Bankless - SotN #39: Is Wall Street Going Bankless? | David Grider of Fundstrat

Episode Date: March 24, 2021

David Grider is a Digital Asset strategy researcher at Fundstrat, the independent research boutique firm. They advise high net-worth individuals, wealth advisors, and a number of actors throughout traditional finance. They're on the frontier of educating finance natives and bridging Wall Street to crypto. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ GO BANKLESS WITH THESE SPONSOR TOOLS: ⭐️ AAVE - BORROW OR LEND YOUR ASSETS https://bankless.cc/aave  🚀 GEMINI - MOST TRUSTED EXCHANGE AND ONRAMP https://bankless.cc/go-gemini  💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith  📱 DHARMA - MOBILE ONRAMP DIRECTLY INTO DEFI https://bankless.cc/dharma  ------ SotN #39: Is Wall Street Going Bankless? Guest: David Grider of Fundstrat Is Wall Street going Bankless? What do they know about crypto? We bring on David Grider of Fundstrat to answer these important questions for us. If an asset is legitimate, it will inevitably end up on Wall Street, the heart-center of global finance. David embodies the growing bridge from traditional finance to crypto, and he sees the space as increasingly on the radar of high-level investors. Crypto should be understood as making the internet an emerging market. For David, the tipping point came as crypto boasted a trillion-dollar market cap. The finance space is not uniform, and some spheres have been more quick to adapt and adopt than others. As crypto becomes more standardized and accepted, it will be easier to continue this trend in accordance with the Lindy effect – the idea that life expectancy decreases over time with things like technology and concepts. A general willingness to adopt must also be paired with necessary technologies and infrastructure to support custody and investment vehicles, and these things take time. Wall Street is starting to recognize changes in the current monetary regime, and trailblazers like Fundstrat are making this change more real and accessible. ------ Resources: David's Tweet Thread https://twitter.com/David_Grid/status/1369417235761102855?s=20  Fundstrat https://fundstrat.com/  David on Twitter https://twitter.com/David_Grid?s=20  ------ THIS WEEK ON BANKLESS: 🎙️ ULTRA SOUND MONEY (3/22): https://shows.banklesshq.com/p/-ultra-sound-money-justin-drake  🗞️ Weekly Rollup (3/19): https://shows.banklesshq.com/p/-rollup-elon-musk-nft-song-stimulus  🧢 Weekly Action Recap (3/20): https://newsletter.banklesshq.com/p/another-1400-weekly-recap  ⚫ Token Thursday - Ren (3/18): https://newsletter.banklesshq.com/p/rens-trillion-dollar-opportunity  ✏️ Ultra Sound Money (3/15): https://newsletter.banklesshq.com/p/eth-is-ultra-sound-money-market-monday  🐦 Follow Bankless on Twitter: https://twitter.com/BanklessHQ  Follow Bankless on Twitter https://twitter.com/BanklessHQ  ----- 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 

All right, bankless nation. Welcome to another state of the nation. This is going to be an epic episode. We are talking Wall Street. Is Wall Street going bankless? What do they know about crypto? Ethereum, D5, Bitcoin. We brought an expert on to tell us David Gritter, who is from Fun Stratt to tell us all

of the details around this. If this is your first state of the nation, we do these every Tuesday. We live stream them on you. YouTube and then you can catch it on the podcast. David, I'm really excited about this topic. How are you doing today, man? Dude, this is such an important conversation because at the end of the day, all legitimate assets end up on Wall Street. And this is the progress that we are seeing Bitcoin run through. This is the progress that we are seeing Ethereum run through. And at the end of the day,

like if we want this to be the worldwide asset class that we think it deserves to be, it's the logical conclusion is that it ends up on Wall Street because that's the center of capital of the whole entire world. And so this is a fun story to follow. And I'm excited to ask David about how this is going to work out. Yeah, they've come a lot farther than they were over the last 10 years or so, but it still feels like they are in the early innings of understanding this. And David is definitely key in helping them, educate them. Before we get to that, David, we've got to talk about what's new. right before we started this episode, something huge just dropped in Ethereum in Defi writ large. That is the Uniswap V3 launch.

This has been much anticipated by all of us. So what are we doing, David? We're going to do a walkthrough of Uniswap V3 with the details that we have. The blog post is pretty extensive. And there's a lot of interpretation and guesswork that I think is going to be left for the readers of that of that blog So we're going to go through that with the bankless community to figure out what actually is Uniswap v3. So that is going to go live at 1 p.m. Pacific, 4 p.m. Eastern time. So join us back on the YouTube as we learn what the hell Uniswap V3 is.

Guys, I think that's going to be an alpha leak. And of course, we will DM Hayden Adams. You never know. Maybe we'll send him the Zoom link. He might show up. You never know to explain some of this. But if not, we will proceed without him because this is definitely a major launch of for the defy ecosystem and we need to figure out what it means for us. Also, David, we dropped an

epic episode on Monday on ether, the asset and Ethereum the economy with Justin Drake. That was a fantastic episode. Ultrasound money. It is ultrasound money week as well. Tell us about that episode and why it's ultrasound money week. Yeah. So this is, I think, going to be over the long term ultimately connected to Wall Street. And the reason why ultrasound money meme is so powerful is because it's the ultrasound money meme stuck before the podcast was even released, which I think is awesome. That's how you know a meme is going to work. And what memes are are ways for interpretation and, and there's learning about something in a

very small bite size package. And so, you know, Bitcoin has really been spearheading this like sound money narrative in the times of Money Printer Go Burr. But Justin Drake came on to the podcast and talked about like, well, what happens instead of just replicating like what he called Stone Age economics, which is like replicating gold 2.0, what happens if we do sci-fi economics? What happens if we maximize and optimize both the cryptography and the economics side of crypto economics? And what that product is, is ultrasound money in ether the asset. At least that is what that's what the long-term vision is. And so I'm excited for that podcast to go out and start with the bankless podcast.

And as we have seen with other previous content, I expect that to eventually make its ways to the ears of Wall Street, right? And see like, well, you know, because there's always this cognitive dissonance of people, professional investors investing in Bitcoin. Because is like, is that really what the cryptocurrency world has to offer? Is that really the best thing that is going to come out of crypto is Bitcoin? And that podcast suggests that perhaps not. Perhaps there's something more that the world of crypto economics has to offer. Perhaps that thing is ultrasound money. Absolutely. I don't think the world has heard the case for why ether is sound money. They've heard the case for why Ethereum. They've maybe heard tidbits of the case for YDFI, but they have not heard the case for Ythi asset. They think of it as something else. So hopefully, you know, we at Bankless operate at kind of that narrative layer. So we get it direct from the researchers. We sort of parse this into an understanding of the economics and of the asset itself.

And then ultimately the hope is that kind of filters up to the higher levels and makes it way, makes its way to a global understanding of what these systems are and what this asset is. David, before we get into our episode with David on Wall Street, let's talk about the state of the nation. I'm going to ask you the question I always do, which is what is the state of the nation today? The state of the nation is maturing. We are maturing, especially on the day where uniswap v3 comes out. which I think is going to be the last perhaps version of uniswap. So uniswap is coming out in this max limit mature form. You know, ether the asset is both getting at EIP-1559 and proof of stake expedited at a faster rate. And meanwhile, how we understand and explain these things is also getting better and improving.

So overall, we are maturing as an ecosystem. And I think this is going to be the main through line that we have are about to have with our conversation with David from Fundstra. is that, again, Wall Street only pays attention to mature assets. And Wall Street is paying attention. Therefore, we are maturing as an industry and as an asset class. Absolutely. Well said. All right, we are going to get to our episode on Wall Street and crypto with David Greider. He is a digital asset strategy at Fundstrap. But before we do, we want to thank the sponsors who made this episode possible. If you want to live a bankless life, you need to get a monolith, DFI,

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That's Gemini.com slash go bankless. All right, guys, welcome back. We have David Greider. He is digital asset strategy, a researcher at FundStrat. FundStrat, if you've not heard of this firm, they are an independent research boutique. So they advise high net worth individuals, wealth advisors, people in traditional finance. He does a great job educating what we might call what we crypto natives might call finance natives. You probably seem Tom Lee from Fund Stratt.

He's a managing partner on CNBC. This is really our bridge to Wall Street. And David, it's great to have you on bankless. How are you doing today? I'm great. Thanks a lot for having me. Well, before we begin, we should just echo, of course, like all bankless shows, none of this is financial advice. Do your own research, of course. But we are here to talk about

crypto. We're here to talk about DFI. We're here to talk about DeFi. We're here to talk about Ethereum and Wall Street, particularly what Wall Street understands about it. And we're thinking about this conversation, David, in two parts. The first part is really, what does Wall Street make of crypto, writ large, the asset class. And then secondly, I think we want to zone in on what Wall Street actually thinks of ether, the asset. And you've written. written some great reports on both of those subjects. So I know you'll be able to cover it extensively. But let's start with that basic question at the 20,000 foot view. What does Wall Street make of crypto? Like, what do they think of crypto right now? It felt like in 2016, you know, crypto was this

weird sort of scam, you know, crypto anarchists, a very small niche community. But that's all change this cycle. I get the impression. Where are we today? Yeah, I think, you know, really starting, you know, towards the end of last year and into this year, I think it's come on the majority of Wall Street's radar as, okay, this thing is real, we need to figure it out. And, you know, that trillion dollar asset class kind of revisiting that moment was really a tipping point for crypto because it became so large that, you know, if you compare it to, I mean, other sub asset classes like, you know, different bond segments and different, you know, areas of the credit or emerging markets, right? Like it's a very large segment. And it's in terms

of investment assets, it's kind of flown under Wall Street trader and they couldn't ignore it anymore. Before that, I would say, you know, largely ignored, which is why I think, you know, the question is, you know, what does Wall Street think about crypto is, it's very dependent on, um, different pockets, right? There's people who have been, who have been following it, who have been early. You know, I talk to some PMs who are, you know, traditional portfolio managers, very wealthy, fund managers, right? They have their family money. They've been following crypto investing in it, and they're money for some time, but, and they're up on it, but it's everything across the range of the spectrum to, you know, other funds who, you know, they're just mutual funds. They, they don't,

they don't get it. They haven't got it, but now it's time and they're trying to figure it out. out. And I think it's, what do they think of crypto? Some of it, they don't know yet. And it's, you know, this thing, this thing is Bitcoin. Okay, this thing is kind of real. We've got to get a handle on it. What are the rest of these things? And how's that, how's that going to fit into our portfolio? David, I want to ask about career risk with crypto, because this has been something, at least from the inside of the crypto world, is something that we've all been paying attention to, because if there's less and less career risk for investing in crypto, that means the, this is just more legitimate. This is capital will flow easier. And I think back in, back in,

you know, 2017, 2018, 2019, perhaps up until 2020, perhaps that that career risk element was still very, very strong. Maybe you could kind of give us the timeline over the last three years as the conversation of career risk and investing in crypto has has matured and developed. Yeah, I mean, I think the thing to remember is Wall Street, I heard this once early in my career, going to Wall Street and being an investor is like one of the best jobs you can get. You know, you paid a lot of money. You know, you don't have to do too much but outperform the market by a few percent. And all you have to do is really just don't blow it up and don't, don't take too much risk.

Right. So, you know, if we think back to, right, the 2017 wave and everyone's like, the herd is coming, the herd is coming, the institutions. And it kind of never came at that time. And I think one of the reasons was, you know, the money that was coming in at the time was, you know, it was a trickle-down effect from Wall Street, but I think it's the private money from Wall Street, right? It wasn't the actual managed assets and managed fund assets from Wall Street. And it's like, it's the personal money of people because you don't have career risk if you're putting your money in it and you see the upside and investing in the crypto economy. But if you try to put your clients money in it, plus there's fund mandates and things that are constrained from it, and it's new.

all the custody things. That stuff was just unheard of and impossible back then. But, you know, we think we slowly seen, of course, some of the endowments come in over the years, right, from 2018 and 19, you know, I think on the liquid public market side, if I think about career risk for some hedge fund managers, right, and setting aside the kind of crypto fund, crypto native group, the traditional sense of folks, you know, you know, you can see people play the futures and play the options and speculate maybe on the price, you know, when the CME came out. But when you, when you saw Paul Tudor and you saw some of these, you know,

Stan Drucker Miller in 2020, you know, kind of on the hedge fund side, be willing to actually, you know, place kind of macro bets on the longevity of, or at least the, on the trade of owning Bitcoin for that time and that period. I think that opened up for a lot of fund managers who, really have been following those guys for years, right? This is a time we can kind of start to look at this thing, or at least it's not going to be such a career risk moment. And I think now that the banks have kind of gotten on board too, right? You know, I think that that's starting to change in a number of different ways across

not just the hedge fund spectrum, right? Because there's a lot of different places to invest capital, right? There's also the RIAs and the wealth managers. All right. So, you know, now you see also that group with like Morgan Stanley, getting a platform, getting a place to put capital to work right in the crypto ecosystem through what was just announced there. That's something now that's kind of reducing the career risk to investing in crypto and making it

more accessible. So I think the macro narrative here that you guys are painting to Wall Street really comes across in the report that you just wrote in the beginning of this year. And I'm going to show an image from that report. Maybe we could walk through some of it because this to me feels like the lens. almost like the narrative lens that you guys are painting for the rest of Wall Street. And as I said, I see Fund Strat is really a bridge between digital assets and crypto and this new economy that's emerging and Wall Street.

Like we do a good job. I like to think bankless does a good job trying to explain this to crypto natives. But what you guys do, David, is a great job explaining this entire asset class and movement to traditional Wall Street folks. So we want to go through maybe the lens through which you explain it. And I love this image on the report that you put out in 2021. And it's this image of like a family. I don't know.

This looks to me like it's circa 1993, 1994. They have like a Windows PC of some sort. And it's a family like sitting around a computer saying surfs up, see you on the net. Right. And this is like, you know, the beginning of cyberspace, the beginning of the internet. before we all knew it, you know, before we all used it every day and it was sort of this niche thing. Let's talk about that comparison first because the report is titled 2021 Outlook. What's the Outlook for Crypto?

It's going mainstream. Is Wall Street picking up on this comparison to the early Internet, the 1993, 1994 internet and seeing crypto? Yeah, no, I think it absolutely is. I mean, you know, our focus is, like you said, like there's a lot of folks who are very deep into crypto, and we try to be very deep ourselves. But what we also want to do is kind of be the bridge, right, where we can help, you know, our traditional investors think about how crypto's merging with the real world. And when it was so small and when it was just emerging, and the use cases were, you know, more limited than they are today, it hadn't really kind of merged with the global and traditional economy. And we're seeing that really happen now, right, as similar to. any of the emerging of any technology, right, just like when the internet came,

where it's going to disrupt, just like the internet disrupted many traditional business models, right? So our focus, really, with a lot of our research, is helping investors also think about, right, you own, you know, these types of companies in your portfolio, right? Here's what crypto's coming up, and here's what crypto's doing across all of these sectors, just like the internet came up and disrupted some media, disrupted, broadcasting, disrupted. you know, the way we all communicate online, create social media, right? And here's how that world is emerging with our current world. And it touches every part of almost the traditional economy.

So, you know, when I think about when we're trying to convey the idea to people of, you know, crypto, this novel foreign thing, you know, we really have to kind of help them come back to the period of when a new technology emerged like the internet. And, you know, how foreign it was then to, you know, get on dial up, to get on these, you know, these websites, you don't know who you're talking to in the chat rooms. But what it emerged to and what the technology really brought us, right? And that's the same thing we want people to recognize is really happening here. What does that metaphor land? Does that make sense for people or do they still kind of need some convincing after the internet metaphor? No, you know, I think the internet metaphor

really does work for people because they, you know, they have enough experience to be able to think back to the dot-com days, right, and to kind of the early kind of getting online days. I mean, even I can remember, you know, I'm not, I'm a millennial kind of mid-millennial. And even I can remember, you know, really kind of getting online the first time and some of the companies and stuff that were coming out, doing interesting things. So I think, I think people, people get that now. And I think that it's still like, it's like the internet, right, the one is early. But there's so much new stuff happening, so innovation, like you get it's going to be big and you know it's going to change everything, but you don't exactly know how it works, right?

And from, you know, even experts in the space across all the things that are happening because there's so much innovation. But you know, it's important, right? And, you know, and then I think there are some people who maybe have gotten even bad narratives from the crypto community that have just been fed to them for a while, right? And I think that is possibly one of the reasons, too, that it's taken so long, is there just been some bad narratives. What were some of the bad narratives, David? Well, I think, you know, I think a lot of the illegal stuff, right? That's been a bad, that was just a bad narrative. And it's still, you still hear of Janet Yell and saying it.

You know, and I think. You're talking about like money laundering and stuff like this? Yeah. And then I think some of the other stuff around. you know, whether it be like, you know, I think Wall Street generally doesn't want to displace the dollar. I think that that from their vantage point is, you know, it's very against their entrenched interests. Well said. So, so Wall Street did not like the whole crypto anarchist, like this is dark net money, like screwed the central bank, screw the government, sort of thing.

Yeah, I don't I don't think that that I don't think that that pulled weight for a while, right? And then, you know, I think it's catching more now that there has just been such, you know, with COVID, such a massive change in the monetary regime, right? So, so I think that was kind of a catalyst that that kind of brought the digital gold and that narrative stronger, right? But I think there's still people who still think, you know, even the currency narrative of crypto is all currencies. Right. They're all just going to be currencies. And they're not. We all know that they're not.

Right. We all know that defy is not just, it's not currencies. Right. We know Ethereum is really a cloud network. We know a lot of these things can look like, you know, digital companies and other many digital assets. But I think the confusion around, you know, thinking there's a thousand currencies of everything, that happened for a while too. right so and then and then i mean i still talk to you know i i was i was talking to that day to someone inside one of the very very very very large macro funds and um you know they're

they're they're they're they're kind of getting it on bitcoin right but but even still they're like i don't get why anything else they haven't even done the they hadn't even done the work on ethereum um so you know i think you know but but then it depends right some folks are even down they understand more, but that's the answer your question. All right, cool. Well, let's lay at the case that you guys make because I think you make it very well in your report. And the first goes back to something that you said in the intro when I asked you the question is like, what does Wall Street make of crypto?

It feels like part of your answer was they know it's not dead and they know it somehow bounced back from 2017, 2018 to over a trillion. So they can't ignore it. Now, I think the first point that you guys make really well in your report is that Bitcoin has been the best performing asset, nine out of 11 of the past years. Right. Like so when you look at all of the different asset classes, here's a slide that we're showing gold, various commodities, oil, stocks, S&P bonds, treasuries, everything. Up at the top here, you see Bitcoin. And it has not just outperformed, but like massively outperformed every single asset class almost every year.

It had two bad years, which was like a negative 56% a year and a negative 74%. But its good years were real good. Positive 5,000% growth, you know, 126% growth, over 1,000 growth in 2017. So can you talk about that? When Wall Street hears that and sees the data of like, hey, you can't, they don't like ignoring gains, right? So when you make the case and you say, hey, the last 11 years, if you want to see what the best performing asset class was, it's a cryptocurrency and it's called Bitcoin. What do they say and how does that resonate? How does that land with them?

Well, I mean, I think back to, you know, even one of the prior things we're just talking about, right? You know, obviously, everyone wants to make money. But then I think on the other side, even today, I still see like, you know, a few months ago I saw, I think it was, you know, one very large bulge bracket bank who came out and said they were just showing the returns of Bitcoin. And they're saying, is it, you know, the biggest bubble in history, right? And people see, you know, the returns. And for some reason, they think, you know, high returns like this must mean. it's about what's going to crash because they're not used to that type of returns unless it's maybe Tesla or something, right? We know what that created on Wall Street in terms of the chaos,

but and without in traditional markets. But I think what's happening here is it's not fitting in their existing paradigm box, or at least it wasn't for some time because of the disruptive innovation. So, you know, I think now that people have seen the returns for so many years and we're just at the size of scale of its, you know, of the maturity of the asset class, I think people now understand that it's an investable segment for their portfolio. Do you think that, do you think that the people expect Bitcoin to not have those kind of same levels of returns because it is maturing as an asset? Or do you think that people are hoping that at this point in time, like Bitcoin has been

the best performing asset classes in the last nine out of 11th? 11 years and therefore they're hoping for, you know, strong continuation over the next five years. Where do you think people's heads are with like the next five years of Bitcoin performance? Do you think it's going to, are people expecting this to be equally as crazy? Or do you think people are getting in now because they think that it's finally going to start to behave like something that they are more comfortable with? Well, it's definitely becoming more integrated with the global traditional economy and traditional asset classes. I mean, we can see, you know, that, you know, when certain assets, you know,

perform a different way, there's a lot of correlations now that we can see that the crypto's gotten so much bigger. But I think, you know, you're seeing a lot of people getting in today because they do still expect a lot of upside from this asset class. And then you can have strong returns in crypto if if the tech continues to disrupt. Again, you know, we think crypto is like the next wave of the internet, just like internet stocks, you know, have risen to create the fangs and and all of the large tech winners that have made a lot of people, a lot of money on Wall Street for a long time. We think there's still a lot of upside in crypto. I don't know that the yearly returns, we can see that cycle over cycle, you know, Bitcoin returns,

and this is just the kind of a law of large numbers thing, right? You know, they are slowing down. But I think people are really getting in today because they do see, you know, more upside. and it's intractive to putting their portfolios at this point, right? It also seems like, I mean, the case that this is like the third market cycle. This is the third time really this has happened, right? So you can kind of get them used to the rhythm of these three, four-year cycles. These boom-bust rhythms aren't just one-time events.

This is part of the cyclical fractal nature of crypto. And I love this chart here where you just show like it just says, you know, 2017 when we see crypto spiking up towards one trillion, didn't quite hit that. Is it a fad? Nope, because we just hit one trillion again. And we are, this is in January of 2021 that you guys published this report. We are over a trillion now decently over a trillion. So it just feels like it's the next reverberation of that cycle again. But I want to talk about this comparison you make because this is a really interesting lens through which maybe Wall Street can see crypto, which is not just as a commodity asset, but as an economy.

And in this slide, you compared the top largest nation state economies on Earth. You've got the U.S., you've got China, you've got Japan, one, two, and three. And then you compare that with crypto as an asset class. And crypto actually places as the 16th largest global public economy. Can you talk about that framing? Does that resonate with Wall Street? Yeah, so that's a comparison with the stock market capitalization versus crypto. Actually, nowadays, we're probably coming up on Canada, which is kind of interesting to think about. But I do think about crypto as really the next wave of the Internet in the sense that it gives the Internet its own, it makes the Internet its own emerging market economy, right?

You know, you hear a Code's Law with Ethereum and what that enables. and it kind of gives the self-sovereignty to the internet and gives you a global internet communities. Right. So in that sense, you've kind of created countries in the cloud, which is a narrative that I think is kind of developing. And I think what, you know, is happening is back to the boom bus cycles, right? And, you know, it's just a small economy, a small digital economy, very reflexive to capital flows before. People saw that as, you know, just pure speculation. But what I think it is, it's just like, you know, as any small economy, nature's, right, it grows. And I think, you know, crypto economy, I think it has a potential

to be as big as the internet economy and potentially larger because of the innovation it can unleash over the long term. So I think that now that it were at that size, you know, again, it's it's like you can't ignore it from an investability standpoint. This is another slide that I think is hard to ignore and some data points that are hard to ignore as you guys are painting the picture of this whole crypto thing being as large and on a similar growth trajectory as the early internet. So what we see here is the amount of crypto users over time, starting from about 2015 to 2020. And there's another chart on the amount of internet users over time. And that chart spans across the top from 1992 to 1997. And what you guys are reporting out here is

there are close to, it says passing over 100 million worldwide users of crypto. These are all people who are not necessarily using defy in their everyday lives, but I would assume at least have a crypto asset, and that would count as usage of crypto. They're using crypto maybe to store their value. And the interesting thing here is it looks like it's a similar trajectory as the internet in terms of annualized growth, but maybe even faster by this comparison. So you're sort of charting that out. And I love that people always ask, well, you know, if this is the early internet, what year is it? And this data point says it's the year 1997, basically, of the early internet. So like right before the dot com boom and before this internet thing went mainstream,

we're still in that sort of early speculative hype part of the cycle. Can you comment on this a little bit? I mean, I think it really goes back to the cover page that we were talking about when, you know, people were getting online, right? And everyone's kind of just trying it, right? crypto is kind of hard to use. Not everyone uses it. It's not as intuitive storing and keeping your custody and your security. But, you know, just like getting online with dial up and how effortlessly it is, you know, nowadays, right? Because we're also native with it.

And we've all, you know, billions of people most of the world have kind of joined the internet revolution. You know, I think this crypto internet revolution is really in the early endings. And I think, you know, back to, you know, the days of it, I mean, I really do think, you know, we're seeing use cases. emerge just like these early use cases that are really hitting society's kind of going mainstream moment, you know, as we said in the cover, right? Whether it's, whether it's things like defy or things like NFTs, I think we're kind of crossing that chasm where, you know, the traditional mainstream society, it's not just this, these niche technologists, right, these people like us who have been following it for some time, right? But it's now, it's now kind of hitting, you know, application level for everybody to use.

So, and again, we have data that says that as the internet growth of users, right, the growth of the value tracks it as well. This is kind of a, you think, for crypto as well. A Metcalf's law sort of derivative. Yeah, it's similar. I mean, yeah, it's similar to that. David, I've got a question because we always, in crypto, we always use like the dot-com bubble, kind of like this frame of reference. And I remember back talking about in 2017 when I was first getting into crypto saying like, oh, yeah, this must be. crypto's own like version of the dot-com level.

But, you know, maybe that comparison back in 2017 didn't hold water. Maybe that was just my anchor point back then. But my question to you is, do you think that this is going to turn into a speculative mania actually inside the stock market? As in the stock market is going to start playing the crypto game in the same way the stock market started playing the dot-com game back in 2001. We see Coinbase ready to go public. We've seen companies like Gemini signal interests. And then we've seen a number of companies signal interests after that. And then there are plenty of already public companies putting Bitcoin on the balance sheet.

And then those companies share prices going up after that. And then there's public companies like PayPal putting BitGo or custody providers with their acquisitions. Do you think that this could actually start to play with the valuations of stock market valuations and that this kind of turn into its own kind of legacy market mania just because of how much excitement there could be in the crypto markets? Well, I don't think that, you know, look, the Fed said the other day, they're not concerned about what's happening in the crypto markets for the broader economy and for the broader traditional markets.

And I would agree with that because, you know, back to the other chart that we showed the size of the stock markets. I mean, the U.S. stock market is, I don't know, maybe it's 50 trillion, right? We're, you know, pushing on, you know, 1.75, right? So that's much, much smaller. I mean, this is just a, it's just a pocket of global investable assets. It's very small these days. You know, is crypto was, I mean, I think crypto in 2017 was not, was not the dot com moment because, you know, if, as we just showed, right, that, that, like, was that a trillion, right, of market cap.

Then, you know, if we just think back to what the dot com bubble peaked at, if you take the technology and, index then, it was 4.5 trillion market cap for the dot-com bubble back then. Right. So if you even think about where we are today with crypto's growth, you know, in terms of market size, we're still under that. And then if you think about broadly, like that was back in the 90s and 2000s, how much bigger has all of the investable asset class base become since then? So if a . . . . if a dot com bubble is your frame of reference, right?

in $4.5 trillion in 1998, 2000, right? And then you think about M2 growth, you think about all assets class growth, right? Like how much bigger, if there is a dot-com bubble, right? And I'm not betting, you know, I don't want to bet and speculate on one, right? It's possible. But, you know, what would that size be, right? And at that point, then it does kind of become maybe some risk, but not today. It's funny, David, how well that maps to like, today is 1997, right? Because what this all means is we still have the speculative dot-com bubble essentially ahead of crypto. And 2017 wasn't it. Maybe this time around, maybe this cycle will see that. I'm wondering if you see this cycle kind of growing into a, not a stock market speculative like mania, but a dot-com sized event where the assets and

crypto run up to the, you know, maybe the tens of trillions of dollars. Well, you know, we, um, you know, we don't want to put our clients and things that we think are just going to kind of be betting on a speculative frenzy, right? So that's kind of not our core focus. But we do think, you know, even still at today's levels, there's fundamental value. And we don't think the market's in a bubble by any means, right? So, you know, is it really possible that, um, you know, the macro could, could happen and we could go to, uh, those levels? Absolutely. I think, I think it's possible that those types of things could happen.

So I definitely think crypto could see that, right? And I think what's important is making sure kind of just like defy is, right, the usage and the application growth and the fundamentals track it, right, to make sure, you know, how sustainable that is. Absolutely. Well, guys, we are going to be back with David in just a minute. We're going to talk about how crypto is disrupting banks. We're going to talk about how Wall Street sees ETH the asset and Ethereum, the network.

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party time. And this seems to be a little bit about like the message that you're sending as part of your messaging to Wall Street. You're saying, distribute ledger technologies. are lowering banking costs and reshaping the financial sector. And what I think you mean here is DFI. What's super interesting here is we're talking about 6% of all GDP is actually goes to the financial industry, actually goes to the banks today. And that's a whole lot. So when you break it down like this, the average person spends about a month of their productivity, that's three and a half weeks to just to pay for the right to use the modern financial system in the U.S., which is actually crazy to think about when you put it like that. But I want to ask the question, how does Wall Street

respond when you tell them that crypto and DFI in particular is about to drink their milkshake? Do they get upset about this? Or do they know it has problems? They know it's about to be disrupted. And are they excited for this future? Yeah, I mean, I think, You know, I think when you look at charts like this and you can kind of see that in any industry, whenever there's someone who's just been able to kind of, despite the economic buyer, be very kind of, you know, very profitable, really, you know, as the times change, right, that's like a key industry for being disrupted, right? And I think that, you know, banking has kind of had that point, right? It's had kind of monopoly over many things in its own way.

You know, so I think actually when you think about defy and the applications that are being invented there, I think they're actually, they find that more possibly threatening to to their business models or innovative in some ways. I think that even some of the things like Bitcoin to some people, they kind of get it. Right? And I think that, you know, from a fintech perspective, I mean, I've even seen, you know, I'll just say I see a lot of sell side reports that come out. And some of these things have been made public right, but just a couple of bullet points from two. I've even seen Bank of America has been pretty critical on Bitcoin and crypto in a recent report. Be like, you know, defy has a lot of innovation potential. And then, you know, yeah. And and they were kind of, you know, giving some not so good takes. on Bitcoin, right? And I think that the same thing is being said kind of across, you know, some of the other, you know, kind of Wall Street firm. So I think the view on Defi is actually more bullish and positive than on Bitcoin. This is crazy to me, David, because actually what you're saying here was echoed by, I guess we had from Bitwise, Matt Hogan. It's not the first time we've had this take. Not the first time we've had this take. And it's

kind of a kind of met well. So, okay, so Matt basically, he made the point that a lot of people who didn't understand Bitcoin, they get defy right away. You know, first because we're talking about capital assets, but second, and maybe, like, from a larger perspective, they know that the current existing financial system and banking system sucks. Like, they know it has rent-seeking behavior and needs to be fundamentally disrupted. And they know that fintech just kind of scratch the surface on the level of disruption that's needed. And this goes to one of the slides you kind of put together about this evolution of banking,

where we had this kind of banking 1.0 and fintech was sort of a 2.0. But defy is kind of a ground up. We're replacing the entire infrastructure from the ground up revolution that hasn't happened yet. And Matt said that people in finance, you know, CPAs, CFAs inherently understand this and even understand it better than the narrative of Bitcoin becoming a new global money. Right. That's like they dismiss that as Bitcoin gold bug stuff. but this they gravitates you. Is that what you're saying? That's exactly what I'm saying. That's exactly what I'm saying.

I think they see the kind of disruption potential. And I think with this, right, like if you think about back to what we're saying with trust-based systems, right, what was the point of having a bank? You know, you had to walk into the bank. You had to know the person in the local banking region where you were going to get a loan. You said hello to them. You know, you went to church together. They knew you were a credit worthy person that bank would give you a loan because you were borrowing it from the person down the the street, right? You created a global network of this and these payment rails and the tech

has just not been as innovative as you have with a digital society and technology. And then you have fintech that's emerged. And instead of walking to a bank, you can authenticate through your phone. You can use, you know, biometric authentication, right? You can use different things like SOFI and they have all these other data points that you didn't have in banking, right? But so that's, that changed the trust layer again, and that opened up access and increased, uh, or, you know, increased access, lower cost, right? But the thing that underlined at all, underlying it all, right,

was this decentralized infrastructure layer of the trust-based systems, right? And with crypto and these open blockchain networks and the defy applications, right, it's, you know, I think, you know, when you decentralize that, that aspect of the trust-based system, right, it creates a lot of, you know,

especially non-custodial, everything's on chain, you know the contracts, you know how liquidity works, works, right? It changes how the, you know, the product can reach the market and expands, right, the user base. And I think there's a lot of disruption potential for that. I mean, there's, you know, a few guys writing lines of code and you have protocols that are the size of, you know, mid-sized community banks right now, some of these borrowing and lending platforms, right, in terms of assets. Yeah, absolutely. They're getting large. And I mean, it's, it's, we've often

echoed the story of uniswap, which we, you know, you talked about some big news today. But it's like a team of 15 people, basically. And they grew to volumes that surpassed Coinbase in like less than two years, which is crazy. What I love about these types of reports, too, David, is you guys aren't afraid to make predictions. This is what's fun about Wall Street analyst reports, I think sometimes. People in crypto are somewhat reticent to make predictions, but you guys are throwing out some numbers. These are some numbers you put together at the beginning of January, and I'd love for you to give them some context. But this is the 2021 Outlook, Bitcoin to 100K, ether to 10.5K.

So we're hitting that ETH to 10K, magic meme marker, and the crypto market writ large, $5 trillion. We're going to get some details maybe into how you're coming up with those numbers for ether, the asset. But can you give us just the high level? Where are you coming up with these numbers? And this isn't the first time you've made price predictions on some of these assets. How do you go about even coming up with price predictions for these assets? Yeah, that's a great question. Just so for context, you know, we're a little past that, right?

This was back when I think Bitcoin was around 35,000 at the time. I just hit 40 and pulled back. And so, you know, we've come a good ways towards that. And, you know, Ethereum. I guess we all kind of know you can probably triangulate where it was back at that time. And the crypto market cap was still back at a trillion. So we're on a good pace. But yeah, I mean, the way I've come about it at least is kind of fundamentally driven.

There was a, you know, for Bitcoin, I look at it kind of like, you know, strangely in a way, digital real estate or in its own commodity. I look at it first as a bulk value multiple of kind of the total mining investment because, you know, you have to mine a lot to produce these things. and I came up with this model, you know, I call it price to book for Bitcoin, kind of like you value a bank on a price to book multiple. And my book value was just the total mining investment. And this is something I came up with back in, you know, January of 2018, right? And so that's how I look at that one, right? But I look at Ethereum in a different way, and we can talk about it in a second

because I think about it like a cloud computing stock network in a way, a crypto network of a cloud stock. So I look at now, of course, it's still mineable like Bitcoin. Today I'm just looking at an a kind of two lens. And on the crypto market cap side, I think it does kind of come back to some of the cycle factors that we're talking about. I kind of think if we hit those two numbers because that's, you know, 80% of the market, you know, the rest of the market kind of goes with it. And, you know, I'm just thinking about kind of ratios, you know, broadly alts tend outperformed just because of capital flows. and, you know, thinking about what kind of dominances could be, right, at that point.

But I do think about it kind of as an economy level, right? So that's kind of how I got to get to that one as well. So let's get to this kind of second part, this whole conversation around Ether and Ethereum and the understanding. It very much feels to me like we've said this before on Bankless that Ether, in terms of its narrative understanding is maybe a cycle behind Bitcoin. Like now Bitcoin is just adopted as, yeah, that's. digital gold. Okay, we understand that. We get that narrative now and they put it in the context of macro, which we haven't dug into, but obviously that's a, that is definitely a catalyst for crypto. But can I see this basic question? So it feels to me like a little bit. The conversation is

moving from just a conversation of when you say, what is crypto? And somebody says, well, it's Bitcoin, to now it's maybe not just Bitcoin. It's Bitcoin and Ether, like those two assets. Is the conversation moving in that direction, or is Ether still and Ethereum still not really rising to the level of being something that's named that people understand? I think the best way for every user or every kind of probably listener to your show to think about it is imagine that the mass bucket of capital that's been enduring in the mass segment of investors and users. are you when you first got into crypto. For me, that was back in 2015 with Bitcoin and then, you know, Ethereum after the Dow hack, right? And, you know, think about what your learning curve was.

When it first came on your radar, you first decided you're eventually going to listen to it, look at it, and you had to try to understand it, where you started and when you kind of got to within your investment spectrum, right? And I think for most people, it really is this process of, okay, Bitcoin's the biggest, it's the largest, is the first one. It's the one most people talk about in the media, you know, but that's changing, right? So, you know, if you figured that one out, right? And then we figure out the rest and you kind of move down the spectrum and you capital and flows and invests down the spectrum.

So I think that that same awareness, knowledge and learning and then invest capital flow curve applies, right, to what's happening today, right, just at a bigger scale. And that's the thing to keep in mind. So the way I'm seeing it now, right, most talk was about Bitcoin for some time. Bitcoin's kind of now most people are starting to understand it and starting to get it. You know, most research reports and stuff on crypto that it came out first for Bitcoin. But in the products like, you know, Morgan Stanley and the ETS, right, were Bitcoin, right, through those channels. But now I'm seeing stuff like, you know, I think Alliance Bernstein, one of the, you know, the software group there put out a pretty good. good report on Ethereum and also on, you know, some of the upgrades that have been happening.

And I think that that same exact learning cycle is going to happen and it's happening right now with Wall Street, right? And again, everyone's kind of following this educational curve. And I do think that, you know, there's a lot of crypto smart money in Ethereum, kind of like what's going on with, you know, the strong fundamentals in Ethereum, you know, in terms of all the application usage, all the ecosystem growth. And then of course it outperformed, you know, last year, Bitcoin. And this year, right, it's had strong returns as well, but, you know, we're kind of taking every cycle, takes a breather and a pause, right, and kind of wondering what's next. But I think that that's part of it, right? That's just the learning capital flow dynamic, right?

And I think that people are going to recognize the potential for disrupting, I think, in my view, big tech with cloud platforms on the blockchain computers. side. David, I want to ask about how this whole defy thing impacts people's learning process about specifically Ethereum, because as we've said, there seems to be this resonance that, you know, more traditional investors have with the defy assets, mainly because they are capital assets, which fit into older models that they're familiar with. Yeah, I would imagine as they start to, you know, do this evaluation on some of the most common defy assets that are out there, such as, you know, uniswap and it's, you know, X number of billion dollars of volume or AVE and compound and their

X number of dollars of assets under management, all these things fit into their models. Yet I would imagine that, like, oh, the uniswap is an application. What's that application built on? It's built on Ethereum. Oh, Ave compound. Oh, it's also built on Ethereum. MakerDow also built on Ethereum. Like basically, if we're talking DFI, we're talking Ethereum. How does that fact that, like, these DFI things that they are learning about that fits into their legacy models and they all happen to be built on this same platform, that's this Ethereum thing. How does that impact people's perceptions or trajectories about learning about Ethereum versus Bitcoin? Well, I think, you know, I think it's the same as, you know, developers, right? You know,

I think if you're a developer and you see a lot of tools on one platform, right, you're going to probably, you know, you can get, you know, the, you know, the API layers and you can get all the things you need to get to, right? You're going to probably learn about that platform and learn how to build on it. And I think, you know, I think people, you know, recognize, right, that, you know, to this point, the Ethereum economy is certainly the largest in terms of applications, right? And I think that's one reason, you know, reflected why it is the second largest in terms of, you know, it's market cap as well. You know, so I think it definitely says a lot, right? There's a lot of product market fit with the Defi applications in what I call the Ethereum Cloud Network,

you know, and, you know, I mean, people, you know, sometimes criticize it. the fees, I think that's, you know, you know, I saw something similar where someone said, you know, Bitcoin couldn't work because fees were too high and they were too volatile. And then I just thought, like, do you say that when you get a surge charge with Uber because it's because you have demand pricing or is that product market fit because you're willing to pay it? And, you know, that's the thing I think is interesting, right? So, yeah, I mean, I think showing that, you know, all these things are built on Ethereum, right? And things are being built on other platforms as well.

and there's a lot of exciting stuff happening in crypto, right? We cover it, we cover it all. But again, we are bullish on Ethereum, too, amongst other things, right? And I think that definitely it's a sign to say, hey, you know, this is a very good place to look for fundamental innovation happening that is kind of lasting through the cycles, in my view. I want to get your sense, David, of Wall Street's level of understanding Ethereum and Ether the asset, sort of the investment of Ethereum.

So, like, there's the base level understanding, I think, where you think of ETH the asset as kind of a commodity to pay for gas in the network, right? And you can kind of value it based on what's the demand for this commodity going to be, this commodity money within the network? So that's, like, one level. There's another level that David and I have been talking about a lot, which is ETH as a store of value asset, right? And so that's the— Ultrasound money. Ultrasound money. ultrasonic money.

And so like that's that's kind of the similar case that, you know, of Bitcoin, which is Bitcoin is digital gold. Well, ether is kind of digital gold for an entire economy, right? There's that case. But you're making a different case as well when you get to that 10K valuation, which I think is really interesting. You're making the case for ETH as a productive asset, ETH as a capital asset as well. And like both David and I would agree.

that like, ETH is a triple point asset, it can be all of these things. When it's staked, it can also be a productive asset and provide returns. But here's the case that you're making. And once again, 2021, I think, is the first time that I've seen those bridges to Wall Street, which you guys are, an educational bridge to Wall Street, being able to make this case for ether the asset. And your case is based on the revenue that ETH the asset and the Ethereum network is generating. So I'm going to read some parts of your tweet and then maybe you could talk about this a bit.

This is from March 9th. Ethereum has a market cap at that time of 210 billion. ETH generated 1.75 billion of revenue year to date for 2021. That's a 3x of its 600 million that it earned in 2020. At this pace, ETH 2021 revenue is set to grow 1,400%. If you annualize that, that means year-to-date revenue, top-line revenue of $9 billion. The framing of this is so interesting because what you're arguing for is basically ether to be viewed through the lens of a capital asset. And it's a capital asset that's going through an insane period of growth. And that's, I think, where you're getting to when you start talking about comparing it to cloud compute type platforms, right?

Maybe you could walk us through the comparison, David, because I think it's super cool. Yeah, so I'm kind of putting it through, you know, kind of a post, you know, you've implemented some of the changes to the protocol that are kind of coming up, right, you know, staking and kind of a burning implementation lens, right? Because, you know, obviously it is still mindable today. But, you know, when you are in finance, always, you have to think about it, right, on a forward-looking basis, right? what is the future or what of the company, you know, how can they do? Right.

So, you know, the thing that, you know, the reason that I don't think people were able to do this in the past and they can do it today is because the numbers just weren't there. Ethereum, you know, at, you know, any scale on a layer one today, at least, in terms of fees and revenue generated, you know, it is, it is, it's Ethereum and Bitcoin at that level. Right. And it's, if, you know, you think back to, you know, Wall Street is investing more mature things, right? You're not investing in the small startup kind of early seed stuff, which the tech stuff can grow for a lot of these other crypto platforms. But you can look at it now on a traditional lens and compare many, you know, these types of and some defy protocols these days too, right?

We can talk about. But in terms of the fees and stuff, they're generating. But if you think about what fees are to a crypto network, if you start burning fees, that's a reduction in the token. apply, right? And if you think about a company economics, right, people would say, how is that revenue, you know? If, if you think about what happens, I give dollars to a company like Salesforce and, you know, goes through the P&L, they have profit from that, and they can buy back their shares, right? If you burn tokens, that's the same thing, right? So that's the reason you can think about, you have, you can be, you can be comparative to a degree with crypto network economics and traditional company economics because I do think like crypto is kind of a two point like a theorem is

really a 2.0 cloud stock is the case I've made before. And you know, that's that's the reason we kind of frame it in that sense. Yeah. So let's talk about that framing or that comparison. You know, I got to admit sometimes when I hear the kind of the cloud stock metaphor, I get a bit of PTSD from this whole idea that people thought in 2017 that Ethereum was like a decentralized AWS, right? That it was like the internet computer and that like we were going to store everything in this internet computer like graphics and everything. And the reality is it's it's an internet computer. It's a it's a world computer in terms of its, you know, permissionlessness and in terms of its kind of its span. But it only has the power of like your computer, your, you're,

your consumer-grade laptop, right? So this is not going to store all of the world's images. It's not going to be a world computer if you're looking for the second coming of AWS. But I think I start to understand you as you describe it as kind of a country in the cloud, right? Because it is a property management system in the cloud. It's like a country in the cloud.

And it does have this capital asset element, whereas David has described it before too. With EIP 1559, it's doing essentially a share, buyback and it's taking those shares and it's it's burning them it's removing that scarcity but i want to get into that that um detail here if you compare the the kind of rate of growth that we're seeing which is right now 1400% year over year growth in terms of the top level of revenue uh ethereum is generating you compare that to other cloud stocks let's say these are fast-moving um you know tech companies that are growing fairly fast you get

like Salesforce, which is $195 billion market cap, and it's on a revenue of $21 billion, and it's only growing at 25% year-over-year growth, right? Is this kind of the comparison that you're making? And what are the metrics that fall out of this? Does this indicate that ether, the asset, just from a top-line revenue perspective, is undervalued, overvalued, fairly valued relative to these sort of cloud stocks? Yeah, I mean, I think, you know, I think that, you know, there's kind of a lot to unpack in here, right? Like, I think the cloud is kind of an arbitrary thing, right?

Cloud is also a lot of computers that are traditionally on, you know, one layer, right? And like, you know, people just took it somewhere. But I think the narrative of framing ether and crypto is kind of a cloud, a new wave of the internet. I think that resonates for our clients because if you think about the narratives of things, right, back to narratives for investing in crypto. for a while, crypto and cloud, investing in the cloud wasn't cool. And then eventually it became the thing, right? And everyone was like, I'm moving to the cloud. And where's the cloud?

Really, it was just some data centers, but they weren't in your place. Right. And where's the data source? So it's kind of the same thing here, right? And, you know, I think about the, you know, your compare. So we are saying like it's a next wave of the internet, right? So it's the next layer of internet applications by adding the trust layer on top, right? Even if you are storing it wherever you're storing it, right?

So, and if you think about the growth layer that these things enabled, right? It's been very rapid growth of the cloud. It's made a lot of money for a lot of investors. But, you know, I mean, for them, if you're growing 25, 50% a year, that's fast, very fast. And that's why you deserve a very high growth multiple. And people are willing to pay up for that. You know, if we look at crypto and we look at just Ethereum, that 1,400% is like eye-popping, right? But you could say it's an anomaly, right?

Because, you know, but it's been volatile. But really, it's been growing that fast since 2015. So if you take what's called a compound annual growth rate, it's been up and down. There's been much better years and much worse years. But on average, since 2015, Ethereum fee revenue has been growing that fast, 15,000 or 1,500%. So, you know, I think that's important for folks to see, like, the sustainable trajectory of what's been happening with the trend of this this crypto you know i still call i will so call it kind of crypto cloud platforms right in a way right for for our audience and people who think about it that way

because you know this new wave of the internet just like we went from you know central you know centralized and traditional you know piece you know other forms then went to the cloud right um i think this new wave is really kind of taking over of crypto computing right and um so if we think about if you're going to invest in the next wave of computing and the next wave of, you know, you know, internet cloud tech, right? I think that this is probably a good place to be from a, from an industry standpoint, right? So, I mean, there's big growth multiples being paid for things like the traditional cloud 1.0 companies, and that's fast growth. And Ethereum and crypto networks are growing much faster. You know, the economics aren't exactly the same. So we'll see how it shakes out.

But I think that there's something to be said about the potential here, certainly. David, how is that message landing with Wall Street when you talk about it as kind of an as a capital asset as this being similar to a cloud? How close is Wall Street to understanding this? Maybe in like Bitcoin terms, right? So are we at like their 2016 level of understanding for Eith? And then how do we how do we continue to bridge that gap? Well, I think there's, you know, again, and I speak about Wall Street. I'm speaking, you know, there's very broad terms, right? Because there's a lot of really sophisticated people on Wall Street who know a lot.

And there's some people who kind of know very little, some people who haven't, you know, spent the time at all, right? But I think the people who there's a segment of people, right, who have, you really just looked at Bitcoin and they haven't gotten to Ethereum to understand the nuances of how this works. But I think that the folks that I've been talking to that are listening and getting to know Ethereum, I think that the model resonates with them a lot because when they view it through that lens of, you know, kind of the potential for economics to be kind of more similar to something that's within their bucket and their paradigm and for framing, I think that that's,

that resonates. And especially, I mean, the usage and the traction of the fees, I mean, that's, that says a lot itself too, right? And this is back to your defy thing, right? With everyone building there, right? So it's an indicator, just like financial statements are, right? So, David, there's a conversation that we have on bank list that we think will permeate out into the rest of the world. So I want to get your opinion on it. And this comes in stark contrast to the very, very low rates that bonds are returning for the investors. Like bond yields are at all time lows. And famously, Ray Dalio just put out a piece where he's saying, well, at these price levels, bonds to me just make, they're overbought and they're just not, it doesn't make any

sense to him. And, you know, it's something that me and Ryan have been trying to pioneer on the bankless podcast, bankless ecosystem is that, you know, Ether is like exactly what you are saying with like this internet cloud platform. Ether offers this internet bond, this internet native bond. Does that, does that narrative or mental model fit into what you are talking about with your clients and investors at FundStrapp? I think, you know, I think very, I think closely. But, you know, I would make a nuance to it, right? And it's kind of, you're kind of kind of agreeing and kind of making a slight nuance. If you think about a company's capital stack, right, you can have a lot of different

types of assets from fixed debt to preferred shares that can do things like pick and accrue interest, right? So you know, and so you can have like convertible preferred debt and you can have traditional equity. For me, the closest analogy to like staking ether is kind of like owning like a preferred convertible preferred shares because, you know, you have, I think ether itself, because of the way that the economics we believe will flow, right, in the future, once kind of these upgrades, if they come through as we think they will, right? You can have, you know, revenue come in. You can have some portion of that be a net reduction to the supply.

And the way I think about a crypto company network, right? Crypto, I think about, you know, companies, platforms, networks, right? Crypto company network, right, as this evolution is the P&L is, you know, you know, wherever the revenue exceeds the inflation rate, you have a profit. And that profit is your net reduction in supply, right? That's your net hard money, right, in a sense, right? Just share buyback or like a dividend or you can do the same thing with staking, right? And that's like traditional company economics.

That's like kind of owning a cloud network equity, like a crypto equity, right, in a way. But if you're staking it, you know, you kind of got a little dividend. And it's kind of like being an employee in a way, right? You're providing compute to the network and you're getting paid. the salary and that's like your expense on that side to the network. So that's kind of how I would kind of bridge the gap to thinking about personally those things. Yeah, that makes sense. I love these conversations because it's very clear. All of us are trying to understand these new assets and like fit some existing paradigms into them to help to help the world really understand

it. And there are different ways to do that for sure. But I think you've hit on something in identifying ether as a productive capital asset that's very much tied to the growth of the Ethereum economy and block space revenue, which is really cool. And again, this is one of the first times I've seen like Wall Street education making that case. And I think you said it well, David, you're able to make that case now because it's true because EIP 1559 is coming down the pike because we have proof of stake because those returns are going to come. back to Eath holders. Let's conclude with this. And this has been a fantastic conversation, David. We've really enjoyed your time and definitely learned a lot here. Let's conclude with this.

What is something, because our audience is mainly crypto-natives, what is something that crypto-natives should know about Wall Street and people in traditional finance and what they're doing in crypto? What's something that crypto-natives should learn and should know about Wall Street? You know, I think I think there's a lot of people on Wall Street who personally, maybe they're not the guys who are actually able to make the, you know, the changes to the investment mandates into the investors. But, you know, personally kind of probably interested in crypto themselves. Personally, you know, who will read our research and, you know, maybe they'll have their PAs and they're interested in it. I think that's.

So, I mean, I think a lot of people on your podcast, maybe are people on Wall Street who are smart people. and they could be crossing the chasm, right? Because, you know, I look at you guys. I think you guys have a great show. I think you appeal to a great audience, both crypto and traditional folks. So maybe that answers the question. I think it does. It echoes something we talk about a lot, which is the base layer of all of this is people.

And, of course, what is Wall Street composed of? It's people. People understanding the narrative, the most bullish thing for Ether for Crypto is to be understood. David, thank you so much for helping. the world understand a little slice of crypto here. Thanks a lot for having me. Guys, risk and disclaimers, of course, none of this was financial advice. Bitcoin is risky. ETH is risky. So is DFI. 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.