Ep. 712 Crypto Isn’t Dead — It’s Being Rebuilt by Wall Street: What Smart Money Is Buying Now

Summary

CRYPTO 101 – Episode 712: "Crypto Isn’t Dead — It’s Being Rebuilt by Wall Street: What Smart Money Is Buying Now"

Hosts: Bryce Paul & Brendan Viehman
Guest: Arian Shkalian (Head of Research & Investor at CMT Digital)
Release Date: March 19, 2026

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Episode Overview

In a rapidly evolving crypto landscape, hosts Bryce Paul and Brendan Viehman sit down with Arian Shkalian of CMT Digital to dissect the "rebirth" of crypto in the hands of Wall Street. The episode unpacks how smart money—institutions, banks, and asset managers—are driving adoption and infrastructure shifts, the disconnect between fundamentals and price action, and what thoughtful investors should be watching next. The conversation then pivots to the future of privacy, Ethereum vs. Solana, and actionable guidance for navigating bear market volatility.

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Key Discussion Points & Insights

1. CMT Digital’s Mission and Market Perspective

[05:28] Arian Shkalian:

• CMT Digital, a subsidiary of a major proprietary trading firm, was early to crypto after noticing Bitcoin during the Silk Road auction.
• Innovation-driven DNA: “We’ve always been interested in innovation, especially as it has a propensity to disrupt legacy infrastructure.”
• Institutions are moving beyond experiments to actual integration of blockchain in core systems.

2. Crypto’s Evolution: From Silo to Mainstream

[08:33] Arian Shkalian:

• The market is now driven by backend transformation within financial systems, not just speculation.
• Over 60 Fortune 500 companies have blockchain pilots or programs.
• “Institutions are engaging with this technology... it doesn’t exist in that silo anymore.”

3. Investment Approach: Infrastructure vs. Specialization

[10:36] & [12:48] Arian Shkalian:

• CMT invests across early stage through mature infrastructure, balancing between broad infrastructure plays and specialized niche projects.
• Fund evolution:
  • Fund 1 (2017): Access (e.g., Coinbase, Circle)
  • Fund 2 (2021): Infrastructure (custody, data, trading)
  • Fund 3 (2022): Utility (payments, decentralized services)
  • Fund 4 (Current): Re-architecting the stack, especially bridging on-chain and off-chain worlds.
• “We’ve seen the long arc of innovation... it’s not necessarily a linear adoption cycle.”

4. What’s Next for Adoption? Tokenization & On-Chain Settlement

[17:47] Arian Shkalian:

• The convergence of regulation, technology, and liquidity needs to happen; smart money is now integrating, not just poking around.
• “Tokenization and onchain settlement... the conversation has shifted from IF we can do this to HOW we do this.”

5. Volatility and Navigating Bear Markets

[19:43] Arian Shkalian:

• Volatility is not tightly coupled with opportunity: “Volatility is somewhat decoupled from the market opportunity.”
• Suggests founders focus on end utility and product-market fit rather than price noise.

Memorable quote:

“Focus on the end utility that you think the market needs and that will be able to weather any sort of short term volatility.” – Arian Shkalian [19:56]

6. Disconnect Between Fundamentals and Price

[20:39] Podcast Host 2:

• Hosts observe blockchain is making strides: “Bitcoin almost doing more dollars transacted than Visa and MasterCard combined. Ethereum doubling daily user activity… and yet prices are down.”
• Market fundamentals (adoption, utility) are not reflected in current price action—opportunity exists for patient investors.

7. AI, Quantum, and the ‘Obsolescence’ Fear

[23:00] Arian Shkalian:

• Quantum and AI are legitimate future challenges but do not obsolete blockchain as coordination mechanisms:

  • “Quantum can’t align incentives across a decentralized network... AI can’t align incentives across a decentralized network."

• Openness to improvement and resilience in the community ensures adaptation.

• “Bitcoin... has weathered storms before... if the core team can get consensus... then I don’t think it’s a massive existential problem."

8. Smart Money Portfolios: Case Studies

[26:33] Arian Shkalian:

• New investments target infrastructure for institutional adoption: e.g., TRM Labs, Athena, EtherFi—tools suited for compliance, liquidity, reporting.
• “Institutions need other things than what we care about... They don’t care as much about NFTs or looping on DeFi.”
• Liquidity from Wall Street is expected to be a significant growth driver: “We haven’t seen massive upticks in net new liquidity... that is one byproduct we can expect [from institutions].”

9. Privacy: Compliance and Technology

[29:00]–[31:20] Arian Shkalian:

• The privacy narrative has shifted from black-and-white approaches (like Monero) to nuanced, compliant privacy solutions enabling institutional use.
• “Privacy with compliance... we have the tools available to do that.”
• Impressed by platforms like Canton that enable varying degrees of privacy and compliance for different use cases.

10. Ethereum vs. Solana: The Value Capture Debate

[33:22] Arian Shkalian & [36:18] Podcast Host 2:

• Criticizes Ethereum L2 ecosystem for lack of real differentiation, slow progress, and unclear value flow back to L1.
• Solana is eating market share by delivering usable environments regardless of decentralization dogma.

Memorable quote:

“L2 environments really need to be able to offer something unique and build their own user base… no L2 is incentivized to become a full stage 5 rollup and no L2 is really creating meaningfully differentiated blockspace.” – Arian Shkalian [33:22]

• Suggests Ethereum’s future value is as a “large security base” that can validate state transitions for custom-built environments (ZK verification).

11. Self-Correction in Open Source Crypto Ecosystems

[42:34] Arian Shkalian:

• Ecosystem competition and user migration will force platforms to improve or consolidate.
• “The users will reward those that are aligned with them and punish those that aren’t through not using them... it’s something that self-corrects over time.”

12. The Future of Crypto Investing

[44:47] Arian Shkalian:

• In 2026, expects to see:
  • On-chain credit and capital markets
  • Institutional-grade products that were previously impossible
  • Expanding Deepin (decentralized physical infrastructure networks), e.g., Helium’s partnership with T-Mobile
• The core advantage: decentralized solutions must be “unit economically cheaper than the centralized alternative, or able to access something centralized systems cannot.”

Memorable quote:

“There’s no shortage of things that a decentralized system can provide that a centralized system cannot. But obviously not everything needs to be decentralized… really focusing on what is made uniquely better as a function of decentralization.” – Arian Shkalian [46:04]

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Notable Quotes

• “Institutions are engaging with this technology... it doesn’t exist in that silo anymore.” – Arian Shkalian [08:33]
• “Focus on the end utility... and that will be able to weather any sort of short term volatility.” – Arian Shkalian [19:56]
• “Quantum can’t align incentives across a decentralized network... AI can’t align incentives across a decentralized network.” – Arian Shkalian [23:11]
• “L2 environments really need to be able to offer something unique and build their own user base… no L2 is incentivized to become a full stage 5 rollup and no L2 is really creating meaningfully differentiated blockspace.” – Arian Shkalian [33:22]
• “There’s no shortage of things that a decentralized system can provide that a centralized system cannot. But obviously not everything needs to be decentralized...” – Arian Shkalian [46:04]

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Important Timestamps

• 03:21: Introduction of Arian Shkalian and CMT Digital overview
• 08:33: Current market and institutional transformation
• 10:36 / 12:48: Investment approaches and fund evolution
• 17:47: Next phase: tokenization and on-chain settlement
• 19:43: Navigating volatility and advice for builders
• 23:00: Reflections on macro fears: quantum, AI, and crypto’s resilience
• 26:33: Portfolio focus: Institutional infrastructure plays
• 29:00–31:20: The evolution and future of privacy in crypto
• 33:22–41:10: Ethereum vs. Solana, L2s, and the path to value
• 44:47: The future of crypto investing and Deepin
• 47:09: Where to follow Arian and CMT Digital

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Conclusion

This episode is a masterclass in how institutional capital is reshaping crypto from the ground up. Listeners learn what “smart money” cares about—tokenization, institutional infrastructure, compliant privacy, and true cost advantages over legacy—and how to cut through volatility and hype by focusing on products meeting real needs. Ethereum and Solana’s different philosophies reflect deeper questions about ecosystem value and user-driven evolution. Overall, Arian urges retail investors and builders alike to focus on what decentralization does uniquely better—because that’s where both the growth and the edge will be found.

Transcript

[Podcast Host 1]

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[Podcast Host 2]

All right, everyone, welcome back to the Crypto 101 podcast. We hope everyone is having a fantastic week. No matter where you're coming in from, you're certainly in the right place because we got a really exciting podcast in store for all of you. And we know the markets are volatile. There's a lot going on, which is a big reason why we do this in the first place. Because whether it's a bull market or a bear market, there's always something going on in the world of crypto. We're moving at a thousand miles an hour, regardless of what's happening with price. It's one of our favorite reasons, you know, why we get to do this and why we get to talk to some of the builders and leaders behind the scenes so that we can understand and kind of, I guess, reassure ourselves why we're invested in this technology in the first place. So today's going to be really special. We are joined by Arian Shkalian. He is the head of research and investor at CMT Digital. Arjan, welcome. It's good to have you.

[Arian Shkalian]

Thank you so much for having me. Good to see you, Brandon.

[Podcast Host 2]

You know, this is going to be an exciting one. You know, you're a legend. You've been working with this stuff for a while. You got a lot of experience and I know the audience is going to be really excited to kind of pick your brain, I guess, via me and the questions that we'll ask here. But get just an inside scoop of what's going on and what goes through your head when investing and researching and looking at crypto, because it's always good to see things from a different perspective. A lot of the listeners are retail traders. You Know, they're normal people, they work full time jobs, they like investing or trading. But it's always cool to kind of get an outside glimpse in and say, hey, you know, why are these people investing in different parts of crypto? What has them so interested in these different sectors? You know, sometimes it's, you're going to be investing in things that are different than some of the listeners. And I think they find it valuable to understand not only what you're looking at, but why you're looking at it so that, you know, everyone can start getting maybe a little bit more of a, of a well rounded approach when it comes to understanding investment. So, you know, right from the top. For people who might not be as familiar with cmt, can you walk us through what your mission is and how that relates to crypto?

[Arian Shkalian]

Yeah, absolutely. So CMT Digital exists as a blockchain investment fund. We are a subsidiary of the CMC Group, which is a larger proprietary trading firm. By background. The CMT Group was Originally established in 97 around the genesis of electronic trading. And so we've always been interested in innovation, especially as it has a propensity to disrupt legacy infrastructure. And we saw that play out with the electronic trading markets back in the 90s and I think that's been a core part of CMT's DNA since. So in 2013, the group here was looking at the Silk Road auction and trying to understand how the U.S. marshal Service was actually selling Bitcoin and what bitcoin was and what this meant for the asset class. And I think it's that, you know, taking notice of innovation and a changing of the regime that interested them. Initially, they saw this as a potentially new asset class and engaged early to ensure that they could be positioned well to capitalize on that, should that be the case. And I think that is what we, what initially got us interested and what continues to keep us interested as we see the market evolve over the years.

[Podcast Host 2]

Yeah, I'll tell you what, a lot has changed in the last decade. You know, I started making my first public videos, I think around the time of 2017. And it's been super interesting to see how crypto has evolved. And if you're a listener out there, you know exactly what we're talking about, or if you're newer and you're coming in, you know, you've probably experienced quite a bit of change even in the last few years, let alone the last decade. And that's why I said at the very beginning, it feels like we're moving at 1,000 miles an hour, regardless of what's happening. And sometimes, you know, believe it or not, some of the biggest changes and some of the biggest updates happen to crypto when you're in a bear market. There's a reason why a lot of OGs in crypto like to call the bear markets builders markets, because that's usually what they end up being. They usually end up being a time for some, for everyone to kind of take a step back, take a deep breath, saying, okay, you know, we're not maybe as worried about how much appreciation we can get, how much funding we can raise, how we can do all these different things. It's usually projects stepping back and saying, how can we change this? How can we make it better? And that's why we call it a builder's market in the first place. You know, let's just talk about the state of the market before we even get into the rest of this because I know listeners are probably fascinated about what's been going on really since the start of this year. You know, we're, we're recording this towards the end of February. It'll probably go out a little bit later than that, but it's been a roller coaster. It has. You know, we kind of hit those all time highs in October for a lot of crypto. We have seen a lot of downside, but kind of just back and forth volatility. What do you make of what's going on here? And I guess from your perspective, should you be looking at this as a time to flee or a time to maybe double down? I'm sure there's mixed opinions. At least that's what I've seen from comments and other people that I know.

[Arian Shkalian]

So I got my start in the professional space back in 2015. I started working at Accenture. And at Accenture I was looking at change management, so kind of updating of financial systems for our financial services clients. And one of the things that sticks out to me with regards to what we're seeing in the market today is somewhat similar to what I was seeing at Accenture in that there's a broad market transformation that is occurring. A lot of it is back end transformation in financial systems. And I think that's very different to what we've seen thus far in the crypto market. And that's probably part of the market environment that we see today. You know, we're in a very strong regulatory position. We're in a position where, you know, something like 60 of Fortune 500 companies either have a pilot or a blockchain program in position already internally. And so, you know, institutions are engaging with this, with this technology, but prior to this the technology had kind of existed in a silo for crypto natives by crypto natives. And I don't think that's the case anymore. And that's part of the reason that we're seeing this volatility, because there has to be a reckoning about how much is this stuff worth because it doesn't exist in that silo anymore. And I think that is a big maturing opportunity for the space and I'm excited about the ability for the technology to be applicable to transformations broadly in the market.

[Podcast Host 2]

Yeah, I think people are having similar thoughts to a few of the things that you just said. Immediately what comes to my brain is, you know, as the head of research at CMT Digital, can you just walk us through and really lead us through what hedge your analysis, especially when you're evaluating projects. I know you do a lot of early stage infrastructure plays, pre seed seed rounds, things like that, but walk us through kind of how you lead your analysis to begin with.

[Arian Shkalian]

Yeah, well, we're really looking at what the market or what the technology looks like today and what the end use cases really need. And I think from that we back into what technology changes need to occur or spot gaps in the market for infrastructure projects as a function of that backing in exercise. You know, there's a lot of, there's a lot of research that we can do when it comes to thesis formation, but without having the end goal or the end transformation in mind, it becomes a little bit difficult to tether that to reality. And so I think it's having a broad understanding of what the blockchain environment looks like, what the Ethereum ecosystem looks like, what these alternative L1 environments look like, and what problems they're trying to solve. And then from there we can spot, okay, well maybe to solve this problem, to solve problem XYZ adequately, we're still missing key infrastructure pieces A, B, C. And that's kind of how research and investing really play together.

[Podcast Host 2]

So do you think that maybe the biggest things to look out for are saying what are the biggest unsolved problems?

[Arian Shkalian]

Absolutely. Yeah.

[Podcast Host 2]

I guess when it comes to that, there's, there are two ways to look at it. You mentioned infrastructure. That's a big one. And it feels like people have two generalized approaches to investing in crypto. It's either A, I'm going to invest in the infrastructure, I'm going to invest in the bigger picture. They're saying, we know that the industry as a whole is going to succeed. But then there's the second approach which is saying, hey, I think that there's going to be these hyper specific, not only verticals or genres, but I think even going more specific than that. They're going to say within these genres there's hyper specific projects, there's hyper specific companies that are doing these things. And I would say that that's the second type. So you have, you know, kind of class A, which is A, I'm just going to invest in infrastructure. Class B is saying I'm going to get really specific with the investment side. Do you kind of see a place for both or do you favor one or the other more?

[Arian Shkalian]

Well, I do, I do think it has to be a blend of both. I mean, so we've, we've been investing since 2017 in the space, something like over 150/200 portfolio companies at this point. And we've seen the long arc of innovation play out, so to speak. The that's part of the conviction that we have in the space is just being around it for so long. And it's not necessarily a linear adoption cycle across all sectors or across time. Even where we're seeing each market or each market cycle provide different opportunities for different classes of people to access the technology. And I think we try to form our theses around this anticipation as well. So if we look at Fund 1 in 2017, we're really focusing on access. You know, what companies were giving people access and institutions access to get into crypto. You know, we invested in Coinbase and Circle in that fund really kind of the picks and troubles around access at that time. Fund two, we were getting more into that infrastructure. This was around 2021 time frame. We were looking at things like custody, trading, data infrastructure, layers, all of the ancillary services that we thought would be necessary to support this broad trading environment. Fund 3, 2022, we were looking at things like utility. How do we use this technology to provide real utility? As the adoption curve was picking up, as more and more people were entering the space, we started looking at things like payments, decentralized infrastructure, real world applications. And so I think each. And fund four now we're looking at that re architecturing of the stack, merging this on chain world with the regulatory environment that exists in the off chain world and meeting those institutional standards. And so I think it's a function of where we are in the market and what's really next for adoption.

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So you never miss a moment. Well, that raises the question, I guess, what is next for adoption? There's all these different ideas getting tossed around, saying, hey, it should just be general infrastructure. People are looking at Ethereum and Solana and obviously Bitcoin's in that picture as a kind of different form of infrastructure. But then there's the ideas of stablecoins and tokenization and payment Rails and these other things. What comes to the top of your mind when you think about what's next?

[Arian Shkalian]

Yeah, I think broadly we're looking at where market infrastructure is meeting behavioral change that we can observe in the market. So regulation, technology and liquidity really need to converge there for this cycle. And, you know, have the CMT having a background in trading gives us ample insight into that equation. Generally we get a pretty good practical sense of where it's headed from that perspective, but we're really looking at what we think is next. If we think back to 2017, it was clear that institutions were experimenting, but now it's clear that they're integrating. And so we look at banks, asset managers, fintechs, and the fact that they all have these mandates to explore tokenization and onchain settlement. And so we're spending a lot of time looking at those two functions, tokenization and onchain settlement, because we, we do think that this conversation has shifted from, you know, if we can do this, we can experience XYZ benefits to how do we do this to experience XYZ benefits. As a matter of fact, staying alive or defending your market share. And so I do think a lot of those reconciliation services associated with merging the on chain and off chain world and the legacy financial world is really what's top of the puck for us.

[Podcast Host 2]

Well, speaking of staying alive, the market's volatile. Right. We were just talking about this earlier. It's. It's really, really volatile. And you know, both you and CMT have had the ability to go through several of these, you know, going through the 2017, the 2018 period, the 2020 crash, the 2022 one, you know, now we have this one. There's, there's been a lot of hiccups and ups and downs since then. What kind of advice do you give, can you give to people on navigating a volatile market like we're in right now?

[Arian Shkalian]

Yeah, I think volatility always presents challenges. Right. But at the same time, we think that volatility is somewhat decoupled from the market opportunity, especially as we see today.

[Podcast Host 2]

Yeah.

[Arian Shkalian]

And what I like to say to founders is focus on a product, you know, focus on the end utility that you think the market needs and that will be able to weather any sort of short term volatility. If anything, it provides a opportunity for you to build without the noise and without the distractions associated with a frothy market. And so it's clear that people are looking for solutions in the space and it's clear that there is opportunity for solutions to cater to market needs that aren't being catered to today. And so my piece of advice would be to just focus on finding what that function is and dedicating your product development to optimizing.

[Podcast Host 2]

Yeah, you know, it's one of the things that we talk about over here where we think that there's a time to maybe step on the gas pedal and there's a time to hit the brake. And we're in this unique stage of the market right now where that's like one of the big questions that we get asked is like, guys, you know, how do we better navigate this? What should we be doing at a, at a point like this in the market? And I've been a big advocate of something that you just said, which is that it feels like in some degree the fundamentals are disconnected from the technicals, meaning that what's fundamentally happening behind the scenes seems extremely disconnected in my opinion from what's actually happening on the price chart. You look at what's happened in the last year from different forms of regulation, from different metrics. You know, we looked at Bitcoin almost doing more dollars transact than Visa and MasterCard combined. Last year you have Ethereum doubling its, its, its or its daily transactions doubling its, you know, daily user activity, getting gas fees under $0.01. Solana and Hyper Liquid putting up some similar metrics and you know, Hyper Liquid competing with major exchanges. And there's all these different good fundamental things and the list could go on about those and yet you still have prices coming back down the levels where they were just, you know, nowhere near what, what they were doing at the moment. And I think that's where we're at right now, where it feels like the fundamentals are somewhat disconnected from price action and technicals. The good news is that historically there's always been like these volatile moments, but it's always rebalanced. Right. They've said, hey, there's opportunities, there's fears, but the market bounces back. I think one of the big fears that I've seen get tossed around right now is, you know, yes, people have said, oh, there's there's macroeconomic, there's geopolitical, there's fears about the Fed and there's fears about, you know, the four year cycle and all these other things. I think that one of the big ones that I've seen is the fear of either quantum or the fear of AI. Right. You see the whole software industry getting hit at the moment and people are kind of looping Bitcoin into that and saying, oh, anything that is software related is a target for something like AI. What do you make about all these fears? And I guess what do you say to people who are hearing all these different headlines? I mean, there's a million of them. What do you tell them at a time like this?

[Arian Shkalian]

Well, I mean, I would say that the crypto market writ large has survived many, many of these environments. And I think that's what I kind of lean on for comfort. That being said, I don't think quantum is a false threat. You know, I don't think AI is going to be unimpactful. I think these are very real technologies that have very real opportunities to disrupt the world as we know it. Does that mean that I think bitcoin becomes obsolete or that everything we've been doing in the space is, you know, Insignificant? No, I don't. I think that the market opportunity still exists for blockchains as coordination mechanisms uniquely. I mean, quantum can't align incentives across a decentralized network of participants. AI can't align incentives across a decentralized network of participants. And I think these technologies can complement each other. Now, the quantum threat, specifically with regard to consensus, that is something that we need to grapple and does need to be taken seriously. And our friends over at Castle Line and Nick Carter has some great thoughts and great writing about this stuff. I think to ignore it would be foolish. But it's important to realize that bitcoin specifically has weathered storms before. And if the core team is able to get consensus around what direction they need to move in to safely address the quantum threat, then I don't think it's a massive existential problem.

[Podcast Host 2]

Yeah, I think it's reassuring to hear that. Right. Because if you are newer and you're coming in here and maybe, you know, you make a good point in that crypto has weathered a lot. I would argue some of the stuff that crypto is weathered has been arguably worse than whatever we see going on right now and has the pot all stirred up and again, it's always recovered stronger. And you see this in any kind of market, right? It doesn't matter if it's, you know, financials, tech, you know, software, you know, construction doesn't matter. Right. Any single market has its ups and downs. And the good news is that things make it through it. It's not always easy, but I think that's just where we're at right now. And then the second half of this is that different things come in and out of fashion. Right. Just because something's not hot right now doesn't mean it won't in the future. And you've seen this cycle go from like, oh, tech stocks were hot and then there was the AI play and then there was the metals play and then crypto is kind of in before all of that and you just see things be somewhat secular where it kind of just goes from oh, this is the hot thing. And then we'll move from this to this to this to, to that. And then what that does is all of these things are exploding. They're causing a lot of innovation and growth and then that then enables and kind of lifts up the sectors that we're lagging behind. Because now they're saying, oh, look at all this new technology. Well, that's now reshaping the way that this other sector is working, which just creates a lot of opportunity. And you know, I want to talk about some of the recent investments that, that you've made over here. You know, looking at like Newity and TRM Labs and Architect and Athena and Ether Fi. You know, there's a lot of different opportunities, I would say in the market today. Again, going back to that idea of the fundamentals are somewhat disconnected from the technicals. Can you talk about maybe just a few of those and what's catching your eye?

[Arian Shkalian]

Yeah, well, I mean across those specifically we're looking at, I mean, kind of similar to what I was saying before. We're seeing these banks, asset managers, financial institutions enter the on chain environment. What are they going to need? And I think it's really these, these, these companies that are looking to service those folks in a way that perhaps there isn't someone to service them with that grown up mentality with, with reconciliation or reporting that they can adhere to or that satisfies their auditors. And I think it's about that, creating products for the new entrants in the market. And I think maybe part of the disconnect is because crypto has been so crypto native in the past. We've only really been catering to each other, but we don't anticipate that institutions do need other things than what we care about. Maybe they don't care as much about NFTs or looping on defi or rehypothecation, because there are certain boundaries or limits that they need to stay within. And I think that's the core of the thesis here. We're trying to discover or take a view on who we think are going to be the winners that haven't been chosen for these new entrants in the market who are going to really dominate on liquidity. And I think liquidity broadly is a huge point in the space because, yes, we've had liquidity to date, but if, if we look at the past two, three years, four years, how much of the liquidity that we've seen enter the industry has been net new liquidity. And I think it's been a few years since we've seen massive upticks in net new liquidity entering the environment. And I think that is one byproduct that we can expect as a function of institutions entering the space and having real things to do here.

[Podcast Host 2]

You know, another one is privacy technology. Right. That's been one of your other big focuses. That's one that in recent years it has been, I think, the most whiplash that almost any industry inside of crypto has seen. Right. It was big and growing and then it was really harshly regulated and it felt like the whole world was coming down on it. It's really back on the rise here. Right. You know, for one reason or another, whether you're attributing that to new regulation or something else, privacy is making a huge push and it has been for several months. What stands out to you the most about privacy?

[Arian Shkalian]

Yeah, I think privacy specifically within the context of crypto is different as well, because for the first time, privacy has the ability to not only give you privacy, but satisfy some conditions. And I think that's the beauty of cryptographic methods. With verification, you can retain your privacy but ensure that you're staying compliant, for example, or you're adhering to XYZ rules. And so one thing that we had seen in the privacy space, or a gap that we had seen in the privacy space, was not just privacy, but also privacy with compliance. How do we achieve a private environment whereby people feel comfortable transacting without fear of being tracked, whilst also ensuring that they're staying regulatory compliant? And from a cryptographic perspective, we have the tools available to do that. It's just perhaps we, we didn't have a common standard or a generalizable approach to that.

[Podcast Host 2]

Yeah, it's. It's something that we've started researching more into over here. We started bringing on more guests because I think that there's a lot that's going on there that makes sense. And you know, one of the interesting interviews that we just did was with Canton, who's saying, hey, there's a nice blend of privacy and publicness. Right? There's a place for both. And we think that the privacy side should also be compliant. And it seems to be that's where like a lot of the power is, right? Because, you know, one way or another, I think you could look at like Monero and some of those other ones and say, okay, well, they're very heavily focused on privacy, but then they get a bad rep associated with them from the past. Whereas Canton saying, hey, you know, no, we're fully regulated and kind of compliant and that enables a lot of big businesses and banks and institutions to want to work with them. And at least in my brain, and I want to get your opinion on this, but that seems to be where I think like privacy is going is where there's different. Different maybe privacy levels or different use cases for privacy for different things. Meaning that not everything has to just all be one absolute layer of no one knows what anything is, no one knows what anyone is doing about anything. I think that there can be different levels of that kind of privacy being used for different use cases, 100%.

[Arian Shkalian]

And I think that one thing that we haven't seen fully and you know, I think Canton is great for pushing the envelope forward in terms of expecting privacy at the local execution environment. I also really like the sense that they have these, I don't know, subnets for lack of a better word, that can have any sort of properties that the owner would like, but that there is this still common state machine that they can transact over between each other. One thing that I would say is, you know, Canton doesn't have in depth analytics over those subnets. You don't really know what's inside them. You don't really know how often they're transacting. And I think privacy is great, but privacy with anonymized analytics or insight capabilities is more powerful because you don't necessarily need to reveal information to provide those analytics. I think that's an area that we can actually improve on the status quo.

[Podcast Host 2]

Yeah, it's a good point. And I think that being able to recognize those and pinpoint them so that they can be improved upon is essential. Right. That's the whole point, is that, hey, we progress with time, we learn what works and what doesn't, we learn what we need kind of going forward. And I think so long as the crypto industry, you know, Canton included, I think so long as we're able to make those changes and adapt and evolve, like that's how real progress gets done and that's what I think a lot of us want to see. Now I'm going to stir the pot a little bit here, right, and we're going to talk a little bit about just like the state of Ethereum and Solana, because I've seen you talk about this and there's lots of talks about just the overall stage of Ethereum and its layer twos and all of those. But you know, Ethereum is increasingly becoming a data availability layer, you know, in a, in a pretty modular world. But you've warned that it risks losing value capture to faster competitors like Solana if upgrades don't accelerate. What is your current outlook on Ethereum in an on chain kind of world?

[Arian Shkalian]

Yeah, I mean, look, I've been a fan and user of Ethereum for coming up to a decade at this point, which is crazy to say. And I think there's the certain things like I really value the approach the Vitalik and the Ethereum team are taking. They do want it to be decentralized, they do want it to be an open source project, they do want people to work on it and spot opportunities for improvement and bring a product to market that addresses that. I'm not speaking out against any of that. I just think for the past two years, for anyone who was really looking at infrastructure on Ethereum, it was pretty clear that the L2 roadmap wasn't going the way that was initially anticipated. And specifically it was expected that rollups would build towards becoming a Stage four, Stage three, whatever, Stage five roll up and inheriting or inheriting the security by deriving the state's transition or the latest states from the base layer. But that's not the case today and I don't think it is necessarily going to be the case. Or at least the L2s have shown that they don't really care about that being the case. And so L2 environments really need to be able to offer something unique and build their own user base that's unique to them. And I think that was part of the problem. Those, those two things were really part of the problem where no L2 was incentivized to become a full stage 5 stage 4 roll up and Noel 2 is really creating meaningfully differentiated block space with different, you know, Characteristics, they all look largely the same. Don't get me wrong, I love monads. Parallelizable, read, write. To the best of my knowledge, no applications on Monad are really using that. And so how does the block space actually differ? And why would that cause people to come and uniquely build on that environment? Yeah, and at the end of the day, how does that then, how does that value then flow back to the base environment that security is being derived from? And I think that's the, that's the, you know, imbalance that we're seeing because Solana doesn't care. Solana just wants to provide an environment where anyone can build anything. There's certain scaling considerations that you know, at play there. People have debates about whether a monolithic structure can scale. All of that's great, but my point is Ethereum needs to realign on what that goal is and who they want to align, who they want to build on Ethereum and how they want to derive value. I don't think that too far off. I just think that the common goal needs to be unified. And for the past few years, I don't think that L2s and L1s have been on a common goal.

[Podcast Host 2]

I would largely agree with that. Looking at what L2s have done since maybe the last cycle, let's just say roughly since 2021. What's happened with L2s since then is it feels like a lot of them were doing roughly the same thing. There wasn't a ton of diversity or differences. They were saying which ones can be a little bit cheaper, which ones can be a little bit faster. Maybe there's a few little things here, here and there, but I feel like a, a lot of them were doing the same thing and we just continued to see different L2s launch and it started saturating the space a little bit. And then I think B, you had the main chain, you know, making again more significant upgrades, doubling its previous all time high cycles and transactions while putting gas fees under ascent. I, I think people started to look at it to some degree and say it feels as if the L2s are just lagging behind, maybe they're slacking. It doesn't feel like they're necessarily scaling to the mission. Like you said, they're not scaling into what they could have been or should have been. And I think that that made Vitalik probably question it, maybe a little bit frustrated and I think people are as well. The, the big question moving forward is what should happen next? And I want to get your opinion on this, but My opinion is that I think there's a place for hyper specific and like specific use case layer twos as opposed to like general purpose layer twos, which I think have less, less of a place. So the argument then kind of comes to a point of like, okay, well, you can have the Ethereum mainnet and maybe you see these general. I mean, should these general L2s consolidate into the main net? What does that do to the projects that's built on them? Like, is that even an option? Do we think that. What, do we think that it's too fractionalized the way that it is right now? You know, are we fractionalizing liquidity with every new L2 we create? Like, I don't know, there's a bunch of different ways to look at this, and I'm not even sure if there is a clear answer, but if you

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[Arian Shkalian]

I don't, I don't know if there's necessarily one answer, but I do think, just from my perspective, that there's, there's a road forward that can keep every stakeholder happy in the sense that the L1 needs to derive value. And I think it's pretty clear that it's not going to do that from blob fees alone. What Ethereum can do is provide a really large security base for securing state transitions and later state. And I think that is a service that any execution environment can benefit from. So as the use cases of blockchains expand and people look for continually more unique execution environments, I would expect more and more of that execution to be secured by Ethereum, whether that's through ZK Proofs Whether that's the verification of the proofs on the base layer. I mean, I think that's probably my preferred path forward. People build whatever sort of execution path they want, execution environments they want, and then validate the state transition on Ethereum L1. And that's really, that is a value that Ethereum L1 is providing. It also fits the whole role of Ethereum being a coordination environment. That's in my opinion, how Ethereum scales and becomes a general generalizable state machine. It's by extension of the execution environments to increasingly complex environments and validating whatever complexity is occurring through ZK verification at the L1. And honestly, how different is that to Canton?

[Podcast Host 2]

Yeah, it's a good point. And I think the whole idea of how does Ethereum benefit? It's a real question, right? People are looking at this and saying, okay, well if we're going to use tokenization, if we're going to use stable coins, if we're going to do know privacy, if we're going to do all these different things, how can Ethereum benefit in the best way possible? And that's really the question that I think is being asked here, right? I think that's what people are looking at. And maybe we don't have all the answers right now, but I think that's an answer that we should get around to. And we are, because whether you're looking at Ethereum or Salon or anything, again, you know, I think most people can agree that like we really don't think that this stuff's going anywhere and people maybe disagree about oh, which, which one is your favorite? Right? People always disagree there and I'm always surprised by the answers that we get. You know, we have podcasts and I think someone's answer is going to be Ethereum or Solana. And they say neither I want Bitcoin or I think it's going to be Ethereum. And they say, no, I want Solana or I think it's going to be Solana. And then they say it's Ethereum and vice versa. Or maybe it's even a competitor, right? They say, oh, I don't want any of those three. I want it to be something else because there is a lot of competition out there. But it really does go back to the core conversation of whatever you're choosing. How can the infrastructure plays benefit from it? And I think that kind of drives us into the long term.

[Arian Shkalian]

I do think it's something that's self correcting, especially because of the space being decentralized and open source. Bitcoin isn't a execution environment for generalizable execution because the core devs don't want it. I mean, opcat isn't passing because the core devs don't want it. I mean, we can argue about the internal arguments and how people do actually want it, but the point is we haven't reached consensus on it, and so it hasn't passed. And I think when we look at things like Ethereum and things like, let's say, Hyperliquid. Hyperliquid was able to gain traction because they created a product that people wanted without appealing to the things that people didn't necessarily want. They didn't claim to be massively decentralized at the beginning. People did, you know, fault them for that. But I think the market responded by showing through volume that they didn't care. And I think naturally, as people choose environments that best suit their needs and create products that are best suited for those environments, the users will reward those that are aligned with them and punish those that aren't through not using them. And so I do think that it's something that self corrects over time and we'll see this natural settling of applications on environments that make sense for them. But it's a function of can we speed up those cycles through thoughtful allocation of resources and thoughtful stewardship of these ecosystems?

[Podcast Host 2]

Well, final question for you before we let you go. You know, what do you think the future of investing in crypto looks like? You know, it's no longer as easy as saying, hey, I just want to buy altcoins for exposure. There's all these different ways to get exposure now. You can buy specific cryptocurrencies, you can buy large caps, mid caps, small caps, you can buy crypto related stocks, you can buy ETFs. I mean, there's, there's all sorts of different things that you can look at. What does the future of investing in crypto look look like?

[Arian Shkalian]

Well, I mean, I could talk about 2026 and then I can talk broader as well, just generally. So 2026, I do think it's going to be defined by this on chain credit, capital markets kind of amalgamating, coming together, where we see just long term adoption foundations being built out for these institutions and hopefully we see them scale that engagement and we see increasingly complex, increasingly previously impossible financial products being created as a function of that. But broadly, when I think about investing in crypto in the long run, I want to give an anecdote to something like Deepin. We look at Deepin now as an opportunity to invest in the capital expenditure that legacy companies would be doing but are now outsourcing to a decentralized network. If you look at Helium for example, Helium's a portfolio company of ours and they're working with T Mobile and the work that they're doing with T Mobile is essentially because T Mobile can offload what otherwise capital expenditure on this network to handle, you know, the excess capacity, the backstop for infrastructure. Because Helium is able to be on a unit economic basis cheaper than the centralized alternative. And so when I think about investing in crypto in the future, it's really that key principle that we're looking for or that I'm looking for something that is able to be on a unit economic basis cheaper than a centralized alternative, or able to access something that a centralized counterparty just can't. Whether that's proprietary data that's crowdsourced, whether that's co location through provisioning of hardware services, whatever it may be, there's no shortage of things that a decentralized system can provide that a centralized system cannot. But obviously not everything needs to be decentralized and so really focusing on what is made uniquely better as a function of decentralization or decentralized coordination.

[Podcast Host 2]

Well, Aryan, thank you so much for coming on here. I mean man, we appreciate your time. So many different good topics to talk about. Where can people follow you at? You know, if they want to track what you're doing, they want to track what CMT Digital is doing. Where can they find you?

[Arian Shkalian]

Yeah, I'm on Twitter at Arianchain, a R Y o N chain and then TMT Digital is just to CMT Digital but we'll be publishing research there. We've got a research portal coming out here. We, we have research articles and why we invested pieces on our website but if you go to our Twitter you can find everything there. Perfect.

[Podcast Host 2]

Well, once again thank you so much for joining us and we appreciate your time.

[Arian Shkalian]

Thank you so much for having me. Brandon. Great to meet.

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[Podcast Host 2]

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[Podcast Host 2]

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