Three forces behind Ethereum's long-term case

Transcript

That Wall Street Journal ad, and I think cost about $140,000, is the greatest signal that we are game on for tokenization. >> On Thursday afternoon, today's guest and I were on stage at a Chainlink event here in New York City talking about Wall Street coming to crypto. Meanwhile, hackers at North Korea were pulling almost $6 billion off of Binance. What does all of this mean for the future of crypto? And what do investors need to know about all of this? Hello and welcome to Milk Road Crypto, the show that's never been hacked by North Korea, but we also don't have $6 billion of crypto yet. I'm your host John Gillon.

Today is Monday, November 2nd, and today we are joined once again by my good friend Joseph Shalom. Joe is the CEO of Sharplink, one of the biggest public holders of Ethereum. And before that, he spent about 20 years at BlackRock, where he helped lead the digital assets team helping to launch their crypto ETF products and their tokenized fund Biddle. Joe and I used to sit on the same floor at BlackRock, and last week we shared a stage at LinkNYC, as I said. We're going to catch up on a lot of things today. Joe's going to break down what all of this means for for ETH, for Ethereum, and for tokenization, as well as gentic finance. Joe's been written a lot about that recently. I'm excited to talk to him. If that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going

to enjoy it. And as a reminder, our podcast today is free, and that would not be possible without our wonderful partners at Alumni Ventures, giving accredited investors access to private market investment opportunities alongside leading VC firms, and Nexo, the digital asset platform that let you trade, earn, and borrow all in one place, all from one account. So, keep an ear out for more information about our partners later in the show. But for now, welcome back to Milk Road Crypto, one of my favorite guests, Joe Shalom. Sir, how are you? >> Doing great, John. Good to see you twice in three business days. >> Well, I hope we can keep that pace going.

Uh Joe, this has been a little bit of a schizophrenic time in crypto. We've seen a huge slew of positive announcements recently, but we've also seen a a slew of hacks and and the biggest heist in in human history. I don't want to dwell on this subject, but I did want to just kind of get your reaction to this news about this hack from Binance and just any thoughts you'd care to share on this subject. >> Yeah, look, we we had a string of really, really important announcements in the stablecoin space. Institutions are here. Um we had some regulatory relief even though the Clarity Act didn't pass, it felt like we had green light, but it's never smooth sailing.

Uh obviously the the Binance hack was really disturbing. Less because of the size of the hack and it was multiples of the next largest hack in history because it was just another recurrence of uh a single vulnerability. An individual, in this case, I believe someone in DevOps, uh laptop was compromised, and uh by knowing how the systems work, they were able to drain a lot in a very short time frame. Um I think this is going to weigh on the industry for months, and I'm an optimist. I think it's going to give pause uh not only to regulators, but also to financial institutions. Um and I think it's going to spark a really

important debate uh around uh centralized storage of your assets uh live on exchange uh for those who need to do that versus pure decentralization, which is what the earliest ethos of a blockchain were aspiring to. Just to be clear for your listeners here at Sharplink, we own about $2 billion of ETH. It sits uh entirely in US-domiciled custodians. It sits in qualified custodians, and it sits in uh HSMs or hardware security modules that are offline, not connected to the internet, and globally

distributed, which require multi-signature approval system. So, I'm not suggesting no one is unhackable, but I think a lot of people are asking the questions again, where do I store my assets? >> Yeah, and I I think that one thing that I hope comes out of this is that the entire industry will re-evaluate their security, and you know, we'll we'll come out of this stronger on the other side of this. Um so we'll thank you for your thoughts on that. And I'm sure Sharplink investors are not worried about the the Ethereum you all have. Um, but I do want to talk about what you've been doing with the Ethereum you have because it's been a while since we caught up. I think you were last on the show in July. Since then, uh, Sharplink has put over $200 million of ETH uh, into Lido. There's another $200 million that you've uh,

partnered with Etherfi on. Um, and you know, I don't want to go through the whole list of partnerships because you've been quite active, but talk to me a little bit about how you're putting your ETH to work and and how things have been playing out at Sharplink since we caught up. >> Sure. First, it's worth noting uh, Ethereum is a wonderful asset. It will become the global settlement layer for uh, for most of capital markets and finance. That said, it's also a productive asset. And if you have a productive asset, whether you're an individual holding it, you're an ETF holding it, or in our case, a digital treasury, the first thing you want to do is actually make it maximally productive. We started uh, last June by fully staking our ETH. Uh, today we have been doing allocations on chain uh, in a very slow and institutionally grade risk

man-uh, manner to try to do something that's very unusual in crypto, which is to deploy permanent capital. The idea that we're not a fund, we're not an individual, we don't have daily redemption requirements. So, if you have a couple of billion dollars of ETH, you could take sleeves of it, put it, and deploy it on a multi-year basis, and get a higher return than the Ethereum staking rate. We did it in January with Etherfi. We did it this summer with Lido. Um, and then we did something quite exciting. We realized that we're not the only ones in the world who know how to deploy on-chain capital for yield. And if you want to do it in scale, we partnered with Galaxy Digital, a public company

run by Mike Novogratz. We launched a $125 million fund together where Sharplink would put $100 million in, and we are in the midst, they as the manager, we as the largest investor, of deploying it to Michael to multiple protocols to do exactly that. And I use the word jump-start capital because VCs can invest in a team, in a business, but they're not necessarily providing the initial capital for a protocol, and we're the ones doing that. And when you provide that initial jump-start capital, you can do better things for your investors. Again, all of the deployments are to generate yield, and that goes right back into our

treasury for investors. The interesting thing about funding that $125 million Galaxy fund is we didn't sell our ETH and uh capitalized the fund with stablecoins. We actually invested in Lido. We deployed that Lido to be borrowed against to capitalize the fund, so we can say directionally long ETH exposure. We can get staking rewards and use that as collateral to fund. That is how on-chain capital 2.0 is happening.

>> This pullback on Bitcoin is scaring a lot of people, and I am not one of them. So, if you want to see what I'm not selling and why, what's on my watchlist, and when I'm going to be deploying more capital into these markets, you can join Milkroad Pro today. It's just a dollar. The link is in the description. I answer questions day and night in Discord. I'll see you there. Okay, so there's a lot to unpack here, but I think maybe a way to frame this conversation is with perspective I've heard you share before: that you want Sharplink to be stewards of the Ethereum ecosystem, and I think that's what you have in mind in terms of how you're deploying this capital. Can you talk to me a bit about what it means to be a steward of the Ethereum ecosystem and how these capital

deployments are are part of that strategy? >> Sure. And if I could be really direct and honest with the viewers, I did not know that part of my job description when I joined Sharplink after retiring from BlackRock was that I would have any role that involved being a steward. I knew I would have to have a voice on behalf of Ethereum. I knew I would have to tell the story, the long-term Ethereum opportunity, but two things actually uh that required us to step up and be stewards, not controllers.

Ethereum is not owned by anyone. The protocol is neutral, decentralized, censorship resistant. But I think the two things that we realized are one, this summer when the Ethereum Foundation was intentionally making themselves smaller, the idea of addition through subtraction, focused more on props, privacy, the long-term health of the protocol. There were really talented groups that were getting spun out of the Ethereum Foundation, and a number of stewards Tom Lee at Bitmain, Joe Lubin personally Sharplink, ended up funding three or four of these ecosystem spin-offs who are focused on privacy for institutions,

scaling the L1 (including shorter block speeds and times), and then the go-to-market, which was Ethereum institutional. The idea that we could provide funding because it's in the best interest of not only the ecosystem but our shareholders. And then the second thing, so that is funding talent and the road map. The second thing was what I mentioned before, having permanent capital. You can deploy that not as a VC trying to get venture-like returns for your investors, but actually you can jump-start the ecosystem. And if you can provide long-term TVL to protocols who are starved of that, that's quite unique in the ecosystem. I think it's The

analogy from the real world is you go to capitals like Abu Dhabi and Japan and Norway, you end up seeing sovereign wealth funds who have permanent capital and they invest that capital for the long run. That's what we mean by putting it back in the ecosystem. We're staking it to provide security and we're deploying on chain in a new manner that had never been done before and raising standards. So, a steward by funding the ecosystem, a steward by deploying in the ecosystem, and the hardest one is telling the story uh when there's a lot of fud and noise in the crypto ecosystem. But, actually, it's something I enjoy most. I just didn't realize it would be part of my job description.

>> Well, I'm glad you have that as part of your job description now because I think you're doing a great job of it. Um Joe, just catch us up on how those two legs that you described there have been going so far. You know, I've done interviews with Eth Labs and with Ethereum Institutional, which are two of the groups that you mentioned, but there's also Eth Systems. Uh updated thoughts on how that's going, and then, you know, on the deployment of capital side, what's that been like so far? And, you know, maybe tying it all together of like how that drives value or differentiates Chainlink uh on the market. >> So, I think each of these three spin-offs is doing something quite unique that at other foundations, whether it's Solana or BNB or Ripple, they kind of have it wrapped within one

group of owners and controllers within a foundation. And that's, in some ways, not a defect, it's a product feature of Ethereum. But, you can think about the three most important things for Ethereum to continue leading in market share with the biggest institution. So, it's leading in stablecoins, it's leading in tokenized assets, and it's leading with on-chain activity. It requires scale and throughput, and that's what Eth Labs is doing. It is building the core protocol into smaller block times to ensure finality quicker, among a number of other things. That's the number one thing they're focused on. Eth Systems recognizes that the biggest institutions in the world are choosing Ethereum, but

to be honest, they have very unique privacy requirements and confidentiality requirements. Eth Systems is the world expert in understanding institutional needs and building in those capabilities. You can think of it almost as both a product organization, a great listener, and a forward engineering team. And they're meeting with the largest institutions in the world who are choosing Ethereum, but have unique privacy requirements. And the third is Ethereum institutional. Ethereum is winning. It has the license to win. It just has to tell a better story and get in front of institutions. Ethereum institutional is now independent, but they're engaging, I think with Last Time I checked, over 500 of the largest institutions in the world to educate, to

do conferences, to give them collateral material, and to help them do biz dev. But Ethereum is harder. They spend most of their time doing the hard work, securing the ecosystem, actually making it credibly neutral, like focusing on the stake, not the sizzle. We need to equally focus on the sizzle, cuz the other blockchains have great budgets and biz dev groups and the like. And I'm not knocking them, but if you're a large owner of ETH, you want it to be successful, you have to help fund and steward this opportunity.

>> Okay. Really helpful context on that. Um I would love to talk about this a lot more cuz I'm always fascinated with this, but I wanted to pivot a little bit to something that I got to ask you about at the Chainlink event. And for viewers of this For viewers of this channel, we will be sharing the conversations I got to have at the Chainlink event. We talked a little bit about your thoughts on agentic finance. And you have written, I think, three or maybe more essays on this at this point. You've done several presentations as well. Um I'm just curious at a high level, what prompted you as an Ethereum digital asset treasury company at Shapelink to take the time to put all this effort and study and attention into agentic finance and and what's the opportunity you see there?

>> You know what's quite interesting? I'm spending half my time on immediate short-term opportunities, but an equal amount of time trying to tell the story of what is the long-term Ethereum opportunity. For years, we've been talking about stablecoins. You know, the fastest-growing tokenized asset class, it's dollars, and over 50%are on Ethereum. That's an easy story to tell, especially when stablecoins are going to be go from being the on-ramp of fiat to crypto to stablecoins are going to be a payment rail for peer-to-peer payments, for payroll, for security settlement.

Um, it's going to be much broader. Tokenized assets are something that we've been talking about since 2017. It's now becoming immediate and in the short to mid-term. You've seen we have regulatory clarity. You've seen the largest central institutions, decentralized finance take on the mantle of tokenizing everything. And then DeFi has gone through a bit of a roller coaster. It had some security concerns, but when you have stable coins and tokenized assets, DeFi are where most of the collateral, the borrowing, the lending, and execution's going to come from. So, what about Agyntic is unique? You have the money layer, you have the asset layer, you have the execution layer.

AI agents are just going to supercharge it because they are the automation layer. And they are the continuous attention layer. And why does this matter in Ethereum is if you think about each of these three things being transformational, stable coins, tokenized assets, on-chain execution, Agyntic is going to speed it up by a thousand X. And the number of transactions that agents are going to be doing with one another are going to really multiply. And why is this important for Ethereum?

For two reasons. One is agents are not going to use the ACH Fed payment platform from 1975. They're not going to be initially open to banks and a lot of the legacy institutions. They're going to need the new rails to do micro payments, to trade with one another, to buy data, and to move your assets. The second reason Ethereum is important is Ethereum often is viewed as something that institutions use, sometimes users or humans use. It's kind of hard to measure who the users are.

It's going to be very clear that there's going to be billions of Agyntic users in the form of their agents. And they're going to need rails to execute. The final final thing is and I'm going to say something a little bit spicy. Every revolution that we've seen involving technology ends up happening with a huge innovation, competition, consumer benefit, and then finally a handful of winners who take all. And I think it's really really important that this agentic finance revolution does not have the same ending and it doesn't need to. You don't need a technology company, a bank, and one, you know, new upstart to own

your agents and own your battle over money. If you have decentralized rails with guardrails, it can be the new way that humans can take back control of this revolution and it could be running on neutral rails. And so it's not just an idea that Ethereum is going to be where most of the transactions happening, it's actually a protection against consolidation. Uh, and centralization again. So, that's why we're spending so much time. It's also probably one of the most difficult and exciting topics happening in the public societal debate.

A long answer, but it's really really important that we get this right. >> I I totally agree and I'm glad you brought this up cuz I wanted to ask you about something that you wrote in this piece, which is that whoever owns the infrastructure owns the agent and therefore the customer. And I'd seen a report or warning recently from Fidelity Digital Assets basically saying that closed systems that are owned by big tech and fintech are going to try to capture this and it seems like they're they're making a play to do that. Why do you feel that it is so important that that not be the outcome, that we do have a public infrastructure solution to this? And why do you think that infrastructure solution should be Ethereum?

>> I know it's true from history. Because can you imagine the internet if it didn't have TCP/IP and HTTP, the ability to securely transmit information in an instant? And instead it was like the early days of the mobile phone, where you couldn't take your number someplace else. It was the switching cost was impossible. They were closed networks. It was extremely expensive to roam across borders. But, I think the hope here is that your agents will work for you. Can we all agree we want our agents to work for I'll vote yes. You want the agents to work for you, which means they need to be persistent.

You're not going to want to have a different agent on every rail. You're not going to want to have a different agent for each of your financial accounts and each of your social media accounts. You're going to want to have a persistent agent who understands your preferences, which means the systems need to be open. Because if the answer is you need to use Muse and it only works in your Facebook network and you can only communicate in WhatsApp, that is a closed system. So, the idea of an open system is that your agent should be able to go to any bank, to any brokerage company, to any DeFi platform, to any exchange, to any custodian, to any oracle, to any mortgage company, and be able to know

your financial life and to have delegated authority very specific authority in what that agent can do for you. But, most important, if your agent works for you, they will ignore hidden incentives. They will ignore Super Bowl ads. They will ignore the fact that there are sponsored results every time you type a Google search. So, this is why it's so important for decentralized rails to be available, because that's where you can guarantee standards, guardrails, accountability, and an open network. And I'm very, very hopeful that we will get our stuff together and your agents will actually provide you agency.

The alternative is what we know to be true, what we saw from Web 1 and Web 2, where there is two browsers who dominate, who sponsor every search result. There were two two three social networks that have access. And when you go on vacation, John, they own your vacation pictures. So, it's extremely expensive. And I'm equally happy if we're living in an omni chain world. That's okay, but we need to have standards that are open. This is a battle for money, which is more important than what we saw in Web 1, which was a battle for information, and Web 2, which was a battle for your social graph. This is about your money, your future, your retirement.

>> Let's talk about your money. Your study that you published says that Americans have around $15 trillion that are sitting in checking and savings accounts, and they're missing out on approximately, you estimate, about $180 billion a year in interest. And it seems to me that this is what the banks are protecting. Over the last few weeks, we've seen JP Morgan, Bank of America, City, Schwab, several others have said that they won't let outside AI agents move money on behalf of their customers. Can you talk to me about what's at stake here and why the banks seem to be trying to clamp down on this? >> Sure. So, for your viewers, $15 trillion sitting in accounts that most people don't pay attention to. We call it idle cash, but $15 trillion is earning somewhere between 7 and 35 basis points.

When the prevailing rate, if you just switched to a money market fund at the same institution, it earns about 370 basis points. So, 10x, 20x, 30x what you're earning. So, that is the cost and the drag on your investments. And look, I think agents bring two things that come with every technology revolution. They take something that is very expensive and make it cheap. They take something that's very, very scarce and they make it abundant.

Railroads did that with distance, telegraph did that with information and communication. Compute was done with commercial clouds. Here, what your AI agents going to do is give you unlimited attention and cuz they don't sleep, and unlimited financial literacy. And any agent worth its muster will immediately notice that you have uninvested cash. I have some at Wells Fargo, move it to a better account. It will actually go further than that. It'll understand your needs, your short-term goals, and long-term goals, and it will build you a better portfolio. And then when the markets go haywire, it'll rebalance it for you, and etc. etc. etc.

I understand that the banks have security concerns, legitimate security concerns, letting in unidentified agents to open accounts. I get that. They need to do KYC, they need to know who's who. But I think in a very short period of time, agents will be associated with their owners, who are humans, who have legitimate accounts, and they should allow, just like you allow your financial advisor to see your accounts and aggregate them at all your institutions. Your agent is just going to be another form of financial advisor who is smarter and never sleeps and does the right thing through code, not through human trust. It's going to be inexcusable in a few months when the security is handled

and the regulatory is handled, not to let a human have their agents access their accounts. You're seeing that across finance, and you're also seeing Amazon shut off access to Mulesoft cuz they're fearful. You've seen airlines do it. Why? Because of switching costs. Like if your agent can move your money within the same institution to a higher yielding account, banks are less profitable. And if your agent can rebook your flight at a lower cost, it's less profitable. So, we're going to go through a period of motes and protections and walls, but I think over time it's going to be irreversible. You can't stop transparency and technology

progress, and that's what AI agents will be once you solve the security and the KYC. You know, one of the weird things about crypto is that the longer you're in it, the more accounts you seem to end up with. You buy in in place, trade somewhere else, earn yield somewhere else. And if you actually need capital, you end up having to sell something that you probably wanted to keep. That's why we at Milk Road are partnering with Nexo. These guys keep the whole thing under one account. You can buy, trade crypto, earn interest on what you already hold, and even borrow against your capital without having to sell it. All in one spot, all in one account, all on Nexo. So, if you need liquidity, but you don't want to give up your position, or you're already holding crypto, and you want to be able to do more with it,

I think Nexo is worth your time. We love working with them. I think you will, too. Tell them Milk Road sent you. >> In crypto, you can get into a project long before it lists on Coinbase. In tech, the early window mostly belongs to VCs, and companies now stay private for a decade or more. Alumni Ventures, a partner of the Milk Road Show, gives accredited investors a way in. Time and CB Insights both rank them as a top 20 US venture firm. You can sign up for free to see the weekly deal flow, or write one check into their foundation fund for about 25 private deals. Venture is high-risk and long-term, though, so read the details first. Go to av.vc/milkroad.

>> I want to talk a little bit about how this intersects with something we talked a lot about at the Chainlink event, which is tokenization. Um, tokenized stocks have jumped about, I think, 6x in terms of the the amount of tokenized assets on chain just this year alone, and the SEC has given this innovation exemption a 5-year window for for people to to try out these products. Um, paint me the picture of all this coming together. What does it look like when Agoric Finance is is fully operational online, and we have stablecoins, tokenized assets? What does that look like? Where does that live? Talk to me about that future.

>> Yeah, so even before we get to the agents, let's actually put our hands on the keyboard of a consumer. A consumer today who owns a bunch of stocks and funds, we talked about idle cash, but there's also idle securities. The idea that if you own in your Charles Schwab account SpaceX, or the S&P 500, or the Russell 3000, you let it sit, and most investors do nothing with it. And what do I mean by that? If you're at BlackRock, or any other financial institution, and you're managing someone's stocks and bonds and funds, you're lending it.

So, you're making your security productive. You lend your SpaceX stock for 3 days to a counterparty. They pay you a yield in return. That's something that every single investor and consumer should be able to do. First, move your money from idle cash to a yield-bearing account. Then, build yourself a better portfolio and then make those securities productive. And how do you do that? Through smart contracts, through DeFi, and in the future through agents. You specify, "I'm comfortable lending out my bonds, my stocks, just like you lend crypto today to get a yield. I want to do that on chain and get a return just like the biggest institutions do."

In the future, your agent is going to do that for you within some sort of delegated authority. But, let's just be very clear. It's going to take a while for humans to get comfortable. I'm very comfortable with someone investing my cash, easy. I'm actually comfortable with someone recommend mending a better portfolio for me. I actually may trust my agent more than others. It'll take a while to let them rebalance. I'll get very comfortable allowing them to lend my assets. But, I may not be comfortable allowing them to take out debt.

But, when you take these things, the money layer, the on-chain security layer, the execution layer, your agents with your authority are going to be able to make your assets more productive than you can today. And it's that attention span that matters. They have unlimited attention. And it may take longer than we think for it to fully take over your account, but it's going to go a lot faster than e-commerce did in the late '90s when our parents were uncomfortable at first putting their credit card on chain. Now, they're buying without thinking. But, this is the future. It's going to start with composable assets.

You can trade 24/7, but your assets will become lendable and productive. That, I think, is going to be the bigger story. Every asset can be used as collateral in both directions. >> Okay, so there's obviously a lot of advantages to this future that you're painting here, but not everybody seems to be on board with this. We talked about the banks sort of clamping down on AI agents. Someone took out a full-page ad in the Wall Street Journal recently warning that crypto will soon quote tokenize your shares on unregulated venues. And so it's like a nobody's quite sure who paid for this by the way, so I don't know who, but there seems to be this strong sentiment opposing tokenization, opposing AI agents, agentic finance. We talked last time you were on the show about Ethereum's real

competition being the legacy systems on Wall Street. Is this just another example of those legacy systems fighting back and resisting the future? And and how do you see this playing out from here? >> First of all, I think it's we struggle in our daily lives to understand what is noise and what is signal. Right? Like we struggle to understand is this the year of tokenization? What is what is the role of stablecoins? What is the role of AI in society? Like we struggle to understand. That Wall Street Journal ad, I think cost about $140,000, is the greatest signal that we are game on for tokenization. It is a green light signal cuz it's telling you that certain vested interests, and we don't know who they

are, are actually quite scared. Now it may be fintech providers who are involved. I don't think it's the exchanges. The exchanges are now who would have been threatened by 24/7 trading. The exchanges are leaning in. You know, 24 by 7, New York Stock Exchange, Nasdaq, DTCC. So I don't know who did it, but I would take it as a signal that they know it's real. It's coming now. Why else do you spend $140,000? But let me defud what that propaganda was, which is that first the idea that it was unregulated.

There are different ways to tokenize. It's very clear that Nasdaq, New York Stock Exchange, and DTCC are going to be tokenizing assets in regulated manners. You now have, as you mentioned, the innovation exemption for 5 years from the SEC. The idea that there's a green light to tokenize certain shares within certain constraints with the permission of the issuers. This is not unregulated activity. By definition, they're getting a a clear signal from the the US SEC. Next, that it's going to de-peg and you're not going to know what the price is. There's already There are already dark pools and off-chain exchanges where you can determine the

price. No one's forcing you to trade 24/7. They're just saying that on a weekend when your government goes to war after the close of markets, isn't it better for a consumer to be able to express their views when the markets are closed rather than wait till Monday morning when the market's already moved. The idea that pricing is going to be bad. There's going to be oracles. You saw Chainlink announce they're going to get almost exchange-like real-time pricing around tokenized assets. So, it's like myth after myth after myth. And when you're losing an argument, you make stuff up. And it's all been debunked. So, take this as a go signal.

And the fear factor, that's the only reason someone spends $140,000. It's to slow down and scare a group of general counsels at issuers who have to make a decision for their CEO, should we tokenize or not? >> Joe, I love that perspective. Thank you for sharing that. I want to bring this conversation back to Ethereum. And I'm curious your mindset on where you think all this starts to live. Does this all go like tokenized assets, agenty finance? Does this go on Ethereum's L1? Does it go on L2s like Robinhood chain? Do you think it doesn't matter? Like what do What is your outlook on that? Where does all this live when it comes to Ethereum?

>> So, I I think it's going to live in three places. A lot of it, if it's high-speed transactions, you'll see it a lot of it's happening on the layer twos. Take Arbitrum Offchain Labs is powering the Robinhood app. and it's a wildly successful uh use case that launched this summer, and the volumes are off the charts. And by the way, why this matters for the layer one Ethereum is that even though the transactions are initiated through Robinhood on a layer two, the security and the settlement happens on the layer one, and it ultimately uses ETH as gas fees. So, this is a very positive story. I do think you're

starting to see products, tokenized products launched on Ethereum. We did it in March of 2024 with Bittle. You see ARK, Cathie Wood's launching a VC firm. You You now see JP Morgan launching to you know, both money market funds on layer one Ethereum. You see them now launching uh tokenized deposits on Ethereum. So, people go where the security, the trust, and the liquidity is. I think one of the reasons that L2s have seen the dominance of transactions and transaction value is because the layer one historically was focused on security, the hardest problem, less on speed, and you're starting to see, you know, step function increases in

throughput, much lower gas fees. Years ago, if you wanted to settle a tokenized asset transaction, it would cost you 60 bucks. It's probably 6 cents now, and it's getting even faster. And I also think a lot of the most prominent DeFi protocols are being built with Ethereum at at its core. And so, I think you'll see it in all those uh capacities. Look, I can't share everything, but behind the scenes you're seeing the largest banks in the world kicking the tires on Ethereum. Maybe on more private Ethereum-based networks in the future on permissionless with privacy features.

Um but I think most institutions are going where the security is, and that's Ethereum, and I'm quite bullish. Uh I think the Binance situation is just a setback for the entire industry and trust. So, the largest institutions are going to do it slowly and right, and when you do it slowly and right, usually you choose Ethereum. >> Listen guys, there are a lot of big names in crypto and you know that they hold a lot of assets, but the problem is that you never get to see all that information in one place and you also don't know when some of those big names actually buy and sell. Well, we have rebuilt milkroad.com just for this use.

You can see right here, we have all these crypto personalities like Justin Sun, Vitalik, Arthur Hayes, Donald Trump, yes he's a crypto person, Zach XBT, if you know who that is. We have listed all of their portfolios, the stuff that's available publicly right here for you guys to check out whenever you want. If you're curious, what is Arthur Hayes still holding? Did he sell everything? Is he holding anything? It's all here available in our insider portfolios and all that is available for free for you guys on milkroad.com, so check it out right now. >> I want to ask you about your outlook on stablecoins. Stablecoins are one of the more, let's say boring topics that even our audience loses interest in, but I think there's something really fascinating about the play out here. One of the things that was being, let's say negotiated in the Clarity Act that broke

down, was a revision to things that were put in place in the Genius Act about allowing institutions to earn yield on their stablecoins. The Genius Act goes fully into effect in in January of 2027. I'm curious your thoughts on how that impacts the growth of Ethereum here and the growth of stablecoin adoption and, you know, now that the Clarity Act hasn't come in and rewritten Genius, is this what is going to happen with stablecoins and how does this impact the outlook for Ethereum? >> Sure, so um stablecoins to me are the number one tokenization use case. It's been around since about 2018 and quickly it reached $300 of circulation. That is the positive news. In fact, the second positive news

is 80%of that activity was just crypto trading, pure pure crypto, onboarding into crypto. You're starting to see stablecoins used in foreign countries where people cannot access US bank accounts as a proxy for getting access to US dollars. That's another use case, but I think what's remarkable is it's just going to become a platform asset. Every person's payroll, peer-to-peer payments, cross-border remittances, which cost 6%and take a day or going to be done in seconds.

Tokenized assets are going to settle with stablecoins. They're not going to settle in a day with the ACH or Swift, you know, money movement a day later. And agents need the speed of money, and they're going to be using stablecoins for micro payments. You've seen hundreds and hundreds of millions of agent-to-agent payments, very small dollar amounts. All that being said, I am disappointed and I was probably wrong earlier this year when I predicted stablecoin circulation was going to double or triple.

Um we've seen stablecoins unfortunately this year hover at about 300 billion. So, if we're honest with ourselves, we have not seen the growth that we would have expected. Um I don't think it's because of genius. I think it's just we need more agentic activity. We need we need more DeFi. We need trading volumes on exchange to increase, and we need tokenized assets to grow wildly as we expect them to do. But it is the first use case. And why it matters for Ethereum is Ethereum has, I think around, last time I checked, 54%of all stablecoin volumes happening on Ethereum. Solana is not second. I believe it's BNB chain.

Solana is about nine times less than Ethereum. And so, it is really, really important. And by the way, when you have more tokenized assets, you're going to need more stablecoins in circulation to settle them. You you're going to have more DeFi, you're going to need more stablecoins. You're going to have more agents, you're going to need more stablecoins. And what was a US phenomenon, you're starting to see spread overseas because they're petrified of the redollarization of finance and agentic finance because stablecoins today are 99%dollar denominated. That's why you're going to see a Korean won, Hong Kong dollar, Japanese. The Europeans are way behind, talking about a stable coin in two to three years from now. It's going to be a

threat to their sovereignty if they don't have local denominated stable coins. So, that's my hot take. Ethereum is by far the winner. Um it's just been disappointing how it hasn't grown in circulation as much as I would have expected this year. >> Okay, but there's a lot of potential catalyst on the horizon there and we'll we'll keep monitoring that situation. Uh I want to bring this back to Ethereum or to ETH rather, ETH the asset. Um the last time we caught up in July, you said that ETH's underperformance you attributed mostly to a narrative failure and not a fundamentals one. And I'm just curious your updated outlook on ETH as an asset here and how you see this situated uh to to benefit from all this activity that's happening here.

>> Sure, I think there are three short-term and long-term things we should be focused on. The first was very, very simply, the summer there was a lot of negative sentiment around the Ethereum Foundation. We are past that. And I think the ecosystem has more stewards, has more nodes who are contributing and I think that's been a very positive thing. And you saw the price of ETH, you know, in June go from 1550 to what it is today, around 2300. The second thing, which is equally important, is institutional adoption. As more and more institutions do the things we've been talking about for this entire podcast, they will need ether to secure those transactions. And these are high-quality assets that require

finality and that will require ether. The third thing is a little bit further out and it's an analogy I use, which is, you know, the internet became the network infrastructure for information. And we believe Ethereum will be that network infrastructure. It's a network effect and it is the infrastructure for the future of finance and all other cat- a lot of other categories of of money movement and governance. But the internet didn't have a token. Um but it did have credible neutrality, it had security, it was censorship proof. If you have an internet browser, you can exchange information, send an email, access a bank account.

I'd liken Ethereum more to the idea of, you know, a 19 uh lane wide superhighway that is actually a common good. It's credibly neutral, anyone can drive on it. It has guidelines, you can't stop someone from driving on it. Uh it doesn't favor one driver or another. Everyone's going to start at point A and get to point B. The rules apply to all, it doesn't matter how big you are or how small you are. But, the difference is today with toll roads and highways, you're willing to pay a small fee to make sure that it's secure, it's paved, it's lit, and the rules are followed. And that is what

Ethereum's going to be for the future of finance. It's going to be that toll road. I'll quote Larry Fink, who in January was at Davos and he had a whole deck in presentation on the future of finance, and he had a slide that said Ethereum is the toll road to tokenization. You're going to want your tokenized assets, your stable coins to settle, to have rules, to be secure, and you're going to want to pay a fee. And that fee is very low right now, um and it benefits ETH. But there's still a lot of block space, but when you see the wave of transactions coming from stable coins and tokenization and DeFi or on-chain finance 2.0 and agents, the demand for ether as a store of value

and as a transaction and security commodity to give you that trust is going to be important. So, those are the analogies I'm going to use. You want it to be open and neutral and censorship proof and secure like the internet is, but you also are willing to pay to get from one side of the highway to another because you want the rules to apply to everyone and you want it to be predictable and final. So, that is the analogy and uh the more assets that come onto Ethereum, the more important ether will be as a store of value and a trust commodity.

>> I asked a question to someone at the Chainlink event, John D'Agostino, who's head of institutional relations at Coinbase. I asked him a question about what catalysts he was watching for for Ethereum, for crypto. I'm curious your thoughts on that because he said that this idea that we need a specific catalyst is now behind us and it's really more about this gradual catalyst of of Wall Street coming on chain. I'm curious if there are any catalysts you're watching for or if you agree with John that catalysts are now a thing of the past and we're just, you know, in the progress of of all this finally playing out. >> So, John is one of the smartest people and actually one of the highest quality people in crypto. I really admire him. I do agree we don't need a new catalyst.

It's stable coins, tokenized assets, DeFi on-chain activity and agents. I would answer the question in a different way, which is what are the litmus tests to know whether we're going fast or slow and I would suggest there are three. The first is just stable coin supply and circulation. How quickly does it grow from 300 billion or 305 billion to a trillion and 2 trillion? That'll tell you how quickly this industry is is is really going to move forward. The second is tokenized assets and tokenized assets today are around 40 billion.

In the early days, including when we launched Biddle at BlackRock, it was largely on the short end of the curve. It was tokenized money market funds. It was other type of funds, maybe it was commodities. I think the litmus test I would point to you is the fastest growing area. It's about 4 billion of the 40, but growing the most rapidly is tokenized public equities in the US. Why do I say this? Because the TAM is massive. There's about 150 trillion of public equities globally, half of that in the US, which is 75 trillion. The top 10 public names in US public markets are 25 trillion dollars.

So, if you start seeing public equities flip and start having more and more of them in tokenized format, that is an impetus. So, one is stablecoin supply, second is tokenized equities cuz it's simple, it's clear, it's measurable. And the third is just watch agent-to-agent transactions using X402, ERC 8004. And I would focus less on the value of the actual transactions. Most of them are going to start below $1. But when do you go from hundreds of millions of agent-to-agent transactions in a quarter to billions?

And when does the average value of transaction goes up? So, I agree with John. We have the tailwinds, we have the catalysts. We just need to monitor these three litmus tests. That would be Look at the beginning of the year, look at the end of the year, it'll tell you how quickly we're going. >> And Joe Shalom, CEO of SharpLink, thank you so much for being on Milk Road Crypto. I really appreciate you coming on the show, sharing these insights and wisdom, especially at a time that is so stressful and uncertain for so many people in the markets. I think your leadership and voice are really important right now. Where can we send people to find more of you and your work online?

>> You can go to sharplink.com or you can go to@joeshalom.com. Um I think a big part of my job is talking the truth, not just Ethereum, but what's happening. And I think the most important thing at moments like this when sentiment are down, we've seen massive hacks, are for people to keep the cool heads, realize this is technology progress, but in every technology you're going to have bumps in the road. And if we all do the right thing, tell the truth, raise the standards, we'll be in great shape. And John, you're part of that story as well.

>> Well, thank you so much, Joe. It's always a pleasure to catch up with you. I hope we can do this again sooner and not wait so long till next time. But Joe Shalom, CEO of SharpLink, thank you so much for being on Milk Road Crypto. >> Thank you, John. >> And thank you all for joining us. I hope you all learned something today. So, until next time, stay safe, stay educated, stay bullish, and we will see you all in the next episode of Milk Road Crypto. Thanks for being here, everyone. Bye. >> Thanks for listening to Milkroad. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's exactly what Milkroad Pro is built for. Our analysts have called some of the biggest winners early, and Pro lets you see what they're buying next, every

trade they make, and the research behind every position. Check out Milkroad Pro at the link below. Everything you hear on Milkroad is for informational purposes only. These are our personal opinions, not financial advice, and we may own some of the investments we talk about. Always do your own research and make the decisions that are right for you. See you next time.