Bankless - SotN#25 - Road to Ethereum 2.0 w/ Ryan Watkin & Wilson Withiam of Messari

Episode Date: December 2, 2020

Get the report: https://messari.io/road-to-eth2 ----- 🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/ ✊ STARTING GUIDE BANKLESS: https://bit.ly/37Q17uI❤️ JOIN PRIVATE DISCORD: https://bit.ly/2UVI10O🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 👕 BUY BANKLESS TEE: https://merch.banklesshq.com/ ----- GO BANKLESS WITH THESE SPONSOR TOOLS:  🚀 ZERION - INVEST IN DEFI FROM ONE PLACE (download it now!)https://bankless.cc/zerion 💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDShttps://bankless.cc/monolith 🤖YEARN - YIELD-SEEKING MONEY ROBOT THAT FARMS DEFI FOR YOU http://bankless.cc/yearn ------ State of the Nation #25 The Road to Ethereum 2.0 With Ryan Watkin and Wilson Withiam of Messari Ryan Watkins and Wilson Withiam lead the effort behind Messari's 'The Road to ETH 2.0' report.  Both Ryan and David agree: this is the best piece of literature that has ever been produced about Ethereum, ever.  This report will serve as an accurate guide to the uninformed as to the nature of Ethereum and the types of economies it can support.  Get the report from Messari here: https://messari.io/road-to-eth2 We bring Ryan and Wilson on to discuss the production of this report, and some of the decision-making that went on behind the scenes.  ------ Don't stop at the video! Subscribe to the Bankless newsletter programhttp://bankless.substack.com/ Visit the official Bankless website for resourceshttp://banklesshq.com/ Follow Bankless on Twitterhttps://twitter.com/BanklessHQ Follow Ryan on Twitterhttps://twitter.com/ryansadams Follow David on Twitterhttps://twitter.com/TrustlessState -----  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 we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.  

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So check them out at monolith.xy Z. Bankless Nation, welcome to another state of the nation. This is number 25. David and I have already had a very full day, but it is an exciting day. This is the day that ETH II launched. We are going to talk about that. We're also going to talk about probably the best report we've ever read on Ether in this space. And we're bringing on the analysts who actually wrote it, Ryan Watkins and Wilson Withiam from Masari Crypto.

First, I want to ask you, before we get to the guests, before we get to the agenda, David, how are you doing today, man? Are you a little tired? You had to wake up pretty darn early to see the launch. Yeah, I woke up at 3 in the morning because the East 2 launched at 4 in the morning. But I went to, I was smart and I went to bed at literally 8 p.m. last night. And somehow I managed to make that work. So I'm actually just like a bundle of energy right now. Like today's the day. Like today's the day that ETH II is here.

And, you know, thank God it got out the door with all systems go. It's like all the blocks were green. Everything went out without a hiccup. And so, you know, today's just a good day. Can't complain. That was awesome. It was a lot of fun to live stream that. Guys, if this is your first state of the nation, we do these every Tuesday.

We stream them live on YouTube at 2 p.m. Eastern time. We drop that in YouTube as well, but we also put it on the podcast so you can listen to it. And our goal here is to talk about what's happening right now. Right now, the story is all about EF2. So today we're going to be talking about this analyst report. It's called EF2.O, the next evolution of the crypto economy written by the folks at Masari Crypto. We'll introduce them in just a moment. But I think for me, David, this was like the first analyst report. that I've read where I'm like thumbs up on the whole thing. I mean, most analyst reports about Ethereum that have come out over the years have been like garbage, like really.

Wrong. Miss, wrong, like bad take. Don't doesn't make sense. This one nailed it for me. I don't know. What's your take? Yeah. And this one nailed it not just on like the technical details because like even that is to generating a report on the technical details is a monumentous task.

in of itself, not only because like understanding Ethereum 2.0 and the different phases to how to get there is like, that's a hard ask, but also it always changes at the same time. And so, so, Missouri has done a really good job of producing a report that actually keeps up with all the changes. And in addition to that, there's also just conversations of like the social contract and the political philosophy and kind of got pretty meta with about the philosophy of Ethereum and and this is the ethos of Ethereum, which I really, really enjoyed. And it's integral to understand what that is to understand Ethereum. And they did a really good job with that.

Yeah, we are going to dig into it. Also, a few things that are new. Of course, our ETH2 live stream that we're just talking about, David. That happened at 3.30 year time this morning. That is now archived on our YouTube. But a lot of, like a lot of folks tuned in for these live streams. So we had a live stream on bankless. ETHHub had a live stream as well.

there's some the Reddit, ETH Steaking community. And it felt like between all of those live streams, there were like 6,000. Yeah. Yes. Attendees, participants who witnessed the launch of ETH2 Genesis live.

Yeah, that is the largest single event, at least Ethereum event based on viewership that I've ever seen. Like, I've never seen like six, five or six thousand people all like watching the same thing. And that was just the people that were watching on YouTube, right? Like other people were watching it from like just watching their own nodes at home, right?

And so like, far as events go with Ethereum, biggest event ever. It was super cool as well. So that is archive. If you guys want to check it out, we'll put in the show notes. Also, our Belashi podcast came out on Monday. Man, that, that was hot. Dude, I remember recording that and I was doing it like, it was like between 12 and 1 o'clock in the morning, my time. And we just kept going because the conversation was so inspiring and so interesting. What was your big takeaway from that? Yeah, the recording that was a ton of fun. We actually had to record. with Bellagie twice because like we recorded about an hour and a half except we still had so much

left to go and he had a meeting to get to and so he went to the meeting and then he came back and we recorded to finish it off so and I think I got this line from you Ryan so I'll steal it um back in 2010 it was crazy to like consider Bitcoin as like a new money right and so like even if you believed it like speaking about it to your friends was like hairbrained as a hairbrained idea and so like but now Bitcoin's money. Now Bitcoin is just like understood by the world. So what's the crazy hairbrain thing in 2020? And Bellagie has an answer to that question.

It is let's make a country. Let's make a nation. First, let's make a nation in the cloud. And then let's figure out how to make it real and real life. And so we had a two and a half hour, like epic conversation with Belaji about like, how are we going to go from just like a group of people who are interested in this project to like actual real land somewhere building a real country? So I think that's like the new crazy topic of the decade that I think maybe in one decade from now, this will be a normal conversation.

That's the teaser. And Blaschi brings a lot of credibility to it because he tends to see these things about 10 years in advance. It's like he's from the future. Also, David, speaking about the future, tomorrow, you've got a Masari event. Are you guys going to be talking about this report as well? Or what's that event about? Yeah, I think we'll talk about this when the boys come on in a sec. But I think the gist is like there's just so many different things that are new with Ethereum 2.0. And so Missouri is throwing this event tomorrow, which I'm speaking at with Cammy Russo and Mara Schmidt. Yes, Mara. Absolutely. She's fantastic. She wrote the Etherbonds paper.

Yes, right. Yeah. So that's just going to be a really fantastic conversation. Like kind of trying to get a grasp on like, how does new economics work in Ethereum 2.0? Really important conversation. Awesome, man. Okay, going to introduce the guests in just a moment, but first I've got to ask you the question we always start with, David. What is the state of the nation right now?

The state of the nation is launched. Past tense, past tense, because it already happened. It happened this morning. We are launched, right? So Ethereum 2, it's launched. Like, there's no double meaning here. This isn't that creative. The state of the nation is launched.

And that is pretty exciting in and of itself, right? A lot of these sorts of things fail online. We've actually seen a number of, like one of the major test nets, just kind of the rocket died on the launch pad and tipped over and exploded, right? But this time for Maynett, the rocket took off, it cleared the atmosphere. When it mattered. We're on our way to the moon, I guess, somewhere. Destination unknown. We'll call it the moon.

All right. Awesome. State of the nation has launched. Now we want to bring on our guests to talk about this epic report. How many pages is this? We're going to have to ask the guys when they come on. 70-page report. All of it is gold. We'll dive right into it. We want to introduce our guests. Ryan Watkins, because there's two Ryan on the podcast. We're going to call him just Watkins.

He's okay with that. And also, Wilson, with you. And these are the brains, the analysts behind this epic Ethereum report. Gentlemen, are you with us? How are you doing today? Hey, what's going on, guys? Doing well. Hey, guys. Welcome, welcome. Yeah, yeah, decided to be here. It is great to have you. Well, we're going to dig into it. So first we just want to say like, nice job on the report. If you didn't hear our intro, we're big fans. Like you did a fantastic job. I'm just curious, how long did this take you to put together?

Was this something that was like months in progress? Or did you finish it on the weekend before? Yeah, well, we definitely finished it the weekend before. But yeah, we work on this for probably about two months now. I guess originally we were working towards the kind of like November 16th-ish launch date for the beacon chain. But then, you know, once I got pushed back, actually, you know, lucky enough gave some time to put in a limit with thonsor report and, you know, I end up taking about two months. So, you know, by far the most research I've done on anything within crypto, just a ton of fun. It was perfect timing for the, for the BLSC audit to come in last minute to just give us that little extra time so they could bump it up from like a 30-page report.

All right. So what Wilson's referring to here is he got an extension. on his paper, basically, because ETH2 was delayed a little bit. In November, some people thought it would come Thanksgiving weekend. And there was a kind of an audit that was sort of pending for some BLS crypto signatures. So you guys got to reprieve in a few more weeks to finish it up, right? Yeah, exactly. So when you guys first started chewing on, like, producing this report,

what were some of the initial, like, motivations? Like, why? Apart from just like providing, making information available as part of Mizarre's business model, like what really specifically about an ETH2 report was really attractive for you guys in Missouri? Yeah. So I guess I'll start first. I think what was what we really wanted to do with this report was, we looked out on what has been written on E2.0 so far. We've seen really great technical deep dives. We've seen really great economic deep dives. But we really want to do it. to current report that combined all these different elements, as well as touched on some of the

more philosophical and historical elements of theorem 2.0 that we think are like critical to understanding what is actually being built, why it's being built, and where Ethereum is going. And to put that all in one report is really what we were looking to do. Trying to put something together that really took away. There were a lot of misconceptions going into what ETH 2.0 can be. It's this major upgrade, really trying to break it down into a very simple but in a descriptive report as far as what's going on. So people have a good idea of what is happening now and what's to come and what are the implications

for it. So really covering all of our bases in a very easy to read and digest manner. So we're going to open up the report and talk about some graphics and components of it that we thought were particular interesting. But before we do that, I want to ask about the decisions. to include like political philosophy and like a social consensus and and a social contract in in a report right because this is this is not something that you will ever find in a in a legacy report about a legacy equity market company or whatever like there's no political philosophy of like

Tesla or Amazon right and so this is something that I think you know legacy people or institutions quote unquote people that are trying to like peer in from the space from the outside in they might open up this report and be like why is their political philosophy here. So maybe like you guys could add some perspective as to why you thought it was important to add in like some of the social aspects and or social narratives around these blockchains. Yeah. No, it's funny because Wilson and I were like literally just talking about this yesterday about the differences between writing a report, you know, say at an investment bank and it's pretty much just very descriptive, very dry to the point, you know, what are the numbers, et cetera.

And no, you don't really need to dive that deep into what is the political philosophy of just Bezos to understand Amazon. But with blockchains, it really is a different story because blockchains are just technology, they also are institutions. And they're institutions that are encoded with different values and were created for different purposes. And we thought that like it was really important with this report, like if you really wanted to appreciate what Ethereum is and kind of like the underlying design principles for Ethereum 2.0, it's really important to understand these philosophical components, right? So to understand.

And I think another thing that was also pretty interesting is that with Bitcoin, there's been a ton of content written on what is Bitcoin's social contract? What are Bitcoin's values? And these ideas have actually seeped into mainstream consciousness as well. Like when you hear about Michael Saylor or any of the major Bitcoin

Bulls, including some institutional investors, they will touch on some of the core elements of Bitcoin social contract with the 21 million, it being immutable, censorship resistant, decentralized, like all these different things. But for whatever reason with Ethereum, there's this perception because it keeps changing its narrative and because it's always evolving, that its social contract is kind of like nebulous or it's just weak. And that's not necessarily true. Like there are like very consistent values that Ethereum has had and continues to have

that the community agrees upon and that kind of keep the Ethereum ecosystem together. So if that was like really important to start, you know, up front really right after introduction with what is, like what is Ethereum actually and why like what are we all doing here? Really trying to get to understand what Ethereum. is you have to understand, you know, where it kind of comes from and what are its key principles. And so that's why we kind of lined it up right there, not only the philosophy going into why it was built, but then the principles of what Ethereum 2.0 is supposed to bring. And it goes into its design, why it took so long to come, why it took seven years of research to get to where it is,

because they didn't want to sacrifice decentralization for all these different upgrades that they're looking to make. And that was core to its design, to its social contract going forward. So really kind of understanding that concept was key to diving into the rest of the report. I think one thing I'll also add is that these concepts of Ethereum Social Contract, it's not just like some kind of ideological appeal to people. Like these ideas actually underpin many of the desirable properties about blockchains, making it so that they are globally accessible, making it so that they are unable to be censored. Pretty much everything that makes like a blockchain interesting is a blockchain.

enabled by the fact that you have these like core ideas that actually become real when they're manifested in like the design of a blockchain. Yeah, it's not just they're just, you know, trying to tell everyone like why, you know, what we believe in this industry, but to actually get to understand like why this stuff is important in the first place. So I would imagine that like the research process, because of this difference, the research process for producing this report was probably also like different. I don't know what your guys' backgrounds are with producing reports of this nature,

but I would imagine if you did have experience that this particular report was perhaps different than reports you've produced in the past, specifically based off of this like attempt to talk about the political philosophy and the ethos of a blockchain. So maybe talk about just the research process at large and also maybe any of the differences

as a result of this unique nature of what Ethereum is and how that impacted the way you guys came to coalesce the report. So I think a lot of the research, I mean, it's been like years in the making, especially on the more philosophical and historical aspects of Ethereum and Ethereum 2.L. I mean, and that's, you know, years of, you know,

reading some of the content that you guys put out, like reading all the Ptallix blog posts, reading or watching all the interviews that Battalic and, you know, various members of the Ethereum Foundation have given to really get a sense of, like how are they thinking about Ethereum 2.0? So in that respect, like, it was a unique. I mean, it is similar because you're just finding information

and synthesizing and putting it to report. Again, I guess like another thing is that, you also have to understand some of these ideas, like what is a social contract in the first place, for example? So we actually had to do some research on, okay, well, what is a social contract and how do we actually experience? express this idea and report that may actually be like palatable to people who has come to

this space and just think this is just a technology like I've never heard of this concept of the social contracts and especially apply to Ethereum. It seems crazy. So yeah, those are kind of the differences. It's kind of interesting because I was drawing a little bit more on like experience because when I first I mean I'm I guess I'm relatively new. I really got into crypto back in 2017. So typical bull run bandwagon fan. I'm right there with you, brother. September 2017.

Yes. So yeah, same time. So when I first came in, I was particularly drawn to Ethereum. And so that's kind of where I went. I started helping teach classes about people how to develop smart contracts. And so it was kind of like this ecosystem of like acceptance. And it was kind of like a pragmatic approach to everything, which is. what I found very, very interesting going in.

So kind of drawing on that and that kind of culture around what Ethereum was. And then the other part was really diving into not only a lot of the historical pieces that the TALI put together six, seven years ago, but listening to a lot of the podcasts to try and get a deep understanding of what it was kind of like going through this process. And so in some cases, I was diving deep into Reddit threads of stuff that was happening. back in like 2014, 2015. It's seeing kind of like, how were they saying, how were they acting? What was the community like at that time

and how it evolved over time, which I've just, it was fascinating to kind of dive into the history of how everything has evolved over time, both Ethereum, as we know it now, and, you know, ETH II and where it's going to go from there. I think what you're saying, Wilson, is super interesting because this is not how a traditional institutional investor would go collect data, right?

They are not going to go to the Reddit threads or the old Vitalik posts or the Discord channels or Twitter. You know, heck, you know, we have some probably institutional investor exposure at bank lists on like substack and YouTube. But it's not necessarily their channel either. Like we don't package it in a way that institutional investors like Dave and I don't wear suits generally. Right? But the way this is packaged, it's very appealing to the institutional investor, I suppose, or the traditional investor who is used to reading like analytic, heavy, data-driven sorts of reports like these on other traditional assets.

I want to ask a question about who this report is for. Is that kind of who it's for? It's obviously for the crypto community and anyone who is investing. crypto, right? They're going to read this report. Everyone who is reading bankless should go read this report, obviously. But also outside of that, are you guys trying to reach a new audience, an audience that may be like Paul Tooter Jones of the world? They understand the Bitcoin narrative, and now they understand digital scarcity, but they don't yet understand Ethereum. That was my guess on who you're trying to reach after reading this, but why don't you tell us, who's the target market

for this kind of a report. Yeah. So I think, well, we wanted to create this so that it was accessible to kind of as many people as possible. So whether they be a user of Ethereum or an investor or someone who's building or a service or a service or buying a space, we want to have insights that would be helpful for all these different groups to navigate the space. but yeah, I mean, definitely something that we definitely considered, probably like one of the first things we consider was actually, how do we like really communicate what's special about Ethereum to this more like institutional, like more professional audience that now is comfortable with Bitcoin, now understands the value property of Bitcoin but has not yet been able to garage Ethereum because of how kind of like, kind of like,

expansive the idea of Ethereum is. You know, I think when, like, we're thinking about, like, how to, like, craft this report, you know, one of the things, like, when people think about the smart contract market, and I'm sure, like, it wasn't going to elaborate on this, you know, a lot more is that, you know, when people think about smart contract platforms, they think, one, they are, like, utility platforms. Like, they just, you know, and it's all about how much transaction throughput it has. It's all about how scalable it is, like, all this stuff that like yes does matter but is probably about like less than half of the picture of actually matters with these these blockchains and to understand you know why those things are everything it really was

important to really like touch on you know kind of that first section on philosophy and history to really talk through the different design decisions that the theory of team made for a theorem 2.0 to highlight like why that's important so you know hopefully it was written in a a way that, you know, someone with that more professional background will be able to appreciate with who that's written. Yeah, and exactly we're saying on the institutional side, people from outside of Ethereum, I'm trying to get familiar with it. But I think I had a little bit of something for everyone in a sense. So you can kind of get a sense of the history, of the philosophy behind it. But I had a lot of talk on the monetary policy of Eid that

walk has had a lot of phenomenal work on. So if you're looking as from, an investment standpoint, those are some key critical parts that you definitely want to check out to understand what's coming forward with Ethereum. So, yeah, that was definitely one of the key things we talked about going in is who is this going to be for, how are we going to really structure this and write it? Obviously, we want to make it very approachable, but at the same time, have something where people have some key takeaways that they can make decisions on going forward. Very good.

All right. well, with all of that, I guess, set up, we want to get into some of the meat of the report. And I like what you were saying, Wilson, about sort of, you know, not just talking about kind of the network side of things, but also talking about issuance and ether as an asset, because I think a lot of people get, they have trouble separating the difference between Ethereum as a smart contract network and ether as a reserve asset for that network. because in Bitcoin, it's a little bit one and the same. I mean, the purpose of Bitcoin is to transact Bitcoin and move Bitcoin around.

So monetary policy is very tied into that. Anyway, we're going to get into all of that in the report, a few sections to cover. Can we start here, though, which is the scalability trilemma? Maybe Watkins, you could kind of describe what that is and why, like what ETH2? does about that. Basically, the high-level idea with the scalable trilemma is that there exists this trade-off between these three

properties of a public blockchain being it can be decentralized, secure, and scalable, but can't be, or it can only be like two of the three. And, you know, different blockchains have made different trade-offs to get those desired properties. And it's been this, you know,

really tough problem to try and solve, especially for theory. where it wants to become scalable, but doesn't want to sacrifice its security or decentralization. So one of the ways that Ethereum approach this problem is through sharding, which is one of the major components of Ethereum 2.0's design. And the high-level idea with sharding is that it involves partitioning the Ethereum blockchain into subsets of nodes, which can process transactions and store data kind of in parallel. And the reason why this is done is, and it's kind of like tying back to some of these, you know, underlying philosophical aspects of, you know, why this was built, because Ethereum wants to ensure that, yes, well, like it's scalability, that it is still accessible for people to run infrastructure for Ethereum.

So that, you know, someone with a laptop or some other kind of consumer hardware can participate, in the consensus process and run an Ethereum validator is something that's very important to maintain the property that this thing is decentralized and accessible. And then probably another aspect about this kind of sharding component is that it also makes Ethereum accessible for users when it's more scalable. And I think this is actually a really important point

because if it's a case where transaction fees become extremely high in the future, because block space is very limited, then practically speaking, the way that the majority of people who would interact with the Ethereum blockchain would be through intermediaries that subsidize the transaction cost for them. And if that's the case, then all of these special properties of a blockchain don't actually flow up to end users. And that's kind of like a compromise on the vision.

So scaling is important, not just from respect of, you know, kind of the supply side of people who run the infrastructure for Ethereum, but also the demand side so that people can directly interact with the Ethereum blockchain and really take advantage of, you know, all the special properties. As we've said so often, the alternative to scaling the base layer in some way or having a trustless scalability solution is basically you have to scale by trusted intermediaries, as you're saying. So often crypto banks, right? We see Bitcoin doing a lot of this today, transactions through Coinbase, more institutionalization. Hopefully that is not the path

that Ethereum takes. But I notice you kind of plotted these things in, I guess, different sides of the triangle here, right? And it looks like things that have strong decentralization with high security are sort of on the left, and they're more conducive to money type use cases. So Bitcoin and Ethereum would be those. Those that kind of make some tradeoffs with decentralization in favor of getting more scalability like EOS or a Tron or a ripple. It seems like what you're saying in this graphic is they're not as conducive to non-sovereign money type use cases with bare assets. Is that one of the ramifications of the scalability Trilemma that you're drawing out here?

That has to be a part of it. The main purpose is they're making the accessibility to the base layer, whether as a node operator as a user, or mainly as a node operator, very, very difficult. They're limiting that. So when you have a limited number of node operators, obviously that's just a high amount of centralization that you have in the network.

And as we've seen with some of the cartel issues with EOS and obviously Tron, you know, there are some issues that can that can seriously bubble up there. So making that maximally democratic is going to be far more beneficial in the long term for any network. But it's tough to kind of meet that high level of security, that something that Bitcoin and ether have reached. And one of the main reasons behind why they're valued at where they're at is because they do have this high monetary premium right now. And they are kind of seen as these store value assets. At least it's, you know, some people that most do. But so yeah, I think that's kind of why Bitcoin neither fell to one side and the others haven't because they really haven't reached that

point of how people kind of look at them as a store of value asset. Wilson, that sounds a little eth is money of you, sir. Is that what you're saying? A little bit. So we see a bunch of blockchains around the perimeter of this triangle, and then we see ETH II at the center, right? And I feel like the reason why we wanted to start with this particular graphic is because this kind of illustrates the difficulty of like moving into the center. Like this is called a trilemma for a reason.

Jeff Coleman recently had a fantastic tweet thread that talked about like why did ETH2 take so long? And the answer was well, because it's hard. And like getting into that center point where you have a nice balance of security decentralization and scalability, where you are working all the angles to maximize all three of these rather than having to make compromises is why Ethereum 2.0 has taken so long to get out the gate, right? And so it's at this point, excuse me, with Ethereum 2.0, well, probably speaking of Ethereum 2.0 past phase 1.5 when the ETH 1 and 2 chains merge, there is nothing like Ethereum like that, right? And Ethereum, 2.0 is what it's it's not just trying to like have an evolution of ethereum to me it's it's more like trying to in the most pure and most essence way possible solve the scalability trilemma right and as a result of that effort is what ethereum 2.0 is the thing that solves the scalability trilemma not some just inherent it's it's technologically neutral right like whatever needs whatever technology needs to solve this scalability

Rilemon needs to be discovered. And that's what Ethereum 2.0 has morphed itself into, right, out of a very long, like six-year-long research and development process. So I'm super happy to see this graphic, like, really early in the article, because it really sets the foundation of the whole purpose of the whole point of this whole Ethereum thing. And also sets the groundwork for the rest of the article, rest of the report. And I think you nailed it when you're talking about the, it was Jeff Coleman. That was an excellent tweet. That was an excellent tweet. That was fantastic diving into why it took so long and in the background on BLS signatures. So the idea that, and this is kind of why we put Ethereum 2.0 in the middle here is that there are other networks that have introduced proof of state and charting. But no one's done it at the level that Ethereum 2.0 is looking to do it at. No one's going to have the level of validators that are on the network. And so that level, it kind of takes it to another level of like, hey, we're introducing this. the scalability feature and then at the same time you're going to be significantly more

decentralized than any other competitor at the moment. Who knows where they end up at, but just based on design, that's where it's leading to. And just kind of one of the reasons why going back to that thread was the idea behind the BLS cryptographic signature aggregation. So basically if you have a ton of validators on a network and you're pummeling the network with a bunch of signatures on each block, it can lead to a network overload. And so what BLS does is it basically aggregates of signatures. It makes it very, very small so you can maintain the speed of block finality without making node operator costs go through the roof. Let's talk about this graph, David. Yeah. So this is the one the subjects we want to bring up next because again, this actually sets up really important groundwork for

why all this effort needs to be undertaken in the first place, right? And when I first look at this chart, and this is a chart of the percentage of Ethereum block space that's used, right? Like how full are the blocks on percentage terms? And we see like relatively in the center, we have like the 2017 like mania, right? This is where we experienced like ICOs that sold out in 10 seconds because everyone was racing to get in the blocks. This is when we had CryptoKitties.

This was like the first real test of Ethereum's capacity. right and like we see to me when I look at this shaded area in the center I see three big spikes one in like Q1 2017 one in Q2 and then maybe one in like late Q4 2017 and it's that in each spike gets progressively higher and higher and higher right like the first spike spikes up to roughly 70% full then like the second spike is 85ish 90% of full and then the third spike in 2017 actually got to comparable levels that we see in in DFI summer 2020 like like plus 95% full, which if you're above 90%, 95% of a block, you're basically full. That's basically a full block.

And what's interesting to me is like, okay, that's great. We reach capacity, but that was in like peak mania times. But we actually didn't really fall off in block usage between 2017 and 2020. It stayed relatively high. And then the first instance of like defy coming back to life after the bear market of 2018, it looks like we have just this incredibly high sustained block percentage used in 2020. Like it starts at the very start of DeFi summer 2020, it's like 95%. And at the end, it looks like it's something like 98% full.

And so to me, this is just like extremely validating of the whole incentive or need to scale Ethereum. Right. Like we're trying to scale Ethereum and this is why we're doing it. Like the first instance of Ethereum becoming like adopted again, we max it out. It's like it's already maxed out. And like this is before like new wakes of people come into the space. That's my analysis. What's your guys to take when you see this chart?

Yeah. So I'll just give a couple of thoughts and then I'll answer off to Wilson. But yeah, I think you know that like the reason why Ethereum is like Ethereum is not doing this upgrade because they just want to make things complicated. That's not what they're doing. The reason why there's this transition to Ethereum 2.0 is because, like, Ethereum doesn't currently scale today. And it's cool that we can run all these very interesting experiments on here and everything that's happened, even during the ICO boom, but, you know, especially now with DFI. It's incredible what's been built on here. But what we're doing now is still very small scale and no way.

where near what, you know, the level of scalability we need if we actually want Ethereum to actually serve as a public infrastructure for the world, where you can actually run, you know, significant amounts of the world economy on Ethereum and actually start, you know, have, have like real people actually use this thing. So, yeah, that's, I mean, this is why Ethereum 2.0 was built. Yeah, I won't add too much. I'll say on top of that. I kind of wrote it in the piece, but I thought this was clear affirmation of some of the concerns that a lot of the developers and researchers, when they first built Ethereum, they had those concerns around, you know, Ethereum couldn't scale. Should have reached this level of utility.

But it also from a lot of the research they had already been doing and research that they had put towards building Ethereum 2.0. So that was a clear reason in this whole event starting in 2017, and you can see it hasn't gone down since. is the clear showing that there is a need for scalability and that it's a top priority. I have two thoughts on this when I see this, which is super interesting. But it's a little bit of a side quest. You know, one thought when I see this is, oh, my God, like in 2017, we wasted block space out all sorts of stupid things. There's this concept we talk about on bank lists, like,

economic density of blocks, transactions, like more economic value and throughput being pushed in each block. And this is something, by the way, that happens in Bitcoin, right, as well. But it also, when I look at this, and I contrast from three years ago, it also seems to be happening in Ethereum. Like, in Defy Casino Summer, we were spending blocks on more productive things. Like these are collateralized loans, you know, a lot of still speculative behavior. but it wasn't crypto-kitties, right?

And I wonder like three years from now or five years from now if the things we did in DeFi Summer are going to seem awfully silly to and awfully wasteful because it seems to be the case that at least on the main chain, these transactions are getting more and more economically dense. And you guys talked about roll-ups a little bit later on and kind of that way of thinking about Ethereum. And that is a maximally economic, economically dense transaction because you're doing all of this economic activity in a roll-up chain,

and then essentially you're just like settling that on the main chain. So that's one thing I think of. Any reaction to that? Was that an observation that you made as well? You know, I'm just kind of even thinking about it a little bit more right now, and you'll see a lot of these. And this is just how I'm thinking of is each cycle that we go through in 2017 and what we went through in Defi Casino Summer is we're going to go through these cycles

of where things start. to get somewhat popular and then and then they'll catch on um and you almost you almost need to run through that you need to get to the other side and uh and then the ones that actually have some utilities some good teams behind them as they're seeing right now with like urine is basically eating up all of defy um they're the ones that are going to come out and be a potential front runner or all i mean is that they'll they'll still be there come the next cycle of uh of whatever comes to next. And I think it's going to be related to defy, but what that's going to be, maybe it's not liquidity mining food coins, but it's something even more interesting related to it's very,

it's very survival of the fittest, isn't it, in a healthy evolutionary way. And only the most valuable transactions survive, because those are the only ones that can compete for block space, which is super interesting. I want to move on to this, maybe, because this is sort of related, I guess, to block space, but the median Ethereum daily fees have certainly shot up as well. And that means, like I was looking the other day at Token Terminal, and basically, e-fees annualized are about $700 million right now, right? So if you look at kind of all of the fees that are going to pay for Blockspace, Ethereum is generating $700 million in revenue, which is pretty surprising because that

is not the case in 2017. What's the story behind the Ethereum Daily Fees? Are blocks just becoming more valuable? Or like, what does this tell us? Is this also part of the story of, oh my God, we need scalability on the base layer too? Yeah, definitely part of this, the same story, except maybe this chart highlights the perspective

of the user of Ethereum and what they experience if they're trying to submit a transaction. So throughout this year, like, you kind of see like the median daily fees like paid on Ethereum is in E terms is about 2000. And then since kind of like the D5 summer, which I'll say started in June, it was around like 5,000. Which is a ton. I mean, and we'll talk about this kind of in the section we get to Ethereum two Pino's monetary policy.

And you know what happens when you start burning some of those transactions. fees and you know why that matters. But yeah, it just really highlights just how how much more competition there was to get your transactions included into blocks because there was just so much opportunity on the theory of the summer for people. I mean, to be frank, just for people to make money. Yeah. Yeah. And the criticism is real, right? At sort of the peak in October, lots of folks in D5 were saying, this is just a whale chain, right? Like, we can't afford a basic transaction. Only if you only have a certain amount of capital, maybe you can, but it's not worth it for my $500 transaction to actually pay $100 in gas fees to do this thing. Well, let's switch to

issuance because I think that is another key part of the story. So we were talking about blocks. It's all the same story. So we're talking about blocks and that being kind of the chief commodity that Ethereum sells, I guess, right? Get your blocks in an Ethereum transaction. We're selling that to you, and you have to pay an ETH, by the way. But this is a story around ether as an asset and its net annual issuance, right? We'll get into why that matters,

maybe kind of the three points on the triangle. We call it triple point asset thesis. But can you talk about this? Because I'm not sure that many people, frankly, know this, guys, right? Like, I don't know how many times a week I get asked on Twitter, what is ETHs issuance into the future, right? I'm like, well, like, we kind of know it, right? Like, I can't tell you there's a fixed amount of ether, but we kind of know it. Can you tell us what we know and how we know and what this graph is showing us? Yeah, so some helpful background for this is just to describe Ethereum's monetary policy, kind of what it is.

And you know, if you guys have discussed this plenty of times, so it might be prepared for you guys. But that high-level idea with Ethereum monetary policy, it can be defined as like minimum necessary issuance. And basically what that means is that Ethereum always aims to issue enough ETH to ensure that it remains secure now and into the future. Now, the trade-off with that is that, and this is probably many people's criticisms, is that, who defines what minimum necessary issuance is. It's something that sounds very technocratic, subjective. Sounds like, and yeah, and it's like really hard to, to really, like, quantify, like, what that actually is.

But practically speaking, I mean, this has always been Ethereum monetary policy. And what's happened in practice is that Ethereum monetary policy has only changed twice in its history. and both adjustments were to reduce this monetary policy. So this is not something that, like, while, yes, it may be a little bit kind of, you know, like, it's not like clearly defined. Practically speaking, if there was going to be a change to if you're in the monetary policy,

there would need to be ecosystem-wide agreement to do so. So this is not something that can just change at the, you know, if Talek this says one day, like, hey, guys, let's jack up inflation to 10%. Like, this is it. Like, that's just not how it's going to work. Now, I think that it's kind of important to highlight the differences here. So Ethereum has designed this monetary policy to prioritize security. And this is in opposition to Bitcoin, which has designed its monetary policy for kind of like monetary idealism,

at least what the Austrian thinks is what would be like ideal money. And the trade-off with that, you know, because we kind of discussed the trade-offs with the minimum lesser issuance, the trade-off with optimizing for, you know, this perfect money, is that as a consequence, you also set your security budget arbitrarily. It's unclear if having halvings every four year and then ultimately a fixed supply, where the Bitcoin blockchain will be supported by fees is actually viable in the long run. So that's to trade out that Bitcoin mix. So now that we have that kind of framework for how to think about the monetary policy,

well, this is how it actually translates into, you know, Ethereum 2.0. So when phase zero launches, well, I'm saying this as it hasn't launched, I mean, now that phase zero has launched, all of the issuance on Ethereum to the ETH2 beacon chain will actually be incremental to what's on the ETH1 chain. So for the next maybe. call it no one to two years before the eth one chain merges into e2, Ethereum's annuitions will actually increase slightly.

And it will increase maybe about, yeah, so like here it is. It'll increase, you know, probably somewhere between 0.10 and under the most aggressive assumptions, maybe 0.8%. This is a temporary thing, right? Because once that Ethereum 1 merges into Ethereum 2, well, all of that issue, that's coming from Ethereum 2.0, that right now is incremental, will now become the only issuance for Ethereum 2.0. So if we go back to the last chart, that's kind of what it's showing,

is that once this merger happens, Ethereum's annual issuance weight will drop, you know, well below 1%, potentially even below zero. And kind of like that range you see on the screen, that's depending on how many, how much transaction fees, are burned. So one of the things I touched on before is how when EIP 1559, which is kind of like a proposal to restructure how users bid for block space that results in majority of transactions fees being burned, depending on how much transactant fees are being burned in E2, it can actually

cause Ethereum's net issuance to actually be negative, despite the fact that Ethereum 2.0 is perpetually inflationary. Oh, it should be super interesting because at that point, I mean, you're talking about Ethereum's issuance rate, effectively being zero, while Bitcoin's issuance rate is 1.8%. And I don't think this is something that, you know, many people have appreciated it yet just how, I mean, potentially deflationary Ethereum could be at this point. One thing.

I just read, I just want to read this last line here because it's kind of encapsulates what you're saying. is very likely that once eth one one dot o merges with eth two ethereum will not only be the most secure blockchain but also the one with the most credibly low monetary policy that's the summary of what you just said yeah and i guess when i say credible i really just mean credible in the sense that it is very likely that this is sustainable so it's not going to be a question of down the line like, is this issuance enough so that Ethereum remains secure? So that's kind of where that credible part comes from.

Ryan, you talked about how like you gave the theoretical hypothetical example of like if somebody asks you like, well, what's Ethereum's like monetary policy? Like, you know, tell me how much ether there's going to be in 10 years. If somebody can answer that question with like a specific number, the ability to do that comes as a sacrifice to the understanding of the knowing of the security at that point in time. It's kind of like that I don't know what law there is. It's something to do with quantum physics, but you can either know the velocity of a particle and not the place, or you can know the place of a particle, but not the velocity, right? Like, there's some like quantum physics

rule about that. And so that's the same thing with blockchain security and monetary issuance. It's like either you get to supremely decide what the monetary issuance policy of a blockchain is, or you get to decide what the security of a blockchain is, but not. both. You only get to maximize for one of those two things. And the thing is, like, with Ethereum, it decided to innovate and be pragmatic in its approach to generating security. And one of the big incentives to generating a very efficient and efficient insecurity blockchain is that that allows you optionality with your monetary policy. And so, like, the innovation behind proof of stake means that we get to tinker with our monetary policy in ways that are long

term net positive for the ecosystem. So at the same time, we've been able to generate a secure environment for the Ethereum economy, while also we've been able to figure out a path forward for something that is actively deflationary versus something that is just passively deflationary. And that's what I see in like this chart here where like the thing, the line is variable, but it's trending in the direction that you want it to no matter what. And I want to go back to the the line that Ryan just read out. Ryan, if you want to scroll down a little bit, to me, when I read that line,

that felt like a mic drop moment. And because if you gave out this line two years ago, back in peak bear markets when the Bitcoiner, like, maxi narrative was, like, dominating. And if you got, like, Ryan Selkis to, like, Ryan Selkis, like, what do you think about this line? I'm sure people would be like, like, no, that's just completely ridiculous.

But the fact that this sentence is, being like reported out in a report nowadays to me just indicates like how many people are starting to wake up to like this new alternative security model and the positive benefits of the monetary policy over the long term and so I see this as just like a shifting of the tides if you will about like the the perception of ether from like the outside in and and I'm just really thankful that you guys are putting this actually putting these words into a report because they mean so much when you guys typed, whoever typed this into this page, did you think about the implications of typing those

words in when you type that? Yeah, no, that definitely, we definitely did. And, you know, I'm sure there will be people that are triggered, and rightly so, because this is something that could have, like, will happen, or I should say, it's, this is something that is planned to happen in, you know, once two years. And in theory, it's not guaranteed. So I can get why people will be skeptical if they read something like that. And they have a predisposition to be an Ethereum skeptic.

But this is the plan. And if Ethereum 2 works out the way that it's been designed, this will happen. And at that point, people need to deal with the consequences. And granted, even at that point, you know, maybe maybe, maybe, maybe, you know, people still might not get it. Maybe they'll be like, you know what, Ethereum is still perpetually inflationary, and it will be hard to get people to buy the narrative.

We still don't know, but this is something that will happen if the 2.2 works out, and it's important, it's integral to understanding how Ethel will evolve as an asset in Ethereum 2.0 when it does, you know, trying to kind of fully roll out. I want to answer that question another way too, right? Because when someone asks you, what is the monetary policy of ether? How much supply will there be? Right. The answer, of course, is what we've said, minimum necessary issuance, right? It's about this tradeoff between we're going

to maximize for security. But we also like, it's not like we don't know. Like, we know the bounds of what this is going to be. Like, it's not that hard, right? So maximum is 4.82%. Like, that's probably going to be the maximum because we're not going to have likely more than 30 million staked Eath. And it'll probably fall somewhere in the 10 to, you know, 16K range. So we're probably talking about before the merger a 4.47 to 4.6% issuance rate, right? So, like, that's the max. And we know it won't be more than that. And if this merger happens, which, again, as you say, is not concrete, nothing in the future is.

is who knows, right? But if the plan is carried forward, and by the way, we have evidence that the plan seems to be working because these two just launched, okay? But if that happens, yeah, you haven't heard, in two years or so, which is what the timeline, what the timeline kind of predicts, look, maybe you're bearish on that, maybe it happens in three years, maybe it happens, but there's a tremendous amount of momentum and force from the community to deliver on this plan. And we just completed the hardest part. if that happens, then we get a drop of issuance down below the 1% range. And do we know whether that's going to be 1% or negative, half a percent? No.

But to me, both of those scenarios are pretty damn deflationary. Like, that's a pretty good store of value asset. It's a pretty good story. So I am fired up because I'm also tired of people saying like acting like Vitalik could trigger a master node and suddenly inflate like 15% annual issuance into his personal account and steal it like a Fed chairman or something because that's just not true. But I want to ask you a question here because I'm getting to a question. This is not just a rant. Why is this so taboo? What like so David and I have been talking about this. You guys know, right, for like the last year and a half to two years,

right? It's why we started bankless, like literally to talk. about this stuff because no one else was. And here's the first report I've seen that is actually like spreading the truth about what is about to happen for Ethereum, right? And you guys are doing it and fantastic. Thank you. Like sincerely, thank you. But why has it been so taboo to do this? Is it the fact that it's taboo or maybe it's something else? Maybe it's just the data is hard to compile. What's your sense as analysts as to why no one else has written a report like this? Yeah, I mean, there's probably a ton of different things going on for why people always discount this scenario that could happen. I think among them is that many of the early people who got involved in Bitcoin were playing for a very specific thing when they thought about what a cryptocurrency would be.

And they're playing for a fixed supply currency with a deterministic monetary policy. And one, that's what you're playing for, and one that's what you don't want to compromise on. When someone offers an alternative, oftentimes I feel like people can think in binaries, that it's either fixed or it's hyperinflationary, and Ethereum's going to be Zimbabwe on the blockchain. And that's just not, this is not true. So I think that was probably one of the, one of the biggest things is just that, you know, some people just don't want to, you know.

And also I think another thing is that for whatever reason, there's this idea that there will only be one crypto asset that will succeed and that there's not a future where these different blockchains, Ethereum and Bitcoin, can actually, be symbiotic and they can both be successful, that it's not a zero sun game. And I think that that like thinking is probably one of the reasons why, you know, so many people haven't been able to appreciate this. And hopefully that will change, you know, especially when, you know,

this ETH1 merger and finally happens. And this thing is real. And it's no longer a point of, you know, contention or of what if. It's just this exists. You know, Yeah, I think, yeah, on that last point, I couldn't agree more. It was the idea that there will only be one winner, winner-take-all situation. And especially when you have a lot of Bitcoin holders or people that have been in crypto for a while, as soon as you tie any sort of, you know, financial holdings to this narrative that's going to just kind of bring out this ideology. that's not going to allow someone to kind of think of something else as money. And I think that was the other thing that kind of maybe attributed to why it was potentially

taboo is the idea that using ETH as money, that narrative was, I guess, kind of brought up more within, kind of got legs within the last like two years. So kind of looking at it when you're thinking about issuance schedules, you really kind to do that for assets that you're looking at it from a monetary standpoint and less so for something that might be just used as a utility or gas. So actually starting to look at a theorem from a different perspective, I think that's exactly something. As it starts to gain more acceptance, then you'll start to maybe see more people look at it. So I think that was kind of one of the reasons why we definitely wanted to take that perspective, like as we're saying, get everything into

this report so everyone understands what's what's really going on all right ready to move forward let's move forward i do have one solution if you're if you're a bickowner you know is you can just buy some eth right you can diversify a little bit right so like i think having some investment in the space does color is on the space and it's okay to be hedged um i guess if we're moving on maybe can we talk about this concept of uh the staking implications on eath because that is the thing that launched today, right? And we've used this term, like, Ether as an Internet bond. And it looks like you guys agree with that as well. Can you comment on this kind of sovereign bond analogy and what that means for Ether as an asset, what that like turns Ether into?

Yeah, and I'm sure this will probably end up leading into the Ether triple point asset. Oh, we're getting there. Yeah, we're building. Yeah, but, yeah, I think so the guys actually touched on this earlier that Mara and Colin did this report called the The Internet Bond. And it was a really interesting report

because, you know, when you think about, like, what staking is, it's not entirely clear that there is a very, you know, easy analogy to what is happening here. So there are aspect of it that are similar to like a sovereign bond in the sense that, you know, if you think, and this is like a very simplistic model, but if you think, you know, why do, why does the United States raise capital be a selling treasuries? Well, in large part, I mean, this large expense is to pay for its defense. And there's kind of a similar concept here with the theorem. it's like, why is, what is theorem doing?

It's raising capital from people who will eat, and it's using that capital to then go and secure itself. And another common thread between a nation state issuing a big sovereign bond and Ethereum paying people staking is that the currency that it's paying, kind of like these bondholders, is one actually issues itself. So Ethereum is issuing users. E for staking on the Ethereum protocol. And that's interesting because of what it means for the risk you take when you're staking.

So the risk you take when you're staking are really two risks. It's one systemic risk, and that's just the idea of like Ethereum failing. And then two would be validator risk. So the risk that your validator underperforms and you get penalized or let's say you blame maliciously in the US flash. Now, Vowler risk can actually be diversified a way if you were to stake through like a decentralized, a staking protocol, like say, like Rocket Pool,

in which case you're just holding this kind of like ETH bond that is paying you ETH for providing the service to Ethereum blockchain. Now, it's not quite just like a sovereign bond because there's also these other interesting components of it, right? Like there's no maturity on it. users can demand their money back whenever they want, obviously subject to like withdrawal period. It's perpetual. And there's also, you also get paid transaction fees as well.

So yes, like when EIP 1559 is implemented, the majority of transaction fees will be burned. But there will be a portion of it that is actually not burned. And that portion of it that's not burned will be based on, you know, Ethereum's ability to kind of serve users well in their use cases. And this is almost like an equity component to it as well, because it's kind of like this like variable component of how much return that a staker can get that's based off the utility of the Ethereum blockchain. So it kind of is this like really kind of new like financial opportunity for,

for investors to be able to, you know, basically like lend your. to Ethereum blockchain and receive this return from this non-sovereign, but in a sense, sovereign because Ethereum is like the sovereign over, like Ethereum users, no source of yield for buying the service. So, yeah, I think it's like a super interesting, like opportunity for people. By the way, Watkins, I'm not sure that people know about that last part, right? So we've talked a lot about EIP 1559 and the burn, right? So if there's a transaction, some portion is burnt, and that benefits all ETH holders because it reduces supply, of course.

But if you're staking, if you're a validator, you also receive some proceeds for denominating an ETH from that transaction, too, in addition to the block rewards that you receive. That's a really interesting point. Exactly. Wilson, do you want to add anything on to that? I think I couldn't have covered it better. but I think it's important to kind of fit these kind of narratives around what's actually happening here because it just makes it that much more acceptable what's going on because even there's still some people who are skeptical of what proof of state can actually

provide and being able to kind of bring a story around it and make it relatable just makes it that much easier to understand what's actually going on. Do you guys think that this is a narrative? that the legacy markets, the legacy institutions, the institutions, this headless thing that everyone keeps on pointing to, do you think this is a narrative that people can grasp on to these days? This is to be determined. I feel like part of that would be predicated on acceptance of ETH as a monetary store of value.

And then I think once you get over that hurdle, this becomes an incremental benefit to being able to hold ETH and that you can be productive with it. by, no, staking. Cool. All right. Totally agree. Should we get to it, David? I know you're itching you get to it.

We're here. Are we here? Is this the moment? Okay. This is the moment. So asset superclass triangle. And when I see this, I see Ether, the Triple Point asset, right? And so I kind of want to ask you guys, like your thought process as to why you thought that the Ether, the Triple Point Asset thesis was worthy of getting included into this report.

Yeah, so I think this is actually a recent tweet that the Talak had where he was like when describing like assets. Now, I might be like boshing what he was saying, but the general idea is that like when describing things in the blockchain world like assets, it's better to describe their properties than to just like kind of box them into like what they are. And with Ethereum, you know, there's always been this, and there's something I've shrug with as well as like, what actually is this thing? Like, is it just a commodity because it's used as, you know, fuel for transactions? I mean, there's also the analogy back in 2017 that Ethereum would just kind of digital oil. And that's like, it's not really the entire story. It's not quite just oil. And then, you know, is it a store of value? Well, I mean, that's something that, you know, you guys, if I talk about, But that's also the full story, because it's not just something that people use for collateral and defy to pay for transactions, et cetera. And the mistaking, well, now you can actually get a yield on your ether.

So now you have these like three like properties of ask. And maybe I should also zoom out and just describe what these properties mean kind of where they come from. So I think like back in 2017 Chris Pridisci and Adam White wrote this page. called Ring the Bell on a New Asset Class, where they looked at Bitcoin and then they kind of introduced research from, I guess, a guy named Robert Greer about classes of different assets. And the student basically said that there's three superclasses of assets stores of value,

which are assets that retain their personal power into the future. There are commodities, which are, you know, assets that consume and transformed. and there are capital assets which can, you know, they're capital assets that can, like, generate an income, right? Now, with Ethereum, it is, I mean, as far, in credit, I have not looked through every asset in history to determine if the statement says true, but it could be, like, the first asset that actually has all three of these properties. So if you look on this, this kind of visualization, we've had to be. asset seven too. So we've had gold and Bitcoin, which are both commodities and stores of value.

We've had U.S. Treasury securities, which are both capital assets and stores of value, right? Like people will gladly, I mean, there's what, like $17 trillion of negative yielding debt that people are holding. They're not holding it because of the yield. They're holding it because to store value, right? But Ethereum is actually probably one of the only assets that actually has all three of these properties. And, you know, I think it's just good to highlight these properties because they, you know, not to try and like box Ethereum to like this, like, it's like this, like Ethereum is money or Ethereum is commodity or Ethereum is this, just saying like it just has some properties. And these properties are, it could be different sources of demand for ETH on the Ethereum blockchain. like eth will be demanded to as a store of value, eth will be demanded to pay for block space,

ethel be demanded to stake. And this, I think, is actually what's important for people to understand from an investment standpoint about Ethereum. It's not some abstract concept of like, oh, like it's money or oh, it's a commodity or what's capital asset. It's like, no, there's three kind of different use cases that are all pulling upon it for, to be used. And that's an important driver of value.

Do you guys think that when somebody from the outside world, maybe a money manager, family office, quote-unquote institution, when they stumble on this page of this report, do you think they're ready for some sort of interpretation like this? Because this is like not something that is within the legacy topics. Like this is an inherently crypto-based narrative or topic. So when the outsider perspective comes in and sees this, what do you guys think their gut take is going to be? Well, hopefully, I'd want to fix the title of under Kaplanade.

But yeah, I mean, hopefully this can help people understand, just help them to begin to understand what drives Ether's value. Because it really is difficult. people would love to have these assets just fit into predefined boxes. But that's just not the case. You really can't just box in what either is. And I think that's fine because part of what makes this industry interesting is that in many cases we are reinventing what like money is and we're like creating these like new assets that haven't before existed.

So I think it's fine that you can't box it in and that it has these various properties that we may not be able to make sense of now, but certainly are important in dropping value for Ether. So hopefully that that idea can get across in this page of, you know, sure, you might not be able to, it doesn't neatly fit into some box that you have in your head, but here's what makes it valuable. So what David and I have found through our travels is this is the simplest way to explain ether as an asset. This idea of an asset superclass triangle, this idea of the triple point asset thesis. We need to take this to the world, guys. Like what's the next step here? How do we get people to understand it? There's an element of I feel like we're Bitcoin, like ether is Bitcoin in 2015, where some niche group understands it.

but like institutions didn't understand digital gold back then. They thought it was like, you know, hacker money or drug money or something like that, right? So I feel like we need to take this out to more people and spread the message. You know, I know that's what you're doing with your report here, but, man, we're aligned. Let's do this, guys. This is the collateral we need to get that done. It's why we're so excited to see this. You know, I do have one, I guess, thought on this. So as I've thought about the triple point asset thesis in these three ways, one like next level thing. So first of all, this is the way to explain it exactly as you had, in my opinion, Watkins. You did a great job. One subtlety I've often wondered is, well, actually, like, the commodity here is not actually ether, the asset. The commodity is actually Ethereum blocks.

space, which is different. We're talking about that block space earlier. But ether, the asset, is almost like the petro dollar, because that's what, like, as barrels of oil are all denominated in U.S. dollars in kind of the real world, that is the unit of account for barrels of oil worldwide, U.S. dollars, as the reserve currency, as the petro dollar, if you will. Ether is kind of the reserve currency for the commodity, which is Ethereum block space, right? So like the next level of thinking about this, I think, is understanding that subtlety.

We don't have to get investors there yet. But that's what I've come to to think of it is. It's like ether is actually just the unit of account for that commodity, which is Ethereum block space. I don't know if you guys agree with that. I brought that up with Chris Berninski when we had him on the podcast. And he was like, I'll have to think about that some more. I remember when you tweeted that out.

And, yeah, the kind of idea that Ethereum was, ether was gas money. Yeah. Yeah. It's just kind of like an easy way to think about it. You know, you go fill up your tank and you're just paying with your credit card, whatever cash. And that's essentially the ether in that transaction. So it's a very interesting way to think about it because I think kind of wrapping ahead around the asset superclass thesis. It makes it sound really nice when ether acts as that commodity as well.

It does. I don't want to. Plug your ears, institutional investors. Let's go with that. It's super class. Don't worry. We'll dress the rest in 25 when you're ready. Well, it's important to know that like when you purchase block space with ether, you're actually, there's an intermediary currency that is gas.

And so it actually goes ether gas, block space. And when you are like calculating the way for the gas price or whatever, like you are actually doing a very quick instantaneous creation and then destruction of this gas currency. which then purchases you the block space, right? And so like this conversation actually gets really, really nuanced. Yeah, no, honestly, I totally agree with that. And honestly, I think that the commodity analogy will be even stronger when EIP-1559 is implemented. And there's actually a direct relationship between block space being used

in the theory of ether of the currency being consumed. Gasoline wouldn't be as expensive if it was renewable. That is for sure. Absolutely. I think we have maybe one last area we wanted to cover really quickly. And this is in the report to do with decentralized staking, right? So staking is now upon us. And you guys have characterized, I thought this is pretty unique. Decentralized staking protocols, almost as investment banks. Can you talk about what these decentralized staking pools could actually become in the future and how you think about them.

Yeah, so there was a really good article and then paper that Alex and Alex Evans from Placeholder and Turun from Gottlund wrote about this topic of, you know, what proof of stake and defy can learn from mortgage-backed securities. And they kind of interest this concept that staking derivatives are similar to mortgage-backed securities. And what this kind of diagram is, is showing is what that process looks like under the hood when you stake through a decentralized

statement protocol. And the process is you as someone who wants to stake deposit your ETH into this protocol, let's say it's like Rocket Pool. And then Rocket Pool will then go and allocate that ETH to different validators in this kind of network. Right. So it's almost like a two-sided marketplace. Investors on one side do want to stake, validate. Validator and the other side who want ETH to stake with. And if you think about it, the validators are, in a sense, receiving loans on ETH because they don't actually have to put up the entire 32 ETH that they need to stake.

They're actually borrowing, you know, part of that 32Eat to stake and they need to pay it back. Now, that's interesting because, you know, you when you hold this kind of ETH derivative that you get from depositing your ETH into one of these decentralized statement protocols, well, what does that D.ETH actually represent? It is a claim on the underlying ETH that is being loaned out to all these from validators. So one analogy to think about this is that imagine like each validator loan is kind of like a mortgage, and then you're packaging those valid their loans into a security, like a mortgage back security. And that's essentially what this derivative ETH is. It's kind of just like this package of all these different, you know,

loanlessly different validators. And I think it's also interesting with such where I think these essentialized taking protocols will actually be preferable as a form of ETH derivative is that it actually diversifies the underlying, I mean, just like mortgage by securities, diversified underlying risk of, you know, a single mortgage failing. Similarly, like a derivative ETH that's issued from one of these staking protocols

diversifies the risk that individual validator fails. So that's a lot better than if you were to go in stake with a centralized service provider, like say in exchange, and, you know, if their validator fails, and that E derivative is like, you know, it's toast. So I think that they'll probably be why people will prefer this. Combined with the fact that, and this is, you know, protocol specific, but in the case with like Rocket Pool,

well, validators are actually in a position of first loss if they get penalized or slashed for behaving maliciously. So, you know, validators have to put up 16. they get the other 16-eath from stakers in the protocol. If it was the case where they got slashed for five-eath, then that validator would lose that five-eath as well. So from the receptress of someone holds this derivative ETH, not only do you get to diversify the validator risk,

but you also get kind of like insurance against being penalized or losing because the validator misbehaves. So that was kind of the idea of these staking pools, and how big they could be when a theory. Yeah, I keep saying what, Ethereum 2.0. Now that A2.0 has launched. You're used to it, brother. So before I hop in, Wilson, we want to add anything?

I just think this is got one of the most interesting aspects of phase zero, this idea of the illiquidity dilemma for validators or prospective stakeholders and how this is going to play out between the centralized protocols versus centralized protocols. And I know the centralized staking protocols are going to, in a sense, mitigate that risk, that validate a risk a little bit more. But I will say, like, if you're staking with Coinbase, most likely they're probably going to ensure any losses off of that. But I think there's a lot more that could go on.

One of the clear benefits of utilizing these essentialized services is obviously you're not using a custodial service. So you still kind of have that ownership over. And exactly what Ryan is saying, there's a built-in insurance protocol as well. Right. So when I was reading through the report, this was one of my favorite sections. And the reason why this, especially this little graphic right here, and the reason why I got so excited about it is because, like, it opened up my eyes to what, like, could be a very, very competitive world in the world of staking pools. Probably both on the centralized and decentralized end of the spectrum, they're all probably

competing on the same few things. And it's basically all competing for like eth deposits into my staking pool. But where like where we are eliminating mining pools, we are creating the possibility of staking pools, right? And that can be decentralized or centralized. But there, but no, matter what, like no matter what characteristics or the parameters of how these staking pools come to be, they're going to be competing on the same few things. One of them is uptime. How does a pool incentivize maximum uptime from its validators? Because that's going to create the strongest amount of ROI in the derivative token that each staking pool is going to inevitably issue, right? Like you deposit your 32-Eath, you get 32, like, staked-eath derivative tokens. That's one of the

articles that you guys have cited here from Dan Ellitzer. And so, like, I'm really bullish on, like, this competition to be the best staking pool system to really add overall to Ethereum's security because it's really amping up the incentives to have strong uptimes, to be staking as much ETH as possible. And they're going to be fighting for generating liquidity on their staked-eath derivative token. So like, you hear it here first. Yield farming on staked-eath derivative tokens is totally going to be a thing. Like, you are going to be, people are going to be compensated for providing liquidity for, like, whether it's like our ETH for the rocket pool token or coin, US, or ETHC for the coin-based token, I don't know. You're going to get rewards for providing

liquidity between staking pools and, and ether. And that was kind of like my big takeaway from from this part of this section. And so I thought that this part was really ingenious. And this graphic especially was a nice add to the piece as a whole. Yeah. You know what this made me think of too? Just to add to what David was saying is basically like, you know the stable coin wars that we have?

Yeah. Like we're going to have the ETH staking wars in a big way. Right? So ether is already the most liquid asset on Ethereum. Staked ether is going to be this. second most liquid asset, right? But steak ether will have all of these different flavors, right? So there's not like just one US dollar on Ethereum. There's USDC and there's, you know, tether and there's dye and all of these things. And that range will be from centralized

to decentralized. And then because of like Dan Ellitzer, who you sourced here, superfluid collateral, right, we could to mix and match all these things too. So we could create some basket of, you know, centralized, um, state teeth if we want. And it's a blend of finance and coin base and cracking, right? Yeah. And then we could have a like,

because one, one dimension, David, that, um, you know, you mentioned uptime, but another dimension that's probably going to be important is the degree of, of trustlessness of the asset itself, right?

So we talk a lot about, uh, economic bandwidth and in particular trustless economic bandwidth. Well, like, and you guys cited, the protocol sync thesis, thank you, by the way, we're propagating that. Like, the protocol sync thesis would predict that

defy is going to want to build on the most trustless form of staked eth in the Ethereum ecosystem too. So rather than build on Binance's version of ETH, right, that is completely custodial, Staked Eth, maybe you want rocket pool because that is more decentralized or maybe you want this blend of decentralized. Anyway, we could go down. on the rabbit hole here, but you guys have unlocked something, I think, in both of our minds

with respect to how the future could pan out with all of these ether bonds that are floating around, and it's super exciting to think about. Yeah, honestly, I think both of you guys nailed it. I think when we were researching this, this was probably one of the most surprising things when we were looking through it because of how little it has been discussed. So obviously, like Dan had that great article on the death of Ethereum. But outside of that, it just didn't seem like there was an equal amount of coverage for how big an opportunity this ETH derivative space is. And yeah, I think there's going to be kind of like you said,

there's going to be like incentivized pools between like ETH and derivative Eid to build liquidity between those two. There's going to be uniform opportunities with derivative Eid. There's going to be the opportunity to like lend it to lend and borrow derivative of Heath, like use it as collateral to mint dye, like all these different things. There's also going to be like, you know, structured products that will probably be built packaging these different derivative bees together. It's really like, I think the possibilities are really endless. I mean, there probably be like opportunities for you to like swap your variable yields in your state deed for like a fixed one.

That's interesting. So there's like a whole ton of, you know, products that I, you know, imagine will be built using this derivative Eith as a primitive. And I think they'll be very popular because no one wants, I mean, everyone would prefer liquidity over illiquidity. And this is probably going to be the way it happens when there's no withdrawals for your safety. Well, Ryan Wilson, I really appreciate you guys coming on and talking about the Mizarre report. Ryan, I'm looking forward to talking to you tomorrow at the Mizarri,

Mizari Conference online as well. Yeah, no, looking forward to it. You guys have done a fantastic job with this report. Bankless Nation, this is the report that you send to your financially minded friends who have not yet gotten to crypto. This is the report that you send to your friends and family if they're trying to learn about Ethereum. Ryan and Wilson here have done a bang-up job, really just going to every single nook and

cranny of Ethereum subject matter and getting it relayed. into this report. So tip of the hat for really pushing the narrative forward, pushing why we're doing this and pushing Y Ethereum. Really, really appreciate your guys's work. Yeah, seriously, guys, thanks for getting it right. Thank you. It's not easy. Yeah, no, yeah, thanks for having us on. Thank you guys. Yeah, really, really appreciate it. Absolutely, guys. Take care. Thanks a lot. All right, Bankless Nation. We're going to turn to sponsors really quick, just to talk. And then afterwards, me and Ryan are going to talk about just, you know, ETH II's launch. So we're going to reflect on that a little bit. So stay tuned as we get

through some of our fantastic sponsors that make the show possible. Hey, guys, the next sponsor is Ledger. And Ledger is running a 40% off Black Friday week sale. So if you haven't gotten your ledger yet, you are in luck. For the week of the 23rd through the 30th, you can get 40% off of all ledgers on the Ledger website. So if you are still using a hot wallet or you're just looking to get a backup maybe for a multi-sig or just for some more redundancy. Now is the time to go get that ledger. There's a link in the show notes that can get you that 40% off Black Friday deal. If you want to live a bankless life, you need to get a hardware wallet. There is no alternative for storing your crypto in a self-sovereign fashion. That's why I

have four ledgers that I use to manage my different crypto assets using the Ledger Live account as well. Ledger Live is like your home base for managing your Ethereum, Defi, and crypto accounts. It does a really good job of aggregating all of your different Ethereum wallets if you are the type of person that uses more than one, but you can also add other cryptocurrencies like Bitcoin or Cosmos or whatever your preferred blockchain is, and then it will display an aggregate portfolio of all your accounts at the main page.

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your preferred ledger hardware wallets. I personally like the Ledger NanoX, but I also have both. They're both great options. When you own a ledger, you own your own assets in the way that they have been designed to be held by the user and the user alone. So go get your ledger today to make sure that you are. as self-sovereign as possible. The bankless state in the nations are brought to by WIREN. WIREN is DFI's first self-building community-run project, which I just get really, really excited about.

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It looks around D-Fi to see where the yield is coming from, and it directs stablecoins automatically so you don't have to. Check them out at Y-earn. get started and also check out the stats page to see what other people are doing as well. Bankless Nation, we are back from the sponsors. David, that was fantastic. Like, I felt like Watkins and Wilson are kindred spirits. Maybe they're the Ryan and David of Massari. Well, one of them is literally Ryan. Yeah. Well, okay, literally. I mean, I think that it was the first time, to be honest, I talked to analysts, crypto analysts specifically, who actually like got it.

right like they totally understood and they um i don't know there's i just nothing nothing i disagreed with in that it you know so like what was your take on on that report is this the one that gets into institutions did we just did we just uh advance a step on the ethereum education and a theory narrative side yeah you know i i think we did and a lot of what was included in that report was like stuff that you and me have been chewing on, like since 2018, I think, like, Ryan, even before we knew each other, like, I think the first time we actually, like, talked, we just hopped into a Zoom just to share ideas about stuff, right? And I don't think we, you and me at the time didn't really have the words that we use now to communicate things of that nature. But, like,

we talked about, like, other teams that were trying to get to Ethereum 2.0 before the actual Ethereum team could and things of this nature. But like I think the beginning of that talk that we had in 2018 was like talking about things like credible neutrality, talking about things about the importance of ether as an asset, ether as a money, defining ether and like narratives. And that conversation that we had like like over two and a half years ago, I think has turned into some of these like some of just the canon truth about what ether the asset is and what Ethereum the platform is. And so it's taken like two, three long, long years for that to finally like bubble up to the surface and get into something that's uh that's

like a like a legitimate institutional report coming out of missari so it's not like rome was built in a day like we've been hammering some of these points for years now and it's finally kind starting to like rise up to the top and be put into like an actual fantastic PDF by the missouri team yeah it's it's super cool to see that happen and a lot of like so uh sometimes with with the bankless thesis and bankless ideas, like the ideas are novel and new. But a lot of times, like, what we're doing is basically what they did, which is we're synthesizing things that we see in the community, and ideas and posts that people like Vitalik write or like that, you know, like synthesizing the social sentiment and trying to put that into metaphors and words and easy to understand

models. And this just felt like the next extension of that is basically like, You know, we have a reach with bankless, but that reach is also limited. I mean, people who aren't on YouTube, people who don't do podcasts, people who don't like newsletters, right? We struggle to reach everybody. So the more people that we have talking about this narrative, right, the better. So we're just seeing it spread. And I think part of this is like the bankless community, quite frankly, because like the bankless

community helps get guests on our shows. The bankless community helps spread like the narratives and the memes and helps really, really support us. So what this is is it's the next iteration of the social layer that we talk about so much, which of us like it rests on very simple models or like as we call them memes. And those memes like propagate up the stack. And pretty soon the next level after I'm a sorry, right, this is now mainstream crypto. It's like where this where this like niche right and then we got mainstream crypto and the next level is wall street journal in cnbc right and i don't know if that happens next year or if that happens maybe 2022 but i'm not going to be surprised david if in a few years everybody the common way to think about ether as an asset is oh it's like

an internet bond it's like a digital bond it's like bitcoin is it's just digital gold right right like bitcoin propagated its narrative in the exact same way so Super exciting to start seeing that. Yeah, one thing that I think really excites me about the future is, to me and to you and to the Ethereum culture and community, Ethereum is inherently good. It's a good thing, right? Maybe it's a neutral good, lawful good, I don't know, but it is good, right?

And one of the reasons why it is good is the protocol sync thesis. Like things that are good, incredibly neutral, like balanced, fall down to the bottom of the protocol sync. And this is something that they cited in their report. They talked about how, like, the credible neutrality of a protocol makes it more socially scalable to the whole world. That's something that they cited in their report. And if this Missouri report lands on the desk of some Wall Street individual, there's a link between Wall Street and the protocol sync thesis. And the protocol, what inherently the protocol sync thesis is is the promotion of global public goods, public financial internet-based infrastructure that are credibly neutral.

that reach out to the whole entire world. And all of a sudden, so to me what Ethereum does is all of a sudden there's generating alignment between somebody as far away from alignment as Wall Street to the creation of global financial public good infrastructure on the internet. And that's the power of Ethereum. It's linking people on Wall Street

to open permissionless protocols that just are going to better everyone's lives. And so to me, it's just very validating of like why we are here in this space, basically like it's to do good and then we have the path to do that yeah absolutely um not only the path to do that too right so the second piece maybe we could talk about this morning and the launch of it 2.0 right so i think partially for for a while it's felt like we've been profits in the wilderness and no one's listening because everyone's like yeah like sure tell us when eith staking ships

like tell us when you know proof of work and staking merge into one chain and ether issuance drops down to less than one percent right then maybe we'll believe you right and our take on that i think david is like if you wait for all of these things to happen like let's say let's take it to the extreme let's say you wait until ethereum is the globally adopted financial permissionless financial infrastructure for the world it's the internet of money, right? Maybe that happens in the next decade, maybe it takes longer. Maybe it doesn't happen. But if you wait until that happens for the evidence, you're going to be buying Eith at 50K and Eith, right? From me. I don't know, man. I might not sell. I might be just staking. Right. So part of this, I think, is where I was getting to full circle is, the message starts

to have more credibility when some of these things are active. shipping. And now that we have EF2 shipping, as we witnessed this morning, it was basically like the launch could not have gone any better, right? Stuff can still happen in the future. We're talking to Lucas Campbell on the bankless team. And he was like, guys, something bad's going to happen at some point in time over the next year, right? Like, probably this is still an early kind of network. There could be some bumps along the road. But the launch went super smoothly. And the sentiment, the narrative over the past two years has been ETH II will never launch and none of these things will happen or come to fruition. And I think when reality starts to

kick in and things are shipping, it just shakes. It shakes that that narrative. Maybe it's no accent that I feel like, is it just me or it feels like on crypto Twitter at least, there's a lot of angry Bitcoin maximalists. Yep. Unlepanced maximalists. I don't know. It just seems like that. They're throwing these like red herrings about if you do something with ether,

it's going to be like a taxable event. Right. The IRS is going to bring Ethereum down. Right. It's like grasping at straws, man. It just feels like maybe it's a reaction to, wow, Ethereum is actually shipping. That thing that we said would never happen is actually happening. Right.

By the way, I'm looking at myself. Does it look like I'm wearing lipstick? Like my lips are super red, dude. Yeah, you live. I don't if you got a weird filter or what? You got the pretty filter on. I'm not wearing lipstick ads, but whatever. Yeah, so like the funny thing about like Bitcoin or narratives is like the Bitcoin

or narratives have kind of painted themselves into a corner where they're actually out of control of some particular things that could like pull out all the Jenga blocks from the tower. Like a decent amount of Bitcoin or narrative is that proof of stake. can't work. A decent amount of Bitcoin or narrative is that Ethereum can't ship. A decent amount of Bitcoin your narrative is that you don't scale a blockchain. If all of those things and others like turn out to be not true and instead like actually plausible, then like one by one you're taking ammo out of the tool belt of, you know, of a community that is just frankly obsessed with making sure that Bitcoin is the only blockchain that the crypto economic blockchain world ever

produces. To be clear, when you talk about Bitcoin, like thinking you're talking about maximalists, right? There are so many Bitcoiners. At some level, maybe this is the more silent majority who, like, they hold ether too. They want any bankless system to succeed. But there are definitely many maximalists who think of things in just binary like, you know, Bitcoin wins or Bitcoin has to win and everything else has to have to have. to lose. So yeah, I, I, anyway, successful launch this morning. So how are you feeling about things at this at this moment? We are December 2020. We're getting ready to get, go into 2021. How are you feeling on this day, December in December in 2020 about just, I guess your

crypto journey in the future of Ethereum, future Bitcoin? Yeah, I feel pretty split because one part of me is like, and especially at the same time, the rise from Ether price going from my 300 to 600 and also the launch of Ethereum phase zero staking. Like, yeah, like, duh, like, duh, it's here. Like, we've told you it's been coming. Like, yes, I've seen it coming and now it's here. Like, now today's the day. It's like, my birthday doesn't surprise me every single year when it comes around either. Like, some of these things are just like expected. And so, like, yeah, maybe to the outside world, like, this is like, oh, like Ethereum 2 is actually shipped. But, But to me, it's like, well, some of these things are just obvious.

Like, yeah, Ethereum 2 ship today. Like, you know, cool. But also, Ethereum's becoming ready for the world. And the world is becoming more and more ready to accept Ethereum. And so, like, this is why Ethereum scaling is so important. It's because we've been chanting, beating this drum on the bankless pod. Ethereum is a platform for trustless institutions, and the institutions of the legacy world are breaking down, right?

And so we need to find different ways to produce, new institutions on Ethereum. And I think, and as Ethereum is becoming more ready for the world, the world is becoming more ready for Ethereum. And so at the same time, while I see like, you know, phase zero launch, like, yay, like, cool, we did it. Like today's the day. And maybe, maybe I'm not as excited as other people just because, like, I kind of saw it coming. At the same time, I'm so incredibly, like, optimistic as to like this arc that is seemingly like getting really, really close to being complete that is going to save a lot of people from a lot of stuff. bring it in the world. Does it feel like things are starting to happen faster now?

Things are happening. Velocity has increased. Time it's accelerating. Really quickly right now. Like never mind 24 hours. It's 24 hours or units of time of units of time. More progress is happening per unit of time. And therefore it feels like we're moving forward through time at a faster tick rate. Absolutely. At some level, it just feels like the decade could be over in a, you know, snap of the fingers. Right? And just, I don't mean to get existential on you, but I just feel like velocity is increasing in this space. Over the past, I don't know, year and a half, two years, it's really picked up. And I have been frankly blown away with even the velocity of some projects on Ethereum, DFI,

projects that start out so small. And suddenly you wake up a few months later. and they're doing billions of dollars in transactions and value, right? And like, I'm wondering what the next phase of this looks like. Because if it continues to grow, right? It's going to start consuming parts of the mainstream world. Right now, we are still in this niche where crypto is weird. And like, you can't talk to anyone about defy.

No one really knows what Uniswap is. is, right? And there's maybe a million people using this. But like last year at this time, there was less than 100,000 people using this. So if you think about like just the Bill Gates quote, people don't really think in like log scale, basically. And you think about log scale, I mean, where are we going to be in five years from now? Right. It could be pretty, pretty incredible. The Bill Gates quote that I know is that you overestimate what you can do in two years and you underestimate what you can do in 10 years. So like I always anchor my perception onto 2017 because that's when I got into crypto, right? And it's like, all right, 2017, I thought

like all of the world was going to be crypto enabled by like the next year. Like it was going to be 2018 and like the world just runs on crypto. And that was just like my hair, brains like mania mind that I had at the time. And so, like, moving forward, moving into Bill Gates's quote, like, we overestimate what we can do in two years. Okay, well, that was 2019. And then we underestimate what we can do in 10 years, right? And so now we're at, like, three and a half years past 2017 when I got into the

world of crypto. And so now it feels like we're actually at the meeting point where, like, what gets developed in the next year actually starts to exceed my expectations of what I could have envisioned back in 2017. and it doesn't stop there. It just keeps on going. It just keeps on going. And again, there's just an inherent demand for a platform like ether, right?

But like Ethereum. Like think of all the jobs that Ethereum is going to create in a world where jobs are extremely hard to find. Like just any sort of defy protocol or platform or company is going to be hiring in the next two to three to four years. And there's also going to be more of them. Like a lot of economic activity it's going to be put onto the Ethereum, but also generative outside of Ethereum as well. Like, it's just going to be, it's just going to be the savior of the world.

It's going to save the whole world. Well, David, chances are your kids may work for a Dow or for a protocol rather than a company. I think that's kind of the trajectory we're on. Yeah. Speaking of kids, not my kids, but my sister is due in February, and I just bought a B is for Buffacorn book

from John Poller who runs in Denver. And so just FYI, for any other families that are having COVID babies, like my sister, get the B is for Buffacorn book because it's a great children's book to indoctrinate your kids with. All right, well, we should include that in the shit notes. All right, David, we should maybe wrap it up. This has been fantastic.

Okay, bankless nation, thanks for hanging with us on the state of the nation extra long, but today is an extra special day with the ETH two launch on this fantastic report from Masari. It's been a pleasure to be with you. Of course, none of this was financial advice. ETH is risky, so is Bitcoin, so is D5. Everything we talk about is relatively risky, but we are headed west. This is the frontier.

It's not for everyone, but we're glad here with us on the bankless journey. Thanks a lot.