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- [00:01]
A
Welcome to Galaxy Brains.
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B
An infinite amount of cash. Cash.
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A
I'm your host, Alex Thorne. The US banking system is sound and resilient.
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C
Bitcoin meeting new all time high.
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D
If you're not long. If you're not long, you're short. Satoshi is going to come on there, laugh hysterically, go quiet.
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B
All bitcoin's gonna be erased.
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D
Bitcoin. Bitcoin's the best crypto. Bitcoin is going to zero.
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C
Welcome back to Galaxy Brains. As always, I'm your host Alex Thorne, head of Firmwide research at Galaxy Bitcoin.
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A
Not zero.
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C
We have a great episode for you this week. Mert, the co founder and CEO of Helios, is our guest.
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A
We'll talk with Mert about Quantum, about
- [00:39]
C
privacy, about Solana versus Bitcoin versus Ethereum and the current state of market share battles in the layer 1 blockchain space. It's a fascinating conversation. We'll also talk with him about upcoming upgrades to Solana and how that could affect the ecosystem. We'll also check with our good friend Bimna BB from Galaxy Trading, as always, to talk about markets.
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A
And we're going to focus a lot
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C
on the Strait of Hormuz potential initial ceasefire brokered by Pakistan between the us,
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A
Israel and Iran, and whether that's durable
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C
and what, if anything, it means for markets. Before we get to that, I need to remind you to please refer to the link to disclaimer in the podcast notes. And note that none of the information in this podcast constitutes investment advice or an offer recommendation or solicitation by Galaxy or any of its affiliates to buy or sell any securities. Well, thank you for sticking with us and coming back. I'm back from a two week vacation, the first ever back to back weeks that I've ever taken off from Galaxy Brains. But we are back with a great episode for you this week, so let's
- [01:34]
A
hop right into it.
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C
Let's go now to our friend Bimnet Abibi from Galaxy Trading. As always, Bimnet, welcome back to Galaxy Brains.
- [01:42]
B
Thanks for having me. The block clock is off.
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A
Yeah. What's going on with our wi fi
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C
in this room today? It's very upsetting, but we are higher.
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B
Mythos. Hacked it.
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A
No, no, we are higher.
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C
We'd been in the 60s, mid-60s for a couple weeks while I've been out ripped. Higher with everything else. After this temporary ceasefire agreed to in the Middle east, equities reacted strongly to it as well.
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A
Right.
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B
Yeah.
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C
Is this market just ping ponging on those headlines right now?
- [02:13]
B
Yeah. The geopolitical risks were top of mind for any investor and they probably outweighed any fundamental story that any specific stock had. It's nice that we have a ceasefire in place in theory, and that there is a pathway that the market can envision in terms of getting to a permanent ceasefire agreement. I believe JD Vance and Wyckoff are scheduled to go to Islamabad on Saturday to kind of iron out the details. But long story short, I think the market is aware that there's clear communication between both sides in terms of the Iranians and the US and that there is consensus around enough stuff to make it so that we're going to send a convoy of.
- [03:12]
C
Diplomats.
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B
Yeah, diplomats. But it's also J.D. vince. I mean, he is the second highest person in government technically. And so I think that's a big deal. And more likely than not, you do end up getting a permanent ceasefire agreement probably in the next two weeks.
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C
Think so?
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B
I do. Now, do I think it holds over the medium term? Probably not. But in terms of the situation on the ground right now, in terms of the diplomacy efforts that are taking place, I do think you will get to a permanent ceasefire in the next two weeks.
- [03:50]
C
Some clear de escalation, basically.
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B
Absolutely. But then the issue becomes the commodity. Right. There's still a huge amount of oil that is not in the marketplace. You know, hundreds of millions of barrels
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C
and damage to oil and energy infrastructure.
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B
Absolutely. Petrochemical stuff. And so, like, the repercussions of the supply chain disruptions are super material and
- [04:19]
C
they haven't fully played out yet. I saw there's been some rationing though. Europe, uk, Asian countries.
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B
Days off from work.
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A
Yeah.
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B
Bike days.
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C
People are worried about jet fuel in Asia.
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B
Absolutely.
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A
Like, are we gonna be able to fly to as.
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C
Is that even possible?
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A
Like, it's not.
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B
You can fly there, it's just a question of flying back.
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C
No. Right. It's our jet fuel.
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A
If you leave from here.
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C
Yes, yes, yes.
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B
So, you know, you're getting to like, very elevated levels in terms of price on, you know, everything in the, in the, you know, commodity petrochemical stack. You know, that's diesel, that's jet fuel. Helium, helium, urea, you know, sulfuric acid.
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A
They even make plastics out of oil, right?
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B
Yeah. I mean, the plant that was struck in Saudi Arabia produces like 7% of the total petrochemicals by volume. But that's by volume, not by, like, value. But these are like polyethylene and ethylene and some of this other stuff that goes into making like basic plastics. Right, right. And so, you know, the way I would think about it is, you know the plastic that wraps your food, that price went up. The ammonia that's required to feed into the. Sorry, to the nitrogen fertilizer.
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A
Yeah, the nitrogen, nitrogen fertilizers.
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B
Fertilizer costs have gone up. Right. Food will be more expensive and then you have to transport the food from A to B. So basically like there's a lot of different vectors that are impacting like food prices. Right, right. And then, you know, commercial aviation, you've got some impact to the semiconductor industry with helium. I mean those helium tank, like if the tankers with helium so that don't get to their destination in time, the helium will literally like release from containers.
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C
They're not, I learned about this as well. They're not cooled, but they need to stay cool. And they just sit in these containers which, you know, are insulated or whatever, but they have like a 45 day life or something. Right, exactly. And the containers just automatically vent it back into the atmosphere. If that's time is. So you lose it.
- [06:27]
B
Yeah. And you need things like sulfuric acid to extract metals from ores. So there's all sorts of wide ranging supply chain implications that have fed into the market in terms of futures curves and inflation expectations. But they haven't fed into the market from the standpoint of, oh, I'm about to go to the grocery store and these tomatoes are a lot more expensive or the next year crop and things like that. I wonder how the real economy is going to deal with the implications of this inflation. And then in terms of some of the craziest pricing you've had in markets, it's been the rate market that has priced in significant hikes all over the world, whether it's in Europe, Eurozone, ecb, hiking, or the bank of England or the RBA or rbnz, those guys, their reaction function to higher inflation and higher inflation expectations is to hike interest rates. Hiking interest rates is fundamentally tightening financial conditions which shouldn't be good for risk markets. You've got this setup where even with a reopening of the strait, you've got permanent damage to commodity production. In addition, you will also have hoarding that will take place subsequently, even by
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governments in their strategic oil reserves.
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B
Absolutely. You can't get caught with your pants down again. And so I think the moment the strait is fully open, every molecule coming out of there is going to be bid. They will want as much of that stuff as possible. And truthfully I'm hopeful and I would love for this to be A permanent ceasefire situation. But for the entirety of my life there's been conflict in the Middle East. And so whatever ceasefire agreement gets done, I don't have a huge level of confidence that you are not going to have a re spark of the tensions.
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C
Even if it's not US and Israel, Iran, it could be something else. And you know, let's talk about that Citrini research report from last week.
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B
I thought it was so analyst.
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C
Yes, analyst number three. If people haven't read that, I really recommend it. One of the things that was so interesting, I guess at a high level, I'll just say Citrini research and investment research company based in New York. They sent an analyst to the UAE and eventually on to Oman with the goal of getting going into the strait like on a boat and talking to officials and locals about what the real situation is at the Strait of Hormuz. Literally using binoculars, looking at boats, seeing if they were passing through.
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A
It was very fun.
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C
It was almost like they referenced it like David Foster Wallace or even a Hunter S. Thompson where the journalist inserts
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A
themselves into the story.
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C
But one of the things that I think the key takeaway that they pointed out was that the strait isn't even actually really closed. It's closed in the sense that it's not being treated by the parties as international waters where you can freely traverse. But Iran has been letting through boats and an increasing number of boats, assuming that those captains or shipping companies get their permission. And they highlighted some examples of, you know, people. The FT today had a story saying that Iran was seeking Bitcoin in exchange for passage. Yeah, they addressed that and they said that while it had been widely reported that crypto or even Chinese Yuan had been sought by Iran to secure freedom of passage through the strait, really most of the ships were having their governments release diplomatically held funds. So what? They weren't even really quite being paid. And by the way, their sources said China also wasn't paying. So I think some one takeaway was that the idea that they're being paid in crypto, for example, probably not the that prominent of a case.
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A
Maybe they accept crypto.
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B
Yeah, but really I certainly would accept tether if I was them because you can get that frozen.
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C
But bitcoin ether or something like that. The main takeaway though was that actually the, the straight is open if Iran lets you through it. And they were going by that other island, not directly through the middle, except for one crazy Greek captain who just chugged right through the middle, which is
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A
bullish by the way.
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C
Probably means there's not mines there. But this is one of the interesting stories now. There's what, two or three thousand boats waiting to get through Ships, I should say they're not all going through, but they documented just while they were there, the Citrini research analyst number three, that maybe 15 then the next day 17 were getting through. And it raises an interesting point here because one of the negotiating points that the two sides, the US and Iran are saying, US is saying open the strait. Iran saying, give us control, we need control of the strait. Apparently on the ground, in the sea, de facto Iran is in control of the strait. Today they are letting some boats pass and most that don't get their permission are not passing. And it makes you wonder whether Iran has had a strategic victory in that sense because the non friendly boats are not passing, but those that deal with them directly apparently could pass. It also raises a question about the economic data that people are using. What is it? AIs data, this GPS information that you can get in Bloomberg and otherwise that show the locations of these tankers. It's not telling the full story that they're even during the conflict, some have been passing.
- [12:16]
B
Yeah, no, absolutely. But it's just like an order of magnitude question. And ultimately to have free passage through the strait, you need the insurance markets to loosen up. And I think you need a lot more ships to get more ships comfortable.
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C
You need more comfort than just like.
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B
Yeah, but ultimately what we've done, what the US has done in Iran is the way I would describe it, is if you talk to intelligence officials and military officials during the Bush 1, Bush 2, Clinton, Obama, Biden, Trump won, they all would have been like, the US Isn't handling Iran properly. They're just letting them kind of accumulate resources and things of that nature. And you finally actually struck where it matters at the same time. So you've limited their abilities and capabilities. At the same time, though, they are, you know, they're people that have lost all of their friends.
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A
They're resilient now.
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B
Yeah, they're dug in, super dug in. And it's not like the tensions have eased.
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A
Right.
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B
You know, I mean, in Lebanon today, like there's 89 deaths and almost 800 folks wounded. And so that element of tension between the Israelis and the Iranians and you know, the Saudis and the Iranians, et cetera, like, that's still palpable and probably more elevated than ever.
- [13:51]
C
Yeah.
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B
And so in terms of like lasting peace, like, I still think we have a long way to long ways off and you know, that should be like, I don't know, like if you were a captain that was on a ship trying to navigate through the strait, would you go through even with a quote unquote ceasefire right now? Like, would you risk it?
- [14:18]
C
Maybe if I was a crazy Greek captain that just plowed right down the middle. But no, it seems like you're seeing some Indian, Chinese, French, even perhaps get through with significant hurdle. Right. And working with the IRGC basically to get through. I mean, the question to me about the, with the ceasefire and these point plans, which, you know, there's a lot of fog of war, it's not like quite clear even if we're seeing the actual proposals, but Iran has a 10 point plan that they gave to the U.S. we have somewhat. A 15 point plan.
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B
15 point plan, yeah.
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C
And it seemed like the one, you know, President Trump indicated some willingness to use the Iranian proposal as a baseline for discussions, which really just means, like, we won't reject it outright.
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A
We'll answer these, maybe we'll say no.
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C
But one of our colleagues pointed out this morning that the things he's now saying are perhaps a reasonable baseline for discussion were things we'd outright rejected just a week ago. And so you just have to. This is one of these tough things with military conflict where once they get going, it's like Slim Charles said to Avon Barksdale. He said, he said, when you're in it, man, when you're in the war, like you in it, like it don't
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A
matter how it started, like you got
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C
it, you're in it.
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B
Yeah, right.
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C
And like this type de escalating a conflict spiral, very difficult. I mean, basically both sides have to walk back their demands in order for this to happen.
- [15:52]
B
Yeah.
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C
And even though they've got the temporary ceasefire, Pakistan, a very competent and well placed interlocutor here, close with China, you know, nearly a neighbor to Iran, has a relationship with the US
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A
From a
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diplomatic standpoint, it's not clear yet what a compromise looks like.
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A
Does it really look.
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C
Because Iran is asking for. They're saying they control it now and they intend to keep controlling it.
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B
I think what you're meant to do here is ignore the noise from the media regarding the negotiations. I think there's a very limited set of people that truly know, like how much common ground there is versus not. And I would rather let actions kind of dictate what you think is happening with the negotiations. And right now we have a temporary ceasefire and we've got the Vice President of the United States and the chief Negotiator for peace stuff going to Islamabad on Saturday. Right. And so those steps wouldn't be taken unless there was a super viable path to de escalation. And so I err more on the side of like people do want peace as well. And the current status quo is like, it's not great. I mean, you're having your bridges bombed, your military personnel killed, your nuclear scientists killed, you've had your entire air defenses taken out and the leader of the free world was talking about wiping out a civilization like yesterday. And so I think there's enough reasons for both sides to find common ground. And I think you'll have that. The question is, will it be lasting? And in terms of the market reaction function to, you know, a ceasefire, like I think you'll have a little bit more of the same. I don't think you'll have like another like, I mean this was a pretty aggressive rally and short covering squeeze and I think there's probably another leg to that trade. But in terms of, you know, the outlook for the next like six to nine months, you know, I'm much more cautious. But in the near term I think all signs are pointing to a resolution in terms of a more permanent ceasefire agreement. Sooner rather than later. I would say within the next two weeks you'll probably get something.
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A
All right, there you have it.
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C
Bimnet AB from Galaxy Trading. Thank you so much.
- [18:32]
B
Thanks for having me.
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A
Let's go now to my guest, Mert from Helios Mert, thank you so much for joining Galaxy Brains.
- [18:39]
D
Thanks for having me.
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A
I'm a big fan of you on Twitter. You're very prolific. I'm not sure when you sleep because you tweet so often, but you also are one of the rare, well followed crypto Twitter personalities on that application that posts really substantive content and has gained a following through substance. It's actually quite rare. So I hope our audience. You're what? 0x MERT on X?
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D
It's just that Mert now I removed the 0x. No more Ethereum.
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A
Was that the X handle marketplace at work?
- [19:13]
D
Yeah, exactly.
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A
I've been trying to get at Alex, but it's this like OG tech guy in, in Silicon Valley. And then you know, I just check it periodically, it's not working out well. Again, thank you so much for coming. I wanted to talk to you about a few topics. Solana Privacy, narrative wars in crypto adoption, maybe Quantum as well. Maybe we can start just Solana at a high level, you know, a year ago from today, which is April 8th of 2026, a year ago and before. And Solana was really riding high as the true insurgent general purpose L1 against Ethereum. The market has evolved since then. I wouldn't say so much that Ethereum is taking ground, but maybe Hyper Liquid is. How do you view Solana's position as a blockchain in sort of the market share battle of crypto these days?
- [20:04]
D
It's an interesting question. I would say when people talk about Hyper Liquid, they're generally referring to not the blockchain hypercore, but generally the application that provides perpetual trading. And when they talk about Ethereum, to me it's somewhat unclear what they're talking about. Like are they talking about base, are they talking about arbitrum, or are they Talking about the L1 or the future of Ethereum? So it's important to have some concise frames of reference. But in terms of as a pure. So I run Helios, obviously, which is a developer platform and the reason we build exclusively on Solana and I believe we're the only ones to do this is because when you look at what is required for a crypto to succeed, right? And I'm not talking about Bitcoin and store value type things like zcash as well, but I'm talking about entrepreneurs basically expressing their knowledge on chain and contracts and wiring up these components to build crypto native applications, right? So whether that's payments, whether that's swaps, whether that's RWAs, borrow, lend, all these different things, how do we make it? What do these people need to be able to order, to actually build lasting businesses without having to worry about, let's say, infrastructure details, right? So when me and you communicate on this podcast right now, we take it for granted the communications infrastructure that is super complex between us, right? The fiber optic cables, the encoding of the information. And so for crypto to actually succeed, you need these low entropy channels that you can express bits and information, and those bits of information also maybe have a crypto cryptographic properties such as, you know, being hard to mess with, being super secure, not having a single source of control. And when you look at that equation of things that you must have. So not only do you need decentralization and security, you also need usability, you need users and you need composability, right? And you definitely don't want to write a new smart contract every time you want to do something. And so you put all this together and I think the ideal manifestation of that is Solana, where if you are a product oriented person and you just want to build crypto systems that get users and that you can iterate with. Then you would pick Solana. Right. And one way to look at this is most of the apps Hyper Liquid withstanding that are really popular are basically Solana apps or at least they're disproportionately on Solana compared to how much market share it has versus Ethereum. Right. So things like Pump, Axiom, Phantom, Magen back in the day, these Launchpad things, believe all this, whatever, are generally with the main exception of really borrow and lend, which AAVE is extremely good at that. Although Kamino is up and coming, I would say Solana is, that's how I think of it. It's just like the best place to build a crypto business. Ethereum has its obviously perks when you want to be extremely rigorous in the trade off that you pick. So for example, let's say your use case somehow requires for you to run a node at home and all these different things. Perhaps Ethereum might be better or perhaps your trust assumptions for your app that you're building are important but not of primary importance and you just want the liquidity for an app then perhaps, and the app maybe is about synthetics, then perhaps Hyper Liquid is better. So that's kind of how I view it. I think there if you look at the history of really any platform that hosts developers on it, so anything from PlayStation to Xbox or mobile systems or Operating Windows and Mac systems and all these other things, there's always about three to four people in that design space that make up the market depending on the trade offs that they expose to the user.
- [24:10]
A
Yeah, I think that that is a helpful framing and it sounds more like you're saying we've gotten to sort of a level of maturity and differentiation between these platforms that you know, makes them, you know, some good for some things and others better for other things. I, I, which I think is fair. Do you think there's a, there's space in that market for a more permissioned chain variety like a Canton or a Tempo? I know there's been a lot of debate about that.
- [24:37]
D
Well, I think assuming Tempo, you know, at least their stated communications reveal that they are planning to decentralize and become more permissionless. You know, remains to be seen how likely that is given that there's also social risk of being on stripe chain if you're a stripe competitor, for example, but so I wouldn't put those in the same category. But in the case of something like Chanton, I think there's absolutely no space. No, I think exposing. You need to just derive the usefulness of blockchains from first principles and understand what those are. And the second you bring permissions into it, you just don't necessarily need a blockchain. I mean, you can get away with it and then perhaps you can use the reflexivity of the token to then gain more attention and then, you know, tap into some other distribution channel. But fundamentally speaking, if you, for example, the way they achieve privacy is basically that access lists. Right. Which is the same as Web two. Okay, that's great. So like, why using a blockchain in that sense, you can do much better if you just, you know, recreate Swift, which is a set of permissioned operators operating on some unified Rails. It's just a really different format of that. So, like, if I'm a builder, and I am, I wouldn't feel comfortable, you know, building my application logic on it and expect it to be stable over time. Now, if I'm a bank, perhaps it might be useful, but my incentive as a bank isn't to use crypto in the first place. So it's a weird, weird approach that I personally would not recommend.
- [26:26]
A
Yeah, it's been tried a number of times. I mean, I, when I saw Canton launch, I, you know, couldn't help but think about the, you know, blockchain, not bitcoin era of like 2016, where the banks all said, oh, you know, we love that blockchain. But bitcoin, I don't know, that's, that's like for criminals or something. It just, it seems like one of those ideas that refuses to die. But I agree too. It also feels like an intranet, you know, and the Internet is not built on private intranets.
- [26:56]
D
Exactly. Yeah. I mean, the main thing, and I have a few writings on this, but fundamentally the, the what makes a blockchain interesting in the long term is if you have shared state that's composable with all other actors, then you are basically compounding on that bandwidth. And then people can use that to build things that they just could not build in Web two. Right. I mean, for example, if you're a developer and you want to just write a piece of code that moves money from Malaysia to, let's say, Turkey. How, how are you going to do that today? It's actually extremely difficult. You need to sign up for some KYC APIs and maybe get access. And then even then there's so many fees and there's no unified interface for this. But blockchain is really just API for Money, Right. Or I call it the API for capitalism. And you know, you can put whatever adjective you or noun you want there, Internet, capital, markets, all this stuff. But that's the thing where you have people's local knowledge which is dispersed globally and time sensitive. When you have that knowledge able to be expressed on some unified, let's say canvas, then you have all these entrepreneurs building different things that are super useful without asking for permission from the banks. But otherwise, instead of using Canton, why not just use PayPal's APIs, right? It's fundamentally not that different.
- [28:22]
A
Yeah, I agree. And you wrote eloquently about another noun for what you're talking about, which was cipher capitalism. And you said that, I've got a quote here. You said that blockchains in theory increase the bandwidth while reducing the noise of economic knowledge propagation at planetary scale. It sounds like you are a open, permissionless, cryptographic network maximalist when it comes to this technology. And I think you've already explained pretty well because it's not just use PayPal's API to me, it's like just use a SQL database or something like you used to, which can be permissioned and shared. There are shared databases. I wanted to ask you a little bit on a more technical side about something happening in the Solana. Well, I guess being proposed in the Solana ecosystem, which is called Multiple Concurrent Proposers mcp, which at a high level, it changes how blocks would be produced and away from the sort of single leader model, right. Where one validator produces and then another and then another. And you're sort of your likelihood is weighted by your stake. If you could, at a high level, what is the change? What is the proposed change? And then, you know, what is the state of that at the moment?
- [29:41]
D
It's first worth understanding that. Yeah, again, like you said, it's a proposal. And so it's being proposed by Anza, which is the new name for Solana Labs, which is the main client entity. And they have good, I think it's called Constellation. They have a good website that's interactive, that helps you visualize what happens when you send a transaction. Where does it go, how does it get merged? But without getting too technical, the fundamental difference here is today when you send. So let's say you're on your phantom wallet and you send a transaction, that transaction gets sent through an RPC to either a set of validators that then forward to the leader or it goes directly to the leader. So the way it works is every slot, which is, let's say you have some. A lot of time period that you're a leader and you receive information and then you pack it in and then you emit that information and then the network confirms and then you have a block. And by the way, in Solana, the blocks aren't like these discrete steps that you might be used to from like Bitcoin or Ethereum. They're continuous. They're just always being streamed at all time frames. So but there's a few problems with doing that, right? You're basically giving that unilateral leader full control, or not full control, but within, you're giving them a lot of privilege to be able to do things. Like they can just not do anything. They can censor things, they can reorder things depending on how it's constructed, and generally speaking, there's some encryption, so that doesn't happen, but they can do a lot of things. And MCP is really just a way of saying, or as the name suggests, having multiple concurrent of these things such that, you know, if one of them censors you, there is another one or there's n set of other ones, depending on where you are in the geography that are likely to include you, depending on the fees and the economics and incentives at play. So it's, it's really fundamentally a way of increasing censorship resistance. And now it is certainly quite contested, I would say. So One person might say, for example, that current slot times in Solana are 400 milliseconds. And you know, one thing that might be useful to reduce the censorship possibility is, well, just reduce that in half such that they have less privilege than they used to. And then perhaps, you know, teams like Jito and Harmonic are working on different types of block packing systems, and perhaps we experiment with those. And once we do that, we take the learnings and then finally make the big change. So, and to be frank, it is a complex change. I think it introduces some moving parts that are obviously higher risk than parts that aren't moving or parts that aren't there to begin with. So I think we're still in the phase of debate, right? Like, and Solana is very good at this, where there'll be a proposal and then everybody will just fight the whole time. And but, you know, it's not like, you know, tinfoil conspiracy theorists on Twitter fight. It's more like nerds that are like, no, no, like, here's the algorithm or like, here's the method you should use. And so I would give it a few more months of bickering back and forth. Until there's some optimal refinements made.
- [33:12]
A
Yeah. How do you think if. Well, I guess let's table that. Maybe I'll follow up with you in the future once there's more concreteness to the proposal. But one bickering episode I recall vividly recently in the Solana ecosystem was regards to, in regards to reducing network inflation. That was last year. There were some various proposals. I know Galaxy Research put forth a pretty, you know, small proposal, but a sort of a high level idea of using futarchy to decide what the correct inflation should be. What are your views on, on inflation in Solana? It does seem like staking rewards generally are going down across all of crypto. Should they, what benefit or cost might there be in the case that they do come down?
- [33:58]
D
So this is a very debated topic and I think nobody has or not many people have the full picture. And so I'm actually one of the people who proposed or helped define the first proposal. But then I also made the second proposal which then I basically stopped. And so like the way it goes is if you look at the chart of Solana and generally what you'll find is somebody will show you the market cap chart and the price chart and they're like, oh look, the market cap hit an all time high but the price is low, right? Which implies obviously that the tokens in circulation have increased and it's not necessarily a great monetary system. Now most people associate this with inflation like the printing of new coins during later schedules. However, if you look at the data, it's much more. The dominating factor is really the unlocks where obviously Solana started. Not necessarily like Ethereum or, or Bitcoin, but more it needed venture capital funding. Kobe actually has a good piece on this where he compares like how the token models have evolved over time. And Solana was actually quite good overall it wasn't as good as Ethereum, but it was still pretty good. And then the projects that came after it, they were just incredibly bad. Tokenomics in terms of, you know, the private to public kind of flows or, or the returns you can expect. Now those are most, for the most part they are largely over. There's obviously some still remaining, but their effects will not be nearly as much as it was before. Okay, so then you look at. All right, what about the money printing itself, right? Like what is the, what is the set of properties that are concerning about how the network issues new tokens? And if you look at it, it's basically a curve that was copied by Cosmos and it's just decreasing over time, 15% year over year. And it is, I think at, at and you know, people will look at and think that the inflation is something like 8% or 14% but it's actually not, it's really much lower than that. And then you look at, okay, if I were to push for this proposal of actually reducing the inflation, what's the best way to do it? And the proposal at that time was a relatively complex one. It was based on the staking rate, right. Like it's, the framing is okay, how much do you want to pay for security as a network? If such and such percent of the soul in the network is staked, then if the target is higher than the current state, then perhaps you increase the staking rate so that people are incentivized to stake. And if it's lower, then it gets lower so that you're not incentivized to stay. But that's a pretty complex mechanism all in all. And you're not super sure how the second order effects of that might look like. I think one thing that threw institutions off was that they felt that it came as a quick proposal and that it wasn't necessarily in line with a mature monetary system. And so, you know, the proposal didn't pass. So like this was a proposal that was backed by me, Anatoly Multicoin and a bunch of others and it actually didn't, pass, which ironically shows that network is much more decentralized than even we thought because we couldn't even get it to pass. So now we're in a state where unlocks, there's not much of them and the inflation is going down year over year. And so it doesn't seem to, to be the biggest fire to tackle. I think there's much more interesting things, things like quantum things like increasing bandwidth and all sorts of other changes to make.
- [37:49]
A
Yeah, that makes sense I think. And it has the sort of urgency and the debate of it has sort of died down. I think that's right. Let's shift gears. You mentioned quantum. I know that there is plenty of interesting things to talk here in the space. There were those big papers from or ATOMIC and the Google Stanford team just I think last week, or maybe the week before that suggested that the math is simpler. The complexity of an eventual quantum computer wouldn't need to be as high as previously thought to run Shor's algorithm, which would let you know a quantum computer, brute force, ECDSA and other elliptic curve cryptographies. Still not one of these things is really built that's anywhere close to doing that. So it's like the sort of software and math side got simpler, but it seems like the hardware side is still elusive. But what is your view generally on the threat that quantum poses to cryptography and thus, you know, most major blockchains?
- [38:49]
D
Well, I think there's two things to look at here. One is that just risk management, the risk that quantum poses is, you know, nonlinear, fat tail, you know, black swan type risk where, or, or it's convex risk in that the benefit to preparing or the benefit to not preparing is basically zero, but the cost is basically infinite. Or I mean it's not infinite, but it's much higher than the, the, the, the counterfactual. So from a basic risk management perspective, I think it obviously needs to be looked at and considered seriously. However, obviously it is quite early. I don't think there's any reason for panic today. I think what the discussions or the new improvements should do in theory is communicate that, look, there must at least be a plan for this. It doesn't need to be implemented, it doesn't need to be fully ironed out, but you need to have some concrete answer in the potential, you know, case of new information entering the economy, which is that, okay, well, actually it moved up again by another three years so that you're not in panic mode. So I think, you know, I think bitcoin will be fine. I think one thing that has frustrated people, me included, is the complete dismissal of it from even the realm of possibilities, right? Which kind of communicates to me that certain members have either very interesting risk management or they're not necessarily interested in actually improving the systems. Right? Like when you are a big proponent of bitcoin, you're like, well, it's a huge threat to prepare for quantum because like, you know, such and such people have bags in the quantum companies. It's like, okay, now we're starting to get into a territory where perhaps the actual concept of quantum breaking, this cryptography, is not primary, but it's more so like a game of social clout. So I think it needs to be taken quite seriously, especially for things like Bitcoin and zcash where basically the entire premise is being bunker coin. In some sense it's a thing that needs to hold up in the failure of other systems. Things like Bitcoin or Ethereum and Solana will have generally an easier time because they're much more nimble versus things like Bitcoin. It is just extremely decentralized. Right? You have so many different actors and Diverse points of view that having some rough alignment beforehand is going to prove beneficial. And I think, you know, I'm, I'm a tech accelerationist. So my thinking on this is that the timelines will keep moving up unexpectedly, but I don't think it'll ever really be too late. So it's, you know, the short answer is I think the risk is real, but the panic is overblown.
- [41:56]
A
Yeah, I think that's a fair approach and thought process. One of the things I saw as it relates to Solana, although I think this would be true for all of them, is Solana did a pilot with Project 11 in December to I guess probably on a test net maybe you know, more but to test out some post quantum signature schemes and they it works. But one of the issues with the actual technology and mathematics behind solving quantum and implementing post quantum secure cryptography is that the signatures are very large. And crypto, you know, blockchains in particular, you know, a large signature doesn't matter too much for like TLS or something you use in your web browser. But basically all of blockchains are built around signatures and them being very small. And so it would be true for Bitcoin. I know there was a 2.5 kilobyte per signature proposed by a blockstream researcher for Bitcoin just last week that's still enormously larger than the current signature scheme. In general, I think they're 20 to 40 times larger than what we're all basically using, which is some form of classical elliptic curve cryptography. And the Solana one found that again with the current post quantum algorithm that they used, it would reduce the transactions per second, you know, the throughput on Solana by 90% to implement it because they're just so large, meaning you can fit fewer transactions per slot or block. You know, does your tech accelerationism, it sounds like it makes you think, you know, you probably will get quantum computing at some point. Does it? Do you have the same confidence perhaps that we'll also get a more durable and compact post quantum cryptography that we can all use that doesn't lead to major degradation in throughput?
- [43:47]
D
Well, I think if such a thing occurs, then what you must do is rethink the system design from first principles because now the assumptions have changed. If the assumptions were that signatures are cheap and small things and as a result you can pipeline the lifecycle of transactions in a certain way. Perhaps now that looks different, perhaps now there's some off chain components and maybe there's a ZK proof that hey, this is the signature and here's the part that's stored on chain. Right. So you would just rework with those assumptions in mind. But let's say quantum is 10 years away. I think by that point Solana will have scaled to such a point where I don't see it making a huge difference in performance because there's so many low hanging fruit. I mean we just released or we're in the process of releasing a new token program that'll make tokens transfers 20x more efficient. And that's just one change. Right? So I think there's a bunch of those.
- [44:49]
A
Yeah, I think that makes sense. I also am an optimist about this problem. I guess some bitcoiners would call me a pessimist because I believe it exists, the potential problem. But you know, that even something as, you know, disparate and contentious as bitcoin development will eventually decide that the risk is high enough to justify some work here and that also humans are smart and we eventually figure stuff out. And it used to be, you know, 20 kilobytes, now there's a 2.5 kilobyte one, et cetera. And that will probably come down over time. So I agree. I don't think people should panic. I like the way you said that before. Before we wrap, just a couple more questions. One, on AI, there was just a new story. I know you're a big user of AI and I think everybody should be. There was a story that came out that Anthropic's new model, Mythos is so incredibly powerful that they are guarding it and only giving early access to a select number of elite institutions, banks, mag7 companies specifically, because it is like an order of magnitude better at penetration testing and finding vulnerabilities in code. And they said that they'd found thousands of zero day vulnerabilities, which are those that are previously unknown to the developers of the software. I don't know, maybe your reaction to that. But also then one of the thoughts I had was, gosh, I wonder if they've pointed it at Bitcoin or at zcash or at Ethereum or Solana. It sounds like they've been very responsible about this. And maybe to the extent they found zero day vulnerabilities, they've been doing responsible disclosure rather than release the model to the public. But you know, generally what does that make you think about the fears and power of AI? But then also, you know, what do you think the odds are that there are, you know, zero day vulnerabilities? In crypto that we're not aware of that maybe this thing is finding.
- [46:44]
D
Well, the odds of that are almost certainly 100%. As long as humans are writing code, there's just going to be issues in information transfer between the mine and the, let's say, the transistors. Part of me with this mythos stuff thinks there's certainly a large element of marketing to it because this is not necessarily the first time we've seen an approach like this. It seems to be a very common thing in AI to message it like this. And this was before even we got LLMs. You know, it was all about AI safety and doomerism. And, you know, this thing will destroy everything. And certainly it's extremely good at coding, and I can definitely see it discovering security issues that were previously undiscovered. Now, I don't know about thousands
- [47:35]
B
or,
- [47:36]
D
you know, things that are. I'm sure they found a few. If it were thousands, though, that seems unlikely to me that no human had found them before. Given that these systems like these. I mean, I worked at the big tech companies. Their security teams are insane. I mean, like, it's hundreds of thousands of people, like, many people working with different contractors and all this stuff, you know, Palo Alto Technologies and whatnot. So I think, you know, I. The question I go to here is like, okay, well, what happens when Deep Seek gets access to this or other regions of the world? Right? Like, what is going to happen then? And I have been pretty paranoid recently since, like, the Drift hack and how North Koreans were involved in, like, very elaborate social engineering. And so I have been thinking a lot about this, you know, in terms of, like, hardening wallets. You know, this morning I was like, you know, it's really weird that we are soaring wallet seed phrases on browsers. You know, they're encrypted, sure, but, like, they're chrome extensions. That's kind of wild to me. And so I think there still needs to be a lot of growing up, and I think AI will accelerate that. The trick here is, of course, how do you survive this without breaking? Right? There's a. There's a. There's a. A potential where you come out much stronger and antifragile, let's say. But then there's a place where you die, and it's like, how do you make sure you don't die? And I think everybody in the industry needs to do a very thorough job, and it needs to be a very conscious effort. The Solana foundation just released, you know, a very big program for helping Teams harden their security, but I think it needs to keep happening. I think especially like, even with things like the Iran war, which is a kind of a tangent, but like, a lot of that was due to like, the Israelis hacking the infrastructure in Iran, which is like, people don't even know. Like in, in, in real life, it's very easy to understand security threats because, like, your heart rate goes up and you're like, okay, I'm gonna die. But on the Internet you don't even know that you've been exposed. So, you know, we'll see how it goes. I certainly think there's issues in blockchains, though.
- [49:53]
A
Yeah, it would make sense that there are. I mean, part of me hopes that, you know, with something like Bitcoin or Solana, Ethereum, like they've been around for so long with so much code available that like, it's the biggest bug bounty in the world and surely they've already been looking. But I do, it seems like the pace of AI development, particularly on the frontier models, is, it's astonishing. Right? And it may even be accelerating, not even plateauing. I think your point about deepseek is really interesting as well. Maybe one last AI question because, you know, we're talking, that's an anthropic model, it's private, it's a paid proprietary model. But you've got Gwen and Deepseek, and I saw Google release Gemma 4 as open source. Do you think there's a time maybe when the frontier models kind of run out of data to train on and so they sort of plateau and then the open source models take over or catch up?
- [50:54]
D
Well, it's, it's an interesting question. It's sort of, it's similar to like the operating system wars of like Linux and Windows and Mac, except now like the currency is. Seems to be compute and how fast you can do these things. So I studied AI in school, you know, majored in math, and you know, I actually built my version of JARVIS back in the day with some deep learning algorithms. And as, as far as I can tell, I, I think there, there is. And I, I was just copy David Deutsch here who's like the Oxford physicist who invented quantum computing. I think, I think there's a fundamental limitation to scaling this way that like once you get to a certain level, like, the improvements are just can't be exponential. Like when you compare it to something like the human mind and how it computes things, it uses much less resources. Right. So there's something clearly different with different types of intelligence. And like the way an LLM works is really extremely sophisticated autocomplete and so like I think there's a lot of art and science in the contextual engineering of IT and you know, these harnesses and orchestration and stuff. And I think that's where open source will be very interesting. Right. Like openclaw seems relatively simple, but like it was an open source, it is an open source project that the AI labs with all their funding just did not think of for some reason. Right. So I think there'll be a lot of those. But like in terms of like the pure underlying, let's say the engine, the physics of it, it's going to be very challenging for open source to compete on that front.
- [52:37]
A
Yeah. One of the sort of optimistic things, as a big supporter of open source technology that I am that I think about, it's almost like another analogy is like Proof of work and you have the everyone can mine on their CPU and then you need a PGA and then eventually asics and obviously GPUs in there too. And it results in a much more centralized big data center, you know, bitcoin mining operation. Right. It centralizes over time around big computer. And one of my hopes is that the open source models sort of catch up to the frontier models. So you actually see the reverse happen. Rather than, you know, giant data centers feeding Claude, you know, prompts and inputs back outputs back to users from huge data centers is a decentralization that may occur where everybody's Mac Minis and laptops like get so good that perhaps you get like a dispersion of the compute out to the people as opposed to a forever centralization.
- [53:33]
C
I don't know that that would actually
- [53:34]
A
happen, but it does seem like it might be a trend that goes the opposite way that Proof of Work did one day as those model. If the, I mean it would require the frontier models to kind of plateau in terms of their level of intelligence for that to happen. But I guess a man can hope, you know.
- [53:52]
D
Yeah, I think one idea I had that I was looking forward to back in the day was like the idea of people having their own data centers like in their garages in some sense where you just have these stacks of hardware. Like, I mean people already do this with gaming, right? Like with PC gaming, they do some extremely custom shit. And now that the other side isn't necessarily like, you know, Elder Scrolls, but it's actual intelligence that gives them a better incentive and you know, perhaps there's something, you know, deep in projects are kind of trying this But I haven't seen a good approach yet. I think there is a world in which you have local data centers that are much more decentralized. But again, you're always going to run into the same problem, that the giants have this weird capital edge over you where they can raise almost infinite amounts of capital, and partly through this marketing that they have, where they're like, if you don't give us money, you're literally going to die. That's basically their strategy. And so it is hard to compete with that.
- [54:57]
A
Yeah, yeah. All right, last question here, Mert, before we wrap. You know, you've talked about zcash and privacy a lot. I know you've been building in the zcash ecosystem as well. You care a lot. You've written about cipher capitalism. You're undoubtedly on the open and permissionless side of this industry. What gives you hope and excitement about the growth and adoption of permissionless blockchains going forward?
- [55:24]
D
And with your work at Helios, I would say that. And the reason I've been talking about the cypher capitalism thing, which is a word I made up, is that if you just look at the development of other just of progress in general, the concept of progress in science, in biology and in the economy, it always happens through the same mechanism, which is the P2P voluntary exchange of pieces of knowledge. And then they're basically fighting with their environment or their peers until the best ones propagate up, right? This is how biological evolution works. This is how science works, where you publish a paper, you criticize the ideas until you have things that basically error correction reduces and you're like, okay, this is pretty approximate to reality. And capitalism is the same thing because like, it's the economic model of that concept of knowledge propagation. However, it has. So that is to say, capitalism is an information system. However, in real information systems, you have the concept of like a stable carrier, right? Like when I'm, when we're talking on this call, you know, our messages are encoded in, you know, zeros and ones and some redundancy. And that's a very high entropy piece of information. It's unstable, it contains a lot of surprises. And the way that works is that the carrying channel, the wires, the antennas themselves need to have low entropy. They need to be very stable in how they propagate that information so the information itself doesn't get corrupted. And so that's actually a very perfect parallel to how the economy works where like, you know, an entrepreneur built something, but then perhaps somebody prints money or perhaps there's some rent seeking happening or property rights aren't respected or like your money is surveillable and as a result you are coerced into not doing something. And so it's a very lofty information system, but with blockchains you have a system that is in premise a giant financial computer that can be used by everybody, but controlled by nobody. And so it is like the perfect evolution of that information system that you can use to evolve capitalism. And capitalism is basically the meta machinery, which is to say it's the machine that makes the other machines possible. And so if you have a world where you have, you know, private encrypted money, you have contracts being enforced by cryptography as opposed to humans. And like, humans will never get out of the loop fully and they shouldn't either. But like, we have already run the experiment. What happens when you apply cryptography to these information systems to increase the bandwidth and then reduce the noise? And crypto is really, and I haven't seen it frame this way, but I think it's the correct way. With the system, you can actually scale capitalism from not just America, but to the entire world. Right? When people have access to dollars or other currencies and there's free flow of capital, then the best ideas kind of propagate up to the top and more people have access. And then I think that's like the thing that's missing that. Anyways, that's what excites me. I'm not super excited about any particular vertical in crypto, but really just this meta concept of it being the rails for improving economic knowledge and its propagation.
- [58:52]
A
All right, well, well said, Mert, co founder and CEO of Heliosrt on X. Mert, thank you so much for coming on Galaxy Brains.
- [59:01]
D
Of course. Thank you for having me.
- [59:03]
C
That's it for this week's episode of Galaxy Brains. Thank you to our guest Mert from Helios and our good friend Bimnet AB from Galaxy Trading. Everyone have a safe and happy weekend and we will see you next week. Thank you for listening to Galaxy Brains, the weekly podcast from Galaxy Research. I'm Alex Thorne, head of Firmwide Research at Galaxy. Follow me on X at intangiblecoins. Follow Galaxy Research on X L X Y Research. Read our written reports@galaxy.com research and don't forget, if you like Galaxy Brains to like and subscribe on your favorite podcast platforms like YouTube, Spotify, Apple Podcasts and more.
- [59:41]
A
We'll see you next time.