The Breakdown - Are We Measuring Crypto All Wrong? | Nick Almond

Episode Date: March 24, 2026

While The Breakdown is between seasons, we’re sharing the full version of a past conversation with Nick Almond. The discussion explores how to think about crypto networks, why common metrics can be misleading, and what actually matters when evaluating activity and value. Follow Blockworks Research: https://x.com/blockworksres Follow Nick: https://x.com/DrNickA Follow David: https://x.com/dcanellis — Nexo is the premier digital wealth platform. Receive interest on your crypto, borrow against it without selling, and trade a range of assets. Now available in the U.S with 30 days of exclusive privileges. Get started at http://nexo.com/breakdown Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/ — Timestamps: (00:00) Introduction (03:07) Ethereum vs Solana Endgames (06:18) Nexo Ad (06:54) Valuation Paradigms and Realism (14:56) Nexo Ad (15:47) Decentralization vs Fintech Future (24:44) Measuring Decentralization — Disclaimer: Nothing said on The Breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Host and guests may hold positions in the companies, funds, or projects discussed.

The Overton window is shifted in crypto on decentralization. So decentralization is a continuum. For the first sort of era of crypto, we used to think it was, you are decentralized or you're not. But there are degrees of it. And we're actually just getting to the point where the kind of line of decentralization is being negotiated. Is this a decentralized network or not?

And I do think the likes of tempo, who for me, have kind of crossed the line into this permission validator set, which we used to call proof of authority chains. That was a kind of previous red line. And we've moved into an era where we are letting go of our previous paradigm of decentralization. And that's pointing a kind of selective pressure across the rest of the industry. This episode is brought to you by Nexo. Step into a new era of digital wealth. Earn interest on your digital assets, borrow against them without selling and trade all in one platform. Get started at nexo.com slash breakdown. Nothing said on the breakdown is a

recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are opinions, not financial advice. Hosts and guests may hold positions in the company's funds or projects discussed. Welcome everybody to The Breakdown. I'm your host David Canales. And with me is Nick Armand, the head of governance for Gito Foundation. How's it going? Very good.

Thank you, David. That's good. You've heard me ramble on about, you know, this idea of what the most used chain might be for the past 15 minutes, I guess. What did I get wrong? What did I get right? What do you think? I thought you were largely over the target, actually.

I think you were right to kind of critically analyze the way in which we're evaluating these chains. I think the kind of argument around pulling out how Bitcoin is different, Bitcoin's valued most in the market, and yet it effectively is close to zero on revenue in the classic sense. So the metrics that we're using to measure blockchains, things like daily active users, all of these things like need to be revisited in this kind of new paradigm of value, if you like. We did catch up, you know, before we kind of had this chat just now. And, you know, something that came up was that, you know, Salana is really kind of headed where the market wants it to go. And in some sense, Ethereum and under Vitalis leadership, that isn't so much of a concern.

And instead they're kind of looking at Ethereum would kind of. of play for what, you know, society, they think society needs in a few decades in these kind of really hyper-decentralized networks for more, you know, public good use cases rather than high-frequency trading and stuff like that. How long do you think it will take for the market to kind of realize that it does have control over what these networks are doing are kind of in terms of a business development sense and their trajectories? Yeah, I think we're definitely seeing this, potentially like a bifurcation between the end game

for these different networks. I think you're right there to frame the Ethereum goal, which is much more cypherpunk, right? So it's much more about building a hyper-resilient network that will be here in a hundred years. You know, Vitalik is a long-termist, the roadmap spans, you know, decades, really. So it moves slower and it optimises for resilience and decentralization.

But the trade-off of that is it's not going to move to where the market is quite as quickly as, say, Salana is directly doing. So I think there's trade-offs of both of these dynamics. And at the moment, the market values decentralization very high. leaf, you know, the kind of top two most decentralized networks, if you like, being Bitcoin and Ethereum are top two in the market. So it's clear that that kind of resilience, long-term, Lindy effect kind of system is valued in the market. However, I do think there's going to be a huge amount of value to moving where the market is to facilitate things like high-frequency trading, sort of low latency, execution, high quality execution. And yeah, those are tradeoffs

that Vatelic and Ethereum at large don't really want to make because that will kill home stakers and it will reduce decentralization on the network to a point where I don't think Vatelic finds tolerable. On a long enough timeline, it does kind of feel like Salana will eventually be faced with a very similar conundrum as what Ethereum is facing. and that, you know, Solana is, you know, working through this process of reducing token emissions to reduce the subsidies for validators, which has made it somewhat less attractive to run a validator for some of the existing participants on the network. You know, and that can only go on for so long because those token emissions are valued

based on the price of Seoul. And if we enter a world where the price of soul goes up dramatically from here, then all of a sudden, it doesn't matter that the token emissions have been pulled back. And at that point, it would become more attractive to invest in the high computing power, bandwidth and all that sort of thing that you need to run a validator. So like that, that kind of feels like that both Solana and Ethereum, while they're on the same side, they're not exactly competing for the same end goal. But at the same time, Ethereum is valued much higher. And then, you know, than Salana, at least presently. So it's like you're kind of touched on the lindiness of it all.

Like how much of we should we look at the difference in valuation of, say, Ethereum and Salana through the lens of, well, the market does value decentralization. That's why Ethereum is worth more? Or is it a lindy thing? Like, how do you square these two kind of aspects of it? Step into a new era of digital wealth with NXO, the premier digital assets wealth platform. Earn interest on your digital assets. Borough against them without selling. trade a wide range of cryptocurrencies, all in one place. Nexo is now available again in the US with an evolved product suite tailored to today's market. For a limited time, new US clients can unlock 30 days of exclusive wealth club premier benefits,

including enhanced interest rates, reduce borrowing costs, and up to 0.5% crypto cashback on trades. Get started today at nexo.com slash breakdown. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. We're looking for new valuation paradigms that are more sort of rooted in crypto, economics than your traditional equities like valuation. And that includes things like time in the market, Lindy effect.

It also includes, you know, actual usage of the networks. It includes monetary policy. I think a lot of it is about trust, right? So time in the market is huge in crypto. If you can see a, if you can be very convinced that this network's going to be around in five, ten years, we're more likely to be able to hold significant value on these networks. So I think Lindy Effect is big.

But I also think we're moving into a sort of era where, as Blockworks frames it actually, like, real economic value. What is the value that is flowing through these chains? And we're starting to see the institutionalization of these networks. We're starting to see ETS come online. You know, like there's staking ETFs. Like Gito Sol has an ETF coming in soon. So we're going to start to be able to look at inflows through things like inflows and outflows through ECFs as value flowing into the network. And we're going to be able to sort of analyze these things in a way that is different to the way in which networks are valued or rather like traditional companies are valued.

So it's a it's a kaleidoscope of different data points, really. And we're starting to see the impact. act of like there's things like marketing and narrative and broad scale adoption and all that sort of stuff. So yeah, I think we've yet to really land what the value valuation paradigm is for for blockchains and that's still currently being negotiated, I think. But one thing is true is that it's going to, I think we're entering into a new era where we are going to head into more sort of realism around decentralization. So kind of radical decentralization is becoming less preferred in the market as the regulatory

context changes and more realistic approaches to what does the market want and who are the personas, if you like, of the kind of people that we want to come in and start adopting crypto. And I think it's going to be possibly a network like Solana that can go to the market and and be actively modifying its blockchain to deal with these things. And it is a more responsive. And there is a direct desire to modify the network frequently, to modify to the network context, to the market context.

I can only see this really ending where, you know, that there are, say, a handful of blockchains that really do prioritize decentralization. and that is obviously a stale because Solana is prioritising decentralisation compared to something like Tempo with its permission validator set. But at the same time, Ethereum is also to the left of Solana on that stale as well. But at some point, it will become important that we just measure the usage of each individual chain, perhaps with custom parameters for each network, because, you know, real economic value does make sense for a

blockchain that is primary use cases, either payments or settlement for trading and stuff like that. But if there is a quote unquote public's good network that handles very important processes for society in some future network state, but it's not a lot of economic value that's flowing through those changes. It's more a settlement system for smart contract actions in kind of critical worldwide context. like insurance payouts or something like that. I just don't see how this squares with the hyper-financialization of crypto, where we do want these metrics to understand the valuations of things, but public goods are almost priceless in a way.

And at least that is what the idealistic view of like what Vitalik and kind of the solar punk people want. So how do we get through that without, you know, devaluing, the need for decentralized systems for public goods? So I think the Overton window is shifted in crypto, on decentralization. So decentralization is a continuum. For the first sort of era of crypto, we used to think it was you are decentralized or you're not. But there are degrees of it.

And we're actually just getting to the point where the kind of line of decentralization is being negotiated. Is this a decentralized network or not? And I do think the likes of Tempo, who kind of cross. the, for me, I've kind of crossed the line into this permission validator set, which we used to call proof of authority chains. That was a kind of previous red line. And we've, we've kind of moved into an era where we are letting go of our previous paradigm of decentralization. And that's pointing a kind of selective pressure across the rest of the industry. So, yeah, we've got this

kind of continuum of decentralization. You've got Bitcoin at the most radical end of decentralization. and with that becomes its rigidity and low transaction speeds. And Ethereum is much more closer to that. It's like for me in my mind, it's a kind of Bitcoin adjacent network. And I think that's its general trajectory is that it's going to be a kind of Bitcoin with smart contracts and it's programmable money. But it's got the same philosophy of hyper resilience and Vitalik's new angle of it's about simplicity and code minimization. and it's trying to become a kind of base layer public good-like execution environment, ready for a world where, you know, things get incredibly hostile for crypto.

And I think philosophically we have a whole lot of other networks who are moving in a kind of slightly different direction that have much smaller validator sets. They're much more centralized and they're optimizing for pace and institutionalization. And actually, Solana is not one of those kind of very centralized chains, certainly much, much more decentralized than the likes of tempo and many of the other sort of up-and-coming networks. So, yeah, it will have this kind of choice around where does the validator set live?

What's the optimal validator set? And I do think we are likely to see a further contraction of the validator set in Solana as the requirements. we're pushing towards this kind of notion of iBRL and increasing bandwidth reducing latency and necessarily that's going to push the frontier of hardware so that's going to up the requirements further on validators it's going to get more technical the likes of GTO's bam is like you know it's using trustless execution environments that the hardware is changing and that and that's the kind of optimization frontier for the likes of salana it's it's pushing

both hardware and effectively trying to run at the kind of boundary of physics and hardware on one side and and willing to find a a kind of optimization around decentralization. It is still very, very decentralized. And, you know, it's a matter of what is the necessary level of what is the realistic and necessary level of decentralization that achieves a network goal, but continues to stay resilient to like 99.9% of attacks. I think Ethereum is you know, it's planning for the apocalypse a bit like Bitcoin is. And I think Salana's a bit more, let's go and synthesize with the traditional finance world and see where we end up. Let's take a moment to talk about NXO. Nexo delivers a premier digital assets wealth platform

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structured wealth strategy, visit nexo.com slash breakdown to get started. As always, investments in blockchain technology involve risk, terms and conditions apply. I do your own research. This is like philosophically like the one thing that I always get stuck on in terms of like being a decentralization maxi. It's like the instances where most of us in, you know, the Western world, we don't really have a dire need for decentralized money networks. Like it doesn't come up that much for me and you.

And then so that's why it's so easy to use centralize. stable coins, it's easy to just wire USDC to crack and then off ramp to our bank. You know, it doesn't really come up. And, you know, there's so few instances where these networks are legitimately tested for the decentralization. So that's why it comes down to like, well, what's the validate account? And if it's, if it's, if the validate account is reducing, then it must be less decentralized. And, you know, there's, I mean, historically for Ethereum, but has had those moments with, you know, the Dow rollback or whatever you want to call it hard fork in 2016, you know, but that was an incredibly long time ago, so it's not even worth bringing up

anymore. And it kind of comes up with Solana here and there when there's network downtime or like whatever you want to call that downtime. But, you know, it happened with B&B chain when they needed to roll back and CZ was talking about rolling back, you know, Bitcoin even when there was some hack going on as well. And that's not possible. So it seems like that at some point, whether it's tempo or another permission validate a set chain that is used for payments,

that maybe rollbacks on those networks would become very familiar for users. And at that point, would we even say that that's a bad thing? Because we do have these other decentralized networks that you can transact on. and the cost of doing business on these regulated chain rails is that, yeah, maybe your transaction might be rolled back or someone else might have to action that transaction after the rollback.

And, you know, you don't really have control of your money at that point, but you do have access to these deep liquidity on chain liquidity networks. And that kind of makes up for it. Like, I worry that there is just no more line in the sand to be drawn and that, you know, we do. just kind of gravitate towards these World War III resistant chains as, you know, the fail safe for us to use while we play on these, quote, unquote, sandboxes that just let us do what we want in terms of what the regulations dictate? I just worry about this well, because the line then between FinTech and crypto is completely non-existent, and crypto is just pushed into this tiny little corner over here. How are you thinking about all of that? Yeah, I worry about

these things too actually and you know for me one of the core affordances of crypto is permissionlessness and that decentralization is a kind of prerequisite for that so if you let go of that which tempo have then you're going to have

to do rollbacks you know you're not going to be able to let large hacks go down that may end up in extremely dodgy hands and you're not going to be able to if you can credibly stop the network and roll it back at will, they'll have to. So, and in fact, I'm very sure being a stable coin sort of

orientated thing and partnering with Stripe, they're going to do chargebacks and they'll do reversible transactions and they'll move in, which is a, you know, credible future dimension of the way that crypto could go in. And you're right, that will become kind of fintech 2.0, if you like. And that's going to be a huge industry. But in my mind, it, it, it, won't be crypto. It will be kind of just neo-finTech. And you could probably, in the past, I've referred to this kind of fork in the road as kind of Web 3 in crypto, Web 3 being this kind of much more permission, centralized, kind of socially oriented environment that's much more user-friendly, but let's go of things like decentralization in permissionlessness.

but certainly as a kind of core value set in the likes of Solana, permissionlessness is a key and core direction that the network is going to maintain. And I think that's going to be the line in the sand. And in fact, what's likely to happen, I think, is as these kind of regulations firm up, we're going to start to see different carve-outs, certainly the likes of mica that has come out and Micah 2 is starting to define this line of decentralization. And if you're credibly decentralized, then you'll have a different sort of regulatory and compliance framework that you'll move into. So I think we're just going to start to see more clear and obvious separation between these classes of networks.

And I think you sort of touched on this earlier, but I see the kind of broader industry now as a kind of tapestry of these different interconnected blockchains, each with their own utility cases and tradeoffs that they've taken. And it's actually good that we've got these kind of different, we're starting to see these instead of all of these kind of general perspice blockchains that are what's the difference between them of a slightly different consensus mechanism or whatever, but how does it materially change? I think we're going to start to see those separations

around which philosophy these networks are picking. I do think true crypto is likely to be the ones that maintain the most value in their assets. Tempo, for example, might have the most stable coin volume flowing through it, but its currency itself, if it does one even, will not generate as much value as the like of Bitcoin, Ethereum and Solana because they are credibly neutral, permissionless and decentralized. I hope so, because then at least the market valuations do make sense. from an idealistic point of view that, you know, the reason that we are building all of these things is, is to be credibly neutral and decentralized. So the market should value that.

Yeah, I don't know. Like, I don't know if the more fintechy networks and their coins, like, you know, because I mean, where my brain immediately goes is, you know, the divide between Linux and Microsoft and Apple. And, you know, Microsoft and Apple are the, you know, some of the most valuable companies in the world, but there's not a Linux in the top 10 or top 20, you would say. You know, so it's like, I want to believe that. I just wonder if the market is too nihilistic to really agree. But at least they do for now. The thesis is sound for now, you know?

And yeah, I suppose I hope that your version of the future actually does become more real as we go on. Yeah, I mean, I certainly think we're close to kind of peak financial nihilism as it is right now. I'd be wondering where that goes if it goes even further. So even in that context, right, decentralization has some degree of a premium. I think BNB is a bit of an outlier there that has, you know, there's, and I think that's because it's got this deep adjacency with Binance and there's a degree of control over that network that allows it to capture that much value and it's got the kind of whole Asian market to target.

But I do think we will end up with a kind of battleground for decentralization. And the likes of permissionlessness will be challenged as, you know, there's probably a good amount of powerful actors that wish there wasn't permissionless blockchains that kind of facilitate people to trade on them and transact on them, they would wish they could stop, right?

So I do think although we're in a rather amenable regulatory environment at the moment because of the kind of shift in policy context in America, I do anticipate that will change again in the future. And decentralization and these networks are a kind of challenge to centralized forms of power because they cannot be controlled in quite the same way. So I think we will always have this section of the industry that protects these affordances because that level of long-term thinking is very obviously needed. Yeah, just to bring it back to the original kind of my monologue,

it's uh it's that we haven't really spoken about how how much the most used chain is even facted into all of this so it's like we we almost need some kind of legitimate metric for decentralization but i mean even all of the regulators in the u.s and around the world haven't figured out how to do that either uh you know there's like the there's like the nakamoto coefficient or you know like how do you look at you know i know i know permissionly might be the overarching thing, and that's not really a metric. That's more of a property. How do you view measuring decentralization then? There's a few ways to think about this. It's easier to think about when you know you haven't got it. So for me, I think about this from

the lens of dows, right, where you've got this kind of interplay between decentralization, autonomy and organization. For me, decentralization collapses when the system is like thinks like a single mind when effectively there is a single personal group that controls the thing in which case they can make unilateral decisions around the network articulating it the nakamoto coefficient is kind of not a great measure it's it it presumes that all of the validators will collude against the network it presumes a kind of perfect collusion so that's not quite a great network either. Like number of validators, to some degree, could be a kind of vanity metric,

where over a certain threshold it kind of doesn't matter as much. I do think the kind of things like Ethereum protecting solo staking is really important, and that's Vitalik's red line. But the number of solo stakers you have, it just needs to be possible. And in fact, if you look at the decentralization of the Ethereum network, and where it's distributed across the world, it's almost exactly the same as Solana. And most Ethereum validators live inside data centers,

just like they do in Solana. So I think, like, decentralization is, it is a kind of elusive concept in that sense. And, you know, you know when you've lost your autonomy, which is a kind of function of decentralization, when you've been captured effectively. Once the network can and has been taken over, you know it's kind of collapsed.