Vance Spencer: The FAANG of DeFi (S.M.E.L.L)

Transcript

thank you bankless Nation super excited to introduce you to another state of the nation David uh I smell the bull market that's what I smell yeah uh we're gonna be talking about some bull market narratives today with Vance from framework what's on the agenda first we're going to talk about smell there's a reason why Ryan just said he smells a bear Market uh do we have the Fang of defy Fang Facebook Apple Netflix Google oh God what's the other one uh I don't know because I don't own equities anymore but Fang it's like the uh all of the the Staples of Trad fire the Staples of Silicon Valley Vance thinks that there might be the thing uh a foot in defy uh the tokens that are going to

brew the Staples of a D5 portfolio smell would be the acronym we're gonna get into what is comprised in the smell uh but also there's some other bull market narratives that we wanted to touch on uh friends is sweeping through crypto Twitter is the the app of the moment is that a sustainable narrative or is that a fad um and then there's some other narratives that we're going to talk about as well such as ETFs and gaming and staking and launching casinos and so this is uh gonna be the topic of the show haunching casinos right uh guys before we begin we want to uh give you a message from our friends and sponsors over at safe as safe it was kind of funny David you and I were going through our safe multi-sig almost confirm the transaction but didn't quite

do it but what what is uh safe want the bankers Nation to know yeah so safe is working on their proposal for a modular open source uh protocol framework for account abstracted wallet smart contract walls we all know that we are now in this world of uh externally owned accounts which is just probably the wallet that you have but eventually we're going to get into being into the world of 99.9 smart contract wallets and safe is introducing their safe core protocol to help with that transition so there's a link in the show notes this is for all the devs out there that they want you to check out as their proposed way to move forward into the transition for smart contract wallets it needs to be a unified standard so that we can all agree that this is a standard that we

move forward for it's unopinionated and they think that it is the right place to go so if you are a Dev working in the world of wallets there's a link in the show notes and they also have a hackathon a Dev uh Dev another thing for the devs they have a hackathon in early September for people who want to build on this platform so there's a link in the show notes to get started with that David as we get in this episode with with Vance I know he's one of our uh you know one of our favorite marketing commentaries has a really sharp sense of you know when the Cycles begin when they end and so I really want to get a sense of what he's uh looking at right now what some of the narratives he's looking at are I know we've talked in the

roll-up a little bit about you and uh preparing your your bull market station yes I think what you call it I think this for me will be an episode to start exploring kind of what the bull market narratives might be and that is an important component I would imagine of the bull market battle station what what do you think listeners should should know going to this episode in the coming out of it yeah I think that's right I think generally the sentiment on crypto is that there is a bull market afoot it's not here yet and we're but we're getting whiffs of it on on in the air we're smelling it so that was either yeah right uh and so like but there's a bunch of narratives as to what it could

be we're starting to get a Direction but we still haven't found the source the source of the smell the source of the bull market and so I think this is kind of the state of crypto Twitter is like there's all these different narratives some of them multiple narratives might also might be correct some of them might be wrong and since we are you know preparing ourselves for this potential bull market we need to try and figure out where the source of all the smell is and so that is what we're doing here today on the show we're just going to be smelling our way through this episode guys we'll be we'll be right back in just a moment but before we do we want to thank the sponsors who made this episode possible including our number one recommended crypto exchange Kraken go check him out Kraken Pro has easily

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ring a bell these tokens were generally massive contrarian bets after the Ico Mania of 2017 turned everyone off of tokens today we're bringing Vance back onto the show because of smell s-m-e-l-l not an odor but instead five different assets the Fang of crypto is the question we are asking we're going to run through each one of these talk about the merits of each and also some other bull market narratives that is running around the current crypto Vance welcome back to bankless thanks for having me good to be back yeah so let's start with the current narrative that's running around which is which is a social Phi uh because we got to get this one out of the way before we get into smell social fight uh friend Tech is now sweeping through crypto starting to poke through to mainstream

maybe overall like even if I I don't think anyone really thinks that friends specifically is the app that's going to take crypto mainstream maybe you disagree but overall like what are your learning lessons your big takeaways from this whole friend phenomenon that's going on yeah I mean first of all you never know these things are uh like the stuff that looks like a toy oftentimes ends up being really powerful and I was on Instagram this morning and this influencer that I follow was like all about their friend Tech shares and this is someone who hasn't been involved really in crypto since the last Bull Run and let's just pause because what that entails is they actually have to do some fairly sophisticated crypto native stuff to get their their eth assets on the

other side right they have yeah their Shares are I guess keys are trading now so they've done oh wow yeah and uh I actually you know we we invested in bit cloud and it you know I don't think it worked I think it's okay to say that um but I I thought it was an interesting idea in terms of you know how do you kind of unify the Creator economy with a lot of the fungible token action that we saw on chain and um I I don't think the question is like can and I said this before it's like it's not like can you build it it's like can you kind of can you find a legal framework that you can fit it into where you know you don't get taken to the cleaners by Regulators immediately and I

don't think changing shares to Keys is is probably enough but the context for the bankless listeners friends dot Tech used to call them shares because you're buying shares in your friends uh this last weekend they rebranded to Keys oh my God I totally missed that yeah so they can only imagine why yeah no longer called chairs um but like I I really am a fan of the dev team racer and and I forget the other uh woman's name but I think they're you know in crypto for the right reasons I like them a lot um and if people remember they they built steel cam which was a consumer app that was around I think earlier this year um so maybe they weren't expecting this

to catch far like it has but it certainly did and I think now the question is like how do you expose facto kind of stick handle your way around the obstacles that exist so you can make this interesting but I think there's a path like you know this influencer on Instagram that I saw you know they were telling their friends and like one thing leads to another I don't know so what's the concern here from a regulatory am I just seeing the obvious by saying that Gary Gensler would would maybe think of all of these um these humans trading shares and everything's a security I mean it's hard for me to um say that because like Gary just seems to think everything's a security so of course I mean I it's not even clear to me whether like he knows of Pokemon cards if they're like instantiated as an erc20

are a security or not is this the main concern that this is going to run afoul of sort of uh SEC as a regulatory body is that what you're inferring here advance I think that's the question I'm not a lawyer so I don't know the answer but um you know there used to be a uh a market for the secondary or take to trade shares and athletes so like you get like a percentage of their contract and that was like highly regulated and existed on a traditional exchange um and so there's like precedent here but I'm I'm just they obviously think that they have a workable framework I think people on Twitter you know there's opposing views I think the question is who's right and you know doesn't matter I think this

conversation as to whether or not these things are like should be considered and categorized as Financial assets that need to be regulated it's part and parcel with this other half of crypto Twitter that's kind of taking a more resentment stance towards friends saying like great our the breakout consumer application that we have is a Ponzi game that allows us to you know financialize our friends and speculate on them and great this is clearly our breakout apps are all ponzis Ponzi games not Ponzi schemes and so like there's this growing resentment out of you know a decent portion of of the crypto landscape is that we can't actually make any application that's not about speculation and financialization and uh something that kind of results gambling gambling

yeah what was your take about that speculation in financialization are okay they're not evil in and of themselves um I think if you think about the definition of a Ponzi scheme it's literally something that is financially unsustainable by Design these are not Ponzi schemes these are just tokenizing shares of a person and if they go up down or sideways there's no perpetual motion machine that someone's trying to create and you know if if we could live in a if we lived on a small island together where we could set the rules you know I think this would be something that would be okay with me I I think it's something that creators want you know their alternatives are are selling like you know coffee scrubs or like sugar bear hair you know vitamins for people to regrow their hair it's it like

the options for creators to monetize themselves are actually really shitty honestly um and I think if you got a way for people to incentivize a community and also pay them fairly for what they've contributed or a way to transact with the Creator directly they would want that and so I don't think it's morally wrong or the speculation is inherently bad I think we're bootstrapping an economy and painting everything with a wide brush is is one way to just kind of like delegitimize the crypto industry and I see that people are trying to do that and I think it's okay to push back because this is not that frankly yeah maybe asking kind of another case so I tuned this out last night and I said you know is is friends.tech good for crypto bad for crypto and good for crypto divided it was it was 50 it was not

divided my yeah you are not divided but in my uh Twitter followers which obviously skew heavily crypto is 55 to 45. wow uh and uh 55 yes so by some margin but not a lot and 45 no and I think this comes from the back advance of like um you know 2022 which felt like there were a lot of um short-term type games we don't even have to instantiate the you know the p word for that the Ponzi word for that just short-term games uh being played um you know so people look at this and they see a bunch of like crypto Elites getting rich again look at them influencers like making all of this money maybe there's some resentment there maybe there's like a sense of and I got left behind I think more broadly it's um to some people in crypto it

feels like straying from the mission like I thought you were here to revolutionize Finance I thought you were here to um Bank the unbanked I thought this was about like a global permissionless money system now here you are stuck you know on on kind of like this this tourist trap and you're back to your like jpeg selling Shenanigans again of speculating on like share and so even within the the settlers who are still here right there's like this sense that yeah um I don't like where this is going this is not where I signed up for and you could tell them you could say well then just ignore it just opt out you don't have to do it like whatever but um I think there's some worry that the I guess the social layer of crypto is it gets kind of corrupted by these

short-term uh games and this kind of Shilling and or at least in or maybe we we get off Mission off focus what do you think about this I think uh I think I generally think people like to rewrite history in crypto um and like what provokes the immune response from like you know crypto Twitter to immediately seize on this thing and throw it out the window I I can't say exactly what it is but I think it has something to do with uh we are now going into a territory that has historically not been crypto's domain like we're trying to onboard influencers and entertainers and people who are not just the crypto Twitter set onto this and I think that's a noble Mission and it's okay to be upset as well but I do

think ultimately expanding the pie is good for everyone this is also one of 10 concurrent narratives that we have today and like is it my favorite it's not you know it's I don't think it's like the most interesting I don't think it's going to scale the most um but I think it's really awesome that entrepreneurs are taking shots on things that are you know difficult to understand complex to build and difficult to navigate from the regulatory perspective so I don't know I'm never gonna really uh you know take a poor view of an entrepreneur for pushing the envelope I just think people need to if they don't like it just focus on something else life is too short to be upset I think one of the most fascinating things about this will be sort of any regulatory reaction to this because this will be kind of like an

acid test right and so if the U.S uh bans this or does something quite drastic won't it just move off shore where these these types of um you know laws this these Securities laws don't exist I don't know I I think that's going to like force the question even more of like what is an actual security and what's not and if you tokenize something at what point does it become security so I'm actually kind of bullish about this as an acid test for answering some of those questions I mean does the SEC really want to be in the business of like regular like painstakingly regulating all of these influencer tokens like is that what they want to be

spending their time doing are they equipped for that um I I like it from that perspective too as only the crypto industry is adding to the conversation the regulatory angle about friend shares the SEC hasn't done anything that's true you wait for the video though David it's coming maybe it has already moved offshore it's a it's a very like U.S condition that all the people who I've seen backlash against this are us-based and they say no it's a security we can't have that it's over it's like well maybe it's our like do you know where Racer the anime girl on Twitter who's Twitter account is locked in private do you know where he she or they live maybe it's in a country where this is allowed

I think it's more of a decision on on a per I guess key basis for each person where are you based sure yeah okay so this is one of many narratives that that we need to get through on this show so Vance let's wrap let's wrap this one up Social Phi which is what people are calling this what are your big takeaways and learning lessons from this friends movement like what what are you now thinking of that you weren't thinking of maybe two weeks ago um honestly it's a continuation of the recovery continued interest and continued experimentation of crypto I think that was the thing that I was looking for is like you know when are we going to really get that

I guess it might have been kind of like the nft the big clap moment where we start spreading our tentacles outside of like you know the Winter's cave that we've built for ourselves and I think that's basically now you know with Bass with this like you have enough side it's starting to happen games are going to come soon I think it's just a continuation of a positive trend that's happened since probably November of last year I can't believe it's it's been 10 months FTX blew up it's crazy but it's like we've made more progress and we're a better place than I would have expected at that point in time okay so you're a your big takeaway is that it's a strong plus one to the idea that appetite is returning yeah oh yeah it for sure it is if you hate it or love it it's just it's a fact

what do you guys think of this Progressive web app thing this bypassing of the app store is that significant to you do you think that's a model that will be replicated and useful for us I think so many people are are affected so there's two advantages right you can pin a app to your home page on your phone um that's one and the second is historically the problem with getting crypto on Apple or on iOS has been that if you're on the App Store you owe 30 to Tim Apple um and that's just really hard if you are selling digital goods for a variety of reasons let alone like what happens when it's a secondary Market transaction with this you can use Apple pay outside the confines of the IOS app store and you don't have to pay that tax so

like expect people to move more and more towards this model as as a mobile first Paradigm where we don't actually have to deal with the app store which is super bullish you know it's the tax it's also that asking for permission it's also the gatekeeping I remember when unit swap we were talking about their wallet and it took them I don't know like 10 months a year to like get to the permissions process to actually get listed in the App Store and so you could bypass this I mean I was amazed at how fast friend.tech was spun up and it was pretty clunky I mean let's be honest like the ux is just like lacking but they were able to do this because they didn't have to ask for permission and go through like a month-long process of getting listed

it's awesome okay Vance let's get into uh the Fang of defy smell we're gonna go through each one of these tokens just so because I actually have not actually heard which tokens are which I can you know speculate I can guess but I actually don't know I don't know if it's ever been uttered before or what what tokens correspond to what letter but before we get into the specifics what makes you think that we are actually in a place where we can have a Fang of defy because a Fang implies some sort of you know lasting power it's not going to go away it's a pretty pretty stable Foundation why do you think that we have a Fang of defy in the year 2023 yep so before I before I get into that couple disclaimers number one um when I talk about these uh

when I talk about smell I'm talking about the actual products not necessarily the tokens um not Financial advice not talking about token price and the last disclosures we own all of these tokens um so smell in my mind was uh an exercise in coming up with okay you know bomb went off in July and November of last year and basically everything was just completely decimated the hundreds of uniswap copycats the hundreds of stable coins that shouldn't have existed but you know amidst all the wreckage of that you did see that there were a lot of protocols that frankly were generating earnings they had real traction their networks were picking up

an activity um and I think you know if you look at the.com bust of 2000 you know what happened to the NASDAQ was very different than what happened to individual stocks in terms of the NASDAQ just absolutely got crushed there was so much vaporware out there that basically you know it weighed down the index for years but if you looked into the internals you saw things like Amazon you had the Google IPO in 2003 you know there were enough companies with enough fundamentals where that led the new meta and it led the Reconstruction of the industry and and that's basically what I think is going to happen here and you know there's amazing projects that are not in smell it's not to disparage them but I think in my mind that is you know our core portfolio in terms of like what

do we think is going to be really from a from a fundamental perspective an attraction perspective valuable um and so you know smell is synthetics maker ethereum Lido link um and you know that that's it that that's that smell and and we can go through each of them but I gotta asked did you come up with the acronym first or the company or the projects first so one uh I came up with the companies first and then I rearranged all the letters enough times where I was like you know there's only one comedy smell was the best you could do huh um and we can go through each of them but I think you know there's there's a sense

in my mind that these are the companies that have the enduring Advantage the talent the traction um and they're gonna kind of lead us out of the bull market and or out of the bear market in terms of just having products that work at scale sure yeah so let's let's go through each one because I think each one provides its lessons to uh the crypto world so starting with synthetics right uh framework already you had a big win with synthetic synthetics coming out of 2017 to into the 2020 uh bull market why uh 2021 bull market so why why synthetic so what signal did synthetics provide you when you said that a bomb went off twice in 2022 what signals was synthetics giving you that it was going to be able

to make it the the main one is just frankly the Reformation of this new team around the product and you know synthetics was something that always kind of had fits and starts a product Market fit Kane is an amazing entrepreneur he took some time off last year just he was just frankly burnt out and this is public knowledge but you know he came back he's re-energized they have this amazing new core talented team they launched perps uh they launched V 2.5 and they're about to launch V3 and really V3 is a culmination of the effectively since I've been involved with synthetics all the learnings all the products that we've wanted to build and you can see it in the traction you know they're doing 500 million dollar days they've got

tens of front ends probably a hundred at some point this cycle and if you look at you know last week there was like a million two in fee income and it was just people getting blown out liquidated playing paying funding rates and you know one of the worst days of the year in terms of price action was as a and I think we're one of the larger stakers was our most profitable and if you annualize what they're doing you know it basically equates to about 50 to 60 million of earnings that go directly back to token holders and like there's the you know Finding product Market fit part there's the creating value part and then there's the capturing value part and synthetics has done all of those and if you didn't know anything about crypto and you were dropped in the middle of it

and told to point to the profit centers you'd point to binance and you point all their perps markets so if we can get one percent of that I'm gonna be very very happy with where synthetics is and infinix which is Kane's you know new kind of like quasi-centralized Exchange that's just going to be another Boon to the volume and so I think it's a pretty clear story and frankly all the other purpose companies have died for the most part so there's a lack of competition maybe as we go through all of this smell s-m-e-l-l um one one question I have to maybe help frame this thing is that we have a successful app successful protocol teams right each one is we're going to talk about each one and but the way that you've selected them like perps and you know synthetic Assets in of itself is

also just a fundamental vertical that exists in crypto and so there's one part is like if we have you know five different teams that we're going to talk about each one is you know being successful that's why we're talking about them but then there's also the value landscape that exists irrespective of the these teams and I think synthetics you're saying is it's a successful team for all the reasons that you just articulated and it's building entire inside of this very valuable landscape called like synthetic assets and and perps is that like kind of a model for how we should think about these things because we're about to talk about maker and decentralized stable coins which you know another big valuable vertical in this crypto world is that kind of how we should think about these things as we go forward yeah so the the things that I would I

would keep in mind in terms of the two pieces of context that underlie all of these is that number one these are crypto endogenous markets like we don't need to create anything new the cash flow already exists it just happens to sit inside the centralized exchanges um and so that's the first one and the second one is we're riding a Tailwind that already exists in terms of the transition from centralized to decentralized and if you look at last month it was 40 percent 40 dexa did 40 the volume of centralized exchanges you swap did more volume than coinbase so like it's already happening I'm not like Reinventing the wheel I'm just lucky to be able to ride with these entrepreneurs and protocols to the promised land so the last thing I'll say is

there are basically 2022 is brutal all other protocol teams you know uh uniswap clones derivatives clones stablecoin clones They're All Dead so like you now have number one incumbents in each of these categories that are poised to just compound their advantage and that's another theme that we can keep talking about yeah the the number one rule of cryptos uh do not die do not get washed out stay in the game right and so uh if you're still in the game at this point in time uh you're doing well all right so that's the S how about the the M we got uh maker I think you said tell us about why is maker in the smell acronym

M for maker is is a is a new one for us fairly recent um we've been in D5 forever we hadn't held maker in Forever um just because we didn't really understand the stablecoin model in an era of low interest rates um we thought the expenses were a bit out of control but you know roon is is an interesting really singular figure and I was always kind of like interested in in kind of like his leadership of the project and you know I think people have you know personal views on whether it's like too much leadership or like not enough but like those to me are like personal issues and like this is like just it's just like investing it's just business for me at least um and so I think when I first came

around to make her was just reading endgame and it was it was very bizarre like everyone read endgame and I think people's the most of the reactions I heard were like this is absurd AI for governance having a separate token you know rebranding redenomination all this stuff but to me it just encapsulated a lot of what I was feeling in terms of like what are the lessons of the last cycle you know like it's it's it's uh it's redenomination rebranding is a good way to restart you know they have all this usdc and the PSM if they can redeploy it into treasuries that can be a base of 150 million of Revenue that they can build on um you know the sub-dials having the allocator model that makes a lot of sense to me you know spinning out those

things that maker can focus on just being a really cohesive core unit that's basically a central bank and and so like you know all of those things um were really good indications to me that maker was turning itself around but also like I you know I've I've been historically disillusioned with with central banks and and and that type of thing and just this felt like an opportunity to create a decentralized central bank um and I thought that was just fascinating and I think endgame is the right way to get there so you know those are things which I really like it has you know I think a hundred and fifty or 60 million of Revenue today earnings are probably 80 annualized Revenue that's annualized revenue and I think it's just going to keep scaling as they deploy more of the PSM into

treasuries but also they're they're lending business ramps up and they're they're ramping interest rates so that'll go up um and sub Dows are super interesting in my opinion like I want to go far on them I want to go figure out what's going on I want to go participate in in these new you know governance experiments and I think it's a really hopeful view of crypto that I like and I like that about what roon is saying and you know I've never met him um but just from what I can understand like it's it's just the right direction so you know it's uh that and a lot of the capitulation around the token has got me pretty excited um I think when you know the best time to buy something is when nobody believes but you have to know why and there's

there's the why it's Don chain it exists you can go read it um and I think it's it's just really interesting it's it's the first D5 protocol that'll probably hit 100 million of earnings and that's just like fascinating to me it's interesting to me because like maker is the OG of OG protocols like maker was the defy app that got me into this space got me actually before we started yeah before we called it D5 and they're definitely pushing the frontier of like governance right they're stretching the governance thing as far as they can you got kind of The Narrative of real world assets and and that sort of thing not once in your description uh Vance did you mention stable coins like die that's actual products that they're creating does that matter Less in this world or is is die still important I mean you were talking

about um this is sort of a central bank I guess maybe in implied there is is a stable coin but it I think the narrative right now is that um basically you know PayPal is going to come up with their their centralized stable coin and you've got usdc and you've got tether and you have the fall of the algo stable coins and like you know people aren't as excited about die as they once were back in the era of like 2017 2018. um what's your take there is that a a factor in this project uh uh I mean tether is a really bad stable coin for us as an industry to embrace in my opinion um it also doesn't have a lot of the utility of something

like die where you can stake it and earn yield through the DSR you can go farm with it in sub-dials you can go Finance you know bridged and construction loans like they already do like there's a lot of things you can do with that don't doesn't exist today and non-stable coin dye Supply bottomed at one billion in November 2022. like that was a point where I think you could as a rational person say that this might die die might die whatever but now it's like you know funny whatever so now it's like a billion it's grown 5X and so like there's a recovery underfoot and the question is where does it top out where do makers business model is very simple how much dye is there what is the interest rate that they're

earning on it I think dye is going to go from about 5 billion today to probably about 15 to 20 billion in in the next you know few years and I think rates on that are probably going to be around where treasury bills are and say that's like you know four to five percent you know 20 billion times five percent is a billion in earnings you know and the DSR will have to be taken out of there and we'll see where that lands but like wow what an incredible different project and and like I don't think of it I guess it is a stable coin I think of it more as like a central bank but I think the hope is that we can actually like fix the money and help fix the industry so I think the mission is Noble as well and you know

redenomination is one hell of a drug frankly like if you I remember when Aunt shares rebranded to Neo that's like super OG you know that's like Chinese crypto people probably are not with me on that one but um like you can really reform communities around this stuff and if you have a new brand and I'm excited to see what that is like I think there's a lot to be excited about and you know if you if you lose money on vaporware you feel stupid um but if you buy things with fundamentals and in my view I can sleep a lot better at night the inclusion of maker in what we are calling the Fang of defy and yes like loosely held that's still in the early days of course but that's to say that dye is the stable coin that's won the

stable coin Wars there's you know massive stablecoin Wars that have existed both in the centralized and decentralized Landscape so are you saying that do you think that maker has actually won the decentralized stable coin worth it's earned that Throne oh I think I think it's gonna I think the wars are gonna get so intense in the next 12 to 24 months why would you hold usdc if you can go stake die in the DSR and earn yield you know and so like the addressable market for that trade is circles market cap or usdc's market cap which is like 25 billion so like I'm not just pulling this like 20 billion number out of my ass like there's there's real um you know sub-dials are going to add more diet uh demand uh the DSR is going to

add more die demand um all the different projects that are in the maker ecosystem but also just like people want a better stable coin I have that distinct sense and so I think both sides of the usdc eth pairing and I tweeted this are going to turn to be focused about yield why would you at LP not be doing s die and wrap stake teeth in a pair on uniswap what's the point of LP if you're not maximizing your yield maybe there's something else that I'm missing but you know I think there's going to be a lot of momentum there beautiful should we move on all right the E is the E is uh I don't know if we need to really unpack this one too much he is ether yeah okay I I think um

for me the reason why I I think eth is just so interesting is because I mean there's a few things um number one it's just it's such a unique Network you know it passes uh you know 20 of the fees to etholders it burns the rest um it has this web of L2 model and I think everyone was waiting for Cosmos to play out with this model in mind and it just happened to have played out on Ethan I'm talking to Cosmos teams that are moving to youth now just saying like we've trudged up this hill we've tried to get our validators going but it's just easier to launch an L2 um and I I think you know the demand that sticky to ethyl one is the D5 it's the high quality nfts that's not going anywhere I'm not moving my money on any

Bridge absolutely not um and so like you have defensibility you have this web of chains playing out but you also have just like ethos the super unique asset for the network and like all friend Tech Shares are priced in ether I guess keys or Price underneath you know all of the interesting you know bridged pairs are are as well it's just like the language it's the asset of just I don't know the it's speculation but also just like this digital world and digital economy that we're building on chain um and I think that's really cool so I I don't know there's not much to to say about eth other than its Network effects are compounding the multi-chain thesis has gotten worse not better um and if you talk to all the Trad five

people they're they're it's like it's like you know they're not putting anything anywhere unless it has nuclear grade censorship resistant guarantees and that's what eth is and so like all the real world assets that you see those are going to eth and those are just going to keep increasing and that's like one of our core Theses for eth going forward is all of the tokenized stocks bonds assets that exist or that don't exist yet those are going to go on eth and if you look at the the dashboard of real world assets there's about 680 million they're growing 30 per month um and so you're probably looking at like 10 billion of fixed income on chain at some point next year and so that's going to be a huge Boon each cycle eth just swallows more real world assets last cycle it was stable

coins the cycle it's going to be fixed income maybe in 10 years it'll be you know some crazy ETFs that that we don't you don't even know about yet but you know you said um that the the the institutions out there the big money the outside players who are coming in to allocate that they really value censorship resistance why why is that can you just unpack that conversation what is the Trad conversation around ethi asset and ethereum than your network like I think the conversation is pretty simple it comes from a place of you're telling me I can lower my costs I can increase or I can decrease my settlement times I can offer my product to more people if I put it on chain okay that's that's the pro side the con side is

what happens if the chain goes down what happens if eth is a or if the underlying token is the security what happens if someone steals my token somehow it's all the same questions that you think you'd get from normies but they're like 10 times more loud just because these people have real money at risk and so eth is you know it's like uh you know are you going to host your company's website on AWS or like some new startup uh you know uh AWS competitor like you're always just going to choose AWS there's no risk that you can take that would make it worth it for you to go with some other you know platform so that's the youth effect basically part of the the implication I'm wondering if if this is true so with

with Fang right you have sort of the the Fang tech stocks and they're all somewhat on an equal footing you know they're they're all tech companies um you you have eth in the middle of a set of um defy assets yeah essentially apps right and so sort of like the bankless idea would be that um no actually eth is is not side by side these other sort of defy applications it's even more important it's like base level it's almost like buying you know a NASDAQ index it's an index of all of them or it's almost like you know betting on uh Silicon Valley or like you know uh the nation state of uh the the us or something like this and and I'm

wondering if you see it that way as well or if you treat this as it's you know it's kind of similar to synthetics or maker link or you know Lido and the other assets do you give it any special status I mean like is it a unit of denominator eth has special status for us and it also has you know turbo special status in terms of our portfolio waiting but you know I mean your point is right you know everyone's bridging assets to eth whether it's roll bit whether it's DMT from senko game Corp like everyone wants liquidity the profile it's the main stage of Finance this is where you want to be and it's the same thing on the L2 side you know everyone is creating an Ethel too if it's a game you need your own L2 there's I saw a real world asset

L2 I saw like I've seen so many I think one of my questions is how many l2s are there going to be is it going to be I think I think like earlier in the year was my mind was hundreds now it seems like probably thousands and it's like you know thousands of l2s each one paying e-stakers one eighth per day and that's like a super weird interesting economic model that doesn't exist anywhere except for crypto and so I I think you know eth is super well positioned you definitely need the e in order to make smell though the acronym so that's why it has to be in the video here exactly all right moving on to our first L uh does Lido or link come first and does that matter a lot it does matter Lotto comes first why does Lotto

come first uh it doesn't actually matter but uh um I mean Lotto is just uh first of all the team is just incredible like Constantine haasu all the guys in the telegram you know seraphim like all those dudes like they're just firing on all cylinders they just hit 8.3 million each today and they've had like 50 60 000 East input days which is just wild to see and you can see it on chain and there's a really good dashboard on Dune it's just Lido Finance extended if you want to keep score at home but you know let's say I think at the end of the year when we when we bought Lido last year

my expectation was that by the end of this year they would hit 10 million in each staked I think they're they're on board they're on track to hit or exceed that and so like you know check mark um end of next year maybe it's 15 maybe it's 20. either way they are the dominant LST provider and on their Tech roadmap it's DVT it's staking modules it's effectively decentralizing it and making it more and not less eathlon and I think that was always one of the existential threats is like with the EF just like tell everyone to go home at some point and I don't know how they would do that but I don't think they want to anymore um and so my hope is that you know people like swell people um like rocket pool people you know like

figment eventually they just become node operators on Lido and it becomes less about like this like one monopolizing factor and more about we've created this platform for everyone to run nodes on safely so we can make the cost and the overhead of running ethnodes as low as humanly possible um and I think that's a really Noble Mission I think it's really Ethan I think it's really you know personally aligned um and you can you can do the math you know let's say that Lido has 20 million ethernet staked at the end of next year and let's say you know just for all intents and purposes that the price of eth is five thousand whatever new all-time highs so they would have a hundred billion in tvl let's say a yields are five five

percent they have five percent or they have five billion in yields flowing through them and they take a 10 cut of that which is 500 million wow what an amazing business you know lever to eat super unique super defensible steath has its own network effects because it's money it's used in D5 it'll soon replace all the lp pairs just like wow that doesn't exist anywhere else so I think it's really interesting how do you think the feed Dynamics play out though is my big question here because we have we have another like we had the stablecoin wars now we have the LST Wars liquids taking token Wars uh I mean everyone everyone wants to be the winner everyone wants to be the Monopoly uh everything like that's on the if you

are an LST you want to be the dominant LST uh and so the thought is that all the fees just compressed to zero and even under the model of uh okay everything just fits under the Lido umbrella with all their staking modules how do you think about the fee Dynamics playing out over the long term here sure so just to lay it out for everyone coinbase charge is 25 on CBE rocket pool charges about 12 on um uh our eth uh frax is similar to wreath uh swell is similar to wreath when it's you know done with its incentive period but like the cost factor that is most predominant for the staking Riders is how do you pay

your node operators like there's a cost to running nodes and if you don't have good quality nodes with good quality operators the worst thing is going to happen which is you get slashed and you lose your ease and so like the price and let me go even further if you look at the centralized taking providers coinbase you know figment places like that they're like a seven to nine percent fee so there's not like there's some like external Force saying like we can do it for so much cheaper it's like that is the rate like we've kind of already competed with each other down and what fees are going to be um and if you think about you know uh the really small subscale operators like the new startups uh and we're we're investors in a lot of them

there's a certain point where you can't actually pay your node operators correctly if you're subscale and I think subscale in my mind is like anything less than a million eth so a lot of these people are going to face you know cost pressures in terms of like how do we pay our node operators effectively while keeping some margin for ourselves and I think long term the answer for that is that a lot of them build on Lido's DBT and staking module platform the nodes are already there you can already Source them you can compete with each other for fees if you want it's going to be a Marketplace and that's how cost pressure to come down in terms of you know where where are node operators today with the with the you know it's a 10 fee for lotto five goes to the Dow five goes to node

operators known operators are running probably like a 20 30 35 margin business like there's not that much room to cut and keep them high quality say say the price of Youth goes to 10K they probably shouldn't get five and five you know half of the total fee split they're gonna be running hugely profitable businesses at that point that makes no sense um and so like you know as the price goes higher I think the share capture by the Dow probably goes higher but I don't see any real aggregate cost pressures coming I just don't think it would be safe yeah yeah I learned a lot just there um let's move on to link time for the last l

link why does link get to be a part of a smell I mean perennially disrespected you know people don't take it seriously people think it's a joke whatever the fact is is that most of D5 relies on chain link oracles and if they were to rip out tomorrow a lot of it would fail and they finally launched ccip which is incredible it's a cross chain messaging protocol so you can you know borrow one one lend on another you can you know cross-collateralize derivatives transactions whatever you want you can build um and so it finally has this economic model which is frankly I've been holding chain link since man I guess it's been like six six or seven years now but uh

uh they finally have an economic model which was always kind of what bothered me it's like when is staking gonna come when is this thing Gonna Act look or feel like a L1 blockchain that has some security guarantees and now it does and so that's very positive and they've already got all the oracles integrated it's just a question of like what else can they sell is it cross-chain messaging is it asset transfer is it random number generation like they've got a lot of products in there and so I think you know Lake Marines are amazing as well don't don't count them out ever oh they harass us they harass us a lot they're gonna harass us now good good oh don't encourage them makes you grind harder okay so here here and here's why because like I at least from my opinion as to

like why I get scared about link is exactly what you said like if Lincoln goes down until the chain link goes down like all of D5 collapses that scares me and I actually don't want that to be the state of things I think that we should be more resilient than that and so I would like to have some sort of bottom-up more emergent solution to some like top-down Heroes the state of all prices Oracle provider and so that's why I get scared of Link I'm I I think it's okay to be scared I get scared sometimes but I I think it's I mean I don't know like I'm not I would never self-delude myself into thinking that it had an economically secure model and that was the scariest time for me it's like in

the last Bull Run we run chain-like nodes we're just getting paid chain link you know how like we didn't have to stake like how does this work now it's much different and I think we have reasons to be optimistic about you know why it's going to provide a more secure backbone for defy um but also do a bunch of other things outside of oracles and I think everyone should use uni swap oracles as a you know range bound indicator of like our channel coracle is correct uh but it's it's oracles are so hard you know there's no answer it's just like hopefully a bunch of them combined can do something you know better than the status quo and I think chain link is moving in a positive direction to make everything more safe which is good

so for me just one observation and then I have a question for you Vance so my observation is this when you mention the age of like link tokens and how long you've been holding it struck me that like damn these are some old tokens this is some uh Boomer D5 if I may say so myself so we've got synthetics we've got maker we've got link uh Lido is the only kind of newer kid on the Block but this is some like defy 1.0 stuff that you are advocating here so that's my uh comment and then my question is um but what about and I know when you're talking about the projects and not the

tokens themselves but now it's our time to kind of inject the you know like the token question all of these assets I haven't really looked at um the charts of independent assets but like I'll tell you directionally we all know they've all uh disintegrated uh as denominated in ether so my question is you might be bullish on all of these things and you've given a compelling case as to why why would you be more bullish on these things than just holding ether so how about rather than the smell portfolio the E portfolio which is just like just a whole bunch of ether and that's been kind of the problem of I I feel like D5 tokens in general I mean look at maker it's just flat for the last five years

and probably down substantially as denominated in ether can you uh shade in that part of the story look I can't get too much into token prices as you guys know um so I don't want to disappoint too much the thing I will say is I see a lot of Twitter commentary about you know this asset is never going to break its all-time high in terms of ether it's like well yeah no it's down 95 relatively you know it was not recoverable well it's like it would take like you know it would take a 20x gain against the youth pair for it to you know break its all-time high but like if it like it can go up 3x versus youth with and still be down 70 against it

and in that scenario you know you've three or four x your youth um and so like I don't know the myopic uh you know it'll never break its all-time high again see it's I don't think that's what you're saying directly but I do see that said a lot and it's just entirely misses the point of relative performance um and I think you know smell is just a way of expressing like there's a lot of different things that are going on that are really positive in crypto it happens to be mostly around the incumbents defy 1.0 dinosaur coins as you might have said as you might have kind of uh alluded to but I think uh last cycle was very VC driven you know we invented this thing Solana

you know in the last full Market or in the last bear market and you know it's it just happens to be ready or like uh dfinity and these charts are just tragedies like they just they you know the holders of these things the private holders just sold them into retail and just absolutely eviscerated them I think it's actually cool that we have the dinosaur coins that have real fundamentals that are have been up 100 accent down 99 and are now kind of back from a fundamentals perspective and you have enough price discovery that it's not like you know there's some guy waiting around the corner to sell his tokens into you it's more fair and I like that as well can we call this episode smelly dinosaur coins please okay so I think the most interesting thing

about smell is actually what's not there um I would notice if we're talking about dinosaur coins where's uniswap uh and that will also open up the can of worms that is the fee switch conversation which is not just for uniswap I think that's a conversation for many many D5 tokens out there that are also call themselves governance tokens so these conversations and more coming up right after we talk to some of these fantastic sponsors that make the show possible are you a metamask user well you're listening to bank lists so of course you are the wallet you know and love just got a whole lot better metamask portfolio is the ultimate One-Stop shop for all of your crypto needs it gives you a holistic view of your crypto portfolio across multiple chains and multiple addresses all at once you can easily View and manage all your coins

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world's largest decentralized exchange with over 1.4 trillion dollars in trading volume you know this because we talk about it endlessly on Bank lists it's you to swap but uniswap is becoming so much more uniswap Labs just released the uniswap mobile wallet for iOS the newest easiest way to trade tokens on the go with a uniswap wallet you can easily create or import a new wallet buy crypto on any available exchange with your debit card with extremely low Fiat on-ramp fees and you can seamlessly swap on mainnet polygon arbitrarm and optimism on the uniswap mobile wallet you can store and display your beautiful nfts and you can also explore web3 with the in-app search features Market leaderboards and price charts or use wallet connect to connect to any web3 application so you can now go directly

to D5 with uniswap Mobile Wallet safe simple custody from the most trusted team in D5 download the uniswap wallet today on iOS there is a link in the show notes and we're back rounding out this smelly conversation with why it's not a small e conversation with EU God I hate myself for these funds Advanced uh uniswap where does uniswap land in your register and why I didn't end up in the smell index smell portfolio could have been smell you didn't update you but uh so I I think you know one of the themes of smell is that there's just such strong moats around all these synthetics it's the front end maker it's the actual die stable coin ethereum it's it's just the network of chains and the lindiness

of defying nfts steath is a network effect because it's money and Link is just because like nobody's gonna rip out their oracles there's just no shot we've people tried to unit swap is different it's uh I think probably the most vulnerable to disruption in terms of payment forward or flow models and you saw Bex is a move in that direction um you know private order flow being sold through a different venue um there's going to be a lot of that that feels like the central difference between this cycle and the last is that we now have a bunch of these more sophisticated Financial protocols you know companies that are starting to build payment Florida flow on chain and I just don't know how uniswap is going to compete with that

you just swap X is also in my mind just a different direction for the protocol that probably doesn't have as much of a connotation around the token as you know I would like and so you know like I think if there was to be an addition it would be probably uniswap um but right now I just I don't have the confidence that uh they're gonna fend off uh all the payment for the flow that's coming on chain okay so say I'm uniswap and I aspire to be a part of Vance's smell index to turn it into the smell you what do I need to do like how do I how do I pledge the the index the smell index what do I need to get there do to get there um

there's a lot of stuff you know it's like where's the team based it's still the US that's tough um you know what what does the protocol look like in the face of payment order flow frankly we're only going to know once like uniswap X really launches and you need before um and so I think it's just time and like I just one other common theme of all of these of smell and and also I guess uniswap is that everyone has a plan synthetics it's V3 maker it's end game ethereum it's the scaling roadmap Lido it's you know DVT and V2 chain link it's ccip like they all have like an answer for like where are we going you just saw but it feels more ambiguous um and you know there's the company

there's the token like hula Cruise what why those are unanswered questions for me so you know love uniswap I use uniswap a lot but just didn't make it guys you guys are missing a tremendous opportunity it's not smell you it would be you smell okay yeah [Laughter] and then and then if uh if if Solana really pans out I think I reserve the right to append that to you know or it smells smells you smells I don't know we'll see it's a it's a Solana potential Contender here I think it's I think it's interesting I think it's a model for a chain which doesn't involve 100 l2s I think you could argue the l2s are like leaking value from ethyl one you could also

argue that they're doing things ethyl one could never do Solana it feels like those two things are simpatico so I I think it's interesting and if you look at teams like Judo that are just showing up in an environment that's just a Barren Wasteland and like just eating glass all day every day that just feels like it doesn't matter what chain you're on if you do that long enough you're going to be successful I've never heard you say such good things about Salon events that's uh that's new that's interesting I'm I'm I I have ideology around crypto and I think it's Noble and important and I want to be in this industry for the rest of my life but I'm open to new things I'm not myopic yeah yeah sure I share these sentiments really just to hammer out this last little bit about the

uniswap uh fee switch how do you think about fee switches uh they're off generally but they could be on is that like how do you even think about and consider this when you make a evaluation on a token I think there's going to be an amazing time to turn the fee switch on um when regulatory Clarity arrives in the United States and I don't think that day is too far off um but I don't think that day is today either so that's the main calculus it's like political and I really hate thinking about politics in the context of like investing I like thinking about it in the aggregate because I find it fascinating but I I just I can't bet on things that have political you know connotations to them so van says we close this out there's a

ton of other narratives um that we could talk about we could talk about real world assets we could talk about ETFs that I think we all think are are coming we could talk about um you know gaming in Asia we could talk about the Bitcoin happening events all of these things seem to be in in the future and you've got a bunch of them listed in the Tweet but I want to ask you kind of the the overarching question here do you think that we are in the early phases of a bull market I mean is is it um is it too early to call that or like what phase of the market cycle do you think we're in right now I can't I can't I can't answer that but uh I'm optimistic that the technology is

improving and will rapidly improve you know in the coming years and I think crypto is inevitable and we're kind of just stewards of it to some extent and people come and go there's like been a revolving door of main characters that have been blown out over the years who once were our standard bearers and I think it's just going to continue to be the same and the goal is to not be the main character the goal is to just quietly Shepherd the industry to where I think it's going to go so is there a bull market bear Market I have no idea I think we're coming out of a bear Market I'm not sure what we're headed into I think it's going to be better than the past couple of years that's for sure well congrats on never being the main character at least up to date let's uh I

I hope that you will remain a supporting actor uh Vance and we appreciate always coming on Bank list just cameos you know yeah yes uh awesome gotta end with this of course risks and disclosures Vance mentioned his disclosures a little bit earlier about these smelly dinosaur coins that he holds bags we hold these things especially the E and smell um if you want to see all of our disclosures of course they are always available at bankless.com disclosures just a reminder Dave and I are long-term investors we're not journalists we don't do paid content there's always a link to all of our disclosures there in the show notes and gotta end with this crypto is risky you could lose what you put in but

we're headed west this is the frontier it's not for everyone but we're glad you're with us on the bank list Journey thanks a lot