The Search for Reasonably Priced Tokens | Analyst Round Table

Transcript

before we get into today's episode 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 all right welcome back to another episode of ZX research today the research team is back to bring you another analyst round table I'm joined by my co-host Ryan as well as Carolina from the Block Works research team to talk about what's happening in the markets and cross though um it's been kind of a boring week in the markets but I think two like relevant piece of news that we had is um with l2s so lanaa um a protocol on lanaa called velore a ve3 FreeX um was

exploited and all LP funds were stolen uh I think it's like $10 million in total but from Lena was $25 million um in response Lena which is consent this is L2 PA it sequencing um I think this the first case of a team stopping their sequencer and halting their L2 and it's like the most obvious takeaway is that it's kind of a s slippery slope um obviously stopping an exploit is good but on the other hand like a centralized party being able to stop um the chain and decide on what is right and wrong is not uh ideal I also think like this might kind of help people realize that l2s have

have like different trust assumptions to the l1s and also that they have like different trust assumptions to each other so like vast majority ignore that um the current state of rollups they're not like actually really rollups um it's essentially like sequency that you're trusting and you're like they make sure that your money is safe and withdrawable um plus like in terms of l2s like arbitrum and optimism have forced inclusion is which is when so usually when you want to withdraw from an L2 you have to rely on the sequencer um that's like the most easy path but you can do forced inclusion uh so you interact directly with the L1 and your transaction is included in the L1 smart contract on lanaa they don't have this

um so if the sequencer shuts down or you do something wrong you just become stuck on the Chain um you can't take your money out I um honestly like this was kind of funny to me this morning because everybody thought that blast would be the first L2 to do this um like months ago they had the Munch not months ago maybe weeks ago I I honestly don't know timelines are so bad now but um they lost 63 mil on munchs like users and on Luna the Expo was 2 and a half mil and like that's only 2 and a half mil which is decent amount of money but it's also like nothing in terms of crypto it's so I'm surprised that they went to like stop for 2 and a half mil um on the

other hand I saw some takes on Twitter that were like you shouldn't do this obviously like it's against the EOS but but I think it's okay to have some centralized l2s I don't think that's like a really hot take I think like some l2s can be a safe space where you just don't get exploited um obviously people should know that and L2 be actually have like a good dashboard for this I um I should have pulled it up I didn't but they have one um that shows like what your risks are with sequencing uh centralization Etc and it's like it kind of shows that for example L you don't have forced inclusions so users users should know but I think it's fine to have some

centralized VES yeah the team also mentioned it's not like their um their goal is not to to keep this on forever so they won't be able to Hal the chain in the future when decentralization is really like in force and I think yeah people um people try to always be a bit too um theoretical in in this industry but I mean we know that decentralization is like an end goal and it's okay for the path towards it to not be like super decentralized from the get-go I think we know the team like teams are building and doing a good job and this was the

best solution for the users so I think it's a bit um of an exaggeration to be very concerned about uh what this means yeah I second that I think that look everyone most people there's not a lot of new people in the industry that don't know what's going on everyone generally knows how these things work as you said l2b provides a really valuable service letting you know the risk and parameters that you're dealing with if you put money into one of these systems um we're all adults um we know the risks generally no one is really surprised about this and I think that the people online are who are um you know pointing out that this is against the ethos I

think they're just making noise rather than being practicable practical they're they're they're looking for clicks and they're not really looking um to have a conversation of any substance some there there are various degrees of decentralization in the industry pick and choose what's right for you and like move on I'm just gonna I'm going to take the opposite on this because you guys are both agreeing so I feel like we need some form of opposition um on the other hand I think for two and a half mil they shouldn't have stopped it because you're like we all know that there's like levels of decentralization and centralization but you shouldn't like you at least want to keep up appearances to an extent like you want the Optics um the other thing is I think the people like getting angry about it

on Twitter I know it's like kind of clickbaity but I think you kind of need those people because or else it's just all Devol like we know centralized is more efficient so if you don't have those guys who are yelling um big one is like Chris ble I don't know ble I don't know how you say his name but he's like he's very he'll be on under every threed just commenting like oh this isn't like how it should be done and like okay he's a bit goofy but at the end of the day you need like a couple people who are a bit goofy like that or else like it's just it might become too centralized yeah I think it depends on who your end customer is right like I don't know who line is positioning for but for example

if you wanted a more institutional crowd that wants to trade with tight spreads uh and you know is is more of a sophisticated actor in the market they're going to want to make sure that if the chain gets hacked that you can shut it down and stop the hack like that's going to be of Paramount importance to them or else you're probably not going to get that client um so it it really depends on who on who your end customer is and I think the the reason was also not only the the 2.5 million but um that the exploiter was trying to was starting to just sell off more um tokens and with liquidity available in in the pools it will probably like affect more users

than those that had been exploited and it could kind of maybe trigger some some more effects that would that would be later on worse for users yeah I guess they don't think of like Mass liquidation I assume on all of those l2s people are also levered up just because they're trying to farm as many of whatever point there is talking about l2s which have a specific purpose great segue and to arbitrum um so they have a I think most people have seen this by now probably but they had a $250 million fund um that they requested from the Dow that this would come out of the arbit

treasury um to earmark 200 mil ARB over a 3year period um 135 mil of this will be for investment so like seed rounds um and the rest would be for Building grants and infrastructure bounties on top of that moving from so arbitrium is like three stages uh just from like a high level it's the discussion stuff so just on the Forum on discourse and then it moves on to snapshot and then it moves on to tally for a final vote and in between snapshot and tally they added an extra 25 mil for operations and administrative costs um they have been discussing this on the forums for some

time to be fair but I think it's like I already tweeted about this it's way too much money like $250 million for gaming is I think like way too much money and I like I don't see this being spent well well I see this being spent on like threee ways it's like Partnerships with existing semi dead non- crypto games I think like maple story and Avalanche even though maple story is not a dead game but something of that sort and like what they would launch would be an nft collection or like a secondary derivative um they'd give money to existing gamey infrastructure or like it would just a final attempt sub Park click to earn

games from Talent um to hit kpis I um like I mentioned I think it just makes more sense for arbitrum to stick to being a defi chain um at the end of the day I do understand like the Allure of gaming though it's such a massive industry and it feels like crypto should get a piece of it I I think there is already like so many shovels um there's so many of these like game fight chains um or some form of game game fight in infrastructure that I don't really and I just I don't think they're going to use this well at all I feel like they're they're allocating more than half for investment I don't think if you're a d you should be making Investments it's

just I think it's just a messy situation that they they have this like desire to spend as much of the treasury as possible for some reason I I genuinely don't understand it yeah it's um it's really hard to justify a gaming specific Fund in crypto today the reason is because you really can't point to any lasting successes in the market VC is really hard to begin with the returns are actually quite low if you take the medians um VC gaming is incredibly Niche you probably need specialized expertise

you need a specialized Network um you need some real competitive Advantage there and it's not obvious to me that any crypto Dow possesses any of those advantages to like Drive meaningful returns for a game fund um more importantly like we had this conversation on slack today I I I just asked the group you know what percentage of crypto games have been on mobile uh the guess was less than 1% yet Almost 100% of the growth in Gaming revenue since I'm eyeballing the chart right now 2010 2012 has come from Mobile gaming so to be that kind of like

off base as an industry in gaming is I don't know it says a lot it says that if this goes through you need some real strings attached to this Capital um and you know just out of pure Prudence I'd say you got to scale it down there it there's just the proof of concept isn't there yet sorry I was just wondering if uh you you guys feel like it's like it makes inherently more sense like you were mentioning to H for gaming to be in dedicated chains uh like does is that also something that bothers you or not really to be fair to them their whole push has been to launch gaming lree um so like it would be technically on

dedicated chains I still don't like there's so many already gaming l2s that aren't used very often and they already have like a gaming lre which is relatively popular valuation wise called Z but I mean even if you go on these chains they're just the thing is that this like the way that I'm arguing this makes it seem like I'm against any investment in gaming I'm not like there's obviously some net um usefulness for crypto gaming be it like owning your own assets or like more intensely you're like everything needs to be on chain everything needs to be verifiable no exploits no changing of minutia from um and I think that gaming is a good way to like definitely like we crypto gaming

can be attractive um but my like Point has been that we already have so many game fight infrastructure I know for a fact that they're going to spend this money on game fight infrastructure somehow because that's like the more attractive thing to do um I'm just worried that like Ryan said I know people think that like you just Chuck around seed money and somehow you get the returns I don't see the doubt doing this efficiently I think there's like too many incentive misalignments there's already like massive players um in arbitrum Dow that are gaming related um I don't see like how it ends up well for users and for token holders um frankly I just think it would be

misspent um in their defense they have been talking about this for six months so like this is very late that everybody's starting to talk about it now because they have been discussing it for six months and people probably should have said something five months ago and he guys maybe like 250 mil is a bit much um but it's like I don't know they've had like they have so many incentive programs which is fine you want attention you want to attract users um I'm just worried that like if you have a very clear product Market fit and that's like offering some form of defi um they were doing pers really well for some time then like pers started moving

offchain and other like l1s l2s um and now they don't really have anything very clear but they still have most of Def activity and tvl as an L2 so I don't see like why you would spend money to say okay like ignore the thing that I already have uh and like working on that I'm going to instead do something that's a historically not been adopted very like well at least over the past year or so and B like something that I've not been able to do very well there are like gaming chains that have done well Ronan has done relatively well um but they already have a community to them I I just think it's like as a business it's not a great way to way to approach an issue um just Chuck money at it um very

like Loosely what What's the total size of the treasury oh I don't know like free bill or something a little bit above three free billion that's just based on a reply a saw though three billion yeah I mean we had people talking about this this morning but somebody this is one of the most like detrimental research papers ever written definitely because somebody wrote a research paper that the da can spend 800 million ARB a year and be fine like it wouldn't impact the token price and it's like I don't know if that's true like maybe theoretically I guess but like just based on Optics they've had large incentive

programs it hasn't done very well for the ARB token so I don't know who came up with that I don't know I um in general gaming has been kind of hell for the past year if you're a gamey analyst it's just yeah I think I mean it's super it's pretty weird right like Gamers seem to be some like obvious natural first adopters for crypto like they spend money in the game like they're enthusiastic about technology they like toying around with new systems they'll try new things their technology first people um yet if you look at some of the earliest crypto VC notes um in the industry on like where

they're putting their Capital they were all excited about gaming in you know 2014 to 2017 and everyone was certain it was coming in you know 2018 2019 and it still like really hasn't happened um I like what what what first principles thing does the blockchain add to a game that that that is clearly missing that the market clearly wants today that they don't have the thing is that Gamers hate crypto like they legitimately hate crypto and that's like a I mean I don't know if it's like like subjectively it's

a fact if you go on any Reddit like any gaming Reddit or if you go on like game the gaming side of Twitter and you mention nfds blockchain crypto anything they just hate it um I think they fell for some scam everybody fell for one scam at some point and now they're just like I also like read that um it might be resentment because like you said their technology first they're very clearly like a fit yet none of them or at least majority of them never got into crypto and then random people got into crypto and made wealth so they're like oh this is a scam I think I think that the typical crypto line of reasoning around

gaming is wrong because they just like fail to make the empirical observation that people don't want to um like a game a game is someone's Escape like they do it for fun they do it for enjoyment they typ they typically do it to like exit the real world and go and do that thing that gives them release whatever that is people don't want to make financial decisions in their free time they don't want to risk capital in their free time like they are stressed out enough if they lose a game and there's disappointment to it like why should it have to come with like losing Capital as well it makes for like a really ugly

experience for a lot of people if you look at like the percentage of people like or like like opinion polling about like I don't know how much do you enjoy financial decisions or like you know stack rank like your daily activities like the the lowest ranked activities are going to be like the financial decisions that need to be made to like keep things going um people people use gaming as an escape from The Real World and like a lot of the gamei stuff it it puts the real world like Capital At Risk thing it forces it into their like free time and to their play time and I think it's like really off-putting for a lot of people people I think um like I'm very far from being anything any gaming expert but uh from what I understand the the pmf I saw

more clearly was the nfts that you could like get your skins or whatever to be actually yours I know people get like banned from their accounts and maybe they spend like a couple thousand dollars just like over time and then they they don't have any type of uh ownership um on those skins and I feel like that could be solved with crypto but I haven't really seen it take off I feel like that was a good narrative that made sense to me at least um but I haven't seen people caring a lot about it yeah I think that's the main thing um is that you can't really transfer your skins because they're like in W Gardens

like the Steam Workshop you maybe you can trade like I know you can trade CSO skins on steam but that's still like you're try like you have to do it through Steam and then you can't do other stuff with it um yeah I think that's the main Allure it's just it hasn't picked up and people just like apart from this whole like okay um like Gamers just don't want it they want to have fun they don't want to make financial decisions there's also just not been any good crypto games like um at least over the past few years it's like games that have never launched um but they keep releasing content packs or DLCs or whatever like Star Atlas is a good example of this there's no game it's just content pack on content back

on like whatever update like oh we're in pre-alpha beta okay three months you've been there um they have like games that are very quick and like defy wrapped crypto valleys was an example of this it's like just pure yield farming but some form of like luck mechanic or you have to click something somewhere and then there's like I think that's it like that's those are really the two big ones or there's like stuff that launch but never get any attention I also like that's probably one of the key um issues here as well is that people just don't like the games that launch like I'm sure if there was a good game one game that I'm excited for and I feel like everybody in crypto gaming is excited for is like project

Awakening um they just did stage free I'm not sure when they're going to be moving forward with that but they're like an actual game that I think could be interesting but we need to wait and see I think Ryan you should introduce poly Market to us yeah so want to talk about poly Market um poly Market has been one of the I'd say most interesting but underappreciated successes this cycle in crypto um they just hit a bit of a milestone um they achieved uh over $60 million in onchain volume last month and

you know the app has like a lot going for it from like a catalyst perspective I guess just like first from first principles um prediction markets on chain just makees sense right these are inherently Financial systems so like theoretically like it's a great place to have a prediction Market um permissionless betting like should be a thing and if it is permissionless you should expect deeper liquidity which will lead to tighter spreads better product um poly Market in of itself is pretty interesting they have a bunch of interesting markets that it's like you know it's not just like will Donald Trump win the election it's like you know what quarter will chat gbt 5 launch

in um you can do like you can bet on the timing of of an airdrop so like will pump. fund drop before June 30th and then the political ones can get creative it's like Will trump say the word MOG in 2024 like that could be an interesting bet um I think poly Market's super interesting because they're they're in a really tight spot as far as like go to market where the way I think about these crypto startups is that they kind of have to start crypto native in order to survive and then if they want to get to substantial size they need to build for something Beyond crypto and that's like obviously how they've started right like

they have crypto related betting on there like what I just mentioned with tokens um like you know it's it's on polygon you can connect your wallet so they are building for a crypto native audience the problem I think is that um Crypton native audience audiences don't like capped payouts they like un they like uncapped upside so there's something just like that that's a hump that the team needs to get over um but then there are a bunch of uh Tailwinds like near-term ones like versus just like wallets and stable coins are in more uh hands than they've ever been um popular culture is like very political especially in the United

States and getting increasingly so politics is seeping into a no like you know all areas of life you kind of can't get around it and if people are politically interested they might want to bet on those things betting is obviously more accepted in US culture today than it has been historically and the really interesting part is there's like a lot of political volatility in the United States and globally right now which bodess well for these kind of markets so if you were to imagine a scenario where it's like you know in the United States or most countries like the incumbent party has like 7% 70% of the popular vote like there's not much to bet on right like the the decision like the the next like ruling party has been decided however in the United States it's 5050 and the players um have a lot

going on uh you know Biden and Trump both have age issues Trump has legal issues and they're are betting markets on all of those things right so the the environment for for an app like this is like super interesting and I think it's like pretty well timed um so yeah I'll kick it to you guys what do you guys think about poly Market I think that uncapped thing makes a lot of sense because at the end of the day like um why wouldn't I just buy Tren or Bowden on Solana instead um so I think that'll be the issue but I agree with you like I think poly Market's one of those it's like a good app um it's something that you could very clearly has a pmf um especially like since they are appealing to the most financialized

and like Risk on crowd in the world um they also recently raise as far as I can tell so I'm sure like they'll get more and more activity as that is that becomes like more um widely spread and people find out about it I I assume they'll do a token um but they raised 70 mil which is kind of I I I think that's a lot um for a betting Market especially I'm not sure like crypto has ruined valuations for me and like what assets should be raising but it's I mean it's quite a bit of money um I don't I don't have any hot takes for this I completely agree with everything you said I I can't do any opposition well the hot take and I know we we don't

want to talk about it every week but we're going to inevitably is that like the biggest competitor here are are meme coins um um the biggest the the more interesting the more fun um they're they have uncap payoffs um they're far more entertaining uh do you want to bet on whether or not Trump will say MOG in 2024 or do you want to buy the trp or Trump and MOG coins like it's a pretty similar experience to do both I think there's more friction buying or I think there's less friction buying the meme coins and um I know you can you can let it ride it and just make a lot more has there been a lot of like

interplay between between the two or um like actually betting on the coins itself on the prediction Market or kind of me manipulating the markets through there I haven't heard anything about Market manipulation but I mean you have to assume that someone's going to take that shot at goal right yeah I don't I haven't seen any small caps but I have seen like oh will e cross 3,500 this month or something like I've seen stuff like that before but you can't move those um yeah at least I think most people can't um and you can probably Express that bet in the market in a more interesting way and have more upside than doing so on on poly

Market Ryan about the uncapped gains thing can you do options with betting and you don't have to if you don't know you don't know but I just want to find out if that's like some form of new derivative we can do I mean permissionless financial markets someone can build it right um I haven't heard of any products like that I feel like that could be anyway yeah a limit I think there's actually one more headwind here um around these prediction markets and maybe why some of them I mean we cycle through predict like like

everyone's favorite prediction markets every five or 10 years um there there really hasn't been any lasting players but like poly Market kind of reminds me of the nft space so if you think of um this comparison that people are making today like meme coins or are the new nfts uh me mem coins eliminate a lot of friction associated with with nfts so like I look at nfts like a look at the bond market like you have to manage all these different traits and characteristics and it doesn't bode well for liquidity and it adds a lot of complexity to the process whereas a meme coin is just like one thing and very fungible and you don't have to think too much before doing your thing if you were

to and like similar in in the case of poly Market if you were to go on there right now and you wanted to bet on what you like Trump going to jail and you should type in Trump jail there are three different Trump jail bets and it all depends on the timing of when he gets into jail assuming he does right so like there's just again versus meme coins there's just like a little bit of complexity and friction when I think about like the apps that I'm on like using on a day-to-day basis on my mobile device like none of them have that much friction like I'm swiping on Tik Tok I'm swiping on Instagram I am clicking by on mother and Jenner um I don't have to

think about much uh poly Market makes me think a little too much my argument for this is that if you are let's say you are like you're excited about Trump winning the election whatever it's November you want to buy Trump if you buy the wrong Trump you have to work for the rest of your life if you buy the right Trump because there's a million tokens you know so that's I would say I mean I don't know if that's friction though because it's not hard like you don't have to do any thinking you just have to make sure that you pick the right one or else your descendants will to go to a N9 to-5 yeah there there's friction around the early partici for the early entrance into the markets for sure but after some time like there there there tends to be like

that obvious coin right like there are there are like you said there are probably thousands of trump coins but I think there are like two or three that are like actually getting the volumes and you can like easily filter those um so yeah I mean that's friction no doubt but I don't think it's comparable to um to what I see on poly market today we're once again talking about mem coins again never gonna stop this is like a month in two months in maybe um I don't know I I don't have anything else to say about meme coins I think we're at the the thing is you can also never call Top on these because there there's

likely no top um I do want to say that it is like I think the Jenner and mother Trend the one that you mentioned that you were buying on the podcast which is not Financial advice is like definitely um I think I want to say froy but it's probably not like it's probably still fine um it's just like I think it's getting less and less attractive for most people um one thing I saw is that pump fund is now I didn't know this I assumed they've always been doing this but I just found out is that they convert all of the revenue they make in Solana directly to USBC now it's not a lot of money right now I don't know how much money they're making but I think it's like um 30 mil 40 mil a month maybe

it's a lot of money for a pumped off fun but it's not like incredible sell pressure um but I'm kind of wondering why they do that I feel like I mean I guess if you're a business you want to hold Cold Hard Cash not Solana but like I've I've read some people say it's a bit extractive I think it makes sense like you want to be able to pay your developers or whatever but yeah the the less crypto the bigger the industry gets the less crypto native it will be you're not going to see people holding large quantities of the Native token they're only going to keep as much as they need to pay for fees um yeah they're going to convert their soul to usdc uh especially

in a five and a half you know front end rate environment like it just makes a lot of sense they don't need a lot of it for Opex and they get a decent yield on it and it makes it clean as well that they're doing it always and it doesn't spark conversation like when they suddenly sell a big amount like they're a company managing their money it's totally fine that's true um that'll be an interesting token 200 mil annualized revenue is insane yeah I think it's 30 30 million cumulative since the Inception of the project yeah um all right we'll talk a bit more about

reasonable valuations but before we move on um let's have a quick word from Stargate thanks thanks for fantastic sponsor layer zero I need to redo that because I said Stargate instead of Stargate um all right we'll talk about that a bit later before we move on to more questions let's have a quick word from Stargate thanks to our fantastic sponsor layer zero all right guys for this week's layer zero segment we have Angus found needed at the Stargate Foundation Stargate is a fully composable liquidity transport protocol that powers Omni chain def5 thank you so much for coming on Angus thanks for having me on been a been a long time listener so excited to be on here thank you I think Stargate doesn't need an introduction so I'm just

going to get straight into it how does Stargate utilize layer zero to power its product yeah so I mean Stargate was the the first and actually still the largest application built on on layer zero and so as you kind of said there it's essentially like a an Omni chain liquidity layer and so if you think about user who wants to move token from chain a to chain B uh their assets are deposited into pool on chain a a layer zero message is then used uh and passed from chain a to chain B assets are released from a pool on chainb and then passed into the user's wallet um and so as I said it was the first application built on top of layer zero I think has done about 35 or 40% of layer Zero's messaging volume at the moment deployed now on on 13 or 14 chains and so allows

us is basically to move assets between chains uh utilizing layer zero as kind of that messaging protocol in between how has activity in traction been over the the past few months like what kind of volume are you guys seeing on a month-to-month basis yeah it's been it's been incredibly impressive I have to say I think Stargate has really found some good product Market fit it's really grown to at the moment is the largest bridge in defi um and kind of every new chain that that the Dow deploys the protocol to grows to become the largest bridge within that chain uh within that ecosystem so I think the the month of March recording this in April here the month of March saw almost all-time high volumes with 3.1 billion dollar of volume uh Stargate at the moment has done over $ 36 billion doll in global

volume uh kind of since its since its Inception which is just about two years ago now um so I think it's it's really as I said kind of found product Market fit and as it expands to new ecosystems really becomes kind of the dominant Bridge into that ecosystem and that's that's across all of the asset pools that Stargate has so kind of the the regular stable coins usdc usdt uh eth pools have really picked up significant volume and Stargate is actually kind of the the main interface for bridging uh layer Zero's token standards the ofs so STG the token was the first oft um and I think the oft token standard has really seen significant adoption most recently um again recording this in April Athena uh USD launching as an of and bridging

into mantle I think it did over $250 million of volume of for two days and all of that was done through Stargate as well nice that's great to he and I know Stargate facilitates a lot of like the ofd transfer so super great to he that that's been popping off one last thing that I've personally been excited about for a really really long time I know Stargate has some exciting updates coming soon would you care to share a little bit more about this Stargate V2 that I've been hearing about yeah for sure I we we spoken about Stargate V2 within the community within the Dow for a long time I think um you know Stargate as I said it's been live completely immutably on chain for for over two years now has done $ 35 billion of volume I think a lot of the uh things

that star V1 was built for uh I suppose the defi ecosystem is Chained so you know Stargate was built for a world with maybe you know 10 to 12 Chains It's now live on 13 or 14 uh the world that we're seeing today is really a world of 50 to 100 maybe even a thousand rollups and so the the protocol is is kind of in need of a a bit of a a change and so that's what we've done with star V2 and I think there's a starget V2 actually brings a whole bunch of things I'll try and run through them quite quickly um but the number one thing I think that the market has shown is that uh users really care about cheap transactions uh cheap bridging and so Stargate V2 is now the cheapest bridge in defi which which is super cool uh that's been done in a

number of ways firstly the protocol was Rewritten to be in super gas optimized um and the second thing and I think relevant to this conversation is that it actually introduces batch transactions as well using layers here messaging so starget V2 is built on top of layer Z V2 um and what this means is essentially if you think about users moving from uh for example arbitrum to optimism uh they can now choose to and the the analogy that we've been using is kind of a bus and a taxi so user can now choose whether they want to take a taxi and they pay kind of the premium for the taxi and they have onetoone transaction um messaging essentially your assets are deposited on arbitrum layer zero message across the optimism your assets are released to your wallet uh alternatively if a if a

user is willing to uh kind of sacrifice a little bit of latency then they have transaction batching uh and what that means is essentially the layer zero message portion the fee for that is amortised over the amount of users that are that are on kind of the bus uh and so a user can pay for a bus ticket um there may be you know four seats on a bus between arbitrum and optimism once all four seats are occupied that layer zero message or that bus then gets passed over to optimism and those four messages are then released on destination and what this means is that we've been able to reduce gas costs significantly I think with with layer zero V1 or starget V1 on top of layer Z V1 um we saw kind of gas cost on source of about

550k and then 220 is on destination uh and now using this kind of bus mechanism or a user riding the bus uh is only paying about 70k on source so it's a over 90% reduction in gas fees allows Target to be the cheapest bridge in defi um which is super super interesting uh the other thing I think that is incredibly important is uh We've launched kind of Hydra which we've been again speaking about within the community for a long time is Stargate offering of bridging as a service essentially so all of these new app chains l2s l3s alt l1s that are coming out and and kind of have this cold start liquidity problem they now have access to Hydra which as I said is targets

offering for bridging as a service for a couple different assets usdc usdt in rra eth uh and what this just means is that any any application sorry any any rollup or L2 that has a cold start liquidity problem now has access to all of Stargates chains all of Stargates liquidity all of Stargates users and so if you think about um kind of the the core Stargate pools you have a usdc pool in arbitrum for example we launch Hydra on chain x uh assets are deposited into a usdc pull and arbitrum and then a STG usdc of is minted on chain X um and the most important thing is that this oft is kind of horizontally composable across

all of hydr chains so the assets that a user deposits into arbitrum usdc pool um kind of sit within Stargate core protocol and then the of that then is minted on chain X can then be used across all of the different hydr chains nice I appreciate that rundown and love the bus and taxi an eny unfortunately that's all we have time for today but thank you so much for coming on Angus thanks guys all right Ryan do you want to introduce reasonable yeah so so I think it was about a week ago um I posed to the team are there any coins out there like

with sub Ava sub1 billion doll or $500 million valuations that are like legitimate projects like we're looking for bargains the reason I asked the question is that this is this is like my second or third cycle depending on how you count a cycle and it's so insanely hard to purchase something with a margin of safety in a bull market uh in the previous bear I watched like some of my favorite projects uh trade at like 20 to 60 times sales which was a nice discount to where they are today um I'm seeing those same projects trade at like 1,000 or 4,000 times sales today so if you are

an Institutional Investor in the space or or someone with a you know with an eye for valuation a margin of safety it's like becomes impossible to to to to find new things to purchase and to add to your portfolio in a bull market so I asked that question to the team uh at first we thought that there were a bunch turns out there weren't that many uh Luke one of our analysts who's always on Shain I think he brought up drift and Camino as two project on Solano with sub $500 million ftvs um also a cross Luke would be upset if we didn't mention Luke called the bottom of a cross and across check out that report from Luke um and so poking around a little bit more really

surprised to see a number of core salana projects like these base Primitives that you need that are going to generate real revenues in that ecosystem trading at these sub $500 million valuations I think it's really interesting for two reasons the first reason is that salana is very obviously one of the big stories of this cycle everyone knows about salana you've seen its meteoric rise you've seen it best ethereum on many and come within like top three of ethereum on a lot of the metrics that matter it's like a it's a legit project that's here to stay yet

the tokens in the ecosystem are still trading like the markets forgot about them which makes it really interesting at this point in the cycle the other you know the other point is that there is an obvious upcoming Catalyst for the ecosystem in general and it's just like the fire dancer upgrade right you're going to have a lot more throughput there people are going to be able to do a lot a lot more things uh networking problems are going to be hopefully solved over some meaningful time Horizon and um those are catalysts and to see these core kind of Primitives on salana trade at these valuations is one of the more interesting things that I'm seeing

today uh in the cycle and I I think they I think they trade there today because of the historical um consequences of outages so like for example if you're to look at salana Dex volume I think their number number one or number two depending on the day and the time frame uh if you're looking at derivatives value specifically they're I think top six or seven so like what's the difference there like the two should be pretty correlated right and I think that it's like sophisticated Risk Managers who trade derivatives on chain will not use salana because of its historical downtime uh you can't manage risk when the rest of the market is trading 247 but you can't trade for 18 to 36 hours right um so so you know looking at these

valuations looking at these upcoming catalysts and thinking about how Market perception changes uh surrounding that downtime risk in salana makes a for a really interesting setup in that ecosystem um yeah I don't like um perex is on chains I like my perex is separate on their very own chain I think that makes a lot of sense but I agree with you I think like just based on the fact that the chain will improve will likely lead to some I I I do think that like Solana defi is kind of in some weird spot where like the meme coins are doing so well there's so much activity on the Chain but the def like like you said the core D5 Primitives aren't doing

particularly well um one thing that was like crazy to me is marinade it's it's like at 130 mil market cap and they have 1.5 billion tvl and like yeah okay their market share is like diminishing jeto is obviously like the sexier coin it has staking it has me it has all of these fancy words but like marinade is still one and a half billion TV it makes no sense to I don't know this is not Financial advice but to me it just it was kind of intense because there's like very clear divide over there um same with Orca it's like the only usable a decks on chain it's like radium is horrible Orca is the only

one that actually works and it's like it's to on market cap it's it was kind of insane to me um but I think it's like to what you said I will say that there are actually like a lot of pretty decent protocols out there with like reasonable valuations I just think that they are getting no attention because defi is getting no attention whatsoever like everybody's just focused on something else their capitals either locked up in some form of yield farming for either reaking or some new L2 or L1 um or they in me I don't I like I think nobody's really spending that much time but there's like very clear winners I think like DMT is one um that really well over the past few months um very clear like

it's it's a working product that was sub 50 mil FTB and people were like okay like what else do I want um but honestly like apart from that I I'm like I'm also a bit like shocked at how I mean we this is another topic I feel like we always talk about there's too much infrastructure not enough apps and the apps that do launch have like eight Bill FTV what am I supposed to do with that um but I don't know kolina what do you think um yeah I was thinking like what you were saying it makes um a lot of sense that if these products are like fundamentally good and they should maybe be valued higher but there is also like

a very big dis distinction between a good prod and a good token and just because like I I'm not like 100% sure what the tokenomics on Ora for example are but just because it is a very good Dex doesn't mean it is a valuable token and yeah sorry did you want to answer no you're absolutely right I was just gonna say it's also not a very good product it's just the only decent deck on just nobody thinks that anyway yeah I agree with you yeah so it's just like important to to make that distinction I don't think there are many good tokens actually driving um like protocols that are

driving value back to to the Token it depends on like many things and there are also regulatory reasons um but you know it is okay to just use a product and be very happy with it and not own its token that's that's fine too and um what you were saying about Solana for example Texas I definitely agree I feel like when we solve Salena issues we will finally be able to on board more serious derivatives Traders there and because right now people on salana are trading meme coins and I you don't need to perpetrate mean coins I mean that will be a bit insane if it's like Sal Salen

coins are traded within like one day of being launched and then they're back to zero so unless you're very very crazy you don't really need that what we need is um actual serious Traders on the chain and it doesn't make sense for them to come right now yeah it's also like I mean one thing about Salon is that they had like a really great year like I think people don't really think apart from the token price like just in terms of defi they have had a good year um jto is a fantastic product tensor is a fantastic product jupit is an incredible product like these new defa and the old Solana protocols oh like they're

still like I'm gonna say radium again I don't know how they're still in business um I mean obviously because it's just launched so they can't change you but like they have had a good year with good product so I'm hoping that like with fire dancer I mean I still like you to I I don't perpetrate though and I would if even if I did I think even if they fixed everything I still wouldn't perpetrate on Solana I don't know why I like like a different environment for that um but I mean they have had a good year with lots of good products I guess yeah just because the product is good doesn't mean it should have a good valuation I just think some of these like it makes you kind of think when you see the counterparties do so well on other chains yeah there's clearly a

distinction between the product and token that like I think crypto hasn't figured out yet but yeah something like it's not obvious why a DEX needs a token right like it's just people trading Dex Dex feels a like especially in amm feels a lot more like public infrastructure than it should feel like some uh fee generating business um I think the drift token makes a lot of sense I think like Bach said marinade makes a lot of sense um but yeah there there's there's clearly a um there's a distinction between between good token and good product for sure sure especially when the equity is taking value at expense of the token which

which we see pretty often in tii like drift's a bad product but it might have like I know they're doing good stuff with futar so we I think drift's a bad product this might be a hot take but like as far as I've seen it's it's not a great product I don't know if you guys think it's a great product I haven't used it I only see it on the leaderboard unlik tvl yeah I mean last time I used it it was not like comparable to like vertex hyper liquid uh like any other proex but to be fair all other proes I use on solo were a similar experience so I think it was mostly a salana issue yeah

maybe um I don't know I mean they're also like per texes are just difficult business to figure out if you're on a chain that doesn't have as much tvl as other people and like you're not running some crazy incentives program because you're I mean if you're an order book technically you should still be able to compete even without the tvl because you don't need tvl you just need market makers I just think like they're just they weren't able to attract them and I know there were horrific uh liquidation candles on drift at certain points and there's also still not that much liquidity um pibbles always complains about drift even though he was talking about apos per xes that had two assets

on them so I don't know what he was talking about um I think I think that's it I think this is this week's analyst round table there aren't that many topics to talk about unless you guys have any final words of saving for salana defi or hatred for salana defi I think we're done um yeah I could um just mention on because we were talking about perex is attracting um maybe if order books don't need a lot of liquidity but they KN they do need need a lot of users or market makers and I think it hasn't really um gotten the attention it deserves yet but vertex with their new um vertex Edge I think um it is it is a good idea they have a

sequencer off chain that basically lets you create an a Vertex Edge instance on any chain and uh liquidity is just there from day one so basically you have different front ends that you can connect to it to them and you see like if I connect to vertex on arbitrum I see the same order book as if I was connecting to Blitz on blast and that is um a really cool feature so it's not really just launching on on many other dexes is really having a unified source of synchronous liquidity um that I think can solve a bit the problem of fragmented liquidity across B dexes and dexes in general okay

I have a couple questions about this first of all is this just for the because I as far as I understand they're hybrid they do both order book as well as like an amm style right yeah yeah it is mostly like a fall back mechanism so for example if the sequencer because it is off Chang for some reason something goes wrong with it it falls back to the amm but in general yeah the it always tries to um it always gets you the the best price so you can be connected to the you don't you can also choose like you can also say that you don't want to have anything to do with the ofin sequen interesting I think that's definitely like the clear path forward for these for any protocol is to do I mean ideally not offchain ideally want everything

onchain but like some form of fixing up this liquidity fragmentation issue I always thought it would be at the wallet level to be honest with you but like if apps want to try and tackle it that's fine as well um but there's just it's just like especially for something like vertex which did really well because of some like because of arbitrum really um but they want obviously as many users as possible and some people don't want to be on arbitrum they have money elsewhere um so I think like it's definitely the right approach we'll see we'll see I'm a bit I've become enamored with Hyper liquid for some reason it's the first per deck wow it's the first per deck that I traded on and now I can't I can't give

it up no but I I understand what you mean and it works like really really well and you don't feel like it's a very big thing to be bridging onto the specific L1 it works like super easily but I think it's also like I think they're fundamentally different approaches and it's interesting to to see them them take off but um because hyper liquid basically is like assuming okay we can do the best uh per we just need to on board like everyone here and we will have most liquidity and best execution while vertex is just assuming okay everyone will be on different chains for different reasons we accept that and um we will just try to give a unified

ordered book to anyone that wants to trade on their favorite chain so it's fundamentally different but it's interesting yeah I wonder which one will work out I feel like the vertex one is very like I in general I think that idea is very good I like hyper liquid but I'll need to try out vertex um all right thank you guys for coming on Ryan and Carolina I really appreciate it I wish you all a very good day [Music]