Bankless - 150 - Bull Case for Ethereum IV with Justin Drake, DCinvestor, & Anthony Sassano

Starting point is 00:00:06 Welcome bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Guys, the greatest way is to go bankless is to hear the bull case for Eith. And then I think at the end of this episode, if you are bullish, to do something about those bullish feelings. We have the bullish panel here, the ultimate bullish panel, Justin Drake, Anthony Sassano, DC Investor, We've done this like every six months or so, David, since late 2020, the Heath Bull case. And this is another episode of this type.

Starting point is 00:00:45 Yeah, installment number four. And Ryan, while you were doing that intro, you said, this is Ryan Sean Adams here, David Hoffman, and we are here to help you become bullish, Heath. Because if you're not already, but you should have, but you should have. Because that is what this episode is designed to do. We want to get back to our roots and get back to what we are good at, which is becoming bullish. and I think everyone is perhaps scared right now if you're a first cycler and they're flipping, they're going from optimistic to pessimistic, they're just like pessimistic on the future of crypto,

Starting point is 00:01:16 things hurt right now. I would just like to remind listeners that when the prices are in the tank, that is the time to be bullish. The time to be bullish is not actually at the top. It's at the bottom. It's when most of the opportunity lies. And so I think out of all the installments of the bull case for Ethereum that we've ever done, Ryan, I think this might be my favorite. This is Justin Drake's first bull case for Ethereum. I think he's definitely invited back to episode number five when we eventually do that. Oh, man, he is fantastic. And it completes the panel because he has technical reasons to be bullish, which is super important, too, to kind of ground this. And then also, well, we'll get into it. His description, though, of the total market cap was just crazy.

Starting point is 00:01:53 Chills. Some housekeeping before we get into this episode as well. David and I are revamping our sponsor strategy in 2023. And we're putting a focus more on long-term projects that are playing long-term games. So we're really excited to be building a relationship with Cracken. David, Cracken is one of the few exchanges. I still trust with my Fiat trades. Doesn't mean I keep a lot of funds on an exchange. Of course, you can always go bankless. But when I'm trading and you need to go from Fiat to Crypto, Cracken is one of the few exchanges left standing. It's why we wanted to strike up a partnership with them going into 2023. So you'll hear more about that in the future. They've implemented proof of reserves before anyone and ask them to, and I plan to take more of my business personally to Cracken in in 2023.

Starting point is 00:02:39 Thanks to Cracken for sponsoring this. And with that, Bankless Nation listener, I hope you are ready to get bullish. First, in order to get bullish, you need tools to get bullish. So we're going to talk about some of these tools to help you go bankless. And then we'll begin the Bull case for Ethereum episode number four. Happy holidays, guys. The Brave Wallet is your secure, multi-train on-ramp into Web3. And it's built directly into the Brave Privacy Browse.

Starting point is 00:03:02 Gone are the days of managing multiple wallet extensions that put you at risk of fishing, spoofs, and tracking. With the Brave wallet, you can securely manage your crypto assets across more than 100 different chains, including Ethereum, Layer 2s, Solana, and more, all without downloading risky extensions. The Brave wallet is easy to set up and removes the headache of jumping between wallets and extensions. It's lightweight, but packed with great features, like built-in token swaps, buying and holding NFTs with a gallery view, and support for hardware wallets. But also much more than that, because Brave is shipping new features. every single month with a mission to make Web3 easier to navigate for its over 55 million users.

Starting point is 00:03:38 Wall extensions are a thing of the past. So get started with Braves' Web3 ready browser today and experience a decentralized web seamlessly without all the clutter. You can download the browser at brave.com slash bankless and click the wall icon to get started. The reality today is that five corporations control the entire world of social media. They own our names, they restrict our content, they monitor our every move. And their time is up thanks to our sponsor, DeSoe. DeSoe. layer one blockchain built from the ground up to decentralized and scale social networks. With DeSo, you can own your own identity, content, and social graph, and take it with you across hundreds of applications already built on the censorship-resistant DeSo blockchain.

Starting point is 00:04:16 DeSot storage advantages make it finally possible to build infinite state applications that can efficiently store and index large amounts of content and data fully on-chain. DeSo also offers multiple crypto-native monetization primitives for developers and creators, including social NFTs, social dows, social tokens, and social tipping. So in order to experience the social layer of Web3, go to DeSo.com and claim your username. That's DESO.com. Trufi is Defi's largest credit protocol, connecting global lenders with institutional-grade lending opportunities. TrueFi has completed over $1.7 billion in originations and paid out nearly $35 million to lenders, proving that DFI is ready to take its next big leap into the

Starting point is 00:05:00 $8 trillion credit market. Trufai gives lenders, like you, access to sustainable high-yield opportunities backed by real-world investments, usually reserved for high net worth individuals. At the same time, fund managers use Trufai's financial infrastructure to bring their portfolios on-chain, benefiting from the global liquidity, cost savings, and transparency of Defy. Truefai is a decentralized financial utility. The protocol is owned and governed by the Truffi Dow, and Truffi is here to bring defy into the golden age, bridging the power and access of crypto, with institutional-grade

Starting point is 00:05:28 lending opportunities and portfolio tooling. Explore the diverse financial opportunities available on Trufai or launch your own portfolio at TruFi.io. Welcome to the Bullcase for Ethereum episode number four, a reoccurring series that we are doing on bankless. Today on the episode, on the fourth episode of the Bull Case, we have Justin Drake, Mr. Ultrasound Money himself, the guy who created the most bullish meme to ever come out of the entire crypto space.

Starting point is 00:05:57 Justin Drake, welcome to the show. Thanks for having me. And as always, ultra bullish. As always, coming up next in the left corner, we got Anthony Sizzano, the man who is literally the most bullish person about Ether. He is so bullish that he makes a 30-minute YouTube video every single day because he can't stop talking about Ethereum. And then after he's done doing that, he writes another newsletter, also about Ethereum because he is so goddamn bullish. Anthony Sazano, welcome back. Hey, David. Then Ryan, thanks for having me. I'm also ultra-bullish. And DC investor, last but not least, the ultra-great bull, not just bullish on Ethereum, but also bullish on NFTs.

Starting point is 00:06:37 He's got an NFT portfolio that blows all of ours out of the water, yet his ether portfolio is also just as strong. DC, welcome back to the show. Thanks for having me on, guys. I'm excited to join today's discussion. I'm really looking forward to this one, guys. I think this is going to be some great end of your content on what was a very destructive year in crypto, yet the Ethereum blockchain continues. to produce blocks. I want to start the conversation here, because this is something that has been a frequent theme about Ethereum up until recently that I want to start this conversation with.

Starting point is 00:07:08 And that is the general conversation of, has Ethereum fulfilled its original promises that it made even before it was a live blockchain in 2015? Has Ethereum fulfilled some of its original promises? Are we done yet? Justin, can I start with you on this one? Yeah, for sure. So the way that I see it is that, you know, Vitalik, when Ephiram got started, was a bitconer. You know, he basically wanted to see Bitcoin evolved. And I was a bitcoiner in 2013, and I had the same feeling.

Starting point is 00:07:38 The reason I was building on Bitcoin specifically is that I had this common understanding, this almost social contract that, you know, Bitcoin would evolve, and I felt rugged. And I feel Vitalik kind of also felt rug. And so from that perspective, I think Iffirm has fulfilled its mission in being like

Starting point is 00:07:55 the continuous place where innovation is pushed to its boundaries and the frontier of what's possible is push forward. I guess, you know, now that we have some hindsight, seven years of hindsight, I think we can kind of more crisply define kind of the endgame, kind of the mission of Ethereum. And for me, it's, you know, Ethereum is meant to be a settlement layer for the internet of value. And I think in order to get to that end game, we still have a lot of work to do, you know, on the order of maybe one decade. But I think the most important thing is that we have the culture, we have the people, we have the mentality, you know, that is basically innovation-friendly and will get us to this very ambitious

Starting point is 00:08:31 endgame. Anthony, you came into the crypto space a little bit later than Justin. I believe you came in 2016, 2017. So you're fully aware of the promises that Ethereum has been making ever since it was originally inception. How do you feel about where Ethereum is on its original intended purpose? Yeah, I think I agree a lot with what Justin said there. I also think that Ethereum has been executing on its long-term roadmap. It's just taken. longer than I think anyone would have thought, especially things like major upgrades like Pryph of Steak, right? That had been talked about since day one. And it really only, I guess, fully was realized this year, right, in September when we did the merge. So obviously, it's not

Starting point is 00:09:09 something that happens overnight in Ethereum when we have these roadmap items that are, that are kind of major changes that have been promised for quite a while. But I think we eventually get there, which is, I guess, one of the reasons why I'm so bullish on Ethereum is that we can actually ship, right? But in terms of, I guess, Ethereum's changing use cases and narrating, and what it was known for over time, it has changed pretty substantially, right? I mean, originally it was called this world computer where people could execute this arbitrary code on and build whatever they wanted on. And then obviously we ran into lots of issues with scalability and we didn't actually know

Starting point is 00:09:40 what people were going to build and what people were going to use. Defi was, I mean, talked about here and there. I mean, I think Vatalik actually was talking about defy still back then, but it wasn't called defy back then. And I think that the people back then had a general idea of what they wanted to see built on these things. But I think some things got way more popular than others. like Dow's and Web3 stuff didn't really take off like Defi did.

Starting point is 00:10:01 And I think that was due to scalability and also just the frameworks not being in place for those things. But as I said, Ethereum does take a while to ship certain things, but eventually it does ship. And I think that's very important. And I think what Ethereum is useful for has evolved so much over time that it's actually come to a point now where we understand it a lot better. And we can actually see like a kind of a clear path rather than meandering through the many use cases that we were talking about. we actually say, okay, you know, this works, this works, this works. You know, how do we optimize for these use cases, but how do we ensure that we can actually have new use cases pop up over time as well?

Starting point is 00:10:34 DC, as one of Ethereum's heaviest power users, how do you feel Ethereum has stood up over the years? Well, I think it's stood up well. And I think to start with Anthony's point, you know, there was this discussion around Ethereum, certainly is a world computer early on. And I think at that point, people had a different conception of perhaps what Ethereum, especially Ethereum Layer 1 might become.

Starting point is 00:10:53 I think it's fair to acknowledge that the vision for layer one has shifted a bit. And I don't think that's a bad thing necessarily. I think it's accepting the realities of limitations in the technology. I think it's accepting the role that Ethereum can play in the current environment. And a lot of Bitcoin Maximus would probably crucify Ethereum for being bold enough to say that. Because like, oh, you didn't deliver every promise you ever had in the white paper. Although if you go back and read the white paper, by the way, it's actually aged really well. A lot of the most interesting use cases that we focus on today were actually identified in that white paper.

Starting point is 00:11:28 But where I think Ethereum has succeeded is it's become the most important multi-asset, decentralized ledger of record in the entire world. And I think that is a huge accomplishment. And even through this crop of new layer ones that came into the market during this cycle, I think that record kind of remains unchallenged. As far as opportunities and things that Ethereum still needs to do, look, Ethereum does need to scale further. it needs to be more accessible to more people and for more use cases. And I think we are seeing that through the heavy activity that's starting to emerge on Ethereum Layer 2s and the scaling roadmap that still exists for Ethereum Layer 1. So what is long-term success for Ethereum Layer 1? I think if we ever reach a point where nobody wants to change it anymore, then it's probably

Starting point is 00:12:13 succeeded in what it meant to do. And I do think that day might come at some point, maybe decades from now, because things are being built on top of it and people don't want a layer that might be changing. But we're a long way from there. And there's still a lot for Ethereum to do. And so I'm excited about that as well. DC, you mentioned kind of a pivot and like a little bit, right? And maybe some pushback from other communities on Ethereum pivoting. In what ways do you think it's pivoted from maybe its original vision, right? I know there's this meme of the world computer. Right. I'd argue that was always a dumb meme. Like that was never what people meant by a world computer of like being like a decentralized Amazon, AWS. But in what ways do you think the critics have a

Starting point is 00:12:50 point on this about sort of a pivot and maybe not living up to its promises. I think in the earlier days there was a lot of perhaps delusion about how much activity layer one could accommodate particularly. And so for a lot of these newer monolithic blockchains that have emerged over the past, let's say four years, that have promised higher transaction throughput and cheaper transactions and so on, they make huge sacrifices in terms of decentralization. They make huge sacrifices in terms of liveliness and ability for people to use them at certain times when it really matters. Ethereum has made a different set of tradeoffs. Ethereum layer one is like a honey badger. It's like a tank. It's, it doesn't go down.

Starting point is 00:13:30 It's never really gone down. And that is what the community and the engineers prioritize more than everything else. So I think that vision of like, hey, everybody's going to be on layer one around the whole world and we're all going to be buying coffee for, you know, super cheap transactions on layer one, that's not realistic. I do think the shift to thinking about Ethereum more as a settlement layer has been a productive one. I think it's kind of changed the conception of how people think about it a little bit. But I think, you know, now Ethereum is really emerging as this trust layer, as this base layer of trust that these other layers then build upon. So I don't know if that's necessarily a pivot. I think it's, we can call it a refinement. I think there's probably some change

Starting point is 00:14:10 there. And again, I don't think that was a bad thing. So a question for all the bulls. and maybe I'll start with Anthony on this. So like, 2020, like, what a freaking crazy year that was. And yet there's an element where I feel like I'm ending 2022. And it's almost like a Michael Bay movie. Like there's like explosions and cars blowing up and like airplanes crashing behind me. And a helicopter has just gone down, you know, fireballs whirling to the sky. And like we're just kind of the Ethereum communities is like walking away from that.

Starting point is 00:14:40 Like everything's fine, clean, crisp suit, sunglasses on just like walking. ahead. And, you know, I guess the reason for that is sort of like, look, ETH the asset didn't take a massive hit when we look at prices. I mean, it is down, but it is down comparable to what Bitcoin is from all-time high anyway. Last I checked, it was actually up one more percent versus Bitcoin. And we're talking about like the 75 percent from all-time high range, which like people who are new to the cycle, like, oh my God, 75 percent. We're like, the bear market? Okay. It's just a flesh wound, but then also, like, other communities are down far harder, like Alt Layer 1s are completely wrecked. I mean, we're already talking about down 95% plus from all-time high.

Starting point is 00:15:23 I also think that, look, if you kept custody of your keys and you used Defi, you didn't get absolutely wrecked. If you went with some of kind of like, even members of the Bitcoin community who are like, yeah, this crypto bank is probably fine. Well, it turned out not to be fine. If you gave someone your custody of your private keys, like you're also feeling the pain. And so defy, decentralization, Ethereum, the merge last year, like, it feels kind of okay in the Ethereum community coming out of 2022. And yet there's a massive amount of destruction behind us. Anthony, what do you say to that sentiment? Is that me being too bullish or like, what do you think about all of this? No, I think the sentiment is very accurate. And it's funny when like the analogy that you use

Starting point is 00:16:03 because so much stuff happened this year that was negative. And then we had the merge, which was like the most positive event in Ethereum's history. among all that negative that was happening to the rest of the crypto ecosystem. And I know in Bitcoin our land, they love to make this distinction between like Bitcoin and crypto, right? And as much as I kind of hate them for doing that because they put Ethereum in the crypto bucket and then they make the distinction about Ethereum, I think there's something to that because there's a lot of crypto that is hot air, that is just crap, right? We've seen a lot of it blow up. And there are things that are kind of labeled crypto that shouldn't be. Like a lot of these C-Fi services that people say, oh, this is

Starting point is 00:16:38 crypto. It's like, no, it's not crypto, right? It's kind of. It's kind of, it's kind of, it's kind of kind of a service that works with crypto, but it's not what we know as crypto, right? The on-chain stuff that we do, the networks behind this industry. So I think from that perspective, you know, sometimes the bit of a bit of a distinction there between those things. But in saying that, I think on top of all of that as well, in terms of market action, yeah, I mean, it's quite surprising to an extent of like how I guess resilient Eath has been. I think for a lot of people, it's not surprising to me, I should be clear. Like I fully expected it to play out like this given the position ETH is in right now, not just on the fundamental side, but also with EIP-1559 and the merge having

Starting point is 00:17:15 that massive issuance reduction, which definitely impacted ETH's performance this bear market. I mean, without that, I think post-FTX collapse, ETH would have gone to triple digits again. It would have been pushed down by all that extra minor cell pressure because miners were capitulating on the Bitcoin side, and there's no reason to believe they wouldn't have been doing the same thing on the Ethereum side. So I think that a lot of the fundamental work that has been done has come home to roost, so to speak. Like this is years in the making. As I mentioned earlier, Ethereum has a long roadmap.

Starting point is 00:17:41 It takes years to do things, but it does things that are extremely impactful and continue to impact the network and the community and the ecosystem over longer periods of time. Whereas a lot of these Alt-L-1s, they try to take shortcuts, right? They try to get to a position where they think that they can be as dominant as Ethereum. And sometimes they can get to a position where they grow really, really quickly, right, both on the price side and see some kind of adoption. Maybe that's because they have a massive liquidity mining program. But then it's all short-term games. It doesn't last very long. It doesn't even last a year, really. I mean, we saw the Alt-L-1 Mania happen basically the second half of last year, and then we saw it all fall apart this year, and it fall apart in a very spectacular way, not just on the prices, as you said, a lot of them are down 95%. But their network activity is down even more. And even the biggest competitors that people considered to be, you know, actual Ethereum killers. Like, we always hear that term, but people were really serious about it this time. Like, no, you know, Ethereum's finally done it. They've failed to scale. So now these other networks are going to,

Starting point is 00:18:36 take over. I mean, just to name one, Salana, for example, they have less kind of TVL than chains that I haven't even heard of before. So, like, to put that in perspective, Salana last year was considered the ETHKiller. It was going to be the thing that finally dethroned Ethereum. But as DC mentioned, these other ones have taken shortcuts. They've compromised on specific things. And Salina is definitely a poster child of that, compromising on decentralization to achieve this scale. And in my opinion, they've gone the wrong way about it. And I think we've seen that. But, you know, you can take the other side of that and say, okay, well, this is just Salana and the other Altel ones trial by fire. And I'm like, I don't really buy that.

Starting point is 00:19:13 I feel like Ethereum is in such a strong position now. Ethereum is solving its scalability issues. And it's not just been about scalability. It's been about so many other things. But Ethereum is in such a strong position compared to what it was last bear market. I mean, 2018 and 2019 was very brutal for Ethereum and for Ether as an asset. But this time around, people can see that, as Ryan said, is not down, like anywhere near the amount. the other coins are down, right? And it's even up there, up or performing better than Bitcoin.

Starting point is 00:19:38 I mean, the ETHBTC ratio is flat on the year. In 2018 and 2019, it went down like 90 plus percent, which was just crazy compared to now where it's flat on the year. So taking all that into account, Ethereum is incredibly strong position, even though there has been so many blowups this year of just all the crap, like CFi and within the on-chain ecosystem and other Alt-EL ones, as you mentioned. Yeah, it's kind of hard for me not to be like stupidly bullish on Ethereum. I was really bullish the bull market and even more bullish in the bear market just given how resilient Ethereum has been. We should have warned you guys at the outset. This is not for those who do not wish to be bullish on this entire episode. We should have put a full warning on this. But, Justin, what's your

Starting point is 00:20:18 take on this question? Do you think Anthony over here is just kind of grave dancing? You know, is he like other alt ones down, but my favorite asset is not down as bad and that's a good thing? Or do you think there's merit to what he's saying here? Right. So I guess one thing I want to do is kind of maybe highlight the good stuff about the fear before talking bad about the competitors. And I think I would agree with Sasano and you, Ryan, that, you know, we've come out unscathed. Not only have we had a perfect uptime, such genesis, we've never had downtime, 100%. This almost never happens in software. And it's even better uptime than Bitcoin. But, you know, now we're in a position where we've also removed a lot of the FUD, you know,

Starting point is 00:20:57 there was this execution risk fud around the merge, and that's completely gone. and not only has it gone, but we're in a position where we have five consensus clients, none of which had really any issues. And the fact that we have so much redundancy makes Ethereum even stronger than it's been in the last seven years. So one of the reasons why we've had so much uptime in the last seven years is because we've had two clients. We had Geph and parity. And sometimes Geph would go down and parity would kind of be the fallback and vice versa. but now in a position where we have five clients and arguably now Ethereum is like potentially

Starting point is 00:21:35 the most secure piece of software infrastructure ever built. Now in terms of kind of coming out on Skaid, another thing that I'll note is that, you know, Ethereum continues to be a talent magnet. I'm just seeing this year after year after year. And not only that, like it has a very low churn in the sense that all the settlers, all the people who really understand are here to stay.

Starting point is 00:21:56 And not only that, but it's, it seems to be attracting talent beyond its reach. We have, you know, the phantom wallet, for example, from Solana. And I'm seeing more and more projects kind of regrouping around Ethereum. Now, in terms of the competition and all the other stuff, I actually think it's good from an experimentation standpoint, right? Because some of the technical ideas, for example, we're able to inspire ourselves and use that to improve Ethereum. So, you know, Bitcoiners have this kind of this meme, or at least had this meme in 2015 or whatever, saying like, Ethereum is the test. net of Bitcoin. And this has failed miserably because they've been completely incapable of, you know,

Starting point is 00:22:34 even copying one single, you know, good idea from Ethereum. But I think we're in a position where, you know, we can really use the rest of the ecosystem as inspiration. And, you know, I'm very grateful for that. Justin, if we could actually hang on that one moment really quick, because in an elaboration of that meme that many, many Bitcoiners would echo in my early days that I remember is that they would say that if it's useful, it will eventually come to Bitcoin. If something else that's not on Bitcoin, some other chain, invent something, then we can just apply it to Bitcoin. That was a frequent meme that they were chanting. And this meme, I think, is a great meme. It's a great narrative. And it's something that does speak to some very

Starting point is 00:23:12 fundamental truth about the way that network effects in the crypto industry work. And I think that this meme is correct philosophically because of just a broad aggregation of network effects. and this is what has always made me so bullish about a general purpose, Turing complete, fully expressive blockchain because that meme can actually become true on Ethereum. And so this meme started to wane off from the Bitcoin space and it started to become true with Ethereum. Zcash, shielded transactions. Oh, we've got that. That's Aztec.

Starting point is 00:23:46 If you guys remember EOS, we tried that on Ethereum. It was Lume Network. Turns out that idea didn't really work. There's so many things that has been created in the generalized crypto space that eventually got plugged into Ethereum. And this is one of the things I will always give Bitcoiners credit to. Correct in ideology, correct in philosophy, miss the execution. Like, miss just the wrong chain. And so, Justin, I'll hand the mic back to add anything to that.

Starting point is 00:24:12 Yeah, 100%. Like, Bitcoiners have all the memes correct. They are visionaries. They're able to see a decade into the future. But unfortunately, they don't have the fundamentals. back it. Now, in terms of, you know, being able to copy ideas from the ecosystem, there's various layers at which these ideas can be incorporated. They could be incorporated at the service layer, you know, basically the centralized layer, like the, for example, you know, we've seen lending in

Starting point is 00:24:37 Bitcoin. We've seen all sorts of, you know, C-Fi and there has been innovation at that layer. I think the other two layers would be the application layer. Now, unfortunately, Bitcoin is, you know, this, it's UTXO model with almost no scripting. It's just completely inadequate for the application layer. Like people have tried to build stacks on top of it. People have tried to build all sorts of hacks. It just doesn't work. Like in theory, you could use I.O.,

Starting point is 00:25:02 which is indistinguishability obfuscation, a very, very fancy piece of technology. And you can run the EVM on top of Bitcoin. But that will happen for another maybe three decades. And then like the final place where kind of innovation can come in is at layer one in consensus. And the way that I think of Bitcoin is basically a social experiment in premature ossification at the consensus layer. And so really like the only place where they can innovate is at these like really higher levels, you know, including the meme layer. This is why maybe they're so good because this is the only thing that they can work on meaningfully.

Starting point is 00:25:35 Whereas, you know, we have an ability to evolve the layer one over time and we have this notion of escape velocity at the application layer. So all like the centralized lending, all of that stuff, you know, actually we're actually. capable of building much more decentralized alternatives within the application layer. D.C., I want to throw this one to you because you're the veteran investor in the room. And as someone who's like sharpened their teeth in the traditional equities markets before coming to crypto and then seeing all the shenanigans that we do in the crypto room, one of the things that I try and convince people who are like thinking about leaving the space right now or like they have flipped from bullish to bearish.

Starting point is 00:26:13 and right now at the price of $1,300 Ether and like $17,000 Bitcoin, they're now bearish. My response to them is like, well, no, no, no, no. This is like all the pains already passed. Like, this is the time to be bullish. You actually wanted to be bearish at $4,800 Ether. That would have been the time to be bearish. And so it's time to put on the bullish cap. But I want to also draw some attention because I know we are just all, you know, five of us here

Starting point is 00:26:40 have a decent amount of our portfolio in Ether. and we're going to talk about that for the rest of the podcast. But I just want to play devil's advocate for one moment. In that same vein where like, okay, Solana Altlayer ones, they're all wrecked, right? They're all down. Well, is the risk to reward of Ether right now justified in comparison to some of the deals that we can see in the public markets in the crypto space? For example, Cardano at $11 billion is 14 times cheaper than Ether.

Starting point is 00:27:08 Pocoda at $6 billion is 26 times cheaper than Ether. Salana at $5 billion, $31 times cheaper than ETH. Avalanche at $4 billion, $40 times cheaper than Ether. So in this moment, at the depths of the bear market, when perhaps some of these Alt-Layer ones are as wrecked as they were ever been, is the risk to reward for Ether justified, in your opinion? Not only do I think it's justified, I think it's actually far superior to all of the assets that you just mentioned, despite the fact that they've had bigger drawdowns,

Starting point is 00:27:39 that's no guarantee that they're going to make up the magnitude of those drawdowns. And first I want to start with the broader point. Crypto goes through cyclical bear markets. It is an asset class with a lot of potential. There's a lot of potential around what's being built on networks like Ethereum. And when you have that kind of potential, market excitement tends to sometimes get ahead of itself. That's why we get these really exciting bull markets. We are now seeing the reverse side of that.

Starting point is 00:28:07 And the consequences of that are we are seeing the bear where we have people who are in this space as tourists. They've left. You know, we've had this spectacular collapse of multiple trading funds and now FTX, you know, one of the most prominent consumer exchanges. It's bad. I mean, it's definitely bad just from a market sentiment point of view, not from a fundamentals point of view. But from a market sentiment point of view, things are very bad. It reminds me very much of the early days like 2013. when Mount Gox kind of got hacked and had their issues, the market just lost confidence.

Starting point is 00:28:43 You had a lot of lower information people get flushed out. So I want to put that on the table. But I think that what differentiates Ether from all of those networks that you just discussed is that Ethereum is a successful multi-cycle asset. Ethereum is a network that has proven itself time and time again and continues to gain users. It continues to gain developers. Sure, interest is down during this bearish period. but Ethereum isn't going anywhere.

Starting point is 00:29:08 I actually feel a lot more confident about Ethereum and Ether this year than I did in 2019. In 2019, you guys all know, we were all there together. It was bad. That was rough times. And there were some existential questions. Like, was Ethereum going to survive? I mean, I had confidence, but it was just that. It was confidence.

Starting point is 00:29:28 I didn't have that degree of surety. I feel like with Ether and Ethereum now, that surety is much, much stronger. with a lot of these other networks, look, I'm not saying that they're all going to die or go to zero, but some of them very well could, right? Most of those are first cycle assets. To the extent that they aren't first cycle assets, they never delivered anything of value before this cycle. And you could argue some of them didn't even deliver anything of value this cycle,

Starting point is 00:29:51 to be perfectly honest, not to be too harsh. But, you know, when I look at Ether and Ethereum, I think it emerges with actually a much stronger and more exceptional and unique value proposition. Ether right now is the most decentralized programmable asset in the world, period. We've taken this incredible step of moving it to proof of stake, which was one of the big clouds hanging over Ether and Ethereum, like, is it going to successfully do this? We did it and we did it without a hitch. We've moved Ethereum to become a network that is economically secured by Ether, which is also

Starting point is 00:30:24 incredible. So I suspect that during the next cycle, Ether is actually going to get a lot more market interest. It's going to be sought after by financial types who want to earn a yield from the staking. It's going to be sought after by people who want an alternative store of value to something like Bitcoin, which is secured by proof of work. And it's going to become an increasingly popular medium of exchange for things like NFTs and other digital goods and services. So I'm hyper bullish. And after the FTX collapse, I kind of came out on Twitter and I said, I'm going to start buying again now. I've been dollar cost averaging.

Starting point is 00:30:59 one to two times a week since then. And do I think all the pain is over? It's really hard for me to say that with certainty. We could definitely see like spikes down. We could even see new lows. But for me, I'm not going to try to play that game. And the example, I know, David, you saw this tweet when I put it out there a few weeks ago. And I said, do you think the people who bought ether at $120 are upset that they didn't buy it at 80?

Starting point is 00:31:22 And I'm one of those people. I didn't buy ether at 80 during the last spare market. But I bought a lot between $100 and $120. and I didn't worry about the fact that I didn't buy it at 80. So you may have missed 800. I don't know if that's coming back. Right now you can buy it for 1,200. Maybe you'll buy it for cheaper and more expensive tomorrow.

Starting point is 00:31:39 But I think that you've got to have like a long term outlook if you're in the space right now. It's so funny by the way, D.C. That the numbers are so similar, just 10x, right? Rather than 80 to 120, it's, you know, 800 is kind of the low range to, you know, 1,200 right now. It's like literally the same type of decision. But I just want to zone in on that, D.C.

Starting point is 00:32:00 So are you saying the return, the risk to reward ratio of $1,000 into ETH is higher than, say, Salana, which is a 31 times cheaper? By my calculus, yes. And if I felt differently, I would buy Salana. But there are clouds that are hanging over some of these coins, right? And I'm not trying to slam anybody else's investments or anything like that. But one of the structural factors, that we have seen over the past, probably year at least, with the FTX collapse,

Starting point is 00:32:32 part of what happened there was Sam Bankman Freed and Company were selling their consumer deposits of ether in Bitcoin. Okay. I mean, and the flows, while we don't have direct visibility into the flows, what we know is a lot of money has gone and we know that he had a huge incentive to pump up the value of Seoul, of FTT, of serum, of some of other Sam coins, if you will. And so that structural selling, it was structural in the sense of he was unloading billions of dollars of those customer assets so that he could do whatever he wanted to do. That seller is gone.

Starting point is 00:33:07 We don't have minor selling anymore. We are going to have an unlock of staking deposits, but even that will be a one-time event. And it's not clear how many people are going to move their points at that point. So a lot of structural selling that was in the market before has just evaporated. And so I can't, like, just being dispassionate, looking at the market, I'm like, I can't not buy ether when it's below the 2017-2018, all-time high, given how much has happened in this market since then. Anthony, you and I have talked about this subject, so I want to throw a similar question to you. I recently put out a tweet not too long ago saying, hey, good luck to the Solana community out there. This is when FTX was imploding.

Starting point is 00:33:48 People were really realizing that it was going to be a ton of soul cell pressure. and I said, good luck to the Salonanah community. I hope this is your $80-eath moment, a strong and committed community is waiting on the other side of this. And what I really meant by this was that I remember when we had all of us here in this room and a few others all had our $80-eath moment, when there seemed to be like no bright spot on the horizon for Ethereum, yet we all still bought because we believed in it.

Starting point is 00:34:15 And it really put our community, the Ethereum community, together. It was very disconnected, it wasn't really banded together. we really needed that $80-eath moment in 2018 to have some sort of camaraderie. And so this is what I wish the Salana community, that same moment for them. Like, sometimes you need to be stress tests in order to have that camaraderie to come out on the other side. However, I'm hoping you can unpack, is this apples to apples or apples to oranges with me? Because that was 2018 and that was Ethereum, and this is 2022, and this is Solana. I'm wondering if you can unpack the differences behind. Is this the same, or is this different? Yeah, so I gave you a lot of grief about this

Starting point is 00:34:52 tweet in DMs and you know what though you're always good at taking feedback so that's that's one of the things i like about you but generally i don't think it's apples to apples i think that the just the ecosystem right now is in a completely different spot than it was in 2018 i think that no longer are these alt-tile ones just competing with ethereum layer one i mean i view them as competing with ethereum layer two and for these old-tale ones generally especially for something like salana their main value prop was those lower fees right like that was the whole value prop for the majority of people. Yeah, okay, maybe they have different ways to create smart contracts, program smart contracts. Maybe they have different virtual machines and different kind of like

Starting point is 00:35:30 intricacies there. But for the vast majority of people, it was about the fees, right? The cheaper fees. And with layer two's on Ethereum now, we have that. Yes, okay, we don't have like the sub-sent transaction fees yet. You know, we're hoping to get to that point with things like proto-dank sharding. But we do have those cheaper fees. And no longer do you need to be stuck on Ethereum layer one, you can now seek refuge on these layer two just so as people sort refuge on these Alt-L-1s. So I think that generally for the Alt-L-1s that are EVM-based, I'm going a bit wider here, but the ones that are EVM-based, I don't think they're going to survive because they're competing directly with Arbiturum and Optimism and the ZK-AvMs, which are just vastly

Starting point is 00:36:08 superior on every front, right? And they're in the Ethereum ecosystem already. They get the Ethereum community and the Ethereum network effects. In terms of Salana, they've taken a radically different approach, I think, generally not just on the scalability side, but also on their architecture side of things. But I don't know, and I'm kind of, I don't really think it's going to be enough for them to have this community that was formed like Ethereum did in the earlier days, because there's just much more competition out there. There are much more other, I guess, chains and communities that pop up. And as you mentioned, or someone was mentioning it about like FTX, D.C. was saying it about kind of like Sam Bankman-Fried, being a massive supporter of Salana propping up a lot of

Starting point is 00:36:48 the value, well, where is that buy pressure going to come from when that massive structural buyer is gone? Like, who's going to buy soul right now? Like, it just seems they're in such a poor position where people are asking these questions. And people are asking the same questions about Heath in 2018 and 2019. They're like, you know, where's the ETH buy pressure going to come from? Back then we had answers, though. Like, there weren't certainties, but we had answers. We were saying, well, people are going to buy it to stake, right? And then when we're burning ETH, we're going to be making ETH deflationary. Like, during the bear market, we knew about 1-559 as well. We knew about proof of steak, obviously.

Starting point is 00:37:19 We knew about defy. We said, you know, people were going to buy defy. I mean, I wrote a post in January of 2019 talking about all of these things. So can someone write the same kind of post for Solana? Can they prove to me that, hey, you know, this is where the soul buy pressure is going to come from. This is why people are going to buy Soul. This is why they're going to use Salana instead of other networks, not just Ethereum, but like every other network out there because there's so many of them now.

Starting point is 00:37:41 And how is Solana going to fare in the face of something like Aptos and Sui and say, like all these other chains that are coming online that. that are promising the exact same thing. It just feels like this cycle of just, you know, use one chain, make the money from it, move on to the next. Whereas I never felt that with Ethereum. I always felt like Ethereum had this core contingency of a community that would go through anything and it would go through hell and wasn't just there for any one particular reason.

Starting point is 00:38:05 As I said, I believe the majority of people were in Solana and it's still in Salana for those kind of cheaper fees, right? They feel like they can make the most scalable blockchain ever and preserve decentralization. But they haven't done that in my eyes. haven't preserved decentralization at all, they definitely have a very different set of community members than Ethereum, and they definitely optimized for mercenaries a lot more than Ethereum did. And yes, Ethereum had its ICO mania, which has a massive amount of buy pressure for Ethan 2017. But I think Ethereum still had a lot of fundamentals outside of that that I'm just not seeing in Salana.

Starting point is 00:38:34 And on the community front as well, like, I'm obviously not very versed in the Salana community. I don't spend much time there. But from everything that I've seen, it is still very mercenary. It doesn't feel very put together. doesn't feel very missionary and it feels very, and they still go on about, you know, cheaper fees. They're still going on about Ethereum being too expensive and all these sorts of stuff. And they never really mentioned layer two's. So it seems like they're both behind on what Ethereum is doing and also trying to find their

Starting point is 00:38:59 own new narrative to take them through this bear market, take them to success. So in terms of comparing the two, yeah, I don't really see it, to be honest. And maybe that's because, as I said, I'm not in the community. Maybe it is there. But yeah, just taking it all. And I could go on about this for a long time. I'm not going to keep going. But just taking it all, taking that all together, yeah, I'm not bullish on any of the old-tale ones to be able to get, like, not just Salana, but like any of the other ones, to form a community like Ethereum has. I feel like Ethereum is home for a lot of people. The layer two networks are forming their own communities that may not be Ethereum, but they're the ones. That's where a lot of the activity is going to settle and be taken of. But who knows, maybe the next bull market rolls around. We get a bunch of new people coming in. They all go to these other networks. But I'm talking longer term kind of sustainable stuff.

Starting point is 00:39:44 not just flash in the pan kind of things. So this is where the three big ethos think Ethereum relates in relation to the other smart contract chains that exist in crypto. And just placing Ethereum into the grand scheme of 2022 and all of the crypto industry, I think is pretty useful. But I want to focus and zero in on some Ethereum-centric conversations. And I actually think that I'm going to pull in Justin Drake to lead some of these conversations because he's given us a little bit of an outline,

Starting point is 00:40:12 a three-part outline as to what is bullish on the Ethereum roadmap. Proof-of-stake, EIP-1559, those things are behind us. So what about the future Ethereum roadmap is bullish? And then after that, we'll cover the size of the opportunity. How bullish is the opportunity that Ethereum has in front of it, if Ethereum can execute on its roadmap? And then the last bullish thing, we'll talk about the timeline, the timeframe for all of Ethereum.

Starting point is 00:40:38 So when can we actually expect some of the innovations that's coming out of the Ethereum development camp to show up in the price of ether, in the overall bullishness of the industry at large. So Justin, let's start with this. The bullish tech roadmap for Ethereum. What's left? What are the big parts of the roadmap that we have left to be excited about? Right.

Starting point is 00:40:57 So what I'm excited about regarding the roadmap is that, you know, we have a very good understanding of it. You know, when I joined the research team in 2017, we didn't really have this roadmap. And now I feel like things have really crystallized in our mind, and at least from a research standpoint, were essentially done. And one of the things that makes me particularly bullish

Starting point is 00:41:17 is that people don't seem to really appreciate how good this roadmap is. And I want to kind of take some time to highlight a few kind of nuggets, you know, maybe some alpha leaks for people to help them appreciate this roadmap. So one of the things that I want to start with is basically dankshadding. I really think dangshadding is a massive breakthrough. And like one of the reasons which is kind of underappreciated is this idea of synchronous composability, right? Like, in theory, you could have all sorts of blockchains and contracts

Starting point is 00:41:49 compose of each other, but there's like really these two types of flavors. There's like asynchronous and synchronous. And it turns out that dank sharding is not sharding at all, right? It's like this one monolithic shard where everything happens in a synchronous world. And it turns out that it unlocks synchronous composability, just like we have today, which is the best type of composability. and specifically when you have two ZK roll-ups, and this is kind of a requirement, they can compose synchronously. And that's one of the reasons why I'm particularly bullish

Starting point is 00:42:19 over ZK roll-ups is that they have this superpower. You take two of them, they can compose synchronously. Unfortunately, if you have an optimistic roll-up, then it can't compose synchronously with anything else in the ecosystem. Is that just when you say synchronous? Is that like atomic composability, same kind of thing? Yes. The same sort of experience we have on MainChain,

Starting point is 00:42:38 where I could do something with Uniswap and something, other in the same kind of blocked, same transaction? Yes. And I want to give you like one very concrete example. So you know how we have these aggregators like one inch and matcha. And the way that they work is that there's all these fragmented pools of liquidity, you know, maybe on uniswap, maybe on sushi swap or whatever. And like these aggregators, they're capable in like one fell swoop, like one atomic transaction kind of taking the liquidity from everywhere. And this is what's going to be possible with ZK rollups. There will not be this fragmentation of liquidity. You'll be able to kind of benefit from real, like, strong network effects across the roll-ups.

Starting point is 00:43:15 Justin, just to really drive this point home, one-inch, the exchange aggregator, works on both optimism and arbitram. But when you use one-inch on optimism, it aggregates the liquidity inside of optimism, and it stays inside of the optimism layer two. Same thing with the implementation of one-inch on arbitram. It doesn't extend beyond arbitram. What you're saying with ZK roll-ups and with dank sharding is that in the ZK liquidity pools, which there is a proposal for Uniswap to be deployed on ZK Sync, for example, I would expect it to be eventually deployed everywhere, as it will. And so all of the ZK roll-ups where there is Uniswap and any other liquidity source, one-inch or any other Dex aggregator, will work atomically across all liquidity pools, across all ZK

Starting point is 00:44:03 roll-ups all at once seamlessly. So it escapes unlike the optimistic roll-ups like optimism and arbitram, the liquidity actually escapes from the bounds of that particular layer too because of how awesome cryptography, ZK. Roll-Up Magic, all that kind of stuff. And so it is one single universal Dex aggregator for all of Ethereum. I just really wanted to drive that point home. Yeah, that's correct. There is like this one kind of subtlety, which is worth highlighting, is that there needs to be some element of opting in to this shared liquidity pools. Unfortunately, we can't have synchronous composability over like the whole state of the roll-ups. And the reason here is that you would need to have one kind of mega-prover

Starting point is 00:44:41 who's kind of aware of the state of all the ropes at the same time. And so really what needs to happen, what's going to happen, is that the ZK roll-ups will have a relatively small surface of intersection. So they're all going to intersect in this kind of liquidity pool. And that will be kind of the eye where all the liquidity is consolidated. And is that on the Ethereum main chain? It doesn't have to be the main chain. No, it can basically be a subset of every single roll-ups simultaneously.

Starting point is 00:45:08 I didn't know that, by the way. I did not know that. Very few people realize that, but it's one of the superpowers of ZK. Roll-ups. Amazing. And Deng Sharding specifically enables this, or is that a nature of ZK. Rolos themselves? Yeah, well, Deng Sharding doesn't ruin it. So the previous kind of sharding was that we had these 64 shards or 1,024 shards, and they were each kind of their own kind of synchronous zone.

Starting point is 00:45:31 And you wanted to compose between them, you had to pay the cost. of asynchrony. Now we have this one monolithic shard where all kind of the clever sharding happens in the back end, you know, at the consensus layer. And you don't realize it as an application developer as a user. As a user, it's just one big synchronous zone. And we said dank sharding, does this apply to proto-dank sharding as well? It does. Wait for full dank sharding. It does. Bullish. Amazing. Extremely bullish. I did want to quickly note as well, like as Justin was saying, you know, there are these ZK roll-ups that do these, but optimistic roll-ups don't. Both Obtriman optimism can convert themselves to being a ZK roll-up as well. So a lot of people get

Starting point is 00:46:07 confused by that and they think that obtermin optimism are going to be obsolete because of these ZK roll-ups. No, it's just the simple as trading out fraud proofs for validity proofs. At least that's my understanding of it. Right. Anthony, can Solana convert to a ZK. Roll-up? Is that possible? I mean, too optimistic, Ryan. Okay. Yeah, yeah. Technically, the state should be able to be carried over, but I don't know what that would look like. I mean, they're never going to do it, but it is worth noting that it's actually explicitly in the optimism roadmap to do that to eventually turn into a ZK roll-up. So that's not just a theory that is explicitly part of the optimism roadmap. And really just to also talk about the second-third-order consequences from this, one of the reasons why people generally just are more bullish about the ZK roll-up design philosophy is a lot of second-order consequences. And a lot of that ultimately comes down to usability and allowing Ethereum to kind of just, work for so many people. Things like account abstraction and other UX breakthroughs, just allow Ethereum to be kind of this intuitive blockchain technology that doesn't have to inject the clunkiness

Starting point is 00:47:14 of crypto in front of people. And a lot of that comes from just ZK magic and the UX improvements that this kind of technology can bring. And so not only do we get just like increased scale, increased speeds, increased composability, but there's a significant number of other second order consequences that comes with ZK technology that allows people to just have the UX that they envision that crypto will have ultimately. I wonder, Justin, if you're able to make what I'm saying, any more concrete than I'm able to. Yeah, so I do believe that there are going to be some standards that are going to emerge across

Starting point is 00:47:45 the roll-ups, just that like we have standards at the ERC20 level or standards at the NFT level. One of them, I think, you know, will be around this liquidity pooling aspects, right? And this idea that you're going to have synchronous composition. that's going to be an important kind of standard to come up with. Maybe another one could be around the exact proofs that are being put forward. So one of the exciting things about ZK roll-ups is that you can actually aggregate the proofs of multiple roll-ups into one master proof.

Starting point is 00:48:17 And so the amortized cost of settlement is essentially zero. Because one of the worries here is like, you know, if you want a post-quantum snark proof, that's going to cost you, let's say, a million gas or something, just pick this number. It doesn't necessarily have to be a million gas. Now, let's say we have 50 roll-ups. We don't have 50 million gas per block. And so we really need to go this extra layer of aggregation. And this, I think, will happen partly through standardization. Another important thing, you know, for standardization is the ability for users to, you know, have this seamless UX. And I think what we're seeing here is that the EVM is king, right? It's like, it's because, you know,

Starting point is 00:48:56 the shilling point around which all the roll-ups or most of the roll-ups are converging towards. And one of the things that we're seeing is you don't get there in one step because, the EVM is like full of intricacies and complexities. You get there incrementally. And we saw this, for example, with optimism. They had their initial version of DVM, which was almost EVM with some exceptions. And now there's like essentially zero exceptions. They're fully compatible.

Starting point is 00:49:21 And we're seeing a similar trajectory with the ZK EVMs, right? it's very difficult to get full compatibility in one shot, but with enough engineering, we can get there. And then eventually, you know, that will bring us to this idea of an enshrined roll-up where we can bring all this technology at layer one. That middle point that you were talking about where we can have this aggregation of ZK roll-ups together, it starts to look like a root structure or a tree structure.

Starting point is 00:49:47 This is what people are calling fractal scaling, and each one of these specific roll-ups can implement a very specific purpose. For example, optimism has OP craft, where you can run Minecraft on optimism for whatever purposes that you want to do this. And this is really what allows Ethereum to find its way into every single nook and cranny of the internet, because it can produce a particular chain that's built for a specific use case, wherever that part of the internet demands it to be because of ZK rollups. And what you're saying with the scale, the more that this root structure converges on the same rollup, rather than all each individually setting down to Ethereum, that just makes the whole system faster and cheaper. there's a flywheel effect here. Justin, you ended that conversation with talking about the EVM.

Starting point is 00:50:29 There's a lot of fud out there, if you will, about the EVM. There's a lot of startups that are taking Ethereum's EVM and saying, we're going to make it better. We're going to make it parallel. It's going to go faster. We're going to take the EVM but make it better. Can you talk about the EVM and its baggage that it brings to the Ethereum ecosystem and if this is a concern for the future of the Ethereum roadmap? Right. So I guess two or three years ago, there was a very common narrative around technical people that the EVM is And I was one of these proponents where, you know, it just seemed that there was this laundry list of bad design decisions. And really, you know, this could be like one of the Achilles heels of Ethereum. And, you know, there was even research in alternatives, right?

Starting point is 00:51:09 People may remember the WASM research that we did. Now, one of the striking things in the new roadmap is that there are no EVM alternative. There is no WASM box, you know, in the roadmap. And this is basically the fruit of the realization. that the EVM is good enough. And this is kind of really kind of shocking for me. Like I did not believe, for example, that DVM could be snockified and could be fraud provable and that you could build optimisms and arbitrams.

Starting point is 00:51:38 But you can. Another thing that people had doubts about is can you even build secure small contracts with the EVM? You know, it's not friendly to formal verification. We don't have, you know, the tooling and then not. And it just turns out that all of this, you know, fair and uncertainty has dissipated. We now have excellent tools and we are capable of building secure contracts that are efficient and we even have formal verification of EVM bytecode, which is amazing.

Starting point is 00:52:06 So, yeah, this massive risk, you know, has been removed in the same way that, you know, the potential break in composability with sharding has been removed with dank sharding. And one of the things that I want to highlight on the ZKVM specifically is that until a few days ago, I and various other people within the research team, for example, Vitalik, we're kind of scared about ZKVMs in particular. And the reason is that ZKVMs are extraordinarily complicated. And we can't even get bridges correct. So it's very, very likely that every single ZKVM, when they come out,

Starting point is 00:52:41 they have at least one vulnerability. And it's likely that these vulnerabilities will eventually get found. And the worry here is that we might have on our hands a $10 billion hack. and it's just a ticking time bomb. Now, one of the things that we realized very recently is that there's a very simple set of training wheels that we can put on these ZK roll-ups, which involves using SGX.

Starting point is 00:53:06 So basically, we can have a dual-engine system where on the one hand, you have the snark proof, and on the other hand, you have an SGX proof. S-G-X is like these trusted enclaves by Intel. No one likes the Intel stuff, because we don't want to be using trusted hardware. But it's a strict security improvement. It doesn't remove anything from the security of the snarks.

Starting point is 00:53:28 And it gives us the confidence that if there are bugs in the circuits, which most likely there will be, then at least we have this fallback engine with SGX. And then in maybe, let's say, three, four, five years, once we have very high confidence in the snarks, we can remove the training wheels if we want to. So just to summarize what I'm hearing here, The EVM is inadequate. Your response to that, I think, is we can pull from the lessons of the QWERTY keyboard, if you will. There was once a keyboard, I think it's called DeVorac keyboard, and it was built to be highly optimized, highly, like, put all the good keys right next to the good fingers, and you could type super fast. No one really uses that, because the QWERTY keyboard is plenty good enough. Wait, you guys don't use DeForex? Are I the only one here?

Starting point is 00:54:15 And then also what you're saying, Justin, with the ZK roll-up, the security risk of ZK roll-ups. and getting ahead of the problem of bridge exploits that we have seen so many of is that we actually have a very simple answer to this. And so what would be a future, perhaps cataclysmic problem that we've seen so much with like cross-chain bridges or a similar problem, not equivalent. We already have a solution for this. Okay, so I want to underhand you the last section here about the Ethereum roadmap before I let Anthony and D.C. kind of interpret these for themselves as MEV and censorship will break Ethereum. People are super bearish about Ethereum on this subject. I think you've got actually a reason to be bullish. Could you tell us what that is?

Starting point is 00:54:52 Right. So the whole story around MEV and social resistant all happened extremely quickly. And it's been great for researchers because it's been a ton of open problems to work on. But one of the things I want to highlight is that we have this new category in the roadmap called The Scourge. And the TLDR here is that at least at the research level, we have 100% solved the censorship issue. issue is not a fundamental problem. It's just a matter of doing the engineering to completely remove it. And I would also make the claim that we have essentially fully solved MEP, like toxic MEPV, you know, with front running and sandwich attacks. This will be a thing of the past, you know, relatively soon with encrypted mempools. And so here we've just been extremely lucky in a way,

Starting point is 00:55:38 because to be quite honest, we didn't really fully appreciate the open problems in MV and censorship. but it turns out that there was some low-hanging fruit with inclusion lists, with MEV-Burn, with encrypted mempools, and other gadgets that actually solved this problem fully. On the topic of MEV-Burn, the reason why it was kind of invented originally is to remove some of the volatility, but in the returns as a validator. So as a validator, you know, you might, essentially in a lottery, where, you know, one day you might receive a 400-Eaf block and you've won one. the lottery as a validator. And we kind of want to remove that because it turns out it's a centralization

Starting point is 00:56:18 vector. And the reason is that you're expected kind of the median return as a validator is much, much lower than the average. And so that's an incentive for you to go join a pool in the same way that as a Bitcoin miner, you would join in a pool to be able to extract the average return as opposed to the median return. Now, one of the amazing thing about the MEV burn is that it actually also helps solve censorship specifically of the valid. validators. Like right now, the validators, whenever they get chosen to build the next block, they have full discretionary power to choose this next block. And in particular, they can choose to censor transactions. That's a decision that they can make. And MEV burn basically removes that. It basically says

Starting point is 00:57:01 that when it's your turn to pick a block, you have to pick a canonical block. Specifically, you have to pick the block that burns the most if, which not only removes the censorship from the proposers, but it's kind of bullish because it burns the if. And not only does it kind of burn the if, and we're talking about half a million eph roughly per year, but it also, as a kind of double-whammy second-order effect, it reduces the overall rewards that go to the validators as a group. And so that means that we should expect slightly less validators to be staking and actually slightly less issuance. And so there's an other roughly, you know, 300,000 ephs per year in issuance reduction from this. And Domophe, who recently joined the Film Foundation, has been leading

Starting point is 00:57:46 this research and been doing a great job. But yeah, the MEV burn is just something I'm really bullish about. It's kind of misunderstood. I think there's a lot of education to be done, but it's what I'm excited about. And then the final thing I want to kind of highlight in the roadmap is this idea of moving to post-quantum. And the reason why I'm excited is not because we have to do this upgrade or for the technology or for the fact that we've been more secure. I'm actually more excited about the fact that it is almost like a difficulty bomb. So the current non-quantam secure cryptography is a forcing function for us to rip off the guts and the internals of Ethereum and build and replace it with post-quantum alternatives. And I think it's going to be the very last chance that we have as a community to basically remove technical debt from the consensus layer and put in,

Starting point is 00:58:41 basically a near perfect consensus engine from all the learnings that we'll have in the next decade. And then after that final upgrade, I think we'll be in a position to say, Ethereum is done. It's perfect. We don't need to change it anymore. Justin, thank you for walking us through that roadmap. And a lot of newer bankless listeners, people who haven't finished going down the technical Ethereum rabbit hole might feel a little bit underwater. in this moment because it is very technical. For people who want to learn more,

Starting point is 00:59:14 I definitely encourage listening to the Moon Math episode that we did with Justin, which talks about a lot of this. It was called the Bull Case for Cryptography. If you've been listening to Bankless, you know that we're fans of the modular blockchain thesis. The idea that blockchains will separate execution from data availability and consensus,

Starting point is 00:59:29 allowing all three to become the best versions of themselves. And Fuel has built the fastest modular execution layer in the industry. By supporting parallel transaction execution, fuel unlocks significantly faster throughput for the web free world. Fuel also goes beyond the limitations of the EVM with its own Fuel VM, which is more efficient and optimized, opening up the design space for developers. And lastly, fuel brings a powerful developer experience with its own domain-specific language, sway,

Starting point is 00:59:56 and a supportive tool chain called Fork. With Fuel, you can have the benefits of smart contract languages like Solidity, while adopting the improvements made by the Rust Tooling ecosystem, letting the fuel development environment go beyond the limitations of the EVM. If you want to learn more, there's a link in the show notes to see how you can get involved with a fuel network. Sequence is the all-in-one developer platform you need to build Web3 games and applications. For your users, Sequence is a smart wallet, and it's the easiest, most intuitive onboarding your users will ever experience, and comes with all the features users need

Starting point is 01:00:25 to feel empowered in the Web3 world. Multi-chain support, NFT display, and users can buy SFTs, NFTs, and crypto directly with a credit or debit card. For developers, Sequence is the plug-and-play platform for Web3 games and apps. Their APIs let you bring NFTs, SFTs, and tokens into your game or application. And a Sequence relayer enables gaseous transactions for your users. Sequence already power some of the best Web3 games like Skyweaver, NFT projects like Cool Cats, and marketplaces like NiftySwap.

Starting point is 01:00:54 And Sequence is compatible with all the EVM chains, including Ethereum, Polygon, Binance, Smart Chain, Arbitrum, Optimism, and Avalanche. So go to Sequence. To get started unlocking the full potential of your application today. Arbitrum 1 is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web 3 landscape. Hundreds of projects have already deployed on Arbitrum 1 producing flourishing defy and NFT ecosystems. With a recent addition of Arbitrum Nova, gaming and social daps like Reddit are also now calling Arbitrum home. Both Arbitrum 1 and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM compatible.

Starting point is 01:01:37 Both builders and users will experience faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitram Nitro, it's also now 10 times faster than before. Visit Arbitrum.io where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be. Secure, fast, cheap, and friction-free. Anthony, I want to throw this to you for a little bit of digestion and interpretation as an educator in the Ethereum ecosystem. Justin just talked about like how we are able to restore composability with dank sharding and ZK roll-ups. We talked about how the EVM is actually a fantastic shelling point, which continues to be innovative on, and how we totally have solved censorship, and actually

Starting point is 01:02:23 we've solved it in a way that increases the ETH burn, which socializes all the revenue beyond Eastakers to the just broad ETH holders. When you're hearing all of these things, how should listeners think about the meaning and significance of these innovations, right? Can you zoom out for us and just what's the significance of this at a high level to you? Yeah. So I think I want to start with the EVM point, which I think is very important because as Justin said, not just was the community kind of bearish on the EVM, but also were the researchers and all the smart people and developers out there who were saying that it was inferior technology. We needed to rip it out and replace it. It wasn't fit for purpose and all that sorts of stuff. But it turns out that, you know, if you're

Starting point is 01:03:03 competitors are forking you, if the Altar ones are forking you and using the EVM and teaching people how to make smart contracts and solidity, the network effect gets really, really strong, right? And as Justin said, we got to a point where we realize that it's good enough. It does what we need to do. We can keep improving it over time, definitely, but there is no need for us to go through this whole process of ripping out the EVM, replacing it with something else, and then starting from zero, basically. Because not only do you have to start from zero on the adoption front, you have to start from zero on the security front, which is something that I think a lot of people undersell is that the EVM and Solidity have been battle tested. Security-wise, there is a lot of documentation

Starting point is 01:03:40 out there about good practices, a lot of people to talk to a lot of specialists who know more about it than other people and can teach other people, whereas some of these other languages and other things haven't been tested in this environment. Maybe they've been tested in the Web 2 environment, but they haven't been tested in a blockchain environment, which is extremely hostile, right? Like, it's much more hostile than the traditional environments that we're used to, and everything's public right, everything's transparent. People can say, okay, well, if I can hack this contract, I can get this amount of dollars, right? It's very transparent about how much money you can get for exploiting something. So I think starting from zero just to, I guess, bring these improvements

Starting point is 01:04:14 that we, you know, maybe they're major improvements, maybe their marginal ones, just wouldn't make much sense. And at this point, the EVM and solidity are a wrecking ball. There's no stopping them. The network effect is going to continue to grow. It's going to continue to take over the space. You know, people are going to keep forking. The EVM keep using it for their own purposes. So I definitely agree with Justin on that front that AVM is here to stay. There's no point looking to rip it out. And the other points as well, I think, speak to something at a high level of Ethereum researchers and engineers, developers are the only ones really working on these problems right now, these really, really hard problems, like censorship resistance and MEV related problems,

Starting point is 01:04:48 because Ethereum is the only one that has to face it. There's no real kind of like, I mean, we don't know for sure, obviously, we can never prove a negative. But in terms of the OFAC sanctions, they only targeted Ethereum. They didn't target any. anything else. So the other networks at this point in time don't have to deal with this. This is not something that's even on their radar. Same with MEV. There's not a lot of value to extract on these other networks, so MEV isn't really a big problem. And because of the censorship concerns on Ethereum, and because MEV contributes a lot to that, we have this co-mingling of things that need to be worked on. And the beautiful thing is, is that this isn't just something new. This has actually

Starting point is 01:05:21 been worked on for years and years and years. I mean, FlashBots is not an organization that came to life this year. They've been around for quite a while. And Phil Diane, one of the co-founders, has been researching MEV probably the longest out of anyone, right, and developing solutions for it. So from a high level, the Ethereum ecosystem has been tackling these issues before they even became issues and has been working towards rectifying them and working towards improving the ecosystem before they even read their kind of like ugly head here. Whereas I feel like a lot of the other communities and all the chains are more reactive than proactive,

Starting point is 01:05:50 where they'll see an issue and they'll be like, oh, I can fix that. Like the high fees on Ethereum, they'll be like, oh, well, I can fix that. Whereas Ethereum has been working on its scalability for a long time. Yes, it's only materialized recently, but it's not like we waited for the high fees to work on it. We were working on layer two technology from almost the beginning, right? They just came in different forms, like state channels and plasma. Now we have roll-ups, but it was all working towards that. So in terms of where Ethereum is, even though it's a slow-moving beast, the research side is always so far ahead of every other ecosystem.

Starting point is 01:06:19 If you look at it from a high level, and it does take a while to implement things, they do get implemented. And we do have these improvements. And it sets a culture within Ethereum of tackling the hard problem. And as I think Justin said at the top of the podcast, it is a talent magnet. That is what attracts the best and brightest minds to Ethereum is those hard problems that no one else is really working on right now. So that's my kind of high level take there. And I guess, I mean, it really does make for a bullish case for both Ethereum and

Starting point is 01:06:45 ether's an asset because it means, you know, when you have the smartest people in your ecosystem, it creates wonderful things. And you create missionaries instead of mercenaries, which I think people still undersell as being incredibly important. If all you have is mercenaries, you don't have anything healthy. If you have missionaries, like if you're weighted towards the missionaries more than the mercenaries, then you have a long-term sustainable ecosystem. And I feel like Ethereum has so many missionaries at this point, so many people who just

Starting point is 01:07:08 really wants to work on hard problems, solve hard problems, really want to see the community grow in an organic and beautiful way. It's hard not to be bullish on Ethereum and ETH because of that. D.C., put your investor hat on here. And you've seen many manifestations of the Ethereum roadmap. You've seen, you know, the 2017 version of the roadmap, which was kind of like, what roadmap and then you see it today, is this the kind of roadmap that is investable? Does this make ETH more attractive to you? What would you say about what Justin and Anthony

Starting point is 01:07:39 just described? Absolutely. I mean, I'm definitely more excited now hearing some of the contacts that Justin's had added around the ZK roll-ups. But before I jump into that answer, I want to kind of start off with why did some of these alternative layer ones take off during this cycle? And I think there's really two reasons for that. that. The first is like there's an institutional incentive to promote some of these networks because they give themselves early allocation. They pump them up in the market. They are then able to sell those tokens or build additional projects on there and do all that. Right. So that's one set of incentives. But the other incentive was I honestly think there are a lot of users who were earnestly

Starting point is 01:08:20 interested in participating in Ethereum. They wanted to participate in Ethereum. They were priced out, but they wanted to participate in public blockchains or semi-public blockchains, as I would consider some of these. And so they went to other networks. I think looking forward into the next cycle, this next phase of development, L2s will hopefully provide some of that throughput and that transaction capacity. And we all hope that it would arrive for this past cycle. I think it's here now. And it's going to start being built upon in a very significant way. So to hear about some of these developments as it relates to interoperability between those roll-ups, I think that's absolutely massive.

Starting point is 01:08:58 Because one of the biggest points of concern around roll-ups is, are we just building these silos that won't be able to interoperate together? But it sounds like there's been some meaningful progress and being able to address some of those in a way that doesn't require necessarily settlement by users back to layer one to be able to move between rules. So that's number one. On the point of EVM, I'll just say for now, EVM is clearly one.

Starting point is 01:09:22 And I think as long as EVM is in the lead, Ethereum is winning. And why do I say that? Look, you can have other layer ones that are EVM compatible. But eventually, and I think in the very near future here, they're going to lose to layer twos, which are also EVM compatible and have superior security secured by Ethereum. And so at some point, I think the market is going to look at that and say, well, why would I use some other layer one, which claims to be EVM compatible when I can use a roll-up secured by Ethereum?

Starting point is 01:09:50 And the other interesting thing about roll-ups is you can even have a roll-up that doesn't use EVM and is still using Ethereum for security. And so, you know, even if you don't want to use EVM, you can still build on top of Ethereum the strongest trust layer in the market. And I'll also say, look, on the third point, as it relates to Mev, look, I haven't made it a secret that I haven't been thrilled with how a lot of this stuff has evolved in the market. But the reality is, look, even those transactions, which are still potentially being censored or filtered, they're still getting through even right now, but with degraded service. We're lucky in a way because proof of stake and the network have just been really stress tested. And all of the developers and researchers have been working overtime trying to find solutions

Starting point is 01:10:33 to potential censorship. You know, if we have actors who are potentially willing to censor, how do we solve that? And so I think in a way, it's maybe put Ethereum ahead significantly. And so when I listen to some of the roadmap developments that Justin's talked about, it just makes me more bullish. I don't know if that's possible, Ryan, but I'm more. listening to this. Yeah, it's definitely possible. And like for people who weren't there, don't remember, I mean, the contrast between the roadmap that Ethereum has right now and also

Starting point is 01:11:00 the additions, which even the, like some of the bulls on this panel weren't even aware about, and the roadmap that we just kind of didn't have back in 2018 could not have been more stark. It was just incredible. And I don't see another community with this. So look, the bulls are bullish the Ethereum roadmap. Did you expect anything less? Of course they're going to be bullish on the Ethereum roadmap. Let's see. talk now about the market opportunity. That's a second question I think people have in its mind. And crypto in this market cycle has now dipped below a trillion. I think we got as high as $4 trillion. You guys, you mark, you guys, keep me honest, something like that. But now we're below a trillion.

Starting point is 01:11:35 And I think there's a question in people's mind. Back to the bear market question, everyone always asks, well, is crypto just a niche use case just for a bunch of like, you know, I don't know, people who listen to bank lists and whatever, daily way and like just, you know, whatever. They have ledgers and that's a little cute, but they're going to be the weirdos. And mainstream has doing other things. They don't care about crypto. How big can this market? Internet gold bugs, right? Yeah, internet gold bucks, right? But I mean, crypto people have talked about, no, this is bigger. This is like property rights. All right? And property rights birthed a $100 trillion real estate boom and opportunity. If we look at total market cap. How about the LLC? Oh, you got another $100 trillion in

Starting point is 01:12:15 stocks. There's another boom. Like the limited liability corporation and capital market. and all of that. Bretton Woods with Fiat, like that's another massive opportunity to combustion engine. We got oil as a resource, right? So like, justify why this, why this asset class should be even bigger than a trillion dollars. Maybe it shouldn't be. I'll throw this one to Drake. Justin, what do you think about the market opportunity for Ethereum? Why are you bullish on that specifically? Because maybe it's just a niche. Right. So I guess first I want to give, you know, a bit of context on how I think about this. And I like to simplify things and think in terms of orders of magnitude. And it turns out that the orders of magnitude

Starting point is 01:12:55 actually very, very close to reality. So one of the things that I like to think about is global wealth. Like how much wealth is there? If you just add up everything, if you add up real estate and fiat and stocks and gas and oil and all the long tail, how much do you have? Well, it turns out you have roughly one quadrillion. Now, that's not a number you may have heard very often. It's basically a thousand trillion. Now, let me just provide a little bit of perspective just to give you a feel for this number. So we have about 10 billion people on Earth. And so one quadrillion divided by 10 billion is $100,000. So what that means is that on average, the average kind of per capita global wealth is $100,000. So if you have more than $100,000, congratulations, you kind of higher than average.

Starting point is 01:13:41 Now, of course, there's huge wealth inequality in the world. And so it turns, out, unfortunately, that the median per capita wealth is actually much, much lower than 100,000. It's closer to 10,000. So what that means is that roughly half the world has less than $10,000 to their name. And roughly the other half has more than $10,000 to their name. Okay, so that's kind of like the really big picture. And then as you did, Ryan, you know, we can zoom in and try and understand these asset classes within this big picture. And I think you highlighted, you know, maybe the big four, real estate, fiat and gold, stock. and gas and oil, each of which are kind of roughly 100 trillion, with the exception of real estate,

Starting point is 01:14:21 which is actually quite a bit bigger, you know, something like 300 trillion. And like you can ask yourself, you know, how did all this wealth, you know, be created? I really like the gas and oil example. It's like gas and oil was literally like this black, dirty kind of thing and it was dangerous, right? It could like explode in your face and, you know, you had to do a lot of work to go extract it and And then it just turned out, you know, out of nowhere, we invented the combustion engine and then suddenly it was worth a lot. And then you can think this very similar story with land, right? Like before we had land titles and properly realized, like, you know, there's just trees and fields and, you know, stuff. And it wasn't very well defined.

Starting point is 01:15:00 And then suddenly we had this changing of the rules, changing of the paradigm. And then suddenly we've created wealth out of nowhere. And I think to a large extent, you know, fiat and gold is a very similar story. It's like nation states somehow convincing us that. these pieces of paper have value and even that gold has value on a geopolitical context. And we can say the same thing for stocks, you know, how it came from the limited company. And I think one of the amazing things when you look at this is that three of these four asset classes are actually created by the nation states, right?

Starting point is 01:15:30 Like these kind of came from this coordination tool, the nation state. And now I think we're in a position here where we have an opportunity to recreate the rules in a very fundamental manner and have the ability to create a, really powerful new asset class. And the way that I think about kind of sizing that is, first of all, looking at the existing kind of legacy infrastructure in this addressable market. So what is there? Right. There's basically I think of it as financial coordination. What do we have? We have payments companies. We have banks. We have fiat. We have gold. And that's roughly a $100 trillion. And I think maybe I know 80%, 90% of that will move to crypto, just like the internet, you know,

Starting point is 01:16:12 has basically eaten all of, you know, maybe 90% of communication. And I think not only are we going to see this eating process happening, but we're also going to see, you know, totally new things get created, you know, just like, you know, suddenly we realized that oil was valuable. Now I think, you know, NFTs is a great example. Like now suddenly dickbox are valuable. And it's like, it's crazy. But it is what it is.

Starting point is 01:16:37 And I think this is just like a taster. It's just the tip of the iceberg in terms of the assets that we're going to be able to create. And, you know, maybe that's another $100 trillion. And so maybe, you know, I prefer to just talk about orders of magnitude, but I have high conviction that we're looking at a $100 trillion kind of asset class here. And now you can ask yourself, okay, where are we now? Now we're at a $1 trillion asset class. We're like 0.1% of global wealth. We're like a rounding error, right? We're just so early. And really what we can be is a $100 trillion asset class. And so we can grow roughly a hundred times as an industry. But if you look at Ethereum specifically, right, what is its order of magnitude?

Starting point is 01:17:18 It's actually closer to 100 billion. It's roughly 150 billion right now than a trillion. And I personally think that within the crypto asset class, Ephraim and ether is going to become the dominant thing. And so I think for ether specifically, the opportunity is actually somewhere between 100 and 1,000. So yeah, that's kind of how I think about it. So you think the bear case for eth, the asset, is like 10 trillion. if this whole crypto asset class is 100 trillion total. And that's the bare case. That's like your threshold.

Starting point is 01:17:48 Yes. And just to be very, very clear, like this is in terms of the long term future, like in terms of 10, 20 years. Yeah, we're not talking in 2023. We're talking maybe post-quant. We're talking long, long term here. But like, I want to get the Bulls reaction.

Starting point is 01:18:02 And one of my ways of thinking about this, too, is you can look at the companies marketcap.com. These are all of the world's biggest assets, right? and right now at 150 billion, Philip Morris is bigger than ETH right now. Okay? What's Philip Morris sell? Cigarettes? We've got Wells Fargo, our favorites, bigger than ETH right now. Heath is the 72nd largest asset in the world. Wells Fargo, a bank, is the 66. We've got a bunch of banks that are higher than this. I bet, as someone point out a bank, Bank of America, there it is. Coke is bigger than ETH right now, right? So we've got a ways that we're we could rise. Bitcoin number 24. Let's flip this over to the Bulls. DC, what do you think about

Starting point is 01:18:47 the total addressable market size for ETH and the way Drake's thinking about it? I think Justin's points are spot on. And while I can't give you an exact market cap number, I agree with the orders of magnitude around the numbers that Justin is talking about. So just in two sets of arguments, in the near term, look at ether as an asset. And I think ether is a much higher quality asset than many people understand or give it credit for. I think Ethereum bulls like us understand it, but for a lot of the space, a lot of them only really came to appreciate the value proposition this cycle. And I think this is going to just grow to the point where it wouldn't surprise me if ether is the dominant crypto asset by the end of the next cycle, to be perfectly honest. By the way, is that bullish D.C.

Starting point is 01:19:29 that a bunch of people don't understand, ether, is that bearish? It's bullish in the sense of that's potential market opportunity, right? And I think as like another big dynamic that I think people should think about, by the way, is like during this next cycle, so you already see organizations like Fidelity, which is a big brokerage house here in the U.S., primarily focused on stocks and equities. They are spinning up their crypto operation. It will be live probably in the next year or two. And once that goes live, the previous generation of, we'll call them the boomers and above and slightly slightly younger, their reservations about getting into crypto because they didn't

Starting point is 01:20:06 want to work with some sketchy exchange or whatever. that's all going to go away and they're going to be able and willing in some cases to start buying. But I do want to talk just near term about ether. Look, mining is gone, okay, which was a huge detriment and kind of weight that hung around Ethereum's neck, I think, in a lot of ways. But it's specifically with proof of work, OPEX, right, was expensive. And so miners would have to sell their ether pretty much after they earned it to continue operating in a lot of cases.

Starting point is 01:20:35 issuance is at the lowest amount that it's ever been because of proof of stake. We're burning ether via EIP 1559 in a significant capacity. And I mean, like I just look at these things and the prices below what it was in 20 at the top of the 2018, 2017 bull market. It blows my mind. Look, I think honestly, when I look at the space right now, like the next two years are going to be probably ugly. I'm not going to sugarcoat it.

Starting point is 01:21:01 I think if you're in the space right now, be committed and be for, focused on this long-term vision. But ether, in my opinion, is on the verge of becoming the most important decentralized crypto asset and certainly the most important decentralized crypto financial asset. And it's going to become the world's best natively programmable asset. And there's basically unchallenged for that use case and for its level of liquidity and fungibility. I think that's huge.

Starting point is 01:21:28 And I mean, Justin alluded to this as well, but as you guys know, I'm super bullish on NFTs as well. NFTs as a whole ecosystem, and there's going to be a lot more than art and collectibles. But some of these art and collectibles have held up surprisingly well through what has been a heinous bear market so far. These are being held by collectors as true store of value assets. And I think having, like, store of value assets on Ethereum that are not just ether, only makes ether even stronger, to be honest, because it creates that economy. It creates a virtuous cycle and economy that can build around that. And in the past, I know some people have viewed those things as potentially threatening to ether.

Starting point is 01:22:07 I think that's totally the wrong way to look at it. Ethereum is the only public blockchain, which has a significant economy of digital goods and services on it, period. And I think that's just going to increase by leaps and bounds over the course of the next four years. Okay, D.C. So D.C. is also bullish. Justin Bullish. We got to get our final checkmark here. And one comment I want to make about EIP 1559, you know, to you, Anthony, as you kind of lead into like the big, market opportunity here is like, I defy you, anyone who's listening, to find me someone who understands in detail ultrasound dot money, the website, and the economics of this thing, and ETH supply, and is simultaneously bearish on ether the asset. I don't think such a person exists,

Starting point is 01:22:55 all right, but that's a challenge to anyone listening. Somebody who can explain ultrasound dot money and the metrics here and where ETH is going from just a raw economic supply side and also be simultaneously bearish on this asset. But go ahead, Anthony. Take us home with the market opportunity. Drake says $100 trillion. The base case is, you know, 10 trillion of that is maybe ether. DC's backing up and he's also like, yeah, and look at NFTs alone. That's a multi-trillion dollar asset class. And that's all going to be kind of settled in some way on ETH. What you think about the opportunity here? Yeah, so I would say that I totally agree with everything Justin and DC have said. I will say that when we're looking at the total market cap, that takes into

Starting point is 01:23:40 account stable coins, which are just like based on the US dollar. So removing those and just taking into account Bitcoin, Ether and like actual crypto assets, it's more like 600 billion right now, rather than a trillion. So it is 400 billion less there. And ETH alone is only 150 billion. So if the market opportunity is as big as Justin thinks it is, and I think it is, and I think it is, as well, then, yeah, I mean, it's obvious there's a lot of growth left there. Now, of course, you can't just say that, oh, well, it's going to go to $10 trillion because of reasons, right? You have to actually give reasons. You have to actually give a thesis behind, which is what Justin and DC have done. But I think, as you said, there's this website, ultrasound.com money, which shows the bullcase,

Starting point is 01:24:17 if you know how to interpret it. It's kind of like reading the Matrix. If you can read ultrasound money and interpret exactly what it's telling you, you can see the lady in the red dress, right, if you know how to read it. So if people don't know how to read it, I would suggest, that they kind of learn because this is your Bible towards like being bullish on ETH. Now, I'll break down a few other things here just for people. So I think that for me, one of the most bullish things that has happened is that I guess like supply change that we had with the merge, right? They're massive issuance reduction, which is basically almost 100%.

Starting point is 01:24:47 Right. If we were still on proof of work, we would have issued, I think, 1.1 million ether net of the burn. So that's including the burn. And then with proof of stake with, you know, post merge, then this is since the merge. we've only issued 1,294 ETH, which is almost a 100% reduction in net issuance in three months. And today, it's been 90 days. So it's been about three months since the merge. Now, of course, against USD, ETH has done nothing since the merge.

Starting point is 01:25:12 And we all know that, right? But I look at ETH against other assets. And looking at against Bitcoin, it has performed so extremely well against Bitcoin in a bear market, which basically destroys every narrative that has gone on about Bitcoin being the flight to safety asset in bare markets, right? Now, if ETH is the flight to safety asset in a bare market, if ETH is the best performing asset in a bare market, what's it going to do in a bull market when we don't have this minor sell pressure, when we have the burn offsetting a lot of the issuance because activity goes up? What happens when people realize that the

Starting point is 01:25:46 staking APIs or APRs are so good and you're getting it on an appreciating asset as well as time goes on? What happens when people realize that ETH is the only decentralized program digital commodity money in existence, and not only does it exist, it exists in such a way that makes its value accrue to itself. It doesn't just exist and the value leaks to everything around it. The value accrues to itself. The value accrues to holders. No longer is value occurring to miners who don't hold the ether. They're forced to sell. It is now accruing to stakers, which are much less likely to sell because they cost them much lower, but they're also much more aligned with being Heath holders because they hold Eath. Like miners didn't have to hold Eath. They held ASICs, right? They

Starting point is 01:26:24 held mining machines. So it was kind of like that split there. And then we also have the burn, which obviously all the activity or most of the activity that happens on the network burns ETH and brings it back into the ETH as an asset as a value of accrual mechanism. So you take all that into account and like I don't know how you can be bearish on ETH. I mean, even in the bear market, the gas prices obviously are much lower, but we're still burning millions of dollars of ETH per day. You know, that's all going to pay dividends when demand comes back, I believe. And it's already paid dividends against BTC for ETH, but against, I guess, USD, it's just going to take a bit longer to play out. But as people have said throughout this podcast, like, this is not the time to be bearish,

Starting point is 01:27:04 just because we're in the depths of a bear market, this is not the time to be bearish. Like, I personally think that we're in an accumulation range, as they call it, where, as D.C. was saying, like, no one's going to care if they buy at 1,200 versus 800 in the future, like in a few years, right? Just like I didn't care that I actually bought a lot at $220, and then ETH went to $80, I didn't care about that. It took like over two years for me to actually be in profit on that buy, but eventually I didn't care. So if you have a long-term mindset, if you understand the bull case for Ethereum and ETH as an asset, if you understand it really deeply and can see the writing

Starting point is 01:27:37 on the wall, so to speak, then, you know, you're buying ETH today, basically. And that's basically my reason, or at least most of my reason for buying now, even though I bought much earlier too, right? Like, I bought the majority of my ETH between $1 and $200, just because I bought that doesn't mean that I'm not buying now. I see the opportunities still. I see the massive market opportunity. I see that Eath is below its 2017-18 high, as DC said, which is just insane to me. And I think that, you know, people will talk about, you know, global macroeconomic forces and all this other stuff happening. It's like, yes, okay, that plays into it. Obviously, as rates go up, debt is harder to get, you know, money's harder to get. Things will kind of soften there.

Starting point is 01:28:13 But there's always people looking for opportunity. There's always investors looking for opportunity. Now, are you going to look for opportunity in, you know, old world stuff that's boomer, that all the boomers have, like real estate? Like, young people are. it just stayed in real estate, right? They can't even afford real estate because it's so expensive. They don't want to buy a lot of stocks because stocks are just, I don't know, they're boring, right? Then you have this new thing, this new crypto economy, this new exciting thing that has all these use cases and it's all happening on Ethereum. And then you want a stake in the ecosystem, well, you buy ETH, right? Like, you buy ETH to have that stake in the ecosystem. And then you literally

Starting point is 01:28:43 can stake it to have a literal stake in the ecosystem as well. And then you accrue that value to you accrue an ETH denominated yield. So like, taking all that together, I know I am going off in a billion different directions right now. But that's because like every one of these things that I'm talking about has a million different threads you can pull out and kind of go down. I do think that 8th is the best positioned asset in the world right now to outperform pretty much everything else. And yes, okay, there are smaller cap things that in a bullish period might go up faster, right, because they're just smaller cap, they're easier to move. But I'm talking over the long term, like bulls and bare markets, something to store your wealth. I believe that there is literally

Starting point is 01:29:21 no second best to eat right now. I know that's a meme, but I do believe there's no second best to eat. And a lot of the reasons I just outlined is why I believe that. Anthony, you claim that you are the Ethereum's biggest bowl, the East biggest bowl. And I just have no doubt sometimes that that is actually true. If I could actually throw my own hat into the ring, something that you and I were talking about, Anthony, on a recent live stream is just to recap some recent history. The 2017 ICO mania, I claim, and a few other people will agree with me. Well, others will debate it, but I claim that that was Ethereum's bull market. It was called the ICO mania for a reason.

Starting point is 01:29:58 For better or for worse, ICOs weren't all that great, but Ethereum won the show. It got so much adoption because of ICOs. The 2018 to 2020 bear market, Ethereum lost. Like, we took the L then. The ETH price took the L. You can just look at the ETH price versus the Bitcoin price. And it didn't do so great. It did not hold up.

Starting point is 01:30:16 once the bull market came back in the defy summer of 2020 and the nfti mani of 2021 that was ethereum's bull market ethereum won once again because of defy because of smart contracts and then also unexpectedly because of nfts and so as soon as the bull market came back ether once again regained so much ground versus bitcoin i think right now even right now there's like 95% of time ether has been a better buy than bitcoin and that is into the middle of this bare market as we experience it right now, I think ether is up just one or two percent more than Bitcoin is from its all-time highs. And so if ether is starting to win the bear market too, and so when Ethereum starts to win both bare markets and bull markets versus the whole rest

Starting point is 01:31:03 of the crypto industry, what do you think the next bull market looks like? I will leave that in the imagination of the listener. Well, I've got a big imagination, David. So I'm thinking about a few numbers with some zeros attached to it because this is the bull episode. Can we just touch base real quick on timeline though? That was the third thing. Justin, do you have a take on timeline? Is all of this stuff going to take forever? Or are we like reasonably close? You're talking about the technical roadmap. You're talking about the opportunity, right? And not saying all of this will happen overnight, but just give us a sense. Are you bullish or bearish on the timeline of this stuff? Right. So my favorite timeline is the 10-year timeline. And I think it was maybe Bezos,

Starting point is 01:31:43 who said, you know, that you're over bullish on the one-year timeframe, most of the time, but on the bullish on the 10-year timeframe. Or maybe it was Bill Gates who said that. And I really think it's the same thing here. Like the roadmap is a 10-year roadmap. But even putting aside the technology, let's assuming that we had it all today, we still need kind of this onboarding phase. We still need network effects to play out.

Starting point is 01:32:04 We still need Lindy to play out. And like all of these things will take a decade. So my suggestion is just, you know, sit back and relax. and enjoy the next decade, basically. Don't go under one-minute kind of candles looking at the price. You might as well just hold and forget about it. Now, in terms of the one-year timeline,

Starting point is 01:32:27 which people love to talk about, because we're at the end of the year and we're projecting into 2023, I think it's very, very difficult to talk about that because we're just so small that even like one person could have a very significant impact. So, for example, on the upside, you know, we could have a billionaire.

Starting point is 01:32:43 We could have, you know, Jeff Bezos or Bill Gates or whatever. Elon suddenly wake up and, yes, it clicks for them. Ethereum is going to be the settlement layer for the end of the value. I'm going to put in $100 billion into this thing. There's only $150 billion now. You know, the price would explode. It could happen. You know, I wouldn't hold my breath on it.

Starting point is 01:33:02 But, you know, the same thing could happen with builders. You know, someone might have like this genius killer app idea that we've, you know, never thought of, you know, a bit like the crypto kiddies back then, but kind of something just people don't expect. That could also happen. I think regulators could also, you know, just one person in the world, Gary Gensler could just say, oh, suddenly I understand the ether. I'm in love with it.

Starting point is 01:33:24 I'm not bullish on that one particularly. No, neither am I. Take the point. And, you know, same with macro. You know, it's like 12 old men, you know, in a room and, you know, they could change their opinion on things. And I think it's a very similar thing on the downside. You know, you can have like one hacker who just decides to be a black hat instead of white hat.

Starting point is 01:33:40 And, you know, he found a bug. and he's just going to make the world burn. You know, it's very hard to predict. But what I like to do is a couple of things. Like one is look into the past. Does anyone remember Mount Gox? Does anyone remember the Dow? Does anyone remember the Shanghai Doss attacks or the parity wallet bugs or Bitfinex hacks?

Starting point is 01:34:00 All of this is like long-distance paths. And so even like the recent stuff, like anyone remember Luna? Like we're no longer talking about Luna. It's kind of, it's been digested, it's gone. like the Ronan Bridge, a hack, right? That was like a $400 million hack or whatever. Like, no one's talking about it. So what I encourage you to do is just assume the worst case scenario. Just assume that Binance, great scale and jump all simultaneously collapse. Assume that EF has declared the security. Assume that withdrawals are delayed to 2024, 2025. Assume that EF researchers

Starting point is 01:34:35 hit by a bus. Assume that we get 51% attacks and we need kind of manual intervention. Assume all these good things. It doesn't matter. It doesn't matter. On the 10-year timeline, it's all noise. And, you know, ether is going to win, at least that's my thesis, regardless of the noise that happens on the one-year candle, basically. This is a great way to kind of like wrap this up and end it. So Drake is saying sit back, relax and hold, right? Or as we've said on bank lists, stake it till you make it. I think that's the long-term play here. DC, so you got me. All right? somebody who's listening, they're like, you got me, Heath Bulls. I'm leaving this episode, and I'm feeling kind of bullish. Do you have any thoughts on how they get, not financial advice,

Starting point is 01:35:21 of course advice, but like any thoughts on how somebody should begin to get exposure to this asset class? Like, what if we made somebody so bullish? They're like, oh, second mortgage. I'm yoloing in. Sorry, don't talk to the spouse. And they're just like all in. Is that the way to do this? Or are there smarter, more prudent ways with your investor cap on that you would say to someone to channel that bullish energy. This is specifically going out to the listeners who have bought Ether while listening to this episode. You know who you are.

Starting point is 01:35:49 You can't escape. D.C., who do you say to these people? Well, first of all, I'd say definitely don't borrow money to buy cryptocurrency. Certainly not at a bottom. I mean, because you never know where the bottom is exactly, right? So this is me injecting my caution into the discussion because we don't know. There could be further downside. But I'm going to tell you guys, rather than give advice to you, I'm going to tell you what

Starting point is 01:36:08 I'm doing. I'm accumulating a bigger addition to my Ethereum holdings over the course of the next at least one year, probably up to two years. And that's going to consist of weekly buys or maybe twice a week buys. And I'm just adding to my ether holdings. And that's really what, look, there's going to be volatility in the market. Even in a bare market, if you want to see what can happen, I encourage you to look at the Ethereum and Bitcoin charts between the years of 2018. in 2020. And you'll see a pretty violent tale, which a lot of people live. There's a lot of blood, sweat, tears, lost ether, gained ether in that chart. And that chart has stories behind it. And so if you're looking at this and you're saying, hey, I'm really excited about ether.

Starting point is 01:36:54 I would say start dollar costs averaging in. The important thing I think is being consistent. As Justin said, over the 10-year time horizon, the bull case for digital assets being ownable is absolutely massive. It is a massive paradigm change. I mean, I was talking to my neighbor and he is telling me how his daughter prefers to be paid in ether when she babysits their kids. She's like 14 years old. She's like she's got a metamask set up. She's like minting NFTs. They think about digital ownership the same way that previous generations think about physical ownership in a lot of ways. And so I really think that paradigms are changing. That doesn't happen overnight, but it will happen over time. And I think you want to be here for that. You know,

Starting point is 01:37:38 and don't make the mistake if you're a longtime community participant. Now is not the time to walk away. Okay. I walked away in 2013 or whatever after Mount Cox and I didn't get back until after Ethereum had already launched. If I had stayed engaged, I probably would have been engaged in Ethereum much earlier. D.C. asking for a friend, what percentage of your portfolio in crypto is irresponsible? Just asking for a friend. I don't think any of it's irresponsible because it's all thesis-driven. And it's not money that I can't afford to lose. It would really suck if I lost it.

Starting point is 01:38:10 But I'm not going to be on the street. And I think that's what's important. You know, you can and you should have exposure to this asset class. But you don't need to put your entire net worth into it like, well, most of us have. We are hopeful, D.C. I was about to say. Yeah. We are hopeful to see that next full cycle.

Starting point is 01:38:26 You can get some furniture in that house, though. We're working with a little bear. We're working on. I'm getting into webcam, too. That's a supply chain issue, isn't it? I see DC going to the furniture store and looking at that couch and be like, No, I saw a tweet from him this morning and he said he's been waiting on furniture for like a year. That's why I bought that house.

Starting point is 01:38:45 It's crazy. I'm waiting. patiently. All right. Anthony, be the responsible adult in the room, okay? We're all hot and bothered at the end of this podcast. What should we do about that? I mean, ask you me to be responsible.

Starting point is 01:38:58 It's just not going to happen, man. I'm asking you so you, like, yeah. I'm going to put on... Tell us what you really think. I'm going to put on my Suzu hat for a second and call Eith a revanchist apocal multi-generational assets. Is that really a Suzu quote? He used to use these words that no one had really used before to make himself sound smart

Starting point is 01:39:19 hard, but yeah. But no, no, I'm being serious now. Heath is a multi-generational investment opportunity. He's not going to kind of make you lots of wealth overnight. You're not going to buy it today and be rich tomorrow sort of thing. But in my opinion, over the longer term, ETH acts as a true multi-generational store of value. And the most amazing thing about it is that it is digital. It is not physical, right?

Starting point is 01:39:43 Like, physical stores of value have existed for a very long time and they will continue to exist, right? People use their property as a store of value. Obviously, there's gold and other precious metals. But digital store of values are something that's relatively new. And as D.C. said, there are people in the younger generations, much younger than us, that are growing up in this environment, right? this is going to be natural to them. It's not going to be foreign like it is to a lot of us, you know, at this point in time, like a lot of the older folk are like, you know,

Starting point is 01:40:07 why would I want to own something digital? I can just copy paste. It's like, you don't get it, right? You just simply don't get it. You're thinking in the old world kind of way of thinking. And it's the same thing we saw with the rise of the internet and computers. The older generations had a much harder time grasping this than the younger generations do, simply because they didn't grow up with it. It wasn't part of their worldview before they got to that age, which I feel like I'm pretty much getting to where you become. jaded and you become, oh, you know, is that new thing the kids are into these days. Ah, I can't be bothered with that. Like, I just want to focus on what I'm used to, right?

Starting point is 01:40:39 But it's always the younger generations that cause this change and it becomes natural for them. So I think that they're growing up with this. And that's why it's a multi-generational kind of asset. They're growing up with this. It's normal to them. Digital ownership is extremely important to them, given as well as that physical ownership is out of reach for a lot of them. They don't want to play the game that's rigged. Real estate is rigged. A lot of stocks are owned by the boomers as well, right? Like by the older generations, they don't want to play that game. They want to play their own game. And for them, I think, you know, because it's digital, because it's all online, they're used to that. That's their world. So they're like, I'm going to

Starting point is 01:41:11 go play this game, right? And that can come in the form of ETH or other assets on top of Ethereum or even other assets outside of Ethereum, just crypto as a whole. And I think that to me is the bullcase for crypto generally, is that you don't have the reverse happening where people are becoming less and less digitized, you have more and more digitization going on. And on top of that, if we'll take the macro scale, you have actual globalization, physical globalization actually reversing, but you have digital globalization just continuing to increase. So I think looking at it from that way, Heath as a digital asset and other digital assets, to me, are much better investments than physical assets going forward and much better things to kind of hold as stores of value as well.

Starting point is 01:41:52 Guys, this has been great. Full disclosure, all of the Heath Bulls, including Dave and myself, we do own Heath. And at the end of this episode, it'd be kind of weird if we didn't, right? And we were talking about this, all right? Most obvious disclaimer in history. I may or may not have just bought East. I was just actually looking this up. So, guys, bankless listeners, this is the fourth bankless, the bull case for Heath episode that we've done, the fourth. And Anthony and D.C. were on the very first. And that happened, fun fact, two years ago, the time this came out.

Starting point is 01:42:22 ETH was trading at that time around $630 when the episode was published. On the way up. So on the way up, went to 4K, and we're still 2x up, right? Pretty good return for two years. So if you want to play another game, you can go down Memory Lane and listen to the previous Heath Bull episodes. We'll include a link to those in the show notes. It's just kind of fun to see how the thesis really hasn't evolved at all.

Starting point is 01:42:47 It's just been bullish, Eith. Just more has happened to make us bullish. It's gotten more specific. Yeah, I will say that. We have a roadmap this bull session. Never had that before. Anyway, Justin, Anthony, D.C., it's great to have you, as always. Thank you for being bullish Eath.

Starting point is 01:43:02 Thank you, guys. Thanks, have an awesome. Action items for you, Bicklis Nation, just one link to go understand during the holidays, and that is ultrasound.commoni. Go click that link. Go learn everything you can. If there's things that don't make sense, do some research. At some point in time, we've got to collectively come out with like a video,

Starting point is 01:43:19 like a five-minute video to describe this whole thing. I feel like that should be a joint project maybe that the ethibles take on and publish somewhere for folks. So it's a quick how to. That's super important. Anyway, go do that. Risk and disclaimers, got to end with this. None of this has been financial advice. All right?

Starting point is 01:43:34 Seriously. None of it. Crypto is risky. ETH is risky as well. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone.

Starting point is 01:43:43 But we're glad you're with us on the bankless journey. Thanks a lot.

Bankless - 150 - Bull Case for Ethereum IV with Justin Drake, DCinvestor, & Anthony Sassano

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.