Vance Spencer: The FAANG of DeFi (S.M.E.L.L)

On the show today, we’re bringing Vance on to talk about S M E L L. Not an odor, but instead 5 different assets. The FAANG of Crypto? We walk through all 5 assets and talk about the merits of each, along with the other subjects running around the current crypto meta. Let Vance loop you into what he thinks is worth paying attention to. ----- 🏹 Airdrop Hunter is HERE, join your first HUNT today https://bankless.cc/JoinYourFirstHUNT ------ 📣 SAFE CORE | Smart Wallet Infrastructure https://safe.global/core ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦊METAMASK PORTFOLIO | MANAGE YOUR WEB3 EVERYTHING https://bankless.cc/MetaMask ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum ⁠ 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⁠ 🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap%E2%81%A0 👾STADER LABS | ETHX LIQUID STAKING https://bankless.cc/Stader ----- CHAPTERS 0:00 Intro 06:37 Takes on Friend. Tech 13:02 Good Or Bad For Crypto? 17:40 The SocialFi Narrative 20:17 S. M. E. L. L 23:23 Synthetix 27:55 Maker 35:34 Ether 41:26 Lido 47:10 ChainLink 50:48 Can They Outpace ETH? 56:35 Where's Uniswap 59:22 Solana? 1:01:29 Closing and Disclaimers ----- RESOURCES Vance Spencer https://twitter.com/pythianism ----- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠ https://www.bankless.com/disclosures%E2%81%A0

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

• 0:02Ryan Sean Adams?

  Bankless Nation, super excited to introduce you to another state of the nation. David, I smell the bull market. That's what I smell. Yeah. We're going to be talking about some bull market narratives today with Vance from Framework. What's on the agenda?

• 0:18David Hoffman?

  We're just going to talk about smell. There's a reason why Ryan just said he smells a bear market. Do we have the FAANG of DeFi? FAANG, Facebook, Apple, Netflix, Google. Oh God, what's the other one? I don't know. I don't own equities anymore. But FAANG, it's like the, all of the staples of TradFi, the staples of Silicon Valley. Vance thinks that there might be the FAANG afoot in DeFi. The tokens that are going to brew the staples of a DeFi portfolio. Smell would be the acronym. We're going to get into what is comprised in this smell. But also there's some other bull market narratives that we want to touch on. Friends is sweeping through crypto. Twitter is the, the app of the moment. Is that a sustainable narrative or is that a fad?

• 1:03David Hoffman?

  And then there's some other narratives that we're going to talk about as well, such as ETFs and gaming and staking and on-chain casinos. And so this is going to be the topic of the show.

• 1:11Ryan Sean Adams?

  On-chain casinos. Guys, before we begin, we want to give you a message from our friends and sponsors over at Safe. It was kind of funny. David, you and I were going through our Safe multi-sig, just part of this episode. Almost confirmed the transaction, but didn't quite do it. But what does Safe want the Bankless Nation to know?

• 1:29David Hoffman?

  Yeah. So Safe is working on their proposal for a modular, open source protocol, framework for account abstracted wallets, smart contract wallets. We all know that we are now in this world of externally owned accounts, which is just probably the wallet that you have. But eventually we are going to get into being, into the world of 99%, 0.9% smart contract wallets. And Safe is introducing their Safe Core protocol to help with that transition. So there's a link in the show notes. This is for all the devs out there that they want you to check out as their proposed way to move forward into the transition for smart contract wallets. It needs to be a unified standard so that we can all agree that this is the standard that we move forward for. It's unopinionated and they think that it is the right place to go. So if you are a dev working in the world of wallets, there's a link in the show notes.

• 2:14David Hoffman?

  And they also have a hackathon, a dev, dev, another thing for the devs. They have a hackathon in early September for people who want to build on this platform. So there's a link in the show notes to get started with that.

• 2:24Ryan Sean Adams?

  David, as we get in this episode with Vance, I know he's one of our, you know, one of our favorite market commentaries, has a really sharp sense of when the cycles begin, when they end. And so I really want to get a sense of what he's looking at right now, what some of the narratives he's looking at are. I know we've talked in the roll up a little bit about you and preparing your bull market battle station, I think what you call it. I think this for me will be an episode to start exploring kind of what the bull market narratives might be. And that is an important component, I would imagine, of the bull market battle station. What do you think listeners should know going into this episode and then coming out of it?

• 3:05David Hoffman?

  Yeah, I think that's right. I think generally the sentiment on crypto is that there is a bull market afoot. It's not here yet, but we're getting whiffs of it in the air. We're smelling it. So

• 3:19Ryan Sean Adams?

  That was you that time.

• 3:20David Hoffman?

  Yeah, right. And so like, but there's a bunch of narratives as to what it could be. We're starting to get a direction, but we still haven't found the source, the source of the smell, the source of the bull market. And so I think this is kind of the state of crypto Twitter is like, there's all these different narratives. Some of them, multiple narratives might be correct. Some of them might be wrong. And since we are, you know, preparing ourselves for this potential bull market, we need to try and figure out where the source of all the smell is. And so that is what we're doing here today on the show.

• 3:49Ryan Sean Adams?

  We're just gonna be smelling our way through this episode. Guys, we'll be, we'll be right back in just a moment. But before we do, we want to thank the sponsors who made this episode possible, including our number one recommended crypto exchange, Kraken. Go check them out.

• 4:03David Hoffman?

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• 4:48David Hoffman?

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• 5:33David Hoffman?

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• 6:18David Hoffman?

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• 6:43David Hoffman?

  Biggest Bankless guest to articulate the bull case for DeFi. This was right after Vance and Framework rode some legendary assets out of the grave of the 2018 to 2020 bear markets to their all time highs in 2020 and beyond. Link, Ave, Synthetix, these tokens might ring a bell. These tokens were generally massive contrarian bets after the ICO mania of 2017 turned everyone off of tokens. Today, we're bringing Vance back onto the show because of smell, S-M-E-L-L, not an odor, but instead five different assets. The thing of crypto is the question we are asking. We're going to run through each one of these, talk about the merits of each, and also some other bull market narratives that is running around the current crypto meta. Vance, welcome back to Bankless.

• 7:23Speaker 02

  Thanks for having me. Good to be back.

• 7:26David Hoffman?

  Yeah, so let's start with the current narrative that's running around, which is a social phi, because we got to get this one out of the way before we get into smell. Social phi, Friend Tech is now sweeping through crypto, starting to poke through to mainstream, maybe. Overall, like, even if, I don't think anyone really thinks that Friend specifically is the app that's going to take crypto mainstream, maybe you disagree, but overall, like, what are your learning lessons, your big takeaways from this whole Friend phenomenon that's going on?

• 7:55Speaker 02

  Yeah, I mean, first of all, you never know. These things are, like, the stuff that looks like a toy oftentimes ends up being really powerful. And I was on Instagram this morning, and this influencer that I follow was like all about their Friend Tech shares, and this is someone who hasn't been involved in crypto since the last bull run.

• 8:15Ryan Sean Adams?

  And let's just pause, because what that entails is they actually have to do some fairly sophisticated crypto native stuff to get their ETH assets on the other side, right?

• 8:24Speaker 02

  Oh, yeah. Their shares are, I guess, keys are trading now, so they've done it.

• 8:29David Hoffman?

  Wow, wow.

• 8:30Speaker 02

  Yep. And I actually, you know, we, we invested in BitClout and it, you know, I don't, I don't think it worked. I think it's okay to say that. Um, but I, I, I thought it was an interesting idea in terms of, you know, how do you kind of unify the creator economy with a lot of the fungible token action that we saw on chain and, I, I don't think the question is like, can, and I said this before, it's like, it's not like, can you build it? It's like, can you kind of, can you find a legal framework that you can fit it into where, you know, you don't get taken to the cleaners by regulators immediately? And I don't think changing shares to keys is, is probably enough.

• 9:11David Hoffman?

  For context, for the bankless listeners, friends.tech used to call them shares because you're buying shares in your friends. Uh, this last weekend, they rebranded to keys.

• 9:20Ryan Sean Adams?

  Oh my God, I totally missed that.

• 9:22David Hoffman?

  So they're only imagine why, yeah, they're called keys now. No longer called shares.

• 9:28Speaker 02

  But like, I, I, I really am a fan of the dev team racer and, and I forget the other, uh, woman's name, but I think they're, you know, in crypto for the right reasons. I like them a lot. Um, and if people remember, they, they built Steelcam, which was a, a consumer app that was around, I think, earlier this year. Um, so maybe they weren't expecting this to catch fire like it has, but it certainly did. And I think now the question is like, how do you ex post facto kind of stick handle your way around the obstacles that exist? So, you can make this interesting, but I think there's a path, like, you know, this influencer on Instagram that I saw, you know, they were telling their friends and like one thing leads to another.

• 10:07Ryan Sean Adams?

  So what, what's the concern here from a regulatory, am I just seeing the obvious by saying that Gary Gensler would, would maybe think of all of these, um, these humans trading shares and everything's a security? I mean, it, it's hard for me to, um, say that because like Gary just seems to think everything's a security. So of course, I mean, I, it's not even clear to me whether you like, he knows of Pokemon cards, if they're like, instantiated as an ERC20 are, uh, a security or not. Is this the main concern that this is going to run afoul of sort of, uh, SEC as a regulatory body? Is that what you're inferring here, Vance?

• 10:42Speaker 02

  I think that's the question. I'm not a lawyer, so I don't know the answer, but you know, there used to be a a market for the secondary or to trade shares in athletes. So like you get it like a percentage of their contract and that was like highly regulated and existed on a traditional exchange. And so there's like precedent here, but I'm, I'm just. They obviously think that they have a workable framework. I think people on Twitter, you know, there's opposing views. I think the question is who's right and you know, doesn't matter.

• 11:13David Hoffman?

  I think this conversation as to whether or not these things are like, should be considered and categorized as financial assets that need to be regulated. It's part and parcel with this other half of crypto Twitter that's kind of taking a more resentment stance towards friends saying like, great, our, the breakout consumer application that we have is a Ponzi game that allows us to, you know, financialize our friends and speculate on them. And great, this is clearly our breakout apps are all Ponzi's Ponzi Ponzi games, not Ponzi schemes. And so like, there's this growing resentment out of, you know, a decent portion of, of the crypto landscape is that we can't actually make any application that's not about

• 11:52David Hoffman?

  speculation and financialization and something that kind of resembles gambling. Yeah. What's your take about that?

• 12:00Speaker 02

  Speculation and financialization are okay. They're not evil in and of themselves. I think if you think about the definition of a Ponzi scheme, it's literally something that is financially unsustainable by design. These are not Ponzi schemes. These are just tokenizing shares of a person. And if they go up, down or sideways, there's no perpetual motion machine that someone's trying to create. And you know, if, if we could live in a, if we lived on a small island together where we could set the rules. You know, I think this would be something that would be okay with me. I, I think it's something that creators want. You know, their, their alternatives are selling, are selling like, you know, coffee scrubs or like sugar bear hair, you know, vitamins for people to regrow their hair. It's, it's like the options for creators to monetize themselves are actually really shitty, honestly.

• 12:45Speaker 02

  And I think if you got a way for people to incentivize a community and also pay them fairly for what they've contributed or a way to transact with the creator directly, they would want that. And so I don't think it's morally wrong or the speculation is inherently bad. I think we're bootstrapping an economy and painting everything with a wide brush is, is one way to just kind of like delegitimize the crypto industry. And I see that people are trying to do that. And I think it's okay to push back because this is not that frankly.

• 13:11Ryan Sean Adams?

  Yeah, maybe asking kind of another case. So I tweeted this out last night and I said, you know, is friends at tech good for crypto or bad for crypto?

• 13:19Speaker 02

  Good for crypto.

• 13:21Ryan Sean Adams?

  It was, it was 50, it was in my

• 13:23Speaker 02

  Not divided.

• 13:24Ryan Sean Adams?

  My, yeah, you are not divided, but in my Twitter followers, which obviously skew heavily crypto is 55 to 45.

• 13:30Speaker 02

  Wow.

• 13:31Ryan Sean Adams?

  Uh, and 55, yes. So by some margin, but not a lot and 45% no. And I think this comes from the back, Vance of like, um, you know, 2022, which felt like there are a lot of, um, short-term type games. We don't even have to instantiate the, you know, the P word for that, the Ponzi word for that, just short-term games, uh, being played. Um, you know, so people look at this and they see a bunch of like crypto elites getting rich again. Look at them influencers like making all of this money. Maybe there's some resentment there. Maybe there's like a sense of, oh, and I got left behind. I think more broadly, it's, um, to some people in crypto, it feels like straying from the mission. Like, I thought you were here to revolutionize finance. I thought you were here to, um,

• 14:12Ryan Sean Adams?

  bank the unbanked. I thought this was about like a global permissionless money system. Now here you are stuck, you know, on, on a kind of like this, this tourist trap. And you're back to your like JPEG selling shenanigans again of speculating on like shares. And so even within the, the settlers who are still here, right? There's like this sense that,

• 14:32Speaker 02

  Yeah.

• 14:33Ryan Sean Adams?

  Um, I don't like where this is going. This is not where I signed up for. And you could tell them, you could say, well, then just ignore it. Just opt out. You don't have to do it. Like whatever. But, um, I think there's some worry that the, I guess the social layer of crypto is, it gets kind of corrupted by the short-term, uh, games and this kind of shilling and we, or at least in, or maybe we, we get off mission, off focus. What do you think about this?

• 15:00Speaker 02

  I think, uh, I think, I generally think people like to rewrite history in crypto. Um, and like what provokes the immune response from like, you know, crypto Twitter to immediately seize on this thing and throw it out the window.

• 15:14Speaker 02

  I can't say exactly what it is, but I think it has something to do with we are now going into a territory that has historically not been crypto's domain. Like, we're trying to onboard influencers and entertainers and people who are not just the crypto Twitter set onto this. And I think that's a noble mission and it's okay to be upset as well. But I do think ultimately expanding the pie is good for everyone. This is also one of 10 concurrent narratives that we have today. And like, is it my favorite? It's not. You know, it's, I don't think it's like the most interesting. I don't think it's going to scale the most. But I think it's really awesome that entrepreneurs are taking shots on things that are, you know, difficult to understand, complex to build, and difficult to navigate from the regulatory perspective. So, I don't know, I'm never going

• 15:58Speaker 02

  to really, you know, take a poor view of an entrepreneur for pushing the envelope. I just think people need to, if they don't like it, just focus on something else. Life is too short to be upset.

• 16:08Ryan Sean Adams?

  I think one of the most fascinating things about this will be sort of any regulatory reaction to this, because this will be kind of like an acid test, right? And so if the US bans this or does something quite drastic, won't it just move offshore where these, these types of, you know, laws, these securities laws don't exist? I don't know. I think that's going to like force the question even more of like, what is an actual security and what's not? And if you tokenize something, at what point does it become a security? So I'm actually kind of bullish about this as an acid test for answering some of those questions. I mean, does the SEC really want to be in the

• 16:49Ryan Sean Adams?

  business of like, like painstakingly regulating all of these influencer tokens? Like, is that what they want to be spending their time doing? Are they equipped for that? I like it from that perspective, too.

• 17:03Speaker 02

  To be clear, only the crypto industry is adding to the conversation, the regulatory angle about friend shares. The SEC hasn't done anything about that.

• 17:12Ryan Sean Adams?

  That's true. You wait for the video, though, David. It's coming.

• 17:15Speaker 02

  Maybe it has already moved offshore. It's a, it's a very like US condition that all the people who I've seen backlash against this are US-based and they say, no, it's a security. We can't have that. It's over. It's like, well, maybe it's our like, do you know where racer the anime girl on Twitter? Who's Twitter account is locked in private? Do you know where he, she, or they live? Maybe it's in a country where this is allowed. I think it's more of a decision on on a per, I guess, key basis for each person. Where are you based?

• 17:48David Hoffman?

  Sure. Yeah. Okay, so this is one of many narratives that that we need to get through on this show. So Vance, let's wrap, let's start wrap this one up. Social Fi, which is what people are calling this. What are your big takeaways and learning lessons from this friends movement? Like, what, what are you now thinking of that you weren't thinking of maybe two weeks ago?

• 18:07Speaker 02

  Um, honestly, it's a continuation of the recovery, continued interest and continued experimentation of crypto. I think that was the thing that I was looking for is like, you know, when are we going to really get that? I guess it might have been kind of like the NFT, the bit clap moment where we start spreading our tentacles outside of like, you know, the winter's cave that we've built for ourselves. And I think that's basically now, you know, with base with this, like you have enough time that it's starting to happen. Games are going to come soon. I think it's just a continuation of a positive trend that's happened since probably November of last year. I can't believe it's it's been 10 months since FTX blew up. It's crazy, but it's like, we've made more progress and we're a better place than I would have expected at that point in time.

• 18:52David Hoffman?

  Okay, so your ba- your big takeaway is that it's a strong plus one to the idea that appetite is returning.

• 18:58Speaker 02

  Yeah, oh, yeah, it for sure it is. If you hate it or love it, it's just, it's a fact.

• 19:03Ryan Sean Adams?

  What do you guys think of this progressive web app thing? This bypassing of the app store, is that significant to you? Do you think that's a model that will be replicated and useful for us?

• 19:11Speaker 02

  I think so. Many people are are affected. So there's two advantages, right? You can pin a app to your homepage on your phone. Um, that's one. And the second is historically, the problem with getting crypto on Apple or on iOS has been that if you're on the App Store, you owe 30% to Tim Apple. Um, and that's just really hard if you are selling digital goods for a variety of reasons, let alone like what happens when it's a secondary market transaction. With this, you can use Apple Pay outside the confines of the iOS App Store. And you don't have to pay that tax. So like, expect people to move more and more towards this model as a mobile first paradigm, where we don't actually have to deal with the App Store, which is super bullish.

• 19:53Ryan Sean Adams?

  You know, it's the tax. It's also the asking for permission. It's also the gatekeeping. I remember when Uniswap, they were talking about their wallet and it took them, I don't know, like 10 months, a year? To like get through the permissions process to actually get listed in the App Store. And so you could bypass this. I mean, I was amazed at how fast friend.tech was spun up and it was pretty clunky. I mean, let's be honest, like the UX is just like lacking. But they were able to do this because they didn't have to ask for permission and go through like a months-long process of getting listed. It's awesome.

• 20:27David Hoffman?

  Okay, Vance, let's get into the Fang of DeFi smell. We're going to go through each one of these tokens just to, because I actually have not actually heard which tokens are which. I can, you know, speculate, I can guess. But I actually don't know. I don't know if it's ever been uttered before or what tokens correspond to what letter. But before we get into the specifics, what makes you think that we are actually in a place where we can have a Fang of DeFi? Because a Fang implies some sort of, you know, lasting power. It's not going to go away. It's a pretty, pretty stable foundation. Why do you think that we have a Fang of DeFi in the year 2023?

• 21:02Speaker 02

  Yep. So before I, before I get into that, a couple of disclaimers. Number one, when I talk about these, when I talk about smell, I'm talking about the actual products, not necessarily the tokens.

• 21:16Speaker 02

  Not financial advice, not talking about token price. And the last disclosure is we own all of these tokens. So smell in my mind was an exercise in coming up with, okay, you know, bomb went off in July, November of last year. And basically, everything was just completely decimated. The hundreds of Uniswap copycats, the hundreds of stable coins that shouldn't have existed. But you know, amidst all the wreckage of that, you did see that there were a lot of protocols that frankly were generating earnings. They had real traction. Their networks were picking up in activity. And I think, you know, if you look at the dot com bust of 2000.

• 21:57Speaker 02

  You know, what happened to the NASDAQ was very different than what happened to individual stocks. In terms of the NASDAQ just absolutely got crushed. There was so much vaporware out there that basically, you know, it weighed down the index for years. But if you looked into the internals, you saw things like Amazon. You had the Google IPO in 2003. You know, there were enough companies with enough fundamentals where that led the new meta and it led the reconstruction of the industry. And that's basically what I think is going to happen here. And you know, there's amazing projects that are not in smell. It's not to disparage them, but I think in my mind, that is, you know, our core portfolio in terms of like, what do we think is going to be really, from a, from a fundamental perspective, in a traction perspective, valuable.

• 22:41Speaker 02

  Um, and so, you know, smell is Synthetix maker Ethereum, Lido, Link. Um, and you know, that, that's it. That's, that's smell and, and we can go through each of them.

• 22:54David Hoffman?

  Did you, I gotta ask, did you come up with the acronym first or the company or the projects first?

• 22:59Speaker 02

  So one, uh, I came up with the companies first and then I rearranged all of the letters enough times where I was like, you know, there's only one.

• 23:08David Hoffman?

  Smell was the best you could do, huh?

• 23:10Speaker 02

  Smell was the best I could do, basically. Um, and we can go through each of them, but I think, you know, there's, there's a sense in my mind that these are the companies that have the enduring advantage, the talent, the traction. And they're going to kind of lead us out of the bull market or out of the bear market in terms of just having products that work at scale.

• 23:32David Hoffman?

  Sure. Yeah. So let's, let's go through each one. Cause I think each one provides its lessons to the crypto world. So starting with Synthetix, right? Uh, Framework already had a big win with Synthetix coming out of 2017 to, into the 2020 bull market. Why, uh, 2021 bull market? So why, why Synthetix? What signal did Synthetix provide you when you said that a bomb went off twice in 2022? What signals was Synthetix giving you that it was going to be able to make it?

• 24:02Speaker 02

  The the main one is just frankly, the reformation of this new team around the products. And you know, Synthetix was something that always kind of had fits and starts a product market fit. Kane is an amazing entrepreneur. He he took some time off last year, just he he was just frankly burnt out. And this is public knowledge, but you know, he came back, he's re-energized. They have this amazing new core core talented team. They launched perps, they launched V two point five and they're about to launch V three. And really, V three is a culmination of the effectively, since I've been involved with Synthetix, all the learnings, all the products that we've wanted to build. And you can see it in the traction, you know, they're doing five hundred million dollar days, they've got tens of front ends, probably a hundred at some point this cycle.

• 24:47Speaker 02

  And if you look at, you know, last week, there was like a million two in fee income. And it was just people getting blown out, liquidated, playing, paying funding rates. And you know, one of the worst days of the year in terms of price action was as, and I think we're one of the larger stakers, was our most profitable. And if you annualize what they're doing, you know, it basically equates to about fifty to sixty million of earnings that go directly back to token holders. And like, there's the, you know, finding product market fit part, there's the creating value part, and then there's the capturing value part. And Synthetix has done all of those. And if you didn't know anything about crypto and you were dropped in the middle of it and told to point to the profit centers, you'd point to Binance and you'd point to all their perps markets.

• 25:28Speaker 02

  So if we can get one percent of that, I I'm going to be very, very happy with where Synthetix is. And Infinix, which is Kane's, you know, new kind of like quasi centralized exchange, that's just going to be another boon to the volume. And so I think it's a pretty clear story and frankly, all the other perps companies have have died for the most part. So there's a lack of competition.

• 25:48David Hoffman?

  Maybe as we go through all of this, Smell, S M E L L. One, one question I have to maybe help frame this thing is that we have successful apps, successful protocol teams, right? Each one is, we're going to talk about each one. And but the way that you've selected them, like perps and you know, synthetic assets in of itself, is also just a fundamental. Vertical that exists in crypto. And so there's one part is like, we have, you know, five different teams that we're going to talk about. Each one is, you know, being successful. That's why we're talking about them. But then there's also the value landscape that exists irrespective of these teams. And I think Synthetics, you're saying is it's a successful team for all the reasons that you just articulated.

• 26:29David Hoffman?

  And it's building inside of this very valuable landscape called like synthetic assets and perps. Is that like kind of a model for how we should think about these things? Cause we're about to talk about Maker and decentralized stable coins, which, you know, another big valuable vertical in this crypto world. Is that kind of how we should think about these things as we go forward?

• 26:47Speaker 02

  Yeah. So the, the things that I would, I would keep in mind in terms of the two pieces of context that underlie all of these is that number one, these are crypto endogenous markets. Like we don't need to create anything new. The cash flow already exists. It just happens to sit inside the centralized exchanges. And so that's the first one. And the second one is we're riding a tailwind that already exists in terms of the transition from centralized to decentralized. And if you look at last month, it was 40%. Forty percent DEXs did 40% the volume of centralized exchanges. Uniswap did more volume than Coinbase. So like, it's already happening. I'm, I'm not like reinventing the wheel. I'm just lucky to be able to ride with these entrepreneurs and protocols to the promised land. So

• 27:30Speaker 02

  the last, last thing I'll say is there are basically

• 27:35Speaker 02

  2022 was brutal. All other protocol teams, you know,

• 27:40Speaker 02

  Uniswap clones, derivatives clones, stablecoin clones, they're all dead. So like you now have number one incumbents in each of these categories that are poised to just compound their advantage. And that's another theme that we can keep talking about.

• 27:55Ryan Sean Adams?

  Yeah. The, the number one rule of crypto is do not die, do not get washed out, stay in the game. Right? And so if you're still in the game at this point in time, you're, you're doing well. All right. So that's the S. How about the, the M? We got Maker, I think you said. Tell us about why is Maker in the SMEL acronym?

• 28:14Speaker 02

  M for Maker is a new one for us, fairly recent. We've been in DeFi forever. We hadn't held Maker in forever. Just because we didn't really understand the stablecoin model in an era of low interest rates. We thought the expenses were a bit out of control. But Rune is an interesting, really singular figure. And I was always kind of like interested in kind of like his leadership of the project. And you know, I think people have, you know, personal views on whether it's like too much leadership or like not enough. But like, those to me are like personal issues. And like, this is like, it's just like investing. It's just business for me at least. And so I think when I first came around to Maker was just reading Endgame.

• 28:58Speaker 02

  And it was very bizarre, like everyone read Endgame. And I think people's, the most of the reactions I heard were like, this is absurd. AI for governance, having a separate token, you know, rebranding, redenomination, all this stuff. But to me, it just encapsulated a lot of what I was feeling in terms of like, what are the lessons of the last cycle? You know, like, it's redenomination, rebranding is a good way to restart. You know, they have all this USDC in the PSM. If they can redeploy it into treasuries, that can be a base of 150 million of revenue that they can build on. You know, the sub DAOs, having the allocator model, that makes a lot of sense to me. You know, spinning out those things so that Maker can focus on just being a really cohesive core unit.

• 29:42Speaker 02

  That's basically a central bank. And so like, you know, all of those things were really good indications to me that Maker was turning itself around. But also like, you know, I've been historically disillusioned with central banks and that type of thing. And just this felt like an opportunity to create a decentralized central bank. And I thought that was just fascinating. And I think Endgame is the right way to get there. So. You know, those are the things which I really like. It has, you know, I think a hundred and fifty or sixty million of revenue today. Earnings are probably eighty million.

• 30:16Ryan Sean Adams?

  Is that annualized revenue?

• 30:17Speaker 02

  That's annualized revenue and I think it's just gonna keep scaling as they deploy more of the PSM into treasuries, but also their lending business ramps up and they're ramping interest rates, so that'll go up. And subdows are super interesting, in my opinion, like I wanna go farm them, I wanna go figure out what's going on, I wanna go participate in these new, you know, governance experiments. And I think it's a really hopeful view of crypto that I like, and I like that about what Rune is saying. And, you know, I've never met him, but just from what I can understand, like, it's just the right direction. So, you know, it's that and a lot of the capitulation around the token has got me pretty excited. I think when, you know, the best time to buy something is when nobody believes, but you have to know why.

• 31:03Speaker 02

  And there's the why, it's Dawn Chain, it exists, you can go read it. And I think it's, it's just really interesting. It's the first DeFi protocol that'll probably hit a hundred million of earnings. And that's just like fascinating to me.

• 31:16Ryan Sean Adams?

  It's interesting to me because like Maker is the OG of OG protocols. Like Maker was the DeFi app that got me into the space, got me actually excited about it. Yeah, before we called it DeFi. And they're definitely pushing the frontier of like governance, right? They're stretching the governance thing as far as they can. You got kind of the narrative of real world assets and that sort of thing. Not once in your description, Vance, did you mention stablecoins? Like DAI, that's the actual product that they're creating. Does that matter less in this world or is DAI still important? I mean, you were talking about this as sort of a central bank, I guess, maybe implied there is DAI as a stablecoin. But I think the narrative right now is that, basically, you know, PayPal's gonna come up with their centralized stablecoin

• 32:01Ryan Sean Adams?

  and you've got USDC and you've got Tether. And then you had the fall of algo stablecoins and like, you know, people aren't as excited about DAI as they once were back in the era of like 2017, 2018. What's your take there? Is that a factor in this project?

• 32:19Speaker 02

  Uh, I mean, tether is a really bad stablecoin for us as an industry to embrace, in my opinion. It also doesn't have a lot of the utility of something like DAI where you can stake it and earn yield through the DSR. You can go farm with it in sub DAOs. You can go finance, you know, bridge and construction loans like they already do. Like, there's a lot of things you can do with that that don't, doesn't exist today. And non-stablecoin DAI supply bottomed at 1 billion in November 2022. But like, that was a point where I think you could, as a rational person, say that this might die. DAI might die, whatever. But now it's like, you know, funny, whatever. So now it's like 5 billion, it's grown 5X. And so like, there's a recovery underfoot and the question is, where does it top out?

• 33:03Speaker 02

  Where, maker's business model is very simple. How much DAI is there? What is the interest rate that they are earning on it? I think DAI is going to go from about 5 billion today to probably about 15 to 20 billion in the, in the next, you know, few years. And I think rates on that are probably going to be around where treasury bills are. And say that's like, you know, 4 to 5%.

• 33:25Speaker 02

  You know, 20 billion times 5% is a billion in earnings. You know, and, and the DSR will have to be taken out of there and we'll see where that lands. But like, wow, what an incredible, different project. And, and like, I don't think of it, I, I guess it is a stablecoin. I think of it more as like a central bank. But I think the hope is that we can actually like fix the money and help fix the industry. So I think the mission is noble as well. And, you know, the denomination is one hell of a drug, frankly. Like, if you, I, I remember when AntShares rebranded to Neo. That's like super OG, you know, that's like Chinese crypto. People probably are not with me on that one, but, um, like you can really reform communities around this stuff. And if you have a new brand and I'm excited to see what that is, like, I think there's a lot to be excited about.

• 34:10Speaker 02

  And, you know, if you, if you lose money on vaporware, you feel stupid. But if you buy things with fundamentals, and in my view, I can sleep a lot better at night.

• 34:20David Hoffman?

  The inclusion of Maker in what we are calling the Fang of DeFi, and yes, like loosely held, it's still in the early days, of course, but that's to say that DAI is the stablecoin that's won the stablecoin wars. There's, you know, massive stablecoin wars that have existed both in the centralized and decentralized landscape. So are you saying that, or do you think that Maker has actually won the decentralized stablecoin wars? It's earned that throne?

• 34:45Speaker 02

  Oh, I think, I think it's gonna, I think the wars are gonna get so intense in the next 12 to 24 months. Why would you hold USDC if you can go stake DAI in the DSR and earn yield, you know? And so like the addressable market for that trade is Circle's market cap or USDC's market cap, which is like 25 billion. So like, I'm not just pulling this like 20 billion number out of my ass. Like there's, there's real, you know, sub DAOs are gonna add more DAI demand. The DSR is gonna add more DAI demand. All the different projects that are in the Maker ecosystem, but also just like, people want a better stablecoin. I have that distinct sense. And so I think both sides of the USDC ETH pairing, and I tweeted

• 35:26Speaker 02

  this, are gonna turn to be focused about yield. Why would you at LP not be doing S-DAI and wrap-staked ETH in a pair on Uniswap? What, what's the point of LPing if you're not maximizing your yield? Maybe there's something else that I'm missing, but, you know, I, I think there's gonna be a lot of momentum there.

• 35:46David Hoffman?

  Beautiful. Shall we move on?

• 35:49Speaker 02

  All right. The E is, the E is, uh...

• 35:51David Hoffman?

  I don't know if we need to really unpack this one too much. E is Ether.

• 35:55Speaker 02

  Let's spend a minute, though. Come on, tell us more about ETH, okay? I, I think, um, for me, the reason why I, I think ETH is just so interesting is because, I mean, there's a few things. Number one, it's just, it's such a unique network, you know? It passes, uh, you know, 20% of the fees to ETH holders, it burns the rest. Um, it has this Web of L2 model, and I think everyone was waiting for Cosmos to play out with this model in mind, and it just happened to have played out on ETH. And I'm talking to Cosmos teams that are moving to ETH now, just saying like... We've trudged up this hill. We've tried to get our validators going, but it's just easier to launch an L2.

• 36:36Speaker 02

  And I, I, I think, you know, the demand that's sticky to ETH L1 is the DeFi. It's the high quality NFTs. That's not going anywhere. I'm not moving my money on any bridge, absolutely not. And so like you have defensibility, you have this web of, of chains playing out, but you also have just like ETH is the super unique asset for the network and like all friend tech shares are priced in ETH, or I guess keys are priced in ETH, you know, all of the interesting, you know, bridge pairs are, are ETH as well. It's just like the language. It's the asset of just, I don't know, the, it's speculation, but also just like this digital world and digital economy that we're building on chain.

• 37:15Speaker 02

  And I think that's really cool. So I, I don't know. There's not much to, to say about ETH other than its network effects are compounding. The multi-chain thesis has gotten worse, not better. And if you talk to all the TradFi people, they're, they're, it's like, it's like, you know, they're not putting anything anywhere unless it has nuclear grade censorship resistant guarantees. And that's what ETH is. And so like all the real world assets that you see, those are going to ETH and those are just going to keep increasing. And that's like one of our core theses for ETH going forward is all of the tokenized stocks, bonds, assets that exists, or that don't exist yet, those are going to go on ETH. And if you look at the, the dashboard of, of real world assets, there's about 680 million, they're growing 30% per month.

• 37:59Speaker 02

  And so you're probably looking at like 10 billion of fixed income on chain at some point next year. And so that's going to be a huge boon. Each cycle ETH just swallows more real world assets. Last cycle it was stablecoins. This cycle it's going to be fixed income. Maybe in 10 years, it'll be, you know, some crazy ETFs that, that we don't, you don't even know about yet, but

• 38:19David Hoffman?

  You said that the, the, the institutions out there, the big money, the outside players who are coming in to allocate, that they really value censorship resistance. Why, why is that? Can you just unpack that conversation? What, what is the trad conversation around ETH asset and Ethereum the network like?

• 38:38Speaker 02

  I think the conversation is pretty simple. It comes from a place of you're telling me I can lower my costs. I can increase or I can decrease my settlement times. I can offer my product to more people if I put it on chain. Okay, that's the that's the pro side. The cons side is what happens if the chain goes down? What happens if ETH is a or if the underlying token is a security? What happens if someone steals my token somehow? It's all the same questions that you think you'd get from normies, but they're like 10 times more loud just because these people have real money at risk. And so ETH is, you know, it's like,

• 39:16Speaker 02

  you know, are you going to host your company's website on AWS or like some new startup, you know, AWS competitor? Like you're always just going to choose AWS. There's no risk that you can take that would make it worth it for you to go with some other, you know, platform. So that's the ETH effect, basically.

• 39:34Ryan Sean Adams?

  Part of the the implication, I'm wondering if if this is true. So with with FAANG, right? You have sort of the FAANG tech stocks and they're all somewhat on an equal footing, you know, they're all tech companies. You have ETH in the middle of a set of DeFi assets, essentially apps, right? And so sort of like the bankless idea would be that, no, actually ETH is is not side by side. These other sort of DeFi applications, it's even more important. It's like base level. It's almost like buying, you know, a NASDAQ index. It's an index of all of them.

• 40:12Ryan Sean Adams?

  Or it's almost like, you know, betting on Silicon Valley or like, you know, the nation state of the the US or something like this. And and I'm wondering if you see it that way as well, or if you treat this as it's, you know, it's kind of similar to Synthetix or Maker, Link or, or, you know, Lido and the other assets. Do you give it any special status? I mean, like, is it a unit of denominator?

• 40:37Speaker 02

  ETH has special status for us and it also has, you know, turbo special status in terms of our portfolio weighting. But, you know, I mean, your point is right, you know, everyone's bridging assets to ETH. Whether it's Rollbit, whether it's DMT from Sanco Game Corp, like, everyone wants the liquidity, the profile, it's the main stage of finances is where you want to be. And it's the same thing on the L2 side. You know, everyone is creating an ETH L2. If it's a game, you need your own L2. There's, I saw a real world asset L2. I saw, like, I've seen so many. I think one of my questions is, how many L2s are there going to be? Is it going to be, I think, I think like earlier in the year was, my mind was hundreds. Now it seems like probably thousands.

• 41:18Speaker 02

  And it's like, you know, thousands of L2s, each one paying ETH stakers one ETH per day. And that's like a super weird, interesting economic model that doesn't exist anywhere except for crypto. And so I, I think, you know, ETH is, ETH is super well positioned.

• 41:33Ryan Sean Adams?

  You definitely need the E in order to make smell, though, the acronym. So that's why it has to be in the middle here.

• 41:40Speaker 02

  Exactly.

• 41:41David Hoffman?

  All right, moving on to our first L. Does Lido or Link come first and does that matter?

• 41:46Speaker 02

  It does matter. Lido comes first.

• 41:49David Hoffman?

  Why does Lido come first?

• 41:51Speaker 02

  Uh, it doesn't actually matter, but,

• 41:58Speaker 02

  I mean, Lido is just, uh, first of all, the team is just incredible. Like Konstantin, Hasso, all the guys in the Telegram, you know, Seraphim, like all those dudes, like, they're just firing on all cylinders. They just hit 8.3 million ETH today. And they've had like 50, 60,000 ETH input days, which is just wild to see. And you can see it on chain and there's a really good dashboard on Dune. It's just Lido Finance Extended if you want to keep score at home. But, you know, let's say, I think at the end of the year, when we, when we bought Lido last year. My expectation was that by the end of this year, they would hit 10 million in ETH staked. I think they're on board, they're on track to hit or exceed that. And so like, you know, check mark.

• 42:44Speaker 02

  End of next year, maybe it's 15, maybe it's 20. Either way, they are the dominant LST provider. And on their tech roadmap, it's DVT, it's staking modules. It's effectively decentralizing it and making it more and not less eth lined. And I think that was always one of the existential threats is like, would the EF just like, tell everyone to go home at some point? And I don't know how they would do that, but I don't think they want to anymore. And so my hope is that, you know, people like swell, people like Rocketpool, people, you know, like Figment. Eventually they just become node operators on Lido and it becomes less about like this, like one monopolizing factor and more about, we've created this platform for everyone to run nodes on safely.

• 43:26Speaker 02

  So we can make the cost and the overhead of running ETH nodes as low as humanly possible. And I think that's a really noble mission and I think it's really eth line. I think it's really, you know, personally aligned.

• 43:37Speaker 02

  And you can, you can do the math, you know, let's say that Lido has 20 million ETH in it staked at the end of next year. And let's say, you know, just for all intents and purposes, that the price of ETH is 5,000, whatever, new all time highs. So they would have 100 billion in TVL. Let's say yields are five, 5%. They have 5% or they have 5 billion in yields flowing through them and they take a 10% cut of that, which is 500 million. Wow, what an amazing business. You know, lever to ETH, super unique, super defensible. STEETH has its own network effects because it's money, it's used in DeFi. It'll soon replace all the LP pairs. Just like, wow, that doesn't exist anywhere else.

• 44:22Speaker 02

  So I think it's really interesting.

• 44:24David Hoffman?

  How do you think the fee dynamics play out though? Is my big question here, because we have, we have another, like we had the stablecoin wars. Now we have the LST wars, liquid staking token wars. Uh, I mean, everyone, everyone wants to be the winner. Everyone wants to be the monopoly. Everything like that's on the, if you are an LST, you want to be the dominant LST. Uh, and so the thought is that all the fees just compressed to zero. And even under the model of, uh, okay, everything just fits under the Lido umbrella with all their staking modules. How, how do you think about the fee dynamics playing out over the long term here?

• 44:58Speaker 02

  Sure. So just to lay it out for everyone Coinbase charges 25% on CBEith Rocket Pool charges about 12% on Our ETH Our ETH Frax is similar to reith swell is similar to reith when it's done with its incentive period. But like the cost factor that is most predominant for these staking providers is how do you pay your node operators like there's a cost to running nodes and if you don't have good quality nodes with good quality operators, the worst thing is going to happen, which is you get slashed and you lose your ETH. And so like the price can and let me go even further. If you look at the

• 45:39Speaker 02

  centralized staking providers Coinbase, you know, Figma, places like that, they're like a seven to 9% fee. So there's not like there's some like external force saying like, we can do it for so much cheaper. It's like, that is the rate. Like, we've kind of already competed with each other down to what fees are going to be. And if you think about, you know, the really small subscale operators, like the new startups, and we're investors in a lot of them, there's a certain point where you can't actually pay your node operators correctly if you're subscale. And I think subscale in my mind is like anything less than a million ETH. So a lot of these people are going to face, you know, cost pressures in terms of like, how do we pay our node operators effectively while keeping some margin for ourselves? And I think long term, the answer

• 46:24Speaker 02

  for that is that a lot of them build on Lido's DVT and staking module platform. The nodes are already there. You can already source them. You can compete with each other for fees if you want. It's going to be a marketplace and that's how cost pressure will come down. In terms of, you know, where are node operators today with the, with the, you know, it's a 10% fee for Lido, five goes to the DAO, five goes to node operators. Node operators are running probably like a 20, 30, 35% margin business. Like, there's not that much room to cut and keep them high quality. Say, say the price of ETH goes to 10K, they probably shouldn't get five and five, you know, half of the total fee split. They're going to be running hugely profitable businesses at

• 47:06Speaker 02

  that point. That makes no sense. And so like, you know, as the price goes higher, I think the share captured by the DAO probably goes higher. But I don't see any real aggregate cost pressures coming. I just don't think it would be safe.

• 47:22David Hoffman?

  Yeah, yeah, I learned a lot just there. Um, let's move on to link. Time for the last L. Link, why does link be a part of a smell?

• 47:33Speaker 02

  I mean, perennially disrespected, you know, people don't take it seriously. People think it's a joke, whatever. The fact is, is that most of DeFi relies on chain link oracles. And if they were to rip out tomorrow, a lot of it would fail. And they finally launched CCIP, which is incredible. It's a cross-chain messaging protocol. So you can, you know, borrow on one chain, lend on another, you can, you know, cross collateralized derivatives transactions, whatever you want, you can build. And so it finally has this economic model, which is frankly, I've been holding chain link since, man, I guess it's been like six, six or seven years now, but uh,

• 48:13Speaker 02

  they finally have an economic model, which was always kind of what bothered me. It's like, when is staking going to come? When is this thing going to act, look or feel like a L1 blockchain that has some security guarantees? And now it does. And so that's very positive. And they've already got all the oracles integrated. It's just a question of like, what else can they sell? Is it cross-chain messaging? Is it asset transfer? Is it random number generation? Like they've got a lot of products in there. And so I think, you know, link Marines are amazing as well. Don't, don't count them out ever.

• 48:42David Hoffman?

  Oh, they harass us. They harass us a lot. They're gonna harass us now.

• 48:46Speaker 02

  Good.

• 48:47David Hoffman?

  Oh, don't encourage them.

• 48:49Speaker 02

  Makes you grind harder.

• 48:50David Hoffman?

  Okay, so here, here, and here's why. It's like, I, at least from my opinion as to like, why I get scared about link is exactly what you said. Like if Lincoln goes down, if the chain link goes down, like all of DeFi collapses. That scares me. And I actually don't want that to be the state of things. I think that we should be more resilient than that. And so I would like to have some sort of bottom up more emergent solution to some like top down, here is the state of all prices oracle provider. And so that's why I get scared of link.

• 49:21Speaker 02

  I'm, I think it's okay to be scared. I get scared sometimes, but.

• 49:27Speaker 02

  I think it's, I mean, I don't know, like, I'm not, I would never self-delude myself into thinking that it had an economically secure model. And that was the scariest time for me. It's like in the last bull run, we run chain link nodes, we're just getting paid chain link, you know, how like, we didn't have to stake, like, how does this work? Now it's much different. And I think we have reasons to be optimistic about, you know, why it's going to provide a more secure backbone for DeFi. Um, but also do a bunch of other things outside of Oracles. And I think everyone should use Uniswap Oracles as a, you know, range bound indicator of like, are chain link Oracles correct?

• 50:05Speaker 02

  But it's, it's, Oracles are so hard, you know, there's no answer. It's just like, hopefully a bunch of them combined can do something, you know, better than the status quo. And I think Chainlink is moving in a, in a positive direction to make everything more safe, which is good.

• 50:18Ryan Sean Adams?

  So for me, just one observation, and then I have a question for you, Vance. So, uh, my observation is this, when, when you mentioned the age of like linked tokens and how long you've been holding, it struck me that like, damn, these are some old tokens. This is some, uh, boomer DeFi, if I may say so myself. So we've got Synthetix, we've got Maker, we've got Link, uh, Lido is the only kind of newer kid on the block, but this is some like DeFi 1.0 stuff that you are advocating here. So that's my, uh, comment. And then my, my question is, but what about, and I know you're talking about the projects and not the tokens themselves, but now it's our time to kind of inject the, you know, like the token question.

• 51:04Ryan Sean Adams?

  All of these assets, I haven't really looked at, um, the charts of independent assets, but like, I'll tell you directionally, we all know they've all, uh, disintegrated, uh, as denominated in Ether. So my question is, you might be bullish on all of these things and you've given a compelling, uh, case as to why. Why would you be more bullish on these things than just holding Ether? So how about rather than the smell portfolio, the E portfolio, which is just like, just a whole bunch of Ether. And that's been the kind of the, the problem of, I, I feel like DeFi, uh, tokens in general. I mean, look at Maker, it's just flat for the last five years. And probably down substantially as denominated in Ether. Uh, can you, uh, shade in that part of the story?

• 51:48Speaker 02

  Look, I can't get too much into token prices, as you guys know. So I don't want to disappoint too much. The thing I will say is, I see a lot of Twitter commentary about, you know, this asset is never going to break its all-time high in terms of Ether. It's like, well, yeah, no shit, it's down 95% relative to Ether.

• 52:08Ryan Sean Adams?

  It's not recoverable?

• 52:11Speaker 02

  Well, it's like, it would take like, you know, it would take a 20x gain against the ETH pair for it to, you know, break its all-time high. But like, if, like, it can go up 3x versus ETH with, and still be down 70% against it. And in that scenario, you know, you've 3 or 4x your ETH. And so like, I don't know, the myopic, you know, it'll never break its all-time high against ETH. I don't think that's what you're saying directly, but I do see that said a lot. And it just entirely misses the point of relative performance. And I think, you know, smell is just a way of expressing like, there's a lot of different things that are going on that are really positive in crypto. It happens to be mostly around the incumbents.

• 52:55Speaker 02

  DeFi 1.0 dinosaur coins, as you might have said, as you might have kind of alluded to. But I think, uh,

• 53:04Speaker 02

  last cycle was very VC-driven. You know, we invented this thing, Solana, you know, in the last bear market. And, you know, it's, it just happens to be ready, or like, Definity. And these charts are just tragedies, like, they just, they, you know, the holders of these things, the private holders, just sold them into retail and just absolutely eviscerated them. I think it's actually cool that we have the dinosaur coins that have real fundamentals that are, have been up 100x and down 99% and are now kind of back from a fundamentals perspective. And you have enough price discovery that it's not like, you know, there's some guy waiting around the corner to sell his tokens into you. It's more fair, and I like that as well.

• 53:43Ryan Sean Adams?

  Can we call this episode Smelly Dinosaur Coins, please?

• 53:49David Hoffman?

  Okay, so I think the most interesting thing about smell is actually what's not there. I would notice if we're talking about dinosaur coins, where's Uniswap? And that will also open up the can of worms that is the fee switch conversation, which is not just for Uniswap, but I think that's a conversation for many, many DeFi tokens out there that are also called themselves governance tokens. So these conversations and more are coming up right after we talk to some of these fantastic sponsors that make the show possible. Are you a MetaMask user? Well, you're listening to Bankless, so of course you are. The wallet you know and love just got a whole lot better. MetaMask Portfolio is the ultimate one-stop shop for all of your crypto needs. It gives you a holistic view of your crypto portfolio across multiple chains and multiple addresses all at once.

• 54:30David Hoffman?

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• 55:55David Hoffman?

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• 56:38David Hoffman?

  Or use Wallet Connect to connect to any Web 3 application. So you can now go directly to DeFi with Uniswap Mobile Wallet. Safe, simple custody from the most trusted team in DeFi. Download the Uniswap Wallet today on iOS. There is a link in the show notes. And we're back rounding out this smelly conversation with why it's not a smully conversation with a U. God, I hate myself for these puns. Vance, Uniswap, where does Uniswap land in your register and why it didn't end up in the smell index smell portfolio?

• 57:07Speaker 02

  Could have been smell you, didn't end up being smell you. But uh, so I think, you know, one of the themes of smell is that there's just such strong moats around all of these synthetics. It's the front end maker. It's the actual die stablecoin Ethereum. It's, it's just the network of chains and the lendiness of DeFi and NFTs. Steeth as a network effect because it's money and link. It's just because like, nobody's going to rip out their oracles. There's just no shot. We've, people have tried to. Uniswap is different. It's a, I think probably the most vulnerable to disruption in terms of payment for order flow models. And you swap X is a, is a move in that direction. You know, private order flow being sold through a different venue. There's going to be a lot of that.

• 57:52Speaker 02

  That feels like the central difference between the cycle and the last is that we now have a bunch of these more sophisticated financial protocols. You know, companies that are starting to build payment for order flow on chain. And I just don't know how Uniswap is going to compete with that. Uniswap X is also, in my mind, just a different direction for the protocol that probably doesn't have as much of a connotation around the token as, you know, I would like. And so, you know, like, I think if there was to be an addition, it would be probably Uniswap. Um, but right now, I just, I don't have the confidence that, uh, they're going to fend off, uh, all the payment forwarder flow that's coming on chain.

• 58:31David Hoffman?

  Okay. So say I'm Uniswap and I aspire to be a part of Vance's smell index to turn it into the smell you. What do I need to do? Like, how do I, how do I pledge the, the index, the smell index? What do I need to get there, do to get there?

• 58:45Speaker 02

  Um. There's a lot of stuff, you know, it's like, where's the team based? It's still the US. That's tough. Um, you know, what, what does the protocol look like in the face of payment forwarder flow? Frankly, we're only going to know once like Uniswap X really launches and you knew before. Um, and so I think it's just time and like, I just. Uh, one other common theme of all of these of, of smell and, and also I guess Uniswap is that everyone has a plan. Synthetics, it's V3 maker. It's end game Ethereum. It's the scaling roadmap. Lido, it's, you know, DVT and, uh, V2 chain link. It's CCIP. Like they all have like an answer for like, where are we going?

• 59:24Speaker 02

  Uniswap, it, it feels more ambiguous. Um, and you know, there's the company, there's the token, like who accrues what, why? Those are unanswered questions for me. So, you know, love Uniswap. I use Uniswap a lot, but just didn't make it.

• 59:38Ryan Sean Adams?

  Guys, you guys are missing a tremendous opportunity. It's not smell you. It would be you smell. Okay.

• 59:43Speaker 02

  Yeah, that is true.

• 59:44Ryan Sean Adams?

  This is so obvious.

• 59:47Speaker 02

  And then, and then if, uh, if, if Solana really pans out, I think I reserve the right to append that to, you know, or it's smells.

• 59:54David Hoffman?

  Smells.

• 59:55Speaker 02

  You smells. I don't know. We'll see.

• 59:58David Hoffman?

  It's a, it's a Solana potential contender here.

• 1:00:02Speaker 02

  I think it's, I think it's interesting. I think it's a model for a chain which doesn't involve 100 L2s. I think you could argue the L2s are like leaking value from Ethel one. You could also argue that they're doing things Ethel one could never do. Solana, it feels like those two things are simpatico. So I, I think it's interesting. And if you look at teams like Gito, that are just showing up in an environment that's just a barren wasteland and like just eating glass all day, every day. That just feels like it doesn't matter what chain you're on. If you do that long enough, you're going to be successful.

• 1:00:33Ryan Sean Adams?

  I've never, I've never heard you say such good things about Solana. That's, that's, uh, that's new. That's interesting.

• 1:00:38Speaker 02

  I'm, I'm, I'm, I have ideology around crypto and I think it's noble and important. And I want to be in this industry for the rest of my life, but I'm open to new things. I'm not myopic.

• 1:00:49David Hoffman?

  Yeah, I share, I share these sentiments. Really just to hammer out this last little bit about the Uniswap fee switch. How do you think about fee switches? They're off generally, but they could be on. Is that like, how do you even think about and consider this when you make a evaluation on a token?

• 1:01:07Speaker 02

  I think there's going to be an amazing time to turn the fee switch on. When regulatory clarity arrives in the United States, and I don't think that day is too far off. But I don't think that day is today either. So that's the main calculus. It's like political. And I really hate thinking about politics in the context of like investing. I like thinking about it in the aggregate because I find it fascinating, but I, I just, I can't bet on things that have total, you know, connotations to them.

• 1:01:35Ryan Sean Adams?

  So Vance, as we close this out, there's a ton of other narratives that we could talk about. We could talk about real world assets. We could talk about ETFs that I think we all think are, are coming. We could talk about, um, you know, gaming in Asia. We, we could talk about, um, the Bitcoin halving events. All of these things seem to be in, in the future and you've got a bunch of them listed in the tweet. But I want to ask you kind of the, the overarching question here. Do, do you think that we are in the early phases of a bull market? I mean, is, is it, um, is it too early to call that? Or like what phase of the market cycle do you think we're in right now?

• 1:02:14Speaker 02

  I can't, I can't, I can't answer that, but I'm optimistic that the technology is improving and will rapidly improve, you know, in the coming years. And I think crypto is inevitable, and we're kind of just stewards of it to some extent. And people come and go. There's like been a revolving door of main characters that have been blown out over the years, who once were our standard bearers. And I think it's just going to continue to be the same. And the goal is to not be the main character. The goal is just quietly shepherd the industry to where I think it's going to go. So is there a bull market, bear market? I have no idea. I think we're coming out of a bear market. I'm not sure what we're headed into. I think it's going to be better than the past couple of years. That's for sure.

• 1:02:51Ryan Sean Adams?

  Well, congrats on never being the main character, at least up to date. That's, I, I, I hope that you will remain a supporting actor, Vance, and we appreciate you always coming on Bankless.

• 1:03:01Speaker 02

  Just cameos, you know?

• 1:03:02Ryan Sean Adams?

  Yes, cameos. Awesome. Got to end with this, of course, risks and disclosures. Vance mentioned his disclosures a little bit earlier about these smelly dinosaur coins that he holds bags in. I don't think-

• 1:03:15Speaker 02

  We also hold, hold some smelly dinosaur tokens.

• 1:03:18Ryan Sean Adams?

  We hold these things, especially the E and smell. If you want to see all of our disclosures, of course, they are always available at bankless.com/disclosures. Just a reminder, Dave and I are long-term investors. We're not journalists. We don't do paid content. There's always a link to all of our disclosures there in the show notes. And got to end with this. Crypto is risky. You could lose what you put in, but we're 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.