ROUNDTABLE: The REV Debate - Real Metric or Fake News? Jon, Bread, & Andy8052

In this episode of the Bankless Podcast, hosts discuss Real Economic Value (REV). Triggered by Jon's exploration of how ETH and SOL prices correlate with REV, the team delves into REV's role as a value capture metric and demand signal for blockchain networks. We evaluate the implications for network valuations, debate the sustainability of relying on REV, and analyze competitive dynamics between Ethereum and Solana. The conversation concludes with musings on crypto investment risks and the evolving identity of digital currencies in relation to app utility. Jon Charbonneau: https://x.com/jon_charb Bread: https://x.com/0xBreadguy Andy8052: https://x.com/andy8052 —- 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium --- BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🌐SELF | PROVE YOUR SELF https://bankless.cc/Self 🟠HEMI | BTC & ETH, ONE NETWORK https://bankless.cc/hemi --- TIMESTAMPS 0:00 REV https://x.com/jon_charb/status/1923739890115543264 https://x.com/TrustlessState/status/1924835154700234866 17:56 Stablecoins vs Native Currencies 28:38 Tribalism https://x.com/post_polar_/status/1924458711940055246 https://x.com/RyanSAdams/status/1924202146117153172 39:30 The Trenches https://dune.com/beincrypto/solana-launchpads 49:14 Pump . Fun --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

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

• 0:04David Hoffman?

  Welcome Bankless Nation back to the roundtable. Back here with me today is the man with gluttonous glutes, 0X Bread Guy. Good to see you.

• 0:10Speaker 01

  Yo, yo.

• 0:11David Hoffman?

  And crypto's chief lowercase r, Rev researcher, John Charbonneau.

• 0:16Speaker 01

  How's it going? Rev searcher, maybe.

• 0:19David Hoffman?

  Rev searcher, yeah. And then last but not least, the world's most zen DJ, Andy8052. Welcome back.

• 0:26Speaker 01

  Hello.

• 0:28David Hoffman?

  Okay, so crypto Twitter is talking about REV. And I don't exactly know why we picked this week to talk about REV, but I think it has to do with John Charbonneau over here, who put out a tweet and then all of a sudden the meta for this week started talking about REV, which means that we just had nothing better to talk about, I would assume. John, why are we talking about REV?

• 0:50Speaker 01

  Yes, sure. And yeah, I definitely do think it's a sign that we don't have anything better to talk about because none of this is on. You don't think so? I think it's good. I think it's good. It's good stuff, but none of it's that new. The only new thing was, so I put out this tweet on Saturday morning and that was kind of what kickstarted everything. I'm showing it on my screen for the viewers. Yeah. I'd basically just done the back of the envelope math of I was curious what it looked like just looking back at the amount of fees and MEV generated by these platforms. So REV, the way that we're using it here is real economic value. It's just all the network fees and MEV tips that users are paying for a given network. And I kind of realized, I was curious.

• 1:34Speaker 01

  Most people are saying that most of these networks have traded on completely irrational valuations. I was curious what the biggest ones have traded on historically. And if you look back, ETH, when it traded at its all-time high price, which was in late 2021, and Sol, when it traded at its all-time high price in January this year. Both of them actually traded at pretty much the exact same multiple to rev if you annualize what their REV was at that time. And both of them were at their all time highs of generating REV at those points. So I tweeted that out intentionally, also not really tweeting an interpretation of that, just to let people make their own interpretations of that of, is this a correlation versus causation? Because I think you can make both arguments. I mean,

• 2:18Speaker 01

  the really strong fundamental argument would be more in the direction of, oh, see, the market is trading very rationally. They were making money and that's why the price went up. The other side of this would be much more of, oh, it's a correlation. Yeah, obviously, people were paying a bunch of money to use the chains at the time of the all time, all time high prices, because that's when on-chain activity is crazy. People just want to throw money at things. People feel rich. And so they correlate a lot. And so they just ended up lining up cleanly. There's probably some degree of both. I think the market is starting to price, or at least ask for a little more of these signs of, hey, show me that users are willing to pay the network. While I don't think that people are valuing very literally and very explicitly something like Sol or ETH as strictly based

• 3:03Speaker 01

  on cash flows, certainly as they are traditional equities, it's starting to at least become one of multiple factors that people are taking into account when they are looking at these larger tokens. And so the question is kind of going forward, how much of a factor does that become? Because you really do kind of have this spectrum of equities, that is the majority of what you're talking about when you're talking about valuing any of these large equities is obviously just how much money are they making? How much money can they make in the future? Whereas for these large crypto assets, there's some spectrum of how much of the picture is that. And it's at least becoming more of a part of the picture going forward. And so that's the question of where it goes. The quick, I guess, terminology history on it for people, because also I saw a bunch of people confused about that.

• 3:45Speaker 01

  There's a different REV that I saw people confused about today, which was it was realized extractable value, which is a thing that Flashbots had written about a few years ago, which is supposed to be the actual captured subset of MEV versus MEV, which is the theoretical bigger number of everything that can be captured. REV is the captured amount. So this is just a different metric than that. It's just the same acronym.

• 4:06David Hoffman?

  Unrelated. We're measuring two different things, right? It just coincidences that's the same name?

• 4:10Speaker 01

  Yeah, they end up being somewhat overlapping measures, obviously just because they're touching REV and stuff like that. But for example, the other one doesn't include base fees, for example, is one of the gigantic differences between it, which if you look at Ethereum is the majority of their REV historically. So the metrics are just completely different.

• 4:25David Hoffman?

  How would you explain like I'm five, the version of REV that we want to talk about?

• 4:31Speaker 01

  Yeah. So the one that we are talking about here is this is also the one where people probably started seeing it around the end of last year. Dan tweets from Lockwood tweets out these dashboards of looking at all the different chains. How much REV do you get from all of them?

• 4:47Speaker 01

  The other confusing terminology thing was they initially called it TEV. I was writing a post at the same time. We both agreed that TEV, you should include an inflation number in a total and then real, you just kind of needed a separate formula to take out inflation. But basically what this number is trying to capture here, I'd say there's two ways to look at it, both of which are actually pretty analogous to a lot, similar tradf metrics is, one, you can view this as a value capture metric, particularly in a proof of state network. We'll put aside proof of work because all of that just goes to the miners effectively in something like Bitcoin. But in a proof of state network, you can view this as a value capture metric, where if you're a token holder, in one shape or another, you are entitled to receive all of the REV that is coming into the network in some form. That could be a burn,

• 5:32Speaker 01

  it could be a dividend that's paid out as stakers. So there could be different allocations between holders and stakers. But in some form, the token holders are owed all of this. So it's a value capture metric. That looks like a top line revenue metric for a traditional company to an equity holder. The other part of it is, and this is, this is useful for everyone, but even more useful, particularly if you're on the side of, hey, we don't want to think of these L1 tokens as equities. We care about them as more currency commodity looking things is, it's a, it's a helpful demand indicator regardless of, this is very literally what are users willing to pay to give a, to use a given network. Because this explicitly is not counting app level fees. This isn't including, you know, the fees that I pay under the Uniswap

• 6:15Speaker 01

  front end or the Pump Swap or anything like that. This is the actual network level. Fees and MEV tips that you are paying. So it's actually going to the Salt looking holder. This is, you know, this is what I care about using Solana over some other network. It's like effectively watching my application be there. So those are kind of the dual parts that it's capturing is this looks a lot like revenue, particularly to proof of stake network. It's very analogous to revenue in an equity context of this is kind of the top value, top line value of what users are paying in, which is a good value capture mechanism for token holders. And it's also just a good demand signal. Same way you're looking at any startup, you know, or any company, revenue is useful as a demand signal. And it's also literally the value capture for that company.

• 6:57David Hoffman?

  So every blockchain has like two halves with it. It has its native asset and then it has its block space. And with smart contracting platforms, the block space has some amount of utility value, like Solana block space, Ethereum block space, even Bitcoin block space has some amount of utility value baked into the block space itself, which is also kind of like downstream of the apps on that block space. So Ethereum has value because of AVE and MakerDAO and Uniswap and Morpho and Pendle and its app ecosystem. And Solana block space is valuable because it has PumpFun and Drift and its applications. And so there's some unique value represented by the block space.

• 7:39David Hoffman?

  And I think that more strongly correlates to what you're talking about with rev and the equity like part of the valuation of an ecosystem. And I don't think that that does too much to talk about the native asset side of things because Bitcoin has zero rev, but it is valued the most. And so for Bitcoin, like rev is like as a metric, not totally relevant here, but for smart contracting platforms, the concept of rev because of the utility value of smart contracts of a smart contracting blockchain, I think it is much more relevant into the total valuation of a chain. And now, John, I think why, understanding that where we are only talking about like the utility value of a block space, I think one of the reasons why this tweet.

• 8:24David Hoffman?

  Set fire in the crypto Twitter community is because you're kind of dog whistling that the utility value of the block space is the thing to focus on because the native demand of an asset that's outside of the utility value of block space is just not even relevant in your tweet, it's not even addressed. And so like, yes, you're being neutral about just like, is it correlation, is it causation? But I think you're also kind of dog whistling towards like the, towards the ETH crowd to point to them that there's this one valuation metric called REV, it's related to DCF, and this other ecosystem is doing better than Ethereum in recent times. So I think, I know that I think you can say that is neutral. I think you can also say that you're doing a little

• 9:06David Hoffman?

  bit of a silent dog whistle and like hiding behind the neutrality a little bit.

• 9:11Speaker 02

  Gotta have some fun on the weekends.

• 9:15Speaker 02

  The most interesting thing to all this is, I remember that when the original article came out with the TED versus REV and all this stuff, and it actually kind of fired me up in the sense that it shows how nascent this industry is. And like, I think it's important to call out that literally no one knows how to value this shit. No one, no one has any idea of how to properly do that. And even if you think back to TradFi, like, no one used to know how to do that, but eventually enough models came forward, people put in enough effort to create these things that people kind of said, okay, I can kind of, I can kind of see this. And then you kind of coalesce around that. And then the market just continues to move in that direction using multiples, using DCF, using all this shit, right? So I think it's important to note that like, no one knows what they're talking about in our industry, and we're all just doing our best to try

• 10:00Speaker 02

  to figure out like, okay, how do you quantify whatever the hell it is that we are building? And like, where are we going to go as a, as a collective? Like, what do you buy into? What makes sense? What's rational? What's irrational? And, you know, this is, this is an attempt at that, I think. I think it's an earnest attempt. I think, I like the blockwork size. I think Dan did a great breakdown of this at the DAS summit, if you guys like that and want to actually like see how they actually talk about this, a YouTube video of him, him breaking it down and saying like, oh yeah, like if you just do some traditional calculations, you're actually missing a subset of the people that actually are, are like some of the flows in the ecosystem. And you should be capturing that if you do want to try to. Articulate GDP or just like general demand on block space. So yeah, I just want to like, point out that we don't know what the fuck we're talking about either, but we're trying our best. And I think like you can squint and you can see something here and say like, yeah, okay.

• 10:45Speaker 02

  Like this, this seems like it can hold up. There's some rationale here.

• 10:49Speaker 01

  The one other thing I would still stress a bit is I think most of the stuff that we talk about with Bitcoin and the monetary properties of any of these types of crypto currencies. I would agree that there is a very high degree of, we just don't really know to some extent, what, what the reality of this is, and we are working on it. What are the right mental models? This is the one thing which is different of, I would say, cash flows is this is actually the minimum intrinsic value of these assets, because fundamentally what a DCF tells you at the end of the day is, I don't care if anyone else in the world agrees with me. If this asset is actually generating this much cash flow per year, I'm not just buying

• 11:32Speaker 01

  this thing to sell it to you at a higher price. I can literally just hold this asset and it will make me more money than it, than an alternative investment, you know? The, the simple test is like, you know, would you buy this asset at this price if you could never sell it? Would you buy, you know, Warren Buffett has the famous, I would never buy all of Bitcoin for $25 because he's, to him, as a value investor, there's no utility in this thing. I get nothing out of it. The only thing, the only reason for you to hold this is I sell it to you at a higher price versus any human being in the world would buy Apple for $25, even if you could never sell it, because you would literally get your $25 back in about a few milliseconds, because that is just how much money the company is generating.

• 12:14Speaker 01

  So that is the one thing to separate for this. And basically the question is, are we going to end up gravitating towards that baseline for a lot of these assets, which is obviously what equities in general tend to do, is they gravitate towards what is their baseline intrinsic value over a long enough time period? That is usually the trend. And most of these large crypto assets are still pretty divorced from that at the moment. So do we get closer towards that over time?

• 12:37Speaker 02

  Very divorced. If you, if you consider these metrics, like I, I extrapolated on his, he did these two for just the, the top two, but Blockworks actually. Has it for, I think it's like five or six different assets, you know, Aptos, I think was one, Avalanche. And I was like, all right, Tron was on there. Like, fuck it. Let's extrapolate this over to the other ones and see how they're doing. And yeah, at peak, these two were at like 26 was the multiples between like the annualized rev and their actual price at the time. But then you get like Aptos. Aptos is at 1,000. Was it a Tron was at like, I don't know, like 48, which is actually pretty impressive. And then you have like Avalanche, 136 times multiple. So it's like, yeah, like if you think utility and like the actual intrinsic value of these things is where this stuff is going to go, you start squinting, you look around, you're like, all right, maybe,

• 13:21Speaker 02

  maybe we overshot a little bit on some of these and you're pricing in a lot of growth.

• 13:26David Hoffman?

  Pricing in a lot of growth, yes. And I would say like the fact that the fact that they're all divorced from that, it can tell you, okay, that these things are all overvalued, or it can also tell you that in the global equation for how to value a layer one asset, REV is only one part of that. And we are missing the other part. So I put out like this tweet of the classic, how to value, how to, like the three blind men feeling up an elephant and one's feeling the tail. It's like a rope.

• 13:53Speaker 02

  Feeling up is a very funny way to say it.

• 13:54David Hoffman?

  Feeling up an elephant, that's right. And then the other, the other one is feeling the trunk and it's like, it's like a snake or something. And like we have, I think we have REV down. We have that one nailed and it's nice because of how objective it is. It is just how much people are paying for block space in that present moment. And that is doing the, I think is setting the floor, is doing the DCF, the equity side of all of these projects are kind of like businesses in a way. But it's also completely missing other things that we know are out there because Bitcoin is the way that it is. And all these other things are divorced from DCF in a particular way. So there

• 14:36David Hoffman?

  are other things out there that we haven't quite figured out that I think are worth investigating. Me and Ryan and then a guest are going to do a live stream on Friday because this particular guest thinks that he has at least another component to this puzzle. But I'm not ready to share any of that here. But like, I think if you are, if you just say that like, REV is what it is, then you're just bearish about crypto as a whole. And you have to, you just go short all of these businesses because they're never going to return you on investment. But none of us are doing that for some reason. And it's because we know that like REV is not the complete story.

• 15:12Speaker 02

  Yeah, I mean, it's particularly for infra, right?

• 15:15Speaker 01

  Yeah, exactly. That's what I was gonna say. It's not, it's not all tokens. I think you probably take the view that most of these large smart contract platforms are increasingly difficult to hold. That is what I think it actually comes down to. Because REV can approach zero while app fees go crazy because people build a bunch of great apps. And then the things that you should own are, what's the good DeFi protocol? Where are people launching tokens? Where are people staking all of that? That's what actually owns this user. And these large smart contract platforms are the thing that's difficult to hold.

• 15:44David Hoffman?

  Wait, so you're saying that like, say, there's, say, there's, you know, there's Ethereum. And I think Ethereum's most valuable application is Aave. I would say that's probably true, followed by MakerDAO. Maybe MakerDAO, once upon a time.

• 15:58Speaker 02

  Do you guys consider stable coins applications or is that infra?

• 16:03David Hoffman?

  Both, both. But, but, okay, so say Ethereum gets like eight more Aaves. At the same time, all of the Aaves learn to recapture all of their apps, all their fees. So zero fees go to the blockchain, goes, goes to Ethereum. Is that bullish Ethereum? Is that bullish ETH? Or is that bearish ETH? Because like now, now the REV is at zero, but it has eight Aaves. Like, how, how do you, how do you think about this thing, John?

• 16:31Speaker 01

  I don't think that we know the answer. I think at least in the short term, it would definitely be a positive. I think that it is possible in the long term, if we actually get to the state where these assets are more rationally valued at this minimum intrinsic value, then yeah, it's negative. It, or it just doesn't matter. The way that the market is pricing these things today is REV is a component of how you're valuing these things, but it's not the entire thing. So at minimum, it is positive for all of these other components. And it probably gives you some future expectation of there's some other way to monetize this in the future, which is generally a positive thing if you have a stronger market position. It's generally how I view it. It would still generally be a positive, but yeah, it's not as clear anymore.

• 17:12Speaker 03

  Well, and I kind of think too, like the one other part of that is just like if you're a normal consumer and maybe not thinking about AVE, but thinking about like, you know, like NFTs when they were really big or like meme coins, if you pretended that PubFund made no money or whatever, like if it also is just the default currency that people are using to use these apps, that has value that we haven't really like figured out how to like quantify, but it's like, oh, if on all of these apps, you're still using ETH as the currency to transact and do things, that obviously, even if ETH isn't seeing fees from it, it's seeing demand because people want to use it to do stuff. But I have no idea how on earth you would value that.

• 17:55David Hoffman?

  When we go back to John's first tweet, the thing that triggered all this REV conversation, the all time highs for REV was when ETH was money for NFTs. And the all time high for REV for Solana was when Sol was money for meme coins. And so this is like John was saying, it's a correlation, it's a causation. There's also just like the unit of account nature for the primary activity that's happening on the blockchain. And like, I would contend that there's high MEV, there's high transaction demand when there is a, when there are things to do on the blockchain and that thing tends to be the unit of account. I asked Andy right before we started recording this episode, Andy, when you go buy or sell a meme coin

• 18:39David Hoffman?

  shitter on Solana, do you do it with Sol or do you do it with USCC? And you kind of, you kind of gave me a 50 50 answer, but you also said you'll ultimately prefer the native currency on the asset. And so there's some sort of like-

• 18:51Speaker 03

  Yeah, definitely prefer Solana.

• 18:52David Hoffman?

  You prefer, you prefer Solana. You prefer Solana over USCC. And so while there are things happening that are generating REV, those same things are prioritizing the commodity money like nature of that layer one asset in tandem. And so that is happening in unison. I don't, I think it's like chicken and an egg, which one comes first, the REV or the app? There's both happening, like fees are happening because there's some sort of thing to use the native currency on that chain in a particular way.

• 19:22Speaker 01

  That's at least the case today. The other question becomes, how much does that get abstracted away? What does that look like in the future of that description that's, you know, call it roughly 50/50 that Andy is doing today? Roll that forward five years, is that still 50/50 or is a lot more of that in stablecoins?

• 19:38David Hoffman?

  I mean, Andy, do you see yourself using USDC as the stablecoin on-chain in like 50 years? Because I think we're all kind of bearish on fiat, generally speaking.

• 19:47Speaker 03

  Yeah, I mean, I don't like holding cash in general or anything pegged to USDC. But if it made trading easier, I would do it. Because I think at the end of the day, the like, trading with Solana is just also like, what is the like default? And so it's going to get you the best execution generally. And so the apps that I use that use USDC as a base pair, it's only because I'm, you know, that app. It's easier to trade with USDC than it is Solana. And so I think like, there is some world where all of the chain abstraction and gas payments and all of that gets to a place where you are having the best apps to use USDC instead of ETH or Solana. And then it's a different story.

• 20:33Speaker 03

  And so, yeah, it's hard to say one or the other. But yeah, generally, I don't really ever hold very much USDC.

• 20:39Speaker 02

  I think the question ultimately becomes, what do you see the the future layout of the ecosystem? Like, is it going to be the applications abstracted and display in USDC, but the pools are always denominated in the native asset on the backend? Or do we get to a point where the pool is no longer denominated in the native asset? It was like, I've been a believer that the medium of exchange component of the the moneyness trifecta, however you want to label it, is like even more than the store of value, although like that one is, it is what it is. Because like, for all the reasons we're pointing out today, you hold, you know, $20,000 in Solana, not because gas is cheap or gas is expensive. You do it because you want to be one click away from the new hot shitter, right? Like, you want to, you want to be right there. And like, that's all buy pressure.

• 21:20Speaker 02

  And then if it's denominated and sold, that means all those abandoned pools are now locked sold for the rest of time. Right? Like, all of that stuff collectively is a medium of exchange property that is buy pressure on the on the token, is deflation, it's, you know, all of these things. So if you see a future where like eventually we move away from that and USDC is abstracted to the point where it's denominating the pools, then you start going like, well, fuck now. All of our moneyness properties are eroding. And like, then what?

• 21:47David Hoffman?

  Yeah, I think the big question here is like when all of these real world assets come on chain onto the respective chains, if they come onto Ethereum, then we're talking about ETH, if they come onto Solana, then we're talking about Sol. What does that do for the local economies of the native asset on that chain specifically? Because we know, we have, I think we have plenty of data to say that when there is a crypto native on-chain fervor, like NFT summer, like DeFi summer, the layer one asset becomes the currency for that respective fervor. And then we saw it again with Sol and with meme coins. When it's crypto native assets with no real world components, the native asset of that chain gets a huge boon. We don't know if the same thing happens with real world assets. Actually, in fact, we've

• 22:31David Hoffman?

  seen $150 billion of stable coins come onto Ethereum with like pretty lackluster response by Ether the asset. Maybe that's different with tokenized equities or more sophisticated tokenized real world assets. But I don't think we know what a like trillion dollars of on-chain real world assets does to that local, to the local currency of the respective chain.

• 22:54Speaker 02

  I'm of the belief that like there's going to be hierarchies of abstraction and that like the, the andies of the world are going to like dictate how, how all this stuff functions, right? Like there's going to be the, the people that are truly on-chain, like one click away, they're, they have a Telegram bot that's fine tuned to this one specific chain that's doing the thing. And then there's going to be a layer of abstracted people, but the people like the andies of the world, the developers, the people that are in the trenches, doing the very like on like bare metal interactions with the chain are going to dictate a lot of the exciting things. And the more abstracted you are like, cause that's the only way like you can be hyper efficient there, right? You get the best, you get the best snipes, you get the best, you know, exchange rate, like you're less slippage, like you're the best at all of these things. And because of that, you're going to drive

• 23:36Speaker 02

  the excitement momentum, like the energy of the chain. And then the abstracted users are going to be seeing US dollars, they're going to be, you know, a nice UI, it's going to be one app for 75 chains. Oh, it's nice, it's slick. But you're getting worse execution because you are allowing yourself to be abstracted. And that's fine. So like Andy dictates the world. That's where the excitement is. That's going to be denominated in Sol because he likes Sol because he has those beliefs of a crypto. Native and he hates Fiat and whatever. And the dude that doesn't really give a shit is playing on his phone like late one night from his bed. And he just, you know, he did into a meme coin and it's USC on the C on the front end, but the backend is denominated in Sol. Because that's what Andy wants and Andy is the one that generated the excitement. It eventually matriculated its way up to this person in his bed, abstracted away.

• 24:16Speaker 02

  And then, uh, yeah, that's like, that's who is just, uh, on boarded, but still all of the native things remain kind of similar constructions to how they are now. Like philosophically aligned.

• 24:28David Hoffman?

  How's that power make you feel, Andy?

• 24:31Speaker 03

  It's a lot of power and I don't deserve it. I just click buttons and buy things, but I'll take it.

• 24:36Speaker 02

  This is the, this is the royal Andy. So it's, it's all of the Andys.

• 24:40Speaker 03

  It's just all my group chats.

• 24:42Speaker 02

  Yeah. So like just extending on that and like talking about this broadly infrastructure and how we value these things and is it bearish? If we like, look at these things as pure DCF or pure rev and say like, are we overpricing these things? Like, that doesn't mean go ahead and sell all your shit, right? Like, you know, John's over there. He's still investing in Sol and Bitcoin, right? Like I was looking at hyper liquid, getting exposure over there. Like there's a time lag to all this stuff too. Like it's not going to be all of a sudden, oh my God, we woke up to rev this weekend, dump your shit. Like we gotta pivot to apps for the rest of time. It's like, it's the same bull case that he has for Bitcoin that I frankly hate. We're just like, I hate the construction. I think the security model is stupid. I think 21 million cap isn't makes sense. You need to have a little bit of inflation if you're going to try and be like all this stuff.

• 25:23Speaker 02

  But it's like, bro, it takes time and like, we have 10 years to worry about it. People are slow and like, it takes time for the collective to change their opinion, to look at new models and value things. And like, dude, you can ride the wave, make some money and like, understand that the ecosystem is figuring it out. And yeah, it's like, I have that position broadly, even though I'm bearish like infrastructure right now, I'm starting to think like, hell, man, we probably overpriced all this stuff. I think we're still cool to ride the wave for, for the foreseeable future because it just takes time for that stuff to happen.

• 25:53David Hoffman?

  Uniswap is your gateway to a more efficient DeFi experience. With Uniswap swapping and bridging across 13 chains is simple, fast, and cost-effective, helping you move value wherever, whenever. Thanks to deep liquidity on the Uniswap protocol, you'll enjoy a minimal price impact on every trade. And now, Uniswap V4 takes it even further. Swappers benefit from gas savings on multi-hop swaps and ETH trading pairs, while liquidity providers can create new pools at 99% lower costs. The best part: you don't have to do anything extra. Each trade is automatically routed through Uniswap X, V2, V3, and V4, so you get the most efficient swap without even thinking about it. Whether you're swapping, sending, on-ramping, off-ramping, or bridging, Uniswap's web app and wallet gives you the tools to unlock DeFi's full potential on Ethereum, base, Arbitrum, Unichain, and more.

• 26:37David Hoffman?

  Use Uniswap's web app and wallet for a more efficient way to use DeFi. Imagine verifying yourself without handing over personal data. No hacked databases, no unnecessary personal exposure for airdrops, and no AI bots ruining community governance. Meet SELF, the on-chain identity verification protocol built for privacy and control. SELF protocol uses zero-knowledge proofs to confirm your identity safely. Users prove key details like age or citizenship without revealing sensitive personal information. SELF never stores your data, it only generates cryptographic proofs. Here's how it works in three steps. First, register and verify. Use the SELF app to scan your biometric passport's RFID chip. SELF verifies authenticity with zero-knowledge proofs. Each passport creates one unique identity. Second, you can share proofs privately.

• 27:22David Hoffman?

  Third-party apps request identity proofs, like confirming you're over 18. You can also link proofs securely to public wallets for airdrops or governance participation. And then last, secure verification. Apps validate your proofs instantly on-chain, like on Cello, or off-chain. Audited by ZK Security, the SELF app is live on iOS and Play Store. Visit self.xyz and follow SELF Protocol on X. Imagine if your checking account and DeFi wallet finally spoke the same language. That's Mantle Banking, an all-in-one fiat and crypto account. It lets you save, spend, and invest all from one dashboard. Swipe for coffee, stake ME for yield, or even use virtual cards for payments through Apple Pay. So it feels Web 2 simple, yet stays Web 3 sovereign. For allocators, meet Mantle Index 4.

• 28:03David Hoffman?

  The S and P 500 of crypto, a tokenized institutional-grade fund seeded with $400 million from the Mantle Treasury and balanced across Bitcoin, Ether, Sol, and yield-enhanced stables. One asset, broad exposure, pure DeFi composability. The momentum is real. ME faults, FBTC bridges, and a $2.4 billion community treasury are all powering the next phase of on-chain finance. Mantle brings real-world access, yield, and utility to digital assets. Ready for the next era of on-chain finance that actually belongs in 2025? Explore Mantle at mantle.xyz or follow mantleofficial. Mantle, bridging TradFi and DeFi so you don't have to. I think one of the big questions is why is this REV debate split down tribal lines? Like, it is perfectly split between, like, if you are in the Ethereum camp, you diminish

• 28:48David Hoffman?

  REV.

• 28:49Speaker 02

  If it makes you look bad, you don't want it. If it makes you look good, you want it.

• 28:52David Hoffman?

  Yeah, I don't know if that's totally the whole story, though. That's definitely a part of it. I'm not going to discount that.

• 28:58Speaker 02

  Well, there's frustration, right? Ethereum doesn't feel like they're accurately represented for the value that they're contributing in that model, which makes sense. That's your picture, right? They're like, okay, like, I get it. There's some stuff there. Some people think MEV is malicious and they like, they don't like that. They don't like the ethos of all that stuff, but they're like, they can respect it, but like you're saying, it's not the whole picture. We're not represented here. Like, that's why you like, talk it down. Does the ballot seems a little extreme, but talk it down.

• 29:23David Hoffman?

  Yeah. There was a little bit of talking, the communities talking past each other, where I don't think I saw anyone saying that REV is the end-all, be-all, or even that REV is the dominant metric. I don't really think I saw anyone saying that, but I saw.

• 29:37Speaker 02

  David, are you saying there's no nuance on Twitter or that we lack nuance on Twitter?

• 29:41David Hoffman?

  I guess the fight is just a tug-of-war of the importance of REV. And I think like some people in the Ethereum community are like, don't even, it's so unimportant that we shouldn't even talk about it. And that's too far. That's too far. But also saying that it is the tail wagging the dog is also incorrect. And it's like somewhere in the middle, but it's also just interesting to see that like there is a tribal line between people who are pro REV or I don't even know if pro REV is the word, but like the people who are more comfy with REV tend to be Solana-aligned and the people who are more. Would like to diminish REV tend to be Ethereum line. I saw this tweet from a poller who said, this REV debate is reminding me for years about

• 30:23David Hoffman?

  how Bitcoin and ETH maxies would talk around each other until they mostly realized that there were, they were different economic models. And what they were really doing was talking past each other. Many sensibly therefore accepted that they were indeed different cultures. And I kind of see this happening in this Ethereum Solana community where Solana, I think Solana will be more likely to be more dominantly valued by REV because of what Solana optimizes for with it, which is state transitions, just trading, trading fees, decentralized NASDAQ, trading as fast as possible. And I think like Solana doesn't really care about holding state as much as it does about state transitions, whereas Ethereum is more the opposite.

• 31:05David Hoffman?

  Ethereum has always prioritized holding state than swapping assets. And like when we opened up the episode last week, I was like, John, please say one nice thing about Ethereum. And he said, I would trust Ethereum to hold my money for the longest amount of time. And to me, that's holding state. So John trusts Ethereum to hold state and REV is not as important. It's not in the forefront in that kind of optimization. Whereas on Solana, REV is much more optimized because we are, Solana is much more concerned with changing state very quickly, very efficiently, very, very fast, rather than in holding state. Because like the long, long distance verifiability of the blockchain of Solana just is very hard by comparison to Ethereum.

• 31:45David Hoffman?

  And so in these respective ecosystems, like I think we all, we all know that REV is good and more REV is more good for your respective ecosystem, but for Solana, it's more good for Solana than it is for Ethereum. Because Ethereum, there's something else. And by the way, whatever that something else is, whatever that thing is, I think it's the same thing that makes Bitcoin a special snowflake, by the way. Bitcoin just has like 99% of it. And Ethereum has a more balanced, more moderate view of REV and whatever the special snowflake, the thing that Bitcoin has. And then Solana is like, we're just going for REV and that's kind of our whole deal. And that's like, why there's like tribal lines down all of these things. John, what do you think about that?

• 32:24Speaker 01

  Yeah, no, I generally agree with that. And that was why, in particular, I was saying I disagree to your point earlier of, I think it just depends on what you're talking about, of

• 32:35Speaker 01

  didn't see people who are saying that this should be the primary, the only metric. I think that it should be, it's just dependent on what you're talking about is, I don't think that REV holds the same amount of weight when you're talking about Ethereum versus something that just effectively looks like an app.

• 32:49David Hoffman?

  Right.

• 32:49Speaker 01

  Where I would say that Solana is, again, not even 100% price based on REV or even expectations of REV.

• 32:56David Hoffman?

  I'd agree with that.

• 32:56Speaker 01

  But I would guess that the average investor that is assessing what is Sol going to be worth in the future versus assessing what is ETH going to be worth in the future and why? REV is a higher percentage of that calculation for people who are holding Sol versus ETH and then the value that's embedded within that. So I think that the answer is different depending on what you're looking at. And then again, I've got the question of, okay, what, how is that going to change going forward? My general gut is that REV is going to matter more for the majority of assets and large assets as well going forward. That that's my guess. That certainly doesn't mean that I think that ETH is going to be valued as a strict DCF starting tomorrow or possibly ever. It's, those are still just different degrees of statements.

• 33:37David Hoffman?

  Here's a take, all like the net new blockchain, like, I don't know if there's any consensus on what the next best blockchain after Solana is, but like the fourth, number four, whatever that is, Aptos, Sui, say, whatever, is going to be even more rev focused than Solana is. And then the next one after that will be even more rev focused than that. And there's like an emphasis on being faster and and generating more revenue, the longer tail of like the layer ones that we generate. Because like the layer one premium has to die, but you know what has the best layer one premium? Bitcoin. And so if you go the other direction, like you actually like reduce your emphasis on velocity.

• 34:18David Hoffman?

  And you actually want to increase your emphasis on like supply syncs more than revenue. And I don't know what might you, what, what word you want to use for that. Maybe it's money-ness, commodity money, something like that. But like in one direction, in the Bitcoin direction, it's something like supply syncs, you know, the Michael Saylor's. And then in the other direction, it's cash flows, DCF equity model.

• 34:38Speaker 01

  I would say that's fair, although as you were going through that, you know, you hear John would like to hold his assets on Ethereum.

• 34:47Speaker 02

  But you wouldn't hold Ethereum on Ethereum because you don't think holding, you don't think holding Ethereum is good for Ethereum, the price, right? Like, it's like the actual act of doing that, the the actual state of like, holding Ethereum is not necessarily conducive to Ethereum, the price. And like, we're going to talk about like, relative valuations, right? So like, you know, there's, there's some, all things being equal, like, maybe the story changes. But right now, with Solana being where it is, Ethereum being where it is, the current state is that you would rather hold your Solana on Ethereum, because Ethereum is the better, whatever, the better store of value. But you would rather have Sol because the act of state transition and like, the DCF, the rev that is associated to that,

• 35:29Speaker 02

  is probably better for the price action of the native token than simply holding state, right? Like, which of those two actions is actually better for the native token? Because, you know, Ryan Shad Adams, you know, came at one of my tweets and saying, hey, you know, Ethereum is for non-sovereign ownership in participant in DeFi, like all this stuff. It needs to secure so much value. And I'm like, well, okay, like, you need, if you're going to secure a trillion dollars, why? Like, does it, does the native asset need to be worth a trillion dollars? And like, why wouldn't I? I think it was deeper in here, like, he, yeah, he said, what's worth this? Like, anyways, it's like, it's kind of the totally meme of like, secure, like, how do you secure the chain? Like, is security is a meme?

• 36:11Speaker 02

  Like, why would you spend, you know, $500 million or $500 billion to attack the chain? They take over the Valouders by stake when you could just spend, you know, a 10th of that to attack like a couple of client teams, right? And take them hostage, get the GitHub repo, inject a bug, like, do all like the sci op stuff? So it's like, you know, if it, if it is a ecosystem of no motion, like, is that good for the actual token itself? I don't think it necessarily is. And, you know, like, yeah, that's just kind of where I'm at.

• 36:41David Hoffman?

  Yeah, yeah, and that goes to like what I'm trying to push in the Ethereum community is, hey, we should increase the slow, slow, we should lower the block times and we should increase the desire to trade assets on the layer one. And we should emphasize the layer one as the economic hub for Ethereum. Because all of that is working on what I think Ethereum is weak on, which is rev. Because Ethereum has, Ethereum has, this is what some of whatever makes Bitcoin a special snowflake, and it has got some of that. And it's not, doesn't have rev nearly as much as it has whatever Bitcoin has a special snowflake thing.

• 37:20David Hoffman?

  And I think Ether would be even more of a special snowflake if it was able to increase its rev as well.

• 37:30Speaker 02

  I think the hardest battle is like Jashin Yano was all excited recently as a podcast about like these institutional players coming in and trying to get more and more data from the industry, which means like, and if you think about how traditional finance values their stuff, like they want models, they want to be able to like run a valuation, they want to be able to make their own calls, they like data, they want to do all this shit, right? And with Ethereum being a smart contract platform, it means that that data is available, it is comparable to other things. And even though it does possess the Bitcoin property of the world, I think just the existence, the mere existence of smart contract functionality is going to sigh off these people into like, well, if we just do this thing that is applied broadly to all of these things, it equates all these things, it'll be tough for them to buy into the secondary like narrative

• 38:15Speaker 02

  of Ethereum, which is like the digital oil of the world, right? The monetary asset, all this stuff, which I do, like, when I responded to RSA is like, I can get pilled on the fact that like, yeah, like there is, if there's a large nation state or nation that wants to interact on the blockchain and do it trustlessly, like, yeah, like I would, I would choose Ethereum, right? Because Ethereum not only would store the value, it allows me to deploy a contract to trustlessly swap with some, another nation, right? Like in a hostile environment, Ethereum is the place that I want to do that, right? Credit and mutual, all this stuff. So it's like, okay, I can see that, like, that's a unique property that Ethereum possesses. What is that worth? And is there, is Ethereum decentralization too much, right?

• 38:54Speaker 02

  Like, is, are they starting to be acceptance of like a Solana level of decentralization? Like, eh, you start squinting a little bit, you start seeing a lot of things starting to go over there. Like Solana is being okay with, with its level of decentralization. Is Binance decentralized enough? Probably not. Like, that's, that's a bridge too far. Tron, eh, nah, we'll stay, we'll stay back on, on Ethereum, right? Or on Solana. So it's like, you start asking the secondary questions of like, I see the use case, but then you ask the players or see where the players are going and wonder how far they're willing to go. Do, like, do they need the level of decentralization that Ethereum offers? And what is that value at?

• 39:30David Hoffman?

  Andy, how's the Belief ecosystem? Still alive?

• 39:33Speaker 03

  Great, yeah. Lots of cool coins, you know?

• 39:36David Hoffman?

  Any cool projects? Tell me about a cool app that you tried this week on Belief.

• 39:41Speaker 03

  Oh, I mean, I don't, I don't try the apps personally, Dave. But let's not get ahead of ourselves here.

• 39:47Speaker 02

  You're all pre-revenue.

• 39:50Speaker 03

  There's actually one that the token came out like today or last night or something that's doing some sort of like chat GPT ad-based stuff that like actually seems somewhat interesting called like Prompt Bitter. They're like a old, like a YC 2023 winter company. People get really excited by apps that are like, actually have fundraising and, and investors doing launch coins. But that, that's probably the most recent like hot coin. But they just started to roll out today, like an API for apps to start like integrating token burning into the app.

• 40:30David Hoffman?

  Okay, so we're doing the utility. We're turning the apps into cash flow buyback and burn models. Right?

• 40:37Speaker 03

  Yeah, so we're getting there, you know? But. Yeah, no, internet capital market's still hot as ever.

• 40:44Speaker 02

  So I did, I did a chart yesterday because like, like the trenches are getting a little more interesting. So tokens of the last seven days that have launched, there's like a meme coin war thing. So we have pump fun that's out there now. Boop is still existing from a few weeks ago. We have Bonk, which is going crazy because Bonk believers are doing their shit. And then, uh, belief, right? Believe is doing its thing. And if you look at the top tokens by market cap over the last seven days, there's actually a surprisingly large portion that's owned by belief, right? Like belief has, it's one, four, five, six, seven, eight, nine, 10 of the, yeah, so 10 of the top 11 or 12. It's, it's crushing. And then you go to, uh, the last 24 hours, though, it's all pump fun.

• 41:29Speaker 02

  So it's like the, basically anything that has come out with value has come out from believe in the last seven days. And then the last 24 hours is saturated, like 80% of the, of the market capital of the last 24 hours is all pump. And it was the same story yesterday, too. So pump fun is launching still an unprecedented amount of actual tokens, relative to the, to market. I think it's upwards of 81% right now of all tokens launched on, on, across these, these dashboards. Um, our latest launch pad is still pump fun. So it's back in pole position pretty comfortably. But the highest market cap things are coming out of belief. So, and, but that's, that's beyond the last day or two. So it's like, we, we basically had a shotgun of like these highly valuable believe apps that are out there and exist in the world. Hasn't really launched many things that have been, uh, a good trade recently.

• 42:14Speaker 03

  On like Thursday or so that they were going to stop featuring and part, and doing new partnered launches. Because they just had so many live and they wanted to make sure that they could like, basically work with and like handhold these different teams that had done stuff. They haven't said anything much more since then. But that was at least something that they kind of pretty publicly said like, hey, we're, we're gonna hold off on, like really featuring more apps and stuff for now while we, kind of work through this backlog of people and make sure everyone has the support they need.

• 42:46David Hoffman?

  Is it, is it one notion of like curation? They're trying to only curate quality apps because they want those meme coins to like, it would be nice to know that there is a curated launchpad out there where there's at least just some notion of quality for the meme coins.

• 43:03Speaker 03

  So anyone can, like you can launch a belief coin right now on Twitter. So there it's not gated in that sense, but in the sense of like what they will add to the, the app and kind of like, like feature and promote that is pretty meaningfully gated. Uh, and they're like, you know, working with teams and talking with them and trying to like, help them figure out what it means to do this and like what to do with the coins, all of that kind of stuff.

• 43:31David Hoffman?

  I like that. I like that. So you have to actually grow a useful, fun, real, legit application in order to have some like curated, approved meme coin be served to people who like go to that front end. I'm, I'm okay with that. That sounds great.

• 43:49Speaker 03

  Yeah. I think, I think it makes a lot of sense for their, for their particular positioning as well of being this more like web two focused, like actual business focused thing versus just, you know, the fire hose that is pump fun.

• 44:03David Hoffman?

  It is funny that we talked about this idea of like, okay, they're going to launch a meme coin according to their app, but then they're not going to have any sort of like C corp governance over their app. There's not going to be investors with tokens. There's not going to be a team members with tokens. There's just going to be the community with meme coin. And we all know about the misaligned incentives if the team doesn't have the meme coin. Uh, and then we talked about, okay, like we saw teams try to back their way from their, their meme coin into like an actual org token, like AI 16Z, which is what I see them doing with like trying to burn the revenue of the trading fees to burn the token. But at the same time, like I'm cool with that direction. I keep, I want someone to go and press forward into that direction and truly actually associate the token with the value of the app.

• 44:50Speaker 03

  Yeah, it seems like that's what they're gonna try to do, or at least try to give people the tools to do it. I think it'll take time and I'll be curious to see kind of how it turns out, but kind of like as the data that Brad was talking about shows, like there is pretty real demand from like the more on-chain traders.

• 45:10Speaker 03

  Like people are pretty excited to buy these coins comparatively to like random pump fun coins and stuff. Because it just, it does feel like it's, there's a much higher hit rate of like, oh, this is a real person who's not like some scammer from the Philippines who made a fake account that's trying to steal my money. And so it just feels better.

• 45:29David Hoffman?

  Yeah, the timing is also, I mean, they're definitely pushing the timing on this one because there is no true sandbox around tokenized securities from the SEC. And so I think in the Biden administration, I think we would all be like squeamish about this, but during this administration with the SEC truly trying to figure out and be more open to experimentation, I think it's still on the early, it's on the early and bold side, but it's not irrationally early or irrationally bold.

• 45:55Speaker 02

  These raw numbers still blow my mind, like pump fun, even like for 31,000 tokens launched today.

• 46:05Speaker 02

  What is that? What are you doing?

• 46:06David Hoffman?

  There's gotta be a low number of people who are pumping these things out.

• 46:09Speaker 02

  Of course, yeah, you've seen threads come out and this dude's like, this one wallet has launched five tokens a day for the last 875 days and he's made $500,000. So it's like, yeah, like some people are like, this is what they do. They just launch shitters all day. But just like the raw numbers of some of this, and that's not even the automated stuff. That's what it's like a dude that's just like eating shit into the ether. But like, yeah, yeah. Tens of thousands of tokens launched and the success rate or the graduation rate is oscillates between 0.8 and 0.9% for pump. So it's like less than 1% of any token that you see even, even reaches a radiant pool and then probably instantly nukes from there. So it's just like, man, like the game. And the funny note is that we talked about Boop's incentive model.

• 46:54Speaker 02

  It's like they, they're incentivizing people to graduate tokens. So even though Boop is getting basically no traction, like a thousand coins a day, its graduation rate is like 6%. Like, so people are still launching coins over there and making sure they graduate so they get the daily Boop drop.

• 47:09David Hoffman?

  Have you ever imagined Bitcoin and Ethereum truly working as one, unlocking the full potential of Bitcoin, DeFi, and more? Meet Hemi, a groundbreaking modular network designed precisely for that vision. Co-founded by early Bitcoin core dev Jeff Garzik. Unlike other Layer 2s that treat Bitcoin and Ethereum as separate silos, Hemi connects these giants into a single, powerful super network. With Hemi, users gain unprecedented asset portability and possibilities, combining Bitcoin's security and value with Ethereum's versatility. Hemi's unique innovation, the Hemi virtual machine, integrates a fully indexed Bitcoin node directly into an EVM, enabling dApps that seamlessly interact with both networks. And with Hemi's proof of proof, or POP consensus, users benefit from truly decentralized, censorship-resistant Bitcoin-level security. Since its recent mainnet launch,

• 47:53David Hoffman?

  Hemi has rapidly ascended the ranks as one of the top Bitcoin chains. With a thriving global community and robust ecosystem support, Hemi isn't just building a network, it's shaping the future of Web3, DeFi, and beyond. Visit hemi.xyz slash banklist to learn more, discover ways to interact, participate in a leaderboard program, and be part of the community that's uniting Bitcoin and Ethereum. In the Wild West of DeFi, stability and innovation are everything, which is why you should check out Frax Finance, the protocol revolutionizing stablecoins, DeFi, and Rolix. The core of Frax Finance is Frax USD, which is backed by BlackRock's institutional Biddle fund. Frax designed Frax USD for best-in-class yields across DeFi, T-bills, and carry trade returns all in one. Just head to frax.com, then stake it to earn some of the best yields in DeFi. Want even more?

• 48:36David Hoffman?

  Bridge your Frax USD over to the FraxL Layer 2 for the same yield plus FraxL points and explore FraxL's diverse Layer 2 ecosystem with protocols like Curve, Convex, and more, all rewarding early adopters. Frax isn't just a protocol, it's a digital nation powered by the FXX token and governed by its global community. Acquire FXX through frax.com or your go-to Dex, stake it, and help shape Frax Nation's future. Ready to join the forefront of DeFi? Visit frax.com now to start earning with Frax USD and staked Frax USD. And for Bankless listeners, you can use frax.com/r/banklist when bridging to FraxL for exclusive FraxL perks and boosted rewards. Okay, so what about PumpFun increases Sol price the most? The bulls.

• 49:21David Hoffman?

  The reservation demand for Sol, the asset? Or the trading fees that goes into our EV and shows up on like a Blockworks dashboard?

• 49:31Speaker 01

  Neither. It's all the Solana that's permanently locked in radium LP pools and pump swap LP pools.

• 49:36David Hoffman?

  That's the reservation demand for Sol. That's reservation demand.

• 49:40Speaker 02

  Would that go, would you bundle that with the Sol in Andy's wallet? That he's waiting to yeet into a token?

• 49:46David Hoffman?

  I would classify those two things as two different flavors of reservation demand. But any sort of Sol lockup in any particular way, I'm classifying as reservation demand. And like the reservation demand of the Sol in Andy's wallet, I think is a little bit more fleeting because Andy could go, you know, FSH his Sol. But that Sol in the LP pools is not going anywhere forever. And so I think that that is the much stronger force for upward Sol pressure.

• 50:12Speaker 01

  I don't think it's either of them.

• 50:14David Hoffman?

  Okay, what do you think it is?

• 50:15Speaker 01

  I think it's a higher level, non-quantifiable. Solana is just winning at the thing that matters and the users and the new apps and everything are going there as a result. And we have some notion of what is this pie of smart contract platforms worth, looking at ETH in particular? And the market's assessed probability of Solana being that thing is just going higher. I think it's a, I think it's a less, I don't think it's a dollar impact from Sol being locked in LP pools or a measure on REV. I think it's just the market's assessed probability loosely of Solana being the more important thing in the smart contract platform area. It has just gone up a lot in the past couple of years. And that's like mostly downstream of winning all the meme coin stuff.

• 50:59David Hoffman?

  I think that's growth, right? This is, investors are pointing towards growth and you see growth in Solana most of all.

• 51:05Speaker 01

  Yeah. And I think a lot of that is loose even from the, oh, that means they're going to get future REV or they're going to get future whatever. I think there's some implication of that and that's a meaningful part of it when you actually get into it. But I, I think the very practical literal is I see all the users going to Solana now. I see the applications, the developers increasingly going there. I see Ethereum is some large multiple higher than Sol. I and I don't have a good reason for that anymore. Therefore, I think that that gap should close a lot because this is what the market is telling me ETH is worth. I think in practice, that is the math that a lot of people are doing is that like very simple back of the envelope math. I think going forward, that will change a bit.

• 51:47Speaker 01

  And I mean, very literally, it's been harder for Sol that ETH has gone down in price over the past couple of years because I think that is the comp and it's gotten lower. And I do think going forward, REV does become like a more important metric. But I, I think that anyone who is also trying to do a more sophisticated DCF type analysis on Sol, if you actually wanted to do that, you would have to very clearly acknowledge that the REV that it is getting now, and other people have pointed this out, it's completely correct, is it's not actually the best indicator of future REV, probably. These markets are probably going to get reasonably more efficient. And so the margins of how much of this REV is actually still going back to Sol versus will we get recaptured at the app layer, those margins are probably going to compress quite a bit. So you need to account for a lot of scale.

• 52:30Speaker 01

  These numbers are going to be volatile, they're going to be volatile, they're all over the place. You can't just take a spot, this is where REV is today and apply a clean multiple to it. So I, I think a lot of it ends up being this looser notion of Solana is winning, the people are going there. This is what the smart contract platform market is worth. That's what the market is telling me. I bet on that gap closing.

• 52:50David Hoffman?

  Even if we scale a bunch of block space, doesn't that not matter? Because REV mostly comes from contentious state rather than quantity of block space.

• 52:58Speaker 01

  So historically, that's probably technically inaccurate because I think that the numbers are so heavily skewed by Ethereum in the past. But that is where it is today, and I think that's where it is going forward. Where if you look at those crazy REV numbers from Ethereum in the past, I think 90, 95% of that at least was all base fees. It was all congestion, just because Ethereum was the place and it was so constrained. People were just paying insane base fees. It's never, it's never been MEV or prior fees to get in there where Solana has always been the exact opposite. Their base fee is next to nothing. And then all of their REV is coming from exactly this, it's contentious state. It's all, it's all MEV and prior fees. So there's actually some worlds where Ethereum could increase the block size.

• 53:43Speaker 01

  And their R E V would go down at this point, that probably wouldn't happen because the base fees have also gone so much down that Ethereum doesn't have that baseline that it did before. But this would have happened if, for example, the literal example would be if Ethereum just all of a sudden 100x the block sizes in November of 2021, their R E V would have actually went way down. At least in the short term, just because you would have lost the majority of those base fees. But yeah, going rolling this forward, the more sustainable form of R E V is likely to be still coming from just access to contentious state prior fees and M E V, which is what Solana has. And that's what you would get more of this if Ethereum brings more L1 activity back. But even the margins on that should compress over time where apps are going to try to recapture more and more of that as well.

• 54:25Speaker 02

  Yeah, I try to think about it like, so yeah, the the priority fees scales better with a with a expanded block pay, an expanded block space, right? Because that first slot in that block is is finite, right? Like everyone who wants that, you're still going to pay a premium for that. Then there's if there's 10 people that want it, whether the block has a tail of 1,000 or a tail of 500,000 other transactions they can get in there. There's only one top of slot or top of block slot, and you're going to have to pay that premium for it. It's like, I could see that persisting longer, right? So that that seems healthier, sustainable. Do we think the infrastructure is actually going to get, you're talking about apps taking some of that, but you know, isn't, are you thinking like, like app sequencing? So that like the app is the one that can guarantee the the ordering there and therefore they capture that.

• 55:07Speaker 02

  Therefore, it goes to the app and no longer leaks to the Gitos of the world and therefore is no longer captured in R E V.

• 55:13Speaker 01

  Yeah, it's stuff like that. It's more efficient A M M designs. It's better liquidations for borrow and markets. All of that are just going in this direction of apps don't want to leak this. And then at the extreme, if people can't build those well enough, then people will leave and build their own chains. If you can't figure out how to stop leaking some meaningful amount of it, that you decide, hey, it's worth me going to make my own chain as opposed to I can't figure out how to internalize all of this on Solana. And so I'll just go leave and go do that. But yeah, in some form, apps are going to internalize this and we're going to figure out what that balance is. My guess is that the balance today is going to shift more in favor of the apps where the apps will have more bargaining power, particularly as infrastructure gets better and easier to move across. And there's less lock in from them. They won't be able to charge this, you know, kind of high level,

• 55:58Speaker 01

  which is right now, the result of just inefficient infrastructure that's still improving. So you leak a lot of value back. But yeah, in in general, I expect that to the those margins are certainly going to swing towards the apps over time. And then on the on the base fee side, I don't think that high congestion fees are ever going to be a sustainable source of demand for anything. The the only way that you're going to ever be able to monetize base fees to like a serious extent is if you're just doing insane scale. And I think the closest is this is roughly what something like the Celestia thesis is of you're taking this, you know, it's probably not going to work, but you're taking this bet on, you know, demand to use crypto is just going to go a thousand X, a million X.

• 56:38Speaker 01

  And, you know, AI agents are doing micro payments on chain, you know, it's this unfathomable level level of demand where, yeah, if you even if you're shaving basis points off of this type of activity on, you know, millions of TPS that you actually get cash flows that makes sense. But in absence of that, you know, you're you're doing a thousand, a few thousand TPS. You can't back into numbers that make sense on a DCF just off base fees alone, because if they're too high, people will leave.

• 57:02Speaker 02

  Bearish in from, man, like I'm I'm getting blackpilled even more. I I hate it. I hate it. But I'm I think I see it.

• 57:10Speaker 01

  Great for the apps, though. Great for the apps.

• 57:11Speaker 02

  Yeah, it's great for the apps. Yeah, like the future is applications like in it's bearish or not bearish is it's bullish for me, right? Like, like, we're trying to build specifically for an execution environment. And like, if the apps are the things of value, they should gravitate to the best execution environments. Like, that's kind of what we're trying to play on, right?

• 57:26David Hoffman?

  Are you trying to optimize for like trading? Or are you trying to optimize for latency? Or how do you like? Because I don't really, just as a vibe, I don't really see mega ETH as a place to like compete with Jupiter or Uniswap or Pumpfund. I kind of see it more of just like on-chain Minecraft and on-chain consumer apps that aren't really trading focused, but I could be naive about that.

• 57:51Speaker 02

  Yeah, I think like you're gonna get a user profile that is associated to fast and cheap, right? Like you're like, I think just natively, you're gonna get any environment that is like this, the fast and cheap stuff. I think you're gonna get traders that can do stuff because it's cheap and easy and you can fuck around and like, it just necessitates that. So like, yes, like the, are we targeting any specific subset? Eh, not really. It's just like, we're trying to build the best environment for, for people to just create whatever they think they want. If that's a sniper bot, or if that's a, you know, a full suite trading thing, or if that's a Minecraft thing, it's whatever. But like, it's just the experience, the bet we're making is that the experience of, of being real time is the, the edge will eventually carve out and people will gravitate there because it's just, if you want your app to be better, it'll feel better whenever you're

• 58:36Speaker 02

  instantly responsive, right?

• 58:37David Hoffman?

  Well, we had one of our panelists create the meta of the week because it was a slow week. So next week, if next week's a slow week too, one of you guys is gonna need to cause a controversy. So we have something to talk about.

• 58:47Speaker 03

  Hey, listen, I've been called Launchcoin GCR more than once. So I'll claim, I'll claim last week's. So it's on you for-

• 58:56Speaker 02

  I was gonna pump your bags. I was like, I was like, dude, Andy has been yelling at me or just at the timeline of all this stuff. And I was like, yeah, he's getting decent engagement on stuff. And it's like, now looking back after Launchcoin did everything, it's like, dude, he's, he nailed it. I don't understand how everyone isn't all over him.

• 59:10Speaker 03

  I had a lot of people message me saying, thank you so much for tweeting about that.

• 59:14David Hoffman?

  Yeah. Oh, it's gotta feel good. And with that note, Bankless Nation, crypto is risky. You can lose what you put in. We are headed west. This is the frontier. It's not for everyone, but we are glad you're with us on the Bankless journey. Thanks everyone for joining this week.