Ryan Sean Adams (2:10)

Thanks for doing that so we don't have to read all these predictions. This is like a best of the Predictions. All right, now before we get into these predictions we know next year is going to be a big year for stablecoins regardless.

David Hoffman (2:21)

I don't care what anyone's one of the predictions.

Ryan Sean Adams (2:24)

I don't care what anyone says the prediction I'm making and we should thank our friends. As a stablecoin maker over at M0, what are they up to?

David Hoffman (2:31)

M0 is a pretty unique on chain stablecoin architecture design if you will. They separate people from issuing the money from people validating the reserves. So there's like the 1 meta architecture of m0 and then there are all the brands issuers issuing stablecoins. The current system of stablecoins is fragmented. Just you know USCC is siloed from USCT which is siloed from the next stablecoin and M0 has come up with a simple solution. So if, if the general predictions that everyone agrees with in this episode that that stable coins are going to just continue to expand, M0 should be pretty well positioned. If you want to learn more about m0bankless cc/m0 is the place to go.

Ryan Sean Adams (3:14)

Let a thousand stablecoin experiments bloom. I think that's what M0 is up to. All right, predictions. David, give us the you said highly congruous predictions. And are these predictions that $10 word right there? That's a $10 wor. These are the predictions that sound really similar across all of across your meta.

David Hoffman (3:32)

Analysis of all of the predictions. Consensus predictions correct.

Ryan Sean Adams (3:35)

All right, what are these?

David Hoffman (3:36)

Give us the first stablecoins shift from just basic crypto plumbing to real payment rails. I think we started to see the beginnings of this in crypto and maybe think people will think local. That was what happened this year and I wouldn't say that's what happened this year. They are not yet real payment rails. We are still building out the infrastructure infrastructure for real payment rails. The broad strokes of everyone's prediction is that the real payment rails comes in 2026 and so here are some quotes from four of the different predictors. Galaxy stablecoins will overtake ACH in transaction volume.

Ryan Sean Adams (4:10)

Oh wow.

David Hoffman (4:11)

Yeah. Large coinbase institutional we expect to see growth in cross border transaction settlement remittances and payroll platforms. Pretty broad A16Z stablecoins will fundamentally shift to the foundational settlement layer of the Internet. Very A16Z of them probably was written by Chris Dixon. And then lastly bitwise perhaps the most specific and interesting prediction Stablecoins will be blamed for destabilizing an emerging market currency. At least one is what they are Predicting, which is a certainly just a byproduct of the growth, of the growth of dollar payment.

Ryan Sean Adams (4:44)

Rails on the Internet, stablecoins being a killer app. And it seems to me, on the consumer front, I'm not sure that many consumers actually notice what's under the covers here, all of these patterns.

David Hoffman (4:55)

Yeah, yeah.

Ryan Sean Adams (4:55)

I guess if you're in a regime that's being disrupted, that's being destabilized, you'll certainly notice that. But in the developed world, you may not know you're even using stablecoins. It'll be fused into the experiences that we have with our crypto wallets. I mean, an example of this is just the Coinbase wallet, right? You could send money to anybody under the covers. It's usdc, it's a stablecoin. But it feels just like Venmo. I mean, Venmo adopting stablecoins too. I guess it's all the same and you won't really feel the difference, except transactions go faster, lower fees. Maybe we start to pay for things in stablecoins as well and bypass Visa altogether. All of that seems to be poised on the horizon for 20, 26 and beyond.

David Hoffman (5:41)

Yeah. For the average consumer who just still will not interface with stablecoins, they can still be benefited by stablecoins, by platforms that use stablecoins in the back end and they just show you, you know, the normal integers on the website. But it's stablecoins in the back end. But, like, not everyone's going to adopt this. Like, Ryan, do you think Wells Fargo is going to? Because whenever I try and send money, when my Wells Fargo, it's either Zelle or a wire, and a wire cost me $25, which is an insane fee to charge me to send $25 to. Do you think you will be able to integrate stablecoin payments in Wells Fargo? I don't think so, no.

Ryan Sean Adams (6:16)

I think they'll just be disrupted by.

David Hoffman (6:18)

Disrupted by literally anyone else who's a little bit more innovative. And they can use stablecoins to transfer payments, but it's just a send money button that actually works in that app.

Ryan Sean Adams (6:28)

One thing I like about stablecoins too, is for the person, the skeptic, who is always like, oh, crypto hasn't done anything. Crypto has no use cases. You're always just like stablecoins. It's a congressional bill. Like, it's going to trillions of dollars. It powers everything. That's going to be the future. All right, what's the second Second?

David Hoffman (6:43)

Tokenization goes from just experimental pilots to totally scaled issuance and collateral. I wouldn't call BlackRock Biddles Fund a pilot that's a real product, but I think everything else is still kind of in pilot mode in 2025 and in 2026. The broad stroke of everyone's predictions is that tokenization is going to be a breakout year. That's a literal quote from CoinShares. Galaxy says a major bank or broker will accept tokenized equities as collateral. Grayscale says asset tokenization is at an inflection point and they expect rapid growth facilitated by regulatory clarity. And then Coinbase says 2026 might be the year that tokenization makes a similar jump into the mainstream as stablecoins did. Nearly $20 billion already tokenized could balloon to nearly $400 billion is the prediction from Coinbase. And so everyone else other than BlackRock I'll say is still kind of in a pilot program, still kind of experimenting, still trying to figure out what to do about it. But the broad strokes is everyone's predictions like these become real products that aren't just like inert tokens that you own in your wallet, but become actual like collateral utility across different lenders or borrowers or apps.

Ryan Sean Adams (7:52)

What's the benefit for the crypto native, do you think? Or like, how will people feel this change? I guess equities go 24. 7. I guess maybe there's a world where we start to be able to use these tokens inside of decentralized finance. I don't know that that's 2026. It seems like there's still some fusion of tradfi and DEFI that are necessary to make that happen. I guess you can start to bring your own assets to your wallet and you're not kind of locked into the siloed garden of your your brokerage, which is a really nice feature of DeFi. It's sort of just bring your assets to the interface that you want and the interface loads them up. We've enjoyed that in Defi from the beginning. Those are some of the benefits, maybe. Are there others that you think average crypto users will feel?

David Hoffman (8:38)

I think the average crypto user and also DEFI will be probably one of the most slow parts of this sector. I think the DeFi plus tokenized assets security tokens integration will take the most amount of time because it's the most complex and we might need more white glove like specific verticalized defi apps in order to make that work. Because like, can you really put a tokenized security inside of aave? Like maybe the Big ones like the Biddle Fund. But after that then you start to need to account for more legal complexities.

Ryan Sean Adams (9:10)

Yeah.

David Hoffman (9:11)

And so like I think it's still going to be pretty white glove and pretty narrow at first, but then maybe 2027 is that is the year of security tokens in Defi.

Ryan Sean Adams (9:20)

A lot of these predictions that I'm reading, it feels like it's a best of fusion between sort of the best of DEFI and the best of trading. Like one thing I'll give Tradfi fantastic credit for, as you mentioned, the AAVE debate is they got their investor rights down. Yeah, right. Like that's a huge benefit of securities. Like I know what I'm buying and I know the management team behind what I'm buying has a fiduciary responsibility and legal responsibility to return their upside to the equity to the asset that I'm purchasing. We don't have that in DEFI yet, so we get kind of a best of of that. But Defi has all of these features that Tradfi doesn't and hopefully that starts to come together in 2026 around tokenization. All right, what else we got?

David Hoffman (10:04)

Number three ETFs. Bitwise predicts more than 100 crypto linked ETFs to launch in the United States this year. Galaxy said more than 50 spot altcoin ETFs plus another 50 crypto ETFs. What they mean by that is like non single coins like basket ETFs. Basket of crypto assets launched in the in the United States. So pretty congruous between Bitwise and Galaxy. Just the explosion of ETFs. Galaxy predicts US spot crypto ETF net inflows exceed 50 billion in 2026. And a major asset allocation platform adds Bitcoin to standard model portfolios. Which effectively means that like Bitcoin ETFs get embedded into model portfolios at strategic weights like half a percent, 1%, 5%, hopefully 5% and then coin shares for big US wirehouses open solicited Bitcoin ETF allocations in discretionary portfolios. So that's like Morgan Stanley, Merrill, ubs, Wells Fargo actually puts pushes bitcoin in certain portfolios and then also one major for a 1K provider allows Bitcoin allocations via ETFs. That's like people like Fidelity or Vanguard or Principal or mp.

Ryan Sean Adams (11:15)

They're not doing that yet. You can't get a Bitcoin ETF inside of your fidelity 401K. I don't know.

David Hoffman (11:23)

I don't know.

Ryan Sean Adams (11:24)

All right.

David Hoffman (11:24)

I don't know. I don't pay attention to my 401k too much.

Ryan Sean Adams (11:28)

All right, so more ETFs and more saturation of crypto ETFs into mainstream.

David Hoffman (11:33)

Yes. Yes. Is any of this a surprise to you, Ryan? So far we got stable coins, tokenization and ETFs.

Ryan Sean Adams (11:39)

Not at all. That's more of the same. Okay. But a continuation. Right? Of. Of course. How about number four, Is that going to surprise me?

David Hoffman (11:46)

Market structure legislation is plausible. Plausible. And the base case for 2026. So coin shares, this is really about the Clarity act or market. A market structure bill. Yeah, I've heard controversy around this. More controversy than what this meta analysis of predictions says. Coinshares just straight up predicts is that Clarity act will pass. Well, it's just. It's just going to pass. Grayscale didn't name the Clarity act, but they say expect bipartisan market structure legislation to become law in 2026.

Ryan Sean Adams (12:15)

Sure.

David Hoffman (12:16)

Coinbase Institutional says clear regulation is a core reason 2026 could become transformative and changes how institutions handle strategy, risk and compliance around crypto. And then, but bitwise, then specifically ties upside scenarios for Ether and Ether and Solana to Clarity act passing and doesn't actually give a statement about if they think it will.

Ryan Sean Adams (12:38)

I'm 50 50. This is a political prediction. I'm still 5050 on it. And I think that it would make sense to pass it. I'm wondering if we have used crypto in general and Trump, the Trump administration and anyone pro crypto has used its political capital for the genius bill and has, I guess, levered up its political capital in the form of like meme Coins and Trump crypto businesses to an extent that it becomes a bit like a partisan issue and Democrats really push back on it. They don't want crypto legislation or particularly. They say, fine, you can have your Clarity act legislation, but you know politicians. Trump can't continue his crypto businesses. And if that's a deal killer, that's like, yeah, this is why I'm 5050. It would make sense for it to pass, but I'm not sure the politics of the moment will allow for that in 2026. It's right. It's an election year.

David Hoffman (13:37)

How much are we really banking on the fact that Trump has to agree to not start any more crypto businesses? Like what? To what degree does Clarity reside just on that nuance?

Ryan Sean Adams (13:48)

I mean, this, this is a whole political calculation midterm year. Right. These things. And Trump is definitely losing momentum. Right. Republicans feel like they, they lost in the key elections in 2025, so they're maybe vulnerable. We'll have to see. That's why this is 5050 to me.

David Hoffman (14:06)

Mm. All right, next one. Prediction markets. Pretty similar predictions here. Basically everyone predicted billion dollar plus weekly volumes on poly market throughout 2026. Not every single week obviously, but like over one point. Who Galaxy says 1.5 billion in weekly trading volumes on polymarket. Bitwise and Coinbase institutional say both expect billion dollar plus weekly volumes on Poly Market in prediction markets. And so that polymarker is just the poster child here. But I think everyone's just saying that like prediction markets are just going to continue to like become a staple of institutional actual usage is, is one of the nuances there.

Ryan Sean Adams (14:47)

It's more interesting if these same firms predicted that like four years ago or three years ago or even two years ago than it is now.

David Hoffman (14:54)

This definitely feels like an extrapolation, a trend.

Ryan Sean Adams (14:58)

Safe predictions this year. It's all safe predictions. Is that what you found in your research?

David Hoffman (15:02)

Well, okay, so what we're doing is we're seeing where everyone agrees.

Ryan Sean Adams (15:06)

Oh, this is the Congress.

David Hoffman (15:07)

This is. Everyone agrees. Yes. Ok, there, there's a little bit. There's some debate further down. So maybe this is the boring section. We started with the boring section.

Ryan Sean Adams (15:15)

Let's get to the next. This is, this is actually interesting in the congruous section. Quantum. This is a growing risk, but not a threat in 2026. So what are the predictors saying?

David Hoffman (15:27)

Yeah, so this is Grayscale, blackrock and a couple others basically all saying that Quantum is going to become a growing subject, but it's not a risk in 2026.

Ryan Sean Adams (15:36)

We know it's not a risk in 2026. Yes, that's also very safe.

David Hoffman (15:39)

Very, very safe.

Ryan Sean Adams (15:40)

Prediction, threat. What does that mean? Like a perception type of threat? Like you talked earlier in this episode. If we were going to do a roll up, it would have been the Nick Carter article on this and sort of raising the attention and he's, he's very concerned about it. I mean some have called him an alarmist in kind of a negative way. What's the sense, do you think, from the predictors around the Quantum concern or do they all agree that it's a real concern, just not in 2026?

David Hoffman (16:09)

I think Nick Carter would say, and many other he would say about the people that he is fighting on Twitter that they are saying that it is flat out not a concern. Like the concern just does not exist.

Ryan Sean Adams (16:19)

That Makes me more concerned, how about.

David Hoffman (16:21)

You, whether that's true or not. Like, maybe, maybe they're, they are on the side of not a threat in 2026. And so Nick Carter is like pulling the fire alarm, like right now, saying, hey, we need to deal with this. And everyone else that he's debating with is like, this is not real. This is not a real concern. Maybe it's just a difference on timeframes. Because Nick Carter, part of his assumption is that, you know, bitcoin moves so slow. That is turning a gigantic shift.

Ryan Sean Adams (16:46)

It moves so slow. And also this is a pretty big upgrade. Like, this is the biggest upgrade bitcoin has ever done and will ever do.

David Hoffman (16:58)

Yes. And it is at the most calcified and decentralized point in bitcoin's history with the most amount at stake. And so it's just such a monumental task. And so Nick Carter is like, we need to deal with this today. We need to start dealing with this today because it's going to take five plus years for bitcoin to have consensus. And if we get to 2030, then the amount of risk is very different than it is in 2026. So, like, it could be like a difference of time, frame, opinions, but, like, people are calling Nick Carter like an alarmist who's trying to sell his VC bags.

Ryan Sean Adams (17:29)

I think I'm interested in your take on this, right? Just like a court take. Because I think it is a big freaking deal. Like, it's a really big deal. Particular, particularly if bitcoin developers don't come up with solutions for this now and don't admit that it's something that they need to navigate. Because there is this myth that bitcoin, they've started to almost believe their own narrative a little too much, which is like, bitcoin literally is gold. This element, this base element, it's not software at all. I guess maybe software that the universe created, right? Which it has no changes. There is no social layer. There is no bitcoin core. There is no quantum threat against gold. Like, there's no developer who can go tweak it and change it. Bitcoin is not that. It is a social consensus technology like gold, but at the end of the day, it is software. And it is vulnerable to something like quantum on the horizon. And there is a path towards fixing that if they take it or partially fixate it, but they have to take it. And I think there has been a movement within bitcoin for a long time to sort of say gaslight people, but just to Propagate this myth that bitcoin is completely ossified. It doesn't need any changes into the future.

David Hoffman (18:50)

Bitcoin is bestowed upon humans by God and therefore it is perfect and doesn't need to be production.

Ryan Sean Adams (18:56)

Anyway. Yeah, anyway, I think that could come to bite them. It's been a strength from a store of value narrative propagation perspective. Right. And that's why bitcoiners are so hardcore and that's why it feels so like pure and it propagates so easily. But it's also weakness when it comes to Quantum. I think it's a serious, serious threat. And it also is like if you start undermining the store of value nature of Bitcoin, how does that propagate through the rest of crypto, the good and the bad. It's a major subject and I don't know if 2026 is going to be the time we fully discuss it or if it'll be put back on the back burner for another year or two. Interesting, but I guess we'll see.

David Hoffman (19:38)

Yeah, I think there's enough momentum to have it at least. Like, if you want to be a specialist in this subject, you'll be consistently supplied with information to talk about over the next year about Quantum. Like, it's worth noting. I think it's both your and my opinions that like, if bitcoin does nothing, then it divides by zero when Quantum eventually comes. Like if it truly just sticks its head in the sand and it makes zero changes, eventually Quantum will come and it will like ultimately end bitcoin. Like you won't find it in the top 10 market cap assets because Quantum actually destroys bitcoin wholly and completely if bitcoin does nothing. And so it has to do something and it can't wait too long. Like it needs to do something sooner than a decade.

Ryan Sean Adams (20:23)

Yeah, I completely agree with that. All right, so that's the consensus type takes. What's the next category?

David Hoffman (20:30)

Broad strokes, broad themes. Not things that are like, specifically in agreement with each other, but things that are, are like, you know, Disdirectionally correct. There's three here. CoinShares coined this concept of hybrid finance. We also have to talk about privacy and also sex to Dex transitions, the bank transition. We're going to talk about all these and more, but first we're going to talk to some of these fantastic sponsors that make the show possible. Mantle has launched a global hackathon until the end of 2025. The focus is on building the future of real world assets from now until December 31st. Mantle is inviting developers, founders and innovators around the world to design and launch new real world asset and DEFI products on Mantle. The reason to build here is simple. Mantle is not just another blockchain. It is an ecosystem built for builders who want real distribution and real users. 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At the core is fraxnet, an on chain fintech platform built to align with emerging US regulatory frameworks where you can mint, redeem and use FRAX USD with just a few clicks, deposit usdc, send a bank wire or tokenized Treasuries and receive programmable digital dollars straight to your wallet. Fraxnet users benefits from the underlying return of US Treasuries and earn just by using this system. Whether you're bridging, minting or holding your FRAX USD works for you. FRAX isn't just a protocol, it's a digital nation powered by the FRAX token and governed by its global communities. Join that community and help shape FRAX Nation's future by going to frax.comr Bankless Frax designed for the future of compliant digital finance Hybrid finance this is pretty congress with with everyone. Hybrid finance is a concept coined by Coin shares. Coined by Coin shares which I think maybe we'll see it stick. I don't know how similar this is to the Defi mullet. It's not perfectly similar but they kind of call it just an intersection of crypto ecosystems, public blockchains, you know, smart contracts, apps, et cetera and tradfi infrastructure. So tokenized markets, stablecoins, tokenized funds, custody, basically putting conventional tradfi services on blockchains and I would say that was the broad strokes of everything above that we talked about. Stablecoins, tokenization basically these blockchains, public blockchains and smart contract tools become Treadfi infrastructure to do what they want to do. So if I would actually summarize the whole of everything about all these predictions, this idea of hybrid finance of like Wall street learning to do business logic on chain is like the net sum of it.

Ryan Sean Adams (25:14)

Yeah, you've got this line. The public chains become the settlement composability layer while tradfi supplies the regulation scale, distribution, custody and product wrappers. Right. Summary. I was thinking about this a little bit in the context of preparing for our conversation with the founder of the Canton Network which remember we discussed that in the rollup, this is blockchain I don't really know what to do with but the DTCC is like tokenizing securities on it in kind of a pilot type way and what's interesting to me is like, there are some things that are just in crypto that are incompatible with securities or with the way nation states want to like run things. And one of those is you can't really have securities that are bear assets.

David Hoffman (25:59)

Correct. You cannot. You cannot.

Ryan Sean Adams (26:01)

This is a challenge. And it just like run through the scenario where Apple shares are bear assets. They get hacked by North Korea. North Korea now has 5% of Apple.

David Hoffman (26:12)

Would never be allowed.

Ryan Sean Adams (26:13)

And then Tim Cook's like, oh, shit, we got it. Like we got North Korea on the, on our governance board. Right. It's like, that's not going to happen.

David Hoffman (26:23)

Governance and bear assets at the same time. Those two things don't work.

Ryan Sean Adams (26:28)

And so that is kind of the, the tradfi layer. They're going to use smart contracts, but those smart contracts will be a bit more like stablecoins in that there'll be some sort of logic that has reversibility or the ability to do something. It puts governance essentially in the hands of some entity that is not like a bear asset.

David Hoffman (26:51)

Okay, yeah.

Ryan Sean Adams (26:52)

But the contention of crypto is you can build centralized things on top of decentralization, decentralized settlement layer, but the opposite is not true. You can't build something decentralized on top of something that's centralized. Right. So at the root of it, this is the way physical objects work as well. The root of it is bearer assets that are settled by something. Right. In the case of the real world, it's ultimately it's like settled by the nation state, but we've abstracted that. It's used to be settled by violence. I'm stronger than you, so I can go take your stuff. Right. Well, now we have the nation state.

David Hoffman (27:27)

For me, but not for you.

Ryan Sean Adams (27:29)

Right. Anyway, so that's an example of how these things are going to work together. But also it's pretty bullish for crypto in that you have to have the most decentralized thing at the bottom, particularly when you have two parties that don't trust one another and they're trying to engage in some sort of interaction. Right. You know, where's the place where China's securities can exchange with the United States securities and their geopolitical adversaries? Well, the only place to do that. Something decentralized, essentially.

David Hoffman (27:59)

Yeah.

Ryan Sean Adams (27:59)

So that's an example of how these things come together, I suppose.

David Hoffman (28:02)

Next one, Privacy. Privacy was a pretty broad strokes theme that like everyone kind of agrees that we need it without too much similarity in how or what it that looks like. Coinbase says with institutional adoption rising, users want greater control and confidentiality. We expect to see continued build out of technologies like CK proofs, fully homomorphic encryption as well as a meaningful surge in on chain privacy usage which aligned with Grayscale's line of the rising of adoption of confidential transactions on Ethereum and Solana. And then Galaxy predicted something kind of different. The combined market cap of privacy tokens will exceed 100 billion by the end of 2026 as investors park more money on chain.

Ryan Sean Adams (28:43)

Wow.

David Hoffman (28:43)

Different. Different prediction of privacy. 100 billion in. In privacy tokens. I can name Ryan, I can name two privacy tokens. Yeah, Aztec. It's not as zcash and Monero.

Ryan Sean Adams (28:55)

Okay.

David Hoffman (28:56)

And yeah, what do you look.

Ryan Sean Adams (28:57)

What's the market cap? 7 billion right now, which is incredible. Like up significant amount. From the beginning of this year it was a billion. So it's, you know. No, actually, yeah, just as the beginning of this year it was yeah, under a billion dollars.

David Hoffman (29:13)

West Monero.

Ryan Sean Adams (29:14)

Oh God. I don't, you know, I don't want.

David Hoffman (29:16)

To think about XMR.

Ryan Sean Adams (29:17)

XMR. Monero is wow, 8.2.

David Hoffman (29:24)

8.2, wow. That is also doing a very strong price performance.

Ryan Sean Adams (29:28)

Yeah, yeah.

David Hoffman (29:30)

I can't name a single privacy coin beyond those. And like Monero, is the, well, Aztec.

Ryan Sean Adams (29:35)

Infrastructure still a privacy coin? I think totally, but it's not.

David Hoffman (29:39)

What are these? Is Aztec a store of value? Because like zcash and Monero I consider to be store of value privacy coins.

Ryan Sean Adams (29:44)

They are, but why do you need a store of value? Do you know what I mean? Remember that it means Solomoni quip, which is just basically I shouldn't have to invest in your Ponzi scheme in your store of value in order to get privacy. Right. And so if you look at that.

David Hoffman (29:59)

I mean, I agree with that. But nonetheless, people are doing that with zcash and there is something to the effect that like. Well, if you have a privacy app chain, which zcash and Monero are, you have better privacy in that scenario than you do. If it was like.

Ryan Sean Adams (30:16)

But that's, that's what Aztec is. Which, which is sort of what I mean, like does something. Is. Is privacy a feature? Does it need its own app chain? Right. So like a use case of zcash right now is if I have Solana on Sol, right. I can use like near intense and convert my soul or any asset on Solana to zcash, like through zcash on the other side and get my privacy and then come back out. I don't have to Keep my asset part in zcash. I'm just using the zcash blockchain for some utility temporary basis and you can use Aztec that same way. But if you can have your store of value be Bitcoin or Ether or some other crypto asset, do you really need to park in the local app chain store of value asset.

David Hoffman (30:58)

Yeah, yeah.

Ryan Sean Adams (31:00)

Is it a feature or is it like you like. I don't know that you need store of value in that case.

David Hoffman (31:04)

The only people that I really think would really use that use the value of that is like North Korea or people like them like pariah states that want to park value inside of privacy for an ongoing basis.

Ryan Sean Adams (31:20)

Sure. So I don't know, could be a niche use case anyway that. But. But this prediction, the galaxy prediction specifically says that's going to get to $100 billion which is.

David Hoffman (31:29)

I mean where I would like to learn what they mean by privacy tokens. Like do they. Are they narrow to privacy store value tokens or are they including things like Zama and I think they would include all that. You think so?

Ryan Sean Adams (31:41)

But even so that's a.

David Hoffman (31:42)

Even so that's a huge. That's a secular increase in privacy. Yeah.

Ryan Sean Adams (31:47)

Next year in a bear market. I don't know. That's a surprising.

David Hoffman (31:51)

In a bear market. What do you mean in a bear market? Is that a prediction?

Ryan Sean Adams (31:55)

I hope you have some predictions on whether we're in a bear market in 2026 but let's get to the next one. So that'. Privacy. What else?

David Hoffman (32:01)

Wait, one more privacy quote that I thought was pretty interesting is from a 16Z that is pretty nuanced privacy. It will be the most important moat in crypto critical for world's finance to move on chain on and almost every blockchain lacks it. They argue that privacy creates chain lock in and network effects because bridging secrets is hard. And then they brought in privacy beyond payments into data and key management secrets as a service to and making privacy more core infrastructure. So I think they're calling for like yo. Whichever chain can solve privacy acquires a huge technological moat which I. I can see that that argument that makes sense to me.

Ryan Sean Adams (32:39)

Interesting. I also think there's degrees of privacy in the same way that there's degrees of security like do you need privacy that's nation state like resistant privacy or do you just want it to not be public? If you are you fine with it being confidential to some trusted entities, you and your.

David Hoffman (32:58)

Yeah. Your service provider.

Ryan Sean Adams (33:00)

Exactly. And so that. That all depends. That's also On a scale and your.

David Hoffman (33:03)

Accountants, because you have like a reveal key. What are those called? Like a reveal key.

Ryan Sean Adams (33:08)

Yeah.

David Hoffman (33:08)

Or there's like a, there's like on some privacy things you can share a key with someone so they can view transactions so they can do your accounting for you. That's zcash has this. Monero does not have this.

Ryan Sean Adams (33:20)

Yeah, that's right. Okay, nuanced conversation there. We'll have to see how that evolves. But picking up privacy as a theme certainly.

David Hoffman (33:26)

Yeah.

Ryan Sean Adams (33:27)

What's this next one?

David Hoffman (33:28)

Sex to Dex transitions. Galaxy says today's Dexes account for roughly 15 to 17% of spot volume. They say that by the end of 2026 dexes will capture more than 25% of combined combined spot trading volume. By the end of this year Coinshares directionally agrees Dex volumes are structural. Dex volumes will be structural, not the 2021 mania. They will exceed $600 billion per month, which is far beyond the speculative mania observed in 2021. So CoinShares a secular structural increase in on chain Dex trading volumes.

Ryan Sean Adams (34:03)

This is bullish. I agree with this long term trend. I think Dexs from a take rate perspective are so much lower than sexes right now. And over the long run cexs as, as long as Dex liquidity and user experience increases, the centralized exchange business model for the actual trading of assets will not be sustainable over the long run. And so I, I, I even see sexes are pivoting away a little bit. I mean they still make the bulk of their revenue from trading on the centralized exchange. But Coinbase going into base, they're very.

David Hoffman (34:41)

Happy to disrupt themselves.

Ryan Sean Adams (34:43)

Yeah, I think they, they see the writing on the wall. If they don't do it then the Dexes will eat their. Yeah, eat their lunch. Right.

David Hoffman (34:50)

Which is why Coinbase, Coinbase integrated Solana and Jupiter. But on base they integrated aerodrome which they bought a ton of tokens of. And so that is an interesting way to like retain value by directing a lot of the volume to a Dex that you own 30% of or something however much they own.

Ryan Sean Adams (35:07)

That's right. Yeah.

David Hoffman (35:09)

Tokenomics was a noteworthy thing basically tokenomics. All these people, Coinbase, Galaxy, Coin shares, Grayscale, all kind of predict that the trend that value capture will become explicit Grayscale called a focus on sustainable revenue as a top 2026 theme. Coinbase talked about tokenomics 2.0 protocols are leaning into value capture, fee sharing, buybacks, buy and burn and a shift towards revenue re durable revenue tied models. And then Galaxy said application revenue to network Revenue will double, the ratio will double from where it is accelerating value capture at the app layer. And they invoked the FAT app thesis, which there used to be a fat chain thesis, fat L1 thesis, which is like the chain gets all the value. They are saying that this trend is going to the app layer. So at the FAT app thesis, this one, I could critique all of them and say this works. Maybe this is a prediction, but it's also a hindsight, 2025 year in review statement as well. Like this definitely happened in 2025.

Ryan Sean Adams (36:09)

Well, it did happen, I think. But aren't they saying more than this? Aren't they saying that basically our crypto native tokens become value capture mechanisms and start returning the revenue to investors? Isn't this the token reform that we have to do in crypto? Isn't this back to kind of the AAVE Labs versus AAVE types of debates that we've been having?

David Hoffman (36:36)

I don't know if that's true because AAVE as a token has been capturing and returning value to AAVE token holders for a long time now.

Ryan Sean Adams (36:44)

How much value? And is that all of Stani's efforts and all of the AAVE Labs efforts as well? I mean, if you buy an asset like Amazon, you're getting all of what Jeff Bezos puts into the thing, plus all of the product lines, plus all of the user interface. And it's not clear that you're getting the same thing with an AAVE token right now. And I think investors want that, or at least want that clarify.

David Hoffman (37:08)

It's not clear that they're getting all of it. They're getting some of it. They're getting the on chain components and then not the off chain components. But I think that's a common conversation that is currently being had and needs to be had. I'm going to have a conversation with Jake Siervinski in next year about like.

Ryan Sean Adams (37:21)

Does he have a solution to this?

David Hoffman (37:22)

He has a. Yeah, so his, his general broad strokes is like, you know, tokens get the on chain value capture, but if it's not on chain, then the, then it goes to the, the labs or equity entity. And there are some models like Morpho, for example, that actually there is no off chain equity. There's only the token because the equity is owned by the foundation, so that flows to the foundation. But then Jake says like, well, that's not appropriate for all circumstances. So it was a very nuanced conversation.

Ryan Sean Adams (37:48)

I, I would love to hear that conversation. I mean, I feel like the problem with that is with these models, you don't know where the value is going to accrue. Like, so let's, let's say for example, with aave, let's say, for example, with aave, that rule like, moves forward and so they're completely within the, the realm of AAVE Labs to take a cut on their interface. Because that's not necessarily. I guess that's not on chain revenue. Correct. Or is it not?

David Hoffman (38:09)

The interface is not on chain revenue.

Ryan Sean Adams (38:11)

Okay, so it's not on chain revenue. Right. Nave gets all the. On chain revenue. There's a conflict of interest there. But then also you don't know which layer of the stack is going to.

David Hoffman (38:21)

Have more of that. Which one has more revenue.

Ryan Sean Adams (38:23)

Yeah, exactly. And so it might be the case that the user aggregation layer captures all of the revenue and that completely limits the upside of the AAVE token. And like, as an investor, what I want, I simply want to capture all of it. I want one asset that captures all of it.

David Hoffman (38:42)

Yes.

Ryan Sean Adams (38:42)

One asset to be on chain. So like Jake's vision. Well, that helps from a clarity perspective, I suppose. I don't love that as an investor.

David Hoffman (38:52)

Yeah, because you are a, a token bull or want to be a token bull. And if I'm an investor and I have some capital to allocate and I look at Tradfi and I look at Google and Nvidia and Tesla, I'm like, oh, I get 100% of the value being created and if I look at tokens, I look at like, oh, I get some of the value being created. But then there's another equity asset that I don't own. If I buy this token elsewhere that is also sharing the value. And I don't get that. And so just like, it's impure, it's imperfect is kind of what you're saying.

Ryan Sean Adams (39:25)

Yeah, it's. It's kind of frustrating, right? It's like imagine if Amazon, they spun off aws. There's a separate equity vehicle. Oh my God. Like I want.

David Hoffman (39:34)

Now I now have to buy aws.

Ryan Sean Adams (39:36)

Exactly. Okay, what about the controversy or disagreements that you found in the predictions?

David Hoffman (39:44)

Two core disagreements about DATs and about cycles. I think you can see why there would be disagreements here. That's gonna be interesting. Coinbase thinks that DATs will evolve. They calling, calling for a DAT 2.0 model. Future iterations of DATs will move beyond simple accumulation and specialize in professional trading, storage and procurement of sovereign block space. This shift is predicated on the view that block space is a unique commodity and an essential structural input for the digital economy. Consequently, we think that a successful DAT business model will revolve around a deep understanding of the duration, risks and cyclicality inherent in the block space economy. So basically saying that like if you're a dat, you got a sell block space. You sell block space because if you're an ETH that you, you stake and you sell amount, some amount of blocks to the market and so then what are the benefits of being able to do that frequently across time? And they are saying that they are not just accumulation, but you will start to provide value and services to the fact that you can produce a lot of blocks. That's what Coinbase says. Galaxy on the other side says five or more digital asset companies will be forced to sell assets, be acquired or shut down completely. And Grayscale says DATs are a red herring and not a major factor in 2026, which there could be some overlap here. So like the Coinbase thing of like dats could evolve will be like, yeah, evolve. One, one or two will have successfully evolved and the rest are dying. It's like maybe, maybe there isn't some controversy here.

Ryan Sean Adams (41:14)

Yeah, I'm not sure that there is a controversy because I could see all three of these playing out. Right. So DATs will evolve. It depends on the type of debt. So if you're bitcoin, you're not necessarily getting into the mining game, are you? As a debt, I suppose you could. Right, but that makes much more sense to be in kind of infrastructure and validating and block production, the block production supply chain. If it's a proof of stake asset. Right, because then you're, you're kind of getting yields. So maybe proof of stake assets is it'll more so that way. I definitely think some DATs are going under and I agree with Grayscale that DATs are not going to be a major factor in 2026. Because I don't think 2026 is going to be a secular bull market. And when that's our DATs will be a major factor in a secular bull market. Once again, I don't think they're dying.

David Hoffman (42:07)

I agree with that, that they are momentum vehicles more than they are bear market vehicles.

Ryan Sean Adams (42:12)

A hundred percent. And some of these dads are structured well and for the long term and they can batten down the hatches and weather a bear market without any problem whatsoever. Only the weak ones will die.

David Hoffman (42:26)

I think the big question is how many, what percentage are weak ones versus strong ones?

Ryan Sean Adams (42:30)

Is that the big question? I mean there's a Percentage of how many. But there's also a percentage of like it's a. There's a power law. Right, right. And so the ones with. I mean Tom Lee has what. I mean he's got more probably 3x. All the other DATs combined for ether at least.

David Hoffman (42:46)

Right.

Ryan Sean Adams (42:46)

And he's continuing to stack as long as that one stays alive. That's a massive bull catalyst.

David Hoffman (42:53)

Why doesn't it simply just consume all.

Ryan Sean Adams (42:56)

The little dats and that will probably happen as well.

David Hoffman (42:58)

Yeah, yeah, yeah. Okay. Market cycles and macro trends. So two different positions here, Bitwise and grayscale. Pretty similar. Bitwise says bitcoin will break the four year cycle and set new all time highs. Grayscale says we expect really the end of the so called four year cycle and bitcoin will likely reach a new all time high in the first half of the year. So those two, those two agree with each other. Galaxy and Coinbase. Galaxy's core stance is 2026 is too chaotic to predict with very wide price ranges, even if new highs are possible. So they do.

Ryan Sean Adams (43:31)

But I will add, I did read the Galaxy predictions. They did say 2027 new all time highs. It was like Bitcoin at 250k. So they took the break.

David Hoffman (43:40)

2020 cycle. Okay, okay. And then Coinbase says 2026 is a macro driven cycle with a plausible trading range between 110 and 140k as their central case.

Ryan Sean Adams (43:51)

What do you think?

David Hoffman (43:55)

Did you read my article that I put out called Yearly. The Yearly Candles.

Ryan Sean Adams (44:00)

Yes, I enjoy looking at the yearly candles actually on an annual basis. I like to look at that once a year. What was your divination from that?

David Hoffman (44:09)

Yeah. So to visually describe to the listeners what the yearly candle. So actually maybe you can pull up the article, but for the, the podcast listeners who are going about their day not looking at a screen again. Happy New Year's. Glad you're doing that. Excuse me? New Year's. Happy Christmas Eve. Glad you're doing that. The early candles is just like when one year of time comes into one candle and bitcoin has this like pretty similar pattern of like two or three green candles followed by one medium to large red candle.

Ryan Sean Adams (44:37)

Is that the four year cycle in candle form?

David Hoffman (44:39)

Yes, four year cycle in candle form. That's right.

Ryan Sean Adams (44:42)

There's a red and then two greens and a red and then three greens and a red and three greens and a red and two greens and now we have a red. So that could either be followed by another red.

David Hoffman (44:54)

Usually red candles are large. This is the the 2026 year is the smallest red candle in bitcoin history.

Ryan Sean Adams (45:02)

So it's so tiny that if it follows the pattern, you're going to get another red in 2026, right?

David Hoffman (45:08)

No, because there's only ever been one red candle in a row. And so like there's, there's that interpretation, Ryan, where like there's only ever one red candle in a row. There's never ever two red candles in a row. And, and we just had the smallest red candle of all time, which means we got the red candle out of the way and it wasn't that bad. And now we are primed for like it doesn't even have to be a large green candle to be good. We just need like, you know, a medium. It could be a small, small to green candle and we're all kind of happy. Or it was such a small red candle that we got more red to come.

Ryan Sean Adams (45:40)

Maybe another tiny red candle.

David Hoffman (45:42)

It's hard to see a tiny red candle.

Ryan Sean Adams (45:43)

Yeah, it's hard to see a big red candle next year.

David Hoffman (45:45)

I'll agree with, I agree with that. It's hard to see a big red candle next year.

Ryan Sean Adams (45:49)

Okay. It's also hard to see a big cream candle next year.

David Hoffman (45:52)

I think it's hard to see big candles with bitcoin ever. What?

Ryan Sean Adams (45:58)

I'm not sure about ever. I don't think ever.

David Hoffman (46:00)

Yeah, like a, like a dude gold.

Ryan Sean Adams (46:03)

Went up 65% and that's like a.

David Hoffman (46:06)

Okay.

Ryan Sean Adams (46:06)

Okay. Now it's a 30 trillion dollar asset. That's a big ass green candle. Okay.

David Hoffman (46:11)

So the, the first two big green candles, the one in 2011 and the one in 20, we're not seeing that anymore.

Ryan Sean Adams (46:17)

Yeah, you're not gonna see a, like a 10x or 3x.

David Hoffman (46:20)

Yeah, that's right.

Ryan Sean Adams (46:21)

Yeah.

David Hoffman (46:21)

Yeah.

Ryan Sean Adams (46:21)

Okay. But, but okay, so I could see that. So your prediction is basically baby green. Baby.

David Hoffman (46:26)

My prediction is my bear case is another red sliver candle. Like it just goes down just 5 to 15% up to plus 50 is my, is my range.

Ryan Sean Adams (46:40)

Okay. Yeah, I could see that. I mean, I guess that's what bitwise and grayscale are essentially saying. So from that from, from the yearly candle perspective is not that crazy.

David Hoffman (46:50)

Yeah. Maybe an add on to that prediction is that the red part happens in the first half of the year and the green part happens in the second half of the year.

Ryan Sean Adams (46:56)

Okay, I can see that. Yeah. How about galaxy?

David Hoffman (47:00)

Galaxy. Oh, I think I said that.

Ryan Sean Adams (47:04)

Too chaotic to predict. Okay. Yeah, I could see that. Do you have any prediction for ETH is it just that it follows Bitcoin?

David Hoffman (47:12)

Yeah. Same predictions for both Bitcoin and Ethereum.

Ryan Sean Adams (47:16)

Okay. Do you know.

David Hoffman (47:17)

Oh but but I do really like Bitwise's asterisk which is if the Clarity act passes. That looks so good for Ethereum. Tokenization is so good for Ethereum. Like the whole plan starts to really come together.

Ryan Sean Adams (47:34)

Ben Cowen had a take on ETH next year that it could actually hit all time highs even a world where Bitcoin does not. And his take was basically like keep the ratio the same. Bitcoin has sort of a return to the 50 week simple moving average that it usually does even during kind of bearish years. That takes Bitcoin to 100k and like the ratio is about the same, maybe improves slightly for Ether and we see you know, 5000k or 5k plus ether for some brief window of time before it goes back down. God damn it, why can't this stay there? Goes back down and resets again and then, you know, 2026 is kind of an off year. But he said that's a scenario that he thinks is possible anyway.

David Hoffman (48:23)

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Ryan Sean Adams (50:23)

Are the predictions as we conclude this David maybe I want your thoughts on the core assets, the biggest assets in the space, the ones that we've been talking about on Bankless since the very beginning, the ones that we have called crypto monies and that we believe are store of value assets. The layer ones essentially, that settlement layer, the most important layer in the space and the layer, that's what's still like 80% of all of the value in crypto, at least. So let's talk about Ether that is near and dear to our hearts and I want to give you my takes. I want to hear yours. So there's Ethereum which is the network, and there's Ether the asset, and I think you have to look at those at times independently and other times they're interrelated. Looking at them independently, I feel like Ethereum the network had a good year. I will not say a great year. And here's how I justify a good year. Shipping the momentum is back. There were two hard forks this year and they fit in a lot that was beneficial to Ethereum. There's a much clearer roadmap in the priorities. We're back to scaling the L1 and that feels really good. And I feel like ZK Tech, which has been almost the gambit bet for Ethereum, is starting to show up and is starting to compound. It's in the early phases of that. But the lean Ethereum roadmap is all about that and it uniquely positions Ethereum as a bet on ZK Decentralization and that's been their bet that they were hoping would happen. And it is starting to happen. There were some Major breakthroughs in ZK this year and I think those will compound in the future. And if Ethereum does ship the lean ethereum roadmap in 2 years time, 3 years time, 4 years time progresses along that. Think it's incredibly bullish for the Ethereum ecosystem. Might I add all quantum resistant as well. Right. So at a time it's going to struggle with that.

David Hoffman (52:24)

Likely not a problem for Ethereum.

Ryan Sean Adams (52:26)

So a good year from my perspective, not a great year. I'm not going as far as saying that this was a great year.

David Hoffman (52:32)

Why wouldn't have made it a great year? Why didn't it achieve great year status?

Ryan Sean Adams (52:36)

I think there's still some malaise out there. I think that the EF is course corrected but. But I don't know that we're fully there and I guess I haven't seen enough on the ZK lean Ethereum roadmap to just be like, oh shit, that was a great year. This is not and great years. I reserve for years like for the network 2022 which was like the year of the merge. That was a great year for Ethereum when Ethereum launched, that was a great year for Ethereum. Not every year can be a great year. 2024 was a bad year from my perspective for the Ethereum network.

David Hoffman (53:14)

I feel like 2024 was expressed in the social layer around hey, it's been bad and we need to deal with that. And so it was just a year of fighting.

Ryan Sean Adams (53:24)

Yeah. So I'm locking this in as a good year. What do you think about that?

David Hoffman (53:30)

I think it was a great year for the technicals of Ethereum. The technical protocol made some of the best advances that it has made. Fundamentally it was a bad year for actual layer one usage. So like the actual usage of the layer one, like gas fees are down.

Ryan Sean Adams (53:53)

And new apps, but gas fees are down. But have you looked at active addresses? Active addresses are like spiking up. It's all time high. Like usage is actually up. This is the thing go to like grow the piece. Like L1 has never been. I don't recall L1 ever being better from the perspective of like low cost and all the things that you can do on chain. Active addresses up, transactions up, the gas fees aren't up because there's more supply gas.

David Hoffman (54:27)

It's flat on the layer one. I see active addresses as flat on the layer one.

Ryan Sean Adams (54:33)

Yeah but like in terms of transaction volumes, all of these things, like more people are doing more things on the L1. I guess it's not like NFT frenzy if maybe that's some of the kind of the comparison.

David Hoffman (54:45)

I just look at the low gas fees and low espird and be like, yeah, you know, like we made a mistake of trying to maximize that or like have that be the narrative. But like it's still too low. It's still. I would select it to be higher then and then in the future. We did not get any increase in block times in 2025.

Ryan Sean Adams (55:05)

Yeah.

David Hoffman (55:05)

As well. And I think that is one of the big things that would be a necessary catalyst to actually increasing usage of the layer one. Like we can keep throughput the same and charge the same amount of gas, but if we get blocked speeds down to three seconds, which is possible and we're trying to do that, then actually there wouldn't. It would induce more usage of the layer one if we had faster block times and we did not get that in 2020. My take on 2025 on the Ethereum protocol is like fundamental research turned into engineering and, and things are getting a shipped to production that are like again a pilot E and an experimental, but are going to become in production in 2026. And so I, I expect 2026 to be leveraging a lot of the progress that we made on the layer 1 protocol level. But it did not yet get expressed. But it does feel the Ethereum layer one is primed for a good year next year.

Ryan Sean Adams (56:02)

Let's talk about Eth the asset then. Right. So this is the other piece we were talking about the narrative belief that Ether is a store of value. I would still say that's a minority belief. I mean it could express itself in like eth does have a pretty high monetary premium. So maybe there's more hidden belief of that in the asset price itself than the narrative, the popular narrative begets. And I think that's true. It was a good year for some things on Ether. The asset in particular, Tom Lee, that was a really big move. This is a legitimacy style move. Him showing up and showing himself as a long term bull, you know, three, three and a half, almost percent of all supply. And he did that in like five or six months. That's incredible. But overall I don't think it was a great year or even a good year for Eth the asset. I mean we traded down to 1500.

David Hoffman (56:57)

Yeah. And the year that we had Tom Lee, Eth price went down on the.

Ryan Sean Adams (57:01)

Year and it was down on the year in a year with Tom Lee. And also the narrative around it, like it was not super successful. Now I want to show you this. Right. So this is kind of the sentiment. This is the Ethval website, which takes into account all the different ways that people have proposed to value ether, the asset. And I want to show you two things. If you value eth, the asset from a price to sales ratio that is like from a, does it generate enough fees, revenue capture side of things? The value of ETH, if you take 25x price to sale is $39. Okay, $39.

David Hoffman (57:39)

That's bearish.

Ryan Sean Adams (57:40)

Short that thing. Short that thing. If, if you think ETH should be valued as a price to sales asset, short it. I mean, the same with Bitcoin for that matter. Okay. That's the bottom side, of course. I mean, like what the. If you were doing price to sale on bitcoin, it is worth like $10.

David Hoffman (57:57)

Yeah, but Bitcoin doesn't even get the sales. It's the bitcoin miners that gets the sales.

Ryan Sean Adams (58:01)

Okay, my point exactly.

David Hoffman (58:03)

Yeah.

Ryan Sean Adams (58:05)

Now that's the low side of the range. This website takes into account 12 different valuation models. That's the lowest valuation model. If you take the highest valuation model for ETH or the asset, Metcalfe's Law, which is just some sort of derivation of transaction, throughput, settlement, active addresses, all of these things, and the scaling of that, then eth would be $9,400 eth of the asset. From a Metcalfe's law perspective. Think about that range, David, from $40 to $9,500. And that's why you see such a division and contention in narratives around ethnic asset. Because there's a group that says bitcoin.

David Hoffman (58:48)

It'S worth $12, and there's another group that says it's worth $9,000.

Ryan Sean Adams (58:53)

Exactly. And this is the war that's going on, I think, in the market. And we've seen that war play out. Because I am on the, for instance, Metcalfe's law side of things, right?

David Hoffman (59:04)

Yeah.

Ryan Sean Adams (59:05)

I'm on the ETH as a monetary asset side of things in a similar way as Bitcoin. And there are others, the sellers or the bears or ETH that just think that ether, the asset is a price to sales, revenue generation type thing. And by the way, there's all of these other blockchains that are also that. And only bitcoin is the monetary instrument, app chain phenomenon. Ether cannot be a monetary instrument. And so the market's going to have to fight during the bear to figure out who is more correct and who is more right. And that's the struggle. And it's A narrative battle as well. But my take as I conclude the year is still like Ether is a triple point asset, always has been from the beginning. The bulk of layer one value actually needs to come from monetary premium. I don't think in a world where you're expanding block space that revenue generation is sustainable for any layer one blockchain. And that's not just a principle that applies to Ethereum, it certainly applies to Bitcoin, also applies to Solana and Monash.

David Hoffman (60:14)

Down significantly across the year and will.

Ryan Sean Adams (60:17)

Continue to drop, but then it will spike up and it will drop. It's just not a sustainable. These are not price to sales instruments. Yes, at least if it's a layer one decentralized money type of asset. And so I'm still of the belief that ETH is either a money or bust or like go short it to you know, $30.

David Hoffman (60:38)

I think where ETH gets valued on the spectrum of like $12 to $9000 is a function of the market dominance, that's it that it has as a smart contract platform. So in 2021 when ETH dominance like the smart contract usage dominance was like 90 plus percent ether, it was valued 90% of the expression of like a store of value money, Metcalfe's law valuation. But when ETH's smart contract transaction market dominance is only 50 or 60% wherever it is, then it starts to move much closer to the price to sales end of the spectrum. Which is where you link up the fundamental growth of the technicals of the Ethereum layer 1, like the lower transaction times ZK, the ZK ing the EVM being able to just like outrace every other chain as a layer one actually becomes extremely relevant to where the valuation of Ether shows up between price of sales versus versus Metcalfe's law. And so I think we kind of actually have hit a bottom in terms of Ethereum market dominance because like Solana has done great, but it's not growing secularly anymore. And you do see a lot of tailwinds towards the Ethereum layer 1 with when it comes to tokenization and stablecoins and all the other stuff that we talked about. And so I could see the combined institutional adoption of blockchains starting with Ethereum, mixed with the actual technical growth of the Ethereum protocol becoming very good for Ethereum's, the Ethereum network's smart contract market share.

Ryan Sean Adams (62:09)

Also one of the things you might be saying is you favor some sort of TVL multiple, right? So the more value that's on chain on Ethereum the better the. The. The higher the ETH price. Right? So you do the TVL multiple percentage.

David Hoffman (62:23)

Of all tvl, not just John, not just the raw number.

Ryan Sean Adams (62:26)

Right. And this is the thing. If you did a TVL multiple, like, you know, like this in at ethval, you. You'd say eth is worth about 4004k right now from a TVL multiple perspective. I. I guess the broader point is just like, like, we still are arguing over how to value ether the asset, and that range is like $40 to 10K. And you get to pick how you want to value the asset. We don't have that problem with other asset classes as much. And that is what the market is trying to figure out moving forward. And I have my take on it, but other investors have their take on it, and you get to choose your own adventure here. Year. Let's talk about bitcoin. How do you think that, that. How do you think bitcoin as an asset did on the year?

David Hoffman (63:12)

On the year, bitcoin is down 6%. And it's like one of those things where, like, man, if that was all it is and next year's green, then that's a fantastic year to like.

Ryan Sean Adams (63:21)

If.

David Hoffman (63:21)

If that's what we had to do.

Ryan Sean Adams (63:24)

I'll take the mildest winter ever.

David Hoffman (63:25)

Yeah. Yeah. For real. Ryan here is still talking about bear markets next year, and so maybe we haven't gotten out of the way. I don't know if it was really all that exceptional of a year for bitcoin. It started to, like, reintroduce itself as, like a debasement hedge. But, like, that wasn't really a big macro theme across the year. And like, you know, granted, you know, bitcoin is supposed to be this, like, the basement hedge liquidity asset. As you know, fiat currencies all devalue themselves. But, like, this is the one year where, like, our government did try to do austerity and trying to actually put value back into the money, and bitcoin is down 6%. So if that was the outcome of that, they can't do that forever. We all know mathematically the fiat's going to zero. They can hold their breath and try and hold out as long as possible to get better yields on the bond rates and all that kind of stuff. And that's bad for bitcoin. It's like financial responsibility by the Federal Reserve and by Congress is bearish for bitcoin. And they actually did try to do that, and they tried to do some amount of that job this year.

Ryan Sean Adams (64:34)

I Think my take on Bitcoin is like maybe I'll zoom out from the year and look at kind of the cycle. It's had a really, really strong cycle. Like it is doing the thing that bitcoiners had hoped it would do, which is like institutional belief is all time high. Every macro person I talk to now includes Bitcoin as part of the hedge against issuance, fiat issuance and inflation. Right. And I just think the narrative market fit has been exceptional. I do think that it has some icebergs on the horizon in the form of Quantum. In particular, I think markets will front run some like. So if you look at prediction markets for quantum breaking cryptography, as that increases, as the probability increases or as the window of time when that is probable decreases, I think that will actually affect Bitcoin price. I think that will like this is not a small problem for Bitcoin. I think the security budget issues are still out there as well. But I think those could be navigated in a way that maybe is not a crisis. Yes, it's not a single crisis. It's more like kind of corruption type influence over time. And it's not going to be as noticeable as something like Quantum. I think qu a big deal.

David Hoffman (65:54)

Ironically, I do think the biggest bullish catalyst for Ethereum is Bitcoin's failure to deal with Quantum.

Ryan Sean Adams (66:01)

You think so? I'm divided on that because I think that it could undermine the entire digital store of value narrative that is out there. If Bitcoin is false from grace in.

David Hoffman (66:16)

The short term, in the short term.

Ryan Sean Adams (66:18)

Okay, but how long is that short term? Is that short term like a generation of humans? Is it a decade?

David Hoffman (66:24)

What?

Ryan Sean Adams (66:24)

What?

David Hoffman (66:24)

No, that's not the short term. That's long term. Short term is one to two years.

Ryan Sean Adams (66:28)

So you think that happens and then, and then eth could. Are you calling.

David Hoffman (66:32)

Yeah, like the big bitcoiners are like even Nick Carter said this, like if bitcoin fails, it takes the entire crypto market down with it. And I'm like no it doesn't. There's no, no technical dependency that any blockchain has on Bitcoin. In fact, the fact that the Ethereum project dealt with Quantum ahead of time is going to provide an immense amount of investor confidence in Ethereum specifically if that if that is how this plays out. And so people will look at like, well, Bitcoin didn't deal with the issue. Ethereum did do deal with the issue. As an investor, I'm going to park my capital in the platform that can deal with issues effectively. And that has been proven out by the market. So Bitcoin's failings are not Ethereum's problems in the short term.

Ryan Sean Adams (67:19)

I think I agree with that. I just don't know how long that period of short termness actually is.

David Hoffman (67:25)

It would take a while for that information to be digested by the market.

Ryan Sean Adams (67:29)

All right. You know where I see things ending the year is two worlds kind of emerging and wondering what you think of this, David. So there's like two visions in crypto at play and you want to have some allocation across these two visions. The first vision is something that I think Bankless has been excited about since our inception, which is the United chains of Ethereum type vision where.

David Hoffman (67:52)

Or not even of Ethereum, but just like the United chains model shared security.

Ryan Sean Adams (67:58)

But it happens to be Ethereum, which.

David Hoffman (68:00)

Is Ethereum, if you're executing it manifests in Ethereum. Yeah.

Ryan Sean Adams (68:03)

So United chains of ethereum, where almost everything, 80%, 90% of everything in crypto is kind of rooted in this single credibly neutral chain. And you get all of the features and use cases on top of that chain, including store of value. And that store of value is not actually Bitcoin, it's ether as an asset. Asset. If you want privacy, well, there's Aztecs. You have to go for zt.

David Hoffman (68:26)

Put your E on Aztec. Yeah, yeah.

Ryan Sean Adams (68:28)

And if you want perps trading, you go to lighter. That's on an L2. So it provides all of these things inside of one United chain. Okay. And that's been the bet, I think, for eth heads and for eth maxis. Let's say that bet has not fully played out. It's partially played out, but hasn't fully played out. There's another bet that's going on, which is the specialized app chain type of bet, where it's all of the app chains essentially. And what is Bitcoin? That's an app chain for storing value.

David Hoffman (68:57)

Yeah.

Ryan Sean Adams (68:57)

And what is Solana? Well, that's an app chain for execution. Permissionless trade. Execution pretty much. Right.

David Hoffman (69:04)

And then what? Cyber liquid, it's a app chain per chain, which is revenue. So basically it's all Bitcoin as a store of value. And every other chain needs to have strong revenues. And that's right.

Ryan Sean Adams (69:13)

Zcash app chain for privacy. Like you could see it all. And that's the, the other version of things. And you want to have some capital deployed against that version. And this is why it often seems, I think, to people in Ethereum like, God, why are all the other chains beating up on us. Right. Well, it's because Ethereum, you're trying to freaking do everything. Yeah.

David Hoffman (69:31)

You're trying to do. Who's picking enemies. It's like, well, Ethereum is trying to literally blanket the earth with all possible chains as layer twos. And then there's all other chains, which is like, I'm fuck you guys.

Ryan Sean Adams (69:44)

Yes, a little bit. There's a. An element of that and why all the other chains are like, well, ether is not the store of value. Bitcoin is the store of value. I think the truth is both of these visions have played out from inception and will continue to play out in the future. And I'm not sure that anyone can call which vision is going to dominate or if one vision is going to dominate. I think they will both be present into the future and certainly in 2026 and beyond.

David Hoffman (70:10)

Big Yin Yang vibes, like, very, very Order and chaos, as in like Ethereum, is like the ordering of chains. Put them all together, stitch them together, make them interoperable, and that's order. And then there's chaos, which is just like a blanket landscape of any chain from anyone from anywhere, about anything. And there's no. There's no coordination or organization. The coordination is actually just centralized exchanges allowing you to go from chain A to chain B.

Ryan Sean Adams (70:38)

That's right.

David Hoffman (70:39)

That's how I see it.

Ryan Sean Adams (70:40)

All right, well, some predictions and some takes on the leading crypto assets. We'll leave it there for you. Happy holidays to everyone. Of course, you know, none of this has been financial advice. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot, Sam.