EthCC #2 | Kain Warwick - "The Crypto Fees Boom"

🇫🇷 Welcome to the Bankless EthCC 2022 Experience 🇫🇷 With fantastic guests from all corners of the ecosystem, this 8-part series is an exploration of crypto culture and the current state of Ethereum. With Episode 2, Kain Warwick from Synthetix joins us to frame the next bull market. Pockets of DeFi are heating up, the Layer 2 narrative has room to breathe, and electricity (hopefully not COVID) is in the air. ------ 📣Rhino. Fi | Massive Mystery Airdrop https://bit.ly/3o9trRE ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: 🌱 LENS | ACCESS CODE: WAGMI https://bankless.cc/Lens 🚀 ROCKET POOL | ETH STAKING https://bankless.cc/RocketPool ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave 🌉 JUNO | BRIDGE FIAT TO LAYER 2 https://bankless.cc/Juno ⚡️ ZKSYNC | THE LAYER 2 SCALING ENDGAME https://bankless.cc/zkSync ------ Topics Covered: 0:00 Intro 3:30 Kain Warwick 5:20 EthCC 2022 8:05 Alt Layer 1s 13:00 Layer 2 Vibes 16:00 The Fees Boom 18:27 Kain vs Su Zhu 21:17 Bull Market Goggles 23:14 Setting up the Next Bull ------ Resources: Kain on Twitter: https://twitter.com/kaiynne ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

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

• 0:03David Hoffman?

  Welcome back Bankless Nation to the ETH CC experience. I hope you enjoyed that conversation with Vitalik. Talking with Vitalik in real life, it's always a treat. It's always a treat. Coming up next, we got Kane Warwick. And Kane, he's always just so articulate and so clear-headed. And I already teased the part where we talk about his tussle over crypto Twitter with Suzu. Obviously, that's part of the show. But Kane gave me this very fantastic presentation of his idea for how bull markets progress. And it's with this idea of a scoreboard, where first we had the scoreboard of the ICO mania, like how many millions of dollars can your ICO raise? Then the next mania was the DeFi summer mania. And that metric, that scoreboard,

• 0:43David Hoffman?

  was how much TVL can you get deposited in your contracts? And he makes a claim that the next coming bull market is going to be a bull market in fees. How much fees can your protocol earn? And we are currently witnessing perhaps the beginning stages of a fee revolution going in the app layer on Ethereum, unit swap, generating more fees than the Ethereum protocol itself, which is insane. Synthetics, not too far along. And this definitely fits within the Bankless vision of fees are fundamentals. And in order to have a fundamental alternative financial system, it needs to have fees, because that's how companies, protocols, tokens operate, is they generate and capture economic value. So I'm super aligned in this thesis that we drop

• 1:23David Hoffman?

  with Kane. And overall, he's always such a kick to have a conversation with. We tell the story of the last ECC, and how I got COVID. And Kane was the last person I saw last year while we were getting our COVID tests and mine came back negative. Turns out, it was actually, it should have been positive. And that's a fun story there. But quickly, we're going to speedrun the sponsors that make the show possible. One of the big themes of ETH CC Week was the launch of the ZK EVM. Three different teams all launched their testnet. And while everyone is trying to claim who was first, we can confidently say that ZK Sync has been focused on the ZK EVM for the longest. The golden endgame of the ZK EVM has been the vision of ZK Sync since the beginning. And during ETH CC Week, they launched their 100 days to mainnet plan,

• 2:06David Hoffman?

  which is now already down to 93 days. So if you're going to join the ZK VM Wars, make sure you post about it on Lens, the first decentralized social networking graph. In crypto, we say not your keys, not your crypto. But on Lens, we say not your keys, not your content. Own your own social media handle, choose your own algorithm, and mint your profile using the secret code word in the show notes. And something that's likely going to be talked about on Lens is of course the Ethereum merge. And the merge is why you should be staking your ETH with Rocketpool. It's a decentralized Ethereum validator network where you deposit ETH and get your rETH in return. And then you can take that rETH into DeFi. And if you run a node, you can let other people deposit their ETH into your node, and you earn 15% of their staking commission as payment for your node operating services. And then maybe you want to take your rETH over to Arbitrum.

• 2:51David Hoffman?

  For all of your DeFi things, Arbitrum is where you have to be. With over 35,000 contracts deployed and 1 million unique addresses, Arbitrum is leading the way into the age of rollups. You know how I know those numbers? Because I watched Arbitrum's talk at ECC, which you should definitely also watch, but not before you're done watching this video first. But in order to get your money over to Arbitrum so you can buy your rETH natively, then you should use Juno, because Juno is the fastest bridge from your checking account to an Ethereum layer two. A checking account to an Ethereum layer two is absolutely crazy, and it just takes minutes. Juno is your crypto checking account for the crypto era. But when you're doing all of these things, make sure that it's on a privacy-first browser, which is why you should be using Brave. It blocks all the browser ads. It's got a native Web3 wallet,

• 3:34David Hoffman?

  and it puts the user first the Web3 way. I hope you use all of these sponsors on your quest for going bankless. And now I bring you my in-person conversation with Kane Warwick. What's up, Kane?

• 3:45Speaker 01

  Hey.

• 3:45David Hoffman?

  How's it going?

• 3:45Speaker 01

  Yeah, good, good.

• 3:46David Hoffman?

  Dude, yeah, second year at ECC.

• 3:48Speaker 01

  You're back in the hot seat.

• 3:50David Hoffman?

  I'm honored for you for taking the risk and coming and talking to me again.

• 3:53Speaker 01

  I know, right? I was a little bit worried, but I feel like I've had COVID enough times now that I'm probably, I'm probably out of danger, I think.

• 4:01David Hoffman?

  How many times have you had it?

• 4:03Speaker 01

  I've had it twice.

• 4:04David Hoffman?

  Yeah.

• 4:04Speaker 01

  So, yeah.

• 4:05David Hoffman?

  I've had it. I've had it three times.

• 4:07Speaker 01

  Yeah, but I also I got a a double dose of the booster. So.

• 4:12David Hoffman?

  Okay, oh, four shots. You've had four shots.

• 4:14Speaker 01

  I had two shots and then instead of getting the regular booster dose, I got a full booster dose. Long story. It was so much worse than COVID.

• 4:23David Hoffman?

  Yeah.

• 4:23Speaker 01

  Way worse than COVID.

• 4:25David Hoffman?

  I've heard the booster is bad. For the for the context here, Kane was the last person that I saw at last ECC. We were both in the pharmacy getting our rapid tests. Uh, and you know, chatting it up, like recapping, uh, recapping ECC twenty twenty one. Uh, and then I fly back home and then start having COVID symptoms. And turns out I I tested positive for COVID and Kane was the last person I had ever seen.

• 4:45Speaker 01

  But you told me that you were negative. You're like, I've got a negative.

• 4:50David Hoffman?

  They let me fly home.

• 4:51Speaker 01

  Yeah, yeah. So, yeah, I was actually on a call with someone and they're like, uh, David from Bankless just tweeted that he's got COVID. And I was like, no, he doesn't. And they're like, uh, I just saw him tweet it like he does. I'm like, I saw his test. He doesn't have COVID. And then I was like, oh, no, this is not good.

• 5:07David Hoffman?

  No, it turns out, it turns out I had.

• 5:09Speaker 01

  But I didn't actually get it from you that time. I avoided it. I I assume.

• 5:13David Hoffman?

  I've I've passed on COVID, at least as far as I can tell, to zero people, even though I've gotten it three times. Um, okay, so you were you were here at ECC last year.

• 5:20Speaker 01

  I was.

• 5:21David Hoffman?

  Uh, we're also at ECC this year right now.

• 5:23Speaker 01

  Yep.

• 5:23David Hoffman?

  Compare contrasts. How does it feel different? How's it feel the same?

• 5:26Speaker 01

  You know, crazily enough, I feel like it's more vibrant this time. Like you think macro, you know, bear market, all that stuff. I don't think that people were quite ready July of last year to travel. And so I think there's a lot of people, especially US people um, that didn't come last year that are here this year. So it feels like you've got a wider range of the community this time. Um, and yeah, I mean, people, people seem pretty upbeat. Um, like even at, you know, permissionless, uh, what was two months ago now? I feel like there was a bit of fear in the air and we hadn't quite like worked out what was gonna happen. I feel like the markets kind of shed that fear and we're like, okay. It's not great, but like we'll survive.

• 6:07David Hoffman?

  Right, it's it's it's kind of funny. I was joking before flying out here is like, well, if we had come out here at $1100 Ether, people, things would have been depressed. But if also if we had come to ECC at 1500 where we are now, and it hadn't fallen down to 11 first, people also would have been depressed. But now, since we went down to 11 and now it's up to 15, now it's like, oh, we're in the green, it's great.

• 6:28Speaker 01

  I know, I know. Yeah, price action has a way of doing that to you.

• 6:31David Hoffman?

  Certainly, certainly. Yeah, I've also noticed that the variety of projects is much more, there's so many more chains, so many more Layer 2s to talk about.

• 6:41Speaker 01

  Yeah.

• 6:41David Hoffman?

  Cosmos has a big, a big appearance here, but they always have a big appearance at ECC. What are some of the themes that you've been picking up on so far?

• 6:49Speaker 01

  Well, I think we are now at a point where, look, you know, I'm always trying to meme stuff into existence, right? So I'll shill my memes, but like, I think we're at a point where the the L2 narrative has the room to breathe that it needs. I think the Alt-1 thesis that was playing out so well for everyone for so long, really kind of, you know, suffocated. The, you know, roll-up centric feature of Ethereum and like all of that stuff, it was really hard to get momentum around that. I think, you know, in the same way that positive price action can be beneficial, negative price action can, you know, take the wind out of the sails of some of these things that maybe were not as sustainable as they appeared.

• 7:31Speaker 01

  On the surface, you know, especially when entire ecosystems implode, that doesn't help the Alt-1 thesis, you know, too much either. And so I do really feel like people are taking L2's, you know, arbitrom optimism. Obviously, there's a ton of like zero knowledge stuff that's, you know, been talked about this week. They're really taking it much more seriously and the thing that I've been, you know, kind of hoping for, which is this resurgence in interest in Ethereum. The ecosystem, not L1, but like the scaling ecosystem, all of the L2s, was it would happen. And I think we're seeing that, you know, the first kind of glimmers of that happening.

• 8:06David Hoffman?

  Yeah, there's been a lot of adoption, specifically of synthetics in the last couple of months, and I definitely want to talk about that. But first, I want to double down on the alt-layer-one thesis, and I'll play devil's advocate here. Is it fair to lump Luna, the algo-stablecoin Ponzi scheme, in with the other alt-layer ones? I feel like if I was like Anatoly or Emin from Avalanche, I'd be like, dude, that's not fair. We're not an algo-stablecoin Ponzi scheme.

• 8:31Speaker 01

  Sure. I mean, I guess my response to that would be that all's fair in love and war, right? If you want to use memes against us, you have to be prepared for the memes of production to be turned against you as well. And, like, yes, on one level, that is true. But I think so much of the memetic power over the last 18 months for alt-layer ones has been price action.

• 8:58David Hoffman?

  Sure.

• 8:58Speaker 01

  Right? So when one of them blows up and you go, oh, wait, maybe these things aren't invincible, especially when the price action has been negative for a lot of the alt-layer ones, as it has for everything, right? But it doesn't really matter if DeFi tokens are going down. If the thesis was that Cosmos or Avalanche is going to surpass Ethereum, and then everyone who's betting on that thesis gets wrecked, it's going to have an impact on that and people's conviction in that theory.

• 9:29David Hoffman?

  To keep going on this train of thought, I've said it a few times, that at least one alt-layer-one will make it through this bear market. And that would probably be pretty bullish for them. Because when you talk about a lot of these alt-layer ones were driven by price reflexivity, right? Adoption because numbers going up.

• 9:46Speaker 01

  Yeah.

• 9:47David Hoffman?

  You know, things that only are sustainable in the bull market. And now during the bear market, the tide is going out, we're returning back to fundamentals. Things are moving up the market cap stack to the derisked ecosystem. All of a sudden, we're interested in the layer-two thesis because there seems to be a much more rational fundamentals case to argue these things.

• 10:05Speaker 01

  Yeah.

• 10:05David Hoffman?

  But also, at the same time, if these alt-layer ones can make it through the bear market, would that make you more bullish on the multi-chain thesis?

• 10:12Speaker 01

  Absolutely not.

• 10:13David Hoffman?

  No, no!

• 10:13Speaker 01

  Absolutely not. And I think they will all make it through because they're all extremely well-capitalized.

• 10:18David Hoffman?

  Sure.

• 10:19Speaker 01

  Right? They were able to build significant war chests through that.

• 10:25Speaker 01

  Ridiculous run, right, that happened for the last 18 months for the Altair Ones. Like, that was the, I would say, probably singular, you know, price meme, right? It was like this Altair One thesis playing out and, you know, taking on Ethereum and Ethereum being too slow and, you know, too expensive and all of that stuff in, you know, that caught a lot of the ETH maxies, myself included, by surprise. You know, we all got a little bit sideswiped by that. But surviving the bear market, I mean, you know, this is going to be even more controversial. EOS survived the last bear market. No one gives a fuck about them.

• 10:59David Hoffman?

  Right.

• 11:00Speaker 01

  You know, so just surviving, I think, is not sufficient. I think it's going to be much, much harder to sustain an ecosystem. The ones that survive with an ecosystem intact, like just surviving as a project is not enough. Keeping the ecosystems that they've got, these nascent ecosystems, alive and thriving. If they were able to do that through the bear market, then I'm impressed. Then I would say that's a pretty bullish sign for those networks.

• 11:25David Hoffman?

  Okay, so there's a spectrum here of multi-chain, multi-layer one to multi-layer two all on one chain. Where would you say you land in this spectrum?

• 11:37Speaker 01

  On the outside of the edge of the spectrum. I've like fallen off the other side.

• 11:41David Hoffman?

  110% into the multi-layer two.

• 11:44Speaker 01

  Fallen off the edge of the spectrum, yeah, definitely, yeah. And, you know, my reasoning behind that is that, you know, Ethereum, while L1 as an execution layer is not viable anymore, right? And even, you know, the thing that I worry about, one of the things I worry about is people being lulled into a false sense of security that L1 is making a comeback. Like, L1 cannot make a comeback. We need to shut that down.

• 12:10David Hoffman?

  Right. The Ethereum L1.

• 12:11Speaker 01

  Ethereum L1.

• 12:12David Hoffman?

  Is not your home.

• 12:13Speaker 01

  Yeah, sorry, when I say L1. I mean Ethereum, obviously, yeah, the L1, exactly. Like the DAO, right? Yeah, so like the L1, you know, thing is like not a thing anymore, right? Like, we need to move on, we need to go and we need to deploy, regardless of what your, you know, scaling solution of choice is, whether it's Stockware or Stocknet or Arbitrum or Optimism, we need everyone to, you know, really commit to bringing liquidity onto this L2 layer, right? Which will be composed of multiple networks at this point. I think that's the way it's going to play out. You know, it'll be interesting to see whether any of them dominate. But I think that's just a critical thing that we need to kind of see is, you know, this.

• 12:53Speaker 01

  Kind of scaling of Ethereum as a state layer, right? As opposed to an execution layer. That we have to, we have to get that right.

• 13:02David Hoffman?

  A bit of the narrative around layer twos is that their execution has been slower than what would have been desired.

• 13:09Speaker 01

  Yes.

• 13:10David Hoffman?

  And we're starting to see some signs of life. You know, optimism and arbitrage are generating, albeit small, but growing fee revenue for the layer one, you know, proof of use.

• 13:20Speaker 01

  Yeah.

• 13:20David Hoffman?

  We're seeing like new projects deploy onto a few of these layer twos natively.

• 13:24Speaker 01

  Yeah.

• 13:25David Hoffman?

  The synthetics ecosystem is generating a boatload of fees. And so I'm wondering, do you, do you give, how much credence do you give to the criticism that the layer two ecosystem has lagged more than it should have? And do you see, where do you see that trajectory going from here?

• 13:40Speaker 01

  I think you've got to, you have to measure it on a few different sort of dimensions, right? One is like, how usable is any of, you know, any of the different L2s as an ecosystem, right? Like for composability, you know, for liquidity, all of the things that, you know, users care about, right? And the reality is that they're all much further behind than I think we would have hoped that they would be. I feel like DeFi summer lulled us all into this sense that like liquidity was super easy to move, you know, and like vampire attacks and all that sort of stuff. But all of that kind of played out on the same network. I think the added degree of difficulty of migrating liquidity from one network to another, especially off L1 to L2 has been much harder.

• 14:25Speaker 01

  And so when you look at the state of optimism today, let's say, and you look at, you know, the liquidity for like an ETH trade on chain on, you know, wherever Uniswap or wherever you're trading, it feels like back in early 2020 on L1, right? So we're, you know, a couple of years behind where the state of, you know, where L1 is in terms of arbitrage bots and, you know, and liquidity and like all of the things that you want to see. But it is catching up and, and I think it will catch up faster than it took to build it the first time on L1. But it's just going to take a bit more time than I think we hoped.

• 15:01David Hoffman?

  I think Synthetix is actually a great just canary for the whole story of Ethereum scaling, where Synthetix and a few other tokens really drove the whole entire ecosystem out of the 2018 to 2020 bear market. And you could see that in some of the fees that the protocol was collecting, some of the volumes of SUSD and just like the users. It was like the beloved DeFi app of 2020. And then we hit DeFi summer and like the whole thing ground to a halt because of the fees on Layer 1 were just like too restrictive.

• 15:32Speaker 01

  Yeah.

• 15:32David Hoffman?

  And like that, in my mind, that's kind of when like Synthetix stopped growing. It's like when the fees came.

• 15:38Speaker 01

  Yeah.

• 15:38David Hoffman?

  And then now, but the whole plan, and like I think you and the Synthetix team were really tapped into this Layer 2 specifically on Optimism thesis, light years ahead of the rest of the ecosystem. So like early, committed to the Optimism ecosystems earlier than anyone else that I can remember. Deployed on Optimism, you guys were on their testnet. And now Optimism, the token's out there, Synthetix is fully like, I don't know, fully fledged on Optimism, but definitely lively.

• 16:03Speaker 01

  Pretty much, as of like, yeah, today, you know, SUSD is now fungible across, you know, and transferable across networks, so pretty much it's done.

• 16:11David Hoffman?

  Beautiful.

• 16:11Speaker 01

  Yeah.

• 16:12David Hoffman?

  And now like the Synthetix fees are like bigger than Bitcoins. On like, on a daily basis, it's usually bigger than Bitcoin.

• 16:18Speaker 01

  Which is awkward for the Bitcoin max.

• 16:21David Hoffman?

  That's a different subject. So would you say that you feel vindicated by this strategy, the scaling strategy that you like put into motion years ago?

• 16:30Speaker 01

  I, look, I do. I think there are things that I'm happy with and there are things that I'm probably less happy with. I do feel like we were kind of forced into that move by the fact that Synthetix being very complex was very expensive. And we had pressure from users super early on. You know, a Uniswap trade might have been like a dollar fifty or whatever in like the, you know, single-digit way days, right? We were like fifteen dollars. So we were always kind of like an order of magnitude more expensive than like any transfer or Uniswap transfer or whatever. We just weren't very gas efficient. And I think that just meant that it forced our hand to react sooner. And then once we saw the Unipig demo, that was like it for us, right?

• 17:15Speaker 01

  We were like, okay, you know, we were kind of sitting around like this is the thing. We need to do this. This is what we've been waiting for. We thought that scaling was going to happen, you know, through ETH2, right? You know, Vitalik promised me back in Cancun, it was coming in a few months, you know, a long time ago. And so I think everyone was kind of stuck in this mindset of like, let's just wait for ETH2 to come and solve these problems, right? And then we just were like, no, no, this is, we need to do this. That said, while it was the right decision, I think the amount of time that it took, and you know, everyone's always too optimistic, no pun intended, about these things. And I think we could have done better, both as the Synthetics community and even as like

• 17:59Speaker 01

  the, the kind of deep Ethereum community of supporting Polygon. I think we were a little bit too ideologically pure about that. And we're like, no, it's a side chain, like whatever. And now, you know, look at the investment they're putting into Zero Knowledge rollups. And so there's things that we could have done better. There's things that I'm happy we did. And, you know, but at the end of the day, I think you just get, you survive, and you get to the point where you now have done the thing that you wanted to do, and you build from there. And that's where we are.

• 18:27David Hoffman?

  So one of the interesting parts of the, interesting stories of the 2021 bull market was that Twitter fight between you and Suzu. He was like making fun of you for like selling Synthetics, but I don't think that was totally true. And then you were making fun of him for whatever reasons. Basically, it was just like crypto Twitter OGs like going after each other.

• 18:48Speaker 01

  Yeah.

• 18:48David Hoffman?

  And then, and then we find out later that Three Hours Capital has basically borrowed all their money and then leveraged long and then, and then went to zero. After having that fight with Suzu, how do you feel now?

• 18:59Speaker 01

  Look, you know, I try not to dance on people's graves because you never know when you're going to be the one who's in the grave, right? So, you know, I really haven't spoken about it publicly too much. I think, you know, I go back to that tweet that's kind of started all of it, right? Which was not a subtweet of anyone in particular, right? It was a buildup of frustration that I'd had, where I felt like there were a lot of people who could have chosen to support Ethereum.

• 19:26David Hoffman?

  Sure.

• 19:28Speaker 01

  Did so well for them and they chose to go down this kind of dark path, at least in my perspective, right? And, you know, I mean, I was on a podcast with SBF, right? And, and, you know, he has his own view of like, no, I'm going to go do the thing that's going to be, you know, the solution that I want, right? I'm going to go and support the solution that I want to see in the world. Okay, cool. But I think that some of the capital allocators just went down this dark path of, of, you know, trying to chase gains as opposed to reinforcing this kind of nascent ecosystem in Ethereum that still needed a lot of help. We were not there yet, right? Like, we're still not there yet. We still need everyone to kind of, you know, come and work together.

• 20:13Speaker 01

  And that tweet was about that. It was like, this ecosystem has given you so much and you kind of just turned around and went and supported, you know, other DeFi ecosystems, you know, other L1s, all of these alternative competitors or whatever, purely driven by profit. That's it. Because you could get a cheaper price in this seed round and you knew that it was going to pump and you just let it happen, right? And I think that that mindset, and I, I believe in markets. I believe that speculation is a very powerful driver of behavior. And so I'm not saying that people should not be driven by incentives and, and that we should, you know, forego markets or something like that, right?

• 20:53Speaker 01

  But I think if you throw all of that out and you don't have any kind of core ideological belief about what we're doing and how powerful this technology is, and, and you just lose sight of that, you can go to a bad place.

• 21:08David Hoffman?

  Right.

• 21:09Speaker 01

  And we've seen that now play out. You know, there's a lot of people that have been revealed to, to be doing things that, you know, maybe were not, not ideal, I guess. Yeah.

• 21:18David Hoffman?

  Would you chalk it up to just like bull market goggles, though?

• 21:22Speaker 01

  Somewhat, but but I think the underlying behavior of like just this kind of constant chasing. And people, you know, I tweeted at one point, like, you know, SBF is way smarter than me, right? If that guy tells you to go and buy a token, like, you probably should, right? He'll say it's not financial advice, but I'm saying it is financial advice, right? And like, if he says, look, I think this thing is going to work, right? Who am I to say it's not going to, right? And so when I looked at, you know, something like Solana, and like, I'd talk to Anatoly, I'd like, talk to, you know, people. And I was like, this is a potentially a genuine competitor, right? But I chose to not participate in those ecosystems because I was concerned that it would blind me.

• 22:05Speaker 01

  Because I'm human and I'm fallible and we all are. And if you have a heavy bag of something, confirmation bias is fucking dangerous, right? And it's so easy to be like, oh, that's okay. It doesn't matter if, you know, the network switches off every couple of weeks, like, you know, and you start to become an apologist. And it just goes down this very dangerous path, right? And so I think that is ultimately what it what it came down to for me is that I was like Ethereum is the ecosystem that allowed me to do what I have done. You know, the idea that I would, I would, you know, even in the early days, when it was really, really hard to get cut through. And, you know, Maker was so dominant and, you know, Haven struggled to kind of get mind share, whatever.

• 22:49Speaker 01

  And we did, you know, like flirt with this idea of multi-chain and go into EOS or whatever. We ultimately looked at it on merits and said, this is not going to work. And we shut it down before we even got there. But, you know, we we learned that lesson pretty early on. And from that point forward, I think myself, the synthetics community has just gone all in on Ethereum. And that's been the the strategy we've enacted.

• 23:14David Hoffman?

  Okay, so we're in we're in this bear market, whether whether $1,500 feels like a bear market too. I'll let the listener decide.

• 23:20Speaker 01

  Yeah.

• 23:21David Hoffman?

  But we got we got the merge ahead of us, merge soon. I don't really think we can count on the merge pulling the entire ecosystem out of a bear market. The the theme we've been running with a bankless is it's not a bear market, it's a build market. But if we want to get out of the bear, we have to build our way out of it.

• 23:36Speaker 01

  Yes.

• 23:36David Hoffman?

  So as an ecosystem, what do we need to do in the next 18 months to have our next bull market?

• 23:41Speaker 01

  So I think if you look back historically, like, what are the metrics, right? Like, what are the things that people measure? In the ICO period, it was capital raising, right? Like, there was a thing called token data. It just tracked every ICO every day to see who could raise the most money. And that was the game that people were playing, right? And it was like, how much money can you raise at? Like, what ridiculous valuation or whatever? People forget, and like, EOS raised $4 billion. Now, whether you believe they did it or not, when people in the last cycle were like, we've gone crazy. People are raising at a $4 billion valuation. I would say, I'm sorry, but a $4 billion valuation is not as insane as someone raising $4 billion, right? Like Telegram raised $2.2 billion. It wasn't a $2.2 billion valuation.

• 24:25Speaker 01

  That was the capital that came in, right? So ICOs took the idea of like capital formation and just like blew it into insanity, right? And but we played the game and there was a scoreboard and everyone tracked it. And, you know, I think Haven came like 87th or something like that on the scoreboard. That's pretty good. Yeah, it was not too bad. We were top 100, I think, for quite a while. You know, and then we got a much better scoreboard. Still not a great one, which was DeFi Pulse. Sure. Pre-DeFi summer, we were like, wait a second. What is it the thing? What's the heuristic that people are using to like figure this stuff out? And it was, who is putting money into these contracts? That's the only, like, who's got skin in the game, right?

• 25:06Speaker 01

  If I'm putting money into a contract, on some level, that's a signal that I think, you know. Contract good. Exactly, right? And so if enough people do, then you get some kind of signal that it's valuable, right? And we all fought it out, Curve and Uniswap and Maker and us and, you know, Ave and Compound. And, you know, the Compound and Ave really heavily fought it out, right? It was like fighting to the death, right? But we had this game and we all played it. And we were trying to like work out like, how do you optimize for this thing, right? Like, how do you attract as much capital as possible? And I think it pushed us forward. But ultimately, that was not sustainable. What we've seen emerge now is crypto fees. And I think, in my mind, crypto fees is the next scoreboard.

• 25:46Speaker 01

  And the fact that there are multiple DeFi protocols beating Bitcoin is a very powerful meme. Right. Like, if we, like, if we get to a point where the top 10 protocols in terms of like revenue generation, whether they're distributing to token holders or not, but who is paying to use the thing? If all of those things are DeFi protocols and Ethereum. That's a very powerful representation of what is actually going on here, right? And so I do think that that is going to be the game that we play over the next six months. And it's the closest thing to like fundamentals we've ever had.

• 26:21David Hoffman?

  Certainly, certainly. I think there's this growing appetite of fixing DeFi tokens. And I mean, I think the actual recipe for that is relatively simple. Other than fixing governance, which is very hard, we'll, we'll excuse that part for another podcast. But just like growing fees and turning on the fee switch is a bull market.

• 26:41Speaker 01

  Yeah, yeah. And you know, like there are protocols out there who have been rightly subsidizing and, and you know, creating kind of uneconomic incentives, right? For people to use them for years now, right? Multiple protocols, right? And not paying users what they potentially should have and not charging users and consumers of the protocol what they should be paying, right? And that's fine in an early stage, right? Just like a startup, you know, you offer discounts or free things or referral bonuses or whatever you need to do to bootstrap growth. And we've been doing that in the form of tokens and the form of no fees, low fees, whatever scheme you want to come up with.

• 27:25Speaker 01

  But ultimately, if we cannot get this ecosystem to a point where people are paying for the services that they consume and that the services are profitable in producing those services based on the fees that they're consuming, then this is all nonsense. It has to be sustainable. And I think if we can get that meme going to the point where we say, okay, we've gone up and down, up and down, and we finally come up again. And we're coming up because we've got to sustainability where this ecosystem works. People pay, it's a, you know, it's a genuine functional system. I think that is the type of thing that would attract the attention of, of people in the larger world. That we've never, you know, we've attracted speculators.

• 28:09Speaker 01

  I don't think we've attracted people who have fundamental valuation methodologies.

• 28:13David Hoffman?

  I think we can definitely allude to the fact that Ether, the asset, has attracted those types of people because of the fees. And so we can probably extend that same idea.

• 28:22Speaker 01

  If you go further down with DeFi and you're like, wait, there's, you know, let's call it 10 protocols, right? They're all charging fees. The fees are being paid to the people who are producing the service and the users are paying the right amount of money to use the service. That would be an amazing place for us to get to. We're not there yet, but it feels like that goal is in sight.

• 28:42David Hoffman?

  Well Kane, I can promise you that I'm going to steal everything that you decide and turn it into an article.

• 28:45Speaker 01

  Amazing. I love it. Cool. Because yeah, I haven't been producing as many articles as I would have liked. Although, we didn't get into governance and I'm writing something on governance right now because I think the state of governance is something we need to fix in this bear market.

• 28:57David Hoffman?

  Wait, I'm also writing a piece on governance.

• 28:59Speaker 01

  Okay, well you'll probably beat me to it.

• 29:01David Hoffman?

  Who's gonna get there first?

• 29:02Speaker 01

  You will absolutely get there first. I'm not the fastest rider these days, but I'll do my best.

• 29:07David Hoffman?

  Awesome. Kane, thank you for joining me at UCC.

• 29:09Speaker 01

  Yeah, thanks so much.

• 29:10David Hoffman?

  Bam.