✨ DEBRIEF | Ryan & David unpacking the episode:
https://www.bankless.com/debrief-eth-2024
—–
2023 wasn’t great for Ethereum… from a price perspective. But it was fantastic from a building perspective.
Where does Ethereum go from here? What does 2024 have in store for ETH the asset and Ethereum the network?
Anthony Sassano, Mike Ippolito, and Jordi Alexander join to give a high level overview of the Ethereum ecosystem. The problems, the solutions, and the future.
—–
🏹 Airdrop Hunter is HERE, join your first HUNT today
https://bankless.cc/JoinYourFirstHUNT
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——
TIMESTAMPS
0:00 Intro
6:13 Ethereum in 2023
17:40 ETH as Money
24:30 The Internet Bond
30:00 From Execution to Settlement
37:40 Inside vs Outside Crypto
43:20 Restaking and Data Availability
1:10:00 Layer 2s and Modularity
1:23:00 Fragmentation
1:33:15 Decentralization
1:46:50 Wrapping Up
1:51:00 ETH Price Predictions
——
RESOURCES
Anthony Sassano
https://x.com/sassal0x?s=20
Mike Ippolito
https://x.com/MikeIppolito_?s=20
Jordi Alexander
https://x.com/gametheorizing?s=20
——
Not financial or tax advice. See our investment disclosures here:
https://bankless.com/disclosures
You guys are all bullish for different reasons like Jordy was was bullish because of layer 2os and uh Community money Anthony is bullish Because the Internet Bond and ethereum is a settlement layer Mike was bullish because ethereum has the potential to export its validator and Staker Set uh
To the world and receive yield on top so there’s just a lot of reasons to be bullish on eth going into 2024 especially when it’s had a 2023 let let let’s face it kind of a mediocre year compared to other crypto assets and so this is the question that everyone’s
Going to have to decide for themselves going to the next year is ethereum being squeezed between these two sides or is it actually starting to push its competitors uh to the margins by being a bit more more more generalized welcome to bankless where we explore the frontier of Internet money
And internet Finance this is Ryan Sean Adams I’m here with David Hoffman and we’re here to help you become more bullish on ether oh is that what we’re doing here yeah uh David you made me change the title to Ethan 24 I wanted to call this bullish eth in 2024 but uh
Same and then you came in with a bull statement and that’s what this episode actually is um 2023 for ethereum wasn’t great from a price perspective it was fantastic from a building perspective it felt fantastic from a fundamentals perspective but what’s going on with the narrative we have three panelists today
To talk about the case for eth in 2024 we’ve got Mikey Belo Jordi Alexander and Anthony Sano and I really like this panel David because they’re not all hyper eth Maxi Bulls right right they’re like just one of them they’ve got yeah and they’ve got some sobriety with
Respect to ethereum and they all have different takes and you know they went back and forth and there was some debate and at the end of this episode I walked away with just like a really strong feeling of uh what the catalysts are for uh eth and ethereum going to the next
Year I I think that’s exactly right previously we’ve done this show format with Anthony zazano DC investor and then like Eric Conor orus Jessi people who all I think are in agreement about the articulation for the bull case for eth asset uh in a vacuum I would say whereas
Mike and Jordy understand that ether and ethereum is not in a vacuum there are are other networks there are things to be pragmatic and realistic about and so bringing these new alternative perspectives who they’re all bullish ether uh Mike and and Jordie also have other assets uh but they’re also bullish
Ether and so these more diverse uh perspective into the uh conversation about where is ether’s position in 2024 what is its role why will people buy it what does it do uh how is it positioned inside of the world of crypto I think that is something that uh I think just
Generally crypto is is interested in and pequ by because it feels a little lost in the last quarter straight out if you hold eth you’re going to love this episode if you don’t hold eth you’re going to love this episode uh this is a fantastic episode for you to to evaluate
This this asset in this network at the beginning of the year and that’s why we brought it to you on the first of the year and of course David and I are going to be recording a debrief which is our episode after the episode David I’m
Hoping that we get a little more bullish in that debrief I want to hear your takes on ethereum uh as well and uh your your takes on what we discussed uh during the episode guys we’re going to get right into the conversation but before we do we want to thank the
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Foundation Mina foundation and many more you can learn more about how toku can help you streamline your token management and get started for free visit toku at tok.com bankless or click the link in the description below bankless Nation we are super excited to introduce you to our next guest this is
The eth bull episode but honestly these guests are just coming as they are I don’t know what their opinions are on eth except for Anthony San op I know what his opinion is but we’ve got a Brain Trust here and we’re going to talk about ether ending 2023 and going into 2024 we’ve
Got Mike iolo he is the Relentless podcaster from blockworks how you doing Mike howdy fellas glad to be here doing well we also have Jordie Alexander he’s the chief Alchemist at mantle and the CIO of selini Jordy what’s up man good I’m excited not to be the bear for once
I don’t I don’t need to play that role yeah well the last time you were bear really bad things happened for for the networking question let’s hope that doesn’t happen for ethereum today uh Anthony Sano the infinite creator over at Daily guay how you doing Anthony I’m
Doing well I’m glad I don’t have to be the bear either today are you ever the bear anthon never the bear ever I may not on ethereum of course but certain other things yes well well let’s start with you then Anthony so let’s talk about ethereum um so ending 2023 if we
Kind of zoom out eth was up what like you know 70% from 1200 January 1st to 2200 as of today and by the way for Bank list listeners we are recording this pre- holidays okay so the date of recording is December 22nd the time by the time
You will hear this this is our first episode of the year so a few things could have changed I know Anthony’s been looking at the two-hour charts and uh eth is looking a bit more bullish on the 2our so things could have changed but that’s the context under which we’re
Recording this but Anthony tell me about 2023 because Bitcoin was up 2x you know eth just like am measly 3x excuse me eth was just like am measly not even 2x uh salana of course uh 6X on the year there’s been a massive narrative shift uh for myself personally I I almost
Compare this not to uh Ethan 2020 but almost Ethan 2019 in terms of like the narrative sentiment for ether the asset and ethereum the network being at some kind of local lows I don’t want to say alltime lows because things have always been wor like there have been times
Where things have been worse recap the year for 2023 how are we looking uh on the ethereum front from your perspective yeah I think 2033 has been a really interesting year it has basically challenged everyone’s beliefs I think doesn’t matter if you’re in the ethereum camp or in the salana camp or the
Bitcoin Camp I think a lot of interesting things has happened have happened across the board uh you know we had 2022 obviously we came off that and that was a pretty brutal year across the board I mean there were so many things that collapsed the crypto lending Market basically collapsed completely all of
The main characters from the last cycle are now either arrested in prison or you know still sticking around like cockroaches somehow but you know most people got kind of wiped out and then we entered 2023 uh the narratives of 2021 and and 2022 we’re all kind of like old
And and and defeated at that point and I think that if I’m looking back on on the whole year collectively as I said you know just before uh we’ve had a lot of different kind of shifts over over the whole year and we’ve basically challenged all our all of our leld
Beliefs and I think ethereum is at the center of that right where ethereum has been and continues to be the the PowerHouse of of crypto you know so many things happen on there everyone talks about it whether you hate it or love it you know it is the thing that everyone
Kind of talks and thinks about but over the last few months in particular right we’ve had the uh you know salana recovery basically where you know the obviously the prices went up of of soul and other assets on there but also the network started getting usage and then
Of course the sentiment shifted greatly in I guess the ethereum community and the salana community around that but whenever I look at these things I kind of look at the Timeline that it’s happened in and why it’s happened I think that uh a lot of sentiment in crypto is definitely dictated by what
Prices do right the narrative follows the price so if the price is going up on something suddenly it’s like the best thing ever and if something else is lagging that’s something these just just uh gets made fun of a lot you know memes get made of it but you made a joke
Before how I was looking at the 2-hour charts I mean we were recording this and eth and some L2 tokens went up over the last few hours in price and suddenly everyone’s now a bull on ethereum and L2 tokens like literally within a matter of hours so I think that if you’re
Ingesting content from like Twitter crypto Twitter exclusively your entire mental model of this industry is going to be very warped I think and you’re going to sight of of the bigger picture so I think that uh just to round out I guess what I was saying here is like if
You’re going to let your your I guess thoughts be dictated by that by the short term uh you’re going to get Whiplash and you’re going to get whipped around a lot and I don’t think that’s a good way to approach the industry I think that there’s been a lot of good
Stuff that has happened over the longer term I think that there are certain ecosystems positioned for really you know strong long-term kind of growth now uh but at the same time things get ahead of themselves so absolutely completely and and people calling ethereum dead when eth ethereum layer one and layer
Twos are at all-time high usage across the board uh is just utterly insane to me and just speaks to the fact that the narratives have followed the price and because eth has relatively underperformed everyone suddenly became bearish on eth which I think is more of
A a trade bear kind of thing not a fundamentals bear thing and uh it just depends on who you’re following and who you’re listening to really yeah as we are entering 2024 everyone assumes that there is a bull market going on and I think we’re more or less all in
Agreement that there is a bull market happening and I just see a lot of chips being shuffled around and that’s really kind of defined the activity in Q4 or so and all that conversation about how and where chips are being placed is happening on Twitter and more conversation is happening than actual
Chips moving because that’s just the perception I would say m as we’ve wrap up 2023 and entered 2024 like just overall how would you characterize like a like why why the narrative is what it is and how important the narrative actually is because the narrative I would say mostly happens on Twitter and
Like overall anything else you want to add to just out the placing of ethereum in in Q4 2023 yeah I I have some longer term thoughts on eth’s narrative moving into 2024 but I would just say I agree with what Anthony said that the narrative tends to follow price so price is what
Leads and then we all infer quite a bit from that I I would also just say that in in some senses what’s playing out right now is actually relatively typical and what you might expect um from a blockchain cycle and what I mean by that
Is if you rewind the clocks back to 2019 2020 you know usually what happens at the end of a bear cycle going into a bull cycle is actually Bitcoin dominance tends to Peak and Bitcoin tends to lead so if you’re around in 2019 and 2020 you saw this really typical pattern of uh
Sort of Bitcoin Bitcoin leading and then eth would kind of follow and then of course eth overtook Bitcoin by the end of the year so people pointing towards Bitcoin outperforming eth this year as some sort of evidence that people aren’t going to want eth I just think that’s that’s pretty misplaced and that’s
Relatively typical and not something that folks should be worried about um I think what’s throwing people off a little bit is this more idiosyncratic thing that’s happening with salana frankly um which is sort of a mini defi summer I think I’ve seen that analogy get placed a lot and that’s what I sort
Of think it is too there was you know salana went through a lot of hardships with the the fall of FTX it probably fell more in price than it than it actually needed to and what you’re seeing now is sort of a rebalancing which is I think confusing some folks a
Little bit and actually if you go back in time I was listen I I’m probably one of the only people out there that loves to go back and listen to Old podcast that I like to get a sense of what people were talking to at the time and I
Actually went back and listened to some old bankless podcasts that you guys were recording um in 2020 how they up well but there was a really interesting narrative that was actually going on back then which was this barbell Narrative of Bitcoin and defi uh that was happening during defi Summer
And the thought back then was well maybe you only want to hold Bitcoin for your sound money um and defi is just a high leverage play on eth so why would you hold e there’s going to be this this sort of barbell strategy and time is a
Flat circle and I feel like that’s probably the place that we’re at in the current in the current day I remember when that narrative was in Vogue and that narrative Ended as soon as eth ripped from $400 to over ,000 and no one talked about that narrative anymore is
This is the what what is the barbell in this narrative Mike is it Bitcoin plus salana basically yeah Bitcoin plus salana and and to be clear I think salana has a really bright promising future I just think people tend to you know fit narratives around recent price
Action and I I see a bright future for all of these ecosystems and yeah ether is not Not Dead by any it’s funny I’ll give you a sense of that barbell take this is from udy this morning jumped into my timeline so of course I had to
Retweet it under under my eth is dead kind of like thread that I’m compiling here he says Bitcoin for high and luxury digital Collectibles of course because you know Wizards and salana for day-to-day degeneracy ethereum for what mental illness question mark That’s A Taste of the narrative right
Now Bitcoin and you got salana and then ethereum is kind of crushed in the middle it’s not just it’s not just dudy it’s and people like Ryan selus and his predictions are like hey you know um bit ethereum is getting squeezed between Bitcoin and salana right now these these
Fast High TPS uh chains um the folks at vanx said something similar that seems to be the narrative what’s your take on all this discussion so far Jordy yeah so uh last time I was on was actually around the merge and I would say I was a year early um exactly what I
Was saying was that ethereum has a huge problem it’s stuck in the middle you have Bitcoin as like the better hard money on the one side and then you have you know the cheaper chains kind of faster chains on the on the user side so if you go back literally one year ago
This this was like very laid out the good news is I’ve kind of like taken like a much more positive tone in terms of where we are right now so going forward you you know if we look at this in a year from now um there’s a couple
Like very positive things that I I see about ethereum right now apart from the fact that everyone’s already capitulated the whole timeline is just crying about underperformance but but but that aside so um you know we have seen this play out but ultimately like in my mind
Ethereum has a few like massive things going for it one it’s already in that sort of top two Breakaway Zone where it is an institutional asset it will get an ETF people can like legitimately treat it as you know a Lindy asset and that’s massive that’s huge like it’s hard to
Underestimate how big that is I think what’s happened to ethereum lately is we’ve had like Celsius selling this is apparently been going on daily like thousands of ether just kind of being sold off and I completely agree with Anthony like price in the short term just dictates that’s the narrative right
So it’s underperforming because because there’s more sell pressure but in the meantime you know soon enough you will have Bitcoin sell pressure because you know you do have government coins and you will have ongoing salana cell pressure and here’s like the key thing I want to get to ethereum is not base
Money in my mind but it is community money and it is the best community money because it is very widely distributed there’s no VC unlocks going to be going on for the next 5 years if you look at salana March 2025 it’ll that’s the reason why I don’t hold any salana
Because I’m not going to play around the March 2025 like you know a huge unlock that’s happening theum doesn’t have that so as a community money and we can get into that later I think ethereum is fantastic well unpack that definition Jordy you said base money versus uh
Community money why isn’t eth base money and why is it more Community money yeah I mean so like me and Michael have gone into this in the past but uh so I think that you know in terms of the gold uh narrative Bitcoin is has the the storyline you know it was
What was created for this purpose it’s it’s just like it’s like if you’re a Christian you understand like the the power of like this this Immaculate Conception right um ethereum is the first smart contract money it is kind of based around activity and socialness Bitcoin if
Nobody uses it and it kind of sits there it still kind of works ethereum requires you know the innovation and the apps and everything else Community really needs it and being the first Community money that doesn’t have unlocks um it’s a new form of money it’s not something that’s
It’s not easy to do when you have Fiat because Fiat is within a geographic Zone this is like an internet money so um it’s a little bit different it’s not it’s not as pure as like a base money but it’s very powerful as well I uh I I sometimes wonder about that definition
Whether um base money is just scaled up Community money and your community becomes like a whole bunch of Institutions and governments and bankers in that way but but I’m curious actually Jordy and this is a quick Sidetrack we’ll get back on ethereum in a second I
I’m just curious do you think that other layer one uh tokens essentially uh currencies cryptocurrencies are contenders to become community money as well is that just a path that maybe salana is going to go down or other chains Beyond ethereum are going to go down yeah they they can um I think the
Characteristics this is like so early no one talks about this and I think over the next years we’ll have more people talk about what is good and bad Community money in my mind the worst kind of community money is the VC money where you just kind of get people
Dumping on you you know for years every month that’s really bad um so that’s that’s a huge thing and with salana specifically you know there is a community aspect clearly like these people have gone through a lot and it’s like this like Phoenix rising and so it
Has this this community buzz but even Anatoli himself he says if you look at his tweets recently he says I don’t even want salana to be in the top 99 coins I would just want apps to be there salana is kind of can be like number 100 it’s
Not meant to be money he’s kind of like talking long term maybe it’ll it’ll ACR some value but the fees are low it’s meant to be used as a platform and in my mind it’s sort of like a meme coin and people get very upset in the salana
Community when I when I say soul is a meme coin but it is it’s just a better kind of version of Bonk because it’s it’s kind of more widely no you’re making everyone mad Jordy stop no because the founder is not saying it’s money so it’s not on the left side
And there’s no there’s no fee acrel you know at least for the next 10 years like you know we’ll see what kind of stuff comes up in 10 years but so it’s not money right it was I was talking to Anatolia a couple earlier this week a
Couple days ago and it was interesting we talked about Soul as the unit of account which he just had no interest in and he was actually like inviting ether eth to be the money inside of salana not not in shining ether any above any other
Like unit of count it could be BTC it could be eth it could be usdc uh but he was like yeah sure just like coming it’s like other things can be money on salana and I was like that my mental model doesn’t compute with that for like layer
One chain so it’s just such an interesting found like found like layer one philosophy of how these systems are built tried that too I remember when was going down that path um for sure so I want to um I I was eventually going to build to this as well but Jordy it’s
Interesting because I I also sort of saw that as a potential issue for eth going into 20124 about this like trying to compete with Bitcoin and maybe to say the slightly more negative part but build to the positive uh going forward is I I’ve never liked the ultrasound
Money meme um and the reason I never liked it is because I feel like Bitcoin won that spot um and if you talk to people in trafi it it’s just very clearly like okay Bitcoin is this this sort of money thing but you know if you
If you look at money or talk to people in trafi that study money you’ll find that there are many different types of money that exist out there and it’s actually very difficult to even Define what money is so even within the us we have this sort of definition of m0 M1 M2
And there are different types of money for people and Banks and other sovereigns and it depends where you deposit that money is it in the US or is it if you do you deposit it outside of the US and is it a euro dollar and it
Gets actually like the more you look at it the more complicated it actually gets and there are different philosophies around money as well and because Bitcoin was the first essentially app chain that tried to be money um it was based off a very specific philosophy of money which
Is Austrian economics and we all got inculcated by this idea of sound money and that’s the only way uh to protect your wealth right and everyone in crypto has seen the chart of the dollar going down over time and 98% of your your wealth got destroyed if you held dollars
Well there was actually another way to protect your wealth over that time it was better than holding than gold it’s called staking your dollars that’s that’s bonds uh right that’s yield bearing money and yield bearing money actually outperforms gold bonds are a much larger asset class than gold and
Actually most people in trafi don’t own gold because it has this massive mental hang-up with people that it’s not productive right if you if you if you’re a gold bug and you’ve tried to talk to people about getting gold in their portfolio you’ve heard this over and
Over it’s not a productive asset those are the people that keep saying gold is just a meme right theor yeah yeah yeah it’s a barbarous relic is what Paul T Jones calls it right and it’s a very specific type of person that wants to hold it and trade it over a long period
Of time and it’s actually a limited market size what is an extremely large Market is the market for yield bearing money and that is where I’ve always seen eth sitting and having an extremely unique and very interesting Advantage internet Bond Mike you like that M yeah
I love the internet Bond meme I I love that me I was like this makes so much sense to me and eth has these really you know all these l1s we created this new commodity called block space and we’re still figuring out the proper which properties of this created block space
Mak uh make sense for which use cases but I’ve always seen eth as kind of like it’s one it’s more useful than Bitcoin right we haven’t tried to like make it so useless that it can only be this hard form of money it’s not as performant maybe as something like salana but it
Sits at this very interesting intersection where it’s still a monetary money- like asset but it can do more things specifically be productive and get yield and that to me is like a very interesting Niche that I would love to see it’s not even a niche it’s the
Largest market in the world that I would love to see e go down so this idea of maybe kind of maybe we’re getting into a little bit of the the bull case there’s there’s still some I think fud we need to talk about but let’s let’s dip into
The the bull case for for just a second here uh and throw it to Anthony maybe this idea of um eth as an internet Bond as a productive asset that can be used in other chains uh to power other applications I know there’s been a lot of uh just I would say latent
Conversations like sitting in the background about reaking and enan layer and that kind of thing what’s your take on this internet Bond Meme and this property of um eth as a yield bearing asset uh collateral maybe going into 2024 do do you think that is powerful do
You think that is something that can Resurrect The Narrative power and actually fundamentals of eth I mean I think that is the biggest narrative and meme that we really have within the community and to go back to what Mike was saying about you know him not liking
The ultrasound money meme I think in the ethereum community we have this tendency to create these Insider memes that just get out of control right I always felt like the ultrasound money thing was an Insider ethereum thing that we made for ourselves to poke a little bit of fun at
Bitcoiners right but of course memes have take on a life of their own and they go way crazier than you think they’re going to go and we’ve done this with other things right with like the ethereum alignment meme like that just is not anything that should be taken
Seriously it is an Insider thing that we talk about um amongst ourselves but because we do it publicly and because we speak about it on Twitter and podcasts and because it’s easy to poke fun at right the ultra sound money memes easy to poke fun at the alignment stuff is it
Just goes much further than than we can basically uh uh can control and that leads to bad narratives forming that leads to people making fun of ethereum and I think that’s why ethereum is always kind of uh in that spot and and I will agree also with the earlier points
Made around the fact that ethereum has always sat in the middle I think between Bitcoin on one end and all the other layer ones in the the other end because ethereum is competing with all of that or at least tries to like I think eth is competing with BTC um you know people
Disagree with me on that but I think it is and obviously ethereum as a platform is trying to compete with the other layer ones as well but I think uh you know over the last couple years ethereum’s competition as a platform has actually shifted to the l2s right
Because we we’re using the l2s as kind of the execution layer and L1 as a settlement layer so we’ve shifted that but that is a thing that’s going to take a while to play out because we’ve now shifted basically Bally uh what ethereum
Was to what we want it to be and what we think it’s it’s best to be but that takes time for the network effects to catch up for everyone to understand that for all the complexities to be abstracted away right like the inoperability and the fragmentation those sorts of things they’re all going
To get solved they’re all just engineering issues to me but you know over the short to medium term they’re not going to get solved they’re not going to be seamless and that’s going to be a a narrative point for not just uh the other layer ones to hit on us about
But also for the bitcoiners as well because now they have things like ordinals and now suddenly they’re incentivized to pump order and say oh we can do nfts on Bitcoin now we don’t need ethereum so ethereum is always in this kind of Middle Ground where uh everyone
Around us basically is competing with us and I wouldn’t say they hate us but they’re going to obviously not talk favorably about ethereum if they’re trying to promote their own thing um and I don’t think that’s as I said a new phenomenon it’s been around for a while
But I’ll so go back to the point around eth being that kind of Internet Bond uh and and appealing to those more tradire folks I I I’ve heard this from a lot of people honestly and a lot of smart people have said the same thing that yeah trfi is obsessed with yield you
Know in crypto I don’t think people understand how obsessed trfi is with yield because in crypto people look at yield like ah I can get 5% on my eth or I can go dejen into this dogcoin and make 100x right because it’s just like a lot of Deens that are crypto natives U
But there are a lot of people who care about that yield I mean there is a lot of eth staked uh and I think people look at the amount of eth Stak like oh it’s not as much as other chains and it’s because e is used for much more than
Than staking but of the E that he staked they’re earning a real yield from obviously there’s the inflationary rewards but then there’s the real yield from the network activity right the me and the tips that are going to these stakers so people are using uh this already within within crypto but I think
Yeah as I said like crypto natives tend to vastly underestimate how popular yield is in the tradire well and just for everyday people you know everyday people don’t want to be a Deen and don’t want to sit on their computer throwing money at random things and hoping to
Score it big right uh and you know people do that in in real life like in casinos but it’s not like in every everyday thing you don’t you know most people don’t go to the casino with their life savings and like I’m going to put a
You know I’ll put it all on black and we’ll see how we go but yeah there’s that disconnect but as we progress into 2024 as we get the ETF right as e eth continues to integrate with the traditional Finance system and becomes kind of that that asset that Breakaway
Asset as um as it was put before where beta and E of the only things that are there right now uh uh eth is stands on its own uh because BTC doesn’t offer a yield right because it is proof of work so e really stands it on its own in that
Arena uh and I think that is a huge narrative that we actually need to be leaning into more because I feel like a lot of ethereum natives they’re stuck in like the Crypton native uh uh uh memes and narratives and they’re forgetting about the fact that we’ve actually
Graduated from that it’s like we’re still thinking we’re in high school but we’re actually in college now and we should we should be focusing on that we shouldn’t be trying to impress the high school kids we need to impress the college kids right so we’ve actually
That’s that’s that’s a problem I I I I I will actually say is that we we we’re still stuck trying to in high should be in college with Anthony I see you as one of um ethereum’s most effective Educators and and communicators uh really and I’m wondering if you could
Talk a little bit more about kind of that that narrative because here here’s maybe um kind of a setup uh that I have or an idea I have I think that um we are stuck in high school and ethereum narratives are stuck in high school and I think that um basically memes have
Sort of a shelf life to them and ultrasound money was fantastic IC coming out of like 2019 2020 where the popular narrative was eth is gas and has no monetary policy right but like maybe its shelf life has kind of expired and maybe the ethereum community needs to move
More towards this internet Bond type of motif but I’ll tell you something else that I I see is happening in the background is uh ethereum itself has shifted from an execution chain to a settlement chain for other chains and that is totally different than other
Points in the cycle so one of the things that I’ve seen is basically when somebody comes into crypto used to be 2019 2020 they want to use some cool defi stuff their first spot is the ethereum main net right they spin up metam mass and they start using the
Ethereum main net now that’s no longer the case all right and people in the ethereum community wouldn’t even Point them to main net people in the ethereum community would be like go pick your favorite L2 and we’ve got arbitrum and optimism and polygon and CK sync and all
Of these different brands and names so there’s kind of like some some fracturing it seems like then also I think I’ve underestimated previously as an eth myself the effect of somebody coming to a chain and then they just buy the local asset of that chain why not
Necessarily for use in gas they’re just like this this shit’s cool I want to own some of the Native uh token of this protocol and they’re no longer doing that on ethereum because when they get to ethereum they see a $30 gas fee and they’re like what is this like what is
This I I’ll go to to salana and I think previously I have underestimated that effect so this is part of this there there’s a two-fold pivot here there’s one it’s the pivot of ether moving from kind of like an ultrasound money type of motif to an internet Bond type of motif
And I still want to talk about how that plays out in its maximum form in 2024 but there’s also a pivot on the network layer of ethereum moving from a an execution layer for end users and it’s really let’s call it what it is it’s now
It’s a whale chain now it’s a settlement layer for other chains effectively can you talk about that and reflect on on that pivot do you uh do do you see how that’s been harmful uh over the past few months with with respect to eth’s narrative and different than it has been in the
Past yeah yeah so there’s a there’s a few things to unpack there I think that the first thing I’ll touch on is that kind of uh shift in in narrative around kind of ethereum and and that kind of shift from ethereum being the execution layer to to that kind of settlement
Layer there right where essentially as you said people no longer go to the ethereum main chain uh because I mean one no one’s going to tell them to go there because unless you’re as just said a whale or someone that can afford it uh which is not most people they should not
Be going there and at the same time if we want to uh make ethereum a chain of chains or a settlement layer for other chains then we should be encouraging people obviously to go to those l2s um and and then you spoke about like people buying the native asset of those of
Those kind of chains that they go to whether it’s an L2 or something else and I actually wrote about this a long time ago in my newsletter and I called them shelling Point assets so you know you have a shelling point of that ecosystem
So if you go to Sal you buy soul right because that is even if it doesn’t even make any sense from an investment perspective it doesn’t matter right you’re using salana you buy soul not just to obviously pay for fees the fees are really cheap so you don’t actually
Need much but you buy it because you’re like oh well I’m on salana I’m having fun you know this seems cool I’m going to buy soul because if salana does well I think Soul’s going to do well right or then you know you go to these l2s but
The l2s I think are a little bit different I I I think the l2s are using like ether’s gas right they’re using for gas fees they’re using ether’s money ether’s like the base money asset of that ecosystem to use as collateral it’s accepted everywhere in all the defi apps
Right so e is still seen I think as the the shouting Point asset for those ecosystems but then it becomes that kind of open question around okay well what happens when these l2s start using their native token as gas like I know David had a tweet the other day about how
Stark net is actually going to be using St their Stark token as a gas token okay then do people suddenly think to themselves well I should just buy Stark because I’m using it as the gas token and it’s it’s it’s the shelling Point asset for this ecosystem but then you
Can go even further down that curve and say well in and in the end everything’s just going to be able to be paid uh so you’re you’re going to be able to pay for gas fees and really any token it’s just going to be abstracted away from
The end user so uh people will probably pay mostly in stable coins at that point because that’s just the most obvious thing for you to do if you want to pay for fees you’re not going to go speculate on some token you’re just going to buy stable coins have them in
Your wallet and you’ll pay for fees that way so I think that it’s there’s a lot of open questions around that about okay what asset are people are going to buy when they go to different chains and it was said ear ear that uh in in salana
They’re not even viewing Soul as kind of money or as like an asset that should even ACR value at least the founder isn’t I’m sure a lot of the people on there are as well so I don’t actually think we have answers for those yet
We’re just going to have to see how it plays out in in the coming years but I still think that the strongest uh point is that if the asset is used as money within that e ecosystem it doesn’t have to be necessarily used as gas fees because as I said that that’s probably
Going to be abstracted way but it’s used as money in that ecosystem within defi as collateral obviously e is collateral because it has a really high market cap it’s accepted everywhere you know it’s good liquidity profile all those sorts of things so I think that all plays in
On of it in of itself uh and what gives eth obviously a lot of strength and a lot of staying power and people want to hold eth as well because they’re using it in in that way even if they aren’t using it for to to pay gas fees and on
The L2 Point as well like even if you’re not using it to pay gas fees you still have to settle to L1 which does use eth to pay gas fees which goes back to we were saying you know ultrasound money it makes e deflationary those those sorts
Of properties and on that note as well well there was one other thing I wanted to say before about how um you you said that we maybe should move forward from the ultrasound money meme and I actually agree with this because we know we we made up this meme in like 2019 2020
Because we wanted to prove to the world that eth was a investable asset we wanted to prove to the world that eth was a strong asset that it would ACR value and that it wasn’t just some shitcoin that you know had its cycle and now no one’s going to buy it again but
We don’t have to prove that anymore even though the narrative over the last few months has been bad for ethereum and eth right I mean eth is still almost almost a $300 billion do asset I mean if you want to do market cap comparisons here eth can double and like could dple or
Triple Solana’s whole market cap from just from just doubling right and Sol has already done like a 10 10x or whatever from the bottom if you want to do relative comparison so people tend to forget just how big eth is as an asset obviously it’s not as big as Bitcoin but
Because it’s that big as I said I don’t think we need to prove that anymore so we can move past that and and as I said before we can graduate to now okay everyone knows that eth is a is a great ass not everyone but like people
Generally believe ether is a great asset it’s investable it’s it’s number two uh and it has all these interesting properties so what do the the the new money what are the new money interested in what is the new money interested in the money that’s going to be coming in
Via the ETFs and stuff like that well they’re interested in yield okay so let’s start promoting that instead of falling back on ultra sound money which literally means nothing to these people at all like even like it means absolutely nothing right so that Meme is
Not going to hit with them at all uh and uh and I think even the the term sound money isn’t but yield right yield is going to hit with them yield everyone knows what yield is all right so we so we got to do an episode with Justin
Drake and ask him to Rebrand to internet money or internet’s not gonna like me if but I just said that sorry dtin I do see us falling back the line between inside of crypto and outside of crypto I think is is worth to reconsider every time we have a part of this
Conversation because um bull markets are times in which people come inside in crypto and everyone gets really chainy like they love touching the chains they love like like yeah they they they open up the hood they see what’s inside they’re like really curious but really the bull market for crypto at large is
To not necessarily have that behavior like getting crypto people to become crypto people is not the bull market for crypto it’s to get crypto into the internet in this invisible fashion and so there’s like this inside crypto which is crypto Twitter which is dog tokens which is you know touching the chain
Having a handful of wallets you know you fighting on the narrative on Twitter and then there’s like the rest of the world who are just using apps and then sometimes there might be like crypto under those apps and they don’t really care either way and so I do want to like
As we move forward in conversations remind us like when we are talking about outside crypto and when we’re talking about inside crypto because I think it’s outside crypto that’s really the Golden Goose here outside crypto is really the the big thing to win Jordy as we’ve been going on through these conversations a
Do you agree with that sentiment and and B just what what do you want to add to the conversation thus far yeah I agree with some of it so um I guess I’m not as kind of gung-ho on the internet Bond meme either I would say
That I agree that yield is good for trafi and it’s it’s mainly because like that you want those like middlemen like the fidelities and the black rocks and the sales you want them to be able to sell something extra and maybe like you know you get eth but they’re the ones
Taking it and they’re keeping the yield like trafy kind of needs those ways to generate some extra fees and I think that type of existence is good um I don’t know that it’s that sexy to be like oh this is like a bond internet Bond maybe for like some Boomers you try
To get them to diversify into eat the Boomers have the money they do have the money for now yeah eventually like us Millennials will will get a chunk hopefully um I will say that you know the yield is not even higher than treasuries right now unless you’re uh
You know buying meth which which has a higher yield but uh for normal eth I would say buying meth let’s let’s be clear we’re talking about a token here why guys listening are uh maybe not want to know aboutt that’s mantle eth folks all right a holiday episode
7.2% uh so uh I I do agree about one thing very heavily I think the the L2 um like ecosystem that’s what’s made me bullish on E it because it changes everything I was always a like multi-chain guy because I I love incentives I think about Game Theory a
Lot and I love incentives and I think that’s what drives the world is like incentives in Game Theory and when you have like different chains it allows different use cases and different ways to incentivize people and you can kind of perfect different things and I think l2s allow that now we didn’t have
That before when it was like this kind of like you know one monolithic e that’s it um now I really like the fact that you know you can have an L2 that’s focused on gaming you know immutable or you can have one focus on defi like
Mantle you can and then you can use the native token it’s obviously not for security because that’s ultimately you know you’re paying gas to eth that’s always going to be the case but you’re you’re using the native token for incentives and that allows like all these little ecosystems and if eth is
Kind of like the security layer that’s like so powerful for an Community money use case which I think is very very strong um One More Story so like like I said I I used to not be as as bullish before the L2 thing came out so in 2021
I was stacking salana I bought like a ton of it at $20 and and just staked it and rode it up to 300 I went to breakpoint and at that point I I had like 80% of my net worth in Salon it had gone up so much and had just kept all of
It and it was staking and all this stuff and I had made multiple Australian Mansions of of salana money and I was like feeling good about life I’m like I have the right this is like a good money right and I I remember sitting in a car like going to one of
The parties and everybody was starting to play this clip from all-in podcast where all these billionaires are sitting around talking about how like oh I got a billion I got a billion I got it at a discount I’m holding it is like this like shamas thing just changed my world
I slept at night and I woke up and I’m like a I’m I’m selling all of this because I’m not gonna wait for like Chamas to wake up one day and like dump it all on me why why you felt like the sucker there yeah I I feel like this is
Not a reliable form of me to store my wealth in like this is like 80% % of my net worth it’s not going to be like a joke billionaire who like got it at a discount and then you know Anatoli is very like I’ve had interactions with him
On Twitter people can go find where he just like he doesn’t get it he’s like oh it’s eventually in the long run it’s all going to get distributed so it doesn’t matter that like you know it’s very concentrated right now the VCS have it or whatever because in the long run it’s
Just it’s just going to go out there and but like no this is there’s like Canon effect you don’t understand like things like of like you know being close to the source of money and how powerful that is and it changes like the entire Dynamics I think ethereum had that issue maybe
Like you know people can definitely criticize the early days and you know Ico etc etc but now we’re like a decade in everybody it’s kind of distributed very widely and there’s no kind of unlocks I feel more comfortable having like money like having my net worth some
Of it like a good a chunk in E Jordy let me just follow up on one thing because this has been a definitely a source of fud against eth which is basically the idea that layer twos are bearish for ethereum why because it takes uh users
From the L1 to this diverse ecosystem of l2s but I heard you just make the opposite case you actually said that this diversity of layer 2os was was bullish I’m wondering if you double down on that why why is that so bullish for ethereum and then maybe in particular e the
Asset yeah I mean the reason I love this episode is because you know me and Anthony are very like he’s he’s the Maxi I’m definitely not a maxi of anything know by by my nature but we agree so much on some on some like key key parts
And the one that I agree with Michael as well I think the the kind of more like Bitcoin Direction that’s that’s where like eth should go and not like the the casino Direction first of all even right now if you take 300 billion as a market
Cap and you look at like how much the the gas you know it’s like one or two billion we talked about this in the past the p ratio is like 100 200 it’s a very high p ratio what that shows is there there’s potentially like another source
Of like you know premium and it’s not the the gas fees that are being burnt it’s the fact that like there’s a a shelling Point coordination that’s going on that’s very powerful and I think that’s ultimately like where eth will Thrive and do really well and so the l2s
Yeah maybe like you know they’re taking away some of the gas you know people might not even want to use it for data availability and you know we have Celestia Ian lay all this other stuff it creates a better user experience and maybe you get more users that way and
Maybe it’s a better Community money and it’s a better shelling point for that first thing and not so much necessarily you know maybe people don’t want to pay for data availability on on E maybe that’s not the end goal maybe some of them do because they want to be very
Ethereum aligned but again that’s the beauty of the l2s people can do it in different ways and then we’ll see kind of where the users go Mike with what Anthony and Jordy have been saying what’s been fitting into your mental model of ethereum and what
What is not fitting if anything um so I agre so David you and I were talking a little bit about this and I think I think one of the things that ethereum is getting knocked for a little bit right now or just like why it feels a little
Bit disjointed is because this is a thorny problem that many blockchains are going to have to solve I actually think a lot of different blockchains out there are sort of converging on this this end state of maybe like a base asset and then this interoperable chain uh this interoperable network of different app
Chains or general realizable sort of l2s certainly ethereum’s going that way Cosmos is going that way it’d be unpopular to say at this point but I even think salana is going to end up in that direction as well um and it feels a little bit confusing at the current time
And everyone has a different idea so maybe to just uh maybe to just Chuck a little bit of a bomb into the room here I actually don’t like the idea of eth as a settlement chain um and and I’ll I’ll tell you why like the reason I don’t
Like it is because I think it is I think it’s bullish for ethereum the network but I think it’s bearish for e the asset and the reason is simply incentives um you know we can say shelling Point all we want but ultimately these l2s are businesses
They all raise money from VCS um and they’re all going to want to produce solid economics and the largest cost that they have is what they pay to the network to eth um and you’re starting to see this already with da so you know we can shame these l2s all they want like
If you talk to these l2s they’re going to Outsource their da to Celestia or Igan da because that’s 7 % of their cost and it’s entirely variable so I just think that’s again it’s very good for eth the the network but I think it’s bearish e the asset if we just want to
Call it this settlement layer but the good news is I don’t think we have to do that and I don’t think we have to leave it at that so even if you look at something like Igan da like what is Igan da right it’s a it’s this sort of
Outsourc network of um operators who are going to opt in to run da services for basically eth L2 maybe ask ourselves like who is likely to do that I think the most likely group of people that are going to do that are existing eth validators right and
They’re doing it through reaking so for me I think for eth the asset we we can love what’s going on on the L2 layer that’s ultimately going to ACR some value to eth the asset but we have to ask ourselves what are people going to
Do on eth the main chain and this is why I do just think reaking and yield is so critical here we do need activity that’s happening we do need a reason for people to buy eth and one of the assets that I think eth has is this network of people
That are willing to stake it that’s a really difficult thing if you talk to anyone in Cosmos you will understand it’s actually not that difficult to get people to go out and validate your network from day one they’ll make a profit you can pay them what’s really difficult to get is this like
Evangelical group of people that will hold and stake your asset across multiple Cycles on the way up on the way down that is an incredible asset that eth has and to everyone’s you know credit on this show it’s because of East monetary properties and I think the the
Obvious next step is to say well what else can we do with this like what else can this network of stakers ultimately do and I think what they’re going to do is offer and sell their security to other chains and what that creates is an incentive for people to actually buy and
Stake eth to opt into not only eth yield y but incremental yield from other chains as well like I think I am bullish on Etha asset but it’s for that reason I want people doing things on eth the main chain and the unique set of what uh the
The trade-offs that um eth has chosen for its block space is it’s incredibly secure it’s very very secure but it’s also flexible enough to do things like reaking and so that to me is ultimately that’s you know I I see I see the point but when it comes to just calling it a
Settlement chain I don’t see any reason for anyone to buy and hold eth and and I think to be bullish on eth the asset we need to give people a reason to buy and hold and ultimately stay eth that’s what I think let me throw what I just heard
Right back at you Michael and and I can make sure that like my interpretation of this is is um in line with yours um so Igan da is like the first reaking Network it’s the first AVS coming out of igen layer uh it does the same thing as
Celestia it does actually the same thing as every single blockchain because every single blockchain is a daa layer to to some degree but some da some chains are meant to be da layers and Celestia is like the new DA layer on the scene um IG
Igan da I kind of consider as like a side car to ethereum so like pick a like picture a little motorcycle that’s ethereum and you have the little side car and that’s Igan da it’s attached to the main chain of ethereum because it is restak ether that secures Igan da
Whereas Celestia is just like a different car it’s a different car over there it’s disjointed it’s not not connected and so to some degree there’s a like um alignment between uh eth Stak to aan Da and what what like many many many layer twos want to settle towards
Or use da from which is something more approximate to ethereum there’s also DK sharding a Proto D charting and D sharting to talk about um but if we’re going to talk about alternative networks that’s that’s adjacent and so Igan da uh can recapture some of what you think
Might be lost if rollups start to settle to to Celestia and it will recapture that value towards eth uh fees paid towards Igan da will actually be ending up as yield towards ether and that’s just that’s just Network number one that’s just like the first one that we
Know is coming online and I think what you’re saying is that there is um some sort of like mesh network of many possible interoperable chains that are also not blockchains but other types of networks as well and with reaking ether the monetary unit gets exported into these plur pluralist types of networks
Some might be blockchains some might be da layers some might be Oracle networks some might be something we can’t even imagine yet but the idea here is that eth the monetary unit is being exported to these like pluralist networks Beyond just like the layer twos just like these
New types of networks that are coming from igen layer reaking networks and that yield flows back in into eth is this a fair interpretation of what you’re saying yeah I also think it does something very powerful which is it you know this has been kind of overly talked
About as well I would say and there’s a question about is this going to exist but people have asked like is there a risk-free rate in crypto there is in Trad five there’s something it’s the it’s the rate that the Federal Reserve sets it’s treasuries that’s what you get
But I think ultimately I think reaking comes to multiple different chains but I think eth is the furthest along and it has the block space properties that are most suited to it and I think what the opportunity that I see for eth is to set itself as the definitive risk-free rate for crypto
Um where basically the the interest rate gets set by whatever eth ends up paying out to stakers plus the incremental yield that you can earn from securing other chains and you could actually imagine in the future eth conducting some sort of monetary policy based on its issuance rate where the more the
Less uh issuance ether ultimately offers to to stakers the more people are incentivized to restake to riskier and riskier change and the the more IT issues the less people are incentivized to go out along the risk curve but that’s ultimately the that’s ultimately the future that that I see for it and
You know when it comes to these larger blockchains like Bitcoin and eth there’s I think an uncomfortable attention that everyone has to ultimately reconcile which is we’re making it into the big leagues now right like people will say like people say this about Bitcoin I’ve been pointing this out for years people
Like Bitcoin is money well money doesn’t go up 100% in a year like if we wanted to be this big thing like money we all have to get comfortable eventually with uh slower you know slower marginal sort of growth from a price appreciation standpoint but less risk it’s been drisk
So I would I would argue for these larger crypto assets even though the absolute returns might go down over time I do think the risk adjusted returns continue to go up because every year they exist they’re less and less risky and this isn’t like the sexy narrative
That I think crypto people want to hear but it is the narrative that people in trafi want to hear and actually I think one of the big knocks on crypto generally is is trfi people don’t trust stuff that goes up 100% in a year they just don’t they look at it and they’re
Like this doesn’t make sense to me this doesn’t foot with what I think is realistic in terms of assets so yeah I that’s to to me the yield thing and reaking gives people a real incentive to hold e the asset and that’s this is just
My opinion and by the way I realize this is orthogonal to the thinking that cut in because like I I I completely uh disagree about the reing thing like I I I think like you’re adding risk on first of all staking is not risk- free if it was completely risk free like it
Wouldn’t even like because you’re staking something it means you might lose it that’s kind of like the whole the whole point once you start like reaking I know vitalic has also kind of like expressed concern about this and it does remind me of 2008 a little bit with
The CDO squar and and like all this stuff because at some point you’re just think about what you’re doing you know you’re taking eth and it’s staked and then you’re taking the Stak eth and they accept rocket pool eth and Lio e and which you know other eth and then
You restake it but then like if there’s actually a slashing event and then you know you might have to take it and then unwrap it and then slash it there like it it starts to get I don’t know that this is like the like the true like Fed
Rate it it just feels like a like an option that people might decide on the risk curve whether to do or not but I wouldn’t call it like fundamental I I kind of see it differently I think it’s definitely like apples to oranges to calling it the risk-free rate
But like the patterns are there uh and like the systemic uh risk in igen layer reaking uh I mean we didn’t have Smart contracts in 2008 um we had a lot more clarity in uh in crypto these worlds in these worlds so I do think that um there
Are new patterns here to unpack but but Jordy jordy’s just basically talking but he’s not saying that Stak eth isn’t the risk-free rate for ethereum he’s saying you know he probably agrees with with that he he’s saying once this gets bundled in all of these other like high
Yield but like incredibly high risk and like shitty app chains basically or or just like bad things then that could cause a Cascade of trouble on ethereum isn’t that what you’re saying like you’re worried about rebundling this risk and chasing yields yeah I just I I
Guess like when I look at like 10 years in the future I don’t see like reaking as being like a fundamental piece of of what’s happening I see it as being you know kind of what it is now like some people do it they want the extra yield
For them they decide they want the risk like they kind of they do it and maybe it’s a good service and I agree with everything about Igan da being kind of like this side car and it’s actually pretty cool and manful of course is kind
Of like the first one that CH a DA versus you know a Celestia and that that’s all like very agreeable with like the whole the whole thesis But ultimately I don’t think that everybody will be like reaking and then like kind of chasing down that path I don’t know
Anthony I would love to hear what Anthony thinks and I would also love to see if Anthony can diffuse the bomb that that Mike th th I theom he said Anthony let me just let me just repeat he said that uh this settlement layer is bearish etherum
Being a settlement layer is bearish for easa I wonder if you address that too yeah yeah so there there’s actually the other part to that as well which is the part about where the data is going to be po posted to right for these l2s and I
Want to just quickly Define some things so that people know what I’m talking about when I use these terms when we call something a rollup it means that it both settles its data and it’s like proofs and everything to the same layer so like to ethereum L1 that is the
Technical definition of a roll up when we call something a layer two it means it can settle its data on ethereum L1 or on the same kind of layer that it’s that it’s settling it its proofs to and it has its bridge on and things like that
Um or it can store its data elsewhere like on Celestia or igen da or something like that these terms are a little bit debated in crypto um but that’s how I view it right so when you think about where to post your data okay well why
Are rollups paying so much in fees today to post their data to ethereum well obviously because it’s more secure like like that’s that’s the main reason right um because if your data is on another Network and then you no longer have access to that your funds cannot be
Stolen from the L2 but they can be frozen so you if you don’t have the data to come and say okay well uh the L2 is offline I want to escape back to L1 you can’t do that if you don’t have the data piece it won’t let you it just it
Literally is impossible to do it right and there are debates about like letting people store their own data but what does that look like you know does it actually work there’s there’s this whole kind of can of worms that gets opened when you start storing data off chain
And it definitely makes it less secure but then the argument becomes okay well it’s a cost argument as Mike said these l2s are businesses you know they’re going to have token holders that want to maybe stake the token and earn fees and then they’re going to see well why are
We paying so many Fe so much in fees to ethereum L1 why don’t we just use another data uh availability layout pay cheaper fees and get more yield for ourselves but but the thing is is that like when it comes to fees always a race
To the bottom right like da I think is a race to the bottom that like if you’re storing it on Ian da or Celestia you’re still choosing between which one you actually consider to be more secure right like because you have to make a decision there about where you’re
Storing your data and and and obviously ethereum L1 is in this decision so then it becomes a game of Arbitrage like is ethereum L1 cheap enough for you to justify posting your data there now okay well if it’s not you post it somewhere else and then you keep playing this game
Of kind of just driving costs down to zero basically across all of these different layers is and in the long-term roow map of ethereum L1 if dank sharding actually works like full dank sharding actually works like we hope it does it’s actually going to offer like a lot more
Throughput capacity than we have today and the reason a lot of the um l2s are choosing to store their data off chain is not necessarily cost it’s because ethereum L1 cannot actually handle their capacity like I know eclipse for example which is the svm based L2 it’s impossible for them to actually have
That live with data posted to ethereum L1 because not only is it um you know there’s that cost but but they actually can’t do it because they can’t offer the TPS that they want to offer because ethereum L1 does not have that data throughput even with blobs with EIP 4844
Um because that’s just the first step that’s just laying the groundwork for full dank sharing which hopefully I’m not going to promise anything of course but hopefully you know the whole design spec around it is to offer a lot of data availability and then of course you get
The security of of ethereum and that’s why you would would kind of settle there but da is definitely a race to zero especially on these off L1 uh off ethereum L1 data availability networks like if you’re trying to compete you’re not competing with ethereum L1 because uh ethereum L1 is is already expensive
And will be for the foreseeable future you’re competing with other da networks now and then you’ve got to convince these projects to use your da layer over someone else’s the quickest way to do that is to lower your fees as much as you can but then again it falls back to
The question of security now it’s like okay which one is more secure is it Igan da because it’s using restake eth and eth you know node operators and and whatever or is it Celestia because they have such and such going on or is it Nia
And a Nia is pivoted to a DA right there’s there’s all kind of considerations you have to make so I think that for the for the L2 for the rollup they would IDE want to settle on ethereum L1 first and foremost up to some certain cost eventually they’ll be
Priced out or eventually um or at least for the shter medium term they’re not actually going to be able to settle there just because ethereum doesn’t have the capacity right now for that to happen right uh and then they’ll go somewhere else but then in the long term
If we think you know when full dank sharing is is is out what what does that world look like so those are the open questions around that and I know a lot of people are debating this in the community right now about where data is ultimately going to be stored but at the
Same time just even if your data and this goes to the bomb about athum not being a settlement layer or or you know it’s not not good as a settlement layer even if your data is off chain you’re still settling stuff to ethereum right like the bridge lives on ethereum you’re
Settling the proofs there you’re using ethereum as as as I said like the bridge is there so people are bridging in from ethereum to these networks maybe they won’t be bridging in themselves from L1 but the centralized exchanges are bridging funds uh across these kind of things and they obviously um still
Secured by that bridge on L1 ethereum to to the L2 and then if you wanted to do like Arbitrage between things or market makers doing their complex strategies between different layers and accessing liquidity on L1 versus l2s it’s still going to be used for settling these types of value but then ultimately um
The uh the l2s will store some of the l2s will still store their data on ethereum right if they want to be the most secure for example if they want the Gold Standard Security they’re going to pay for it even if the token holders start pressuring them into putting it
Somewhere else like you the logic becomes but we’re trying to be as secure as possible and with security comes money because the big there’s a reason why a lot of money is invested in BTC and eth right it’s it’s security I mean you can argue about decentralization and
Things like that but decentralization is an emergent property of many other properties of a chain and I think security is one of the most critical here so that’s what the conversation basically boils down to and each L2 is going to approach this differently based on their own individual needs but I
Don’t think it it takes away from ethereum being a settlement layer and I don’t think it takes away from from eth either uh and and on the kind of reaking front as well I’ll just finish up here I’m actually someone that sits like smack bang in the middle of people
Between that love reaking think it’s going to change the world and people who think it’s going to be the end of ethereum I’m in the middle and I love being in the middle because it means I get to talk to all these people and I
Get to hear their arguments and I I get to kind of uh come up with my own own opinion on this and the Reas and and the number one opinion or the I guess high level opinion I have about this is that reaking is going to happen whether like
It or not the network allows it to happen it’s going to happen and the only way we’re going to know if it destroys ethereum or has negative externalities or increases risk exponentially is if we do it so there’s no point debating all of these things right now about reaking
Because we’re all making massive assumptions about it and we’re all making massive assumptions about how much risk people want to take which is which is pretty much like what the markets do right the markets are are a waiting machine for risk at the end of the day how much risk people want to
Take and we’ve seen that over over longer time frames people are actually quite conservative with with their money yeah they’re playing the the G gen games over the short term but there’s as I said there’s a reason why BTC and eth account for most of the market cap of
Crypto because those are the safe havens right they’re the security for people they’re the the riskof so to speak um obviously cash as well but you know if you’re a crypto native you want to go there so that’s my whole take on those topics I rambled a bit there but
Hopefully that landed so Anthony right in the middle on on reaking and I’m wondering Mike if if you want to respond so so Anthony’s expressing hey you know what it’s still great to be the settlement layer and bullish on a settle settlement layer and I think he was
Saying the da layer kind of becomes a commodity and and you know prices go to to zero so there’s more value acral on the settlement layer side um we didn’t touch on the execution layer and value acral there but in general Mike how would you respond to that yeah just to
Touch on the response to reaking Anthony I wouldn’t change a word it’s ABS it’s going to happen um this is the whole point of being a permissionless network it’s going to happen and we’ll have to see how it ultimately ends up playing out I I for the record I do think eth is
Going to be the dominant settlement layer for most things in crypto I don’t think that that’s not like bearish I’m not disputing that idea I just um I I’m a little bit more the reason I’m a little bit more bullish on eth the asset Falls more in the reaking camp than the
The settlement Camp I’m not saying that that’s not valuable or that won’t have uh that won’t lead to Value acral to eth but you know if I’m kind of waiting you know my different bull cases I would be more in the in the reaking camp than the
Settlement Camp I just want to ask a question on that followup do you think more people people are going to restate their eth because ethereum is a secure ciment layer because they know that they can get a real yield so then it becomes self-referential right it becomes self
Enforcing yeah I think you’re right that’s how I kind of view it as well like I just I just view all of each value acrel mechanisms as self-reinforcing right and it all just plays on on each other and kind of I know you know you can talk about risk
And things like that but I just think that they all work in Tandem and they work really nicely I wrote a piece about this a while ago called The Grand Design and it was me describing ethereum’s design with its l2s and being a chain of chains I didn’t mention reaking because
It wasn’t a thing back then but if you can you can slot that in but I was talking about all these things and how they all just ethereum is trying to be something that works in concept with each other you have all of these things
Going on it’s trying to be a grand coner that works perfectly in sync with each other and that all of the the the incentives are aligned stuff like that obviously it’s not that what what it is today because me is that one big thing that’s kind of like overarching
Everything right now and I call me the killer if it’s left unchecked because it is not a pretty thing but that’s how I imagine these things and how I see them all playing with each other you look like something to say too yeah I mean you know whenever I hear this stuff so
I’m just like there’s this meme on Twitter there’s like the elephant you know going after his own dong and kind of like self-referential folks Jordy talking meth and elephant talk life Life’s a Ponzi guys like just you guys got to accept it that’s why you have me on the show no
But um so the the concern I have is that you know the the argument is being made is well you know eth is going to be valuable because it can be restak and why will people choose it for reaking is because it’s valuable and like you know
It’s secure because it’s a lot of money but that’s like very self-referential and I think that can ultimately like be the the bull case it has to be this kind of shelling point of of uh of kind of community and and Sh and like settlement
For for sure is a big part of that I so I thought that was actually a really profound Point like my my mental model for crypto in general is that we’ve created a new commodity like thing new asset class called block space and the properties of the block space ultimately
Determine what the use case is bitcoin’s a really interesting example of that because they took a pretty bold strategy of having extremely small very non-performing blocks and that closed them off from a ton of use cases but what it did is it made them really useful for this very specific large
Market siiz use case which is this hard money store value digital gold type thing ethereum has a different set of trade-offs for its block space and I think Anthony the point if I understood the way that you made it is it’s kind of like one more to the left here where
It’s still very secure and can be used as a settlement layer and one of the things that’s just difficult to predict about all of this is this whole technology is super emergent right none of us really know how this is going to play out no matter how confident we
Sound on this podcast and it can allow you to be like there are multiple different ways to skin a cat right we have this this property of ethereum block space which is it makes for a very good settlement layer ultimately that could be rollups paying fees down to
Ethereum to settle to it it could be that the settlement property of East block space makes it good to to restake but that’s that’s very similar right um so I thought that was a really profound point that you made Anthony I agree with you arbitrum is the leading ethereum
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Already has sub commmunities from around web 3 onboarded like game s for web 3 gaming and bybit for tvl and liquidity and onramps so if you want to build on the mantle Network mantle is offering a grants program that provides Milestone based funding to promising projects that help expand secure and decentralize
Mantle if you want to get started working with the first Dow Le layer 2 ecosystem check out mantle at mantle. XYZ and follow them on Twitter at zerx manle I think a lot of the debates as to whether eth is bearish or bullish really determines uh is determined by um where
You what you think about its positioning in relation to other um blockchains like we talked about the barbell Theory right you got Bitcoin on the left sque squeezing ether as money you got salana on the right squeezing ether as an execution layer and that can make you bearish alternatively you have ethereum
In the middle doing both of those things and doing both of those things pretty well and that can make you bullish depending on how you want to see it and it’s really to me my interpretation of of the value AC cruel for ether and the utility of ethereum is that it does
Everything and Anthony talked about like you know ether ether’s value acrel or value capture mechanisms all kind of being self-referential to each other you know the layer twos by the block space makes ether have yield which makes it you know highly interesting as an Institutional asset which makes it
Restak uh reaking a possibility and like all of these different value acrs which are can be siloed and made more stronger by like a modular chain like celesia for data availability in that one narrow aspect it could be stronger as a as a single purpose train but when you get a
Little bit of everything you have a self-referential value acral mechanism which is a weak narrative because it’s spreading it out over like all possible utilities but nonetheless you do have like this kind of Whirlpool of of assets at least that’s how I kind of interpret
It and I do want to uh bring us to the last maybe part of ether’s value acral mechanism which we haven’t talked about yet which is definitely in the conversation sphere in crypto Twitter which is layer twos and ethereum’s execution layer because without layer twos uh ethereum doesn’t really have a
Very good execution layer you ethereum needs its layer twos and right now the The Narrative around layer twos is that like they’re incomplete no one wants to bridge bridging is unnecessary it’s a byproduct they’re fragmented it’s a byproduct of a of a Like A Primitive blockchain Mike I’ll throw this one back
To you what do you think is signal about this narrative going around in crypto Twitter and just broader more broadly crypto and what do you think what do you think has mer and what do you think doesn’t um um I I think it it it highlights an issue like I said I
View the endgame of most of these blockchains as there being some sort of base layer which does a thing and then ultimately a layer of interoperable uh rollups app chains whatever you want on top of it um that settle back down to it so if you talk to people from Cosmos
Interoperability has been a challenge they’ve been focused on for a very long time um and I think it’s just a ultimately it’s something that’s thorny I think Cosmos underestimated I think eth underestimated it a little bit but I think it’s ultimately something that’s solvable and not a long-term bare case
For for rups uh whatsoever in terms of the the evm I would say that this is a case where steel sharpens steel and salana focused extremely they had like a very narrow focus on execution with svm and I think what it’s going to push uh
What it’s going to push layer twos to do is to experiment with uh improvements to the evm I actually heard someone from the EF recently say that the E that the evm was originally designed for eth the blockchain but the Assumption was that once we got layer twos there could be
More Innovation that would happen at the execution layer that would be appropriate to again the sort of block space qualities of a rollup but because you know these rollups had so much to do there were so many different uh things that needed to happen at a really quick
Time they just didn’t prioritize that and one of the things that I’m really interested in in the coming year is to see how these rollups end up tackling things like parallel execution you can see it with uh monad you know which is a new blockchain that’s going to launch which
Is parallelizing the evm whole bunch of other improvements pipelining Etc I think the layer twos are going to start doing that as well um they haven’t come out publicly and said it but I would be really excited to see what the Innovations the rollups have on the execution layer are you bullish bullish
Layer twos then Mike do like so there’s the strong ethereum case which I’ll make which is layer twos will just freaking eat everything and salana will have to become an ethereum layer 2 at at like one point in time that’s the extreme bullish uh e take according to Anatolia
It already is what yeah he he says that stop throwing bombs David yeah um I do want I was just gonna add on that point that the layer 2 thing has never I mean the scalability thing is is obvious right that’s the whole point why we’re doing it but it has
Never been the main strength for me or the thing that I’ve been most excited about I’m most excited about exactly what Mike’s talking about the fact that we can now experiment Way Beyond the evm right and even like within the evm because to change the evm on L1 would
Take so long to do right because to get that through L1 governance and to like convince the core devs that it’s a good thing to do because they will look at it from a security perspective and they’ll look at it from a chain stability perspective uh it would take years many
Many I mean it took us 2 and a half years to get EIP 1559 into the network and uh that was the most popular EIP in history so just using that as as a benchmark here uh but then the l2s they have freedom to do whatever they want they can literally be completely
Centralized or completely decentralized they can use whatever VM they want to use they can store their data on ethereum or or or elsewhere right depending on their needs and they get to just have this Grand experimentation phase that ethereum L1 could never have and I don’t think any L1 can actually
Have this because by very definition if you want to be a decentralized L1 you cannot move that quick if you move too quick you are de facto centralized in my eyes like I think one of the the the strongest uh barometers for decentralization for me is how slow
Actually things changes are made to the L1 right so if you want to be decentralized you cannot do that uh whereas the l2s will be decentralized eventually like it’s not going to happen overnight it’s going to take years right but in the meantime they trade off that
For the fact that they can experiment and experiment in in a million different ways that could never be possible on L1 so that is and will always be the most exciting thing I think about l2s for me RA like the scalability is table Stakes if you’re not scalable then why are you
Even building an L2 to begin with but then if that’s table Stakes what what else can you do and you it turns out you can do anything on an L2 Anthony I completely agree with that we agree on a lot um I I’m curious to
See like I was about to explain like my sort of prediction for how L2 Market structure plays out I think one of the things that sort of trips people up is even the last couple months it’s like there’s an L2 it’s like why do we need another L2 and you’re reading that like
Oh that doesn’t really bode well right if you have to say that caveat in your initial announcement like how do you view the ultimate Market structure playing out for layer twos yeah yeah I mean right now which just an Cambrian explosion right everyone wants to experiment with l2s and that means that
Most of them will not will not work out long term they’re just like anything else I mean we had that with defi right defi summer was a Cambrian explosion of stuff do you guys remember Danny cesta the Frog Nation Army or whatever it was called back then remember that was like
The biggest thing for like three months and now no one talks about it right um I think L2 is are going to have a longer shelf life obviously than than three months just by their nature but the thing is is that I I I ultimately Envision what you were talking about
Where you essentially have have these super chains which are chains made up of all these other rollups all these other l2s that can all interoperate with each other and there’s not going to be that many of those things that have the market share it’s just going to be like
A power LW effect like we already see pretty much everywhere in crypto and it’s not just in crypto obviously it’s outside of crypto as well but that’s how I ultimately Envision it playing out but the cool thing is is that we still get all of this experimentation and then all
Of the cool things from these l2s that don’t work out can just be ported over to other l2s I mean if you want to take an early example of this pogon just bought Hermes which was an L2 right they just bought other ZK teams and they’re
Like well come build the polygon ZK evm and come build the polygon cdk and then we can have an awesome kind of super chain going on uh so I think that’s what’s going to happen with a lot of that because the tech is open source right the tech is available to be used
Well not all of it but like a lot of it is open source uh and there’ll be a lot of uh there’ll be Acquisitions between teams as well definitely but yeah I envisioned the ultimate end goal being just a bunch of super chains uh right now obviously the leaders are op stack
Polygon cdk but you’ve also got arbitrum orbit they’re doing their stylus thing you got ZK syn with their their whole thing they’re doing and then you have some satellite ecosystems like starnet for example that are very focused on a on a specific kind of ecosystem they’re not doing the whole super chain thing
Yet some of those will probably probably paning out I think as well uh but yeah that’s how I generally kind of view the L2 ecosystem Mike I want to add one more thing to to Anthony’s answer here about Market structure I think um these layer 2 cdks train development kits the ones
That Anthony just like listed off the polygon one the optimism one the ZK syn1 Etc um the this bit of technology which you know settles to either a layer to main chain or directly to ethereum doesn’t matter is the only bit of technology that I see as production
Ready to go into a corner of the internet and be an invisible piece of blockchain architecture that allows some application on the internet to be a blockchain you know token crypto-based architecture without having to be in front of the face of the consumer consumer like we’re seeing this with
Immutable and zero gas fees we’ve already seen this with so rare and all of the people like playing their trading card games with NBA cards and soccer cards and all this stuff and the thing is like this is an extremely outside crypto narrative these people don’t play
Come into the world of crypto Twitter and talk about how they’re playing so rare in this in crypto Twitter circles and so it doesn’t permeate into the inside of circle inside of crypto Circle and it’s one of it’s it is the gold that’s like I said it’s the Golden Goose
It is the Internet it’s the only way that like people the internet is going to become crypto people because they’re going to come become crypto people without knowing it and I don’t see any other technology that can get to that point because we need specialized chains to fit into specialized corners of the
Internet so that’s what I want to add to Anthony’s like answer there yeah I was gonna say something really similar which is I see consolidation across major l2s maybe maybe major generalized l2s like optimism arbitrum polygon ZK sync that that sort of thing and they’ll have different business models like the
Optimum business model for how it extracts values very different from the arbitrum business model and we’ll we’ll kind of see the the tech development narrative and business model ultimately shake out to a few Big Winners but then I think there’ll be kind of this this
Other side of the barbell with uh so for instance blast whatever you think about it is kind of interesting because it has a completely different construction where you get native yield on the L2 I actually yeah I I think there were a lot of reasons to be a little worried about
That but like it is a it’s a novel experiment that couldn’t necessarily happen on one of the majors and you know to your point David I do think at some point you know it’s been a it’s been a pretty good play to fade the you know
The like Shopify of the World when they have a crypto thing or the reddits of the world it’s like hey here’s this big thing but then it disappears eventually those things are going to become real they’re going to want their own sandboxed environmen is to start and I
Think l2s will be a really good solution for that also so I would say like barbell of a couple majors and then other l2s that have very specific Niche use cases some of which we can’t even imagine right now and then other sort of uh corporate uh use cases for l2s as
Well which I think is really cool um I would love to see that happen so that’s how I see it too I I will add on the note about the the cdks or the op stack the chain development kits things like that the cool thing about them as well
Which may become a liability not a liability but may become a bit bit kind of uh I don’t know may may slow things down long term is that for example with with the op stack it’s like a stack that pushes everything Upstream to all the op stack chains when it when it changes
Right like for example the op stack will be upgraded to support blob style transactions on ethereum L1 now suddenly op main net base whatever other op stack uh is built on it it now has access to that right because you’re built on on the same kind of shared stack here but
Why I say it might slow things down longer term is because now you’re stuck with the same governance problems that L1 has where you have to go through that if you want to upgrade but there are ways to do this more flexibly where essentially you can do it for your own
Chain and then you could push it out to the op stack um and then you know have it have it sitting there but you could still adopt it for your own chain in in the meantime so there are solutions to this and the last point I wanted to make
As well was was around fragmentation right liquidity fragmentation that’s like the number one narrative right now and honestly I do think that most of the people that talk about this are only saying it because it is a narrative to just on eth with if I’m being brutally honest before you uh give the
Answer to fragmentation Can you steal man the case for fragmentation so what are saying what you like what does it feel like where AR come from well the argument basically comes from uh the fact that obviously when we were just ethereum L1 all the liquidity was there
Right all the users were there all the apps were there and now obviously in the face of of salana going uh you know the activity on salana picking up over the last few months salana is is that right is basically you know we’ve got salana it’s one chain you do everything on here
All the liquidity is here um but then the reason why they’re saying that l2’s fragment that is obviously because now ethereum L1 is not the only thing in the ethereum ecosystem now you have these l2s and there’s many of them where liquidity will go to uh you know
Arbitrum liquidity will go to to op Manet or go to Bas it won’t just exist on the same kind of singular layout that we’re used to right same with the apps not just the liquidity of course the apps and and the users so that is the
The argument here and and the reason why people think this is bearish is because uh you essentially lose efficiencies by doing this right you you force people to have to Bridge and you force people to have to think about more than one thing and stuff like that which I honestly
Don’t disagree with on the surface like I I agree that that’s not an ideal user experience but the way I look at it and the way that I think this is all going to play out is that like if we’re thinking about on boarding the world I’m not talking about onboarding crypto
Natives because crypto natives are always going to bridge to where they can make the most money right they’re not going to care they have to bridge if there’s a dogcoin going up 100x on a chain and they’re going to firo into that they’re going to bridge there like
I’m sorry but like I don’t think people Crypton natives actually realize why people do anything on chain honestly or or most of the time what they they they do it for speculative reasons and you’re not going to cry about having to bridge uh to you know to to speculate you’re
Just going to do it because you’re not going to miss out on that if you really want to do it but if we’re talking about like onboarding the world right and onboarding everyone that’s not going to ever be a crypto native then the the user experience is essentially going to
Be like two clicks in an app on their phone like in their wallet or whatever then they’re not necessarily going to know what chain they’re on as well right uh as David was alluding to before about things like so rare and stuff we already see these things kind of playing out
They’re not necessarily going to know what chain they’re on they’re not going to be bridging or anything like that they’re not even going to be paying gas fees that’s all going to be abstracted away for them and the way that gets handled is by the technology that we build within the ecosystem the
Interoperability technology that we build each of these uh super chains that are happening have interoperability between their own chains polygon actually has a really really cool way of dealing with this if you want to read uh up on it they’ve got it on their Docks but they has basically have an
Interoperability layer that sits as the base of all the chains and then all the chains basically tap into that and there you have interoperability so it’s a really elegant way of of solving I just like it’s just there’s so many assumptions that I is completely disagree with they’re starting to stack
On top of each other challenge a little bit because yeah challenge me plays yeah um first of all you’re saying that like this is for the future and for on booring the world I completely disagree right now there’s a huge ux problem like it’s like let’s say like oh yeah yeah
Yeah right now there is definitely yeah yeah like you know let’s just take this most simple thing like I I need to use tether instead of usdc and let’s say like you know curve on mainnet is where the vast liquidity is so if if I want to
Change 10 million of one to the other I have to do it on Main net but meanwhile you know the app that I’m actually trying to use this is not about dog coins and meme coins it’s not about bridging as a one off to do like 100x
This is just like I just need to switch from tether to Circle dollars and I need to do something on that’s a huge pain not only does it take time you know these bridging Solutions like they can have a cost obviously there’s gas cost you just want to use Stargate something
Like that there’s you know 10 bips 10 bips is a lot of money for like large amounts maybe it’s not a lot for moving $100 but if like you know to do like large Financial transactions so this is like an existing problem right now so that’s kind of like steel Manning it a
Little bit more fairly I would say no no and I mean I completely agree with you right now like I see I I tend to do this thing where I look too far into the future I think this is where I lose a lot of people is that I’m always
Thinking in the future because I see the kind of path to get there or at least like the the path that I think that we can use to get there but if we’re talking about right now I mean 100% yeah that that that’s the current state right
Now the ux is fragmented the liquidity is fragmented the existing Solutions are not ideal as you said these existing Bridges they charge fees right and they’re not necessarily secure depending on the bridge that you’re using and there are ways in which you could lose your money from from bridging right or
Something bad could happen uh from bridging here so yeah definitely right now I completely agree and even with the people saying it on crypto Twitter and pushing the narratives and it’s not the narrative it’s reality right that’s that’s the current reality but I guess like what I was getting to was that I
Feel like these are just issues that are going to get get solved and obviously I went to the the end state where essentially you know we just on board the world and everyone’s just interacting with things on on apps and on on apps with like two clicks and
Things like that but if we’re even looking like medium medium term out um yeah I think a lot of it just gets solved um by by by people um solving it via as I said like polygon has their own solution and there’s different solutions between these and the bridges will
Definitely kind of get better but then you know you mentioned size I think size is actually something that is very important when you’re talking about these things too because at the end of the day if you are trading in size like and you’re on L1 you’re probably paying
The gas fees right I mean someone’s paying the gas fees on L1 right now so if you are trading in size you’re probably still on L1 so then you think about okay who’s moving to l2s right now I mean the marginal person moving to l2s is the people that really can’t afford
The gas fees so I think that there is still going to be a lot of activity on L1 during the short to medium term for those bigger players and then once the fragmentation stuff gets solved and once once kind of those things play out uh those bigger players will be more
Comfortable moving and and stuff like that so I think there is definitely a a size question there too that um but yeah I mean I complet as I said I completely agree with you that right now yeah it is it isn’t ideal um but yeah I I I I’m
Hopeful that we can get to that ideal State I I have another question for this panel but JY do you have any uh comments on what Anthony just said no no I mean he’s clarified and I agree the one thing I would love to just give like two
Minutes is like my L2 endgame thesis this is something I you I work for you know I’m actively thinking about l2s every day this is like how do I make a good L2 and what Michael said is like the oh another L2 you know every day
There’s like another one like I I fully agree like everyone should have a reason to exist like a Ron there should be like something about it and my mental framework is is like ethereum is kind of like is the Earth is the globe and then the l2s are countries and the need to
Occupy like a piece of land and the land is is not a physical land the land is a use case or users you know a a group of users so like yeah polygon you could say is like the European Union because there’s a lot of countries and they’re
Together and they’re sharing a currency and hold on ethereum as the globe are there other planets in the solar system or is just other l1s yeah like there’s other smaller planets hopefully etherum is likeing out the model okay yeah but so like if you want to like occupy piece of
Land and not get taken over cuz these guys I agree like there’ll be takeovers there’ll be mergers you know if you’re not doing well another country is going to come and occupy your your piece of land cuz like let’s say you’re trying to do per dexes and you decided okay I’m
Going to like do my own country and we’re just going to be L2 that does per decks but maybe maybe you don’t have you know good native s like usdc maybe you don’t have you know chain link maybe we don’t have all these things and so like somebody else comes and like occupies
You ultimately like in the end goal I see is kind of the same as the Earth some countries will start disappearing some countries will like emerge out of nowhere even today like that still happens but you will have superpowers you will have kind of groups that you know are aligned together maybe there’s
Like an svm you know Eclipse we’ll get some other guys and they’ll have like their little thing and yeah some of the ones will share a currency some of the ones will be doing different things and there’ll be islands that just have a single app and it will make sense for
That app to do it as its own L2 and that makes complete sense so ultimately that’s the framework and I think if you want to exist in 5 10 years you better like occupy your piece of land and like do it efficiently M Mike you want to say something I just I agree
With that yeah I I agree with that Framing and I one of the things that I’ve been thinking about recently is you know you you sort of have two different types of chains which is one which produces very general block space which is kind of the ethereum turn complete
Build whatever you want with this block space it’s not optimized for one thing and and then you have app specific block space which is the dydx or Cosmos full stack app chain approach which is my app space is optimized for a perex one thing that might be interesting is like sector
Specific block space actually so uh something in between fully generalizable and completely app specific where maybe I’m the L2 that’s trying to optimize for uh dexes in general and you actually see experimentation with this with like say um say which is sort of sort of an L1 but has these built-in features that
Make it extremely optimal for multiple different dexes to launch so I agree with jordy’s framing everyone needs to have a reason to exist I think one of the big questions is which use cases are going to require composability and then how do we organize users across these different chains and I feel like
Probably how it ends up shaking out is that there are kind of these these Hub countries in jordy’s model which is maybe your arbitrum or your optimism where that’s where We Gather a bunch of different applications that require closer interoperability and they’ll figure that out within their Hub and
Then there’ll be these sort of sector specific Islands which is maybe all the Dex is over I haven’t it’s very difficult to reason what that would be like but these sort of sector specific l2s that ultimately settle back down to eth but I agree I think it’s a problem
Today but ultimately I do think every blockchain is going to have to face this problem at some point so I I I want to throw one last bomb to this uh this panel before we kind of w wrap up and Mike you threw the first so we’re just
Using that analogy and I think some fought on ethereum but it’s also sort of an existential question for like for me and like uh and I think for a lot of Crypt natives whove who’ve been here for many years a lot of the ogs is just what
If the next cohorts that come into crypto don’t give a damn about decentralization like what if they don’t care okay and so here’s the Bitcoin network of course like optimizing for decentralization the ability to run your own node and I think ethereum has followed down that path with a different set of
Trade-offs but it’s very important that stakers and validators Mikey were just saying how important of an export the the validators and stakers of ethereum could be for for the world ethereum has made some choices some trade-offs in order to allow individual stakers to kind of run their validators from home
Decentralization right we talk a lot about uh ofac and like Anthony you brought that into into the picture um is e theorum letting um you like non ofac uh transactions through so this notion of decentralization but what if the future cohorts don’t care about the cyer punk
Values that that we care about well like then is ethereum overdesigned is it over optimized right it’s like what if World War 3i never happens sure exactly what what if it’s just peace time I mean a lot of alternative high TPS uh chains make fantastic peacetime chains and if
You could just like restart start it in like a you know a Discord with all of your validators there it’s like it’s just fantastic what if we don’t need these features of decentralization and what’s more what if future cohorts don’t really care do you really need it to
Create Your Meme coins and your casinos and your usdc it’s in a bank account anyway it’s not freaking decentralized uh maybe we’ll start with you Anthony yeah yeah I mean I have my own interpretation of this and I think it’s like a pretty good response but I’d love
To hear what other people say it’s a short response but this has been something that people have asked for many many years now right within crypto like this is always the number one question that I see people ask once they’re deep in crypto and it’s like why
Would anyone care about this stuff it’s so deep it’s takes so long to learn any of this stuff and like we see people just go to centralize things anyway you know everyone went to Terror everyone went to Celsius and blockfi and all these things um but I will say that I us
I usually kind of uh think of decentralization as security there’s a reason why the top two nation states in the world spend a ton of money on their security right because they know that you don’t do that because you expect there to always be even if you
Expect there to always be peace time you do that because you know that there’s not always going to be peace time and you don’t want to take the risk of being the one with the smaller stick when the hits the fan right so if you think
Of it that way you think of decentralization as security you basically design these systems in in the people who design them are the people who care about this right they design you design these systems in such a way that yes no one else has to care about
And everyone else can criticize it they can say that you’re doing the wrong thing whatever people criticize the US military budget all the time right for example but then when hits the fan you start thinking oh I’m glad that we spent so much money on the military to defend ourselves against these
Aggressors right and the same is true for ethereum and the same is true for blockchains generally so you’re going to be glad that you have decentralization when she hits the fan and you’re gonna take it for granted when it’s Pace Time JY what what’s your take what if people don’t care about
Decentralization I think you know first of all like some apps don’t need decentralization but they can still use ethereum because a they want the user experience of you know I’m already on the wallet I already have my money here there’s liquidity here like it’s already there yes I’m paying a little bit more
For security than like if I didn’t do that but I’m getting so much more so it still has that Network effect and so even for those use cases it can still make sense right yes a lot of things sweatcoin whatever like walking around getting points like maybe that doesn’t
Need a huge amount of like security bud but it can still be built you know on ethereum for for all the other reasons mentioned so I think that’s fine I think ultimately like some l2s will be you know maybe more centralized and you’re trusting somebody you know like an
Amazon or whatever but they’re they’re providing a service and you’re using it for that case and as the base money kind of I don’t want I should have said base money as as a sort of money Community money in my opinion uh you know it can
Still it can still kind of use that decentralization and you know geopolitically we are going to see escalations again like yeah China us everything else it’s not going to suddenly go away and having a neutrality um of a technology I think is going to be very valuable now I think
Bitcoin is further along on that just to be clear and I I do like Bitcoin for that for that reason of the of the neutrality of it I think ethereum is still kind of working its way towards that you mentioned ofac you know yeah like a lot of Founders will just shut
Down their front ends or the apps or whatever because they don’t want to go to jail we’ve saw tornado cash we’ve seen things happen so um you know people caring or not caring about decentralization is less the the Boogeyman in my opinion Mike what what’s your take on this what if the market
Just doesn’t value decentralization in the way that the first you know decade of of crypto ogs have really valued it and U they allocate somewhere else yeah I think that there are sort of two reasons to care about decentralization and one which has been the first decade of crypto has been from
An ideological standpoint there is a relatively smaller group of people in the world who like just deeply care about this idea of decentralization and things being fair and I think what we’re about to move into is the bad news is I don’t think that’s everyone I think the
New entrance of crypto are going to care less from an ideological standpoint but the Market will value decentralization and I think that’s the important thing to understand we actually the success of this industry of ethereum doesn’t rely on a group a small group of ideologues decentralization has a value a market
Value which is credible neutrality in my opinion and there are just certain things that you could build on blockchain substrates that simply would not make sense in a web 2 context and you I feel like the first 14 years because there are so many frictions associated with building on
Decentralized Rails has been all about kind of the downsides oh it’s not as efficient oh it’s not as cost effective but it does one thing so much better than anything that’s come before it which is this idea of being in credibly neutral and if you look at something
Like Lio as a as an example of this which I know there’s been a lot of controversy around but something like 80% of Li’s resources goes towards decentralizing themselves why are they doing that because it’s an ideologically driven group that they just care about decentralization so they’re allocating
80% of company resources no they have a market reason to do that because the flatter they are the more decentralized they are the larger their ult ultimately their total addressable Market is going to be so what I would say to you Ryan is the the bad news is like right every
Niche industry kind of starts like this ideologically driven Etc crypto probably gets less like that over time but that doesn’t matter this technology doesn’t depend on new ID logs coming in who care about decentralization there will be Market driven forces there will be things that are only possible to build
On decentralized incredibly neutral substrates and that should be really exciting for everyone I remember one thing i’ I’ve heard you say before Mike that the number one rule of crypto is to survive and it it strikes me that things that are decentralized tend to survive uh longer and far past their centralized
Centralization is a liability right for a lot of these kind of different I mean we saw it right what happened to Celsius what happened to blockfi what happened to SPF FTX right contrast that to defi contrast that to the Bitcoin Network contrast that to ethereum they survived
But the the counter is is that takes a while for that to play up because you have to go through these kind of like bad times and drastic events and cataclysms for uh decentralization to show its value kind of going back to what Anthony was saying which is that
Like you don’t really need decentralization until hits the fan like in the modern day and age living in an earthquak proof building working in an earthquake proof building is a non-negotiable like this is built into the the world that we live in and anytime we have cities that don’t aren’t
Built with earthquake proof buildings eventually in the fullness of time those all they all collapse uh and this this Taps into I think what is a very big like ideological debate and a t point of friction between many communities out there because it’s all about like future planning for unforeseen events and
That’s very hard to debate in current times around especially while some people are getting R rich off of doggy coins right this is a Phil this is a philosophical debate it’s an ideological debate um and it’s it’s uh it’s also a time frame debate I think a lot of
Debates in crypto are just because we’re using different time frames like when Anthony talks about like oh in the fullness of time layer twos will totally have all their ux issues solved so therefore I’m not going to bring up that subject well then somebody who’s in the
Near- term is like oh well I just used a layer two yesterday and the ux was broken like all of these are like time frame debates and I think the reason why I’m here in crypto is that I understand that in the fullness of time there will
Be an earthquake there will be a shock to a Global Financial system built onto the internet and if we’re not building with those precautions in mind now then that’s actually not what motivates me to be in crypto in the first place and I think that’s why like I have found
Myself in the ethereum world because all these all core Dev calls are like look looking for all potential shocks rather than just trying to move fast and break things uh and so I just want to want to add that one little note of flavor before we move
On I I also but so I agree with all that David but I but I even think there’s reason to be more optimistic than that like I think there are reasons today I don’t think we have to wait for something to go drastically wrong like
There are like so here’s a here’s just a trade-off in between something like ethereum and salana ethereum has optimized quite a bit for solo staking right they’ve made the hardware requirements bandwidth requirements very very low uh for to optimize for solo stakers that’s led to some downsize
Higher fees on main chain eth as opposed to something like salana but uh in something like salana what you also have to it’s more expensive and difficult to be a validator over there right so the advantage is you get quicker blocks but you have uh slightly maybe more
Centralizing properties of the way that proof of stake works over there so maybe there are applications that are built or rely ultimately on a network of solo stakers and they’d rather pay for access to those validators I I think there are like there’s this ideological thing but
I also think there are more proximate Market forces um and Builders like Builders and entrepreneurs tend to be really pragmatic do the thing that makes the most sense for their solution and I think like one of the things I’m excited for for Ethan 2024 not to keep bringing
This back up but like reaking like one of the challenges of salana if you look with uh like with goo an interesting inverse mirror of what’s going on on ethereum versus salana is there’s a much higher stake rate in salana but a much lower penetration of liquid staking
Probably because people don’t view uh salana as money like as they do ethereum and consequentially you’ve seen this much larger richer stake liquid staking ecosystem grow within eth and you have reaking and so I just don’t think we have to wait for a World War II thing I
Just think there are trade-offs in between these different blockchains that will make sense for different use cases and there’s like plenty of reason to be excited about the decentralized properties of ethereum today and it will make sense for some use cases over here and some use cases over
There I I mean I can add one more thing to this before we move on um because I want to talk about the credible neutrality point that Mike brought up before this is not a well understood term I think in crypto uh you say this term and a lot of people don’t
Understand it the way I’ve been kind of talking about it lately and it really is just something that I that I kind of uh kind of come up with lately off the back of some conversations I was having is basically that let’s imagine a future where eth is like a global money and
People don’t cash it out anymore it’s just money right people use eth to buy things with and and you know they don’t care too much because doesn’t actually fluctuate too much in value it’s like a normal kind of money that we’re used to now let’s imagine both the US government
And the North Korean government store their wealth in eth on a ethereum that is a credibly neutral network if they do that because that network is not favoring either party and either party has confidence that that network will not favor either of them and either party doesn’t have control over the
Network so that’s what we talk about when we talk about credible neutrality basically a completely neutral layer that anyone can use and have confidence in that no other party even their parties that they’re you know basically enemies with at the nation state level can uh take their wealth away or can
Control them or can manipulate them in in some way but it’s broader than that of course and I think that if we talk about ofac and stuff like that I mean ethereum has already proven its censorship resistance I think even though a lot of the network uh sensors
Uh the TOA cash transactions it’s just delayed inclusion we call it where essentially you wait like a couple minutes and your transactions getting included anyway uh because ethereum is uh censorship resistant uh Network it’s not censorship proof neither is Bitcoin mind you because um that’s a lot harder
To do but I think ethereum has already proven that out so ethereum has proven out the sensorship resistance and the credible neutrality in my mind but if we want to talk about it in its end State that’s how I kind of think about it guys this has been a fantastic discussion I’m
So glad we had this panel and we’re going to move to wrap up in uh rapid fire questions and allow you guys to just uh summarize but one thing I really liked about this discussion is because all three of our eth Bulls today uh I don’t think we have a single bear here
But all three of our eth Bulls today was kind of bearish no no no I don’t think so he’s a bull’s a new he’s a new bull he’s uh you guys are all bullish for different reasons like Jordy was was bullish because of layer twos and uh Community
Money Anthony is bullish Because the Internet Bond and ethereum is a settlement layer Mike was bullish because ethereum has the potential to export its validator and Staker Set uh to the world and receive yield on top so there’s just a lot of reasons to be bullish on eth going into 2024
Especially when it’s had a 2023 let let’s face it kind of a mediocre year compared to other crypto assets and so this is the question that everyone’s going to have to decide for themselves going to the next year is ethereum being squee squeezed between these two sides
Or is it actually starting to push its competitors uh to the margins by being a bit more more more generalized um and there’s also this discussion of inside crypto versus outside crypto right the next millions of uh crypto users how will they come into the platform anyway
A lot of exciting things in store for 2022 but I want to ask this question as we wrap up just Rapid Fire for me here eth ETF okay there’s rumor that it’s coming the Bloomberg analyst will will tell you 70% uh probability in 2024 do you think this
Is overrated underrated or uh about correctly rated in the market first Anthony too yeah I mean uh about correctly rated I think because there is still some concerns around it but I think generally you’ve seen genla change his tune on on eth I mean they proved the Futures ETFs
I know that’s a different product but still that’s signal right there um and the fact that it’s like as far as I know a copy paste from the BTC ETF because it’s not a Stak one they won’t have to do these back and forth dance that they’ve been doing with the SEC the
Issuers um like they have for BTC they can basically just uh copy paste it over um maybe change some things here and there so yeah I would agree 70% sounds sounds about right Mike what do you think is uh EF overrated underrated I think assuming that it gets
Ped I think it’s underrated because I think people are generally underrating the Bitcoin ETF and people will point to the E Futures ETF and say look what happened nothing happened very silly uh as an argument I think so I think most I could see this
Maybe to Bull case for for the eth ETF would be the Bitcoin ETF surprises to the upside there’s this other Narrative of an eth ETF being approved and yeah I would say it’s probably actually not being appropriately rated more bullish what’s your take overrated underrated I think the 70% sounds about
Right so I think on that on that we kind of aligned and I think you know mid year is is sort of the time that most likely I think we do see it I agree with Mike like if Bitcoin one goes well yes Bitcoin will do amazing as as like a
Price but immediately like everyone will be like okay what’s next markets are always forward-looking we talked about this many times before but like the fact that that will be the next thing in the Horizon that will start the price and then as Anthony said price kind of
Builds upon itself it’s it’s it it is the product I’m I’m here underrated am I hear an underrated from Jordy underrated 100% there we go I would say underrated I would say underrated as well I think I was just talking about the percent I was talking about yeah yeah you can’t be more
Bullish I was talking about 70% being fairly rated but I mean I completely agree with what what what Mike and Jordy said yeah I mean if the btcf surprises to the upside for sure you’re going to see The Narrative pivot immediately to being like Oh well if this has happened
For BTC it’s going to happen for eth too and that will just make eth like this guy cannot be beat on bullishness okay and I’m but I’m going to give a chance to redeem himself near the end of that episode because we can’t have an ethb episode without giving price predictions
Okay for 2024 as we’re recording this Bank list Nation uh the price of eth is 2325 at least according to my tracker it went up it went up 4% during this episode congrats guys did it Well Done guys well done bulls and we’ll see who
Knows what price it’ll be by by the time the community hears this but I want your price for 2024 okay so we’re starting in the you know 2300s or so starting the year uh where do you think we close now Jord it’s your chance to redeem yourself
Uh Pro prove whether you’re an ethb or not what do you think for 2024 man I always like with my prediction I’m always conservative and I’m not a moon boy and I uh my prediction at the end at the end of last year for this year was a
2,000 so we’re 2300 that’s good I’ll say like 6,000 and if we end up being at 8,000 I’ll be happy but I’ll kind of say six 68k there we go Mike what do you got I was is literally going to this is going to sound like I was going to say
6,000 I I I’m not the price predictions guy I’m always wrong on this no one’s a price predictions guy I know yeah yeah a little more color yeah go add color first well Anthony uh I just think I think eth has some catch-up room now
Yeah I I think it’s been sort of it hasn’t performed as well my mental model for this has been Bitcoin leads the beginning of new bull cycles and it takes a little while for eth to catch up so yeah I think that’ll happen more towards the end of the year and get us
Into the 6,000 range okay 6 to 8K Mike’s going 6K Jordy 6 to 8K Anthony what do you got for us and I’ll just I’ll just remind folks what was the top last cycle 4,400 something like that for a 4,900 4,900 that was the second leverage Le
Top of in November yeah yeah but I mean I count no may as like the real top I don’t know that’s a whole other debate but um what’s your take I do want to just springboard before I like I hate giving price predictions cuz I’m always
Wrong like 100% of the time I’m just too bullish because I just I’m too biased but I want to springboard and say I put a tweet out a while ago where I said that I actually thought eth wasn’t lagging but it was leading the market
Because it led the market in the bare it bottomed first right it bottomed in June of 2022 and then didn’t set a new bottom 6 months later when FTX blew up so my the running thesis which may or may not play out we’ll have to see is that eth
Actually LED and that’s why it lagged this year and as we said at the beginning of the episode I think maybe Mike said it you know got oversold like so hard right 96% or something down um and then obviously it rebounded a lot this year but if you actually look at
The price of Solar year ago and the price of ether year ago they’re about the same um so the performance is pretty much like the same if you look at the the prices maybe not I guess last couple days cuz so went up a lot but you know
If if you’re looking at it from that lens so I will say I I I I think that I agree with these guys about if you’re talking about 2024 6 to AK sounds like a good range but if the hype gets ahead of itself because of the ETF stuff if we
Get like bombastic like crypto likes to do I don’t see why 10K wouldn’t be on the table here so I’m I’m just going to leave that at that you know what the three guests have given their predictions David should we indulge ourselves David I want to hear from you
Man I what’s your PR I don’t have any further thing to add what these guys tired of being wrong from David myself you know what I’ll give my prediction then 10K I think we’re hitting 10K in 2024 in 2024 please I’ve been saying it since 2019 it has to happen
I need to be indicated guys thank you so much for joining us this has been uh such a pleasure and I I know the bankless audience will uh will enjoy this episode as the kickoff to 2024 it’s going to be a big year for everybody cheers thanks guys thanks for
Having us guys got to end with this of course uh God knows none of that was Financial advice okay crypto is risky so is eth you could lose what you put in we have no idea where the prices are going 2024 but we do know we are headed west
This is the frontier not for everyone but we’re glad you’re with us on the bankless journey thanks a lot
27 Comments
BTC >> ETH
Mannnn I’m so close to swapping my ETH for more BTC
ETH isn't good at anything. I don't see a bright future for it. BTC has the decentralized money locked down and a there are tons of chains competing to be a faster/cheaper smart contract platforms and they are interchangeable.
"What if new users don't care about decentralization" well then we will just repeat the same mistakes of the past and people will learn the hard way to value decentralization again. Do you understand?
For me, participating in the Block Sailor BLOCK presale changed everything. Assemble the movement!
Block Sailor BLOCK is about to go off the tracks.
The disruptive potential of Block Sailor BLOCK excites me. This might alter the course of the cryptocurrency industry!
Block Sailor BLOCK is set for takeoff like a rocket. Put your seatbelt on and take it easy!
Block Sailor BLOCK, the first token that is controlled by itself instead of owners or anybody else, is the smartest token in the world.
Block Sailor BLOCK is set for takeoff like a rocket. Put your seatbelt on and take it easy!
Block Sailor is Block Sailor.
I liked ETH but the fees are downright ridiculous and antithetical to the goals of cryptocurrencies. I still hold a position but I’m not investing anymore into it.
All scaling comes down to DA scaling with erasure coding / KZG commits and zk roll ups. It is the only known way to have many nodes with moderate network bandwidth providing 1 Tb/s+ DA bandwidth. This is how you keep both security and scalability. Solana's method of optimizing on L1 requires large network bandwidth for nodes, and grows state enormously. EigenDA itself will make ETH a nice asset to hold.
happy new year all!!!
One issue that was undiscussed is that I don't think anyone will want a U.S. ETH ETF, at least in the short-term, because the current regulators will never allow it to have yield… Thoughts?
perspectives for 2024…stETH, W-ETH, M-ETH…"mental ETH" 😉
Dangerous to listen to this echo chamber. ETH has lots of activity with big VC but once ETHGATE is widely understood, people will fall away. The governments and banking system will not adopt. Fees make it unworkable. Beware.
The only conversation we as a society should be having now re crypto is reparations for their financial crimes against society and forced wealth redistribution from the grifters to the exploited
And then- political asylum. These are people who are currently running ads to literal kids telling them this crap is the future of finance while the top teams in the industry get hacked millions daily.
What happens when millions of teens get hacked billions of dollars or their parents’ savings and used against US national security interests?
How should we treat those legitimately trying to topple the financial system, state, and societal order for their own greed and portfolio by shilling this deeply flawed, experimental, anti state tech and brainwashing kids to join their extremist political cult?
Political asylum is generous, no?
literally stopped watching when the guy said he has no sol because there will be unlocks in 2023
Ryan's Bankless poster looks like a roll up
First time I actually understood Anthony. He connected some dots for me today
Let’s buy meth for yield;) 40:00
I am happy that I am alone to bullish on ETH, thanks, guys
Perfect! educative! Enlightening!
Anytime anyone mentions being bullish on eth, it looks like David is getting his balls tickled under the table with his sneering happy grinch grin.
SOL my guys. It’s the one.
Damn mETH heads everywhere!