Unchained - Debate: Should Stablecoin Chains Have an Ethereum L2 or Their Own L1? - Ep. 907

Episode Date: September 19, 2025

In this episode, Cyber Capital’s Justin Bons and Codex’s Haonan Li challenge the new orthodoxy: whether payments chains should be alt L1s or Ethereum L2s, how “neutrality” and finality matter for real-world transactions, and why fragmentation could make or break onchain dollars.  We dig into Stripe’s Tempo (and its permissioned start), what it would take for L2s to reach true decentralization, and whether stablechains undercut general-purpose chains. Plus: the trade-offs of sequencers, paying gas in dollars, and whether protocol-native stables are the future. Thank you to our sponsors! Binance Token2049 – Get 15% off with code UNCHAINED Guests: Justin Bons, Founder and CIO of Cyber Capital Haonan Li, Co-founder and CEO of Codex Timestamps: 🎬 0:00 Intro 💭 1:45 Laying out the first arguments 🛠️ 12:57 What needs to happen for L2s to finally become stage 2 rollups 💵 15:40 Why Haonan chose to launch a stablecoin-focused L2 on Ethereum 🏦 30:17 Does Stripe’s Tempo L1 spell trouble for Ethereum L2s? ⚖️ 38:55 Whether Tempo can position itself as a neutral blockchain 🔗 50:02 Are L2s capable of true decentralization? ⏱️ 53:58 How important finality is for stablecoin businesses 🧩 57:08 Why fragmentation could make or break stablecoins 🔮 1:02:31 What the future of rollups should look like ⚔️ 1:05:58 The case for and against general-purpose chains 📉 1:13:12 Whether protocol-native stablecoins will keep gaining traction Learn more about your ad choices. Visit megaphone.fm/adchoices

If we look at things now, the most basic L1, like the most crappiest L1, number 200 in MarketCat. You cannot steal user funds. You cannot sense it. Okay? You can do that on the top 20 L2s right now. That make up like 99% of the TVL? Like, this is crazy. That's the reality right now.

So like, I'm asking you, who's on the side of decentralization here? You started your sort of critique on Rolls generally on talking about, you know, incentives and how it doesn't make sense for a roll-up to give up. the position of being sequencer. Yeah. If you are a roll-up today, do you really think it is in your interest to steal your user's funds? Hi, everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Jin. Finance is the world's number one crypto exchange, trusted by over 290 million users.

With industry-leading liquidity, security, and a wide range of digital asset products, finance is place to buy, sell, trade, and earn crypto. Download Binance today to get started. The crypto world is buzzing. On October 1st and 2nd, 25,000 people will be at Token 2049 Singapore, the largest crypto event in the world, featuring headline speakers like Eric Trump, Vlad Tenev, Tom Lee, Bologi Srinivassin, and Arthur Hayes. Visit asia.tokin.com now to get 15% off tickets with the code Unchained. I am here with Justin Bonds, founder and CIO of Cyber Capital and Hounan Lee, co-founder and CEO of Codex. Welcome, Justin and Howan. Pleasure to be here again. It's always love coming on to Unchained. So it's going to be great. Thank you.

Hey, Laura. Nice to see you. Nice to see you, Justin. So you guys, we are at this moment in crypto where fintechs and crypto are clearly converging on the same space. And we are seeing that staple coins are likely to be one of the first big on-ramps, which is why there's probably just so many staple chains that have been announced recently. Those would include, you know, arc, plasma, stable. And then the big one that really kicked off a huge discussion on Twitter was Stripes Tempo. You know, after that announcement, Twitter was aflame with people debating the merits of, you know, new ventures creating their own layer ones versus building layer twos on top of Ethereum.

And, you know, that is basically why we are here today. And this also touches upon a previous discussion that was had around Robin Hood chain's choice of building a layer two on top of Ethereum. So here to discuss our Hounan, who is actually building an L2 for stable coin payments and just bonds who has a different view on how it is that these types of projects should be built. But why don't we start with kind of like the general view from each of you on how it is that you think companies should make this choice. You know, there's probably like certain cases where you think one choice is better than another. So, you know, who do you think should build an L1? How should, you know, a venture, a new venture think about this, who should build an L2, et cetera. And Hannon, why don't we start with you? Yeah, I think, as always, that the companies that are built on first principles are the ones

that win. And I think I would caution against any kind of motivated reasoning to back into a set of justifications to justify building an Alt-L-1 in hopes of some sort of Alt-L-L-1 premium. I think you saw movement shift from L2 at L1. It was like an 11% spike. It went way back down immediately. I think these types of valuation games by trying to put yourself in a right reference class of assets is old. This is an old game. That's not interesting anymore.

I think the future here is thinking about what really matters and how can we actually deliver value to users. I think if you perform that first principles analysis, you will arrive at a conclusion that we have arrived at, which is the correct one. But, you know, Justin, I'm sure has a different view. Actually, I will partially agree with you, actually, because I think we should start with first principles. And actually, that's why I have the position that I do.

And what I thought was most interesting, actually, about the tempo announcement is the reason why they said they were not building on an L2, because they value decentralization. They want a permissionless validator set. They don't want a single admin key. that can still use a funds. They don't want a single server that can censor and front-run transactions.

So I think the decision by tempo was one from first principles where from a business and competitive perspective, it makes no sense to wait for Ethereum to increase capacity. When that's completely vague and there's no like clear timeline on that. While simultaneously, if the other option is building on centralized altus, then I'm glad they're either building out their own L1 or building on another L1. that can scale for the sake of decentralization, for the sake of credible neutrality,

for the sake of what this whole movement is supposed to be about and what actually makes it valuable in the first place. So I don't want to put our viewers to sleep here and I'm happy to debate, you know, what stage zero, stage one, stage two, roll up, blah, blah, blah, right? I think the sort of TLDR here is there's a very clear path to decentralization for roll-ups and it's built on a sort of technical base that is deeply lindy. You know, the bugs that they find, in Geh these days are bugs at the go level. That means that, look, the bug is so robust that the only bugs you can find are at the language level. Will we have the same sort of picture when it comes to this, you know, experimental new

Alt-L-1 that's coming up? I don't know. I'm not convinced of it. You know, there's some smart people over there. But I think OSS and a long duration of, you know, being attacked under the most adversarial circumstances and manageable on the planet has made this code base so incredibly hard. Now, you could say that's L1. What's that got to do of L2?

Well, you know, the best L2 role-up companies are the ones that have figured out that really the key to winning this game is minimizing the diff between L2 and L1. And so, you know, optimism, for instance, where, you know, I'm biased, I used to be there, has the philosophy of minimizing the diff between O.P. Gath and GF. And so in a sense, you're inheriting that, lindiness, the robustness of that code base. And I'm just deeply skeptical that some guy's going to one-shot this and it's going to be amazing. I'm also deeply skeptical about the neutrality arguments here. You know, I think decentralization neutrality sometimes get coupled together as buzzwords.

You know, if you are another fintech, do you really want to bet your business on a substrate controlled by your competitor? I just don't really find out all that credible. And we can sort say the words, right, and chant an incantation, but I think in a boardroom somewhere, somebody's going to make the cold rational analysis, and I think it's going to come in the theorem's favor. You make quite a few points here, actually. And I think it is worth digging into that claim a little bit more, because you say L2s will decentralize, and I just don't see a path towards that happening, because decentralizing implies a lot of these parties giving up on their power, giving up on their revenue. And it's, and it's, and

It's a rule, I think, in history for the most part. People on mass don't tend to do that. The exception to that rule is incredibly rare. So I think, I think, you know, this audience is up to maybe us diving a bit deeper into shit sequencing, based roll-up, success, and maybe what kind of solution. I'm on my new territory here. Yeah, no, no, this is going to be a great question. I'm appreciating the back and forth as well.

It's productive. You are putting me on death's ground soon. And I know this is, you know, your bread and butter here. I'm happy to do some of it. I think you'll outclass me on many of the specifics. I think there's no need to sort of think about the roadmap in sort of a decade or two decades later, right? I think let's just examine the case now, right? Okay, agreed.

Okay, okay. Let's look at it now. If I may just respond to that, like, because you gave me quite a few things to respond to you before. Like, if we look at things now, the most basic L1, like the most crappiest L1, number 200 in market cap. You cannot steal user funds. You cannot censor. Okay? You can do that on the top 20 L2s right now.

That make up like, what, like 99% of the TVL? Like, this is crazy. That's the reality right now. So like, I'm asking you, who's on the side of decentralization here? I'm not able to defend every L2 on the planet. You know, certainly they're poorly run L2s, right? What about the vast majority of them, including all of the dominant ones? Like, that's the ecosystem we're dealing with.

Let me, let me make, let me make, let me make, my case here for a little bit. I think, look, like, we don't have to think about some far-off future where, you know, the sequencer, it's a shared sequencing scheme that, you know, some brilliant person has thought of, and, you know, it's instead of compatible and all these wonderful things. Let's not think about that yet. Let's just think what happens at a stage one of decentralization for a roll-up. You know, we're talking about permissionless withdrawals, right? What does that mean? That means a user can always exit the L2 by submitting a transaction on L1. what is that? That is the right to exit. Now, Albert Hirschman talked about voice and exit as being sort of the most important checks on authority. And similarly here, even in the near term, we can have these properties that are a real check on sort of abuse at the L2 level. This is in a way that no L1 is going to be able to offer in a credible manner. And so I, like Justin, I'm happy to do the, you know, we can do the whole like,

deep dissection of the L2 roadmap and so on and so forth. I think for me, it's just even in the near term, you can clearly see that there are properties that are going to be a real check on abuse for L2s. And by the way, maybe I'll seat our discussion in an interesting way because I don't want to do the whole, right? I think folks have heard that content from here just then. The Eiff Maxis have said to L2 talking points,

and I don't want to just do that again. right. I'll throw some, you know, I'll throw some controversial views in here, right? I think certainly many of the L2s today that are, in my view, set up incorrectly and targeting wrong markets are parasitic to L1. I'll say that. Now, this is not, you know, I'm probably going to get canceled for this, right? And that's, that's probably one of your, is that one of your views? Is that right? There's some common ground here. There's some common ground here. I think what is exciting to discuss is like, well, how does the future look like? You know, what, what sort of let's, I would love to go that direction if you want, Justin. I'm sure there's, no, no, I think the future is interesting.

And I think for me, that's very much about the incentives around change. And that's why I'm skeptical that, that this transition can happen. But before we go, though, I'd like to just, just respond some of the things you said as well, I don't want to lift all of the points uncounted here. But specifically, you talk about the right to exit and having exit cues. And it's like, well, that's nice, but it's kind of just like desensualization theater, right? Because if the admin key can instantly do an emergency change to smart contract, they can still steal all user funds.

And there won't be any time for users doing exit. You know, typically what's concrete is it's a security council, right? And then, you know, whatever. It's 10 folks who agree. Then yes, in that case, that would be true. In stage two, the security council would not even be able to freeze. withdrawals, right? In stage two, a smart contract has a detective bug. Then only then-

But we agree to talk about what exists now, right? And we're not at stage two. We're talking about what stage one. Yeah, I think, like, I think, look, it's a progressive, it's going to be a progressive process, right? And I think certainly you can have critiques about, you know, stage one roll-ups. I think if an intellectually honest critique would also apply similar logic to how big are these validator sets for these Alt-L-L-1s, really. How do they compare to the security council sizes? So look, I think a lot of this is not that interesting. Hold on, hold on, hold on.

If we just use Solana as an example, okay, Salinas got about, I think around 1,400 validators compared to say Ethereum's 5,000, I would estimate around 5,000. Great, great. Like, that is a lot more than just like five people or 10 people as part of chosen as part of a permission, like, like admin key. Like, I don't think it's fear to conflate those two things. you'll be happy. By stage two, you'll be happy, right? By stage two, look like, you know,

30-day delays before you can do any upgrades. You can't pause withdrawals. But now we're back to future promises, right? We're not talking about what exists now. So I think I have a question. So what do you feel like is keeping, you know, these L-2s from moving to stage two just yet? Like, how much longer do you think it would be? Do you feel like it's something that, you know, needs more years? Or is it like a, a timeline of months, like, what would you say it needs to happen? I think what needs to happen is, like, people are, I think the biggest problem in roll-up plan traditionally, I think Justin will agree with me here, is that people have approached

who's kind of like generalized roll-ups, do you know what I mean? Where, you know, you do a roll-up and like, what's the difference between this roll-up and L-1? Well, the gas prices are cheaper and, you know, they're going to try to do NFTs and gaming and defy, something about payments and, you know, 12 other things. And I think historically that is really the approach that has failed because in a sense, I think it is parasitic, right? Like what is it that you are adding to L1 other than your batch submission fees? And traditionally, you know, pre-4844, you know, perhaps you could say that is like a set of economics that matter.

Post-4-4-4, there's no way you can argue that this is, you know, an interesting economic or cruel. So I think the future here needs to be... Just for the audience referring to blobs here, right? Yes, shout out to Proto Lambda, my former colleague. Not even knows the code numbers or whatever, you know what I'm saying? Yeah, yeah, it's the jargon. I mean, that's why I want to get away from the boring stuff, right? But like, so I think, like, what really matters is roll-ups should be focused on industry-specific things,

like very narrow focuses, these strict verticals. Like, for us, it's stable points, right? And so what is the value at there? value at is we are able to focus on this in specific use case obsessively. I wake up, I think about stable coins. I eat lunch. I think about stable coins. I'm in the toilet.

I'm thinking about stable coins. We're on the ground, you know, talking to people. You know, we were in Malaysia talking to people. These are things that means that we can run a full product iteration loop very, very quickly and focus on one specific industry vertical, which, you know, assuming we are not idiots, should give us an enormous edge when it comes to building things are actually useful for people, building things that can actually extend the usefulness of stable coins and broaden the appeal of these systems. And so then what is our obligation then?

Our obligation then, as in Theronel2, I think, is to return real economics to L1. And, you know, there's various schemes to do that. But that's kind of how I see this future going. You know, highly specialized roll-ups that really accrue value to Ethereum L1. So why don't we, so obviously we went into all different kinds of issues there that I was going to ask specific questions about later on. So why don't we actually just take this moment to have Hounan kind of explain, you know, you are building codex. This is this L2 specifically for stable coins for businesses, and it's obviously on top of Ethereum. So why did you, you know, decide that that was the optimal structure for your project?

Yeah, I think first observation is that most of the stable coins are on Ethereum. And, look, you know, this one doesn't have a EIP number, right? So maybe sounds less like, you know, highbrow. But I think that brute fact is extremely important. And I think that's driven by a structural BD edge that the Ethereum community has over everybody else. Ethereum historically does not do BD. Like, you guys know this, right? Like, who is there to call?

You know, there's nobody a call until very recently led by, you know, leaders like Vivek, Ramon, and Ash and others at the Ethereum. Foundation, there's now, you know, some BD motion. Now, the reason why Ethereum has had so much adoption, even though until very recently there isn't, there wasn't even a BD team, is because of the enormous credibility and neutrality that Ethereum has. When somebody thinks crypto, first stop, maybe Bitcoin, right, but look, you can't do some stuff on Bitcoin. Like, where do you go next? You go Ethereum. For sure. Justin, like, you know, your salon bags aside, like, come on, right? Like, the first name that comes to mind is definitely Ethereum. The adoption of Solana has massively outstripped Ethereum over the recent years, right, to be fair.

And I think that's a consequence of the L1 not scaling. I think Salana is wonderful. I think there's lots of really smart people there, and I think fantastic things have happened. But that's only possible due to Ethereum's failure from my perspective. Otherwise, Ethereum would still just have the dominant position right now. We're now most metrics are now in Salinas favor, right? Well, I mean, here's one metric, right? I'm a stable coin guy.

So I look at the stablecoin metrics. Sure. Stablecoin TVL is on Ethereum side. Anything else is on Solana side right now, metric-wise, for the most part. Well, I mean, Justin, let me finish, right? So, yeah, I think, like, look, there's $160 billion of stable coins on Ethereum, and there's like $10 billion on Solana. That's an order of magnitude. So, yeah, I don't think there's much of conversation here.

I would say $10 billion worth of stable coins that can actually serve as money and can actually be used for commerce in a permissionless way. I actually think is more valuable than $100 billion in either an unscalable system that is actually kind of pointless and useless because people can't actually use it or locked up in L2s that are, you know, centralized and, you know, funds can be stolen and it's not censorship resistant. Yeah. I would say that $10 billion is more valuable. I mean, like, do you, I mean, don't you see that, you know, defy on Ethereum is much bigger?

Like, it seems like you feel like. Sure. But it's very much a legacy. see of its past, right? Like a lot of the TVL on Ethereum is very static and unoptimized. So you have this old system that's kind of riding on its laurels while the competitor comes along is outpacing it in almost all adoption metrics. So yeah, I think Ethereum has been steadily losing. If you begin with the premise that, you know, you know, Salana is wonderful and you need to say some things to make Solana sound wonderful. Like there are many ways to do it. And I think you're

doing an excellent job of that. I think though, but come on. Like look at the numbers, man. And one is 10x, the other. Like, it shouldn't be... You're focusing on a single number, like revenue, both protocol revenue and application revenue on Solano is higher. I would actually argue that's more important. But, you know, I've noticed that once TVR and StableCrum was the only metric left on Ethereum, it became the most important metric.

But, I mean, that's okay. I mean, look, Justin, like, I'm a stable point guy. Of course. I'm a stable point guy. I was asked why, you know, to why build on Ethereum? I think, yeah, for me at least, for, you know, my narrow. domain. And again, you know, I eat, drink, shit, stable coins, right? So I only do this. And for me, the choice is very clear. And like for me, like, I think there's a seven adjudgeys.

Like, I do want to ask, you know, because, because so we have seen the metrics from Salana that, you know, on the usage sides, like, especially, you know, kind of more like user adoption apps, like UX, those types of things. Those metrics are at least on the upswing on Solana. So, you know, at this moment in time, like, it's definitely one of those things where, yeah, okay, clearly Ethereum was the leader in so many ways for a long time. And now they have a credible competitor. And you were launching at this moment in time where there's this clear competition between the two. Like, why did you decide to throw on your lot with the more established chain, even though, you know, its future is a little bit more in question than it has been in the past? I think, again, like, I think the first principle analysis bears it out that, you know, Ethereum is the better bet.

I think if I'm truthful about this, there's probably a social angle to this as well aware, you know, like a lot of my friends are in Ethereum and so on and so forth, right? But I think the first principle analysis alone justifies this very clearly to me. It doesn't make, but this analysis, if we actually have this, have this debate. Let me offer the analysis. And then I'll tell you the usual. Sorry, what's that? And then I'll counter the analysis. Let's go.

Oh, absolutely. I expect it. I mean, yeah, 100%. So look, I think this BD point is really underappreciated. So most of the adoption on Ethereum is there, not because there's somebody from a EF picking up the phone going like, yo, use my chain. That motion historically does not exist, right? The stuff on Ethereum is because people are like, my God, like, I want to do something

crypto, what's the most neutral, best place to do it? Everybody's first instinct is Ethereum. Now, what happens when you have a L2 that's focused only on stable coins that also is working with, you know, Ethereum folks to really capitalize and to really listen to customers and really engage with customers in a way that previously is very, very difficult to do at the L1 level? I think that's like a very underappreciated piece of this. And, you know, a big part of the story. Justin, you're smiling, which has me, has me worried. Okay. So, I mean, again, back to first principles. From my perspective, if you're a user, if you're a cryptocurrency user and you're deciding what product to use, you can use the Ethereum

L1, which is slower and expensive, right? So that doesn't really make sense, right? It doesn't even have the capacity for mass adoption, right? It's just impossible. Or you could use an Ethereum L2, which means there's an admin key, which can still use a fund, which means, which means, means they can censor. Let's not go back to stage one, stage two. No, no, no, no, no, no, no, this is important. But this is important. Today, today, if first principle matters, you can choose between an unscalable system that's

expensive and doesn't work, right? Or you can choose between a centralized system that can steal user funds, consensual, etc. Or you can choose to choose to use a cheap, fast, permissionless, and decentralized system. When we say first principles matter, and you're actually analyzing it from the perspective of a user, of course they'll use an alternative L1 if they actually care about decentralization. Why then are there 10x, more than 10x more billion stable coins on Ethereum than there are on Solana? Because people deployed more stable coins over there? Like you're focusing on this single metric and I already told you it's not the most important I'm the stable coin guy. Just I'm a stable

guy right? Okay, the majority of stable coins are on Ethereum. Okay. I can see. I don't think you can offer this like theoretical or logical analysis that you think is airtight. And then I give you an empirical, I give you a piece of empirical evidence and you go, you're cherry picking. No, no, you're cherry picking a single metric. I mean, if you want to talk metrics. Okay, sure. Ethereum, I mean, this is also not, this is also not really a counter argument like to what I'm saying.

Because what I'm saying is from a user's perspective, right now this is the choice. I think what you're saying is interesting. I think what you're saying, you kind of like, You apply these adjectives that are like, not really intellectually honest, right? You're like, look, hold on. No, no, stop. If you're going to call me not intellectually honest, what did I say that was not honest? If you're going to start from an ad hominism.

Go ahead. Yeah, okay. Okay. Well, I'm sorry. I don't mean to add homin and you. I think, like, I'm just characterizing. What did I say that was dishonest? I think, I think, look, like, the way you describe the theorem, you describe it as if it's like

this terrible, terrible, terrible. experience and you describes Lana as this like twittering, glittering I didn't say terrible experience. I did I did a It's like come on like these are not and then these were factual statements. Factual just just

sexual statements without even rhetoric. If you play this back you'll see what I just did there. Okay. So then you talk about roll-ups in a way you know you started your sort of critique on roll-ups generally on talking about you know incentives and how it doesn't make sense for a roll-up to give up

the position of the sequencer. Yeah. If you are a roll-up today, do you really think it is in your interest to steal your user's funds? You think, you think like Arbishop over there is going to like decide, hey, guys, like, even go better. Hold on, hold on. Is this now going to be the Ferrari? Is this now going to be the debate?

I mean, if you want to have that debate, you can. It's just like, look, like, I've laid out for you. Well, no, I'm making the case that, look, I've laid out for you that there is a progressive roadmap to deessentialization. Okay. And sure, it is a progressive one, but I can point to you very clearly at which point what technical assumptions, what assurances can be given? Okay. These are good assurance. Can you just simply concede?

Can you just, you know, today for a user, they have a more decentralized, more secure, better experience on something like Salana. Can you concede that today? You can see that is a more than 10x worse place for stable coins than a thing? Yes, I concede that. Can you concede the other point? And then we can both do a little concede thing here. I think that's what is the one we concede? Justin, I don't want to.

This is good. This is good. Today, for a user, if they want to seek out the, say, the best user experience from the perspective of decentralization, security, and fees and speed, that they're bitter off on Solana than they are on an Ethereum L2 or Ethereum itself. I think if you are a stable coin user, the best place for you is Kodax. That's what I think. Yeah. That's not an honest answer.

Now who's being into fact is dishonest. Everyone can speak through this. Okay, so let why don't we, so Hanna, go ahead and back that up, make your case. We want to hear how you're coming to that conclusion. Yeah, so like I think some of this decentralation talk is maybe besides the point. And I think, you know, what we are focused on is certainly, is certainly those properties and certainly we're committed to a roadmap of progressive decentralization. I think today, what matters for users when it comes to stable coins is that they function and work the way. way that, you know, Chimov Polyhapitia believes they work. What I mean by that is their buzzword

of stable coins is that, look, like all this shit is seamless, you know, everything's super fucking smooth, like really low cost. It all just works great, you know, like circle stocks at 40x revenue. Everything's fucking amazing. If you're on the ground, I think you see all of the frictions and problems of stable coins today. And most of them are at the boundary between on chain and off-chain. And so what we're focused on today as a first-order priority is to eliminate that boundary between off-chain and on-chain. And so our first product Avenue is a stable-coin liquidity hub that offers wholesale pricing between different types of stable coins and between different types of fiat and stable coins globally. And so what we want to build long-term is that

a stable coin chain with this property, that any fiat that comes in can convert into a stable coin so seamlessly and so painlessly. It's the way Chumapu imagines it in the same. It's the way Chumapu imagines it in his head. And stable coins can move around in this really wonderful and efficient way. Over time, we need to layer on other assumptions, other technical properties like atomic off-ramps. Basically, when stable coins get sent into exchanges today, sometimes it get stuck because, you know, they run the QIB checks after the money arise. Why can't the QIB checks be run before? And if the QIB checks fail, why can't the transaction revert on the spot? So the user's never, you know, stuck. Anyway, this is why I spent most of my time thinking about.

Crazy idea. How about we just scale the R1 and then we get rid of all of this crazy complexity and trust tradeoffs? Finance is the world's number one crypto exchange, trusted by over 290 million users globally. With world-class liquidity, security, and a wide portfolio of digital asset products, finance makes crypto easy for everyone. Whether you're new to crypto or a professional, finance offers a simple user experience. Learn with Binance Academy, browse hundreds of tokens, and track your portfolio on an easy-to-use dashboard. For experienced users, Binance Pro provides industry-leading services and bespoke trading products. With some of the lowest fees and deepest liquidity in the market, it's no wonder over 290 million users choose Binance for everything crypto.

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These are just some of the headliners at Token 2049 Singapore, the largest crypto event in the world, happening October 1st and 2nd. Over 25,000 attendees, 500 exhibitors, and 300 speakers will converge for an unmissable week. Token 2049 will take over all five floors of Marina Bay Sands, transforming it into a pop-up city with 1,000 side events, nonstop networking, and immersive experiences, all leading into the Formula One Grand Prix weekend. Ticket prices are rising this week. Visit Asia.tokin249.com and use code. unchained for 15% off tickets. Well, okay, you guys, I want to actually just take this moment to talk about the tempo thing because Justin's actually seemingly arguing more like pro-salana. But, you know, what we have been seeing is obviously people are, they're going to be building new all to L-1s.

If we look at kind of how Matt Huang described, you know, their reasoning, he said they didn't want to be beholden to the tech specs of being an Ethereum L2, you know, fast finance. obviously was an example. And, you know, for a finality from Ethereum, that's like 12 to 13 minutes. He said also they wanted multiple validators rather than a single sequencer. They're going to be creating what he called custom transaction lanes and custom gas pricing. So those are, you know, some of the different things. What did you think about their reasoning?

And, you know, let's leave aside this issue about the neutrality thing because we can discuss that later. But let's just focus on the tech specs. I actually applaud their decision. I think it's great. I mean, personally, I would have built on maybe a pre-existing L-1. I think that's generally the better. Look, and I'm not, look, I'm a pluralist when it comes to crypto, right? I'm not just, I'm not a maxi of any sort. There's many good blockchains out there. So I don't want to make this a Ethereum versus Salada debate. That's not what I'm here to do. But I can talk about the stripe. And I think, I think what they're doing there, I think is really interesting. And I particularly thought that it was quite the condemnation, actually, of Ethereum's altitude scaling roadmap. And, and, It's the first kind of sign, I think, of a company also really appreciating and valuing decentralization and permissionlessness. And I think that is something we should applaud. Because I think this whole idea that, like, I think I like to draw the analogy with, like,

the early internet. In the early internet, there were these things called internets that were like these private internet for companies, let's say. Because these companies just weren't comfortable using a public internet that everyone could connect to. That sounded very scary to them. Rightfully so, actually. But actually, over time, these companies start to deploy more on the internet directly and started to get more comfortable the idea of a public network that is permissionless that everyone can access. And I see a similar pattern and a kind of journey of understanding that's happening with a lot of these institutionals

as well. We're at first to like, oh, this is scary. I want to control everything. It should be centralized. It should be in the way that I understand things. But generally, they'll start to embrace decentralized systems and permissionless systems, because that's really where the value is. That's where the value at is. Well, wait, so, Justin, like, it's interesting to me that you're saying, you know, they're heading in that direction, which is actually what Hounan is saying about the L2s. So, you know, you're not okay with the- But Stripe is actually doing it and Al-2s are just saying it, right?

Wait, but what do you mean by that? Well, there's no change, Justin. Yeah, Stry's no change. Tempo is literally starting with a permission to validate or set. I mean, you're asking me, sorry, it was a permissionless validator set. It's starting with a permission to validator set. They will move to permissionless. Okay. And so it's not permissionless from the get-go.

And, you know, I mean, you're asking me to comment on a blockchain based on just like a 2000-word article or something, right? So I don't really have much to go by you. I know. Well, none of us. I'm just running with it. Yeah, we're just going with what they said. I mean, generally the way that I'm seeing is generally speaking, look, if it's permission, then I'm going to say this is bad. to be consistent here. I think they should use a permissionless

validate seat. I think that's what crypto is all about. Right, but they're saying that they will move to that. And so they have this like roadmap to get more decentralized. And Hounan is saying that the L2s have a roadmap to become more decentralized. So why is it not okay for Ethereum L2s to be working toward the decentralization, but it is okay for it's. It's not okay for both. Honestly, it's not okay for L2s to say we will promise decentralization in the future. and it's not okay for strive to say we will promise dissenters and its future because we have

decentralized options now. We always have, right? Well, okay, but one question, which is, you know, the history of literally every blockchain, including Bitcoin, is that it started centralized. You know, we all know the first however many blocks of the Bitcoin blockchain, there's only like a, you know, two or three people mining it. So, you know, this is kind of just how a lot of these blockchain are. I understand that, but like, there's a difference here, right?

When something is small and just starts out, every, you're right, every blockchain starts out centralized. I like saying that as well, because it's 100% correct. And then you have this gradual process of decentralization. But we're talking about networks that are worth tens of billions of dollars that have been around for four plus years. I don't think you can keep using that excuse. I'm just going to call out incompetence and just them not actually caring about those

principles and putting them worse. Even worse, this is actually a case of perverse incentives. It's not a coincidence. that the top 20 L2s are all centralized. It's not a coincidence. They're just following their incentives. And that's the same reason why these systems won't decentralize as well. Of course, base is not going to decentralize.

Of course, they're not going to give up on 100 million plus of giving you in the process. It's nonsense. And it's also that's why Ethereum is in such a messed up situation like now, because if it did actually scale, you would put half of the Ethereum ecosystem out of business. Because optimism would go broke, base would go broke, it would all just go. bankrupt. That's why there's such a strong incentive to actually never scale the system. I mean, Justin, optimism will never go broke because, you know, Andreessen's there. So, but, you know, like, I think I hear you all of that. I think we can do another round of that

if we want, but I think you said something else that's really interesting, which is the corporal networks. You know, you said, look, the sort of prehistory of the internet is that you had all these companies who decided, look at this shitty open internet thing, right? It's kind of shitty, it's got these problems, kind of chaotic. Let me make. my own one, right? They call, Bill Gates called this the information highway. And he had a book where he wrote a lot of this. But they didn't become the incident of the future, right? I guess that's where I'm going, right? I think like that's what you're seeing in

stable coin land today. Again, you know, I'm a stable coin guy, right? So you know, you've got Stripe, yeah, circle, you got other players who are looking at something like if you're going, well, my God, like we ought to have the, you know, information highway for stable points. And they're thinking. the same way that Bill Gates thought back in the day. Now, what happened to Gates here? So, Gates wrote these ideas in a book. And, you know, that was the first edition of the book. By the time the second edition came out, he was conclusively proven wrong. And so, you know, they had to pulp a bunch of these books and, you know, edit the language such that Bill had always thought that it would be

this open internet concept. I mean, Bill aside, like, what is the point here? The point is that open systems when, neutral systems went? Why wouldn't you, why is it that the open internet won over, like, like Microsoft's like information highway. Well, if you're somebody building, like which one would you rather build on? Where do you think your property rights are more secure? Where do you think like neutrality actually means something? It's not just a buzzword, right?

And that is why fragmenting the Ethereum ecosystem was such a big mistake, because now it's no longer unified. I think the future of roll-ups needs, roles must add value to L1. The role-ups that add value to L1 and the ones that, you know, are able to play in this, new paradigm are the ones that are going to be extremely extremely successful.

The way that I see it, like, say when. Focus. Say when base pays, say, $1 out of the $200, you know, it makes back to the L1, right? So only a fraction, a fraction of the usage goes back to the L1. If I compare that to a system that actually scales while preserving decentralization, right? Like, that means all of those fees goes back to the L1. So if you project that out in the long run, if you take all of the fees that that would go to L2s And now going back to the L1, right, if you project that out, in the long run, the blockchain that

scales the L1 will have a greater security budget. It will become the more secure. It will become the more decentralized blockchain. So Ethereum is really setting itself up for a powerful failure economically here, because it's outsourcing execution to private L2s, and it's only getting a fraction of those fees back, while competitors are able to maintain a single composable state and keep all of the fees to themselves, which are then utilized, for improving decentralization and scarcity over the long run.

That's what makes these other systems superior, including from the decentralization credible neutrality perspective, if you project things out, if we start talking about the future, which you do keep bringing it back to that. I'm happy to have that conversation. Yeah. Yeah.

So let's do one thing, because we started with neutrality, and then you kind of said, like, you know, you brought up the, you know, scaling issues, the parasitic issue about the L2. So let's kind of put a bow on the neutrality thing

and like finish that up. And then we'll move to these other descriptions because I just wanted to ask you, you know, so Justin, like obviously we were talking about tempo. We like, you know, you keep mentioning a salonet or it doesn't have to be salon, but any L1 that is, you know, capturing all the fees and we'll use that to scale.

But, you know, tempo, they are claiming that they are going to become a neutral platform with respect to stable coins. And I even heard like Zach Abrams on bridge, a bridge on bankless calling Stripe a major contributor, which, you know, he works there now. I don't know how many people who are outside of Stripe would consider them a major contributor to Tempo versus, you know, like, you know, I think people think tempo is Stripe's blockchain. So, you know, I saw Anthony Sasano tweeted at Matt Huang, how is Tempo going to be neutral when it's backed by Stripe? Why would Stripe allow competitors to use their chain to grow?

So let's just talk about that. Like how do you think they get over like in this period when they're not decentralized yet? How do they get people on board and using their chain at this time when they are much more in control of that chain than, you know, then they would up in, then they would be in a truly decentralized system? If they choose to decentralize in the future, so you actually apply a permissionless validator set and anyone can join, then the problem takes care of itself, right, as long as this token itself is sufficiently distributed. I mean, that's the whole point. Like a private corporation can launch a blockchain and profit off it,

and then the system becomes decentralized and eventually comes out of their hand. I would also say it would be good if they implement stakeholder governance. I'm a big fan of on-chain governance. That's something that Ethereum lacks. I think that's a big problem. It's not the subject for today's debate. But I think if they add something like stakeholder governance, they have a sufficiently distributed token.

They make it truly permissionless and truly think about how making the system more decentralized. A lot of ifs there, granted. But then the problem takes care of itself. Like, it's okay that private corporations launch new L-1s and compete in the free market. That's how we create solution if some of the dominant blockchains are failing us.

And I think that's a great thing. I think the smart move for Stripe will be to act as neutrally as possible for as long as possible, have, try to get all the flows on the chain, and then by then it's too late. Then they capture everything. I actually agree with you. And that's why I see a similar path to altos, yeah. Well, I think there's a difference, right?

Like, we're not, we're not striped. You know, we're not striped. We don't have a payments business as well. I think the reaction you're seeing in the market, you know, when you talk to payment service providers and other folks, other fintechs, is, you know, people are a little aware. of this for good reason, right? I don't think the team is like malicious or evil or anything like that. I think it's just that people, it gives people pause.

Like, should I really be on a substrate that is fundamentally kind of not in my interest to be on? It feels a bit like you're sowing doubt here because like we can verify ourselves if a system is permissionist and decentralized. We can just check. We can look at the code. We can analyze the network. So it's like, why.

I think, I think maybe you're fixating on the. certainty around design, you know? I think maybe you're fixating on like some of those nouns. I think like end of the day, if you are a competing fintech, do you really want to build the future of your business on a substrate that is adversarial to you? I think the answer is no. And I think, by the way, I didn't cherry pick this example. You found the history example, right?

You said corporate corporo internets and sort of prehistory of the internet. It's the exact same thing. The analogy fits perfectly. You've got these companies who obviously everybody wants to own this layer, right? It's incredibly valuable. They think the existing open, neutral version kind of sucks, and they think they can do better things. Hold on. But you're missing the moral of the story.

Let me finish this point. What really is going to be the deciding factor is where do people feel like they have more secure property rights? Where do people feel like they can leave assets and feel safe? And I think the market test here is very clear. And Ethereum is clearly winning on that front. Justin, please go ahead. Yeah, this is saying Ethereum is winning. It's not exactly an argument.

But it's, sorry. Well, it was preface by evidence. So, I mean, honestly, if I were to like the way that I'm looking at this, I feel like what, you know, to my mind what Hounen is saying, makes sense in the long term, but I feel like at this moment in time, we are probably going to see all these like corporate chains that are going to not only launch, but like flourish from some time. Like if we look back at AOL, you know, that's probably the main example from that era. But yeah, as AOL used today, you know, it's like when you see somebody using an AOL email address,

don't you kind of like give it a side eye? Like you're like what? So I feel like, yeah, your argument makes sense. but the question is really, you know, will Codex survive that period when the intranets, the, you know, crypto equivalent of the intranets will be dominant. That to my mind is. Well, but it's also somewhat missing the point of the moral of this historical story, right? Because the intranets didn't win. It's the internet that won.

It was these private companies that were actually wrong about the future of the internet and that it wasn't all about creating these silos, fragmented permission, centralized private internet, that the future was actually in a permissionless single cohesive internet. And that's why this analogy, this historical example, actually serves to support this idea around having a scalable, decentralized L1, as opposed to centralized L2s, right? Well, but so just in like in your world,

are you saying that you think stable coins should just live on Solana? because like, you know, payments, that's just a different ballgame, you know. Staport coins will naturally gravitate towards the best product. And I'm arguing that if a block 10 is faster. Interesting. Justin, how do you process payments that are, you know, payments that that's a very high throughput type of product. So how do you do that at the same time, you know, that like a Trump meme coin is launching

on Solana on the same chain? Well, Solana has local fee markets, right? So that helps deal with that problem. I think what you said earlier was really interesting. You said, you know, the stable coins will go where the best product is. It's what you said. 160 billion dollars of bids on Ethereum, right? So, yeah, I don't know what to say to you.

It was higher during the last bull run. Like, this is a legacy of Ethereum's past, right? And if you actually look at where the growth is happening, it's not where Ethereum is, right? Have you seen the growth charts recently? Out into the future. If you project things out of the growth charts recently. Of course I have. And there's been more activity on.

on Ethereum granted. But like, the winners, I mean, again, and you're brushing away all these facts, right? And then you're going back to your talking point. But I don't think that a centralized system.

A centralized system is not a superior system. That's not first principle. Right? Justin, do you know, do you know what Marco Rubio is in the U.S.? Like, there was a presidential debate where he just kept doing these talking points he prepped?

I feel like you're doing that a little bit where, you know, you've got this set of talking points against, you know, various characterism, crypto and I mean, look, I don't think you can brush aside the evidence here. Like, you've got, there's 10x more of it there. I think that's very difficult to hear about this. I've seen it so many times that, yes, Ethereum currently has more stable coin activity.

It's more dominant in regards to stable coin right now. But I'm saying that the competitors will outcompeted in the long run because of the fundamentals that I'm seeing. The fundamentals that I'm seeing is that a fast, cheap, permissionless and decentralized system is better than a fast, fast, cheap centralized system. Okay, very simple argument, one that you're unable to concede when it's just the pure fact of the matter. Can you just concede that simple point? What is the point you want me to concede?

That a centralized fast and cheap system is worse than a decentralized fast and cheap system. Of course, I concede that. Of course I can see that. I think where you lose me. And when users have to choose today, that's currently the case for altru scaling. Concede, right? Can you concede that? Justin, where you lose me is when you talk about the prehistory of the internet, and somehow you cast Ethereum as Bill Gates.

When clearly Bill Gates here is strike. Right. Like, who is the analogy for the open web? It's clearly Ethereum. This is, again, until recently, they don't have obedience to you. No, no, no, no, no. You're confusing in now. Very clearly.

If you're talking about L2 versus L1, we're talking about a bespoke centralized. Laura's asking you about... Public systems, right? Like, you're confusing the argument here. That's not correct. Laura asked you about tempo and your views on tempo. And, you know, how it compares to the other sort of incumbents in the space? And would you cast tempo?

I mean, I wouldn't. I just think like... No, of course not. I would wait until it becomes more mature. I would wait until it fully does its permission as validate to say it. But I applaud the company for not wanting to build a centralized system. for actually wanting to have a path, a viable path towards decentralization instead of just saying trust me, because that's what Ethereum is all about right now.

It's trust me, bro, we'll desensize in the future. And in my of a decade of cryptocurrency experience, of being a researcher, that's a very bad idea to trust. I think I did this stage one, stage two, we did all this, right? I don't know if the viewers want to hear all. Let's talk about the different... I just need to... Laura, maybe just assert one thing. so that folks are upset at me.

Like, we categorically reject that there is not a path to decentralization when it comes to altitudes. And I think, Justin, you see it differently. You see it differently. And I think we should move on. I think we should move on because I don't want to talk about it. I mean, let's let's let's, let's, I'm happy to talk about it. I just, we went through, I went through, you know, all the stages with you. We haven't, we haven't actually talked about each stage.

What are the sequences? We haven't talked about these things. We can talk about these things if you want. We haven't actually talked about it. I just, you just. Clay, that it will be centralized. Trust me, bro. Okay, go ahead.

You can, we go ahead and lay out your, your kind of view on how that will happen, Hounen, and why it hasn't. And then Justin, you can respond. But then I really want to move on to some of the other issues, like the finality issue, fragmentation, privacy, there's a bunch. So go ahead. But just Hounding can start and then Justin responds, and then we're going to move on. We can make it a quick back and forth, if you prefer.

Up to you. I think it's just really boring for a viewer. No, no, no, because your whole argument lists on this plane. No, no, no, I don't think it's fine. Go ahead. People are interested in decentralization, I think. So go ahead. I think there's a very clear path, right?

I think, you know, again, like in stage one already, there are certain properties that are extremely useful, right? We're talking about the right to exit. And the right to exit is a key check on the behavior of the L2. Yeah. Yeah. And in stage two, look, like you got like 30-day delays before doing. any kind of upgrade. You can't pause withdrawals.

Smart contract has detect a bug. Then it posits, deposits, and withdrawals. Security Council can only resume withdrawals, right? They can't freeze it themselves. I mean, I don't know. Like, that's pretty good. I think at that point, we're pretty good, right? You're basically arguing admin keys are good.

That's what I'm hearing right now. No, I don't think I said that. I think I categorically didn't say that. Security councils are good. It's right? Well, no. I said, I was describing, Justin, I was strictly, I was describing to you the properties of the system at different stages of decentralization and the

guarantees that they offer. Okay, can I explain why I don't think that will happen? So take base. You're going to say that the roll-ups, you know, their incentives are against them. Bates would have to sacrifice all of their revenue, right, in order to, like, truly decentralized, right? Like, do you really think that people do that? I'm not sure that's the case.

I just am like, I'm not sure the evidence for that is solid. How is it decentralized as basicing a cut? Are you serious right now? Yeah, I mean, probably the phrasing, like, all of it, like, is, like, so. I mean, you would need a valid, you need a decentralized set of sequences maybe or its own validator set. Like, that's how you'd achieve, like, a real form of decentralization. I mean, they're not going to burn the admin key, right? So, like, therefore, you need some sort of consensus in order to still be able to allow for upgrades.

That's part of the dilemma that you have with L2s. I think, you know, when these code bases are hardened and when like the products, the product features are solid, burn the admin key. There's no need for the admin key anymore. But in the interim, you must be pragmatic and make sure that we do use things that are useful for users. That is kind of insane. Like that doesn't work, right? Like, cryptography keeps evolving. Like quantum is 10 years away.

Like saying just burn the admin key. There's a reason why no single L2 has done that. Why has, why don't L2 just do that if you say that? Like, it's nonsense. incentives don't line up for that. And reality doesn't line up with that. I think Laura was pointing out the hypocrisy of this, right? Like you're describing, you were talking about tempo.

And, you know, there's a, it's, of course, it's a progressive thing. I mean, think about us as a company code access. To add on that point, Justin, a lot of the criticisms that you're making of the L2s used to be levied by Ethereum people against Solana. So it's kind of funny. like there's like, you know, are, were you, were you criticizing Salana back in the day when they were much more centralized? I was actually one of Salana's biggest critics back in the day. Okay, okay.

So you do understand that there's an evolutionary process that a lot of these chains go through from And the way we predict that evolutionary process is by looking at incentives. And if you're looking at a mass system and the incentives are perverse, then I'll predict that it won't decentralize. And that's exactly what's happening with Ethereum today. we're four years in. Just that, I've given you my view on how I think the raw ecosystem should evolve. Okay.

I think these are controversial. I don't want to miss these other topics. So let's go on to this finality issue because I do think that this is important for payments. You know, as we mentioned, you know, if you're a stable coin L2 on Ethereum, then finality takes like 12 or 13 minutes. So like, especially in your case where you are targeting businesses. I'm sure you get questions about that. Like, how is that, why do you feel like being an Ethereum L2, given that fact,

is still the best product that you can offer to your customers? I think it's not a first order problem we encounter today when it comes to our users. I think the first order problem we counter when we speak to our users is that stable coins are offering a markedly better experience for them than whatever they're using currently. So whether or not the finality, is this or that. It is sort of a second order thing. I think most important. Like, I mean, you can't, so you, you are operating what is essentially going to be a kind of app chain on Ethereum. And your ability to offer certain technical benefits to your customers

is going to be limited by Ethereum's roadmap. So how do you account for that as well? I think, first of all, there's a concentrated effort in Ethereum to solve some of these finality issues. I think we see a great deal of progress there. I think some of this finality stuff is a bit overblown. And certainly an L2 offers instant confirmation and offers a kind of game theoretic finality immediately. And for many users, that is sufficient. So, you know, some of this talk about, you know, finality, finality, to me seems like

some ex post reasoning about how to justify building an Halt L1. Candidly, that would be my view. Now, there are, of course, cases where finality does matter. I think, you know, if you're bridging stable coins from one chain to another and folks have to underwrite the risk of, you know, things being not quite completely final, of course that matters. Now, that can be smoothed over in a number of different ways, right? One way is capital. And so, again, I think the whole category of these issues is not a first order issue. I think if you put a team together and you said, I'm like, how can we make stable coins more useful for as many people as possible?

this would be on the list, but it certainly wouldn't be at the top. Yeah, that's kind of how we think that. I mean, that type of finality is completely unworkable as far as I'm concerned. I think the most recent example that I thought was really interesting was hype and CLOBs. And I think that's shown us that there's a massive demand actually for large, fast central order books. And that's only possible if you have extremely fast finality, like what's some of the fourth and fifth blockchain, generation blockchains, are now achieving. So I think, yeah, if you don't have that type of finality, the idea of a central limit

order book ever being competitive on an hour tours just doesn't really make sense, right? So, yeah, I think that's really a deal breaker for what is currently the number one use case in terms of revenue. Well, I'm happy to move on from there. Yeah, let's let's move on because I think the fragmentation issue is another big one. You know, just because, you know, at the beginning of the show, I mentioned, you know, you know, like arc and tempo and plasma and stable. And I mean, it's just like, and now there's codex.

So, you know, how do you, how do you think that it's possible for us to prevent fragmentation? This just creates so much hassle for users. There's a lot of, you know, money and time spent on swapping stables, and it creates, you know, even like risk, right? So talk a little bit about how you feel like that can be resolved. First of all, Codex is actually the only stable coin chain on Ethereum. So with respect to the Ethereum ecosystem, there's no fragmentation whatsoever. Now, certainly there are many chains across other things, right?

And of course, that is very very effective. I respect it. Justin, I got to do my job. I have to do my job. Yeah. So certainly there is fragmentation across these chains. You know, there's plasm, this arc, so on and so forth. And I think if you peel under the.

the first layer of underneath the buzzword, you'll actually see that these guys are pursuing very, very different strategies. You know, I won't name names. One is sort of bundling a chain with a neobank app. Another is basically running a kind of bare chain playbook, but skinned as a stable coin thing. You know, we are focused on these like real payment flows on the ground and like dealing with the banking and the licensing and during all this gunk and making sure stable points are more useful. And so like candidly, when we go to market, we don't bump up against the other stable coin chains at all. We're doing totally different things.

Now, of course, on a VC deck or something, and somebody's got stable coin chains, you're going to see four logos. And yeah, they look side by side and they do the same thing, but not really. They really don't. And so like on the ground, you know, we're growing four X month a month. Charts are all going up. We don't really bump up against stable coin chain competition, and parts of the market we play.

And so, like, what is the end state here? I think the end state is the buzzword goes away, the stable point chain buzzword goes away, and better language is used to describe these different companies who are actually doing very, very different things. Well, Justin, do you want to respond anything there about documentation? Yeah. Yeah, I think fragmentation is a massive issue. And this all ties into the kind of economic critique that I made earlier because it's,

and also the U.X, right? Like, I think the two main reasons why I think Ethereum was so successful initially was, one, due to programmability. That was a huge breakthrough, the unleashed innovation, I think, on the cryptocurrency space. And number two was that you had a single composable state. And, like, that having that single composable state is incredibly valuable because the network effects of that just compound, right? Because you could have, say, a stable coin over here on that L1, and so you have a lending program. protocol over here and you have say a exchange over here and these can all kind of interact very quickly and seamlessly with each other. You lose that.

You very much lose that atomic composability. You lose a lot of the seamless UX when you move over to this type of quote unquote L2 ecosystem. And I think that's a terrible tradeoff to make. And I think it's incredibly confusing to users that you have. Oh, in my world, I've got USDC on optimism and I've got USDC on Arbitrum and I've got USDC on Codex and and oh, if I want to move it from one to the other, I need to use a bridge and then, oh, but I can't use this bridge and I need to take the security risk. I need to click on this and I need to understand this.

It's a nightmare compared to just scan QR code stage. That's how it's supposed to work. Well, like, I bet the base guys are like, I don't know what Justice is talking about because I bet I can do this scan QR code. and pay. Yeah, because they're, because they want to stay on the same to last L-1. I think I'll steal man your argument. I'll steal a man your argument, right?

Your argument is like, look, you have all these roll-ups who are kind of general and like doing everything and like you're fragmenting the use base. I think there's some truth of that. Yeah, there's some truth of that. I think that's why I tell you the future of roll-ups cannot be that. I think the future role-ups must be specialization. I can actually meet you halfway. This is actually quite interesting that you say this because I mean, I can meet you halfway.

because I don't actually dislike L2s. Like, I'm not against L2s. I'm against the L1 not scaling. I know that. Maybe I am. Maybe I'm not. But like I don't dislike L2s. I dislike that the L1 is scaling.

So in my ideal future, all L2s are specialized, right? Because L2s are kind of providing these niches that actually would maybe make sense. That maybe L1 time to provide, right? So like I actually agree with that. But the problem with Ethereum, but the main problem with Ethereum is they said, no, Altus, we're off, we're outsourcing all execution and like everything to Altus. And that Altus are supposed to be this general purpose. Let's talk about, that was the big mistake.

If only Ethereum scale, then I'll be very happy with any L2, right? Let's talk about the future, right? So I think we have common ground here, which is I think the future is specialized roll-ups. develops are extremely specialized in doing one specific thing. And I think in that configuration, I think Ethereum is unstoppable because you have this sort of neutrality of Ethereum. That's an extreme. That's extremely fredminted if the Ethereum can't do general purpose itself, right?

Because now, oh, now I transact over here, I lend over here, I exchange over there. That sounds terrible to me. That's not a good solution. Yeah, Justin, I think, I think, I think. you exaggerate many of these difficulties. I think certainly, certainly the sort of where we agree. If you one can look at what I'm saying here, I'm literally not exaggerating. Well, okay, you know, I would be interested to hear Justin. So, yeah, because like it feels like when I listen to Howan, what he's talking about is almost like this app chain, sort of like Cosmos-ish world.

So Justin, in your ideal world, how would these issues be resolved? well in my ideal world which does exist on some blockchains I suppose it's the L1 step and actually this is I mean my my ideal world would basically be Ethereum pre 2022 maybe as well like I was a big Ethereum fan as well right back when I was a Solana critic and an Ethereum supporter right like Ethereum was the largest investment in my fund since like 2016 when we founded it okay so it's like I do have that background and I do have that like appreciation so like in my ideal world world, that is what I'm talking about. If you're an application,

build on the L1, you can be seamlessly composed. Let me just answer the question. Build on the L1, have a seamlessly composable system that is maximally secure, maximally decentralized, and maximally permissionless. Because I actually think these straight-offs go away. Explain what that looks like. Yeah. So, for example, if I have my wallet, my phantom wallet, if I may, since Stripe hasn't released their wallet yet, or if Stripe Wallet, Let's go of Stripe Wallet to stick with the theme. And then I say, I want to swap. I want to swap an asset.

So I click swap and then a fraction of a second later, it's confirmed, it's finalized. I paid a fraction of a cent and it's extremely reliable. Like that's how it works today, right? And I can do that across all use cases, pay a tiny fee without congestion of extreme reliability. That's what Ethereum is competing with. And I can't actually compete on the U.S. level. It can't compete on the level of security. It can compete on the level of economics, as I've already covered.

It can compete on many levels. Sorry, I'll let you respond here. So just to understand, so in your world, you think every single use case exists just on the L1. It's all interoperable and it will scale indefinitely without, you know, causing. Yes, because demand is not infinite, right? And we keep increasing capacity. So my belief is that we can actually demand will stay below capacity. and we just keep increasing capacity over time.

As soon as we hit capacity, then we hit capacity, right? But I do think there will be, there's some room for altrues in my world, I will say. Like, I would say even in my ideal world, there's some. I'm glad to hear it. I'm glad to hear it. Are you calling the network extensions? You can call them whatever you want. But like basically.

We're in the concentration gap. Yeah, yeah. Yeah, yeah. But I can take codex to move to Sislana or a strike one day. Here you go. Let's let's talk about one aspect of this, which is, I think you're advancing this vision of like general purpose, right? Yes.

A chain, it's general purpose, can do everything, it's be fantastic. Yes, it can do everything. And that makes it the best. Have you worked at one of these chain foundations that are attempting to do this? I mean, I've been a cryptocurrency, full-time cryptocurrency for over a decade with a team of researchers. Totally. But have you been in one of these foundations before?

What do you mean by being inside, exactly? Oh, you know, so like I was in one of these foundations, right? where the mandate at the time was, look, we're going to do everything. I'm going to defy, do NFTs, something to AI, some payments, something else, something else. I was there. And I spoke into colleagues in other analogous organizations, all the best, right? These are all the, I won't name specific names, but like any name you know, like, this is the dynamic.

The dynamic is when you try to focus on 20 things, you end up focusing on nothing at all. And when you try to focus 20 things, there are also tradeoffs between these things. Let me give you one very little way. Justin, I let you finish. You can have to let me finish. Let me give you one very basic example, right? Where are there tradeoffs across these use cases? Let's think about just one.

The dominant product market fit in most chains today is defy, right? So what are the political dynamics inside each of these foundations for a defy guy? The defy guy is the, you know, a big deal guy, right? Like, this is the big deal guy. This is where the bread is butter. And let's say until very recently, stable coins, you know, who cares, right? Two years ago, nobody cares about stable coins. There's a payments guy.

Payments. The fuck. Right? And like, what is it that these two guys want? What is the defy guy gold on probably? TBL, likely, right? That's the measure of success, defy. And what is the metric that this payment guy might be?

trying to go for, like, I guess payment flows. What might be really good for payment flows? Well, one thing you could do is you could subsidize on-off ramps using your token. It's like a very obvious thing to do, right? If you sit down for five minutes and you think, like, how might I help disable coin flows move more and faster? Let's pay. But the on-off ramps are cheaper, so transaction is cheaper. Let's say you're the payment guy.

You take this to foundation. What do you think happens? What happens is they laugh out of the room because the DeFi guy, like, have you lost your mind, you want me to pay tokens to move assets off the chain? Like, you're an idiot. Let's never talk about this again. And it dies. So there are these like very harsh tradeoffs across use cases.

And if you attempt to do everything, you will do nothing particularly well. And I think that's why you're seeing things trend the way that they do. But this is somehow bullish for Solana, right, Justin? If I may respond, yeah, no. Because all the things you said, you're probably the most wrong about this. particular point, because this whole idea that a core team needs to focus on lending or stable coins, that's BS. And I already told you why, because Ethereum's big innovation was programmability. All the core team needs to do is focus on scalability, decentralization, and latency, right?

Like, they just need to make the L1 blockchain. They should create as much fast, cheap and decentralized as much. Hold on, hold on, hold on. They don't need to be distracted by all these use cases. So this argument is kind of nonsense because the core team should just be focused on making the L1 better. Part of the problem with Ethereum is that they are distracted with other things such as L2s. Like let private parties build L2s. They should focus on making the L1 better. That should be the mandate of any core development team in my view. And that's part of where it goes wrong.

You managed to, you managed to mangle the L2 history as well as mangle the existing dynamics in these chain foundations. It's like, I mean, don't just make it. Why am I'm angling? I'm about to justify it. Well, Justin, so is it your view that all the folks employed by the Solana Foundation currently work on stable coins should be fired? I don't understand this question, to be honest. Well, first of all, like, first of all the first of all the team, you said the L1 should not be thinking about this stuff, right? Like, the interim had been in permissionlessness.

And they don't need a thing about any of this. This Alana's team has been hyper-focused on building out the L-1. So, yeah, I think that's great. Ethereum hasn't. Okay? Like, I don't know where you're going. You're not answering the question, Justin. Yeah, because, Justin, you were saying they should only focus on...

Should some guy by the Ethereum Foundation who I don't understand his job and I don't know who he is and I don't know what he knows? Should he be quiet? We're not talking to the Tiram Foundation. We're not talking. The Slan Foundation, yeah. You're asking me, should this random guy that I don't know, should he be fired? Well, because you were saying... Yeah, you were saying so exclusively kind of on like technical scaling type stuff and not like...

the business applications. And so Han, Hanans just pointing out that the foundation does still also, you know, employ people who are looking at, like, specific applications. And he in terms of BD, he's just clear. I know, you're an advocate. In terms of BD, you're

100% quick. But I'm talking about developmental focus, right? Like, that the developmental focus needs to be on the O-1. So this idea that to have a generalized L-1, that therefore the developers get too distracts that to do stable coin defy. It's simply not true. Because all they need to focus on is the

box page itself. I didn't make an engineering argument. There are certainly engineering arguments. I give you one that's actually just focused on incentives, which is like the simplest one, right? I think the one that's least bullshity and like everybody can evaluate for themselves whether it's real or not. I think, look,

obviously I don't think you're advocating for mass firings at the Solana Foundation. So what I'm pushing you to like recognize is that the reality of running a chain is more than maybe the talking points you assert here. the reality of running a chain involves thinking through BD, thinking through who are the customers we want to face through. Just so we don't miss each other. I was talking about one second.

Just one second. Just one second. Just one second. Of course, of course. So I'm about to make that connection. So like how should tech be built? There ought to be a feedback loop, right? It's very, I mean, this is non-controversial, right?

You have an idea. No matter how brilliant you are, the idea may not be correct. it has to be tested by the market, try to sell it. If nobody wants it, give it up, try something else. And so you need to run this feedback loop, this product iteration feedback loop. That is very difficult to do if you're attempting to do it across 20 things. And all 20, many of these 20 things conflict with each other. And then there are the political dynamics on top of that.

You should be doing, not development, right? No, but what he's saying is that, like, you were saying they should just focus on the tech in a vacuum. And he's saying, if you're going to build something, you should talk to your users. No, no, no. I think we're missing each other a bit. No, no, she's right. That's what I mean. No, no, like, I agree with that.

That's why we're missing each other. Okay. Then we're good. And that's why I like things like salina that are more user focused, right? That's right a bit of UX. Okay, okay, okay. You guys, we're so far over time. And so now I'm going to give you literally one minute each to address just one other new

trend that we're seeing that it fits in this space. that I'm just curious to hear your thoughts on and how it fits in this argument that you guys are having. Obviously, this protocol native stable coin thing is taken off. You know, we obviously on this huge competition about USDH, which, yeah, that was bonkers in five million different ways. You know, Mega-Eath also announced its own. So this just adds to like the kind of fragmentation thing. And anyway, so I'm just curious to hear your thoughts on like, why are we seeing this trend? Like, is it, you know, do you feel like it fits in your position?

of like what you would say is a good thing or do you think it's a bad thing? And Hounan, you go first. You have literally one minute. And Justin, you have one minute. And then we're going to wrap. Shout out to Max. Congrats for winning. I'll see you in Singapore.

I think these are, it's the market's getting sorted out. I think, you know, sort of it's not clear where the power lies. And I think in different situations, the power cruises a different layer. In a case of hyperliquid, I think it's very, clear that the power is occurring at the hyperliquid level. I think in different cases, this power is occurring in different ways. You're seeing this kind of explosion of different variations of this game being played out. Chains are launching stables. Some stables are a chain, like some walls have a stable, PSPs might have a stable, PSP might have a chain. The roll-up guys

were like trying to sell chains. Are we just going to have this huge number of like five million different stable coins? I think long term, a lot of this will get shaken out. And, And I think that long term, you know, I'm talking about my own book here. I think long term, the value cruised sort of dominant substrate where most of this stuff happens. I think that's how sure. So you're one minute's up. Go ahead, Justin. All right, sure.

I mean, it's wonderful to see all this competition. I will just say, I mean, I haven't followed the whole hype thing that closely, but it very much seemed like a very much an insider choice that they chose native markets over Paxos. but that's just my offhand opinion here. It's actually not only your opinion, but anyway. Yeah, I've noticed. Yeah, yeah. So to me, that was a little bit wild,

and it's kind of that example of like decentralization theater a little bit. Like, yeah, sure they had a vote, but in reality, they're all buddies and they're just voting for their buddy, right? Like, just be honest here, which is fine, I suppose. I mean, it's their right to vote the way they want to. But so do you think that's the future? For every chain to have their own stable coin and we just have this plethora of stable coins, like, do you think this is a good trend?

a bad trend. I'm going to, I mean, if you're asking me either or I would say good trend, because I like free markets and I like innovation. I think I also agree that eventually this gets shaken out because like, you know, the liquidity tends to concentrate around a few, but I think we're now during a bit of an explosion of new stable coins and that's great. I think, I think let the best products win. And you also mentioned, by the way, putting a stable coin like natively in the L1 or is the misunderstanding? Oh, you think you're referring more to the hype thing there, right? Yeah.

So, yeah, I do think there is some dangers there if you implement it that way. But like I do, yeah, but I do think like the decent, that it was a decentralized vote or at least, I know it was very concentrated. But I do think that's at least a very, like, good thing. And I think we need to do more of that in this space because I think giving stakeholders a voice is actually, I think that's really what this movement should also be more about. Because if it's all closed room decisions, then like, what, then the whole chain kind of becomes a farce in a way.

All right, you guys, this was very fun. It was wild. It was a really good debate. There were, yeah, good points made on both sides. So thanks to everybody for joining us to learn more about stable coins, all L1s, you can check the show notes at that time. And until then, thanks, thanks, everyone, and we will catch a while later. Thanks for tuning in to the weekly news recap.

Let's begin. SEC approves faster path for crypto, ETFs. The U.S. Securities and Exchange Commission has approved new generic listing standards that will streamline the approval process for cryptocurrency exchange-traded funds. The change allows asset managers to launch products more quickly if the underlying crypto has regulated futures trading for at least six months or trades on an exchange within the Intermarket Surveillance Group, which monitors for market manipulation.

SEC Chairman Paul Atkins said, This approval helps to maximize investor choice and foster innovation by streamlining the listing process and reducing barriers. The rule approved by the NYSE, NASDAQ and CBOA, reduces the maximum approval timeline from 240 days to as few as 75. Baseway's native token launch. The Coinbase backed Ethereum Layer 2 is exploring the creation of a native network token

after reaching key growth milestones. At the Basecamp 2025 summit, head of ecosystem Jesse Pollock said, we're in the early phases of exploration and don't have any specifics to share around timing, design, or governance. Coinbase CEO Brian Armstrong added that a token could be a great tool for decentralization

and expanding opportunities for developers. The announcement marks a shift from last year when Base dismissed the idea of token issuance. The network now reports nearly one, million daily active addresses and more than $5 billion in total value locked, second only to arbitram. Speaking on unchained, analyst Ryan Yee said, conservatively, I think it could come out at a $20 billion FDV and probably run to 40 or 50, noting the potential for acquisitions and growth campaigns fueled by token resources. Native markets wins bid to issue Hyperliquids

Stablecoin. Native markets has been selected to launch Hyperliquids first Native Stablecoin, U.S.D.H following a high-profile bidding contest that drew proposals from major players, including Paxos, BitGo, Frax, and Athena. The team secured a two-thirds supermajority of staked hype tokens, Hyperliquids governance asset, and will begin a test phase for U.S.D.H. Minting and redemptions within days, according to co-founder Max Feege. The stable coin will be issued on Hyperliquid's Hyper-E-V-M network, with reserves backed by cash and U.S. Treasuries. Management will be split between Black Rock for off-chain assets and Superstate for on-chain reserves, with yield directed toward hype, buybacks, and distribution growth.

Kalshi partners with Solana and Base as prediction markets chase billions. Prediction platform Kalshi is joining forces with Solana and Coinbase's base network to launch a new ecosystem hub aimed at funding builders, traders, and creators through grants. We're backing off-chain and on-chain innovation, the company wrote on-X, promoting the initiative as trading volumes climb closer to rival Polly Market. Calci recorded $875 million in August, compared to Polly Markets' $1 billion, according to the block. At the same time, both platforms are drawing investor attention.

Reports suggest Polly Market is weighing fresh financing that could value the company at $9 to $10 billion, a sharp increase from the $1 billion valuation it secured earlier this year. Calci, backed by Paradigm, is also said, said to be close to raising funds at a $5 billion valuation, more than double its level from a few months ago. With the CFTC recently clearing polymarket to relaunch in the U.S., competition and predictions is intensifying. Finance and Talks to end DOJ. Compliance Monitor Early. Finance is reportedly negotiating with the U.S. Department of Justice to end the three-year

independent compliance monitor imposed under its $4.3 billion-billion settlement agreement, According to people familiar with the talks, the monitor, run by Forensic Risk Alliance, was required after Binance admitted to violations of anti-money laundering rules and the Bank Secrecy Act in 2023. If approved, the deal would ease federal oversight of the world's largest crypto exchange, though Binance would still need to adopt stricter reporting requirements and remains subject to a separate monitor from the Treasury Department's Financial Crimes Enforcement Network. The DOJ has recently ended monitorships for several companies as part of the government. of a broader review of the practice. News of the potential change sent Binance's B&B token to a record

high of over $1,000. Former CEO Changping CZ, Zhao also updated his ex-profile to read simply Binance, removing the label X Binance. Circle expands to hyperliquid. Circle has launched a native version of its USDC stable coin on the decentralized exchange hyperliquid. The rollout includes Circles upgraded cross-chain transfer protocol on Hyperliquid's HyperEVM, aimed at making USDC transfers more efficient across multiple blockchains. Alongside the launch, Circle confirmed an investment in Hyperliquid's native hype token with on-chain data showing a $4.6 million purchase. The company is also weighing a role as a validator on the network.

Circle wrote on X, This launch is the first step toward enabling USDC deposits into Hyperliquid's spot and perpetuals exchange on HyperCore. If the platform shifts its $5.9 billion in USDC collateral into USDAH, Circle could see a reduction of roughly $200 million in annual reserve income. Ethereum Foundation creates AI team. The Ethereum Foundation has launched a new artificial intelligence unit, known as the DAI team, to integrate AI with decentralized infrastructure.

Led by Ethereum researcher Davida Krapis, The group aims to position Ethereum as the settlement and coordination layer for autonomous agents that can transact and cooperate without intermediaries. A key focus will be advancing ERC, 8004, a proposed standard that would allow AI agents to verify identity and reputation on-chain, giving users more transparency when interacting with bots. Krapis said, the more intelligent agents transact, the more they need a neutral base layer for value and reputation. In related news, Google unveiled a new AI-to-AI payment system that includes stablecoin support, developed in partnership with Coinbase and over 60 other firms,

to power seamless transactions between autonomous digital agents, Manero hit by 18-block reorg. The privacy-focused blockchain suffered an unusual network disruption on September 14th, when 18 recently processed blocks of transactions were replaced by a competing chain. The incident effectively erased more than 100 transactions and left them unconfirmed for about 40 minutes. Reorganizations, or reorgs, happen when two versions of a blockchain compete, and the network switches to the longer chain. This can undo payments that users thought were final, raising the risk of double spending. Manero researchers advised users to wait longer than the usual 10 confirmations before treating transactions as secure.

Some community members accused the mining group cubic of exploiting the system with a tactic called selfish mining, but its founder denied responsibility. Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Oranovich, Margaret Curia, and Pam Majumdar. The weekly recap was written by Juan Aranovich and edited by Stephen Erlich. Thanks for listening.