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bankless_DEBRIEF_ETH_in_2024

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Speaker A: Hey, guys, welcome to Debrief after our ETH in 2024 bull panel with the three panelists. David, good panelist selection, I would say for sure. Yeah, because you had a taste of the bull, but it wasn't like three kind of people saying similar things to anthony. Sasana. You had three people agreeing. They were all bullish. It struck me for different reasons.

Speaker B: Yeah, that was kind of cool. I liked that, actually.

Speaker A: Yeah, I really enjoyed that. I was not expecting that. I think they all had some really good takes and some pushback. So it was like a bull episode, but like a sober bull episode, which is like my favorite kind, I think.

Speaker B: Yeah, yeah. I think my biggest takeaway, and this has been, like, my opinion for a while, is like, ether and Ethereum, the narrative and understanding of ether the asset, the understanding of Ethereum the protocol and its vision for itself and what it can do is extremely complicated and hard to wrap your head around and takes a while to understand and to its detriment when it comes time for, like doggy coin season, like, no one really has the patience or the time or the fortitude to really like, go through and understand every single aspect that makes up the Ethereum version of its, its articulated version of the future, both for the asset and for the network. And so it's complicated and it's not simple, whereas there are much other assets that are just so much more stupid simple. They're like, oh, I understand that. And now I'm on that side, sas, that asset side.

Speaker A: There's a lot to talk about. I guess one thing I want to throw at you is this idea of Ethereum is at least this bull cycle for the last three to six months, let's say, has not been the Internet casino or the crypto casino.

Speaker B: It is no more.

Speaker A: It's not where the casino, not where the, and like, I think Ethereum expected, like the Ethereum community expected this to shift to layer twos, but some of it shifted to layer two, certainly. But over the past three months, let's say it's actually shifted to alternative layer ones and particular Solana. And there's like people saying, well, Solana is the casino. And so, like, where, where does Ethereum, you'll fit in this. What's, what's your reflection on that? Is it, is it fine for eth to miss all of this casino type of value accrual, these speculative games, all of these meme coins?

Speaker B: Yeah, like this is kind of how I've understood Solana. And it's like rise in the last, like half a year or so. It's just like, it's just the better casino. It's just what it is. And I think there's. We made a couple of different contrasting points on that episode. One is like, toy versus prime time, right? Casino versus institution, high school versus college. High school versus college, right? Yeah, no, that's exactly right. I. And. And then also inside crypto versus outside crypto and inside crypto, crypto, twitter, crypto narratives. The rotators, for example, they're playing the game. They're playing the crypto game, and it's a game that's played once every four years. It's harvest season, and so there's only so much time to go around to, like, have your gains. And that's a very much an inside crypto phenomenon. It's very much a casino spectacle.

Speaker A: Fastest way to make incredible, the fastest.

Speaker B: Way to make money. Right. Uh, and it's like, not, it's not the, it's not the mature version of this industry that we all expect to eventually export to the real world. And so it's the inside high school version of crypto, whereas Ethereum has always had its eyes on the. The largest, longest horizons, the most distant version of the future. And so, yeah, it's given up the casino because we had that last year, right? That was Defi summer or last cycle. I mean, that was Defi Summer. That was the NFT mania. And that was just like, I think every single chain must go through its casino cycle. And Ethereum's casino cycle was last year, and Solana's casino cycle is this year. But now it, but now, like Ethereum and this whole layer two strategy, which is invisibly sneaking your blockchain into corners of the Internet, wherever it can fit. That is the institution. Mature side of things. That is the b two b side of things. That's the companies building their own layer twos for their users. That is the long term time horizon. That is Ethereum, the settlement network. That is ethereal. And it's not sexy. It's. It's slow, it's boring. Uh, it's. I'll call it mature. Uh, but that's the game. That's the game I'm here for.

Speaker A: It's definitely. It's definitely a different game. And, and I think. I don't think it hit me as much. So I've been inside of kind of the bubble, I would say, of, like, understanding layer twos and Ethereum's pivot from an execution layer to like a settlement chain to, like a chain for other chains. And like, I've understood that that pivot for like, years. But new entrants are coming to crypto and they're being deposited onto Ethereum and they're like, WTF, this sucks. Gas fees are too high. Like, it's expensive. Whenever I try to bridge that cost me money. And where do I bridge to? Like, I don't really know. And compare that to an alternative layer one to a solana. And by the way, I think there'll be a long term, this cycle will have a lot of high TPS competitors to Solana. Like, oh, yeah, go look at avalanche. Those charts are, those charts are nuts, right? Like, say, like Monad. All of these things will be layer ones that compete for this narrative as well. Solana does not have dominance over this fast layer one narrative, I don't think.

Speaker B: But anyway, monopoly of being a casino.

Speaker A: It'S a painful pivot for ethereum because it's pivoting its roadmap. This is the layer two pivot, essentially, of execution is going to be in the layer two. I know a couple of years ago, a few years ago, when I first realized that this was the direction Ethereum is moving in, I was like, oh, there's going to be some pain ahead. Gonna be some pain. Like, we're gonna feel that at some point in time. And then it felt like that pain kept getting deferred. And I was like, okay, well, maybe. And here's kind of the pain is basically like, everyone's used to coming onto Ethereum main chain, and they have to get used to the fact that they're gonna have to move locations, right? So, like, guys, you live in Manhattan, you have to go move to the suburbs where it's like, land is cheaper and like, there's less traffic. You're gonna have to move to a layer two. That's going to be painful. Well, it felt like we didn't really feel that pain so much. It felt like, oh, this will all be seamless. They're like the, well, we're feeling that pain now. I think the Ethereum narrative is feeling that pain because normies are coming to crypto for their first experience. And why? Because prices are pumping. So of course this is the time they come and they're not landing on Ethereum as an execution layer. And here's the Ethereum community being like, well, you should go on Ethereum. What are you doing? You should be on a layer two anyway. And they're like, what? What is that? I'll just go to, I don't want.

Speaker B: To be on a layer two, I want to be where the action is.

Speaker A: Yes. And so I think the resurgence of, like, because that is the plan. It's not like I see Twitter comments being like, ethereum's really got to fix its scaling. And what they mean is, like, it has to become like Solana and it scale out its base layer transaction per second. I'm just like, that's not what's happening. No, no, no. You have to go to a layer two. But, like, that is bad user experience, and that is really costing Ethereum on the narrative side. So kind of the pivot is, I think, going into 2020, moving from the high school game to the college game. The college game is you are competing to become the best settlement layer for the world and, like, a very competent data availability layer and basically a chain of chains. Right? And you are competing in the monetary premium game, the Internet bond game, at all new levels, and you are exporting ETH as a productive asset everywhere you can. And I think the beauty of this is if Ethereum pulls it off, it'll have an incredible moat because it is the only chain that other chains settle to. Okay? And, like, pay, like, on Ethereum, other chains pay, like, buy your block space. No other chain has that. Okay? So they're way ahead there. And I think they'll be way ahead in exporting their validator set for productive yield and kind of like Eigen layer and exporting ETh as an Internet bond. And I think that is the new narrative setup for 2024. But it's not. I don't know that it's going to be a fast money narrative setup, David. It's not.

Speaker B: It's definitely not.

Speaker A: It's not going to be a degen setup. Right?

Speaker B: Ethereum's pivoting to b two b. And so it makes perfect sense that the b two b chain, that's meant to be invisible, that's not meant to serve consumers. The layer one has a shit narrative on crypto Twitter because everyone is like, well, this doesn't make any sense to me. Like, yeah, I bet it doesn't. Like, that's the point. And so inside of the narrative games of crypto Twitter, that that outcome makes perfect sense to me. And we're also in that, like, early phase where just like, we're the b two b chain, but we only have a few b's to be to. And so, like, that, that is also just like, it's a, it's the interim phase. It's like a little trough, uh, between, like, we had massive success last cycle, and we're still kind of working on our BD side of things this cycle.

Speaker A: Well, I think I underestimated the extent to which crypto assets are just purchased because, like, people go to that chain and then buy the native asset of that chain. Right? So, like, what. What could happen is if we have fewer people coming to Ethereum as their first experience, because they won't. Because that's kind of a whale chain and a chain for chainst, and they go to another alternative ecosystem, like Solana or something, they'll just buy the asset of the ecosystem. Why? Because they're using it. They think it's cool. They buy what they're using. They don't look at the fundamentals. They're not looking at what's the p e ratio and how much, like, block space. Is this asset actually profitable? No, they're looking at. They're using the chains. They buy the asset, and then they're seeing the asset number go up, and they're getting even more bullish. And so that, that compounds, I think. I don't think I fully have weighted that into my, like, a calculation of things that could happen, by the way.

Speaker B: I don't know how much capital that actually is, though, in the grand, grand fullness of time.

Speaker A: I don't know. Neither do I. And by by the way, I also think that could happen to layer twos as well, which is why I've not, um, weighted that pretty, like, very highly in my calculation. Right. Like, right now, as we're recording this debrief, isn't optimism, like, close to optimism.

Speaker B: Highs, touching all time highs? Which is, like. It's funny because, like, the entire narrative is on Solana, and Solana's at $90 when it's all time high is $250, $280 or something. And optimism, is that at its all time highs, but that no one's talking about it.

Speaker A: That's what I mean by, like, I'm worried the execution environment is not defensible because you have. You have one settlement, a layer, right? Just one ethereum. No one else is, like, competing in that domain right now. You have so many different execution environments. There are so many, and they are all competing in this game to bring transaction fees down to zero, basically, and to deliver some sort of profit value accrual for their token in some way. I think that plays out over the long. Like, we might be in this part of the cycle where we just have an alternative layer one pump, and now it's going to move to, like, a whole bunch of layer twos. Or like, you know, Monad's going to get it and say it's going to get it. Like, it could be that part of the cycle and it's just not going to sustain. I don't know. It's. It's hard to know when you're in it.

Speaker B: Yeah. Um, two things that I want to unpack out from that episode. One is one really quickly, maybe you want to touch on it, too. Uh, credible neutrality is so underrated. So underrated. Uh, and I think preach, yeah, incredible neutrality. It's the fairness of the foundations that you build on. Is the foundation you are building on key making anyone in specific, or is it pretty equitable and pretty fair? And like, Ethereum unequivocally has credible neutrality as a smart contract platform. Uh, and that is what Mike was talking about when, like, and why Ethereum as a b, two b, a chain to chain sales platform works block space sales. Right. Uh, and that's, that was, that's a very crypto native thesis. That's a very crypto native, like, philosophy, philosophical take. It's not sexy. But, like, Vitalik wrote this piece about, uh, credible neutrality. Our version of this is the protocol sync thesis. Uh, it's something that we've based our opinions on for a very long amount of time. You're muted. Uh, and I encourage everyone, by the.

Speaker A: Way, there's an episode we did with Vitalik where we touched on credible neutrality. I think that's the title's legitimacy, one of my all time favorite bank canonical episodes.

Speaker B: One of the best.

Speaker A: Like, if you have not caught that because you've entered bankless earlier, go look up the legitimacy episode with Jimacy, with Vitalik.

Speaker B: That episode, that art article that he wrote to me was like, oh, Vitalik is putting names on forces. That is an all time first for humanity. He just named that force. And, and maybe other people have done it, but he did it so well. And in a modern era with modern context. And, yeah, it's just like, it's something that underpins crypto, I will say it's, it could be one of those things that, like, the early adopters of crypto really care about. And the late adopters of crypto is just invisible to them. They just don't see that they're, like.

Speaker A: Invisible but still important or invisible, and it becomes no longer important.

Speaker B: Invisible becomes no longer important. And kind of in the same way that, like, decentralization, like, the people of the world who care about decentralization, like crypto probably has most of those people already, like, we've already nerd sniped those people. And so like, the, for the power of credible neutrality, maybe it's wanes over time, but goddamn, is it like one of the core reasons why I'm here?

Speaker A: Well, that was my question at the end about, hey, what if the new generations don't care about decentralization? And like, the consensus answer from the group was, they probably won't. But over time, the decentralized protocols will be the survivors. And so in the long term iterative game that we're going to play, decentralization will win whether the masses care about it or not. That is a more fundamental than, it only matters if people care about it as saying like, no, no, there is an underlying, like, truth to like, anti corruption and decentralization. Credible neutrality, irrespective of whether the kids care about it or not, and they'll learn to care about it over time, or the systems that don't respect these principles will get wrecked and the systems that do and enshrine them will survive. I think there's some truth to that. But on the longer timescale, I think.

Speaker B: The Solana response to that would be like, credible neutrality. Like, what the hell? You eth holders who bought eth cheap just want us to build on your platform and you guys are the kings because you were able to buy cheaper early than everyone else and to like, and this is one of the coordination defection forces. Oh fuck.

Speaker A: We could just do this without your camera. A lot of people listening on the podcast, David's camera just went off camera just, oh, we're back with a new camera.

Speaker B: We're back with a MacBook camera. Yeah. Cause it's cold as shit in my house. And so I turn on the heat and then like actual Cameron. So they camera. Anyways, what was I saying? Oh, yeah, so that, so that critique of just like, yo, you don't get, you're not the incredibly neutral platform because you guys all like, you just want people to build on your platform because that's the asset, his only a defection incentive. As in like, okay, so then therefore Solana, because as soon as Solana becomes expensive, then you're the new, like, King, and then you want people to build on your platform. Platform. So it does actually matter what the fundamentals are of just like ETH proof of work for the first five years. Oh my God, I'm so glad we had that more than five years, right? The immaculate ico, a very real thing. Vitalik, who sold like 80% of his ETH at $7 because he doesn't care about money. And then he continues to live in hostels for as he goes and travels around the world. Like, that is important. That is the closest thing to the actual bitcoin immaculate conception that we could ever get that matters. And businesses who are building on crypto, they're going to see Solana as, like, a company script, and they're going to see ethereum as, like, the decent, decentralized, open source project.

Speaker A: Less company script, more community money, like, on its trajectory towards becoming a base money. Like, it's fascinating to me to hear how pissed off Jordy was about the all in guys, like, joking about how cheap they purchased Solana in these, like, private deals.

Speaker B: Well, that was super cringe, dude.

Speaker A: Well, it was, but also, Jordy heard that and was like, what am I doing? Like, this is not a stable store of, like, wealth. If the funny thing is, is like.

Speaker B: Why is Solana pumping so hard right now? It's like, well, VC's all bought the hell out of the dump. Like, out of, like, lower 30, maybe.

Speaker A: Yeah. Is that why? It's fundamentals, man. I don't know.

Speaker B: Like, all the VC's are shilling Solana.

Speaker A: Yeah.

Speaker B: Because that's where the gains are to be made.

Speaker A: Yeah. I do think the take about, like, your take about all layer ones kind of suffer the same fate of the people who purchased low become kind of rent extractors for the beginning. So that kind of, like, nullifies the argument across all of them. Reminds me of the pattern of fragmentation. The very frustrating thing about the fragmentation argument for, like, basically an alternative layer one, like, Solana being like, do Solana, because it's not fragmented. It's like, well, that only works if everybody's on Solana.

Speaker B: On Solana, your fragmentation, you're still. You're still far worse.

Speaker A: If we have ethereum, all of these layer twos, cosmos chains, we have fragmented chains.

Speaker B: Can I introduce you to Monad?

Speaker A: Right. So, like, that argument is so, like, short term unless your chain becomes the king and wins. But, like, no, no, no, we want many chains.

Speaker B: I don't know if Solana wants many chains. There's definitely a growing Solana maxi out there.

Speaker A: Well, then that's. That's. Yeah, that's like a challenge. Then I think if you are the king, you have king type problems. So these things will come back to by Chiyo.

Speaker B: Okay, but that was only the first. The first of two things that I want.

Speaker A: Yeah, give me your second.

Speaker B: Restaking. Restaking is going to be the theme of ethereum. Yeah, I won't liquid retaking tokens.

Speaker A: Specifically, what do you think of this? This idea? I'm floating an idea by you. Okay. Ultrasound money meme has had its day and was incredibly effective. And all of the metrics behind ultrasound money, if you go to, like, the ultrasound money website, are absolutely essential in terms of understanding the monetary policy of ethereum and cook, like. But the meme itself of ultrasound money has had its time, has had its season, and the new meme becomes. You transform all of those metrics, that data to, like, Internet bond, ethan, Internet bomb, and you add all of the restaking kind of properties, and you talk. Because ultrasound money was, at its root, memetically a reaction to the bitcoin is sound money type of, like, it was all.

Speaker B: It was all about being antagonistic to bitcoin.

Speaker A: We don't need that crutch anymore.

Speaker B: We don't. Yeah, we already won. I feel like even though bitcoin still.

Speaker A: Has a big theory, one and, like, above two k. It already won. Above, you know, $250 billion. It already won. So now you move into, like, that was the high school meme. Now you move into the college meme, which is, like, Internet bond.

Speaker B: I was gonna say the same thing, except I was gonna say, like, college. I was gonna say college into, like, young adulthood. Like, is getting its first drop. It's getting. It's. Ethereum is getting its first drop. It's like putting on a suit. First job. Yeah, first drop.

Speaker A: Job. Okay. I think drop. I was like, what?

Speaker B: Drop? Yeah, yeah. It's getting his first job. It's shedding its frat boy memes.

Speaker A: I don't know. Above a trillion, you graduate college in the billions. I feel like we're college students, but.

Speaker B: We all just predicted a trillion dollar network by the end of this year. Like, it. Excuse me. Excuse me. It needs to go get its first job, and so it has to put on a more polished narrative.

Speaker A: Resume. Work up that resume. Cook up that resume.

Speaker B: Yeah.

Speaker A: So what do you think? As bankless has played a role in memetic forces, I will not say. I will not give us credit for being the originator of all a theory. Memetic forces.

Speaker B: But as somebody had a role in most of them. Yeah.

Speaker A: Smiling right now. As somebody's played a role in some of those memetic forces. What do you think of Internet bond? Jordy? Hated it.

Speaker B: I've always loved the Internet bond. I've always thought it was great. Me too.

Speaker A: And that's something we've talked about. I think it just becomes much more real when you start to get into restaking, and all of these apps give me a flavor.

Speaker B: Ether, the bulk case for ether to summarize, everything that we've talked about, bull case for ether's yield and to what degree that eigen layer and wreath and increase its native real yields beyond just the native yield of the Ethereum blockchain is a, is a proxy for how bullish you can be.

Speaker A: It's fascinating because then ether becomes the chief export of Ethereum. So Ethereum is exporting a pristine, decentralized block space, basically, right? Like, that's its export for settlement and for Da. Okay. But it has some other DA competitors in the game, and settlement won't necessarily have, I think settlement will be an incredibly popular, high demand type of like, function of block space. But then the other thing it's exporting is its validator set and its yield to the world, and it's exporting ETh. So like, the shift becomes actually almost like bitcoin or David, is this weird? Or like the shift becomes like Ethereum to the market and to participants. Right. Because you're not actually going to be living and breathing on Ethereum, the network, like, you're going to be an arbitrary optimism or ZK sync or IMX, not even know it. The, um, how the market, how the world experiences Ethereum will be primarily through ether, the asset. They'll experience that through all the various, like, yield. So it becomes more about the money or the Internet bond and less about the network itself, because the network itself becomes a whale chain b, two b type network. Yeah, that's an interesting shift.

Speaker B: Some, one episode I want to do sometime this year is about how insecure the Internet is. And this is not even a crypto. This is just like, yeah, the Internet is an insecure place, and it's not fit for crypto. And actually, I kind of think crypto as a necessity is going to have to make the Internet more secure. As we are getting, like, russian civil armies impacting the United States election, as we are getting, like, hacks are becoming more sophisticated, phishing is more sophisticated, and now everyone's starting to have bare assets, the Internet's going to need to become secure. And I'm curious how ether plays a role in that security. Like, how can the bond, ether, the.

Speaker A: Internet bond for Internet security, for Internet.

Speaker B: Security in one way, shape or another? There's, there's a there there that I want to go tap into.

Speaker A: Well, the, of course, the thing that really propels, uh, prices and markets during bull markets of the season.

Speaker B: Yeah.

Speaker A: Is speculation. Speculation is dj and type of behavior. Right. And so there's a question to me of whether a theorem is kind of, like, fully put on the suit, and it's just not going to have upside exposure in that d gen behavior. And then maybe you're looking at, like, the six to eight k type of range as far as highs. Or there's also the question, I think, a source for degen behavior on Ethereum, of course, it's staking. Definitely layer twos. So layer two coins aside of re staking, basically, it's just like, look at all. I'm not encouraging this behavior. Bankless nation. Just. Just so you know, do not, like, your ETH should be sacred. Your eth should be sacred. Like, be very. Okay. If you yield chase in 2024, make sure you're doing it with a slice of your eth. Okay. Of, like, the risk side. Anyway, not financial advice, but I think there could be the opening for dj and behavior in all of the, like, take your eth, put it in, like, eigen lair, and get 120% per year. 300% per year, plus an airdrop. Like, okay. Crypto, Twitter.

Speaker B: Like, game on. Yeah, yeah.

Speaker A: Enjoy. Enjoy that, I guess. Like, again, I'm not encouraging this djen behavior, but, like, it's a little bit.

Speaker B: Of a Moloch trap. You know? It's kind of. It's gonna happen no matter what.

Speaker A: Yeah. Did you. Did you read chaos? Remember chow? We had him on talking about, aih. He wrote a post called degens are pioneers, extolling the virtues of degens, basically.

Speaker B: Oh, yeah, sure. Yeah. The furthest west. Yeah, that's right. That's fair.

Speaker A: I wrote a counter to that, though, which is, like, I agree with that. But also, if you hold someone else's assets, if you have their trust and you are risking their assets.

Speaker B: Oh, yeah, sure.

Speaker A: Yeah. If you are do Kwan or FTX, like SBF or Alex Mashinsky, Djen is not cool. Like, you are not a pioneer. You're.

Speaker B: No, you're djen of your own assets.

Speaker A: Yes.

Speaker B: Not someone else's assets.

Speaker A: The problem is I find that. That, like, in this promotion of Djen culture, it doesn't get translated to, like, whether, like, so Suzu or do you remember. Remember what? Do. Kwan used this so much, he was just split, basically, like, encouraging the Djensh and the populist rhetoric.

Speaker B: Like, I just don't want to really lean into that. He was like, I am your savior. I am. Like, I will save you from your nine to five, blah, blah, blah.

Speaker A: Just. I think that's gonna happen again in 2020. I'm not looking forward to it. Yes. That's an aside.

Speaker B: So you remember when we ran into Danny Sessa for the first time? You know how that happened? This is one of the things I'm the most proud of, actually.

Speaker A: People don't remember Danny Sesta. David. Maybe she'd give them a. That was a flash in the pan.

Speaker B: It was very short. Yeah. It was like. It was like a kind of a terra unback, stable coin. And his prices, the abracadabra. There's, like, a whole ecosystem. There's a bunch of abracadabra. There's bell, there's wonderland. They're all just, like, going up. And I've always been a makerdao supporter, and I can't remember what the hell I said, but it was something about, just, like, me being bullish or maker is, like, the most underappreciated, kind of in the same way that, like, maker just graduated from high school, went into college, and then try to get his first job really, really early. Maker's just ahead in maturity. That's why I've enjoyed that, like, process for maker. They've always been, like, looking at the horizon, and I made this tweet that was like, mKR is the most underappreciated, and one of Danny's projects was a decentralized, stable coin, but he was in his populace arc, and so he responded to that tweet like, oh, that's why you've never had me on your banking podcast, because. Yeah, because you and the VC's just love each other. But he was, like, hew in the suits. He was implying that MKR is, like, full of suits, which is just fundamentally false, but he was making up narratives, and I had no idea this person was. So I just. I just responded like, I don't have really know who you are, but you don't. You seem unpleasant, so.

Speaker A: And you got invited him attacked.

Speaker B: Of course I'm not inviting you on my podcast. And, like, even people like Anthony Sedano, Eric Conner, they're like, oh, that's weird that you didn't know who Danny Sesta was. I had no idea who this guy was because it is the djinn side of crypto, and that's not my vibe. Like, between you and me, everyone is like, oh, David's the dgen one, but between us and the rest of crypto, David's.

Speaker A: So, Boomer.

Speaker B: We're both pretty boomer.

Speaker A: Yeah.

Speaker B: And. And, like, I just got so much shit for not, like, knowing who Danny Sesta was his army came after me like, he was in vogue because he had made a bunch of people a lot of money. And, like, it was one of the things.