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The Duopolies of 2026: Ethereum & Solana, Coinbase & Robinhood, Polymarket & Kalshi | Ryan, David & Arnav Pagidyala
01:02:55
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- [00:00]
Arnav Pagadiana
One I'm very bullish on Solana from the perspective of pretty much every founder I meet in consumer that is where they just default go to build, right? And on the other side of the spectrum, I expect to see like a very strong reversal in Ethereum sentiment. I think we've already begun that with Genius Act Clarity act improvement in Rev and TVL datbid institutional bid. I think everything is just going to go Ethereum's way this year in particular.
- [00:31]
David Brian
Bankless Nation. I want to introduce you to Arnav Pagadiana. He is an investment partner with us at Bankless Ventures, also one of the sharpest minds I found in crypto when it comes to meaningful intelligent investing. We recently had him on the show not too long ago to talk about Bankless Ventures. Bankless Ventures investment focus for 2026. That episode will be linked in the show Notes if you're curious. And in this episode we're going to talk about about everything else. The Ethereum, Solana duopoly, Coinbase vs Robinhood, Polymarket vs Kalshi, investing in ICOs and whether or not tokens will suck in 2026. Does HyperLiquid further entrench itself or does it get a competitor? Big questions and topics that guide Liquid Market Investing in Crypto Arnov welcome back.
- [01:10]
Arnav Pagadiana
To Bankless David Brian, thank you for having me.
- [01:13]
David Brian
I'm excited for this conversation. There's a just a mortgage Borg, a charcuterie board of relevant topics that I think really guide investment decision making as I kind of just alluded to for this year. And we're starting this year off fresh. I think everyone has maybe some chips that they would like to place on the table. I am not fully deployed. I don't think Brian is fully deployed and I think there's a lot of people like that who are just confused about how to invest in in 2026. So I want to go through some of the big topics that I just mentioned. Let's start with Ethereum and Solana Duopoly. This is something that you wrote something in the Bankless newsletter about the duopoly of Ethereum and Solana will become clear in 2026. Ethereum is the slow risk defi chain for real world assets money markets. Solana is the home of consumer crypto and moving towards the decentralized NASDAQ vision with Fire Dancer and Alpenglow. I think what you're kind of alluding to Arnav, is that this is kind of it. These are the chains. It's Ethereum and Solana they are pointing in different directions, they are targeting different markets and that's this duopoly is going to entrench itself and make it very hard for a new smart contract change to come into the market. Explain a little bit about what your reasoning is and color in this, this idea that you have.
- [02:28]
Arnav Pagadiana
Absolutely. So I definitely don't want to give the idea that I absolutely do not believe alt L1s or L2s could have their day. They absolutely can. And definitely application specific chains can. But if we're talking just about general purpose chains, I think in 2025 it's become abundantly clear that, that it's incredibly difficult for an incumbent to disrupt the network effects already achieved by Ethereum and Solana. And especially these general purpose all L1s and L2s. I believe they're going to continue to struggle to attract new liquidity, new users without blasting incentives. Right. We've seen a number of Alt L1s throughout the last year run these really aggressive deposit campaigns. You get nine figures in deposits, bitcoin, they pay out a significant amount of incentives and the capital immediately leaves. And maybe one of the more recent examples of this is Unichain. You know, back in July they were at roughly $1 billion in TBL with the incentives. Fast forward to today, they're at circa $100 million in TBL. And it's just this very common playbook that's been run. And the reason why is like all the capital ends up going back to Ethereum or Solana. And I think beyond that, if you were to ask me a year, two years ago, will Pump, fund or Polymarket launch their own chain, I would have bet strongly. Yes. Both controlled, you know, the front end, they owned all the users, the eyeballs and they didn't. Right. And that really begs the question, why didn't they? And if they didn't, who should? Right. So even for these application specific chains, it's come into question that these companies actually really a not only value the network effects of their underlying network, but B, they can't really justify launching a chain because before the reason to launch a chain was you could really establish this large L1 premium. And by and large, again, outside of the really big winners, that doesn't exist today. And again, you're abandoning the network effects of the underlying chain and you're introducing a lot of friction. The last two things I'd probably say here is one. I'm very bullish on Solana from the perspective of pretty much every founder I meet in consumer, that is where they just default go to build, right? And two things they've nailed is a again everything consumer is happening there right now and b they're nailing a lot of the microstructure required to build low latency on chain order books and become the home for a lot of spot trading. And on the other side of the spectrum I expect to see like a very strong reversal in Ethereum sentiment. I think we've already begun that with Genius act, clarity act improvement in Rev and tvl, DAT bid, institutional bid. I think everything is just going to go Ethereum's way this year in particular. So at a high level that's kind of why I believe like Ethereum and Solana's Duopoly, for lack of better words, could strengthen what if you could trade.
- [05:10]
David Brian
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- [07:34]
Ryan
Let's talk more about Solana because for me the, the more surprising thing is how durable Solana has actually been to some of the these forces. Say, you know there is an idea in kind of Ethereum circles that an Ethereum L2 can do everything Solana does except better. In fact we have some pretty strong L2s, not just from a tech perspective but also from a go to market perspective. I mean something like base, that's, that's Coinbase, the world's largest or the US's largest exchange. You know, a hundred million plus users. They have a go to market with an L2 that's general purpose. And then you also have some, you know, app chain type of things that might start to nibble on the edges. Like can a Solana on chain perps, you know app outperform something like the L2 lighter, right. Maybe that gets divided up. But in the face of that it has been surprising how durable Solana has been at least so far. And why do you think that is? Arnoff?
- [08:37]
Arnav Pagadiana
Yeah, it's a great question. There are a number of factors that kind of play into this. One of them you could argue is like the Solana Foundation. They are very different than the Ethereum Foundation. They do take a much more hands on role in onboarding institutions and supporting builders in a different facet. Right. So that kind of is one of the big reasons why it has such a flourishing ecosystem. Beyond that, it really is. They've just nailed it from like a culture perspective as well. Like I was at Solana Breakpoint, you go around, you have so many people vlogging, so many people, you know, creating YouTube videos, so many wacky new ideas. It's also just a culture thing, especially because Pump Fun is on Solana as well. Right. So I think just a number of these factors kind of contribute to why they've crushed it.
- [09:28]
Ryan
Do you have any take on how this impacts the way the market should value these assets? This has been a recurring theme on Bankless since the very beginning. Right. So just because a chain maybe creates all sorts of value doesn't necessarily mean the token itself is going to capture that value. And there's a big question as to how should layer one assets be valued. So something like Bitcoin is app, chain, monetary, premium, store of value. Solana is not that. I mean, it was really emphasizing revenue that is generating basically on chain GDP and its cut of that, its tax of that. This is similar to other L2s. Ethereum is maybe somewhat in the middle in that the market, like if you look at Ethereum, ether valuations some value at like $80, right. If you. If you base it on future revenues, maybe that's a valuation for either the asset. Others say it should be worth like $30,000. If you value it as a store of value and say it's kind of the next Bitcoin or something similar to Bitcoin, then maybe commands that type of value and the market's not really figured this out yet. Do you have a take on that and do you think that's important going into 2026?
- [10:37]
Arnav Pagadiana
I don't have a very strong take on exactly how we should value L1 tokens, and I don't think I'm the best person for that. But what I can say is I strongly believe that builders and activity and liquidity and users are going to converge very, very clearly on these two ecosystems? And by extension of that, I imagine the assets will perform well. That's. That's the extent I believe.
- [10:59]
David Brian
So do you think that Solana is not really going to have to work too hard to fend off some of the newer, shinier chains like Mega Eth and Monad, which have generated at least a ton of interest at the very least, and they've done their public token sales to get more people into the fold and kind of fly their respective flags. But you, I can kind of understand what you're saying is like Salon is not going to have to work that hard to really fend these people off. It's not really going to be on their radar. Is that kind of what you think?
- [11:28]
Arnav Pagadiana
Yeah. I'll start by saying I do like Mega Ethan Monad. I think there's very talented builders in each ecosystem. And I'm definitely not saying Solana doesn't have to work hard. They're working very hard. Again with Fire Dancer, the type of work that's got an alpenglow, the work that Jito and Harmonic is doing to improve microstructure, I would say they're crushing it. And again, on the Solana foundation side, they're taking a very proactive role in growing the ecosystem. So they definitely do have to work hard to maintain their position. But on the other side of that, you know, Meg and Monad kind of serve maybe their own special function in that. Again, they are tapping more into the network effects of the evm. So it's maybe not one to one competitive, but no, it's definitely going to be a very competitive battle.
- [12:06]
David Brian
Yeah, yeah. This is starting to align with a prediction that Mike Ippolio had not even this year, but maybe even two years ago. That has kind of stuck in my head of the dice have already been cast for Ethereum and Solana. And what is Ethereum? Ethereum is the real world asset tokenization Wall street chain. And what is Solana? It's the consumer good UX consumer crypto chain and it doesn't really matter. Like Ethereum still has its drawbacks. You know, it's only so scalable on the layer one. You know, there are cracks starting to show in Ethereum's, in Solana's like microstructure because we saw, what we're seeing is like the streaming blocks paradigm being kind of like being backed into normal block times with, with timing games. And so maybe some of that is invalidating some of the original thesis of ibrl, but it doesn't matter. What you're saying is that the network effects are just so large that no one cares. Consumer goes on Solana and tokenization goes on Ethereum and that both of these trends will continue to grow independently of any other outside influence.
- [13:13]
Arnav Pagadiana
Exactly.
- [13:14]
David Brian
Let's talk about the. Since we're going to, we're going to talk about some duopolies or some rivalries. So we talked about Ethereum, Solana, Coinbase versus Robinhood, who wins here? So Robinhood has shipped a Bunch of new products and they're growing immensely in their market price. In the trad market, I think it started last year, about a year ago, pretty equal to Coinbase, like $60 million each, I think is what I remember. 50 or excuse me, billion. 50 or $60 billion each. Robinhood has taken the lead in terms of market valuation. Robinhood is currently at $106 billion to Coinbase's $70 billion. And each one of those are, each one of them are starting to reposition themselves or position themselves as like a financial super app. You have a take on who gains more of a lead in 2026, Robinhood or Coinbase.
- [14:03]
Arnav Pagadiana
I think it's very consensus that it's likely to be Robinhood. But that's not to say Coinbase couldn't be a dark horse here and to kind of break that down, you know, Robinhood has had a phenomenal 2025. They've shipped 11 new products crossing over $100 million in run rate. They were the second highest performing stock in the S and P and they've shipped a lot of cutting edge crypto and non crypto products. So it's very hard to not believe we're going to see continuation of this moving forward. The other very interesting thing about Robinhood is I think they're very intentional about their product design. I'm personally a power, you know, Robinhood user on the credit card side. I think their, their product is great. What I mean by that is they're taking this credit card app and banking app, they're kind of merging it. So you're going to have the basically Robinhood banking app, which has checking, savings, credit card on one side and a whole separate application which you're going to have maybe options, perps, prediction markets. This is actually very smart in my opinion, because the moment that you have your checkings and savings account right next to the perps button, you're going to turn a lot of users, especially when you consider their user base skews very young and continues to skew younger. So I don't know. They, they're very thoughtful and they ship very fast. So very bullish on Robinhood.
- [15:19]
David Brian
I got access to Robinhood Banking just because I'm just trying. I hate Wells Fargo and they have fantastic ux so they. I got some early access Robinhood Banking. And it's not like all it is, you put your money in there and you can send your money around, but the UX of it is so good, it's so simple. Like I can log in, face ID into Robinhood. It looks just as cleanly and polished as the normal Robinhood app. And there's something about that just like fits with Millennials and Gen Z where like this, this is just what I've always wanted. I don't have to go to my Boomer bank anymore. I know Robin Hood is basically there's just white labeling a bank. There's a bank in the back end. So this nothing to do with any sort of bankless values. But I do appreciate good UX in 2026 and nothing else comes close in terms of the financing world financial like personal finance world as to like the UX of Robinhood.
- [16:10]
Arnav Pagadiana
It's, it's.
- [16:11]
David Brian
And I even got a Robin Hood debit card. It's amazing.
- [16:15]
Arnav Pagadiana
Yeah it's again I, I have to tip my hat to them. They've. They've done a good job. And then on the Coinbase side I think Coinbase this is more of a prediction but I think they're going to abandon these the content coin narrative and overall just reevaluate the North Star of base and how and if to use the base token as a lever for growth and more broadly I think from a company direction perspective I think Brian Armstrong has explicitly stated that you know, he wants Coinbase to become a bank replacement for people which is an awesome Northstar to have. Right. In order to become a bank for people. I think A moving away from content coins is just smart but B probably taking a page out of Robin Hood's playbook as far as probably can't have options pers meme coins right next to the checkings and savings checking and savings account. Probably better to create almost two apps. So that might be another one of my predictions. It's very possible we see them come out with two apps as they move towards this bank replacement for people.
- [17:17]
Ryan
So Arnav Coinbase has always had the advantage of being more crypto native than Robinhood. Sometimes you can clearly see that's an advantage, sometimes that could be a liability. Maybe you're making the case that it's somewhat of liability when it comes to content or creator coins which is really. Jesse is really doubling and tripling down on. Jesse of course is one of the executives and leaders of the on Chain Base Slayer 2 that Coinbase supports and you could see that influence in the design of the new Coinbase wallet. It's very creator for let's say creator coin forward. It's less financy from a like the boring defi stuff giving you yield and that sort of thing. Do you Think that was a mistake? Like, would you rate Coinbase's on chain strategy below Robinhood's on chain strategy at this point?
- [18:07]
Arnav Pagadiana
Yeah, I would say in relation to Robinhood, Robinhood is still very early, but with Robinhood they're moving towards tokenized stocks. Tokenized pre ipo. Intuitively, that makes a lot more sense versus going towards the more social route. I certainly don't think creator coins were inherently a mistake in and of itself. I have a lot of empathy for anybody who tries weird new things in crypto. I think it's so necessary for us to go from 0 to 1. That being said, I think at this point in time, the smartest move moving forward is to go more the institutional route, if you will, and serve just the average user who wants a bank replacement.
- [18:43]
Ryan
This is another duopoly. So you mentioned the Solana and Ethereum duopoly. This is another one. Is this what we're stuck with? I suppose that's in particular to the US market. Of course, Binance looms large outside of the us, but is this what we get? All we get is two major crypto bank exchanges.
- [19:01]
Arnav Pagadiana
It's a great question. Definitely not. I think right now, obviously they're two hallmark players, but you will definitely see some challenging incumbents, I expect, over the next year or two. I think specifically the barrier of competition is reducing in the sense that there's been a lot of regulation passed that makes this stuff a lot more. I would say it makes it a lot more favorable for startups to compete. So a great example of this is we have this trend of open finance. So this is essentially sharing open data. Right? And that is a great equalizer, if you will. Another great example is Apple was mandated to open their NFC chip, so it's no longer just Apple Wallet. All of these things kind of add up to allow a new player or a new Neobank to build a better experience from first principles. So that's not to say it'll just be Robinhood and Coinbase. I expect others to come in and many are here, but I think one in particular could break out and capture the younger audience and maybe even specifically leverage a token as a growth lever, because that hasn't been done well before.
- [20:04]
David Brian
Hmm, interesting. I do know that a lot of Asian exchanges are looking at the US market a little bit more hungrier than usual. And this is just based off sponsor conversations with mantle slash, bybit, same, same, and also bitget like they're. For some reason the Asian exchanges are looking towards the United States a little bit more aggressively than they have in the past. I don't know what the timing is with that other than maybe just like, you know, all the regulatory clarity and approvals that we've been getting domestically. But I do know that that, that is something that they are eyeing on. There's a third duopoly that we have to Talk about. Kalshi vs Polymarket. Who wins the prediction market wars in 2026? The volume of where people participants are participants, like prediction market participants, where they're placing their money is very different. If you're on call sheet versus Polymarket, K is like predominantly sports betting and Polymarket is a little bit more diversified. K is a little bit more United States domestic. Polymarket's a little bit more international. Who do you think is better set up to, to make ground, gain ground in 2026? You have a take there?
- [21:08]
Arnav Pagadiana
Yeah, definitely. I def. I strongly believe that Poly Market is better suited over this next coming year and I expect them to end with materially higher open interest than Kalshi. There's a few reasons for this, right? I think the most obvious is that you have FanDuel launching a prediction market in partnership with CME. You have obviously Robinhood launching in partnership with SIG. You have DraftKings launching a prediction market. So what's abundantly clear is that if you are a prediction market predominantly servicing sports, that is just going to become an infinitely competitive landscape in 2026. And if you go on Dune, you check out what Kalshi's doing. Over 50% of their open interest is on sports and over 90% of their volume is on sports. Polymarket also has a decent amount of volume and OI in sports, but nowhere close to the same as Kalshi does. And even beyond that, you actually do have individual players, like no big for instance, who are, for lack of better words, unbundling prediction markets. And they're creating like a prediction market just for sports. And there's others doing that as well. So again, people know that sports betting is super lucrative. Parlays are even more lucrative and pretty much anybody I believe, who has existing distribution capabilities and licensing, they are going to go launch a prediction market if it proves to have meaningful margins. The last thing I'll mention on this note is I also don't think Polymarket will launch a token in 2026.
- [22:33]
David Brian
Do you think Kalshi will?
- [22:35]
Arnav Pagadiana
No, I don't think so either.
- [22:36]
David Brian
Okay, so no prediction will.
- [22:37]
Arnav Pagadiana
Kalshi's Koshi's a little bit more up in the air. I'm not sure. And I'm also not as knowledgeable about their business. But Poly Market, I really don't think so. The reason why is because this year they're waiting for a lot more regulatory clarity. As far is as like, is this, are these derivatives or is this gaming? Right. Because the way that these things would be enforced are wildly different. Of course they want this to be derivatives. And I think Shane is probably just going to wait. And the reason why is like you, you look back on like the 2024 election when Polymarket's OI was crazy high and they had like a billion eyeballs on their front end, 99% of founders would have probably launched a token in that scenario. If Shane didn't launch one, then I suspect he won't launch one now.
- [23:20]
David Brian
I mean, I think it makes sense that there's no Poly Market token when prediction markets are growing, you know, month over month, quarter over quarter in volumes. Anyways, like, why distract yourself with a token? You've, you're doing the growth thing. Focus on growth, focus on doing what you need to do to, to focus on your core competencies. It seems too early when, while these, both of these producer markets are in more or less their hyper growth stage, do you really need a token to like even to add any more jet fuel onto that fire? Like maybe there's an argument that you, it could, you know, it could really, you know, you're already doing the growth thing, but maybe you could do even more growth. But I don't know why a whole company would want to distract themselves by introducing a financial asset into the market at a very early stage in both of their respective lifetimes.
- [24:06]
Arnav Pagadiana
I completely agree. I mean, it's shocked me how quickly both colochee and polymarket's OI has grown like relatively organically. Mind you, they're both spending a lot of money on customer acquisition, but even the retention metrics on prediction markets are actually quite good. So I definitely agree. No need for a token right now.
- [24:26]
David Brian
From what I heard you say, it sounds like Kalshi has more domestic competition with Robinhood, with FanDuel leaning into prediction markets and their customer acquisitions are all kind of more natively US customers and there's more and that environment's going to be more competitive where polymarket is kind of privileged in the sense that it's a little bit, it's like the tether, you know, it's not uscc, it's tether, it's offshore, has fewer rules, has a little larger audience that can go on to Polymarket and trade on Polymarket and for that reason it's not in that same competitive pressure that KI is in. Would you agree with that statement?
- [25:04]
Arnav Pagadiana
Yeah, I wouldn't say because of regulation anymore, because Polymarket has actually moved onshore so that's no longer the case. But generally speaking, probably the better mental model is that if anybody wants to structure an exotic bet on anything, I feel like intuitively the first thing they think about let's spin up a polymarket on this. And that's a very valuable piece of mind share to own.
- [25:24]
Ryan
Arnav since we've talked about three duopolies, I have another like duopoly idea for you. It's not kind of on your list or anything that, that you've been talking about lately, but this is the store of value duopoly. Maybe this is just me like not being able to kind of let go of a thesis or a narrative, but at some level I still think it's somewhat true that there is a two horse race. Some would say there, there's, it's more than two horses, someone include zcash in there, et cetera. But there's some sort of race going on for store of value. Now people don't agree with me, say no, that that race is already over. Bitcoin has won the store of value type race. I still think that even though it's lost ground over the past five years, Ether the asset is still in a duopolistic race with Bitcoin for crypto store of value and they could both play at this game. But there's things coming up like Quantum which I worry about the ability that Bitcoin not having any sort of on chain privacy for example, whereas Ethereum you can kind of get that with at the smart contract layer and L2s. There's of course the security budget which has been talked about to death, which is a longer term horizon thing. You have things like Tom Lee and he's doing a DAT and that's kind of similar buying pressure of, of a Michael Saylor. I don't know, I just don't think it's over yet for the store of value use case here. And I think there's still a duopoly running there and Ethereum is falling back a little bit but it's still in the game with respect to Bitcoin, what's your take on that?
- [26:55]
Arnav Pagadiana
Yeah, I mean to be very frank with you, ETH is money or store of value is not something I think about too heavily. I more so think about where users and liquidity are going to converge. But that being said, could ETH become the canonical store of value at some point in the future? I think it would be naive to potentially think otherwise. Like, it's very possible. And that's definitely not something I would bet against.
- [27:22]
David Brian
Let's talk about tokens. There's two topics here. Tokens and how investable they are. And also ICOs, since people seem to be investing in tokens regardless tokens, do they still suck in 2026? I think we all know the importance of this conversation. We're watching the AAVE story unfold and hopefully come to a solution. Between the misalignment, between the DAO and the labs, we're watching the unification happen and we're watching the UNISWAP labs go under the foundation, which is therefore under the token, which is also good to see. This is a fundamental pillar that we need. We need to have investable assets. Our assets need to be competitive with traditional securities in terms of their investability. Do you think that we solve this problem this year?
- [28:07]
Arnav Pagadiana
I strongly believe we solve that problem this year because the space is pushing for it. I think in particular, you nailed it. How do we make tokens investable assets? And the answer is we have to reach parity with equities and even surpass it in many ways, right? And we can surpass it in many ways because we have things like on chain verifiable cash flows and on chain reserves, right? So there's a few things that I think will come up this year that will be very important for us to reach parity, I think more mature legal structures, token rights. So people understand that when I buy this token, I have ownership in this company unequivocally, there's no question, right? Things like standardized accounting, things like prioritizing investment relations, having quarterlies, stuff like that, and essentially just making it easier for large allocators to actually justify purchasing individual alts, right? And I think that's super exciting. And maybe the second thing which is maybe a bit less talked about is that in 2025, crypto's institutional bid got caught in DAT's, ETFs and actually crypto equities, right? Look at Galaxy Circle, Bullx, Robinhood, Coinbase. And maybe one of the questions to ask is why is that? And I believe a major reason is just because we've had this market full of lemons problem and without the proper token rights, without the proper reporting, institutions are just better off buying equities instead of. So if we are in a world where a lot of that capital finds its way to alts instead. I don't think we'll have an alt season, but we'll have a number of individual high quality assets that perform incredibly well this year.
- [29:41]
David Brian
Arno, if you have any idea as to like the mechanism as how tokens and equity find alignment or how tokens become equivalent to equity, or are you just kind of saying the lawyers are going to figure it out? The whole industry is trying to solve this problem. The market is going to find a solution and it's going to take 2026 to find that solution. Maybe that. Do you have any opinions as to how this actually happens or you're just saying that this will happen?
- [30:05]
Arnav Pagadiana
I think definitely the latter. The market knows this needs to happen and it will happen. There's also many credible attempts at this so far. Right. Or even success successes you could call it. Right. I think Morphos token is a great case study. I encourage everyone to check out how that works. Metadao doing a great job. ERCS is an interesting standard. Yeah, there's just a number of people working on this problem and I would be shocked if we didn't solve it by this year. Again, pending. Obviously there is regulatory clarity that's needed to do so, but other than that we'll have it.
- [30:39]
Ryan
Well, how, how much of this does depend on regulatory clarity or like the actual Clarity act passing or some sort of market structures bill passing in Congress?
- [30:48]
Arnav Pagadiana
Yeah, I mean clarity is obviously going to make a huge difference here, but beyond that, again, we need to have the infrastructure set up beforehand so when it does pass, and hopefully it does pass, we'll be in kind of that golden era.
- [31:02]
David Brian
What do you think about metadao? I'm watching Metadao with interest and it seems to be growing in attention founders. I'd be worried about the level of constraints that metadao imposes upon startups. That's kind of the whole deal of Metadao is we are going to set up some walls, some guardrails, some constraints upon what founders and teams can do with the money that they raise from the Metadao platform. And why do we do this? So that we can offer investor protections and investor assurances that their money is going to actually be put to good use and actually invest in the company. And so it's solving kind of the investor protection side of things, but it's doing that by constraining founders. This is kind of like my query concern about metadao scalability. What do you, what do you think about that?
- [31:49]
Arnav Pagadiana
Yeah, everyone always references the Founder constraining as like the number one piece, the number one basically counter argument to not just metadao but futarchy generally. Right. I don't disagree. But one maybe caveat I'll add. It's not like founders are having to approve every single micro decision on metadao if they're literally just going to the forum once every few months or once every six months to increase their spending from the treasury and to hit XYZ goal. I don't think that's a terrible thing. But the bigger issue I see with I guess just launch pads in general is there could be this adverse selection problem where actually the upper echelon founders, the upper echelon projects, they're just going to go raise plenty of capital from VCs and probably not ICO. So there's kind of that issue where you're left with projects who wouldn't have raised otherwise. So that's something I do think about.
- [32:43]
David Brian
The other half of this conversation is ICOs. Now we have seen a huge surge in ICOs, especially led by Mega Ethan Monad, which had some pretty gargantuan raises and some pretty pricey valuations. But that has continued on and now we've kind of seen just a splattering of ICOs across different valuations. The $20 million valuation from Ranger on the Metadao platform and the $100 million Infinix token sale. So some pretty reputable projects are raising some decently sized valuations, all with public token sales. Now, I have fallen into the trap of wanting things to be true and therefore making predictions that those things are going to happen. But I want ICOs to happen. I believe that they are a logical conclusion of capital formation. We have ICOs in the trad world. They're called IPOs. Do you think arnav that this fad is sticky and this actually just becomes the new paradigm? Or my ICOs kind of just hit a wave and then teeter off because I don't know, we haven't solved investor protections or some other reason. What do you think about this?
- [33:46]
Arnav Pagadiana
I'm incredibly bullish on ICOs for a few reasons, I think. One, it just gets the community involved, right? And especially if your community is, you know, the users of your product. It could drive, you know, volume, TVL, etc. It's actually very high EV to do an ICO. The bigger challenge is these launchpad or ICO platforms. They're going to have to continue to do a very good job curating exactly which companies they allow to ico and at what price these things? Ico. The reason why Metadao has really garnered a ton of attention lately is because a lot of the ICOs have done well and a lot of them have traded above the ICO price. And that creates this flywheel where you get a lot more attention, a lot more liquidity, etc. So as long as these platforms continue to do a good job curating better projects to actually ICO and these things trade above the ICO price for the most part. I'm very bullish on ICOs in 2026.
- [34:44]
David Brian
And beyond, I want to turn to Morpho. Morpho is something I think a lot of their, a lot of the industry is at least keeping one eye on. It's seen a lot of growth in the last two years, especially with the integration on base and Coinbase where you can use your Bitcoin and now also Ether, you can put it into Morpho, Coinbase will put it into Morpho for you and give you a loan based on the market rate. Pretty cool integration. Huge win for Morpho. Extreme validation of the Defi Mullet thesis, I will also say, and that's led to a lot of Morpho growth, especially on base. Like the base integration of Morpho is very much larger than the Ethereum layer one version of Morpho, which is pretty cool. It's kind of hard to see Morpho grow from here because it's already grown so much. And like AAVE is still a very sharp competitor too. Where do you, where do you see Morpho going from here in 2026?
- [35:34]
Arnav Pagadiana
Probably the most interesting thing about Morpho is that they've really nailed the architecture in B1. Right. So a good example of this is in contrast to aave, where things are a lot more interdependent, for lack of better words, Morpho has very, very clean risk isolation. Each of these markets is an independent market and you have curators which basically deposit into these markets and manage users who want to lend to these markets. And this very clean separation and management of risk makes it very, very compelling for institutions and makes them the prime candidate for lending newer assets or spinning up markets on newer assets like more long tail RWAs. So it's very hard not to be bullish from that perspective. Beyond that, you know, there are a lot more, I would say, corporate minded almost in the sense that they are, you know, they nailed the Coinbase morpho integration. I wouldn't be surprised to see at least half a dozen more fintech unicorns implement a similar playbook after seeing how well it's gone for Coinbase. And again, Morpho is just very well set up to do that versus other lending markets. And then maybe the last reason why I think they're very compelling is if you look at it, since January 2024, both AAVE and Morpho's total active loans were pretty much directly correlated with the price of eth. That's actually still true or largely true of aave. That is not largely true of Morpho. And it's actually decoupling more by the day. Right. So that is, you know, they're just very well positioned to absorb a lot of these institutional capital inflows. And my prediction is I suspect right now they're 10% of total active loans issued. I suspect that'll grow to maybe 25 to 30% this year.
- [37:23]
Ryan
Arnav, I'm wondering what kind of pattern that you see for the successful DEFI protocols these days. Because there have been many teams, many startups, maybe many seed rounds and beyond for Morpho type entities previously, yet Morpho is the one that has really emerged. Right. So look at compound aave. AAVE was much more successful. Right. You look at Morpho and there was Rari back in the day that was doing something similar. Now that's gone, but Morpho has remained. Is there some sort of pattern recognition that you have for the types of teams or founders that are able to actually deliver and execute on the promise? Because this primitive was is nothing new. What Morpho is doing is at the, you know, at some level, it's just some variation of aave. We've known about it the entire time, but it really took Morpho to kind of take it to the next level. What's special about that team and what they're doing?
- [38:21]
Arnav Pagadiana
Yeah, the one thing that Morpho's really nailed is that the risk isolation there is very, very compelling for institutions. And if you look at any individual Morpho market, it's very, very clean and simple. Every market is made up of just five things. A collateral asset, a debt asset, a liquidation value, an Oracle price, and an interest rate model. It's very, very simple and clean. And that's just what institutions want.
- [38:46]
David Brian
And a curator too, like an actual person that manages the actual market, Right, exactly.
- [38:52]
Arnav Pagadiana
And if you think about it, let's say I'm a fintech like new bank and I want to implement an earn feature like Coinbase has for my users. I don't want My users to be exposed to the entirety of a given lending market. I would like them to have exposure to just individual markets because again that is significantly higher EV than having exposure to probably a lot of long tail assets you just don't want exposure to.
- [39:18]
David Brian
Do you think there's something similar here? Kind of how we talked about the duopoly of Solana and Ethereum and what is Ethereum good for? It's good for slow defi tokenization of real world assets. What is Solana good for? Salon is good for consumer. Do you think there's something similar here where like Morpho is kind of just going to become the fintech backend for a lot of fintech startups and that's where they're going to be able to get their loans from. They're just going to use more from the back end where AAVE is a little bit more for the consumer. It's a little bit more for the individual rather than the institution to kind of just like be their decentralized bank, their decentralized money market. Do you think that's a fair comparison?
- [39:53]
Arnav Pagadiana
I think it could be. What I will add is that AAVE v4 is moving much more towards this Morpho esque architecture. So that's definitely an important consideration. Beyond that, another thing that I think about is I wonder how lending economics are going to work the same way. Stablecoin issuers pass a lot of economics back to the front end. I wonder if the same thing will happen with the lending market as well. And I'll also say the lending market isn't quite a duopoly yet. Like obviously Morpho and AAVE are really the big winners. You still do have folks on, you know you have like Solana or sorry, Camino on Solana and then probably the one you have to really account for is Fluid. Actually had a phenomenal year. They kind of came in out of nowhere and took a bunch of market share and I didn't, I didn't see that coming. I'm like there's no way a lending market come in this year in just one year and get to a few billion dollars in loans issued. But they did it.
- [40:42]
David Brian
Let's talk about Hyper Liquid. Hyper Liquid definitely the dominant perps platform. So many attempts to dethrone hyperliquid. Some have not succeeded but they have like nonetheless won. Some traction lighter comes to mind and perhaps a few others. But just this game of the perps winning the pers platform race seems to just be constantly being played over and over and over Again, do you think Hyper Liquid retains its position in 2026? You think it grows more dominant? You think it loses dominance? What do you think?
- [41:11]
Arnav Pagadiana
Yeah, I think the dominance stays relatively flat, if not reduces a little bit. The only caveat is if they introduce a season two points program. But they're actually performing phenomenally even in the face of like all of these incentives. Their OI has remained persistently high and they're charging fees and people are still trading there even though they're charging fees. Whereas they could go to lighter where nobody is charging fees. Right. At least on the, on the taker side. But the way I suspect this year will pan out is you're going to have many more per taxes, many more points programs, but maybe towards the end of the year, early next year, you're going to see a little bit of a consolidation. And what I suspect that consolidation will look like is I think Hyper Liquid is here to stay. The Hip three markets are here to stay. We could have a zero fee perp Dex and the reason why is because a lot of front ends who want to integrate a perp Dex in the back end. It's higher EV to basically integrate a perp Dex that A obviously has deep liquidity but B doesn't charge fees so they could charge their own take rate. So again, that could be somebody like Lightr and maybe the third type of exchange I could see taking off is an RFQ style platform. This could be somebody like Austrium or Variational to not get too deep in the intricacies of how it works. They're just better positioned to offer things like RWA perps, kind of all of.
- [42:32]
Ryan
The different applications and projects that we've named. It feels like Hyperliquid has the most potential to kind of break up that duopoly we were talking about earlier, the Coinbase and Robinhood duopoly. Of course there's Binance, et cetera. But when I look at Hyper Liquid, I kind of see an on chain version of Coinbase or an on chain version of Robinhood. And it wouldn't take all of that much for them to expand back into some of Coinbase's core businesses, just without the custody piece of things. Do you think that's a possibility for an entrant here or like a competitor to the Robinhood vs Coinbase thing? That the next thing is actually something that is much more crypto native and non custodial and on chain?
- [43:22]
Arnav Pagadiana
It's a good question. I don't think Robinhood or Coinbase and Hyperloid competing is very likely. Hyperliquid is really laser focused on the growth of these HIP3 markets and probably getting more into things like cross margin with different assets and such. So I wouldn't say that's necessarily the case. But related to this, something I am very curious about is the option space obviously is incredibly large. Specifically zero day to expiry options. Zero DTEs are growing like crazy in the US in particular. And I'm very curious to see whether these traders are going to switch over to perps, whether it's more intuitive to them or not. And the reason why I suspect they will prefer perps over options is because options predominantly give you exposure not only to the delta but also to the volatility. But most people, they just want to speculate on whether something goes up or down. Perps are objectively a better asset to do.
- [44:28]
Ryan
So one other thing you've mentioned is proof of personhood becoming a requirement. Just before we started recording this Arnov, I saw something on Twitter just came through my timeline. It was kind of deep fakes of Stranger Things character. So it showed just some normal looking person and then he could apply an overlay to be each of the characters in Stranger Things. And I mean it certainly passed the human Turing test for me. As I was looking at the image in front of me, it looked exactly like the real characters here. And the comment I think was like, kyc, video verification is dead. Can you talk about that and what implications that has on proof of personhood? I know crypto is somewhat innovating here, but what more will happen in 2026?
- [45:17]
Arnav Pagadiana
Yeah, Ryan, that's a fantastic point. I think we're in this world now where agents are flooding the Internet and it's becoming almost indistinguishable to determine is this a human or is this an Opus 4.5 agent interacting with my platform. Right? It's impossible to know sometimes. And that's why like I'm very, very bullish on specifically privacy preserving either biometric or even using your passport NFC chip kyc. Like of course nobody wants the kyc. And one of my like personal apprehensions with kycing is you have countless data leaks out there. And you know, that's like pretty infuriating to think like, okay, I KYC with this platform and my data is now on the Internet. I'm never kycing again. The beautiful thing with a lot of the technology we have in crypto, whether it's MPC or ZK or even fhe probably in the near future, is we're able to KYC without our counterparty actually storing that data locally, therefore it can never be leaked. So I'm very, very bullish on this. And probably the last thing I'll mention on this front is it's kind of funny, I Remember back in 2021, Worldcoin was announced and I'm like, my immediate reaction was like I am never scanning my eyeball for this Fed change. Like there's absolutely no chance. Right? But that was actually pre chatgpt. Right. So I didn't really conceive the actual value of this thing. And lo and behold, like now with all of the agents that we have, like you could actually make a very strong case for what worldcoin is doing among other privacy preserving, you know, or biometric style protocols. And then the last thing maybe related to crypto itself is I think this privacy preserving KYC will become a standard across a number of emerging applications. Like imagine a points program gated by this or an ICO or earning rewards in a deepen protocol or to be a voter in a dao. Basically all of these applications which are very prone to civil attacks. Well, this is one of the better conduits to make it civil resistant.
- [47:28]
Ryan
Well, it strikes me that the entire world needs this, not just crypto. I'm wondering, it sounds like crypto will be probably from your perspective on the frontier of this though, and then it will filter down to maybe the rest of the world. Are there billion dollar unicorn types of plays here? I guess you could argue worldcoin is already one of them if you look at kind of its token valuation. Is there more here? Is there investable surface area?
- [47:52]
Arnav Pagadiana
It's very difficult to say because historically privacy hasn't performed very well in crypto. Like we can go down that rabbit hole, but I think it's just still a bit early for privacy, believe it or not, like as much as you know you want it and I want it, we're actually in the minority, probably closer to the cypherpunk crowd. You look at the new, just the marginal new user in crypto, they're not so concerned about privacy. And that's why a lot of these businesses just haven't taken off yet. And then also introducing privacy without adding too much friction is incredibly important. So yeah, and actually maybe the actual last thing I'll mention on this front is we have a lot of phenomenal FHE and ZK companies. You're, you know, like succinct, like Zama. I think they can and will do incredibly well over a longer period of time. It Just probably won't be. I don't expect to break out maybe this year.
- [48:43]
Ryan
Can you talk about a thesis that I've seen having some airplay going to 2026 and seems at least somewhat true, which is the fat wallet thesis, which is this idea that it's actually going to be the wallets, not the protocols, that are going to capture the majority of the value moving forward. Certainly seen some big moves with Fantom. Metamask has been a little more sleepy, but they're trying to keep up. And there's just a lot of wallet innovation that can happen in integrating some of the DEFI protocols. You can actually make a case even that they could be the disruptors of the exchanges, the Coinbases and the Robinhoods of the world. In fact, Coinbase and Robinhood, of course, they have their own crypto wallets as well. So they are product competitors in that world. What do you think of the continuation of the fat wallet thesis? Do you think that's going to accrue more value in 2026?
- [49:36]
Arnav Pagadiana
Absolutely. And I think we could almost call the Fat Wallet thesis the super app thesis at this point. I think in many ways they are one and the same. And to your point about Fantom competing directly with Coinbase 100%. I think centralized exchanges will face a lot of headwinds from wallets. And the reason why is you think about historically, why haven't maybe wallets presented a one to one competition with an exchange? Well, it's because to get to a wallet you have to go through an exchange. But if we have better fiat on ramps, what if I can go directly to my Phantom wallet and that's that I'm earning interest on my deposits, I have access to perps, to lending to everything. I can trade all assets from one venue and I could hopefully do so with even lower fees than on Coinbase, because Coinbase's spot fees are like egregiously high. So absolutely I'm very bullish on this spot. On this fat wallet thesis, you call it the aggregation thesis. And two interesting things to note here is number one, the economics of whoever owns the front end are phenomenal. If you look at whether it's Aerodrome or Uniswap, for the average spot transaction, you're looking at like just a few cents in fees, whereas somebody like Phantom is charging like an average of a dollar, right? You're that's like a 50 to 100x higher take rate. So it's very, very, very lucrative. And there's an extreme premium on owning the end user. The second thing I want to mention is the fact that value will continue to be pushed up towards these front ends, interfaces, super apps, whatever you want to call them, that own the end user. So a good example of this is stablecoin margins. MetaMask launched their own stablecoin. Everybody wants to internalize the stablecoin margins, right? That's very table stakes. But beyond that, internalizing MEV is something, right? And actually enforcing this distribution power on protocols. So let's say, you know, MetaMask wants to integrate a perp Dex. Well, they're. Why wouldn't they go to that perp dex and be like, hey, I want, you know, an eight figure kickback. If I integrate you within my front end, they can do that. And I expect that to be a very defining trend this year.
- [51:46]
Ryan
Now, a dark horse here I want to throw at you for this category, the fat wallet thesis category. Arnov is existing social media apps and platforms. In fact, this has always been a back burner narrative that I feel like we've had. Well, wait until meta enters or wait until, you know, X enters. You can actually, if you squint, you could see the possibility with something like X entering the Fat Wallet wallet space in general. And what would they need to do? Well, all they need to do is integrate some decentralized defi protocols. The Coinbases and Robinhoods of the world already have maybe a morpho for instance, and with a few bells and whistles and some product positioning and added features, they too could have some sort of crypto Fat wallet. In fact, they already have the social element that Coinbase has kind of been going for with its creator Coin push that you saw smart tags being added to X just this week, which is the idea of like social trading. You'd have to squint to see it and it would take some product finagling, of course. But can you see an existing social media company enter this space in 2026?
- [52:56]
Arnav Pagadiana
In 2026? I'm not sure, but it is definitely a when, not if question whether X is going to, you know, dive into this space. Like there is absolutely zero question in my mind. They are going to participate, you know, with stablecoin pay ins, payouts and how deep they go. On the Neobank side, I'm unclear, but we know they want to push towards this everything app vision and the best conduit to do so is going to be on chain.
- [53:28]
Ryan
Let's talk about AI a little bit and maybe sort of vibe coding and the possibilities that open up for small Development shops. So Opus 4.5, I know you've been playing a lot with models like that lately. What do you think this is going to do to builder velocity, especially with smaller teams? Does this impact crypto in any way?
- [53:52]
Arnav Pagadiana
Totally. I mean I expect at least one, if not multiple sub 5 person unicorns this year. Opus 4 point.
- [53:59]
Ryan
Wait, what sub 5? Like sub 5 person unicorn?
- [54:03]
Arnav Pagadiana
Totally. And I've seen like the direct impact in the private market. Like I've seen a few teams or even individuals like one person teams who have managed to ship smart contracts into production, build the entire front end and then obviously they're doing the BD themselves as well. And it's like it's possible this was never possible before now. Like, I'm definitely not saying don't, don't vibe code a smart contract and deploy it in production. Please don't do that. But like I've even talked to some smart contract auditors and they've been blown away by how effective Opus 4.5 has been in particular at writing high grade smart contracts. So, you know, it's almost like the technical moat in many ways is diminishing and you know, distribution becomes a lot more of the edge in many scenarios. Obviously there's edge cases here to do with like privacy and whatnot, where engineering is still very important. But yeah, I mean, I'm super bullish.
- [55:01]
Ryan
I mean, doesn't that filter down if you get more five person, sub five person unicorns? Right. What impact does that have on say, fundraising? I mean like how much, how much in funding do you actually need to raise in order to achieve that? If you have just a five person.
- [55:16]
Arnav Pagadiana
Team and of course you definitely don't need nearly as much capital and that's a good thing. I think crypto is by and large over the years over raised for a lot of things. So it's actually pretty refreshing that people need less capital to do a lot more one.
- [55:30]
Ryan
One theme I think we have going to 2026 and this is maybe a marker of a bear market, is this idea that, that crypto is dead. What can you say about that? Or you know, what do you think will be the life signs of crypto this year?
- [55:46]
Arnav Pagadiana
Yeah, so the inspiration for talking about this, a good friend of mine, Dougie over at Figment Capital, wrote a great piece on this which went super viral on crypto Twitter and it was titled Crypto is Dead. And to really summarize it, and I do believe this will be defining trend of 2026 is we're just going to trend towards moving away from this terminally online points farmer type of Persona who's flipping between X Telegram and Discord. And it'll be this shift away from that user towards just crypto will become ubiquitous infrastructure and powering cross border payments and yield and everything in between you could possibly think of. And I think people are just very tired of, you know, the scams, the rug pulls. Eric Adams recently launching the NYC token. I don't know what that was about. Right. And people understand that like okay, we have that side of things. We have the altcoin market and this market full of lemons problem which has occurred and everybody's just a lot more keen, I feel like as a whole to move towards this just more proper builder direction, I guess.
- [56:51]
Ryan
Is that a new era? I mean has crypto ever seen anything like that? There's a bit more behind the scenes, a bit more like mainstream, not front and center, not maybe dominated by the Twitter conversation and the crypto natives, but more I guess suit coiner. Is this a new era?
- [57:09]
Arnav Pagadiana
I do believe it's a new era. Right. And I think a lot of that is driven by regulation, but the other half of it is truly driven by sentiment as well and this fatigue that's existed.
- [57:19]
Ryan
Arnav, this has been great. Is there anything we didn't cover that you feel like needs to be communicated as you look towards 2026?
- [57:28]
Arnav Pagadiana
Yeah, there is one more thing that I'm very excited about moving into this year and hopefully even beyond that. And that's the entire capital stack moving on chain. Right? We have everything from pretg perpetuals to hyper efficient dexes to discoverability infrastructure. And when you have the entire capital stack on chain, I do believe centralized exchanges will lose power and that's very, very positive for the space. A lot of the space has been beholden to the centralized exchange listing communities and a lot of the decisions founders have made kind of work backwards from that. Like what do I need to do to get listed on XYZ exchange? And oftentimes that is completely at odds with how to build a sustainable business. But that's no longer something that founders have to do. Like as we've seen with Metadao, like you can ICO, right? You don't have to go after give 2, 3, 4, 5% of your token supply to an exchange and instead after you build like a sustainable business, revenue is growing and you haven't listed anywhere. You can go to these exchanges and try to get listed, but it'll be on your terms this time because you have A good asset. It's clearly growing and centralized exchanges are incentivized to list good assets because they also have this, for lack of better words, a survivability problem. If all of their launches and their tokens, you know, do not do well, well, they're going to churn users. And if they see that you have a really good asset, that's likely going to go up, you know, over the next five years, they're going to list you under more favorable terms, hopefully. So maybe a little more of a hot take, but this is something not only it's more of a wish list item I'm hope, and I'm hoping for, but I think it's quite likely in this new, in this new market structure.
- [59:11]
Ryan
Well, what's interesting about that is if the whole financial stack does move on chain, certainly everything that's on chain will benefit. Certainly it could the case that centralized exchanges will lose power to some of the things that are more on chain native. However, what about TradFi? Because it strikes me that maybe the centralized exchanges and the crypto native on chain sort of hybrid types of entities like the Coinbase, maybe the Robin Hoods of the world, at the same time they're losing some power to even more on chain, even more crypto native applications and wallets and that sort of thing. They're also grabbing power away from traditional finance. I mean, what does a fidelity do in this world? What does an E trade do in this world? What does a Charles Schwab do in this world? And so they might in absolute terms actually be getting better. Like, I guess the question is if all of this stack moves on chain, what's TradFi going to do?
- [60:06]
Arnav Pagadiana
Yeah, I'm certainly, you know, it'll take a long time for us to disrupt TRADFI itself. Like again, you look at the deeply entrenched moats of the dtcc, of visa, of swift, like we're, they definitely understand what we're doing is valuable and this is something we didn't get to cover today. But I guess I'll, I'll touch on it briefly. One thing I'm very curious about this year is, you know, how they're going to come on chain, right? Like, will it be through something like Canton, will it be through something like Tempo or Ark, right? Or will they just launch, will BlackRock launch its own new chain? I don't know. But my intuition is that this year a lot of these institutions will understand that specifically building on a chain that already has very deep network effects is going to be Incredibly important. But it's very hard to come to terms with that because this is a chain that does not care about you, it doesn't care about your business and how well you will do tomorrow. And you have no say in that chain either. Right. Ethereum is not going to push a certain upgrade just because JP Morgan wants it to. And that's not a world in which they are used to. So I don't know. Something that I am very much thinking about as we move into this year.
- [61:15]
Ryan
It's going to be fascinating to see this play out. As I look at kind of tradfi strategy, it seems like they're kind of trying it all. Definitely seems like they would prefer chains that they have more control over and yet they don't just want to go all in on kind of their own tradfi type chains. They'll play a little bit there, but then they're also actively deploying to the open, more decentralized crypto native chains and they're just letting it all kind of play out and see which one wins. That seems to be the strategy though. If they could, I feel like the DTCC would prefer something that is just a DTCC chain. If they could get all of the buy in and everyone to opt in, they would certainly go down that path.
- [61:57]
Arnav Pagadiana
Yeah, and they may very well. I think a very important question to ask is for said institution coming on chain, how important is composability? How important is global access to users? If the answer to those questions is no and they're kind of building their own closed loop system that's just more efficient, then yeah, you know, building another chain is totally cool.
- [62:16]
Ryan
A lot of things to figure out in 2026. Arnav, thank you so much for joining us and talking about all of this, of course. Got to let you know bankless listeners, none of this has been financial advice. Crypto is risky, you could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the Bakeless journey. Thanks a lot.