Unchained - 2 Crypto Investors on Why They Believe DeFi Is Poised for a Bull Run - Ep. 719

Episode Date: October 15, 2024

DeFi tokens have faced significant challenges in recent years. However, are we now on the verge of a new bull market? Arthur Cheong, founder and CIO of DeFiance Capital, and Jordi Alexander, founder of Selini Capital and chief alchemist at Mantle, join the show to discuss why they believe DeFi is poised for growth. They dive into how DeFi's security and user experience have improved, the impact of Layer 2 solutions on Ethereum, and whether Ethereum or Solana will drive the next bull run. Plus, they discuss whether interest in memecoins takes attention from DeFi, and why sustainable tokenomics matters when it comes to valuing coins.  Are DeFi tokens finally ready to shine again? Show highlights: Why they believe that DeFi is poised for a bull cycle  How DeFi's security and UX have improved Whether DeFi activity can be sustained in the long term Why Jordi thinks that Layer 2s are not parasitic to ETH but Arthur thinks they are Whether the DeFi bull case is stronger on Ethereum, Solana or other chains Whether the Ethereum Foundation and Vitalik Buterin should be more proactive in supporting DeFi How memecoins reflect a broader societal problem  The importance of tokens that don’t have big unlocks How the lack of solid frameworks for valuing tokens might be causing capital misallocation in crypto Whether a liquid venture investing approach is better for crypto Why Jordi says that there’s a lot of “potential to unlock” with the overlap of Bitcoin and DeFi Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Polkadot Mantle Guests: Arthur Cheong, founder and CIO of DeFiance Capital Aave, the Core Pillar of Decentralized Finance and Onchain Economy Liquid Venture Investing in Crypto Jordi Alexander, Chief Alchemist at Mantle, Founder of Selini Capital Links Previous coverage of Unchained on this cycle & DeFi :Has Decentralized Finance Hit Bottom? Kain Warwick’s tweet on Vitalik being anti-DeFi Cointelegraph: Vitalik Buterin responds to criticism that Ethereum ‘doesn’t care’ about DeFi The great return of DeFi, by @tradetheflow Bitcoin DeFi Bitcoin Layer 2s Aim to Attract Ethereum-Like Dapps. Will They Succeed? Bitcoin Is Worth Over $1 Trillion. How Much Will Coinbase’s New cbBTC Grab? L2s and ETH: ETH Is Down Bad, While Layer 2s Are Ripping. Are L2s Parasitic to Ethereum? Are L2s ‘Parasitic’? Analysis Shows Ethereum Only Gets a Tiny Percentage of Fees Learn more about your ad choices. Visit megaphone.fm/adchoices

I think that a lot of the sins of the industry in the past five years are really over-indexed on the continuity of all these dumb retail to buy asset at stupid and nonsensical valuation. And we are really feeling the effect of when all these dumb retail have stopped, like, increasing and just like all went away. And we get a more realistic asset valuation. Like, no, layer two are no longer launching at 10, 15 billion valuation. they are launching at two or even less. And I think that is positive for the industry.

Hi, everyone. Welcome to Unchained. You're a no-hype resource for all things crypto. I'm your host, Lauren Shin, author of The Cryptopians. I started covering crypto nine years ago, and as the senior editor at Forbes, was the first mainstream reader reporters to cover cryptocurrency full-time.

This is the October 15th, 2024 episode of Unchained. Mantles and Meath is now the fourth largest LST with $1.3 billion in TVL. M-Eath offers holders cumulative incentives and airdrops in addition to native ETH, POS, yields. This includes exclusive rewards

like Eigen and Cook. Check it out at meth.mantle.xyZ slash campaigns. Pocodot is the original and leading layer zero blockchain with over 2000 plus developers. And the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem, making it faster, more secure, and adaptable. Perfect for GameFi and DeFi

to build. build, grow, and scale. Join the community at poca dot.network slash ecosystem slash community. Today's topic is the bull case or bear case for DefyFi. Here to discuss are Arthur Chung, founder and CIO of Deviance Capital and Jordy Alexander, chief alchemist at Mantle and founder of Salimi Capital. Welcome, Arthur and Jordi. Good to have us. Thank you. Yeah. Thanks for having me here as well, Laura. So just a quick disclosure before we jump in, Mantle is a sponsor of Unchanged. but this is not a sponsored episode. So let's actually start with you, Arthur.

You've been making this bull case for Defi. So can you explain your thoughts on why you think Defi is set up for a bull cycle? Yeah. We are actually about to publish an article on this, but I will just summarize our view on this. I think it's been four years since Defi summer. And one big changes is I think that the space collectively have really realized what work in DFI and what doesn't work.

So if you look at the Gardner hype cycle of analogy, most technology went through different phases. Like, they usually, people get very excited about them, and then they are at the peak of the inflated expectation. And then this overhype, and it starts coming down to, like, the people start to get this illusion about them. But I think that right now, D-Fi is exactly

play out very similar to this Garner hype cycle, where I think we are coming out of the throw-off of this illusion to the kind of enlightenment path. Because, I mean, we experimented with many different method, product. I think we kind of know what work and what doesn't work. And the second thing is macro. We are entering a new interest rate cycle. The opportunity cost of doing any activities on DFI and on-chain will decrease pretty

significantly over the next six to 12 months. and I think even how reflexive finance and crypto is, I think that will drive a lot more capital inflow into Defy again. And last but not least, I think that it's pretty well established that finance is still the largest product market fit for crypto. We have experimented with many different use cases, NFT, Mettavers, gaming, all this thing. I think while all of these are very promising. None of them have actually come close to replicating the product market fit and success of Defi. And we have many data and metrics to measure them. Defi have essentially recovered almost 60 to 80% of the previous all-time high metrics. In fact, it's just so integrated into everything

people do on chain that people don't talk about it. But I think that kind of illustrate the success and the product market fit of Defi. And Jordi, what about you? I mean, our Arthur has always been the megabola of Defi even last cycle, and I've always enjoyed hearing his takes. Obviously, like, Defi is the big product market fit. I think that's quite clear to anyone who uses crypto day and day out. Like, it's mainly around financial assets. And then the next step is, like, how do you use those assets

and how do you utilize them to the best of, you know, the efficiency, basically? So this will continue to happen. This cycle, I would say, we've had small, baby steps on RWA as well. Obviously, it's not huge numbers. I mean, I think like the total treasuries is around a billion dollars in terms of like actual treasury assets. But that's a good start. And there's a lot of room to grow. These types of assets, as, as Arthur said, like over time, the regulation gets figured out. We kind of figure out what we don't want to do. Eventually, like the smart contracts, you know, kind of get standardized. And that allows more and more large

players and institutions to feel safe doing transactions on chain. And even Bitcoin, I think, that's kind of like an interesting, like starting to unlock all this like huge asset, because Bitcoin has always been the biggest asset. But, you know, we've had WBTC. But I think now we're starting to see more L2s and more assets get created out of Bitcoin. And that's very interesting. And so, you know, you Arthur in particular mentioned how the macro environment is going to be favorable. And in a recent episode we did on bits and bits. They were saying things like everything is going to be going up soon and stuff like that. But, you know, in that kind of environment where we're expecting all these different, you know, sectors to go up, like, do you feel

that defy is differentiated to, you know, have even more of a bull cycle? Or is it just riding the same wave that everybody else is? Or like, you know, either of one of you can answer this. But, you know, I was just curious, like, if there is any kind of extra juice that you think we're going to see in that sector. I'll start first. I do think, yes. I think that DFI will be more reflexive to the lower interest rate than a lot of other sector. Because when you look at the more consumer-focused sector like NFT, I think you can argue that they are the highest risk. In terms of the risk spectrum, they are the highest risk one.

But you also kind of get a lot of the collectors kind of like a lot of. the user that doesn't necessarily overlap with lower interest rate. And I think that for some of the infrastructure project, I don't think they directly benefit from a lower interest rate. Like, for example, like a new L2, I don't think there's a direct relation. I mean, there's some indirect relation there. But DFI is just like a direct beneficiary of lower interest rate in many cases, in many different vertical.

Yeah. So I always say that everyone will kind of benefit from it, but DFI benefit the most. And draw out that conclusion, the reason is because defy what will be able to offer higher yields and people will be chasing that? Or like, what's the exact reason? I think it's really come down to the opportunity cost of going on chain has become lower because for the past two years, you can earn risk free for five and above five percent.

So for a lot of people, they just don't see the need to take risk. But let's say interest rate came down to three or below three percent again. people will be, you know, push out of their, you know, risk-free rate comfort zone and try to just get some extra yield elsewhere. And I think we kind of see this happen a little bit in the traditional finance where the private credit sector has been very popular in the past two years. And I think that this will continue to happen in crypto as well. Yeah, I think there's going to be some big winners also. We have learned a lesson from last cycle, which I think one of the lessons was that a lot of these pooled two tokens that were forks of uniswap or forks of Ave, let's say. and just kind of got blasted across all chains,

they're not worth very much unless they're actually differentiated. You know, they do something unique or they innovate. And this cycle, like no one's even bidding those. They're kind of, even if they have TBL, because they're on some chain that's like a new chain that's getting farmed, which is good. I think that's kind of step in the right direction. In my opinion, the amount of work that it takes to do something

should kind of correlate with its valuation. So if all you're doing is like a low effort for, even if you get TBL and kind of do a bit of marketing hype, ultimately it shouldn't be worth much. And we are seeing some big, big winners already this cycle on the defy front. And, you know, like Pendle, like stuff like this has just been like very cool to watch. And I think we'll have more. Obviously, the defy around meme coins is also quite hot.

Like we're seeing something like Jupiter, you know, still trade like a super high valuation and do quite well. Yeah. Well, I would call into questions some of the sustainability of some of those activities. Before we get into that, let's just actually just talk about Defi, just generally, kind of its evolution since 2020, 2021. What are the ways that you think it's kind of like fundamentally improved? Yeah, I think a big part of it is just the security practice and I think the UI, Ux layer, and this is not just for Defi, but like the experience of a crypto wallet, I think actually have dramatically improved compared to four to five years ago. I believe that the whole, the need to manage your own seat phrase and private key will be a thing of a past in two years. There's enough smart wallet and embedded wallet out there that just significantly remove the need to do a very expert level of private key management.

And I think that just significantly improved the convenience of user interacting your on chain. I think there's one big part that have changed compared to four or five years ago. And I think that a lot of the DFI team, especially the more veteran battle tested one, they also a lot more security focus. So I think we are going to see a decrease probability of these big D5 protocol getting exploited and hacked. In fact, that's exactly the pitch of many of the new smart contract layer. One blockchain, they all advertise like the move language that advertise is like more secure from a ground up to program compared to solidity.

So I think we are going to see these decrease going forward because people have kind of learned their lesson. A lot of it are more battle tested. And I think for like when you get it, there are certain category of defy, again, can come back to the lending and borrowing where it's actually just significantly better than the centralized exchange counterpart. I like, I have 20 billions of assets that are deposited on a gross basis. I do not think there's any other centralized exchange lender that even have half of our deposit size on a gross basis.

So I think it kind of means that in certain area, Dify actually have already outcompeted its centralized counterpart. Yeah, I mean, I would add quite a few improvements apart from, I agree, like the account abstraction stuff and the wallets, like everything is getting better. I would say that the education is there. And after Luna happened, a lot of these like stable coins that offer yield but are kind of dodgy, they're not getting much traction because people are really asking where the yield is coming from now. They got the memo now. So we're seeing more sustainable things pick up, I would say. Even when like Ethina launched, like it was interesting how much controversy it caused.

And I think it was partly because of that immune system we have because of Luna. And that's a good thing. You know, people should be asking those questions and figure, out exactly where the risks are. And I think those, those have been explained. And, you know, none of these products are, like, bulletproof or perfect, but at least we understand a lot more now. So that's a good thing. The other thing is on the staking side, staking, restaking, you know, we've had the merge in the meantime. We've had things like eigenlayer come up. And I think people are more aware about how to utilize their assets, especially their layer one assets. So that's quite

interesting. It kind of unlocks better moneyness and better usability and more kind of building blocks for these like layer one crypto assets. Yeah. So I agree with, you know, all these points that you guys made. But as I hinted earlier, I do feel like there's still some question kind of about traction or how sustainable this is because we've of course seen all these different points programs and then frequently after the air drop. Well, actually, even before we get to the air drop, there's the issue of the civil farming, you know, which obviously layer zero tried to address. But then after the air drop, we often see this huge drop-off in activity on these chains and people are just, you know, chasing the points and then getting their allocation and dumping maybe or,

you know, whatever and not necessarily using the chain. So I am still wondering, like, even though we have seen a lot of these improvements, you know, why is it? that we're not seeing kind of like longer-term traction or do you disagree with me? Yeah, I think this is really on a case-by-case basis, right? There is obviously a lot of the newer protocol that are still incentivizing heavily to get their initial product market fit. But we have also seen a lot of the more established protocol. They have almost zero incentive, yet they are still capturing a lot of that, like, revenue

from a protocol level. Ava is obviously a prime example. Uniswap as well. And like even Lido, I think that obviously the DOS do spend a lot of money, but it's mostly not to incentivize people to participate in liquid staking. But it's really to push out the decentralization of the Lido's staking architecture. So we have kind of seeing the gap opening up between those who have been able to achieve sustainable usage without incentivizing for.

it. And I think that for all of the newer protocol, yeah, I think that it's completely fair that they're trying to do this to compete with their competitors. And I think one way to think about it is a lot of these emissions, point farming from DFI, I mean, and they're not even exclusive to DFI, are actually no different from layer one protocol giving out staking reward to get the validator to support their blockchain. Ultimately, all these are emissions that, you know, that needed to support the initial stage of the protocol. And even if you launch a new proof of work blockchain, like a Bitcoin fork, is going to be the same. You're going to have a significant emission at the first few years just to get people to, you know, incentivize

to support the blockchain. So I think the entire crypto space always have been willing to use this aggressive emission at the beginning to try to push trap. And I mean, most of that are not going to work, but those who end up working can become very big. Yeah, I would also push back a little bit. I think that the market has already figured out the things are not sustainable because the last launches over the last six months that have happened that were points related or like this kind of they get dumped very aggressively, very quickly. So there's clearly professionals that are mainly like participating in these. It's not as much, you know, people that are sort of clueless. There's big wallets, big whales. There's, I even hear like, you know, there's there's like

organizations of whales that will offer their TVL as a, as a, as a, group and you know you can get it like that these people know what they're doing and they're not going to give a token evaluation that is unsustainable because you know they know how to recognize the appropriate value and you know you're right that there's not as many users as we would like still in defy i think like arthur said the usage needs to get easier and we're getting there within a couple years we will get there so there will be some players that establish now and do like a really good job in good UX that will be able to grow. But I would agree with you, Laura, that the P ratio of a lot of these shouldn't be super high. They're not proven out businesses that should

have a very high ratio. Yeah. Honestly, what you were talking about, the kind of industrial farming, there was another example that Brian Pellegrino gave when he came on my show. And he said that when they did their, you know, weeding out of the civils. Some of the operations they found, I think one of them he said was like 70,000 addresses. So it was like, yeah, truly industrial. Well, I did also then want to ask about kind of just like this other kind of running commentary that's been going on that's related, which is this question of whether L2s are parasitic to ETH. Because there's a couple of things in there. It's like not only is the base asset of ETH affected, but then when you have all these L2s, you know, liquidity gets fragmented.

So I just wanted to hear your thoughts, you know, in both ways, like the L2 effect on DFI itself and that fragmentation, plus also, you know, what it does to the base chain. Maybe I can go first on this one. It's something I've been thinking about for a long time. I think in most ways it's not parasitic. And the fact that fees of L1 getting burnt are lower, I don't think is the major factor that's affecting price, you know, like, it was always just a small part of the equation, and ETH ultimately was always priced at a 200p. So the money-ness aspect is the most important and the community kind of aspect there. The one issue with the L-2s is that it has confused people.

They're kind of like looking for clarity to understand exactly how this is going to end up because it's so annoying to bridge between all these different L-2s. Still, it's getting better, but it's still kind of difficult. So that has affected a bit of the narrative and confidence. And the other thing is just, it is true that if you're everyday using a chain that's not Ethereum, yes, occasionally, like, you'll remember that it's getting settled on Ethereum, but let's see you're using, you know, base or mantle, and that's kind of what you're using every day. You start to, like, lose a little bit of mindshare for ETH just because you're not interacting

with it directly. And maybe we are underestimating the effect of that. So I think it's to be seen how this plays out. Wait, I'm so confused. I thought your beginning statement was that it's not parasitic, but then now it seems like you are saying it is. Yeah, so for the most part, it's not. And I'm saying that for the fees not getting burnt,

there's too much being made of that. That was never going to be like that big of an issue. However, I think on the mind share and like that aspect, like the community aspect, we are in need of a little bit of clarity, I would say. That's kind of what's been affecting the sentiment, in my opinion. And when you say the community aspect, you mean what you were talking about, how when users are interfacing now, they're not necessarily interfacing with Ethereum,

even though they're in that ecosystem, but like just literally their association is not directly with Ethereum. Is that just what you mean by that? That plus the fact that it's not composed. with other L2s, so it doesn't feel like a unified chain. So, I mean, that specifically as well, until that gets solved. And I don't see it immediately getting solved. We have ideas that will solve it within like continents.

So you'll have like the O.P continent and maybe the arbitram continent, maybe the maybe the polygon continent, maybe the ZKSync continent. And those will maybe have some shared sequencing and very good composability. But within the continents, you'll still have to take a plane. for now. Yeah, well, obviously Unichane got announced this week. And it sounds like for them, they're going to try to work in that O.P. system initially to, you know, I guess make it even smoother within that system.

And then something similar to what you're talking about, the plane. I don't know, do you have thoughts on what you think, you know, the prospects are for Unichane to result those issues? I mean, what are you seeing, Arthur? I think OP has managed to do a good job of onboarding new chains, even though they haven't done a great job of their own chain, like their own L2 is not very active. Yeah, I think I'll come back to unichain later, but I think that at the current form of the current stage of Ethereum

and the relationship with the layer 2, objectively, layer 2 is parasitic to Ethereum. because they have taken away a lot of the fees that are going to Ethereum Stakers and actually captured by the sequencer. So objectively, you can't deny that it's not happening. It ended up most of the fees that are paid to execution on layer 2 end up going to the sequencer,

which are usually mostly centralized and run by the layer 2 team themselves. So that is a fact. I think what people are trying to figure out is will that be the same? in the future. And I think there is a few possibilities there. Although I think that the base case is still yes, it's still going to be parasitic. Because I just think the incentive are not aligned and people can say a lot of, you know, can do a lot of virtual signaling and you know,

sing kumbaya together. I just don't think that's realistic. And it's just not how the human incentive. I mean, almost in every single cases, human decision are driven by incentive. And the incentive are just not there for the layer two to give back all this value they are capturing back to Ethereum. Because unless you own what 5% of Ethereum supply, why would you care? I mean, you care more about your Layer 2 token. And I think there is also kind of a bit existential question for all the Layer 2 token as well. I mean, so it's completely fair for the Layer 2 team to prioritize their Layer 2 token over

Ethereum. You have kind of seen the new Layer 2, their valuation kind of start to hit lower. and lower. I mean, we used to see layer two token launching at 10 billion on a fully diluted basis, and I think scroll was launching at 1.2. It was 80 to 90% lower compared to one and a half year ago for layer two with legitimate tech, not using some other stack. I think that they actually will care about more on returning value to the layer two token instead of caring about what will happen to Ethereum. It's just how incentive works. And I think the argument for how Ethereum will not be parasitic to,

so the L2 will not be parasitic to Ethereum, it's not very convincing and it's not very certain, how do we get there? Because the argument is you're going to get so much layer two or focus on different things, and they're just going to increase the user that are interacting with all of them by 100 to thousand times, and these will end up just indirectly interacting Ethereum.

I don't see how that is going to happen, the pathway to that happening in the near term, not even two years away. So for the next two years, you're just going to end up with the status quo, which is the layer two are going to continue to capture their sequencer revenue with a more than 90% margin

compared to what they spend on doing the settlement on Ethereum. So the bookcase, if the bookcase materialized, layer two would not be parasitic to L1, but I assign a pretty low probability to that bull case materializing for now. And I think back to the unichens,

I think it's the same. I think that it's completely rational for Uni to do that because they are the largest defaac application. They probably, I think we just did a research. Uni probably contributed to 10% of the fees on the Ethereum main net. And they are not capturing the MEV layer of the fees, some part and some ordering. I think there's some few categories of you are not capturing.

And if they are able to get these activity moved to Uni chain, they end up capturing all of this instead of leaking these value to Ethereum. And I think just kind of very obvious, right, they want to capture more value for themselves instead of even giving up some of the base layer value capture to Ethereum.

So that means that you're going to get one less reason to use the Ethereum main net if Unichain is successful. Again, then you're back to the same argument. Unichain can bring 1,000 X more user and they're all going to benefit Ethereum in the long run. But how do we get there?

Nobody has a answer. We are just all again back to kumbaya saying, hey, that's going to happen. And I think that's not realistic right now. Yeah. Ryan Berkman's was recently on the show and his thesis was in the long run. It will happen. It will benefit Ethereum. But if I kind of recall the balance of the comments on that episode, I do feel like more people were like, no, it's parasitic. But just from the way you're discussing, it makes me wonder. So when you guys talk about how you think, you know, we're about to enter this bull cycle for defy. Do you think that will be just on Ethereum? Do you think it will be across both Ethereum and Solana? Or do you think that the bull case could even be stronger on Solana?

I don't think it's particular to one chain. When Arthur talked about incentives and why would somebody be an L2 and why not just spin off as an L1 or why would they even deploy on Ethereum, generally, if you put yourself in the mindset of a project or an application or a chain, a lot of it is just like looking for liquidity. They're looking for, you know, users. And sometimes it doesn't have to be users. It could be like whales. They just want like, where's all the money at?

Ethereum was having a huge monopoly on this during the bear market, especially was literally there was nothing else. Solana, through just having this different culture and a lot more speculation and sort of like quick, you know, you click and you get a response right away and now you can just hypergumble or whatever you want to do has done an incredible job of becoming the de facto liquidity place for meme coins, which is, you know, one of the big successes of this cycle, probably the biggest, you know, you could argue. And so it has become very relevant in that category. I think defy is relevant to Solana as well. But for Ethereum, ultimately, if things like composability,

between the chains between all the L2s gets better and it does feel like a more unified experience, then at the end of the day, like there's 100 billion there. That's where all the money is. Like most of the stable coins are still there and the big users are still there. So if people want to tap into it, they will be incentivized to deploy there. So yeah, I think both chains have a way, have a path. I think that it's going to be pretty broad base, but I do think that we are going to see the most amount of success happening in Solana and Base. I think this is something more on the nuance side where I think Solana just has, on an ecosystem level, has just been executing very well on capturing the new user.

Obviously, most of it came for a meme coin site. But I think even on a non-mean coin side, you can see that now every time Solana labs, they launch a new phone is going to get snap out. I mean, because people know that the airdrop is going to be worth more than the phone. And you just need you to buy the phone. So all the new mobile phone of Solana will just get and get sold out quickly. and they just kind of demonstrate the success of Solana in capturing the user. And I think that we are seeing a lot of high quality a defy builder on Solana.

And I think that it's getting very close to the quality of Defy Builder on Ethereum and a relevant layer two. So I think that that really stands out. And the second one is base. I think that is without mention that Coinbase has just done a tremendous job in pushing the whole on-chain narrative and the whole on-chain summon movement. And as a result, has been pushing a lot of their existing user to try out on-chain activities via base. And I spent a lot of time studying their strategy and vision.

And given the kind of resources and the focus Coinbase has on pushing base, I think they have a high likelihood to be very successful in doing that. And again, like the CBPTC launch in less than a month has reached a few hundred million of TVL. and have like daily like 30 to 50 million volume on aerodrome on base, less than a month since launch. And without that much incentive, I don't think there's any incentive for you to mean CBBT.

And I heard there's more plan to bring more different kind of asset on chain to base as well. And again, yeah, Coinbase is the most successful crypto company in the US. And I think they have just been executing incredibly well. So I think these two stand out to me. I mean, I agree that they've done the best job so far. They have shown that there are users that will migrate from a centralized exchange or that will kind of like come in. I think the, you know, the other big exchanges are trying to also like kind of give their users this education to move them on chain. Obviously, finance, you know, even last cycle with B&B really kind of got a lot of like cheap activity, you know, low gas ability for people to click around.

It was so expensive to use Ethereum. So it was good that they kind of introduced a lot of users that way. Certainly with Mantle, you know, we're trying to also attract a lot of the kind of centralized exchange users, bring them on. And I think that the one thing that base lacks, obviously, it doesn't really have an ecosystem token. There's stock, you know, there's Coinbase stock is a way to speculate on Coinbase. I think sometimes if you have good tokenomics, I can also give a good flywheel for building

incentives and building a community. And, you know, I think Unichain might try to do that. They have a token, obviously. It hasn't had a purpose for many years. You know, it got airdropped and then I think the lawyers just sort of froze it there. We'll see if it's kind of like how the UIDX used having a chain as a way to start unlocking utility for a token as well. So that would be interesting to see. Yeah. So in a moment, we're going to talk a little bit more about Ethereum and D5. but first a quick word from the sponsors who make the show possible. Pocodot is the original and largest layer zero blockchain with over 2,000 plus developers, and the anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem,

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methamorphosis, which will be convertible to Cook. Visit mmeath.mantle.xys slash campaigns to learn more. Back to my conversation with Arthur and Jordy. So one other thing that has been, talked about recently is whether or not Vitolic is pro-Defi. And this actually happened this summer when I was, I had a vacation and so missed part of it until afterward. But Kane Warwick expressed concern that Votelic and the Ethereum Foundation do not care about DFI. And Vatolik ended up tweeting a picture of a bull with a sign on it saying, Ethereum is good to try to appease those critics. But what Kane had said was, quote, If the only thing propping up your chain for the last five years is defy

and the best you can muster is begrudgingly tolerating it, you are anti-Defi. I'm sorry, but the default position should be absolutely falling over yourself to support and encourage it. So what are your thoughts? Do you think the Ethereum Foundation in Vitalik are pro-Defi or anti? And, you know, if you think anti-I, what could they do more to promote it? I think they are not anti-Defi.

they just think that it's not the use cases they are most excited about to promote and to see. And also the kind of thing that Defy is already successful enough even without their support. So they just don't see a need to spend more resources on promoting and supporting Defi, which unfortunately I think is very misguided and just wrong from a strategy point of view because every other layer one are ready to take their lunch on this aspect. And the whole layer two thing definitely have fragmented liquidity and just make building D5 on Ethereum a lot more challenging compared to building on other layer one from a pure technical architecture and liquidity perspective.

So I think that you can't say they are like, I think that from a pure strategy point of view in terms of retaining D5 market share is wrong. But from an ideological level, you can't say they are wrong. And I think that's where the problem is. Their ideology is driven by sometimes I would say a bit detached from the ground on the reality. Like they want to support all these kind of things that have we have tried for many years and just doesn't seem anywhere close to succeeding. While you have the biggest product market fit out there and you say, yeah, you guys are doing well. You don't really need us to support you guys.

And when we are doing any of the upgrade, they are going to impact like D5, they don't even bother to really communicate with the top D5 builders. that, oh, yeah, we're going to make some changes to a technical roadmap that might impact you guys in a major manner. They don't even really try to communicate and get some feedback in advance. It's mostly the if research people, the ACD, call, death call. And then sometimes the D5 community found out from some people highlighting on Twitter. I was like, oh, damn, that's going to impact us. And then you start to see more and more people on Twitter start talking about it.

And then you rally the support and that forced them to kind of pull back a little bit from doing some of these technical roadmap. And I think I want to give one recent example. not been following that closely recently, but there was a proposal from EF research on, I think it's called minimum viable issuance. I think the Ethereum Foundation and Research side seems to think that the current sticking you of Ethereum are too high. They seems to think that they do not even need to, even at the current level of 3 plus percent, I think they even think that it's not necessary. They seems to want to get it lower to something below 3, like 2.5, something

like that because they think that they don't even need to pay so much for the security. Ethereum is kind of secure enough. And this is actually going to impact Defi a lot. And I don't think they really care about what the Defi people are thinking about this. I like Haseeb's analogy of the cities and how chains are cities in a way that always something I felt back on. And I have been feeling that Ethereum is quite European in the mentality. And Solana, like some of these other chains, are kind of more capitalist, maybe more American in a way. that's kind of done well.

I would worry about being too much like Venice and just looking at your museums and the statues and wanting to have all this cultural stuff and the theaters and the opera. Like those are great and we all love those, but you want to be a financial hub because that will attract the infrastructure and the investment needed

to have, you know, really good operas and museums. So I think that's the frustration. Like ultimately, like Ethereum has to be a financial center. It has to be like a New York, has to be like a Singapore. It shouldn't just be, you know, like an engineer.

European city that we all like and are doing fun stuff. So it's a bit of a culture thing. Ultimately, we do think that there's a middle ground. You can have both. There's different builders and they can care about different things. And as long as we're sort of unified on, you know, the rules of the game and there's like a neutral layer. And I will push back a little bit on what Arthur said. Like, yes, like if they do change things like the staking yield, like that that might have effects that we have to consider. But some of the founders complaining about lack of support, maybe it's just a sign of a mature system.

You know, it's a very mature product. And maybe, like, everybody has to just sort of bootstrap themselves and not rely on help. I mean, if you're building on Aptos or somewhere else, okay, like, you kind of need some support because there's nothing going on, you have to kind of build it from, and that makes a lot of sense. And Arthur, I mean, do you think that, like, an Ethereum founder should be hoping and needing some Ethereum foundation help at this point? Or, you know, does the code speak for itself? No, I think, I think agree on that part as well. I think that there's definitely a much more mature

system. But I guess that really came back to my point where Ethereum are pushing on some technical roadmap change that might impact Defi. They should at least, you know, like, you know, get some feedback and discuss with all the top DeFi team. And hey, we are going to make some change that might really impact how you guys operate. discussed, but it doesn't seem like they did that in the past. I mean, they kind of have. There's been ideas in the past that have been killed. I remember one idea I read, they were going to allow a validator to not just take 32Eath,

but do like 2048. I think they were going to increase, increase that. And that's the only reason not to do that is that it will affect, you know, some of the big validator companies who kind of build their whole system around this business model. otherwise it kind of makes sense like it won't affect centralization in reality that much

it just reduces the amount of AWS expenses that collectively we would spend but they didn't do it and I think it's because there are those other interests so it kind of... Yeah, I can't agree but we have kind of seen it quite often that it came quite late and it kind of

then community just realized oh this is going to screw us pretty hard and then they start to rally a lot of support to go against it and then oh then you start seeing things happen. I don't think that is the best approach. I think that it shouldn't even wait until then, you know, to wait for pushback before it makes some changes, right?

I mean, ultimately, defy power the most amount of activity on Ethereum. And yeah, you should be prioritizing them. I mean, I'm not saying that you should give them tons of support and just abandon every other experiment, other use cases. But, like, you know, it just strategically, it just makes no sense to just, you know, doesn't care about your biggest use cases until, yeah. And when your competitors are all going very hard on it. Yeah, but I think that goes to the point of like, if they were in kind of more proactive

communication and got comments back, then there wouldn't be these like last minute efforts to try to change things. So, well, you know, despite this kind of like indifference, I guess, from the Ethereum Foundation, it seems like you guys don't think that that will affect this bull cycle. Like you still think just like the conditions are set up for defy. to have a bull cycle. Yeah, I think that's my view. I think that DeFi Renaissance is not just exclusive to Ethereum.

I think that it will be broad-based, although I do mention, you know, I'm most bullish on it taking off on Solana and base. And I think that it's also a cycle. I think that we are still going to continue to see dispersion. You know, I think that we have seen it playing out this year. I think, again, going back to, you know, I think everyone has realized it by now that you have coins that have done very well this year, and you have some cryptos that have just massively underperforming. And we even have some, some project have actually went below.

They are 20-22 low. And some of them are not even like some small projects. They're like top 50 projects that actually went below their 20-22 low, when Bitcoin have hit new all-time high. And I think that is likely going to continue. Well, so one other thing I, by the way, I'll say when I asked you that, and you said, oh, well, I still think it'll be salon and base. Like, it's just interesting because base is technically a part of the Ethereum ecosystem. So again, that shows there is this like opposition between the L2 and the base layer. But I do want to ask you guys about meme points because, you know, obviously that's been peppered throughout this conversation. And as we've mentioned, they've been one of the best

performing sectors, if not the best performing sector this cycle. And I often see commentary where people kind of put them in opposition to defy. But before we actually, get to that comparison? I was just curious, like, why is it that you think that meme coins have been the darling of this cycle? You know, I just had Marad on Steadylads a couple days ago, and he makes a very forceful case. One is that there is a bit of a rebellion against the VC coins, as he calls them, that, you know, people have been fed and those not performing well. That's specifically the problem. I think they launched too high and then they kind of drop down. We get told that there's sort of like vindicates the Jack Dorsey Bitcoin Maxi crowd.

I would say, I would say Bitcoin has differentiated itself because of some of the altcoin underperformance. It just presents a different philosophy. So meme coins in essence are a factor of that. And then the other thing he says, which I'm open to believing, is that society is kind of like reaching this, this climax of like discontent. and there's a lot of changes happening in the whole world around us that are kind of affecting this. So forget crypto and, you know, listings and all this stuff.

Just generally, like, there's a move towards like absurdity of speculation and just hypergambled to try to get out of the lives that people are in. And it's just like such a, it's like a lottery ticket way to get out. And people are drawn to that. So it's like the nihilist philosophy of meme coins or something. nihilist and also just absurdist yeah I mean why else would you know a cat that pops or a dog that wears a hat you know just just be worth more than entire country's GDP

yeah I think people try usually try to compare defy and new coin because they are in some sense defy many defy tokens like you know they have some sort of value capture and some fee so you can kind of put an objective metrics into it. You can even run like some valuation model or like give them like a profit like PE multiple price to sale revenue multiples. So it's the closest to traditional finance way of valuing stocks and investments. Well meme coin just have none of these right. So in that sense,

they are quite polar opposite. But I do think that they are complementary to each other. I think mean coin is actually a very good stress test to defy and the base layer as well. because it's just, you know, everything that animal spirit unleash. So it's a good stress test to the ecosystem. And also, if you run a decentralized exchange, you want to be the decentralized that support all these meme coin activities, right? I mean, it's just like stock exchange, right? I mean, does New York Stock Exchange care if people want to trade, like, Tesla stocks or whatever

stocks, or like whatever stocks as much as possible? I mean, as long as legal, they were happy to facilitate that, right? I think that's the kind of like a relationship between D5. Although you do get a kind of different crowd, investors who like Defy are generally a lot more skeptical of meme coin because there's no value, it's just pure memes. And people who like Mimcoin saying, having value capture actually restrict the upside

and we do not want any of these. We want pure height and hope here. We don't want any numbers to restrict the upside. So yeah, but I'm a lot more neutral on Mimcoin compared to other like DFI people. and I think going back to like Jodi what Jodi said right the whole thesis and I think that it's kind of one of the most compelling thesis I've actually read and watched in crypto in the past two year I think that if you want me to point up some like investment thesis that really

shaped the industry top three came to mind one is the the fact protocol thesis published like eight years ago by one of the partner from placeholder and another one is probably like multi-coin kiles thesis on technical scalability, create social scalability. And probably the whole like Bitcoin is the digital goal alternative. I think there was a lot of article on this.

And then you get this meme coin supercyclical thesis, which I think from a pure presentation point of view, it hit every point. It resonates with many retails because it's exactly, most of it are facts, right? And it's kind of hard to count. argue Murat's point.

I mean, you might disagree with the conclusion, but you can't really counter argue many of the points he brought up. So it just really

come down to do you agree his conclusion or you, but you can't really counter argue many of his points. And I think that's very compelling.

And I think even on a pure objective empirical sense, like, there is more meme coin in top 100 than DFI. And the meme coin

as a sector, the total market cap It's also more than DeFi market cap as a sector. So, yeah, if you look at it very objectively, yeah, meme coin has been an asset class for quite a while. And I think they continue to do well. And there's no reason you should completely overlook and dismiss them. It's a new sector, though. I mean, it hasn't shown sting power, just like NFTs, everybody was going crazy,

trying to buy, you know, monkeys for $300,000. I think we'll end up with two use cases for meme. One is just like the online casino speculation. Like it's just a really good slot machine kind of thing. And then maybe we'll see some of these movements that Marad is talking about where they kind of become cults, online cults and sort of like a financial asset of that movement. I don't know that they'll get as big as he envisions, you know, these hundred billion numbers when he throws them.

I still try to envision it and I have a hard time getting that big unless, you know, Like everyone's sister, cousin, friends are all suddenly like, you know, trading crypto. It's hard to get to like some of those numbers. But those two industries probably are here to stay. Like we have a great casino and we have a great sort of online club, like a country club that people can join their own. Everything from like the milady kind of more, you know, edgy style to like the really nice pudgy style. style and maybe there's some stuff in between. So we'll see how it plays out. It's interesting. Well, you know, initially when I brought up meme points, I talked about how there are some people

who have been kind of talking about meme coins in opposition to Defi. And Defi, let's see, so definitely some sectors of Defi are the like VC coin types. Some are like so much older now that I'm not even sure how much that effect matters, but I just wondered, like, for this point going forward where you guys are expecting to see, you know, a more bullish defy cycle, like, how do you think the fact that meme coins right now are quite hot? Like, how do you think that will affect that? Do you think they'll just, you know, like a new set of people will come in a defy, or do you think they'll compete or do you think people will lose interest in meme coins or how do you expect that to play out? I mean, one is the picks and shovels, right? Like, people want to trade

meme coins all the time. We're seeing certain protocols do extremely well. Even some things like aerodrome that are not specifically around meme coins as much as some of the other ones, they have a lot of activity. So it can help. It can help with the overall activity. I like what Arthur said, like this kind of test the system and it creates a use case for it is an asset. Maybe it's not the most serious asset, but you can use it in all the ways that you know, you can use other assets. That's great. I do think that meme coins are inferior to some of the existing defy projects in that, yes, they both have unlocked tokens, and I'm a big, big fan of having like less emissions or not having ongoing emissions. I've talked about this a lot. I've probably

been the most outspoken person around. This is what's causing the frustration of retail is that they just keep having unlocks that are massive constantly on them that creates a negative sloping forward curve for the asset values, like the expected asset value is going to be lower because, you know, people are willing to create a discount for these lockups. Memecoin don't have lockups. In my opinion, they're still very boughted and like sniped and still like caballed. And you can try to hide it on chain, but like almost all of them like 99 plus percent have like a cabal that so you can say that like things like Pendle, Ave have been around a long time. Like at this point, everything's unlocked. Even mantle is unlocked. Like a lot of these

coins that have been around for a while don't have any emissions. It creates a little bit more of a stable block? Well, the meme coin thing, I do think we have more to run. We will hit higher and higher levels, but how will people feel when it kind of comes back to Earth and there is not much liquidity there? I don't know how they're going to feel at that point. Arthur, do you want to add anything? No, I think I've said most of it. I think that, yeah, meme coin is here to stay. And I think that there's two things, right? One is the performance of the DFI token, and the usage of the D5 as a protocol. I think that. that the usage of D-Fi as a protocol will actually be boosted by the DEM coin activities.

Like in Solana, all these coins that graduated from Pump Fund, their liquidity pool is usually on radium, and there are some on all-car as well. So all these obviously contributed to the D-Fi activities. But from a D-Fi token performance point of view, they might take away the attention. But I would say generally the investor are like a different crowd anyway. And I think there might be more and more overlap, I think there will be more defy-investor open up their mind to meme coins. But I think that also

you might see the reverse, right? People who make 10 millions for meme coins and say, hey, actually, I might not want to take the same amount of risk anymore. And if there are some defy coin that seems undervalue and decent growth prospect, I might allocate back some to defy tokens. Yeah, I think

so in a way they can be complementary. But I do think that yes, a lot of the attention will still probably be focused on meme coin from a retail level. But on the institution side, we actually, let's say we see the mean coin activity boosted the D5 protocol metrics a lot and that will actually end up pushing us to invest in the D5 token instead of buying the meme coins. So everyone can win.

Well, one other thing is I have seen both of you talk about how issues of capital allocation and crypto generally are just causing, you know, some of these kind of, I guess, weirdnesses maybe in the market and that part of that part of the reason that you see for this is the lack of good frameworks for valuing tokens. So can you just talk a little bit about what you think are the main issues there? Everything that we hear about is usually around relative value. So, oh, this chain is worth $10 billion and this chain has a faster tech. Therefore, it should be $20 billion. Or, you know, this is an L2 and this is a similar. L2, they should both be same valuation. that's not a great first principles framework and we end up in trouble after a while

because everything becomes comp to each other and you just like follow this like path and end up with like completely like misallocated capital. So we need better frameworks. Very few people talk about frameworks. I'm starting to like look back in history and like there's some really good articles and things I'm starting to find from some of the private equity people that from KKR and they came into crypto and they, you know, they wrote how to value these tokens. I think we're in dire need of a well-explained framework, like, that is as well-explained

as like Morad's meme coin thesis. We need like a good presentation for how to do this. And it's not easy to do, but, you know, hopefully me and Arthur and other people that are full-time in the space can kind of start building the blocks needed for that. Yeah, actually on the recent shopping block, though, has Stephen Turin kind of had a little disagreement about this, where Tarun was arguing that it's hard to standardize this kind of thing because there's like so many variables. So I don't know what you guys think of that.

Like, do you think it's possible? Because basically what could happen is like, let's say people come up with like five standard models or something. Then I could see it kind of like distorting what people are, what levers people are trying to pull in their different blockchains to try to game different metrics. I don't know. I'm just throwing that out there. Yeah. So I think my view is a bit different.

I think that there has been many attempts in the past to come out with a valuation framework and methodology for crypto. It just never get widely adopted and agree on. even though some of them, I think, came pretty close to the right way of valuing it. I think the big reason is, there's two big reason, two main reason. One is, first of all, the largest asset is Bitcoin. And Bitcoin, there's no, like, you can't run a cash flow analysis. And if you run a commodity analysis, there is no real industrial demand. So it becomes like back to the gold comparison.

So the best way to value Bitcoin is always going to be comparing it against gold, because that's the most similar asset and then you value Bitcoin based on how many percent of market share you think Bitcoin will take away from gold and eventually after if exit gold how many percent of the total non-productive store of value

market share Bitcoin will take away with it. And then that is, so the largest asset already set the tone that the best way to value is on a relative basis. So people kind of get really influenced by this and that impacted everything else. Because the largest asset,

is the best way to value Bitcoin is that way, and it kind of influenced everything downstream. And I think second factor is, and I think this is really going to change, and I think that is happening. That also explained the dispersion of return this cycle is we are running out of dumb retail to buy assets at ridiculous and nonsensical valuation. And I think that a lot of the sins of the industry in the past five years are really over-indexed on the continuity of all these dumb retail to buy asset at stupid and nonsensical valuation and we are really

feeling the effect of when all these dumb retail have stopped increasing and just like all went away and we get a more realistic asset valuation like layer two are no longer launching at 10, 15 billion valuation. They are launching at

two or even less and I think that is positive for the industry. I mean this is something that I think objectively that you're just seen a particular country in Asia. I don't want to name which one, but it should be fairly obvious. The retail there tend to chase the most dog-shed asset at the worst valuation, and it has lasted for a long time. And it just, they have in a hyper-gambling society, and they're just buying stuff that make no sense from professional investor. And I think that they're kind of slowdown,

and that kind of also affect the out coin, because it's harder and harder for stuff with no substance and peer hype to sustain like five, 10 billion valuation where none of the professional investor like us are buying them. And the retail are also not there and you start to get a reality check. And I think that's what happening. And so without all this thing, actually I think most of the professional investor like us are getting a lot better and valuing crypto assets. I think we all have our own methodology.

And I think that there will probably be like let's say you find some asset with like some objective metrics you can measure. The variance of the valuation is not going to be more than 30% away for most professional investors. I don't know. I disagree completely. Like I was kidding. I think that we're so far from that.

We're not close. And probably like we could estimate like what something's going to launch at and what's going to happen. If you tell me, for example, like which exchanges it's going to be on, I can give you like a very good estimate. But that shows that we're relying on the distribution of an exchange. Like if you tell me something's on finance or not on Binance, I can adjust and probably be quite accurate as to, you know, what if it's on upbit or if it's somewhere.

I can kind of like estimate the number of flows that enter, but that says nothing about the quality of the token or the product or anything else. And it kind of shows that we are very early on in the game where like Arthur said, like it's frustrating. But I don't think we're out of that. Like we're still at the point where dumb flows will affect price. I think we'll get out of it eventually. The point about Bitcoin, I also disagree because Bitcoin now is a macro asset, and there's a lot of correlations and covariances being done with NASDAQ, with gold, with the US dollar. And there are very sophisticated models that are predictive.

The fact that they're predictive shows that we're starting to exit that point of the immaturity cycle for Bitcoin, where it's no longer like a couple whales that have 200,000 Bitcoin each that are just like moving the price up and down. we're getting to the point where there's some predictability around like the global events that are happening that are driving it. So that makes me optimistic. And the other thing that makes me optimistic is that we are starting to talk about moneyness after the Ethereum ultrasound money thing and then people kind of didn't like it. Now we're having questions. And I think the way out of this is having finally an answer as to what what is monetary premium going to be for digital asset. How do we like view it being there?

And you talked about the chopping block. I heard one of the recent episodes that were asking, like, does Celestea have monetary premium? And I think Robert kind of said maybe like it does. Maybe in the future it will. There's some problems. These are good questions. And we're getting to the meat of the issue. I think we'll get there.

Yeah, I was honestly thinking about this question about kind of standardizing frameworks for valuing is that because each of these assets is distinct in, like, its purpose and mission. that like trying to do this standard comparison for to be just super obvious. You can't really come up with one framework that is appropriate for both Bitcoin and Ethereum because it's just apples and oranges. They're trying to do completely different things. And, you know, beyond that, like just generally any framework that you have, you'll have, you have to put your own values into it. So, you know, like clearly the Ethereum crew, they really value decentralization in a way that the Salon of people don't. And so whatever framework you come up with would need to make a judgment call on that.

And, you know, clearly the people who believe in Solana maybe don't think it's as important or whatever. And so the framework that, you know, like if you put the Solana supporters in a room and the Ethereum supporters in a room and you had them trying to come up with some valuation just from scratch, like they would come up with different things because they value different things. So I think what it comes down to basically is the old. added, you know, do your own research because it's more just like, do you understand what this asset is about, what, you know, this blockchain is about? And, you know, once you kind of understand what it's trying to do, then you have to understand the tokenomics and then think, okay, do the tokenomics kind of like cohere to the mission where, you know, if this blockchain succeeds in its purpose, then will the token also rise along with that? And so I think, you know, I,

I guess I'm saying that maybe this notion that, you know, having standardized frameworks would be helpful is actually going to lead people astray because then they will, they'll try to fit something onto a system that maybe isn't appropriate. Yeah, yeah. I just want to add that. That is very true. But I have to say that most of the professional investors have actually have a pretty good idea on how to value certain assets. I mean, obviously there are some that are harder to value. Some are easier. DeFi is usually the easiest.

to value because you have the fee and then you start running whatever multiples you want and your growth rate assumption. But I think what my experience is people generally disagree on the conclusion and the input, not so much on how do you value. I think people, like, when it comes down to, Celestia, it's like, big part of it, come down to, does it have, will it able to have monetary premium in the future? If yes, it's going to be worth a lot more. If it's not, so I think most of the disagreement is, will Celestia has monetary premium,

not on, yeah, like, yeah, I think that we are getting quite close in like the variance, but people still obviously disagree on the outcome and the conclusion. One other thing I wanted to ask you guys was about, are there a post that you published about how you think a liquid venture approach to investing is best in crypto? So can you kind of explain, you know, what the different approaches are and why you think that is the best one? Yeah, I think that in essence, I think the liquid venture, which essentially is investing in liquid crypto, and especially for the non-major, like non-Bitcoin,

non-Etherium, in my opinion, offer the best risk-adjusted return in crypto, because you are able to get exposed to the upside, which can be exponential in crypto, while still reserving the flexibility to manage the risk at the same time. And I think this is generally very valuable, because in a traditional finance world, you usually get a tradeoff. If you want to get your startup venture return, you need to sacrifice the liquidity. You need to get locked up for like five, ten years. If you want the liquidity, then you are less likely to get a venture scale kind of returns. You're not going to get that much like 50, 100 X in the public market.

But I think in crypto is actually one of a very few space you can have the best of both world. That happened a bit less likely the past one to two year. But I mean, in the past two cycle, we have seen many like a 20x, 50x to 100x outcome on the public market alone. And I think that it's still possible in the future. And yeah, I wish I think that this approach just give the best research adjusted return in crypto. Yeah. All right. Well, one other thing that I just had to ask you guys about is because we've seen, you know, this past year that there's this notion that Bitcoin will be coming more to defy.

And, you know, we have these like Bitcoin layer twos. Now there's Bitcoin staking. And then with the news about WBT now being partially controlled by Justin Sun. We have new wrapped Bitcoin-type players such as CBBT. And I just wondered what you thought the impact would be on Defi if we are able to get more Bitcoin into the Defi world. I mean, the fact that Bitcoin has been doing so well as an asset is indicative that there is just a lot of potential to unlock. And even though a lot of the Western Bitcoiners are

very purist and they just, you know, they don't want to touch their Bitcoin, you leave it there. And that's just, just don't touch it. You know, out here in Asia, we've already seen that there's both people who, you know, the Venn diagram of like Bitcoin lovers and like people who want to kind of do more active stuff on chain and not just leave it. There's a huge overlap in this part of the world. So the thesis that these are like separate philosophies, I think is wrong. is kind of like very U.S. centric maybe.

So I'm quite excited that I think we will have a bit of a resurgence on this like BTC-Fi optionality. And like you said, WBTC, I think at this point has had some concerns and, you know, we're seeing anything like happened with the maker. CBBTC like Arthur, I think said previously is kind of doing quite well. Mantle is working on FBTC, which is different, but, you know, also kind of trying to unlock the power of Bitcoin. And we'll see some good assets out of this.

And it'll be quite interesting. I think the approaches are going to be different. And whoever can create good ecosystems for their assets, which is why I'm quite bullish on the mantle side, because you take an asset, but then you also have, like, you know, apps and you have ecosystem partners. I think you need that whole integration. You can't just sort of have the vertical.

So you need everything put together. Arthur, do you have an opinion? Yeah, I think that if we can unlock more D-Fi, more Bitcoin into any of the other ecosystem, whether it's Bitcoin Layer 2 or other smart contract L1 like Solana, Ethereum, Base, Mento, is all going to be very bullish. I'm just not sure what is the best approach and which approach will end up getting the most market share. I think, yeah, it's also not an area we have spent that much time. I think it's just something that we're going to let the market show us,

which way is going to be the most successful and yeah which pathway ahead. Yeah, I think this mantle approach is kind of like a new thing, like a new trend that we're seeing. I just said O'Gill on the show when he was talking about how glue is going to be similar. And, you know, just like what I said to him when I learned about, I was like, oh, it's sort of like, AOL, but for crypto. And he was like, yeah, basically. Because I do like even, you know, for me, I talk about, I spend a lot of time thinking about crypto, but I don't use it. And when I do go to use it, I'm just like so confused.

When I get it to work, it's like magic. But, you know, just from a user experience perspective, it's like, oh, my God, what am I doing? Am I going to lose this money? So I think like the human mind likes nice, simple pictures and, you know, even like these mascots, animals, like this kind of meme coin stuff we're seeing. The best world is if you start to put them together where the user experience is pleasant and it's not like this, it's not like you're reading like tickers on the Wall Street Journal and you're just like seeing these tons of numbers. So like, you know, I've helped design M-Eath and this is something that is always being part meme coin, but part like, let's actually make the best way to hold Ethereum.

Like it's a very serious financial asset, but also let's make it very funny and easy to look at and kind of memorable and create a good customer experience ultimately. And I think increasingly we're seeing more and more serious protocols tap into like the cultural side and not just be very serious. So I'm quite bullish on those that are doing that. We have like, I saw Pudge's doing the abstract chain now, kind of curious to see what they do. I think we'll see more of this. Yeah, by the way, I'm so glad that you've indicated my pronunciation of M.E. Because somebody tweeted at me that when I did the host read ad, they were like, you mispronounced it. It should be math.

And I was like, wait, what? You can do both. They're both okay. Okay. We cater to, you know, both sides of the spectrum. I think that's the intention. All right. Well, you guys, this has been a super fun conversation.

Where can people learn more about each of you and your work? I think me and Arthur are both Twitterholics. So that might be the best place. So I'm at game theorizing, and I also have a weekly podcast, called Steady Lads. We have a lot of fun there if people want to check it out. Yeah, I'm active on X, formerly Twitter. My handle is Arthur underscore Zero X. Yeah. Yeah, feel free to DM me if there's any interesting to talk about. All right, great. It's been a pleasure having you both on Unchained. Thank you, Laura. Thank you. Thanks for us.

Thanks so much for joining us today. So learn more about Arthur and Jordi and the full case for D-Fi. Check out the show notes for this episode. Unchained is produced by me, Laura Shin, from Matt Pilchard, Juan Oranavich, Macon Gavis, Pamma Jimdar, and Margaret Korea. Thanks for listening. Unchained is now a part of the Coin Desk Podcast Network. For the latest in digital assets, check out markets daily, five days a week, with host Noel Atchison. Follow the Coin Desk Podcast Network for some of the best shows in crypto.