Why You Should Still Be Bullish ETH | Anthony Sassano

ETH is down bad when compared to SOL & BTC, but is all this narrative following price or something more fundamental? We’ve got Anthony Sassano on the podcast today. He’s a notable angel investor, ETH bull, and creator of Ethereum podcast The Daily Gwei. Anthony is here to bring us some clarity to all the noise that has been going around the ETH price these days. He answers the criticisms, gives us the bull case and tells us what’s next. ------ 📣 GET YOUR ALL ACCESS PASS TO THE PODCAST https://bankless.cc/podshownotes ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ ⚡️CARTESI | LINUX-POWERED ROLLUPS https://bankless.cc/CartesiGovernance ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/89?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E ------ TIMESTAMPS 0:00 Intro 5:01 How is Ethereum Going? 8:52 Why is ETH Down Bad? 19:43 Are L2s Parasitic? 34:02 Is Ethereum Security Overkill? 39:41 ETH vs SOL Metrics 46:32 Making the L1 Great Again 54:41 ETH Pincer Attack 1:01:21 Investors Barbell Strategy 1:05:42 Ethereum’s North Star 1:12:57 ETH Bull Catalysts 1:18:25 Based Rollups 1:28:07 Ethereum’s Marketing Problem 1:37:37 What’s Next for ETH 1:48:46 Closing Thoughts ------ RESOURCES Anthony Sassano https://x.com/sassal0x The Daily Gwei https://www.youtube.com/c/TheDailyGwei ------ 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.

• 0:00Speaker 00

  At that market cap, we need that bigger money marginal buyer to decisively move ETH up. But I think as part of the regular market cycles as well, with a flood of new kind of money coming in from like retail investors, that can still move ETH up. But if you want ETH at like 10, 15, 20K, it needs to be the big money as well, like the Wall Street ETF money. It can't just be that regular retail buyer.

• 0:25Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. We've done a lot of ETH episodes lately, some ETH episodes that have been more bearish. This is not one of those. This is an episode that is Max bullish on Ether the asset and Ethereum the network. We got Anthony Sassano here. He took a couple of months off on vacation and he came back with some bull, fud busting fury.

• 0:56David Hoffman?

  Pent up demand, pent up energy.

• 0:58Ryan Sean Adams?

  Yeah, I think he heard rumor of some of the episodes that we did with Kyle and Max. And he wanted to come on and basically refute some of the points made. So we've got three parts to this episode. First, him answering the criticisms, then him making the bull case for Ether the asset and explaining why he is still bullish, and then prognosticating on the future. Particularly the question that's in a lot of ETH holders' mind is like, when we going up? Is this cycle gonna skip?

• 1:28David Hoffman?

  When us.

• 1:28Ryan Sean Adams?

  My asset. What about Ether this cycle? So we get into all of that and more.

• 1:33David Hoffman?

  Anthony Sassano just has an absolute wealth of knowledge. It kind of comes at you like a fire hose. So listener, brace yourselves, because here we go. Let's go ahead and get right into our conversation with Anthony Sassano. But first, a moment to talk about some of these fantastic sponsors that make this show possible, especially where we prefer to buy our crypto assets these days. Kraken, our preferred crypto exchange for 2024. If you do not have an account with Kraken, consider clicking the link in the show notes. We're getting started with Kraken today. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Kraken, one of the longest-standing and most secure crypto platforms in the world. Kraken is on a journey to build a more accessible, inclusive, and fair financial system, making it simple and secure for everyone. Everywhere to trade crypto. Kraken's intuitive trading tools are designed to grow with you, empowering you to make your first or your hundredth trade in just a few clicks.

• 2:18David Hoffman?

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• 3:03David Hoffman?

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• 3:41David Hoffman?

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• 4:25David Hoffman?

  investor, perhaps known as the ETH Bowl of ETH Bowls, the creator of the Ethereum podcast, The Daily Guay, Anthony Cisano. Welcome back to Bankless.

• 4:36Speaker 00

  Hey David, thanks for having me. Hey Ryan, how's it going?

• 4:38Ryan Sean Adams?

  Going well. We get, this is a long time coming, this episode.

• 4:42Speaker 00

  Yeah, yeah, definitely. I think it's coming at the right time as well.

• 4:46David Hoffman?

  Anthony, I'm just curious, are you still bullish Ether? Just curious.

• 4:52Speaker 00

  Oh man, that's a funny question because like the default answer is yes, but like my today answer is also yes.

• 5:01David Hoffman?

  Okay, so I want to kind of zoom out before we get into so many of the questions that we are going to ask you, which are going to be some of the same questions that we have asked our other guests over a handful of episodes that we've done, both on the bullish and on the bearish side. We're going to throw some of the same questions at your way, but I want to zoom out. The Ethereum project is a big project, started in 2015, we are now in 2024. Some of that project, which was once ideas, has now manifested into real life. Zooming all the way out, if we went back in time when we all met, me, Ryan, you, all met in 2017, 2018, and we were able to zoom forward to 2024 and see what's up with Ethereum, how would you think that it has gone? Like vet the progress, the successes of Ethereum, the

• 5:45David Hoffman?

  project as we once saw it in 2017, 2018?

• 5:49Speaker 00

  Yeah, so I mean, just to give some context for listeners, I got into Ethereum in early 2017, so I missed things like the DAO and I missed a lot of those kind of, I guess, very early, I guess, years, 2015, 2016, which were pretty formative, I think, for Ethereum as an ecosystem. It really tested Ethereum. Like the DAO was Ethereum's biggest test, I think, maybe ever at this point in terms of the amount of controversy that it made for the Ethereum ecosystem or created for the Ethereum ecosystem. And then the fallout from that is still being felt to this Today, actually, we still reflect back on the Dow in certain kind of areas of Ethereum as a kind of example of what not to do or what to avoid or how to build Ethereum. So we don't have to deal with that ever again, sort of thing.

• 6:30Speaker 00

  And it obviously informed a lot of smart contract development in terms of security, because it was the first big hack from a smart contract. And obviously, it led to the worst case scenario, which was altering the chain with an irregular state transition to quote unquote fix it, right? So there was a lot of lessons learned there, but when I got into Ethereum, the ICO mania was just kicking off. So my first kind of, I guess, impression of Ethereum was that everything was fucking awesome. We're getting proof of stake this year, like it's all gonna be great, we're gonna scale, we're more scalable than Bitcoin, it's gonna be amazing. So I think I got in at like a nice time because I obviously wrote it up that that year ETH went from like $10 to 1400. Everything was amazing until obviously like towards the end, we started hitting like real scalability kind of limits with CryptoKitties clogging the network.

• 7:15Speaker 00

  The ICO, the big ICOs clogging the network and it became very clear, I think to everyone that a lot of extraction was happening in the ecosystem as well, where these ICOs were not novel ideas anymore. It was a scam dressed in a white paper, really, and a lot of money got sucked out of the ecosystem, billions of dollars, of course. Tens of billions potentially got sucked out of not just the Ethereum ecosystem, but the crypto ecosystem, because people were selling their other crypto assets like BTC to come into ETH to buy these ICOs. So that was my kind of first impression, but then during the bear market of 2018, 2019, I stuck around. You know, I tried to do what I what I felt was most valuable, I created ETHUB with Eric Connor. You guys created Bankless during that time as well, and we all kind of got together and started talking about Ethereum there.

• 7:58Speaker 00

  But what's funny is that while like there was all that optimism in 2017 with that everything was coming like that year, nothing ended up coming from like another three years, right? Proof of stake didn't get delivered until December 2020. DeFi didn't take off until really mid 2020 in a really big way, even though we had the protocols live for a while. Scaling was an absolute pipe dream at the time, we were still talking about like state channels and plasma. There wasn't really rollups yet that came later. So if I was to look back at 2017, I would say that, yeah, because the bull market kind of, I guess, put a shadow of all of this.

• 8:29Speaker 00

  Kind of hit it away for a little bit, but then it came to light in 2018 and 2019. So I would say that today, like thinking back, um, I, I, I, I'm actually amazed that where we are today, given where we came from and like how everything was stacked against Ethereum at the time as well, considering that we had that brutal bear market after the bull market. So yeah, I would say that we've exceeded my wildest expectations at this point.

• 8:52David Hoffman?

  Then why in that case, uh, would you say ETH is down so bad now? Uh, when you look at like some of the dominant pairs that people look at these days, uh, we have the ETH BTC ratio down for two years in a row. Solana ETH ratio up straight for a year in a row. Uh, how do you account for this price action that you can't really call it like local price action anymore when some of the trends versus Bitcoin at the very least is, is two years old now. Uh, so how do you account for this?

• 9:18Speaker 00

  I try not to overindex on price ratios. I, I try to look at what ETH is, is kind of valued as in, in kind of USD terms first and foremost. So yeah, it's a $300 billion asset. So it's obviously absolutely massive. It's one of the, the most valuable assets on the planet. I think it's worth more than Coca-Cola. I was looking at the other day, which is, which is kind of funny when you think about the fact that like everyone knows who Coca-Cola is. It's a global brand. Like I'm pretty sure everyone has had at least one of their products in their lifetime. Whereas Ethereum, on the other hand, is, is nothing like that. Like most people haven't heard of Ethereum at all and definitely not bought ETH. So I think that's a pretty big achievement already.

• 9:54Speaker 00

  But in terms of ratios, the reason why I don't overindex on them is because they're a picture in time, I think. And you mentioned that against Bitcoin, it's, it's less, I guess, like, uh, local and more kind of macro. It's been many years now. I understand that. But then against kind of like other assets, I, I think it's a picture in time of what, where we're at. If you're going to talk about like against Solana, for example, which obviously is Ethereum's kind of main competitor, um, in, in the ecosystem today in terms of like being a platform to build things. I have other opinions about how I believe ETH and BTC are competitors as well. And ETH's main competitor is BTC to be money. We're going to talk about that, of course. But in terms of like the actual platform itself, the technology, uh, obviously Solana's had a great last, I guess, 18 months, you could say, maybe, maybe a bit longer than that. They've on boarded a lot of people into their ecosystem. They've kept building. They've kept grinding during the bear market and they're basically experiencing.

• 10:39Speaker 00

  A lot of what Ethereum experienced last cycle, but it's fresh eyes, new eyes, the shiny new thing, right? So that's why I don't like to overindex on this snapshot because like you don't know what's going to happen in the future. You don't know if the same thing is going to happen to Solana where a lot of that that activity washes out and goes somewhere else, maybe another competitor network. Maybe it comes back into Ethereum layer twos because we're scaling up as well. It's not like Ethereum has sat still and done nothing. So I think it's just a picture of of the current landscape, the time, what we're in now. And it doesn't really have any, I guess, like bearing on the future. I think that's one lesson we can take from a lot of crypto price action is that a lot of it reacts to the now, to the very short term. And a lot of it has a very delayed reaction to the long term.

• 11:18Speaker 00

  Because if you look at the players in the crypto ecosystem, a lot of them don't have a long term, I guess, kind of mindset at all. A lot of them don't understand enough to have a long term mindset. Because a lot of people who get into crypto, for for better or worse, are just in it to make money. They don't care about the technology, they're chasing where the money is. And there's nothing wrong with that, but you have to kind of take that into consideration and give context to understand what's happening in in the market. It's just a very complex kind of beast there. But I think I saw a tweet, I think it was from Jill Gunter. I'm probably going to get the actual tweet wrong, but she basically said that every other chain is living in Ethereum's past or Ethereum is living in every other chain's future. I think that's the best description I've ever seen of of of that kind of phenomenon there.

• 12:00Speaker 00

  Because every issue that Ethereum has today, or every perceived issue, will be an issue for these other chains in the future. And you're already seeing this as as time goes on. The more mature an ecosystem becomes, the the more issues, I guess, rear their ugly head. Especially when it comes to pace of development. The bigger an ecosystem, the slower your pace of development. And this isn't just for blockchains, this is true for centralized companies as well. Like a small nimble startup is going to move a lot faster than Apple, for example, when developing new products and new features and and stuff like that. Because it doesn't have all that bureaucracy, it doesn't have to go through a million different product managers, so on and so forth, right? It doesn't have to make sure it doesn't harm the stock, so to speak. So there there are complete differences between big and small. And I think that the Ethereum competitors, a lot of them are still very, very small today, right?

• 12:45Speaker 00

  And they can move very fast, very nimbly, shiny new thing, people love that and attracted to that. But then as they get bigger, they just fall into the same thing that Ethereum has fell into in terms of like they're a really big ecosystem, they have to move slow now, they're mature. So no one, you know, people are like, oh yeah, that's been there for ages. Like that's old news. I'm going to go bet on this shiny new thing. So that's going to happen and I, and I, and I, and I'm strongly confident in that because it has happened to Bitcoin. Bitcoin was the, obviously the, the shiny new thing once upon a time. Now it's the old boomer thing. Ethereum, same thing, shiny new thing, old boomer thing, so on and so forth. It's happened to pretty much everything that's reached a certain critical mass here. And, and the last thing I'll say, and the one thing that really excites me about the Ethereum ecosystem is that we're, we're basically trying to have the best of both worlds.

• 13:28Speaker 00

  We're trying to have the old established kind of like mature chain with Ethereum layer one and the small nimble kind of startup move fast break things thing with L2s. And I know that there are trade offs there with interoperability and things like that, which I'm sure we'll discuss. But the way I look at it is that we've essentially done, uh, done this thing where we're trying to thread the needle between being that old kind of like, uh, mature platform and being new and upstart and attracting those new people. Because that's, that's the only way you're going to attract new people is making it so that they feel like they're coming into something new and exciting and not something that's old and dated.

• 14:03David Hoffman?

  So there's a, a perspective out there that the choices of the Ethereum roadmap have led Ethereum into a path that has changed its fundamentals, right? The, the fee burn of Ether is down because the layer two roadmap took it away, right? So as a result, the vibes on Twitter are bad being, and the narrative around Twitter right now is bad because the price is bad. And some people are saying, well, this is actually a fundamental truth. This is a, as a, is a reaction to the roadmap, which has, is flawed and has led people down and not a very value accretive path for Ethereum. But I think what you're saying is, is well, actually all of these chains are on kind of more or less the same paths. Uh, and Ethereum, we had our kind of like euphoric fun times in 2021.

• 14:45David Hoffman?

  Uh, and now we are kind of doing this very hard thing, which other chains will also have to do. And so the main dislocation between prices of Bitcoin, Ether, Solana is actually just a dislocation in the timeframes of many of the market participants. Some people are looking kind of like, looking in the, in the short term, placing their bets in the short term, uh, and not really looking out into the long distant future horizon. Uh, and, and as a result, there are dislocated market prices. Uh, is that how, is that a summary of what you're saying?

• 15:13Speaker 00

  Yeah, I I I think so. And and also, like, I don't know if I maybe use the word dislocated. It's it's, as I said, more like a snapshot in time, you know, it's it's the market basically saying, well, we give this kind of platform percent, this percentage of odds of succeeding uh uh uh over a certain kind of timeframe. And this is how much we think it's worth against Ethereum. Maybe it's going to outgrow Ethereum, maybe it's going to outstrip Ethereum. And you mentioned kind of things like value accrual to the asset and and a big reason why. I mean, especially with um with Solana, where they've been generating a lot of this fear of you lately um through uh priority fees, uh through things like MEV, which Ethereum has has done in the past, Ethereum did this in twenty twenty one, right? Our fear of you was absolutely massive. We obviously had the burn go live, which made it look even better because, hey, deflationary ETH.

• 15:57Speaker 00

  But I think that lo- long term, what seems to happen in every ecosystem, and Ethereum is the prime example here, is that that value is uh considered leakage to the L one, where the apps themselves look at that and like, hey, I want that for myself, you know, the MEV participants look at that and like, hey, why am I paying so much for this? Like, I want to pay less to extract MEV. I want to still extract MEV, of course, but I want to pay less for that because they're businesses at the end of the day, right? They're ma- they're profit maximalist businesses, they're trying to make money. I mean, I think the most profit maxi entity in crypto are MEV related kind of entities. Like, their their whole business revolves around making the most amount of money. So what you've seen with Ethereum over the over the last couple of years, um and this isn't the only reason, but this is a big reason.

• 16:41Speaker 00

  The MEV on Ethereum has been minimized a lot for the user. The user is able to protect themselves through things like Cow Swap, for example. There is private order flow, and there are trade offs here as well. I'm not saying it's a good or bad thing, but it's what has happened. And that's taken a lot of this kind of fear of you off and also smoothed out the the fee market too, where if you have like these, uh I mean, one five five nine did this as well, like the IP one five five nine. But essentially, you have like a a much more kind of orderly layout, where essentially people are protecting themselves from MEV. The apps are potentially internalizing that leakage and accruing it to themselves rather than leaking it out to the L one. Uh and I think that's going to happen to to every mature kind of L one ecosystem and even L twos, you know, it's not just the the L one here. So so that's a big reason why I think that over indexing.

• 17:23Speaker 00

  On on fear revenue for L ones is the wrong move and valuing these things based on fear revenue is the complete wrong move. Because if we did that, Ethereum wouldn't be worth three hundred billion dollars or ETH wouldn't be worth three hundred billion dollars. It would be worth a lot less than that if it was just valued on its fear revenue. Even in the times that its fear revenue was really, really high, it shouldn't be worth that much. But if you're if you're just valuing it based on that. But my strong belief, and I believe you guys agree with this, and this is a belief that I've held since twenty nineteen at least. So this is not a new thing. It's like five plus years of it. My strong belief is that every single L one token, if it wants to be durably worth hundreds of billions, trillions of dollars, it has to be money. It has to be a store of value. There is no other path to that.

• 18:04Speaker 00

  Because of the phenomenon of, there's no way these apps and these kind of MEV searchers and anyone else in that pipeline are going to leak all this value to the L one. It doesn't make any sense. The incentives do not go there. The incentives go the complete opposite way. And I think what we're seeing now as well is that more and more people are accepting of this because we have the evidence to back it up. It's all well and good for us to say ETH is money, ETH is a store of value. But people ask, you know, what is the evidence to back this up? Well, to me, the clearest evidence is that ETH is worth three hundred billion dollars, Bitcoin's worth one point three trillion dollars, and neither of them, especially Bitcoin, justify enough, uh, sorry, justify their valuations via their fear revenue, not even close to that.

• 18:44Speaker 00

  So this isn't to say that Ethereum isn't going to be able to generate fear of a new L one, and that shouldn't accrue value to ETH as an asset as well. But I think we're talking about where the bulk of the value comes from. It seems to, based on the evidence, not based on just me saying it, it seems to come from a monetary premium, from a store of value premium, and people believing this and wanting to actually hold the asset. And then you've got everything else that falls into that as well, which accrues value to ETH. But that's that's the kind of way I see it. And I think if we're talking about what's happening now, where people are allocating money, I think people are seeing these high Solana revenues, like they saw the high Ethereum revenues, and being like, oh, my God, I want a piece of that. Like, that's really high. That's going to keep growing. It looks really good. The charts are up only. And I think the same thing is going to happen where with Ethereum, a lot of that was minimized, a lot of that was, a lot of that came down over time, just naturally.

• 19:29Speaker 00

  And I think that's what's going to happen with every network. And I'm not trying to pick on Solana. It's just obviously the obvious example here or what to compare it to. But I think that's the end fate here, because a lot of it is MEV as well. That's what people don't understand. A lot of it is MEV, which is harmful to users. And we want to internalize that. We want to make sure, well, the apps want to internalize that. And we also want to make sure users are protected from this, because they're losing a lot of money at the moment.

• 19:53Ryan Sean Adams?

  So let's do this, Anthony, because you are eth bull of bulls. I mean, they say like Bankless is bullish eth and you're like, I think maybe we certainly are. And also, we have nothing on you. We don't, we don't hold a candle to Anthony. So let's divide the remaining portion of this episode into maybe like three kind of paths for us. Like first, let's have you directly enter the criticisms. Then let's have you give us kind of the, the pure, unadulterated bull take on ether, the asset. And then finally, we'll kind of end with, with you maybe predicting what's next. But, but first, answer the criticisms. So there have been a lot of criticisms of ether and its value accrual and Ethereum, the network.

• 20:38Ryan Sean Adams?

  And let's start there. We'll kind of lightning round this, Anthony. So like, I'll just throw, you know, criticisms, FUD your way. And like, you can kind of like, you know, deal with smacking it down or addressing it, however you see fit. And I want to start with the criticisms in kind of like three different sections. So like, the first is the criticisms that come from outside the house, from outside the community. Maybe the alt layer one VCs, you know, outside of the Ethereum community. That's one subset. Then those that are inside the house, internal to the Ethereum community that I see more often. And then kind of the neutral parties, the market onlookers. So first, criticisms coming from outside of the Ethereum community.

• 21:20Ryan Sean Adams?

  This first one, this has been a main one and kind of like a narrative staple in 2024 against Ethereum, which is this idea, L2s are parasites. You're like, all the L2s that have launched are primarily like clones of the L1. You know, we're a copy and paste, unit swap. And so that results in taking of users liquidity and DeFi from Ethereum and parasiting. All of the like, you know, TVL value accrual. What do you say to this idea that L2s are parasites?

• 21:53Speaker 00

  The main reason this kind of narrative and similar narratives exist is because it's a really easy kind of bike shedding point that people can throw into like the Twitter sphere, the social sphere, and get people just like constantly debating it because it sounds like fun on the surface. Hey, L2s are parasites because they're taking users from L1. Hey, they're not paying much fees to the L1 yet. And go discuss this until you guys run out of breath sort of thing. So I think that if you're a competitive ecosystem, the best thing you can do is basically sow confusion, right? And sow doubt in your competitor and get them talking about it, especially when it comes to discussing this online, especially on Twitter in a very adversarial environment there. But I think that the whole premise is just completely flawed from the beginning, even for people who may believe it. Like,

• 22:37Speaker 00

  let's discard the people who are just saying it to fight Ethereum and they don't actually believe it. They just want to sow confusion. But let's look at the people who actually believe this. The whole premise is flawed because it's essentially saying that if Ethereum didn't have L2s, then Ethereum will be doing fine. Like, that's what you're saying. And there would be no parasites on it. There would be no one leaking, you know, taking users from it, which is completely false. The other L1s would be taking users from Ethereum. They did. When Ethereum, even the L2s before blobs went live, were expensive, users were going to other chains because it was too expensive for them. So in reality, there were parasites. The parasites are the other L1s. They're the other ecosystems. They're taking the users from Ethereum. And Ethereum L1 was never going to scale like

• 23:20Speaker 00

  the other L1s are. Like, it has a completely different scaling roadmap for Ethereum L1. So I think the whole premise, just to begin with, is completely flawed. Because by saying the L2s are parasites, you're essentially saying that Ethereum would have been fine without the L2s. It would have been, you know, a growing ecosystem. Ethereum L1 would have been onboarding new users. When the flood, like, well, even a year ago, was that, oh, Ethereum L1 is so expensive, all the users are going to go elsewhere, Ethereum is dead. And now that we're keeping the Ethereum, I guess, users within the Ethereum ecosystem because these L2s are part of the Ethereum ecosystem, that's another narrative that they say. I don't know if you've got it on your list that L2s aren't Ethereum. But like essentially, from the base premise, it just doesn't make sense. Like, if you actually reason it out, it doesn't make any sense. And I think that the people who actually

• 24:03Speaker 00

  believe it may just be confused about that. I may just have like a wrong frame of reference here. But that's how I think about it.

• 24:09Ryan Sean Adams?

  So are L2s, if they're not parasites, are they neutral? Or are they symbiotic? Are they net good for Ethereum, the network, and for Ether, the asset?

• 24:19Speaker 00

  I think like if you if you look at each individual L2, like you could basically reason and say, hey, there could be an L2 that literally exists just to siphon off users off Ethereum and its plan was always to become a new L1 or something like that and leave Ethereum. That is a possibility. That is always a possibility. But if we're talking about the current set of like L2s that have most of the activity on them, your base, your Arbitrum one, et cetera. Like, I don't consider them to be parasites at all. Their ecosystems constantly give back to Ethereum, are constantly involved in Ethereum. I mean, team members from from these L2 teams were involved in getting blobs over the line, which means getting involved in the core development process of Ethereum, which is not an easy process. Anyone who's paid attention to core development process knows just how hard it is to get things over the line and get things into the network. But they did this.

• 25:03Speaker 00

  They're part of the community. They give back. They do things like donate to the Protocol Guild. They're they're on Twitter defending Ethereum all the time. They're talking about why they're on Ethereum and why what they're building is only possible on Ethereum. So there's a lot of social kind of signaling around that. And yes, okay, they can be lying, but these teams like Optimism, for example, which is what base is built on the OP stack, Arbitrum, Offchain Labs, they've been around for a very long time and they've been in Ethereum for a very long time and and stuck with Ethereum for a very long time. So I think if you if you're just taking them on their word, you never should you should never do that, but you can also look at the supporting evidence as well. And then in terms of what they're actually driving, you know, objectively to the network in terms of fee revenue and stuff like that, they are still driving fear revenues to the network. They're still interested in doing things like interoperating with other L2s.

• 25:44Speaker 00

  They're still interested in doing things like becoming a base rollup, which would drive even more revenue to to the L1. So there is a lot of different things that they're doing that I consider to be symbiotic and not parasitic. But I I think like if you use the general term that like all L2s are symbiotic, I think that's incorrect because that that is objectively false because there are some L2s that will become L1s. Maybe they're smaller L2s and or maybe they an L2 that becomes really big from incentives and their whole plan was to basically become an L1 and be like, hey, look, you can survive as an L1 and and do some kind of stuff there. Like the the competition's fierce and people people do these sorts of things here. But I think if you're looking at the ones that have succeeded and the ones that potentially are going to succeed in in the future, the the really big ones like um these these GigaGas L2s, like uh Mega E people have heard of,

• 26:30Speaker 00

  Rise, there's a few others out there. If you look at what what they're doing, they're literally saying, without Ethereum, we don't exist. So how can it be a parasite if like without Ethereum they don't exist? Then like it's it's a symbiotic thing where with Ethereum they exist, they thrive and Ethereum thrives. So it's symbiotic. That's that's the way I kind of view it.

• 26:48David Hoffman?

  I want to see if I can actually strong man this argument a little bit more because I think some people, some of the people who say like layer twos are parasitic to Ethereum or layer twos aren't Ethereum, won't actually be totally satisfied by that answer. And I think it definitely comes from the perspective that all blockchains are kind of maximalist of themselves. So when we have a user who's transacting on Uniswap on the Ethereum layer one with whatever amount of capital that they have, and then they decide to migrate to a layer two, objectively, less fee revenue gets burned via the Ethereum layer one gas fees, and it goes to optimism base Arbitrum, you know, pick your layer two, and it goes into that DAO's treasury instead because they

• 27:31David Hoffman?

  collect their fee revenue. And Ethereum lost one user, Arbitrum gained one user, Ethereum lost like $10,000 of capital, Arbitrum gained $10,000 of TVL. And when Arbitrum captured ever fee revenue that Arbitrum captured, it actually only gives one hundredth of a share of that fee revenue back down to the Ethereum layer one via fraud proofs. And in the Ethereum world, we look at that and be like, thumbs up, that's great, that's what we want, that's scaling. But then the alt-layer-one camp will say like, well, sure, you kept it inside of the Ethereum ecosystem, so you got a sliver of that fee revenue. So congrats,

• 28:15David Hoffman?

  it didn't go to Celestia, didn't go to Solana, didn't go to Suisse, Aptos, whatever. So yeah, it's in the Ethereum ecosystem, but you still lost the revenue and you still lost the user. The Ethereum layer one still lost those things. And so how would you, because I think that perspective is a little bit different than the answer that you gave.

• 28:32Speaker 00

  Yeah, and I totally understand that perspective, but I think it goes back to what I said earlier about kind of where would these users go? If they're not on Ethereum L1 and there's not an L2 for them to go to, where are they going? Well, we know where they're going, right? They're going to another L1, and that is a complete and total loss. It's not a one one hundredth of a loss, that is a complete and total loss for Ethereum. And because you've literally lost the user. It's like someone buying a Samsung phone instead of an iPhone. That is a complete loss. Apple didn't get the sale. Samsung got the sale, same thing here. Ethereum didn't get the sale. Solana got the sale, for example, right? Like, and, and, and, and I think when it comes to, uh, I guess blockchains, there's a, there's a stickiness to it as well. There is a, a very big network effect to it. So by losing that, that kind of user, we're not only losing that user,

• 29:16Speaker 00

  but we're also reinforcing a competitor's network effect, which can potentially get them even more users that, uh, won't go to Ethereum because they're just going to, to another network. Because that's where the stuff is, is kind of happening now. So I think that's, that's the first point on, on, on, on that. But then there's, there's two other big things here. One of them is that I'm the L2s as scaling ETH, the asset, as well as scaling Ethereum block space. So essentially scaling ETH as money. So the fear accrual fear of revenue stuff, at least over the kind of short to medium term, is not a concern to me. It's basically us lost, you know, doing loss leader. We're essentially the L2s are very, very cheap. They're not paying much revenue right now because we're trying to keep Ethereum ecosystem, Ethereum users within the Ethereum ecosystem. We want them, uh, in the Ethereum ecosystem.

• 29:58Speaker 00

  We don't want them going to these other ecosystems because even though it's, uh, I guess you could say an objective loss in terms of fear of revenue and I TVL to the L1. If you think of it as like a, a kind of like, uh, big, big thing with Ethereum at the center and other, other chains orbiting Ethereum and, and, and kind of being part of Ethereum that way. Then, um, to me, it's, it's not like a total and, and irrevocable loss. Like it's, it's, it's still a net benefit, especially for ETH asset, scaling that out as, as kind of money there. Um, and especially when in the future we get more interoperability between these L2s. And when, I mean, some of them are going to be based L2s. And what that, that basically means, people who don't know, is that they use the L1 for their sequencing. So they don't have their own sequence. So they actually use the L1 validator. So they're very tightly coupled with Ethereum L1, uh, versus do, you know,

• 30:43Speaker 00

  maybe being a little bit detached by doing their own thing there. And I think kind of, uh, on that note, like, I know we're going to probably talk about more, more ETH's money stuff, but that also flows into the value of ETH as an asset. As I said, like, I strongly believe ETH needs to be money. L2s are a really, really good way of promoting ETH's money. They've been doing it for years now. And some people may argue, well, you can use ETH on, on other chains. Basically, you can use ETH on the other L1s. Doesn't that scale ETH's money as well? And I would say that a little bit. But the ETH on the L1s is, I mean, even on the L2s, it's it's an IOU. It's not like complete and real ETH because ETH is issued on the Ethereum L1. And if you want like complete settlement guarantees and assurances for your ETH, it's on the L1. But on the on the L2s, when they get to stage two decentralization,

• 31:25Speaker 00

  they have like an escape hatch there, basically tightly coupled with the Ethereum L1. And you have this way back in case something happens to the L2. You have this way back home. But with the other L1s, you don't really have that. And also, the other L1s are not incentivized at all to push ETH as the asset. They're incentivized to push their own native asset as the money of their ecosystem, which is kind of funny when people fight back against like Ether's money. It's like, well, you want everyone to use your native token, don't you? Right? Like, so isn't that the kind of the same thing here? So so those are the kind of major points that I'd push back on there. But I I get like for a lot of people, they see the world as it is today, and it's very hard for them to imagine the future. And it's very hard for them to look at kind of the incentives and see, well, what's keeping the these L2s in Ethereum?

• 32:07Speaker 00

  Like, if they're able to to siphon off so much value, why not become an L1? And that becomes like a huge discussion as well from there. So I understand the argument, I I do. And I understand the argument for people who may not be aware of all the intricacies here. But as I said, like, you start analyzing it and breaking it down, and you eventually get to the point where you're like, OK, well, that doesn't really make much much much sense there. But it does require a longer term, I guess, outlook.

• 32:30Ryan Sean Adams?

  You know, some some of the like the L2s have a different token. And so they're going to be like reluctant to promote Ether's money type takes. Do you guys, this this kind of reminds me of like, you know, back to everything in crypto we've seen kind of before. Do you guys remember back in the days of early DeFi, when actually the first AMM automated market maker wasn't like Uniswap on Ethereum? It was this other protocol called Bancor. You guys remember Bancor? And like, one of the the worries or concerns about Bancor from like the strong ETH bull community was like, hey, why is Bancor like basing all of its trading pairs in the Bancor token? Do you remember they were doing this?

• 33:10Speaker 00

  Yep.

• 33:10Ryan Sean Adams?

  And and so it was like, oh, like ETH should be the base pair because you're on Ethereum and like, we want ETH to be money, not some like Bancor token. And

• 33:19David Hoffman?

  It was like the beginnings of an alignment conversation.

• 33:21Ryan Sean Adams?

  Yeah, it was an alignment conversation and there was like almost early discussion of like, well, is Bancorp parasitic? It was that kind of a conversation and then along came Uniswap and of course like it used Ether as its base pair and then obviously you know like has massive stablecoin markets as well. But that that fit much more in the Ethereum ecosystem. Why? Because Ether was kind of the credibly neutral money across all of the other DeFi apps. And so Ether was in AVE and Ether was in Compound and now Ether made sense to be the dominant pair inside of Uniswap. I kind of think the same thing will play out in L2s. Like if you just think of L2s, what are they? They're kind of like apps, right?

• 34:02Ryan Sean Adams?

  They're like, it's almost the same fractal pattern of the early apps establishing Ether as money in DeFi. While L2s, the most credibly neutral asset for them to like to use as a store of value is going to probably be Ether. And those that don't will be kind of disconnected from this network effect. Anyway, okay, we're still outside the house, outside of the ETH community in terms of takes. This is another take that was given to us recently. It's basically like Ethereum is over provisioned with respect to like its security. Okay. And like other chains have kind of enough security. It's almost the idea of like economic security is a meme.

• 34:41Ryan Sean Adams?

  I won't go so far as to that, but the basic idea that Ethereum is like, you know, four nines, five nines with respect to its security. And all you really need for a global permissionless financial system is like 99.9% security and like uptime or whatever else, right? And so the idea that it's over provisioned, we're not actually practically, Anthony, going to be like up against kind of nation state attack. And like if we are anyway, neither Bitcoin or Ethereum or any blockchain existence can actually withstand that. So like Solana or some alternative layer one security models is enough.

• 35:19Ryan Sean Adams?

  And all this solo staker stuff, all of this max decentralization stuff, that's like way overkill for what we actually need. What's your take on this?

• 35:29Speaker 00

  Yeah, I mean, I think it goes back to what I was saying about looking at more longer term. I think that Ethereum has always been built with the mission of being as maximally decentralized as possible, respecting all the different vectors of that. Because it's not just the economic security via each stake, it's not just solo stakers, but it's also things like client diversity. And these things have downstream effects where with client diversity, not only do we get better defenses against, I guess, any potential attackers, but we get redundancy in the network as well, where essentially if one client was to have a critical bug in it, it wouldn't take the whole network down. Whereas other networks, even Bitcoin, right? Bitcoin has one client. If that client has a critical bug in it and takes the network offline for whatever reason, there's no, I guess, recourse there in terms of other clients. So there are downstream effects here.

• 36:12Speaker 00

  And as well with the clients, you have more and more people building Ethereum clients as well and getting involved with the Ethereum kind of core development ecosystem, which further decentralizes out the core development of Ethereum. So there are a lot of different angles to kind of attack this from, but I would say it's basically a preference. It's not really a kind of argument or not really FUD. It's a preference. It's like, okay, if you prefer to be in an ecosystem that prioritizes the, I guess, like far end of the spectrum that Ethereum does in terms of being maximally decentralized, censorship resistant, planning for the potential worst case scenarios of nation states, but also of just like opportunists as well, wanting to break the network. Because it's not just nation states.

• 36:54Speaker 00

  If an opportunist sees, hey, like, I could break the Ethereum network with a bug. Maybe I found a bug in the core protocol, I can break it and I can make some money on this, whether it's in the markets or something like that. Well, there needs to be defenses against that as well. So I think from that perspective, you can go in all the different directions of how Ethereum kind of does that. As I said, client diversity is one, there's a bunch of others here. But if that's not something you vibe with, or it's not something that you really care too much about, then we can't force people to kind of care about that. We can't argue against them and say, hey, you should care about this. Because it's really, I think, just a preference thing. But I think when it's tested is when it's most important. Like, we had the OFAC sanctions against Tonetta Cash, and that really tested Ethereum's claim to censorship resistance. Because I think people...

• 37:38Speaker 00

  Don't realize that these networks have always been censorship resistant, not censorship proof. And this goes for every network in crypto, except maybe some of the privacy layers like Monero, for example, where it's default privacy. So you essentially get better guarantees because you don't know what's happening on the network anyway. So how can censorship happen? It still happens because you can have censorship at the centralized exchange kind of layer there. But we're talking about just the chain, right? And that really tested it. Essentially, what ended up happening is that ninety plus percent of the network was censoring Tornado cash transactions at one point. And guess who wasn't? The solo stakers, right? Most of the solo stakers were not doing it. So they were the defense of last resort here. They were the final bulwark against complete and total censorship on the Ethereum network. Now imagine if the Ethereum network didn't have solo stakers.

• 38:23Speaker 00

  Imagine if it was only a big bunch of, I guess, like beefy kind of stakers that are part of all these centralized companies. And you had, obviously, on the block builder side as well, centralization there. But when it comes to validators, they were the last resort because like five, 10% of them weren't building their blocks with these block builders. They were building them on their own here. So imagine we didn't have that. You can imagine the counterfactual world here is essentially that there would be total censorship of Tornado cash on the network or much closer to that reality. So I think if you actually look at the objective evidence that we already have, solo stakers are that final bulwark against this. And again, this is more of a kind of, I guess, preference thing, more of a long term thing. Maybe you don't care that Tornado cash is totally censored if you can trade your favorite meme coins still.

• 39:08Speaker 00

  That again is just a preference thing, but it has a lot of downstream effects. It has a lot of consequences because if you're building things on the network, it doesn't matter what it is. If you're building things and you think to yourself, well, I could be censored one day by the whole network simply because the government doesn't like what I'm building, then you're probably going to be like, hmm, maybe I'll go build this on a chain that actually has a chance of, you know, resisting this essentially. So that's the way I kind of view it there. But as I said, this is like a very long discussion and we could spend the whole episode on this. But I think it does come down to a personal preference thing as well.

• 39:41David Hoffman?

  Kyle Somani at Solana Breakpoint, or no, Token2049, made a presentation about why Sol will eventually flip ETH. And summarizing that presentation down into just a few nuggets, it's more just like, look at the metrics, transactions are up, Dex volumes are up, economic fee revenue is up. And then also Ethereum has just been so slow. The Ethereum projects nine years took them forever to ship proof of stake. What the hell were they doing? They took them forever to find a scaling roadmap and they picked a terrible one. So eventually Solana will flip into ETH. Mainly metrics and then timing. What would you say to this?

• 40:18Speaker 00

  I say hindsight's always a beautiful thing, right? Like you can look back and be like, why did they take so long to do this? It's like, well, I mean, no one else was doing it, guys. Like, I mean, Ethereum proof of stake is extremely novel. It's very different to the other proof of stake networks. I think people aren't aware of that. And it also took so long because Ethereum is a truly decentralized ecosystem. It was a coordination issue of getting all these people to coordinate and build this thing is a lot harder because of the fact that Ethereum started decentralized, very decentralized from day one, basically, especially by starting via proof of work, getting the community involved, directly involved in mining. Like, from day one, that was the principles there. So I think that's why a lot of things took long, one of the reasons. But also, we had to invent a lot of things. We had to invent a lot of ways to do different things. And to be sure, Solana has also had

• 41:03Speaker 00

  to invent a lot of things to scale themselves up as well. They've got tons of novel technology that they've come up with themselves to benefit their own ecosystem. And to say that like, they're so far ahead of Ethereum, and yes, they're a younger network, but to say that they're like, all the way over here, or even to compare things like, you know, Solana proof of stake to Ethereum proof of stake, I think is wrong, considering that they're just different beasts, right? They had to do different things, they built differently, and they're different ecosystems altogether. In terms of metrics, I think it's very dangerous for anyone to overindex on metrics at all. And we have very nice, I guess, evidence of that, nice, within the Ethereum ecosystem, where if you just take a snapshot of like 2021 Ethereum, just take a snapshot of that, look at the fee revenue, look at the activity,

• 41:46Speaker 00

  look at the DeFi volumes, and say, oh my god, this is gonna Continue. It's like the Disco Stu meme of like, hey, the trends are up and it's gonna keep going up. If you did that right in 2021 and assumed that, then you'd be in a really bad place because all of those assumptions were completely wrong. That growth did not continue, obviously because we went into a bear market. The fear of a new came down substantially, not just because of the bear market, but because of the things that I mentioned earlier. And of course Ethereum took longer to get their scaling stuff out, get the L2s live, get them mature enough to have cheaper fees and things like that. So I really don't think people should be like looking at the today's metrics or even like the last six months and extrapolating that out to the longer term.

• 42:28Speaker 00

  That definitely is not the case, no matter what it is within crypto, because things change very, very quickly. And I think Kyle likes to imagine that Solana exists to only compete with Ethereum when there are so many other competitors out there. Like, as you mentioned earlier, David, there is Sui and Aptos and Say and Monad and Bearer Chain, all these other L1s that are very serious about competing as well. They're not just like these scammy L1s that are like, oh, we don't care about competing. You know, we're just gonna do a token, cash out, whatever. I mean, I'm sure there's some of that, but like, they're very serious about this. And they're not necessarily gonna be competing with Ethereum because they're not a roll-up kind of, I guess, centric chain. They're an L1, trying to scale up the L1.

• 43:10Speaker 00

  So for Kyle to be like, oh, it's just Ethereum that we're competing with, it's like, bro, like, look around you. Like, there's all these other competitors. You shouldn't be just indexing on Ethereum here. So for those reasons, I'm not gonna say whether like Sol is gonna flip ETH or not. I think that's like a wrong way to kind of think about it. But I will say, as I said, like, over-indexing on metrics is always a very dangerous, dangerous thing and extrapolating them out. Metrics are fine, we want them to be going up, but extrapolating it out as if that growth's gonna continue into the future is a dangerous game, I think.

• 43:41Ryan Sean Adams?

  By the way, have you guys seen the recent like mega ETH like projections in terms of transactions per second? It's just like dwarf.

• 43:49David Hoffman?

  Availability, yeah.

• 43:50Speaker 00

  Yeah.

• 43:50Ryan Sean Adams?

  It's just like.

• 43:51Speaker 00

  Yeah.

• 43:51Ryan Sean Adams?

  It's like, isn't it like something like 10,000 transactions per second?

• 43:55Speaker 00

  They're quoting 100,000, but I take these things with a grain of salt because it's always fun to quote testnet figures and internal figures and then you go on mainnet and you're like, oh, yeah, I mean, like, we're doing a bit less.

• 44:07Ryan Sean Adams?

  But you can kind of see, you could kind of see how the architecture, if you go full like TPS and you're in L2 and you just kind of centralized sequencers and you go kind of like all in the way MegaEthereal is basically dialing that to max, how like it's almost impossible, it is impossible for an L1 to actually like exceed that from a transactions per second perspective.

• 44:30Speaker 00

  To take a kind of, I guess, I mean, and then there's intricacies here too, yeah, but to take like a note from the Solana camp where they, they like to say that, you know, Solana is as fast as the speed of light, right? All of the validators communicate at the kind of speed of light here. They, they process transactions at, at or near the speed of light because they're using beefy nodes going over, over fiber connections, you know, 10 gigabit per second connections. And, you know, it looks like they're doing that to an extent, but then with the, with the L2s, you don't have that issue because you don't have consensus. Like you don't need to come to consensus on anything. So as you said, an L2 can be super centralized and MegaEthereal is claiming that they can have transactions that kind of go through in like 10 milliseconds or one millisecond, which is obviously faster than the speed of light. But the way they're thinking about transactions and the way that Solana thinks about it, it's like, well, they're not technically

• 45:15Speaker 00

  finalized because they have to go through the Ethereum L1 pipeline. And I'm talking about finalization from a technical perspective, not from like a economic security perspective. So there are, and there are differences here. Like that could be reverted for whatever reason at the sequencer level. Ethereum L1 blocks 12 seconds, you know, slot times are 12 seconds. So that's the, the long period of time there rather than what Solana has with 400 millisecond target. So when you look at it from, from kind of that perspective, I, I wouldn't say it's like one-to-one comparison here, but at the same time, you have to look at like what users are doing and where users are and what their experience is going to be. If they're getting a really amazing experience on, on MegaEthereal where fees are just like dirt cheap, fees don't go up, there's so much TPS happening there and, and it drives activity to it, they're going to go there as

• 46:00Speaker 00

  well, of course, right? Going to care about the underlying kind of stuff. Not to say that we shouldn't still build that. And as I just said, it's very important for us to prioritize decentralization here. But there are, there are kind of trade offs here and the users are going to go where they're going to go. And I think we have evidence that users are happy to go to wherever gives them the cheapest kind of transaction fees. And also has a lot of activity for them to do, like a lot of things to speculate on, of course.

• 46:23Ryan Sean Adams?

  Okay, let's go to the group of criticisms that are more coming that I'm seeing from inside the Ethereum community. At least like some members of the Ethereum community are kind of taking a look at all of this and saying, hey, like, did we make a misstep with the roadmap? And kind of dovetails on some of what we were talking about, but let me sharpen these criticisms a little bit. Basically, the idea is that it was a mistake to pivot so much in the direction of Ethereum layer twos. And like, point taken that they're not parasitic, but if we outsource all of the DeFi, if we outsource all of the execution, if DeFi itself moves off of the Ethereum layer one and goes to these L2s.

• 47:05Ryan Sean Adams?

  Well, that's going to take both the value accrual from Ethereum, like Ether, the asset itself. And it will be a case of kind of the tail waggs the dog. It will, you know, like shift control and the nexus of power, the nexus of DeFi into these layer twos and away from Ethereum. And be not like disastrous, or maybe like net negative for Ether's ability to exist as a money. And this goes on, which basically says that the Ethereum community is kind of naive to trust these L2s. You address like some of that, the, the L2s themselves aren't actually going to decentralize. They're not going to get to stage two, they're not incented to do that.

• 47:47Ryan Sean Adams?

  They like the, the sweet MEV fees, they're not going to decentralize their, their sequencer. They're kind of in it for themselves, they don't have full economic alignment. And so the summary here goes, you know, Ethereum should get back to its layer one and make the L1 great again. Make sure that DeFi has a home on the L1 and not continue down the path of like increasing blob space. And it's all about L2s and the rollup centric roadmap.

• 48:14Speaker 00

  Yeah, so this is actual good criticism and well thought out criticism. This is not like your garden, I guess, variety fud, which is very nice. And I actually agree with a lot of it, to be honest. I think that we did overindex on rollups and layer twos. And I think that we should have more focus on the L1. But I think people are expecting us to do to Ethereum L1 what like Solana did to their L1, right? And that's never going to be the case. There's just completely different beasts here. Ethereum L1 is not going to scale up execution like that. But in saying that, we should do more things to scale up Ethereum L1, especially for for L2s, I think. Because it's not just blobs. We can add more blobs and give L2s cheaper fees here. But by scaling up the L1 in terms of increasing the actual L1 gas limit,

• 48:59Speaker 00

  we give more capacity to not just end users, but also the L2s. And by potentially doing things like reducing slot times from 12 seconds to even two seconds, which is a big ask. But if we do do that, that is extremely beneficial to L2s because they get faster finality, they get faster kind of transaction inclusion guarantees. And we make base rollups better because instead of having to wait up to 12 seconds to get your transaction included, it's maximum of kind of two seconds there. And you don't have to use something called preconfirmations as like a stopgap there. So I think from that perspective, absolutely, we should be doing that. From an engineering coordination perspective, it's not an easy task. It is a longer term thing. It is something that needs to be not only prioritized, but also it has to be data driven.

• 49:43Speaker 00

  The way the Ethereum core development process works with anything is that they want to see data on things. They want to see how is this going to affect the network? How is it going to affect the bandwidth usage of the network? Which is a big concern overall for the Ethereum L1. How is this going to affect users? How is this going to affect apps? How is this going to affect people storing the chain and retrievability of it? There's all these things that we care about as an ecosystem that are prioritized. And then we can think about doing this stuff that people want to do. So I think that from that lens, the reason why it may seem like we put too much emphasis on the L2s is it goes back to my former point where I said that they move a lot faster because they're small and nimble. They don't have to go through this process necessarily. They have their own kind of process that they go through there.

• 50:24Speaker 00

  And that's why the L1 has naturally moved slower and will always move slower than than the L2s, I I think. But that's not to say that we shouldn't put more effort on the L1. And there has been a lot of teams working on this, not just at the protocol level, but also at the client level. The execution layer clients such as Nethermind and Ref are pushing very hard on scaling themselves up, even if the network itself isn't doing that right now, even if the network itself, like the protocol, is is limited in what it can do, the clients are are are right, they're ready to go. Like, if we want to increase the scalability, the clients can handle that, right? If we want to increase the gas limit, the clients can handle that. So they're already working on this stuff. And then eventually, when it goes through kind of like the protocol level stuff, we can do it and do it safely. So I think that that's critically important to keep in mind, is that we need to do it safely.

• 51:09Speaker 00

  Because I think one of the worst case scenarios for Ethereum is moving too fast at the L1, breaking something, and then all the L2s go offline as well. People don't realize that. The L2s go offline when the L1 goes offline. I mean, offline is a is a term you can unpack here, but essentially, they rely on the L1. And it goes back to the parasitic symbiotic thing, right? So if you if the L1 goes offline or something bad happens to the L1, it has massive downstream effects across the entire ecosystem. And that's why we prioritize stability over this scalability. But we can still do more at L1. I completely agree with that.

• 51:45David Hoffman?

  I've actually made this point on Twitter before. You know, if the layer one goes down, all the layer twos, I think I said the words go down, which is actually technically not perfectly true, because the layer two blocks will still produce. So maybe you can kind of suss out that point, because the layer twos, they will still produce new blocks. You can actually put more transactions into the layer two blocks. So what do you mean by the layer twos go down?

• 52:09Speaker 00

  Yeah, so it it it kind of like is easiest to illustrate when we think about assets. So for example, if the kind of L1 goes down and your asset was issued on the L1, let's say you have ETH. ETH is issued on the L1, it's not issued anywhere else, and you've bridged that ETH into the L2s. That ETH is now worthless if the L1 is offline, because there is nothing backing it. It's essentially an IOU, as I said before. Essentially, you've got no collateral backing that ETH. So if you're on L2 and you're saying, well, I can still kind of move my funds around. I can, there's blocks being processed. I'm going to send some, some funds to a centralized exchange and cash out, send my ETH there. The centralized exchange is not going to honor that because there's nothing backing that now. That's just a worthless token that they don't want.

• 52:53Speaker 00

  But if you think about something like USDC, and if that is issued even on the L1, but if it's issued on the L2 especially, a circle can just say, well, this is the balance of USDC in this person's address. We have the collateral in a bank account. It's not on Ethereum L1. We can just zero it out on Ethereum L1, replenish this for our users and just redistribute it out. So essentially, there's no net loss there of the asset. But every natively issued asset on the L1 would become worthless on, on, on the L2 because you can no longer access the actual asset. So that I think is the, the cleanest way to explain it. Then there's a lot of intricacies about what happens to DeFi positions. What happens to like NFTs downstream of that, right? What are they worth now that you can't unwind them or you can't kind of settle them down?

• 53:37Speaker 00

  And then obviously you lose like all your sediment guarantees now. Like you're literally just like a completely centralized server. There's, there's no proof that anything happened on the L2 or on the L1. There's no verifiable proof of that. You're literally trusting the L2 to do what it says. So, and, and there are other things that fall into this. It really does depend on how the L2 is constructed and what stage they're at in terms of decentralization. But the asset thing, I think, is the thing that people drive with the most is that you're not getting your ETH back if Ethereum goes offline because there is no, you know, there is no ETH anymore, like Ethereum's offline, it's gone and, and it's worthless now.

• 54:10David Hoffman?

  Yeah, I think the point really to illustrate, to drive home is that sure, the layer two blocks can keep on producing, but if the property rights is severed between the layer one and then layer two, then just like you have this silo database that's not interconnected with the rest of the ecosystem. So yeah, so like Jeremy, a layer could reissue you your USDC. But like, what are the odds that the L2 is going to just kind of come back online and fix itself?

• 54:33Speaker 00

  Yeah.

• 54:33David Hoffman?

  It's, it's before he does that. Yeah, you're just going to have to just wait for the link to be established, reestablished between the layer one and the layer two. I want to turn the conversation to some concerns that the market might have. Call these non-tribal neutral investors who are just looking to place bets in the space. And they might see Ether being squeezed between Bitcoin's money narrative and Solana's DGEN, EZUX, and revenue positive Layer 1. The Bitcoin ETF inflows are gargantuan. The ETH inflows into the ETFs haven't actually been able to outpace grayscale outflows. And so we're actually still negative with the grayscale outflows. Meanwhile, Solana economic transaction fees are rivaling the Ethereum Layer 1s.

• 55:18David Hoffman?

  So Bitcoin on one side, getting the strong money premium. Bitcoin definitely money. Solana definitely getting the revenue. Ether, kind of money, not much revenue. So getting squeezed. How do you, how do you think about this?

• 55:32Speaker 00

  I think Ethereum and ETH as an asset, they've always been the middle child of the ecosystem, right? Where you have like ETH trying to compete with BTC as this money store value. That naturally makes the Bitcoiners not like Ethereum and ETH. And they already don't like Ethereum and ETH for other reasons. So they naturally attack it, discredit it, so on and so forth. And then you have the other side, which is the L1 competitors. And they're directly competing with Ethereum for, as you mentioned, like things like transaction fee revenue, DeFi volumes, user activity, stuff like that. They're not necessarily competing with ETH to be money, or they're not even trying to do that. Whether it becomes money, it's up to, I guess, social consensus. But like, they're not directly competing on that front. But that's, that's something they don't need to do because Bitcoin is handling that. So it's like this pincer attack where it's like, okay, you guys come at ETH as the money

• 56:17Speaker 00

  thing, we'll come at Ethereum as like a better platform because we can do more fee revenue, have more activity, and we'll just like spread so much fud about Ethereum that people will think it's dead when it's worth $300 billion and it has so much user activity still like, and it's growing, you know, so on and so forth.

• 56:31Ryan Sean Adams?

  It's actually, I just like, I very much identify with that. Like, this is why it feels like everyone hates Ethereum sometimes, right? It's like, I mean, it's not in our head. It's almost always been like this. I remember when it was like other, you know, blockchain ecosystems where there's like Bitcoin and Cosmos, where Cosmos said, it's doing the app chain vision, but Bitcoin is like our money and our atoms, you're like, money? No, of course they're not money. We're just trying to build an app chain network, right? And so there was this alliance between like Cosmos and Bitcoin. And it's always been pincer attacked. And I guess that's why it feels like it's a, it's a hated asset from like, across all the tribes.

• 57:09Speaker 00

  Yeah, exactly. And I think it's impressive that even in the face of that ETH can be still worth what it is. Ethereum still is, I believe, the biggest kind of ecosystem within crypto in terms of like to build within. It's still growing, like hugely, actually. Like the L2 is absolutely killing it right now in terms of growth. The L1 still has usage, you know, contrary to popular belief, it still has like $44 billion or something worth of TVL. Like, it's still a home to a lot of capital, a lot of DeFi, a lot of stuff going on there. So I think that even in the face of all of that, like Ethereum has just, you know, gone through that, has persisted through that, and has been able to deliver things that people actually find valuable here. But I think that that kind of pincer attack is always going to exist because, yeah, you're stuck between those two camps. And those two camps are quite, quite strong,

• 57:52Speaker 00

  if I'm being honest, like especially the Bitcoin camp, like because of the fact that BTC is worth a lot and ETH has outperformed BTC over the long term. And as you mentioned, like ETF inflows just reinforce that kind of narrative there, it becomes a lot easier for that to stick for people. Where people are like, well, ETH failed at being money, it's all BTC now. So, you know, screw ETH, Ethereum's cool, but like screw ETH, sort of thing. Where I believe, as I said before, that's more of a shorter term outlook. I believe if you look longer term out, I think that ETH still has a very strong shot at being, you know, potentially worth as much as BTC or if not dethroning it. I'm not going to use the F word here, but that's how I, if we look longer term out, because I've always believed that, like, yeah, you can have that social consensus around

• 58:35Speaker 00

  something being money, a store of value, which is incredibly powerful. But then to grow that beyond just a social consensus, to use kind of like objective measures, you need to have like the user activity to back it up. So I'm not talking about things like fear of new anything like that. I'm talking about what I said before, in terms of increasing the network effect of ETH as an asset, because money is just a network effect at the end of the day, right? The more people that that hold and buy an asset, it's worth more. Even if you look at something like a fiat currency like USD, for example, the reason it's worth more than everything else, every other, I guess, like fiat currency in the world, if you actually chart this out, you can see this over time, is not because it itself is like a good store of value or a good asset to hold against maybe gold or against BTC and ETH, but it is against other fiat.

• 59:18Speaker 00

  Because it has the strongest network effect, right? It is like a reserve asset. It is used everywhere. People in countries like, and it is backed up by a really strong economy as well, which is, I guess, like the point that I'm making about the Ethereum economy backing ETH as an asset, as well as ETH having that social kind of monetary premium store of value story around it. So I think while we're getting pincer attacked by two different kind of tribes, we're also pincer attacking the money. And we're basically saying, you can do both. Attack the money use case, get it from social consensus, but also get it from economic activity.

• 59:53David Hoffman?

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• 1:01:21Ryan Sean Adams?

  Yeah, what's interesting is like Ethereum has always, I guess, fought against Bitcoin's monetary narrative and Bitcoin certainly had a strong, even stronger monetary narrative relative to Ether in like 2019, as evidenced by like the ratio. I mean, that was a really low point in the ETH Bitcoin ratio. What feels a little bit different this cycle is the strength of the pincer attack from all the alternative layer ones, at least at this point in the cycle. And so at least going into kind of like 2021, like in 2022 and onwards, Ethereum had sort of the the big, exciting on-chain use cases. Like it had

• 1:02:05Ryan Sean Adams?

  DeFi. All the exciting things in NFTs and kind of the cultural narrative were also happening within the Ethereum economy as well. One thing it didn't have is kind of this algorithmic stablecoin narrative and you know, Luna and Terra took that and like they took it to their grave. But like it had the bulk of all of these use cases. And I'm wondering if this time around in this cycle, you see a stronger cohort of competitors in some of these alternative layer ones, in particular Solana. And I'll say that the average like investor who looks at this uses this to kind of justify the barbell approach of like, all I need is a crypto money and that I'll pick the, you know, the number one, which is Bitcoin. And then I'll bet on these fast layer ones, you know, like alternative layer

• 1:02:49Ryan Sean Adams?

  ones, primarily Solana, etc. And so they do Bitcoin and the all L1 overweight Solana play and they skip ETH altogether. Do you think it's kind of different this time?

• 1:02:59Speaker 00

  I do think it's different in that like we do have serious competitors, you know, this this kind of time around. Like, I'm not going to sugarcoat that and say that I don't think they're serious competitors. They definitely are and objectively are as well, if you measure it by what's been going on in the ecosystem, which I think is great, honestly, for Ethereum overall. It pushes us harder. The competition is not a bad thing. But in terms of like the barbell strategy or the kind of, I guess, like money strategy or where to invest your money, I think if you look at it from like a barbell perspective, you kind of mapped it. See out to its logical conclusion of, well, if one side of the barbell is the money and the other side is like maybe your tech growth kind of thing. Then that tech growth thing is just going to go through cycles of being replaced by something else.

• 1:03:43Speaker 00

  Because if you're trying to get upside in an asset, right, you're not going to go for the assets that are already big. Like if you're going for the growth upside, you don't want to bet on assets that are already huge in market cap. Like BTC, you're not betting on as a growth asset, you're betting on it as a store of value as a money. It's going to go up slowly over time compared to other things. And then you bet on like the hottest new tech play. So that will always get rotated out. So you're always changing that side of the barbell. So I think from that strategy, that's not a long term strategy for the other side of the barbell. It's good for BTC, but that other side is always going to be rotated out for something else. So I think that ETH needs to just worry about the BTC side. I don't think ETH necessarily needs to worry about the the tech growth side. Um, because of the fact that we were already on that side of the barbell at one point in time, right?

• 1:04:28Speaker 00

  We were there and then we got rotated out for something else because ETH matured as an asset, it got bigger. It is no longer something that looks like a pure kind of growth, like massive growth kind of tech play. It's more of a, yeah, more closer to BTC. So I would say that if it's a barbell analogy, ETH is kind of sitting in the middle right now, right? And it's trying to edge closer to the BTC side. That's where we want to be. We don't want to be on the left. Like, because as you, as I said, the left gets rotated out and ETH has already been there and been rotated out. So we're trying to push ourselves to the the right side, which is the BTC side there. So I I think that as long as we can keep doing that, um, and as long as we can keep reinforcing that, as I mentioned, via economic activity, but also via the story of ETH's money, um, I think we can eventually succeed there.

• 1:05:13Speaker 00

  But yeah, it is a long term bet. There's a lot of unknowns here. And depending on the type of investor you are, you're not going to allocate to ETH if you're just in it for the the growth play. Or if you just want to be really, really safe and say, I'm going to go into BTC. Because that to me looks like it's already got, you know, everything, it's going to go up only from here, it's got the ETF inflows, so on and so forth. But again, the upside is is very limited there in terms of like, I mean, you're going to still get upside, of course. But in terms of other things, yeah, it's going to be the the least upside you're going to get, basically, I think.

• 1:05:42David Hoffman?

  Anthony, a bit of discourse that's been going around in crypto Twitter lately is Ethereum's lack of North Star, or maybe it has a North Star, but no one can articulate what it is. Bitcoin has a North Star. It's digital gold. Solana's North Star is decentralized NASDAQ, or consensus of the speed of light. What's Ethereum's North Star? And/or is it a problem that we can't really articulate one?

• 1:06:05Speaker 00

  I go back to what I said earlier about getting involved in these kind of like bike shedding arguments. And for those of you who don't know what bike shedding is, it's basically this phenomenon of like, when you have a group of people together and you have to decide on something small, it becomes like this huge thing. And the analogy is, what color should we paint the bike shed? And there's like 10 people deciding this. Everyone's gonna just keep going in circles about what color to paint it if there's no, I guess, leader or no coordinator to have that final decision. Because if everyone's got the same say, then everyone just keeps going in circles. I think that's what happens with these North Star discussions. Because Ethereum is such a decentralized ecosystem, there is no single person or single entity that can define what Ethereum is. Originally Ethereum had this,

• 1:06:48Speaker 00

  I guess, tagline of being the world computer. And that came from the early Ethereum kind of people where it was much more centralized because it was just starting out, like this world computer thing. And that didn't stick at all, because it didn't really make sense on the surface. Like, someone thinks of a computer, they don't think of something incredibly slow, like Ethereum L1 is in terms of compute power, right? And it was mean to death, essentially, and we don't use it anymore. But another reason why we don't use it is, well, the reason we don't use it is because of that social consensus of, we don't like this thing. The more decentralized Ethereum became, the more people rejected that description of Ethereum. Then we had meandering through a bunch of different things, like Ethereum is the new internet, for example. ETH is money is another one, which is obviously just for the ETH

• 1:07:32Speaker 00

  asset, not Ethereum the network. Bitcoin went through this too, mind you. It started off as peer-to-peer money, now it's digital gold, right? And now the money thing isn't even discussed at all. People are saying, no, no, no, you don't use your BTC as money. Like, you keep it, it's a store of value. So it's just a social consensus thing when it comes to decentralized networks. It's not something that you're going to be told what it is. And I think the same Going to happen in in Solana as as time goes on as well like yes today it's decentralized NASDAQ or finance at the speed of light I've seen another one but that that's already two I'm that's already like more than one so the the bigger that ecosystem gets and the bigger any ecosystem gets the more you're going to have this fragmentation of of a quote unquote North Star so I think that the premise again is just like flawed it doesn't really

• 1:08:14Speaker 00

  have any kind of meaning here but what ends up happening is when you have like an absence of this is you you essentially have a social consensus on what uh I think should be and I think within Ethereum even though we haven't got like one thing to point to we've coalesced around this roll up centric roadmap of essentially keeping Ethereum L one decentralized um and and and then scaling by L twos that is the closest thing I think we have if we're talking about Ethereum as as a platform and that came naturally yes Vitalik originally proposed the roll up centric roadmap but that was after people had already been working on it all he did was say hey like this seems like the roadmap that we've always wanted here it is and then people coalesced around that and there have been some kind of like splinter factions so to speak that say well no we need to scale the L one more

• 1:08:59Speaker 00

  or no the roll up central ground was a mistake uh but that's fine there was splinter factions in Bitcoin too no we don't believe that Bitcoin's block size should stay limited we're going to fork off as Bitcoin cash and go go be money right or go do this or go do that so that exists but as long as the core remains the same I think that that is that is the the really the North Star in the end the the social consensus around that core so I think while Ethereum doesn't have a tag taggy kind of like meanie fun one liner to describe it it has social consensus around a path and we've been on that path for four or five years now and we're going to be on that path for more for more years than that probably till the end of the decade to really realize this vision and I've just seen that strengthen over time that obviously because we have L twos we have L twos that work they've gotten cheaper

• 1:09:43Speaker 00

  we're improving the L one for the L twos so on and so forth so that that's generally how I view that but going in circles around trying to find a one liner to describe Ethereum is is just gonna yeah just buy shitting really I I would love for people to like if you ask the question what's the internet's North Star how would someone you like possibly answer that is like it depends what

• 1:10:02Ryan Sean Adams?

  Of the internet are we actually

• 1:10:04Speaker 00

  Exactly.

• 1:10:04Ryan Sean Adams?

  It's so general purpose that it can do. It's like so many things. It's e-commerce and then it's like email and then it's like, you know, social networks and now it's like AI. It's so many different things at once. I do agree with you, though. Ethereum does have a North Star with respect to its roadmap. Like, having been in Ethereum for like some time, I don't think I've seen the Ethereum roadmap as clearly articulated as now. I mean, do you remember back in like 2018? When it was very unclear, was very unclear what the next steps were to accomplish that this entire vision was? And now it's like much more clear.

• 1:10:38Speaker 00

  That's putting it nicely. If I look back at 2018. It was a complete and total mess. Like, I don't think people realize just how bad it was. Like, people would like to say, oh, sentiment is so bad right now for Ethereum. It looks like Ethereum is dying, whatever. That's obviously all untrue. But like, a lot of those people maybe weren't around in 2018 and even 2019. Sentiment was, within the core Ethereum group, was actually pretty good because we believed in what we were building. You know, we had confidence in it. But outside of it, Ethereum was written off as like completely and utterly dead. And it actually looked like it too. Right? It actually looked like it. But, but yeah, and as you said, there was no roadmap, really. Proof of Stake was completely up in the air. We had no idea what was going on with that. We had no idea what was going on with anything else, really, like sharding as well.

• 1:11:22Ryan Sean Adams?

  I remember, we thought we were going to ship Proof of Stake as a smart contract, right?

• 1:11:25Speaker 00

  Exactly.

• 1:11:26Ryan Sean Adams?

  Felt like we were months away from that and then the whoops, nope, not anymore. We're totally shifting that idea.

• 1:11:32Speaker 00

  Yes, exactly. They literally, I don't think people realize, but like with Proof of Stake, they literally completely pivoted the roadmap. The, all the old work was discarded. I think only a few things from that old work were kept. Everything was discarded. They started from scratch and then launched it as a new chain. And then we did the merge. Like, the amount of kind of things that had to go right for Ethereum to even get to where it is today is insane. And I think that gets lost in the source. People don't realize all of the things that Ethereum has achieved so far, which spoiler alert, is going to be part of my Bankless Summit talk because I feel like it's worth reminding people of this stuff. And then they, they look at just the present, which is fine. Like, the present obviously is important, but I think learning from the past, seeing where we've come from and getting confidence from that, looking at the present thing, the present kind of state of things.

• 1:12:16Speaker 00

  Maybe changing course where we need to and then looking out into the future and seeing, okay, where logically is this going to go? And I think Ethereum has never been in a better position. Like, it's objectively true that we've never been in a better position as an ecosystem. Yes, we've got better competitors, but that's fine. That means Ethereum is going to be better. And it already is playing out where the L2s are like, well, screw you. We can do what you can do and better. And they're marketing this out there and they're actually putting it live on the network. Basis scaling every week. I don't think people realize this. They're actually increasing their gas limit every single week. They're scaling up, they're doing so much TPS there. The OP stack is killing it. Like, I'm going on a rant here right now, but in terms of like getting all this stuff happening on the network, yeah, there's never been a better time in Ethereum, in my opinion.

• 1:12:57Ryan Sean Adams?

  Okay, well, we've punched down, you've punched down some of the critiques here. Let's get into the bull case. I think you've articulated a lot of it. And I want to ask a more targeted question on the bull case for Ether, the asset, and Ethereum, the network. Are there any bull catalysts ahead of us? Like, what do you see that's kind of exciting? I mean, you mentioned based rollups a little bit earlier. Of course, we're not done the L2 roadmap and we're going to continue to expand blob space. But when you look at the roadmap and what's ahead, are there any bull catalysts that you see for Ethereum?

• 1:13:35Speaker 00

  Yeah, so I think, you know, people always like to rally around some kind of big catalyst, right? Like, EIP1559, the merge, the beacon chain launch, so on and so forth, which is great. It acts as a coordination kind of thing where everyone...

• 1:13:48Ryan Sean Adams?

  You've got to keep hope alive, right? I remember like my last bull catalyst for Ether was like the ETHTF. And like, that didn't like fully materialize. Now, like, maybe that's a sleeper. Maybe that'll age like a fine wine and that's the hope. But like, you kind of have to have something to look forward to.

• 1:14:04Speaker 00

  Yeah, I think so. But then you can also look at Bitcoin and it's had nothing to look forward to for ages and done just fine, right? So, you know what I mean? Like, the ETF was the last big thing that they had to look forward to, really, in the last few years. Like, there's really been nothing else because they don't change the network. There was a little bit of energy around ordinals, but that seems to have faded a bit. Not to say it's gone away or won't come back or whatever, but... Most people in Bitcoin are interested in that, right? Like, they're not even talking about that. So I, I think if you look at that as a counter example, you don't necessarily have to have something to always look forward to. But if I'm being totally honest here, I don't think there's anything as big as the merge. For example, down, down the line in terms of like one singular event that everyone can rally around. And that's like this big, huge thing that's coming.

• 1:14:48Speaker 00

  But there is a lot of kind of incremental stuff over the next few years. A lot of stuff just, just continuing to happen because Ethereum is now a mature ecosystem. Because we've got a lot of the, the, the kind of puzzle pieces in place now, we can just keep building on top of that. So i- i- it's more of a snowball effect where the snowball just keeps getting bigger and bigger and bigger over time. Rather than having like the big snowball that's sitting there for you to go play with sort of thing. So that's, that's how I'm viewing it. Now, if people actually look at the roadmap, and this is timely because Vitalik just put out his final blog post of a six-part series of the Ethereum roadmap. He describes each part of the roadmap and then what the goals are for that, that, that, that kind of area of the roadmap. And then what that actually means for, for developers, end users, so on and so forth, scalability and stuff like that.

• 1:15:32Speaker 00

  So I highly recommend people go to Vitalik's blog and read all of those. But among those things, there is again, not like this big thing, right? There's not this big event because they're all happening in parallel. So they're not like sequential where it's like, okay, well, this part of the roadmap happens now. Then in a year's time, this one will happen. It's like, okay, part of this roadmap happens now, part of it happens now as well, but part of it happens later, so on and so forth. But again, it's all kind of like just overall improving the Ethereum ecosystem, improving the Ethereum network. And I right now can't see like that one kind of big thing anymore. Which again, as I said, I don't think is necessarily an issue because if we look at Bitcoin, it hasn't been an issue for them. I know that the premise is different here in that Bitcoin doesn't, doesn't do anything.

• 1:16:15Speaker 00

  It's literally just like a story that, you know, and a social consensus thing about it being a money store of value. But I think that that is the same for, for like ETH as an asset, like as we've discussed before about ETH being money. Also, the Ethereum network, if you, if you believe in the rollup-centric roadmap, if you vibe with that, if you think that L2s are awesome and they're going to keep growing Ethereum as a network, which I think that we can all agree on has been the case so far. And and and seems like it should be the case into the future. Again, not extrapolating out certain TCR, but we're all about taking bets. Like that's what investing is really. It's about taking bets on on the future. Essentially, if you believe all of that, then you believe that the Ethereum ecosystem is going to grow dramatically from here. I may say the word incremental, like it means like small little things.

• 1:16:56Speaker 00

  But in terms of growth, I think that we've got like, you know, thousands of times, tens of thousands of times growth ahead of us. Because we've barely on boarded most of the world into crypto. People say, oh, well, there's a hundred million people, whatever, that own crypto assets. OK, cool, but how many of those people are on chain? Because the majority of them are not on chain. They're in centralized exchanges. And this is actually one of the theses for Infinix, which is Kane's new project. All these people are on centralized exchanges. They do nothing else. They're not on chain. They never go on chain. They sit there. Their actual users or they have the assets. Let's give them a way to use them. Let's let them do stuff with these things. And if we look at it from that perspective, the entire industry, not just Ethereum, to be fair, the entire industry is growing. Like the on chain industry is going to grow so massively from here.

• 1:17:38Speaker 00

  So while the actual like, I guess, like upgrades to the Ethereum network and to the L twos may seem more iterative in that we're not going to be having this massive kind of event to look forward to. But we do have to look forward to is onboarding billions, literally billions of humans and trillions, if not more, of of machines. That's another thing that's become a big theme lately, but something that I know that you guys have talked about for a while now. About these machines coming on chain, these AI agents, like actual AI agents, not just AI dressed in a five person trench coat, right? Like actual AI. So if you if you look at it from that perspective, there is no reason not to to be bullish. Unless unless you think that the L twos aren't going to capture this activity, that Ethereum isn't going to capture this activity. Then that's the reason to be bearish.

• 1:18:22Speaker 00

  But from where I'm sitting, that doesn't seem to be the case.

• 1:18:25Ryan Sean Adams?

  It does seem like the like L two momentum is very strong and it's kind of like a snowball rolling downhill at this point. It's like with Kraken just last week, like all of the major centralized exchanges now have L two strategies, basically. Anyway, that that will continue to kind of roll downhill. And I think a lot of the trends you're speaking to are are you like just moving. Forward at an accelerated pace. One, this episode will come out after an episode, the day after an episode that we will release with Justin Drake. And the episode with Drake was all around based rollups and kind of the future and why he's kind of bullish based rollups. I remember we did an episode earlier with Max Resnick, who's kind of critical of the

• 1:19:09Ryan Sean Adams?

  Ethereum Layer 2 roadmap. He's like, wants to quote unquote, make the L1 great again, even to the extent of like, if we have to sacrifice solo stakers, that was his take, not like our take. But anyway, we asked the question that episode, hey, Max, if all of the L2s overnight were converted to base rollups, meaning that they used Ethereum validators for sequencing rather than a centralized sequencer, would that kind of solve the L2 alignment problem that you're talking about? And his answer was basically like, yes. And so I want to ask you this question. Do you think that based rollups are going to be, I'm not going to say a silver bullet, nothing's a silver bullet, but do you think that this will solve some of the outstanding

• 1:19:51Ryan Sean Adams?

  issues that Ethereum like is perceived to have with L2 alignment and even like, you know, like problems like liquidity and fragmentation and keeping DeFi on the Layer 1, all of these things? How bullish are you or optimistic are you on this technology?

• 1:20:06Speaker 00

  Yeah, I would say that obviously Justin's going to dive deeper into this on that episode. I mean, as you said, this comes out after that. So people will have learned a lot about base rollups from him. He is like one of the champions of it. I would say from my understanding of them and from all the research that I've done, as you said, isn't a silver bullet, but is like really fucking cool. Like part of my language there, but like, when you look, it's really cool because not only does it tightly couple the L2s to the L1. So it actually, not only on the surface, like in terms of like talking about it, but actually feels like one kind of united Ethereum ecosystem, like you're under the Ethereum umbrella, but it drives more revenue to Ethereum L1. So people who like to see more revenue, like to see those numbers, like to see that direct

• 1:20:49Speaker 00

  value accrual to ETH the asset and to the Ethereum network, that's better for it. You get better interoperability between. The different kind of layer twos and rollups here because of the fact that they're sharing, I guess, like a sequencing layer on the L1. And you get access to the most decentralized validator set in the world. No other validator set is as decentralized as Ethereum's, not even Bitcoins, because Bitcoin mining is very centralized. People maybe don't realize this, but it's quite centralized. And if you look at Ethereum's kind of validator set, as you said, like Max, maybe has this opinion that we should kind of maybe sacrifice solo stakers. I don't think that should be the case at all, because that's what gives us, as I went to my previous point from before, that's what gives us our strength as a network here.

• 1:21:34Speaker 00

  But it's not just the solo stakers. It's the hundreds, if not thousands, of other entities that are staking on the network as singular entities here and providing that infrastructure. And then you can throw like Eigenlayer into it as well, like getting AVSs involved and doing things like not just on the rollup side, but things like Oracles and stuff like that. So you're basically just like tightly coupling the ecosystem again. So essentially, instead of it feeling, because it does feel fragmented, right? Like to the end user, it does feel like when you have to bridge between different layer twos and stuff like that, I totally understand that. That's an issue that the entire ecosystem is actually focused on solving, by the way. Like, this is not something that we're just looking at and being like, oh, that's not an issue. It's fine. We'll just ignore that and do this other thing. No. Like, I mean, just today, there was a Twitter Spaces with all of the major L2 builders,

• 1:22:19Speaker 00

  or most of them, talking about how to better interoperate. And it's actually in their best interest to do it as well because of the fact that they're stronger together than they are apart, much stronger together than they are apart. It's like doing alliances between nations that don't like each other, like economic alliances. It's like, okay, I don't like you. Your culture doesn't vibe with my culture. But hey, we both interested in an economic alliance here. Let's put aside our differences because we're stronger together than we are separated. Because if we're separated and we're on our own, if you form an alliance with the other people that don't like me, then I'm on my own. And I'm here like, oh shit, like you guys might invade me or something if we're using the nation-state analogy here. So I think the same is true for blockchains where it's like, wow, if we don't unite, if we don't unite under one umbrella like Ethereum, if we don't tightly couple ourselves

• 1:23:03Speaker 00

  to Ethereum L1 as L2s, we may just find ourselves. In a isolated island, we won't get the economic activity that we want. We won't get the liquidity, the TVL, the users. And we'll we'll basically lose because of that. You could have like the best technology. But because you haven't actually played nice with the entire ecosystem, uh, the, uh, which is your incentive if you want to grow. Then you end up in an isolated uh kind of place there. So that's that's kind of how I view it. But to have to to Max's point, because Max is very big on pushing the L one, as you mentioned. To have good based rollups. And when I say good base rolls, I mean like based rollups that can get as close as you can to the same guarantees as transacting on L one. You need to do it at the L one slot time. And and what I mean by this is that you need to have your transaction included as part of an Ethereum L one block.

• 1:23:48Speaker 00

  Not on a pre confirmation. So I I maybe I I Justin's going to explain this, but but I just want to reiterate for people. A print confirmation is basically a promise saying there's these people that run the software and they're like, and they put up like a collateral bond and they say. Well, I promise to include your transaction in an Ethereum L one block. Uh, it's sometime in the future because Ethereum L one block right now or slot technically is 12 seconds. So if you want to get your transaction soft confirmed in like one second, that can't happen just going to the Ethereum L one. You have to wait those up to 12 seconds. Whereas a pre confirmation can be as fast as as the speed of light, basically. But that's a promise. It's not confirmed until it's actually in the Ethereum L one block. And on top of that, it's not actually finalized on Ethereum for like 13 and a half minutes.

• 1:24:32Speaker 00

  So there is still a potential of a reorg, uh, is that that's what we call it there. But to Max's point. Reducing slot times to like two seconds, which as I said before, is a huge thing. It's not something that we can do overnight. But reducing slot times from 12 to two is massive because of the fact that now we don't necessarily need pre confirmations. Like if a user has to wait like up to two seconds to get their transaction included on an L one block, I think that's fine. It's same as loading up a website. I'm happy to wait a couple of seconds if I have to, right? I'd rather not because, you know, there are short attention spans these days. But like if I had to, that that would be that would be fine. But then print confirmations are still a thing. And they become even stronger because now instead of having to wait like 12 seconds, you wait two seconds. And then also there's the opportunity to do single slot.

• 1:25:16Speaker 00

  Finality. What this means is finalization at the two second mark. Like it's a it's a huge kind of lift here, but essentially you get finality within two seconds. You get your contract actually confirmed. And then basically what it means is that you get the best possible guarantees you can get as a roll up on Ethereum. Rather than doing things with your own sequencer and putting all these bridges in. And then the users feel safer, the big capital feels safer. People tend to think that people don't care about this. I'm telling you guys right now, well, not you guys, but like the audience, it's like the big capital absolutely cares about this. Like they look at everything. They look at every single thing about an L two, about the L ones, about where to put their money. What small contracts interact with, because a lot of the time it's not their money.

• 1:25:57Speaker 00

  So they don't have the luxury of just yoloing. They're not an SBF who like it's not, you know, it's it's it's him just like putting customer money into things. No, no, a lot of these outfits are serious, like the Black Rocks of the world are not going to just throw their money into into some random thing that they haven't researched. So if you look at it from that perspective, having a base roll up just gives you the best of kind of like all worlds. Not a silver bullet, not going to be for every single use case because there are limitations here because you're basically not exactly limited by the L one. But it is, it does place a limitation on you, but you get that that interoperability, that that that that essentially like better censorship resistance and liveness. Because you're now a part of the Ethereum validator set and it's just a huge unlock. And I'm sure Justin explained all of this already in more detail.

• 1:26:39Speaker 00

  But yeah, to say I'm bullish on base roll ups is an understatement. I'm very bullish on them. But the reason why I think that I I'm not talking about them too much yet is because they are a little bit further away in terms of getting them to maturity. The two second slot time thing may not even happen, like there's a there's a there's a chance that it won't happen because it may be too heavy of an engineering lift. And then people will be like, well, pre confirmations are fine, you know, let's just do single slot finality of 12 seconds. And then in in the slot time, and then essentially what you get is the pre confirmations after 12 seconds, then you get finality. And that might be good enough, right? Quote unquote, good enough, rather than rearchitecting the Ethereum protocol to handle this. Because it's not just the protocol, it's the people running nodes, the stakers and everything, because now you're increasing load on them.

• 1:27:21Speaker 00

  And yeah, it's it's a heavy lift. In saying that, one last thing, you don't have to go from 12 to two, you can go from like 12 to eight. Eight to six, six to four overtime. Um, and yeah, maybe more engineering work to do this, maybe more coordination. But by doing that, you don't have those risks necessarily. You can be like, okay, well, we've been running on eight second slot times for like six months and everything seems to be okay. Maybe we can lower this to to six. So what we've done with blobs, we're running on three blobs since March. Network's been fine, I think, I don't, but like bandwidth usage has gone up, but there's work being done there. But people are like, okay, well, maybe we justify to increase blobs to four or five in the Petra hard fork. We need them, we need them to scale the L twos. The network seems to be doing fine, so let's do that. So as I said, iterative things that snowball into a massive kind of thing for Ethereum.

• 1:28:07David Hoffman?

  Anthony, we've covered a lot so far on this podcast. We've covered the different ways that investors look at ETH. We cover the economics across different layer ones and the layer two model. We covered money-ness. Uh, we cover, we tend to cover a lot of things when we talk about Ethereum. Uh, there's like 50 different lenses for viewing Ethereum from 50 different perspectives. Ethereum is kind of a prism. Uh, it's actually, it is, it's logo. Uh, and that kind of presents a marketing problem. Because when there are so many different ways of presenting Ethereum, telling the story of Ethereum can become difficult. Uh, so how do we tell this story to the world? How do we get the world to understand Ethereum? How do we get the world to care about Ethereum? How do we solve like Ethereum's like marketing problem?

• 1:28:50Speaker 00

  Yeah, I think it's a difficult problem to solve because of the reasons I outlined for like the North Star problem. Like a North Star is is really like a marketing vehicle as well. It's like something you can point to, to for all your other marketing to fall off of. But because Ethereum is a is a properly decentralized, distributed kind of ecosystem with thousands, tens of thousands of different participants. It's very hard to kind of agree on, or I guess like coalesce around a uh, marketing strategy, so to speak, right? Or a communications PR strategy. It's very easy for centralized companies to do this, obviously, because everything's in-house, there's a top-down approach here. But Ethereum is a flat kind of organization. There is no like central figure. Uh, well, there is no central figure that asserts its influence because there's been a lot of discussion recently about the Ethereum Foundation and say, hey,

• 1:29:34Speaker 00

  the Ethereum Foundation should be doing this, they should be doing more here, they are like. A central figure within Ethereum. They have the influence. They have the money, of course, as well as everyone has been talking about, like they have a lot of money. But people are kind of saying, yeah, they should be doing more here. Now, from that perspective, I think people don't realize that Ethereum Foundation isn't built like that at all and hasn't been built like that from basically day one. Especially over the last five years where their philosophy is to push this stuff out to the community to do and fund those efforts via grants and things like that, which they've been doing, to be fair, like they've actually kind of completed that mandate. But then there are smaller things like the Ethereum account on Twitter barely gets used. It has millions of followers and it's never used. And I think prior to the ETF, this was mostly a regulatory and legal thing.

• 1:30:17Speaker 00

  Where I don't think that they wanted the Ethereum handle to promote anything necessarily because it would maybe lend the SEC some arguments they could use to classify ETH as a security. And then other kind of legal and regulatory stuff that falls off of that, of course. But in a post ETH ETF era, where ETH is a commodity now, like it's objectively a commodity based on the evidence. Doesn't matter what the SEC says anymore. They approved the ETH ETFs based on ETH being a commodity. It's there, it's trading, it's out there. Everyone agrees at this point that it's not a security, except the Bitcoin max is like to call it a security, but you know, everyone's sane. So from that perspective, I believe that Ethereum's marketing kind of efforts can be a lot more aggressive. And I believe the Ethereum Foundation can actually not necessarily do it themselves,

• 1:31:02Speaker 00

  but maybe change their stance a little bit and say, hey, okay, let's maybe give the Ethereum Twitter account to a group of community members, longtime trusted community members that can manage it and will put a set of guidelines out. Like you can't promote this, you can't promote that because you don't want to be promoting scams, obviously. Promoting individual projects is always a funny thing, but maybe that account can tweet out things about the layer two roadmap. Can say, hey, okay, here's a nice explainer on what the rollup centric roadmap is. Here's why, you know, here's a nice explainer on what ETH is as an asset. Here's what's coming for Ethereum, like shit like that, like. Like the important stuff like that, basically, right? So not necessarily promoting individual projects. And that, I think, would be an easy win and a huge win for the community.

• 1:31:42Speaker 00

  And I actually put a proposal forward, not a proposal, but like I put a comment forward on Twitter where I said that the easiest way to do this is just to have like one EF member, one to two independent community members and one person from maybe like a major Ethereum kind of company, maybe Consensus or something, that is part of that management team for that account. And then they can have their guidelines and follow them. And there you go. That's an easy, easy kind of win there. And then on top of that, I think the Ethereum Foundation could potentially fund an effort that is focused on purely marketing PR comms, but like using world-class teams for this, not just the community. The community is fine, but if you want to actually do proper marketing and PR and communications, you have to hire people that are specialized in this field.

• 1:32:26Speaker 00

  You can't just rely on the community who just tweet bullish E things. That's not the same thing. So proper marketing efforts can be done here. But I do think that pre-ETF, the main concern was those regulatory legal concerns. But in this world that we're in now, those concerns shouldn't exist anymore, I believe. And the EF should be more aggressive here because there's really no other entity that would do it. Consensus used to do it, but I don't know what's happening with them these days. They're kind of quiet. Whereas the Ethereum Foundation is still there. They've got the money. They've got the reputation as well of being a very well-run organization. Contrary to what you hear on crypto Twitter, they're an extremely well-run organization in terms of what they've been able to do over the years and what they've had to deal with as well as a foundation there.

• 1:33:08Speaker 00

  So yeah, long story short, I think Ethereum should have much better marketing and public relations and communications. But you have to coalesce around where that is actually going to come from, where the finding is going to come from, and who's actually going to do it. But in the short term, give the Ethereum Twitter account to a group of long-term Ethereum community members that are very, I guess, like trusted and aligned within the Ethereum mission. Let them go crazy with it because that will be a big win already. Because you already see how much attention Vitalik's tweets get, for example. Like me, you and like David, Ryan and me, we can all tweet as much as we want, but we're viewed completely differently to someone like Vitalik, right? For example. We're viewed completely differently in terms of our reach as well. Like, our reach is very small compared to that.

• 1:33:49Speaker 00

  So if we have the Ethereum Twitter account tweeting out these things and educating more, it has like a thousand times more reach than we do. And we can reach more people, we can get better, better kind of handle on marketing and PR. So I think that's what needs to be done there. So that, I would actually say that's the biggest issue we have in the Ethereum ecosystem today, like by far, is the communications, marketing. Everything else, I think, is quite all right. I think we're doing really well on that, on that stuff. But yeah, marketing, we've, we've always been bad at marketing, I think.

• 1:34:16Ryan Sean Adams?

  Yeah, I, I think I, uh, like, pretty much agree with that take, particularly on, like, something that David and I haven't said in a while, but you used to say all the time, is the most bullish thing for Ethereum is to be understood. And I think that Ethereum marketing is like really kind of lacking. And so we're not educating enough people. The, the one area I, I would actually like say, though, is Ethereum, the network, needs less marketing. It still needs some marketing, like, and Ether, the asset, needs like much more marketing, much more focus. Like Ethereum, the network, has already kind of reached escape velocity and taking off. Whereas Ether, the asset, how to value this thing, whether Ether is a monetary asset or if it's just gas.

• 1:34:58Ryan Sean Adams?

  And, I mean, even look at like BlackRock and TradFi and the way they pitch Bitcoin versus Ether, they, they pitch Ether as kind of like a crypto technology growth, internet, like tech platform. Whereas Bitcoin, they, they pitch as an asset, and that's just flat out wrong, right? Both assets are long-term store of value, monetary asset, collateral assets, and they're kind of like pitching wrong. Anyway.

• 1:35:20Speaker 00

  I, I think from, from their perspective, just on that note, like when it comes to the ETFs, I think they just don't want to cannibalize their products, right?

• 1:35:27Ryan Sean Adams?

  I know.

• 1:35:27Speaker 00

  And which is just like a, a natural consequence of having these two products out there. Yeah, well, yeah, exactly. And, and being the underdog, it's, it's like if they were to pitch BTC and gold to investors in the same presentation, right? Like, they would probably pitch Bitcoin as a technology platform, because then they're cannibalizing gold as a store of value.

• 1:35:44Ryan Sean Adams?

  Yeah, well, they kind of do, yeah.

• 1:35:46Speaker 00

  Yeah, well, yeah, exactly. So I, I think from that perspective, it's, it's kind of hard for them. But I think that they're still going to be the biggest marketers of Ether as an asset, for sure. And getting value to ETH as an asset. But also, I don't know if people may be aware of this. I've tweeted about this and talked about this on my show. I've talked to some of these ETF issuers and they've said to me that most people they talk to haven't even heard of Ethereum. Like, haven't even heard of Ethereum, which is crazy. It's wild considering how big Ethereum is, but I guess that's within our bubble. Like, outside of our bubble, you know, obviously, everyone's heard of Bitcoin because it's always in the news, right? But Ethereum, yeah, they haven't. But then, when they actually learn about it, they, as probably a technology platform first. They probably don't pitch the ETH's money thing to them first.

• 1:36:27Speaker 00

  But that when they learn about it as a tech platform, they start to really understand it and see the value in it quite quickly. So again, to your point, Ryan, yes, the most bullish thing for Ethereum is to be understood. And that flows on to ETH as an asset as well. But I do think that if we can shore up the marketing around Ethereum as a platform, as a network, as a technology, the ETH kind of asset stuff will be downstream of that. Because I don't think we should be going for ETH as an asset first, because Ethereum really is a technology platform first and foremost. ETH as an asset is linked to that and is definitely valued based on that, but also it's used as a store of value. And that kind of like reiterates its value through the technology. But yeah, I think that we need to shore up our marketing there and it needs to be a lot better than what it is today.

• 1:37:10Speaker 00

  And obviously, it's not just us saying it. A lot of people in the community are saying it. So the way I look at things is that if the haters are saying it, if the people who love Ethereum are saying it, if the neutral parties are saying it, then you can be pretty sure that it is the right take, right? If everyone's saying it, like from the different camps, you can be pretty sure that that is the truth. Like, maybe not the whole truth, but that is like closer to the truth.

• 1:37:32Ryan Sean Adams?

  Yeah, well, I think in this case, even ETH haters are maybe even saying this. So, Anthony, this has been great. Thank you so much for like spending time, give us the bull case here. Let's end with this and kind of the what's next category. So Ether the asset has had, let's just call it, a lackluster cycle this cycle. And it's like not clear that, I mean, David has taken to kind of debating whether we like, we were ever in a bull cycle at all, and maybe we're kind of in a bear cycle. But like, so maybe we're in this neutral Limbo type territory, maybe we're still in a bear market. I don't know, but it's not quite a full on bull market. But other communities are way up from their bottoms. I mean, Bitcoin holders are feeling pretty good.

• 1:38:16Ryan Sean Adams?

  Solana holders are feeling pretty good, even in the alt, like, you know, layer one ecosystem. Some projects are like doing quite well. Ether, not so much. It's had a lackluster cycle so far. And now the cycle's not done. I don't know if we're halfway through. I think a lot of us are expecting 2025 to be a big year for crypto in general. But let me ask you, do we get a strong ether this cycle? I mean, were you gonna hit 10K plus? Like, what are your kind of your price predictions? Because some people at this point are saying that this entire cycle will skip ether, the asset. And I'm pretty sure that's not your perspective.

• 1:38:54Speaker 00

  Yeah, I mean, it's definitely not my perspective, and there are multiple ways to attack this point, I think. I think in terms of price predictions, I think we shouldn't be doing that anymore, like overall, like with any asset, not just, not just ETH, by the way, with BTC. Because I think, you know, there's all this talk about BTC going to 300, 400, 500K this cycle. I actually don't think that's going to be the case at all, just based on the fact that, stop looking at price and look at market cap. BTC is $1.3 trillion asset. It is in the top 10 assets in the world, right, out of everything. Like, for it to go that high, 300, 400, 500K, this cycle, mind you, I'm not talking about like 10 years, I'm talking about this cycle. The amount of money that would have to come in to push it that high is, is massive, right?

• 1:39:36Speaker 00

  So I think that any asset you're looking at right now, and especially the bigger ones, yeah, doing price predictions is kind of a fool's errand at this point. And I understand why people do it is because it's like, well, you don't want to be saying BTC is only going to 100K. You want to say it's going to 500K so you can get FOMO and get people in, get people buying, buying this thing. So I understand it from that perspective. But yeah, if you just look at the market caps, like, they're massive. And on the market cap note as well, if you look at, obviously Solana's performed quite well against ETH this cycle, right? But then I take a broader view here and I look at what happened, I guess, like in the bear market. If, and I will maybe overindex on The short term here is like, I think Solana went down like ninety six percent in the bear market. So like two sixty to like seven dollars or something like that.

• 1:40:22Speaker 00

  And if you do the math on ETH from forty nine hundred, ninety six percent down is around a hundred and ninety dollars, I think. I did this math recently. ETH didn't go to a hundred and ninety dollars. It went to eight eighty, so more than four times as a bottom here. Like we're talking about like the cycle stuff. So, so what was going in, and if you look at the market cap, I think Sol bottomed at like a five billion dollar market cap. For ETH, it was like a hundred billion dollar market cap. So, so if you're looking at this as a USD market cap valuation kind of framework, then you can see from that framework why these other smaller assets just can go way, way beyond than ETH can. Now, do I think that trend's going to continue from here with Sol at a hundred billion dollars, ETH at, oh, I think it's like eighty billion dollars, something. ETH at three hundred and something billion dollars, Bitcoin at one point three trillion dollars.

• 1:41:07Speaker 00

  I think once you get into that kind of market cap territory of hundreds of billions, it's a lot harder to move that asset, a lot harder, because you need a lot more money to move that asset. So I think that if you just take a snapshot of the last eighteen months, it's not giving you the whole picture on things. And I think the reason people overindex on this is that if it was just ETH bleeding against BTC in terms of like not outperforming BTC, everyone would be chalking this up to that's just normal cycle things, because it really is. Historically, it's the normal cycle of BTC dominance going up in a bear market because everyone flees to safety when, especially when rates are high. It's like, well, why would you buy the risky kind of like stuff over here where we can just buy? Like if we're in crypto, we just buy the safest asset, which is obviously BTC right now.

• 1:41:47Speaker 00

  And then, of course, if Sol wasn't outperforming it, if some other things kind of weren't going crazy like meme coins and stuff, everyone would be like, okay, this is just a normal cycle here. So I think that when you look at it from, yeah, that market cap perspective, that performance perspective from like bottom to where it is now and into the future, I do think that ETH is going to surprise people, not just from the crypto native people maybe being under allocated to it, but also from the ETFs. I know the ETF has been a slow start for ETH. I do think that's a big consequence of it launching so close to the BTC ETF. And then the issue is not wanting to cannibalize the BTC ETF as well, but also the price performance too. Like if you're looking to allocate to an ETF and you look at BTC's year-to-date performance, you look at ETH, BTC looks a lot better, right?

• 1:42:31Speaker 00

  But it works, works the other way where it's like, okay, well, if ETH starts going up for whatever reason, like there's a million different reasons that can happen, then I think that people are gonna, you know, FOMO in, so to speak, to, to the ETFs here. So, long story short, I have a, a very bullish outlook on ETH, of course, but it's more longer term, especially because the market cap is bear. And I'm sure next cycle in crypto, we're gonna have another asset that does really well against ETH and BTC, right? Uh, that, because it starts from like a $5 billion market cap instead of $100 billion, for example. And I'm sure, which, which is funny to me to think about, but I'm sure next cycle, the people are gonna be making fun of the, the Solana people, like they make fun of the Ethereum people now, because it's gonna be the same kind of talking points of like, no, we, you know, we, we, we have the, this asset, it is money, right? It is a store of value, it's going to do this, going to do that.

• 1:43:15Speaker 00

  So I think that we're just gonna keep repeating that, that kind of narrative cycle over and over again. And it all comes down to the size of the asset. And I think they will miss that because they look at price. No one looks at the market caps. And, and if you actually look at the market cap, I think Solana's market cap is at all-time high, where its price is not, because of the fact that the inflation has been high. Bitcoin's, uh, market cap, or, and, and price are at all-time high today, but look at inflation-adjusted price as well, then no one looks at that either, either. Bitcoin's inflation-adjusted all-time high is higher than, than, than what it is at, at 73K or whatever it is. Same, same for all the other assets. But I think people over-indexing on price is where the confusion stems from and where they may not be able to zoom out and see the, the bigger picture here.

• 1:43:55Ryan Sean Adams?

  Bottom line, Anthony, you, you think, uh, ETH is going to, like, not be skipped this cycle, it's gonna have a blessed cycle, at least, uh, like, cause, so far, I mean, the last time ETH hit, or Bitcoin hit 70K, that was earlier this year, and, uh, Ether was closer to 4,000, it was like 3,800 or something like this. And this time, it's at like 2,500, and people are saying like, what? What, like, what's happening here? And they're worried that the cycle's just gonna skip, like leapfrog right over ETH.

• 1:44:23Speaker 00

  I don't think, I don't think skips the, the right term. I, I will say that I, of course, I expected ETH to perform better against BTC, um, during, during the kind of cycle because of the better stuff like the merge, reducing. Issuance by ninety percent, the burn, stuff like that. But I think I I've I've learned that maybe the hard way that liquidity cycles matter a lot more for these assets than individual kind of, I guess, like tech improvements and and issuing stuff. Because if you actually plot the ETH BTC chart against the rates, like the US rate chart, it it's it's not like a one to one mapping, but like it seems to follow. And and and that's like a liquidity chart where essentially when liquidity is getting out of the markets and going into like treasuries. People who are still in the markets don't necessarily want to bet on like super risky stuff, so they go into the safest asset.

• 1:45:09Speaker 00

  But if you actually look at crypto more broadly, the only assets that have performed like extremely well over like maybe the last, I don't know, year is BTC, Sol, of course, and then meme coins. Now meme coins have a market cap of basically nothing, like that's that's why they perform well. You can't even compare those things to to to those three, you know, to to BTC and Sol even and even ETH, of course. But if you actually look at the broader market, yeah, people aren't bidding on the DeFi tokens that are actually doing well. The L two tokens, stuff like that, like they've all bled completely, they're all down, not only against ETH but against USD, or at least most of them are. So I think the as much as people maybe don't want to omit this, liquidity cycles, rate cycles, you know, the the Fed cycle plays a huge part in all of this.

• 1:45:51Speaker 00

  And if that's true, you could expect ETH to outperform from here now that the rate cycle is flipped and we're going with cuts now instead of rises and monetary policies easing. So if if that is true and that holds true, that that thesis, then yeah, ETH should outperform BTC from here. I know Ben Ben Cohen, who you've had on, he's very big on this, right? And you know, I'm not the only one saying this, he's been saying it for quite a while now. But but just looking at the at the data and seeing what what picture that that that kind of paints, that's how I how I view it here. Not to say that fundamentals don't matter, they absolutely do. If they didn't matter, then ETH wouldn't be worth three hundred billion dollars and Sol wouldn't have gone up from all the economic activity that it's been able to generate and all the growth that it's had.

• 1:46:29Speaker 00

  But if you're looking longer term out and you're looking at these assets versus each other, not the USD market cap, I think it comes more down to liquidity cycles than anything else.

• 1:46:38Ryan Sean Adams?

  I think at this point in the market, you got a lot of bulls cheering Ether on and certainly like a lot of core believers that are still holding Ether, right? It's like, I don't know who sells at this point. I mean, we probably have a pretty diamond hand gang.

• 1:46:53Speaker 00

  And the thing is, is that like at the market cap size that ETH is, it's all about, okay, where does the next marginal dollar come from to move the price? Like a regular retail user buying a few thousand dollars worth of ETH is doing nothing to the price of ETH. Even like a lot of those investors, probably not moving ETH that much because it's such a big asset. Same with BTC, mind you, and maybe even Sol is getting to that now because it has such a large market cap now. So then BTC has been able to get that marginal buyer via the ETFs who are buying lots of BTC, obviously. And that's, that's people, that's regular people as well. But there's also massive kind of funds and Wall Street and stuff like that. So until ETH has that, which I think it will in the future, but I think a lot of people are basically making the, the kind of bet. It's like, okay, well, until ETH has that, ETH is going to struggle to kind of move up

• 1:47:37Speaker 00

  because it needs that marginal big money buyer to move its price. But if you don't believe that's coming, then yeah, you can be bearish ETH. Like if you don't believe that's coming, I do believe it's coming. I, I really do, and I think people are underestimating it. But again, I don't know for sure. I'm speculating, I'm not going to tell you it's 100% certainty. But yeah, I think at this point in time, yeah, we definitely need like that market cap. We need that, that bigger money marginal buyer to decisively move, move ETH up. But I think as part of the regular market, market cycles as well, with a flood of new kind of money coming in from like retail investors, that can still move ETH up. But if you want ETH at like 10, 15, 20K, it needs to be the big money as well, like the Wall Street ETF money. It can't just be that regular retail buyer because I would say that without the ETFs,

• 1:48:20Speaker 00

  BTC would probably be worth like 30, 40K, maybe not even that. Because of the fact that like, there's just, it's just so large, the market cap. There is not enough liquidity, especially during the, the tightening cycle. There was not enough liquidity buying BTC because it was all in treasuries. Like, it's like, why would I buy BTC when I can just be in treasuries and earn this massive yield, relatively massive yield? So yeah, I think from that perspective, uh, yeah, I'm bullish going forward on, on ETH getting that money.

• 1:48:47Ryan Sean Adams?

  Well, there you go, Bankless Nation. Anthony Sassano is still bullish ETH. Anthony, thank you so much for joining us today.

• 1:48:53Speaker 00

  Thank you for having me. I hope people learnt something new. It's always my goal when I come on here. I know I've been on a few times and maybe I'm considered a bit of a boomer these days because I've been around for so long.

• 1:49:02Ryan Sean Adams?

  We're all considered boomer.

• 1:49:03Speaker 00

  Actually, there's an account on Twitter. His name's Bread. He puts out really great analysis about L2s. Yeah, and he recently said that he's coming around to the fact that ETH needs to be money. And I did the, I quote tweeted this tweet with a meme, that meme of that like a good-looking guy in the office.

• 1:49:20Ryan Sean Adams?

  Oh, the human resources one?

• 1:49:21Speaker 00

  To the girl, "ETH is money." And then me saying it, like, "ETH is money," and the girl being like, "Hello, HR." So it's kind of that thing of like, Ethereum ecosystem obviously wants new blood coming in and then repeating the same meshes that we've been repeating will hit differently. So yeah, as I said, even if people consider me an ETH is money boomer, I don't really care. As long as new people are kind of believing it and getting that message out there, that's the main thing.

• 1:49:45Ryan Sean Adams?

  Agreed. Sometimes it's just the source and you know, some people won't believe it until Larry thinks as ether is money. But that'll be coming eventually.

• 1:49:52David Hoffman?

  And then Bankless will be like, "Guys, this is what we've been trying to tell you."

• 1:49:56Ryan Sean Adams?

  Yeah, yeah.

• 1:49:57David Hoffman?

  Human resources?

• 1:49:57Speaker 00

  Well, yeah, it's you guys, but Larry, like, he's an actual boomer. I mean, he's an actual boomer. Like, Larry, he said it. Like, he's Blackrock. Like, come on. So, yeah.

• 1:50:08Ryan Sean Adams?

  Well, here you go. None of this has been financial advice. Of course, you guys know crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:50:18David Hoffman?

  Bankless Nation, we're doing something we've never done before today. We're offering an all-access pass to all the best parts of our podcasts at a price that's kind of a no-brainer for the value that you get. This is a price that includes basically everything. It's the private debrief episodes that Ryan and I record after our guest interviews, where we say things that we wouldn't have necessarily said on the interview itself. It's also the early access to all of our episodes, so you can get the early scoop and stay ahead of the trends. And it's also the private bonus episodes that we keep exclusive to our paid subscribers. Content directly from the best builders that will give you an edge. So you can scan the QR code for wherever it is on the screen, or you can enter the code PODCAST at checkout for that exclusive discount. That's PODCAST. In all caps and then from there you can click the premium feed and add your unique

• 1:51:01David Hoffman?

  link to your favorite podcast player. And if you're in Spotify, we always ship the ad free video of every episode as well. So you can watch or listen inside of your shiny new premium feed anywhere, anytime. So what are you waiting for? Get your all access pass to the bankless podcast today.