Bankless - A Conversation with Michael Ippolito

Episode Date: February 17, 2024

David livestreams with Blockworks's Mike Ippolito in a freestyle conversation covering all things crypto. ------ 📣SUI | Register for Sui Basecamp https://bankless.cc/sui-basecamp  ------ 🎧Listen On Your Favorite Podcast Player:  https://bankless.cc/Podcast  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2  ⁠  🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo    🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku    🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle    💸 CRYPTO TAX CALCULATOR | USE CODE BANK30 https://bankless.cc/CTC  ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

Bankless Station, happy Friday. We got an unscripted conversation coming at you live. Me and Mike Abolito are just going to go at it. Whenever we talk a bunch in real life, it's always super. I always learn a ton from Mike Abolito. And so I'm going to do that again today, but this time live on the stream. So we're going to get into that conversation. But first, I'm going to talk about some of these fantastic sponsors that make this show possible. Cracken knows crypto. Cracken's been in the crypto game for over a decade. And as one is the largest and most trusted exchanges, in the industry, Cracken is on the journey with all of us to see what crypto can be.

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The joke is we actually, we talk quite often. But we never get to talk, I think, open-ended. That's very true. When we do, it's usually in some sort of like crowded loud environment and not as productive as it could be. So I hope that I hope we can kind of change the game a little bit with what we talked about today. Yeah, I agree. Well, where do you want to start first? I mean, it's been an interesting week. It's been an interesting week. It's been an interesting quarter.

I think things are crescendoing in their interests. Maybe we could start just as like where we left off when we had you on the podcast like half a year ago now. And you had, I think, one of the most banger podcasts that we had in a while really just talking about. the Solana thesis, the Ethereum thesis, the Cosmos thesis, and how they're all kind of like representative of different points to enter into becoming a blockchain, and how you were saying like everything is kind of converging. That was like a banger episode.

Everyone loved it. And I'm just wondering like, that was six months ago. There's a lot of stuff that has happened since then. Maybe that I can just present that to you and see where you want to go with it. Yeah, I think since then, we've started to see even more, even more convergence. And one of the, you know, there's actually a great, you know, this is basically anything that Vatollic writes is gold, right?

But he's got this great, very nicely summed up, very nicely summed up diagram, which is the basically three different ways that blockchains are evolving. And the common component of that is centralized block production, but decentralized proofs and verification. And there are three different ways that that's playing out across a whole, bunch of different ecosystems right now. So like let's take two of these examples, which would be Ethereum, where there's Ethereum and there are centralized builders and a couple of different roll-ups, or there are maybe let's call it one large roll-up where there's one centralized

sequencer that's doing a lot of the block construction up there. Or there's many different roll-ups, which is sort of what we're seeing now. But MEV is ultimately what ends up re-centralizing that block production because you have M-EV that gets to. extractive. It's very expensive proposition to build blocks across all of these different fragmented roles. That requires a big centralized builder to stand the way. And then on the Salana side of things, like this would be sort of the high TPS chain, which is the third leg of that stool. You've got obviously higher bandwidth and hardware requirements for validators. But you actually saw, this was pretty cool from Sovereign Labs. You saw the very beginnings of a

of a light client over there, an SPV-type light client. And we know we're going to get tiny dancer on the Salana side of things. So I think that Vatolac, as per usual, said it much better than than I ever could in a million years. But additionally, like we just saw Polygon release something pretty cool this week called the Ag Layer, which is this. We've been talking a little bit about aggregated ZK proofs, which do something very similar. Celestia, which, to be honest, at the time, I didn't really get too deep on the design is also very similar, kind of big blocks, a few chunky validators, but they've got these light nodes, which verify and have special powers than the chain. So I think, if anything, it's pretty live and well. So I think like, before Bankless, I did this

podcast with my old buddy, Christian Carolla, who then went on to work at Bitcoin Media. And my arc in that role was like the everything guy. So I'm all the chains, the multi-layer ones, the cosmos, the interoperability, the bridges. And then he was Bitcoin. He was the Bitcoiner. And then slowly over time, I kind of morphed my thinking, my like my like, just like ideas for how the space would converge. And then I converge into the Ethereum camp. And then, became like a Bitcoin versus Ethereum podcast. And now I'm kind of like going back a little bit the other way where just like you're seeing the writing on the wall. Like Salon is not going away. There's so there's always so much excitement on like newer change no matter what era you're in.

Like right now Celestia is super hyped and actually getting real adoption. Monad isn't even live yet and people love it already. There's always going to be the move towards just like newer chains. I think people are always going to enjoy new chains. And so like, I'm kind of like waving the flag on just like one central chains that will like gobble up everything. Even though I do think that like there are forces that push towards that direction and there always will be. But there's also like forces that push away from that direction and they're likely always will be because we've definitely seen that over the last like, you know, it's eight years in crypto. So David, what do you think, if you had to outline what do you think the forces that push us towards that direction of one

chain to rule them all and what are the forces that disperse us from that consecrate? Well, I think the very, very simple one is like the, the bigger that the top dog chain is, like the one chain to rule them all, the bigger that that one is, the stronger of an incentive there is to fork off from that chain and try and build a new one, a better, like a better Bitcoin. Build a better Bitcoin, like an Ethereum killer. So like, there's like this natural equilibrium that is set in between like, it doesn't

matter how successful you are, the larger, the more successful you come. become the stronger the incentive it is to be to dethrone you. And then you get into like the VCs playing like the Alt Layer 1 games, which, you know, retail also loves. Retail loves that game too. And so like there is, I don't know if there's ever. And then also like there, there was that meme that John Charbonneau tweeted out that I think you retweeted maybe.

And it was like generalized chain wants to become more specific, more specific or app, app wants more sovereignty. So it becomes an app chain on a generalized chain. And then app wants more features. becomes more generalized. A new app comes and is born on that slightly more generalized chain. And then now that app wants more sovereignty. So it makes an app chain and there's like a cycle. There's always just like you can't have too much of anything because there will always be some sort of opposing force to check on that. And so that's kind of what I'm saying. Like I'm just ready for like the new crop of layer one.

So like gain of attention attention in this bull market and the cycle repeats. I'm with you. Another way of saying that VCs and retail love new layer ones is entrepreneurs love it. too. That is, I think, the single driving force, which is just that entrepreneur sees inevitably with these, you know, with blockchain architectures, you have to make tradeoffs. And there's always like one smart person who's like, I don't really like that you made this tradeoff. I actually think there's a market for someone who made the opposite side of the straight off and then they go do that. So every experiment ultimately ends up getting run. And again, I think that's, I think that's a positive thing. But that's a funny meme because I think also one thing that might be changing, at least

my worldview about how I used to think about things. I used to think about the world very black and white between general block space versus app specific. So like general is like Ethereum, right? Like you can do anything you want. It's the world computer. And then osmosis is an example of an app specific chain. It just wants to be a Dex. That's what its block space is optimized for. But it's kind of converging in both directions. And even the general blockchains like Ethereum's roadmap now looks like the main chain is a bulletin proof or bulletin board for posting ZK proofs. And it's exporting money. And it's like, well, Bitcoin kind of started general, but now it's the app chain for money. Ethereum looks like it's heading in that direction. So Ethereum is specializing. But then some of those

decks is like, oh, moses, like, hey, yeah, we've got a decks, but you should come build a decks on our decks, you know, and say it's like, yeah, we're actually, you know, we're building, you know, sector specific block space. So all of our validators have to run their own order matching engines. Like, you know, we're kind of converging on it probably both sides that, you know, once you have an app that reaches some amount of product market fit, you want to expand. But the big, really general ones are like, actually the world is just too big we need to specify. So we're kind of converging there as well, I'd say. Are you saying that there's no such thing as actually truly general block space? I think, yeah. I think I'm landing on that. I don't think,

I think it might be a myth, similar to bridging. Okay, so but Ethereum at block, at the Genesis block in 2015, and then before it became, had any sort of like actual real, applications on it. That was general Blackspace, right? Yeah, yeah. And then had to specialize at some point. And then had to specialize, yeah. But is Ethereum specializing now? I guess now it will still be pretty general until

Dengoon, and that is the first instance of Ethereum specializing with Blubspace, right? Like it's still pretty general up until that point. It's just like the apps have started to force it into being more dedicated towards specific reasons. But not anything inherently at the base. protocol? I think ultimately every, even like Solana, which is the, you know, it's the light speed,

it's the world, it's consensus at the speed of NASDAQ, global, all that stuff. It's probably going to have to end up specializing. I'm not technical enough to be like at this level of throughput, this many transactions, this globally distributed is when you would have to start specializing. But I sort of do trust the modular camp that eventually not the entire internet can sit on one layer with one set of validators. Ultimately, you're going to need to start specializing. So I think it's coming for Ethereum and Solana, and not in a bad way. It's just, hey, we have product market fit on these certain things. We should double down on this and really expand.

Yeah. I think we just did this super long podcast with Mike Nuter and Domitie, two hours, 45 minutes around the Ethereum roadmap. And that's kind of like when, like, once again, it was impressed upon me that the long-term conclusion of Ethereum is this super lightweight layer one blockchain that just receives and verifies proofs. of what could be anything at higher levels. And that's also what the Bitcoiners want Bitcoin to be.

Like that is, if you're a Bitcoin builder, if you're a Bitcoin Renaissance, not a Bitcoin Maxi, then like you're really interested in Bitcoin being like the truth layer for any sort of expressive alternative layers. They've just never been able to figure out how to get Bitcoin to become that. But that is what Bitcoin wants to be, according to them. And the thing is like, if Bitcoin achieves that, like there's a lot of focus on the bit VM right now.

If Bitcoin achieves that, then it's actually achieved that faster than Ethereum did and without all of the technical debt that Ethereum has, which is just kind of funny. It would be hysterical if they wound up doing basically the same thing. But I also think here's a challenge, or here's just something I've been trying to think through when it comes to Bitcoin. You let me know. So the great thing about Ethereum from a monetary standpoint is it's this very large, very liquid asset. And people historically want to do things with that asset. It has this culture of like, okay, have it. my Ethereum, then I buy an NFT or I deposit into this D5 protocol or I'm going to restake it

and loop up. Probably not financial advice. Maybe don't do that so much. But still, there's this culture of like once you have this crypto-native capital, Ethereums tend to want to unlock that capital. Whereas that's much less proven out in the world of Bitcoin. Bitcoin is the largest, Bitcoin is the largest form or pool of crypto-native capital. And there was early product market fit through BlockFi.

Like you saw Bitcoiners wanted to earn yield on their Bitcoin. There is a culture there of not one. to do things. Like the culture in Bitcoin is like, I bury this shit deep in cold storage. You know, it's like Arctic tundra cold storage. So how much of that unlocks into these new cool use cases on drive teams that I have no idea. I have no idea. And that's the big question. Okay. Yeah. I think I have some sort of like not answer, but just like I think why there is that culture in Bitcoin is because they haven't been given the tools to express themselves and their desire for a more productive asset in Bitcoin.

So all of the people who are like, I'm going to dig a five foot hole inside my backyard and bury my bitcoins in it and not touch it. Those people have all of the tools to like broadcast their culture and their preferences because Bitcoin hasn't been expressive. But now we actually have like ordinals as a tool for Bitcoiners to be like, no, I want to like play with my Bitcoin. And there's actually a bunch of deals that we're like looking at the bankless ventures. Do you actually know that, you know, who's the largest custodian of Bitcoin? Like who's got all the Bitcoin? Binance. Because like people just trust Binance with their Bitcoin's

Binance custody. And so like there are deals like who are working inside of this realm of just like actually there's a lot of Bitcoiners who have given up their private keys because that's whatever. And so they're trying to build like utility around that whole part of the world. And so I think once Bitcoiners have like the tools to be DGens, then they will become DGens. I think so too.

So one of I, we. going into this year a prediction episode, one of my highest convictions bets was actually Bitcoin JPEGs for exactly this reason. So I've been cheering on just because, you know, when C-Fi blew up, it eliminated the tools for Bitcoiners to do anything with their Bitcoin, right? But I think basically BlockFi and Celsius was proof positive that people do, Bitcoiners do actually want to earn yield on their Bitcoin, do fund things. I just don't know enough about the limitations of building on Bitcoin to know if, like, for instance, like Bitcoin still, those blocks are tiny. And there are 10 minute block times, not 12 seconds. Like the 12 second

block times are tough enough in Ethereum. Like, I just don't have a good enough sense about what the actual technical limitations are of that. But JPEGs are just so easy. It's like, yeah, I want to buy this monkey JPEG. This looks cool. It is kind of funny how fast JPEG culture got Incept into Bitcoin. I feel like they have a bigger JPEG culture than Ethereum does these days. They do. And low-key, Magic Eden, they pivoted away from Slana, but they basically own, they have super dominant market share there.

Like if you want to trade a Bitcoin JPEG, you basically go to Magic Eden, so props them for doing that. What do you think, David, about, there have been a lot of hot takes on the death of the 10,000 PFP collection. What do you think about that? The death of the 10,000 PFP collection. What was the last 10,000 PFP collection to really come out? Well, I guess you had like Madlads.

I don't know if there was actually 10,000, but that was somewhere. Madlads was, yeah, it counts, right? Madlads was like a year ago. Yeah, yeah. There's like the Brian Armstrong one on base, but that's never really exploded beyond base, right? I agree. Yeah, I wouldn't count that. I mean, in Salonah, there have been a couple.

There have been Tensorians I would put in there as well. There's a, on Bitcoin, I don't know how many there. there are, but there's node monkeys and there's there's the Bitcoin wizards. Right. And then quantum cats was like the new one, which minted at 0.1 bitcoins and got up to like, I haven't checked the price in the last week or so, but like the last I checked it was like 0.27 bitcoins. That's what node monkeys was trading out. I was like, I just can't make myself do that.

Yeah, that's too high. That's too high. That's too high. Yeah. So, but what do you think about that as a concept? Because, you know, the, if you were against that concept, you'd say this was ridiculous. these JPEGs aren't worth very much and there's no reason they ever sort of traded at that valuation. But I think there's maybe another case there too. I mean, in a digital world, I've always

thought like the PFP utility on your profile has immense utility. Like me too. To the point where I'm like meeting people at a conference and I'm like trying to like get a grasp on who they are

and then they show me their Twitter and I recognize immediately their PFP. And that hasn't seemed to be, like, taken up lately. I think people care a lot less about that now and people are just ignoring that aspect. But that was, like, the big thing last cycle. And I don't know why that would, like, go away. It didn't seem like a flash in the pan. They've got built-in distribution.

There's a guy named Scott Galloway, who's kind of this talking head, but he also, he's pretty good on brand. Not so great on crypto, but he's really good on brand. And, you know, he talks about basically every. all the great products out there, they end up applying, they tap into this very primal human desire. So it could be like sexual fitness. It could be survival and security, whatever. And PFPs kind of have that. It's a flex, right? Like some people just don't get that. And some people have a fucking crypto punk right here. There you go, baby. There you go. Yeah. I've been saying for months that I'm going to get, uh, get art here and hang it up. But I haven't done it

yet. But every time I go over to your place, I'm like, yeah, I actually got to do this. But yeah, I think it's a, I mean, it definitely taps into that. The other thing, they have really native built-in distribution, like better native virality than maybe any other product that exists. And here's an interesting thing that started to happen as well is, have you been noticing that these PFP collections like Bad Kids or Pudgies are getting air drops? Yeah, yeah, certainly. Pudgies would love to tell you all about the airdrops that they're getting.

But that can't be, there's limited ammo there, right? So let me describe. So here's why it makes sense from the perspective of protocol that's air dropping. Imagine you are about to launch your protocol. And what you want to do is you might have multiple different objectives, right? Like StarClear is pretty interesting. They wanted to do, they want to bring, they want to reward their early users. They want to attract new users. They want to reward and continue to incentivize the developer community. They want to transition some people who are staking on ETH to be like restaked operators on Eiger. So they have all these objectives.

The problem is sybilers, right? Like that's the big thing. You don't want just these industrial air drop farmers to come in and take everything. So NFTs communities are this really interesting intersection of both those things where they're sibbled, right? So you're not going to be dumping that to air drop farmers. And they're wealthy new community members, right? Like if you have the floor of pudgy is like 50,000 bucks.

So if you're dropping to the pudgy community, you know, if you get even a really low conversion rate, that's probably worth it. You know, you've probably got acquired some really high value customers. So I feel like we're a couple months out from all these threads being like, I paid for my Pudgy with XYZ AirDrop. And yeah. So I could see that being a huge. And there's going to be a million air drops this year as well. Yeah, there are going to be a million air drops.

It's actually kind of nuts. But, okay, but Pudgy's got like two air drops, though. Like, I don't know if we have enough data to say that this is, this is, maybe you're just saying it doesn't, data doesn't matter. This is just what makes sense to you? This is what makes sense to me. Yeah, but like pudgies are just so far away from just like Starknet. Yeah, I, so Starknet, Starknet didn't do this, but like dimension, like the dimension air drop. The dimension air drop got targeted pudgies and bad kids and some of the other NFT questions.

I have really, did you know about dimension before it's airdrop? I had heard of it, but I couldn't have articulated what it did. Because there are these tokens that are getting airdropped and all of a sudden these protocols are like between like two and ten billion dollars that I've never heard of before. Yeah, I'm on this page for you, dude. If you have a logical explanation for why dimension is trading where it's trading, I would all ears of- No clue, dude. It's just like, I lost my, like, well, I need to go find it.

It's somewhere. I send it to an address. I need to go find which address. But I haven't been able to actually, like, sell my D-Y-M. That's what I've heard is, like, people just, like, can't figure out how to actually sell the tokens. But it's not the only one, right? Like, Alt layer also drops into some sort of insane valuation.

And I don't think anyone heard of it. like a month prior. Yeah. I mean, even the FDV of Starknet is I mean, Starknet's obviously a super credible, you know,

very attractive project, but like that's super high. I mean, some of these are great projects, but even like Gito and Jupiter, like great projects, you know, but they're launching a multi-billion dollar FDVs.

It's like crazy. And I know people say that at this point, FDV is a meme in the cycle and then people don't care until they do, but I think people watch FDVs. I look at FDV exclusively. And sometimes I feel like an asshole for doing that because everyone says the FDD is a meme. But I'm like, what is the most rational number that exists?

Yeah. Well, here's the other. I mean, I'd love to get Vance's take on that. Can you, next time you have a podcast with Vance, can you ask him about that? Yeah. Actually, in one of the early Bell curve episodes, he was like, wait, what do you guys look at market cap or FDV? And we paused. And he was like, please, for the love of God, there's a right answer here.

So I know he's on the FDB train. But, yeah, I don't, I don't really. have a great explanation for it other than just like risk. There's just, the market is just kind of risk on again. Right. Yeah. That's, that's kind of like, yeah, people just are not hitting the sell button. People are hitting the buy button. Yeah. No. And to be fair, I mean, maybe to assign like some amount of rational thinking to this, like, are you selling anything right now? No. Yeah. Yeah. Okay. So like the, the two air drops that I got, which are big fans of, Alt layer and dimension. Both of them, I'm like, well, if I keep them, it might qualify me for a

future AirDrop if I don't sell. So I'll sell. Yeah. You probably just answered that question. So yeah. And just on the margin, people are like, well, you know, I feel like everyone is in the same, you know, we're crypto, what the total market cap right now is at like $2 trillion, right? Bitcoin is, you know, 20, 25% off its all-time highs. I think most people have the same framework that we're going to slowly grind up from here

and then it really gets on, you know, the party really starts when we cross the all-time high. So I guess to answer my own question, why are you selling anything at the current moment? You probably don't. And I, everyone has these stories too, right? Of like an airdrop that they flipped and, you know, they tweet out, oh, I would have had one and a half million dollars.

So that's definitely the mindset that I have. I'm just holding on to everything for the most part right now. Dude, I think everyone is trying to be Celestia right now. Like there are future projects that are going to air drop. their tokens and they're like how do we airdrop our tokens at a low valuation so that it can pump for a long time afterwards like how do we do that i'm like you guys can't force the market to do anything but like the fact that celestia dropped and it just rocketed and did a 10x to air drop holders kicking off like the bull market like blowing up the whole like modular money meme into like this

new mine chair that everyone has and then actually gaining adoption by some of the ethereum roll-ups and it was airdropped to a bunch of like random people and then it pumped 10x. That's like the bar that everyone will remember that that they're like that this airdrop could be that. This air drop could be that. And like the next year of air drops, we're all going to hold our air drops because it could do a Celestia. But even when Celestia launched, I don't remember thinking that was particularly cheap.

You know, like it was a launch that a $2 billion FDV. I was like, oh, it's like a lot. I, you know, but it just ripped. And it was, did not stop. Yeah. I mean, Celestia is a phenomenal project and they deserve it. But like that, that initial price action was, I'm sure, massive for the general psychology product.

Right. So, yeah. Right. But, you know, Celestia is also kind of like, Celestia is also, you know, going back to this convergence thing, you know, Bitcoin, bullet and board where you can put like really small blocks. It doesn't even support smart contracts. That's where Ethereum headed.

That's what Celestia is doing as well. well. Celestia is actually really similar to Bitcoin and its construction because it also, you can't, it doesn't support smart contracts at the, you know, at their layer. So yeah, in a lot of ways, like, that's all, that's a super interesting ecosystem, I would say as well. Yeah. I have not yet been able to like categorize Celestia very well in my brain. Like in the big blocker category, but not, not no virtual machine, so no settlement. I don't know how to think about Celestia. Yeah. So the way that I think about Celestia is they have found a way to obviate a lot of the negative tradeoffs of what was this huge argument back in the day of the block science war. And there were two very different camps of thinking about blockchains, which is one, you know, you want to keep the ironically, actually, the small block camp is not the way that Satoshi thought about it.

I know it's gotten a rebrand, but like the original vision of the in the Bitcoin white paper is digital peer-to-peer cash, which required scaling hardware. And so eventually there, you know, you came to this disagreement about like, how big do we make the blocks. The miners wanted bigger blocks. The core devs did not want as big of blocks. And ultimately, Bitcoin, I think made the right decision and went the small block route. I think a lot of that design inspiration has found its way into Ethereum, the Ethereum way of thinking as well as just the next large successful blockchain post-Bitcoin. And I think Solana and Celestia I would put in this camp of, you know, the Solana approach is that, We're going to have larger validators now.

They don't even really have a concept of block building. It's continuous building. But it's basically like allow for larger validators now. Let, you know, let, what's that law where? Moore's law to catch up on cost and eventually we'll be able to decentralize that way. And Celestia has a different approach where they say we're okay with big blocks. We actually are going to have fewer validators that are bigger and more expensive. Still permissionless, but there's a barrier to entry.

but what we have that the Bitcoiners didn't have at that other time is these things called light nodes and this technology called data availability sampling. So what the light nodes do is they basically can call a check on the few chunkier nodes that are producing these very big, very cheap blocks to keep them honest, you know, to talk about it at a very high level. So it's kind of a cool best of both worlds type thing. And that's the architecture. Right. And that goes back to what you're saying about Vitalik's vision of just like big, big blocks being checked by small blocks, basically.

Big block philosophy being checked by small block philosophy. Exactly. Yeah. And I do think, you know, honestly, Polygon has done a really good job of this. I'm not actually a huge fan of the Ag layer branding, but I think they've kind of nailed it with that design. Yeah, I actually have not looked into that. I think we might have a show scheduled or something like this. What is the ag brand?

is the guy. Yeah. Basically the idea, like my, my brain breaks around ZK proofs. Like that moon math is just beyond the left side of the bell curve guy like me. But basically the idea is that, all right, if you, you know, take the example that you want to do things on, like you are on chain X and you want to do things on chain Y. And maybe that's a swap or something like that that requires multiple different legs to ultimately end up getting completed. you need proof somehow you on chain x need proof that this thing happened on chain y so that's what these execution proofs are they get posted to the central layer so everyone knows that you that everyone

has done the action that they said that they were going to do the big question about zK proofs and these ag layers in general is what is the setup of the proving is it decentralized what is the cost what is the latency because obviously if you can only make send one of these proofs, you know, once a year, then that's not useful to anyone. But if you could do it every one or two seconds, which is where Polygon wants to get, pretty freaking useful, actually. Is it just a settlement layer that's on top of Ethereum but below the layer twos? I think I would think of it almost as kind of next to the layer twos.

It basically just allows you to take, there are all these different execution environments which are super different from one another, right? And originally, like we kind of thought it would be really nice if these execution environments all could like directly pipe into each other and talk to each other. But now what the Ag layer concept sort of asks is, I'm just going to let you do things the way that you would like to do them in your layer. I'm going to do them the way that I would like to do them in my layer. I'm going to create a proof that the outcome, the important outcome here, don't really care how you did it. But the outcome here that you said that you were going to do is right. And that all goes

this common layer. So I don't know if it's on top of or below or next to, but like it's complimentary, I think to the roll-ups. There's a lot of these composability technologies as being innovated on in the Ethereum landscape. And some of them overlap. Some of them don't overlap. Some of them are solving their own problems in different ways. And there's like eight of them, eight different categories of ways of solving

Ethereum composability. And they're all happening in parallel. And coordination between, because like in order to actually get perfect composability, it's going to need to take like the best of all of these things and put into one more seamless solution, which sounds like a massive coordination lift. But the only thought that I have about Ethereum composability is that it dies

a thousand cuts. There's no one golden silver bullet. It just dies in a bunch of small different ways. Or what if the best solution just wins? Or one. But I don't know, I haven't seen one solution actually be able to encompass all types of composability issues.

I haven't seen that. Well, all right, here's the, maybe to move into like some spicy waters here. But I think the challenge with the challenge with the ETH roll-up landscape as it exists today is actually that the roll-ups don't have as much of an incentive to be composable as you might think. I think everyone would say that they want to. But really, the economic incentive is to keep people. They want to in spirit, but not in their bags. Yeah, they want everyone else to do the thing that I'm doing. Like, we should all interoperate, right? I've got these great standards.

Yeah, yeah, Polygon, come be an OP stack chain. come on, come on. I've been working so hard for this, you know. You want to come and be my thing. But I think they'll get, but so I think that's the challenge is, I think what you're alluding to, David, is it's not necessarily a technical challenge. There are probably multiple different technical, like tech solutions that could work, but it's kind of a social, it's a social challenge. And I ultimately think the market is going to end up proving out.

Like, here's a question that I've been asking myself. So Ethereum, what it's trying to do. as a protocol is to export its currency. The way where it's exporting itself is its roll-up environment. How is, where is the ether going to go? Is it going to go evenly distributed to every roll-up? Do optimism and arbitram end up taking the lion's share of that eth? Do, do weird schemes like blast end up taking a shit ton of eth because they're offering

yield when no one else is? How do you think? Like, I'm curious, there's a ton of eth out there. how do you think when it gets pushed up to these roll-ups, like, how's it going to shake out? Like, where are the final syncs for ETH in the grand scheme of things? Yeah. Hmm. And so we're not talking about eigen layer because that's still on the layer one.

Yeah. Well, that'll be another sink, too, I think. Are you asking, like, pick your chains? Like, is optimism is arbitrum or are you kind of... Yeah, we don't have to... Basically, where I'm getting is, like, what I would guess is there's this, like, power law where the bigger, like, let's just say there's a couple different sinks for ETH, right? There's like the roll-up sink, which is probably where most of the ETH, I would say, is going.

Then there's probably this sort of weird sync for people that want to wrap their ETH and use it on Solana, which I would guess is like a really small market. And then there's this kind of restaked sink where, you know, you stake it in Lido or something like that, and then you go into this crazy liquid restaking ecosystem and do a bunch of yield type activities. But I think people that want to use ETH the way that you and I have thought about using ETH in the past, they want to do stuff like buy NFTs or trade or whatever. I think they'll end up on these roll-ups. And I'm guessing a huge amount of ETH is going to migrate up there. It already is. So is it going to evenly distribute like, you know, two ETH for arbitrum, two ETH for optimism, one-Eth for scroll? Or is it going to like accelerate and more ETH is going to pour into the roll-up that already has the advantage, if you know. It really depends on the categories of composability solutions that we come up with. Because, like, if there is, so, like, say there's, like, a sliding scale of composability across roll-ups, and, like, on the zero side, we just can't figure it out.

Like, bridging takes, you know, minutes and days. There's, like, you know, asynchronous unit swap pools that take forever to settle. There's, like, high arbitrage between these things, composability sliders at zero, versus composability sliders all the way at 100, and there's like perfect synchronous universal composability. It's one single state, even though there's many different chains. Cross-chain contract calls are perfectly seamless,

and they never fail. And so, like, we're at, we started at zero. We're already marching somewhere further away from zero. So we're already off of zero in composability. Maybe we're at 5, 10, 15, something. Still pretty low. And really the question is, is like, how far down the slider

of perfect synchronous composability can we get and can we get to a hundred. And if we can get to a hundred, then there is no sync. There is no chain that dominates all of the defy. There's no like defy chain. If we stayed closer towards zero, my answer would be like the defy chain. All of the liquidity, all of the capital would aggregate into the defy chain. And then you would have like systems like Starknet, which would be like the fully on chain gaming chain that doesn't really need that much eth. It just need payments, right? And then there would be like the Zora. It doesn't need that much, it just needs payments, right? And so, like, there would be, like, the one single defy chain,

and then the 10,000 payments chains, and the payment chains would be for different purposes, like gaming or collecting or whatever. But then as we start to slide down the scale, like, if we get past on the composability scale to the point where, like, unichain is its own chain and not a deployment on arbitram and optimism and polygon and whatever, and we get that far. And, like, it's trading on uniswap is a contract call to unichain. and that can happen in settlement across roll-ups, then all of a sudden, capital will be much more diffuse across the roll-ups. Because then you'll have unichain, maybe you'll have compound chain,

then you'll have the general purpose chains like arbitram and optimism and attracting whatever activity they're going to attract. And then there's going to be a lot more of like application-specific roll-ups doing whatever the hell they want, and then it'll be a lot more diffuse. So my answer is like it really depends on that slider where we end up. Yeah. I don't know. I think that composability stuff is going to take a while. So I would bet on high. Yeah, it's going to take a while. So I feel like there's a path dependence thing here where it's a little bit of a race. Like if I was sitting in the, if I was sitting in the driver's seat of one of these big frameworks, I'd be like, how can I get as much eth onto my platform as I possibly can right now? Because I feel like that's going to be a colossal mode. So is that what you think Blass explicitly what Blass was doing? Yeah. Yeah. I do.

They thought in your terms and they're like, we're just going to do whatever we can to get as much eat as possible because the door is shutting. And so we're going to play whatever game possible to make that happen. I am, like, I don't know Pac-Man. I actually like, I like the way he thinks a lot. I'm not 100% sure if I'm a big fan of blast yet. But here's my, here's the logical series of events as I saw it. He launches Blur, right? It's NFT trading, very, very successful in taking market share from open.

just like every other exchange operator that's ever operated on Ethereum says these gas fees suck. Oh, this is great. We have these new things called layer twos, which have cheap gas fees. Man, why would I take this app where I have a ton of product market fit on and go launch it on someone else's L2? I'm going to create my own L2. Here's the problem, though.

I don't, I'm going to launch this L2 and there's going to be no liquidity. How can I get the liquidity on? Oh, I know. I'll allow people, I'll do it with yield. You know, I'll allow people to earn yield. And I think that was the series of events that, if I had the guess, yeah. I've never understood the blast yield incentive because I have ETH in AVE on optimism, except, and then I have like stables borrowed against it.

And it's Staked Eth, it's Lido's Staked Eth. So I'm getting the same Eth on optimism that someone else is on blast. So what's the fucking deal? Well, probably a lot of these people are air drop farming is right now, right? That's what I would guess. Yeah. So they're probably air drop farming. And it's kind of this idea.

Like I really think crypto people love yield. Tradify people love yield. I had a conversation with someone who works at a big, very crypto native, but very tradfi type trading desk. And they were describing to me. So most of the liquidity still exists in Bitcoin and Ether. trading pairs, right? So if you want to trade in and out of something, the highest likelihood is that you're going to have the most liquidity on an ether Bitcoin cross. It's like 70%. But what they don't

like doing is just holding ETH or Bitcoin on their balance sheet because it doesn't earn any yield. So now what they have is they're swapping out their non-yield earning stables for, there's a new compliant yield earnings table. The hash note just launched this week. And they're going to hold Steith. And when they want to make a trade, they move from Steeth into Eith. back into the yield-bearing thing. And they're trying to literally, David, reduce the amount of time that they're in non-yield-bearing stuff. So this is the yield thing is not a story that's going away.

And I mean, it is kind of nice, right? Like, I can just, I don't even have to think about it on this L2, just whenever I'm in ETH, I'm just earning yield on it. That's kind of nice. Yeah. And it solves a problem that's a different problem, which is like when I go on to optimism or arbitram or like I look at my wallet and like ETH but like the optimism logo and then ETH but the Arbitrum logo.

And like so like what you if you, there can't be like Lido Eith on, uh, blast. It just has to be blast Eth. And they have to homogenize all Eth that goes on to their layer two. Like it can't have any sort of like derivative in front of it because they all needs to be blast Eth. Um, but maybe I guess that's table stakes for all layer twos though. It's table sticks for all layer twos. I actually think you just hit on a super important point.

This is not my observation. This was John Traub's observation. which I'll give him the credit for the initial observation, and then I want to abstain from any incorrect conclusions that I draw from it, but basically protected from all the wrong stuff that I say after this. But the idea, like every single eth instance that exists off of main chain is a wrapped version of that Eve. Like it's OPEE, it's RB, et cetera. So once you've made that mental leap, why wouldn't you just hold the yield-bearing version of that wrapped over?

Yeah, I agree with that. And that's why I have staked, I have Lido-staked Eth on optimism inside AVE. And so I have Avey-Rapped-staked-Eath. Optimism-Rapt-A-W-A-Staked-Eath. That's the derivative set that I have. That just feels a little bit more complicated than just as soon as I get up there, I'm immediately earning yield. And it just feels like, I don't even know.

I think, we'll see. I just, I don't know. But it was a novel strategy that other protocols weren't doing at the time that clearly allowed him to attract an enormous amount of liquidity. It will probably allow him to attract a lot of activity up to that roll-up. And it'll be a good home for blur, which is where I'm assuming that they're going to migrate. I'm just skeptical as to like how because a ton of ETH went into Blass and Blass had the, we have native Eith, yielding Eth on our layer two, which doesn't exist. And then also the point farms, right? Also the token air drops.

And like everyone is describing a ton of legitimacy to like blasts new innovative strategy of native yield. But really, but really it was legitimized by the point farming. And maybe it was actually not that big of a deal. We were just thinking it's a big deal because of all the eat that it got from the point farming. Like I'm worried that we're running into that trap. David, let me ask you a question. All of this interest in eigenlayer, how much of it do you think is the demand is coming

from yield from ABS's? versus farming EigenLair point. Okay, EigenLair had hype before the point farm. I agree. I agree. But then the point farm amplified. I do think a lot of people are in there for the point. So yeah.

And that's the hope of this whole thing, right? It's like you, the value proposition to someone that is yolowing into Eigen layer because, look, EigenLayer, the team is phenomenal. But there is eventually going to be slashing risks. There is smart contract risk. You know, the way that they solve this cold start problem with this cool idea, but if I'm not getting this extra thing, I don't want to risk my funds is points and rewards and all that stuff. That's how our system works. And some brave souls will try it.

Some will be rewarded. And so we're going to get in trouble for taking too much risk. But the eigenlayer part of the ecosystem, you know, you and I talk about this a lot, is definitely, I'm like simultaneously the most concerned about it, but I'm the most interested in it and excited about it at the same time. I think it is where a lot of the action is going to happen this cycle. Yeah, I judge ecosystems by their ability to nerdsnite people into crypto. So, like, Bitcoin won because it nerds sniped like the digital gold bugs and, like, gave them a banner to, like, rally under. And then Ethereum nerds sniped a certain set of people and that was sufficiently large to create the Ethereum ecosystem. So Lana nerd snipe a bunch of other people that Bitcoin and Ethereum did not nerds snipe.

and I'm watching EigenLayer nerdsknit people that no nothing else in crypto has ever nerdsniped people before both people in like on Wall Street and Silicon Valley like the SaaS, SaaS companies can like rally behind EigenLayer. Don't care about Bitcoin. Don't care about Ethereum. Don't care about Solana. But just like trust as this like module that they can like incorporate into their product offering. Like that makes sense. And like Wall Street is also like totally able to wrap their heads around EigenLayer. So like, eigenlayer is in the middle of this like very slow motion nerdsnipe, and I'm just like kind of fascinated to see what kind of what types of people it brings into the fold. Yeah, I'm with you on that too. One maybe dimension that I would add to what's driving a lot of the eigen layer buzz and this flywheel that's kicking in for them is as much as it is an economic security play where if you're either a Cosmos chain or an AVS and you do not want to pay an enormous amount of.

emissions to convince people to stake your chain. It makes a ton of sense from the, that's the demand side of their marketplace. But the other reason why you might want to launch as an eigenlayer AVS is kind of a growth story as well. In the same way that remember a little while ago was like all these chains were moving to Ethereum rollups because the idea was like, hey, let me plug into this massive ecosystem in it. I think that was pretty good play for a lot of those, a lot of those, you know, L-1s that were kind of, you know, wasting away into obscurity. But now I get to plug into this ecosystem. I get to put myself in this narrative. There's a bunch of ETH that wants to move up and to roll-ups. Like, it was really good for a bunch of those chains. And I think there are going to be

a lot of chains. Like, that is another element to the eigenlayer thing that people are sort of missing, which is like, I could be this weird, you know, AVS that does this middleware thing that no one really cares about. Or I can be the next eigenlayer chain, baby. And I could be a part of this point, you know, take a bunch of the, you know, there's $8 billion of capital, ETH capital that wants to find its way into these chains. So I think it's a growth story as well as a security story. Interesting. A growth story, right?

Yeah. I think that's the meta that a lot of these ABSs are, that these ABSs are playing. It's like I could either launch this weird, obscure middleware thing that no one's going to care about or I can catapult myself into this narrative spotlight. and $7 billion worth of each, ETH, which is looking for a home in various ABSs, of which I could do one. Right.

Yeah. Yeah. Well, that's kind of like the bullish element of like shared security is that it actually costs very little to get a lot of security, right? Yeah. And there's like economies of scale here. The more AVS is that are providing like some minor amount of yield to the entire system, more like a leveraged amount of capital comes into that because of how free that yield is.

It's free yield. for yield, baby. It is for yield. Yeah, you're just opting in to this incremental additional yield, which feels like a win-win. Right, yeah. And so it's what you're saying

is like there's like just a lot of pent-up potential energy here between like the massive amount of eth that's in eigenlayer that has nowhere to go except for these LRT projects who are also filling to the brim with ETH right now. And then like all these AVS is like, there's no supply side. There's demand for me.

And there's like zero AVS's. and there's about to be like eight. And then maybe in a year, they'll be like 16 or something. And so like you're saying like, well, as an AVS is going to be so easy to attract a ton of capital.

Is that what you're saying? Attractive ton of capital to, you know, the hope is that some of those people end up being, they're trying to acquire some of the, the users from the people who have this ETH. And they're also trying to put themselves in this kind of sexy spotlight and narrative.

You know, I think that's, I think that's all a big part of it. But there's also, there's a very real reason why this exists and it's super cool. And the way that I view the LRTs and even projects like ethos is there are a lot of, it's very difficult right now for projects to actually connect with eigenlayered directly. So what the LRTs basically are are allowing, it's like adding

modularity and flexibility in terms of how these ABSs end up procuring that security capital and spend. So, but like we're talking about a lot of high-minded stuff here, David. Let me, Let me take us out of the weeds for a second. I want to get your, I want to get your take on. Can I actually share something? Josh. Yeah. I'm going to share my screen.

Are you ready for me to share my screen? Josh is the operator, bankless nation. All right. All right. All right. I'm going to throw my screen a second. Here we go. Share screen.

Here we go. Ready for this, Mike? I'm ready. Yuga Labs just acquired proof. Wow. Oh, no way. I did not see that coming. Wow.

This is in the YouTube comments. Can you give us the background of that? I'm actually not as familiar with. That's Kevin Rose's. That's Kevin Rose's. It's the Moonbird's thing, the Proof Collective. And so, yeah, apparently Yuga Labs just acquired all of them. So I guess, yeah, the Moonbirds collection is now part of Yuga Labs, who owns Bored Apes, Mutant Apes, Cryptopunks, mebits, all of these.

All right. Cool. Do you think, do you think without looking or cheating, do you think moonbirds goes up or down, the price of moonbirds birds go up or down? Definitely up, definitely up. A, A, it's a bull market. B, there's, can't go down anymore. Yeah, God, you're right. You're right. All right. What were you going to be up? Unless we're going to keep going with that. Oh, I don't know. Where do you want to go? I want to just get your thought. on, it's such a cliche question, but just like, where are we in this cycle here?

Your sort of mental framework for it. Like, are you, you know, do you wake up a lot of mornings feeling particularly euphoric and bold up and excited? Like, where do you, you know, maybe especially if you like haven't been in the space for a particularly long time and this is your first time going through one of these cycles, you're starting to get jazzed up. Press Bitcoin's above 50K again. Like, how are you, how are you feeling? I think we are further along in this bull market than what the typical, uh, new. newer entrants will give credit for. Yeah.

I think I was reflecting upon like my experience last ball market. And like last bowl market, like I thought I came in with a reference. Like it started in like January of 2021 when an ether like pumped and hit new all-time highs. Or it hit like 11,000, right? Or 1100. After being at 100 for like a year, 100 to 300. So it did like a three to four X. Like all my Ethereum friends were like over the moon.

Like we're finally like we're finally getting out from under the shadows of Bitcoiners. And then like and then NFT mania hadn't actually started yet, but it started very quickly after that. And that's that bull market. I was like, okay, that's when the bull market started. It was like January, February of 2021. So we got like a good like 18 months, two years left in this baby when we actually only had like 10 months. Because like I wasn't accounting for, you know, defy summer when like Eith. price action stayed below 300.

People were making a ton of life-changing wealth, but you wouldn't have really called it a bull market. There was still, during DeFi summer, there was like, this isn't product market fit. Like, this is not what people, people don't want to gamble on food tokens. Like, this isn't mainstream. This isn't causing Bitcoin to go up.

This isn't causing ETH price to go up. This is just a bunch of like long-tail, like, risk-on assets to turn into like yield farms. That's not a bull market. And so I never accounted for, I never added that onto my bull market time. But that was a mistake because it totally was the bull market. Like people were making a ton of money.

And I learned this from Chris Berniske. It's just like it really depends on how much net paper gains the entire industry has. And that will determine whether the bull market ends or not. And so like paper gains have started. People's like paper. People like you're just like them out like people are receiving billion dollar air drops, not selling them. Like soul bros are like massively up. haven't sold definitely probably

like NFTs are rising like everyone's sitting on like a good healthy stack of paper gains right now and no one's taking anything off the table because like retail's not in yet and then retail is going to come in and then like we're going to our paper gains are going to be massive and that's really when the clock starts ticking but like I'm saying we're like

we're like approaching halfway through the bull market which I think is a lot further along than most people think yeah I was going to say about probably timeline about, yeah, halfway through. I was going to say fourth inning, but I think fourth inning is almost halfway through. Yeah, because, you know, the real... We started the fourth.

You know, we got the fourth. We're in the middle of the fourth. Yeah. You know, it's just funny, because I, my experience was exactly yours. I have this really vivid memory of, because COVID happened. That was the big thing that happened last time, right?

So it actually, at the end of, if you go back and look at the price action of 2019, you'd be, it looks good. It's up only. It's up only. But it's not how it felt during that period of time. It's not how it felt. Not until the very end.

Yeah, not until the very end. But then COVID happened and you're like, oh, my God, is this industry? Bitcoin went down to 4,000. And then it started to creep up. And I remember I didn't even really start paying attention to it until it was at like 13 or 14. It was like, whoa, I have not seen Bitcoin at 14 in a long time. Right. And then I sort of started to watch it heat up and go and go.

And I really only was like, yes, it is the bull market. it cleared all-time highs. So that's exactly my framework now because, I mean, it was interesting like Coinbase earnings came out yesterday and we don't need to go into the weeds of it, but you saw the very beginnings of retail was back more than institutional. The retail volume was up more than the institutional. It really, it's not even going to show up in their numbers. It's where does Coinbase, where is Coinbase on the app store? And that has started to jump up. and yeah, it's like we're starting to see the very early signs. But you know what's something that's kind of, I mean, I'd love to get your perspective on this

from your bankless venture seat. But one thing that hasn't really started to happen yet is like funds are raising a bunch. I've heard it's actually still kind of tough sledding out there for the fundraising environment, which is surprising. Yeah, what are you, is that accurate, inaccurate? Because that's another big marker of when these funds start to get raised. funds are deploying bigly. Valuations of startups have crept up a pretty meaningful amount, but nothing over the top.

Nothing like sloshy. I haven't heard of funds raising, but I'm also just not tapped into that world because we're done raising, so we're not doing that. We were like one of the only funds to raise in what year was that, 2022, 2023. You guys crushed it. Yeah. We were the only ones who could really get away with it. it. I haven't heard of funds raising, so no, but I wouldn't be the one because I'm not paying attention

to funds. I'm paying attention to portfolio companies. And funds are definitely deploying right now. Like cash is being spit out. And there's a lot of startup interest. There's a lot of like people who are actually building really cool shit, really novel shit. And so I would definitely call it a pretty exciting market. Nothing is too hot. It's definitely a founder's market, not a VC's market. the pendulum has shifted to the founder now. Whereas like maybe a year ago, it was definitely still on the FECC side of things. But yeah, that's kind of my take. So you don't think the private markets and public market just being liquid tokens, I guess, in crypto?

You think they're still walking relatively similarly or is one crept up in front of the other? I think so. I've heard other people, I've heard Chris Berniske say that private markets are starting to get kind of crazy. and I've seen, I know, I see what he's talking about, but I wouldn't call it crazy. Chris, definitely knows more than me. But everything seems okay to me. Like, I'm the bull of bankless ventures. Ryan's the breaks and Ben's, like, the rationalist. But like at some point, like, I'm just like, guys, like these like 50 to 80 million dollar seed rounds are, have become the norm. Like, that is like, and it's a hot market. And this is like, and this is like, and. And they're like, oh, that's really expensive. I'm like, yeah. So was all the other ones?

Like, this is just what it is. Yeah. I've heard, you know, one way of thinking about it is you're a price taker, not a like you just got to find the best prices that exist out. The market will tell you what the valuation is and you just got to decide whether or not you want to take it. But you guys raised it a really opportune time because it's going to become, like we've talked about this before, but there's probably a window.

where especially for like most people, your first and even second cycle, you don't make any money because you wait until the new all-time high, you have way less time than you think. You go small in the beginning, but then the euphoria kicks in and you invest most of your money

at the top where you shouldn't. There probably is some period of time to just sit on your hands. I don't know when that is. I think FTX actually paint an exemplar model of how everyone fails in a bull market, which is they started off conservative. They started doing like arbitrage, like free arbitrage trades between Bitcoin and

stable coins. And then over the bull market, they started to become more and more risk on with their trading strategies to the point where they ended where they were like, how can we take the most amount of leverage? Three hours capital also did this. They were also like a very safe GBTC premium trade. And like even before that, I can't remember what the trade was, but it's even safer. There's like like risk off trading during the bear market.

And then as the bull market continued, it was like, okay, we are down to take price exposure rather than just like time, like settlement risk, right? We'll actually take, we'll take upside now. And then it was like, okay, we'll take leverage now. Oh, we'll take even more leverage now. And so, like, everyone who failed was taking leverage at the top. Whereas, like, you should be taking leverage at the bottom and then clear it out before the top and then sell at the top. That's what everyone ought to be doing. But everyone does the opposite.

Everyone just goes more and more exposure as the markets go up in price. I know. I mean, the other thing, too, a couple other dynamics about this is there were a lot of funds last cycle, good funds that are still around that went from $10 million in AUM to a billion dollars in AUM. And your universe of investable assets or opportunities is so much smaller when you have that size. And I watched this interview that the three arrows guys gave. Their defense on GBTC was that, oh, it was a really good trade, but we couldn't account for other people piling in. It's like, yeah, you actually could account for that and you're supposed to account for it. That's why you're a professional money manager. You know, and the GBTC thing was just such a hilarious, concentric hallucination because those close-end funds always trade at discounted nav. It should have been really obvious to this industry that I just did an interview of the guy who it was a huge part of that, ETH part of that trade. And dude, it's just, I mean, it's literally as simple as, Have you heard that quote?

There's nothing so damaging to your health is hearing that your neighbor made money. Like, that's what it is. It's just a couple people made 15 or 16 X their, they're, what they put in and everyone just fomoed into that trade. So I'm sure the same thing is going to happen here at this time. I just don't know what it is. Everyone thinks it's going to be restaking, which makes me think it's not going to be restaking, because everyone literally thinks that it's going to be.

But I have no idea. I think there's a lot of just like ancient wisdom that people in Wall Street know that like people in crypto definitely don't know. And just by in the fact that like sometimes we're in a bubble and so are they and our bubbles don't mix. But it's not going to be me to bring that over here because I don't know it. No, I don't know it either. Actually, you know, it's funny. I mean, I feel like of all people you do know it the most because you interview all the macro people. So a golden rule of this that I've found interviewing macro people is that.

that you know how when you hear old macro people talk about crypto and you're just like, oh my God, that's the most cringe take ever. You do not know what you're talking about. It goes the other way too. And when you hear crypto people talk about macro, you're like, oh, God, you have no idea. I'm not saying that I know enough to make great predictions about macro. I definitely don't, but I've done enough interviews where I can understand who knows what they're talking about and who doesn't.

And I mean, one thing that should have been extremely. obvious to our industry that wasn't at the time is when they started raising rates, we all should have gotten extremely concerned. And I was not concerned. I had no frame of reference for this. I remember a Jim Bianco tweet saying like the times have changed. This is, I think maybe he used a term like paradigm shift. And I remember this tweet because it's burned into my brain. I'm like, Jim Bianco, what do you mean by that? I don't get it. Like, why is the new phase of markets? I don't understand. And then like 10 months later,

I very much understood exactly what he meant. And so did my portfolio. Like, oh, that's what you mean by that. The fastest rate hike in history. But this is also like why like the end of last bull market was also just like so weird. And maybe it wasn't. Maybe it ended just the same way it always going to end

because everyone was sitting on the mountain of paper games that I was talking about. But also we had the fastest interest rate hike that we've had in most market participants. living memory. Yeah. I feel like it's always going to be something. I sort of am in the camp that I'm in the Chris camp of everything that goes up must come down. Crypto goes up so fast that it must come down. Although I do think that there's good reason to believe that it's not different this time, but here's a trend that's been happening for basically as long as crypto is in existence.

every bull cycle becomes slightly more muted. Like the peak to trough returns of, say, Bitcoin as you go along, has gone lower and lower. And the volatility of Bitcoin and Ethereum, the assets go lower and lower. And the reason for that is really just a law of large numbers things. If Bitcoin peak to trough returned what it did in the 2011 cycle, it'd be the most valuable asset on Earth 10 times over. So that just can't happen. but that's probably good. And then the other thing is these ETFs might have not changed the game, but they might

have exacerbated that existing trend. Because think about what was driving the price of Bitcoin in the 2020 to 2021 cycle. It was retail, fomoing their Stimmy's into Bitcoin, or it was smart money that was front-running that retail. And so the incremental dollar moving into Bitcoin was that hot money retail kind of just chasing this trend. But now with the Bitcoin ETFs and soon, ETH ETFs, which I think everyone is generally sleeping on, is the next incremental dollar is not a hot money retail dollar. It is a slow, passive dollar that is moving into Bitcoin now. And the people that trade the Bitcoin

ETFs aren't like you and me. They don't see, oh, Bitcoin go up. I should buy more. They say, oh, Bitcoin's up 10% this week. It's probably going to mean revert. I'm going to sell. And that behavior over time is just going to level out the price appreciation of Bitcoin. And I think it's going to happen with ETH. And that is the way that it should ultimately end up happening. I think that's a good thing. I learned this from, I can't remember, how press. And maybe I need to get a second opinion on this.

But his big idea was that as soon as we have like sustainable, dependable flows, you get less volatility. I think that's just like true of any financial asset. If you have sustainable flows, like volatility goes down, which would be great for like the PR and optics. If Bitcoin can stop and Ether stop being so volatile, that'll be just a maturing market. You said that these markets dampen over time,

law of large numbers, totally true. Like you can see that in the Bitcoin and the ETH volatility. But also like looking at the market, bowl markets as like events in crypto, they can still be just like equally frothy as the last one because people will always go down the long tail and like there's no cap on how far down the long tail you can get like we were trading like jpegs of text at one point when they one of them like the floor got to 25 eth like that was some extreme frothy shit and like sometimes like I think it's kind of a little bit lost to his loss to history

but the ICO waterfall of just like the shit coin waterfall that was in the 2017 like that was an insane time where like it was completely disconnected from reality and it's kind of hard to to express it's even hard to remember how insane it was. I think therefore he's had a tweet where he was talking about like yeah, most people are just under indexing about how insane the 2017 ICOMania was because it's just like lost to memory. Like it's it's like the memories are smoothed out. You can't really remember. It's hard to compare to the 2021 bull market. But also I think like with Bitcoin and Ether are massively large numbers. Those are just hydraulic pumps down on the long tail and can make the long tail equally frothy, no matter what kind of bull market it is.

A hundred percent. Those arguments never held that much water with me. You hear people talk about, you know, we're never going to inject seven trillion dollars into the market again. That was as crazy as it's ever going to get. I think 2017 was crazier than 2020 and 2021. I can't, without confidence, I think that's true. it felt crazier. I remember looking at the price.

I mean, that was also our first bull market, though. We had no frame. I know, but I think that it was just smaller and the prices, dude, I just remember these things would go up like,

you know, 60, 70% a day. I guess maybe, I missed the whole NFT thing last time, which is maybe why I'm doubling down on it. But, but yeah, I just,

I don't know, equally crazy. And there's going to be something equally crazy next time. But yeah, the long tail of cryptos is interesting as it's ever been, I think. And it's as dispersed as it's ever been. I can't keep up with all the different,

you know, it's, it's tough to keep up with everything that's going on. But David, what are your thoughts on the ETH ETF in general? Because I've been seen, there's a, there's an argument on Twitter that it's not going to be as big of a deal. People are saying that. Yeah, yeah. It's not as attractive to institutional audience as a Bitcoin ETF is. What do you think? So I asked Sandy, Franklin Templeton about like my my perspective on ether is that like it's a more attractive asset for Wall Street surprise the bankless guy thinks that ether is a more attractive asset just because it's like a tech platform it's like a platform technology play and that just resonates with them like Bitcoin Bitcoin is digital gold okay great but

Ethereum is tech with like apps and other chains built on top of it and just as a form factor it just is more understandable it's got like it you can do DCF analysis on on ETH. And I know like you want to throw up for your flag about how to value networks with a DCF analysis. But the point is you can and they will accept it because that is what they understand. I think you're, I think you're probably right about that, David. Yeah. And so like it doesn't maybe I'm only like right a little bit on the fact that like, okay, Wall Street likes it a little bit more because of the tech play, the DCF play. But also, ETH is one third of the size of Bitcoin. So liking it a little bit more for that reason. Like you multiply that by three because just like it's and then also this is a,

you know, from Van Spencer's Twitter. And it's like, there's just much less float on ether on the markets because it's in layer twos. It's in eigenlayer, right? It's like it's in compound. It's in Ave. And so, like, a dollar means a lot more to the ether price than it does for the Bitcoin price. I think that's going to be the ultimate driving thing. People, the crypto natives will debate.

What is East story? Is it a money or a tech platform? Is it yield or is it ultrasound money? You know what Tradfi thinks? They don't give a shit. Yeah. They don't care. They just need a story.

It's like Bitcoin. It's the next Bitcoin. It's smaller. Get in now. And I think another thing that I don't believe that the Bitcoiners have always believed is it's only Bitcoin. It's only central banks will only buy Bitcoin. And that's the safest one. I've just never bought into that idea.

If anything, I think the most, the most realistic outcome is a basket. They love baskets. They're already building baskets with bonds, equities. and Bitcoin in there. They're already building the baskets. There you go. And so there'll be a crypto basket. And how many times have you heard, David,

from maybe someone who is on the older side who, I don't really understand this. I just want to give me a broad exposure. Like, I just want exposure. You know, they don't. So I just, I've never bought into that idea that it's only going to be Bitcoin. I think if anything,

I think if anything right now, the Bitcoin ETF has surprised people with the flows. Yes. And even the most bullish, more and more. Yeah. And I don't know if we're in some kind of near P. If you, if you do a run rate of 250 trading days, $500 million in flows a day, you wind up with $100 billion. And I think that's, that just sounds wrong to me. That sounds too high. But it's looking like it's going to be a phenomenal success for Bitcoin, right? People are going to say, ETH is going to do something similar to that.

And Vance pointed this out on, on Bell curve, but Bitcoin, Eith Bitcoin bottomed. The EFTC ratio bottomed, like the day of the ETFs. And it's probably, not to make a prediction, but it's probably, if it hasn't bought it, it's probably a good bet. Probably that that's going to. Yeah. Yeah.

So that's, and also this is the time. Solana really messed everyone up. You and I've talked about this before. The typical thing that happens during this point of the cycle is everything sells off. Bitcoin sells off the least. ETH is the second least. And then everything else is this kind of bucket.

And then what ends up happening is, That's when Bitcoin dominance peaks. Then Bitcoin runs first and then everything else follows. And people move out along the risk spectrum. Solonis just messed everyone up because it was so, there was that idiosyncratic FTX event. And so it got drastically underpriced. Then it got overpriced. But this is just really typical stuff for this part of the cycle.

Bitcoin is running first. Each is going to run again soon. So that's how I feel about it. And people will say it's the ETF narrative, but it's probably just probably, was always going to happen, honestly. Yeah, that's probably right. That's probably right. Yeah, there's a lot of things like that.

Like, the whole interest rates were hiking faster than all time, but the bull market was ending. Like, it was a time. We were trading text JPEGs. Like, we're time now. Yeah. Like, how much longer do you think we would have gone if, even if the interest rate thing hadn't happened?

It couldn't have been that much longer. I agree. What goes up must eventually come down. So, yeah. All right, man. Should we call here? we can call it yeah this was a lot of fun buddy i like these unscripted things yeah i really like raw unvarnished david's i think people want that david don't think am i i i don't think

i think i think ryan's the more like varnished one i'm always kind of like more unscripted and shooting from the hip but maybe maybe that's my take that is true in it in the best way in the best way um all right man this is great thanks so much uh what's your twitter handle if people want to follow you uh i am mike ipolito underscore so you can follow me there We'll put those in the show notes. Thanks, Mike. I really appreciate it. Great. Thanks, partner. Cheers. Cheers. Cheers.

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