit and you know like genesis had 50 billion of loaned originations we talked about this on last pod in Q4 of 2021 um you know that is being built up onchain in a more safe and more regulated way uh and that's kind of the last thing that I'm looking for one of

the one of the funnier ones that I thought was on my checklist that appeared this week was like when are eth fees going to kind of start ripping again and like you know people are like make all these like you know mental gymnastics arguments about like is it da is it settlement you know the L2 is taking Fe is it the trading that's going to you know really hurt eth fees in reality it's like one day of price action and a shitty telegram bot that pumped G for to 50 to away for an entire day imagine what that looks like in a in a bull market so all the pieces are kind of starting to collate and yeah I mean I'm I'm like in a good mood this is uh this is the start of something it feels like yeah I tend to agree one other something else that you

know may or may not be on the horizon but there's the there's a launch of some sort of major so like dydx made their migration today they are now live on Cosmos so congratulations to the team at dydx we've also got we've talked about it before about Celestia um you know they've done their airdrop they are most likely launching they're launching main net soon so that also is like that's kind of a another big L1 potential to recapitalize the degens and it's just like a very high quality project that I would say um there's also probably a good amount of tokens that I would guess are going to launch in the somewhat near future in the in the salana ecosystem there's there's been like a sort of quiet uh build of like high quality

projects that have launched and are live but they don't necessarily have tokens yet I have no inside information but I would assume that there will be tokens there soon so I think there's going to be there's going to be start yeah there's going to be stuff that will get people excited again I guess Bitcoin has to do its run first before there's a rotation into some of that other stuff yep I mean couple things on that I think that's exactly right is like when when are the okay so you think about it in terms of uh Bitcoin runs first it draws a bunch of trafy in trafi is kind of like overpowered relative to the on Native or onchain native Deens you you kind of need both of those factions to be like roughly equal power there's no

like hard math to this this is just like my intuition and last time you know what got the DG's up to full strength it was defi summer it was all those air drops it was the uni air drop it was the nft stuff that was happening this cycle it feels like it's going to be probably like maker endgame in q1 Q2 that really Rec capitalizes people like that'll be like a large scale industrial farm that you know you're probably talking about mid nine figures maybe even a billion of like incentives in the first year um Celestia um you know dydx they they calculated what the cost of that aird drop was it was over a billion like that's kind of the stuff that you're looking for to get the DG fully recapitalized I was very curious about that where do you shake out here let me

actually pull the Tweet up I think uh someone from one confirmation but hosu retweeted it it's basically looking at the dollar value of airdrops for major products or major projects out there so here I've got it so there's dydx on there there's Unis swap there's arbitrum optimism it actually was interesting because I had never really done the math to back into how much each of these projects spent and they were pretty different so here's so okay dydx the cost of the airdrop was 1.4 billion Unis swap 600 57 million arbitrum 1.4 billion or just under 1.4 blur 342 million ens 1.16 billion optimism 234 million that's a big differential frankly between

arbitrum and optimism like I didn't have that off the top of my head but what do you think about this whole concept I mean it's funny like people have always given you know half the tokens roughly to the community because people have always given roughly half the tokens to the community like there is no underlying logic to it there is no like X Y or Z you know inputs and we're trying to get an efficiency of roughly you know some arbitrary number I I think everyone needs to do a better job of uh you know uh counting the impact and and making these more efficient but like add those all up like what is that that's 24 that's three that's 3.7 that's three that's like $3.3 billion dollar of money

that was given to DG and so like you know think about that is like the recapitalization event of DG in the last cycle um you know where how can we add that up and and you know get to a number roughly like that you know maybe Celestia launches it a billion and you know gives half of it away to people that's 500 million you know say the maker end game incentives are a billion say the infinex incentives are you know a couple hundred mli like you can kind of get close to that so my point is like regardless if this is efficient or not it's free money that's given to you know our faithful countrymen and hopefully not you know a bunch of meev bots that just sell it um but like we're get we're going to approach levels of this you know recapitalization fairly quickly um

and I think it's going to be um it's going to be really interesting to see kind of what people do with the money this this time around because I think people have learned some lessons in the past few years I agree I maybe I mean correct me if I'm wrong here I think you would know this probably better than me but it feels like there's been a shift in thinking around airdrop whereas I think some of the really early teams like the the compounds of the world might have thought about this in terms of like let's just get our token out there right this is supposed to be a governance token so I just wanted to get it into as many hands as we possibly can whereas now I think the thinking for airdrops and incentives is cost of customer acquisition and so it's very

easy to sort of look at this and then it's like well what do I want my community to do how am I going to incentivize them and I think these get roundly criticized it's very easy to look look at these numbers and say hey this is an enormous amount of money to spend did you actually see Roi was this particularly worth it but I think what's maybe less apparent is that that wasn't for some of these necessarily the explicit intention and then two I would also qualify that these are non-cash expenses so it's not like there I'm sorry there's there just is a big difference between printing something a token out of thin air that ends up being worth a lot of money and giving it away versus actually spending a billion dollar cash it's just I just think those are two very different things and the

question maybe I'd pose to you or for people who are kind of like dunking on these numbers is it's not an accident that some of the most successful protocols in crypto have also spent quite a bit on this and I do wonder if some of these names would be up here if they hadn't done this you know right and so in that lens it's worth it yeah you know how much of your company like you know if you knew your company was going to be worth you know call it you know unisoft is worth like 4 billion would you give away 600 million of the supply yeah of course you would um now there's a lot of people who tried to shoot that Gap and like hit the lip and didn't clear it where it's like you know you gave away 50% of the supply and everyone

just sold it so you know there's not much you can do but the success case is so compelling that even if you waste a good portion of it it is worth it um and so like you know I've seen all these people saying um you know Q2 2024 I'm going to watch Margin Call a bunch CU like that's when I think the cycle top is going to be the cycle toop can't come until the DG are recapitalized and then they spend that money because that's what makes those like you know Avalanche I checked uh in 2021 went from like I forget what price point but it went 14x in two months that's not institutional Capital that's that's DJ and Retail like getting in some sort of Unholy Alliance to just like mimetically go crazy and like

that's what you're looking for you're looking for people to be recapitalized then you're looking for trafi to come in really strong strong and really hot and that is when the uh the PVP Market starts oh yeah and that's when it gets really crazy so like the hated rally rhyme and reason right that's when you get the hated rally that's when you get nfts pumping people like what is this stuff and only when other folks start believing that is when you should start watching Margin Call so I think it like you know if you're TJ Spartan post like if you expect this to last nine more months like you know there's just like a kind of aong mental frame you're probably looking at you know the entire bull market of of last cycle for me it started in 2019 in in the summer of 2019

that's when chain link really went wild and synthetics went kind of wild um and it lasted until you know the end of 2021 I mean you could even say it lasted until like March of 2022 ah see that's super interesting to hear you say that because I have a different timeline on that because I like I obviously am invested in crypto and own a bunch but I view it is like the bull market for me I view it more from the perspective of my seat at block works as like when does like activity really pick up like when are people when are people hitting conferences like when are when are people consuming information and stuff like that so there's a there's a lag at least for us like it took definitely 2019 did not feel like a bull market to me that felt like painful basically yeah I mean like

you know it's like I I would I would Define the start of the bull market uh as when things stop getting worse and they start getting better and then I would kind of Define the end the end of the bull market is kind of when things stop getting better and they start getting worse and there's obviously like you know uh a very concentrated period like 2021 was like the meat of it but like there's events leading up to it there's events that end it there's you know characters people com and go like these things last for for years you know summer of 2019 to March 2022 it's like almost three years um yeah and yeah it takes a long time so cycle

Bitcoin Bitcoin up first I saw um Mark over at a posted called beds Bitcoin ethereum defi shitcoins there is a and actually that's pretty funny U and probably probably accurate probably accurate there is there is usually the hated rally is a is sort of a funny one which is feel like that tends to be an asset that has some amount of Mind share so it's like kind of been around but it's really low volume and it's also something that the inside crypto Community just completely writes off and it ends up just ripping really hard in everyone's face so the one that I would say like maybe there could have been two of these uh last cycle which was cardono

I would say is a hated rally and uh and maybe bmbb so I feel like something like that ends up happening uh this time as well I actually do have a contender for who that I don't really want to say who it is on air but I I have a I think there are a couple I think there are a couple solid contenders for who it could be this time around [ __ ] I'm blanking on his last name H press h press yeah hell press came on at the very end of the uh when the bull market turned and gave some really good Alpha actually around um that turning like inflection points in markets so if you guys want to go back find this old Empire episode uh H you had some pretty good pretty good F on that all right everyone we will be

back to the program in just a moment but before we do I want to share something that blw has been cooking up for these last couple of months March of this coming year in London blockworks is hosting D London the largest institutionally focused conference in all of crypto we are gathering 1,200 of the world's largest asset manager so thank trafy macro funds Crypton native funds big allocators and financial institutions so Banks payment processors Etc all in one spot it's very rare to get the likes of Goldman JP Morgan 72 whatever all in one room so you can know what the big money is doing we're diving into the themes that they care about so we're talking about the intersection of macro and crypto where we are in the cycle real world assets so everything from stable coins to unchain treasuries to tokenized assets it's going to be a

blast but the other reason you really want to go it's London baby center of the world at one point you got Pub culture you got fish and chips great beer it's going to be a blast so because you're such great listeners to bell curve there's a Code Bell 20 that's going to get you 20% off so click the link at the bottom of this episode it'll take you right over to the homepage you'll see all of our speakers and use Bell 20 for 20% off ticket prices are going up soon make sure you go use that code I will see you in Sunny London Town in March I'd love to get your take on the uh there was a little bit of a cruffle this week U maybe we could call it that about layer zero um so basically there is layer zero sort of in this sort

of I guess partnership um there was a proposal that was that was that was went live on Lio uh between which was a layer zero prop uh proposal which was supported by the Avalanche Foundation B&B chain and scroll uh which facilitated the bridging of um rap steth uh across ethereum so basically the idea the the selling point from the perspective of layer zero is that you have like one it prevents fragmentation obviously if you have many different Bridges it both fragments liquidity but it's also a really poor uh user experience standpoint because you're like well which one is the canonical uh rap Ste basically um and I I would say you know not there was there was some

there was some push back um I think you know I I like the the team at layer zero I feel like their hearts in the right place but also I think some of it was pretty pretty valid uh um Hart lamber posted uh basically about some of the security concerns on the multisig that supports um that supports the layers of zero Tech and what were if there was some sort of exploit um hosu had pretty strong push back which is basically just the the idea of it to paraphrase is felt sort of strong armed um into trying to say that Lio approved this while this was still in proposal they were sort of trying to push this idea that this was the one canonical Bridge uh whereas that hadn't you know this had to this has to be evaluated by the Dow on the Dow's

timeline across other service providers and vendors there needs to be a process in that if we think this is the best solution we can vote on this but it felt uh maybe maybe from an Optics or tactics standpoint this wasn't received super well how do how do you view this whole this whole debacle I mean just so people understand it's it's kind of like the difference of like remember when there were all those shoty versions of usdc on salana there was like 10 usdc it's like which one is the real usdc like does the full faith and credit of usdc stand behind each individual bridge that it was brid Ed on and the answer is like obviously no like if something happens to your uh you know whatever XYZ usdc on salana and you ask

for you know usdc to Blacklist it or help you out of a hack like it's just like not their problem it's not their security Vector they don't own that um and so lto conversation is kind of the same thing bridging has long been a contentious topic for Lio and it's a it's it's uh it's out of the looking out for the best interest of users in terms of they want to have super secure Bridges and they want to be able to have kind of like canonical versions of wap's steth so when you stake your eth transfer it or buy it on layer zero or whatever wherever other blockchain may live on you get the real rap Ste and there's all sorts of other arguments other than security tied up in this another one is who owns the trademark for rap Ste you know is it is that like

a universal thing you can also kind of extend this to like who owns a trademark for usct like or or like all the [ __ ] that just Justin son is doing on Tron like I'm sure those two two things are kind of like a similar argument but I don't know you know I think this is kind of spil milk under the bridge this will be sorted out um like you said I like the lar Hero guys I obviously like the lto guys um but uh you know people were just trying to get an edge on each other ler zero is in a very competitive game and Hart lamber I think is his heart is in the right place no pun intended uh but he also runs a bridge um and you know there's there's obviously kind of like he wants people to do it one way

Lar wants to move fast and break things but at the end of the day lot is kind of the adjudicator of what the real rap Ste is so probably should just defer to them yeah uh big fan of the Lio Lio team as well obviously I from the from the perspective of just like underscore the the sort of business rationale or the imperative here there's actually really we did a great interview with uh Sam kazian over at fra who did a great job of describing sort of the Sim the similarity even between the business model of like a stable coin versus is a uh a liquid staking token versus a bridge it's actually like all kind of like you're managing withdrawable deposits and then an asset which you want to be used and viewed as as money

uh and there's a huge liquidity Advantage there and kind of like this really big Network effect that sort of kicks in so the race to be like the canonical thing where you don't even have to consider okay there aren't 10 different bridged versions of this essentially there's one bridged version of this and it's as good as gold it's should be the consumer views it as the same thing there's a huge Advantage there and I would guess like a pretty massive power law which is maybe why you'll start to see more BD Wars around like this as things kind of heat up yeah it's the same thing as the circle bridge too right like they they want to own the canonical version not surprising yeah yeah totally agree um all right maybe um we can talk a little bit about the

there's been a lot of blowback about the the Wall Street Journal uh this this week Nick Carter the national treasur investigative reporter that he isad big Chad I I'm actually I'm always like dude he does so much I mean he's a full-time you know running Castle Island with Matt and still finds the time to like thoroughly read into the data sources here and sort of found that there's basically a claim that the Wall Street Journal published where they sourced from which they sourced from which originally reported that Hamas raised you know $41 million um in crypto which sort of got expanded and Nick dug

into the data and found that they were actually counting exchange wallets and just assuming that that all of that was I mean come on and then elliptic actually came out and said they refuted the claims that the Wall Street Journal put together it feels pretty one-sided I actually I didn't watch it but I saw it was getting tweeted around today that there was a a senate Banking Committee where actual senators were saying hey this doesn't feel like this was accurately sourced um or is or valid data but the Wall Street Journal hasn't published a retraction and like Elizabeth Warren and the the classic sort of crew just all cottoned on to this and yeah it feels like not particularly great from a journalistic

perspective yeah and the other thing is like the Ian tally guy you know who hasn't been on Twitter in like a year or something how that's possible for a journalist I mean you tell me but um you know he gets on and he instead of like saying anything of any substance he just starts tweeting motivational quotes cryptic [ __ ] and like you know things that have no no relevancy to the current you know retraction or correction case that he's involved in um and how is that is that like the official Wall Street Journal you know editorial board response like you know you go freelance on Twitter if you get called out and your source is you know refuted on an article that 120 Congress people you know signed a letter for like

it's just insane and uh it's really sad because I love the Wall Street Journal like that's one of the last mainstream Outlets that I read and you know I'm looking at my phone like [ __ ] like do I have to cancel this now like do I still want to talk to their reporters like do I still want to you know support kind of what they're doing because they do have some great crypto takes um at least I think you know they were early to kind of Gary Gensler and his quest to you know ER the industry and they push back on that but like they've done more harm with this article than any good that they've done over the past few years and so I mean retractions are not just ethical they're necessary you know reporting like this can stiming industry's growth it can push policy in

the wrong direction um and this is how you get things like the Patriot Act this is how you get things like legislation that can just invade your privacy and change things unilaterally so I hope that Nick Carter continues his holy war against the Wall Street Journal and and this guy in particular they've always you know I've looked at these people's reporting they always have kind of posted negative slanted pieces on crypto um they clearly are not independent and just that his response Ian's response is just frankly disgusting like how are you an adult male that works in one of the most respected news organizations in the world and your response is just to go on Twitter and [ __ ] post like not helpful didn't feel like it was particularly good-spirited engagement is

what I would say like because no I mean he felt defensive more than anything else yeah I don't I just you know usually I I really do believe as like I do believe in media I I think there there there's an abundance of bad takes around media the the way I would describe it is like for maybe the invisible part is you know how you when you go to an airport and then the people who work at the airport are really rude to you you're like why is this person being so rude to me and then you see the person ahead of you like berading this this airport worker because you know their their flight was delayed and something it's like not their fault at all that is what it feels like to work in media like you do just get bered by people constantly and it

makes you very callous to like when people actually have a point but in this specific instance I feel that the data is so manifest it's so clearly a mistake I don't understand how they haven't published a retraction here this just feels like really bad really bad practice and it's really damaging too because it gets cited in these Senate hearings and has the potential to influence regulation it's so it's so bad like I don't know I mean no matter what industry you're in if you [ __ ] up you know you should take your medicine you should admit that you were wrong and you should you know try to rectify it and like if we make a shitty investment that embarrasses The Firm you think our LPS

are going to yell at us 100% but like look like I I think of myself as like an 18-year-old in a 32y old's body but like I'm able to kind of get right with myself and say you know I [ __ ] up that's okay the fact that this guy isn't is just so bearish on what's going on in that Newsroom it makes me question not only they crypto reporting but kind of everything else like how much of what else we're reading is kind of this vein of like misinformation or you know misunderstood information it's really really sad Gman Amnesia dude get him out of here yeah that's uh it's like when you when you know something and you read about it in

the media and you're like oh my God this is so wrong and how could they possibly have printed this but then you turn the page to something that you don't know about and you continue to treat it as if it's fact it's it's just such a true such a true thing um yeah it's discouraging for sure a lot of stuff happening in the world today having you know slanted Media or uninformed media can only make things worse so I'm we've talked about this before but like I'm so bullish on things like Community notes I think that might be a part of the future of Journalism um and I hope just more thirdparty verification is is a part of what goes on in the future yeah I agree with that one thing i' I'd love to get your your take onment I actually feel like Michael and I talked

about this a little bit um when we were doing a couple of our solo episodes a couple weeks ago but there so Celestia is integrating with um arbitrum orbit for data availability so as a reminder to folks uh arbitrum the construction is it's actually there was a really great we'll link it in the show notes there was a great thread with uh Stephen goldfeder over at arbitrum explaining the difference in business model between optimism and arbitrum and he likened it to two theme park models uh one is a theme park model like Disney where you have to pay a lot up front but once you go in every single ride is free which is the Arbitron business model and if you want to license the the layer two to Fork it you can do that but you have to pay a licensing fee and then there's the

other business model of con Island where it's free to go in but you have to pay to use everything and that's sort of like the uh the optimism business model and that's why you're starting to see optimism have law of chains because they need to extract value or or capture value in some way whereas arbitrum does it via licensing but what you can do at arbitrum is you there's a layer three which settles down to arbitrum and that's aligned with the um the economic incentives of the chain so arbit that's called arbitrum orbit which is the platform that allows you to easily spin up a layer three and that integrates with Celestia's data availability how do how do you view because there's going to be a bunch of data availability Solutions online relatively soon so we're GNA have

Celestia which rollups on ethereum can choose to integrate with uh there's going to be igen da polygon aail all these different things and basically that's going to make costs much cheaper for for rollups so the largest cost for rollup from my understanding is and it's a variable cost as well is data availability posting to ethereum so basically rollups are going to get a big depending on how they want to if they want to pass through that cost their users it's going to become much cheaper to interact on rollups or Roll-Ups are going to get more profitable but how how do you view I guess I'm just thinking about it a lot because Celestia is launching soon but how do you view data availability and what that enables like cheaper da enables for the

ecosystem yeah so if I think about the construction of fees on eth um you know it's it's like you know it's a Mis deployed telegram bot it's all the you know random shitcoins it's all the assets that are in defi it's all the high quality nfts like you know I've said this before and it's interesting the rollups they're a very small share of eth fees you know they're there may be 5% and so you know what how does that 5 per get to 10% or go to zero you know I mean a lot more rollups is one idea and I'm sure that that's coming and you know like integrating with Celestia or not still some aspect of fees will flow to ethereum and so I think there's going to be a lot more roll up sure some of them

might use uh you know da from Celestia igen LA oril but like that's really not going to be material to the fees of eth like what would be material is if the nfts moved if the def5 moved if the assets moved and I think you know the flow of those assets is dependent on a few things but what we've seen for the l3s and honestly the twos as well is that they have kind of failed in attracting the assets to stay on them and like you know you can even look at salana there's 300 million of dvl there like there's really has never been this move to these other chains and sure one day it may happen but like bridging which we just talked about remains like a huge huge issue and frankly like the

institutions are not willing to go across these Bridges and so like rather thinking about it from the perspective of like oh my God you know da or Celestia da is going to take a sh shitload of fees away from eth I I don't think that's right um I think you know eth fees are just going to continue to grow and then like the bar for you know mooning 50 to 100 G on a random day is very low so like that's going to come back I think the burden of proof is kind of on like Celestia da I da whatever else it's like how are these systems sustainable um when you have very little fees flowing through them uh can you always live on incentives you know like is there a path where you can get combinatorial uh safety or staking security from eth that's restak like I

would give kind of a point to Ian da on that front and like probably you know minus points from celest da on the other but like these things like I feel like they they've launched and people have been like it's over you know the eth da game is it's been fun we're gonna have to pack it up it's just not the case because that's not where eth does not derive a significant portion of its fees from these Roll-Ups um and so I expect that to continue to be the case and the burden of proof is is on these l3s to prove that there's any product Market fit on them in general like I I really like polygon I really like you know a lot of the other kind of like L3 style efforts that people are putting out but like those have frankly failed um just

like launching in an isolated vacuum is not worth the cost savings that you get uh when you're not on eel one so that that's my perspective um I do think on the margins something like you know I da is bullish eth like the idea that you have these like alternative validator systems where you can just like you know pick up you know 10 15% extra yield for your e that's really cool it's for super ethylin like it's only going to reinforce the network effect I'm more specious on something like Celestia I don't know what that appeals to in terms of just like a crowd and uh I mean last last point on this so let's say Celestia something happens and launches 100 million FTB is that a secure da layer like is the is like you know like the

market cap is some function of the security there because it's secured by the native token and like do you want to secure your rollup on something that has a smaller market cap than your rollup I don't know yeah I the Celestia thing I think it's it's unclear to me where I I just I think if I guessed anything I would just be I'd just be guessing I don't know if I have a particularly sophisticated take on it it's just there's there's the where the actual stuff happens the execution layer there's the da layer and then there's settlement I agree most of the stuff hasn't moved off of eth for now I agree I think most of the stuff is actually there probably going to be a bunch of projects that still launched on eth main chain like Pepe was a really good indication of this like that's where the

community is that's where the people with money are like probably will be a bunch of fees that still get generated from projects on main chain I think this I think the Celestia thing if they can really I really like what they have with their their light nodes I think that's the I think that blockchains are going to start to gravitate towards that like ethereum has data availability sampling on their timeline salana it is possible to do they don't view it as a something that they need to do today but I think it probably is the right way I don't know I've been thinking I know this is a heretical thing to say but this my problem with solo staking has always like relying on that as a core tenant for the network is like it's great it is 100% a really great thing to do it's a

huge accomplishment of both the Bitcoin and the eth blockchains but I do Wonder out like how many regular average people there are out there that will run the hard setup of an eth full node and I do wonder if like maybe a way that we could get the benefit of users being able to actually verify all the transactions that happening on are happening on chain is something like the Celestia light node like kind of like a light client that you could easily run on an iPad something like that you can still verify the transactions even if you're not involved with constructing the blocks per se I think that would be a really good I've started to sort of think about that as a compromise because what I think of as blockchains it's a shared it's a shared database that you have

both read and write like the average user can both read and write if you want to but maybe there's a lot of people that don't really care about writing and that's not the the point but you still want to be able to verify that all of the rules that everyone has agreed to are being done in a good way so this is sort of I went on a little bit of a monologue just there but I I do that's that's what I I that's why I've always liked the Celestia part of that equation which is their their light nodes and their data availability sampling I think has legs I don't know I I think you're probably right it probably gets adopted by a bunch of different blockchains and becomes less novel um like when youth adopted proof of stake from Cosmos uh but like the supply side and

how transactions get validated is like the end part of the supply chain the demand the culture the native asset being used as money the nfts that have provon on a blockchain like that's the product that you're selling and you know it's like it's great that like people have figured out you know a new way to kind of square the circle But ultimately it's like not what matter like I remember maybe I think you probably yeah you you were here when like you know remember when dags you know you know Iota and that was the only way that supply chain Finance was going to work and you know things you know wum and mimble wimble and uh you know there's there's all these things that kind of come and go and it's not to say that Celestia won't be impactful or that

they're wrong I think they're probably right it's just uh it never is purely a technology thing and sometimes that gets a little lost um but we'll we'll see you know um some of these things have staying power some of these things change the game but a lot of these things are so path dependent like you're only you're only ethereum because you launched in 2014 and you went to the ups and downs you have metalic you have this community you know like Celestia is just starting on that journey and it's so much easier and I've heard this a lot about technology that has not launched it's like you know this is going to change the game and it's x y and z and when it comes out usually there's kind of like yep we're soft launching this and it's going to take a little time and this is like the testet version

and you know like things are rarely as seamless as they seem as when they're kind of unlaunched yeah I think there's I think there's a lot of Merit to that um last last story I want to honestly get your take on we were talking about a little bit it's a bit of a self shell but we uh we launched something this week which we've been putting together for a long time which is the arbitrum Coalition so we've been looking at Dows for long time just in terms of how they Source labor people have called this something different over the years people was a little while ago people used to call it governance mining but the idea is as especially these rollups on eth start to take their training wheels off and rely Less on the foundation you need very high quality service providers that can actually like

are deeply entrenched in the ecosystem know what's going on and can help sort of guide and form the strategy so we blockworks research teamed up with gauntlet and trail of bits to basically be like okay um let's solve some of your problems about just like creating a strategic road map because this is something that happens in the Dow all the time a proposal will go live people will be like okay I like the idea of this but I don't understand how it fits into the broader strategy I don't know how to Source the service providers blah blah blah and then you just lose momentum so it's kind of this combination of fixing that problem so things can actually happen in the Dow and then the two big things that arbitrum are really going to need moving forward are audits going into the future and the stuff that Gauntlet can do so

like when you want to roll out a feature like making sure there's not some you know catastrophic bug or way that people are going to interact with it that's going to take down the system and it the self show part of this being over I do think that you're going to see the this was a prediction of this year actually if you remember the predictions we did going into this year there's going to be the rise of these like guilds and professional service providers and I my hope would be that if this is successful that a lot of others do this across other protocols because Dows need like good professional service providers so so that's what I would that's what say I I love this I mean there's product Market fit for having adults in the room for these Dows and uh we need more of

that not less of it like there was a vote for Lio to give incentives to arbitrum to stake eth and it was like literally like a no lose proposition yeah and they voted against it just because of like bureaucratic mismanagement and so you know government for the people bu the people sometimes you need a little bit of a helping hand along the way and not just a helping hand but being data driven being organized hearing stakeholders out interviewing people to understand how they're feeling and what they want like that's all part of this job and I'm so bullish on on you guys for doing this like there's at least 10 to 20 to 30 more protocols that need this um and like the hardest part is is the uh there's like you know whenever others try to do this I find there's like this

like level of mistrust and you know frankly like nepotism that results in like people being awarded things that are kind of self-dealing um being able to a guarantee that there's someone who's watching is is so helpful because like you know you guys have gohub but things are moving quickly and there's so many of these things that they can get out of hand fast you know what else d i I appreciate the kind words and I would say like this is not just a blockworks research story like my hope would be that lots of if this is successful that there are lots of these that these Dows because one of the things that I feel like is missing from Dows is like you guys invest in companies right like how would you feel if there was just no strategic road map for it's like hey we like we need to

know where we're going here because if you don't know where we're going then we don't know how to prioritize anything and I I think a good example of the pitfalls of not having a cohesive strategic vision is what happened in Cosmos land with the fumbling of the bag with stride like the Hub had the opportunity to acquire stride and it was just such a layup I feel like for additional source of Revenue we solve a lot of the problems that we're seeing in ethland so the stride part of the back end actually becomes very decentralized there's token voting that governs it you have the LSM which serves as regulation additional source and a value ad for the Hub which is still seeking that but everyone is just like well how much does it cost how much adom do I

need to M it's like guys you know but if you had a strategic Vision to be like here's where I'm going to get here's how it's gonna how much it's going to cost but it's going to pay me back 10 times because it's going to help me to get there and to make decisions faster you know like oh dude I went through the same thing on maker where people were like you know we're wasting you know it's like $2 million I was like I know but this could result in like tens of billions of dollars of potential value they're like I know but like we're racing the money it's like just stop like you know there's I I so I think I think retail and crypto is smarter and can sniff out [ __ ] faster than any other investor class that I've ever encountered I think

when it comes to governing things sometimes they can trip over over their own shoelaces and they just need help um and having someone like you guys just you know being able to at least set the guard rails for the discussion needs to happen I appreciate it man that's the goal just setting setting guard rails basically um all right this was uh this was a fun one anything else on good anything else coming up from the framework side of things what's going on with with framework let me think um what's going on with framework I mean we're uh you know we're having a good time outside of the hair care man we're deploying we're having a good time uh spending more time in the east coast um you know we're good I feel like we

came into this Market in a really strong position or just kind of like exploding that opportunity and you know we're we're just riding the wave now so oh the the other thing that I'm doing personally is like making the rounds with Wall Street folks and and kind of notic that you know spreading the gospel you know someone needs to do it maybe a guy with hair like this why not what has the uh just out of curiosity what has the response been from from W Speers right now positive very positive um as I said the narratives of you know High deficits high debt um low growth you know higher inflation like it all kind of is bullish gold and people think gold and then it's

a short hop to bitcoin and once you're in that like there's kind of a panacy of interesting technology things to invest in but the other stuff that we see is like the PMS on trading deaths of large hedge funds which you all know and have heard of are are trying to figure out how to get access to this yeah and they're pushing their risk team they're pushing their back office team but the thing that you know really kind of help enables them to trade this asset class is an ETF um and I like you know the H how can you tell that there's an interest in in Wall Street that's uptick the CME is now the exchange with the highest open interest in all of crypto like really you sold you sold your coin to the bankers like it happened and so you know it's it's it's huge to have

that happen and the last time that that that happened was you know late 2020 so it's just another positive indication that you know the the herd is coming to quote Michael noats indeed yeah the it it was we had a bunch of like webinars at that point with much more traditional Traders and it was like why why do you trade on the CME it's super simple answer it's just because it plugs into their existing infrastructure right they're all set up to trade on CME they don't have to like learn something else uh so it's like it's enough to take risk on something like Bitcoin or eth but you don't want to have to take risk on a totally new asset class and then set up an entirely new background infrastructure that said

I do think that's one of the reasons why I'm so bullish on Crypton native funds is because like you guys have taken the time to actually set up that infrastructure and your world of opportunities is just so much broader than someone who's like yeah I'll just trade on CME and I don't really want to take the time to set that it's it's literally closed on the weekends I know yeah like oh that's that's the other thing that's the other thing I've been thinking about so in the bull market of 2021 the weekend moves were hugely important you kind of tell what what type of week it was going to be by the weekend moves that that's kind of back too yeah so and and where do the crypto have a leg up on the institutions on the

weekends weekends baby yeah they doly internet addicted uh let me let me say something about that too people have been complaining about like you know I'm spending too much time on the internet like you know this is really taking it out of me cryptos 247 then stop like you know like your ancestors were digging ditches like you're complaining about being the internet I I don't understand that I'm actually I reached out to him after he posted this so he's going to be on another blockworks podcast but Ben Carlson who posts under a wealth of Common Sense put out this great piece which is people have more money now than they've ever had and they're more miserable than they

ever were and there is something funny about that I I don't really fully understand it but if you were to just look at very objective measures like if I were to say Advance like what what do you need in order to be happy you know you'd be like well I want like more money my pocket like I want access to better this that or the other thing like on many observable metrics life is improving for everyone and not just people at the top which is the the popular narrative like people in the lower income brackets who actually did better for the most part during during inflationary periods I know people always get super pissed about that but that's just you can just look at the data and but people are still super upset so it's just an it's an interesting Paradox of Modern Life that

actually we've solved a lot of problems for people but people seem to be pretty upset about everything all the time so find something that you love to do and I Honestly Love crypto like yeah me too man I've talked to friends about and they're like you know why don't why don't you just hang it up I'm like what would I do I would just sit at home and trade crypto probably and [ __ ] post under an Al like I'm already doing what I love and I'm doing it with you know one of my best friends and like yeah I just absolutely love it so if you don't you know maybe it's not for you but I really don't see any reason to complain about it I'm totally with you completely agree uh all right partner this was a really fun one I will uh see you next

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