Token Season Review: The Hidden Costs of Airdrops | Roundup

Transcript

all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax legal or other advice you know the deal now let's jump into the episode salana doesn't worry about that salana is purely application platform um and I really respect that and I think that if you have fundamental growth uh from your from your core product which is the platform the token will come uh right like I think there will be there

will be value there all right everyone we will be back to the program in just a moment but before we do I want to share something that blockwork has been cooking up for these last couple of months March of this coming year in London blockworks is hosting D London the largest institutionally focused conference in all of crypto Goldman JP Morgan 72 all in one room so you can know what the big money is doing so click the link at the bottom of this episode it'll take you right over to the homepage and use bell2 for 20% off I will see you in Sunny London Town in March all right everyone welcome back to another Roundup edition of bell curve today you got me and Miles holding down the fort M welcome back buddy good to be back good to be back once again yeah it's been drift in hand I'm rocking a uh

pimple moose lacroy myself a man of taste man of refinement I love it we just uh we were just coined the term chain smoking spin drifts it's was when you're on a Seltzer roll and you know once you're done with one just straight back to the fridge that's the most like just turned 30 thing I've ever heard like chain smoking soers means we've we've come a long way we've come a long way that we have that we have um all right let's let's get into it I I think where I want to spend a good amount of time today is actually discussing the return of token season so just within the last of the span of just over a week we've had it's

not a new token launch but we've had dydx go live over on Cosmos we had Celestia go live mainnet launched and now Tia the token is trading they did a little Halloween launch shout out to Celestia good on them we also had Jupiter over on salana and pith uh as well so salana is is in a little bit of a league of its own this week There's breakpoint and obviously the token has just uh exploded in price we're recording this on the second and I think now it's down just below 40 bucks but it it had quite a run from basically 19 straight to I think over 45 so um lot to touch on salana um and and tokens in general but yeah maybe miles I'll kick

it off to you to to start with is I think there's the one thing that I've been thinking about as a framework and want to toss it over and see if it makes sense to you is there's this idea in uh Equity markets of the IPO window being open which is you don't really want to take a company public when you think you're going to get a subpar valuation uh hence the market this idea that the market is closed but then when the market Heats back up economy's roaring people are ready to speculate again that IPO window opens and you tend to get these bursts so I'm wondering if something like that is applicable in crypto and if we're starting to see the token window open again thoughts uh think you're you're defitely on to something here um you know I think there are a lot of teams that were planning on

launching tokens a long time ago um and they've they've shelved it right because if there's absolutely no speculative demand whatsoever you're kind of playing that card you know uh at the wrong time and not getting any of the benefits um and we've definitely definitely feels like we've turned the corner here um where you don't you know there's there's maybe like a a sweet spot where you want to launch your token really like right before things start picking back up so that you can have that wealth effect and you know under early adopters right but you don't want to launch your token like towards the end of the cycle then everybody hates you because they bought in at a valuation that is just wasn't GNA sustain itself Beyond like the next

six months um and there's lots of projects like that that you know are unfortunately down like 99% and it's hard to tell really where their where their Community is at today um and I think we're into that sweet spot right now um maybe maybe we're getting a little ahead of our skis maybe the projects that launch end up finding out that okay the Market's actually not back and it won't be back for another year or two um but there's enough there enough momentum there I think um particularly in the salon ecosystem um that I think we're going to see a lot of these like um you know tokens that a lot of projects that have pmf or some semblance of it right um have been holding off on their token for a long time um you know

maybe they have like a point system or something like that just to have teased it to users um and now they're kind of coming around right because they can feel you know salana going up um the speculative like dollars coming back into the ecosystem um that's bringing up TBL and you know they just need to like light the uh light the spark with the token and and let it run from there um yeah so I I totally agree with you uh whether or not they you know we have like the same sort of uh strategies of token distribution and and um bootstrapping you know as as the last cycle we'll see but um we're definitely hitting that that that sweet spot and I would say just one other thing like with

the cosmos launches that's a little bit different right because those are not projects that have been live for a long time um you need that to the Token launch comes with the chain launch right um and so that could change over time by the way where are new new ways to build Cosmos chains that don't need a native gas token but I would just say it's a little bit different in that you know this is like these projects are coming alive for the first time versus on salana it's now you can just actually speculate on them yeah so lot of different ground cover I do want to get into your thoughts on the strategy right maybe we can put our operator caps on here and try to speculate about what the strategy for an airdrop or incentives

would look like this time around and how if all it's going to look different from what projects did back in the 2020 2021 era be very interested to get your thoughts there completely agree with you on the sentiment that the strategy here is you want to try to find The Sweet Spot of launching when there's a little bit of excitement and try to maximize the amount of uh Revenue that you can bring into the treasury or uh you know uh reserves that you can bring into the treasury rather but at the same time what you definitely do not want to do is launch at the absolute Peak have down only there's no there's no better way to kill a promising project right or have VC be dumping their token allocation which is obviously not popular with the community I I do want to before we get

into I think it probably makes sense to start with salana here but before we do I just want to give a here's another framework mine I I'll see see if you agree with this but you know in terms of one of the the things that I think needs to happen that uh catalyzes a a Bull marketing crypto first Bitcoin has to run but I think you described it really well which is this idea of a wealth effect so in order for there to be a real sustainable bull market which is why I always push back on that like friend Tech is going to take us into the next bull market like no it's not going to take us that's PVP game action there and those numbers are down quite a bit by the way but really what we need is like the the common bag that everyone

holds to go way up everyone starts to feel very wealthy and then they reinvest those perceived gains like their casino chips into projects X Y and Z right and all the time that you're sort of building leverage so that's why you need to see the run in the majors um which we obviously are seeing a little bit in Bitcoin and eath but salana has really been in a league of its own here and I I know you've got a couple folks on the ground over at breakpoint so do we um so I'm happy to relate some of some of what I've been hearing but what do what do you uh what do you ascribe to this this massive runup in salana here it's interesting I think I think there's a lot there I mean first of all I think it's very clear that the there's been a

a big Community that's continued building through you know really the darkest parts of the bare Market where hit salana um and so there's that community that sense of community is strong and there's really good builders that are I would say like you know building for users I think the other part is is more of like a tech narrative piece where um if you think about this time last year uh or maybe a little bit before this time last year DX had just announced they're going to Cosmos um and there's this large app chain narrative that really took over we saw all the rollups you know going from basically being little mini l1s to saying no no we're going to have this is a a rollup framework we're going to have you know a

ton of these rollups uh there kind of all going to be app specific etc etc we had tons of infrastructure built to to try to like I guess you know handle all of this new complexity um and now we're getting to a point where I think you could argue The Narrative is um maybe we over we overbuilt for for app chains right now um maybe a lot of that you know additional complexity isn't worth it if you can get those benefits of speed and you know Noisy Neighbor problems on a highly performant you know L1 which one is still around which one still has a great Community salana um and so you know that's maybe uh coming from my like Cosmos you know roles and

and um and Ulta being really close to the rollups and the RAS providers um is what I'm seeing is that we've got more infrastructure here and more infrastructure providers for app chains than there are you know developers who want to build app chains um and I guess the the the Simplicity of of just launching on a highly performing L1 is is definitely starting to uh to appeal the folks um so that I think is the narrative component to this but I'm curious to hear if you agree I I would agree with that I've been very positive on salana for for a while um there there's a broader sort of architecture uh decision that I think that that they made the right call on which is uh

largely letting Hardware scale with Mo's law to accommodate for just higher throughput on uh the the main chain like like the E scaling solution has essentially been they and by the way I say this as a as a lover of ethereum but where I would quibble with is this sort of very narrow definition of decentralization that exists there which is we are going to keep the hardware requirements extremely low based on the sort of static definition of who can optt in and run a full Lo on the Chain whereas I think the salana version is to say and so most scaling Solutions in eth whether it's co-processors like axium or if it's Roll-Ups is just to say uh let's just take this computation and move it to this other chain that we're gonna like sort of batch transactions or

submit proofs and then we'll just verify it on main chain whereas I think the salana where salana is uh very ahead and something that they were right about was okay even if you do some things like that ultimately you're still going to want to maximize throughput on on that main chain and that actually has some immediate benefits just in terms of uh Le much less complexity you probably get a lot of the benefits of app chains by the the local fee markets and solving the noise and neighbor problem and you don't fragment liquidity which is which is a little bit of a challenge so now um I I sort of think so I think all of that is absolutely true there's a huge narrative and Community aspect to this I'm not a trador by any means but what I would what I think has surprised me is

the way probably it looks like the crypto natives were positioned here I think eth has just been such a consensus play for such a long time probably most of the buying for eth that was going to happen has already gotten done I think eth is probably it's going to do great and it's still probably the best risk reward play and is set to run here but it it just looks like uh sanao was under owned there were some shorts out on it and I think the runup that you saw was just a pretty classic short squeeze and I think this will probably have a pretty big effect in terms of waking the market up to the idea that Salon is a robust community and here to stay because I think you and I have always had open minds about this I've been positive on

it for a little while but I think a good portion of crypto had and the crypto native bid had counted it out for a long time so yeah I that's I think that's probably right you know I think the evm is still the dominant dominant you know uh developer I guess environment uh execut environment um the svm I would say is has really uh come it's probably in second at this point um and you know you can tell that the folks have been building on it have been there for a while um which means that the tooling around it is getting much much better you know projects like helas are great um and yeah I think I think that that is is appealing to new developers that are looking across the space and I would say

the other thing is you know I feel like with ethereum there's a tension between um you know the product of the token uh and the product of the application platform um a lot of the design choices that have been made you know towards maximizing like decentralization which then kind of makes your your the ass the underlying asset more attractive have really detracted from the developer experience there and even just in terms of like you know the rake that ethereum takes off of off of fees right um is is pretty egregious and so salana doesn't worry about that salana is purely an application platform um and I really respect that and I think that if you

have fundamental growth uh from your from your core product which is the platform the token will come uh right like I think there will be there will be value there and so um you know by not trying to I guess straddle both sides of competing with Bitcoin and competing with other application platform salana has been able to you know I would say um avoid some of these tradeoffs that that that ethereum has had to deal with all right everyone we will be back to the program in just a moment but before we do I want to share something that blockor has been cooking up for these last couple of months March of this coming year in London blockworks is hosting D London the largest institutionally focused conference in

all of crypto we are gathering 1,200 of the world's largest asset manager so than trafy macro funds Crypton native funds big allocators and financial institutions so Banks payment processors Etc all in one spot it's very rare to get the likes of Goldman JP Morgan 72 whatever all in one room so you can know what the big money is doing we're diving into the themes that they care about so we're talking about the intersection of macro and crypto where we are in the cycle real world assets so everything from stable coins to unchain treasuries to tokenized assets it's going to be a blast but the other reason you really want to go it's London baby center of the world at one point you got Pub culture you got fish and chips great beer it's going to be a blast so because you're such great listeners to bell

curve there's a Code Bell 20 that's going to get you 20% off so click the link at the bottom of this episode it'll take you right over to the H page you'll see all of our speakers and use Bell 20 for 20% off ticket prices are going up soon make sure you go use that code I will see you in Sunny London Town in March I I'm a little torn on this I have never been a huge fan of the ultrasound money meme on ethereum or eth is ultrasound money but on the one hand I do sort of wonder if ethereum is just a little bit ahead in its road map from something like salana so salana today can say we don't care about this value cruel to the token and we're just going to build the best platform but again my framework for how these ecosystems grow

is this money wealth creation effect that happens by appreciation in the base layer token I mean that's the best marketing you know call it customer acquisition content marketing money illusion whatever it is I feel like the way that these Cycles get cataloged and start is base price token goes up and then that acts as a rising tide lifts all boats for everything that is built on those ecosystems so you know on the one hand I I do agree I think one of the ways that salana has positioned itself relative to eth is saying we're a tech platform we don't care about this idea of being a money which is probably a good thing but I do wonder if they will have to revisit their fee model eventually and start to think about

value of cruel in a couple years because I do think that that's just the winning model in terms of attracting new apps to the ecosystem I'm not sure what they'll do though because with ethereum it was like had fees were egregious they were just all going to the supply side of of miners right right and so all you had to do is just flip a switch and say actually no we're going to burn like the majority of those of those fees that were going to Miners and now they become Revenue look at our p&l like we just went from you know negative like two billion in losses per year to to cash flow positive um with salana there's not a ton of value that is Flowing either to the supply side or to the um you know to the Token holders in the first place

it's very cheap to use this chain right yeah and I think that it's it you know any sort of like auction enshrined auction is a drag towards uh for meev is a drag towards to to latency um which is again probably going to be a tough design trade-off for them to make because that is really what they're optimizing for right um and so if you can just get enough applications and and volumes and transactions and you actually have like you know H millions or hundreds of millions of people using applications on this chain I don't think there needs to be some sort of you know uh Financial like engineering you know to to that's equivalent to like the base

fee switch for for ethereum but I do see what you mean like yeah I not 100% I don't have my mind made up on that I I think there's two ways that you could look at fees which is fees are a form of value acrel or there's sort of a rate limiting system right to prevent uh DDOS attacks or spamming the network I just think that there's probably a spectrum there and I would just say that it feels like the eth camp on today is a little bit more in the in the camp of more fees equal good and I feel like the way the salonic camp thinks about it is more of a Spam limiting probably just because they at one point fees were just you know. one cents or whatever and they had a huge spam problem so maybe just that there's that cultural difference in

that's how they think of the fees yeah no I think that's fair and the local fee Market um feature is so cool in my opinion um like really one of the more interesting innovations that have come out for a while and you know speaking to like the goo guys you could Implement I guess auctions on an account level right um and so that if there is you know you've got like an nft or something like that that you know is going to absolutely end up with like transaction spamming this account you have you know a way to I guess increase the base fees um to deter spam but you could also just you know Implement some sort of auction and if it's a a use case that doesn't need that sort of like insanely High

latency um and then turn it off right uh when when that period of like I guess you know the the huge activity is is over yeah there's a lot of really cool stuff that you could do there one of the challenges that I think the the goo folks think a lot about is just there is you know Salon obviously has much shorter block times I think it's about 400 milliseconds is the average there is you know one of the design parameters it seems like from the Salata perspective is just shortening those block times U because because it is help it does solve a lot of the stuff that people on eth end up thinking a lot about with like me and loss first rebalancing like those problems do you do solve some of the problem not all of it by just shortening the block times actually a lot of the

like deck designers over on eth are like shorter block times guys this would be this would be this would be great but there there is a certain amount of time that you just need to run an auction as well um yeah exactly exactly and and honestly I think even at 400 milliseconds like there are still um you know dexes there that are saying this latency it's it's still too slow um yeah like we're not getting the institutional Traders still because even even this is too slow uh they're not profitable um right and so yeah I think they'll just continue driving that down but yeah I I think that's worth it um because it brings on that all unlocks all these different user types that now are like oh okay this is literally the same thing

as a centralized exchange I can feel pretty confident in running these same strategies now let me ask you something uh this is going to sound like a little bit of a deviation but in one of our recent episodes that we did we were talking about a framework for looking at layer ones either as a commod or like an operating system and we were talking about them but as being these different ways that you could look at it but what if you looked at layer ones as existing on a scale of something like a commodity to something like an operating system does that make sense and the simpler your operating the parameters are around your operating system and like the less performant and therefore the less complexity you absorb the more

commodity like the unit of accounting is in within in your within your layer one whereas the more uh the more complexity that you that you absorb the more Tech and perform it is the more you you kind of need to have a different structure to support something like that um and you take on different assumptions and then it starts to look more operating system esque and they might actually exist on like a Continuum there actually what do you what do you think about that idea it's interesting I I just kind of view them as as a little bit more separate right like I think think that the like we used to talk about big Bitcoin Big B and little B right um and so you know the the product right is the operating

system but I do agree with you that you know the design of the product and what the product is optimizing for does have an impact on like the the underlying asset um and and can make it look more like a commodity or more like an equity um I think I'm not sure where you would say like ethereum fits versus salana and that comp comparison though because you know salana is like optimized you know to be the operating system piece right um but in many ways that actually makes the role of salana more uh straightforward than what the role of eth is going to be looking like in this you know rollup world right if anything it's like once you have to push that to

the rollup side you you know we've talked about it a little bit you start to like fragment you know I would say like invest fragment even like use of uh of gas tokens from like a commodity standpoint um you know if there's like $5,000 coming into bet on the ethereum ecosystem maybe now some of that goes to the rollup tokens themselves instead of it all going to ethereum um maybe some of the rollups actually you know end up using their own token for gas um which still they have to buy ethereum to like post data and stuff like that but you know just kind of a I don't think it's as um straightforward as as it might seem yeah I I I do want to reiterate

here because some of this is seeming like criticism of ethereum and that's not really how I feel but that point that you just said has been my theory for a little while and I haven't heard anyone else say this so I feel little just putting it out to either but I just think the most lead left curve explanation here is that if you had a th000 bucks to in in ethereum in 2019 or 2020 you put, bucks into ethereum but now you might put 500 into ethereum and 250 into arbit from 2 to 50 into optimism um and I guess I guess we'll have to wait for a couple months uh or maybe like a year maybe people will start looking at the ARB eth or op eth sort of charts to get relative strength

there but yeah I I that that's what I would I think that's sort of going to continue to be a a factor here um but I don't really want to speculate too much on on price here and that's not super important at the end of the day anyway I do want to get a sense I mean you've got folks on on the ground over there in uh breakpoint I we've got the same and my you know from from what I've heard people generally the exact description is people feel like they're sitting on a pot of gold you know Vibes could not be higher I think um solid mix of Builder to investor which is which is what you'd love to see actually pretty famously I I did go to the first break point in 2021 and there that was off there was way more investors than Builders which is

not what you want to see it was that was like extremely hyp be right top signal that's not the vibe that I'm getting now it seems pretty Builder oriented um it seems like folks are having fun I saw totally dressed as you know that Meme of like the the silly dragon or whatever like the third head of the Dragon uh yeah I don't know what have you heard oh same um you know I think I think they're very aware that like the tides have turned uh towards their favor I think what will be interesting um at least personally for me is is just to see what like the mix of developers ends up looking like um because last last time when salana was coming up it was really just like net new developers going in to you know salana right uh it wasn't like

they were stealing a lot of ethereum devs or something like that um and now they're you know coming into like Whatever Whenever this like you activity picks back up they actually have a large you know community of their own developers like Salon native developers um I still think they're like very appealing to that net new developer um because a lot of it resonates with them from from web 2 um so yeah I think we it will be interesting to see if this you know at the application Level if the the stars of salana are like those you know projects that have stuck through the bare Market or if it's going to be a lot um you know this like similar to last time wave of of net new

projects yeah I'd be I'd be very curious as well I the the pool of developers in in Rust is much larger obviously than solidity solidity uh was is the dominant still smart Contracting language but a smaller overall pool when you look at it um just in in the grand scheme although I do think their are efforts this is what Georgios is doing right from Paradigm to actually bring rust into ethereum as well so and arbit arbitrum did it too and arbitrum so that might actually be a non yeah stylus by arbitrum is a super cool project so that might actually end up being not as much of a factor here one thing that probably uh we we should talk about because I

think it's going to be a big Catalyst for this is sort of the the wave right so we had the run up in price from salana from you know between 15 and 20 bucks wherever was hovering to around 40 today um and there have been a bunch of projects that have you know quality projects that that have gotten funded within the last last year or so and the question is when were they going to launch tokens so you know you've seen jto who we've had the Lucas and some of the other guys we've had on the podcast before so they've launched their points so obviously this is speculation I don't know but you assume that a token is coming after points same thing with margin fi um you just had within the last week you had pith announced its token launch you had Jupiter uh

announced a token launch as well and I I would guess there's probably going to be quite a bit more of that over in the salana ecosystem which might make salana kind of an interesting place to to to be or to spend some time in Focus yeah totally um again I think they're they're like playing that card at the right time um if anything like maybe a t early but I think I think it makes sense honestly to to try to drive that um themselves and they've have good usage good products um will be very interesting to see if they they try to you know kind of evolve some of the strategies from last cycle in terms of you know looking to

see what worked well what didn't um I think there's probably a lot of low hanging fruit there um and yeah I think I think in general like I I can only see tvl kind of going up from here um with with salana I mean it's been so low for so long um but the idea here is that you get salana Ulta has some like mainstream recognition now like if I describe tokens to to normies I it's now like in that you know Bitcoin ethereum salana and they're usually have they usually have heard about it um and a big part of this also is like you know not just you know a wealth effect for the early

adopters but um kind of this you know inevitable fomo that ends up happening when when you know people start you know CNBC starts saying like oh crypto's roaring back back and etc etc and then you get in you know net new dollars so um maybe maybe it's time Maybe not maybe look at this uh this is a pretty man the the ups and downs of crypto the human psyche was not meant to Bear these levels of volatility I mean this is just tough look at this this is a tvl chart and by the way I do think tvl I'm glad that people are waking up to this as being not a broken metric but you can't just one- siiz fits all but look at this

run up here in 2021 uh you know in the span of a year just under a year uh you know to nine billion from basically zero to nine billion and then from nine billion I mean it dropped down to 200 some million and just just now I mean even now it's almost still a little bit early uh to talk about recovering it's been a good Trend but only since the beginning of this year you know and T and in even relative to you know the the uh like there was a headline a couple of months ago may maybe a month a month and a half ago that Bas you know overtook the the entire salon tvl so it's it look not Financial advice is a

nonfinancial advice corner but that does feel pretty exciting right I mean a chain with so much mind share um kind of coming out of the gutter and still pretty pretty early here in terms of tvl and and rebooting adoption so yeah we're we're rooting for our our friends over there and uh I think it'll be an interesting interesting ecosystem to watch maybe we could talk a little miles I'd love to get your thoughts I know you and I have debated about the the return on investment of doing things like incentive programs uh air uh airdrops things like that um I got I got a couple of charts to to show you here um maybe one we can debate I think we showed this last week but you and I talk about this

a lot and I was actually wanting to get your opinion on it but uh here is a chart hu retweeted it but I think it originally came from yeah Richard Chen um about the cost of airdrops of some of these major ecosystems so dydx Unis swap arbitrum blur ens optimism and the ranges here of you know dydx the cost of the airdrop was 1.4 billion Unis swap is 657 million arbitrum just under 1.4 billion blur 342 million ens 1 Point almost 1.2 billion and then optimism 234 million big numbers obviously we're talking about some of the most successful protocols in

all of crypto I mean what are what are your thoughts on airdrops like were were these worth it do you think and and then maybe we could get into some of the more nitty-gritty tactical stuff of how the strategy for air drops are changing is changing um yeah I mean there's air drops um and I would almost have that kind of maybe be separate than some of the like on going incentives um for usage um as well and I think aird drops like there's no way you could look at those numbers and say you know that was that was a good decision like on paper on paper that was a good decision um most of these you know projects like even as successful as they are you know

have have not generated anything near what those numbers like represent or nor have they like retained most of the users that receive those airdrops that's like just there's no really arguing against that but does that in itself make this like clear that these were really really bad decisions um it's less less clear I think um I think you I don't know if projects like would admit this or if maybe I'm I'm off here but I do feel like there is or at least last cycle there was you know this is kind of not really a choice for these protocols it's kind of the cost of also being a DA and having that be you know the norm in order for people to like use your

product um you have to get these tokens out there somehow right um if you've chosen the token path which you know they they've obviously all have um and at that point you're not even looking at like profitability I I I don't think there's anybody on these teams who was monitoring the air drops and showing like okay was this a good you know what are the CAC metrics here like what are our retention of air you know users I don't think there's I think because even if you you got the numbers and they were terrible I think the decision was like it's still already made that we need to get x amount of this token out of like you know our ownership and into the

community um and so it's not like there's you know super strong like Financial you know like logic I would say like informing a lot of this stuff or at least there hasn't been in the past now do I still think there's like lots of room to move forward and improve that yes um and can you still like find ways to distribute that you know those large allocations of of token supply to the public like I I still think so as well um and we started to see this a little bit towards the end of the last cycle and and today you know sometimes there's multiple steps to claiming an airdrop right you have to like do this do this

little task do that at least try like bare minimum like do perform some actions vote on like you know something right um to get your full air drop um and I think at the very least you should be doing that like have the Civil civil protection like in there which is is still a struggle it seems like for a lot of PE for a lot of projects have some sort of like you know drawn out sort of distribution even to the first people that that are selected and wh listed and and you know those that like continue using the platform should get outsized allocations you know I don't think this only like backwards looking you know onchain history piece really makes a ton

of sense um but I will say they also have been maybe last thing um I've noticed that air dropped are getting a little bit more strategic in terms of not just looking at onchain activity you see like all the contributors of for Celestia at least it was like all the contributors of you know even some Bitcoin repos ethereum repos Cosmos um basically all the the you know influential stakeholders from the development communities that they want to pull from you know got an allocation and I think that that's you know we're getting there so Celestia got a little bit of um uh push back I would say uh just in terms of that we're

looking at the Celestia's token allocation here um for I mean overall it's actually a very good launch sorry I didn't mean to start off on a negative foot there but uh overall I would say very successful launch for for Celestia um this we're looking at a gra a chart of the token allocation here uh first of all this is created by misari I think misari did Celestia a little bit dirty here by labeling this this whole group as insiders which is just optically not you know not great and I don't think super super fair in terms of but but the the breakout for those who who are following along just the audio uh 17.6% went to the initial core contri rors 15.9% went to early backer seed 15 or 19.7% went to early backer series A and

B so you know that's a combined 35% uh 26 .8% is going to R&D and ecosystem and then there's a public allocation of 20% um some for the Genesis uh drop and incentivized test net and then uh 12.6 for future initiatives so I don't know I I there was a lot of push back on this there not not a lot there was some push back and I don't know I'm a little bit torn I I actually kind of push back on the push back because you know there is on the one hand I think there's a lot of people who've been investing in crypto for a long time who are scarred uh by sometimes unfair but sometimes Fair accusations of VC dumping um I am personally of the opinion that VCS get

kind of a bad RP in crypto the space would not exist without VC's if you've ever like a lot of these companies during these this period of time would just flat out go out of business if you didn't have people that were willing to underwrite good businesses at this period of time um now that's not to say every VC is totally great um and there definitely is there have been some sort of egregious examples in the past of just dumping these sort of VC they tend to be layer ones um that end up getting no adoption and Retail just gets fogged so I think there's some some legitimate push back there but I do think on the other hand a lot of the time the accounts that you see doing this and I'm not picking on this is a scky thought who I I like a lot and we went back and

forth and Twitter on this I I pushed back a little bit I do think there's a little bit of entitlement sometimes um uh entitlement from people who just say I deserve to get this huge allocation that like I'm just GNA turn around and dump let's be honest like I don't want these VCS to dump on me I should be doing The Dumping you know is is my interpretation of of a lot of this push back and I don't know I'm kind of like if if anything I'm looking at this okay maybe the allocation investors looks a little high I mean if anything this looks low to the team like I I would prefer a good healthy amount going to the team and being reserved for future contributors like I don't know I I sometime I do I do think there's a

little bit of entitlement sometimes in in crypto like give some to the community but why does why are we just giving stuff away to the community I don't actually understand that yeah I there's got to be like strategic reason kind of like going back to the the previous point we were talking about um cuz you know on paper it looks like a very bad you know financial decision for for these teams just to be giving it away um I yeah I won't speak to like the the act like the percentages there and like you know whether or not that's Justified but like in general I completely agree with you um you have to put yourself in like the

shoes of these projects and they need to make decisions with their token that are going to lead to you know help their chances of of maximizing like that end you know state right becoming the biggest prod you know version of themselves that they can be um and you know just giving a bunch of speculators tokens that they can immediately dump doesn't really move you towards that um I will say for this one it is super unique because there is no activity that happens on Celestia so it's not like there's users like retail users on Celestia that need Tia to pay for gas right the only users um of Tia will be

the Roll-Ups themselves um the Roll-Ups will need to obviously hold Tia to post data um and you really want like in a perfect world for Celestia they're trying to you know position this token to be um you know as much as possible used by the rollups for gas right um and then then it gets into the hands of the users right because the users won't be on Celestia and so I think a lot of a lot of this is for them if like if I were in their seat it' be like how do we ensure that you know Tia is the base asset of the rollups that that use us um or how do we make sure that it is you know one of the the most commonly you

know held assets um of course that like detracts a little bit against you know trying to attract rollups that one half their own gas token um and so it's just about striking that right balance and so I don't think you know that the airdrop was is the most important part here I think it's it's probably what comes later and um I would also mention that with Celestia it is there's no token governance unlike other Cosmos chains and unlike Roll-Ups like optimism and arbitrum there's no way to have this big you know allocation of in like an incentive allocation right that we with optimism and arbitrum and and Cosmos chain they're all voting of how to like you know which which projects on their

rollup should get incentives or you know with osmosis or something like that which pools should get incentives or lending protocols etc etc um that all needs that's all voted through governance and that's not you know uh possible on celesia and it's it's really the opposite of what they're optimizing for um they want it to be you know like as minimal as possible um um so maybe just to add a little color there and why it's not apples apples yeah I would agree with that Celestia is Celestia is interesting for a couple of reasons so Celestia to me I think what makes it unique is that it's it is an L1 right it obviously comes from the cosmos

ecosystem and is an L1 but it's not quite as clear to me and I could be wrong here and maybe some folks in the Celestia team can correct me if they're listening but it feels like the customer for Celestia is developers right not necessarily like retail users so it makes it interesting from a marketing perspective in terms of who you're trying to to reach and what I would liken it to is I think all right in the same way that in the United States pharmaceutical companies run ads for their various you know medications even though it's going to be doctors that recommend it it's kind of like you have an end consumer that you want to have a

brand with and but you also have this intermediate figure standing between you which in this case would be the doctor's office that prescribes that medication so you want to you want to kind of go around them Market to your end consumer so that they say positive things to the doctor's office and then that that you use that drug instead of other uh you know generic drug XYZ I think there's some element of that there's probably relevant from the go to market perspective for Celestia I think so yeah I think I think Celestia you know it's it's da solution is it's trying to pull from two ecosystems it's trying to get Cosmos developers they're saying the cosmos developers listen you get pretty much all the benefits of a cosmos chain

without the cost in like having to deal with this validator set to ethereum rollup devs they're saying listen you know your your rollup is probably economically not viable because of how you know ethereum's da costs you can have an actual profitable rollup if you use Celestia um and you know I think the token is the way to get to like the End customer or at least build brand brand awareness with the with the End customer um yeah and so I think that that's a separate sort of product for them the the asset itself is a separate product then and who they're going after with the asset is separately than who they're trying to get to use the network itself yeah I completely agree with that I you

know the other thing I like about Celestia is I think that they have that they've got this idea I really like their light notes is what I like as a solution because going back to that observation that we were talking about uh sort of a limited uh definition of what decentralization is basically being able to read read and write to copies of this shared database and so having the least common denominator of that Hardware be extremely low or very accessible that's also you know that's very challenging from the throughputs of the system like I think Celestia and this would be the cosmos point of view and and maybe salana gets there to they kind of have tiny Dan Services I I do think that like clients uh are are very interesting solution for how to keep the

Integrity of blockchains like maybe at the end of the day uh you know you you have something where you have a professional sort of node operators that are actually performing a lot of the the work that's uh building and validating blocks but then users it's super cheap and easy like on your phone you can just verify that all of the rules in this system are being followed maybe that's good enough I don't know I sort of feel like this the celestial light node Innovation is i i a big fan yeah is it is it users or is it like you go to wallets and you have wallets start using light nodes to pull like data instead of using you know like infura or like other RPC like data providers like to me I think it's it I agree with you like it

it gets to the end user um but if I was like in you know trying to to make that that you know reality a thing who am I actually going to go to I'm probably going to go and try to convince you know wallet providers to do that um of course metamask probably wants to use in fura but anyways so yeah I think I agree with you and think that that's where we're heading with with a lot of this all right let me ask you this let's say you are put in charge you are now the head of uh you know coo or head of strategy at Celestia and uh I'm ask miles how are we going to compete with IND uh sort of more native ethereum solution you know what's what's the Playbook you think for

how uh Celestia competes from a data availability standpoint yeah I mean it's a it's a good question because I think that that you know is their main competitor and I would just say that Celestia has if I were in their shoes the way I would frame it is you know we've been focused on one thing and being the absolute best at that one thing um and like on paper I'll be interested to see just how like the metrics compare um but if you can build better products right using like Celestia then then that's your main pitch um I it's it's unclear to me exactly like with Ian da you know just how much of ethereum you know you're

you're getting you know with better performance um and I think that you'll you'll need to view like these alternative da Solutions as you know you're not getting like the market cap of ethereum as your security right um you're going to we're going to start like teasing out what the real tradeoffs here are and I'm really sick of the words like alignment and enshrinement I feel like I'm so excited for us to stop like having you know alignment as a strategy um but that's just that's just me personally we've been been hearing too much for too long I'm with you on that I'm I'm not a huge fan either I here's the issue with it I think is it

prevents spreading good UniQue Ideas across like part of the reason why I advocate like I think it's actually quite a good thing that you have multiple different ecosystems out there in the world is because the the the the infrastructure problem we're trying to solve with blockchains is actually immense and from an organizational standpoint it probably you do end up getting a better outcome if you have instead of everyone just trying to solve everything at once if you do have these ecosystems that uh optimize for data availability and you get cool Innovations like data availability sampling right like Mustafa but Celestia pioneered um and you have maybe salana which is focused on the actual execution layer and throughput of the chain whereas ethereum is leading

the way on uh you know validity proofs things like that I think all of that is is really good but when you have a really tribal approach to it which a lot of people in crypto do you you know you you Miss some of the Innovations on on these other chains like here you know actually a good one that um that there was a really interesting it's been a while since we've talked about the show and I'll put my hand up and say I haven't been paying a lot of attention to this ecosystem but uh Avalanche Patrick ogrady over there actually put forth a really interesting proposal I can share my screen about um the road to you know it's kind of a or the path to 100,000 subnets uh overhauling the relationship between the Avalanche primary Network subnets and the what's

interesting about this is so I had to re refresh myself with the the design of avalanche but they have three chains they have the C chain the the pchain and the the xchain and they have different subnets um and subnets you can sort of think it's very actually similar to it's kind of like a mix uh between a sort of a cosmos likee architecture and and sort of rollups um like a hyper chain architecture like you might see on ZK sync and uh it's it's it's what's cool about it is you know you can be a subnet validator uh there's a high fixed cost to doing that the problem with it is you can basically be a validator for the for the pchain which is sort of this

messaging system between different subnets um and then to be a subnet validator uh you have to actually validate the pchain as well there's a very high fixed cost to doing that but it basically is a really good interoperability solution in between these different subnets the problem is the economics of subnets are almost perfectly inverse with the economics of rollups on ethereum so rollups on ethereum are extremely low fixed costs very high variable costs which is good for startups at the beginning the problem is once you hit scale those costs just never go away and data availability is this massive uh sort of intractable not intractable because you've got Igan da and Celestia for Solutions but it's just it's just

variable cost where it's almost the opposite in in avalanche subnets there's a high fix cost but it's very low variable so not so good for startups because you don't want to have this super high fix cost um which then you don't even know if it's like polka dot right that was that was their issue as well it is like it's exactly like polka dot um and I don't know anything I was getting dinner with a mutual friend of ours actually last night who mentioned that there might be some Innovations over there but that this was a debate right this like what is the economics of these of these uh you know sort of app chains going to be and I think pair chains were actually much more extreme where there was a very very high fixed cost you had to apply to be a pair chain

how many were there there were only like 14 or something like that yeah extremely extremely limited very expensive I would say that model didn't work at all Avalanche is a little less extreme I think it's I think there's fixed cost of like it's in the range of like $30,000 or something like that it's it's relatively it's it's it's high but it's not it's not absolutely crazy um but still too high for for startups so so what they're starting to do is they are they're relaxing the requirements for being a subnet validator uh so you don't have to validate the main chain but you have to like Bond some amount of avac or something like that so they're reducing again it's just this like instead of thinking about these things in a very

tribalistic like this good that bad it's just they're just what these different ecosystems are doing they're toying with the economic models until they find this equilibrium solution that makes sense for where applications are at and I think if you were to be really tribal about it and ignore what other ecosystems are doing you'd Miss some really cool stuff so no no pay attention pull in the best practices like take you know those experim experiments and run with them on in in your own EC systems like I think I think that's a lot of that's actually starting to to go on I would say more and more now um because just reading that like a lot of that you know sounds familiar to i' would say like even like Cosmos you know chain

security uh scaling issues um and it sounds similar to what you know igen layer like AVS is will have to deal with um so you know I I I I couldn't agree more um and I don't know it feels feels like the tribess is maybe dying down maybe maybe that's just me but um you know we it kind of comes and goes in waves of you know like jealousy or like you know one one ecosystem's you know cutting Corners right and and and not marketing it like truthfully like that's another thing here um yeah and so I think it's all okay but it it feels like there's a good you know cohort of folks that are like actually you know pretty

open-minded across all of these things um and just and just looking for the best Solutions yeah I think so I wish I wish it was a little bit even even broader and part of the reason why this ends up happening too you can already see it just because we've been being so kind to salana a little bit of a not admonishment but like you already are like salana went on one run and they're already dunking all over the eth people and it's like guys let's just break this chain you know like we could just not dunk on each other when when our coin runs you know it and it's because I think and it is funny I what because initially I think the ethereum people just got so smacked around by The bitcoiners Who I I they had a pretty not graceful perspective towards ethereum

then they were like they sort of took that and learned it and applied it to salana and so the chain of you know chain of harassment goes uh yeah I think the upcoming one that I'm I'm interested to see is you know how folks react to these da Solutions now that they're actually coming out um you know you could see like somebody throwing around like questionable da Solutions quote like AKA Celestia um but will you know similar sort of like could you poke similar holes in in Igan da uh even though it's more ethereum aligned sure that there are like design decisions that the Celestia team will look to as as counterpoints um or a veil or or

espresso right um you know I think is there G to be looking at like I would say like the canonical rollup right that uses ethereum for everything um is going to come under attack soon um and there's not going to be as many that are like viable to do that um but vitalic you know had a great post this week just reminding people that like there is a spectrum of how these Roll-Ups will look there's a spectrum of you know how they will you know use da and and it should align to their various use cases right and that's always the way to look at it is the infrastructure should be informed by the application and how it's being used um and arguing you know just just to do things one way because it should

be the right way is is it's never that black and white um but I am I'm interested to get the popcorn out and see what happens s when a lot R lot more rollups start moving off of you know the the the tried and true sort of like ethereum Da Model yeah well you know it's I agree that I think da is going to be the the big narrative and when you look at upcoming Catalyst for for crypto I think uh things that are not just straight up macro uh catalysts would be obviously the having a spot ETF and then I think 4844 is on some folks radar because that's going to either decrease the cost or increase the margin

depending on what rollups it's just additional bandwidth essentially that's been subsidized by ethereum for rollups you get your blob space um I I sort of in the camp that that is going to surprise the downside if I had to guess I don't think I know um well I I was talking to a guy who's crunched the numbers on this and it's it's not an enormous amount of bandwidth for for these rollups and there are many different Roll-Ups uh right now and it's sort of unclear to me at least how many rollups we really need um maybe fewer than exist today uh and if like clearly what rollups have been

extremely successful at is attracting transactions and activity and it's I I think 4844 might not actually be as helpful in terms of fees as the market is predicting which would be you know if that's what the market things and we get a surprise to downside that's slightly less good yeah I mean that's kind of what I was like alluding to your is I think once that becomes clear you know it's there's that's when like ethereum as that da value prop will kind of come under attack um but yeah I I don't I don't think like some infrastructure like that is is going to be a market Catalyst um and but it's you know got to come from the applications themselves um and so I agree with the state of the

world today in terms of like you know over supply versus demand um but could change very very quickly so Miles what do you do you think this uh you know knock on what not that it's started already but uh in in this next cycle this is going to be the first cycle we get real uh consumer apps that that breach the the whole of the crypto natives or actually go go mainstream or do you think this is another infr cycle I would hope so I would hope that we we even if it's you know doesn't have like decade long staying power that you know the the main stream we actually break the apps themselves a little bit

more into the mainstream and we did with openc you know for a bit um last cycle and I think we'll see more of that um I think payments are an interesting one we'll see like it's always hard for me to tell just how overhyped or underhyped it is and in like you know where traction stands today but I think that there's a lot being done there on the payment side um which may not look like that killer sexy app but that would look on chain like we are getting you know usage on levels that we haven't seen before if one of those actually takes off um it just wouldn't be like branded necessarily as a crypto app it would just be using crypto in the background so yeah I think I think I think we we we

will in some way shape or form um and you know it's probably going to be very non obvious and something or like non- obvious now that seems obvious when it when it does take off yeah I think I don't know I struggle with it a little bit I I know it's very popular thing to say that the L1 the new L1 trade is dead I don't think that it is so maybe maybe four or five four five l1s I do think I'm just trying to think about stuff that that might be less obvious but but needs to happen I do think there's an amount of infrastructure that needs to get rebuilt um on the Capital Market side there's a lot that we like the lending desks is sort of an area that they just got

carded out and I know it's oh never again we're never gonna do that again we're gonna do it again the only question to me is whether it's just going to be a uh CI 2.0 and a reboot with slightly more professional operating teams uh deeper access to Capital that kind of stuff or if it actually moves on to Defi and I I do I do worry a little bit actually like obviously I'm rooting for stuff to go on chain but one thing I think it's very important for us to just look and be very cleared about is that just putting something on chain does not make it risk proof right we we should be very open eyed about that like you almost saw this happen with the a curve situation this

year where I mean there's a lot of essentially Equity of these uh you know platforms that are being used to pledge collateral to somewhere else and it's just good old risk management right at the end of the day this is just this is the Sam kazian interview that we did it's managing assets and liabilities you can mess that up on chain too so I I would say maybe just as a cautionary word let's just not assume just because it's on chain it's it's absolved of of of any risk it's it's not um so there's infrastructure that I think needs to get rebuilt but more on the Capital Market side of infrastructure I do think a lot of these overhyped infr rounds infr projects in eth probably disappoint to the downside if I

had to if I had to guess like a lot of extremely rich valuations um so I would I would just say like if you want to be bullish for like ethereum um I would say that it I'm almost more bullish on like ethereum L1 as it were like related to institutional Capital coming onchain and things like that um you know if and when there is onchain like if they these Market participants actually choose to use onchain Alternatives versus in the absence or or instead of uh off you know centralized providers they're not going to go on Roll-Ups for the most part like they're GNA start dipping their toes into you know a um on

on ethereum only like the most battle tested protocols and even with curve I mean I was talking to to somebody at a large institution today that did does have like you know tens of millions of dollars deposited on chain and they were not in the effective curve pulls but when that happened they had to pull everything and that and that's a huge pain in the ass and then you have to have all the account all the accounting reporting and you know like data monitoring issues um that all needs to be set up um the other thing I would say about why to be like bullish a theum uh L1 is I think all of these New Primitives around you know like intent-based protocols um the anything that is using ZK you know co-processors I think all of that Innovation is going

to happen first on ethereum L1 because once you add once you none of these guys are going to start with try this you know very experimental like new new sort of like uh way of building applications is not going to start on rollups I don't think um so I think still the home of innovation even though it's the weirdest you know like really really like least performative most expensive to use um but there's I think yeah reasons to be bullish there I agree I also would say if we've shown these charts before I actually haven't looked at it in the last month or so but if you look at some of the def 1.0 uh you know Darlings the sort of

synthetics of the world or the makers of the world I mean those have just been doing extremely well um and when I say extremely well I don't necessarily mean token price but in terms of generating fees and real revenue and I think for for defi you know that's a really good point that you bring up about eth main chain because that is the most tested and true thing and I do tend to think security brand stability safety are the winning adjectives for financial applications and I think eth has that more so than than any chain at this point so we started as a salana bull podcast and we're ending as back to being ethereum Bulls um but no I think I

think it's all fair right um they both serve a purpose I think it's easy to like I just think it's easy to like all of them they they just all contribute something slightly different and uh yeah um feel like I had one more question for you but we could probably we could probably wrap it there I think this was a nice nice discussion tokens are back you know it's it's excting we're back baby we're back we're back maybe maybe maybe I think that's a better way of ending it yeah that is a better way of ending it we're back maybe we got a taste of what it felt like again this week we all all felt nice yeah well you and I were talking a couple weeks ago we were on the phone and that was when

Bitcoin printed that like 15% candle or whatever in uh two minutes and I was a bad phone conversation I was like miles did you see this something's going on yeah yeah so no I think and the what maybe maybe just in closing here because I feel like I've referenced this article before but blockworks research we're doing a lot of uh very fundamentally oriented onchain uh research and and analytics and you know this this everyone in crypto should read this article yeah the crypto price Innovation cycle and it describes the causal uh chain reaction that happens to

Kickstart a bull market and you think right as a fundament investor right that some the fundamental onchain metrics start to pick up and then some Savvy investors who are really keyed in start to see that and they say oh well these devs are building and therefore the you know the stuff is more valuable so I'm GNA buy it and the point that that Eddie makes here that just really resonates with with how I've seen this work is actually the thing that kickstarts it the thing that happens first is price then when the price runs then the interest comes then the new ideas come and then startups and projects so you know because this was what people said about salana for such a long period of time is that I just don't see the

activity there's no activity and I I heard that so much and I was like but you clearly see the momentum shifting here and I think the the rational way of describing that relationship is that onchain activity is actually a lagging indicator like if you are waiting to see onchain activity it is like waiting for it's like just in economics there are forward-looking indicator like new orders or PMI or things like that and then they're really lagging indicators like inflation or uh unemployment rate that's like the last thing to turn and I I really think that's the case with onchain activity too because first you need the price to go up then you need people to get excited about it then you need media writing good stuff about it then you need people that are are

literally wealthier to invest in new things attract entrepreneurs and then finally the onchain activity starts to pick up but I I really think that that it's a lagging my framework for is that it's a lagging indicator actually it's interesting yeah no I think that's probably right um let's said it's you know I think a lot of the new ideas that come out at the tail end of that cycle are now like well positioned today and um you know to actually have like a lot of that onchain activity happen when when prices start to to to go up and I would just say like you know osmosis this week um it's what did not launch a token right it did not like have anything other than being you know the

venue of where Celestia launched on chain um and the amount of activity that came you know because of that was was in like pretty insane uh it was you know nothing that like Cosmos has seen since the Luna days um and so I do think that you know the prices also like benefit the incumbent onchain um uh protocols as well and I don't think that really existed last ccle because they were still so nent but yeah we'll we'll see you know what I was actually I forgot to say this earlier when we were talking about uh it being token season you know what these these token launches remind me of is this was sort of how I felt

when curv launched crb um and yeah that was wow that's crazy this was this late August of 2020 Okay so August of 2020 curve launched their token I remember thinking to myself like man that's like new token launch I mean I guess this was right around the time of Def summer as well but it was kind of you know it is interesting to remember that because I always my memory of that was Bitcoin ran first and then eth and then it all y y it all compounded but really you did have defi summer you know going pretty fast and hard there was this sort of little idiosyncratic rally and that was kind of s of new wealth creation sort of

PVP games a a mix of both of those things totally crypto native I was isolated to sort of one corner of crypto it was before it all really kicked off and the major started running which is what you need to get a real bull market but it sort of feels like that's where we're at uh in at the current time you sort of just started to see it with the beginnings of um uh like friend Tech you know that was the beginning okay maybe or Pepe you know people are ready to maybe start ready to start gambling again now we've started to see a couple like maker went on a little run salana just went on a big one chain link some of these more but it's not really like and bitcoin's just starting to move I I sort of I sort of feel like that's about

that's about where we are uh if I had to so not tomorrow maybe not the next day but uh sort of a checklist you know yeah right oh I'd love that to be the case yeah we've we haven't I we haven't had our own version of yam yet or whatever the that like those fruit tokens were um from back in the day but you know I think friend Tech it's it rhymes with it um and yeah there's a lot of those preconditions are starting to happen um so just stay patient you know one foot in front of the other and like I think it it will pay off yeah well I think one one thing that I will just I would be I don't really know how I feel

I've historically not been a great predictor of this so don't listen to me but what I will say is I if everyone was being like yes the ETF is the most bullish thing on earth I would feel less excited about it but generally when you talk to people about the ETF they're like ah yeah I mean people already could have bought Bitcoin at Fidelity at this point most people who wanted to buy already would have bought it'll be cool but I don't think it'll really move the price and I just think that's just emotional scarring of two years of bad bar I mean that's just that's a that's the middle of the bell curve thinking right there that's I think you could just go ahead and left bell curve that and say ETF good and uh yeah we can believe good news when it's obviously

good news is how I viiew some of this stuff so I think so I think so not Financial advice I'm usually wrong so you never um yeah no I'm with you I'm with you I'm not fingers crossed ETF good half good knock on all the wood knock on all the wood all right buddy this was a fun one yeah that was a blast have a good [Music] one