The Wolf Of All Streets - BTC and ETH Broken? The Rise Of Layer 2s With Sandeep Nailwal, Stani Kulechov, Muneeb Ali, Alex Miller & Udi Wertheimer | Twitter Spaces

Episode Date: May 9, 2023

I run one of the biggest Twitter Spaces in crypto every Tuesday at 11 am EST with the biggest names in crypto. Guests of this show include Sandeep Nailwal, co-founder of Polygon, Stani Kulechov, co-founder of Aave, Muneeb Ali, co-founder of Stacks, Alex Miller, CEO of Hiro, Udi Wertheimer, Matti Greenspan and others. ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►BITGET GET UP TO A $8,000 BONUS IN USDT AND GET MASSIVE DISCOUNTS ON TRADING FEES! 👉 https://thewolfofallstreets.info/bitget    ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

Hey, Stanley, I've sent an invite to your DM, but you can go ahead and request if you're not seeing that. There you go. You're a speaker now. We're just going to wait here for Sandeep. And then we're going to get going here. Sandeep, same thing. You should have a... Oh, there you go. Perfect.

Perfect. Guys, usually we give a whole lot of time and talk shit at the beginning to let everybody come in, but I want to be respectful of everyone's time. Stani only has, I think, about 15 minutes to chat today. Of course, guys, just to give some context, we do this every Tuesday, about 15 minutes to chat today. Of course, guys, just to give some context, we do this every Tuesday, 11 a.m. Eastern Standard Time.

Really my favorite part of the week. Go ahead and click that little arrow button at the top if you can and share this with everybody. Let's get some more people in here. And that's really the context. Today, we're talking largely about layer twos. In the front half, we'll be talking primarily with Sandeep and Stani about Polygon and what's happening there, but generally about layer twos. Obviously, I think that's a hot topic with the congestion we're seeing on Bitcoin, the Ethereum network, largely from memes, of course. And we'll get deeper into that conversation in the back half.

Around 12 o'clock, I have Muneeb Ali joining from Stacks, some other members of his team, Ordinals folks who will be chatting about all that. I'm just pulling up a tweet right now, specifically from Stani that I want to talk about. Stani, first of all, man, how are you doing? Thanks for joining last second. I know that you weren't planning to be here.

Thank you so much. Actually, it's very good time to talk about the gas fees and scalability, everything that is happening, not just actually in the Ethereum ecosystem where pretty much most of my work has been in the past years, but also in the Bitcoin ecosystem as well recently. Yeah, I agree. It's the perfect time to do that. So listen, I have a tweet up here that I pinned. With these gas fees on Ethereum, I'm glad Lens went with the path for Polygon Momoka for now. Social networking artifacts require very high throughput, but not necessarily the L1 security and some actions can't be even limited by the block time. So obviously, this is a topic you know a bit about.

As you said, you sort of started on Ethereum, but you've been expanding onto Layer 2. So I guess generally, let's talk about why you chose to do that and why that is the solution in your mind. Yeah, I mean, you know, essentially what blockchain is providing is security and that security comes with a certain price and cost. You know, when you approach the security perspective from the Ethereum community, you kind of like have this idea like, you know, you want to have sufficient, you want to have widely centralization to whatever things you want to agree upon. So basically that might be financial transaction

doing on chain. What is interesting about that discussion is that, you know, if you apply a level of very wide decentralization, and that's very hard to, what is decentralized enough? And it's something that we've been not just thinking about when it comes to actually selecting and thinking about like what networks to use and to what kind of use cases, but also in applications as well and where kind of like the line of decentralization lies. And for me, what's been fascinating is that,

you know, currently on Ethereum ecosystem, we have 47,000 nodes, which I personally see as a huge amount of security to ensure like global settlement layer for financial transactions and some even non-financial use cases. But I think that kind of like the more fascinating question is that, you know, what is the amount of security for certain things you really need to use and use that security to govern certain activities. We started earlier a few years ago by building Decentralized Finance with the Aave protocol

and the Aave ecosystem. And something that we noticed is that financial transactions, because of the states we have, because as the value logged, you know, these interest finance went from fluctuated, has been fluctuating between 50 to 200 billion. It's a significant amount of value in the ecosystem, even still a very tiny portion of finance compared to the whole financial ecosystem. So you want to apply a wide amount of security,

but when it comes to actually new type of use cases, which in our case that we have been solving as a challenge is the social networking. So basically how do you actually set up an online presence in a way that you could actually have some sort of artifacts that you have guarantees provided by the blockchain. So what we understood that and what we did is actually we took a concept of social network and different kinds of artifacts or like features that exist in social networks. And that's basically creating a profile pretty much you have in every single use case with online presence, social networking, creating your social graphs.

So it's basically who you follow, friendships you make, your peers online, and then the ability to share and identify content. And then we added one more Web more Web3-native concept is the collect feature. So collecting, not just liking, but actually collecting for consuming digital goods as a kind of like a more Web3-native feature.

So something we realized that some of these artifacts, they don't necessarily need to be on layer one, but they actually could be elsewhere. We've decided to go with very early on because we understood that actually it's interesting amount of security to use to secure, for example, profile, the follow graph, and also the content that you uh collect

and then recently with momoka what we did is basically we said that you know you don't actually need to have a single transaction uh with executable blockchain environment you can take some of these transactions and just uh dump them into a data availability layer you know and the users are happy that they have this execution. But what's fascinating, the direction where we're going is that we're actually saying that, you know, we have a good amount of security in layer ones, but what we could actually do is that we could transact somewhere else and settle that state into the L1 execution environment, let's say for example, Ethereum and batch transactions as well.

So what we're doing is that we're transacting in a kind of more suitable app specific transaction environment, but we're critically inheriting the security from, for example, Ethereum, which makes a fascinating thing. And I think L2s are super exciting now because we see all this gas, increased gas costs on layer ones, but also it actually starts to come significantly exciting with solutions like CKVM where the gas costs are going and transaction costs are going down for the users as more and more people onboard to these new L2s and start to actually using them. Ironically, we see a lot of the shitcoin activity happening in optimistic roll-ups, but we need

to see that happen in some ways in ZKVM. So we can get that a lot of activities. People can actually see that the transaction costs can actually be substantial lower and you can get the inherited security from Ethereum. And I've seen kind of like initiatives also building a social network directly on L1, having the ability to, let's say, make the comments or follow on Ethereum. But it's just like we've done that process and we've done that research to, let's say, make the comments or follow on Ethereum.

But it's just like, we've done that process and we've done that research that it's gonna be very hard to scale in more bigger, kind of like a more massive option. And this is where the layer two has become very important because it's actually a technology stack that allows you to onboard substantial amount of users without incurring that significantly increasing cost. Because on Ethereum, for example, every single user adds more cost.

On Player 2, actually, you can have cost savings as more and more users are onboarding. And that's the kind of like a fascinating piece of a component that's in front of us. Can any of this be solved by other layer ones rather than layer twos? I mean, that's what some people have argued. So why layer twos as opposed to having a different layer one that has, you know, I guess, sacrifices a bit of that security for that scalability, speed and low transaction fees? I mean, you could use some different layer ones for sure for some artifacts. In terms of Lens, it's really modular also in the sense that, you know, you can use the

piece of components and choose where you want to secure some of the artifacts. Some users might be happy that their profile is on Polygon POS with a certain amount of validators. But you might have users that want actually security from Ethereum, but at the same time, they still want some sort of

usability as well and scale. Will the layer 2s come into the place? The significant difference here is that you can use the layer 1 security and you periodically inherit it, which provides that scale. Because at the end of the day, and also something we have to remember is it's not just like you don't have to necessarily be on the same

exact roll-up as everyone else. I actually think that there's a lot of value in compensability in various different ways. So like in finance, you want execution compensability. But when you go to things like

social networking, you actually want to have more of a guaranteed amount of throughput that you can have certain transactions and you have a good state and that's where you don't want to, you don't have to even share a state with other participants in the same roll-up network. So you can actually have dedicated, you basically have a dedicated lane highway, which is something where what you need, especially where you start boarding more and more users into the space. And is it fair to say that Ethereum and certainly Bitcoin as layer ones right now are effectively

dysfunctional or broken without layer twos on top. I mean, we've obviously seen ordinals and memes, effectively BRC20s, back up the mempool to historic levels on Bitcoin and ETH transactions. At any time there's a meme like Pepe or something, obviously the fees go up massively. Yeah, I mean, that's the common story that there is some sort of trading activity, especially a lot of the trading actually happens on chain, which is amazing. That means that we have more transparency on the financial transactions because the

settlement finality is on chain and not necessarily on exchanges where people give up the custodies of their funds. But the other side is that you will see that significant increase in transaction costs. And it's not the first time that it happens. So it's a periodical problem. But this is the first time ever we have functional L2s. I mean, we have the optimistic L2s. We have now ZK EVMs as well. Polygon has been doing amazing job with the ZK EVM. That's a live network as well. And we have a POS networks as well, like Polygon POS.

So like there's a lot of optionality there what you could use. And it's actually interesting to see now where users are starting to go, because if you're going to see high transaction costs on day-to-day and week-to-week basis, you're going to start finding a new solution as a user and as a developer. Steny, I think you might have to go. Is that accurate? Yeah. I appreciate you taking the 15 minutes

and giving us that perspective. And you and I are due for a much longer conversation, buddy, okay? Thank you so much. Thanks for having me. Awesome, man. All right, Sandeep, what's up, buddy? How are you?

I'm good, man. I'm good man i'm good what about you i i'm good uh watching this uh circus and and and enjoying it from from the outside but i guess you're like more involved in it obviously and i like your life is i envy your life like you know being out of this circus and enjoying it from outside, you know, seems very exciting. But inside the circus, it's very hard. It's really, really hard to build these, you know, token startups because they have all the problems and shenanigans of a normal startup or normal, let's say, company or organization. And plus, on top of that, you add the decentralization and token and community management and all those things. So in my mind, it's kind of like the hardest things to build.

I agree. So with that in mind, what we just talked about with what's obviously happening on Ethereum and Bitcoin, certainly, does that offer you some vind or a swap it's already high enough right to for people to understand that you need more scalable layers uh to to to have these you know applications built on top of blockchains right so i don't think like you know these kind of crazy days where you start seeing like 200 300 kind of gas fees or transaction fees to do small things helps us that much because you know we don't understand that the the enemy is not like you know people within the like you know the projects actually your competitor competition is not with the other players inside of this industry but it's with the outside web to world or with this current like you know ai hype and all that i was in uh you know medici went uh in la like four days back and you could see that you know the

with all the you know uh the media and the investors uh currently ai is the most hip thing right like crypto is kind of like everybody is like no even after 10 12 15 years like you know it's it's it's it's not ready and all those things so i don't think these days actually help anyone because everybody from the outside world the uh you know the institutions the investors and all that they see that this technology even after 10 years is is in a very, 10, 15 years, is in a very nascent state. So I don't subscribe to that, that it kind of vindicates anyone. It's not helpful for anyone. Yeah, too small of a community to even talk about competition inside of it.

That makes perfect sense, obviously. And I'll go out on an even further limb and say it doesn't really help when regulators and legislators are looking at us and we're trying to make the case that this is a serious and meaningful asset class. And then all you hear about is Pepe. Yeah, exactly. And also, when they hear that you talk about this thing being the next financial infrastructure or payment applications and all that and then this then you know they see that okay the you know the transactions are like transactions cost from 100 to 200 dollars like you know that that's not a payment that cannot can never be a payment platform or can never be a you know scalable uh you know scalable financial infrastructure so that

also doesn't help. And yeah, like all these meme coins, definitely I don't think that any of these help our bigger cause. But Polygon does have the low transaction fees and the speed that's needed. So why is the narrative continually only looking at Bitcoin and ETH? Is it because they're just larger and they have the attention of the media? I mean, you guys have partnerships with it seems like every company on the planet at this point. Absolutely. Like, yeah, I mean, I think the there's no doubt that Bitcoin and Ethereum are the bellwethers of this industry. And anything that comes new, you know, initially gets tried out on these platforms. That's where the maximum, you know, large investors are and all that.

But the other part is like, you know, also why these are like these things always happen on Bitcoin and Ethereum is that the largest speculators are also there, right? And, you know, like the biggest problem with all of us is that, you know, we are still stuck in the speculative loop. Like, you know, these are small games that, you know, the community keeps playing. It makes it fun, but, keeps it fun. But, you know, it's sad that, you know, even after, like, I think the Dogecoin came in, what, like, you know I think, 16, 17-ish, right? Yeah, it's been six, seven years

and we keep seeing these meme coins every now and then and many kind of useless but kind of speculative use cases and definitely that's not a good look

for the external regulators and institutions and everybody else. Yeah. Yeah, I mean, it's hard to make an argument at this point that the main purpose of crypto is not speculation. But, you know, that's for now because it's nascent and small. But you guys are building quite a few things

that could change that narrative. I mean, doing partnerships, like I said, with the biggest companies in the world for real fit for purpose things is very different than gambling on memes. So, I mean, while you talk about some of the more recent things, some of the bigger partnerships you're excited about and some of the more, let's not focus on all this negative, let's move on to the positive and all the things you're excited for and that are being built yeah so i mean see uh what stani was talking about all the scalability challenges and all that so you know the the job is not done yet like you know we are uh with the current zk evm we you know kind of i think created a new inflection point wherein

you know you now have full blown fully like you know kind of like you know fully EVM compatible chains where the developers can deploy their you know things and can deploy their smart contracts

and applications and things like that but then again it's a long way to go from there these like you know we have launched a full-blown roll-up we need a validium setting also where the gas fees can become extremely low because with roll-ups you are still still sending both the proofs as well as the data of the transactions back into the back into the eth as the data of the transactions back into the Ethereum blockchain, which makes the transactions still fairly costly, but which is very good for DeFi because you have 100% security of Ethereum. But for, you know, kind of many social use cases, you would need well-edium kind of settings,

which, you know, we are working on with the same stack uh and then you know in future like also these sequencers and provers need to be continuously upgraded to to handle like millions of transactions from a single application per day uh so all of that is like you know it's happening and i think you know we are still i would say um maybe six to twelve months away from where like you know we can we can open blockchains up for let's say like even like for now today why do you see this high gas fees is that all these blockchains existing even on like i i can feel you know i can see that even polygon is experiencing currently little bit high gas fees like you know obviously it's still very low it's still like you know low

digit uh cents but still like you know it's bigger than or higher than a normal days right because even with these like very few uh million users like let's say maybe right now, I think even with all these high gas fees and all that, you would have 2-3 million daily active users, which is nothing in the larger scheme of things. And right now, I think the moment we start approaching 3-4 million, 5 million users a day, all the blockchains will get choked like you know it's not about one blockchain layer 1, layer 2, layer 3 doesn't matter which blockchain you are everything will get choked for congestion because that's the capacity of the blockchains

today combined capacity I'm talking about right and we need to take this combined potential capacity to 50 million to 100 million DAUs and then you will start seeing some applications which can handle let's say individually handle few million users a day and in combined for the overall blockchain space we can start seeing like uh you know 10 15 20 million users a day on normal days and 50, 60 million users on like, you know,

really highly speculative days and all that. And that would be the place where we, like, you know, at least I will be like more satisfied if we start seeing some real world applications because otherwise, you know, it's not a very happy look like you. I mean, to be honest, you know, it's not a very happy look like you. I mean, to be honest, you know, being, and it might sound bearish, you know,

being, you know, a founder of one of the biggest projects in the space, but it makes me very bearish on our overall space when I don't see even now, you know, real high quality applications, you know, breaking out and becoming big right so it like i i want to take the capacity of the networks to that level which i said like you know 50 100 million users the net capacity the total capacity and then start seeing some applications and re-evaluate at that point in time that okay you know now we have the capacity are we now seeing the

applications which can really uh have like you know large number of users and all that like and if when we reach that capacity 50 to 100 million users and even then we are not seeing any applications that would be a very bad look and you know everybody in the space would need to reevaluate that but i am very optimistic that once those capacities are there, with these applications like what Stani is building with Lens Protocol and all that, when the scalability is available for them, these applications will start going through a new surge

in their growth and we'll start seeing a lot of applications which are really successful. Those are sobering numbers, actually, because we talk about bringing 500 million or a billion people and basically you're saying at three to five million, we're already at full capacity. And you and I have talked about this a lot of times in the past. I mean, this goes back to what I asked Danny, could a layer one handle all this? I guess that makes the answer clearly no. And what you've said to me in the past, we kind of joked about it was layer two, layer three, layer four, layer five, layer six, layer seven. I mean, is that the direction that we go on to handle this at scale for true mainstream adoption? Absolutely. There is no doubt that these computational systems, they grow in the fractal patterns.

And definitely, the way internet has grown today, it has grown in a fractal pattern. You have the large intercontinental lines and then each country will have their own subnet and within subnets you will have more subnets and more subnets. So the system or the internet has grown in this fractal pattern. That will be the same thing for blockchains also. But what's important is that even though internet has grown in a fractal pattern, you know, unlike these layer one, layer two, layer threes, and that's why we don't believe in layer threes, actually. offering from Polygon which will solve this interconnectivity between blockchains once and for all especially using the ZK technology that even though

these blockchains might be settling on a layer 2, layer 3 pattern but they should all be directly interconnected and that's also something that we are working on in our research mode and very soon we are at a place, we have already reached a place where, you know, we can start, you know, talking about it and, you know, present the vision to the community. And that will be the larger vision of the Polygon, right?

So, you know, when I say the Polygon, I mean that that inter that inter network of all these, you know, interconnected blockchains. And that's how all these networks and these computational systems or communication systems scale. They scale in fractal patterns. And, you know, there's no doubt that, you know, in order to get those, you know those hundreds of millions of users on chain, we will need these fractal pattern growing blockchains, whether it's multiple blockchains, interconnected blockchains built on top of each other. it offers you the capability to have Ethereum security across multiple chains, like security and decentralization of Ethereum. It can be passed on in a low-cost manner to these various multi-stage or multi-layer chains. So, yeah, definitely that's the main thing. I understand the idea then

that they would be interconnected. I like to use the term interconnected instead of interoperable, but that makes me assume you're talking about all of them within that multiple layer stack on ETH. What about interoperability with Solana, Avalanche,

all the Bitcoin, all the other blockchains in theory? Because let's be honest, we've talked about interoperability a lot, but it's blockchains in theory, because let's be honest, like we've talked about interoperability a lot, but it's been a complete shit show, right? That's where a lot of the exploits and hacks come. And so that hasn't really worked out that great. That may just be because it's so early,

but are there solutions for that? Or are we really talking about just, you know, building out these multiple layers on one base layer? From the polygons point of view, we personally are focused on building this interoperability between various

polygon chains. Between the various different layer 1s, layer 2s, I think there are multiple third-party platforms that are building. layer 1s, layer 2s. I think there are multiple you know, multiple third-party platforms that are building. Obviously, we have seen some big hacks on that. But then also

some very competent teams and formidable teams are building on such platforms. I think we all know about these, you know, projects like Wormhole. We know about Socket and Byconomy is there and Seller Protocol and then Connects Network.

There are at least 10 high quality teams which I have seen and those are working on these things. And I think between these heterogeneous networks, I think some of the third-party platforms will end up using it or end up creating these platforms which will provide that interoperability. But we are more focused on providing that interoperability. First, solving it within Polygon blockchains. Right now, that itself is a mammoth task

to make it a streamlined, very high or very low latency interoperability and potentially smart contract composability across these small chains

like individual chains. So we are very focused on that. And, you know, talk, like we can only talk about these other chain integrations once we are fully able to build out what we need to build that is within the Polygon ecosystem.

But in the meanwhile, we are banking on some of the third party systems who will end up solving this. Now, the last time somebody else had both of us as guests on the spaces, I can't remember who was hosting. But you and I were kind of laughing. And I think it was a really important point that we're still in this phase where nobody outside this echo chamber has any idea what the hell we're talking about ever. Right. We talk about EVM and ZK and

roll up and optimistic. And I think it's just like, we're so far over anyone's heads. And I sort of made the point that if in a year from now, I don't really know if that's the accurate timeline, but if in a year for now, we're still even using the term NFT, proof of stake, layer one, two, three, roll up ZK, that we have completely lost the plot and failed right that we really need to make the terminology but the technology we just need to abstract away all of that complexity so that people don't have to think about the technology underlying yeah absolutely i agree with you that uh you know like blockchains will not succeed uh or web 3 will not be like you know mainstream till the time blockchains become invisible

so blockchains will have to make them invisible in order to in order for applications to come on the front uh and otherwise we like again this this will remain a niche for some people who are involved in the speculative stuff. So, yeah, blockchain needs to make themselves invisible. And I think this account abstraction campaigns recently or account abstraction technology, which is being adopted by multiple teams and various teams are working on it. I think Argent is there. Again, Biconomy teams are working on it. I think Argent is there, again, Biconomy team is working on that and there are multiple other initiatives, account abstraction initiatives.

And then we also keep hearing a lot of things about MPC related stuff. So I think some of these things can actually really help uh you know get the user experience to a very uh you know simplistic level uh and yeah without that it will not uh we will not be able to see mass adoption of api yeah that makes perfect sense uh actually i just brought up sally uh she messaged me a question that she had for you we don't usually bring up people from the audience but i'm gonna go ahead and allow her toaged me a question that she had for you. We don't usually bring up people from the audience, but I'm going to go ahead and allow her to ask you a question. I will take that.

Also, Scott, because I also need to hop now because I think for my calendar also, it was scheduled for half an hour. So is it scheduled for a longer duration? It was scheduled for an hour, but I see Alexer's in the audience and i'll bring him up we were going to start talking about uh the bitcoin side of it and and i know also um that muneeb will be here in a bit so can i just have ali sally ask you this one

question and then i'll let you go amazing yeah awesome awesome awesome awesome let's yeah hi thank you for the opportunity i never thought i'd get the mic um i just wanted to ask a quick question that um what are your um visions for nft ecosystem in polygon and um um you know any alphas for the founders um you know how are we uh thinking of sustaining and building the you know uh polygon nft ecosystem and um this question is from drill club we were freemint and yeah okay uh yeah so i mean see on the on the polygon ecosystem side like we are uh nft ecosystem we are working very uh you know we were working hard on creating a you know kind of an organic uh ecosystem on nfts uh within the polygon ecosystem and we see now a lot of artists a lot of creators have

started uh you know considering polygon as one of their top choices for their creative journeys. And it has grown multifold in the last few months. And many times, even if I, I mean, on 30 days, sometimes if you check the volume for 30 days 35 days and or like 60 days kind of horizons uh polygon generally uh you know is doing a very good volume polygonic customer is doing very good volumes even on these uh you know nft kind of buy nft marketplaces although and i think many times and many weeks it has become the number two platform after ethereum uh you know very recently uh but we actually do not like you know because this is the this is the matrix with which the community uh you know validates an ecosystem on uh but otherwise like what we believe is that you know kind of the ecosystem the kind of ecosystem reddit has created nike swoosh is is doing starbucks odc campaign all

that we think that some of these uh kind of uh applications will really break out i definitely hope that you know reddit adds kind of marketplace marketplace functionality or something like that for their end users where where the larger crypto community starts seeing because we all just want to see the speculation. We don't, you know, like nobody really appreciates, like not nobody but very few people appreciate the fact that, you know, Reddit has now 12 million NFT holders who have those avatars and, you know, they are like, you know, very heavily interacting with them and all those things uh and uh you know uh that's what i think like that's what that we value a lot but then again on this crypto native like speculative nfts or these like you know marketplaces volumes also polygon is doing well and we are very committed uh to make for making polygon like uh you know after ethereum uh the largest uh you know place for uh

nfts uh whether it's the speculative nfts or like the nfts being used for the brand engagement and things like that so that's why you see all these brand engagements and all that technically every large brand is doing their nfts uh with polygon and uh similarly the on the crypto native side like a lot of artists and off late like polygon has become the most uh kind of sought after place for launching uh their uh you know nfts creative collections so hopefully we keep doing the good work and uh you know eventually see polygonum as the top player in the space awesome Awesome, man. I appreciate the extra time for answering her question. And always a pleasure, man. We're going to, obviously,

I'm sure I'll talk to you in like two weeks or something. I'm sure we'll do it again soon, brother. Have a good one, man. Alex, how are you, buddy? Hey, man. How's it going? Hey, Sandeep.

So Alex and I finally met in person after all of the screen conversations at ConsenSys. And that was sort of the screen conversations at ConsenSys. And that was sort of, I think, at ConsenSys, this Ordinal and BRC20 controversy was really all starting to bubble. And now we're seeing it, I think, peak coming into Bitcoin Miami next week, which should be interesting for anyone there. So, I mean, you obviously heard the conversation with Sam Deep and Bradley Stanley before. I mean, what are your first takes, I guess, on the role of layer twos? Let's talk specifically about Bitcoin and what's happening there, because that's what you're building.

Yeah, I was going to say, needless to say, I am quite bullish on Bitcoin L2s. And actually for anyone, Scott, I don't know when you're getting into Miami next week, but there's actually the Bitcoin Builders Conference on Wednesday. So the day before Bitcoin Miami starts, that is all of the Bitcoin L2s. So Stacks, Lightning, RSK. There's actually a bunch of Ordinals people too, which is L1. But I think spiritually is almost like an L2. So there's going to be just a day packed with all kinds of content on exactly this. Like, how do we build the entire Bitcoin ecosystem, all the programmability around Bitcoin?

So if anyone wants to go, check that out at BitcoinBuildersConf.com, C-O-N-F. But yeah, I mean, I think we've, I assume most people here have been at least aware if they're in your space about everything going on in, you know, Bitcoin and like the cost of transactions for the last week. The fact that for the first time, I think in the chain history, transaction fees actually exceeded block rewards for a number of blocks over the weekend, which is amazing for the future of Bitcoin because that's kind of absolutely critical for the long term viability of it.

Right. That answers the question of what happens when all the Bitcoins mine, right? We've already seen it in a microcosm here in one day or one week. This is the crazy thing to me about the maxis who are complaining about us using up all the block space on Bitcoin. Either it is the most valuable resource in the world or it's not. But you can't be like, it's the most valuable thing ever. But God, don't let anyone use it. I mean, what are we supposed to do then? But yeah, look, the halving is coming up in April.

So block rewards are already going to go down by half. And then over the next 30 years, they're going to keep going down. Like, we need people running valuable is that to keep the chain usable, to keep it accessible to people, we have to go to layer two. There is no other way around it. Like five, six years ago, the block wars were fought. We said, OK, we're sticking with four megabyte blocks. Like it's inherently limited. It's only, you know, blocks are 10 minutes long. Unless you're going to go completely re-architect all of Bitcoin, which I do not recommend doing, got it pretty good the first time out. But the one key limitation is it's not hyperscalable.

It doesn't have smart contracts on it. That's where layer twos come in. Satoshi even saw this back in 2010. He said there would be other networks that reuse the hash power of Bitcoin. And that's what folks like Lightning and Stacks are doing is we're reusing that hash power, all of the security generated by these miners, but bringing the scalability

that will ultimately allow for people to, yeah, send transactions in a second for free effectively instead of, you know, in 10 minutes for $150. I wish we had some toxic maxis here to argue with us effectively, instead of, you know, in 10 minutes for $150. I wish we had some toxic maxis here to argue with us, because I know, you know, that I tend to agree with your take there, but it would be nice to have had the other side, but I didn't invite anyone to take it. It's just interesting, though, then it leads to the next question, which is, we've now come to the point where something effectively clogged the network, right, which makes fees high. And, you know, 400,000 transactions in the mempool is relatively absurd, let's be honest, right?

We got to that point, but are we at the point where there's actually any layer twos that are fit to purpose to solve that, that enough people know about where we can actually solve this before we start to hear the narratives for six months that fees are too high, it's too slow, and it's not working, right? What pushes people to the layer twos right now? Because my guess is that 99% of people still don't really know they exist, don't know how to use them,

and are, we're just now gonna be bitching about block space for the next few months. Yeah, I think it be bitching about block space for the next few months. Yeah, I think it's mainly going to be bitching for the next few months. Like you're not, you know, you're seeing folks rush to get some solution in like Binance has said that they're going to, you know, integrate lightning payouts right away. But not enough people have lightning wallets. Like it's going to take a little bit of time. I think what this is going to do and what we've already seen,

we started seeing this when ordinals came out. There was a rush of new builders coming into the ecosystem. A lot a lot of folks came over and started, you know, either just building on Bitcoin or, you know, building both on Ethereum and Bitcoin. We saw folks who hadn't built in crypto coming in before. So there is nothing that's going to happen tomorrow that is going to solve this. It's just not. We're going to deal with the fact that the chain is going to be crowded for a little bit and that people are going to be complaining about prices

and block space, just like we saw in the Ethereum world when this happened. But that's necessary because crypto is a free market. I think most of us are probably pretty big fans of free markets. And like, that is what is going to cause these to really get invested in and really get built out. So yeah, it's there's gonna be some necessary pain, but like, this is what people will do with it. You know, in the in the stacks world where I spend most of my day, my day, the big thing that we're working on, that the ecosystem, I should say, is working on, is what's called the Nakamoto release. It's coming up. It's going to have two big things in it. One is moving from 10-minute blocks that match Bitcoin down to five-second blocks, or under five seconds, potentially even. We'll see. And the second is a synthetic, trustless Bitcoin asset called SBTC. So basically, you'll be able to totally trustlessly peg in your BTC into the Stacks network, run whatever transactions you want, use whatever smart, you peg it back out where a network of open network of decentralized signers, which might sound familiar, kind of like Bitcoin, will verify the transaction and restore it. And so like, we think that's one way that we're going to really help scale Bitcoin.

Everything's still settled on, totally secured by Bitcoin. But it'll be faster and cheaper for people who want to do more of the programmable stuff, or even potentially some basic sending operations to do it there, while preserving the real power of the Bitcoin chain for like, again, just decentralizing trust globally. Since I have to now be the guy who plays devil's advocate. So in the short term, where we talk about this pain, what does that mean for your average person in a country with hyperinflation who bought Bitcoin or is using it for, you know, missions to send money to their family and it was cheap? And now they're sending 20 bucks and it's costing 20 or 30 bucks to send. What does that mean for them and retaining them? I mean, maybe they're largely 20 bucks and it's costing 20 or 30 bucks to send. What does that mean for them and retaining them? I mean, maybe they're largely using lightning. Frankly, I don't believe that.

But I mean, this is kind of a problem, at least in the short term, for that narrative that this is an asset for poor people who are doing remittances or in foreign countries with hyperinflating currency. Yep. So I think, number one, it doesn't undermine the core value proposition for those folks as an inflation hedge, right? The asset is still there. If anything, by increasing the utility of it, by increasing the number of things it can be used for, it increases the usability of it as an inflation hedge for people. So that's at least an upside. Yeah, if we're talking about the next three to six months, if this level of activity

keeps up on the network, it will hurt their ability to use it directly for remittances. I think there's at least a good enough solution out there for people right now in Lightning. And I think we will at least see some more of an adoption of Lightning for people doing that. But again, it kind of comes back to, in a situation like this, you have two choices. Number one is you create a system, you create an open market like we have with Bitcoin, and you allow things to shake out where they will and sometimes there are going to be ill effects like that or you have some kind of centralized planning committee who says these are the appropriate uses of this technology and not and this is what the costs are and you're only allowed to do it for

this and that and well we've already got that option if you if you want to do that just you know go buy us dollars and send it through western union or whatever and don't use crypto but like the entire point to crypto is that like it's this open market it's decentralized like yes it's going to be messy but i think what we've seen time and again from you know democracies versus autocracies and everything is like it's going to be a little more painful uh getting it set up it's a little r rougher. The autocracy looks really clean and nice, but it doesn't get built nearly as strong and it implodes a lot worse. Well, I do enjoy watching the toxic maxi side twist themselves into mental gymnastic pretzels saying that they support permissionless systems, but we need their permission to do things

with the bitcoin network you really can't like i'm a libertarian but also don't use this uh permissionless system for you're using the permissionless system wrong but i mean that really seems seemingly has been the consensus here uh and i i just do think that this is temporarily very problematic. And if it continues, I mean, you said, if we see this continued level of congestion, uh, listen, I, you know, I'm a trader, so that's my mentality. I think that's going way up, not way down. Right.

So we're at a present level. Uh, but I think ordinals obviously are just getting started. BRC 20, nobody had heard of two weeks ago when we were at consensus, right? And so, I mean, this is just the beginning. So if these solutions don't scale or become more readily available quickly, I think this problem gets way worse before it gets better. Yeah. So I think it rides a little bit of a middle ground or follow what I should say is actually, I think it follows a standard type cycle. I don't know where the local Maxima is on BRC 20 in particular. And like, you know, the, the really bad congestion,

like people were complaining about ordinals before, but like, whatever, it drove the prices up some, the really bad congestion that is coming on right now over the last few days has really been driven by BRC20. And part of the problem is it's just in an attempt to be more fair, it's also kind of an inefficient standard. But that said, it's also happening right now because of the gold rush land grab situation. And you have to get in there and mint right now. and like actually someone was pointing out on something i was listening to it yesterday or day before those

400 000 transactions in the mempool like a bunch of them are probably basically effectively dead transactions of people trying to go and mint uh new you know coins in brc20 but by the time their transaction goes through in a day or two they're gonna have missed the window on it right like they'll have already gotten to 100 min and they're not even gonna get it so that's a little that's gonna be a little funny to see but i think you know even without that like we're gonna at some point in the near future i think hit a local maxima on the transaction costs. It'll go back down. It's not going to go back down to where it was, right?

Like it's going to be at a new level. And the rate of increase is going to be higher than it was before. But I think we will at least get a little bit of a reprieve while everyone's still seeing that like these L2 solutions are necessary. And that's when we're going to get it built. And then hopefully a lot of that traffic moves off onto that. And again, just keeps it scalable for everyone while keeping all of the functionality that people clearly really want. Muneeb's here.

So now we've got my full stack of Stacks evangelists. Muneeb, how are you? Hey, everyone. I actually felt bad for people. There's a Stacks evangelists. Madib, how are you? Hey, everyone. I actually felt bad for people. There's a Stacks podcast as well. I was like, you're going to have a hard time having a claim on that name. So, listen, you've obviously,

you know what we're talking about. I think you caught probably the tail end of that. I mean, where do you stand right now on what's happening with ordinals and BRC20 and how we, let's talk about first, I guess, how we fix it in the short term. You may have missed it, but we were sort of talking about how the higher fees and congestion at this point now are making that sort of base use case of Bitcoin for remittances and people who don't have enough money. It's making it a lot harder to use, right? And they haven't necessarily adopted Lightning or any layer twos yet. So I

guess maybe let's start with talking about how we can fix that in the short term, or is this just, as Alex said, sort of going to be a few months of pain? Yeah, I think, honestly, I don't think there are a lot of short-term fixes other than the fact that some of the biggest sources of traffic, I think they sort of like died down a little bit. Like honestly, like BRC20s, like if you look at it, yes, they're kind of like nice in a way that they are more transparent and more like fair launch tokens, but they're really meme coins, right? Like let's just call them what they are.

And I think there's some level of interest in meme coins, but it also dies down. If you look at the Pepe thing that started, by the way, I'm a Pepe fan. I used to collect rare Pepes on Counterparty back in the day, right? So it's funny that people are having fun doing all of these things, but the interest sort of dies down a little bit. Unless, I think, some really big projects, like really established good projects like stablecoins or other established assets that issue wrapped assets as BRC20s. Unless that happens very quickly. Hopefully it doesn't happen that quickly but if because i do think there are real i don't want to get too technical but there are issues with the indexers and even how the standards are defined that needs to uh shake out and improve and mature before i think we can take

more established assets like stable coins which will be super interesting right like stable coins directly on top of bitcoin one um so i'm I'm sort of like saying in the very, very short term, if things blow up more, meaning I do think we are heading towards like a thousand sats fee market, just a matter of like when, like how many months is the question, right? It can happen very quickly if a major project does a launch. don't know short term like we know we've been doing a bunch of work on these bitcoin pegins um maybe we do a more federated style version of that to quickly try to get some traffic off of l1 onto an l2 because what we are working towards is a more sort of like decentralized full fledged version, right?

But if it's a big pain, then maybe people can trade off a little bit more centralization in the short term to move some of these assets to L2 and use it there and then wait for the more decentralized versions to arrive. Do you have, either of you, color metrics on how much adoption there's actually been of layer twos, how many people are actually using them? Because I have literally no concept. I can give you some numbers

from the stack side, right? So on the stack side, we've seen some more than 50,000 smart contracts deployed, which is, I think, pretty healthy. The number of developers is, I think, in hundreds, not thousands, if you look at monthly active developers. I think Stacks was like project 28 or something.

I don't want to get this wrong, but Alex, maybe you have the data. It was project number 28 in terms of how many active developers there are. In terms of users, I would say the wallets have seen 100,000 average would be the main wallets, like more than 100,000 type users. So if you look at Ethereum, Ethereum, let's call it 500, 600,000 daily active users. I think on the Stacks L2 side, I would say definitely less than 100,000 daily active users. So not a lot, but also not nothing, right? Like these things are very, very new

and relatively small right now. Yeah. Do you have any idea with Lightning? Because that's obviously the one that we hear the most about. Lightning is even harder to track, right? Because it's like Stacks at least has a global ledger. So there's on-chain activity that you can just track, like you know how many contracts, how many unique addresses and so on. I think the unique addresses, again, I don't want to get it

wrong, but it's probably not the 400,000 or something like that. But on Lightning, it's totally peer to peer. The only thing you can track on chain is on the Bitcoin L1 chain when the channels settle. So people try to measure nodes, like how many people are running nodes. I think it's in the order of lower digit thousands, I would say. I've seen numbers as high as like crossing 10,000 at some times, which is healthy.

I think number of users, like I was talking to Udi, and Udi said that basically the total transaction, like the total economy size is that of kind of like a Walmart, what a Walmart does in a day. Alex, what do you think? That's pretty funny. By the way, now I just have to laugh. We've invited Udi, so he may join us in a bit.

But he'll always offer some color at the very least. Alex, what do you think? I was going to say, this is why I love Udi. He has such a way with words. What a Walmart does in a day. Yeah, I mean, I think the, I don't know. is why i love ud here's such a way with words and screaming what a walmart doesn't it yeah i mean i think the the i don't know i think last time i looked there was like 75 000 some odd lightning channels and with like five or six thousand uh bitcoin you know in them across it um so and it's you know it's been i think on a steady linear track up, uh, I think it's

just waiting for, I don't know, at some point, um, the breakout. I mean, I think this kind of goes back to the idea that one of the challenges I think that Bitcoin's had is there just hasn't been that much you can do with your Bitcoin until this point besides send it. Right. And if you go back over the last few years, especially folks working in a lot of different parts of the Bitcoin ecosystem, like Muneeb, have been saying that everything that happens on Ethereum and happens on other cryptos is going to ultimately

come back and get built on top of Bitcoin. And like, that's why everyone is really excited about ordinals. It was a really big unlock for being able to do that on the L1. So I think the, you know, the market for L2s has been smaller on Bitcoin or, you know, it's still smaller than like, you know, Polygon and the Ethereum communities because they had a lot more of like the, you know, Polygon and the Ethereum communities, because they had a lot more of like the, you know, app economic activity as opposed to just straight financial economic activity going on.

But now that it's even possible and people are even thinking about it, I think that's kind of the first really big inflection point for it. I don't know what the second big inflection point will be, but I think this was definitely the first big one. So, you know, we'll see a lot more growth out of it i think over the next year than the last year i actually looked at now i can't find it because i'm just looking on my phone but yesterday i happened to look up the daily transactions per blockchain and i was actually shocked that solana was absolutely crushing both ethereum and polygon which obviously yeah yeah i think, I think I saw that stat as well.

I think Solana, basically the stat said something like the daily active unique addresses on Solana was more than Ethereum and Polygon combined. And that's a... Yeah. So what does that say about the narratives, I guess? Listen, I think all of us here understand the power of Bitcoin, the security, the importance. But what does that say about the importance of that to your average person?

Right. I mean, let's see Udi's here. And he and I both I saw him quoting something that I say all the time yesterday in a comment, which is I was like, seems like everyone's just kind of sending tether on Tron, right? I mean, it's exceptionally cheap and it has the largest market share by far of people using stable coins. So at the end of the day, are we arguing something that very few people care about because they just want it cheap and fast? No, I think it's pretty clear that people want cheap and fast. I think I'm just of the view that the cheap and fast stuff is also going to come to the Bitcoin ecosystem. And then it's one less step for people to worry about, right?

Like they're going to, one way or another, they're going to learn about Bitcoin. It's the largest asset. And if they don't have to learn about other stuff and their bitcoin wallet just does that thing i think people are not not even going to care if something is happening on l1 or l2 like for them it's the wallet that matters right so they have something in their wallet they have bitcoin in their wallet and at some point they'll get stable coins in their wallet right frankly if they do care we're right because Right? Because there's like 400 of us that actually care. We were talking about that before you got here with Sandeep, but the

idea that we need to abstract away all that complexity and people just need to use it. Yep. Absolutely. Udi, I see. Yeah. After Udi, you want to chime in? I know you just got here, but I think you probably have a pretty good idea of what we're talking about. Before you get in, what are you doing for personal security now? Man, this is no joke. This is no joke. Yeah, I'm currently accepting offers from security firms, personal security firms.

I have I have actually had some no joke that offered pretty, pretty, pretty pristine personal security services in return for Tapper Wizards. I of course, I said no, like Tapper was I mean, my life is very important to me, but Tapper Wizards are way more important than the life of one person. So we'll see. No one man should have all that power. Udi, I think it's ridiculous that the Mossad does not provide personal security for its agents once they're under attack from outside.

I mean, I'm not a member to speak about Mossad policy with regards to personal security of its agents. And of course, I wouldn't know either. But I would imagine that if someone was a Mossad operative, then Mossad would not be able to publicly confirm it by sending agents to protect them in public spaces. But that's, of course, speculation on my part, and I wouldn't know. Well, maybe I would. I thought I just got temporarily frozen there. Muneeb, I saw you in the comments.

I was just going to say that assuming you're at a safe place and assuming you'll be safe next week as well, Udi, what do you think about what's going on with BRC20s and Arnav? Yeah, no, I think it's amazing. I think that people are realizing that the Bitcoin block space is valuable. It's interesting. It always has been valuable, but it had those like limits on it. Like the value, I think, was always kind of there, but people couldn't kind of use it. So now that Bitcoin core developers accidentally enabled Taproot and accidentally

enabled people to use Bitcoin block space however they want, then suddenly people are like, OK, there's actually a lot of cool ways to use this. And it turns out that it's actually one of, and I haven't seen many other people say that, but it turns out it's actually one of the most valuable ad spaces in the world too, like the Bitcoin block space. Because it turns out there's a lot of people who are looking at the Bitcoin blog space and the Bitcoin mempools and very similar to the way that I think Balaji has been speaking a lot about what he calls the Bit signal and how

when the Bitcoin price goes up, you have a lot of people looking at Bitcoin, right? If the Bitcoin price shoots up, like we saw in the last cycle to 60,000 Ks, then of course, everyone in the world cannot ignore it. And they really have to talk about Bitcoin all day on the news and on TV because it is such a big deal. I think similarly, so that is the bit signal for the mainstream world. I think similarly, the Bitcoin block space

and the Bitcoin mempool are sort of a bit signal for the crypto world because when the Bitcoin mempool kind of explodes with new data that's trying to get into the block space. And when Bitcoin fees go up and you look at those charts of fees that go exponentially high, just like Bitcoin did in the last bull run, then people in crypto cannot simply, they cannot ignore it and they cannot not talk about it. That's why we're having these discussions.

So suddenly now everyone is looking at the signal and they're like, wait, actually, the Bitcoin block is really useful. Like it's it's really valuable thing. And you can't ignore that because no one, you know, it's it's it affects it affects everyone in crypto. So I think that's a that's a really cool signal. And I think that I think that people are suddenly realizing, like people forgot since like six years ago,

people forgot that the Bitcoin actually has like this very important useful piece in the crypto ecosystem. It's not just a coin that its number goes up sometimes, it is that, but it is also a very crucial piece of utility in the crypto space. And I think people are like on all sides, both on like outside of the Bitcoin ecosystem and also people who have been building in the Bitcoin ecosystem for a while are like,

wait, damn it. This is like, this is a big deal. This is affects our like business plans. This is affects like this affects everything. So we see this shift in the way that people think about Bitcoin. And I think that's like why you see a lot of like tensions and a lot of because this is this is something that people forgot that is just the reality of how Bitcoin works. Udi, I don't know if it's the Masad or security, but I think I've literally followed you on Twitter five times in the last two weeks.

And every time I go back, I'm not following you anymore. No, I do not take responsibility for that. No. Oh, I know. It's not like you're not like manually forcing unfollows. I'm just saying there's something wrong with Twitter. Just so you know that every time I try, I get it's like asking a hot girl out on a date in high school. I just get rejected. So I guess moving on to Udi, then that means you're one of these guys who's clogging

up our beloved network. Does that mean you are truly the enemy? It's worse than that. I would say, you know, yeah, I'm clogging up the chain, but it's worse. Really, the issue at heart is that children in El Salvador cannot eat and drink anymore. So I don't know if you know this, but a few years ago, the country of El Salvador converted fully to a Bitcoin standard. Famous. Yeah, they don't use dollars. They don't use dollars anymore. They don't use, you know, any kind of fiat currency.

Fiat is a scam. I don't know, you know, any kind of fiat currency. Fiat is a scam. I don't know if you were told so. So they read Saifedean's book and after like every every child in the country read it and after they read it, they decided they're not going to use fiat anymore. They are only they're strictly using Bitcoin only and have been for two years and it has been working great because no one else was using Bitcoin. But now that other people are using Bitcoin as well there there's this conundrum because they they literally cannot there's like all economic activity in el salvador grinded to a halt they cannot do anything

on bitcoin even even there like some people have migrated to to second layers like lightning and stuff but it turns out that in order to get a Lightning wallet, you need to make a mainnet Bitcoin transaction in order to bootstrap the Lightning wallet for the first time. So they can't even afford doing that because it's... So essentially for the last three days, absolutely zero economic activity in El Salvador. There's definitely some rumors that Mossad is involved in like this is maybe some international conflict

I hope that people understand sarcasm because when I tweet it 90% of them seem to miss it but man just keep going I don't know why you're laughing this is like a very serious matter I'm not sarcastic at all we were talking about that in a serious manner before we weren't blaming you specifically for starving the children of El Salvador, although now we have that narrative

and I have the clip. But we were talking about the fact that this does diminish the argument in all seriousness for remittances and cheap Bitcoin transactions and that people who are trying to move $10 or $20 should be doing that on Bitcoin for now, correct? Yeah, but more seriously, I think what happened in the last two, three years is that because there hasn't been that much on-chain usage on Bitcoin, then I think some people have been building and pushing solutions that are not realistic. You know, they don't really match reality. They only work when Bitcoin isn't being used.

And, you know, it's okay. That's the way things are. But now that the environment changed, I'm completely certain, I have no doubt that, you know, builders are going to figure out solutions to do things in a way that scales and people will be able to do remission you know remittances they will be able to use bitcoin and in stores in in el salvador and anywhere in the world um the fact that we're dealing with this now means that we're gonna find the solutions now instead of you know continue to build things that don't work um so that's i'm very optimistic about

this i think this is going to be good for everyone. It's like maybe a temporary painful period of time, but it's not going to remain painful. Yeah, I want to plus one that. I think basically the biggest thing that has happened is there were a lot of theoretical solutions or GitHub readme

and maybe some code. And some more mature projects had more code. And what you would see is basically twitter arguments about my theoretical solution is better than your theoretical solution and a lot of infighting and this has just changed the the dynamic to saying look things are on fire on the actual chain and deploy your stuff and show what works and what doesn't work. And that's just such an amazing filter that there's no reason to argue on Twitter anymore. Just go and actually build stuff and ship it and see what works. And I think that's another thing which I love about this dynamic is in the past couple of

years, I do think there was a very strong maxi grip on narratives around Bitcoin. And as the sort of like on-chain activity is exploding, they basically have no influence on that. So it's such an interesting thing that those Twitter narratives are just not holding. They're not sticking anymore because people are just looking at on-chain data and they're just looking at what the users are doing and they can't influence the users and more they can't influence the developers. Does that mean that it was not being used as the narrative said for those small transactions and remittances in the first place?

I mean, it was basically a false narrative that was being pushed and it never was really happening. I think some of that is true, right? But the devil is always in the detail. There's a reason why there was an explosive growth of some of these technologies. Let's take

the example of Lightning, which is the most talked about thing. This is a recorded talk and whenever I mention Lightning, I tell people most talked about thing. And this is a recorded talk. And whenever I mention Lightning, I tell people, I love the project. I've been a supporter since the early days of Lightning. But there are limitations. There are limitations that if you have a very small payment, you will end up paying on-chain fees when you're opening and closing your channel. So if the total value of the transaction is below that you this is not a realistic solution for you right like you have to

you have to look at something else you have to be part of a larger channel go to certain more centralized parties and a lot of the stable transactions that were happening on lightning the the best sort of like description is that there are almost like two versions of lightning one is quote-unquote enterprise lightning which is what you know cash app and strike and these well-funded sort of like big companies and they're they're well-connected nodes uh and they just sort of like and it's also custodial right like you're giving up ownership of your your bitcoin and you're using a custodial wallet on a well-connected enterprise network, which sort of like, it's a great UX, not that great for decentralization and sort of like

this dream of everybody's like in control of their own stuff. And then there's the public liking where there are more liquidity and routing issues and UX issues and so on. And I think it's the state of the public lending network that matters more than the more sort of like enterprise centralized solutions. Alex, what do you think? Yeah, I mean, I think kind of similarly there, the

public network is what matters in the long term, or again, we're just kind of recreating banks. At that point, it's just do you like the strike bank instead of the jp morgan bank and like if i'm going to trust a bank i guess i rather have the one that has a uh government and military backing it with lots of big guns to make sure my money doesn't go anywhere and an infinite money printer um so yeah and this is what i was saying i think fordi and me, we're getting

here the same thing of like, cool, there is now a need, you know, necessity is the mother of invention. And there is the massive need to solve this problem now. So like, it's going to get solved by people coming in and building the solutions here. It's just going to take a few months at least. But interestingly, they're going to be solving basically to make memes work better on Bitcoin, right? I mean, because that's what's congesting the network, not the transactions. So I think actually this shows how crypto is really driving a fundamental shift in how technology is adopted by consumers. And what I mean by that is that for pretty much all of history, there has been one type of content that has driven pretty much all technological development. And that, of course, is pornography. But with crypto, we're moving to the next

generation where memes are what drive consumer adoption of technology. And I just think it's a remarkable development. I love it. It's like Ethereum in 2017. You literally go back in time. What was happening? It was CryptoKitties and it was ICOs. And you look at

what's happening on-chain right now, it's Udi's Wizards and BRC20 tokens, which are sort of like meme coins. And I think they look like toys right now, but the interesting thing is the same infrastructure, like Ethereum had to mature their infrastructure. The same infrastructure is now powering stable coins and actual serious liquidity pools and things like that. And then an entire generation of builders came that were trying to build alternatives to Ethereum because they thought that Ethereum's stronghold isn't strong enough and they can actually replace it here. In Bitcoin, I think, honestly, a lot of that energy is actually not going to go towards

trying to replace Bitcoin. It's going to go towards building better Bitcoin layers. Because people, I think the confidence level for someone to say that, hey, I can actually replace Bitcoin, the monetary asset, is a lot lower than trying to say that I can replace Ethereum, the sort of like the computing platform. And I think that's why recently there's even more attention on ETH L2s as well. But in Bitcoin, it's actually even more clear that most of the developer attention is going to be on the layers and scalability and roll ups and things like that, which is great for Bitcoin.

It's interesting. Udi and I were both on spaces that I hosted with quite a few Bitcoin maximalists a few weeks ago, and we were kind of DMing about it and laughing in the background. But I made the point that at least can we say that some of these other layers, you know, God forbid we say that Ethereum has been at the very least a good test net for all these things that are going to be built on Bitcoin, right? We keep saying these things will all eventually be built on Bitcoin. Why weren't they built there, I guess, in the first place is the question. I think, let me just quote Jeremy Rubin. So this is a guy, if people are not familiar, a Bitcoin core developer, nicest person, right? Spent his time for free, literally for free, building staff on bitcoin contributing to github issues proposing his solutions and when he tried proposing a change he he was just like attacked

and hammered and whatever like on entrepreneur which is what the bitcoin community does to a developer right like by default at least before all now than before the latest stuff and he had a pretty interesting comment when he sort of like publicly said, I'm going to halt all contributions to Bitcoin Core. He said that, you know, from afar, the Bitcoin kind of like developers looked like a bunch of like cool people all sitting in a jacuzzi

and you really wanted to be a part of that circle. And later on, I found out that the reason why the jacuzzi was warm is everyone was pissing at it and you actually don't want to join it. So this is the story of someone who like honestly tried like engaging and contributing to the Glenn gun core so i think was there a toxic culture yes is there still parts of it that remain there absolutely yes right i've been on the receiving end for it for years and years and years right and and that's fine i think the way this is so they drove people away absolutely absolutely, to Ethereum and other places and where people were building and they were supported and so on. My worry was more about, are some of these technologies ever going to come back to Bitcoin?

I believe, I think logically they should, but you never know. And I think now the contest level is much higher. Like all of the rollups research that's happening. I think there's a pretty straight path for, for that coming, coming back to Bitcoin. A lot, a lot of people actually talk about Polygon. They say that Polygon,

I know the founders were there sometime ago. It's very similar to Stacks actually. Like, you know, it started off looking a little bit more like a side chain, but now it's going to become more of a L2 or Ethereum polygon with their ZK stuff and so on. And I think we've taken like

somewhat of a similar journey. And I think that's great. Like there is some, there are lessons that we can look at in the Ethereum world and sort of like apply that to Bitcoin, which helps a lot. So you're going to have to rename this space

as Bitcoin heretics talk. We are the heretics, but we're also the majority. Because if you think about yourself, you're a Bitcoiner too, right? You don't have laser eyes. Of course. I have to defend my card somehow because I like other things sometimes. They took my card so many times. That's the thing. That is the crux of the problem.

You are a Bitcoiner because you own Bitcoin, you're bullish on Bitcoin, you want Bitcoin to succeed and you believe it will succeed. So you're a Bitcoiner. Most people I talk to in crypto, when I say most, I mean probably 90% plus are Bitcoiners. That is, if we're talking about numbers, that is around 100 million people who are Bitcoiners. That is, if we're talking about numbers, that is around a hundred million people, okay, who are Bitcoiners. They also hold other assets, most of them, other crypto assets, but they are Bitcoiners. And what happened is this small group of deranged insoles on Twitter somehow captured this brand of being a Bitcoiner, even though we're talking about like, I don't

know, 5,000, 10,000 people. Like it's like it's a tiny teeny tiny fraction like it's less than one percent it's way less than one percent it's like maybe 0.01 percent of bitcoiners um and the reason it's a problem is because it creates it creates these like very distorted expectations to anyone who looks at bitcoin from the outside. So if you're an outsider who thinks that Bitcoin might be something that can help you to better your life in one way or another, and you're like, okay, let's learn about it. You go on Twitter, you just search Bitcoin. That search is going to end within 20 minutes and you're going to be done.

Because we've all seen it. We've all felt it personally, but we were also seeing it just going on on Twitter every day. These people are mentally ill, truly, deeply mentally ill. I see some of them in the audience right now. So you guys are mentally ill. And that's okay. It's okay to be mentally ill. And I guess at some point you need to offer support. And honestly, Bitcoin can be useful for people who have mental issues. That's great. I mean, I don't want to not have this

group using Bitcoin, but the problem is when they become representatives of it. One interesting thing that I saw in, I think, well, all of us saw in the Bitcoin conference in 2021, so two years ago in Miami, that was like a really difficult moment for me personally, to be honest, was, you know, you look at the main stage, you have this massive Bitcoin logo, so it looks like official. And then you've got like complete insane, crazy people like Max Keiser jumping up and down on stage, yelling in front of the cameras, fuck Elon, fuck Elon, and we're not selling and Bitcoin forever. And, you know, you've got Michael Saylor shaking his hand on stage. And this ends up like this image of Max Keiser jumping up and down on stage with the Bitcoin logo behind him and cursing Elon Musk for some incomprehensible reason.

This image ends up on the New York Times, on mainstream media. It's okay if some people want to feel that they don't like Elon Musk, I guess. It's fine. I don't know. It was because Tesla had just, I think, sold a tiny part of their Bitcoin. Yeah, I guess. Like, whatever. No, I think they, I think it's because he said that, I think it's because they stopped selling Teslas for Bitcoin.

Oh, for Bitcoin, because there were three angry people. Yeah, yeah, yeah. Who were willing to do that. Yeah, exactly. And that, that was that. So that ended up this small, minor, irrelevant conflict. No one was buying Teslas with Bitcoin anyway. So this small, irrelevant issue ended up being blown up to be the major Bitcoin event of

the year. And it just it's a problem because that's not what Bitcoin is about. It's okay if some Bitcoiners don't like Elon Musk. I mean, awesome. But that shouldn's not what Bitcoin is about. It's okay if some Bitcoiners don't like Elon Musk. I mean, awesome. But that shouldn't be what Bitcoin is about, right? So the narratives, the public narratives around Bitcoin are completely distorted. And Munib is right. What ends up happening is that builders kind of end up being frustrated.

They leave too because that kind of culture of just yelling at everyone has arrived at developer circles too. So, you know, the thing that needs to happen, I think the thing that is happening now in the last three months for really for the first time in years, is that a lot of Bitcoiners who have been quiet and have been silent and have not been active on chain either, they're kind of saying, you know what, we're still here. We're still here. We care about Bitcoin. We're going to use it.

You know, we're going to use it however we want. We're not going to ask anyone if they're okay with it. People are building solutions that don't need permissions from like, you know, semi-retired developers that sit around on bitcoin mailing lists like what even is a mailing list i don't know i don't even want to explain as i'm saying the word mailing list i'm realizing probably most people in the space don't know what a mailing list is but supposedly that's where bitcoin protocol decisions are made in some like 70s internet software that's called mailing list. Anyway, it's all very deranged.

And the interesting thing that happened with Ordinals, with BRC20s, and with all those kind of new revolutions is that people built them without asking for permission. Casey Rotemore, when he built the Ornals protocol, and DomoData, when he built the BRC20 protocol, they did not go to the mailing list of the old gatekeepers. They didn't go to their GitHub repos. They didn't go to their little meetings and their little Slack channels.

And they didn't ask them if that's okay. They didn't ask what they think. They didn't submit a proposal to the old council of Bitcoin boomers. They didn't do any of that shit. Not even once. They didn't even try. They just put code out there that works. And they found users that want to use it.

And this is why we're having this conversation today. Because they made it happen. And I think they showed the world. They showed the Bitcoin community. Both the kind of OG people in Bitcoin who kind of gave up and both people who are relatively new to Bitcoin, they showed both of these groups that if you stop asking for permission and you just go out there and do it, then great things can happen. I think that's the big message from all we've been seeing in the last few months.

Interestingly, though, there's also been a bit of polarization even on that side of the community i mean we're literally seeing bitcoiners that are boycotting the bitcoin convention that you just talked about right they've always done that though it's a fucking cult and religion to like people so like they've always spent like yeah they've always spent an insane amount of energy starting these ridiculous inner cyanide wars that nobody gives a shit about except for like 12 people on some weird corner of the internet yeah i think ud was describing the last year event but the moment that stuck out to me last year was i forget who exactly was sitting on on stage but it was a bunch

of people definitely on the Maxi side. And they said, how many people here own Ethereum? And I remember that moment, like the camera turns to the crowd and it's like 80% or more people. Of course. Raising their hand. And then they don't know what to do.

And they go like, well, get out of here. It was like such a funny moment. You're telling 80% of your actual users to like just get out of here. It's like such a funny moment. You're telling 80% of your actual users to just get out of there? No, that's not how markets work. They're the majority. Yeah. Listen, I love the guys from the Bitcoin conference. I literally have had David Bailey and Mike Germano both on the podcast of late. But especially last year when we were at peak insanity and there were almost 30,000 people there, you weren't allowed to say the word and Mike Germano both on the podcast of late, but especially last year when we were at peak insanity and there were almost 30,000 people there,

you weren't allowed to say the word Ethereum on stage, but you could certainly advertise 4,000 NFT products on the floor, right, to pay for the thing. So there was always that sort of aspect where it's not allowed on stage, but you can do whatever you want in the rest of the place and quietly whisper the word Ethereum in someone's ear as long as it's not an ear shot of the microphone i mean that's a tough situation matty man what's up i see you joy tier and i've seen you've had

some very strong words about this uh on your twitter account as well hey scott how's it going uh hi uddy um yeah well it's on the subject of bitcoin maximalist i do believe that there's some serious uh levels of cognitive dissonance happening there uh being a bitcoin maximalist is basically saying well you know anybody can do whatever they want with their money you know except for you for create another competing cryptocurrency. That shouldn't be allowed or should be completely illegal. So I've even seen them siding with Gary Gensler saying, oh, yay, Gary Gensler is going to shut down the shit. You're on the wrong side, man.

That's my favorite. So as you can see, I do have a ordinal PFP. It's from the Bitcoin Frogs collection. This is actually Udi's suggestion that I put one of these up because we had a long conversation in the DMs. When I first noticed the transaction fees and the mempool flooding, this was a few weeks ago before memecoin season ever even came into existence. And I was like, Udi, you guys are flooding the mempool.

You're sending transaction costs up. And I like sending micropayments on Bitcoin main chain. I enjoy it and it's easy and convenient. You know, a lot of the people on my team, 99% of the people on my team are contractors and they prefer getting paid in Bitcoin. And obviously when everybody's screaming at me, lightning or,

or, or other things, there's nothing with the same reach. Lightning is not Bitcoin. In my opinion, it's just, it's a terrible user experience and it's not the same. But Udi was basically telling me, look, you know, this is the, this is the protocol. It's a the same. But Udi was basically telling me, look, you know, this is the protocol.

It's a free market. If I want to go ahead and create a JPEG or a dick pic and put it on Bitcoin, you can't stop me. And I realized that he's right. He's literally right because, you know, it's the same argument that I used against the Bitcoin maxis when they tried to tell me how I should interact with Bitcoin. I've been in Bitcoin since 2013, so you can't tell me what to do with it. I'll do it as I doing anything except for being a capitalist. And as soon as I realized that, and I understand the power of JPEGs and the power of memes, and that coupled that with true digital scarcity that you only get on the Bitcoin network, right? Somebody can print a million NFTs on Ethereum and only pay for gas,

whereas Bitcoin, you're actually taking the satoshi and and pulling it off the market um so there's only there's only true digital scarcity on bitcoin uh i understood that you know these are going to go up a lot more than they are right now um and here we can see today's average transaction cost on bitcoin main chain is 30 is 30 and i'm pretty sure pretty sure it's going up from here. Right now, the Bitcoin mempool is flooded. There was 485,000 unconfirmed transactions waiting to be added to blocks. I don't know how that's going to be changed once the next difficulty adjustment comes in. But I know that the next difficulty adjustment isn't for at least another week and a half.

So fees can go up over the next few days, especially if this madness continues. And the best thing we can do is cope with it, right? Sounds like your kids want to get in on the space, says Matthew. Maybe they have comments for us on Bitcoin. My son's playing Roblox. He found the Bitcoin for us. He's got his own YouTube channel. He's four years old.

I think you just minted a few Taproot wizards. So listen, we're going to wrap this up in a few minutes. But I want to A, we've had a lot of fun here. And I think it's funny and sarcastic to sort of dunk on the maximalism and such. But I do want to remind everyone that everybody you're hearing here is a Bitcoiner, as Udi said. That's very, very important to remember because I think at the end of the day, we all agree on 99% of things. And maybe there's just a little gap on how it should be done or what it should be used for. But the core use case is an importance of the asset is not in question to anybody that you've heard on the stage,

including people who are building on Polygon and, you know, Aave and all these other things. All Bitcoiners at heart, to Udi's point. Muneeb, I mean, do you have any final thoughts here? Obviously, I'm sure you echo what I just said. Yeah, absolutely. I think I really like Jameson Lopp's definition. He has a pretty big

article on some of his culture, like the maxi culture and stuff as well. And I think this is where I find myself as well. A lot of people, I think I go to more non- Bitcoin crypto events as well, like not just Bitcoin events. And a lot of people there, they treat me as a representative of Bitcoin maxis, right? They'll be like, hey, if you're a maxi, maybe more logical than others.

But I'm like, wait a minute, like I'm not, but sure, go on. And I think where this comes from is there's this concept of being a bitcoin monetary maximalist like you believe in the asset and and you believe in bitcoin the asset that has a fixed supply you you could even be a maximalist and um you could be a freedom maximalist right you could say that and i think those things are much easier to get behind like bitcoin as a monetary asset or bitcoin as a freedom technology and open network i think those things are much easier to get behind like bitcoin as a monetary asset or bitcoin as a freedom technology and open network i think those things are much easier to get behind uh this this other derivative culture of like a bitcoin as the only asset right like that's like

becomes much much harder like people have the right to do whatever else they want to do and just let them do it. And focus on building. One last thing I want to say is that there are a lot of practical steps as well to provide a culture, like a healthy culture for developers, especially in this time. There's almost like a magnet right now where so many new teams are coming in. They're building wallets, infrastructure, other tooling, both on l1 also in l2s as well and one of the things that i've been pretty focused on is trying to make sure that there is a healthy community that welcomes them that makes them feel at home that sort of like gives them a heads up about some of the history

of bitcoin and some of these other cultural elements out there. And for that, even we're talking about the event, the Bitcoin Miami next week, we are. Basically organizing a Bitcoin developers event where for the first time, all major Bitcoin layers and projects are showing up, like from Lightning, Rootstock, Stacks, Drivechains, a bunch of new roll up projects. And that to me is like really healthy. Let's get all the developers in the same room, focus on basically expanding the pie, right? Like let's just grow the Bitcoin economy

and give developers a home, especially when the spotlight is on Bitcoin. So I'm pretty, pretty excited about that. Alex, any final words? No, I think this has been a very fun session. Thank you for putting together, Scott. And I'm glad that you realize, yeah, we are all at heart Bitcoiners. And I'm really excited to see what this group of people puts together over the next few years and, well, even a few months to solve letting people use it the way they want to. So, yeah, come to the...

I agree. I just hope that Udi allows us to feed the children. I know. It's, you know... El Salvador. And unfortunately, there are always going to be people like Udi in the world who try and starve children, but together we can overcome.

I can't wait to edit this conversation together to make it look like this is all true, right? We just take select clips and make it sound that way. We'll make Udi go viral again. He doesn't really need our help though. Yeah, guys, that's all we got today. Of course, we'll be doing this every Tuesday and we are going to be upping the spaces a bit more so it's not as sporadic. All of you guys, Matt, even Alex, of course, you're welcome anytime. And otherwise, I'll be back on YouTube tomorrow. Everybody, please share this around after the conversation. And it will be available, of course, on the Wolf of Wall Street's podcast, audio channels like Spotify, Apple Music and such.

Thank you all. That's the end of this space. I'll see you next time. Peace.