What the next wave of crypto investors will buy, per Milk Road PRO

Transcript

GM good morning welcome to the milk Road show The Daily crypto show where we go harder for crypto than Kobe went to practice sorry smoos Parker it's Saturday February 22nd I'm your host Jay Hamilton and today we've got the milroad pro team back at it again we are going to talk about the fat app thesis now this thesis looks at where will value acre in the future within crypto will it ACR to the blockchain in the protocol layer or will it acre to the app we're going to break that down and talk about how you can frame your Investments now and more long term to take advantage of this thesis uh we also discussed this

thesis yesterday with avacha in that chat we're also going to talk about today what matters more to investors right now in this choppy Market should you be paying more attention to fundamentals for your Investments or more to pumpamentals great discussion there we'll also talk about which sectors are likely to perform throughout this year now this episode was recorded on Tuesday and released to milroad Pro members then if you guys want to get access to this episode every week early in the week you're going to have to go pro otherwise you can wait until Saturday when we release it to all of you guys for free before we jump in guys some really exciting news I want to connect with you guys more on a personal and a regular basis uh and so we've started a telegram

group we got a telegram group you can hit the link in the show notes to join now we're going to talk about what guests we have coming up give you guys an opportunity to give insight into which guests we should get on the show what questions we might ask these guests so please join the telegram group you get direct access to me and the rest of the team that makes this show happen on a daily basis and of course we all need a little support sometimes in our investments and that's what we're here for to help each other out also today's episode is brought to you by crypto.com my favorite crypto card with no annual fees lots of perks lounge access depending on which card you're at if you want to check it out hit the link in the show notes check it out today without

further Ado let's welcome the milk R Pro Team all right gentlemen we're back for another Pro research meeting four of us here chatted out on the milk Road show uh going to be another fun session what's going on guys how's everyone doing doing great good I like that yesterday yesterday was Family Day in uh here in Canada so I got to hang with my with my fam my wife and my little guy was beautiful I worked good thing good thing somebody was working yeah I kept the machine rolling uh no I'm just kidding well we've had a wild week since uh since we last recorded and so I think we got to first start on I mean obviously everyone knows about what happened in Argentina and uh and the rug in the meme coins and since then just mem coins are taking a

complete dump if you're on crypto Twitter you're seeing I mean I tweeted out um if you're in memes pivot to fundamentals and it was my best tweet I think I've made in weeks so people are really I think catching on to this this new narrative or this new Vibe of all right we got to get out of these meme coins it's time to go to fundamentals and so we'll talk a little bit about if that's going to um that's actually going to be a thing but first let me just pop up on the screen here uh I think the the biggest issue that came out of this so far is people are getting out of salon and uh and are a little bit scared because I mean salana 80 90% of his activity is mem coins mem coins are getting [ __ ] on now everyone's kind of

losing their mind and um what's the vibe what do you guys think is this an issue for salana do we think beam coins are really actually dead here or is this just like short-term noise like what typically happens in crypto anyone have a strong opinion here for the sake of mcoin investor backs you should have tweeted a little earlier well I think it's just the mark good noise and uh people will always find a ways how to gamble and uh meme coins are yeah now they they might be going downwards for a little bit but then when the sentiment changes again I I think that mem coins will gain a lot of attention again and the prices will

reverse and go up again so it's just a short-term noise and like if there would be something Troublesome with I don't know uh salana client or Sal Foundation or something like that that I would be paying attention but you know nothing's going on even contrary like on the flip side is the the new client for Solana fire dancer is uh pretty close to be fully launched so and even if we look at the activity on salana it's still like doing quite well so I I wouldn't mind to really kind of bother about this um price correction but if there is about

80% of Dex volume for mcoin trading it could impact the Solana price quite a bit as it already does I just don't think that mcoin trading is going away I you know what this feels like to me is you know when you wake up on a Sunday morning after a big night of drinking and you're hung over and you're like all right I'm never drinking again and then like by Wednesday you feel good you've gone to the gym you're feeling good again you're like all right I'm going to open up a bottle of wine and then by Friday you're deep into it again right this is the college life like on repeat right that's exactly what's happening here with meme coins these are degens at heart all they want to do is trade and speculate and I just think this is short

term I Got a Feeling by the time this episode go lives we're recording on Tuesday and this goes live I think on Saturday for like the public I would imagine this candle and salana that I had up on the screen there where it's below sort of that trend line I think it's revers back up and and probably S I don't know if by F by Saturday sorry sentiment already back to normal but I think this is very very short term and um I think mcoins will have its its moment again like I don't think every memec coin goes up and I don't think mcoins I I don't really love mcoins myself I think especially what's gone on here has been really frustrating but DG want to trade and speculate and so I think this is going nowhere and I think salana is going to be completely fine

something new will drop and people will trade it and go crazy with it and um this doesn't go away it does not go away just like college students don't stop drinking even though they wake up hung over thinking they might I think Jo Joe uh Joe McKennon or whatever his name is the the founder of asymmetric Capital he shared this chart Joe mcken yeah he showed his chart that people spend more money on gambling than on investing so it's telling you the story you know um they'll always find a way how to gamble and yeah yeah mem coins aren't going anywhere no but when when $4 billion dollar gets erased from the crypto markets seemingly like what in happened in five hours or something like that

like then yeah there's a lot of pain and people are upset about that happens all the time in this space like what was it two weeks ago or three weeks ago we had a liquidation of more than that right uh when eth took that crazy dump I'm pretty sure the Trump and Molen situation was more than four billion that was erased so like I don't know ter was 40 billion that one took a lot longer to come back let's say but I don't know I think this stuff just continues to happen and something else will come out and it will continue on I just yeah yeah I me to to me I mean you've got you've got a scary situation in Argentina you know that's for sure right like with a president who

made a grotesque decision that is probably going to ruin his his presidency in his career right like what was he that's a bit much you don't think so oh I think so I don't think this will matter at all in two weeks oh wow I hate what he did don't get me wrong I think it's stupid and ridiculous but I don't think he'll have any repercussions for it oh gosh I hope so but but I think but the to me though what stands out is as you said Gambler is going to be gambling that's not going to end there's going to be more of these we're not even in Mania phase yet we're not even where we could be in this bll cycle like I think this is It's only this is going to happen again and again throughout this year and only going to

get worse but at the same time I also really buy into the thesis of meme coins are a way to capitalize attention and attention is only growing in the digital world and so we're only going to capitalize that more so I actually I I think mem coins have got a long way to go and I think have a incredible future yeah and I I think people got to remember that the younger generation this is what they do they love to gamble I was at a bar on Saturday and it was it's like a new country bar that opened up where we were and where I live and I walk in I'm like oh my God everyone here is like 20 years old not even like they're all wearing hats on the top of their head and like I was like this is this is weird we got to go but uh one of

the people I was with like celebrated they put their hands up and like screamed I forget what it was for we were having a conversation and some kid comes over and just Taps goes oh did you just win a parlay and I was like what the hell are you like parlay where did that even come from right like but this is what they do right the kids they were all on their phones just sports betting the whole time that we were there because there was a bunch of sports on that night and I was just like man this is just what they do kids and this younger generation they're going to speculate they're going to gamble this is what's fun for them right they can do it online they can do it instantly and meme coins is a big part of that and so I just I don't think this stops I think

salana will continue to well and also like salana has a lot more going for it than just um than just meme coins though I do understand what you're saying Adrian like it is the bulk of the activity right now which is why it's seeing a big dip but I think I think everything will go back to normal I I gotta I gotta extend beyond that too like the whole world loves to gamble it's not just like the younger generation it's just the younger Generations like that's probably who's gambling on Meme coins right like let's be real like it's like 20-year-old men that are gambling on mean coins right yeah but what happens when Doge gets an ETF this year which I think is likely and Wall Street has to learn about meme coins and the biggest gamblers in the world have to learn about meme coins I

think they will also start gambling on meem coins I really think like we're just getting we're just I don't know about that one I don't know that I I know you disagree with that one but I really I Happ big institutions are going to be investing in this kind of stuff I really don't think so um we'll see we'll see but I just I so I do think what what is nice about what's happened last week is there has been a lot of talk about fundamentals and like it's pushing a few people over to fundamentals now right like people are rage quitting meme coins some people and it's just nice to see fundamentals get its moment on Twitter for a little bit here uh and so like that is ultimately a good thing the question I think we always have and Martin just wrote a pro report on it

last week is do fundamentals actually matter in crypto right do they make a difference uh and so Martin I know you wrote a little about it if you want to give just a a tldr um we can have a bit of a conversation on this topic too yeah and also like because you are talking about meme coins so you might be able to wipe out your account completely I don't know once two times and then you might just s sit down and say like okay what the [ __ ] am I doing here let's look at serious things so what what is available here so you know like it is a journey for people people usually getting shitcoins and then it's usually the next cycle though they come back like all right I'm GNA invest in something more fundamental and like hold on longer not

trade but then if you think about um if you are a liquid fund and you are trying to raise the money it's much easier for you to go to uh potential liquidity providers for your fund and show them that you are using fundamentally basis approach rather than you know we are buying m coins or whatever because it's it's something that people can get pretty easy familiar with and like it makes sense to them right and also like the more people the more sophisticated players are coming into crypto the the the like the Prof Professionals in terms of portfolio

management and stuff they are coming from traditional Finance so they are bringing their own kind of expertise and knowledge from that world and bringing it here because no one is really applying like this traditional approaches here in a in a big way in a you know like deploying billions no one is doing it and that's why this is the opportunity for them too because people don't know how to do these things and they are just speculating so I feel like it's better for LPS to raise more money because it makes sense that you are fundamentally driven all the managers that are coming to this space are going to use that approach that they were used

to do in in traditional Finance it's also looking at fundamentals trying to project the future cash flows also the people who got burned a couple times because trading some [ __ ] now they might be kind of already they they let learned a lesson and now okay so let's let's figure out what's really working here what's making some sense in terms of if I'm serious investor what should I invest in so like it's just bringing me more points where I think we are hitting the point where fundamentals will really start to matter and yeah um and also because I feel

like defi is probably the primary sector which is uh with the strongest fundamentals these days you said that at the perfect time as I shared my screen to show defi fundamentals that was wild anyway continue and yeah my point was that um defy fees or like fundamentals for defi were very volatile over the last years but now when we see like coinbase and revolut and like everyone is stepping into the crypto and they will eventually start to use some of the defi apps so the people will not just you know come in and start use it and once the bare Market hits again they will just

leave so I feel like a a lot a lot of pieces putting together and it it's start starting to feel like okay I believe that fundamentals will have a good good year or not just the from like year I mean like from now on fundamentals will matter more than some people realize well for a few reasons um one when institutions do come in because now the regulatory frame America is allowing them they also so one because that's typical to them they want to do their revenue analysis Etc but also they want to deploy lots of capital not a small amount of capital and most mcoins they can't deploy any Capital because there's not enough liquidity right because like 70% of the token circulation is held by one wallet right and so they actually

just can't deploy a lot of money into a lot of these meme coins and so as bigger Capital comes in they just have no choice uh but what was cool was Martin did a pro report last week and he looked at you can see up on the screen here this is the revenue of um most of the largest defi protocols in in crypto and if you looked at track the price of their tokens it followed this uh almost perfectly now not to the extent so in 2024 um defi Revenue went up 218% the tokens went up 10 and something percent so it didn't match it exactly U but that's okay in the short term that never really happens but it followed it quite quite a bit so like as like the start of the year in March 202 before we had a huge jump in defi Revenue you saw the

tokens jump and then it we had that lag out uh where revenues went down so of token prices and then it had a huge jump again so like you're starting to see tokens actually track their fundamentals which you could consider revenues and there's other things that are fundamentals as well um and so it starts to be a little bit more predictive which I think is huge for a lot of people who want to invest and not just gamble right and so if we think defi revenues are going to continue to grow um then at least from what we've seen over the last year the tokens are probably going to grow as as well along with that if we look at the the best performers year to date so far and I know it's it's only been you know a month and a half or whatever we're at now um it's basically

fundamentally strong tokens hype has done extremely well which is just increased revenues increased market share increased user base uh a lot of the dexes have done pretty good uh radium Jupiter Etc they've obviously done really well off the backs of of of memec coins and they're generating a lot of Revenue as a result to that if you look at the last seven days who's uh the best token maker that's what we talked about all was last week or two weeks ago talk about makers throw that down look at that maker crushing it oh jeez I think we're almost we're almost at what nine billion we're about to hit nine billion in Supply when we talked about this was it last week or two weeks ago we were like below eight billion this thing's just crushing it and then uh so like I just think we are seeing a

resurrection of fundamental fundamentals in crypto uh because in some places things are growing in crypto and doing quite well uh and um and the tokens seem to be um following that and correlated with that so we'll see if that continues I don't know obviously we'll still have a bunch of [ __ ] show and stuff and mem coins but um we're starting to see a Resurgence there anyone think that that's going to change this year and and get worse or or does anyone have a differing opinion or are we we starting to think fundamentals do matter here my my I I definitely think fundamentals matter I think uh it's a it's just a less it's it's a less sexy investment and it's not going to get you the 100x which is unfortunately why most people are so many people are here in crypto for that so they're here for the wrong

reasons my question is will these people actually stay and learn how to invest properly or do they just Rage Quit because we see this in our community quite a bit where people they make a bet they follow some mem coin they lose big and they leave right that's what I can't figure out do we just lose those people or or or is is like gambling and mcoins an onboarding ramp to a bigger uh Investment Portfolio in crypto there's always turn right like you think of it like we have newsletter subscribers and we have a x% turn on our on our Pro Subs every month right this is how all businesses work same thing is true with Finance right people come into this space they want to invest or they

want to gamble they want to do whatever they want use Defi and X percent will churn they will leave they will not come back but a certain percent will stay right and I think that just continues to grow and build over time but definitely you're going to have people rage quit and leave it's just that's just like so like I I I wish I could slap all those people silly because if you are churning in your financial like in the way you manage your money like what the [ __ ] are you doing like no don't churn learn how to become a long-term investor and build your Capital base and do this the right way instead of like taking massive bets and then quitting and then probably coming back in a few months and taking another big bet because you lost big

last time H it's just the thing is there's certain areas that have a lot less turn like once you use a stable coin and you're from outside of America you're not churning you never churn right the difference is when you use a mem coin and it gets rugged because of an Argentinian president like you're have a high churn rate and so you just got to think of like what are the industries one of the sectors in crypto that are solving real problems because when you create a product that has value you have a lot less churn right it's like we run a media company or sorry we run a marketing agency we have a lot of clients and the clients that have really good products have really low churn rates the clients that have really shitty products have really high churn rates the same is true here in crypto

and I think that's one of the things you want to be thinking about is like what use cases are being created here that actually solve problems in the real world and I'll tell you right now there's not many there's not much but there are few and those things will just continue to grow even um like stable coins other than obviously when teruna collapsed uh it it obviously went down a lot because people were scared of stable coins didn't get it anymore but like that thing started to grow back before a lot of like the stable coin market cap started to grow back before a lot of the rest of crypto right because there's just it's solving a real problem and so people are going to use that and so I think if we can find the things that people are solving problems for then then um then those will be the things

that make it long term and have less turn right um let let me talk about jump in I want to say something um what makes me even more bullish on fundamentals is that we don't actually need like more retail people buying these tokens we and now we don't even need those people going directly to I don't know Sky do app and using Sky app because I think quite soon we will see emergence of AI agents who are managing everything for you so maybe because you don't know which Landing protocol you should use which one is the best out

there defi agent will kind of be able to analyze everything that's available and they will use the best learning protocol for you so it's also like bringing more users through to the the best products out there and then the next point you don't even need the retail investors into these tokens because if they are successful they will generate a lot of money and then the protocols itself will be able to do their own buyback and at some point like those sophisticated players I was talking about earlier they will start to pay attention and they will be buying too so you don't really need like people knowing that they are using a or Lio or

whatever and you don't even need like people going to buy these tokens because it it's just like removing more dependency on these unsophisticated players in the space and that's what makes me me uh more bullish in mem coins it's all about you have to be early and you have to think who's the next buyer that's going to come in right and you're like well if this K tweets it then you know a bunch of his followers will buy it so if I'm in early enough I'll get in before them when you're buying fundamentally strong tokens mainly in the def5 sector right now but that will that will continue on other areas the whole strategy here as Martin is saying is look it's very cheap to run a protocol they don't have humans working for them or at least not many it's just an automated thing that exists

on a blockchain they generate hundreds of Millions dollars in Revenue a year at least some are starting to and they can take all that profit and just buy back their own token with it right and so the net buyer the next buyer for your tokens is just the protocol itself and you can track on chain how much they're going to be buying and you can predict that out you cannot do that in meme coins right so there's a just such a big difference here uh and if you're paying attention you understand that it's um it's a big leg up because I think that stuff now the problem was we never really got to have these token BuyBacks because of regulation or uncertainty in regulation I think now we start to get that and I think that's going to be um a massive Game Changer in in the way that we

invest I think it's gonna be a big deal let me let me bring up a thesis here that I want to talk about because this kind of fits this area here uh I'm just share screen so I don't know if our listeners have heard of the fat protocol thesis or the fat application thesis but I'll explain it real quick and I just want to talk about everyone's opinions on this on where we're at here and so basically what we're trying to understand with fat protocol our fat app is where does the value acre in crypto does it acre to the protocols which would be fat protocol thesis meaning the the tokens of the protocols get fat they they get a lot of value or is it the applications meaning the value acrs to these applications kind of what Martin was just talking about and most of the

investment Capital goes into the applications so those tokens do really well for the since the beginning of time of crypto it's always been fat protocol thesis and the idea around this was well if a can attract a bunch of apps and a bunch of users and it has its own native token that has Network effects more and more people will use it which means more and more people will buy it and hold it and this protocol just get bigger and bigger and bigger and bigger it's kind of like if you think of like if the internet had a token right everything is all on one internet if that thing just had a a way to invest in it it would probably generate a lot of value at least you think it might that has been the thesis for a while here in crypto and I think um it has worked obviously

ethereum has made it up to 300 whatever billion salana is over 100 billion or at least was it's probably not now as we speak um but a lot of these l1s have done really well and there's always been this big L1 trade in the last three Cycles right uh even this one with soie and salana Etc but what John sharo tweeted out here was hey we're getting closer now to the fat application thesis starting to play out which is this idea that because the applications own the users that is where the value will acre because when you own a user right or you have a closer relationship to a user you can start to tell the protocols underneath the view you you have the the bargaining power the negotiating power

right and so we're already seeing it l1's and l2s what are they doing they're racing to lower their fees all the time so that they can acquire more users and acquire more uh applications right um and so if you think about an app that deploys on whatever chain they're going to make sure that that chain is really really cheap for them to actually Deploy on it so they technically have targeting power because they are the ones with the users and we're starting to see that play out and a clear way to see this right now is just look at token terminal these are the top 20 Revenue generating entities in crypto so three years ago this was all l1s there was no apps that were up here or even remotely close now 14 of the top 20 are applications so

we're starting to see this fat application thesis play out they're starting to generate more Revenue right we've got okay obviously but then you've got Unis swap Lio goo Circle flash Bots a sky Aerodrome pancake swap Athena GMX Morpho Venus so pretty wild to see like two years ago if you looked at this it was all l1s and maybe some l2s actually back then um almost no apps and so we're starting to see apps really start to generate Revenue my question on this fat app by the way here's a nice picture of it to understand it it used to be all the value going to protocols now it appears to be going more to Applications right um and so this is kind of interesting to see play out and my

question to everyone that I put out on on Twitter and I want to get your guys' opinion on this was okay the fat app thesis seems to be playing out right more value is occurring to the apps and that's because they own the users but who are the apps in crypto we often think it is those that I just shared on token terminal the AES and Unis swaps and the sky Etc but I'm starting to think that it's not them and those are actually also just protocols and instead it's Robin Hood and it's coinbase and it's Kraken Etc now let me explain why we just saw coin coinbase integrate Moro into its app right so Moro was an app it was the app right you had to go get a wallet and then go interact with Moro so that had

the bargaining power over whatever chain it's on if Bas was not being good to it uh if Bas was trying to charge too much it could leave and go over to optimism or go over to SLA or whatever but what's happening now is coinbase which actually has way more users than anyone does on chain integrates Moro and now if you want to if you want to use Moro you just do it through the coinbase app so who owns the user in this instance well it's coinbase and if coinbase wants it could also go use a instead of Moro or fluid or whatever competitor to Moro and so coinbase can go to uh to Moro and say hey you've got to lower your fees for me specifically or I'm going to go to your competitor right and of course that's how it's going to play out this is how

the entire internet has played out most of the value on the internet has gone to the applications Facebook Instagram Google Etc right it hasn't gone to the underlying protocols or the infrastructure except for NVIDIA uh but that's a whole different different world and so to me it seems obvious that the same thing's going to happen here but actually the things we think of as apps in crypto like your AES etc those are just protocols because the real apps which it could be the wallets or the exchanges are just going to integrate into them and that's where the users will remain don't think and I've said this a billion times in the show I don't think many users are going to come on chain and use crypto apps I think they'll mainly do it from existing traditional web 2 apps that will integrate in with these and so my

thinking here is there's a few questions I have from this but my first one is is the fat app thesis really actually just apply to centralized exchanges in maybe wallets and not the apps that we see on chain uh and we're kind of some people are missing the point to that what do you guys think when I say that I think you are missing the the critical piece which is yes Mor for might be replaced by a or anyone else but the point is that these apps the decentralized apps need to have something more valuable than just one piece of code that coinbase can use so think about Lio if anyone wants to have a state version of e they should provide state eth from Le

because it has the the most liquid it has like Integrations everywhere so it's not like coinbase going to Lio and saying like hey guys you should reduce your fees for us because otherwise we are going to your competitor no there is no number one in in liquid staking of eth there is Lio which has an enormous market share which has deepest liquidity and everyone should use Lio so these are the things that you cannot just compete on price because it's a it's a to death you need to provide more value but don't you think it don't you think the coinbase in the robin hoods of the world at least to retail I think for

institutions it's may be a little bit different but like coin the value that coinbase provides is they're not just going to integrate Moro they're going to integrate you know some decks and like a bunch of other things and so they've they've created interoperability I can go in my one app and I can use all these D5 protocols without having to worry about bridging and connecting in and all that stuff and then they also have so they have a way better ux they fix kind of the the interoperability you can do all the things in one spot and then to be completely honest I think a benefit that coinbase has is you don't have to worry about self- custody which I know is like a big thing in crypto and that's like the use case but the fact is like 99% of people don't want self- custody they

actually want the opposite because they're afraid they're going to lose their money uh and so like there is a lot of benefits that coinbase for example or any exchange provides to to their users right now Institution may be different if they're going to stake their eth I agree they probably won't go to coinbase and pay that premium of a fee because they'll go and figure out how to use Lio but on the retail side right your average person I I'm not sure that more liquidity even matters to them right like um because it doesn't impact someone that's putting in thousands of dollars it impacts people putting in millions of dollars right but users might like to hold a state eth and then lend it somewhere and you can lend St eth from Li

everywhere you know so it's it's but okay so coinbase turns CB e or whatever their Stak eth staked eth version is on their app and they allow you to do that in Morpho and take a loan against it all in the one app I got a feeling that's going to attract a lot more from retail users than if they had to go and do it themselves yeah but you are forcing them to use Moro versus with with that state eth I can choose whatever I want anywhere I want but does the average consumer want to choose whatever they want does the average consumer even understand what that means right like I kind of think no again institutions yes uh but I mean if you look at coinbase's

revenue for example it's like 80% of the revenue at least comes from consumers like retail not institutions uh and so I just kind of think at least on the retail side um which is obviously a fairly big market like I don't think average people want want to figure out and go and look around and figure out where the best risk reward is to get a loan on their eth I think they just want someone to tell them what to do you know and make it easy yeah well you gotta look at look at where this came from right like uh look at this screen that I just shared it's it's hilarious so like this came from the fat app the fat protocol thesis came from hey we're getting away from Web Two web two right like it used to be the application layer

was the fat layer and the prot call a got nothing in web 2 right and we were all like great blockchain is the first time that we're going to be able to capitalize the protocol layer because they're these interoperable they provide value the applications need them and I think we're going to end up somewhere more in the middle I I think we will still I agree that applications are going to get fatter and that I agree with your thesis Kyle but I also think the protocols are going to provide they will continue to provide value more than they do in web to and so the protocol there will also do well I think it's going to be like more in the middle of these two long term as opposed to it being like it is in web 2 where

protocols basically get nothing I don't know the thing is there's just so many l1s in l2's launching now that like there isn't much of a mo anymore I I think the value is really going to Applications moving forward um there's some value to a protocol like obviously better than than a little bit but I don't think it's middle I I think it's way way way heavy to application now what I don't know and Martin you make some good points it made me think like institutional demand for apps will be the AES the Unis swaps the skies because they don't want to use the exchange retail demand is probably the coinbase and the robin hoods Etc and so maybe it's it's both uh and so you could see them all as apps but I think all value most of the value is going to go

to these apps and I think these smart contract platforms are going to turn into Commodities essentially but this is a good thing if all the value goes to the apps because as an investor right now you can invest in different l1s l2s and so on if we have a monopo of Robin Hood and coinbase is that a good thing because it's basically just what we have in web 2 with social media agreed it doesn't mean the user data it gets sold again and we don't own our data data anymore which was a big advantage of web 3 so far so I hope we will see some front ends web 3 native basically and I know there some apps being built yeah I look it's it's not a great thing you're right um although I think

it's a necessary thing I think and actually John um this tweet here here's what's interesting he goes okay fat protocol thesis we saw that play out already we're moving in a fat application thesis because the apps own the users and so we're starting to see apps and the exchanges generate a lot more revenue and then he goes then it's fat user thesis which in my opinion this is when the users like we need to onboard people to crypto we need them to probably use centralized companies first because the ux is better it fixes interoperability you're not afraid of you don't need to worry about seed phrases and all that kind of stuff but eventually don't need something like that for that you can do it in web 3 native as well you can log in with your Google account or something like that I

know but it's very like it's super Niche it's not there yet right like I I just think what's Happening Here is most people will be onboarded via exchanges right and then eventually when people get smart enough to have in the tech gets good enough to have your own wallets and self- custody is not about seed phrase anymore we we've fixed that problem with ZK or whatever then I think people start to realize oh we actually have more value as the user and we can just go and use these applications on our own I can just go Connect into Moro or whatever um but I think we're probably years and years away from people doing that and so I think this is the right sort of Journey which is hey we're all going to start to use crypto

but we're going to do it through centralized companies because they're going to create the good ux and then hopefully this one I'm still unsure of hopefully people learn enough that they can go and do it their own way without that although I would say even if this does happen who set up the best to do well here that's the wallets in this world and that's coinbase and Kraken and okx and Phantom and metamask so like it's still centralized companies are the ones that own all the wallets right so I I think we're a long ways away from it not being controlled by centralized companies uh which by the way this is obviously if this plays out like I'm thinking it's obviously bullish coinbase Robin Hood that's kind of all you can invest in in this world right now Kraken will will IPO soon um but I mean as

Martin kind of said institutions will still go direct to apps and so like still bullish a lot of apps of course quick break from the episode to tell you guys about a product that I really like I'm talking about crypto.com cards these are a great card to spend your onchain dollars and get rewards on chain there's no annual fees for their cards which is great you get cash back not in Fiat not in USD but in crypto so you build up more you're stacking more on chain which is great there's also a ton of perks Netflix subscription Spotify subscription and if you get certain levels of the card you can get lounge access like me you travel lounge access is great check out the link in the show description and get your card today let's get back to the boys the

milro pro team I mean is is isn't the takeaway from this uh don't invest in l1s like know so that was my act you know what I mean my next question this is my next question right now almost everyone's portfolios are 80 90% l1s right at what point does that need to flip now I know that's extremely risky and I'm not saying anyone do that we are all about Majors though we do include coinbase as a major recently in our portfolio right and I consider that a major and I've been buying more of that and and my percent of my portfolio has been more and more coinbase which is technically an app I think of that as an app in crypto um now no other app has a meaningful portion in my portfolio and

I'm wondering at what point at what point does that need to change because if this actually is playing out which a lot of people do agree with now I don't know does it play out to the exchanges does it play out to the onchain apps but what point does our portfolio need to reflect that anyone have a thought there as soon as the popular apps get tokenized to something like pump. fun or poly Market they are not yet yeah but do you think it's still just too early in the Journey of the fat app thesis that that upside still is just makes sense risk adjusted on the on the protocol side I think it is yes yeah but you know in the beginning of the episode we were kind of uh Shilling fundamentals and the more the fundamentals are like major role in in this industry in this market I think the

more we will lean into apps and like less layer ones more apps so it's I can see some correlation there because also outside of salana no other chains really have fun strong fundamentals yet they're valued at insane valuations I I think at some point this is there's going to be a repricing and l1's are going to l1's are going to I don't know if they're all going to come down like crazy uh or just everything else will be repriced much much much higher like right now l1's you know you launch an L1 and you're immediately like a 10 billion token right uh but you launch an app and you're like I don't know you're maybe

hitting a billion if it's really got traction um and at some point that that that Divergence is going to change and l1s might either come down or just remain and then the apps become uh valued much I don't know if it's higher or the same or whatever but at some point that that's got to switch so far it was like that because VC's invested in l1's uh and the premarket valuations were extremely high yeah I think hyper liquid is pretty good example here because they were okay they look at the market and they were saying like Okay all people are trading on centralized exchanges why is that because of the user experience is much better there so

they built their own customized layer one which is now competing with the user experience of you know binance bybit those centralized exchanges and they are getting like more people there because they are enabling the same kind of experience but in an but on chain So you you're you are still owning your funds you don't use any custodian like binance or you know someone else so it's showing the Playbook we crypto is always struggling with user experience and we were just talking about there are great products like AA maker Lio those guys but we struggle with user experience

because I don't want to download metamask go to this website then go there to do something else I don't want to do that so like what if anyone else just copy paste kind of hyper liquid approach and say like hey defi is [ __ ] great let's just build one huge great user experience which will enable me to do swaps to buy meme coins to trade to land to do everything I need from one front end and this will be the winner and like you know maybe then the the the idea the thesis behind Okay coin Bas Robin H these will be the winners can pretty quickly change and it can become that maybe infinex I don't know

like someone else doing this thing because then if you are just front end without any kind of other motive to I don't know uh kind of push your products you know coinbase might be pushing your their own products and for the cost of not providing the best products available to the users and if this front end is only hey download this app we know it's a one additional step you need to do but you will experience the same experience you can get on coinbase Robin Hood Etc but we guarantee you get access to the best products out there because we are not pushing our products it will be just

using kind of aggregators so you will not do swap okay here is aggregator and whoever is getting you the best price that will get your order and you'll get the best execution will ever Co base be able to offer that I not sure they they might have their own motives to not do that I think from an invest investment perspective I do believe that the the apps have a bigger opportunity right now than than the protocol lay just because the the protocol lay I think you're right I think it's it's it's in for a correction in some way as you said and apps aren't there yet but the hard thing is the risk reward of

investing apps is also greater so yeah I think like there is there is protocols that have Moes and have Network effects that can make you confident and risk reward so like it's almost like we need like an index IND of the apps if I could invest in an index of the apps that's the be there I would love that investment I feel pretty [ __ ] good about that that's a sick maybe longer term because this cycle I think or this year it won't play out like that and the protocols will still ACR most of the value yes yeah yeah that is a good point I was gonna say that I do think like for those listening this doesn't mean you should dump all your l1s right now and like your eth in your salana I don't think that's a smart move this isn't happening today it's just a trend over

time I I would imagine if we had like a chart of like market share and it was like l1's versus apps or l1s and l2s versus apps in terms of revenues and in terms of token price and market cap like you're starting to see apps take up some market share slowly slowly slowly and that'll kind of pick up over time but probably probably over years I would think not like yeah I don't know how long that that takes yeah that's interesting the game's going to change that's the key thing we're trying to say here is it's not going to be as easy as just buy the most popular L1 and let it ride for forever uh things are changing but man that's a sick idea we should tokenize an index there's a bunch of protocols you can do this with of like the apps that we're most bullish on that

are generating the most revenue and um and make that a milk Road uh no Ro product who wants that who wants it let us know if you want it or we should just build that front end and like connect all the great abs there and just let people we'll just go and build that that'll be so easy you know when we get off this call I'll just go whip it up you know don't even worry about it we'll just take over coinbase just like that that's the spirit all right what else uh what else do we got on our list today um let's talk about AI uh before we wrap up so grock 3 uh was released yesterday and it's a freaking Beast if anyone's had a

chance to use it mainly let me pull up a chart what we're looking at here is each of these like l M that we have whether it's grock or or deep seek or gemini or Claude or GPT whatever they basically have like um benchmarks or how well they score on different things uh so one is on math one is on science one is on coding Etc we just had deep seek come out was that like three weeks ago now maybe I can't remember and it dominated every everything and now you have grock 3 come out and it is absolutely dominating at all of them even deep seek uh and Gemini and it's literally winning on every single met trick um so I don't know pretty wild to see this and I just wonder like what are we doing here

there's just like every day or every week the new one comes out it upgrades and it's just better and it's better and it's better and like where does this end or what happens Martin I know you've done a lot of research on this you want to just like walk me through your thoughts on what's what's happening here and why is this relevant I think the the progress of AI models is just insane and uh yeah as you said like couple weeks ago we saw deep seek Air1 model which was uh competing with um open AI 01 model and we were like wow someone finally cracked the code and were able to you know deliver such a good AI model and now gr did the same thing so it's like already you know you know the level

of what you expect from the next AI model for for from the the next future generation is just like going up and up and we are already pretty close to this AGI kind of thing where it's already like much much smarter and better than the human basically so and also interesting thing is what's what's the mode in AI these days because at some point like everyone was so bullish on open AI because we all thought that they have the best knowhow the best people the best just team to build it and then all of a sudden some Chinese fund built something very similar now gr did the same thing so

it's like okay so is is no how the mode because it feels like it's not so what is going to be mode in in AI era and it feels like for some time it might be access to to the computation to you know uh all these gpus because Twitter somehow managed to get I I think about 200 or 200,000 200,000 uh Nvidia cards which is insane but it sends it sends the message to the rest of the world because everyone is competing to have the most performant AI model and if now Twitter has Priority Access to the newest uh

chips from Nvidia and not open AI not Facebook so they will be like [ __ ] okay so we are GNA have less gpus available and Twitter is gonna have Advantage so we really need to double down on our internal development and we need to really kind of build our own chips so we are not dependent on Nvidia which is first supplying I don't know Twitter maybe then there's going to be Bezos or someone else and then maybe we you know but it's gonna be it's going to be maybe late it's kind of interesting I don't think that here's my so one I think the mo Is Res is you're right this is why the names that

we're saying are from the biggest companies in the world right it's Google's AI it's elon's AI it's open ai's Ai and this is it right no one else can really compete although deep seek managed to to jump into the mix somehow um uh but in terms of Nvidia I don't even think other companies can compete to innovate and create what they're doing because one they're kind of like Tesla where they built everything in house and even the things that they didn't build in house for the gpus they went to those factories around the world and redid their entire model they're like here's how you guys are going to fix your factory to be more efficient so that you can build the chips that we need and so their whole production line is controlled basically by them and it's

as efficient as it could possibly be that one is really really hard there's a network effect that Nvidia has it's kind of like what Tesla has why Tesla can create the best cars in the world for such a cheap price no one else can compete on that right now and it's takes you years and years and years and years and a lot of effort to to ever do that the other thing that Nvidia has that no one else has that none of these other companies will do is NVIDIA launches their newest GPU whatever it's called they already are three Cycles ahead on Research they have a full research uh Department that is already building out the next chip the next chip and the next chip after that and they basically release it's like um they have three new chips that come out every single year

and they've done this for forever and so every year analysts come out and say the margins of NV are too high companies are just going to create their own and no one can ever do it because no one can keep up with the pace that Nvidia is innovating at so I really don't think that they stop anytime soon um so that's I mean their mode is just their like willingness to keep innovating you know Nvidia and then I think everyone else's mode is just resources to buy Nvidia chips but there are risk that at some point we will we will find a new way how to train these models and you might don't need to require much GPU as we do now which is kind of what the Deep seek thing show yeah yeah yeah so then what's

the mode yeah then I don't know so it it might be the data because like right right right where do you go for information I I go I am constantly on Twitter I go to Milk road yeah yeah sure but like you know Twitter is such a good vehicle to communicate new things and ideas and stories and like so they are really in a good position to have a good good model I think yeah I agree the mode will be the user experience because so far none of them is perfect and Twitter's grock you have to be on uh Twitter all the time but if you're writing an article for example it's not perfect to have to switch to another website all the time

but that all comes off data right the user experience is just like your ability to go and it's all chat pods right now the ux is the same on every single model the the the output of the models is all riant on I guess data and the ability to compute that data um so I think it's data right because like you can go and create something cool with your data create some cool new product and then just they're all going to copy it tomorrow you know so one one more thing like when open AI released their um deep research agent I was like okay I I need to I need to try it out so it's 200 bucks per per month and it's really super powerful you you'll just get it

like hey I don't want to do research about ZK and what's happening there and it will give you like 15 pages Report with resources and everything so it's it's just insane it saves me so much time to do research on my own and I was willing to pay 200 bucks but now like a week ago perplexity announced deep research too so it's kind of similar to that and it cost like like 20 bucks now Gro announced also deep research so like you know something I was willing to spend two 200 bucks a month two weeks ago now cost 20 bucks and maybe I can find it even for free somewhere so it's

like it's just insane some something that's so valuable to me that at some point I was willing to pay money and now the cost within a few weeks are just dramatically increasing it's okay riddle me this let's go back to the crypto world for a second here but apply it to ai ai narrative completely completely wiped out over the last few weeks in crypto we're talking about how Elite these companies are data is the mo resources are the mo nobody in crypto AI has even remotely close to the resources that open AI open Ai and Twitter and all them have okay so we know we're not competing in resource ETA we're just tapping usually what everything in crypto AI is for the most part is just

tapping into these existing um networks does value acre to the AI crypto world like like and and why why would it why not just keep putting money into Microsoft Etc um what's the reason to put it into crypto Ai and then one other question maybe you want to apply it to this is um does do this mean it's it for AI crypto or does this stuff bounce back and if it does why does it bounce back yeah I mean ai ai in in crypto like let's use this this deep research example now I can ask about ZK and it gives me pretty good answers but what what if I'm interested about analyze I don't know AA for me can it go on ether scan or June or somewhere

on the Forum to read and post or like go on Discord and give me like the full the full thing no it's not so what if I just why can't it it seems like you just connect an API in and then I can do that pretty easily no no it's not that easy like you need to to kind of tailor like customize it for your specific use case so even right now I describe it's already very powerful but it for a general kind of idea to do research but if I'm in crypto I might be more inclined into crypto research so I would expect that if someone is doing research for me it's a it's it has the skills and KN how how to use June toen terminal

ether scan Discord like everything so like you can see some specific use cases you know what's funny is you just you just said the app thesis the Nvidia or sorry the open AIS and all that these are protocols they're getting cheaper and cheaper as you just said and people are building on top of them right like you want to build an AI you just Connect into open AI or Twitter Etc and you build a use case that is niche specific to a certain audience like crypto like what virtuals is doing with investing and like understanding onchain metrics Etc and now you've created a product an app that people can use and so it's almost like is that the app chain is that the app thesis fat app thesis

playing out in the AI world as well where like why put your money over at Microsoft uh or open AI um because their costs are just getting more and more and yet the amount they're charging is getting less and less if they want to compete and so then those that are building the real use cases which are just apps creating things does value acrew there which some of those might be in the crypto world but in that case it's very hard to invest into the specific apps because there's just so many yeah agreed that's why we need Marketplace for them so like the ultimate goal will be just API and like I am going to sell my crypto research agent to to the

marketplace and it will run multiple tests who with everyone else who is competing in this same sector and it will evaluate the performance of my agent someone else's agent and then if someone is using some AI model it will go into the marketplace find okay this user is asking something about crypto what is the best agent to answer some questions about crypto hey based on the outputs which are automated by the evaluations test your agent is the best one so use that one it's like an aggregator of Agents yeah yeah yeah who's building that that sounds kind of cool I think kind of benser is doing that but not I'll just go Build It Up

why don't we just do it Martin you want me just no problem I'll just go do it after after lunch virtuous agents for example Luna can already do that she got the task or she wanted to create a a picture for a social media post and she was uh then communicating to an agent that could create the picture for her and she paid him but in that case it's a closed ecosystem and it's WID listed which protocols and which other agents she can use also like next generation of of uh open AI model it's going to be just the the router which will decide like okay for for this task you should use this 01 model for this task you should use our gp4 model because everyone is better in

in different things so um yeah that's where we heading I companies are going to be just look so different in a few years from now like when you can get all of your finances and value on chain you basically make your cost to do finances globally zero and then you can start to get AI to run most of your administrative and even Innovative en coding Etc things it's like there really is we're going to a world where you're going to have billion dollar companies with one employee you know what I mean uh like where these companies are going to get so damn Proflo yeah one real employee and then a bunch of B you're going to have actually a lot of employees they're just digital

employees we're going to a crazy ass world uh well that was fun anyone else have anything they want to wrap up on I think that uh like just to answer your question of like does does AI crypto make a comeback as we see it right now I think I think we're in a couple different phases I think from the speculative Casino phase I still think AI crypto has a run this year it's like ai's narrative is too big uh there's so there's everybody wants to invest in it it's very difficult to invest in right now okay there's going to be a lot a lot of speculation within crypto so I think that that that makes it come back and then I think long term I do think that there will be a lot of decentralized

apps built on crypto rails that use AI that might even be they might even be AI based apps they're just built using crypto because that's how the founders want to raise capital and that's how they want to build and so I think I think there's a there's a long life cycle of crypto AI still to come uh the bubble burst on the first one but I think that's that's just the way she goes it's also just like everything is going to use a it's like the internet right like we used to call them internet companies and now everything is just a company that uses the internet I think all companies are going to use crypto and all companies are going to use AI we're sort of merging into that uh very quickly in my opinion um and especially with the regulation with Trump I think

that's going to the deregulation sorry that's going to push that even further right um like you even see it with our company a lot of our uh expense or sorry a lot of our finances is moving on chain a lot of our team is using AI like we're starting to think about building AI products but more importantly we're just using AI to make our existing products even better and more efficient and so like you would assume every company is doing the same thing right um so it's pretty wild for both both uh Technologies I'd say cool well thanks guys that was a lot of fun we'll um we'll do it again next week thank you guys thanks J as always if you liked today's episode please hit subscribe and make sure you follow us so you don't

miss out on the next one there's also a link in the description to our free 5 minute daily newsletter where we simplify crypto for you while making you laugh and if you're willing to step up your crypto investing game we're going to also leave a link for milk Road Pro you get access to our portfolio where you can see exactly what we are buying this is your number one resource to help you invest successfully in crypto one final note this show is for educational purposes only and nothing we say is financial advice investing in crypto or any asset is risky and you should never invest more than you can afford to lose thanks so much for listening in my friends have a wicked awesome day