The Wolf Of All Streets - Bitcoin Halving DONE! What’s Next? w/ @OmniFDN | Crypto Town Hall

Episode Date: April 22, 2024

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We'll kick it off in a couple of minutes guys. I'll have a bit of background noise. Background noise for a couple of minutes until I get into my car. Just waiting for it to arrive. Scott is setting up his airpods so it'll be ready shortly. We'll kick off on everyone just messaging me. All the people not too deep into crypto, new to crypto. They're like, Mario, the harming is done and nothing happened. I'm like, this is not how it works.

But obviously a lot of people don't know that. Scott, is your mic working? Yeah, I'm better now. I don't know if you get some of your people, people new in crypto. Do you get the messages like, Mario, Scott, everyone's talking about the Havoc, but they've got background noise. Ryan, if you could unmute your Ryan, just got background noise on your end. Good to have you, Ryan.

But yeah, so Scott, do you get people messaging you? Hey, everyone's talking about the Havoc. It just happened and nothing happened. No pump. Well, we are up. We are up a few percent. There's nothing to do with the halving though. But yeah, yes, I get some of those messages, but to be honest, I take that to, you know, with my half glass full optimism,

I take that as a good thing because those same people would have never in the past even heard of the halving or message it, wouldn't have been paying attention, weren't even cognizant of what's happening in Bitcoin. So I'll take it as a step forward that there are normal people in my lives or normal people out there who are even asking questions about the halving and aware that it exists. But we all know that the halving itself is not a big event for price. It's a huge fundamental event, but not a huge event in the short term for price. And that traditionally, if you believe that the past three havings are statistically meaningful,

I think any statistician would cringe at looking at a sample size of three. But if we believe that that cycle is meaningful and what's happened in the past, then we probably get a few months of boring and then go up once again. And so that's been kind of my base case for the last month. It's played out for a month, but who knows what will happen in the future. But yeah, I think it's good that I'm seeing the words they're having in the mainstream media and from people who are normal TradFi investors. That's encouraging. Can you tell us, if you want to compare the halving to previous halvings,

what happens next over the next few days, weeks, and months if history repeats itself to the dot? They're not all exactly the same themselves. So it's impossible to give that answer exactly. But if we look at the last few, the first having, and I was literally just making a video about this for the street, the first having, I'm looking at a monthly chart. But if we look at a weekly to get a little closer, the first having price was around $12. The peak of that cycle was $1,152 or so. Obviously, then Bitcoin dropped all the way back down to $200.

That was the kind of Mt. Fox period. You had another halving price had risen to around what's called $600 to $700. The peak of that cycle, everybody knows, was about $20,000, right? You're talking about going from $600 or $700-ish. I'm looking at a weekly chart. I don't have the exact moment of the halving, up to about 20,000, right? You're talking about going from six or 700 ish. I'm looking at a weekly chart. I don't have the exact moment of the having up to 20,000 third having we had price sub 10,000 sort of in that 9,000 area. And we all know that we went to 69,000, right?

This time we'll call the having price 65,000. Uh, do I think that it's going to do one of these 10, 50 hundred thousand X's that it did going to do one of these 10, 50, 100,000 X's that it did every single other time? I mean, even if you look at the last one, when obviously we had a more muted cycle, we're talking about sub 10,000 to 69. That's a, you know, call it 10 to 70. That's a 7X. If we do a 7X from 65,000, I think people would be a little bit surprised, right? But even if we do a 3, 4, five, pretty big. But to answer your question more specifically, after the second halving, you know, we were at 600, price went all

the way down to about 460 in the following months, August. So the halving was July. And by August, so a month later, actually, it bottomed and then parabolic upside to 20. After the last halving, which I said, you know, was just sub 10,000, we went fully sideways from the halving in May, all the way until July. So two months, then it went up to about 13. A lot of people remember that then you had a dip to right back down to test that 10,000 area and then parabolic to 65. So the short answer is Bitcoin tends to have a really boring summer. And then you see the massive upside kind of in the fall, you know, October for October being sort of the meme there from the last cycle. But I do not expect history to repeat itself exactly. But we know that, you know, it often rhymes. And so would not be a surprise to me,

which I've been saying for quite a while. By the way, new highs would not be a surprise either. But if we had a very boring few months, as the halving sort of sets in, we find new narratives, maybe something different happens in the world and go up. We're also in an election cycle and a four-year liquidity cycle that happens to coincide with the halving. So there's a lot of things there that you can't draw, I think, direct conclusions. We've got a sense, since we'd love to get your thoughts on this halving compared to others and what Scott just said. Hey, guys. Yeah, I just wanted to jump in. I just did an analysis this morning for our chat today about what to expect and what kind of trajectory we might see if Bitcoin follows past cycles.

So that's my last tweet. If you wanted to take a look at it essentially what i did was um i took a look at some of the work that has been done for example a coin on metrics has uh essentially projected the expected returns based on the previous the returns of the previous cycle so if you look at the first uh trajectory after the having uh after the first having essentially that implies a huge growth something like five million dollars uh for the price of bitcoin uh that's most people would agree that that it's probably too optimistic if you model it through the based on this second second cycle after the having uh that implies about two million dollars if you model it based on the previous uh cycle that we just ended that implies

a much more modest value of 500 000. but what i did was i improved this model one more step, and I curve or a power law, which is great because it has worked very well in all of the last cycles very accurately. If you train that model based on the first half of the data, it predicts very well in the second half, meaning it's not a curve that is happening by chance. It's essentially modeling a systematic relationship. Now, if you extrapolate that, it does imply a really good growth for a really, really long time, but it has diminishing returns. So, the 100x, 1,000x that we've seen in previous cycles, that doesn't imply it for the future.

Now, if you take that into account, you can come up with a much better average prediction for the next cycle. But another thing that I've noticed is also the peaks are a little bit more humble compared to the average of every cycle. And this is totally expected. When the market is thin, an influx of buyers causes the price to go way above something like, if that's the right word, the fair value would suggest or the average value. But that goes away with time as the market gets more efficient and it gets bigger and more liquid you don't see those huge spikes uh there would be a

lot more sellers and buyers interacting so uh you don't see the the thin market scenarios where someone can corner the market there's no coins you get a supply shock the likelihood of that goes down so that implies lower variance if you take all that into account you get to the chart that i've put out there and that tells us that if we follow uh a path similar to the last cycle then the model would imply exactly like the wolf of all streets was saying uh several months of lull essentially nothing up up down but then the bull market begins probably at month six something like that and then it goes all the way up to 400k and i'll take all those predictions thank you 500 a few million 200 300 since i want to i want to go to ryan and then to simon as well okay ryan go ahead oh thanks um i'll just say that when i bought bitcoin at 900 after happening in i think it was 2013 i thought

i made like a serious mistake i was like devastated because i had bought like at the peak and then it crashed back down and next thing i know i think it was trading around like 150 or 200 but i'll say like looking back at it like i have never uh not regretted uh selling my bitcoin or using my bitcoin to buy something like every single time i've uh i always say like when new egg first started accepting bitcoin for hardware like it was the happiest day of my life because i was like oh awesome i can spend my bitcoin and i looked back at it i was, that was the worst day of my life. But like we can speculate on price up and down. It's, I often think of the price floor often being set by miners where they have hard operation costs to mint these coins. And, you know,

I did a calculation last year, basically looking at what the price floor had to be at the halving. And the calculation came out to about $67,500. I posted that on Twitter last year. And sure enough, we almost hit it dead on at the end of March. So I think we can actually speculate pretty far into the future based on what miners' op-ex are going to be and the cost of hardware and the efficiency of hardware to find out what the price floor is going to be with a moderate difficulty increase over time. Ryan, so at what point would you be able to do

that calculation effectively? And guys, I also really quick, Ryan, before you answer that, just because I'm selfish. Ryan and I, coincidentally, that is here today, had an incredible podcast that I posted yesterday, kind of digging into all of these topics as well. So if you want more on that, and also I think we triggered some people, Ryan, talking about the level of decentralization of Bitcoin and Bitcoin mining. And why you're building obviously, Loomer into decentralize a number of these things. But I highly encourage you before building, obviously, Lumer into decentralized, a number of these things. But I highly encourage you, before I answer this, that you guys go listen to that on my channel.

It's one of my favorite podcasts. And I can tell from the response of people in my life that they really loved it. But Ryan, at what point do you think we can start to make that calculation for cycle highs? I mean, we've been able to make that calculation for quite a while simply because of the consistency of hardware optimization. So, I mean, we're only getting better hardware at a certain rate, and it's actually been pretty consistent. So we look at Bitmain's releases year after year.

We look at the difficulty increases every two weeks. You can speculate pretty far into the future of what the price is going to be based on what miners need to make in order to stay operational. Now early on, Bitmain was like an ROI of about 90 days. So every single time they released a new piece of hardware, you could run the profitability calc and you're sure enough going to be able to pay it off in about 90 days. As the Bitmain started getting larger and larger, selling more and more units, more miners started coming online, 2015, 2016, 2017,

they started creeping that roi out further and further and further uh bitmain then switched to bitcoin cash only in uh i believe it's 2017 right when bitcoin cash launched uh and that's when they started kind of blowing out the roi numbers now i think bitmain's selling their hardware at like 300 or 350 day ROI window, which is, it gets a little bit harder to speculate out what the, what the actual, you know,

targets going to be, but we can still run the, run the calculation. So I haven't sat down to like run it into the future more than about a year. But, you know, So I haven't sat down to run it into the future more than about a year. But right now, we're right on target for what we were expecting to be at. And that implies, though, that we expect there to be a rhyming four-year or having cycle again, right? Sorry. Sorry, I missed that. You broke up. I may have broken up. I was going to say, but that implies regardless of what that target is, that we do anticipate because of that, there to be another cycle and future cycle highs. And

yeah, you know, that Bitcoin does at least rhyme, as I said, with previous having cycles or four year cycles. Yeah, it's pretty consistent. We're working with the same human psychology, right? You can say there's nothing new under the sun and the way the markets work and those cycles of Bitcoin will trace consistent. So humans react the same way to the same stimulus every single time. And that's why we keep seeing these same cycles.

We used to look at Litecoin cycles actually as an indicator of how Bitcoin would react simply because they trace so closely together. That coupling actually broke several years back. So we haven't been able to do it as accurately. But when we looked at the Litecoin halving, we saw a huge run up like a month before the halving happened. And then it started dipping a little bit right before the halving. And then shortly after the halving having it was just a full dump um now i don't know if we're going

to follow that same cycle because like i said it decoupled several years back but historically we used to be able to follow what was happening with litecoin as almost like a test case of the human psychology around the bitcoin cycles. Really interesting. Simon? Yeah, so I'd say if you're watching price, then halving is always uneventful. And so if you experience that for the first time, we will try to warn you, but yeah, it's a non-event for price.

If you were watching the fundamentals, this was, without a doubt, of all four halving events, this was the most wild i have ever experienced and um i don't know if anyone else but i began the day you know on the geopolitical side um expecting to see if there's going to be an escalation in the war we got a de-escalatory weekend so that was good don't need to worry about oil. Don't just worry about gold. Let's just focus on Bitcoin. And so I then went on the usual podcast, which I've done every halving, which is the Tone Vays show. And it's a bunch of like Bitcoin, you know, what I call self-custody maxis, not your keys, not your coins, been there around, you know, really deep in the weeds. And it was really surprising to see how shocked they were by transaction fees because

they weren't expecting it. And they weren't following the market because they're kind of in a different faction of the world where we just think this is the normal Bitcoin halving cycle. We celebrate it as a Bitcoiner. And it really took them off guard. Now, a bunch of them are complaining about their concerns around all of this Bitcoin ending up in an ETF and the centralization effect. And then they were watching all the transaction fees competing and they were like, holy shit, what have we missed here? So after doing that, I then went over to an ex-base with a bunch of the Bitcoin mining community. And the Bitcoin mining community was all looking at their share prices of the Bitcoin miners. And they were wondering, are we going to get more certainty around what a public Bitcoin mining company looks like after halving before halving?

Oh, holy shit, we got this massive 37 Bitcoin transaction fee, block two, like more transaction fees, block three, more transaction fees for like 20 blocks. And the mining community was all celebrating saying, holy shit, we have proven that there is a sustainable market. So when people come to us, and our shareholders come to us in the future saying, well, what happens, you know, when Bitcoin halves? Well, actually, Bitcoin is the best free market the world has ever seen, because you could complain about transaction fees, you can complain about centralization you can complain about all these things and bitcoin doesn't give a shit put forward a bit proposal make the change and then if it becomes a real pain point then there's a very hard process for getting that change through and we'll do it if it's desperate enough so i then head

over to a different twitter space after that um And that was a bunch of people that have probably never heard of me before. None of them followed me. And there were just thousands of people on this space all discussing that they were etching these things into the room. And they were all competing and they were raising finance in order to get more money in order to put into the next block. And they were all there, like literally they were like, hey, you know, I'm not I'm not using Solana anymore. I'm now using Bitcoin. And they were all excited saying, hey, we have fixed Bitcoin. We have literally figured out a way of giving Bitcoin a future because we're all willing to compete for the economics of transaction fees. And then I'd come up and say, well, this is going to drive a lot more innovation into the layer twos

because those that want the cheap fees are going to be innovating because of the desperation. And there is now a competitive market for transaction fees, which satisfies the miners. And then all of these different parts of the community are all going to whinge and moan and fight with each other. And we're going to end up with a better Bitcoin at the end of it, because it just really was fascinating to see. The Bitcoin has now split off into all these different factions that are using Bitcoin for different things that see Bitcoin in completely different ways. But they're all coming together. And it just was fascinating to watch that whole transaction fee market and people complaining about it, other people saying it's good. But Bitcoin just doesn't care because Bitcoin is consistent. And it's the best free

market I've ever seen. And it always adjusts to whatever anyone throws at it. And everyone that's done a hissy fit and said Bitcoin's broken has always been punished in the end. So it was the best halving ever. I enjoyed it thoroughly. Well, I don't think everyone on stage agrees that we're going to have a huge halving cycle. I happen to know because Vinny and I were talking behind the scenes.

Vinny, I saw that you requested. You're not necessarily of the mind that we're about to fly, right? Well, I mean, I would say I think it's not as obvious. You know, whenever the world goes one direction and every single person thinks

something's going to happen, it's generally... Sorry, was that for me? No, no, no. No, it's Vinny. Vinny is speaking. You might not be able to hear him. Sometimes we have a glitch,

but go ahead, Vinny. But you can hear me, Scott? Yeah, we can hear you. Yeah, I hear youny. Vinny is speaking. You might not be able to hear him. Sometimes we have a glitch, but go ahead, Vinny. But you can hear me, Scott? Yeah, we can hear you. Yeah, I hear you great. Okay, cool. No, what I was saying is like, I always look at the crypto market interest from a different lens, right? I watch a lot of people. I follow a lot of a big run and everyone's going to make money. And like everyone's, everyone got amazing charts and I can kind of like, you know, I always temper the enthusiasm.

It'll be great if we get 400 K or 200 K or whatever it is in the cycle. But what if we don't? And so maybe just because the contrarian, we always kind of get skeptical and everyone has this like singular belief that it's going to go up. And for the most part, that's the belief right now. So I'm just asking the questions. Okay, well, what's the bear case?

I play devil's advocate on this. And I posted this a while ago. My target for this cycle was a minimum of around 80 and probably an upper limit of 120 for the cycle. And it's very likely we could have topped out for the third time at this level already it's it's possible most people would disagree with me but i think it's possible and and we'll see what i'm watching very keenly right now is after all this post-harving sort of jubilation settles down if you look at the actual

numbers um you know in terms of the blocks since sat Saturday, I think at one stage it was $1.4 million block reward. You know, it's down to the past three hours. This is about $336,000 on average. The past 12 hours, about $317,000, which is about, you know, nearly 25% down on the average revenue per block before the halving. And that's, you know, still with the backlog in fees, people paying fees, et cetera. And I've watched this happen in Ethereum as well with NFTs and trading and stuff. You get these cycles where it just goes crazy, and then the liquidity dries up. There's only so many people you can keep selling an ordinal to or an inscription to.

Then the money dries up, and then the fees go back down and no one uses it for a while. So the question then is, what happens in three days' time? And I've got a, I wouldn't say it's a conspiracy theory, but I think that in three days' time, we have the adjustment. Do you guys realize the adjustment is actually going to increase the difficulty going into a 14-day block without the benefit of this huge spike, which increased the average earnings for miners in this 14-day block without the benefit of this huge spike, which increased the average earnings for miners in this 14-day block. And so what then happens is it slows down.

And when it slows down the block times, the costs stay. I mean, if you're mining for 10 minutes versus 12 or 13 or 14 minutes, the electricity cost is roughly the same. But now it's costing you more, it's taking you longer to get a block, and then the average revenue goes down. So, yeah, we might have a little bit of a bump in the road here. I'm just looking at this trying to figure out where it's going because the numbers aren't – and if someone up here has some mining expertise and wants to jump in, please tell me. Because I don't know how, with the difficulty adjustment on Wednesday, the difficulty going – I've never seen the difficulty go up after having, I don't think I've ever seen that. Ryan, you have your hand up. Do you have any thoughts?

Well, we have so many public miners that are just continually throwing hardware at it. And right now we have, you know, very large transaction fees. You know, I sit here and scratch my head going, why is everyone rushing to you know transfer bitcoin right now like right after the happening like why didn't they transfer it last week or the week before is everyone just minting ordinals all of a sudden um but that's going to slow down in a month from now two months from now we're gonna start returning to normal transaction fees if not sooner and then a lot of the smaller miners are going to be really hurting. You know, I really think we're going to go through a merger and acquisition period over the summer

where people just don't have the money to keep their minds running because the transaction fees aren't paying the bills like they're expecting them to i i agree with you what i'm watching which is really really interesting i'm not sure you mean other people watch it if you watch uh how much hash power rotate because shard 256 is sharp 26 you can run on any chain the amount of hash power since uh since saturday that floats in and out of bitcoin cash very quickly has been quite pronounced i mean more so than in the past where obviously miners who are suffering, small miners, whatever, if they're struggling to mine on BTC, they've been pushing the hash power into BCH.

BCH went up to like 18 blocks in an hour at one point. And then it obviously adjusts quickly because the DAA adjusts differently there. So, you know, my question would be, be well why are miners doing that if unless it was not profitable for them with the new you know with the new halving with the having and at the current difficulty rate if this adjusts upwards what are we going to see in terms of where hash power leaves bitcoin goes to then what happens to the remaining miners because you have a 14-day adjustment period coming up now where if you're mining even 20 slower it's going to cost people a lot more and what do they do do they do they shut off they just you know uh just keep you know pushing on and grinding away um yeah yeah a lot of them a lot of them will shut off uh if it does

not you know pay their bills they'll shut it off and a lot of a lot of miners will switch to you know bitcoin cash if there's a drop in difficulty. And the profitability calc shows that they'll make more money against Bitcoin Cash. No, but Simon, you say never. You're right. It hasn't been like that for a long time. You say never, but people are doing that. I mean, you can look at the data.

They're moving to Bitcoin Cash. They're mining Bitcoin Cash. There's like 18 blocks in an hour on Bitcoin Cash on, what day was this? Are any of the public miners there now? Sorry? 18 blocks in an hour on Bitcoin Cash on, what day was this? This was on 21st of April. Sorry? None of the public miners are doing that, right? I don't know. I'm not looking at...

Most public miners won't mine against something like Bitcoin Cash because there's not enough liquidity for it. Yeah, the shareholders will have a heart attack if they start putting Bitcoin Cash on the market. Well, the shareholders are just looking at the bottom line. They want to see price go up. Yeah, so you'd have to sell it and create a bunch of selling pressure on Bitcoin Cash. Bingo. Yep, exactly. And that's the thing is, remember, there's hundreds of Shot 256 coins

that these miners could mine. And back in the day, we used to do profitability switching. So you could switch from Bitcoin Cash to Tiger coin to one of the other shock coins at any given moment when the price went up or the difficulty dropped. But for larger miners, there's not enough liquidity in the market for that to make sense. Bitcoin Cash, the hash power on Bitcoin Cash is so low that any one large miner could wreck their network. You have, you know, Corsi or Rhodium or Riot switch to Bitcoin Cash and they will destroy that network. They'll drive the difficulty up so high and then they'll switch away from it and no one's going to get a block for months. And we've seen that.

Bitcoin Cash adjusts a lot faster than Bitcoin. They changed that that but that's not the point really my point is that when miners move out whether whatever the coin they go to that mines shark 256 when miners leave because they can't mine it profitably because the rewards drop off the inscriptions ordinals ruins whatever dries up if it happens in a couple of days you know either they switch off or they go somewhere else. The result is that blocks will be slower on Bitcoin and the current 10 minutes a block slows down and the backlog fills up. I mean, I'm looking at Mempool at Space right now and we're sitting at 235 unconfirmed transactions.

Difficulty adjustment is going to go up in two days time. And at some point, if the extra revenue from transactions dries up, this thing goes up to $400,000, $500,000 potentially. And the fees just keep going up. So I'm just asking the question, like, you know, again, everyone's got great charts showing this thing going to the moon, but what about the data? I guess what I'd say to that is that that's the same conversation we've had every halving.

There's nothing different had every halving. There's nothing different about that halving. There's an adjustment process. Except that we're at the top of the cycle and the highest ever hash rate ever in Bitcoin at the same time. But that's always at the highest ever hash rate, every halving. Yeah. We always get this conversation of like a debt spiral. Relative to price.

If you look at the price charts from 2020, price was way ahead of hash power, price per hash. Yeah, but I agree with a lot that you've said, Vinny, too. I do think you're going to see this. And I think Ryan said this too or replied it. Like you will see hash rate come down at some point in the next few months, I believe, like, if you look at the public miners, basically, none of them are net profitable. On the other hand, if you look at their operational expenses, they actually have pretty high margins. So the profitability problem with miners is mostly SG&A, they're basically just spending too much money on salaries, compensation. If you look at their actual cost to mine, it's not bad at all. I think that will dampen Bitcoin selling pressure, but it also, from a public company standpoint, makes it difficult to keep growing in the near term. So I think M&A is possible. But I will say that there is something

significantly different. And in my view, it drives value of price significantly more, which is flows. The whole reason that we reached a new all time high prior to having it's not because some cycle top occurred, it's because billions of dollars were poured into Bitcoin ETFs. And that is still yet to come at scale. That's why I remain significantly bullish. It has nothing to do with the cyclicality of having cycles. There's reasons why literally billions more dollars want exposure to Bitcoin, and they can't get it, and they're clamoring and complaining,

and MS is going to be the first, and they still haven't turned on of the big bank platforms. I think, again, it's not the labor theory of value. It's not the OPEX cost of mining a Bitcoin, Ryan. It's flows. It's always been demand that it's going to be demand again that drives Bitcoin price. And there's reasons why demand is going to increase. I agree with that. I'll just preface what I'm saying. But I think for the next for the next adjustment period, I'm just going to be a little bearish to see what happens. After that, it's too late. I agree with that, Vinny. I think that

we expect as much of a 20% hash rate decline at some point this year. There are a lot of miners who are not healthy. Like I said, one guy I really like who covers the public miners' wealth is Anthony Power. He's covered this extensively. I've looked at it myself. I'm not allowed to actually comment on individual equities, but basically none of the public miners, almost none of them are actually net profitable. It's something worth noting. They're funding those hardware purchases with huge amounts of dilution and debt, and that just simply won't be able to continue in the near term.

Right. And so so again, the real question here is what happens in the next adjustment period? Because I just it going up is a weird thing for me. I mean, I haven't we always see that when an adjustment happens that are having it goes down because people leave now because of the fees that may have been just temporal and we had a few days before having the Bitcoin actually have in the cycle, we actually get the difficulty going up. If the fees go away, people leave, things slow down.

And now you've got a kind of a centralization of Bitcoin sitting in ETFs. You guys know how Wall Street works. They figure out a way to short something. They're going to put money behind it and flood the market. And then people, you know, so then the price drops, let's say it drops 20%, which is not unusual for Bitcoin in any cycle. A 20% drop from 67, 66 down to like 50s. All of a sudden, there's panic in the market. Miners have to switch off even more now because the price has dropped. It's even more unprofitable for them. Things slow down.

And then the FUD sort of perpetuates. So I just think that there could be a shakeout in the next two weeks. But, you know, long term probably doesn't matter. But in the short term, I'm going to take a wait and see for the next two weeks and just see what happens. I think there's another saving grace, too. I'm seeing a lot of miners talking more and more about retooling for AI compute because a lot of these miners have huge power contracts.

And we're seeing another industry pop up here that is crazy thirsty for electricity. And, you know, we see a lot of them retooling for AI now. Yeah. Andrew, you were trying to jump in before. Yeah, I try and take a lot of the technical stuff that is being talked about here and square it with the macro. Andrew, you did? Oh, maybe I'll come here. And try and square it with the macro commentary. And what I mean by macro commentary is you've got a fairly well-known analyst, Tom Lee, on CNBC this morning saying that he thinks Bitcoin goes to 150K by the end of the year. So who watches that channel? Who's engaged with that channel?

It's all the financial advisors and their clients across the country. It's people at Morgan Stanley, Wells Fargo, UBS. It's all of those folks. So Alex is dead on about flows, right? So we can talk about hash rate, we can talk about miners, we can talk about all that stuff. And, you know, there's real validity to it. And I think there's, you know, tremendous value to having an understanding to all of that stuff. But it's why I've kind of, you know, pounded the table on a real adjustment in how price movements and market dynamics have changed. Because those flows not only are not going to, quote unquote, slow down, there will continue to be a force multiplier over time. So, you know, Tom Lee keeps it fairly simple, right? You know, Bitcoin ETFs and flows, you know, some stuff, you know, having to do with with interest rates and where those go over the course of the rest of the year.

It's, you know, price is something that on a macro level, BlackRock, JP Morgan, Goldman Sachs and those that have their hands on the movement of Bitcoin now, you know, authorized participants on these products. They're not here to see over the midterm and long term, you know, Bitcoin go backwards. So, you know, something to consider when a guy like Tom Lee is out there, you know, fairly committed to a price prediction like that. You know, in past cycles cycles we've all talked about Tom Lee you know being a guy that you know jumps out there is willing to put his put his head on the chopping block associated with price predictions but you know over the long term guy hasn't been all that wrong a lot well he has called like 50 of the last uh you know five bull market cycles

for Bitcoin so Tommy I love Tom Tom, but he's always bullish. So obviously he's going to be right in the long term. And as it relates to Bitcoin, being always bullish, I don't know, fairly right. No, that's my point. He can be wrong, but right because Bitcoin in the long term keeps going up. So it doesn't mean he's good at predictions, though. Well, and the point here, though, is that the macro associated with where we are at Bitcoin now. I mean, Vinny, I get it.

If over the next two weeks you think there's some technical issues here associated with a potential dip, okay. That's a prediction to look at. And for all intents and purposes, that may be correct. But from a macro standpoint, when you have the likes of Grayscale shoveling supply on the market and BlackRock chewing it up every single day, that's a, you know, talk about a buy wall. That's a buy wall. So interesting. Sure. But remember, these guys get spooked as well. So just. Sure. But remember, these guys get spooked as well. So just be careful. When people get spooked in the markets, and whether it's this or ETFs or whatever, war, I mean, the typical example was, you know, when we had rockets flying to Israel, everything like Bitcoin shut the bed because people get spooked.

And that's because we're doing it. Yeah, and I'll go into a haunted house with Larry Fink all day long. You know, I'll follow that guy into a spooky place. Yeah, and just step back, too, though. you're i mean vinnie you're totally right it's not like every etf buyer is a diamond-handed exactly long-term holder that's that's true but but like well actually there's 40 trillion sorry there's 40 trillion in bank and broker dealer aum that doesn't have access still and that's the entire main net new pressable market for this product. So like they, and they have, they're not even here yet.

So, I mean, to me, like we have to reevaluate like demand levels once we see like some of them turn on and see how those turn out. Like everything you've seen today up until now has been like people in their IRAs and small advisors, right? Like $30 billion advisors was the biggest one I saw that added support. Like that's nothing compared to the bank and broker-dealer platform. So we've got to see.

I've never been a fan of the ETFs for like seven years or whatever. Even back in the days when I was a Bitcoin maxi, I think it was a bad idea for centralization of Bitcoin. And so I'll put it out there. My concern is that the ETFs trade like seven hours, five days a week or something. And Bitcoin trades 24-7. So you have this opportunity where these gaps form in the market when it's very volatile,

depending on which way it goes. Either people are going to dump or they're going to buy afterwards. And we've seen just a lot of buying so far. But wait for a weekend where the market opens after two bad days, some exchange collapses, whatever. We never had ETS when we've had bad news in Bitcoin. I've been around and seen a lot of bad news over the years. Well, but even like a week ago when the Iranians struck on Israel,

we dropped to like 61 over the weekend, opened and traded, what, as low as 60.5? Like, I mean, on Monday tuesday that it mostly helped black one but i'm just saying no i'm talking like a 25 dump on the weekend like that hasn't happened yet it may it may never happen again oh yeah i've seen i've seen it happen probably a dozen times in in the past decade in bitcoin yeah well we've had those back-to-back 30 dumps, right? So if that happens over a weekend, that's going to be fun to watch

when the markets open Monday morning. I think Vinny's right. We'll see that again. And it will be, you know, the reaction that people will use the arbitrage between the public markets and the spot markets to adjust. And it will create that volatility

that we're all used to. Yeah, we can handle it, but I don't think the mass market out there can appreciate how much vol you have to put up with in Bitcoin and crypto in general. I mean, we all know this. For us, I've been in it for a while. If you've owned any alts the whole time, Bitcoin's vol, it doesn't even shake us up. You don't wake up the next day. Who wakes up every morning checking their Bitcoin account balance no one does no one if you've been in it for a decade you just don't care anymore um you know it's just the vol is just part of it I mean I'd be more worried about the other also supposed to Bitcoin well and it again macro you know I'm old enough to be around when the Nasdaq was down 78 one in one year, right? So this isn't just a Bitcoin thing. You know,

price volatility isn't just a Bitcoin thing. It's just not an interesting, you know, part of the conversation. It happens. And so again, you know, I'll say there are people involved now. And I agree with Vinny, long term, I don't love the fact that BlackRock's going to own an enormous amount of bitcoin um long term don't don't love that reality short medium term um again uh i i i don't think um they're in it to get shaken out by a 10 15 20 move in the wrong direction um not only that uh it i know it sounds like I'm beating the same drum over and over again, but there are going to continue to be layers. Hunter from Bitwise made a point last week where he said they were in a meeting and one of the advisors asked a question about hash rate. The education curve that we're on, even in rooms where people are supposedly quite intelligent, we're very, very we're at just the beginning of that education curve. And that education curve is then followed by, you know, adoption by owning the asset. So, you know, we've are going to continue to come online, they're long only.

There's no version of them buying a product that's short or arbitraging. They're long only organizations. Not entirely. There's short Bitcoin ETFs now. There are some short Bitcoin ETFs that have been listed now. But remember, too, BlackRock doesn't just have an ETF. BlackRock has huge positions in core scientific. They own very large amounts of hash power also so they you know when

you have a ecosystem like bitcoin that is decentralized and resistance to control uh governments and large institutions that are used to being in control will scramble to find a way to gain control so they're gatekeeping So they'll gatekeep around every exchange. They'll gatekeep around every on-ramp, off-ramp with the banking. They will find ways to get into every single publicly traded miner. They will have ETFs. They will do everything they can to control this ecosystem. And the one thing they can't control is private wallet. And that goes to... This is why ETFs are good. And that goes to, I come back to the way that the SEC drew a, you know, a line in the sand around cash creates, right?

So, so that in and of itself, when that was happening, I knew that there was a larger thing happening longer term at play, right? So that is a, that is a control lever that the, you know, both politicians,, and the like want to have over the process. So I agree with you there. I agree that having control associated with different points of leverage is a longer-term concern, no doubt at the same time though um the the short and medium term associated with the upward price movement of bitcoin i think is is compelling over the three six nine month period so so let's just go back i want to wind back just a second for people who've been in this for a long time i see a lot of like my old friends and paul pooey and a few others in the crowd like we you know the og

bitcoin is 2012 13 era where i'm from. We always wanted this to be very distributed. And what scares me the most right now is the ETF getting to a million coins, a million point five coins, two million coins, and bigger and bigger across the world, where you have such a large amount of Bitcoin basically under control of the government. The government can just say, okay, for any government in the world, not just the US government, they can just block those coins from moving. They can seize them. They can do whatever they want.

If the world got out of control, the coins are not in the hands of people and individual self-custodied wallets anymore. They're all aggregated in these ETFs. And who knows where the world goes in the next three, four, five years. So as much as everyone likes the number go up and this aggregated and oriented ETF, I just think it's a bad idea. But's just me i'm like you know that was more philosophical than making money out of but but this is this is why it's so important that bitcoin stay proof of work it's not proof of stake so it doesn't matter how many coins you own it's all about how much hash power you have and that's why we see a lot of governments around the world starting to build their own

mining facilities because they're realizing that if they're going to play in the Bitcoin ecosystem, they have to have hash power. And this is why it's terrifying that BlackRock has hash power and governments are getting hash power because if they decide to block certain transactions from certain wallets or they say that you're not KYC to AML and you can't transfer your bitcoin then you're basically iced out of the network here's an example like i think it's worth pointing this out if if enough bitcoin whether it's a chinese a hong kong whatever you know russian etf who who knows who cares if enough got into a certain wallet and aggregated a whole bunch of like money from uh you know from from

industry people etc into an et, the government could one day say, you know, we're going to just tank the price of Bitcoin. We're going to make it illegal. And that ETF actually emptied out all this Bitcoin today. And they could crash the price really hard and make it difficult for miners to continue in that difficulty. So this is the problem with having where governments can control these. Everyone thinks, like, it's great having ETFs, but it's not because governments control the entire stash of what's in those nts like if the us government

went rogue the sec or whoever you know could make could say hey bitcoin is now illegal you have to sell it and just dump it in the open market where you're going to get the bids from i know it's like a crazy scenario but this can and will happen in some smaller country on some smaller scale and the bitcoin gets sold and vin Vinny, bring it on. They just did it with TikTok. This is just like the GHash.io. Everyone's saying, well, what if a mining pool gets more than 50%? Oh, well, everyone changes their mining pool as it gets closer.

What if a government makes it legal? What if it gets all pumped into this? I mean, I've already created a service for our investors to convert their Bitcoin ETF into spot Bitcoin. So as a free market, the government are a participant in this market. Central banks will be a participant in this market. Individuals, companies are participants in this free market. And Bitcoin, every time you throw one of these theoretical scenarios at it, it just figures out how to adjust to it. So if it becomes a major, major problem to Bitcoin,

there's too much consolidated in the ETF, someone in some country is going to create a solution where you can off-board that ETF and onboard into spot and it will just adjust. Just let them off. How would you I mean, we all say all this money is coming in. Great. Let's say 10, 20, 30 billion comes in this year and now the US

is sitting with whatever 1.5 million coins in the ETF. Okay, some big number. How do you off-board that if the government just decrees one day that it's now illegal? Well, I understand, but what is the solution to that? You can't say, let's make ETFs illegal. But let me just put some guardrails on this.

Like, the U.S. has the strongest property rights in the world. Agreed. Very unlikely. It was done, and it was done poorly with Executive Order 6102. Most people did not turn in their gold. But yes, obviously, an order to seize all of the ETF did not turn in their gold. But yes, obviously, an order to seize all of the ETFs, Bitcoin in the US would be negative for Bitcoin price. I don't

think anyone would disagree with that. But when you own an ETF, these are grant or trust, you own the underlying contents, legally speaking, and we have the best legally speaking in the world. So you're better protected, I would say, in general as an owner of an ETF than you are in the U.S. In the U.S., but we're not the only ones in ETFs now. The rest of us. True, but I mean, Hong Kong's entire ETF market is smaller than the Bitcoin ETFs in the U.S., right? Like there's no one that's even remotely as close for this problem that you're talking about as the U.S. And yet we have the strongest. And by the way, that's why they're the US. And yet we have the strongest.

And by the way, that's why they're the biggest, because we do have the strongest property rights. That's a huge component to why American capital markets are so dominant. The other thing I would mention is that this problem of centralized, and to be clear, you have much better ownership assurances if you own Bitcoin directly and you hold the keys yourself. There's no doubt about that. But this problem you're describing, Vinny,

is significantly more acute and dangerous for proof-of-stake coins. They actually control the network, whereas proof-of-work coins, they don't do anything. I'm not disputing this. I'm not disputing that at all. I'm just saying that I look at the economic and the network security as two things that make Bitcoin strong. And you can't disregard the economic angle on Bitcoin. That's totally right.

That's why I said putting some guardrails on it here. If anywhere were to have centralized third-party ownership, having coins in a US-based grantor trust, much better than having them in many other places. I'll say one thing and I'm going to slide into the background. I know that some people get annoyed with me because they always think like, why is he always being devil's advocate? And quite frankly, I think someone has to just say,

hey, here's the other side of the coin. Let's have this debate. I'm not trying to be annoying. I'm just putting forward, you know, like maybe it's conjecture in the short term, but in the long term, things I see as real potential risks as we try and build out an ecosystem.

So please don't take this as like, Vinny is just anti-Bitcoin or whatever or bearish or whatever. I'm just like, you know, I consider risks with a little bit more thought than I think other people do. No, totally fair. Totally fair. Yeah. I'll add though.

These are all a market looking for a solution. So you're a VC Vinny, you're an entrepreneur guy. Someone will create the solution of how to really, really easily off-board into an ETF and on-board into a spot within one platform with a click of a button. That just requires having a clear regulatory regime for virtual assets in the US combined with a broker dealer. We've already done it outside the US. It will be done within the US as soon as that. All of these are just problems

that require an entrepreneur to create that solution. And that's all we've been doing ever since the beginning. All these attack vectors, Bitcoin just adjusts. It's just a market. The worst thing we could do is try and lobby regulators to make an ETF illegal or something like that, because we don't think the institutional investors should have the right to put Bitcoin in their pension, because that's not an option. So these are all unsolvable problems without a market solution. Anyone remember what BlackRock did coming out of the financial crisis, 08, 09, 10, 11? What market did they move into in a fairly significant way? I'll answer the question.

They bought real estate. They bought single family homes, right? They bought a bunch of those. Why did they do that? Another easy answer, because they figured the price of those assets would go up and go up significantly. What happened to those assets that they purchased in 9, 10, 11? They went up significantly. There's probably a lesson there.

That's easy. The hard thing is we have essentially five entities on the face of the earth that are making bitcoin blocks and and aggregating all the hash power together i think it's only time before you start having government step up start mandating a mining pool like i wouldn't be surprised if the department of energy says in the interest of national security for our electricity grid we will have a u.s bitcoin mining pool that is sanctioned by the U.S. government and Bitcoin miners will mine against it. And then now they control all the transactions.

I've been saying this for years, but yes, I agree. I think we should hear from Dave. I'd like to hear from Dave. I mean, the last one actually scares me because that makes sense, right? It makes sense not in the sense of we think it's the right thing for the world, but makes sense in the it would be completely in keeping with government policy and the way that they try to do things. The only good thing is we don't even have that. We don't even have a cohesive national grid. It's regional right now.

So I'm not sure that it's as scary as it sounds, but it is scary. As far as the actual consolidation or holdings of Bitcoin, every time I hear not using hyperbole here, but if Bitcoin were trading at, say, $6 million a coin, at that point, the ability to seize it and devalue it like they did with gold may make sense because it would be sufficiently large for it to matter to the government. But make no mistake, the executive order seizing gold was all about a reflation to get rid of a budget deficit. That was, by the way, dramatically smaller in percentage of GDP than we are today. And gold was a dramatically larger percentage of monetary aggregates. So, you know, if we're talking about trading now and owning now, honestly, it's at a point if someone says to you, okay, you know what, we're going to steal your Bitcoin for you at $4 million and we're going to revalue it to 6 million the next day. Uh, sitting here holding Bitcoin, I don't really worry about that. Now, if they did it to me at that time, I would be incredibly angry. Just like a lot of the people were incredibly angry back then. And frankly, I've owned gold from that era that

theoretically should never have existed because people didn't comply. So I just think it's a terrible analogy. There are analogies out there and lots of reasons to it. That's one. The second point is about BlackRock. Everyone talks about BlackRock as if Larry Fink is pulling the strings. What's actually happening is BlackRock has an enormous sales force and has an enormous customer base. And that customer base is basically being reflected through their sales force up to management. So when they talk about it, they made the investment and they created their Bitcoin ETF and made this big push. It was essentially reflecting the broader marketplace

and not the designs of one guy. Larry Fink is not a modern-day JP Morgan pulling the strings in the financial system. He is basically listening to institutional investors that are their clients and saying this. So yeah, I was speaking along with, was it, I think, Andrew, who made the point about buying up single-family homes. Absolutely right. But once again, it wasn't BlackRock deciding, hey, we think housing's undervalued. It was their clients saying, hey, create a vehicle for us to invest in this, guys, and we would love to do this in a diversified manner. And so I think you just need to understand that because that is a dramatically more bullish thing than one person or one company saying, hey, let's prop up this market. This is the market telling this company, hey, we want this.

We want exposure to Bitcoin. We see federal budget deficits as far as the eye can see printing at debt to GDP levels that are insane. And I think that's important. I agree. Before, I know, Mario, you wanted to head on to a conversation with OmniFDN at some point, but Chris hasn't really weighed in. And, you know, we kind of have this title, Bitcoin having what's next. I think that was an incredible, fundamental conversation. But curious, just from a price perspective, Chris, what are the charts? I mean, you know, it's the same thing. I mean, I just feel like a broken record here. Same thing

I've been saying for the last month. You know, we've heard people here talking about how, you know, Bitcoin shit the bed with the Israeli thing, but did it really? I mean, it was a 10% drop and then a bounce and then a dip a little lower. I mean, all we've gotten is this slight little dip that was bought up quickly twice below the range lows. And at this point now, we've just about retraced mid-range. And so to me, the range continues to look pretty damn bullish. And I think, you know, again, once we get above kind of like that mid-range, right around 66, 870 or so, depending on the chart you're on,

I think, you know, we ultimately head out to a new all-time high. I don't think 80,000 is even the least bit of what we should think about. I see us heading over 100,000. I don't think that's difficult at all. As a matter of fact, I would think minimally, we'd probably hit 115 to 117 minimally and so uh but you know as you know you know i've got higher targets than that but um yeah i just you know with everything that bitcoins had thrown at it uh you know over the last month and everybody's been so very bearish and what have we done we've just range traded basically other than the recent dip below and strong rally right back up. So again, to me, there's nothing overtly bearish about the chart

itself. And as long as we remain above that 59,000 level, the market structure is still bullish off that 2022 bear market low. We have to actually break down close down below that. Um, retrace a little bit and then break down again to even start saying, Okay, well, now we can look at some sort of, you know, pullback. But until then, we're just we're just range about this meal. Everyone's pieces. I think everybody's speech. I could not hear Chris, how long was it speechless for you guys i assumed i just couldn't hear it

all of us i thought you could you had the glitch so it was speechless the whole time chris wasn't speaking it's literally been quiet for like three minutes and nobody came in yeah that was pretty ridiculous needs to really figure out that glitch because like sometimes you just it happens all the time and you can like everything works but you can't hear one or pretty ridiculous. I need to really figure out that glitch because like sometimes you just don't know. It happens all the time and you can like everything works, but you can't hear one or two people. I'm messaging Mario in the background, not responding. I didn't see the chat. And I was like, you know,

I didn't want to do that awkward thing where you go, Hey, is someone talking and then you interrupt them. And so thank you all of you for letting us sit there for five minutes. You're a wonderful panel. Yeah. And thank you, Chris, for the incredible analysis. I think we're going to ban Chris

for a month after this. Deep. Chris is going to have to leave for an entire month. Yeah. But Scott, not sure if you have any more comments on the halving.

Considering that glitch, I think you should move on. Yeah. I got Omni on stage and we talked a lot about Bitcoin, I think you should move on. Yeah, I got Omni on stage and we talked a lot about Bitcoin. I think I want to dig into Ethereum for a bit. And I think Omni, you guys... I keep calling it Omni.

Omni, you guys launched on Binance, launched by... I don't know what... What's your... Let me see your market cap now, guys. I'm just going to check it out because it was pretty mind-boggling when you first guys listed, um, are you sitting, uh, there it is. Okay. That's not it. I'll meet you there guys. I'm just trying to get your details.

Yeah. It looks like two and a half bill right now. Jesus Christ. Oh, congratulations on an incredible, incredible launch to the countdown space with you guys. And I think you guys did a really good job of explaining something that I'd consider to be complex relative to other basic things, you know, like ordinals and gaming or RWAs. But you guys essentially, you know, your focus is about simplify, you kind of unify the Ethereum ecosystem.

It's like the fragmentation created by all these different L2s on Ethereum. And you're probably the only L1 that I can comfortably say, you kind of compliment Ethereum rather than compete on Ethereum or act as the next Ethereum killer. So tell us more about what is Omni and kind of, can you kind of explain to people how the hell you guys got that launch at a two and a half to $3 billion TVO, sorry,tv appreciate it mario and good to be back um yeah i mean so at large omni is really the first blockchain like you said designed to complement ethereum in itself so it is

a blockchain but it's kind of like integrated into the core ethereum stack itself and so you know previously what we've seen with many different L1 blockchains is they try to implement a new design, which Omni does as well. But then they have to bootstrap their own security. And it's just like way weaker than Ethereum. Omni was designed using this new technology called restaking, which allows it to pull in security actually directly from Ethereum itself. But then we can still optimize the network for whatever we want.

So that's how we get Omni to be this extremely fast new type of blockchain that still pulls in security from Ethereum itself directly. So that's kind of like at the core kind of like tech level. So some of the key innovations there. It's like an L1 designed to run complementary to Ethereum, not in competition to it. Yeah. So before digging into... I want to discuss Ethereum as well in general before digging into your technology, but can you just explain to us what is

restaping? I think you used an example last time of these, like a lemon or an orange to explain and simplify it for the audience. It is one of the main narratives in this pool market. Can you explain it further? Because a lot of people are describing it in a pretty negative way. It's like extreme leverage, kind of linking it to the 08 crisis.

Yeah, yeah, yeah. Yeah, happy to go over it. So restaking is this kind of this idea that I covered where you can build new types of networks that use the security from Ethereum itself. So why is it called restaking um it's because when uh somebody is already securing the ethereum network effectively they can opt in and use that same amount of capital to secure other networks and it has been a very kind of spicy topic there because it is a super powerful uh primitive and like we're able to create like fundamentally new types of networks like omni using it but if it's used irresponsibly it could uh like effectively just cause problems

that are avoidable. And so really, it's about like rolling this out in a responsible way. Omni is one of the first I mean, it is the first blockchain that is using this technology. And so we spend a ton of time looking at this like, hey, this is a super powerful new primitive. How do we go about rolling this out in a way to making sure that it like is responsible and safe and stable in the long term. Can you explain it further? So you said there's two ways of using, of leveraging the restating technology, one positive, one negative, and essentially leverage the security that Ethereum provides to create new use cases. Can you explain that a bit further?

Yeah, so I'll just give a few examples as well. Obviously, yeah. Focused on what you guys do. Yeah. Yeah. So I'll talk about, uh, the main risks that people probably think about here. So there's restaking. And then if you kind of go left curve on it, you can think about like re re, re re re staking. So like, what do I mean by that? It's like, all right, if people are securing Ethereum with, you know, let's say $2 billion, no, we just launched our main net today and there's already about $2 billion worth of ETH securing it. So let's think about that $2 billion. That's securing Ethereum and Omni. Okay, cool. So there is some risk there, but it's pretty minimal.

But let's think about if that $2 billion of capital was securing hundreds of networks. If one of them has a malfunction, that can impact the security guarantees of these other networks. So that's really the main thing. So in my view, the way that I think about is like, okay, let's keep it to like restaking or like re-re-restaking. But like we're getting to like 50 plus, then just the amount of risk that you actually have to analyze become like super intractable really and so our view here is that it's just important to not like leverage up too high but it is an extremely powerful uh mechanism where if you use it just with a few networks it uh really allows you to create fundamentally new

types of networks that's really the main narrative going on in the ethereum ecosystem right now so what's the uh i want you to do two things so if, can you tell us some negative ways or potential negative repercussions of restaking? That's the first question. And then the second question is, if you can link restaking to some real-world, non-decentralized examples that make it more relatable. Yeah. So the core idea is about really the kind of like precise

financial term is rehypothecation that people use so rehypothecation is effectively like mario being like hey dude like can i borrow 100 bucks and you're like yeah just give me like 50 of e to secure that and then i also go to like scott'm like, hey, can I borrow 100 bucks? And he's like, yeah, just give me 50 bucks to secure that. If I use the same 50 bucks, then in the event that something goes wrong, one of you might be out on your bag at the end of it. So it's really about this idea of using capital for multiple purposes at once. And this is nice because it allows it to be much more capital efficient for you to do new things. But if you do it too much, then you could... I'm not going to say that the 2008 financial crisis really came downstream of making risks

opaque. People would go and offer a bunch of mortgages, for example. But it became unclear that those were subprime mortgages and really risky by the time that we had tranched them together, chopped them up into subcategories and stuff and sold them off. So the 08 crisis is not an exact... Actually, yeah. So that's not a great mapping. A better mapping is just like

a hedge fund takes on too much risk and it blows up. That's kind of like a more simple mapping of... And correctly, if i get something wrong but a lot of people like to shit on the the leverage we had prior to 08 but they don't understand there was a lot of benefits to it as well to get the financial ecosystem to where it is today just got out of control and i think the biggest problem was that lack of clarity that that secrecy what was happening behind the curtains um yeah but would it be fair to say that you kind of bring

those advantages um of of rehypothecation um of of these all these different securities but the transparency that blockchain brings removes the risk that was that kind of brought the dominoes got dominoes falling in o8 yeah that's actually a great way to put it i mean nothing is inherently bad about leverage it's just like some financial mechanism what is bad in finance at large generally speaking is not being able to inspect what's going on not seeing how much risk institutions are taking on not seeing like how close they are to liquidation and so if you rely on the like fundamental principles of blockchain tech and just having transparency, so you can know like, you know,

like how much risk is in this position or like how levered up are these people? That is how you avoid kind of the downstream, like bad things that are usually associated with when people hear the word leverage. Cool. And for anyone listening, I think if you, if you're just not paying attention to restaking, it kind of reminds me of the old defy 1.0 days where these people didn't understand it kind of

ignored it until this became too big, and impossible to ignore. The question I have for you man is kind of why Ethereum like we've had a lot of debates on this stage and others, but obviously, Ethereum, the Ethereum ecosystem versus Solana and other competitors. And you've just got a lot of these well-funded competitors trying to dethrone Ethereum. Why did you guys pick Ethereum and how do you see the future of the protocol? Yeah, so I'm building crypto specifically because I care about increasing personal freedoms for people everywhere.

What that requires with blockchain tech is extremely high security guarantees. crypto specifically because I care about increasing personal freedoms for people everywhere. What that requires with blockchain tech is extremely high security guarantees and censorship resistance. So some of these other networks have done a good job building up security properties, but none can even come close to Ethereum. And so the way that I think about it is building an open and neutral economic foundation for the world. And right now, Ethereum by far presents the best opportunity for it. I think there are very fair criticisms of where Ethereum is at in regards to like how expensive it is, how low throughput it is, how bad the user experience is. But that's really why we created Omni. It's because we see this huge opportunity to bring this like incredible platform to the world in a way that preserves

the security and censorship resistance. But we can abstract away a lot of that. Omni is effectively a way... At the TLDR level, Omni makes using Ethereum, it makes Ethereum look like Solana. Solana is pretty easy to use today compared to Ethereum, so there's some clear work to be done. And Omni really gets it to that point where it makes Ethereum as easy to use as Solana is today, while preserving that deep level of security and censorship resistance.

How do you make Ethereum? What problems do you solve with Ethereum that Solana has already solved? What do you say makes it easier to use? The reason I'm pushing on that is because if you get the things that made Solana what it is now

and you kind of solve them within Ethereum, then there's no reason to use Solana. So I'm just curious what these problems are. Yeah, so Ethereum actually will have greater capacity to scale than Solana with the roadmap it's taking. But they're kind of different architectures. Solana is trying to put everything on L1 itself.

Ethereum is actually kind of outsourcing a lot of the work to what people are calling L2s these days. And this has been great. There's now like 10 times more activity going on on Ethereum L2s than on Ethereum L1 itself. It's really going to become this like settlement layer. The problem that this brings though, is that they're all kind of siloed ecosystems. So it's really hard to work across them and access like users and capital from all of them. So Omni effectively integrates all these different layers together into like one global cohesive platform. So people never need to think about like which

L2 that they're on. Long-term this will get Ethereum to be able to handle far more capacity than Solana does today. Okay. Interesting. And how do you see the, the, you said, Ethereum has better potential to scale in comparison to Solana. How long will this take and how, what happens to Solana then? I mean, I think Solana like has its kind of niche of developers. I think of the other all l1s they've done the best job like i think one of the most important things is like actually pulling in genuine quality developers and ethereum by a mile has that but i think uh aside from ethereum solana has done a

good job of bringing that in i think all l1s will stick around that are not like choose to not align themselves with ethereum but i don't think they're going to reach anywhere near the scale that Ethereum will reach. So I think over the next 6 to 18 months, we're going to see some fundamental upgrades to Ethereum and new ways to build applications where it will... A majority of the users and capital are on Ethereum today. And so once we make it easier, it's cheaper to use, there's not gonna be much of a reason to migrate to other L1s. And so over time, I think this will just lead to like a strong convergence back in the ecosystem. How long do you think that convergence will take? And obviously, if that convergence does happen, that's an incredible thing for you guys. But if it does happen, how long do you think it will take?

The way that I imagine this will play out is it'll start... It's already started, actually. But then if we project it forward where it's kind of like, all right, the game has been won, I imagine this will be a game of 18 for two years. When you say it's already started, what makes you say that? Just the increasing user activity on Layer 2s. Okay, fair. And just going back to Omni, I remember when we did the space, the countdown space before your fucking crazy launch. You were talking about a story about what problem you're solving for yourself.

I could be wrong again. It's been a while after talking 2049. But what led you to create Omni? Yeah, so we actually were developers in the Ethereum ecosystem previously, and we built a DeFi protocol on L1. And it went really well. We hit like 50 mil TBL in like two days. And so we started to think about how to scale it across roll-ups. But similar to users,

it's very difficult to move across roll-ups if you're a developer. Kind of what I'm talking about, these like L2s, they're in their little sub-ecosystem ecosystems. And so it really came from trying to scale our own protocol previously. And we started going down this path, like, all right, how do we make this happen? We were talking with a bunch of teams in the space, and many of them were facing the same problem, like the successful ones were thinking about how to scale traction by expanding

to these new platforms. But there wasn't a great way to do that. And so we ended up building that way. So effectively Omni just like allows people to use Ethereum in a global way instead of making them think about all these like sub ecosystems. And that applies both to users and to developers. I mean, two hours, a few hours ago, you announced the launch of Omni Armageddon. Can you give up with that name? We got to talk to that person. What's Omni Armageddon. Can you give up with that name? We got to talk to that person. What's Omni Armageddon? What does it mean for the ecosystem?

Yeah. We were bantering with the marketing team, like, all right, markets are in a crazy place and stuff. The Omni launch went really well, but like the markets are objectively crazy. So like, let's just lean into it and name it Omni Armageddon. But yeah, so this is really the first phase of rolling out the main net here. And what that means is people can restake and secure Omni Armageddon. But yeah, so this is really the first phase of rolling out the mainnet here. And what that means is people can restake and secure Omni. And it's honestly wild thinking about the scale

that this is already happening at. There's already about $2 billion of ETH securing Omni. Oh, wow. Congratulations. And what happens next? What are your plans for further reductions? Yeah, so once we get through this phase of MainNet, we're going to be launching the full chain. And we have a bunch of developers who have already

been building in the ecosystem. There are like 30 teams on our last testnet, and it's going to be about onboarding them to MainNet and continuing to expand the dev pipeline there. So at large, really the main difference that is going to happen in the short term here in the Ethereum ecosystem due to Omni is people are going to start building their applications in a global way. Right now, they like build them as if they could only access like, you know, one subset of users. But with Omni, people can just build their application and by default, it's available everywhere across the stack. So it's going to make it substantially easier to use the Ethereum ecosystem at large. Okay. And last question last question after you.

First, again, congratulations on your launch. You guys are sitting at $2.5 billion. FTV, and we're one of the few Binance launchpad launches this year, one of the best ones, most successful ones. It's a pleasure to host you again. The last question is, what's the potential? What's the upside potential for omni and for ethereum uh enlarge yeah i mean so my view is that ethereum is going to become the global

neutral foundation for the economy uh just like the world's economy will run on ethereum um the way that i think about omni really is being a core part of that infrastructure stack like it is going to take more than just the Ethereum L1, the settlement layer to scale to like handling the entire world's economy. It's going to take other infrastructure layers on top of that. So part of that will be L2s. Part of that is going to be Omni. So that's really how I think about our growth at Omni. It's like the target, you know,

I don't think about competing with these all l1s and like the market share there we are in such a small niche of like crypto right now and compared to like what it will be able to achieve so really that's how i think about the long term here it's like we are building the open neutral like foundation for the economy and how do we scale that so that it can actually onboard all these people with the best user experience and om Omni will play a key role in that, in the Ethereum infrastructure stack. Yeah, man, I'm just having a look at your metrics as well. It's incredible what you guys have achieved.

Look, a pleasure to have you again, man. Really appreciate it. And we'd love to see more people building solutions like you guys, focusing on the foundations of the industry rather than all these top player projects that are way too early for their time. So congratulations, man, and congratulations on the incredible launch.

And that's the listing and the launch today. Thanks a lot. Thanks, man. Appreciate you having me back. All right, man. Good to see you again. Everyone, thanks a lot for joining. We'll see you again same time as always tomorrow.

And for the panel, I really appreciate doing this today. Thanks, everyone.