Bankless - Where is Ethereum Headed? | Mike Ippolito & Mike Neuder

Episode Date: October 1, 2024

The exploration of the Ethereum Roadmap continues. Today on the show we’re bringing back Mike Neuder who was just on the show to give his defense of the Ethereum Roadmap and we’re also joined by Blockworks Mike Ippolito who brings a wealth of knowledge from around the crypto industry to add his thoughts to the conversation. We cover the essence of Ethereum, the current state of rollups, value accrual and much more. We end the podcast with just overall bullish vibes and reflecting on what will take to make the promises of the crypto industry manifest in reality. Enjoy! ------ 📣 JOIN US AT PERMISSIONLESS III https://blockworks.co/event/permissionless-iii  🎉 REGISTER FOR THE BANKLESS PARTY https://lu.ma/yj5pdeqe?tk=lIr2oe  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2   🗣️TOKU | CRYPTO EMPLOYMENT  https://bankless.cc/toku   ⚡️ CARTESI | LINUX-POWERED ROLLUPS https://bankless.cc/CartesiGovernance   ⁠  🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap  ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum  🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle  ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/71?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E  ------ TIMESTAMPS 0:00 Intro 7:29 The Essence of the Argument 17:50 Ethereum and Rollups 33:00 Ethereum’s Schism 40:23 Value Accrual 59:30 Nation State Resistance 1:04:52 The Bull Case for Crypto 1:10:03 What Will Take 1:16:25 Closing & Disclaimers ------ RESOURCES Mike Ippolito https://x.com/mikeippolito   Mike Neuder https://x.com/mikeneuder   ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠  

If we have a better money that has better properties than exist today and the financial infrastructure around that is much better, then what businesses could you build in that world that you couldn't build today? That's what excites me about crypto. Welcome to Bankless, where we are continuing our exploration of the Ethereum roadmap. Today on the show, we are bringing back Mike Noiter, who was just on the show to give his defense of the Ethereum roadmap. And this time we are joined by Blockworks, Mike Epilito, who brings a wealth of pragmatic knowledge from around the crypto industry to add his thoughts to the conversation. around Ethereum's current position. Before we get into the podcast,

this is your final warning to get your ticket to permission lists. This is our third permission list and this is going to be a fissioner. Just a look at the speaker lineup. We've got politicians like Richie, Pokemon Card Torres, Gary Gensler's bully, Tom Emmer.

We've got investors like Van Spencer, Chris Dixon, Haseeb and Bologi, 3D Vossin. We've got builders like Sri Ram, Nick White, Alex Glucalski from ZKSink. And you guys know my thesis about podcaster organized conferences. we simply produce the best conversations.

That's what we do. So you're going to hear me debate Alex Thorne from Galaxy and Eric Wall about Bitcoin stuff. They think that they've won, but they haven't. Max Resnick and Kowsemani are going to debate Mahalo from Polygon and Jill from espresso as to whether or not layer twos are Ethereum. Even Ryan and Sean Adams is going to be there in the flesh

opening up the whole entire conference with Chris Dixon from A16 and Z. And then on the last day, Kane Warwick and I will be on a panel together just a few hours before we go head to head in karate comments. combat's most high profile matchup to date. Their words, not mine. So there is a link in the show notes to make sure that you attend all of this good stuff. There is also a party Wednesday for all of the bankless citizens out there. So if you are not a bankless citizen and you want to go to

permissionless, there is a link in the show notes to get tickets. And if you are a bankless citizen and you're going to permissionless, there is also a link to make sure that you guys have access to our party. So go get him. This episode will flow very nicely if you have been following along our recent podcast episodes around these topics. Most recently with Mike Noir's episode just last week, but also starting with Kyle Samanis' episode, which many in Ethereum foundationally disagreed with, and also Max Resnick's episode, which people also disagreed with, but I think nonetheless, at least found some value from, even if maybe the delivery of his points were a little bit overly spicy. As for me, my ideas around Ethereum continue to be

in flux. The direction we are going is directionally correct, and whether we want to reprioritize different parts of the Ethereum roadmap in different orders, I think is actually kind of a moot point since the development teams focused on, for example, the Ethereum Layer 1 execution or the development teams around Ethereum Layer 2 data availability are different teams that are already working on both in parallel. All of these different parts of the Ethereum roadmap are all happening in parallel. So it's more about how the social layer around Ethereum thinks about our priorities as a community, as a culture.

So what do? Are we even off track at all? or is it all just narrative and price? I have more thoughts on that that'll be in the bankless newsletter soon. So without further ado, I bring you Mike and Mike, but first, a moment to talk about some of these fantastic sponsors

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That's what I've been thinking. No, no, no, we're not making that a thing. So we have it, we have Ethereum Mike. Mike Noiter, welcome to the show, welcome to the studio. Thanks for having us. You can just call me Mike 1. And then we have the new perspective, because we just did a podcast, Mike, Ethereum Mike here.

We just did a podcast with Ryan. It's going to come out earlier this week when this goes out, all about the Ethereum roadmap. Kind of in response to two of the episodes that we did with Max Resnick and Kyle Simani. That's a very popular one, right? The Kyle one? Yes, yes.

The very extremely popular one. Everyone is. And so we just did a kind of like an Ethereum roadmap in 2024, kind of answering to some of the critiques and like qualms presented by these two episodes. And we just did that up as episodes. We're bringing Pollyamri Mike on the episode today. I sort of that would be the last time I use that. Just bringing in kind of a new perspective.

onto the Ethereum roadmap because Mike flirts with a bunch of different other ecosystems. You love Celestia, you love Solana, you love Cosmos, you love Ethereum. And so I think we can kind of have a very similar conversation that we just had with Mike, Ethereum Mike, discussing the roadmap, but kind of also discussing where the roadmap fits into the broader landscape of the crypto ecosystem because Ethereum is not in a vacuum. The Ethereum Central Roadmap exists inside the context in which it was born, which is all the other's ecosystems as well. How do you guys feel about that? You can do that? Sounds great. Maybe we can start Ethereum, Mike, with kind of just like speed running through some of the main

points of the episode that we just did. You had this article titled My E-thesis, and it was all about just a particular order of the three resources that compose Ethereum. Maybe you can kind of just run us through that. Right. Yeah. So the episode was basically structured like the article, which we kind of went through settlement, DA, and execution in that order. And So the kind of the high level take here is that first and foremost, Ethereum should be and like should strive to continue being the most neutral censorship-resistant-based layer that exists in the ecosystem. And, you know, I don't think anyone argues about that reality of today.

And I think, you know, keeping that as the core kind of founding principle of all the decisions that are made seems very useful. DA, obviously, is kind of the thing that most people are talking about lately because it really ties into this idea of how do roll-ups play into Ethereum, how do they interact, and what value do they add to the Ethereum ecosystem. And so we talked a little bit about potential network effects of DA, how Ethereum DA could come to kind of be differentiated on different axes than just providing the best security and the best censorship resistance for L2s, you know, some of the different constructions. We got a little, maybe too technical in the weeds

there. And so we can leave that there. But then the third piece that I hope we can talk more about today, which I don't think we covered too much, was execution and kind of, what is the endgame vision for L1 execution? You know, I think there's kind of really, that's probably where the biggest spread is among opinion in the Ethereum ecosystem. You know, Justin, in his debate with Tully, basically said L1 execution is dead. Like, we should push all of that to L2, including app deployment and everything. Max kind of swings in the complete opposite direction saying like, make DFI on Ethereum great again. On Ethereum layer one. Yeah, on the layer one. Yeah, exactly. And I think, you know, there's pros and cons to both of those, and we can definitely unpack it.

But yeah, I think that's kind of high level of what we covered in the episode and hopefully can start us off here too. So Blockworks, Mike. Such a much easier name. It's like we should have started with that. You haven't listened to the episode that we just did with Ethereum, Mike and Ryan, but also you did listen to the Kyle Somani episode and the Max Resnick episode. Maybe you can kind of give us your high-level thoughts and reactions as you were listening to those. and the conversations that spawned out of them. Yeah, I think that this, I would, I kind of reject the framing, actually, that this

conversation tends to take on, which is, it ends up getting divided in two camps, which is if you think that execution is the valuable layer that's going to generate a whole bunch of cash flows, and that's where value is going to accrue, then you're kind of a Solana guy. And if you're a settlement and DA person, and you think that's where a lot of the value is, then you're on the Ethereum camp. And my view is that I'm kind of in the camp where we're all building the same thing. same thing here. And I think that these things, yeah, yeah.

I mean, I think he's right about that. And I think my long-term view on all of these L-1s is that they're mostly commodities and that they're going to converge on relatively the same architecture and stack. And I actually maybe a more contrarian point would be, you know, I kind of listened to, you know, the Ethereum argument looking at the execution layer and saying, hey, all this MEV that you're generating today, the incentives aren't really good because your revenue is to a decreased or a not great user experience, which I generally agree with.

And I think that MEV is going to end up going to the app layer and then get redirected back to users as well. And I agree with that. And then I think the execution maxi perspective is that just because everything settles down to one layer doesn't mean that you have to pay a lot to that layer or that value necessarily accrues to that layer. And I actually kind of agree with that as well.

I actually have a long-term pretty neutral view on L1s as assets, I think that they're going to create an enormous amount of value in the next decade or so, because I actually have kind of a bitcoiner mentality. I think that the thing that's driving activity and adoption today is a structural problem with credit and fiat-based money. And I think that's what's moving all of this capital into mostly L-1s, which is, I view them as commodity-based monies that have an improvement on the governance around their supply. And I think that a bunch of the L-1s are going to do pretty well from that. But then I think that the desirable end state of crypto is, once that capital is migrated, that it gets redirected into applications

that actually create value for people. I actually don't really agree with the whole framing of like, this one is better than the other one. I think it's all going to end up being commoditized and it's all going to end up flowing back to the apps and users at the end of the day. Interesting. I guess I'd push back on calling it commodity because I guess at least in proof of stake, kind of a core a fundamental premise of having a staking token is that that token has value, right? Because there's like the economic security or the security of the settlement assurances of the chain are like fundamentally dependent on the token. And so like if everything's commodity, that kind of implies they're all substitutable. Like, Eiff is the same as soul, is the same as Adam or

whatever. But how do you square that with like there needs to be some core security like underpinning these applications if they are going to be like as secure as they need to be? Or do you think that's kind of like a mean altogether. Well, I think that, I mean, I think part of the, like my perspective on polyamory in crypto for a while has been, I think that basically there's a very complicated problem that needs to get solved, which is how to build a blockchain and bootstrap an economy on top of that. And I think the way that it's kind of naturally wound up working is that you have different chains that are focused on different parts of that problem, right? You've got kind of Ethereum, which is maximally focused on how do you be a great settlement layer and be extremely censorship resistant. And then Solana is focused in the current timeframe on execution and how can you pack as many transactions as you can into one shared security layer and pipeline and all of that type of thing. But I think what's going to end up happening is that Salon is going to learn some of the lessons of Ethereum.

I think Ethereum, I would be in the camp probably more of like the Max Resnit camp of increasing the gas limit, decreasing the block. times on Ethereum, and I would move the base layer to look a little bit more Salon-a-like. And I do think at the end state, you're going to end up with, you know, five or six L-1s that, like, have some differences and might be more specialized for some uses cases than others. But I think you're going to end up with stuff that looks pretty similar at the end of the day. I think I brought that perspective up to Vitalik and just about the idea, like, hey, you know, there is some slack at the Ethereum layer one level. Like, we could add some capacity.

and his response to that was, I think, drawing from lessons of Ethereum's past when we had this ice age mechanism in the proof of work era, which was this, we actually would just like intentionally freeze the blockchain every six months until we shipped proof of stake. And it was a forcing function. It was a human layer forcing function and say, hey, we're going to set a... It's like the debt seal. We're going to set a bomb.

Yeah, we're going to set a bomb off on the Ethereum layer one blockchain. And if we don't, we have to just manually diffuse it over and over and over again until we ship proof of stake. And he kind of alluded to a similar phenomenon going on with solving layer two composability, whether if we just like add more layer one composability just to like, you know, bias some time, we're actually just like easing off on the need to solve layer two composability. And that's actually the hard problem.

And also the problem that mostly only Ethereum, Celestia is also working on this, but Ethereum is really leading the charge here. And so kind of just like reducing that pressure and like allowing, you know, a longer lifespan for, you know, like, emphasis and priority of the layer one is actually reducing what is probably Ethereum's biggest value driver in the near-term future, which is solving layer two composability. Interesting. So his argument there is investing kind of resources of the community, focus on the research

and kind of all-core devs layer on L1 scaling actually is just kind of like missing the plot and somehow a misprioritization. Right. It's like you're just kicking the can because you need to solve this problem eventually, so why not just confront it right now? Right. And adding 20%, 20%, 30%, maybe even a 2x, 3x to the Ethereum layer 1 capacity is actually just not meaningful.

And also it's fun to talk about like, let's just up the gas fees. Let's just add some capacity to the Ethereum layer 1, not thinking about how much political difficulty that's going to push into the Ethereum like Core Dev calls, which are already like pretty slow. Yeah. Yeah, I guess I like this conceptually. And I do think it's, it's totally true that it's kind of the natural progression that people are going to want the most control over the devX, like their chains are going to be super specific to, like I think this is already kind of trending in this direction. You had a nice conversation with Eugene and Frankie about Atlas, which is their kind of targeted defy domain-specific L2.

I think that type of thing will be pervasive. But I also see the other side of it, which is like if you leave things as they are and just focus all energy on scaling the L2s, the interop problem only matters if, or is only like valuable if the L2 ecosystems that attract and like are kind of the top of funnel for users and activity are willing to play ball.

And I do definitely agree with Max. in a lot of regards when he describes like the incentives of the L2 teams and of kind of like how the market structure actually plays out is super important here because I think everyone loves the vision of like a united chains of Ethereum and that's kind of like how I usually the mental model I like for the roll up but there needs to be like some balance between the kind of like state level power and the federal power right but if your market structure evolves into like a duopoly or an oligopoly of like a very small small set of L2s that have like outsized market power, then it looks a lot more like a Texas

and California cessation than an actual like real kind of united chains of great interop that's like composable and neutral in the way that like could be if if there were many, many chains. Yeah. There's like one outcome that doesn't feel good to me, which is like Ethereum created DeFi. The Ethereum layer one created DeFi. It like started with Maker Dow, Uniswap, Ave, Compounds. and then Defi kind of spawned off of that. And now we have these like states that are like, you know, states, but they're like, oh, there's equity in these things. Like the OP tokens, the ARB tokens.

These are all startups with VC investors and teams. And if there was like, there, and a large amount of the reason why Defi came to Ethereum was A, because they invented smart contracts, and B, it was credibly neutral. And so it was the breeding ground for Defi. And the idea of, I take Stephen Goldfetter's, point that defy is fundamentally better on a fast cheap blockchain. Lower fees makes more efficient markets. It's more accessible, more participants, more possible total liquidity. But then also if that means that like defy is only going to exist at the layer two level, then it's like not as credibly

neutral. If there's like one dominant defy chain and it used to be the Ethereum layer one and then it moved on to like one single layer two because finance and defy collectively is going to be better in one single spot. And we can maybe we can have this. United chains of Ethereum where all of these chains are completely seamless with each other. But that's not even like a medium term goal. That's more of a like a long term goal. What do you guys see is the market structure for L2's like into the future? It's kind of an interesting spot. There are these incumbents that's like the optimisms and the arbitrums of the world. And then there are new upstarts that have these different axes that they're choosing to compete on.

There's like mega-eath, which is, you know, crank that shit up to 11, make go really fast. And then there's Atlas, which is we're specializing in. we're going to be kind of this defy very specific chain and they've got these cool optimizations that make it better for defy apps but where do you guys see that all shaking out yeah i guess on the kind of axis of the incumbents i see it being very power law distributed like there can only be one maybe two general purpose roll-ups like even the opi stack is it's not totally clear to me like why optimism and base aren't like directly competitive like i get They do this revenue share thing, but it's like you're fighting for the same apps,

the same developers, the same users. You mean the optimism main net and base main net? Yeah, exactly. I actually really like Victor Bunin's point that he gave me, which was, what is the one single point of the optimism main net? And his answer to that is the ERC20 contract for the OP token. In fact, it's very much an Ethereum foundation growth by subtraction, subtraction mentality, which is let's take all of the transactions going on Optimism Mainnet,

make them into their own chain, part of the super chain. And then the OP mainnet does this one thing, which has the OP token contract, and it governs over the super chain. I see, I see. Yeah. But again, this feels a bit isolationist, doesn't it? Like, if you belong to this OP chain, then you have your OP legal tender and like everyone, like, yeah, I don't know. And it's also not totally clear how valuable this governance actually is. You know, I think especially if one chain like base has like 90% of users, like, sure, the OP stack can vote whatever they want in, but like once there's enough market power for one individual, like they're really setting the rules here.

Right. Yeah. What would the United States look like if California was 90% of the GDP of the United States? Yeah, exactly. It would be challenges. It's a bundle. I mean, that business model is a bundle. I do think that even some of the roll-up teams, I wonder if they're starting to rethink a little bit, this stack model.

And most of the roll-ups started with, like, O.P. Main Chain, and then they've got the stack, and there's going to be the super chain and all these different chains inside of it. Same thing with Arbitrum 1 and, like, ZK Sync era, et cetera. I kind of wonder if some of these chains privately are starting to think, maybe we should actually get some activity back on, like, our chain in this stack, right? Because otherwise, it's your point, right? If you're the United States and you're the federal government and you've got California and it's 90% of your GDP and population, how much, you know, control or say do you really have? But do you think it would be, this is actually something that I love that Ethereum does, which is they're a very free market mentality, which is the design philosophies be

max unopinionated at the base layer and then just let people duke it out on the, like, L2 layer. I don't know. I kind of think that this is how it should work, actually. And actually, in Solonaland, it's a little bit more. more integrated. It's a little bit more centrally coordinated or planned. And there are definitely drawbacks, I think, to the total free market approach. But we've kind of slogged through the worst of it, and it looks like the field is thinning,

and we're going to wind up with a couple of really strong, highly competitive incumbents. And then they can make that interoperability within their own stacks. And then maybe they can do, there'll be some kind of shared sequencer with like an aglayer type thing for okay, interrupt in between frameworks. Yeah, I guess this kind of circles back to your original question, which is like, what is the end-game market structure of L-2s? And, you know, a big part of your conversation with Stephen from optimism was... From Arbitron. Sorry, from Arbitron. He won't like that. We'll fix that in post. I might leave it. I might leave that one in there, actually. But a big part of that discussion was like, are L2 symbiotic? Right. Or are L-2's parasitic?

And I actually think those two kind of biological terms are really the essence here, which is like, sure, it's easy to do the lip service of saying like, yeah, L2s get are great because they have Ethereum security and Ethereum censorship resistance and XYZ. But like, that's also very great from the perspective of someone who's trying to like accumulate all the all the users and cash flow and like value at their chain. Right. And I actually wanted to push back against the idea of like Ethereum is TCP IP and the network. and you know the internet stack. This was Steven's take from Arbitrum. Right. Like Ethereum is just this T-I-T-C-IP layer. It's like it's just this protocol. It runs in the background. It's invisible. Yeah, which I think would be great for Arbitrum,

but I think would be quite bad for Ethereum because basically TCP IP is just this set of dumb pipes. There's like no value accrual. It's governed mostly by this group, the ITF, who's like mostly appointed by the biggest like app chains. So like I think in the traditional internet sense, like all the. value accrued at the application layer at, you know, Facebook, Google, Netflix, etc. And so, like, sure, Ethereum could just be like these neutral pipes that facilitate the kind of back end of money moving around, but the relative importance of Ethereum in that world is, like, very small compared to a more, like, equally distributed outcome.

I think this has also kind of been where Ethereum has, like, directionally been heading over the last two years, at least in people's public perception of it, is, this thinning layer one that has the same like EF mentality again IMAIA Gucci's subtraction mentality like you know the EF wants to grow by getting smaller right spin things out

like push complexity to the margins capture nothing in the center because it wants to decentralize and you're seeing a lot of that same kind of mentality show up in the Ethereum layer one which is like let's push users and execution to the layer twos and let's reduce reduce complexity at the layer one, push complexity to the margins. And what you're seeing is like kind of a very similar thing.

I remember a Sunny Augerwald epicenter podcast forever ago, where he was talking about like this Cosmos vision. And he called Bitcoin and App Chain, which it is. And it does this one job of, it spits out BTC. And his vision was that it spits out BTC into the Cosmos App Chain mesh layer. And it was just the money for that layer. and that's how Bitcoin fits into it. That is a pretty interesting take.

And now you're actually kind of seeing that where you have this Ethereum coordinating protocol that just spits out ETH and the Eth goes up to the layer twos. But for the rest of Ethereum, it's actually pretty thin. It's pretty like constrained because all the complexity got pushed up to the layer twos.

And I think that's kind of aligned with the vibe of the last two years of Ethereum. All the user's going to layer twos, all the assets going to layer twos. And then people looking at like the, falling fee metrics of the Ethereum layer one and the falling or stable user metrics of the Ethereum layer one. And that's what we're kind of seeing that like growth by subtraction.

Yeah. I think here's one additional thing I would just say about this whole RL2's parasitic conversation is it presupposes the idea that Ethereum has some kind of choice, right? Or that Solana has a choice. These are permissionless networks. You can build whatever you want. This is also something that Sunny Agarwal said that stuck with me said, you know, AppChains, a permissionless app chain is a little bit of an oxymoron because by definition you can build whatever you want, so how can you keep it to being one application? And so I don't know, I kind of think that,

I think there is something to the idea that, yes, we unbundled all the different functions of a blockchain from, you know, there's DA, consensus, execution, settlement, and you've unbundled those into different layers. And then you do have different cash flows that are associated with each of those layers. I do think that most of the cash flows are going to come from execution for the time being. But again, I think there's a lot of evidence

that that's not what moves the price of an L1. I just don't believe that. And you can look at Bitcoin, which has basically been down only for a number of years. And it's because going back to this, the way that I view the world right now is that I view the megat trend, the structural driver of inflows is actually a problem with credit-based fiat currency. So I think it's coming in regardless. And I think in the long run that eventually it will end up being about cash flows. But it's really tough for me to, it's really tough for me to paint a vision of that world far out where any L1 or L2 is able to really retain those. It's very difficult. Like I think it should go ultimately to the apps.

And you're already starting to see very forward-thinking teams like the Sorrellas of the world that are already figuring out ways to do that. And I think it's mostly an engineering problem, actually, in terms of how to redirect that. value. Yeah, I agree with that overall, but I do think there is an argument about just like what the ecosystem prioritizes. Yeah, I agree. And in the in the medium term, like, there is a decision that Ethereum, the community right now is like very set on one path. And like, that should be viewed as a decision, which is we're going to go all in on on DA scaling. And, you know, I don't, obviously it's not like one unified theme as evidenced by like the fact that. And, like, the fact that, after 4844, there's been a lot of different EIPs floated around.

The Electra Hard Fork has like very little cohesion and consensus around like what the network is actually doing. So I think that's kind of a reflection of the state of the discourse. But yeah, I mean, if Ethereum were to kind of make a more concerted effort to to scale the L1, then I do think that would have path dependency in terms of like what the outcome is for like where the users end up settling and end up interacting with. the chain. There is some element of path dependence, I think, as well. I mean, where do you sit on the whole scale the L1 or, uh, yeah, I mean, I think I'm still kind of coming to terms with, with both. I mean, one part of this discussion that I, I continue to find kind of intriguing, but

slightly unclear, is, I guess, the, the ZK, EVM, op code, end game here. Yeah. Which is, you know, it's something Justin talks about a lot, Vitalik talks about a lot, and they're both just like on a different plane than me in terms of understanding that. So I think I want to do a better job kind of understanding it for myself and maybe trying to communicate it out. But if there is a world where truly execution is no longer the bottleneck because you have basically these off-chain proof generation engines that do all of the execution. And to verify the proof is kind of very, very easy from the kind of everyday node perspective, then I could. see kind of trying to go towards that endgame by scaling Ethereum L1 kind of in the medium term,

which is like, yeah, I think even Vitalik has been open to the idea of raising the gas limit to 40 million. Like it hasn't changed in whatever, however many years. There's like Moore's law. There's the law about bandwidth increasing. I forget. Anyway. Some other dude names law. Yeah, exactly.

So, yeah, I guess if we have super high conviction that this ZKVM op code and what what just in terms based or native roll-ups is kind of the right way to scale L1 execution, then I think there could be an argument to be made that we should try and kind of steer hard in that direction rather than like kind of the direction we're going. I do think it would be intellectually dishonest to say that wouldn't be slight rerouting of the roadmap and stuff. But it's also like the roadmap as a whole is so big that I don't think you can properly say we're going in all those directions at once with equal priority. So, like, you do have to, like, place your chips somewhere, and, like, maybe that's where we should place the ships.

But, again, this is something I want to understand better. And maybe we need Justin here to help expand it. I'm curious what do you guys think, because the direction that Max is sort of pushing people in, it feels like a – it was like a pretty big departure, I would say, from the direction of the roadmap pre-max. And I'm kind of reminded of this – I think that guy, Emmanuel, has shared this around. it's Naval Ravakan. Like, groups don't disagree or something like that. They create schisms.

And in, you know, when you're a part of a group and a community, it's very difficult to disagree and discuss things in, you know, in unemotional ways. And that's why it ends up like you get these schisms. And he actually used the example of the Protestant Catholic Church. Yeah, right, Martin Luther. Yeah, yeah. The, one of the OG schisms.

And you got it in the Bitcoin camp as well around, you know, the block side. wars. And I don't know. It feels, I think one of the, I'd be curious to get your guys' perspectives on this, but it feels a little bit like, you know, if you were to pull 100 Bitcoiners and ask, what is the value proposition of Bitcoin? You'd get, you know, 99 or 100 people would say door of value, digital gold. 21 million problems. And even on the Salonah side, I think if you, you know, pulled 100 Salonans, maybe 85 of them would say a single shared state, global NASDA. NASDAQ on chain. And I think,

For Ethereum right now, it feels like we're in a little bit of a, you might get different answers if you pulled those hundred people. So what do you think? Do you think that's an accurate statement? And if so, do you think there needs to be like, hey, we need to hard commit to one direction or another? Right. I definitely agree with that. But I think that's also been, always been the case with Ethereum is that the Ethereum has always, if you pulled Ethereum about anything, like mostly. But like pre-merge. Oh, yeah. The proof of sake was a North Star for sure. But I think once you start like picking off the most obvious North Stars one by one, then all of a sudden like, okay, then we get like a little bit of directionlessness about what we want.

But also the Ethereum has always had a values of pluralism. Like we want to be a big tent. We want to incorporate as many ideas and philosophies and have room for all of these things inside of the Ethereum ecosystem. And so like to me, having a plurality in thought is not like, that's kind of, like interest me about Ethereum. And like right now like Peter Sigla Gazi from Gath just was tweeted, tweet out, he tweeted out his like 15th take about ETH isn't money. And we have like core devs that says ETH is monkey.

And then you have the Ethereum community is like you guys, what the hell are you guys talking about? Like ETH is collateral. It's used as in commerce. Like it's used as gas. Like of course it's money. And the plurality of Ethereum has always been the thing that attracts me about it. And that's why we have a plurality of.

of layer twos. And I think maybe this gizn that's forming in the Ethereum land, which is like, I put out, I put out that tweet post like talking to Max Resnick, which is like, I'm in favor of scaling the Ethereum layer one. And that got like, they had an, an good amount of engagement from the Ethereum community, which is interesting. On the negative side. On the positive side. Oh, on the positive side. Yeah. Like Sam Casmanian was like, I totally agree. Eric Conner. All the builders. Yeah. Yeah. Like, well, it's like, it wasn't even clear like where. the schism was, like you have like hardcore O.G. ETH people like Eric Connor, who's like, yeah, I totally agree. Let's pump the gas. You have Sam Casmanian who's building a layer two, who's like,

I totally agree. Let's put D5 back on the layer one. And then you have like Anthony Sissano and like Preston from, uh, from off chain labs who's like this is like, why are we distracting ourselves from like the very obvious goal of having the Ethereum roll up centric roadmap? Like that's a distraction. We all know that we can't put finance all on one chain. Why do that in the first place? And I think to answer your question, Mike, about like, block works, Mike, about like the priorities about like, do we want to try and like make the layer one more like salana or do we want to just focus more on the roll up centric roadmap?

To me, that's in the Ethereum land. That is a concave kind of value judgment. Like, it's not going to be convex. Like, we're not going to go full Salana at the Ethereum layer one. Yeah. But also going full roll up centric roadmap and being Celestia and having no execution or settlement at the layer one is also not what we want. And so right now the schism is actually kind of happening pretty narrowly between a

narrow like, oh, let's take the late game priority of the Ethereum layer one, which was execution, and maybe we bump that up a few layers of priority, but we're still going to have this same outcome at the end of the day, which is like eventually all chains will have commodity like execution properties and all chains will have a plurality of layer twos. So like the schism is happening on priorities, not on direction. Yeah, yeah. I think. think it's fundamentally a trade-off, right? And what makes other ecosystems so easy to comprehend is how far along the trade-off curb they are. Right. And it's just like, yeah, if you can just say NASDAQ on chain or say $21 million promise, then the kind of the communication element of that

story is much cleaner versus like the kind of truth, which is obviously more nuanced and yeah. Yeah. I would say I completely agree. I actually view it as a mark of maturity of any like, when Bitcoin, this was kind of a mark of maturity for them. It was like a hurdle rate that you have to pass this like, hey, are we going this way or that way? And I think, honestly, Salana is benefiting a little bit from being more in its infancy in a younger chain here. And, you know, I can imagine a world where, okay, they've shipped FireDancer and, okay, we've maxed out transaction throughput as much as we can. But now L2s are happening anyway. So like, wait a second, what are we here?

You know, I can totally see that happening. I do think, though, that it's important to just align around. The one thing I would, you know, it's, I think plurality is definitely good. but like one mission statement that everyone lines up behind I think is also important. Yeah, I was talking to Ryan about this this morning where he was like, man,

Bitcoiners are just way better at us Ethereum's at meeming money. They're just really good at it. But my response to that was like, they also had no choice. Like that was the only option that they had. The reason why 99 out of 100 Bitcoiners will say BTC is money

is because like what the hell else is it? Yeah. Like that's funneled. And Solana does, it doesn't have that in the same degree that Bitcoin has, but it's like 95% of salon is like, oh yeah, you eat the complexity and you juice up the chain, and that's what we are.

And Ethereum, we are doing most things. We're kind of a little bit in all different directions. And so Ethereum has the most choices, which is why you don't have the same like dogma of thought. Well, think about how many people Bitcoin pushed out. Right. You know, like they pushed a lot of people out. New projects are coming online to the mantle layer two every single week. Why is this happening?

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which is when should an L1 think about value accrual? And then what is it ultimately going to be, what is ultimately the mechanism going to be? Is it cash flows? Is it monetary premium? Is it network effects of kind of liquidity for the token? I'd be curious what you guys think. Yeah, I think. So we definitely talked about this a bit on our previous episode, but I guess I still really

like the triple point thesis framing, which you outlined like a lot of, time ago, but I do feel first and foremost that like the big fish is is being money, is having that monetary premium. And I think that's fundamentally what ETH is like trying to do. And especially in terms of like money that doesn't just sit as a pet rock under your bed, but money that you can use in like a vibrant economy. And that kind of, you know, that crosses a bit of the line between like just a money asset into like this kind of consumable asset or even capital asset. Like you can maybe get some yield in defy you can, you know, make a, make a stable coin, a decentralized stable coin out of it. But I still think first and foremost, like, it's trying to be money. And that's where it should be.

I do think the kind of cash flow element is important. Like, I definitely don't think, I think there's two things that get conflated here a lot. One is this idea that ETH needs to be net deflationary. And the second being that ETH needs to generate real cash flows. And I think people usually think, oh, unless ETH is net deflationary, it's not generating enough cash flows for me to care about the cash flows. But I think that's actually like a bit of a clumping of two things into one.

Like I do think ETH doesn't need to be net deflationary in the long run. And I don't know if there's like a compelling reason to expect it to be because net deflationary in the long run doesn't make sense. Right. Like you take it to the limit and it goes to there. But that aside, I do think there should be some story

about why like it's almost like the baseline interest rate of holding eth should meet a non-zero. And this is kind of like the internet bond analogy that you guys have used before. And, you know, I ran some of the back of the napkin calculations. And if you have 128 blobs per block, which is kind of the maxed-out DA that Ethereum hopes to get to with dank sharding, and if you kind of scale up the L2s and they consume all those blobs and pay enough gas to like, you know, post all that data on chain, then even just from the DA itself, in order to like max out or to match the level of issuance that Ethereum does per year, you need like subset, you know, one-tenth of a cent transaction fees on the L2s.

So there is this idea of like you can generate real cash flows and still have like insanely cheap transactions on the L2. And this is kind of the like induced demand, like build all the highways, everyone drives all the cars and you only have to charge a tiny toll to make like a massive amount of money. Which inherently requires a very optimistic view about crypto at large, because that requires so many transactions. Right. That's like taking the world's commerce

and putting it on a bunch of different chains. For sure, for sure. But I will add one point here, which is this is only to be kind of maintain the level, the total supply of ETH given just DA fees. Like I still do subscribe to the belief, and Donkrad was the first person

who posted this on the Reddit AMA, and it really resonated with me, which is, ETHL1 will benefit from being a neutral kind of bridge between all of these ecosystems. And, you know, I do think there's market power within each individual ecosystem, but being like the Constantinople

of the on-chain economy will be valuable just because there's like port fees, you know, bridging. There's always going to be some amount of like tax that gets paid through the DA. And so even if L1 execution doesn't scale to NASDAQ on chain levels, but it still scales enough that high value transactions, like almost like the B2B price insensitive transactions, still choose to use Ethereum as their execution layer,

then that in conjunction with high amounts of fees, crazy retail activity on the L2's posting blobs down, is compelling, at least to me? But obviously, this circles back to the point of, like, is DA actually sticky? Does it have any network effects that lock in the L2s? Because if the L2s see billions of dollars being generated, and then they're just going to look and say, like,

what am I actually getting from Ethereum here? Like, is the security actually something my users can, about. Like, will I lose users if I just start posting to Google Cloud? Like, probably not. Right. I think the moniness of East does a lot better in a paradigm where a lot of layer twos balance each other out and check each other. 100% rather than a dominant or duopoly of layer twos. A duopoly of layer twos is much less moneyness around East. Yeah. I would say. Yeah, I have played with this one kind of random thought, and we were talking about it a little before, but I really like this concept of etha's legal tender.

And, you know, I'm kind of in my macro arc, so like, bear with me here. But the overall idea here is like one of the core, and Charlie actually had a really fascinating tweet about this, which he posted a poll. And he said, which is better for Ethereum? Two choices. First choice, you have a side chain that posts its blobs to Celestia. Right. However, it uses eth as the gas token.

That's option one. Option two, you have an eth roll-up, meaning they post to Ethereum blobs. They have the smart contract. Everyone's happy, go lucky. However, they use a local, a different gas token. And the results were interesting. 50% said it's better to be a side chain that uses eth as money. 23% said it's better to be an eth roll-up that posts a DA, and 25% or whatever basically didn't respond.

So it's perceived by Twitter that, the non-etherium, not a roll-up, a independent chain that uses ETH as the gas fee is actually better for ETH, ETHER, than the, like, formally roll-up secured by Ethereum DA. Right. It doesn't use, and that doesn't use ETH as a gas token. And the reason I call this ETH as legal tender is because it's like, if you want to belong to this United States of Ethereum or United Chains of Ethereum, then you have to pay gas in EF. And one really interesting thing you could do here, which is extremely hard to enforce.

But, you know, there's a big. Twitter debate over priority fees and base fees on the L2s. And in particular, looking at how base sequencer collected revenue. So L2s use the same transaction fee mechanism as L1, which is 1559. You have a base fee and then you have a priority fee. It's not first come for serve. There is a kind of batch posting mechanism here. And the way the sequencer orders those transactions when it collects a batch is based on priority fee. Right. So, Everyone pays that base fee, and then it effectively turns into a first price auction on ordering, which is exactly what original Ethereum MEV started as, which is just a priority gas auction.

And it turns out that if you actually look at the data, 80 to 90 percent of the fees that L2 transactions pay go to that priority fee, not to the base fee. And right now that base fee is just going straight into the treasury. And same with the priority fee. And so actually, I think this is kind of customizable based on your... piece-deck chain, but I think for for for base specifically, both of those go to Coinbase itself. And so suddenly you get into this really weird thing where, you know, all of that revenue is just is getting completely extracted by by one entity. So one way you could kind of try and socially encourage Heath as legal tender and improve the moniness of Eith is say, hey, you have to take those

fees and you have to burn them, right? Like instead of the base fee in Ethereum L1, you have to burn the base fee as part of 1559. In this version, you just point to, the base fee to a contract that's controlled by the treasury. Like, no, don't point it to the treasury. Like, you're not going to pay it out to future air droppers, whatever. Like, destroy it. That's, like, true neutrality and, like, true commitment to ether the asset. Obviously, like, this is a super opinionated thing.

But, yeah, why would they do that? You're just asking them to destroy their revenue, right? It's going to be a little bit of tough stuff. I mean, yeah, again, this is, like, coercive, you know, social pressure. You know, when 1559 was getting designed, actually one of the things that they were concerned about and why they settled on the burn mechanism was, you know, any out-of-channel, like out-of-band payment

that would get, you know, in between someone who's trying to submit a transaction and a minor at the time, that could be paid in dollars, not necessarily ETH. And they called, there's a term they were calling economic abstraction, which is like, they were concerned back then about losing Eith as currency, like the default currency in the network, actually,

which is kind of interesting. That was actually a lot more of external concern trolling by Bitcoiners, I think. It might have been. There's a little old uncommon core. The real reason why to burn the ether was always credible neutrality. And then, like, kicking out this concern trolling of big corners of economic abstraction was just, like, a nice cherry on top that we would have. But it was always about the neutrality of, like, we need to do something with this. Let's do the most credibly neutral thing and burn it.

Right. Which is good. I think in that Twitter poll from Charlie, I would be in the first camp, the side chain that uses eth as gas. Is better or worse? is better, is better. Although I would say there's a, the nuance that I would add to that is that ETH would have a brand issue there because if you have a bunch of chains and the security assumptions are different, people could lose their ETH is like it could be a brand challenge

for Ethereum, but I'd still be in that first camp. Yeah, for me, I, this is where I start to think about RWAs and stable coins, etc. Like that's the, I think that is, that's what it comes down to for me on the roll-up centric roadmap is if we can somehow find a way to make ETH the native currency on these chains, I think that is much more valuable than the cash flows that you're surrendering, but I don't know how to do that. I mean, that's, I think, the chance. So do you think that these users on, you know, optimism and arbitraming base, do you think they're going to prefer Ethereum or do you think they're going to prefer EOSDC? And I could actually see it going either way because one of the most

bullish things, I think, in all of Rolupdom is if you just look at the bridge, the bridges right now, like the amount of ETH that flows into arbitrament every single day, it's like this incredible vacuum. And I think they might just end up the liquidity network effects up there just going to outweigh even the preference to hold the USDC or something like that. In the fullness of time, I kind of think all gas payments can and will be completed in any currency. Yeah. This is, like, there's just so many ways that this, I think, ends up as being like the local convergence.

Because there's so many different ways to abstract it at the layer two. level. So really the only control that Ethereum has is that when a layer two settles and pays for DA and settles say the Ethereum layer one is that's when they are compelled to buy and then use ETH and having some sort of reservation demand. But anything that happens on the higher level, it would be against Ethereum's ethos to like compel currency usage. It would also be a stunt on growth because any chain that was like, well, we have to use

Ethereum as our gas token. Like, well, maybe we'll go settle on Celestia because they aren't making those same sort of like forces. This is the challenge. So here's a weird catch-22, or this is the way that I view it when it comes to value accrual for the L-1, is the catch chain 22 is, it's very tempting to say, you know, just, you know, don't try to lock in anyone, don't worry about that, just, you know, serve the developers that are your customers today and trust that you're going to create value.

But there's this funny thing, I think, when it comes to blockchains, which is the total addressable market of those developers that are building on your layer is the amount of market cap of your token. That's why it's so attractive in my view to build on Ethereum today. That's why you have SVM, L2s that are settling to ETH instead of Solana, because Solana's got $80 billion worth of TAM, right, or capital on that platform. ETH has $300 billion. And so that's the weird catch-22 of this, where you don't want to be overly greedy, right,

and rake too much out of the value that, you know, you're creating in your ecosystem. But if you do none of that, the challenge is that your token won't do anything. And then people won't want to build on you because the, you know, know, your value prop is now lower. Yeah, yeah, I totally agree with that, but there is the fundamental thing. And I think it's kind of what David was hinting at, which is you can desire something to be true, but it's a permissionless system. And if there's a market value for something else existing, it's going to exist, right?

And I think that another example of this happening, which was really kind of funny and silly, but very related, which is restaking, right? originally, and I didn't really understand this at the time. And I was kind of confused by it. And we had our interview with Sri Ram back in Christmas time last year. But he was all in on using ETH as the unit of account for restaking. Right. Right.

And this was a money argument, right? Like this is fundamentally. It's always been a money argument. It always has been. And that was totally lost on me. And I remember asking him like, well, you know, these ETH derivatives especially, like staked Eith, wrapped steak to Eth, or I guess wrapped steak Eth, bad example, but anything that's like a liquid staking token, it's not really restaking in that regard

because the person who's deploying capital isn't actually the one who's staking in the first place, right? And so I was kind of just like confused by that. And I was like, oh, why don't you just use USC? And his answer was, you know, it's about the unit of account. It's about kind of spreading ETH as the denomination of economic security. And, you know, everyone was like, oh, this is sick, like very pro-etherium. And then symbiotic spins up. And what's their first? branding thing, right? Any token. Boom.

But also, Sri Ram and Eganlear have always been on the roadmap of, and eventually you will use any token. You just start, we just, Genesis is with Eith. Yeah. It's just a funny thing of like, sure, you can try and like push the values top down or whatever, like grassroots even, like kind of our ethos generally seems to be grassroots. Right. But if there's a market demand for something, like, it's going to come up.

And yeah, to your point, as far as L2 is abstracting that away, I do think it's just going to be less and less people even know what they're touching in terms of the chain behind it. So like if I onboard on base, like the average American is going to know U.S. dollars. And at the point of sale, maybe it converts to ETH and swaps blah, blah, blah, but it's just not going to be something they pay attention to and think about. And I think that's where Eath loses. Because you can't be money without people being aware that it exists. You know what I mean? And I think that's a very important distinction there.

The last wallet onboarding experience I had was with Clave wallet on ZKSink. And I onboarded and downloaded the wallet, face ID, no private keys. It was great. And then got my Clave ID, which is like an ENS version of Clave on ZK Sync. And then I did like three or four transactions with zero gas in my wallet because Claif paid for my gas. Yeah. And they actually probably used ETH in the back end because ZKSink used. as Eath. But like, I was not even exposed. So, like, not only am I not exposed to gas. I'm not,

or the currency to pay for gas. I'm not even exposed to gas at all. Period. And honestly, that, like, that's going to be the actual convergence of where this goes. Like, it's actually not going to be, like, chains competing on, on which currency would you like to use to pay for gas? It's like, actually, well, no, we're just going to solve your gas problem in the first place. Yeah. And that's, like, we have to go there as an industry. Gas has to go away. Transaction fees has to go away. And then at that point, it's actually, it's actually, you know, more of a Ethereum layer one, B2 to it's a layer two Bs. So that's two Bs. And then layer two B to B to its user front ends, which are like paying the gas fees to the layer two. So that's actually

really the con. So it's actually not really about user preferences. It's now about app preferences to layer two preferences to layer one preferences. Yeah. Yeah. Super interesting. I mean, it's a great point because I use the main four 3337 wallet that I've interacted with is dimo, which is kind of like a peer-to-peer payment app disclosure. I am an angel investor. And yeah, it's totally a great point. Like when I onboard someone, I just send them $5 and they never hold ETH in that wallet. Like it's a wallet on base. It has USDC in it, but the gas is getting paid by someone else in ETH completely abstracted from the user. So yeah, that definitely feels like the right end game in terms of like how user experiences are going to end up.

Do you think that that, so this is where there's, I think, another element of path dependence. And I'm generally of a perspective that Cosmos was right from the beginning. I also think many such cases. Cosmos end game was right. Not the pregame. Yes. The pregame they flop so hard. No, but they tried to skip to the end.

They tried to skip to the end. Cosmos has been on this forever. Don't require people to, people can pay in whatever they want. But the thing is the user flow of most people getting into crypto is, hey, I've got a buddy who tells me I should buy some ETH or Bitcoin. And then I buy it. And then it goes up. And then it's like, oh, what else can I do with this?

And then you go from your home base of ETH. into, you know, whatever stupid meme coins or whatever else you want to lose money on. It's your casino on Mars. Your casino on Mars, yeah. But that was the user flow. And then it created this common shelling point. And then it created this huge pool of crypto-native capital. And that's when that attracted all the people that wanted to build around it.

So I don't know. I still feel like that's not broken, actually. I don't know. I just, I don't know. Maybe it's going to be different. It could be different with base this time. Bass has crushed it with their, I think they're going to do a really good job this cycle in getting new people because they've got a bunch of people on the exchange and then they've

got the smart wallet and they can just move people directly into base and it's super easy. But that would, yeah, that would make me kind of think differently about a lot of stuff. One interesting point that kind of ties into this is kind of when we're talking about the asset and its monetary properties. On the L1, I think one of the unique differentiators of the L1, is that it is the ledger of record for ETH, right? And I think this is a point that also gets lost on people, but when you bridge your ETH to a smart contract and then out,

there is like counterparty risk now. And you kind of lose some of the censorship resistance properties, at least until the roll-ups like scale to stage two and have like really good forced inclusion mechanisms. So, yeah, I guess the cypher puck in me is like, I wonder if there's a world where there's a few black swan on events, like big asset seizures or kind of like large scale global censorship that like results in the value of censorship being priced in more meaningfully. And especially like holding

the most kind of like trust minimized store of value is is becoming increasingly important. This is a similar conversation I was having with Ryan this morning actually, which is like Ethereum people once upon time will just like laugh at the Bitcoiners because like man, you guys are dooms. Like, you guys are hoping that doom happens so that your bags can go up. That's an inherently pessimistic version of the world. In Ethereumland, we're so much more optimistic. We like growth.

We want to grow things. On the economy. Like, global seizures, baby. But now, now in contrast to, like, the archetypes of the younger generation of crypto cohorts that find Solana this attractive, shiny new toy. Solana is, like, way more optimistic on Ethereum because, like, come on, like, Is Solana going to hold up against nation state attacks? Like, they don't even talk about this in their ethos.

Yeah. And it also doesn't matter because no nation state is attacking Solana. Yeah. So it's even more just like kind of trusting of the world that it exists in. It's less priorities on censorship resistance. It's more defy, more open finance, which is like, it's fintech. It's more fintechy. And it's working just fine.

Yeah. Nothing's going after it. And so now in that contrast, Ethereum is like, oh, but like when the nation states come, y'all are fucked though. and it's inherently, by contrast, like more doomer vision of the world, because Ethereum has prioritized so much on just like censorship resistance,

multi-client architecture, credible neutrality, you know, nation, World War III level attack. And, you know, if World War III never comes, then maybe all of that effort was wasted. I think, I have maybe a somewhat heretical opinion here to share,

which is, I don't think that any blockchain is nation-state resistant. Even Bitcoin? Even Bitcoin. Oh, definitely not Bitcoin. I don't know. Actually, yeah, I'd actually rate Githyrin. I mean, I don't know if you guys just saw this Hezbollah attack where they exploded the Pagers and then, it turns out they hadn't tampered with the Pagers.

They just made them. Yeah. Actually so insane. And I'm just kind of thinking to myself, I don't think any of these things would really withstand. But what I do think the end game is for crypto networks is you kind of see parallels of it with like the swifts of the world. There is some precedent in the financial system for credible neutrality. Like, there are these shared bits of infrastructure that aren't fully owned by any one country,

Swift as an example, although it's heavily leaned on by the United, it basically is. But I think one of the things that you could do, like one goal for crypto could be, is to say, hey, we're going to either become big enough that there's enough financial activity that's happening here, and there's enough apps and people are bit like that shutting, we would be like shutting ourselves off from this. instead of actually, you know, trying to actually lock it down and prevent it. I don't know. I kind of think the way to winning this thing is winning hearts and minds not. It's, yeah, maybe I'd be in the heretical camp of like, I'm not, I don't think

designing for World War III actually makes a lot of sense because I think that nation states could blow this stuff up if they wanted to. I don't know. I'm not sure I totally agree with you. Obviously, like, it's very hard to speculate on something like this, especially around like the networking layer. But I do think there's an interesting point to be made here, which is like if you look at the kind of early protocols of the internet, like you have BitTorrent, which is like the censorship resistant, you know, impossible to shut down. And like they tried to shut it down. Right. It's just like the information wants to be free. And I still feel like the value wants to be free. Is it going to be there? But so this is kind of like the pro side. The con side is like how much value is BitTorrent actually adding to the world? Like is it that pro social? Like sure. if Netflix and Spotify and the main distribution channels of content started raking people in a way

that like they had to go back to like a free distribution channel, then sure, it kind of like serves as a check and balance on that power. But still like 99.999% of content is consumed on centralized platforms from like the main clearinghouse. The worst thing to happen to Bitcoin was Spotify. I was a big torrent way back in the day. And I mean, it was kind of clunky. Like, you would get low quality files. You would get files with like, like, like voiceovers in it that weren't a part of it,

that were just an ad. And then Spotify came and for $10 a month, you can get all the music and it's like a nice curated platform. And to your point, like actually, maybe the reason why Spotify is only $10 a month instead of $40 a month or $400 a month is because Bitcoin, Bitcoin is a check.

There is a counterfactual. But the counterfactual, but the counterfactual makes no value. Right. It doesn't actually capture anything. It just exists. Yeah. How do you price the social value of having an alternative? Right.

I mean, I still do think this has all been like very bearish. I don't know. I still do believe that value kind of of the monetary system and of a digital property manifestation rather than just pure data will be stronger in terms of like preserving individual rights. And like obviously the copyright rules are basically what suffered here. It's like you didn't have any digital property. And so the seeding and kind of distribution channels just get very spread. But yeah, I think for value and money, it's not comparing apples and apples.

So I think it's worth kind of at least pointing that out. I think there's a super bullish story to tell here, which is, I mean, again, this is just the way that I look at the world. But if you look at everything from the lens of what we're reinventing or creating a better version of here is money and a financial system, that is massive, right? That's not like a small thing. And if you view the driver of that as, hey, the debt and the issues with the way that money works today is actually going to push more and more people into this system, then there's a really close linkage in between the money that sits at the center of a financial system and the financial infrastructure that's built around it, right? The issuer of U.S. dollars is the U.S. government and the central bank, right? But then you've got these network of commercial banks that sprung up around it.

And they're the ones that actually control the money supply. They custody all the money. They're basically, it's very, very closely interlinked, LinkedIn related. And we have actually done something a little bit weird in crypto, which is because there's an issue with that money, we created the money first, right? And we just like, hey, we've got this commodity money that's really, has these really great properties. And we're in the beginning stages of building financial infrastructure around it. That's why all the apps that have really taken off have something to. to do with, hey, I want to do something with my money. It's like uniswap. I want to trade my money or

Avey, hey, I want to get a loan against my money, right? That's why we're in the beginning stages of that. And if we have a better money that has better properties than exist today and the financial infrastructure around that is much better, then if we have, I guess, one way to look at like a bright future for this new economy is what could you do in an economy if you had better money and a hundred times better financial system? What businesses could you build in that world that you couldn't build today. And that's the part where, you know, you can't really talk about it on a podcast because a lot of that hasn't been built yet. But that is the vision that that's what excites me about crypto. Thanks for bringing us back there, Mike. Yeah, I got you. I got you. We need a little

bit of bull energy there. No, but I mean, this is fundamentally the foundational argument I tried to make in the ethesis too, which is like fundamentally like this is a technology, but it's also like a coordination engine. And money is fundamentally like you guys have said for a long time. It's like a subjective thing. It's intersubjective. It's a shared collective story. And I think Ethereum is telling a very credible story for why it should be money in a way that like, you know, it's super valuable. I think it's extremely pro-social and I still believe in it. One thing that I think is missing from this like money story with an Ethereum, like this conversation in the last few months and in the with like the Max Kyle episodes and then the rebuttal to these episodes is all

about like layer ones and value capture and the moneyness around this thing. But what's been missing is like honestly like Dify hasn't had like a renaissance in a really long time. Yeah. And a lot of monetary properties come out of DFI. Like MakerDAO was the first ETHIS money application followed by like the

uniswap Alve compound like fracks, all these new newer ones. And then we built DFI tried to build DFI 2.0. Turned out that was a Ponzi. Yep. Oops. Oops. And oopsies. Happens.

Happens. happens to the best of us. And we're starting to get some, like, Defi-like apps, like, Sorrella's, like, putting, making Uniswop LP and great again. But, like, I wouldn't really ever call it the same level of just, like,

zero to one moment that we had with Defi. And the money in this conversation kind of stopped with, like, DFI, I would say. And so, like, I don't really know how much more Jews. Maybe we just, like, need to get back on track with building DFI.

Maybe, like, DFI is actually most of it. Yep. And there's not that much more. Like, I don't really know. if you guys have thoughts here. I have thoughts. I think the coins need to go up. And once the coins go up,

people will come in and they will build cool stuff. And that's how I really think is going to work. That's what DeFi 2.0 is. But here's the cool thing. Just on the track of being bullish, what we haven't had before is a bunch of very abundant,

very cheap, high quality block space. We have never had that before going into a bull market. We were severely constrained last, like seriously, just rewind the clock back to 2020. Like there was Ethereum, which was great. But that was really the only network that you wanted to build on.

And, you know, we didn't even have one-five-nine. There were all of these challenges. Like, we're in such a different place now. And I just think we're going to get a bunch of really cool stuff to surprise us to the upside. Yeah, Vidalik had a tweet, I think, four or five days ago. That was basically exactly this, which is, you know, he pulled up. Me and Vatelik were always the same stuff. Two sounds at the same thing.

I was saying the same thing. But the tweet was basically. basically like a time series showing, you know, L2 fees. And, you know, there's a clear point. April 2024, right. Protodang charting goes live and fees just go to zero. And it's been five months. Right.

And it's like, yeah, I get it. Like the price is down, whatever people are feeling end of summer, angst. But like, we are at the beginning of an abundant block space era. And I do think Ethereum block space is like super valuable. People are going to build on it. Like it's going to be a Cambrian explosion, hopefully win. when like the real, you know, bull market picks up again. Yeah, that's right.

Yeah, that's right. I got a question for you guys. Sure. What would you at the end of this, there's a lot of, you know, I feel like in crypto, there are a couple of different groups and they tend to talk past each other or not want to talk about the same thing. There's the money group. And that's like the Bitcoiners and Ethereum's like, hey, this is all about the money.

And then there's the, hey, there's all about the financial infrastructure, which is like the NASDAX, that's kind of the Solana. Yeah. And then there's, hey, we can build all these cool new business models. And that's also a little bit of Ethereum, I think, and also kind of VCs. Like, stop telling me that wishy-washy money stuff. You know, give me businesses with cash flow, et cetera. And I think that people kind of talk past each other.

To me, those are all related things. But what would you guys say would make this whole crypto experiment that we're running a success at the end of the day? Like, okay, you know, we're getting bigger. Some of the initial ideology we might have to make compromises on, whatever. if this thing were to really take off, if we're having this conversation 10 years from now,

what would you say, hey, this made it a really successful experiment? Kind of a hard question. I think you could take it in a bunch of different directions. Like digital identity or self-sovereign identity that is like legitimized by nation states. As in like your identity

that's maintained by some crypto platform with some crypto mechanism is like your way to like check into some country going somewhere. Like that is extremely legitimizing. And that starts to like kind of like in the pendulum of power, take power away from nation states and putting it on the internet, which to me is the individual.

And so that's always been like why I'm here. And it's like, hey, how, what crypto cryptography has always been about pushing power towards the margins, pushing power towards the individual. And like these money conversations, like why Bitcoin is so valuable, why ether is so valuable, is because now we have this money that's not in nation states, it's owned and operated by these individually run networks. And so, like, digital identity is, like, also very close with that.

We've never really cracked that code. Yep. But, like, once you have this, like, little cryptographic tool called your public key with your private key, and you can roam around the internet and be self-sovereign with, like, whatever, like, you know, credentials that you want to have and you can unlock different things, and you can do that also in meet space, like, that's kind of what I'm looking for. It's just, like, and that's, like, and that's, That could go in like a thousand different directions, right?

Like on-chain ticketing, we've never been able to figure out. But like, let's- Ticketmaster needs to die. Come on, let's like solve that problem. Like, I want to have that- That's what gets me up in the morning, baby. I want to go and like when I go to this concert tomorrow, I want to show my David Hoffman. Dot Eath address,

which has some sort of just like digital identity associated with it. It has my ticket that's associated with it. And that ticket is a bare asset, you know, not a ticket, or I owe you, like stuff like this is kind of like where my head's at. Yeah, I would say super similar in spirit, but maybe even simpler in terms of the actual execution, which I view it very much as like self-sovereign money. That's the inalienable right to send store, transmit,

you know, preserve value on chain is kind of fundamentally what it's all been about. And I actually, you know, like you described earlier, I kind of view it as this check on existing powers that be. Like, people currently in these underdeveloped or like underbanked regimes, like, just don't have access to a way to store their capital. And like, this is what tears countries apart, right? Like, people suffer for like under the monetary policy of these regimes. And like, yeah, fundamentally, I think that is kind of what motivates me and what I hope all of this is in service to it. Even if, you know, it doesn't become the one asset that rules them all, still serving as like a credible, neutral alternative to the existing

infrastructure that these countries have, it feels critical. Yeah. You know, we, in crypto people talk about money as being a social construct, but it's also a tech construct, or like, it's a technology. And one of the things that I'm really hopeful for is, you know, money, the way that money has evolved, if you think about money is gold, there actually what, there were some properties around gold that made it really nice. original proof of work. You had to dig that shit up with your hands. So you weren't really worried

about the supply. But it was challenging when the economy globalized and you needed to move it all around the world very quickly and divide it up really easily. And that didn't really work. And that's when you started relying more on intermediated forms of money like bank IOUs. And then it was like, oh, these banks are really trustworthy. So maybe we just make the IOU the same thing as money. And that technology set up just lent itself towards more of a surveillance state kind of centralized power at the top thing. And the crypto form of money, because it's programmable and you can send it around and you can do more with it, is actually much more conducive overall to just individual liberties and actually property ownership. It's like strong property rights, I think.

It's the self-sovereignty of the gold, the technology of the internet. And the other thing I would say, too, is, I mean, for the thing that initially got me into it as well, it's just the risk-reward and the opportunity and how fast-paced this industry moves. Like, there is no industry like this where it just, the narrative has completely changed one year from the other. There's a bunch of new startups that you can go work at. Just the pace of change and, you know, the intellectual challenge of this industry is really high. And I'm really excited to see it will be a success for me if in 10 years there are businesses built on blockchain rails that could never have existed, you know, not on on blockchain rails. That would be successful from my standpoint.

That's what I want to see. Super cool. Yeah. Kevin Milwaukee's, it's all, of course, coordination and always has been, this has always stuck out to me. Whatever these tools are, I think they do allow for better coordination tools that we've ever had before. They do. And that's always been just like, I think like my personal like North Star, like all these tools I talked about a second ago, there's all kind of just like tools to help people coordinate better at higher levels. And so internet scale coordination we've never really seen before because we don't have the tools to get there. But like what happens when humanity's ability to coordinate like gets a 10x software upgrade?

Like you don't really, you can't really imagine. Exactly. Yeah, you can't really imagine what we can do next. But that's always been like the power of crypto to me. Should I wrap it here, guys? Bullish. Bullish. Yeah, this is a ton of fun.

Yeah, this is great. Yeah. So we're in New York. I'm trying to do these in real life podcasts on a semi-regular basis. Who do you guys think I should bring on next? Since you guys know who our neighbors are. Oh, interesting. Oh, man.

Great question. It's probably get fake tribune in here at some point. You should have, definitely. You should have my friend Nate on. He's going to come to your party tonight. He's building this super interesting attention economy game sort of thing on WorldCoin. And I think it's going to be absolutely sick. It has this kind of like 24-hour, you know that what was the app where you took a picture?

Be real. Be real, yeah. It has that kind of like once a day viral loop thing. That's cool. And yeah, I think once he ships it, it's going to take the world by storm. So I think it's going to be one of those things that we haven't really seen yet. hopefully it really goes crazy. Cool.

Let's go. Cheviano on? Nah. Yeah, you should bring him on. Miss you, buddy. All right, guys, thanks for coming over in the studio. Appreciate it. Yeah, thanks, David.

Bankingles station, you guys want to deal. Crypto is risky. ETH is risky. ETH is risky. Other chains, more or less risky, maybe more. But we are glad you're with us on the banklist journey. Thanks a lot.