28 - The Bull Case for DeFi | Vance Spencer

Episode: #28 August 31, 2020 ----- Tools from our sponsors to go bankless: Loopring https://bankless.cc/loopring-VIP - trade & pay on Ethereum w/ near-0 gas fees! (use "Bankless" for VIP4 status & trades at 6bps!) Monolith https://bankless.cc/3e2TG4E - holy grail of bankless Visa cards Aave https://bankless.cc/aave - money lego for lending & borrowing Rocket Dollar https://bankless.cc/2C57MVW - tax shelter your crypto ($50 w/ "BANKLESS https://bankless.cc/2C57MVW") (Read this on IRAs https://bankless.substack.com/p/tax-shelter-your-crypto-in-an-ira and 401ks) https://bankless.substack.com/p/how-to-setup-a-crypto-401k-for-your ---- Vance Spencer of Framework was buying DeFi tokens when they were deeply unpopular. Deep conviction on DeFi, but he and his co-founder made bets on communities. He was contrarian yes...but contrarian right. Ask him his strategy and he'll simply tell you..."I look at memes all day." But there's hidden brilliance in that phase. Listen as he describes how he invests in the crypto native founders, how he buys culturally composable communities, how the best things start very small. His fund bought SNX when no on believed. They bought LINK when it was worth 18 cents. How? Why? What's he buying now? We end with some FIRE predictions on final market caps for this bull run. We cover: Are we in a bull market? The DeFi Bull Case Crypto Native Investing Fund Composable communities Contrarian bets in the bear market Where did the LINK marines come from? Populism is real in crypto REGULATORS are friends? Turning Communities into Protocols Farming Token Premium Things Vance is buying Price Predictions!!! 🔥 Join us next Monday for a fresh episode! ----- Resources discussed: DeFi Studio Framework Labs Leave Stealth https://www.coindesk.com/defi-studio-framework-labs-leaves-stealth-mode-with-8m-in-seed-funding Listen to Protocol Sink Thesis episode https://bankless.substack.com/p/12-the-protocol-sink-thesis ----- Episode Actions: Get involved in communities - YFI https://gov.yearn.finance/, YAMs https://forum.yam.finance/, SNX https://sips.synthetix.io/all-sip, Bankless https://bankless.substack.com/p/-guide-2-using-the-bankless-badge Get active in the networks you invest in! (e.g. own some ETH, try to run an Eth2 validator https://bankless.substack.com/p/guide-becoming-a-validator-on-the!) ----- Subscribe to podcast on iTunes https://podcasts.apple.com/us/podcast/bankless/id1499409058 | Spotify https://open.spotify.com/show/41TNnXSv5ExcQSzEGLlGhy | YouTube https://www.youtube.com/c/bankless | RSS Feed http://podcast.banklesshq.com/ Leave a review on iTunes https://podcasts.apple.com/us/podcast/bankless/id1499409058 Share the episode with someone you know! ----- Don't stop at the podcast! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Watch Bankless shows and tutorials on YouTube https://www.youtube.com/c/bankless Visit official Bankless website http://banklesshq.com/ for resources Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState ----- Not financial or tax advice. This podcast is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Do your own research.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:07Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. I'm Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, I know I say this at the front of every episode, how to front run the opportunity. It's literally what we say in the intro every single time. I feel like this episode truly is front running the opportunity. I know that because if you listen to episode number 28 with our guest, Vance Spencer, that was truly a time to front run the opportunity in DeFi and ETH.

• 0:50Ryan Sean Adams?

  If you listened to him even earlier, it would have been even better. And now here again is a fantastic episode and an opportunity for Bankless listeners, those who are about that life, the crypto natives in this space, to get ahead of the massive monumental shift that is happening in the global money system. Super exciting, man. I love this episode.

• 1:14David Hoffman?

  Yeah, we are bringing Vance Spencer back onto the podcast more or less because he got things right. We had him on it nine months ago, episode 28, the bull case for DeFi. It was one of Bankless's really big first big episodes. And Vance Spencer, he held the number one spot for the most downloaded episode for, I think, the longest time in Bankless podcast history. People really, really liked that episode. And basically because he predicted everything that he said more or less came true or is in the process of becoming true. So we're bringing him on nine months later to get an update as to how his mental models have updated, where he's shifted, where his focus is now. Because you know, if you talk to one person who got it right one time, he's probably going to get it right again.

• 1:59David Hoffman?

  And overall Vance, you can tell Vance Spencer comes from a place of first principles and he has a very thesis driven mentality about the space. And that's why he can talk a little bit about everything, right? We talked about DeFi, we talked about DAOs, we talked about L2s, we talked about... Enterprise blockchain and rollups and MEV and he's got a take for everything and every single thing is interesting. And so we wanted to bring Vance back on the podcast to give him another shot to get an episode back into the number one downloaded episode of the Bankless podcast.

• 2:33Ryan Sean Adams?

  That's a little harder these days.

• 2:34David Hoffman?

  He's been overtaken by Vitalik and Justin Drake and a few others. And it is a little bit harder these days, but I think he can do it. And guys, if you like Van Spencer and you like talking about DeFi, we are also bringing Vance back on to a panel and Ask Me Anything panel this coming Wednesday. So this podcast is coming out on Monday, maybe you're listening to it on Monday or Tuesday. We have Van Spencer, Spencer Noon and Santiago Santos on a DeFi Eating the Banks panel this Wednesday at 1:00 PM PST. So mark that on your calendars. We are going to put Vance in with the other like big, big brain DeFi thinkers and just talk about what it means to be a part of DeFi and do we really even need banks anymore

• 3:18David Hoffman?

  these days? And so, you know, make sure you watch that when it comes time.

• 3:22Ryan Sean Adams?

  That is on, that's going to be on YouTube. So go to Bankless YouTube and, and find that. I think you could, you should be able to set a reminder for that event. We'll have in the show notes and there'll be an event up. Yeah. So, I mean, look, the big monumental shift this time, last time we had Vance on, it was all about like DeFi tokenization and DeFi summer. I feel like this time it's all about layer two. Layer two is going to be absolutely massive for crypto in this space. And so we spent a lot of time unpacking what layer two actually means and, and playing that out in real time, what it means for other competing ETH killer layer ones, what it means for users in this space, what it unlocks

• 4:04Ryan Sean Adams?

  as far as new applications. So the focus is really on, on layer two and trying to play that out is where you're going to find the opportunities. And Vance said some things that are like kind of contrarian. I mean, when was the last time you heard someone talk about in DeFi enterprise blockchain, right? Or like the verticalization, the fintech layer of DeFi, like, these are some topics that seem controversial at the time and like, don't seem to fit at the time, but I remember thinking-

• 4:34David Hoffman?

  The fact that they're coming out of left field means that Vance is paying attention to them for some reason.

• 4:38Ryan Sean Adams?

  It's interesting because I remember thinking about that at the time when he was bullish in like 2017, 2018, in particular 2018 on Chainlink, right? And, you know, at a time when all tokens were kind of dead or dying and that turned into a really good call, also synthetics, you know? So, anyway, listen to this podcast, listen to this episode, definitely a way to, to front run the opportunity that is coming. We want to thank the sponsors that made this Bankless episode possible before we get into it. Here they are.

• 5:07David Hoffman?

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• 5:52David Hoffman?

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• 6:35David Hoffman?

  Yield and composability all in one application. On Aave, there are a ton of assets that you can deposit in order to gain yield. And all of those same assets can also be borrowed from the protocol if you have deposited collateral. Here you can see me getting a 200 USDC loan against my portfolio of a number of different DeFi tokens and ETH. I'll choose a variable interest rate because it's a lower rate than the stable interest rate option. But I could choose the stable interest rate option if I wanted to lock that interest rate in permanently. One of Aave's V2 features is the ability to swap collateral without having to withdraw your assets. Trade them on Uniswap and then deposit them back into Aave. Aave does all of this for you, all in one seamless transaction.

• 7:18David Hoffman?

  So you don't have to repay loans in order to change the collateral you have backing them. Check out the power of Aave at ave.com. That's A-A-V-E dot com.

• 7:28Ryan Sean Adams?

  Okay, Bankless Nation, we are super excited to have Vance Spencer back on the program. Vance is the co-founder of Framework Ventures. Framework and Vance have been really pioneers in establishing a crypto native venture fund. That's why we had him on the first time back in August. He's got these incredible methods of discovering alpha, particularly in DeFi, and applying a really unique investment thesis. I think the thesis is getting active in protocols, actually using them, investing in crypto native founders. We did this monster episode with Vance back in August of 2020. It's episode number 28. If you want to go back and listen to it, I recently listened to it.

• 8:11Ryan Sean Adams?

  Well worth it. Holds up, guys. It's one of the episodes-

• 8:14David Hoffman?

  It was our number one episode for a really long time. It was like our first gangbuster episode.

• 8:19Ryan Sean Adams?

  And I remember saying after this episode, like just tweeting, it is like 90 minutes of listening, but you got $1 million worth of value at least, depending on what you did with the knowledge. So we've got to bring Vance back for an update. It's been nine months later. Vance, welcome back to Bankless. How are you doing, sir?

• 8:39Speaker 02

  Doing great. Yeah, it's been too long. Thanks for having me back.

• 8:42Ryan Sean Adams?

  What have you been up to, man? I know you haven't been busy at all. Just chilling.

• 8:46Speaker 02

  What have I been up to? You know, raised the second fund for framework, kind of saw the thesis gradually play out in the first fund.

• 8:56Speaker 02

  Have kind of doubled down on being super active, you know, just being kind of on-chain in all shapes and forms.

• 9:03Speaker 02

  And and just being good stewards of the protocols that we support and just trying to push the space forward. But, you know, through the pandemic, DeFi really didn't take a break or stop at all. And so it's been, you know, nonstop for, you know, almost since we last spoke.

• 9:16Ryan Sean Adams?

  Are you feeling like things have accelerated even more since we last spoke? Because we were just coming off of DeFi summer. We're at like the tail end of it. We didn't know at the time, but August 2020 was sort of the tail end of what we now call DeFi summer. Have things accelerated since then?

• 9:31Speaker 02

  Definitely. I would say the progress in DeFi and crypto is not super linear. We kind of like, kind of progressed to the point where we kind of bump up against the limitations of, you know, base layers or kind of the infrastructure of the tooling, or even kind of the level of developer talent in the space. But it feels like, you know, we've had kind of that expansion from DeFi summer. We had like a little bit of a DeFi winter. We kind of even led the way forward with, you know, more TBL, things like derivatives, things like, you know, layer twos that are now kind of coming to fruition. And it feels like we're now kind of about to realize that next step change in terms of just usability and functionality and just usefulness.

• 10:11Speaker 02

  As these things launch, like Arbitrum and Optimism and, you know, ZK saying, so it's, it feels like we're about to enter another exponential period of growth for the space.

• 10:20Ryan Sean Adams?

  Okay, Vance, so we're going to ask you about that second exponential period of growth because at the end of the August 2020 episode, we asked for your predictions. And you're one of the few guests who's just like, yep, here are my predictions, like no hedging, like these are the numbers. Anyway, I want to just recap for folks who haven't listened to that. But basically, at the time, this was August 2020, at the time, we asked, hey, Vance, during the next bull cycle, which we think we're entering into. The next 24 months, what's the total locked value of DeFi going to look like? At the time, it was 8 billion, something like that, total locked billion. You said it was going to hit 100 to 500 billion total locked value.

• 11:02Ryan Sean Adams?

  And I think David and my head almost exploded when you said that. But here we are, less than a year later, and we're at 88 billion total locked value. So like creeping up to your bottom bound, 100 billion. And you also said ETH and Bitcoin might get into the trillions, trillions plural. ETH was at 40 billion when we recorded that. It's now at four, it's gotten as high as 480 billion. So a nice little 10x there, not quite the trillions. Bitcoin did hit trillion dollar Bitcoin. So we had like 1.1 trillion or so at the time Bitcoin was 200 billion.

• 11:41Ryan Sean Adams?

  So we're getting close to your estimates, Vance, which like seemed pretty heady, I would say. Seemed pretty incredible nine months ago, maybe not so incredible now. And I say all this to like, I guess maybe tee up your credibility that, that, that you're not afraid to make big, bold predictions and to invest with conviction on those, on those predictions. But I also say this because I want you to be ready, Vance. At the end of this episode, we're going to ask you those same questions. We want more predictions. Give us more predictions. So I want you to be ready for the predictions at the end. Don't give them now, you know, let's build the suspense. Let's talk about some deeper topics, but be ready, sir. You going to be ready?

• 12:23Speaker 02

  I'm ready, of course.

• 12:25Ryan Sean Adams?

  All right. Well, let's talk first about this drawdown because recently there have been 11 days in Maine, in May, where we saw 60% some odd drawdown, 70% plus in some DeFi assets. 66% I think maybe more down in ETH. Bitcoin's been slumping. Some people are saying this is the end of the bull run. So we might not hit those heady predictions that, that, that you were thinking of earlier. So like, what's your take on that? Is this the end of the bull run? Is this a pause or are we doing something else here?

• 13:02Speaker 02

  Um, I, I don't think it's the end of the bull run at all. And like, I, I kind of have trouble defining what like a bull run is in crypto. I, I think there's a bull run kind of at any given time in any place. Um, you know, Bitcoin has probably a 10 or 20 year adoption cycle that it's going to live through, but it's already, you know, a good way through that story. Um, Ethereum is just the beginning and there's going to be these periods of volatility and drawdowns. But the story on a longer timeframe is, is just that adoption is, is increasing. Um, institutional financial, uh, you know, places are, are able to actually use and custody this stuff. And Wall Street and, and, you know, basically all institutional allocators are now considering this a real asset class. And so, you know, saying that the bull run over doesn't really take those things, you know, into kind of mind.

• 13:47Speaker 02

  And the thing that we learned kind of going out and raising, um, for our second fund was that there's probably, you know, we're underestimating by one to two orders of magnitude, the amount of capital that's on the sidelines that's waiting to come off. Um, and into some productive and interesting assets. And it kind of just depends on, um, you know, how far away are they from, from being convinced of, you know, your given asset or whatever you prefer, um, you know, to allocate to. And, and I think the reality is that Bitcoin is amazing in, in times where, where things are really pessimistic. And, and, uh, you know, when, when the world seems to be going to shit, but you're not that many people own gold. Um, you know, that are institutional investors. They're, the people who have gotten rich over the past 20 years have gotten rich.

• 14:29Speaker 02

  Um, allocating to venture funds, buying the dip on technology stocks, you know, looking at productive assets that have a high growth rate and a large TAM. And, you know, those things just look and feel like Ethereum and they look and feel like DeFi. And so, you know, when people say the bull runs over, it's like, I just kind of feel like they spend too much time on Twitter and not talking to people. And I'm fully aware that people don't have the privilege of talking to these large institutional allocators. But, you know, those people are very bullish and it's just about kind of form fitting the story of Ethereum and the form fitting of the story of DeFi to kind of what they want.

• 15:01Ryan Sean Adams?

  Would you say that people have gotten rich on like wealthy on optimism rather than pessimism historically? And do you draw that distinction between sort of the Bitcoin investment thesis and maybe the Ethereum DeFi investment thesis? One is optimistic, the other is pessimistic?

• 15:17Speaker 02

  I think it would have been very hard to analyze Ethereum through a cynical lens. Same with DeFi. You just have to be optimistic when you look towards the future. And I think that's, you know, one of the principles that we have at Framework is just like, you know, being a perpetual optimist, believing in what you're doing. You know, that is a force multiplier when you kind of, you know, extend that across multiple projects or investments, or even things that you're doing generally. And so we always kind of strive to take that forward looking optimistic approach. But I think the converse can be said about, you know, Bitcoin in a lot of ways. You know, it's a hedge for, you know, the worst of times. You know, it's largely a finished product that has no endogenous catalyst on the roadmap. Really, everything that's happening to Bitcoin right now, in my view, and this is a little

• 16:00Speaker 02

  bit biased, is, you know, people waiting for exogenous catalysts, you know, people coming off the sidelines and allocating to Bitcoin. And for us, it's just a little bit difficult to kind of, you know, see something as a roadmap and a future and catalyst and pick Bitcoin over that. And I think a lot of institutional allocators realize in the same. And, you know, if you look at the BTC ratio, it's almost tripled, you know, in the past, I think, six months. And it's easy to kind of be in the space and to think that, you know, because Bitcoin is consensus within the space, you know, other people will realize that. But not everyone else is coming in with the same set of shared values and context as those early kind of, you know, libertarian leaning people. Like, a lot of people want to see something that looks and feels like traditional technology.

• 16:44Speaker 02

  And I think that's very much where the world is heading.

• 16:47Ryan Sean Adams?

  See, David, it's okay that we're optimistic permables. It's fine. That's it's fine.

• 16:51David Hoffman?

  Yeah, Vance, I want to actually dig in on this subject. And this is actually something that, not something that we had in the agenda, but it's intrinsically interesting to me and I think for the listeners as well, because we've had a little bit, we've had some back and forth with some Bitcoiners lately about just, you know, about the whole, you know, ETH BTC debate, right? And I couldn't, can't remember who said this, but they said something along the lines of like, it's really baked into your genetics what side you fall on. Do you fall on like the Ethereum DeFi side or do you fall on the Bitcoin side? And some people just, they find resonance with one side or the other, and that's where they call home. And so how do you see with you and when, how you invest at Framework and like the culture that you've created at Framework?

• 17:35David Hoffman?

  How does your personal disposition direct what you choose to focus on and how you choose to invest? And how do you think that becomes also true for other venture investments and speculators in this space as well?

• 17:50Speaker 02

  Yeah, so, you know, Framework has never invested in Bitcoin, and I just don't think that's in our mandate. We're a venture fund that invests in founders at the earliest stages. And that's really kind of what we'd like to do at the end of the day is invest in people. And, you know, there's a lot of meat on the bone when you look at DeFi, whether it's the kind of primitives, or the aggregators, or just the different kind of, you know, consumer applications that people are building on top of it. And it's inspiring to work with those people. And, you know, there is an ecosystem around Bitcoin, albeit a lot smaller. You know, it's concentrated around the Lightning Network. It's concentrated around, you know, basically different forms of hyper Bitcoinization for developing countries. And I think kind

• 18:32Speaker 02

  of what I've been seeing is that stable coins are really taking a lot of wind out of that sail. You know, depending on how you think of the US dollar, or Bitcoin's kind of short value properties, the evidence is relatively clear in these developing countries that people are choosing stable coins over Bitcoin, just because it's a little bit more functional. And things trend towards utility over time. And, you know, that's kind of where we kind of seek to play. You know, and I think any potential flipping will be bullish long term for both Bitcoin and Ethereum. I think, you know, Bitcoin is burdened by the expectations of having to carry the entire space, which, you know, props to Bitcoin, it's fulfilled over time. You know, there were times where we needed the coherent narrative of Bitcoin

• 19:16Speaker 02

  to tie the space together through the bear market, even though Ethereum was building, like, you know, it was kind of an open question as to whether ETH would be a real project, you know, a couple of years down the road. But Bitcoin really did hold the space together. And now it feels like, you know, just as this number one asset, it has the burden of expectation of doing basically everything, being technology, being money, being all these things to everyone. And, you know, if there is a flipping and ETH proves to be just this massive technology layer, Bitcoin can settle into, you know, a bit of a more comfortable albeit smaller TAM as as just being digital gold. And I think that's a perfectly amazing outcome for all Bitcoiners out there because it's still a gigantic market and there's still probably ten to one hundred X upside, but it's not going to be the the end all be all and that that's totally fine.

• 19:58Speaker 02

  And getting past that horizon, I think, and getting past the fear will be really bullish for Bitcoin itself. I think the community will become a lot less striking, that would be how I put it.

• 20:09Ryan Sean Adams?

  Angry.

• 20:11David Hoffman?

  Let's uh, let's get back to the the the conversation of market dynamics and I want to get your take on this as as well, Vance. People have speculated that as we quote unquote go mainstream as an industry, the way that these markets are structured and the way that these markets play out is also going to change. No, no longer will we have four year long boom and bust cycles where the peaks are really high and the troughs are really low. There are uh, so some speculate about the nature of a super cycle where we never actually get a deep prolonged bear market and instead we kind of just rebound over and over and over again and stair step our way up to the top. There's other speculations that we just have the same boom and bust cycles, but they're smaller and quicker.

• 20:53David Hoffman?

  Where you know, we we hit blow off top sooner, we we do it, do a bounce quicker and then we just also keep on going. And what what, how do you expect these market dynamics to change from what people are expecting or previously expecting, which is these four year long mega cycles versus where do you think this is going now that we've kind of hit like this mainstream adoption? How do you see these these markets changing?

• 21:16Speaker 02

  So, I mean, generally, I'm, I have the pleasure of of of thinking on longer time scales just because, you know, we run ten year funds. So, you know, my perspective is basically like, you know, we're going to invest in these things and, you know, I'll call you in a decade. I'll let you know how we did. And you know, fortunately with a lot of asset class, you can tell early, you know, there is liquidity. You can, you can understand how the markets are working if the technology is valuable. But I think over the longest time horizon, the math is just very clear and and on our side. You know, there's a generational preference for digital versus physical. You know, largely digital assets in and of themselves are. Phenomenon that is, you know, in the under thirty cohort, which will become the majority population cohort in the next five years.

• 22:01Speaker 02

  Um, you know, those types of statistics just mean that, you know, the financial gravity of these generations maturing is just on our side. And and their preference will manifest in in, you know, the prices of assets that they like going up. Um, and you know, it's both because they like them and it's also because, you know, on a lot of them, they're fundamentally productive. And so while I still do see the case for boom and bust cycles for things that are more store value ask. Because they tend to take trade, tend to trade around these kind of credit cycles. Um, things that are productive. It it just feels like there's really kind of no stopping the growth because the, you know, it's a lot of for flexibility. There's more T B L, there's more fees, the things are more productive, the more useful, there's more capital to bootstrap projects in the ecosystem like.

• 22:45Speaker 02

  That will really never go away once that flywheel is spinning fast enough. And I think we've now kind of reached that escape velocity.

• 22:52Speaker 02

  Does that mean, you know, there won't be sixty or seventy percent drawdowns like? I I don't really know. I mean, there was one, you know, two weeks ago. Uh, but I I I think the thing about drawdowns is like. You know, when when you lose money and and things aren't going exactly how you planned, you know, you can kind of dig the hole as arbitrarily deep as you want it. Kind of emotionally or or, you know, however you're kind of choosing to respond in the situation. But as long as you kind of have good assets and you understand the thesis and you're willing to wait long enough. There really is no cause for concern. And I think the amazing thing about this space specifically DeFi is that. You're able to delay things like tax liabilities, you're able to borrow against your assets, like, you know, the the actual functionality and utility is baked into this asset class, which doesn't put a lot of the same pressure.

• 23:37Speaker 02

  On things like, you know, traditional stocks or commodities or or even Bitcoin. Um, so, you know, when in doubt, zoom out is is kind of, you know, my my personal mantra and I think good advice.

• 23:48Ryan Sean Adams?

  It is so funny, like, once you cross the bridge from the legacy bank system to this new DeFi ecosystem, you don't tend to cross it back the other way, right? So like, even if you sell your crypto native assets, what are you selling to? Stable coins, right? Like, what, like, am I gonna sell back to my Wells Fargo bucks and earn like .01% in a savings account? No, of course not. So it's, it's to your point, it's staying in the DeFi economy and the crypto economy for the utility of things. But like, so part, part of me is optimistic on everything you just said, Vance, but like, also part of me feels like, my God, though,

• 24:27Ryan Sean Adams?

  it does feel like crypto investors, maybe I'll just name retail, haven't actually gotten smarter versus 2017? Maybe it's a new crop because like, we're still pumping doggy coins, aren't we? Like, what's up with that? Is that a counter argument to our DeFi is going mainstream? People are understanding this asset class argument? Or like, what would you say?

• 24:54Speaker 02

  I, I, I mean, I'm very much a fan of, of, of people doing what they want with their money. And, and I don't think Ethereum's get to have it both ways, or frankly, anybody in crypto where, you know, they preach, you know, economic freedom, but only in the subset of assets or things that they like and consider valuable. That doesn't mean that I don't think that Dogecoin is, you know, basically financial napalm and that a lot of these guys will get torched. But, you know, I, I came from, you know, a technology job where I was just speculating on these assets in my free time. And if anybody had told me that I couldn't do that, I, I kind of would have just laughed at them. And I think, you know, that's kind of the same response that we get from a lot of people that, that want to trade things like Dogecoin or Shibo,

• 25:35Speaker 02

  or really whatever the, the coin is, is that they're just kind of expressing their own personal preference. And they're using things like Uniswap to do it. And so anything that gets them on board and interested, you know, is a win in my book. Do I think these things are really good long-term investments? Like, you know, I don't, but everyone has a right to speculate. And I think, you know, generally I am, I am on board with things like accredited investor rules and, and things like that. But, you know, the history of the US at least is, is, is rife with, we're really good at speculation. That is one of the core tenants of what we do economically, other than just kind of labor. And, you know, I like to see that that is back in the markets, albeit it's a little bit frothy. But, you know, to step in the right direction towards getting people another kind of economic leg to hold up their, their kind of stool.

• 26:20Speaker 02

  So I'm, I'm actually, you know, pretty bullish on the fact that that's happening. And it just brings more attention to crypto as well. So, you know, it's not all bad.

• 26:29David Hoffman?

  Parents, I want to hang on the 60% drawdown that we had recently because I think there's some lessons that we could parse out from there. DeFi kind of took it like a champ. We had cascading liquidations like left and right. We had arguably the spike all the way down from like below $2,200 Ether down to $1,700 Ether was really just liquidity just drying up as people had to get liquidated. But then buyers did step in. Stablecoins stayed relatively close to their peg. You know, what lessons can we draw from this 60% drawdown about like where DeFi is in its level of maturity?

• 27:07Speaker 02

  Yeah, I would probably give, I would give, I would give different grades to different parts of DeFi. I think base layer DeFi did really well. The, you know, gas prices, you know, increased as the volatility got worse and worse. And that primarily acted as a decelerant to the moves. You know, anyone with, you know, under X or Y amount of Ether capital really couldn't do anything. And we run a lot of kind of market making, you know, operations to just basically keep markets in line, both across spot and derivatives exchanges in DeFi. And, you know, that allowed us to really kind of have some room to maneuver and stabilize the markets that we were in.

• 27:45Speaker 02

  So that was, you know, really positive. The things that I didn't really like seeing were, you know, people who had, you know, created a loan on layer one on Maker of a withdrawn it to Polygon. And, you know, we're getting closer to their collateralization ratio, you know, being liquidated. And they couldn't get back over the Polygon bridge, you know, that, that was kind of like just something that happened that didn't really feel right. And so I think the learning there is that, you know, things like the virtual dive bridge and things like, you know, the Polygon bridge just need to be, you know, just less idiosyncratic. They need to be more generalized. People need to understand them better and they can't just go down for three hours and miss the collapse. So I think that was, was, was a negative.

• 28:28Speaker 02

  You know, at the same time, Binance viewers went down. I think FTX was down for a little bit as well. So I think those exchanges actually fare worse than DeFi. But yeah, I mean, overall, you know, a 70%, 60% drawdown in, you know, a period of two days is about as bad as you will get like almost by any, you know, measure, the amount of liquidations, you know, the total amount of capital that was, you know, we did in DeFi as well, like. You really don't get much worse than that. And to see DeFi, you know, actually thrive, actually, you know, during the incident compared to last year where pretty much everyone just got worked. You know, it was definitely positive to see.

• 29:07David Hoffman?

  The other concern that I have is like, it's great that DeFi held up and everything continued to chug on as normal, especially when we have the COVID March crash that happened. Maybe a year and a couple of months beforehand to really compare and contrast like what DeFi was like then versus what DeFi was like now. And so that's a great learning lesson, but at some point.

• 29:30David Hoffman?

  Institutions or just people at large don't like assets that fall 60% in a day. Doesn't really matter how fast it climbed, falling 60%, no one wants to see that. Did this, did that event like spook people and scare people away? Are we, is this something that we have to like come to terms with as an asset class that, you know, we are just going to have these just massive periods of volatility where just the numbers next to our assets start could be any different number the next day? Like, did we spook institutions away? Did this scare ETFs away? Like, what are your opinions about just like how the world is going to be able to stomach these massive drawdowns? And if it's actually headwinds to this asset class?

• 30:11Speaker 02

  I mean, I think that institutions who started down this path, you know, call it six months ago with, with the Elon purchase or even the kind of later sale of purchases. You know, they've now, you know, gone through investment committee, they've gone to their board, you know, they've maybe, you know, edited their mandate to allow them to invest in crypto assets like because this is such an esoteric asset class that has, you know, implications across custody, across, you know, is it taxed as property or is it taxed as stock? Like, there's so many different things people had to do like work to get into this asset class. And so that work has just compounded over time. And now those institutions are kind of finally on the finishing, you know, line and ready to allocate and things like this don't really dissuade them.

• 30:56Speaker 02

  If anything, it makes them more bullish. Like, it's hard to buy an asset that's up 5X, you know, 6X, like Bitcoin was at the very top because just the chance it goes down is is pretty high and and you know, these are all just people working at these endowments and pension funds and institutions and like they don't want that. Um, but buying it, you know, fifty, sixty percent off the highs, like while you may not have that same euphoria and excitement about the asset class, like odds are that's probably a better entry point. And you know, it's, there's something that's strange about human nature where, you know, the more something goes up, it's like the more confident you get and the more euphoric you get, you know, and the more something goes down, it's like the more you hate the asset, you're trying to fight yourself to you to not sell it.

• 31:38Speaker 02

  And you just kind of have to realize that those are things that, you know, you should generally counter trade. And and at the highest levels of professional investing, those people are paid and trained to do that. Um, and so this does not dissuade them at all. I think the more damaging thing is is potentially, you know, these ESG concerns about Bitcoin. But, you know, every Fortune five hundred company has gone through this ESG cycle where you know, there's been a guy or there's too much pollution or they're poisoning the environment somehow. And, you know, they fire the guy, they buy the carbon credits, they, you know, they remake the program and generally like they spin it as a bullish catalyst. Um, you know, now with improved corporate governance and, you know, environmental costs has been dropped and like

• 32:17Speaker 02

  that is something that even as I got off the plane in Miami two days ago, I saw someone offering, um, you know, carbon neutral Bitcoins that I could buy. And so like this thing is already happening. Uh, people are already spinning up narratives to counteract it. Um, and you know, it still hasn't really dissuaded anybody.

• 32:32Ryan Sean Adams?

  I think there's something to like making the case that volatility is a feature of free markets and not a bug and free markets, as you said, like when we're talking about doggy coins, I mean, we we can't dictate what people decide to value and what they decide to buy, right? It's just sort of a free feature of free markets. But I'm curious to dig more into your ESG, um, like thoughts, right? So that is definitely a narrative that has taken hold recently. And it's primarily in kind of like Bitcoin or circles, right? Obviously. And now I feel like Ethereum can't really say too much because look, it's still on proof of work and has been for the last five years.

• 33:13Ryan Sean Adams?

  But if the roadmap plays out how the Ethereum community anticipates in nine months or so, that could no longer be the case, right? Transition fully to proof of stake. What do you think that does to the narrative? Because I've just, when I've looked at mainstream headlines, I just see the, it's still a focus on Bitcoin, proof of work, consumption. There's really no recognition or knowledge that something like proof of state could be coming, at least for Ethereum, 99.9% reduction in like, energy costs. Do you think that narrative will be a big one for institutions? Or do you think this is just like, short-term noise? And over the long run, none of it will really matter?

• 33:57Speaker 02

  I think that'll stratify the space even more than we've seen historically. When the two biggest assets are on kind of diametrically opposed sides of the spectrum in terms of proof of work or proof of stake. And also, and this is a little bit of a reach. I think Ethereum maps very clearly to more liberal values. You know, ESG solved by proof of stake. You know, maybe staking becomes some form of UBI, where we can all stake our piece of Ethereum. And you're getting some sort of check of money every month or week or so. You know, it's an open development platform that really espouses the values of transparency and auditability and proposability that's open to anyone.

• 34:42Speaker 02

  And you know, you look at Bitcoin and the main values that it espouses to me, looking at it, are strong property rights. And you know, just, you know, basically, a lot of historical context by this proof of work mining scheme, it has expended a ton of energy, which kind of, again, maps closer to the right side of the spectrum. And so I do see that there will be kind of this ideological spread between these two assets. And that will only continue over time. As Bitcoin is largely a finished product and Ethereum continues to develop and potentially be co-opted by institutions, by governments, by things like that, to use in ways that they kind of may. And so I definitely think proof of stake merge is going to be a really big thing for the space.

• 35:28Speaker 02

  And it'll, you know, just being able to solve that ESG catalyst with something that's forward-looking and productive, rather than buying carbon credits, is just an entirely different kind of view of the space for a lot of allocators as well.

• 35:42David Hoffman?

  That's our last podcast with you. I think really what landed in my head and stuck with me was this line that DeFi is just this sandbox for possibility, right? You got one DeFi app, plugs right into another DeFi app. And not only that, but finally, we have a place for developers to play around and tinker with in a world of finance, not just a world of, you know, software, right? You know, software finance. And that's really the thing that DeFi has really unlocked for the world is it gives developers a chance to play and tinker. And when you give developers like this sandbox, naturally innovation just explodes. That was your insight and prediction back when we did our first podcast back in August of 2020.

• 36:23David Hoffman?

  How have you seen that money Lego system play out over the last, over the next nine months? What did the developers do? What did you expect? What was a surprise to you? And how would you illustrate the, and how would you characterize the nature of DeFi money Legos in its current state and form?

• 36:41Speaker 02

  So, you know, what did we do over the past year? I feel like the first thing we did was just a ton of creative destruction, which is really bullish. You know, you're creating a lot of things that are all incentivized by tokens. It's, it's kind of like War of the Worlds with, with these different token communities. And I think we saw a lot of projects, you know, fail, get hacked, you know, have bad outcomes. We also saw a lot of projects kind of get battle tested, you know, grows communities, you know, morph into different things and extend their use cases. We also saw, you know, the rise of DAOs again, you know, Maker kind of pivoting away from its foundation model, which I think is really smart and going more into a pure DAO. And now I think we're at the point where most of the major DeFi protocols, you know, there are no bank accounts.

• 37:25Speaker 02

  There's no Gusto website for them to set up their benefits if you work there. Now you're getting paid through a multi-sig in stablecoins or native tokens. And that's kind of really a different form factor of work, similar to kind of when, you know, people invented the joint stock corporation. I think that will be something that persists over time and people continue to iterate on. And you know, there was a ton of growth in the DeFi area in terms of just battle testing.

• 37:51Speaker 02

  Things that that launched that, you know, we really excited about were derivatives. And options. And I think kind of what we learned in hindsight is that these things need layer two to really work. Like you just literally cannot have a fast enough Oracle to prevent things like front running and back running. And you can't, you know, build a custom AMM to to kind of trade options on without layer two. And so, you know, the things that we thought would really take off on layer one. You know, we're kind of just, you know, a little too expensive. The gas was too high. The oracles were too slow. And so. I think those are the things that that didn't work as much as we would have wanted, but. Overall, just the growth of the ecosystem has been, you know, absolutely insane, you know. I think Ave has $21 billion of TVL on it.

• 38:33Speaker 02

  You know, Urn has seven, um, Synthetix is creating a ton of volume and issuing a ton of debt. And so, you know, things have been really bullish. I think collectively, we're all waiting for layer two and what that is, you know, going to hold. And I think it's it's just going to be. You know, more than than we can expect.

• 38:51David Hoffman?

  One of the big themes of DeFi is capital efficiency and being able to tap into the value of your assets. And that is definitely a theme that I have been particularly paying attention to, right? Like, you and a swap three, it advertises capital efficiency, capital efficiency, balancer, fee two, capital efficiency. We have liquidity and their new LUSD for 0% interest with 110% collateralization ratio on your ETH. Capital efficiency. And naturally Ave has, you know, kind of led the charge with being able to. Tap into the value of your assets where you deposit your assets and then you can tap into the capital efficiency of your assets.

• 39:31David Hoffman?

  Where where is the logical conclusion of a DeFi, you know, ecosystem that is really competing at the highest degree? To provide its users with capital efficiency, like what what is this? Is this a new paradigm about like how? People engage and interact with their assets? Like, what does this mean over the long term?

• 39:49Speaker 02

  Yeah, it's, it's, uh, when, when Uniswap went in, in the V3 direction, I think a lot of people were, were pretty surprised. You know, there, there is this idea that, um, you know, there's going to be a curve instead of an order book. And, and that means that everyone's going to get to participate. Um, and I think, you know, that dream was probably a little bit oversold, um, relative to reality. Um, and, and you know, now you have things like sushi that are, that are still kind of on that, that same curve. But, you know, all the people that can't set up these bots to do V3, um, are now kind of in the sushi, you know, curve. And, and that just means that there's less fees, there's more people, there's more mouths to feed. And that's probably not the version of the future that plays out.

• 40:29Speaker 02

  And the version of the future that plays out, at least to me, is, um, where there is some sort of either intermediary, intermediary protocol that is basically doing the LPing for people on, on things like V3. Or we get to a point where, you know, basically the people who have, you know, some technical ability are, are the ones that are able to capture those fees. Um, and I strongly think it'll be the first one, like there is just a market opportunity and people will come and fill that. But I think the really interesting thing about V3 and just this kind of capital efficiency in the context of, you know, a bunch of different layer twos and a bunch of, you know, different exciting ecosystems is that, you know, with a couple hundred million dollars of capital and four to five smart people, you can go off and dominate any L2 you want with something that looks like V3.

• 41:15Speaker 02

  You don't need to port all of your liquidity there. And so just like this idea that people can be in multiple places at multiple times, um, is really interesting from a product standpoint, because it kind of begs the question as to, you know, if capital efficiency is going to be the new thing that grabs space forward, you know, where is Uniswap.org routing liquidity through, like if there's multiple layer twos? You know, are they building more of an aggregator? Like, does the focus become more on a consumer product and, and less on these liquidity pools? Or, or like, how does that work? And so I think there's, there's a lot of unanswered questions for me about, you know, the future of front ends in the space as it relates to kind of this theme of capital efficiency and the fragmentation of, of different market makers and pieces of capital across layer twos.

• 41:55Speaker 02

  But yeah, it's, it's, uh, I, I think it's going to be a trend that impacts, you know, basically every market. You know, derivatives markets will need to get more efficient, so will lending markets. Um, and, and this idea that, you know, everyone's earning these fees and these AMMs, you know, may come under question at some point and, or maybe kind of routed through a second order primitive.

• 42:14Ryan Sean Adams?

  Vance, I think there's a whole discussion that we want to have in just a couple of minutes about Layer 2. Because that Layer 2 does feel like a huge unlock for the industry. I mean, you just talked about, you know, like, options being only really possible in sort of a Layer 2 scenario. And that's been a learning of yours over the last nine months. And so let's talk about Layer 2 in a minute. But before we do, want to get to kind of a more, want to ask your more general thoughts on this. So David and I have often said on Bankless that DeFi is basically, we're speedrunning the last 1,000 years of financial history, right? Like, we're just speedrunning it, right? Now, we're at the point in the 1800s where we have like this store of value.

• 42:58Ryan Sean Adams?

  And we have like these proto-banks, it's all code. But then we have things like collateralized loans, right? That's cool. These are some of the money Legos that have been built. What I want to ask more generally, before we get to the Layer 2 discussion, is what's kind of next? What do we need to build next? Okay, we have Uniswap, we've got permissionless trading, we've got that function, that's our NASDAQ, that's our New York Stock Exchange, cool. We've got collateralized lending, some building blocks there, and borrowing, that's cool. We have some other early primitives too. But what do you think DeFi really needs to build next? And what will be next? What other money Legos should be, we be looking at now?

• 43:40Speaker 02

  So, I'll speak to kind of, you know, the first trend that I think is going to happen in the next couple of years is basically verticalization. You know, taking these liquidity pools that are on-chain, taking these, you know, borrow lend or money markets that are on-chain, putting them in a front-end that is, you know, either, you know, specific to an industry or a geography. And just running that playbook as an entrepreneur, you don't need to build the entire, you know, financial services stack that you would as a, as a financial services startup. You can leverage a lot of the open source code and liquidity that exists on-chain, and just build a tailored user experience to whatever industry or geography you're in.

• 44:18Ryan Sean Adams?

  Can I ask a question of that? Is, so is that sort of like what fintech has done with like the traditional banking system? Only this is like fintech on DeFi primitives?

• 44:29Speaker 02

  Exactly, right. And this is a playbook that fintech started deploying in kind of like 2013, 2014, but it's still been pretty slow to roll out just because the legacy rails that are on are so slow and restrictive. But, you know, we are hyper focused on funding these different kind of vertical ideas because, you know, if you have a white listing service that can, you know, basically wrap a piece of real estate, voted in as collateral maker and then start to draw a die against that, you know, that's a business. And, you know, the business is some function of the white listing of the wrapping of the real estate, the governance votes that you need to pass as collateral maker, and generally kind of the entire consumer experience of getting to Iback and your bank account.

• 45:09Speaker 02

  But that's a financial service that, you know, probably worth a few billion dollars if someone builds into a full company. Taking the DeFi products, like a high-yield savings account, like a borrow and functionality, and bringing it to a country like Chile or Argentina or Brazil. Those people have, you know, pretty terrible financial services at this point. They're, you know, inclined towards Bitcoin. They already know crypto. That's another kind of mass market project that we're looking at pretty heavily.

• 45:35Ryan Sean Adams?

  Let's camp here for a second because that is super interesting to me. David and I have talked about this concept of like the DeFi mullet, which is like, you know, fintech in the front and DeFi in the back, so like traditional bank in the front. But I'm curious what you think. Do you think that it will be new startups and crypto natives who start using this DeFi infrastructure for their quote unquote fintech? Or do you think some existing fintech players will jump in and start capturing these markets? You know, the PayPals and the Squares of the world?

• 46:05Speaker 02

  It's gonna be, it's gonna be new teams. The incumbents have a very, very low motivation to really kind of innovate, innovate or build anything that does not exist on their payment rails. And so that limits a lot of what they can do from a DeFi perspective. And so the teams that we're looking at are, you know, a couple of engineers from Mongo TV and Facebook that grew up in Argentina, spent, you know, four or five years in the Bay Area and are now, you know, playing around with Ethereum for the first time. And they're moving back to their home country because they're interested in living there, but they want to take a lot of what they've learned and played around with on the internet back with them. Like, you know, those are the prototypical teams that we're looking for. You know, they have kind of some of the web two talent, their engineering focus, their product focus. Um, and they have the local context to be able to, you know, build and market a product.

• 46:50Speaker 02

  And there are, you know, hundreds and hundreds of these stories, um, both across industry and geography. And, and you're just going to see this play out over and over and over again. I think the reality is like, um, we're naturally inclined to like, look for like, you know, let's find all these new primitives and let's go fund them. And like, we're very much in that business, but like, we are really like an inch deep in terms of the actual amount of attractions we've gotten with the services that we have. And just the ability to, you know, doesn't matter if it's Christmas Eve at on mid at midnight, you know, if you have some form of crypto collateral, you can go and get a loan from Ave, from Maker, from Synthetix. Like it, it just is, is a better financial experience and, and porting that is just basically instant margin for whatever startup does it.

• 47:30Ryan Sean Adams?

  That is awesome. That verticalization idea. Um, so that sounds like a big theme. And I guess, you know, what, what that means is there are going to be all these DeFi fintechs that pop up in these different verticals all like around the world. But it also means maybe a swelling of TVL and, uh, usage and capital for existing DeFi protocols. Is that how you see it?

• 47:53Speaker 02

  Yeah. And, and if you look at the architecture of a lot of the major DeFi protocols right now, um, you know, Ave is, is a, is, you know, in, in many ways a company, you know, it has, uh, you know, a full, a full staff that has an office, like, you know, they, they have people leading the, the day to day. Um, they are not focused on building the protocol right now. They're focused on, you know, mainstream adoption and they've chosen the vertical of institutions. I don't know if you've seen their kind of institutional pools, but like, that's one example of this thesis playing out in real time. And so oftentimes if there still is that core group of people and there is a company around the protocol, that's going to be the first people to do this thesis, but. You know, it's just such an easy way to build a startup where you don't need to build the financial services rails. And people are going to pick up on this. It's just a matter of time.

• 48:39Ryan Sean Adams?

  Vance, explain really quickly AVE's institutional pools for people who aren't familiar.

• 48:44Speaker 02

  Yeah, so institutional pools are effectively a sidecar pool where all participants in the pool are KYC. They know each other and they're, you know, basically have been vetted to not be on an OFAC list, which is the Office for Asset Control, which kind of stipulates that there are certain countries and people that are not allowed to interact with kind of the traditional banking rails. And so, you know, for people like retail, it doesn't really matter that much having those assurances because, you know, you're trading, you know, some coin in a soft pool. And, you know, you're pretty sure you're not doing anything nefarious, but for institutions, you know, they need that higher level of insurance just because, you know, they have a higher level of expectation from their board, their fiduciaries, people like that.

• 49:25Speaker 02

  So, you know, I very much see AVE leading the way in kind of institutionalization, or at least that vertical with their financial services. But, you know, there are hundreds of those industries that would like access to these financial services, but just have no idea how to do it. And currently their best way of, you know, thinking through it is like, should I buy ETH on coin base? But like in reality, there's just so much more depth, you know, when they actually start using it.

• 49:48Ryan Sean Adams?

  Okay, so verticals.

• 49:49David Hoffman?

  Would you call this new version of AVE as like KYC AVE or like permissioned AVE? Just because of the nature of the clientele that needs to have those assurances, is that, is that how you would describe this?

• 50:03Speaker 02

  I would, I would say it's probably like, you know, I wouldn't say it's like regulated AVE because it's self-regulated. Like no regulatory force is going to do this. They're doing this at their own behest.

• 50:14Ryan Sean Adams?

  Right.

• 50:15Speaker 02

  I would say, you know, this is probably like KYC light AVE. And we've been looking a lot into the reg tech space and different approaches to, you know. Yeah, at least some sort of KYC or some sort of, you know, regulation in this space. Because I think over the long term, it's coming and it's a good thing. And it'll probably be, you know, less painful than we all think. But my thing with reg tech is that the solution can't be worse than the problem. Like, the solution to KYC can't be giving the government our money in a custodial smart contract. Like, that's just not gonna work. And so like, the self-regulation liquidity pool there, while I understand the backlash from people on Twitter that don't like it. The bottom line is that it's just a far better way of doing this than than putting our assets in a smart contract from the government.

• 51:01Ryan Sean Adams?

  Yeah, to me, it's like less KYC AVE and more like the the pool itself is KYC, KYC light, right? The protocol and the code is still completely permissionless, uncensorable Ethereum tech, right? And that's not the part that's being KYC'd. Um, what, so, okay, so, speedrunning, again, that was a whole segue on verticalization, which is super cool. Great insight, guys. Alpha, to bankless listeners, I think, look for these opportunities. Look maybe for DeFi protocols that are speedrunning these verticalization opportunities. That's maybe some other insight that that Vance just dropped. What else, besides verticalization?

• 51:41Ryan Sean Adams?

  What are some other future trends as we build out this this DeFi money stack that that you guys are thinking about?

• 51:48Speaker 02

  Um, future trends.

• 51:53Speaker 02

  Yeah, I mean, I think, um, this is gonna sound cringe to a lot of people, but I think enterprise blockchain is gonna be back at some point.

• 52:03Speaker 02

  And at this time, it'll actually be, you know, fundamentally productive at some level. Um, you know, a lot of the investors in our fund are software as a service companies that are looking for ways to to to integrate, you know, blockchain technology. And I think we've gotten past this like goofy, private blockchain proof of concept where like, you know, everyone's holding hands, running a node and like, you know, like, that's how the service runs. And like, I think we're now kind of more into the land of like, you know, like, hey, you know, one of these SaaS companies, like, let's launch a, let's launch a role. You know, let's just use it as our native sandbox. Like, let's have a token. If other companies want to join, you know, we'll kind of incentivize them to just build things in the sandbox.

• 52:43Speaker 02

  And I think that there's gonna, you're gonna need a lot of kind of developer evangelization, you know, which is like a traditional Silicon Valley strength. Um, but at the end of the day, you know, there's just a lot of superpowers in crypto. That, you know, even if it's, you know, earning two or three percent, uh, you know, yield on your cash every year. Like startups have been built on far less than than that. And so like you will see like the slow kind of enterprise blockchain movement picking up again. Um, and I think, you know, the things that make me really bullish on that are talking to people that work at, you know, the big four consultancies that sell these technology solutions. Um, as a service to these massive Fortune 500 companies. And they look at Ethereum, they see it as incredibly neutral kind of sediment layer. And they also see it as a revenue opportunity. Um, because that's just something they can sell through to their consumers. And I think a lot of the work that people like Paul Brody are doing.

• 53:29Speaker 02

  Is really interesting and important because, um, at some level, you know, those four consultancies are the ones that really determine, you know, what is the technology of the future? So I think those are really bullish as well. Um, so I think that will be a big one eventually as well.

• 53:44David Hoffman?

  Is that specifically enabled because of rollups? You you added rollups in your answer and I think people are, who aren't in like paying detailed attention to rollups and maybe are missing the power behind them and the ability for, anyone to just, you know, quote unquote, spin up your own blockchain, like here's here's your blockchain, except it's also, you know, super fast. And can you secured by Ethereum? You don't have to worry about consensus because Ethereum takes that, takes care of that for you. Now everyone can have a rollup, right? Like Coinbase can manage its accounting on a rollup. It could be public. It could be private. Wells Fargo could be on a rollup. Is it, are the reason, is the reason why you are now bullish on on enterprise blockchain stuff is because of specifically rollups?

• 54:26Speaker 02

  So I think the reason why I'm bullish is because rollups give kind of like this modular way for people to interact with blockchains. It isn't just like you're on the base layer of Ethereum, it's public, it's super expensive. You know, there's very little room in creative license to maneuver. I think the rollup gives them that creative license and it gives them just a little bit more flexibility in terms of, you know, deploying a solution that's form fitted to their needs. I think that's kind of the first thing. I think the second thing is, you know, building these developer sandboxes, whether it's like an in-person accelerator, an online hackathon, you know, whatever. You know, having a native incentivization layer of a token, like and being able to distribute this to people that are also kind of like-minded, maybe in the same enterprise, you know, software cohort.

• 55:07Speaker 02

  You know, that's something else that's powerful with a rollup where you can have that token incentivized usage and just testing things. And so, um, you know, my, my good friend, John, who's an investor in the fund, he runs a company called Stream, which is a data replication service where, when you're moving your data from one SQL database to another, you will replicate it and put it in the cloud and you can access it whenever. You know, that's, that's probably a billion dollar business they just raised with Goldman Sachs. Like it, it's really an incredible company, but it's built on a very specific premise. Um, at some level, these rollups will be used for either data replication, um, just experimentation with kind of internal transfers or cash management, or just kind of general ideas about how to kind of streamline workflows.

• 55:49Speaker 02

  And so at some point, you know, enterprises will come to blockchain and use it for things that are productive, but it's not going to be in the private blockchain concept that we're, that we're kind of used to. And, you know, that idea is still probably a few years away, but I do think it's coming at some, some level.

• 56:03Ryan Sean Adams?

  Vance, you mentioned Paul Brody and he's at E and Y and I, I just saw some headlines that they just received another a hundred million dollar investment in their kind of blockchain crypto business unit, heavy into Ethereum. I think a lot of stuff is going unnoticed that might just become, start to become visible with the advent of, of cheaper block space on layer two. Um, one thing I do feel like though is you, you mentioned, uh, enterprises, maybe marshaling and using tokens. It does feel like we need to have. Some more regulatory clarity, perhaps, before the legal teams of large enterprises like get comfortable with this.

• 56:43Ryan Sean Adams?

  We had Hester Purse in the podcast, you know, a couple of months ago, and she's very much like, I wish we could have sandboxes for DeFi. And we were like, Hester, we think that's great. We do too. Can you, can you convince the SEC and Gary Gensler and those in regulatory bodies to go do that? Do you think maybe now it's not so much the scaling technology, it's maybe the regulatory clarity? That is the, I guess, like the blocker right now?

• 57:13Speaker 02

  I, I think a lack of regulatory clarity is, is kind of both a feature and a bug. And I, I think the perspective of regulators, and this is, you know, me interpreting public comments and, and, you know, private conversations is basically, they don't want to hamper innovation and they don't know what the space is going to become. So they don't want to put any rules in place that will, you know, inherently block a lot of the innovation that's happening in the space. At the same time, they're very concerned with things like consumer protection, which, you know, they're given their mandate is right at the top of the list. But I think they're, they're really smart people working in these agencies. And so, you know, it's, it's not like they hate our industry and they don't want to give us rules. I think it's more of a forward looking, you know, we don't really want to kneecap what's happening right now.

• 57:57Speaker 02

  And so they're punting a lot of things. This does put enterprises in a weirder, you know, kind of area from a, from a regulatory standpoint. But, um, you know, what's the difference between custoding something like BTC on your balance sheet or other tokens? Say, what's the difference between selling a software subscription license versus, you know, having some sort of, you know, token denominated payment mechanism like, you know, like any of the crypto native startups that have today. And, and like, I think these questions are, are, are less further afield than you might think. And, and, you know, well, do I see these enterprises like turning their business models inside out in the next few years and adopting tokens in mass? Like, I probably don't see that. But I do see there's this going to be this slow edging towards using these blockchains for things that are fundamentally productive.

• 58:41Speaker 02

  Like, like a good example of a use case that I was talking to someone at Deloitte about is, Just a volume rebate where, you know, based on the amount of orders that are coming through, you know, a smart contract can automatically tell, adjust the pricing and then continue on with that customer at a different rate, you know, based on their volume, you know, into the future. And those are the things that, you know, as long as there's a couple of counterparties that are interacting in public on a blockchain that have, you know, that that logic programmed in that interaction are perfect for a blockchain. And I think, you know, part of that is going to be, you know, enticing the other side onto something like a roll up with some sort of token incentive. But a lot of these companies, you know, are, you know, they're not that far away from doing things like that. I think, you know, like things happen quicker than you expect.

• 59:24Speaker 02

  Like the institutions were coming for for so long and it didn't seem like they were in crypto. And then all of a sudden, one day they showed up, Ethereum scaled like, you know, almost overnight, something like Polygon. These things are nonlinear and they come in months. So I think there are a lot of the, there's a lot of people in the software as a service industry, looking at blockchain as a revenue stream and are working towards a future where they can build applications on top of it. And it's just a matter of kind of incentivizing things. And that's why I think things like roll ups are going to be powerful and in drawing those cohorts in.

• 59:54David Hoffman?

  Let's turn the L two conversation towards, I think, what the average listener might be more familiar and excited with, which is how L twos are going to impact them. And and I've been articulating this this thesis of the L two DeFi summer round two that could, in theory, be right around the corner. And so Vance, I want to get your your gut shake on a gut take on this possible version of the future that may be coming. And, you know, we just had Arbitrum launch last Friday. Optimism seems to be around the corner. Polygon is already doing absolutely fantastically. And all this new real estate is becoming made available, right? Like Ethereum as the central hub is getting all these different spokes unlocking.

• 1:00:36David Hoffman?

  And developers are rushing out to like all this new real estate to build all these new apps, because they know that once they build all these new apps, they're going to attract all the, all the, you know, all the tourists, right? Everyone's going to come and and move and and spend money at their, you know, DeFi app attraction. And so all of a sudden, there's this, there's this massive amounts of new real estate that's really, really valuable for DeFi apps to claim. And so DeFi apps want to, you know, Sushi Swap wants to beat Uniswap to adoption on Arbitrum. And Uniswap wants to beat Sushi Swap as adoption on optimism. And in my, in my mind, how are we going to get this done? Well, to me, the answer is liquidity mining, just because like what do we know and love in this space?

• 1:01:20David Hoffman?

  And we know that it works and it works because you know, there's this massive incentive and we've already done this before. We already had, you know, the OG version of DeFi summer, which was all done on the Ethereum main chain. But now it's not just incentivizing user participation and just usage of these apps on the main chain. It's getting people out into the L2s, out into Arbitrum, out into Optimism. And not only do these DeFi apps need to incentivize people, but the actual L2s also need to incentivize people to use their L2. And so we'll have in possible version of the future, we will have all these DeFi apps incentivizing their usage via traditional liquidity mining like we know and love. But they will also be boosted by the native tokens of Arbitrum, which is complete speculation.

• 1:02:05David Hoffman?

  If they have a token, I have no idea. Same thing with Optimism, no idea if they're having a token. But it would fall in line with the nature of this industry if, you know, people like tokens and people like issuing tokens. And so not only are the liquidity mining incentives going to be juiced by, you know, Sushi releasing out Sushi rewards and Uniswap releasing Uniswap rewards. But Optimism, Arbitrum, and we're already seeing this with Polygon issuing tokens for their own native asset in order to distribute those hands in the hands of the users. So we have this dual liquidity mining possibility ahead of us where both the apps and the L2s are incentivizing usage of the L2s.

• 1:02:44David Hoffman?

  And we can finally have DeFi summer, round two, layer two addition, except this time it's actually even more awesome because there won't be any fees. Or at least it'll be significantly less fees because it's on L2s. That's, that's my perceived theory of what could happen over the next like three to six to nine months. How does that land with you?

• 1:03:03Speaker 02

  Land, I think you're probably right. If you look at something like Matic, which has seven, I think seven or eight billion in CBL, it's basically the size of Binance Smart Chain. You know, a lot of that is Matic itself. Matic is now the 11th most valuable cryptocurrency in the world, which is just absolutely wild to me. You know, not because I don't think it should be, it's just, it has been a meteoric rise. Um, I think you'll see, you know, three or four of these same style of tokens, you know, by probably mid to late summer. Um, and you'll see a lot of kind of the same things where, you know, a lot of the T B L in Matic is reflexive, where it's either incentivized by Matic tokens or trading Matic for rap Bitcoin or or ether, you know. Um, other tokens are on that chain. Um, you'll also see a ton of kind of these, uh, you know, uh.

• 1:03:47Speaker 02

  Roll up native projects, you know, come into play where things like quick swap is like the the DAX of uh, Polygon, you know, something like slingshot is the aggregator of Polygon. You'll probably see kind of like these different tribes kind of form in a line around these different layer two ecosystems. Um, but I think, you know, generally, no, no problems with that thesis. I think that will generally play out. People, there will be a ton of tokens. It'll be very euphoric. People will be on these rollups. It'll be awesome. But I think the main thing that's going to happen is, is the people who've been waiting to try stuff that's too expensive on the base layer. Will now go for it on layer two and and there is just so much pressure of those projects. Um, you know, things like fractal, things like Peter swap that, you know, base layers are just too slow and too expensive. Um, you know, hundreds of dollars per trade.

• 1:04:32Speaker 02

  Um, you know, forty to fifty thousand dollars to deploy contracts like that just doesn't work. Um, and so, you know, getting to this lower cost environment will just be. Really rich soil for for experimentation and that's probably the thing that I'm most excited about. Um, I think. The the con of of a lot of that and and what I've heard frequently is like, you know, these things aren't interoperable and you know, how are we going to get the 30 from one chain to the other? I think there's reasonable solutions like hot network or connects that will be able to route liquidity from roll up to roll up or back to the base layer. Market makers will serve some sort of bridge kind of functionality from the base layer to rollups as well. Um. But I I also think that it's, you know, somewhat bullish for these things not to be able to interact like.

• 1:05:12Speaker 02

  You know, diversity is the spice of life, like having these ecosystems that are forced to grow their own identities and and their own first principles. Is is something that, um, you know, is really bullish, at least for for me, like. You know, if if you kind of zoom out and you look at, you know, Bitcoin, Ethereum and all the early cryptos. You know, you could kind of make the same argument like, oh, these things are too heterogeneous. There should just be one crypto that does it all, but like. Really kind of that variety built that maximalism which built, you know, interesting cultures over time. And I think we're going to see the same thing play out with these layer twos. Um, and I have no idea who will win in the short term. Uh, I think there's definitely, you know, talking to developers, there's a real difference between asking users to pay dollars for a transaction versus a fraction of a penny, which is, you know, kind of what Polygon is.

• 1:05:56Speaker 02

  But, you know, I think people will generally realize the security trade offs of Polygon versus roll up are very real over time. And, and my guess as to who wins, you know, the roll of wars in, you know, two or three years. Is basically the person who, you know, captures and utilizes MEV uh to the best extent for their own ecosystem. Right now, MEV is something that um is basically a societal cost of, of doing business on, on the base chain. You know, people taking one or two or three percent of your transaction, back running, front running, sandwich bots. Um, and right now, the problem with MEV is basically who gets it? And who gets it are the miners? And, and those are kind of fundamentally, you know, misaligned participant set.

• 1:06:38Speaker 02

  Um, because, you know, I don't know uh how much, you know, people running heavy electricity miners have to do with what I'm doing on a daily basis. Like, I feel like if we had a conversation, we probably wouldn't be speaking the same language. Um, but in a roll up, what happens is that MEV is, is basically the business model of that roll up. And you capture it and you basically either distribute it back to everyone who's using uh the roll up. Or you can, you know, allocate it to a token and that token now has a lot of value because it's accruing those cash flows. And so, you know, there is some business model dependency that comes from MEV, but I think the chain that wins long term will be the one that productionalizes and utilizes that most bootstrap or ecosystem. And I think like drilling down into like what cultural alignment with Ethereum means.

• 1:07:23Speaker 02

  It probably means like some sort of high level alignment with, you know, who gets MEV and why? And that will be probably the determining factor who wins this, this uh, you know, this roll up war.

• 1:07:35Ryan Sean Adams?

  That's so fascinating on MEV. We just had Arbitrum on and we had a discussion about MEV and they talked about their their plan to try to create some sort of like fair protocol distribution mechanism for the MEV. Optimism has a different approach where there may be auctioning it. Do you have any insights into like what the best design would be? Or are you just of like, let's try all the experiments and we'll see, but certainly the winning one will have some way to marshal MEV into something valuable and productive? Like any other, I guess, deep takes on MEV and the experiments that that you're seeing that are about to go live in the real world?

• 1:08:14Speaker 02

  Yeah, I think

• 1:08:17Speaker 02

  we just need to experiment with it. Like right now, it's just going to the wrong participant set. I think that's the biggest problem with MEV. Like, not only are you losing money, it's like it's going to someone who you don't really like that much. And the like, as long as we can capture that and make it part of a roll up, I think all of these things have a reasonably strong chance of being successful over the long term.

• 1:08:37Speaker 02

  But I do like the optimism role where they're they're auctioning off the sequencer or the role of the sequencer. So it's kind of like a proof of stake blockchain where, you know, say you have, you know, X amount of the optimism or X percent of the optimism token. You have an X percent of winning that sequence role at any given time and that sequence role has, you know, Y amount of MEV in it for kind of, you know, Z amount of time that you have the role. And so like, that is is interesting to me. It's just like a primitive to kind of bootstrap and use this MEV. I still kind of really biased towards the fact that the MEV should go to the native token of the roll up. Because if that native token is a current cash flows and everyone is is kind of earning those tokens in some way, shape or form from being on the roll up.

• 1:09:20Speaker 02

  It's not really like you're losing any money from any potential MEV exploit. It's more of kind of like you're redistributing this wealth towards, you know, a more common and equitable set of participants that's on the roll up. And you just assume that that has, you know, positive externalities down the road. And so that's kind of how I would like to see it productionized. But, you know, those are pretty loose thoughts.

• 1:09:40Ryan Sean Adams?

  Fascinating takes. And guys, if you're not familiar with the term MEV, go back and listen to the Bankless podcast we just did a couple of weeks ago with Phil, Diane and company. We had a whole MEV panel. MEV stands for maximum extractable value, of course, and also listen to the Arbitrum episode we just did. Vance, you talked about like layer two is opening up new things. And there's certainly like we have a somebody writes for for Bankless from time to time. Kid in college is like, I couldn't afford transactions on Ethereum. So all of these DeFi protocols you guys were talking about on Bankless, like, I just couldn't use them because they cost like 20, 30 bucks. And like, I'm playing with $100 a year, right? Like, I'm in

• 1:10:24Ryan Sean Adams?

  college. But he's like, Polygon just opened this thing wide open for me. And now I actually get to test and experiment. And so like, what you're saying about a new set of DeFi users being able to be on boarded, who are less kind of like OG DeFi whales, Ethereum whales, and are like a newer set of people, totally resonates with what we're seeing. I'm curious, though, with what some of the apps, so like, the mental model here is, it's like, if you've ever played a game like Civilization, something like that, right? Like, there's a tech tree. And like, the Civilization unlocks, you know, writing, and then math, and that leads to like, physics, and eventually you get like, the nuclear bomb, and you're the whole goal of the Civilization is to like, go through

• 1:11:07Ryan Sean Adams?

  this tech tree and unlock these various things. We said before on Bankless that crypto and DeFi is almost like a tech tree. Now we have this big unlock, which is layer two. So we just unlocked something new. And that's going to lead to all of these other technologies and applications. What are some of those, do you think? You mentioned options, maybe being one, something we couldn't do on Ethereum mainchain, but in layer two, we can. Is that one? What are the others?

• 1:11:33Speaker 02

  I think, you know, options, derivatives, perpetuals, those are all the kind of obvious candidates that will launch and, you know, pretty much immediately do well. Once these layer twos are cheap and fast enough to use. You know, there's no kind of existential question as to like, you know, are those going to be valuable businesses? It's just kind of a question of when. The things that, you know, I'm, I'm, you know, kind of, that are further afield that I'm, you know, even more excited about are things like games. Where like in the gaming industry, you have this kind of moment where you know how open source developer platforms like Unity and Unreal. You have pressure on the free to play business model, which is, you know, 80 or 90% of the revenue in that industry. Kind of coming under question is just gets more competitive.

• 1:12:16Speaker 02

  And then you have blockchain developers or gaming developers looking over at blockchain developers and they see them selling 20, 30, 40 million dollars of virtual land. And it's just kind of a moment where they look over the fence and like, like.

• 1:12:28Ryan Sean Adams?

  How do you do that?

• 1:12:29Speaker 02

  Yeah. And, you know, it's, it's a new business model for games. You know, major studios really have no, you know, incentive structure to go and experiment with something like this. And so you have kind of like this, all these indie studios that are in the gaming world that are now looking for this alternative, you know, or new form of, of just, you know, business. And so those are the people that we have spent a lot of time talking to, both in terms of like, here's what a blockchain is, here's how you would do this. And also developing playbook as to like, here's how you can build a game that has all these mechanics and is more of an economy than, than just kind of a free to play game. And so I think a lot of those people are going to come over and they're going to come over quick. Because, you know, people have been funding these startups for the past few years and they're finally ready to release things.

• 1:13:12Speaker 02

  And so I'm really bullish on games and it's kind of a use case that will merge on layer two. Really in the context of either immutable X or Polygon itself. Anything else in that is a little bit too expensive. So that's, that's definitely another area that, that we're excited about.

• 1:13:30David Hoffman?

  Vince, there are still some L2 skeptics or L2 holdouts out there. And I was wanting to get your take on what do you think is the most viable bear case or pessimistic case for L2s? And is there any FUD out there that you want? I hate the word FUD. Not everyone likes the word FUD. But is there any sort of like, are there any issues that you'd like to clear up that you have in your head?

• 1:13:55Speaker 02

  Yeah, I think the main one that I've heard is basically like, you know, if you have a 50 million monthly active, or 50 million registered user application, like you need 100,000 transactions per second to port that over to a blockchain. Yeah, that's just not how these companies think. And I don't think we need to get to that level of transaction throughput to make a lot of these real life use cases, you know, real on a blockchain. So, you know, an example of that is Visa. You know, their max throughput on their network is 22,000 transactions per second. They use about 1,400, you know, at their peak. And so like, that's a worldwide payment network, you know, the people are transacting on. It's not that far afield from where Arbitrum is or Optimism is, which is kind of in the realm of 3,000 to 5,000 transactions per second at the peak.

• 1:14:41Speaker 02

  And it's also not really in the scope of how people develop products because, you know, like, what does putting 50 million users on chain actually mean? Like, if it's a social media app, is like, every time you scroll on the app, like, something you're putting on chain? Like, how does that work? And the answer is basically, no. You know, only the highest value use cases will really interact with these blockchains. Just like Netflix wouldn't use their payment processor to store their content. You know, people aren't going to use, you know, a blockchain to store things that, you know, either belong in file storage or just don't need to be on chain. And so I think, you know, the hybrid world of using these blockchains is really where we're trying to get to with these Layer 2s. We're not trying to build a thing that has billions of people transacting billions of times per second.

• 1:15:24Speaker 02

  That's just not really in the context of reality of blockchain applications. I think that's kind of the main piece of FUD that I've heard that just seems like totally out of line with like, if you've ever worked at a technology company, that's just not how you build a product. The other part that I think is... Is a risk is, you know, one of these things going down. I think the cool thing about rollups is that you kind of have this escape hatch back to Ethereum mainnet if things really go sideways. Things like Polygon get me a little bit nervous, especially when I see things like bad blocks or like an almost fork that happened, I think, last week. And still in confidence in people, you know, is a force multiplier. And if one of these things were to go down, that would probably be a very negative setback for the space that would, you know, be

• 1:16:08Speaker 02

  sad in terms of, you know, money and users lost, but it would also highlight kind of the longer term ramifications of why you would do something like rollup versus the sidechain. So, you know, it's very hard to see a bear case for layer twos right now.

• 1:16:22Speaker 02

  You know, I think, you know, the other, the other one I've heard is like, you know, all of these little zones won't work, but I, I've kind of gone over that. And I think it's, it's just a good thing that these things will be inherently separated at some level, although loosely interoperable. And I think we'll also realize that, you know, there's diminishing marginal returns to more and more composability. Like not everything needs to be on the same chain at the same time, using the same applications. Again, that's just not how these applications are worked or, or built. And, you know, most of the value of composability is historical composability. It's, you know, things that are built before you, using it die, using the set of smart contracts. It's not kind of like every second, every block interacting with them. So I think that's something we'll also kind of realize coming down the stretch.

• 1:17:03Ryan Sean Adams?

  So if this thesis plays out and like the advancement of layer two continues to play out, what does this mean for other layer ones? Read an article recently by Kyle Samani, it was called social scalability versus technological scalability. Talked a little bit about the lack of composability with Ethereum laser layer two strategy, which I think you just talked about and addressed. I think the other thing it talked about was basically transaction throughput, like, like being transaction throughput layer one, like maximalist. What's your take on all the other layer ones? If your thesis is bullish, layer two Ethereum, what does this mean for them?

• 1:17:47Speaker 02

  Yeah, I think I was probably more worried about Solana a couple of months ago than I am today. And I think part of that is just probably like coming to the event horizon where you realize that, you know, this chain, you know, won't be dying or going anywhere anytime soon. And it's just kind of gonna look a lot like the people who are involved in it, you know, in the next two or three years. And what do I mean by that? I think it's gonna be a lot of people like Jump Trading and a lot of people that trade on FTX that are doing things like real time trading on Solana. And I think that'll be a perfectly fine use case in market for them. But I think, you know, Ethereum will also shift. Like Ethereum won't always be about retail DeFi. You know, that will move to layer two, that'll move to sidechain, that'll move to rollups.

• 1:18:32Speaker 02

  The base layer of Ethereum will be used by things like CBDCs, you know, government projects, enterprises that really need something on chain that's really secure. You know, high shifts of stores of value, that'll also be what it's used for. And so, you know, like as Solana tries to catch Ethereum, Ethereum will be changing and it'll look a lot different in the next, you know, couple of years. And Solana will probably be where Ethereum is today in two years, focusing on these like really low common denominator retail use cases of speculative DeFi. I think, and I, you know, I really hope that Ethereum develops into something that's bigger than that. That's certainly on the roadmap with most of the large kind of enterprises that are building on it. But what does it mean for layer twos to interoperate with other layer ones?

• 1:19:13Speaker 02

  You know, there probably will be, you know, Solana's coming in with Wormhole, they're coming out with, you know, EBM compatibility for smart contracts written in C++ and so I think there will be a good amount of kind of, you know, cross pollination. I do think composability is largely off the table with that ecosystem, but that's probably a benefit for Ethereum, to be honest. You know, kind of constricting that activity, focusing on Ethereum, I think that's what we kind of want in the near term.

• 1:19:40Ryan Sean Adams?

  So Chris Berninski asked this question on Twitter recently. I'm going to ask it to you, Vance, which is like kind of related to what we're talking about. It's kind of a question of multi, is there going to be a multi-chain DeFi? Or is there going to be more an ETH with layer two DeFi, right? And he asked this, will ETH DeFi in quotes, get replaced by multi-chain DeFi competitors? Or will ETH DeFi become multi-chain DeFi as Ethereum becomes the most interconnected network, almost like a settlement network idea? What's your take on how this all evolves?

• 1:20:15Speaker 02

  I think, I think that's probably right. Like, I feel like it'll be like multi-chain ETH first. It'll be Polygon arbitrage optimism. It's like, those ecosystems are vibrant enough where something like Polygon can be the size of BSC. And so like, I really do think the data is pointing towards a multi-chain Ethereum future, whether it be uses in settlement network, or you know, for other layer ones, or for other layer twos. So I do think that is probably the most likely case. Especially, especially given where we are with throughput on Ethereum right now. And I think that, you know, I would say, you know, guessing with an order of magnitude, we'll get 100x increase in throughput on the, on the base layer at some point in the next year or two. And that'll probably be good enough with sharding, with rollups to get

• 1:21:00Speaker 02

  to, you know, the 50 to 100,000 transactions per second that, you know, like we need to kind of compete with something like Solana. So multi-chain will be real, but you know, the advantages of this high transaction throughput, those are, those have kind of diminishing marginal returns. And I think Ethereum gets there faster than people expect.

• 1:21:22Ryan Sean Adams?

  What does, what would all this mean for ETH as an asset or the Ethereum network? And some people ask the question of, well, if Ethereum layer two is successful, then block space demand will just migrate off of Ethereum and go directly to layer two. And then layer twos might increase in competition with, with Ethereum layer one. They're just not sure how that pans out. What's your take on how that all pans out for ETH as an asset and for Ethereum?

• 1:21:50Speaker 02

  Yeah, I think, you know, we want, um, we want a smaller share of a bigger pie. Like, I think that's where Ethereum goes, you know, philosophically over time. Um, you know, extracting maximum amount of fees on the base layer is just not a sustainable business model. And so I think we want this proliferation of different security trade offs, and different layer twos, and different side chains. Um, to push the business forward, knowing that ETH is used as the transaction, uh, medium of exchange, or it's used as of some sort of, of economic substrate for the entire ecosystem. And so, you know, I think that's, you know, fundamentally bullish and where we're headed. Yeah, and, and, you know, I think the most scary part of this will be, um, you know, kind of, uh,

• 1:22:34Speaker 02

  things go to layer two, people are wondering if ETH has enough fees, like, there's kind of like that, that lag in terms of like, demand for block space. Um, and then maybe the fees on, on the base layer dip. But over time, you know, just the demand for block space is, is super high in a totally like, seeing things like BitCloud, where, you know, the person who built it literally had to build their own blockchain to do it. Um, that just tells me that there's a ton of these people that are waiting to try these things that, that are just not able to do them right now. And so I'm very, very confident, uh, in the demand for block space. And just Ethereum being able to capture a smaller share of that over time, but these markets will grow, you know, so, so quickly. If you, if you look at, um, you know, Goldman's report on, on, uh, software as a service cloud sales this year,

• 1:23:16Speaker 02

  there were, you know, eighty billion dollars of cloud services sold, uh, worldwide, uh, this year. You know, Ethereum has eight or nine billion dollars in transaction fees forecasted for, for this year. And so it's like, these things are growing extremely quickly, and I wouldn't be as concerned with the margins, given that we're already so sizable. It's just about the TAM exploding, which means that we have to really fully embrace these layer twos in all ways, shapes, and forms. We can't be selective about, you know, what scaling solutions we like or don't like. We just have to try things.

• 1:23:44David Hoffman?

  Vance, on a recent podcast you were on with Frank from The Block, you said this line that, uh, you think that being Ethereum first is in short supplies these days. So what did you mean by that?

• 1:23:56Speaker 02

  Yeah, I mean, we, you know, were very public when we started our fund. We didn't invest in Ethereum killers. We didn't invest in Bitcoin. And to a lot of people, that seemed like we were tying one hand behind our back as we, you know, tried to jump a motorcycle over like 12 school buses that were on fire. But like, you know, basically what that meant to us is it's basically putting a flag on the ground and saying like, these are the values that we're interested in. It's about open permissionless innovation. It's about a culture of mentorship and bringing people into this space. And that was kind of what we identified with first and foremost, because, you know, that was really what got Michael and I into this space. And, you know, putting those values first was harder when Ethereum was down, when, you know, competitors were hotter, when other people were investing in base layers with the pumping.

• 1:24:41Speaker 02

  But, you know, it really has given us some credence with the Ethereum developers who like what we're doing. And, you know, just being able to play those long-term games is, I think, a hallmark of what we do at Framework. And what that has meant is just being Ethereum first and embracing those values. And so, you know, it's paid off for us pretty well. And, yeah, I mean, we have no plans to embrace and have any other chains in the future. We're not maximalist by any stance, but I do think, you know, people will say this is a biased view, but, you know, bias becomes conviction in many different ways. And I think this is just our path to getting there.

• 1:25:16David Hoffman?

  Francis, I want to get your take on the ultrasound money meme. Is it a meme for the insular Ethereum community, for the DeFi power users? Or is it a meme for the world?

• 1:25:27Speaker 02

  I think right now it's probably a meme for the ETH guys. And, you know, like ultrasound money, ETH, like, do I think that is the best framing of the narrative? I think it's a pretty good one, but I think the probably the better one, or maybe a different one is, it's just like, you know, Ethereum is Amazon Web Services for the next web. Like, people want that clean technology comp. And I don't think they're latching on, like, the thing that people don't identify with really in crypto is like this idea of like private currencies. Like, that's just something that people haven't really interfaced with before. You know, putting this This is something that's technology first and framing in that sort of lens for allocators and retail. I think is, you know, the direction that I tend to go naturally.

• 1:26:11Speaker 02

  But, you know, once you use the financial services and you understand that like, oh, I can stake this, I can also borrow against it. Like this is something that can be a medium exchange, like it's deflationary, like. That is when that meme kind of like really the rubber meets the road for me. So I think you want a little bit of the hook and then you want a little bit of like, you know, go down the rabbit hole meme. And right now the this money meme is a little bit of the rabbit hole for me.

• 1:26:33David Hoffman?

  Vance, where would you say institutions are at with this rabbit hole with regards to ETH? Where we, there's been a ton of excitement over the last like, you know, four, six weeks about institutional allocation into Ether, the asset. Are we, where are we in that phase of cycle? Are we still at the beginning of overall institutional allocation or maybe towards the mid? Where are institutions in the Ethereum rabbit hole, would you say?

• 1:26:58Speaker 02

  I would say we're at the very beginning, you know, the ETH BTC ratio change felt like. You know, probably myself and a couple of other people being loud about this thesis, you know, you guys included about. Why Ethereum is relatively more interesting and all the things that are happening, all the catalysts that are going on. I think that initial, you know, reprice of that ratio was basically all funds in space for that same conclusion. But, you know, things like the ETH trust in Canada, things like, you know, institutions really starting to allocate off their balance sheet. Those are just starting to happen and it's a lot easier of a conversation than telling them about Bitcoin. Telling them about Bitcoin, you have to, you have to kind of set the pretense. We're going into hyperinflation, you know, the US dollar is failing, like you need to like.

• 1:27:40Speaker 02

  It's kind of like this, like ever increasing crazy set of assumptions that you need to get people to buy into. Ethereum is much more of a relaxed conversation, talking about technology, talking about the future, talking about reasons to be optimistic. You don't need to get to that same headspace that you do to pitch Bitcoin, which makes the institutional conversations a lot easier. When you have that and you can couple it with some sort of valuation methodology. That is not based on stock to flow, that is not based on, you know, the size of a comparable asset. It's just really easy, like it, it, it does make our job a lot, lot easier.

• 1:28:14Ryan Sean Adams?

  You don't even have to have the like, what really is money anyway, conversation that makes you look at the weirdo at the party.

• 1:28:20Speaker 02

  We don't want to have.

• 1:28:24Ryan Sean Adams?

  They're not ready for the like, the pill, like taking all of that at once. And this is also what Matt Hogan from Bitwise says. He's been on and they're doing more with DeFi tokens. Do you think this also carries over with DeFi tokens? I mean, his, his commentary is basically this, look, institutional investors, capital allocators in this space. They've seen massive transformation through software. So they've seen software eating the world because they saw it eat media. They saw the commerce. Now like they're seeing it eat music, every single industry, right? And okay, now it's coming for banks. Like, okay, we understand DeFi in a nutshell. And what are DeFi tokens? Well, these are capital assets. What are stocks?

• 1:29:05Ryan Sean Adams?

  Oh, similar to capital assets. Oh, we can actually value these things. We don't have to have it like this weird, what is money? Conversation about valuation. Are, are you seeing the same kind of things play out with, with DeFi tokens? It's like, this is actually an easier discussion with institutional investors. Once they wrap their head around the narrative than having the like, what is sound money conversation?

• 1:29:27Speaker 02

  The DeFi, the, the tokens themselves are still really esoteric to allocators. But like, we're starting to build the kind of, you know, the myth-making process of like, let's talk about traditional fintechs. Let's comp them to DeFi startups. Like, let's look at the actual financials. Like, once they see those things, it becomes a lot easier. I think the things that they really have question marks about are like, you know, what is the organizational slash governance construct? That's happening on this. Like, what is a DAO? I've never heard of this before. Like, generally the revenue, the expenses, all that stuff makes sense. But like, the organizational concepts are a little bit esoteric. And so educating them on those is a little bit more difficult. But, you know, the fundamentals, once people realize the fundamentals of ETH, which I still think has not really happened. You haven't really seen like.

• 1:30:12Speaker 02

  You know, Ryan Als put one together, Ryan Berkman's put one together, but like a good discounted cash flow, the malls out Ethereum. While the fees are actually accruing like post one five five nine, I think that will be the first time that people realize the fundamentals of Ethereum. And then that will just lead them to realize the fundamentals of other things. And so it'll be a process, but you know, I think by the fall, people will be in a, in a, in a headspace where, you know, they can actually buy and allocate towards these tokens, often institutional balance sheet. I think the, the big question that people will probably still have is like, how persistent is this revenue? And this kind of comes back to the idea of a super cycle, like, you know, is maker only printing cash when we're in super cycle?

• 1:30:52Speaker 02

  Um, but you know, if this whole like super cycle meme is kind of like predicated on like these four year Bitcoin boom and bust cycles. If ETH flips, you know, Bitcoin, like that materially de-risks the super cycle meme because like, if we're just like building things and winning and user draw onboarding, like we don't need to have a super cycle meme. It just, you know, we can just have like, you know, there, there was no super cycle in mobile technology. There was no super cycle in social media. It's like, we can just kind of redefine this asset class and, and that flipping would de-risk that, you know, question of, you know, are these persistent revenues, you know, quite significantly?

• 1:31:28Ryan Sean Adams?

  This is the thing, Vance, I'm still stunned that investors still haven't fully like understood, DeFi tokens. And so Matt, once again, he, he wrote this in our newsletter recently. Imagine for a moment that Uniswap was not a decentralized crypto product, protocol, but let's just say it was a well-funded Silicon Valley startup. Investors would literally be falling over themselves to sing its praises. Like, look at this business. It was nothing two years ago. Now it's generating 250 million in revenues per month. That's like an incredible story. And, uh, I mean, we just saw last week Hayden Adams making the Wall Street Journal like for the first time. But like, I can't believe this story is still underground. Why if I?

• 1:32:11Ryan Sean Adams?

  It's price earnings ratio for May 12. Like with this kind of growth, it's just insane. So you still think there's a ways to go and it's mostly because investors don't understand still what DeFi tokens are. And they can't grok the organizational structures of these things. Is, is that sort of why?

• 1:32:28Speaker 02

  Yeah, I I think like we're at the very top of the informational total pole and like we realized all these things we can tell the difference between Dogecoin and Maker. And Bitcoin like they kind of bump all this stuff into one and they assume that you know it's only because Bitcoin is up is that everything that's interesting that that is true to some extent. Um, I think, you know, if we see a flipping, if we see some other asset carry the day with more productive. You know, narrative like we can just assume that these capitals will go on forever because this is just like there is no super cycle. Um, and so as much as I am a believer in the super cycle, I think like almost the abandonment of that meme like after. We have some sort of flipping will be really healthy for the space because we're not relying on like the habit to generate these cash flows like these aren't tied to some.

• 1:33:14Speaker 02

  Weird esoteric, you know, Bitcoin, uh, you know, narrative like if these are just endogenous, it becomes a lot easier to tell that story.

• 1:33:22David Hoffman?

  Vance, the to me, the story of 2020 was all about on chain DAOs with yearn yearn DAO sushi DAO, uh, all these these organizations that have smart contracts baked into the Ethereum protocol that is generating fees. And all of a sudden, there's a group of people, uh, focusing around building out that structure on chain DAOs. Lately, we've seen a bunch of off chain DAOs come about, uh, Meta Factory comes to mind, Get Coin DAO, uh, Bankless DAO. All of a sudden, we have these, uh, things that are DAOs because they have a token, but there's nothing on chain about them. Uh, how, where do you see this trend going over the next, you know, you know, one year and then also one decade?

• 1:34:02Speaker 02

  Um, and and you just mean kind of DAOs generally?

• 1:34:06David Hoffman?

  Yeah, yeah, kind of. Yeah, DAOs generally that not aren't necessarily protocols, but are just more digital organizations.

• 1:34:13Speaker 02

  Yeah, I I think, um. You know, so we we made an investment in a company called Satellite, which, uh, which basically is a non custodial Discord, you know, none of your your information is stored on Discord servers. It's all managed on IPFS and textile, and it runs on Ethereum and Solana like it. It just kind of is like a better version of Discord in a lot of ways and and one of their first primitives is going to be just like the ability to. And Dow your community very effectively. And I just think these things are just like a new organizational construct, just like the joint stock company enable a lot of innovation like. You're going to see Dow just proliferate and be some sort of. Function of, you know, like either a notice multi sig or like a or just a general Dow framework.

• 1:34:55Speaker 02

  And you know, those are just going to kind of explode the design space where how you interact with communities, how you manage, you know, a certain set of initiatives. And how you incentivize people. And I think it's just going to be inherently bullish for just human coordination. The more you can kind of get people in a room, get them in a good mood, get them incentivized, like good things tend to happen. And I think that's kind of been a lot of the the headline through line. For a lot of the things in crypto and you know, I think that'll just continue to proliferate. Whether it's off chain or on chain, you know, I don't really have perspective on. On which one is best. It seems like off chain comes with a lot of risks. In terms of just, you know, how do you set it up legally? How do you kind of manage things? But you know, very bullish on on both versions of of the future in terms of those.

• 1:35:37Ryan Sean Adams?

  Vance, so far we've seen crypto native DAOs really take off. Do you think there will be other non crypto native communities? That start to come on board or non traditionally crypto native like I'm thinking of what you just said of one of the. Like next bull cases for layer two is really the gaming community. You think we'll have like gaming guilds formed DAOs or where do you think the next generation of DAOs might come from outside of crypto?

• 1:36:02Speaker 02

  I mean, you know, the the three main areas are are deep by their games. And then there are kind of these like social constructs. In social constructs are kind of like things like Bit Cloud or just kind of further afield web three ideas. I I generally do think that, you know, in in 10 years, we will probably see north of 10% of world GDP come from DAOs. Like I do think it's that big of a transformational ship. And I think a lot of the products that were built. You know, over the past two or three years, we're just ahead of their time, like things like Aragon, like. You know, if if they would have built that a little bit different branding, a little bit, you know, more streamlined, a little bit more enterprise use case, like I think they really could have pulled that off and and built a big business.

• 1:36:42Speaker 02

  And I think there will be second comings of those that are more enterprise oriented and and probably a more bit more streamlined with the tooling that we have today. But you know, these things are going to get adopted in mass just because it is, you know, you can layer in identity permissions, you know, all the things that you would traditionally expect from enterprise. And just have a much more streamlined and effective on shade.

• 1:37:02David Hoffman?

  Vance, in our first podcast, we talked about a bunch of these DeFi native founders, Donnie, Kane, and we were comparing and contrasting what does it mean to be a startup founder of a traditional startup, you know, tech startup, C corp startup versus what it's like to be a DeFi founder. And you said that when you are talking to these founders who have visions of issuing a token and then handing over governance to the community, you say that you ask them, are you really about that life? And I thought that was a great line, but I also want to expand that same sort of vibe to a broader set of people rather than just DeFi founders, maybe just DeFi users.

• 1:37:44David Hoffman?

  How would you illustrate or classify what it means to be about that life? Just as a DeFi user these days, what does it mean to be about the DeFi life?

• 1:37:55Speaker 02

  Being your own bank is terrifying, you know, straight up. Like, I don't think we need to sugarcoat it for anybody that's on crypto, but you know, the access to financial services that you get is one to two orders of magnitude better than what you would receive in a traditional banking environment. And so for me, it's just, it's about accepting those trade offs and realizing that you can get to this, you know, alternative financial services stack where, you know, you have NFTs if you want something visual. You have DeFi as your financial services trails. You can buy Bitcoin if you're not that into the US dollar. And like together, this kind of like comprises this very complete, very interesting, you know, alternative financial services stack, but only if you're willing to go there. And, you know, the risk is you send your money to the wrong address. The risk is your computer gets hacked.

• 1:38:40Speaker 02

  The risk is, you know, your mom gets on your computer, hits a few keys and deletes, you know, your like, like there are non-zero risks to using DeFi that don't exist in traditional finance. And so for me, it's, it's just kind of like about, you know, being about that life in the retail DeFi context is like mostly about your path of getting there. Like you usually heard about it from someone that you know or trust, or, you know, there was some asset that got you hooked and you, and you kind of, you know, went into the breach to go explore it. And, you know, you were up late on your laptop trying to figure it out or troubleshoot issues with Metamask. And, and that's really kind of what that means to me, you know, alongside accepting that, yeah, it's a lot scarier and it'll get easier, but like, you know, you're kind of on the other side

• 1:39:24Speaker 02

  of this divide and the grass is just much greener over here.

• 1:39:28David Hoffman?

  Why are you about that life, Vance?

• 1:39:31Speaker 02

  You know, I was, I think, you know, I just have a very particular kind of set of skills and temperament that really kind of made this space just a natural fit for me. I was always looking for something in technology that had a lot of, you know, both optimism and a lot of edge. And this is something that really kind of satisfied, you know, both of those aspects of my personality, just by being involved in. And crypto has always been just so welcoming to people like me, that, you know, really kind of that's what it's meant for me, at least. It's just like the inclusive nature of open and permissionless innovation. And, you know, if you think that you are made of the right stuff, like you can go out and try, like, there's no one that's going to stop you. And, you know, that kind of gets to my point about Dogecoin, like, I'm never going to tell anybody to not

• 1:40:15Speaker 02

  speculate on that stuff. I think it's awesome in a lot of ways, but it's just about kind of being able to choose your own destiny. And then that's certainly compared to being, you know, stuck in a web two company, where your box is this big, and you know, you can only, you know, do the things that are in your role. Like, this is pretty much infinitely interesting and inclusive, which is just very welcome.

• 1:40:34Ryan Sean Adams?

  A pioneer, a particular set of skills, Liam Neeson's style, that's what Vance is saying.

• 1:40:41David Hoffman?

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• 1:41:25David Hoffman?

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• 1:42:09David Hoffman?

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• 1:42:52David Hoffman?

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• 1:43:14Ryan Sean Adams?

  All right, let's use those set of skills, Vance, because we promised the listener this. Toward the end of this podcast, we would do some predictions at the end. Let's start where we left off. So total locked value in DeFi. I think your original estimate in the next 12 months, let's say, was between 100 to 500 million. Let's start there. Would you revise that estimate?

• 1:43:39David Hoffman?

  That was nine months ago.

• 1:43:40Ryan Sean Adams?

  That was not billion. Sorry, I said million, but billion nine months ago. Would you revise that estimate? Or what do you think? Like, where do you think we will be in the next one to three years' time for total locked value in DeFi?

• 1:43:54Speaker 02

  Yeah, so I think when I guess things, I try to guess within orders of magnitude. I find if I get within, you know, an order of magnitude, I usually correct when I'm investing in it. You know, just point being like, if I assume that DeFi will get between 100 billion and 1 trillion, like, you know, and I invest in DeFi, like, I'm just gonna be right on the financial side. So that's why I try to try to kind of employ that methodology. And so still have three months left. I think we'll get over 100 billion. So I think I'll probably be right on that one.

• 1:44:23Ryan Sean Adams?

  Yeah, you will.

• 1:44:25Speaker 02

  You know, I think,

• 1:44:29Speaker 02

  you know, we're just gonna see this accelerate from like 100 to 500 to a trillion. Like, the trillion mark will be when we are kind of, just, you know, too big for regulators not to no longer ignore us. Like, things will change. Like, we will have some sort of KYC. You know, there will be some sort of, you know, regulatory jurisprudence over the space. But that will be really bullish because we'll be able to interact with legacy institutions. And that will just in turn accelerate the fly with a more TBL.

• 1:44:58Speaker 02

  And I think we could be there,

• 1:45:01Speaker 02

  you know, probably in the next two years.

• 1:45:07Speaker 02

  I mean, guys, like, you know, everyone expects it to go up a lot. Same with Bitcoin. You know, most of collateral is in those two native assets. Okay, we're gonna have more stablecoin flows, you know. There are probably, there's 3.2 trillion dollars of cash sitting on the sidelines right now in institutional allocators that are trying to allocate to, you know, everything from real estate to startups to crypto. Like, some fraction of that will come in, maybe not fully a third, like a full trillion. But, you know, I'd be willing to bet something like, you know, a fifth or a sixth comes into crypto. So I think there's, there's good, you know, rationale for that, that to be the case. I think the even bigger one is just like things like monthly active users, daily active users.

• 1:45:48Ryan Sean Adams?

  Yeah. Where are we now, monthly active users? I mean, MetaMask is saying like, like 5 million? I don't know if that's the way to measure it. I've also seen estimates of like, you know, there's maybe 2 million or so active addresses on Ethereum. So it's within an order of magnitude, we're in the single digit millions, probably. Some might argue a little lower in the hundreds of thousands still. Like, that's where we are now, maybe with monthly active users. Where do you think we'll be in the next, you know, one to three years?

• 1:46:17Speaker 02

  So I think Uniswap is probably close to having their first million monthly active user month. You know, things like Zap or are not far behind.

• 1:46:27Speaker 02

  And so I think we're going to get to, you know, the first app with with 10 million monthly active users probably in the next year. I just like the main thing and then what we talked about earlier was like. I mean, what needed to stop on Ethereum was not being able to onboard people, you know, me having to send someone $20,000 of Ethereum just to get them like trading and interested like. With Polygon, not only is it that things become cheaper, we can just onboard millions and millions and millions of new people. And so I think we're going to see like our first 10 million monthly active user app at some point in the next year. And it may be something that has like this really interesting hybrid front end, which is an app.

• 1:47:09Speaker 02

  You know, and a protocol on the backend, maybe something like Dharma, but like we'll get there pretty, pretty handily.

• 1:47:14Ryan Sean Adams?

  What about total locked value on layer two? Any predictions for that? I'm not actually sure where we are right now. I think you mentioned some stats around Polygon, which is like in the in the billions already, maybe close to double digit billions. So where are we now? And where do you think we will be on layer two for total locked value?

• 1:47:31Speaker 02

  Yeah, we're basically at 10 billion. I'm just going to round up, you know, seven or eight to 10. And I think we're going to get to probably, you know, 100 in the next year. And, you know, just the the nature of Ethereum will change a lot. I think most TBL will still be concentrated on the base layer, but there's a large cohort of people that will never interact with base layer Ethereum. So I think a lot of the retail deposits end up living on layer two on a roll up. And, you know, exchanges are just able to do withdrawals and deposits automatically. There's no need to bridge or withdraw to a layer one. So I think that will probably be, you know, 100 billion would probably be my guess. As to where we are by the end of the year in terms of TBL just on on layer two is probably, probably a little bit more.

• 1:48:17Ryan Sean Adams?

  Hundreds of billions on layer twos in a year or so, getting total locked value in DeFi into the trillions in a three-year time horizon. Sounds like both ETH and Bitcoin are headed to trillions and maintaining that in three years is what Vance is saying. Cool, man. Good predictions. Look, we are front-running the opportunity here on Bankless, and every time we've had you on, we've managed to like front-run some pretty significant opportunities. You've dropped a lot of insights for us here. Vance, I'm curious, what is Framework up to these days? Because you guys seem to be doing a lot, like growing in addition to having these institutional conversations. You're also like growing headcount, and I know you've got a Labs and a Ventures side.

• 1:49:01Ryan Sean Adams?

  Tell us what you guys are doing in this space. I see you very much as a crypto-native fund VC firm. So what does a crypto-native VC firm look like and do at this junction in time?

• 1:49:14Speaker 02

  Yeah, you know, a lot of Ventures is where I spend most of my time, but you know, as things like, you know, you see someone like Sam Bankman-Fried and Solana, you know, you kind of, you start to reason through like, what do I need to compete with someone like that? And what we need to compete with someone like that is just an entity like Labs that, you know, can trade, you know, hundreds of millions of dollars, billions of dollars per day on these markets, keep them in line, keep them healthy. And so a lot of our focus and our efforts have been towards building out, you know, a lot of kind of the active participation stuff that we do on-chain and just being kind of one of the arbiters stewards of just keeping the space, you know, safe when things are really volatile, even if it's not the highest and best use of our

• 1:49:58Speaker 02

  own capital at the moment. Like, you know, we're willing to take kind of take one for the team in terms of helping, you know, protocols stabilize the pegs of their stable coins, stabilize their derivatives markets. That's definitely something that we've really kind of leaned into recently. So that's been a big effort of ours. And then also just building out, you know, just the venture firm that we wish we had as founders in DeFi, you know, all these services that you would need, you know, recruiting, smart contract auditing, you know, those are the things which really are, you know, the first audit you can get right now for OpenZep one is in September. So like, you know, helping solve that bottleneck is a big part of what we're trying to think through right now, and we have the talent to do it. But, you know, really, I think of Framework less as a venture fund and more as just of a company.

• 1:50:43Speaker 02

  You know, venture is one of many things that we do to kind of push the space forward, but we're hyper focused on just adding as much value to kind of both the on-chain ecosystem and the founders that are building the products, you know, off-chain as we can.

• 1:50:55Ryan Sean Adams?

  Well, Bankless Nation, I think you can tell why we brought Vance Spencer back on to the podcast to hear his takes. And if you are listening to this on Monday, the 7th, when this podcast gets released, we are having Vance on a DeFi panel on Wednesday at 1:00 PM PST with Spencer Noon and Santiago Santos from Parify Capital. And so that is going to be livestreamed on the Bankless YouTube. And so we are going to put Vance and a couple of the other, in my opinion, just absolute leaders of DeFi thought on a panel together and see what happens when we put all their brains into one spot. So put that on your calendars. It's coming Wednesday at 1:00 PM and I'm really looking forward to it.

• 1:51:35Speaker 02

  Thank you guys so much. It's been, it's been amazing. Always a pleasure to be on Bankless and thanks for all that you do. Really appreciate it.

• 1:51:42Ryan Sean Adams?

  Awesome Vance. Thanks again, man. It's great, great to keep up with you doing a lot of awesome things in this space. Bankless listeners, we've got three action items for you. First is tune into that YouTube panel on Wednesday, 1:00 PM PST. You'll find that on Bankless YouTube. You can probably set a reminder for yourself. We'll try to include a link in the show notes to that episode. Also, go back in time. Listen to episode number 28 again with Vance. It was a fantastic episode. Holds up very well. Just recently listened to it. And then of course, third action item, re-listen to this episode because there's a ton of gleanings I think you'll get on a second listen as well. Of course, risks and disclaimers. You got to ask yourself, if you're going crypto,

• 1:52:26Ryan Sean Adams?

  crypto native, are you about that life? That is the question that Vance posed because ETH is risky. Crypto is risky. So is DeFi. You can always lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot. We hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how

• 1:52:52David Hoffman?

  How to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcasts and community as a bankless premium subscriber to get the most out of your bankless experience. You'll get access to our market analysis, our alpha leaks and exclusive content, and even the bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the bankless community is where you want to be. Click the link in the description to become a bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings and weekly rollups where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the bankless nation.