The Wallet Wars: Apps vs Infrastructure | 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 a financial technical tax legal or other advice you know the deal now let's jump into the episode [Music] all right everyone welcome back to another bell curve Roundup you got Michael's one and two Vance and yellow tell us welcome what's up Mike you've got your podcast voice all right everyone welcome back it goes like one like one one deeper we should we should record one minute earlier one

week just so that we can see the change yeah I've got a little bit of Elizabeth Holm syndrome going on they're honestly the best podcast would be I have the Elizabeth Holmes today yeah I do I'm really going I'm really trying to bring out Elizabeth Holmes in me exactly yeah it's a little bit of a little bit of job scene Vibes there all right Michael let's answer this on on the on camera here why do you take the content at Netflix is not good well I was gonna say we have someone he used to work at Netflix he's probably got perspectives oh yeah Vance what do you think I mean they do have really good content I think like the the stuff that I watch a lot of are the kdramas like things

like uh the glory even like things like beef like they have a lot of like the Deep you know the the ones that cut deep but it feels like their entire movie slate is just I don't know it's kind of like low budget honestly but they'll figure it out they've had a big quarter too they're starting to they're they made like two billion a profit this quarter so maybe you see some of that get reinvested and they also lost they also lost friends they lost the office they lost all the universal films and TV shows they lost MGM uh you know what they did they over optimize I feel like they had some like complex algorithm that told them what was good and it ended up leading to like a bunch of the same kind of like crappy content that was able to just get pumped

out that's what I think too yeah I think they overall like they tried to create content based on an algorithm and for like a little while it worked really really well and then they over invested in that content creation is one running a dow is is generally like another like you know it's kind of like the Steve Jobs like consumers have no idea what they want you just need to like put something new in front of them and if you go the other direction you kind of just get the copy pasta stuff not that the water I am excited I don't know if you guys ever read this book but all uh all the light we cannot see uh that movie it's really good book but that movie is coming out I think in October or November this year um that one star-studded cast looks

really you know high production value I think that I think it's right you know Netflix for a long time their their entire capitalization model was we're going to finance all this content with debt because we can raise infinite amount of infinite amounts of debt we have this cash flow business we can just like pump anything we want out now I think it's okay we're not going to go to the debt route we're going to get the profitability we're going to actually kind of hone in what we're building and then we're going to be able to actually produce good content but yeah that's kind of where I think they're at Netflix they they were the first stock I ever bought actually or one of the first ones and if I I was holding it for a while I remember that oh well yeah it was that

it was that in the in the middle oh my God what what years were this this is uh this had to be 2016. we were this is when Mike and I were not only roommates but living in the same room because we're in the same room yeah same room oh yeah we don't need to get into it let's get into the details of it but yeah but yeah you know and I do you remember yellow and I fomo'd into IBM because Warren Buffett bought some do you remember that these are like really yeah we were like wait a minute this is so easy Buffett tells you what he buys why don't you just buy what Buffett buys these people are idiots we can just copy we buff it honestly everyone's messing around with stable coin designs IBM is

the real stable coin you look at the chart of IBM over the last five years you can't even see covet on there it's it's just like a band like this it just does not move Netflix was great for a while it was just uh I mean it was all about subscriber count and when they Diversified into International dude it's just every quarter they would beat you know by a huge margin on subscriber count the stock would jump like 10 and then every once in a while they would jack up their price by like 10 which was with the equivalent of a dollar and the stock would jump 10 it was it was a great it was a great album you're starting to see like some of these tech companies are clearly going to make it like especially the ones that bottomed

in June last year cut their costs and are now kind of like turning things around like you had the meta beat you have the Netflix chart which is like looks phenomenal pretty good quarter not as much growth but like I think that's kind of the uh the future for a lot of these things right like your Top Line slows you get a lot more profitable and you sprinkle some AI on it and you make it like Netflix will make it I think you know Michael unfortunately the one that it doesn't look like it might make it is uh is snap that that chart looks like uh looks bad the underworld just just terrible yeah it's an unfortunate fact um I I still have one one share of stock uh I'm I'm still a shareholder but um we're right at the Press of his uh

the the cost of the commission of trading it on Charles Schwab uh might be higher or lower than actually the share of stock itself it's a it's not great what what happens to these companies so my my wife used to work at Lyft so she's got some lift Equity like this this stock is also things down 90 and uh two years but but yeah but it's funny like they people still use Lyft every single day like it's still an amazing product so what happens to these kind of companies do they it depends on their frankly it depends on their cash flow like are they able to sustain themselves with their own business or is it something that

they literally need outside Capital to be able to get in to be able to get this point to survival mode I I haven't looked at the income statement or cash flow statement for a lot of these businesses for uh at least the last month or two but I would imagine a lot of them Lyft included is probably not cash flow positive or at least not to the point where they would be able to subsidize the business and grow um but yeah I mean a lot of these things depending on the governance Model start to look like takeover opportunities where they could be you know especially software businesses lift is going to be a little bit different because that's a harder problem lower gross margin but anything that's got a high gross margin business and the ability for someone to come in and slash whatever you know new

businesses head count whatever it is and turn these in into profitable businesses I think that's you know a lot of a lot of the private Equity firms the big private Equity firms are starting to get really interested in this type of stuff you look at like uh you look at like the top software companies Valley they all look extremely similar so like datadog cloudflare snowflake atlassian um like you know there's like basically 20 of these similar they look very similar uh in terms of you know their financial profile and when you dig into it it's kind of like okay you made two to three billion dollars you know a year you know two is probably the more likely case for like people like dated dog or folks like that

um you didn't make any money you probably lost a few hundred million but the pitch is you know look at all this Revenue if we just get our costs under control we can keep growing it and it'll become gross margin over time and like the fact is like very few of these have that potential um but they've all kind of ended up in the same place and like if you look at Lyft it's very similar it's a bigger example with more losses but you know congratulations you had four billion of Revenue and over that same time period you've lost almost one and a half billion like what does the future look like for a lot of these frankly some of them are just not viable some aren't but it'll be interesting to see which ones are because the the flip

side of that is that investors haven't demanded or wanted these companies to be profitable for an extremely long time now investors are definitely wanting to see profitability so some of them just have to change things up I remember looking at I haven't looked at it super recently but uh breakdown of Revenue and cost for Salesforce if you just look at how much they're spending on marketing is bananas um you know you know that old expression it's like we know half of our marketing dollars are wasteful we just don't know what which half I'm sure they're just going to start experimenting they can be profitable if they just they just cut down on some of their marketing spends so I don't have a great billion dollars on marketing last year apparently 10 and apparently 10 million on Matthew McConaughey

worth it that was good that was money well spent though I would seeming those Lincoln ads that number can't be right 13 billion that is a I would imagine it is I mean but like okay say say you really turn it around and you cut half a billion of costs you know on a yearly basis on two billion of Revenue and you're already losing half a billion like congratulations you're now making zero money like what else are you stripping out like we can't just like chat GPT everything to death like it's just not gonna work so yeah I think eventually you have human cost right eventually you can't just replace the people yeah like many of the companies that just went public that are tech companies

are just like frankly not that good I think that's okay um there's there's a lot that are but like none of these companies are valued on priced earnings because they have no earnings so they get valued on the next 12 months revenue and and the market is basically telling you that like a company that's growing 30 per year with like mostly losses instead of you know gains or sorry instead of profits is worth like 8x a lot of these companies are just not viable at 8x and and to get to go private that's like probably like a four or five x so uh to go private it's like a 12 to 14 ebitda multiple which is effectively profit right so even the dope privates are are not going to be attractive unless

there's a a real path to profitability in short order and they're going to try and you know lever it up they're going to use Financial engineering to buy it and they're going to take that like whatever X multiple on the ebitda and bringing it back to 12 to 14 and that's what they're going to buy it they're going to sell it for 15 in the open market for 20 in the other Market just to like play Devil's Advocate though I will say there there was this entire pitch of every single tech company which has non-linear growth with linear cost non-linear Revenue growth with linear cost growth and if you kind of like hit the inflection point at the right time you're going to be able to have this like massive profitability you know that the Surplus that is generated from that just look at Google just look at you

know Facebook um you know there's tons of those examples the problem is what everybody missed was contribution margin profitable basically gross margin profitable how profitable when you sell something for 100 bucks how much money are you getting back that goes to the cost that's fixed that's growing linearly because if you don't have gross margin hydros margin gross margin increase over time you're going to have increasing costs just as much as your as your Revenue increases so it's you know Basic Finance but um I think we got the head over our skis quite a bit over the last five ten years I have a quite this is some something I just frankly don't know much about but uh just a question to you guys on how different subscription revenue streams

are valued does our investor is pretty Discerning about different types of subscription for instance something that's very core to the business and kind of an Enterprise price point versus more sort of retail subscription the like the obvious one being like a a sales force or something like that which is definitely an Enterprise model and very core it's not super easy to just rip out it's very sticky versus something that's a little bit more like you know to use an extreme like a like a newsletter or something like that right which is pretty discretionary in in your view do investors do a pretty good job of discerning between those two different buckets or or not so much I mean Enterprise is stickier just because like you know if you have someone who's willing to pay 10 million

dollars a year for your software they're not likely to turn you know their existence implies the existence of many others like them and so like maybe the market is is a lot bigger as a result the the problem with like b2c startups and and just like you know generally consumer you know Tech is like it's so finicky it's so feast or famine your app can go from number one the App Store to number 100 within two weeks and that's happened for apps that like places like Facebook or Discord have bought so I don't know like we we talk about this internally outside of gaming if you hit like a consumer win in Venture that's like a once a decade phenomenon if that you know like I would say tick tock is the most recent one but before that was probably Snapchat like consumer stuff is like

stuff like a like an albino unicorn like you're just not gonna find it I mean look what happened with Clubhouse today Clubhouse announced that they're cutting like over 50 of their staff and it doesn't have to do with Runway it just is like they are cutting back so they can get back to a small team so they can figure out what product they're gonna build yeah like these consumer products are pickle and if you don't have it lightning in a bottle can be taught but it's very very few and far between games or smaller outcomes generally but they're more reliable in terms of like you can actually find ones that you know persist over time there have been more successes in gaming than they're having consumer uh for almost like 10 years at this point hey everyone exciting announcement here from the blockworks podcast Network we are hiring two

podcast hosts to build a show with us called Lightspeed tldr of Lightspeed is that it is a show for Builders tinkerers and lovers of Technology it's a callback to the Heyday of Silicon Valley where Great Tech was built in garages not in corporate fortresses and was truly the wild west Lightspeed is an exploration of crypto from the perspective of a builder and an engineer who's designing for scale and is interested in onboarding the next billion users into crypto if this show sounds exciting to you you have a background in podcast hosting or content creation go to the careers page of blockworks that's blockworks.host careers I've also linked it in the show notes here you can just click there it'll take you right to the page you can also follow me on Twitter I'm Mike ippolito underscore you can just slide right into my DMs and we'll

set up some time to talk would love to hear from you we are super super excited about this show just before we um before we transition into into crypto we were talking a little bit about real estate so commercial real estate I think there's a building that made the uh the cover of the Wall Street Journal is definitely a big profile article the title is fire sale 300 million dollar San Francisco office tower mostly empty open up to offers and there was speculation that it might sell for 80 less than the 300 million dollar price tag um so we were just talking about this beforehand I don't know if you guys have any thoughts on that being San Francisco locals uh for any thoughts on Commercial Real Estate in general let me read a quote from this article real quick so Matthew Anderson this is at the end of

the article managing director at trep said that selling the office building at a deeply discounted price would be a sad moment for the office Market sector I want to cry he said I'm getting emotional just thinking about that so that's like the rough temperature in the room this building can hold uh people are crying but so it was 300 million it was 300 million and now it's down 80 to 60. is that the in four years is that the tldr like so basically the entire commercial office market in San Francisco this is a commercial real estate show now is uh basically like waiting for this one

building to clear just so everyone else can reprice their comps and figure out exactly what um they you know are looking at in terms of what their building is worth but also like looking at the data that you know they provided in um the asking rent per square foot for office space in San Francisco they have it at like 75. like just from what Michael and I have rented our office for that's just like not even within 50 of you know where these things are going to be so yeah I mean you're kind of seeing it San Francisco downtown is patient zero for like the covered City that didn't rebound um and yeah I think this is part of the city bottoming but I don't think anybody's ever going back to these offices like you just kind of need to bulldoze them is my opinion

that is actually the biggest question is like what do you do with all of this real estate and like there actually was an interesting proposal which is what if you build out UCSF and make it into like more of a graduate program University you get funding from the state you get funding from a lot of like you can cut a lot of red tape in terms of real estate um but yeah I mean that's like the best idea that's out there right now there's another really really interesting data point in San Francisco of just like cell phone pings in the area and how much is it from pre-pandemic to current San Francisco is the the smallest at 31 cell phone payments in the downtown area wow you mean to compared to pre-pandemic yep exactly wow

hmm that's pretty rough demon Gloom SF has a good vibe right now it's like warm you know there's less people you know there's less crime generally like the city is starting to come around like Ai and crypto being basically the future and all these other startups dying it's kind of like this reformative moment but definitely some pain to go before we get there yeah all right you want to transition let's talk about some let's talk about some crypto stuff here so maybe we could start with our our favorite bald CEO Brian so Brian has launched a he continues to fight the good site so on Monday coinbase filed the narrow action in the U.S Circuit Court to compel the SEC response to respond yes or no to a rulemaking petition that they filed for the SEC last July basically by law the SEC is

required to respond to petitions within a reasonable amount of time they haven't responded yet to put the dish the to the petition since last July and that's why they filed suit so they basically said that they haven't received any formal Communications outside of the wells notice which was served in March and that indicates that the agency intends to pursue enforcement action so I don't know what do you guys think about I want to get your opinions on base as well which there are some interesting Signs of Life there but be curious what you guys think about this action from coinbase well there's actually something else like five minutes ago Brian just Brian and um there's clo just tweeted out that uh that they think this that the SEC is using the threat of litigation against coinbase to push them to their their goal is to get coinbase

to admit that most of the crypto listed on coinbase are securities and what they're what they wrote like five minutes ago is that none of these uh like that this just isn't supported by the law and not only is it not supported by the law but it's not even within the the bounds of the sec's authority um to do this I mean incredible move from coinbase in my opinion like getting regulatory Clarity on all this is not going to come just from waiting for it like you actually have to push for it and there was a long time where coinbase was extremely careful like yeah I forget they didn't have eth on coinbase until like very very late in the game it was just like Bitcoin and Litecoin just out of fear that like any you know potential regulatory action could be pending

um but now you've seen that go 180 degrees the opposite way they're probably going to spend like 250 million of on legal fees on this stuff and like you know fully fight this battle for the industry these things are going to take years like it's not going to come about tomorrow but like everything that has been done everything you know that's been you know put in the Press like it's all very well crafted and orchestrated to you know we're thinking about moving our headquarters like is that very likely I don't think so but like you know you're starting to set up a straw man for when you go and talk to Congress about what your company is doing you know like so in the SEC okay like you know it has been a while since they filed that petition like at some point they're gonna have to come out and say

whether things like eth are a security or not and like with that one it's tough when you've got videos of the SEC chair saying one thing and then saying another but also like if if is a security you know what happens to all the investors uh like they definitely get hurt if that designation is made if it's not like does that mean all the other Securities on coinbase or are also Commodities or non-securities like there's a lot of nuance here but you know these are like rifle shots they're not just like they put this out because they felt like it each one has a specific intention of building the straw man to be even stronger and um yeah there's just like I'm pretty bullish on coinbase and like there was a time where I was pretty bearish like

this is like emotionally you know spiritually whatever but like you have them now going overseas and launching a derivatives exchange one of the historical profit centers of crypto they're sticking their guns on staking you know another future profit Center of crypto um they're building out a lot of interesting stuff like I can kind of see the Tactical case for what they're doing being very positive over the medium term starting to emerge I think there's something else that's happening that uh is like a very just qualitative thing which is it's created a common enemy at coinbase and if you talk to employees of coinbase right now they're they're more fired up than than they've been in five six seven years right now at coinbase and I think like maybe if you talk to coinbase employees in 2020 or 2021 or 2022 like they're feeling a little like

maybe like didn't have a didn't see the vision didn't really know like they're just I think they're like every coinbase employee that I've talked to recently is just fired up right now and then if you look on crypto Twitter like people are fired up about Brian and fired up about coinbase and supportive of Jesse and what they're doing in base and like like very like clapping their hands over for Paul this Chief legal officer and like everyone I think the industry's got behind coinbase coinbase employees are rallied behind Brian and it's uh that's the unintended consequence of I think what's happened with what the SEC has done he's got a good single-handedly made bald being bald cool that's uh that's an impressive impressive feat for him sorry man it's always your actual

observation other than his hair uh no he's got a good team like people forget that there was a revolving door of senior leadership at coinbase for a long time you had that uh was it a thief guy I forget who that was like he just like he was like the head like a head of product [Music] you had the chief product officer who I think is gone now but like just frankly did a terrible job for for a long time um and it feels like those people have left and and they I forgot they had Brian Brooks what it what an incredible like starting five belagia Thief Brian Brooks you know Brian Armstrong and and

then Emily and now it seems to be kind of like Brian and Emily and like we don't talk to these people like we have no [ __ ] clue but like this is what it seems like from the outside it's like Brian and Emily and then like Paul is like the fire breathing dragon and that feels like a pretty good you know three threesome to to just like go off and charge up this hill but at the end of the day it's just like who's in the company who's still left and you've got a pretty hardened core of folks that have been there since the since the beginning mixed with some new people mixed with like a lot of frankly stock based compensation that came out in in q1 which was like I think 90 of revenues for for last year at least so like you

know everyone's definitely fired up about the SEC but everyone's definitely been refreshed on their on their grants as well so it's moving the right direction they they did a good job of doing what Wall Street wants they trimmed a bunch of head count that despite what Wall Street wanting it was probably the right thing to do they probably had too many heads based on what they needed it seemed like at the same time the product velocity has picked up it feels like they're shipping more than ever before and it seems like everything that they ship feels like a good idea these days and they kind of have these great these great products that I'm really excited to see what they do so they've got the core exchange business they've got coinbase wallet which I find very interesting they've got the staking business and they've got

bass which is kind of this really interesting wild card that I'm super interested to see what happens about but each one of those things I feel like is super interesting so it it's not very popular because it's not widely talked about because there aren't just frankly as many institutions uh talking about the the services that coinbase provides but the other huge one is prime and Prime you know you could you could put uh custody in there you could put you know Prime uh Advanced trading um I I've actually been really impressed and we have a bunch of friends obviously who we work with uh at coinbase who are you know on the institutional team on the prime team um and they're just coming out with new products all the time and and they're looking forward to your point on people being excited they're like oh next year

we're gonna have this type of thing the year after that we're gonna have this other type of financial product that you know you'd only be able to trade if you were at a desk at a bank in normal uh financial markets but we're going to build that out like there's a lot of stuff coming down the pipe for coinbase just also on the institutional side it it used to be terrible like we used to try to swap uh I think it was like usdt for usdc or like some like innocuous stable coin transaction and they'd be like okay cool that's gonna be like 15 bips on that it's like we can just do this in deep eye without you and and eventually they changed it but like it feels like all the products that are being designed and shipped right now or being done by

crypto people yeah which is like you know what you need at the end of the day if you have like some guy from Google shipping like you know coinbase debit card and like this nft exchange it's like nobody's excited about that yeah especially the other thing that's ripping right now is the girly test net the um if you look at like the daily contract deployments on base first on ethereum right now like the deployments on base are also cruising um I think if you look at if you look at Daily contract deployments on eth it's like 10K a day roughly and if you look at base it's like 50 60k a day right now so there's a lot of there's a lot of action happening on base right now a year ago or a year and a half ago when like people were trying to deploy

contracts and they need to like crowdsource like 75 000 from the community to like put it on either just like that stuff is is getting a lot cheaper which is just just frankly what you need yeah more content base the base contract deployment is is very interesting I think one of the concerns that at least I had that I think we talked about on on an episode a couple of months ago when they first launched this was our developer is going to build on this because the perception could be that this is some sort of corporate chain or something like that and I think based on what I've heard just sort of chatter in the community I don't think that's the case and I think developers are actually really excited to build on base because the assumption is that they have users

and that's frankly the thing that's that's what developers really want to do they want to build stuff that people will use and I think that's the value proposition That Bass has I I also think it's much so yes that's a huge component of it but there's also a huge other component of it which is in the direction of where so many of these D5 protocols and and we have a number of portfolio companies who are building on top of base and transitioning to base as their L2 option and the way that they view it is not only is it going to be there's grayed out too which is United yes throughput it's gonna you know look and feel like optimism it's going to be EPM compliant we're going to be able to have the same user base and same effective uh user experience but we're also going to be able to

onboard real world assets potentially that we wouldn't have access to otherwise you know we're talking about all the institutional products that coinbase could be working on building out you know providing to their clients but what about having an on-ramp for you know tokenization of assets that are real that get you know real activity from Real World institutions not just you know permissionless D5 in the way that it has been so far so I think you know the the other Viewpoint too is that building on top of Base could be Bridging the Gap between sort of this like previous generation of D5 but also real world assets and being able to enter intermingle the two let me ask you guys so on the Empire we just did an interesting episode with

espresso uh espresso and Austria talking about decentralizing sequencers where do you think and I think the conversation right now in like the decentralized sequencer land is like okay there's a bunch of these Roll-Ups and l2s that have um like very centralized sequencers then there's this end game of decentralizing the sequencer and you could use something like espresso or Astra what's the almost net if you're coinbase and you're looking to decentralize base what is the next step there because I don't think it I don't think they just go from the centralized sequencer to having like a very decentralized sequencer I think it's like they probably what they probably do is just add one like almost do it one by one like my guess and how coinbase will go about this is just like adding they

probably add some institutional validator to the sequencer let that sit for like six months they add one more they almost do it like very methodically very slowly how what do you guys think about this uh I mean like there's there's kind of two ways to decentralize a sequencer one is you use one of these shared sequencing layers like Suave or espresso and you say you know we're not really in the business of like running the sequencer anyways um and we're just going to turn it over to these other systems of which we will capture you know some Pro rata share of both our activity and also all the other shared sequencing activities living on these these layers um and I think that like seems smart it's just like if you're one of these l2s and like let's just see what uh

arbitrum is doing um you know like arbitrum is doing let's see I mean not that like so optimism is doing like a hundred thousand dollars a day in security cost fees that are being paid to the sequencer like what real motivation do you have to like shut your cash cow down and give it to somebody else I think pretty small and so like I think you're gonna have um some people who use the shared sequencing layer that just like frankly aren't that big of l2s that want to Outsource the sequencing decentralization you know whatever but for the biggest ones like the optimism and the arbitrims they're gonna try to figure out their own decentralized sequencing play for for you know both them and like all the other chains that

are building on op stack for optimism and then same thing for all the l3s that are building on arbitrary and like you know that will be the new shared sequencing standard so like I don't know it's it's kind of hard for me to see those getting a lot of adoption in the near term and I think all the biggest l2s are going to just in you know decentralize their sequencers in-house and like decentralize it centralization is just like it's a spectrum obviously um but I think that's kind of what's going to play out I mean yesterday and we're recording this on Thursday I think it was yesterday there there was a total outage of optimism for like 30 or 40 minutes I think uh and you know that stuff happens still when you don't have basic decentralization you know and and

there's all these different arguments right on uh all these different arguments on um you know is it going to be a shared sequencing player are we gonna the single sequencer and keep the economics ourselves I think the biggest point is you need some point of sufficient decentralization even if it is within the the L2 itself so that you have fault tolerance if something were to go down and and I think the the root cause of it was in Fiora in the RPC connection that they had but you know if you have that single point of failure it doesn't matter whether or not it's like is it an economics question it's more of is it an uptime question well so I have some thoughts on this the shared sequencing model it definitely is a way to Mint fees for the time being but I don't think that's a solution long

term I don't think from a regulatory standpoint like bass certainly can't just run a single sequencer forever and not kyc their users I don't think that's an option for them I do think for optimism and arbitrum they have a little bit more time but eventually I think the community would Community would demand some sort of path to decentralization and then you have two different routes you could do this sort of shared sequencing model by espresso or Austria and there are benefits to that right is that would lead to you have more cross-chain atomicity right so some degree of composability in between different layer twos there's a lot of complexity associated with that problem and I think a lot of it is still relatively theoretical but from what I understand they have pretty compelling it's a pretty compelling value

proposition if they could pull it off but to your point you have to give away a lot of your economics so that's not super desirable then on the other hand you could decide all right I don't want to give up my economics what I want to do is bootstrap my own network of sequencers on on my own right that would be specific to my chain but then if I'm optimism I'm thinking okay I need to bootstrap my own network of sequencers which is probably no more difficult than bootstrapping a network of validators I have to basically Implement something that looks like consensus basically like a leader rotation and civil resistance all that kind of stuff at that point what I'm starting to look a lot like a layer one right but I'm still having to pay rent down to ethereum so I think at

that point you start to get to this weird sort of game theory of you know if I'm optimism saying I at least even if I'm not saying that optimism is going to go launch as a layer one I just don't think that that's very feasible and I don't think they would do that but they could definitely push back on ethereum a little bit on the rent collection and say hey all of the the transactions are happening at my layer here I don't want to pay the same amount of rent to you that I'm paying now so it's that I don't that's more of a statement really than a question but I think it's something to consider for sure yeah I mean like there's there's places you can get validators consensus is kind of another question of whether you actually want to build that in-house but yeah I think

Paradox that Suave and espresso are kind of maybe more like espresso and like Austria the Paradox they're going to find themselves in is like the best way to like build the shared sequencing layer is probably to have your own L2 that's like big like go build another optimism arbitrum you know force it on down that way like the converse approach where you build the interop standard and then you try to get everyone to adopt it like I feel like we have a lot of example of that not working yeah the the other thing to to mention is that PBS which we've been working on on layer one ethereum doesn't exist yet on Roll-Ups but people like HOSA are starting to say hey we really need to do this so these sequencers the way to think of them is they don't have a knowledge of the state really they're

kind of dumb pipes that do sequencing but you need some Builder that's standing in front of those shared sequencers to actually execute these transactions So eventually we need to right now sequencers are basically doing what we have moved past on layer one where you have proposers and Builders being the same entity those are logically separate so it's a pretty safe assumption that Builders are going to migrate up to the roll-up layer because that's where all the activity is and that's their business but it's also something to to consider I I have an open question actually to you guys I don't know how much you've dug into but it seems like if Suave becomes a reality and if you layer on account abstraction to that I is kind of changing my conception of what I think

of as the mempool I kind of had this idea of like a pretty simple kind of gossiping protocol between different validators and that's where all the information is and there's kind of different Geographic locations but now the count abstraction it seems like there's an entire alternative mempool and different set of actors up there and Suave is kind of its own chain that acts as an alternative mempool that theoretically standardizes preferences across all of these different chains and it's kind of sort of now I'm starting to divide mempools into public and private mempools and like I don't know if you guys have thought too much about this as well it's frankly something I'm still trying to consider but I I do think like fragmentation of the mempool is going to be a pretty big theme in in the coming

years I don't know if you guys have any thoughts sir that's just a little too wonky I I think it's certainly going to happen you'll have public you'll have private you'll have frankly like by different use Case by nfts long tail by Blue Chip like there's just so many different ways that you can slice it and frankly like different economic models work better for different you know types of Trades different types of transactions Etc like we've talked about but I don't know like youth is going to be the like we've heard that eth is going to be the main or I think it's post on Twitter that youth will be like kind of the validation token for Suave like a lot of this just like kind of all roads eventually lead back to ethereum whether it's like alternative men pulls or different l2s or decentralized in the

sequencer like paying for call data and posting that is is kind of where all of this really makes an impact in my mind at least Mike can you just explain that to me because so are you saying so like what's going to happen is that wallets become kind of like Mev aware and then end up routing order flow where users get paid to transact which is kind of like how like Dex aggregator Source the best liquidity today so if we in so that and that's basically going to encourage fragmentation of of the mempools is that do I do I understand that right yeah like account abstraction introduces a new alternative mempool it introduces these two different actors so basically what it allows is at a protocol level the ability for one account to basically pay for it allows an entity to pay for

the transactions of another another account so it makes instead of an end owned account which is the model in ethereum today you have Smart contract wallets so I could kind of see this going two ways so one is that the wallets end up eating and they do super well because the wallets will essentially act as pay masters and they will on behalf of users kind of pay for their transactions as they move down the supply chain and then they'll eventually get rebates as the proceeds from their Mev gets go back to them but then Michael this is what we were sort of getting into at the end of our talk last time what also might happen is that dapps all build their own wallets so wallet as a service becomes pervasive really the

dapps can dapps can also act as pay masters and pay on behalf of their users so they can subsidize gas on behalf of their users they can also route Mev back from order flow auctions to users and ultimately the dapps end up kind of winning from this and doing super well but ultimately yeah it's like centralization is going to migrate its way up the Mev value chain for sure I so I was I was literally gonna say hey I think the thing that has changed or has been changing from my perspective over the last couple of weeks is who's going to win the wallet Wars so to say um and we talked about this maybe on our like 2022 Roundup or 2023 like uh forecast you know there's gonna be a

wallet war going off and there's going to be like the dominant wallet that wins out eventually I actually think that wallets are just going to become an infrastructure layer on every single application yeah and it's going to be whoever in Whoever has the best application implicitly has the best wallet because that has the most users and every single wallet I think is and it does depend on the application category itself where like d5s would be very different from games it's going to be very different from nfts but the ability to have um an order flow auction or or basically this this private mempool that you're talking about Mike uh I think that's going to be the dominant model where most of this stuff gets gets transacted because it's going to be up to the pay

masters and be up to the wallet itself to be able to choose where that goes and like think about any application where you use today are you you know digging into the internals of the application that actually make the whole thing run like no you just want to get to the app and use it and like have whatever outcome you're trying to have within the app itself not like do it yourself um and so I think that DIY perspective is going to go away as soon as we start to have like good applications that have wallet infrastructure and the ability to route that accordingly um that's that's kind of the the takeaway that I've had over the last couple weeks thinking about this the top three in wallets are metamask or I guess top four metamask uh coinbase wallet Phantom and then Ronin

Ronin is the layer two wallet for axi like they have more users than all of the wallets that you can name off the top of your head it's like have you guys invested in any wallets um we have we have but they're but what they're realizing is a lot of this it's not like the wallet itself that we're that we're investing in it's more like oh yeah we're gonna have this application and it'll have a wallet plugged into it we may have started as building a wallet but we're going to build this app and like yeah wallet infrastructure exists within it that's why we're so focused on games like if you build a win if you invest in a winning game not only do you have the potential of like an axi-style outcome which at the peak of last bull market running an actually where 45 billion

dollars together of market cap obviously that is no longer the case and obviously that's not the model we're aiming for but like it's a big outcome number one number two like you just have the most users if you think Mev is going to play out in a real way like you know you can invest in like the science project like you know decentralize shared sequencers whatever it's probably just better to invest in a lot of apps and have one work like yeah you know that's that's what osmosis has done in sort of a very early POC with Kepler the founding team that has most is they built Kepler as well as a wallet to go on top and it's interesting even like take out account abstraction basically what we're we're gonna start abstracting away a bunch of complexities for users so wallets will

start making decisions on behalf of their users and that creates a bunch of uh leverage for wallets so just to give you an example one of our analysts Ren shout out Ren pointed this out you know how right now if you want to protect against Mev I guess we lost Jason here but uh if you want to protect against Mev you could do the class Bots protect or something like that you can just switch your RPC endpoint on your metamask so on the uniswap mobile wallet you do not have the option to switch your RPC endpoint which implies that unit swap wall is going to do that for you which implies that as you have all these different services that basically compete for that market then uniswap is going to negotiate on behalf of its users and it's just it's just interesting it's just an example of

them extracting leverage um I mean so so Mike what which uh which Port do you think Facebook runs on which internet port it doesn't matter that's my point I think you're right yeah I'm totally with you I'm with you but that's an important question to have a perspective on I think that's so yes and and I I I do think we're in the like infrastructure days of the internet where all this stuff was getting defined and and people were making decisions and like it was it was the build out right um and these decisions will be made and there will be infrastructure providers that come in and like offer new services and it'll be competitive but I think a lot of the stuff will get set and then people will have applications that just

handle all this for their users because you know no user in their right mind is going to want to like do it themselves agree with that let's uh let's let's dig in a little bit to the uh a little bit orthogonal but the current withdrawal cue for eth yeah can you just can we just get like kind of a a post-mortem on that because there were a ton of different opinion there was kind of a consensus going in right that there was going to be a short increase in withdrawals and uh unstaked but then that was quickly going to recover that was kind of the consensus going in you always had some doomsayers right at the extreme saying this was going to be a massive sell event and you know you should de-risk so what what

ended up happening as per usual all the Doom series were wrong and they may have had no idea what they were talking about from the start but um to the more rational perspective like you do have um now net inflows on a you know couple week basis since since Shanghai got got through um I've been impressed with the relative strength of ethereum like yes there's definitely more inflows than outflows at this point but right now in the withdrawal queue there's a great dashboard on nanson that's public um for E2 withdrawals there's 635 000 eth that are waiting to be withdrawn so like if I told you that you know potentially 1.2 billion dollars is going

to hit the market over the next 20 days with 30 eth or 30k eth unlocking every single day like you'd probably be pretty bearish on ethereum but yeah you know it's really held up in the face of everything um the unexpected stuff that I would say is I expected there to be a ramping of centralized exchange deposits um and certainly there has been um I think there have been let me just check uh uh there's 600k eth staked in the last week a lot of that is from the centralized players basically like latent ethereum that was waiting on coinbase to deposit into the queue once they could actually withdraw the bigger surprise for me is like the lsts have seen a lot of the share of folks like

Kraken and finance and and coinbase and even cbeth on coinbase flowing into Lido um and that's just like I don't know I I think the staking Market is too fast it's right now it's like number one or three facets number one what's the activity on ethereum like it seems pretty healthy even in the bear Market even a few of these like frankly [ __ ] coins have pushed fees up to pretty high levels um number two how much eth is going to get staked like my hypothesis changed from like probably 25 30 pre-shanghai now it's like 40 potentially even higher um you're just seeing a lot of heat stick and number three is it centralized state ethereum or is it liquid staked ethereum and I think the balance of power shifting to the liquid state ethereum just because everyone's

realizing it's more Capital efficient all the lending pools and things like maker all the lending volumes are ramping like it's getting Lindy in a way that it wasn't before and this is even without Lido or or any liquid stake token withdrawals being viable yet those that upgrade will happen in May for most of these liquid staking protocols but like if you were to have to force liquidate a huge position of steath right now you couldn't withdraw and get your vanilla back to do it um so that'll be and and we know that that and we know that that's coming with Celsius like we know that that's going to happen eventually right so I I completely agree with everything being said the the things I would add are um I I find it kind of uh oddly uh expected but also funny that it wasn't

expected that frankly we wouldn't be just surviving the next like 48 hours after Shanghai where like 10 billion dollars a beef was going to get dumped and it was you know in reality gonna take a lot longer of course it was like Lido doesn't even have their upgrade in a lot of these lsts don't have their upgrade in the centralized changes didn't even have their upgrade ready where you weren't able to withdraw if you if you use CBE until recently I mean actually I'm not even sure about CBE but like two coin was just recently as well so you're gonna continue continue to see this with with rock you probably persists we think you know probably for the next month or so and you're gonna see it pretty heavy it's going to be you know there's me a lot of eat that's being withdrawn

but what is very surprising is how much eth is now being put in uh and the the difference I would say though is that you know for whatever purpose of withdrawing versus depositing there are two very different purposes I think a lot of the the people who are depositing into these cues right now to state are institutions that have been sitting on each that weren't able to stake it due to frankly just tax reasons and they were waiting to be able to to have the would rock you to be de-risked they didn't want to put it into an LST because the tax reasons and whatever jurisdiction they may be in and that eat is probably not going to go anywhere for a long time so I think we're gonna we're gonna continue to see that as well

because I think there's just a lot of eat that's waiting on the sidelines for that purpose as well I think there's another reason as well and I it actually makes me a little bit more bullish so I you know without revealing I have always been a little bit nervous to fully like to deposit in something like Lido because I know it's unpopular to be like hey there could be something wrong with the tech and you can lose your money but there could be something wrong with the tech and you could lose your money you know I remember you used to have used to having these debates about blockfi actually and the debate was always like hey if you think in the very early days where there's only Bitcoin so hey if you think Bitcoin is going to be much higher 10 years from now like why would you risk

that for an extra five percent a year you know when the alternative is you could lose all your money and at the time but this is how it went at the time you know block buys like coinbase it's not going to go down if block fight goes down then the whole Space is going to be in a whole lot of trouble you know I actually remember watching this this interview with Justin Drake uh who's on the season of bell curve the Meb part and I think it might have been bankless I can't remember but he got asked something to the effect of do you have all of your e-staked this was right around when the merge happened and he was like no I remember that since and so it's only to the effect of like I've seen how the sausage is made and I want that and I

was like woof yeah I'm just gonna wait a little bit but I think this is bullish because now you are just de-risking variables and I was I I saw d-gen Spartan say something like this and it actually hit home with me quite a bit you know the meme of Bitcoin and hodl is much less powerful than stake and get yield and I just think it's a much more acceptable meme for Trad five like Trad five will get this you know all those things about the US dollar you know like you've eroded 98 of your purchasing power over X many years not if you put it in bonds you didn't lose any purchasing power you actually did fine you know and that's that's actually become my mental model for eth versus stake teeth and if you look at

some of these protocol changes like I don't know if you guys have dug into mvv burn as well that is a simple transfer from validators to stakers and that seems to be the way that things are leaning and like why wouldn't you want to stake your teeth in that stage I mean that's that's awesome so yeah bad things can happen but like you know block five it wasn't the tech wasn't that wasn't the issue um I know and I know there is there is like lsts are [ __ ] Lindy like basically that's the point today you know they added last week a

Lido dominance uh thing under the main kind of like TBL charts like steath looping is greater than 24 of defy right now it probably will be like and looping is when you put Steve in a borrowing protocol you take die or usdc you buy Steve again you keep doing it you can lever up your yield in your position but like that is a lot of D5 at this point like if you're not comfortable with that I I don't really know how you participate um you know so I I was going to say the same thing which is you know my on the flip side of your point if you read the fine print of these staking agreements all the custodial stating agreements basically say if you lose your value it's not our fault

the benefit of an LST is you may be stating and earning yield but I also have this token in my wallet and there's there's another opportunity for me to sell it and get out if I needed to like there I can totally see the argument of Trad five but I I would also say like there is the flip side to that as well which you know takes a takes a more crypto native Trad perspective maybe like kind of a little bit right of the bell curve if we were to say but I I think the the other thing that works is about myself [Laughter] um the the other thing that we're saying is frankly just like a lot of activity on the small lsts and they're they're getting like thousands or tens of

thousands of deposits into them and we're starting to see like the ecosystem around lsts also get to be really interesting I can't remember the name of it there was there's this one kind of like dgn LST farm that got to I think like 500 million in tvl in in like a week uh just with lsts and and it's like the ability to have these things and bucket them together and that it feels kind of like what was starting with D5 summer where you start to like put these pieces together of like okay you got this token yet that thing and I I do think that you know there is a shot maybe an outside shot that D5 summer turns into LST summer for 2023.

unaudited smart contracts step right up try your luck yeah see what you win I've got a question for you guys this is a random one actually but it why do you think so these meme coins like like Pepe or whatever I don't really followed this that that closely why do you think those are happening on main chain instead of something like polygon that's where all the whales are that's where all the liquidity is now that's where all the lsts are like the the Donald yeah that's all the Mev is like step right up try your luck but like if you're doing on polygon it's gonna be

like 1 100th of the size yeah like one of the things we're very sensitive about with our capital is like we basically avoid bridging at all costs yeah um we'll try to go through centralized exchanges to get onto native chains like if we have to but like bridging is still the thing that is not figured out or or to the extent that institutions would like it to be like if you lose your money in a bridge and you tell your LPS they're going to be like you [ __ ] idiot like of course because all of these Bridges get hacked and I don't think there is one other than maybe like bungee and socket that like hasn't but knock on wood the bridges are just dangerous and I think that's why they

don't have these things don't happen on these other chains yeah yeah I do think that that's gonna be a while before that changes too I don't think that this is going to be like oh we now have this thing it's like okay we but it's like the days since last incident like we keep going back to zero too often you don't think circles uh cctp will help that did you guys see this the cross chain transfer protocol yeah and and you know like uh link is chain link is working on ccip and you know there's all these cross-chain communications protocols yes those will help it but I think that that it once again just kind of puts it back to zero and then the Lindy effect is going to be the only thing that we you

know can really think about the thing that would help it the most I think personally would be centralized custodial bridging where you go immediate flip okay I've got OE to e e the polygon e and that would be the best way and it's instant and you're charging people like isn't circles thing a nice Middle Ground there between like the fully decentralized Bridges and then like the fully custodial Bridges like in in this case with cctp circles like after the user initiates a usdc transfer through the portal on kind of the source chain the user specifies the wallet address they want to send it to on the destination chain then the portal or wallet or Bridge or like the app burns the usdc on the source chain and

then in this case Circle is attesting to the burn event on the source chain so circle is like putting their stamp of approval on it basically I guess they're specifically speaking from the institutional perspective I think that that would be difficult to to be able to explain away and that that's the only real number but I think that there's a lot of people who are institutional have a bunch of capital who wouldn't be able to do that the custodial experience would be better for the whales sure like cctp or ccip or whatever Communications protocol yes also I just think the user experience gets much much better on with I don't know like with CCT like let's say a Dap uses cctp I got red pilled on it by our research folks but like if a

Dap integrates with cctp you could then like let's say you're buying an nft or something like that you could swap from like you could basically do a native let's say you have a bunch of eth in metamask or something but you want to purchase an nft on Solana you could you don't have to go you don't you don't have to go do the bridging yourself you can just instantly buy the nft on Solana it's just a much better user experience right I I think it is but like to the point of like how do you get Pepe to happen on you know polygon like the Pepe pool was East Pepe um you know it was being bid by like crypto native Wales with crypto native assets it's not like let me put this like kind of like fed coin into this uni

swap pool and like get after it it's just not the temperature of how people are operating right now and yeah if you're counting on stable coins to like really bootstrap URL too just like if you look at the aggregate usdc chart like you're kind of fighting uphill in that regard like I think the best path for like if your L2 wants to like build D5 a you need to make your asset super Lindy and you need to get people to use it in D5 because if that's not happening if you don't have like a big optimism or arbitrum backstable coin or you don't have like a lot of Dex activity that's you know quoted in op or R Blake people are just going to default to eth and if they default to Ethan you might as well just be on the base chain like

the fees aren't that high and that's where all the liquidity the institutions and all the infrastructure basically is all the leverage too to the extent that it still exists is in like the Ave V2 obvious three on ethyl one and then maker yeah it hasn't really migrated it hasn't been liquid up that much yeah the liquidity and the tvl is all still on eth main chain even though mostly like the aves of the world they've they've deployed on you know a bunch of the the layer two so the Roll-Ups but it's not much activity there you know the leading the leading decks on optimism is not uniswap it's a build room it's valid drone which is a very cool design by the way kind of a it's a it's it's inspired actually by

that failed exchange solidly from Andre cronhe but it basically borrowed the design from from Andre that failed for reasons of you know they had bugs in the software and they were trying to do it on Phantom but that they had some pretty cool Innovations actually first I'll play The Exchange you're laughing Michael Andre is it feels like the story of his entire art like some pretty cool ideas but It ultimately didn't work out he was kind of a yeah I mean what he was trying to do my interpretation which is you know I'm sure there's a way more sophisticated interpretation but he was they were trying to tie

emissions to fees instead of liquidity because there are these games that you could play for instance on or balancer where they all have ve like vote escrow mechanisms and what you can do is you can direct emissions and you can do you're supposed to do it to you know incentivize liquidity to a pool but you could also be the only LP in an entire pool you could just direct all the emissions to basically yourself so what they're they've they've got all these incentive mechanisms to to tie um emissions to fees that a pool is producing which is theoretically better trading experience and it's better for the health of the protocol you can also if you have like ve curve you have no Capital that's that's just you can't transfer that or anything so this is actually in nft form so in theory you

actually get Capital efficiency you could like deposit that as collateral somewhere it's it's just I mean it's just it's just an interesting incentive design so um yeah there's also there's also a there's also one on uh I think I think it's binance smart chain but it's a it's a low cap gem so I don't really want to mention it you can read blockworks research to find out what that is um I do want to shout out uh or get your guys kind of opinion on on Solana as well they did their mad Lads mint which I think ended up going live on Friday and it went it went pretty well and I just I saw a bunch of people get the Mad

Lads I'm not an nft guy I've only lost money on nfts usually chasing ones that Yano has recommended welcome yeah I'll show you guys my NFP it's like a horrendous collection um the market just hasn't realized how good the collection is yet that's exactly right yeah just look up Frank Franks and you'll see the last nft that I bought the stupidest and how is your exit liquidity Michael I was your exit you're welcome someone out there I think I've got like five or six uh hash masks sitting around somewhere if you remember those way more than that those hash

masks people are going to get hash masks for a bonus one year my Governor's nft I bought do you remember I bought like a derivative of Doodles called noodles which were skinny you want something definitely definitely want that eat back the NFC Community is like tearing itself apart collapsing like all at once yeah Madlibs was like the best mint in two years you know if those noodles had gone up you would have been like yeah I mean

it's because the noodles are skinnier than the Doodles and because of this and they're so rare let's see yeah you know so here here's my my update take on nfts right now I think they're all about to do their own fungible tokens as well and realize that that's how they can incentivize Community basically in reaction to um what seems to be the final resolution of like no royalties they're like okay we need a new monetization model and I think moonbirds has launched one I I mean I think they're gonna have like most of the big collections are going to realize this and I think the other option for what this summer will be about is nft token liquidity summer

yep yeah I mean they didn't really like the first dose of liquidity that they got them being the nft community but uh they seem to have preferred liquid higher prices versus lower prices that are more liquid but yeah those nft communities what are they spending their money on I'm sure this is an ignorant question but didn't they raise hundreds of millions of dollars by selling jpegs what have they done with this yeah Doodles like oh no 54 million merch bro token gated hoodies [Laughter] I think you know what I think to I don't know I'm I I would not fade nfts frankly everyone's calling nfts dead which probably makes it the right time to buy

nfts but I do think they I don't know one thing this may just be such a boomer take that ages so poorly but the idea of decentralized Ip creation I struggle a lot with at least within you know people were comparing board Apes to Disney at one point and I just I don't think you get great IP creation from a whole bunch of different like a cacophony of different voices right it's usually like one person with a vision you know and maybe there's just different types of Ip that you can create or sort of community-led experiences but I don't think you're getting the next Avatar from a decentralized community of people I just don't think that's how it works that's uh

that's right I think like interesting IP creation is like form a doubt go off and buy a script okay cool like that can work but like we're all gonna pass the Talking Stick and come up with this like you know like Disney story that's just like never gonna happen like there's other there's like so many cool use cases for nfts that just happens to not be one of them yeah which is okay but like uh like mad Labs that's a use case you know putting IP on chain is just somewhere that it lives instead of an AWS server that's a use case like I honestly think some of the nft art the generative art like that's a use case like there's Financial use cases for nfts just like we don't need to take it to like the nth degree and be like we're

going to decentralize everything even the creation of the nft like that doesn't need to happen I'm with you I think the the nft backpacks are feel very interesting to me even I don't know I get more excited about sort of crypto native versions of of nft use cases as opposed to we're gonna do concert tickets as nfts I just it's I don't know it's hard for uh what's the one that people always talk about like medical records or whatever I that's just hard for me to get super fired up about it might work but yeah I just yeah hip is never gonna allow you to do that yeah I don't want them to do that as someone who I don't have that many crazy medical argument I don't want them to do

that I wouldn't I don't I don't either I mean I think that there are digital native ways of having digital real estate represented in nft form you know one of the best ways of doing that might be like a domain or a website or like the things that are encapsulated within a digital ecosystem but the second that you have to have something that Bridges the digital to analog divide it breaks down completely I've never I've never seen a good example of how you'd be able to do that I mean I still want I still want just like a basic app that I can basically use as a scrapbook take screenshots of exciting moments in my Digital Life put it in this thing I'll remember it forever like when we had the Wall Street Journal story a couple times like some

certain people who follow me on Twitter like I want to remember that stuff I don't want to put in AWS I want to put it on Jane but like nobody's built that just like it feels like the simple stuff is the stuff that's actually going to work yeah I agree with you I have one one final sort of observation to make that I'd love to maybe get your guys thoughts on or if I'm just totally off base here but the the thing about the Mad Lads meant that I thought was interesting was the performance of Solana which actually has been I mean they struggle really famously with Solana going down but they handled that mint pretty flawlessly it's because they have the they kind of quietly shipped parallel feed markets which is a super interesting concept which is I think it's been proposed on ethereum as well but basically one of

the problems with General block space like it works on an L1 is you know if there was an nft Mint or something like blur going live you could disrupt the functioning of a completely separate sector so if there's a really popular nft mint it could disrupt uh defy and I kind of think the it's been it's interesting to watch these different blockchain ecosystems start at very different points but they're sort of converging on different types of architecture or solving different problems like the obvious one kind of is Cosmos and ethereum right app chains have now come to roll ups and it's the op stack and people are going to build layer twos instead of um you know basically build Layer Two that are app chains which is super interesting but I

think Solana has been working for a very long time on solving they have a you know a very low blockchain of like 400 block time of like 400 milliseconds basically hot like very performant blockchain very low latency and the the pull for Roll-Ups is is very similar to Solana actually like the the user preference the strongly stated user preference on rollups is low latency very fast confirmation times and you can kind of get around that with like a big Builder with like do to do pre-commits or something like that but I think in like a year or something all these Roll-Ups are going to start talking about solving the same problems that Solana has been trying to solve for a long time so I don't know if you guys

agree with that or I just think it's interesting that you have these three sort of blockchain ecosystems that looked like very very different a while ago but they're all kind of converging on solving a similar set of problems or coming to a consensus a little bit about design decisions I'd be curious what you guys think about that I think the pros of Solana are like you know it's this clean self-encapsulated system it's not going to leak value to l2s it's not gonna you know like have this web of actions like it is what it is and it's now very cheap right now you can do different things from a consumer perspective but like all of the economics are going to flow back to Salon the asset and I think that is like a very different value prop from ethereum which is like this web of

chains and I think it's compelling you know from an investing perspective you know not that we're salon owners but like you know it is interesting so that's like the first one I think the second one is I would give probably Solana just because it's like a different base layer a higher shot at developing something that looks like D5 then probably like you know your run-of-the-mill L2 that Launches on ethereum in a year just because like people are going to take Solano they're going to stake it they're going to use it indeed like you know taking your salon and putting it as Stakes on it is like the first step of the journey towards D5 because then it's not just sitting there you're earning yield and then once it's earning yield then you have it liquid then you're like maybe I can borrow against this you'd

love her enough there's looping trade on Solana like you can bootstrap defy and like to our earlier conversation really the only thing that matters is like how Lindy is your native asset and are people using it on chain so like I give Solana a higher chance at doing that than many l2s in their own native tokens um beyond that there's a lot of negatives I I think like the chain going down all the time not that positive but like they'll figure that out eventually also think it's like kind of ironic for you know salonist supporters to be like l2s are bad because of the single sequence of roll up while it's like you know that chain is going down pretty frequently but you know I think they're going to solve these problems before the l2s probably solve the same ones and and that's pretty bullish for them so I

don't know like it feels like this on an ecosystem is starting to coalesce and really kind of like take shape around specifically like the backpack and matlabs guys and you kind of need that like the the backpack story is pretty you know inspiring to a certain degree they raise 20 million they're in the FTX Solana you know primordial soup or whatever you want to call it you know they lost 15 million dollars in the hack they're still building they had the biggest nft mint you know they're now recapitalized like you're starting to see people string The Narrative together and Tristan and Armani are awesome as well so not surprising that it's them yeah it's um just as a just as a this is stupid hypothetical that you couldn't do

a counter factual for but stay great on Solana I think is is high it's like 70 or something like that on eth it's something like 25 what do you think the stake rate difference would be if Eve had started as a proof of stake chain just yes across like or I guess not Cosmos but like yeah Cosmos um Adam you know Solana Phantom like it's all like 70 80 yeah and you have like and I think that's I might think exactly that's your answer yeah you started as a proven State chain and hit me closer to that yeah and the proof of stake chains also developed very differently than the ones that were proof of work because like you have this

like military industrial complex of like all the centralized validators that get all of the inflation and so like they're actually well capitalized and like okay now you have like 10 centralized companies around Phantom or Solano or Adam that are like highly incentivized to make it work and so like you do have a little bit more of that versus like proof of work miners taking the coins selling it into the floor and like hoping retail picks it back up it's like there's there's different like epistemology as well as to how it all works out what I was what I was going to say though is uh what you would fundamentally have as well is a different distribution model but it's much in it much less decentralized than a central than a decentralized proof of work model because the time at which

you're acquiring the assets let's say that you're an investor at an early stage of the proof of work uh startup uh sorry proof of State startup you're going to get an allocation at whatever seed series a series B whatever round it is and you're buying those assets and you're holding on to them you're probably going to save them but if you're someone who's buying into a proof of work chain you're buying into that Chain by buying those tokens off of an exchange it's a very different economic equation from a how did you obtain these assets perspective yeah all right I think that's about all the time we have folks last one AWS just crushed their their earnings like this okay it feels like text back

so wait wait wait let's let's just see how my snap chair is doing not that way I know this is the states are high for you here Michael not not well you know Tech couldn't keep falling forever Snapchat looks just absolutely terrible First Republic yeah they're they're down 18 after hours so normal companies have quarterly guidance snap removed a full year of guidance off they put pulled it off the table they said we don't even we're not going to take a gas out well feast or famine but well

it's tough yeah it's tough all right guys later that was fun one faces [Music]