Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Epicenter – The Hosts Look Back on 2021

Episode Date: December 10, 2021

2021 was an exciting year for the crypto space. We've seen all time market highs, dramatic regulatory shifts, and some use cases hit the main stream. 4 of our hosts got together to dissect the standout events of this year, and share their predictions for what is coming next.Topics covered in this episode:The NFT explosion of 2021The DeFi bluechip declineLayer 1 wars & bridgesDAO proliferation, tooling, and emergence of new organization paradigmsReturn of DogecoinBitcoin in El SalvadorLooking ahead - crypto and its tax implicationsThe future of MEVUrbitEpisode links:Episode 374 - The Great Epicenter Host Extravaganza 2021Epicenter - About UsBrian on TwitterFriederike on TwitterSebastien on TwitterSunny on TwitterSponsors:ParaSwap: ParaSwap aggregates all major DEXs and makes sure you beat the market price at every single swap and with the lowest slippage - paraswap.io/epicenterChorus One: Chorus One runs validators on cutting edge Proof of Stake networks such as Cosmos, Solana, Celo, Polkadot and Oasis. - https://epicenter.rocks/chorusoneThis episode is hosted by Sebastien Couture, Brian Fabian Crain, Friederike Ernst & Sunny Aggarwal. Show notes and listening options: epicenter.tv/421

Hi, welcome to Epicenter, the podcast where we're in your crypto founders, builders, and thought leaders. I'm Sabasnikwitio, and today I'm here with Brian Fabian Crane, Fredegu Ernst, and Sunny Agarwal. Today we're doing our yearly tradition of having an epicenter host extravaganza episode where we just get to talk amongst ourselves, talk about what happened in the last year and where we think things are going, and usually break apart our predictions from the previous year. Before we do that, I'd like to tell you my response is today. With Paraswap, you can beat the market price every single block. It's fast and it's highly liquid, and they just launched V5, which has a new contract and new APIs. It has a more modular infrastructure, which is more gas-friendly, and now supports free approvals using Ethereum's permit messages.

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Guys, thanks for being here today and taking part in this yearly tradition of, yeah, talking about what happened this year and what's happening next year. So, welcome everyone. This is the best part of Epicenter. I just grind through the rest of it just to get to these yearly episodes. Yeah, and like every year we say we're going to do this more often, but we never end up doing it more often somehow. You have to take what Sunny says today with a grain of salt because for him it's really early. He's over in Puerto Rico and it's noonish for the rest of us and Sunny got up especially. Yeah, really appreciate it, Sunny.

So yeah, I think there's lots of different themes that we want to talk about today. And so I think we'll start with, you know, what were the big themes this year and how we perceive them into, and then like, you know, themes for the future and how we think things are going to evolve in the next year or two. I think the thing that everybody had brought up and is probably on everyone's mind is like NFTs, how like NFTs absolutely blew up this year. Felica, you were not surprised, but somewhat. I was totally surprised.

So basically, I mean, yeah, so basically the NFTs thing, it caught me totally by, surprise. So basically, I always thought that NFTs were coming, but very much not in the way that they've actually arrived. So basically, to me, the way that they have manifested themselves is mostly in the status as a service domain. And I thought that basically NFTs would manifest themselves in the realm of all things financial, but non-fungible, which is actually the majority of essence. So yeah, totally surprised. Do you think that this current form of NFTs is what's going to be like what's used long term?

Like, I don't know. So what I'm personally really interested in is like figuring out how to like use NFTs in like more defy protocol. So I think like most of defy currently is like, so I guess like one prediction I have, which I know maybe. Maybe I'm really that. But I think that like defy and NFTs are going to become more and more like combined with each other, right? Because I think that, like, you know, what's all of defy current is really built around these fungible tokens. And like you mentioned, like, you know, most financial assets are like NFTs. If we want to, like, bring, like, homes and stuff onto a blockchain, like, we need to have, like, those be NFTs. And if they want to have a protocol that gets a mortgage on those homes, you need to

have defy that interact with those NFTs. Now, the thing is, like, yes, I agree with you that, like, you know, the current PFP NFTs, profile picket. NFTs, you know, they're not exactly that. But I think, like, you know, they're just like setting the groundwork and they're, you can think of them as these were the easiest things to build. And so that's why they got there what got built first. And, you know, there's all this stuff that's building this like tooling around them. And that will be usable for more things.

Well, it's, I mean, it's interesting, right? Because like, NFTs, I mean, they've been around for a while. But actually, I think the first use case. of NFTs that I remember clearly is like centrifuge, right? And they've been working on this for like years and years. And that was actually exactly that, right? Because they have basically NFTs for like non-fundible financial assets where you would basically have like an NFT for some sort of loan. And then they would get pooled. And then you'd have like a fungible token that is then backed by these NFTs. So like you've had you've had that. It just hasn't taken. It just hasn't

taken off in the way that it did around all kinds of stuff, though, no. It's not just profile pictures, right? It's like all kinds of like art. The interesting thing about the art thing is, I mean, I remember very well. So, you know, there's this team that now works on Ocean Protocol, but they've had a bunch of predecessors, right? So they had this thing called Big Cheney B at one point. And before that, they had a thing called a scribe.

And the scribe was basically doing something like NFTs where they're like tracking art ownership on the Bitcoin blockchain. And I remember having a lot of discussions with them back then. This was in 2015 or 14, maybe 14. And because I was so puzzled also like, how does this have value, right? Because like you have to define this like separate. You can still copy like there are thing. But then you have this digital ownership.

But this is really have value. And I remember having these discussions with them in like, yeah, 2014. And then of course that didn't take off. But now it is. But it makes sense to me in a way, right? Because I think you have something where you didn't have a market before. Like it was basically not possible to kind of trade a lot of these. intangible pictures, images, ideas, memes, and now you can have it.

And that's pretty huge, I think. I feel like, I mean, the thing that I'm most interested in with regards to NFTs, at least in the next couple of years, like, I don't know how this plays out sort of like more. I'm not sure I have fully formed ideas about how this plays out with non-financial assets, like homes and loans and things like that. But the whole PFP thing and sort of, uh, status of the service for me, I think, can serve as a as sort of a base layer for new forms of social networks where financial services, and this kind of ties into like what you were saying

earlier, like social networks and financial products kind of like end up merging. And it's like the financialization of status and the financialization of, um, of these sort of like, this sort of like intangible idea of status. And I can see where, you know, these things started getting boost trap where NFTs are actually used as collateral. So you kind of stake your NFT in these new networks. And then from there, these sort of new social networks would issue tokens that users could use to like, you know, using Defi and things like that. It's not fully formed, but like this is where I see like at least the PFP aspect of NFTs heading in the next couple years. Yeah, I think there's two overlapping things here, right?

So basically there's NFTs and then there's social tokens, right? And I mean, basically, the tokens that kind of grant you access to social networks, to me that's a different use case. It's not because NFTs to me, this is a very clearly one-dimensional thing where basically you have an exact price point for each NFT and so on. And for social tokens, it kind of allows for a much, more for much richer dynamic, right? What are some examples of social tokens you're talking about?

So I think the first ones were the friends with benefits people. But I think it's proliferated. So actually, I'm not particularly active because I have too little time, but I know there's tons of social networks out there that are gate kept by tokens. So here's one, like, option of what, you know, I agree that I think a lot of NFTs are currently being used effectively as, like, social gating tokens, community tokens. And maybe, maybe what's going on is that these are, it's a sort of proof of work, right?

Because, you know, once you have an ERC20 standard kind of thing, it's very easy for anyone to just go mint a token and just like release it and say, oh, this is a community token, right? But it's like if everyone starts doing that, then like, you know, maybe the barrier to entry is just like so small, but it's going to get flooded with all these community tokens that they lose their value. I think by making them NFTs and like having to put some artwork into it, the community creator had to sort of like a bit of proof of work that they have to do. They have to do this like minimum threshold of like investing, like finding an artist and like creating at least like, you know, whether it's generate like auto generative or like hand drawn or something. but you have to like create like you know okay i gotta go create 10 000 artworks and then you can have this like community token yeah i think i think one of the thing is it's important to recognize here is the importance of firsts um and you know like on ethereum like the sort of first big nfti

projects like you know the crypto puns or whatever like those are going to have those are going to remain valuable like for a long time like the first crypto punk or like the first generative art or like the first like pixelated art or whatever. And then like, you know, on Solana, like the equivalent of that is like DJNA. So I say that's the first kind of like PFP. And then like everything else kind of like comes like goes to zero from there. I mean like the prices are like don't maintain the same value. So I think like the kind of blue chip NFTs will will remain valuable on every platform.

And then like once in a while there's going to be like a first of something. Like there's going to be a first of some new kind of. of art, whether it's like, you know, visual art or film or, or, um, or audio or music. And, you know, that will happen on Ethereum. It'll happen on Solana. And then these kind of like new experiences will always remain sort of like the pinnacle of, like what people expect NFTs to deliver. The value and the floor price will probably like stay super high.

And then like everything else is kind of copies it, uh, kind of goes down from there. So two things. I want to add. So one is about the status thing, you know. I mean, I actually don't think it's that surprising. I think that's actually been this like missing piece in crypto where, so if you guys know, Elaine Ouse, she's like, you know, I really like her blog. And I think I mentioned it in the past couple of times.

But I remember like she had this post from like four or five years ago where she says like, hey, people often forget this like other value. Like, you know, we talk about the, you know, the three uses of money, right? like medium of exchange, store value, and unit of account. And there's actually this like very fourth, very commonly used one, which is a display of wealth, right? And she's like, gold is actually, you know, made for a very good, like, money because it actually served as a good display of wealth where you could turn it into jewelry and use it to show off, right? And that was something that was missing from the digital, like, what, what Bitcoin was.

And like, you know, initially joke, like, oh, maybe what we got to do is we're all going to get like, you know, these like gold chains that have. and have them like some like trusted hardware that like shows your like Bitcoin balance on on your thing. It's like clearly that's not what's happening. And I think NFTs are sort of what came in and like filled in that gap all of like being the display of wealth. Digital Lambeos. Yeah.

Digital Lambo's right. Okay. So question. How about we go around? What is everyone's favorite NFT collection or NFT here? I mean I, I, I, you know, my interact with NFT. been fairly limited. You know, there's like some things like the centrifuge or orbit.

There's some, they're actually like non-traditional use cases. I bought a few NFTs when we were preparing the rareable podcast, right? Because that, because that was kind of, but otherwise I have not been very active. I have actually not bought any kind of NFTs for my collection, I think. I have UniV3. Does this count, Sunny? I think that was like so epic what they did where like you know they mentioned that oh yes these V3 positions are NFTs but like when they dropped it they actually had like a cool artwork for each NFT and I think that like surprised anyone and I think that was like so cool I also still I also still have a very extensive not say for a collection of Clovers I don't know whether you guys remember this and I'm still waiting for this

to come back so I can dump my Clovis back here. You have to tell people that like, you know, this was like an OGM-N-F-E because all the OG-N-FT projects are what's like become really popular. It was an OG NFT project. I mean, this, I mean, it's like this

generative art thing where basically all, I mean, it's a black and white thing. And basically the, it's the end state of a go of a go game, right? So basically it's, and so basically it's generative.

It's actually super cool. But yeah, I feel like there's not a lot of people pushing this. My favorite NFTs that I bought, I bought them like way before this was any, like, was a thing. I mean, they're not like worth anything, but I just think they're cool. But like there are these sort of ninja turtle. all figures on the, you can't really see it here, but like on with a background of like the US dollar.

They're not worth anything, but I just thought it was cool to get that collection. And, um, and of course, uh, you know, my junk dick picks, uh, got a, you know, I love this. And I, I'm holding on to them because I'm convinced they'll be worth something someday. I think for me, I think my favorite one is, uh, it's called stacked toads. And what happens is you get these little toads. and then you like stake them. And what happens you by staking them, you earn stack tokens.

And you use a stack token. So like take the toads and like stack them on top of each other. And you get like a tower of toads. It is the dumbest thing I've ever heard. But I think it is hilarious and funny. And like, yeah. And I think what's cool is it kind of what it did was it started introducing a lot of like NFT people to like concepts from like elsewhere in crypto, like ideas like staking and

things like this. I think that was actually kind of pretty cool. Well, let's go to the, let's go to the next topic, which is sort of, I think Sonny brought it up, no? Because we've had the NFT explosion and at the same time we've had defy. I mean, in some ways it's exploded, right? There's been like explosion of activity. But at the same time, like, defy tokens that I think were like their range. at some point, especially these kind of Ethereum DFI things like, you know, Maker curve, compound, urine, et cetera, et cetera.

They've not done so well. What's going on? Yeah, I mean, this is this an observation I made recently, which was like, hey, like, you know, if you go to 2020 and you talk about, like, what were the defy blue chips, right? you know, what we had like Maker, sushi, uni, Wi-Fi, SNX, comp, like all these things. And like, I think out of all the D-Fi Blue Chips, like, none of them are in the top 50 by like market cap anymore other than uni. Like, you know, sushi and SNX are like not even in the top 100. Compound is barely hanging on. Avey is like, you know, I don't know, number 70 or something. And it's like, you know, it's, so, you know, I asked a lot of people, you know, I was asking a few people, like, more investory friends.

I'm like, hey, you know what's going on with Defi right now? Why is it like just like not, you know, just slipping in like valuations? And they're like, yeah, honestly, like all the, all the interests has like not, it's kind of boring. Everyone's just more into like NFTs and gaming now. And so I wonder if that's all it is or if there's something deeper going on. where like, you know, you know, we had these like forks upon forks upon forks. And I wonder if that's finally like, you know, starting to be felt where like everyone's like like, like, right. And, you know, we always like joked about, oh, these are just valueless governance tokens, right?

But I think, you know, it might be coming a little bit true now where I think a lot of people are starting to realize that, like, hey, do these defy tokens really have any actual value? And it seems for a lot of them, they're not even useful for governance either. So. But it's also happened to the one project that has had no notable folks, right? So if you look at Maker, it's also slid down. It's at like 65 or something now. Wait, wait, but isn't Matt, isn't Mim like the fork of, effectively the fork of Maker, right? But like, I think what I think in 2020, everyone else started getting forked and like added a,

added like yield farming to the forks, right? But Maker never got forth until this year. But now I think Spell is like flipped Maker. And like I think MIM is actually in the top, is, you know, in the top 50 by market cap as they're like a stable coin. So I think Maker actually did get out competed or is in the process of getting out competed right now. Yeah. I mean, I also, I guess that's a different topic we're going to get to.

but I also, you know, wonder to what extent there's a factor here that, you know, Ethereum gas costs has just gotten like so crazy expensive that actually means like the, you know, the amount of users has really shrunk a lot, right? Where it's only now people have like a huge amount and then, you know, you have people going to lots of other things, whether it's, you know, Solana, Avalanche, Cosmos chains, Polygon, I don't. I don't know. And then I, I mean, that's obviously these D5 blue chips on Ethereum have generally

not been able to, you know, like replicate the success on Ethereum elsewhere or like, even how does that work, right? I guess always maybe the ones who seem to be, like, most aggressive in trying to do this and trying to like kind of launch over it in other chains. But, yeah, I think that's also something where, like, it's not working in favor of these defy bleep chips. So you're saying that there's a sort of dilution of the user base relative to other chains and the defy activity happening on other chains?

I mean, let's say someone now, right? Someone new is like, hey, I'm going to start using like crypto and like, you're not even going to tell them. I mean, I wouldn't even say them like, hey, you know, do some hearing thing, right? because it's like, doesn't make sense. Like the gas cost are like way too high. Yeah, yeah.

They're going to go to BSC or something. I mean, most people, I think. BSC, Sala, Avalanche, you know, somewhere, right? Yeah, and that's obviously bad for the Ethereum DFI project. Yeah. Also, I feel like, I feel like the, the DFI protocols that have, you know, tried to, like, Afe is a good example of, like, having, you know, tried to deploy multiple chains.

You know, there are tools to, like, move your liquidity over, but they haven't made it, like, super simple for their users to, like, you know, move their positions onto other chains where, you know, like, fees might be lower. And I find that kind of frustrating. As a user of these protocols, like, being able to just, like, in one-click move your liquidity over, I find that that user experience aspect is, like, not there yet. I do think that, you know, so one, I think that the multi-chain approach of Avey and sushi is, like, wrong, right? because I think that like the interchain application specific approach is the right one. But we can get into that later. But I think like with the ABE, this stuff specifically. So I wonder what one thing I need to like understand a little bit better is like how well are these things competing on these other platforms, right?

Because I like for example, I think that like I don't know how I don't know how Avey is competing, but I know how sushi is getting pretty out competed on the other platforms, right? So if you go on Polygon, like, so sushi has redeployed themselves everywhere, but like, you know, on Polygon, quick swap is the biggest is the biggest stacks. On Avalanche, it's like Trader Joe. And like, like, so I think what's happening is like, you know, these protocols that started on Ethereum and then try to expand are not able to compete with the protocols that are, you know, maybe native to the other ecosystems. Why do you think that is sunny? I think part of it is just like community sentiment or like you know the core team would rather promote the things that are like native to their ecosystem because they have a higher sense of loyalty and things like that. So I think that's a large part of it.

And I think also the things that are native to it maybe started there first, right? Like quick swap was on Polygon first and then like sushi came over. and stuff, right? But it's like by that time, because if you're expanding, you're sort of like playing this like, you know, mercenary of like, okay, all right, fine.

You know, the usage on your platform is good enough that I'm going to, it's worth it for me to start like, deploying there. But by that time, like the missionaries who really liked that platform and I started building stuff earlier, they've already built up a user base. Yeah, I mean, I think also one, one thing, thing is if you have like an existing token, right, that's already distributed to, you know,

like it constrains you a lot, right? Versus, okay, you can start it from scratch and use, like, the entire token supply, you know, tailor made to like try to incentivize and bootstrap the project on that chain. And then I think the other thing is also, if you then have like some coordination, It increases complexity in some ways. I think it will also tend to slow down these projects a little bit, make them a little bit less agile and nimble and maybe customized through the particulars of that chain. Sunny, do you think we'll see, you know,

Ethereum defy applications poured over to Cosmos when kind of EVMOS is live and, Well, I think we'll see Ethereum applications port over to Cosmos. I'm not sure if it'll be via EVMOS because I don't think EFMOS solves the problem. EFMOS is just another polygon or something, right? It's like maybe a more IBC compatible polygon. But at the end of the day, it's still just an, you know, it's an EBM running on tendermint. I think what might happen is we might start seeing.

So EFMOS is built on a software called Etherment, which is, you know, a lot of it was built by the EFMO's team, but also by a lot of other teams as well, like CryptoDocon. com and stuff. And so I think we're going to see more through applications deploy their own, like, sovereign chains with an EVM, right? So they're just going to take, put an EVM module and just have their contracts on it. And I think, you know, like I said, I had a bet two years ago that within three years, Maker will be on its own chain. So I only have a year left in my bet.

And I'm, you know, now I am getting a little bit more worried about my bet. I was like pretty confident. Well, you know, I made the bet because we thought it was a 50-50 over under. But, like, it looks, it's looking like that might not happen. But, you know, I think like things like compound, like, you know, they have for a long time, you know, they haven't been playing that like multi-chain game of we're going to deploy everywhere because they made this bet on compound chain and saying like, hey, we're going to go build an application specific chain to go and have that be the lending market for everything. Do you think these chains will be IBC compatible or? That's unlikely. Yeah, I think they will be.

I think that like, so one, because I think, you know, for example, compound has been built on substrate right now. I have it on good authority that they kind of hate substrate right now. I haven't heard anyone who has had a good time building on substrate. But like, I think that, you know, there is an IBC palette being built for substrate. So those will, so substrate chains will basically become IBC compatible. Yeah, I think, you know, cost us, it just already has this, like, big network effect on application-specific chains and being able to interoperate. And so I think we're just going to see more and more of that.

Yeah, I mean, I'm super bowlless on this vision. Like, I think that, I think that it's kind of interesting to see Ethereum starting and Ethereum and like it sort of, you know, EVM applications start going down this route. And like when I heard, you know, when when when when I heard about like nosis kind of merging off into his own, merging with with X-Eyes and it becomes its own chain, I thought, ah, like, it makes so much sense. And I mean, like, it's, it's basically the Cosmosis vision playing out on Ethereum only like without the bridging technology yet. But I would be so happy to see, you know, EVM chains. Well, like, first of all, like, Ethereum really adopting to see this, this, this, this. this sort of interchained vision and this like application-specific blockchain vision,

but also integrating IBC so that just everything works together. Sorry, I have to clear up, I think, a small misunderstanding here. So basically, Nosis chain is not going to be an application-specific chain. It's going to be a very general EVM-based chain that basically is an Ethereum forerunner in terms of implementing EIPs. does its very best to scale in such a manner as to retain reasonably cheap gas prices, which I think is currently, so I mean, obviously there's pros and cons for the EVM, right? So basically, if you were to sit down at the drawing board again, would you modify the EVM almost certainly.

But, I mean, there's such a huge network effect around EVMs that basically the bet behind noses chain is that EVMs are going to be there and they are going to stay. Kind of like, I mean, various Internet protocols are actually pretty bad standards. But once they hit a certain level of adoption, you can't get rid of them anymore. You can't change the email standard or something. It's like, I mean, yeah, maybe it's shitty, but it's there. And so basically, yeah, I mean, that's kind of the bet behind Nosis chain. That seems like, to be honest, that seems kind of like a strange bed to me, right? Because if you look at it today, right, you have, I don't know, what's some tens of millions of crypto users, right?

And we're so much at the beginning. And then if you say like, oh, actually the EVM is bad, but like, I mean, I don't believe these network effects exist in the same way, right, that you have if like whatever D-G-B-I-B-B-E or like... Yeah, I mean, they kind of do, don't they? Yeah, you know, I see both sides of this a lot. Because like, you know, one... So I will... I have this like tweet sitting in my drafts that I...

Which is like, it goes something like... Like, the early Cosmos team, like, Cosmos was right about everything except EVM skepticism. I think that like the early Cosmos team, like, we had this entire vision of like multi-changed things and everything interconnecting. I think the one mistake we made was that we were way to EVM skeptical. And we thought that tweet's been in your draft since last year because I think you mentioned the same thing in last year's episode. Well, okay.

Well, yeah, it's been sitting there. I don't know. But I think like, you know, I think like, you know, I did not expect that like the multi-chain would play out in such, just a bunch of generalized EVM chains that are talking to each other, right? I think that's, and that is kind of mostly what we have right now, right? like avalanche phantom polygon all of these are just ebm chains and i don't i'm still not sure that this is like the solution because i do i still do think that like the ebm is the bottleneck on scalability right and like i think solana has showed that where like you just if you want to achieve any

sort of real scalability you just have to throw the evm because that like you like avalanche you know they say they do all these like cool things at the consensus protocol there but at the end of the day None of it matters because the EVM is the bottleneck. But I mean, what you could do is, I mean, you could reduce, like, the database or the state size by taking a snapshot every year or something. I mean, there's a way is to actually combat this and make it workable, right? Or you just build, like, a compiler from solidity to, like, LLBM and, like, you know, let people write their contract and salinity and, you know, run in on other state machines. You know, I guess another sort of thing to talk about would be like, I think, so this is kind of maybe jumping ahead because this is one of the things I wrote as like a prediction for the future. But I think it picks in where I do think that 2022 will be like the year of app chains where like I think that Tara has like set the precedent for this, right?

Tara was like the execution of the cosmos vision where what they did was they started they started with this like application specific blockchain. chain, which is a stable coin. And then they've like sort of built like a tiny ecosystem around it where they're like, okay, we have this like app, this application. And then they're like, okay, we want to like drive usage for this application. Let's start building more sub protocols on top of it. And they've built up a little ecosystem on top of it. And then, you know, I think what's going to start to happen now with Terra is you're going

to see applications on Terra start to break off onto their own chains. Because, you know, I'm already talking to applications that are sort of in the, you know, thinking about this right now. And I think that like people, you know, and I think there's like, you know, projects like door chain and osmosis and stuff have been like following in that vein. And I think we're, I think we're going to start to see more and more applications start to do that being like, hey, you know, why, why aren't we also taking this like more application specific route?

And I think 2022 we're just going to see a huge explosion of these. Yeah. I mean, I think that's another, another thing that was a big thing in, in, in, you know, in in this year as I was I think IBC launching and then it's actually I mean it's been development forever and then it's pretty I think the amazing thing has been like you know just I don't know it got to like one million transactions IBC transaction sent like you know very quickly I don't know less than two months or something and then the other the thing that maybe surprised me the most and I think yeah big credit to

like sunny and the osmosis teams on that was just the user experience I thought was like shockingly good because I was often like worried wondering is that going to be okay but I think that's actually yeah it's it's it's good so I think that's that's clearly playing out well and I think it's just going to grow a lot and of course we can have other other types of rich technologies that will also have great user experience. I think the, and it's interesting thing, it's interesting also, yeah, to think about bridges and sort of see these like two ways,

I think is breaking out, right? I think there's like one thing, which is a bridge where you have like some trusted set of parties. And I think that maybe the two leading contenders there seem to be like, a wormhole and axel are. And that's pretty nice. because they can read the trusted parties can basically run like a full node on like whatever chain and they can make the footprint on the chain very easy and it can make a great user experience

and you can support like all kinds of chains and then but of course the downside is these operators have to then decide okay we are going to run a full node on this chain and of course the nice thing where we see that's again pretty amazing it's just the permissionless nature right like you can just spin up connected chains and and so i think that's that's i think both of those technologies have like a huge future uh and then yeah i think both of those have come a very long way this year maybe the trusted bridges are like a little bit behind but not much right i think that it's it's also very soon that i think they'll have uh you know be basically like very usable for like normal users.

I want to ask you guys about like sort of IBC and wormhole bridges like type technologies. What do you, what are the cost structures look like here and where are like is IB, am I right to assuming here like IBC is cheaper for for users than like the wormhole kind of model? So what I would say here is how what I see the difference here is IBC is much, much higher integration cost where, because IBC is this like very trustless like client protocol. And then you have these trusted bridges where you basically have people run nodes. To get IBC integration, you actually have to build something into the blockchain itself. And getting that IBC protocol into more frameworks is challenging, right?

So, you know, we're working, you know, the Cosmos teams are working on like, you know, getting it into substrate. And, you know, I know, of course, one is working on getting into cello. and it's a work in progress. With something like Wormhole, it's very easy. You just have to ask your validators to run nodes for the counterparty blockchain. And there's still development work to be done. So you still have to integrate multisags and you have to like, you know, there's work to be done. But it's not as much.

But I think the key word there is you have to ask your validators. I think that the difference will come down to something like Wormhole is really useful for connecting what I call famous blockchain. It's like, you know, it's great for connecting things in the top hundred to other top hundred chains, right? Where you have to have this like, you know, you have to get people to agree to make that connection and run nodes and has this like higher cost. The beauty of IBC is given how permissionless it is, where literally to make a connection between two chains, you just make a transaction on each chain and you have a connection going, right? And I think what happened. I think that's how you move from the world of hundreds of blockchains to thousands and tens of thousands, right? There's like chains I have never heard of that are like enabling IBC on cosmos right now and connecting to osmosis and like don't even have to talk to us about it, right?

They're just like going ahead and doing it. And I think that's like the permissionlessness is what's going to be like very different. Yeah. I mean, I think it's also if you think of like, okay, what? with these bridges, what is sort of the depology of these bridges? So I think if you look at something like Axelar, right, well, Axelor is a Cosmos S2K chain, and I think, yeah, I think Wormone is going in a similar direction, right? So it's Cosmos decay chain, and then you have basically any Bric, any IBC chain can just, like,

connect to that, right? And you don't have to ask anybody, and you can just use IBC. And then Axelar can basically have their protocol to connect to all. these other chains, right? So I think it makes sense to have like, you know, Cosmos bridges via IBC connect to like, you know, the bridge chain that then connects to like all these like non-IBC bridges. And so you kind of see both there, right? You can see the advantage of both approaches and then you can just combine them by having, yeah, basically like a chain that's run by a bunch of validators that you're connecting to all these other chains that then connects to all the others via IBC.

So I think one of the other topics we wanted to touch on and we should probably get to the prediction soon because we're already like 40 minutes here, but it's been really interesting, is like the proliferation of Dow's, Dow toolings, and the emergence of new organizational paradigms. And I think like one of the areas where we've seen lots of DAOs come up this year is around NFTs. So there have been like lots of NFT projects that have created DAOs with varying, I say like very utility. But what are some of the other kind of Dow projects that you guys have seen perhaps like outside of NFTs, so like in Defi or like community governance? I mean, I think what we saw was like the, we've started taking telegram and Discord groups and calling them DALs, which I think is kind of funny, but like kind of not wrong either, right? Where like, you know, we, I think, so one of my friends, they built this project called Commonwealth, which is this like governance forum for like.

but they pitch this idea to me called token curated communities where like you launch a token and it builds community around it and the community figures out the use case and I was all I was actually a little bit skeptical when they pitch it to me but it's like interesting that like what they did

so so if anyone's familiar with like the ion token ions are this like secondary token in osmosis that like it started as like just two days before launch where like hey let's just add in a token and air drop it to a bunch of people and don't tell them why or what it's for or why they got it or anything and let's just see what happens and like it grew this like really big organic community around it and this like community is like doing all sorts of like you know like you know they're

building stuff and they're like designing protocols and all this kind of cool stuff and it's like funny enough I think the most powerful Dow tool that's been created so far as Telegram Brian, what's going on with, like, free ton? Because I was just thinking about it the other day. Because I'm like, man, imagine Telegram figured out a way of monetizing, like, all the value that's being built off of their, like, platform. And, like, it's kind of sad that it kind of just, like, failed in such a spectacular way. Is there anything still going on with that? Yeah, I mean, yeah, so probably most people don't know the history here.

But, like, I can spend, like, a few minutes. on it, but basically, like, Telegram was, was, uh, wanted to launch a blockchain and they did this huge token sale, like raised like $2 billion or something like that. And then the ACC, and they, they had done a lot of the development work.

And then the SEC basically like last minute was like, you can't launch this thing. And then Telegram basically kind of like repaid their investors. But the code was kind of there. And there was some other company that was also like working on this thing.

And so, and the other were like, oh, let's go and launch this thing anyway and put most of the tokens in the community pool, right? And then before is also, we were like one of the validators that kind of like, you know, help launch this thing. And it's still running. They actually be branding to ever scale now, though, because apparently like the whole taormant thing has been like, you know, a bit of a, so it's still running. I think there seems to be like a pretty active community. It's sort of, you know, there's not too much intersection.

Like, you don't really hear about it much because I think it's like its own community. So let's see where it goes. But it's pretty active. Of course, it's totally decouple from Telegram at this point, right? It's just, it's basically just another like layer one smart contract blockchain. Now, of course, maybe at some point, you know, Telegram would like integrate that or maybe something else, who knows? I think in the end, it seems very likely to me that Telegram will probably, right,

turn the Telegram app into some kind of crypto wallet. I guess it seems like probably not launched their own blockchain at this point, but I guess that's another thing that's starting to happen, right, is that you have just a more, more crypto features being added to like mainstream consumer apps. And I think if you see the if you see the kind of monetization and business models and economic effects of like crypto, then I'm sure this is also something that's going to continue in a big way. I mean, I think even just to see it added to a lot of like traditional payments apps and

stuff. But like I think we're going to see crypto and more. You know, I'm hoping that we will see more like proliferation of existing crypto. You know, I know there was a lot of controversy this year around like Signal and how they like added mobile coin in and everyone is like, ah, what is this thing? And like, you know, just go out of Bitcoin wallet or something like that. Right. So I wonder how that's going to play out. I remember there was a couple days ago where like Discord, you know, I don't know, the CEO of Discord was like, oh, we're experimenting with some crypto stuff.

And then they got this like massive backlash from like their community, which is obviously a lot of gamers. And it's funny that game. So basically that was also what amazed me. How big the backlash from the Discord community, who for me would have been people who are so familiar with in-air purchases and so on still was. Why do you think that was, Sonny? They're still mad at us for stealing all their GPUs. I genuinely think that's like 70% of the reason.

Yes, yes. I think that the gaming community is still pissed about the GPUs. Has anyone talked to them about proof of stake? Maybe, probably. I don't know, maybe. Probably not, to be honest. I mean, I don't know how well they understand it.

But, you know, we can tell them all we want about proof of state. Sonny, you sort that out. You go speak to the game and speak to the game and speak to them to make them. social state. It's your age cohort. I think it should be you. I mean, I...

Yeah, I'm not a gamer at all. What's this boomer doing here? I'm not a gamer at all, but yeah, I mean, I don't know. I mean, well, even if we did tell them, maybe they did understand proof of stake, but we told them that it would be coming in like, what, 2017, and here we are, like, four years later, and, like, we're still sucking up their GPUs, right? You know, I wonder, even once Ethereum switches away from proof stake, I don't know.

if that's going to get solved, right? Because, you know, some other GPU coin is going to pop up and still going to be the suck of, like, GPU compute. So I'm not sure that's really going to be a solved problem. I think basically the, I mean, the demand is going to go down, though, right? I mean, so basically I think, I mean, if, if like large market cap chains shy away from, from proof of work, it's bound to happen, no? I don't know if we're going to get to a world where I think that the, I mean, no matter what, the opportunity cost of using GPUs for gaming versus mining is always going to lean towards the mining. And so the costs are still just going to go off for GPUs. I have a thesis that kind of brings together the last two points we talked about.

So I think a good chain for Dow tooling is going to make a huge. is going to be a huge acid in the layer one wars between different chains. So I think the chain that kind of draws other communities around Dow's, it's just, it'll be difficult to beat. And, you know, another thing to discuss about, you know, kind of semi-related to the ESG stuff, like, you know, kind of stuff, is, you know, I want to talk about like the Elon stuff and like the return of Dogecoin. And, you know, so I think for me, I think that was actually one of the biggest things that happened this year.

It's like sort of this like return of meme coins, right? Where it started at the beginning of the year with the GME stuff that happened in like, you know, the normal like Wall Street bets and all that kind of stuff. And, you know, I wonder how much of which direction this like cultural thing came from. Like was it a lot of like, you know, it felt. very like this moment where like oh crypto culture is like or like vibes are like proliferating into like the normal market and I but I wonder if at the same time it was also like heavily influenced in the other direction as well um yeah I know if anyone has any thoughts on like you know

this how much like you know just the meme coinery that's been happening and like Shiba entering the top 10 by market cap and things like that yeah I did not see that coming so basically I thought, you know, I didn't even get dope. I mean, I kind of semi get Dogecoin, but basically, yeah, I, I, I mean, Sheba, I, I just don't get it. I mean, yeah, I, yeah, maybe I'm, I'm too much on the boomer side here. Yeah, and I mean, in the end, it's like a lot of non-crypto people who are getting burned by those things.

I mean, okay, so I have two interesting thoughts on Dogecoin, right? One is when I left tendermint, like last summer, and I was figuring out what do I want to spend my time doing. So this is before I started working on osmosis. One of the things I spent like a couple days actually like researching and looking into was, hey, I want to bring Dogecoin onto proof of stake. Because I had this like whole idea of that like, you know, okay, we're going to show Dogecoin moving to proof of stake. And this is going to be like set the groundwork to move Bitcoin on to proof of stake. in like 20, 30 years from now. And so, and I, you know, I, you know, I just still really like Dogecoin.

Like, Dogecoin was actually my first, like, exposure to crypto. And it was like, you know, it has like this special place in my heart, I guess. But then when I looked into it last summer, you know, I spent time, like, researching the community and going through their Reddit and stuff. And I came out with the conclusion, oh, no one, Dogecoin is dead. Like, no one seems to care about Dogecoin. I'm just this, like, weirdo that still seems to care about it. but like otherwise this is like a dead project.

And then like you fast forward like six months and it's like, holy shit. I was very wrong, obviously, right? And so I think that's like a very funny. You'd be a Do's billionaire by now. Yeah, maybe. So I don't know. I still think there's a good chance that we can get Dogecoin to entrepreneur state. Right.

I think that Elon stuff actually helped where like, you know, because of his whole like energy usage stuff with Bitcoin, If we can get Dogecoin onto proof of stake and get like a tweet from Elon like supporting this, I think Dogecoin will move on to proof of stake. And I think this will be like, I, so here's the other thing, right? I actually, you know, I am very bullish Dogecoin. And I just like, I think it's the second most important crypto. Because the thing is, I can go out on the street today and ask someone if they know what Bitcoin is. And they will, right? they've heard of Bitcoin.

But I can ask them if they know what Ethereum is. They actually probably don't know what it is. They don't, like, you know, but like you can ask them if they've heard of Dogecoin, and they have heard what it is. And I do think that Dogecoin is legitimately the thing with the second highest, like, cultural permeance. And like, I think that is very important. I think this year, the number of people involved with crypto has expanded massively.

And I legitimately think it's from two things, which is, One is the NFTs and the other is Dogecoin. So when hyperdogenization? Once, well, you know, we got to find some people to switch it on to mistake. I think this is like a one-year project. And we know, if anyone, if anyone listening is interested in taking this on, like, please reach out to me. We will fund you to do this.

Like, we have funding for this. Funding secured. There's an allocation of the Osmosis community pool. that is put aside for... Yes, there's gonna be $150 million in the Ostmustis community pool by the end of the week, and we will make sure there's a solid allocation for anyone who wants to help move Dogecoin onto proof of stake. Yeah, I mean, I think, though, in a way, is the Dogecoin thing, like, okay, why?

And I think the GameStop analogy makes perfect sense, right? Because basically it's sort of like the power of the crowd. People can be like, oh, let's just rally around this thing, all like, you know, pump it up together. And it's kind of fun. And it can have an impact and it can, you know, pump and make money and then maybe crash. But who knows. And I think that's, yeah, that's just a very powerful thing, right? Like I think we see again and again, like these memes and ideas are just very, very crucial.

But you need you need a common enemy, right? So I mean, basically the entire apes together strong thing. This only works if you rally against someone. Like, I mean, the hedge funds or, you know, the people who say, oh, why are you poor? You're eating too much avocado toast just invest in stock. And then, you know, you do it. And they go like, no, not that way. So, yeah, I mean, it's like, I mean, you kind of, you need this, you need this image of what you're going up against, right?

So question, is that, is that, is the CEO of Citadel the one, like, is he like a literal bond villain? Because like, you know, he must have heard of constitution now trying to buy the constitution and this like whole community organized thing. And I feel like he like specifically went in and it's like, no, fuck this. I'm going to like go rug this like constitution from like this like community organized effort. Yeah. That is actually constitution does. I mean in a way it makes sense though, right? Because he's like, you know, I'm a frontrunner.

Yeah. What I do is like frontman's like well this thing I can frontrun this pretty obvious. Right. So in a way it's like, you know, hanging a fish in front of his mouth and then like he has to eat the fish. But actually the Constitution was like another weird thing to me, like crazy thing. Because I was like, this is a cool idea. I would like support this. And so I put some ether into it.

And I honestly thought of it as like, oh, this is just like a donation, right? And then the thing failed. And the people said, oh, we're going to shut it down. But there was a token. And the token, and so I ended up, you know, like then selling these people token. And it was something like 20 times up in the terms, right? In, within like two weeks for a project that basically seems to fail. And that's also such a, like, bizarre thing.

And the most amazing thing would be, okay, like, now what if these people actually turn it into something because that's that's the weird thing right like okay they lost the auction but actually this in a way the whatever 40 million that was like put into that thing was at some point then you know a market cap of i don't know it was like a billion or something or definitely like more than 10 times up from uh so yeah bizarre but i think goes to show the power of these yeah these memes. I like how in the mainstream press, basically the way that the Constitution there was described was frequently as a group of internet friends, which I think it's funny and it's totally not

wrong, but it's so funny. That's so false. So to bring it back to the Dogecoin thing, one last time is this one thing I wanted to mention as well was, you know, I think like every epicenter episode, every end of year episode, I've always brought up this idea, like, sort of this bet with Brian, that, like, a light coin is going to remain in the top 10. And I think this year is fine. I've been winning that bet for the last three years. But I think this year I finally lost that. But I will say it is because of the black swan of Doge coin flipping light coin, which I did not expect, right? Because

my whole, like, thesis on like, coin was this, like, memetic of, like, hey, it is number two after Bitcoin and that is a funny meme and that will keep it going. But once Dogecoin had flipped like coin, I think that like meme stops working. And I think Dogecoin has basically taken that like cultural place of that like coin did. Even Sheba flipped light coin now. So I guess the last thing that we had on our like, uh, on our like interesting things for this year was Bitcoin and El Salvador. So what are you guys' thoughts on this?

Is it, is it a big deal or not? I think it's a big deal. I think in the end, if you look at the crypto thing, right, like what are the potential responses? I think one big response is going to be like, this thing is threatening, you know, our power. It's threatening, you know, our control. So we are going to like, I don't know, try to ban it. I don't know, like in China.

or maybe restricted in some very, very narrow controlled way which seems to be like India now right? Or like

in some other ways try to control it but there's obviously that obviously means with the ability to just like move somewhere else and all of this being basically open accessible anywhere anyway

it means like actually the more some countries do that the more there is to win by other countries going to the other way and then you also have the thing, and that applies, you know, if you look at crypto, right, if you look at Bitcoin, you've always had the effect that, like, if you know this thing's going to happen or it has a good chance of happening, if you go first, you have the most

to gain. And I think the same thing is true of countries, right? So I think countries that, like, deviate from this control crypto path and countries that go early, you know, have a huge amount of gain. And then I think the El Salvador thing of basically now. supporting Bitcoin, issuing bonds, to buy Bitcoin and stuff. Like, I think it is huge. And I think it will end up being an amazing decision for them.

I think you had an interesting thing you mentioned earlier where it's like the micro strategy like play applied to a country. Yeah, totally. I mean, the opportunity cost for a country like El Salvador was also a lot lower than of countries that actually have a, financial market policy for their for their currency right so basically if you're for instance the u.s you have a lot a lot more to lose than the country that de facto uses a foreign currency as as it's as its currency anyway totally yeah exactly like who's going to do that yeah make countries that don't have their own currency i think it's like small countries poor countries it's not

and it's not going to be you know the US and Germany and China and India you know these huge countries that have yeah yeah in the end of course let's see like I would say like you know

for me it was like I know a lot of people were like oh yeah it's just like you know it's El Salvador it's like tiny country but you know for me when I it took me a while to like I was just very busy with the cosmos's lot at that time but one day I was just like in the shower

just thinking and I was like holy shit. Like, can we, like, let's rewined back five years ago, like, at least when I got into crypto. Like, I would have never, like, imagined, like, being, like, a real country, like, not like a fake country, like, Liberland or something. Right. No, this is, like, a UN-recognized country just declared Bitcoin as legal tender. And just the, like, magnitude of, like, wow, how far have we come in this, like, great. great geopolitical game of the 21st century, that, like, Bitcoin is, like, legal tender of a

country from being this, like, internet dark money from, like, five years ago. I think that's a big, like, big leap. One small step for a coin, one great leap for coin kind. I don't know. I think this kind of ties in well with one of the themes you had mentioned, Brian, which is, like, government legitimacy. And, you know, if smaller countries that have, like, less opportunity, that have, like, a lower opportunity cost, start, you know, using Bitcoin as legal tender,

issuing bonds as legal tender, denominating, you know, perhaps government services in crypto, if a lot of, you know, a lot of these countries start using Bitcoin, do you guys think that there's, you know, potential for that to become a sort of dividing line between, you know, Western countries that try to, yeah, I'm talking about like US and Europe, you know, that try to keep, like, grasp on, like, their power of the world and of finance versus, like, all of these kind of other countries that, you know, Western countries want to portray as being, like, anti-establishment, you know, anti-whatever money laundering, like anti-money laundering, like anti-terrorism. Like, do you think that will, if, if this starts to play out and like a lot of African countries and like South American countries start adopting Bitcoin that this new axis of evil, you know, we might want to put it like starts to emerge?

Let me maybe talk about, so I'm not sure at this point, but let me talk about like this, my idea around this government legitimacy point, because I see it maybe a little bit differently. So if you, like, how do governments have legitimacy, right? Like they make basically a bunch of rules and then they need to be able to like enforce those rules most of the time, right? Of course, there's going to be like some people who like don't follow the rules, but in general you have to be like, okay, if the government makes these rules, I better follow them because otherwise like they're going to come after me. And if they can if they can do that, then like, okay, you have to like respect the power of the government. But already, I mean, crypto is kind of a problem for that, right? Because even if you look at now the SEC, right, the SEC at some point made their statement of like, oh,

you know, all these open sales are securities and like, you know, that kind of function that most people were maybe like intimidated enough and they didn't do it. And they enforced it. They went after a bunch of projects. But they even there, they had the problem that, you know, the number of projects they could go after was like limited because their resources are limited and they have to do like this investigation where it doesn't scale at all. And, and then of course, you had all kinds of stuff going on for a long time that, you know, I guess, is against their sort of spirit. And now if you look at,

uh, if you look at all of the things happening now with like defy and DOS and NFTs and I mean, where is like the SEC, right? They're like years behind somewhere else. And I was recently speaking with, you know, some German company that's like regulated, speak of regulators. And they were telling me like, oh, they speak with regulators. And like each time they're like, what's staking again?

Like how? And they're just like totally. somewhere else, like years behind. And so I think that's already is like a huge problem for like the regulators and the legitimacy and power of regulators. But I think where it's going to get like much, much worse is around taxes. Because taxes is not something that's just applies to like a bunch of companies and projects, but it applies to like everybody. And I think that already you have to challenge that if you're like active in crypto and if you make i don't know the nfti defy stuff a bunch of you know yield farming a bunch of transactions it becomes like really hard to file

taxes right because first of all like what are even the tax rules that apply and second all even if you got some understanding of the tax rules how are you going to go like get all together these transactions and i mean it's it's it's like gets pretty quickly to sort of the point where it's like an impossible task. And you know, as long as it's a small group of, you know, crypto people that do that, maybe it's not such a problem. But I think if you get to the point where you have, you know, 10% of the population or 20% of the population that are like using those things because they're like, I don't know, games and artists and they're just part of like the consumer application people use. And then they're also, even with,

without wanting to, basically violating the taxes and not filing it properly. And like, I think that's going to be like a huge, huge problem and like extremely hard to address. I agree. And so basically, there's a couple of governments that have started addressing this by just taxing off ramps. Right. So for instance, Austria does this now. So basically there's, you pay capital gains tax on all your gains. at 27 and a half percent or whatever Austria's capital gains taxes.

But it only applies to off-ramps. And I mean, to a certain extent, that's a good rule because you can forget all your crypto to crypto. You just need to have like some cost base that you construct somehow. But basically, all the crypto to crypto transactions, they kind of, you can forget about them. But on the other hand, I would assume that we might. move into a direction where the line between crypto and non-crypto assets will be increasingly erased.

And then basically, what are you going to do then? So basically, then you tax like a certain class of assets at 25%. You class income differently. You class, I mean, it's a total mess. And I don't know how to go about it. What do you guys think? Yeah, I mean, like, France does the same thing, right? It's like you, you only get taxed on the off ramps.

And already there, it's complicated, right? Like, even as a, even as like a crypto user, because, like, you have to, you have to kind of, like, you know, keep track of like every time you go in and every time you go out. And it's like, it's also not clear whether or not, like, off ramping is just selling into euros on like crack in or actually moving money to your bank account. just kind of like it's kind of vague there what if you buy what if you buy a house with USC that's also unclear so that's that's that's that's that's also settled on unclear yeah what if you buy a token that allows you to live in a house for you yeah or like what if you use us DC to like invest in equities or invest like I mean there's all these sort of edge cases that like what if you take a loan against like you know a like position of

and use that USDC to like invest in a company like or you know where you get shares essentially like there's all these sort of edge cases that laws the law currently doesn't account for uh at least in in France I think like a lot of places there are at least like sort of gray areas that probably will get figured out in the next couple of years but then then there's just a question of control and like I think it touches on Brian's point is like you know where like how easy is it for governments to actually control these things. And I think it does fall into the bigger issue of legitimacy that I was talking about. It's just a different facet.

You know, it's like the legitimacy of crypto as the thing that people use to like, you know, you know, like buy things, invest, et cetera, versus the legitimacy of like existing institutions. And whether that exists sort of at an individual level where it's like people, you know, having to pay their taxes or whatever. or like a government issuing bonds and being like, fuck you to the, you know, to the dollar standard. It touches on like the same, I think, legitimacy issue of like, you know, well-established economies and well-established countries, like trying to really hamper like the development of crypto. I'm not sure what the response is. I think the taxing off-fram things.

it's clearly not going to work, right? Because very quickly you're going to stable coins and all that kind of stuff. You don't have to off ramp ever, right? Or like maybe only if you have some sort of consumption. But then it maybe like just equates to like VAT, right? Or something. I mean, so I don't think the off ramp thing is going to is going to fly. I think from the perspective of like it being easy for people to like pay their

taxes, I think a wealth tax is actually easiest to do, right? Because like, let's say if at the end of the year, you just have to see, oh, what are my crypto assets and then like self-reported and you're like, oh, you're paying like half a percent of that in taxes or something like that. Like that, at least, I think that's going to be pretty, you know, you don't have to think worry about your transactions during the year. And like, I think that, that will, of course, still be hard. It would not, it would be hard for governments to like make sure people report it honestly, but at least if people want to pay their taxes honestly, I think that's something that's, you know, going to like work well even in the future.

But of course, that's completely different from the way taxes work, but even where you have a wealth tax, I mean, Switzerland, you have wealth tax, you don't have capital gains tax. So like that, it kind of like still works pretty well, I think there. I'm not sure, you know, how like staking and yield farming and stuff like that is treated. So it's probably, it's still going to be issues. But I think that tax system works like much, much better than a lot of others in this kind of environment. Yeah. And I mean, Germany in principle has a wealth tax.

Basically, it's just currently 0%. So, I mean, in principle, this has been done before, right? I just basically, we just got a new government and there's, um, there's a, um, there's a, one of the parties that have come to powers, the business-friendly, free Democrats. And, yeah, so basically in Germany, there's no chance of that happening in the next four years. Do you guys want to talk about MEV?

I know it's one of the things that kind of we talked about in advance and speculated about what would happen in 2022. And there were pretty disparate opinions here. it's a solvable problem anyone who tells you otherwise is lying yeah i'm 100% with sonny on this one great onto the next point can you yeah so you think it's how is it solvable or like you think it's a solvable problem for like a particular application or like let's be more specific i guess what i'm talking about is like yeah look what i care about more about than mb is front running which like a very specific type of MEP.

But, you know, I think there's just like harmful meme that's in the community right now that MEP is like inevitable, like evil that we have to like deal with. And like, okay, we should just like, you know, instead of like trying to solve the problems, we should instead, you know, just build these tools to like extract them and like, you know, have this be a profit source and like all this stuff. where it's like, no, this is like literally harming users. And like, you know, I think one of the, we were talking about or our team, like, okay, why are decks is better than centralized exchanges?

And I think the biggest reason we could come up with was because they can provide MEP resistance in a, or like front running resistance in a way that centralized exchanges can't. I think that is, you know, that is the reason why you should use a decks over a centralized exchange. And, yeah. So, you know, I think that certain types of, you know, is MEV going to be limited to zero? No, there will always be some MEV and some front running. But it's like, I just think that the community is like settling on a very harmful like spot where it's like, oh, this is actually okay.

So we've been thinking quite a lot about this. and also thinking a bit about, you know, like the ethical thing. But like one, so, you know, sandwiching, right, people were like, okay, that's clearly bad, right? People are losing and like, okay, that seems to be bad. And then I was like looking at this other thing. So there's this like liquidity sandwiching. It was called. But basically it's like, okay, someone's making like a trade on like uniswap, right?

And on uniswap, we three, right, you can say where you provide your, liquidity, right? So you can provide it in like a very, and you know, normally somebody might say, oh, I provided in this larger range where most of the trading is and then, but if you can concentrate it very narrowly, right, it means like with little capital, you can provide a lot more liquidity. And so basically, in this liquidity standard thing, it was like, okay, someone's seeing, oh, some trades coming in there and they're putting in basically liquidity in this pool before the trade happens, they take it straight out, right? So basically they have like provided liquidity for like an infinitesimally small moment.

And now is this like good or bad, right? Well, for the trader, it's good, right? Because they're getting less slippage. For the liquidity provide, the other liquidity providers in the pool, it's bad, right? Because they get less of the fees and this other guy just comes up with like little, there was some guy from Uniswop, right, who like, comment on this thing. And he was like,

this is amazing. Like, what an amazing use of the power of Uniswop V3, right? And now if you think of this... You know what that's called?

That's called an order book. Yeah, but I think if you think of like, okay, what are the like second, I mean, first of all, what is second order

consequence of that? Like, I don't know, maybe Uniswap V3 has to change their design, right? Maybe you could make a, maybe it just is the reality

of how it works, right? and maybe liquidity providers have to adjust. But it makes it very much of a thing of like good, bad, heart, like, how do you even know? How do you even look at it? And so I think if you look, if you, I kind of like Phil Dian, you know, the guy who, they love his work and is one of the Flashball founder. He had an article where he was basically sort of saying, okay, if you look at M.E.V.

there's like, if you're like a minor or validator, you should like extract it. If you're an application developer, well, you have to design your application, right? So for example, Uniswobv3 has to then think about, well, it's possible for somebody to show up, right? Like, quickly for a single block, remove it straight again. And like, what does that mean for their design? Is that design still work or not? I'm not sure, right? But maybe they have to change it.

And then, but of course, right, like if you. like let's say osmosis or something it probably makes a lot of definitely will make a lot of sense to think like okay what are the types of things that Validator could do right that would be bad for the user and then prevent those right

that obviously makes sense yeah I think that I mean two things one I think so about the unistop B3 liquidity like sandwiching I think this is going to have like negative second order effects so that like you know

like I said You know, you're devolving back into an order book. And I think the AMMs worked because they have these like really cool second order effects where it became very easy. It's okay. When you have this like liquidity sniping starting to become more prevalent, no one's going to be a passive LP anymore because you're basically going to get screwed. You're only going to take the IL and basically get none of the fees. So what's going to happen is people are going to stop being passive LPs. You devolved into an order book.

And part of the beauty of AMMs was like, you're like, hey, If you have a new token, it decreased the barrier to, like, entry for new projects, right? Where, you know, currently, without an AMM, you have to go hire basically professional market makers to go, like, market make your token and, like, do all this stuff. But, like, without that, with AMMs, you can just have your community be the market makers for the thing. And this decreases the barrier to entry to launch new projects. And that's how we got this proliferation of like new tail end assets of which some of them go on to become these multi-billion dollar things, right? But like if you get rid of that and like basically make it so no one can be passive LPs anymore, you're going to basically just increase the barrier to entry. And that's going to have like harmful effect on the ecosystem as a whole.

But don't you think there are ways to actually design market mechanisms that also work for basically for A for, for, for. for discrete time, as you have on blockchains, and B for a large number of long-tailed tokens. So basically my position would be that, of course, Phil Dayan says what he says, because, I mean, I mean, of course he would say it's the morally upstanding thing to extract MEV to kind of keep the system secure. I also find that, I mean, to me, it's not just questionable. It's outright morally wrong and whoever can't see that is I don't know what they're looking at.

But yeah, I think there's lots of ways to actually design apps to eliminate MEV to a large extent. And I think privacy is going to do the rest. So I think that's going to be the solution. I think the burden falls on a combination of the app and the protocols, right? Because I think the blockchains can actually do a lot of the heavy lifting here, right, where I think you can do, you know, threshold encryption, you know, order randomization. We have this thing called joint proposals where instead of having one person propose a block, you have multiple actors be allowed to contribute transactions to a block.

And like you combine a lot of these techniques together at the protocol layer. You can get rid of like 90% of the harmful MEP. And then, you know, I think you tack on additional application layer things like batching and like things like things like this. I think, you know, you can solve this quite a bit. So I want to hear Brian's take on Herbert because you've been talking about it recently. And again today and this is a project that I've not followed. very much since we last had them on, but that usually be pretty bullish on. So what's going on with Urban?

Yeah, I mean, I was, so I guess I've known the Erbit, or Galen, known like some of the Irby team since like three and a half years. I also bought some, some intergalactic real estate back then. And I always was like enormously like drawn to, the vision of orbit of basically having. I mean, what's the vision of orbit? The one explanation that has, to me, always felt like understandable and kind of make sense to me, is, okay, like, back in the day, you had, like, your own computer and you went to the store

to buy a CD with the software and, like, you put the software, like, seed in your computer and your data was in your computer, and then you ran the software on your data, and, like, that's kind of how computing. worked, right? And then you need the cloud, and then the program was in the cloud, and new data was in the cloud. And so my understanding of where it is basically, okay, let's create something like a basically computing framework again that kind of works like back in the day where I have my own kind of virtual computer and my software runs in my computer and my data is in my computer and I can and then you can distribute software and you can communicate with other peers.

And so I was always very drawn to this. Now, of course, urban has gone like ultimate hardcore in terms of we don't use any existing technology and we do everything from scratch. And the project is 20 years old at this point. So the first 12 years, this is just one guy who did it on his own. and then I think Galen, so it's a very old project, right? A huge amount of work went into this. But now, I think early this year, you know, there was like now UI on orbit, like a landscape

and I've been, yeah, like using it a little bit. And it's nice. You know, you can see, actually, I think you can see the potential already. There's some people who built a Bitcoin wallet in orbit, right? So you can have like, you know, stole your Bitcoin in orbit and make transactions from there. And, uh, and, uh, yeah, it's cool. We've had some people at course one who are like pretty, like very interested in

orbit too. And so we're, uh, we've been actually, uh, been wanting to like onboard everyone in the company onto urban. So like, maybe you can start using it a little bit. Uh, so I, I'm definitely bullish in urban. And I think it could become a sort of. A bunch of different stuff. I don't know.

It could definitely be a replacement for, you know, Discord maybe, right? Like, you can have communities on there and chat and stuff like that. I mean, you have an addressable name, right? So, like, you can easily, like, message others on Erbit. You could have it as a sort of, yeah, you could store keys in there. There's also one thing. There's something called Urban Advisor, where they basically built some kind of Metamask-like thing. So it's like a browser extension and then you know you could like go on

something and then you can basically like you know sign something from from within your orbit right like you access your urban planet and like that's so you could use like I don't know sign in with orbit right anywhere like I think that would be would make a lot of sense right because you also have your yeah your username uh that uh is like human readable and they have great designs and I think everybody always had like just amazing aesthetic. So yeah, I'm I'm excited. I had a tweet a little while ago asking people what project do they think has the best aesthetics. And I think like Erbit was like buying far like the number one like response.

Yeah. I totally agree for sure. For sure. Okay. So let me get let me take a stab at trying to explain Erbit because I think that like no one understands it. Part of the problem is every time you ask them, they like go on to this like deep weird tangents about like the vision, which is cool. But like no one has, no one displayed to me correctly how it works. And so this is my understanding.

Can you confirm whether I'm correct or not on this? From what I, okay, do you guys remember a secure scuttlebutt? We did an episode with them a little while ago. And it was basically this like social network that used like how. a dag-like hash-linking structure to build a network. So basically, it will use a gossip network. And, you know, that Sebastian will send a message to me. I'll add it to my little hash chain.

And then next time I send a message to Brian, I'll also pass along all the messages that Sebastian had said to me. And basically, we get some sort of eventual consistency on the topography of the social network. And, like, you know, if people like, you, and it's okay for eventual consistency. because a double sign problem is less of an issue when we're talking about social networks than it is when we're dealing with payments and money. So here's my theory of what Erbit is. Okay.

So Bitcoin invented this cool new data structure called a blockchain, and it was just like very fast consistency, all this stuff, cool things. And they invented it for payments. And then Ethereum came along and said, hey, cool data. data structure, what if we slap a Turing complete VM on top of this? Now, my theory is what Erbit does is it looks at Secure Scuttlebutt and says, hey, cool data structure, what if we slap a Turing complete VM on top of this? And so basically what's happening is I have my little VM that's like doing all this computation and it's like it's hash linking the result of all the computation. But every time your VM sends a message to my VM, let's say it's a, you know, anything that you would send over the internet, but any message you sent to me, I include that into my sort of hash linked tree. And then when I talk to Sebastian, I tell him, hey, by the way, Brian's VM sent a message to my VM. That's what I understand, Erbid to be. Is that, am I on the mark here?

I'm not sure but like so here's another like when we had this internal talk and then we had a guy from the team Irwin who gave a talk and one of the ways he explained it which I also thought was nice was that if you if you look at crypto

right in crypto we have like transactions right and you focus you have all these chains where you have different accounts setting different transactions and then identity and data often something that's kind of like the layer on top of it or on the side. And then with Erbit, right, you really have, it's like identity and data that's like the foundation. And there's actually no blockchain, right?

And there's no transactions. But then you can put those on top. And so it's kind of inverts a little bit, the normal approach we have in blockchain. And I think that makes sense, right? And also sort of like what's, or maybe. another way to think about it's like what's your like your digital home like where is where's your like your base in a way like maybe it's like your computer i don't know like your heart disk on your computer or is it something like last past like or a password manager maybe or like no i i get i get that my

question is i want to understand is how does it work and that's what i'm like you know i don't i haven't fully understood like okay they say like okay yes you can train transfer your state of your computer. So instead of being linked to a physical server, it's just like transferable thing. But my question is like, yes, how? And my assumption, what's happening here once again is like, you know, let's say I have this entire hash link of all the computation I've done. I sent that over to Sebastian. And then I destroyed this computer and moved to a new computer.

When I'm syncing up again, I find out from Sebastian, oh, here's the current state of, or at least Sebastian's knowledge of the current state of my V. am. This is all the computation I had done up until then. Yeah, actually, so that is something I don't know. You have to ask somebody more technically confident about Saddam. I'm not sure. I'm trying to boot up a ship right now and it's telling me it's going to take an hour. No, I mean, this sounds really interesting.

I think, I mean, I was like, Secure Scudlow was a project that I thought was really cool, like, technically and like I like this idea of um yeah being able to create a sort of hash chain without a blockchain and like essentially you you um you sort of like sync state at like whenever you want right like you send a message and you can sync that state over um you know even like over when like if you're in the same in the same place or over like a um like a USB stick or something like that. And so, yeah, it seems cool that you could also do that sort of like with computation. Yeah. If my understanding of it is right, that's really cool. I think there is a lot of cool use cases of that. This was super fun and I will look into Abbott now.

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