Bankless - EIP1559 SmartCon Panel | DC Investor, SquishChaos, James Wang

Episode Date: August 12, 2021

Smart Contract Summit, hosted by Chainlink Labs, is the biggest smart contract event of the year with leading speakers and projects across DeFi, the NFT economy, and the larger blockchain industry. Check out the other discussions here: https://www.smartcontractsummit.io/  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge  ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini  🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer  👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave  🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap  ------ 📣 PoolTogether | DeFi's No-Loss Lottery Protocol https://bankless.cc/PoolTogether  ------ Resources: DC Investor on Twitter: https://twitter.com/iamDCinvestor?s=20  SquishChaos on Twitter: https://twitter.com/SquishChaos?s=20  James Wang on Twitter: https://twitter.com/draecomino?s=20  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Welcome Bankless Nation to this Wednesday panel episode. This episode was pre-recorded last week during the Chainlink SmartCon conference, and we brought on DC Investor, Squish Chaos, and James Wang to talk about EIP-1559. You can also watch the video on YouTube. It's been up there for a few days. And we recorded this the day that EIP 1559 went live. and we had about roughly four to five hours of analysis to talk about. And we also talk about as a number of other issues relevant to EIP-1559, but aren't exactly what EIP-159 is,

such as the intersection between NFTs and EIP-1559 and other subjects like that. I hope you enjoy this panel. We're going to go ahead and get right into it. We introduced the panelists live, and so you will get the guest introductions in this show. but before we get there, we must talk about some of these fantastic sponsors that make this show possible. Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans,

Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswop ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and we'll say it again.

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Once I've selected a stable interest rate, I'm protected against any interest rate volatility that may happen in defy and allows me to plan my defy finances for the long term. V2 also features the ability for users to swap collateral without having to withdraw your assets, trade them on uniswap, and then deposit them back into AVE. With AVE, users can do this in one seamless transaction, saving you time and gas costs. Check out the power of AVE at AVE.com. That's AAVEE.com. This is Ryan, Sean Adams. I'm here with David Hoffman. We are broadcasting live at the SmartCon Summit. This is, if you're here with us now,

this is the EIP 1559 panel, the perfect day to do it. The Ethereum Network has just hard forked its London upgrade and deployed a number of features, including EIP 1559, which is a feature that's been long awaited by the Ethereum community.

And we have three EIP 1559 bulls here to talk about it on the panel. So this is a panel with three EIP bulls, moderated by two other EIP 1559 bowls. That's David and myself. Guys, this is broadcasting, as I said, live at SmartCon. We also have this broadcasting live on bankless YouTube. It'll be available in a bankless podcast as well. We couldn't be more excited to be here. I want to introduce our panelists to you now. The first is James Wang. James is previously an analyst at Ark Invest. He's written a number of works, many that emphasize the real world financial

reporting that Ethereum offers to the world. He's argued that Ethereum is not just a cryptocurrency, but a global software platform with applications, customers, and revenue. You may have read one of his previous quarterly reports for Ethereum that he publishes on his substack. He recently joined Amun as the head of tokens, and Amun builds a crypto index products for the Ethereum ecosystem and Beyond James. Welcome to the panel. It's great to have you, sir. Thank you, Ryan. everything you guys have done for Ethereum and Defy and I can't wait to chat with you guys. Well, we love what you are doing, sir. I want to introduce our next panelist, Squish Chaos, internal medicine resident at University of Colorado, but you may have known him because he wrote

this fantastic, almost 80-page report on ether. He famously coined the phrase, triple having to describe the upcoming upgrades that Ethereum is getting to its monetary policy. He also wrote one of David's favorite lines, I think. Ethereum should dream bigger dreams is what Squish Chaos said. Here's the dream of EIP 1559 here today. Squish, it's great to have you on the panel. Great to be here. Thanks for having me.

Our third panelist as well, DC investor, DC is a longtime Ethereum bull. He's also an NFT collector, maybe connoisseur. DC was the first to put a cryptopunk as his Twitter avatar, one of the very first. And even before that, he was emphasizing the importance of ETH as an asset. But I don't know now whether he's more bullish on ETH or NFTs. Hopefully we find out. I know he's bullish on EIP 1559 and maybe they all tie together in some way. D.C., it's great to have you on the panel.

Thanks, Ryan. Thanks, David. Excited to be here. Oh, man. We are excited to have this panel because just this morning, EIP 1559 went live. It's been live for about six whole hours. It's in the rear of room mirror now. We are actively burning Eath.

I'm just looking on a website called ultrasound. dot money. We're almost at 2000 ETH that we've burnt in the last six hours. I want to start with this question. How does it feel to be an Ethereum at this point? Like, how do you feel about this upgrade? D.C., why don't you start? I'm feeling great. And to me, it's incredible. Like, Ethereum is just hitting on all cylinders. And it started when we got the ETH2 beacon chain live. And now we have with EIP-1559, we've dramatically improved user experience. And we are further hardening ETH as an economic asset, which I think is critically important to the future of Ethereum and to the utility of Ethereum. And now, you know, we're going to be laser focused

on ending proof of work and moving to proof of stake. So I couldn't be more optimistic on Ethereum at this point. James, what do you think? Do you share that optimism? Yeah, totally. I view this as a product launch. You know, my background is a product marketing guy. I worked in Ethiopia for about nine years. And, you know, you always knew ahead of time when you're preparing for something when you're about to release a new product that's going to fundamentally change the trajectory of your business. Like when we launched the first Kuda GPU and Nvidia became a generalized processor and it could be used from everything from like embody simulations eventually to crypto mining.

But you knew that ahead of everyone else. What makes Ethereum unique is that it is a software platform that you can build upon. And there is a group of super talented people led by a Messiah that is able to actually execute on that vision. I know, you know, we've had a lot of questions about the execution of of Ethereum, and this really puts that to rest. You know, Nvidia was such a key lesson in what execution means. When we were competing, there was like 50 other companies making graphics cards.

Nvidia is the only one left today that does that, right? So being able to execute and really launch ambitious products, that's the biggest predictor of your long-term success, not any static modes. So to me, this is such a milestone release, and it really puts to bed those discussions about execution and allows us to look forward to kind of emerge in everything else down the pipeline. There you go. Massive product release for Ethereum boils out some of the execution risk. Squish, what's your take on this? How does it feel to be in Ethereum at this point? Yeah, it's pretty amazing. I'm fairly new to the Ethereum community, really getting into things

just a few months ago when I published my report. And so I haven't seen a lot of the execution from that's been done previously on the network. It's the first major upgrade that I've been able to see. And obviously, I wrote about it a few months ago, but this is an idea that was in the works years ago before I had any clue what was going on in the Ethereum world. So just to see it all pan out and to see it panning out in the midst of this big drawdown we've had,

just see that kind of engine of innovation just keep chugging. It's been pretty remarkable. And just to echo what James was saying, the way that you know the difference between a product that's going to succeed and fail is by these kind of milestones where you can say, okay, like this is a concrete achievement that shows that the development team can actually get things done. And I think that that evidence already existed, and that was a big part of my thesis. But to see a milestone kind of come out after I got into Ethereum and became a real big part of this, it's just, it's fantastic to see. So gentlemen, I want to actually ask this very open-ended question, especially to this panel specifically because we have such a broad range of people that have come into the Ethereum ecosystem, the Ethereum community at different phases. And so in your opinion, now that EIP-1559 is such a major upgrade, it's in the rearview mirror.

It worked. We're burning ether. And we are now having like one of the two very important ingredients for ether is ultrasound money. And overall, the Ethereum ecosystem is also growing in its own direction. your opinion, where are we in Ethereum history? And which is such a broad question, I want to kind of leave that to you, the panelists, as to how you want to define that. And DC, as a person I think came here earliest out of anyone on the panel, I want to throw that to you first. Where are we in Ethereum history? So I think we're at actually a super interesting and pivotal moment in Ethereum's history. And I would actually chalk up the implementation of EIP-1559 as one of the four

most significant events in Ethereum history. And the other ones are the Dow Fork, which I think people are probably familiar with very early on in Ethereum's history, the rejection of EIP-999, where there was a move or a suggestion that the parity multi-sig funds would be recovered. So that was kind of a rejection of this idea of tampering with the chain in situations like that. The third was probably when the Ethereum community rejected the inclusion of Prague-Pal, as the hashing algorithm.

And now the implementation of EIP 1559, which I think that why this is notable is because, one, this EIP had tremendous community input and support. And it's been through a long process, years long, of being vetted and analyzed to determine if it's worthwhile. And now that's implemented, it's finally, finally created this positive feedback loop where usage of Ethereum now directly accrues value to ether as an asset. And not necessarily price financial value. We don't know what that looks like, but it creates economic value for eth as an asset

by making it more scarce. I think this is a critical moment that will be reflected on for decades from now, to be honest. James, you used to be an analyst over at Arc Invest, which I've always appreciated arcs to more nuanced take as to new technologies in this world. So from your opinion, where are we in Ethereum history? The first thing that Ethereum remind me of, the reason why I kind of quit Defi, quit C-Fi to join Defi was really, it was so obvious that Ethereum was turning out to be a computing platform and a technology. And the most successful cloud computing platform is AWS.

It's not a perfect analogy as I kind of dug into the details, but it does give you a sense of the scale and potential. AWS didn't start as a computing platform. It started as a storage platform. The first service it launched was a service called S3, Simple Storage. And this is like the, you know, one of the things that AIP 1559 achieves that it gives this kind of elastic block size, right, it's able to absorb more computation based on demand. I think this is just like the very, very beginning of building out a compute infrastructure.

Right now, Ethereum itself hasn't scaled. To scale, it needs to go to ETH2. This is really an optimization for ETH1 right now. And that to me is how early it is. Right now, Ethereum, the amount of developers building on it is tiny. It's almost not visible compared to the number of programmers in the world. So for me, it's like Ethereum has made a very important software change that makes the system much more robust and self-regulating.

But ultimately, like, the really amazing applications that's going to be built on top have barely begun. We have like a handful of them. We have like Uniswap and Maker and ChainLink. but like the real ecosystem takes off when the value of the software above the ecosystem is worth more and more takes up more mindshare than the base layer itself right nobody thinks about aWS today as a consumer we just use Netflix and the bits just stream through like you know like water and we don't think about it that's the moment of success and we're like not even 2% there that's why I'm so

excited to like wait for that future to arrive squish as one of the younger members in the Ethereum community, yet also one of the people that's written the most lengthy and in detail report on Ethereum and Ether, where would you say that we are in Ethereum history? And also, where do you see us going? Yeah, I would definitely agree. I think it's early. And one of the coolest things I've gone through just learning about it is seeing all of the different elements of the Ethereum kind of infrastructure, kind of be developed and see how people are thinking about it. So I guess I would point to kind of like five different elements.

There's the security model, scalability. It's the second one, the user experience, the product infrastructure, what you can kind of do with it. And then the fifth thing would just be adoption. And when you look at all of these elements, it's very clear to me that kind of throughout Ethereum's history, people have been thinking about all five of these elements.

But today we're at this pretty incredible junction where moving forward, a lot of really pivotal events are going to happen for each, for each angle. So for security, we're moving from proof of work to proof of stake. And then you can kind of see beyond that a little bit to see staking derivatives and trying to further decentralize through those. For scalability, layer twos are already coming out right now, but we're already seeing direct layer two onboarding and sharding is kind of on the horizon. For user experience, obviously EIP 1559 is a huge part of that. But we're also seeing future EIPs like 3074 and app level improvements as well.

Infrastructure, we're seeing new products, whether you can collateralize everything now. You can fractionalize NFTs. And then we're starting to see the beginnings of some regulatory infrastructure, which some people are really worried about. But if I want in the future an NFT to hold legal rights or legal value. We're going to need some of that regulatory infrastructure too. Finally, adoption. I think DC spoke to this, but for ETH as an asset to be adopted, kind of as an investment asset, EIP 1559 just changes the way that it accrues value. And as a project, you know, when I got into this, I thought it was all about defy. And just in the last month, I started to see there's a huge aspect of adoption.

around NFTs that doesn't really require the defy engine to be perfect before it gets off the ground. And so I guess this is all just to say that we're just in the thick of things. There's so much more in the future than there's been in the past, but we've already come so far. And so it's really great to kind of see where this whole project is going. You guys are awesome, just fantastic panel so far. I want to ask this next question. Maybe we'll start with you, Squish, but, you know, you wrote.

a paper called the triple having, right? And you clearly know the importance of narratives. You know, James talked about Ethereum as, you know, and framed it through the lens of, you know, if you were valuing this as a company with quarterly earnings, what would it look like? DC has been talking for a long time about eth as an asset, eth is money, store value. So I want to ask you about a narrative question. James was talking earlier about the execution risk that has maybe been boiled out of Ethereum, and I think that's interesting because strikes me that Ethereum has had a negative narrative. Ethereum doesn't ship. Where is proof of stake? Like where EIP 1559, it's been three years. Where is it? And I want to ask you a question about how the execution narrative has changed.

But even more broadly, maybe how has the narrative for Ethereum changed within the broader markets? The importance of narratives in crypto, like no one has to tell anyone listening how important they are with with analysts, with investors, with like the developer community. So Squish, my question to you is, how do you think the narrative changes for Ethereum post EIP1559 shipping? Yeah, I mean, I think the first thing I would say is I completely agree. I think narratives are incredibly important. But it's not just because we want Ethereum to be better as an investment asset. Because that's not really what we're looking for as Ethereum investors. We're not really looking for the asset price to far outpaced the actual value of the network. We just think the network is

incredibly valuable. And so we just want it to be fairly priced and we think that's much higher. So in my view, the narrative plays a role not really in convincing investors so much, but actually just convincing like culture. We want adoption of the network as a part of society and we want people to build that infrastructure. And if they're only going to build that infrastructure, if we show them why it's interesting. As far as how EIP 1559 changes the execution narrative, I think execution is a really tricky subject. In the real world, we see this all the time and people, I guess, somehow forget when

they're applying it to crypto, but you can have failed product launches and that really sets projects back. So, you know, if you roll out a new car and it starts exploding, like that's your done. And so you have to test things, you have to validate things before you rolled them out. And if that takes extra time, it's time well spent. And we've seen that a little bit recently. There's a project called Thorchane that recently went through a number of kind of highly publicized hacks. And so I think EIP 1559, and honestly, like a number of the prior updates show that the Ethereum team is taking its time, but not because there's nothing there. They're taking the time because

they're building something valuable, right? And so we've had, and I actually just posted a thread on this, but there's been a number of articles about kind of fast merge options where developers, including Vitalik, have talked about, look, if we want to merge tomorrow, like, we can make that happen. It's just not a good idea if we want to avoid errors. And so if we really prioritize the value of the network, we should take our time. So I would encourage people to look at the time it's taking to ship as just an important part of like responsible process. And see EIP 1559 is evidence that progress is being made. If you're not seeing it, it's not because it's being hidden from you.

Look at the developer meetings, like watch the meetings, like become a part of this ecosystem. It's all public and decentralized. So nothing's being hidden from you, but products take time to launch. And I'm really glad that the developers are taking the approach that they are. James, how about you? I'm interested, same question. How do you think the narrative changes in a post-EIP 1559 world for Ethereum? First, I agree with Squish that, you know, 1559 took longer to develop, but for good reason, right?

The risk is now higher than when Ethereum was just a child. And it's funny because it took three years from Vitalik's first post to now because it had this three-year, like, debate and research in the public process of vetting out this idea. because you don't know if the idea is good, even if it's coming from italic, just with a post. And, you know, a protocol that is always, like, touting its process for vetting out, like, theory is Cardano, right? Cardano is like, oh, you know, we have this peer-reviewed process with university professors. Now, I will take a bunch of squishes in a forum debating each other, actually writing code over any bunch of ivory tower university professors writing peer-reviewed paper. Because this is real skin in the game, right?

you're building protocols that actually affect economic livelihood for yourself and for others in the system. And you're like affecting changes, whereas professors are like mostly in a zero-sum status game. So I think this three-year process has been very healthy. On the execution front, I would just say that execution is not something that is mostly interesting looking back. It's mostly looking forward. The reason why Nvidia beat everyone was because it shipped new chips every six months for like five years. So the real question is going forward, can Ethereum's developer community continue to ship every six months or whatever cadence it is, right? Like whether it hits the merge date, how well that goes is going to be very telling.

You build up execution credibility by repeatedly hitting it, not by, you know, retrospectively hitting a few milestones. So I think that's very key. At some point, you know, people talk about the protocol ossifying and maybe, you know, just because the low-hanging fruit is picked, the rate of innovation will slow down. little bit. At that point, the determinant of success is going to shift from purely kind of shifting or shipping new code to almost like more boring, like biz dev and onboarding the rest of the world's GDP. That's a very different skill set. I think Ethereum has been okay at that skill set, but it's no one's being fantastic. Maybe some of the more tradfai companies or Ripple has been a little bit more better at that, in spirit at least. But at some point, Ethereum is going to have to

just do the integrations with the boring offline world. And things like ChainLink are really important to do those integrations. So I think execute until we get to ETH to prove the economic model. Maybe we have some better ideas to put in. And then concurrent with that, really ramp up the sensibility of we have to integrate with reality and the rest of the economy so that we can bring the whole internet base onto Ethereum. You see, how about you? So how does the narrative game change for Ethereum post-EIP 1559? We've talked a lot about execution risk.

But aside from execution risk, how does the narrative change for ETH as an asset? I think the narrative is don't bet against Ethereum. And I think what we've seen is how Ethereum has really become an emergent phenomenon. And when problems arise, there is a really diverse and resilient ecosystem that steps up to solve it. And you can't say that about a lot of ecosystems in the space right now. I think Ethereum is very special in that regard. Now, did I ever doubt that EIP-159 would be implemented? To be honest, yeah, even 1.5, like a year and a half ago, I was like, you know, is this going to happen? Are we going to see it? Or is ETH1 kind of ossified in a way where it can't get a change like

this implemented? And we're just going to have to wait for ETH too. But I think what we saw was the community stepped up, some key developers stepped up, and we got it done. And I do want to kind of reinforce, like, because I know from the outside, it's easy to look in an Ethereum development and say, oh, it's so slow and it's so time consuming. But what you have to understand is this kind of decentralized development is extremely tricky. This is, this is not like a company developing a software product. It really is about building consensus among researchers, among the community, among the node operators. And you have to get everyone on the same page

and agree that a change is worthwhile and valuable to the network. And you have to do that across multiple clients as well. And that is part of the difficulty of doing things in Ethereum, but that is also the bedrock of its legitimacy. And that is why Ethereum is so legitimate and is valued as this decentralized network. So if anything, to me, it's kind of reinforced that point of view about Ethereum

as that decentralized, truly decentralized network, especially versus some of the other participants that are in the space. And I think fundamentally, this really does change the value proposition of ether as an asset. I talked about it earlier, but now you have usage that is directly driving value back to ether as an asset. And when we see the use cases that have gained the most traction, a lot of it boils down to that decentralized economy. So the more strong of a decentralized asset we have, the more use as we can find for it in defy and in other applications. So I'm hugely bullish on this for Ether and the Ethereum ecosystem as a whole.

So I know David is about to ask a question about ETH the asset, but I'm curious because what you said just triggered something there for me, D.C. So like there was a time you were skeptical that EIP 1559 would ship. I'm just wondering with the rest of the panel, show of hands. Who also went through times where they were skeptical EIP 1559 would ship? James and Squish. Just you and me. We're young and foolish.

You know, this is what came in right recently early. We've never seen what sluggish, like, narratives look like. I love it. I love it. Us old guys, D.C. That's us. I know. That's how it goes.

All right. You guys are violating the one rule of don't bet against Ethereum, but I guess it took us a while to learn that rule. Just learn my lessons, sir. You can just inform me now. Hey, guys, in the second half of the show, we bring up some new conversations, such as the triple-havening. idea that squish chaos brought to the forefront, as well as the intersection between institutions

and EIP-1-559. And then, of course, we ask the famous question, how has Ethereum changed your life to each of these three guests? Some really cool content coming in the second half of this show, so don't go anywhere. But first, before we get there, we have to hear from some of these fantastic sponsors that make the show possible. Balancer is a powerful platform for flexible, automated market makers. Typical AMMs just have two tokens inside of of one liquidity pool, which can lead to fractured liquidity across the many pairs in Defi. With Balancer, you can access the full power

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You can open up a free account in under three minutes at Gemini.com slash go bankless. And if you trade more than $100 within the first 30 days after sign up, you'll be gifted a free $15 Bitcoin bonus. Check them out at gemini.com slash go bankless. The answers that I just heard out of the panelists just talked about various, in my mind, just talked about various different ways that the Ethereum process and the Ethereum community

is just like a very magical, rich environment. But in the world of crypto, it's hard to illustrate that to the newcomers, especially in such a short, like short, succinct argument. When people come into the world of crypto, they pull up websites like coin market cap, and then they see Bitcoin, Ethereum, Ripple, Lightcoin, Bitcoin Cash. How do you guys explain the difference between Ether and the rest of the assets in the Ethereum or in the crypto world?

And how does EIP-159 help or change how you guys explain that? And James, I'll start with you. How is Ether a different asset from all the other assets we find in the crypto world? It's a very tough question, honestly. And I agree. This is like the first thing that comes up. I think maybe the first point is to delineate between Bitcoin and Ethereum. And we've done this many I mean, you've guys done this many times over at Bankless. But essentially, it's a difference between a very fixed value proposition with Bitcoin and store value and Ethereum, which is a call it moderate, moderate plus programmable software platform. And it's like, I don't think we should

try to sell people on Ethereum per se. We should just give them things to do that will make the value self-evident to them. So instead of trying to tell them, hey, here's the difference between Ethereum and EOS or, you know, Tether, sorry, or Tazos, I'll be like, hey, would you like to deposit $1,000 U.S. dollars at six, I don't know, whatever is the prevailing rate, 10%? APY, that is possible. And it takes about five clicks. And that actually triggers a much more productive process with them because it's something they can understand because they've interfaced with the bank. They know the interest rate is 0.5% in the U.S. or some miners percent in Europe, right, which is absurd. And then you get them to move the money from their bank account to

Metamask, and the next thing, they're in a year vault or compound, and it is going 5, 10%. And the next question, of course, is why. And then we can get to the mechanism. of where the yields come from in D5 and what does blockchains have anything to do with this. The other thing you can do is just to have them experience the magic of ENS. I've been trying to onboard my friends to ENS, and it's remarkably hard. I would think it's super easy. I'm like, did you want the first Hotmail account? Did you want to be called like, I don't know, Jason at Hotmail.com?

If, you know, if you had it, that was awesome or Gmail. Like, but if you didn't, now you're, you know, John 1,23 at gmail.com. Getting the first like E&S account with a name without a number is actually still possible, which is incredible, right? You can get a five character E&S address that works not just for sending ETH from point to point in the world, which is impossible before, but it even works across Bitcoin and like coin. It's a multi-coin address. It is email for money that's instantaneous and is small enough.

You can put it on your business card. So I try to expose people to these use cases. That's why I wrote that article, five actually useful things you can do with Ethereum. with crypto in 2021. And then you can, if people are interested, backstep to theory. Starting from theory, I think is very challenging. Squish, you wrote 80 pages on Ether, the asset. So those 80 pages, how did you separate Ether the asset from all the other tokens and

coins and currencies that we find in this industry? Yeah, I mean, Ether the asset is different because of its ecosystem. It has just the most vibrant economy. It's being used. And ultimately, unlike a lot of the other assets, the activity on the network is going to drive asset prices and has driven asset prices today. So I think that's the biggest difference. I think when you buy a lot of these smaller tokens, you're buying kind of like hopes for the

future. When you buy Ethereum, you're buying like current people who are today choosing to burn how many ETH has been burned already? Probably over 2000. Yeah. Yeah. Right. And that's like in the last few hours based on just organic network activity. That's what you're buying. It's it's proven they're taking their own dollars and they're burning it to get the value out of the network. And then it's kind of going back to like what makes ether the asset different EIP 1559. Right. So just very concretely. Before EIP 1559, if you bought ether not as an investment asset, you just bought it to pay as gas. You know, the act of buying. it, that's demand and that's going to push up the price. But then if you're using that ether as gas, that gas goes to miners and miners have to sell it and that pushes down the price. And you don't get

this very high, very efficient value transfer. The fees aren't really going to the asset very well. And with EIP 1559, when you buy one ETH and you spend it as gas, miners are only able to sell 0.7Eth, you know, something like that. There's a net positive effect from using ether as gas that wasn't there before. And so where before, I think a lot of these assets were being driven primarily from buyers who were buying as an investment, holding it, and kind of net allowing the price to increase, EIP 1559 really makes Ethereum different than all the other tokens, because now we're seeing that Ethereum, the network, has more activity than everyone else, and that activity is going to efficiently kind of trickle into the ETH asset,

itself, which is just kind of fundamentally distinct than anything else. E.C., I'm super interested in hearing your take on this. How is Ether different and unique from all the other assets you find on Coin Gecko or Coin Market Cap? And maybe also how does EIP-1559 help differentiate it as an asset? So as an asset, I think Ether is unique in Ethereum and in the space overall. And I've talked a lot about this idea of this natively programmable asset with minimal trust assumptions. And you really can't find, and I don't think the broader market has realized this, but I wrote a tweet yesterday saying pretty much my entire investment thesis is underpinned by this

idea that the market is mispricing these natively programmable store of value assets, because I think they're going to offer tremendous utility to the world of defy. And as the lines blur between defy and just normal finance, having that bedrock collateral asset is going to be hugely important and valuable. And really, ether is the only candidate for that because everything else basically has some kind of like trust assumption or you're expecting, there's some kind of roadmap, especially if we're talking about like fungible tokens. This is very often the case anyway. Actually, I think NFTs are like an interesting in the middle case where they don't necessarily have additional assumptions. But ether is unique for those reasons. But secondly, it's also extremely liquid.

I mean, there are days when an ether volume exceeds that of Bitcoin regularly now. And you need that kind of liquidity for that kind of asset in order to drive significant economic activity. So those are a couple of the things that I'm thinking about. And I expect we're going to see even more use of ether for those purposes on the heels of EIP-1559. D.C., allegedly, you are a big fan of NFTs. And so how does the NFT world, which, for all of his intents and purposes,

is largely an Ethereum native phenomenon. And recently over the last few weeks or so, and I think we're actually watching one right now, we've seen the gas, the gray price for Ethereum spike up to levels as high as 1500 Guay, which is absolutely insane. And overall, NFTs have become really alive lately in the last few weeks and months or so. Tell us about the intersection between EIP-1559 and the NFT economy. When you combine those two things, what do we get?

So, yeah, I've got a couple of NFTs, and I think, the first thing that I'll say is EIP-1559 makes the chain much easier to use for a newcomer. And I'm much more inclined now to recommend even to newcomers who have never used Ethereum before to go on, try, submit a transaction, do something, whether that's grab an ENS, buy an NFT or whatever. Before I had trepidation in doing that, especially for someone who wasn't that technical, because 80% of the time, their first experience was a stuck transaction. And it might not clear for a long time. sometimes like not ever. It feels like not ever. And so that is going to go away for the most part. There are still situations where that could happen, but it's going to be the exception, not the rule. But I think I do want to kind of

reinforce this idea because I know NFT auctions have gotten a bit of a bad rap because it's like, well, it drives up gas price and is that Ethereum's fault. It's actually the fault of the way that the NFTs are being issued in a lot of cases. What you see happening is they're using a gas price auction as the buyer selection mechanism. So rather than pricing their NFTs appropriately so that people buy them and people are paying close to the value that is provided by them, they are instead seeing, oh, this NFT is really valuable and I can buy it for 0.1Eth, but I can also sell it for one ether directly after the drop, right? So that basically gives them 0.9 worth of ETH that they could spend on gas and still net a profit or something like that. That is the problem. And that's why you see gas prices surge during some of these. I think that kind of model is actually going to be phased out. So I don't see that persisting. And I know we've talked about this a little bit, but I think it is important to note that EIP-159 is not really expected to affect gas prices in like a meaningful way, though it will reduce the incidence of these bidding wars

where people keep bidding on top of each other because if people mostly paid the base fee, that's going to be more accessible to more participants. But during periods of high demand, I do think it reinforces this positive feedback loop on that we've talked about a lot. And I know we just talked about this a second ago, but it's just this idea of ether as the scarce programmable asset. I think you're going to see some more demand around NFTs. For some of these really high value NFTs, you're going to see them increasingly used as economic collateral, which is just like totally untapped space that a lot of people are not ready for it yet. But Ethereum is going to be the best fungible version of that,

but you'll have NFTs alongside that as well. I want to ask this next question to Squish. So what's interesting, of course, is the Ethereum roadmap doesn't end here, right? In fact, we have another major catalyst sometime in the next maybe six to 12 months or so. That is what we are calling the merge and the end of proof of work issuance and the full migration to the beacon chain of proof of stake. Squish, you put out this idea of the triple halvening, right? And I want to find out from you at what point we are in the cycle and what's coming in the future. So is this the first happening in the triple happening?

Or like, where are we now? And what's coming ahead for the Ethereum roadmap as part of the framework that you've laid out? Yeah. So first, this is a 30% reduction in cell pressure. So it's around half of the effect of a Bitcoin happening. And then the other 2.5 happenings come from the proof of stake merge, which is why the merge is such an important thing for price. And obviously, it's just, it's the linchpin of my thesis. I think it's the linchpin of a lot of Ethereum investors view of the asset is that this proof of stake merge is so important. And then as far as what's going to happen going forward and how that will affect price, you know, I would encourage people to think about the support. of these assets in terms of their circulating supply. And so what that means is, you know, for Bitcoin, it's famously a fixed supply,

21 million that will ever exist. But I would encourage people to think about it in terms of the amount in circulation, which is not fixed. That's actually increasing because of the block reward, right? And the reason I think that's important is because you would never look at the amount of oil in the whole world that's inaccessible. So like if I discovered a new oil reserve far away that no one could ever get at, It's not going to reduce the price of oil.

But if I discover a new oil reserve that people can actually add to circulating supply, that would. And so circulating supply is what counts. And the thing that's pretty wild to think about is that for both Bitcoin and Ethereum and their entire history with the price going up as much as it has, it's done so in the face of an increasing circulating supply. And for Bitcoin in particular, this has been the case because it's already been through three halving events.

And so the rate at which that supply increases has been cut by 50% three times. So that is an 87.5% reduction, kind of if you do all three of Bitcoins having events together. 83.7, 83.5% reduction in the inflation rate of circulating supply. And Ethereum has gone through none of that. So the inflation rate for Ethereum has not. gone through halvings, and yet the price has continued to go up. So what does that mean? It means when Ethereum supply is increasing, there are enough new buyers. They just keep buying the new ether, and they buy it at the same or higher price so that the overall price can keep going up.

And so with EIP 1559, suddenly there's going to be 30% less selling pressure from the miners, which means there's just going to be less ether out there to buy. That's the ether that's been burned, right? And so if people have been buying this ether and buying it so much that the price was going up, even if this new supply is coming online, now those same buyers don't have ether to buy. And so that's kind of the catalyst that's going to affect the supply. And my argument for the triple halving is that the proof of stake merge kind of accentuates this even further. And it brings us to a total 90% decrease in circulating supply, which is more than three halvings worth of decrease. And that's a huge catalyst for the price.

And the last thing I want to point out is that in the history of Ethereum and Bitcoin, circulating supply has always been increasing. Obviously, Bitcoin has a fixed supply, but the amount in circulation is always been increasing because of the block reward. After the merge, it's incredibly possible that Ethereum will be a deflationary asset. And it's important to note that means that for the first time ever, there will be a crypto asset that actually has a static or decreasing supply. Ethereum will actually be able to claim something that Bitcoin has not been able to claim because while Bitcoin has a fixed supply, Ethereum, Bitcoin has had a fixed supply, the circulating supply has always been increasing.

for Ethereum, circulating supply equals the total supply. And when that's decreasing, I think we're going to see something we've never seen before. We've never seen the price of these assets when the actual total supply has gone down. And so models for what the price is going to do based on how the price action has happened in previous cycles, I think they're going to fly out the window because the supply demand dynamics are completely different. What's also crazy about this squish is that this is not happening like once. every four years, this is happening during a very consolidated period of time. We're talking about in the next six to 12 months, all of these triple happening events will happen,

right? This is today, it's 30% of one happening, as you said. And then once the merge goes, then that's the rest of it you're talking about. James, I'm curious to hear from you. So your perspective at ARC might be interesting here. There has been a lot of talk about cryptocurrency, of course among the institutions. Bitcoin, though, has definitely been the lead asset, right? So you go to crypto if you're an institution, you buy Bitcoin first. Does some of this narrative around EIP 1559, the actual successful deployment, decrease of the execution risk, upcoming merge, does that change things? Are the institutions going to start seriously thinking about ETH as an asset to add to their portfolios and their balance sheet? What are your thoughts here, James?

Yeah. At ARC, we were, you know, famously the first ETF to actually buy Bitcoin exposure through GBT, 2015. And definitely the store of asset narrative has been the driving force behind that because it's so easy to understand, right, digital gold. I don't think 1559 itself is the biggest catalyst for institutional adoption. I think the one is just the one they can most easily understand, which is the search for yield, right? Ethereum is unique. You know, back to David's question, what's unique by Ethereum versus someone else? the only one that is like that has apps. You know, when you care about computer system, you don't care about the one with most elegant design or whatever. You care about the one that has the most applications. Ethereum has the most applications for defy and the only really effective platform for NFTs. So that's very important. And when institutions look for yield, the most natural place to go is Ethereum because all the top DeFi protocols are on Ethereum. And secondarily, when the merge happens, Ethereum itself becomes a proof of stake blockchain, which is a, whose tokenomics basically generates yield, right?

The staking rewards is a form of yield, and that is completely understandable. So I think that's what makes Ethereum very attractive from an institutional perspective. And once you can express yield, like that plugs in so naturally to so many of the products that exists in kind of CFI banking, any kind of borrowing, any kind of lending protocols, Like they can plug into the whole defy ecosystem as a source of capital. That to me is like far more exciting than there is a fixed pile of money for gold. How do we divide it between gold and Bitcoin? Guys, as we come down to the end of this panel, first and foremost, thank you for joining us and having such a fantastic conversation.

This has already been so rich. And if you're on the YouTube, make sure to like and subscribe. And if you're watching on ChainLink, make sure you go subscribe to the bankless YouTube before we finish off this panel. I want to end the conversation with one last question. And we are running out of time, so I'm going to trim you guys up to about 45 seconds each. So open end to question. How has Ethereum changed your life? And Squish, let's start with you.

I think the biggest thing is I've, Ethereum's got me writing. It's got me thinking. There are so many new ideas that the Ethereum community brings to the table. And so I'm just more intellectually active than I was before. And so personally, that just makes me really happy. and I'm just really proud to be a part of this big story. That's somebody that also got into this world via writing. I can definitely resonate with that.

James, how has Ethereum changed your life? I mean, you job. I was working at Ark and Vest. Great as job probably in Tradfai you can get. And now I'm working at a moon, right? And I joined a moon because I think this could be the future. This could be the Ark Invest of DFI. We're building DFI products on top of Ethereum.

It's a single token that gives you access to all the top DFI protocols. and we have so many more great products in the pipeline, talk about execution and product pipeline. So it's great to move from a kind of a invest mindset to a builder's mindset. That's what drew me here. And yeah, without Ethereum, if it were just Bitcoin or some other thing, I don't think this would happen. So I'm really excited about that.

Well, DC, the first two panelists definitely did not go on too long. So you have a little bit of extra time if you want it. So DC, how has Ethereum changed your life? So likely is the oldest member of this panel. I grew up literally like with the consumer internet emerging. So a little bit before you guys probably, I remember when it was all super hard to use and you had to dial up and do all those things. And now I feel like the same thing is happening in this decentralized space. And so for me to have been a early participant, mostly observer in that time before and now getting to be a part of this.

global community that is really working to advance this decentralized economy that is emerging on Ethereum and feel like I'm playing a small part in it. It's really just incredible to me. And I wake up every day and I'm just grateful to be a part of the Ethereum ecosystem and community. And I'm always looking forward to what's coming next. So it's been incredible. Well, we are grateful for this panel. We are grateful for the community and the developers that shipped EIP 1559. We are grateful to the smart con. conference organizers and Chainlink for getting us all together on this panel. So excited about the future that is to come. So thanks panelists for joining us. Thanks, Randy. Thank you.

Guys, as always, none of this was financial advice. Crypto is risky. DeFi is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.