Is Solana Starting DeFi Summer 2.0? | Analyst Round Table

Transcript

this is what ethereum did three years ago in in defi summer this is this is what the start looked like right it was mostly just poking around like playing with apps that you probably don't necessarily want to like lever 3x long on a certain defi asset on salana right now but you're just like executing transactions and playing around and like throwing 30 bucks in a in a liquidity pool or something if you fast forward long enough to that world that you described where there was all these things that are happening on salana that cannot happen on other chains and it was like this Rich experience where there's so many things that like you're playing games on salana and you were doing X Y and Z social apps whatever it is how would that all start and my answer would be it would probably look a lot like

what's happening right now what's up everyone welcome back to another episode of zerx research if you're listening to this podcast there's a good chance that like Dan and I you believe the future of Finance is on the blockchain and we're excited that London is becoming a global hub for blockchain Innovation and institutional adoption of business digital assets that's why we're pumped to host the 2024 digital asset Summit in London this March don't miss your chance to get ahead of the curve later in this episode we'll tell you how you can save 20% off on your ticket all right everyone welcome back to another episode of ZX research we got an analyst episode lined up for you today we are recording on December 11th and we are joined by Ren and brick from the blockworks research team uh all of us spend all day every day working towards

building a better blockworks research so be sure to check out what we've built at app. blockworks arch.com and if you're looking to get a subscription uh we have a discount code running for you 0x research10 all caps that'll get you 10% off an annual subscription at checkout uh so we got a good episode lined up today we've got governance updates and a classic game a hot seat cool Throne uh Sam you want to get us moving man I I know you got some good governance updates queued up for us yeah yeah absolutely so the first one I actually just saw this morning crypto condom tweeted about R bit's proposal to uh switch from a buy and burn to a rev share model which is pretty interesting considering how much revenue they actually generate uh it would be like a one-year lockup and the the logic there

is you want a long lockup needed to ensure that the API stays pretty high and looks really attractive thus providing a floorida prices I imagine what the motivation is and there are two options for claiming theoretically if this gets uh implemented so you can either compound the revenue into more rlb that's Auto locked thus increasing your PR share of uh the stake weight uh and revenue or or you could do a 90% cash claim which is uploaded into your account is what it sounds like and then 5% of that will go to a Unis swap LP uh locked to sells side liquidity and 5% more for buy side liquidity so pretty interesting mechanism here you can also unlock early for a penalty so you'll basically get slashed and the rlb that you forfeit will be burned so still have

a little bit of that burn mechanism in place as well by default so thought this one was pretty cool what do you guys think I I think it's a interesting proposal given that historically there have been a lot of concerns around Ro you know we haven't really seen the buyback and burn do its thing yet I think people were projecting like 20 30% of the supply was going to be uh burned over the past year but you know price is still kind of flat over the past few months so hopefully this will inject some life into robit and the whole entire gambling sector I I am so slightly skeptical that like Rob but is a bit sketch because a few people on CTF pointed out that their numbers are just

so much higher than the closest sort of like gambling protocol competitor but I do think gambling protocols in general are one of the long-term winners as crypto as you know like degenerous Degen but that's something you can't fade whenever I hear about like Revenue distribution programs it's something I want to write a report on at some point but the most efficient way to do that is is it's not it's not trivial especially if you're like a deck like I know the guys over at Curve think a lot about how their protocol collects captures fees then collects them so actually puts them in one spot and then distributes them it's it's not just like as simple as it seems especially when the fees are quite large and in the context of curve uh they're in various different assets so

there's a lot of swapping that needs to go on so a you got to play fees on those swapping and B you can't get sandwiched on those or else you're losing fees so it's like this really really complex thing of like actually turning on a fee switch uh which is definitely not spoken about a ton uh so whenever I think of like a revenue distribution mechanism it's pretty interesting I like their in the context of Rob but I like what they're doing with the the cash claim going into your account if I was a gambling protocol that is definitely what I would do is give the gamblers more money directly in their accounts that takes an extra step to take off it's still giving it to you just putting it you know in your account so then you can withdraw and and access it right but

on a gambling platform what do you have as users gamblers so uh it definitely makes sense to kind of help keep uh that stickiness there uh and I'm sure a lot of that a lot of that Revenue ends up kind of getting pumped right back in so really welld designed there I think um but on like the you said the first half was like a buyback in Burn is that right Sam uh yes so so instead of buyback and burning um it's going to compound in a more rlb token so then like your stake weight is just increased so therefore like your pro out to share the rewards each week will go up yeah I don't I don't love buyback and burn uh it doesn't seem like it seems like something that works great in something a super efficient market like say the stock market where all you're doing is

changing the denominator of shares outstanding and the fair value remains unchanged and so like the price actually flows back to the holders uh but in super inefficient markets like most of crypto if not all of crypto uh I don't know if it's just as effective so cool to see that they they kind of pivoted away from that too yeah I feel like rit's like one of the most controversial topics in crypto to be completely honest like you either absolutely hate it and think it's complete farest and they're making up the numbers and it's going to be ins solved any day now or you're like a mega Bowl on it so I don't really know where I lie to be completely honest brick I know you said you're a little bit skeptical of the revenue numbers would you would you double down on that do you

think yeah or I mean it's tough to say of course I'm just speculating but it's weird that you have somebody who has such a or a protocol that has such a sticky customer base and who like create so much I don't know gambling volume or trading volume compared to other platforms and even when other platforms try and like acquire customers through different kind kinds of schemes uh a either they don't like reach even close to those numbers that RIT has or be the customers aren't sticky at all then they just bounce away so that kind of makes me worried in that sense but at the same time I don't really have any proof about like there being any funny business going on

on Ro bits so like at the end of the day I'm just speculating yeah no I feel you though I mean I like I thought winner Wier protocol I don't even know how you pronounce it but that arbitrum stip recipient would see a huge boost in volume because they got like half a million to $750,000 of of ARB tokens to them and the numbers on that thing is still just flat like I don't know why people aren't using them it makes me highly skeptical of the Roll bit numbers but I guess we'll see um Ren I know you got some uh a good update on lra V2 so I'll kick it over to you I do uh lra V2 is coming in hot they recently passed the governance adoption and sustainability f um that basically includes an incentive program with 150 million units worth of the lra

token over 24 months the bootstrap lra chain and V2 of the protocol similar to dyd X's incentive program and they have an ongoing vote ending on December 13th for the deployment of the lra V2 which includes deploying the chain the protocol and the exchange which are kind of all like separate things but for simple Sak just think of it as they going to deploy like this whole like crazy options exchange on op stack rollup um so yeah the foundation is going to fund a security model and once that goes live You2 May net and the incentives will start I think that token hasn't been doing like particularly well uh over the past year this could be a catus but I will say that the per de

space is very competitive right now especially with dydx incentives kicking in um and you're seeing sort of good volume there um and also AO ao's NL stack roll up li V2 is gonna be NL stack roll up so the question is going to be like why should I use AO versus lra V2 and I think that remains to be seen they they do have like some very cool like architectural like developments um surrounding the order book um but yeah just wanted to put this out in I would say some other just random governance updates you should be paying attention to one is the Orca fee switch that one passed I think maybe one or two weeks ago I'm not sure what is it implemented

already but given that Orca is one of the largest like spot Dees in salana chances are it's going to be like a pretty decent amount of Revenue um and another one is cow swops like Fe switch they're sort of debating different Fe switch modules and you know C token is at 44 million market cap and it's kind of like one of the only tokens you have if you want to get exposure to an intense based protocol um and I know like I personally don't like the word intense that much I kind of feel like it's like a VC term that like everyone like just like walked around with but you know eventually like it's going to catch a narrative and every everybody's gonna be like really hyped about intense just like how at some point everybody's

going to be really hyped about like C for serves even though like no one really knows what it is um so yeah just putting that on your radar I'll pass it back to you Sam yeah no those were those were all solid I'm curious though are you are you bullish on lra V2 or do you think the the space like I guess is just getting a little diluted I think the space is getting pretty diluted I think AA has done a good job uh with the perss the pre-launch Futures that seems to becoming a big Trend and I do think pre launch Futures will just continue to grow in magnitude during a bull market like everyone just want to like ape the air drop before the air drop comes especially like if you didn't get the air drop for example like lar zero teas that they're considering like a token

air drop in q1 2024 assuming like you faded there's you and you didn't like Farm the living out of it chances are you might want to get some exposure through pre-launch Futures right sure like liquidity isn't the best but I do think like there's like pretty good product Market fit for pre-launch future so yeah I'm not sure entirely about just like a options exchange and one more thing like I I want to buy like options on sort of like tokens that I think are going to go up over like the one the next one or two years for example like salana I would love to buy like a leap on salana of an expiry that's like two years out but like those don't exist you know like the best expiry you can get is like maybe like one month so yeah I think like the

pro space is like pretty diluted already and like the options like even more competitive just because there's so much less users and there's like very strong Network effects so like options exchange the AO thing the pre-launched future specifically is really cool man like I know we talked about this a bit an episode or two ago so I don't want to dive too deep on it but I thought it was really really impressive how they kind of they that was where price Discovery happened for jeto before the token successfully launched like they pretty much nailed the uh the kickoff price and that that was pretty interesting because I was looking trying to like do some comparisons to see how accurate it would be and just the one that I quickly looked looked at at the time was say the SE token launch and that one actually

looked like it was not accurate at all but I don't know enough about how the to say token launched or what that process looked like to really you know and I also think that was the first AO pre future pre-launch Futures uh the first token they supported so also don't want to really use the first one as a base case here but I using the jeta one as a base case again super Sol sample size but I think it I think if it works that's really cool yeah for sure the key is just going to be getting enough liquidity there cuz I know there was like very very little liquidity to actually utilize uh for the uh the Geo launch but I know hyper liquid's doing this too but nonetheless I totally agree with you Dan I think pre-launch Futures like for sure we'll find product Market

fit just a matter of where most the volume occurs um but moving on a little bit arbitrum has a proposal live to do a research and development Collective uh I know you guys probably remember the listeners um us kind of talking about our original proposal so basically we wanted or the Dow wanted it to be more more of an RFP process so unfortunately ours did not pass but we're super excited to see this moving forward we think it's a great initiative and much needed we think that um you know there needs to be research conducted on governance related things in order to educate delegates do analysis uh from the economic risk standpoint Etc there's so many different use cases for a body like this um so the vote live right now is to fund a six-month term for the the collective of 880,000 ARB 1.3 million

ARB or 1.7 million ARB um for a six-month term so we'll see if that marches forward uh does anyone have any thoughts on this or have we kind of beaten this one like a dead horse or whatever the saying is I think I've seen some interested uh or interesting comments connected to that where like people still want to see some um changes to the proposal that's going up or is up right now where like they want to have the salaries or like the amounts paid to the different service providers to be even more like better defined such that like one entity can't just slack off and still get paid uh like the full amount and I think

that's been like historically a pretty important part to get right when you do this kind of Dow funding things which I thought was super interesting yeah I just add on that I think like more so now than like when we first talked about like this arbit Coalition idea that's probably needed the idea of like this research sort of um Coalition for lack of a better term uh because like you're seeing proposals like left and right and they're really wide ranging right like there's one proposal introducing arbis gas that came in like six hours ago I know um Matt and our team talked about like deploying like the ARB treasury into like RW and then you know you have like

incentivizing delegates back funding steps like it's getting like maybe not so nice but it's getting like a little out of control in my opinion it feels like people are just like randomly proposing things like left and right I don't think the community is going to do a really like well informed vote if for example introducing Arvest gas um if that goes to like a vote and that has like pretty important ramifications for Aram as a token and Aram as a ecosystem you you really don't want to just be like aping that vote um so yeah I think it's pretty needed right now yeah your costs are denominated in eth so like at some point you've got to you know pay the bills so like a lot of research needs to be done on that you just got

like random people proposing these on the Forum it's like maybe we should take a step back and look at this a little deeper so definitely agree with you Ren there's some some crazy going on in the arbitrum forums these days but uh actually that reminds me too we've got that arbitrum staking proposal that did pass so I'm not sure exactly what the implementation timeline is on that but I assume that is something worth paying close attention to so we'll get you an update on that next week but moving on to the next proposal and this is our last one for the week but synthetics is voting to launch on base remove snx inflation as well as uh Implement an snx buyback program uh where it'll be burned and it's 50% of fees uh going to this buyback and burn uh ordeal so you can definitely see this in uh snx price

action people are getting pretty excited that thing was held under $3 for quite some time and finally broke out over the weekend so this is definitely uh feels like the next Catalyst for snx and a really good direction for the protocol in my opinion but do you guys have any thoughts yeah gov Hub users are the winners here because I think that was in our gohub protocol or our platform sorry about I don't know if it was like a month ago Westy was all over that one so Props to him there as well um yeah I mean that's huge like synthetics has been leveraging their token inflation to bootstrap their uh staking the staking side of their protocol and it's worked and it's kind of achieved what it needed to do uh so now it makes sense to like turn it off right you're a mature

product and that's kind of what the Natural Evolution of these things was supposed to look like uh when we started doing this you know back in 2020 2021 and so to see that actually come to fruition even just like two three years later is really damn cool like this is the what progress is supposed to look like um that market seems to be reacting as if that's the case too which is cool to see um so yeah you know congrats to the synthetics team like that's that's pretty cool to kind of hit this Milestone all right zerox research listeners we're calling on you to join us for the pr Premier institutional crypto conference in Europe's crypto Capital London this March 2024 you're going to get to hear exclusive insights from industry Trailblazers on things like leveraging D5 protocols for institutional yield tokenizing real

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cool Throne ren do you want to kick it off for us yeah I'll hijack Rens we kind of we got a tag team one uh this week so we are going to put salana in the cool throne and honestly how it ended up here was because there are so many reasons for salana to be living in the cool Throne this week uh so I'll hit the first uh list Litany of things and then I'll let Ren take it away uh but first and foremost the goto airdrop man that was really cool to see Bas jto basically aird dropped a new car to all of its users the token ran up launched at about 192 $2 ran up to about 440 or so um so the airdrops were between you know let's say let's use the launch price of about

two bucks every recipient got between1 and $200,000 that is absolutely insane this really does feel like a momentum driver for the entire ecosystem the COO of jto labs Brian he put out a pretty cool thread that was just like a reflection of the day at the at the end of the U release day or launch day and it was really cool because he mentioned how many teams all were like working together to make this a Flawless token launch and that is exactly what it was there was dexes there was Sexes lending markets um you know even wallet apps were we all on the same page for that exact day that exact moment token goes live it's easy to access and most importantly the chain hummed along

without a single problem um so netn net it was just really really cool to see that there was actually I wish I could find this thread but it was by a cosmos developer I want to say it was related to the Tia token launch but I'm not I'm not positive on that but basically this developer was saying like it's really really hard to get a perfect launch of a new product a token whatever it may be because you need so many teams to all be like prioritizing that event which every team is doing different things like where this event falls on their prioritization table is going to be different right and so it's just like thinking about um a little bit more separate or lack of connection in an ecosystem like a series of app chains versus

something like salana which is all about Atomic composability on one single layer uh it's really cool to kind of see the teams were working together and in a when there's so much infighting going on in the industry right now this was just so refreshing for me personally um so congrats to GTO team we launched a podcast with Lucas uh when you by the time this comes out it'll be yesterday uh so be sure to check that out we really Dove deep on again just like how they operate on the M side of things because there's so much Innovation going on there as well as this thing called staket um which I I'll let you listen to that episode to get an idea what stakenet is but why I want to bring it up is because what they're doing in this is putting three years of validator

History directly on chain they are putting they're using Lucas's words were we're using salana as the data base and so why I love that so much is because we are seeing the exact opposite narrative from from the ethereum community where fees are expensive as and that is something that has to be dealt with and the response has been let's just push that offchain all right like in a lot of a lot of use cases that's fine maybe or it works or delivers a better product for like an example of that would be Unis swap X right they do computation offchain find a filler and boom you've got a better order than what you would have had that's net positive for the user but then this kind of keeps cascading and it's like where do you where do you stop and now there's

discussion around uh moving events and events basically tell you what occurred in a transaction and they are emitted only to like communicate with the user um and there's a huge discussion around moving these offchain uh and so basically what that's doing is giving less information to the user about what happened in their transaction and making data analysis much harder and to me as a data analyst like that is a little antithetical to the idea of blockchains being transparent and I know like super lowlevel engineers and be like you're an idiot that's not this what's happening at all and that's true on a technical level all of the data transaction data is still on chain and you can replay those offchain and get the same results

I get that but on a practical level data analysis and and like building things on like uh an understanding of what's happening on chain is all done for evm chains is all done through events like that is how it works today and so yes we can pivot and change all that but do we really want to like be pushing all this off off chain it just doesn't make a ton of sense to me so it's very refreshing to see salana being like nah we've built a system where chees fees are so cheap we can literally use the chain as a database for three years of validator performance history and they're going to use that to do this really cool thing which again I let you dive into The Goo episode for that but uh again so what salana is doing is seeming to work and I think

people are catching on because another reason we have them in the cool Throne this week uh is priority fees are making an all-time high so the weekly values close every Sunday night uh so we just set a new all-time high of 250k in weekly priority fees so still peanuts on a relative dollar value um but the chart is just absolutely up and to the right it's about a new all-time high by like 40 or so percent uh and it's really just proving that users want transaction inclusion and are willing to pay for it which is kind of a very important piece of the puzzle but the fee mechanism is it works but it's not optimal basically so right now 50% of the total

transaction fee which includes priority fees are burned and that is different than something like ethereum which only burns the base fee and has the entire priority fee flow to the validator and why that matters is when you're burning the piece that flows to the validator so the priority fee when that gets burned the validator then becomes incentivized to like make a side deal with the user or what they call like outof Network payments so if I was a user willing to transact and I was willing to pay one soul in priority fees the validator of my transaction would get uh 05 Soul after the 50% of it was burned as their payment and so I'm incentivized to figure out who that validator is make a out of network

payment to them of like 0.51 um or F 0.51 Soul right so just over that 50% Mark and that way I'm paying less and the validator is receiving more because none of that out of network fee uh payment will get burned and so net net the validator is happier and I'm happier as a user and so this isn't great it's a bit of like a Val value leakage in the system and you know research so of researchers are aware of this uh it just hasn't become a huge huge issue yet and so there's a we'll get put this link in the show notes but there is a Umbra research paper that dives into like what salana fees look like today and kind of what the fee mechanism design is and this paper was written by uh Eugene Chen

zerox Trader absolute stud of a researcher so definitely give this thing a read I think there's a lot to learn uh from what they're talking about and then the last talking point I have today uh as it relates to salana this one's a bit tangental to why salana is in the cool throne but H it's just a really cool not even cool it's terrible but Connor a director at coinbase tweeted this out the other day and it wasn't that long ago where Robin Hood had to force liquidate about 1.9 million in Soul from their holders because the SEC came out and said Souls of security you can't have this listed and Robin hun was like well shoot what do we do like you know C we kind of are forced to listen to them and so they sold this this was basically

at the uh so lows too and so the SEC just absolutely wrecked the retail users that were using Robin Hood Force liquidated them costed him over aund million approximately um so it's kind of interesting to see this and more interesting Robin Hood is launching in the EU and sole the asset will be listed there so not only can us users not only did US users get liquidated at the lows but now European users can access this asset so you can kind of just see like the overall mess that got made here but uh yeah I guess that's a bit tangential so I don't know if anyone has any any points on any of those topics that I just brought up I got a quick question for you Dan um you say priority fees are reaching alltime high and I would guess

like that continues to increase as uh activity on salana increases if fire DIN goes live and transaction through put like 10 X's or 50x is whatever fire dance is promising then is there really sort of no need for people to pay priority fees anymore and will that drastically come down that is a very interesting question um I don't know off the top of my head to be honest I'd have to think through that that is an interesting one because there's like the idea of induced demand I think probably will play a role here in the fact that more transactions can exist they probably will exist um similar to like you can say oh I don't want to go two tangental but so I think

the reason I think that might play a factor here is because if the throughput is that much higher and it's actually being filled then there could still be like that same bit of hot state right and in fact like if you're still fighting over the same state then you're still going to see uh those increased transaction fees so I would say no not necessarily that that they'll go lower I I would expect them to stay flat or go higher to be honest first reaction and again I definitely need to do more research around that specific topic yeah I was kind of gonna switch the topic in the sense that go back to the whole airdrop thing and like how Solana has basically been kind of growing throughout the last three or

four months or so where it's so funny how suddenly everybody starts talking about how great the tech is and like how it can revolutionize things when the price goes up even though the tech has always been there like it's interesting to see the price kind of Drive The Narrative but I feel that it's definitely deserved and it's cool to see now that every piece or all the pieces are kind of falling into place where like first the L1 token goes up in price and then this like high quality project start uh popping up and of course they've been

building for a long time and then like these wealth effects start coming into play where like air drops become uh more meaning maybe not more meaningful but like real users can benefit from that and then wealth effects can grow on the chain and uh that that leads to more usage and like that kind of starts off the flywheel and things are looking kind of cool right now for or super good for the chain and yeah I got to say I wasn't a big believer like months ago but now I've kind of flipped my mind on this and think that this will definitely be a big narrative or continue to be a big narrative going on or going into the next tier I uh I had someone reach out to me a team member of like a pretty prominent player on the investment side

of the space and about two months ago to the dot he reached out to me and was like all I'm doing is like looking at Salon metrics and seeing all these like increases of activity and I go try to find something interesting on chain and there's just nothing like it's it's still a Barren desolate land and I uh he reached out back out to me today actually right before we started recording and was like all right I was completely wrong like this is the most fun I've had on chain in in years since 2021 and it's true like I I think you have a great point about the price driving the narrative here because price goes up people bridge over you get on chain and one thing that I think is trer true with salana more so than any other

chain is once you use it if you're a previous ethereum user and you use salana you notice the difference and that I think feels good and if there's things to do and it feels good to be there I think you end up staying and so I don't know I think you're definitely right that price drove narrative on this one uh but now people are here and so it's the question of well what are you gonna do with these users I agree with that I like I do think it comes strictly down to like the user experience I think we were kind of like heading the sand a little bit like kind of like just using the different l2s like got used to it loved the ultrasound money narrative got a little bit ahead of ourselves and then you kind of realize ah like I want

to use FR Tech got to bridge to base like oh I want to use vertex gotta you know bridge to arbitrum or oh I want to use aerody drum I got to bridge optimism like that's a pain in the ass like even to just get yourself over from one of the l2s or ethereum over to salana once you get there you're like all right I'm just going to chill here because I don't feel like going through all that again and then like you see like the quick fees or the the low fees the quick transactions and then you're like kind of I don't know Soul pill a little bit I I'll be a bit cynical here I think like the user experience is definitely great you know like I don't need to wait like 12 seconds for my like transaction to confirm gas is like

0.1 probably I probably miss a zero in there but as far as like things to do I would guess like your average user still doing like the same things that would that they would be doing on ethereum probably a bit richer from the but you know they're still like trading on a perex they're still like borro and lending in say like margin fire or Camino they're lping on Medora trying out like um Jupiter's like new like sort of per product it it's not like we've went through like an entire paradigm shift and salana suddenly has like 10x more interesting apps sure I I'll add a cap yet that it seems like there's a lot sort of like broader apps out there on salana you know like interesting deep in

projects um they're sort of like study more consumer focused ABS but it's not like we reach a stage where like your average like normal human being that's like not a comy Deen and just wants a 10x long like Eve has that much more to do on salana today I hear you but I'm gonna push back because this is what ethereum did three years ago in in D5 summer this is this is what the start looked like right it was mostly just poking around like playing with apps that you probably don't necessarily want to like lever 3x long on a certain def asset on salana right now but you're just like executing transactions and playing around and like throwing 30 bucks in a in a liquidity pool or

something right and so that if you fast forward long enough to that world that you described where there was all these things that are happening on salana that cannot happen on other chains and it was like this Rich experience where there's so many things that like you're playing games on salana and you were doing X Y and Z social whatever it is how would that all start and my answer would be it would probably look a lot like what's happening right now where you're doing a lot of the same things that happened three years ago on ethereum but that's onboarding um that is onboarding developers into this ecosystem because now there's like people are talking about it as brick mentioned the price is going up and it gets automatically more interesting it's just how that's an

unfortunate way this industry definitely works and then on top of that once you start bringing increasing number of developers a lot of them start building developer tooling which is like a really really key aspect here that needs to get better like building smart contracts on ethereum is relatively easy now right just launching a contract there's a lot of great tools that developers can leverage and that's not it's definitely not the same scale on Salon yet so you still need some of that to get built out and so why I think this moment is still very very important is because it is the the early Innings of that world that you described where there's all these things that are happening that cannot exist on other chains like yes that's obviously the end goal but it's not a place that you can just start I definitely agree in the point

that like the ecosystem needs to start from somewhere and I just want to say like there's still a long way to go from like crypto reaching Mass adoption but given the current like crypto user base sure it definitely like is catching up very very rapidly to ethereum or perhaps even like soon surpass surpassing ethereum on things to do I do you think there's a path that's perhaps a bit more straightforward for salana than etherum to reach um Mass adoption whether that's to like payments it seems like coinbase and circle are both forming of the salana as like um a blockchain to use for payments a lot more in recent weeks um M constantly spamming Von Armstrong

probably did a little bit there um you know visas going to use salana um Shopify pay is also on salana and also there's a lot of deepen projects that launch of salana which I think touch sort of like the lives of like just your average user right like the daily lives of your average user for example like helium chances are like you don't like T-Mobile because they charge you like $35 and and helium just pushed out their $20 unlimited plan which is like a pretty good deal or for example you know you're just a Uber driver or you own a car and you want to earn some extra money then you can buy a hive mapper map and that's pretty useful I think both from like a sort of developer

perspective because they launched this new like map image API and Scout too but also from sort of like a infr infrastructure perspective in providing a lot of like this real time mapping to kind of everyone to be honest you know like it could be Google Maps it could be like a real estate agent who wants to see like how the current house looks it could be the government if they wanted to see like whether the vote had potholes it could be a hedge fund because hedge funds you know they stock like parking lots I put out this example on Twitter but there are hedge funds that pay for satellites to stock like grocery store parking lots to basically forecast earnings and I think they're pretty good at it and you know like having something like higher could be really valuable so I do think there's a

very feasible path to like expanding Beyond you know like per sparring lending dexes yeah maybe I summarized by saying that my my main takeaway was that like there's probably a lot of or there is lot of cool Tech around in crypto but like the problem is that there's not enough tension to go around for the whole vertical and then some of these chains are probably going to die although the solution would be objectively a better uh built like I don't know mechanism or solution uh and you just need that like attention span to go to the right places maybe even for

the um industry to move forward I I agree on the attention spaning another thing that I want to point out on the dab front is say ethereum goes to 10K in Ayo right um that means at some point your very very standard unisoft soft is going to cost like God like $200 maybe in the peak of the F Market God forbid a really popular nft launch and then um denen has just been postponed to March if we're lucky we might get it by April I don't want to say it's over for AUM but I think at some point if you're a dab you really have to consider like if every swapper is paying $200 just to swap do like some basic

action on your protocol where could have that money gone you know like it could have went to like either side of the marketplace either like the swapper or for example the LP on unisoft and at some point I think those costs are significant enough for you to like really consider what you're doing on ethereum especially from like a value acur perspective and I think on salana just from like the base fee perspective like that's so much lower than ethereum but also salana is doing a lot of research into fee markets right you know they have like local fee markets but also um I know Anatoli and Eugene from Phoenix are also exploring sort of like a per account 1559 um they basically want to create this end game I think

this is just a discussion but end game where like individual dabs can control their sort of like pricing curves for like gas fees because you know like NFD mens amm Central order books they all need different curves and I think that sort of like customizability will be very important especially especially when your dab reaches a large enough scale which I don't think any dab in crypto is kind of there yet in the grand scheme of things one kav I just want to give to the listen is you know you mentioned that eth if eth runs then transactions get more spe expensive which is true except ethereum is DED in such a designed in such a way that um it's

really it's it's dependent on the users's demand so you said like an example of about $200 which I think it will absolutely hit $200 as happened last Bull Run no reason to think it wouldn't but I don't want listeners to take that take away like it's not like a a fixed thing right because the price of a transaction will be the market rate of whatever ever users are willing to pay it because even if the price of eth flies and goes up 5x that doesn't mean that the base fee will increase that much right like if if the base fee runs up to 200 guay when eth is 10K then that would be an insanely expensive transaction like thousand transaction which users won't I'm not gonna say won't but are would be way less likely to pay so it's what however users want

however much users are willing to spend will ultimately determine the price of a of a transaction isn't fixed one to one um with the with the USD price so that is a important C there but yeah Ren like I do agree with you last bull run it got expensive as to transact on chain even right now it's still expensive so I definitely agree with you I would push back on that though a little bit Dan just because we haven't gone through a bull market with so many live l2s like we have fixed demand for ethereum like da and I honestly think that that marginal usage could like like how many times have you wanted to go Bridge from chain a to chain B and realized I got to stop through ethereum first because there's not enough liquidity on this bridge to go there like I've been

dealing with that with salana which is just such a pain in the ass because I don't feel like going to eth but sometimes I'm just kind of forced to okay that's actually a really interesting uh Counterpoint to that idea because you're right and l2s pass those fees on to their users so I guess like it's still dependent on the users but like those users play way less in fees and that still falls down to the to the base layer so it' be really interesting you're definitely right right now I think l2s float between like 4 and 12% of total gas consumption on eth um but if that goes higher like that's going to be a really really interesting Factor here that's that's a great flag but then on top of that too like I've even seen L2 fees get up to like 75 cents like you

know if you get that gay Spike on mainnet and then you've got users trying to transact on l2s doing you know what they're supposed to be doing to scale ethereum even you could see those fees go to two three four five bucks I bet so so maybe on the optimistic rollups only I'm not really sure I haven't played around too much with the zkm so I know those are supposed to scale more exponentially with transactions so it'll be interesting to see how that plays out but actually I just thought of this too maybe that's what gets uh ZK EVMS to kind of get a little little increase in usage because they haven't really seen much against the optimistic roll of counterparts thus far but yeah ZK sync just launched their latest prover upgrade called bjam and right now it looks like it's the cheapest L2 in terms

of transaction costs and so uh it's interesting to think about like obviously they're being very heavily celed that's like very clear I don't think there's much debate around that I like I don't think that's like a contentious statement and one thing that's doing is amortizing the cost of that many transactions across each user and that's like kind of like you need a like if there's one transaction on an optimistic rollup it would be much trans much cheaper than if there was one transaction on a ZK rollup and so if you have like right now ZK saying doing like a million transactions per day which is way way more than the other the largest optimistic rollups and that actually is driving these fees lower so like these

cbers and airdrop farmers are like actually providing a value to the chain which is like this very weird thing to think about because they're literally just farming an airdrop and they will turn off when that gets launched uh but they are like weirdly doing a favor to the regular users of the chain right now that's actually a very cool point but we actually we totally just went on a nerd t Dan brick who you got on the hot seat cool Throne this week yeah for my uh cool Throne this week I have the AO protocol and the whole team I think they've been launching really cool products lately and just like pushing out super super cool stuff that's kind of although they're in the options and per vertical which is super competed and

it's not like a new I don't know Paradigm in itself they're just like creating really easy to use well functioning products and their most recent release was the I'm not sure how to pronounce this AE USD I used which is basically allows um the users of the exchange to earn yield on their collateral uh and it works by having a 5% backing of usdc which doesn't earn anything it's just there for liquidity reasons and then the rest so 95% is um deposited into maker do die savings rate

module which is uh or which rounds up to if you like look at the yield that AE USD token is currently earning it's about 5% apy um and yeah I guess the law they're kind of reliant on maker Dow keeping enough usdc in their uh PSM module because basically to put it short like you need liquidity to be there for able to be able to like pull those stable coins back out to their protocol so that could be like a risk factor but uh all in all I think it's cool that they're the first exchange that launched this and uh

should be a great way to like attract more customers because yeah basically if you have two solutions that work equally well but the other one just provides yield and you're uh willing to take a bit more risk on which I guess crypto users are usually very willing to do um you should choose AO as your exchange of or the exchange you're trading on and then also they recently implemented spot swaps within the exchange so you don't need to get out of the like their layer 2 solution and then get back in but you can swap within the protocol um and yeah on top of that as we talked about earlier on this podcast like pre-launch Futures have been super

cool and then lastly to top to top things of uh like AO is currently making more Revenue than like ribbon Finance ever did even during the last like peak of the pool cycle which I just like feel that is a good example of a team executing well and just introducing products that work really well in their vertical and just as a reminder uh they're doing their token swap the latest uh at the end of next year's January so definitely something wor keeping an eye on if you believe that they're able to penetrate the either options or perps vertical

more heavily oh I definitely want to jam on the the tokenomics side of thing here but uh first question that came to my mind was you mentioned like maybe you know crypto users are just willing to take on risks well the uh the 800 million in the blast deposit contract definitely tells me that's true um but I'm curious like do you think this blast model of taking deposits and uh like reh hypothecating them into different assets is May that's not the right word but nonetheless investing the underlying Assets in different products do you think that Trend will continue with like I don't really think that ever make sense for arbitrum or optimism or some of these larger chains but I'm curious like that kind of seems like an

edge for for smaller chains to be able to leverage that and do something interesting or even app chains like like what AO is doing to me it doesn't really make sense for like if you're just a basic uh Layer Two that's like a general purpose uh blockchain then I'd say it doesn't really make sense because you're introducing so much risk that isn't like voluntary or basically if you want to use the chain you have to take that risk on but then if you're an app chain and you like introduce certain Solution on top of your like application which allows the user if they want to to like go into this um yield bearing product

then I just see that as a positive because then the user just has the option to do that if they want to and it should be really or pretty clear that it's not risk-free or like you can say that it's close to risk- free but as I said nothing's ever free I think that Trend towards Capital efficiency just continues forever within crypto to be honest and I think we continue to just take that to different levels of extreme after we've like reached the next like level of risk I think Avil one is like slightly better in a sense that if I'm not wrong it's oped in um so it's not necessar that like your USC is turned into a USD but however like in a

scenario of like a mass like insolvency event or like a mass as like um sort of redemption event I wouldn't be too surprised to if they spread out that risk between like the ausd converters and like the Nona USD converters so I'm not sure like there's that much difference at the end of the day I do think like a large L2 is gonna like adopt this like yield bearing token in the bridge contract model sometime in 2024 and I think knowing crypto we're just going to take that to the extreme I wouldn't be too surprised in in four years there's like something in like abs and like you're even the bridge contract is like restake and actual

yield is generated using the ABS I think maybe maybe like a scenario where this makes sense is like if you have e in a bridge contract for say optimism um first you stake that into like a liquid staking solution you get like 3.5% or whatever and then you put that into igen layer and then you dedicate that to one operator or like a few operators who are operating for example a Shir sequencer for optimism right um and so the extra risk that is basically attributed to your e in the bridge contract is a like sort of like the liquid staking risk and be the like excess risk from optimism but sort of like the only risk you have

from running that ABS which is like a Shar sequencer is slashing risk right and theoretically that should be defined by optimism because it's a shed sequencer for optimism but you may be able to generate like extra yield or interest or like returns or emissions whatever term you want to use on your e in your brid contract I think that'll be really really interesting to see I'll need to think a lot more about like the potential risk or like alignment of that model but I wouldn't be too surprised if be honest if we see something like that in a few years yeah I agree with you ran but back to like AO specifically I like the idea I just get worried about the liquidity I feel like a better fit for something

like this would be Athena's USD their stable coin because like it's inherently yield generating and like there's no like you know risk of not being able to actually have enough liquidity to meet withdrawal redemptions but I don't know I guess if they've been working on this for you know a year like you said then they they probably didn't know that that was going to be an option at any point yeah I don't know I'm a firm believer in like give the market what what it wants and then if it blow ups you can't really like blame anyone else except yourself and kind of from an Investor's perspective like sometimes you just have to like bet on these solutions that you kind of maybe are skeptical of from a

risk perspective but then you also have to know when to get out and like when it gets too hectic so yeah I can't really complain about like a like a layer two solution implementing yield into their their mechanism one more question on the the Avo front brick do you know how much revenue they've generated uh I guess over the last month or so sorry to put you on the spot but I'm just curious because I thought the tokenomics redesign they had like a $5 million buffer until they started implementing the the maker style buyback and Burn yeah actually I'm not sure of the specific numbers what's been happening recently but like for me I Define protocol Revenue as just like the

Topline Revenue it creates so basically a lot of people call that fees but if that makes sense like I'm not sure how close they are to hitting that so for for those who don't know um the new um recently passed proposal changes the kind of the operating model such that like AO generated revenue is used the first five million is used to cover operating expens expenses for the team that has been building the project and then after the additional revenue is used to buy tokens from a Unis swap pool and then lping those tokens back into the same

pool so the same mechanism as maker though is currently using for their protocol owned liquidity but yeah to like I'm not sure about the specific numbers how much revenue they've been generating for the last let's say one month and then on the token side what's the uh so I know they're migrating from ribbon to Avo any other major changes that we should be aware of in terms of the toonomic changes I mean I think one thing the market hasn't really paid attention to yet is the fact that um when you migrate from ribbon to AO you can't migrate straight to AO you have to go through like staked AO and that has a thre Monon

like unlocking period or staking period so that means that when the like token swap happens or like you're you become able to go from ribbon to Sao it's going to be at least three months until like the full liquidity comes back on and like in the beginning uh all liquidity will come from uh the projects treasury which holds like around 40% of the Supply right now and that will fully be swapped into normal AO so that doesn't have like a staking period and then off that like 40% of the total

Supply a certain amount is going to be used to like seed liquidity in a Unis swap pool and then the rest will be used for stuff like uh incentiv so AO is also planning on doing an airdrop so maybe worth like trying out the project uh if you're looking to like benefit from that but yeah I think the mechanism are super interesting and we could see a like it being beneficial for the token price because like my guess is that based on like kpis and fundamentals the project is doing better and better but the price is kind of lagging behind so if liquidity kind of becomes more uh restricted and then like demand and mind

share just go up it it could do very well in future or once they like do the token swap event nice it's definitely a great flag and a good project to pay attention to Brick but uh do you think that's a good place to take it home guys yes all right let's do it then thanks for coming on brick and ren it was a great show uh if you're listening be sure to check out D London we're gonna be there March of next year institutional Focus conference lots of great people in the audience incredible panels uh set up that just really G to dive into how do we onboard the institutional side of the industry uh how do we bring them here how do we get that institutional Capital allocated

what do they want to see how is that different than what retail users want and how can we kind of meet in the middle so again D London March 2024 be there we'd love to meet you cheers guys hey everyone thanks so much for tuning into today's episode we hope you really enjoyed it wanted to take one more moment to remind you guys about our upcoming 2024 digital asset Summit in London this March seats are limited so be sure to hit the link in the description and use promo code 0x20 to save 20% off on your ticket we'll see you in London be sure to hit us up if you plan on [Music] attending