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As a chef, I know flavor doesn't begin in the kitchen, it begins on the land.
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visit WestHome.comMaitland to learn more and taste
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a story only Westholm Nature Led Australian Wagyu can tell.
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That's W e s t H o
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l m e.com M-E-I l I n hi everyone.
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Welcome to Unchained, your no hype resource for all things crypto. Laura, I'm your host Lauren Shin. Thanks for joining this live stream. Before we get started, a quick reminder. Nothing you hear on Unchained is investment advice. This show is for informational and entertainment purposes only, and my guests and I may hold assets discussed on the show. For more disclosures, visit Unchained Crypto. Com Quick note before we get into today's episode, Bits and Bits now has its dedicated feed. We're spinning up from the Unchained feed and moving to a new podcast and YouTube channel. So if you want to keep up with our weekly live streams and macro meets crypto breakdowns, make sure to subscribe to Bits and Bits directly. We won't publish their until March, but subscribe today so you can be ready for launch. Be sure to subscribe to the new feeds@unchained.crypto.com BitsAndBPS if crypto taxes feel overwhelming, you are not alone. That's why Crypto Tax Girl, a team that's been helping crypto investors since 2017, is offering $100 off on one on one crypto tax help. To get $100 off your crypto tax services, go to CryptoTaxGirl.com Unchained Again, that's CryptoTaxGirl.com Unchained Today's topic is Ethereum and where eth can go from here. Here to discuss are Joseph Shalom, CEO of Sharplink, and Danny Ryan, co founder of Etherealize. Welcome Joseph and Danny.
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B
Thanks Lorem.
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A
Ethereum's been on a path of a slow shift, I would say over the past couple of years, starting first with outside criticism which kind of moved to community unrest which led to changes in leadership. The foundation also led to the founding of Etherealize, and this then has resulted also in some Changes in the speed of development and shipping upgrades. And we have now seen that the rollup centric roadmap is being abandoned. It seems like Ethereum is finally changing its culture a bit more. It's becoming more compet. It's not as sort of like above it all as it has been in the past. And so we are seeing Ethereum to be more proactive than other chains in certain ways, like facing the quantum threat head on in a way that Bitcoin is not, or focusing on AI. And we'll connect with crypto. So you both talk to Wall street quite a lot about Ethereum and I was wondering, are they perceiving these changes or are these just developments that are being noticed by crypto? Twitter, you know, what kinds of questions are they asking about Ethereum or what do they tend to focus on in conversations with you and Joseph, why don't we start with you?
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B
Sure. I think the largest institutions in the world are not monolithic, but they're very, very consistent in what they care about. They care about security, they care about trust, and they care about liquidity. And as they're thinking of just a complete shift from to 24 by 7 trading programmatically on decentralized platforms, the conversations are almost entirely about ethereum and the layer two community around it. Because that's where you have 10 years of uninterrupted uptime. That's where you have the deepest pools of liquidity across stablecoins and tokenized funds. And frankly, they don't want to go from one vendor lock in database system to another. They want a truly decentralized platform and Ethereum offers all those attributes. So our conversations back when I was at BlackRock and even today leading Sharplink, Ethereum is really the platform that people are talking about and you don't hear about some of the other specialized L1s as much as you have in the past.
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A
And when you, you said that, they also asked about the L2. So like, what, you know, what are they asking and how do they perceive the difference or how do you even explain how you know the relationship?
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C
Sure.
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B
I think if you look back a couple of years ago, frankly, from my time at blackrock when we were speaking to thousands of institutional and wealth advisors, they knew that tokenization of all assets were coming. They just wanted to make sure the future of finance had the throughput capability and Ethereum Mainnet back then was still in building and scaling mode. And you had the L2s playing a really important role of providing that throughput while being built on top of the security mechanisms of Ethereum, with the advances and the step function increases in transactions per second and Throughput on Ethereum mainnet, you're hearing less about the L2s. You're hearing a lot more about, you know, living on the security platform and the decentralized nature of Ethereum mainnet. So it's not that the L2s are not significant anymore, it's just that mainnet is catching up and getting ahead.
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A
Okay. And Dan?
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C
Yeah. I mean, on the L2 stuff, there's a lot of reasons an L2 might exist, right? Like scalability is 1:1 L2s are always going to be more scalable than Ethereum mainnet, regardless of whatever technology is embedded in there, because they are just essentially compression algorithms on top of that. But then beyond that, there's a lot of other reasons that an institution might want to maintain an L2 for its own infrastructural purposes, for its own business needs. And that might be one. You get the security of Ethereum, you get the liquidity of Ethereum, but you might need certain privacy features baked into the virtual machine for the applications that you need. Or you might want to have a more bespoke way that it interacts with the front ends that your users manifest in. For example, base is a great business, a great business on L2 on top of Ethereum, their differentiator there. And the reason that it's so valuable to them is because of the integration into their distribution mechanism, the integration directly into their applications and so forth. Institutions. It becomes a tool in the tool chest on how to integrate with and connect into Ethereum.
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A
And so, Danny, for you, when you talk to institutions, if they end up choosing Ethereum, why do they choose Ethereum out of the other choices, the other chains?
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C
Yeah, I mean, Joseph said it, but at a certain point, Ethereum is the answer of like, you don't lose your job for betting on Ethereum. It's the thing that's been around for 10 years. It's the thing that if they have internal teams and any sort of Expertise, they have EVM and Solidity teams, it has 100% uptime, it has the best in terms of a programmable blockchain. The only compelling narrative of no one controls this, no one can censor me. I don't take on counterparty risk for using this as a base infrastructure. And given all of these things, assets will go where there's demand for assets. But when we're talking about fundamentally upgrading financial markets and financial infrastructure, it's Kind of the only game in town.
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A
And I was curious, so how do you pitch people on the value of Ether itself? Like pretend that I'm an investor. I'd love to hear how you're pitching the value of eth, how you maybe talk about the tokenomics. How do you explain. So if I'm an investor who's normally used to analyzing equities a certain way or something, how do you explain that framework to them? How do you help them understand what the value is?
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B
Sure, I think if you take a step back, the first thing we do is we explain the Ethereum opportunity which is stablecoins, which tear about 310 billion going to trillions. Tokenized assets today are about 32 billion going to trillions as well. Institutional defi adoption is happening like we've never seen before. We're going to get to agentic in a minute. So just first explaining to them, and they agree wholeheartedly that Ethereum the ecosystem is going to be the future financial settlement layer for finance and a lot of value creation, that's the first step, explaining that it is going to be the future world ledger. The second is to do the right thing and explain that Ether, the token is what's going to secure these transactions. And as the Ethereum ecosystem grows, you need more Ether to secure these and settle these transactions. And therefore Ether ends up becoming a trust commodity. So you start with the principles and the fundamentals. Let me say what we don't do. We don't make up numbers and talk about short term price predictions for Ether. I think you're setting yourself up for failure. Most people who do that really struggle when you look back at their predictions. And second is, I feel very strongly that the second narrative that people use typically is that we're little brother to big brother Bitcoin and that Ethereum by definition is just some relative coefficient of the value of Bitcoin and they need to trade together. I think what we're trying to explain is there's intrinsic value and Ether is going to be the trust commodity that's going to secure the future of finance. And you should be owning this and it will appreciate in value. There are probably 12 different metrics that you can use to measure the intrinsic value of Ether. Actually there's a great website called Ethval which, which hash had put out which explains those metrics and lets you choose them. But I think the number one thing is not to make up numbers. And number two, we're not a derivative of Bitcoin. It has intrinsic value to the future of the financial system.
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A
And Danny, actually I wanted to ask you a variation of the same question, which is, you know, I'm sure you're aware in the ultrasound money days there was this notion that the value of ether would be tied pretty tightly to usage on the network. And you know, now like once, once they started scaling the L2s, then that also was kind of left behind. So nowadays what do you see as the main factors that drive accrual and value to eth?
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C
I, I'm not a, I'm not a big ETH pitch person. I focus on fundamental value of the platform. I focus on mass adoption of the platform in very exciting ways. I do believe that the asset sitting at the core of this has many value cool mechanisms in relation to, you know, as we onboard the global economy. As for, you know, if we're gonna. If you only value it on ultrasound money and on essentially some sort of weird cash flow model, that's, that's, I think the way you, you would value it is you look at the future when people, when you've onboarded the global economy and not today, and you focus on scaling today. And I think that's what we've done. But I believe as Joseph mentioned, there are many, many value accrual mechanisms in relation to the mass adoption of this platform.
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A
Okay. And potentially we'll see more of them once the L1 starts scaling and we can go into some of the sort of interesting things that they're going to be doing in that regard. So I phrased it as abandoning the L2 centric roadmap when I made my intro and I know Danny objects to that. I also, you know, said said something like that on Twitter and someone again tried to argue with me that they didn't think Ethereum was abandoning roll up centric roadmap. But I don't know if you got. Well, Danny, I know you don't listen to podcasts, but even the bankless guys, they are admitting that Ethereum is leaving that behind. Is, is maybe the most neutral way to say it. But the point is, you know, so like even, even Ethereum or not Ethereum, Vitalik wrote in his X post, quote, the original vision of L2S and the role in Ethereum no longer makes sense and we need a new path. So, so point is change.
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C
So if you read Vitalik 1, Vitalik is one person. There are many voices, there are many perspectives. It's an open platform. You can do whatever the hell you want. On top of it, there is blob scaling and you can use it. So if an L2 brings value to you, your business, how you want to construct the reality, build an L2. It's a trustless system. If you read Vitalik's post, I think it distills into two things. One, do better. What the hell? We're this many years in, we don't have fully trustless roll ups. Like, come on guys, what are we doing here? Why do we have these poor constructions? The technology is there. Two, there's going to be sufficient, there's going to be a lot of skill in O1 given the way we can bring in all of the games we've had with ZK VMs in this. That's awesome. Like we can Trustlessly scale the L1 without taking on the sacrifice of decentralization. And thus if you're going to have an L2, you need to have a differentiator. Which is one of the reasons I was so excited about L2s at the outset. I was like, this is going to like, the EVM is the base. And then you can experiment with virtual machines, you can experiment with more constrained spaces, you can experiment with things that are better for formal verification, you can do all sorts of stuff. But everyone just did the EVM because that was the naturally easy way to kind of begin to build this technology. But again, do better. Two, differentiate. Have a reason for an L2 other than scale. And I think we're going to see that like base exists because they have a great distribution and great UX and can integrate deeply with their user base. We're going to see L2s that exist, for example, like Aztec, because they're a privacy first. L2. You inherit the security of Ethereum, you get the liquidity of a security Ethereum and you get a different environment. You get something that Ethereum doesn't bring. And so that's not an abandonment of L2s, that's a. Let's look in the mirror, let's think about, you know, we're this far into the. Into this.
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A
I meant the abandonment of the roadmap being tied to L2s. Like because now they're going to, you know.
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C
Well, now it's, now there's the L2s existence. We will continue to scale blobs through additional advanced technology on the L2 on the P2P layer and we'll scale the L1. So I think it's additive if we look at these things rather than abandonment.
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B
I agree with Danny. I just think that, you know, there was a period of time when many L2s were more focused on token appreciation than token utility. And I think what Danny's saying, and I agree with him, is that we're going to be in a flight to utility, a fright to differentiation and a flight to quality. And if you're just L2 number 76 relying on your tokening and marketing and biz dev dollars, I don't think that is going to be the future because I think you're going to have a very hard time differentiating yourself. And token values now should be trading based on utility, not on marketing.
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A
Okay, so yeah, let's talk about some of the tech upgrades that are coming to Ethereum. First of all, as I mentioned alluded to earlier, it's accelerated. It's tech roadmaps in that they can do two upgrades a year, which you know, I think people are very happy about. I even saw somebody has Vibe coded a client, so that's kind of interesting. Anyway, so in 2025 it deployed both Petra and Fusaka. And this year we're going to see Glamsterdam and just going to. I'm just going to take a stab at a pronunciation here. I'm going to say hey, because I think Bogota is like part of the name anyway. So a number of the tech upgrades that are being included in these look kind of interesting to me. One of the ones that stood out was encrypted mempools which can either reduce or even maybe prevent sandwiching and front running, which are some of the more toxic for toxic forms of MeV. But I was wondering what you guys are most excited about in these upgrades and which ones you think will be especially appealing to institutional players.
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C
Yeah, I mean I'm taking a look at. So I'm not deep on Ethereum upgrades right now. I spent all my time talking to people on Wall street and figuring out how to upgrade markets from first principles. But I'm taking a look at these looks like in Glamsterdam and try and propose a real separation. This is nice. This helps reduce the reliance on these builder markets or at least make them more resilient and also has some nice to have scalability that shows up. I think, you know, this, this is continued nice improvement. I don't think institutions go, oh my God, I'm so excited about that. But it does make this a better, more resilient platform. The block level access list is really cool. That's going to be one of those dozen upgrades that allows us to scale the L1 more. So without even bringing in the ZK VMs that are going to allow it to scale orders of magnitude. So again these are all nice to these like from an institutional perspective these aren't like oh that's the thing. But they, they continue to show Ethereum can upgrade. They continue to show that Ethereum is focused on resilience and focused on, you know, the structure, the foundation of the platform. When we look at hegota, the only thing I'm seeing in there right now is fossil that's forced fork choice, enforced inclusion list. Essentially it's a censorship resistance addition into the layer. 1 It's interesting, sometimes people are like well wouldn't institutions not want that? Actually they would. They want this open neutral infrastructure that has global guarantees no matter who you are. And the avoidance of being able to be censored actually is a mega boost for that. So there's no world where my counterparty that's preparing to prevent me from getting transactions goes to for example, a proposer, a validator, bribes them to not includes my transactions because this becomes infeasible under certain assumptions as you lay this on. And so censorship resistance adds to the reduction or elimination of counterparty risk at the infrastructure layer. So that I think if we explain it properly and put it into the lens of what institutions really want out of this open financial layer, it's a huge value add. So I'm really excited about that one.
- [19:31]
B
I would just add Ethereum has proven that because it has a really strong mechanism and development plan in its foundation, it can do multiple releases a year consistently without downtime. I am less focused on the individual major releases and just the multi year scaling and throughput that we are seeing on the platform. And the reason why I say that is I came from Blackrock, I spent 20 years, you have these giant institutions who really care about economic security and finality but in massive scale. So Laura, to your less crypto native listeners, there is a day every year where the MSCI index rebalances. It's a month end and it's a highly volatile day and you see the industry have to rebalance thousands of portfolios across millions and millions of trades. I think institutions want to know that when they have a day like that, an index rebalance on a volatile day which is a month end, that the networks they support will be available and 2 they can support the throughput. So just the multi year roadmap to get step function increases in throughput I think is going to be what institutions are going to focus on most beyond the trust and security.
- [20:50]
A
Yeah, there was one other thing that Was so interesting to me is yesterday Vitalik published a blog post talking about ways that the L1 will scale and one of them was something called multidimensional gas. I don't know if you guys happen to see that or if he. Like Danny, do you think you could.
- [21:06]
C
Yeah, we've been talking about multidimensional gas in the research forums for years and we actually do have multidimensional gas on mainnet right now. Two dimensional, we have the EVM execution gas and there's a separate gas associated with blobs. Essentially, when a resource, when two resources aren't fundamentally competing with each other, you could think about breaking them out and pricing them and having their own markets and their own limits because you can for example, parallelize them so that the processing, the load that comes from handling blobs is independent from the load that comes from handling the evm. So these are separate gas markets. You can imagine the load with respect to state reads and writes, which is disk, is different than the load for computation, like adding numbers, multiplying numbers, which is cpu. So we can get additional gains by breaking out these gas markets and allowing for each one to handle kind of the worst case on that particular resource. So yeah, this is, I mean, I, I teach a class at university. I think we've been talking. I, I remember talking about this about four years ago. So it's, it's been in the lexicon, it's just bubbling up as, as real.
- [22:19]
A
Okay.
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B
For a simpler, for a simpler mind like mine, you know, you have a supply and economics on any network when there are times that operations are too cheap, you could potentially have overloading bottlenecks. And when times that it's too expensive, you can limit throughput. This helps solve and balance that problem. And that's what's going to happen in the real world when there are days when there's massive amounts of transactions and days when it's much lighter and you need to be able to be available on both days in an efficient manner.
- [22:53]
A
Yeah. When I was reading about it, it honestly reminded me of the DDoS attacks back when in the fall of 2016, some anonymous attacker kept attacking Ethereum. And they were doing it in this way where they were figuring out how certain functions were mispriced in terms of gas. And when I described this in my book, I said it was like trying to run a bakery into the ground by buying a million of the one muffin that is being sold for less than it costs. And, and, but this attacker did it for like literally every single thing that was mispriced, they would do one and then after they fixed that, then they would like do another. And so anyway, so I made Ethereum better. Exactly. Which I also mentioned in my book. I said that it was like set up for to. To. To handle a lot more transactions, which in my mind is what enabled the ICO craze to happen in 2017.
- [23:50]
C
It was a good fire drill, honestly, to happen then and not yesterday. Yeah. I mean, essentially it's very similar here where there's a maximum amount of disk reads and writes that you're comfortable doing and not dosing the network, but there's an independent amount of computation on the CPU you're willing to do. And let's just break these apart and think about them independently. That's what three dimensional gas losses do.
- [24:14]
A
Yeah. So in a moment we're going to talk about some other upgrades and new priorities for Ethereum. But first I'm going to take a quick word from the sponsors who make the show possible. Quick note before we continue with today's episode. Bits and Bips now has its own dedicated home. We're spinning off from Unchained and launching a standalone podcast and YouTube channel focused on the Fed macro, AI and how it all collides with crypto. If you want to keep up with our weekly live streams and macro meets crypto breakdowns, make sure you're following Bits and bips directly. We won't start publishing until March, but getting set up now means you'll be ready on day one one. You can find the new Bits and Bips channels at Unchained Crypto.com BitsandBips. You can also find us by searching Bits and Bips on YouTube, Apple Podcasts, Spotify, or wherever you listen. If you're looking for help with crypto taxes, Crypto Tax girl is offering $100 off for Unchained listeners. They provide personalized crypto tax reports and returns and spots before April 15th are limited. Go to cryptotaxgirl.com Unchained to save $100. Once again, the link is cryptotaxgirl.com unchained. Back to my conversation with Joseph and Danny. So there's one other upgrade coming which looked really interesting to me. The zkevm, which, you know, there's a certain redundancy built into a lot of blockchains. And this just seems like it makes things so much more efficient without necessarily, you know, having a big trade off in terms of, you know, decentralization or censorship resistance. Danny, can you talk about what that yeah, yeah.
- [25:57]
C
I mean, so the same technology that powers ZK roll ups, which I think we've poured maybe billions of dollars into in the past five years, so reached some production capable sound constructions here that, that have nice scalability, essentially allow compress transaction execution and verify a simple proof instead of running all the transactions. This technology now that is becoming so hardened we can begin to think about what does it look like to integrate that into layer one Ethereum and get the same types of compression that we get out of the ZK roll ups. And this is really nice. In the past you just turn the, if you turn the gas limit up naively on L1 you begin to get a lot of centralizing pressures on L1 who can actually verify the chain. What types of resources do I need to run a node? Those begin to. At a certain point you're like, oh, I have to have a supercomputer in a data center and I've made a super centralized component. But if instead, instead of running all of the transactions I can execute a succinct proof that shows me that the transactions execute correctly and what the resulting state is, then I can cryptographically verify the block is correct and where it brings me instead of having to execute everything myself. And that's what the ZKVM allows unlocks. And so we, we get to essentially turn up that transaction knob without layering those same centralization pressures that if we did it a couple years ago, you would end up with a very centralized chain and construction at the L1. So this is huge. This is huge. You mentioned no trade offs. There are trade offs. This brings in a new complex component into the L1. Complexity is evil when you're thinking about resilient distributed consensus systems. And so we have to find the right path to ensure that it's resilient. For example, maybe layering multiple ZK VMs and having them to agree. So there's a soundness issue with one. It doesn't bring the whole chain down or the types of formal verification that we need to employ or all sorts of stuff. But it's going to be a very rigorous process to get from OK this stuff works to it's time to deploy on Mainnet, but it's super, super exciting.
- [28:29]
A
So last week Vitalik tweeted that Ethereum was now going to be focusing on what he called real defi. And he even also said defi is a central part of the value that Ethereum provides, which a lot of Ethereum people commented that this was in contrast to an attitude previously that was more dismissive toward Ethereum. And in an Ethereum foundation blog post Charles St. Louis and the app Relations team wrote, the Ethereum foundation believes in defi punk, not finance that's marginally better than Tradfi, but finance that couldn't exist without Ethereum. So some of the priorities they mentioned were security, which I'm sure in the age of AI feels even more important. Decentralization, privacy for everything from stablecoins to trading to lending and more. So what would you like to see Ethereum support in terms of making Defi better or what problems about Defi do you feel like Ethereum needs to resolve?
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B
Well I think the first thing is I'm focused on institutional and if you think about what institutions really care about to come on chain, I think they've given up on permission blockchains. Let's just put a pin in that. We don't want to use that word anymore. But they don't fully understand permissionless unless there are confidentiality and privacy features. And whether you talk about Defi or just Ethereum Mainnet, I think there's incredible work happening at the Ethereum Foundation. There's a group called Privacy Scaling Explorations Team and they're doing four or five things that have never been done before and to be honest with you, some of them were the domains of L2s who are privacy specific domains. And Laura, I'd love to give you three or four examples because I think it's going to change how people not only interact on Ethereum but how people interact with institutionally on Defi. The first is just the idea that there'll be stealth addresses that you can create a one time non linkable address that makes it much much more harder to track transactions based to users identity. And then in Defi if institutions are going to participate they're going to want anonymity. The second is you're going to start seeing encryption capabilities that are fully homomorphic and to like the layperson. Look at a project like Zama where you can keep balances on chain transaction data encrypted but still interact with it using these new mechanisms. You can almost think of it as the Internet HTTPs for blockchain. And the idea of having privacy tools with Ethereum, basically embedding these capabilities into the user experience. So instead of having to go off chain or build new applications, these privacy tools are going to be built directly into wallets. You're going to reduce the need to bridge to specialized privacy chains. And the final thing is it's going to be Shocking to people. You're going to have anonymized RPC nodes, which means you can prevent metadata exposure, but basically obfuscating or obscuring user data from node providers. And I know you asked a question about Defi, but just more generally, when institutions are thinking of bringing trillions of dollars of assets and transactions on chain, they want to do it in a more private manner. And you're going to see Ethereum and mainnet build these features just like day one. Security was the first feature. I think you're going to see privacy being the second feature. And going back to your question about L2s, those who only had one use case privacy mainnet may essentially swallow those capabilities because they're going to build them natively. I think before you see safety or good defi take off, institutions are going to bring liquidity when they can do it through privacy features. I think there's a whole host of things that are going to be a step function different than what we talked about before. I don't know if that's cypher bunk, but it is something that allows large amounts of capital to participate without disclosing identity. And that's where liquidity begets liquidity.
- [32:46]
A
And there's one other question that I had really here about defi, because with the L2 centric roadmap we saw just liquidity was fragmenting. The defi experience was just kind of. Yeah, well, Defi ended up being like copying and pasting a lot of the same stuff just on different chains. So I'm just curious, you know, I'm looking at how base, you know, became the top L2. It's now living the OP stack. I don't think I was the only person who was kind of reading the blog post and my mind was going to this place where someday base could just be its own L1. And when looking at that, I was thinking, did Ethereum just end up kind of creating and supporting what will end up being one of its greatest competitors? I don't know, but I just wonder how you think Ethereum kind of pulls things back and makes Defi and Ethereum really kind of the premier place for defi activity.
- [33:54]
C
Yeah, I mean, there's a lot there. First and foremost, I truly believe crypto economic security is a scarce resource and you can't just create it out of thin air. And if you are an L2 and decide to go off on your own, very likely you're not going to have much crypto economic security or you're going to be relying on consortium security. And other things that look like networks and technology of the past, even for, I think, very large players, that. So, you know, I think when you look at Robinhood making the decision to create an L2, they're essentially acknowledging that they're like crypto economic security is, it's tough, it's tough to bootstrap. Let's focus on apps, let's focus on the things that we're good at. Let's focus on finance. And so, you know, if you're an L2, you're, you're, you're making that decision that that's a good, a good value proposition. As for Defi, I think obviously with additional scale at the L1 and reduced gas prices, we can see potentially a big boom there. I'm also, I know we keep kicking it out, but agentic finance, a lot of the problems of ux, a lot of the problems of where are my assets, what am I doing? Are honestly massively solved. When you're talking about agentic finance, maybe layer a nice intense protocol and then agentic finance on top of it and you're like, yeah, I want to trade some stuff. Yeah, I want 90% of my stuff in high security zone, 10%, whatever. And if we solve security in that layer, I think we're going to have a massive boon for defi, a massive boon for just chain usage in general. Some of the problems that we thought of that were plaguing us in terms of ux, I think are just kind of wash away.
- [35:38]
A
All right, so now let's talk about something that I know a lot of people in crypto kind of see as an ongoing rivalry between Ethereum and Solana. Blockworks has this reputation, rightly or wrongly, of being considered pro Solana. But Mike Epolito of Blockworks had actually been tweeting some more positive things about Ethereum in recent months. And he was on the show recently. That show was about Solana. But something that Mike did say, and again, so sorry, he's been tweeting positive things about Ethereum, but this quote is more pro solana. He said, quote, in terms of what Ethereum doesn't have is it's never going to get to a level of scale and throughput that you could have, like consistent trading activity. And then he talked about. I don't know if you guys have been following this thing about the prop amms on Solana, but this is a really interesting development where the prop amms are taking what has traditionally been dex to sex arbitrage that is being done by bots. And they're taking them on chain. So the protocol itself is benefiting from that and able to do that arbitrage itself. Tushar, who was the other guest on this, Tushar Jane of Multicoin, he was the other guest on the show and he said, quote, I don't see how Ethereum L1 can be competitive for any sort of trading applications. And if it's not competitive for trading applications, I don't see how it can be competitive in the long run for borrow lend applications. And then he said, one of the most important, if not the most important attribute of a money market is the ability to liquidate collateral in order to prevent bad debt and insolvency. And in order to do that, you need liquidity, you need trading volume on that chain so you can liquidate that collateral at a reasonable price without incurring bad debt. And then so he basically said, I think where you see the trading activity is where you will see the borrow and borrow lend markets start to migrate. So I don't know what, you know, those were the fighting words on.
- [37:37]
B
I'm happy to take the first.
- [37:38]
A
Go ahead, yeah, start, Joseph.
- [37:40]
B
But I want to be one of the most positive people in crypto because I think we're going to build so much prosperity and we should all win together. I think Danny used the words economic security. I am 100% certain that institutions who are going to bring trillions of dollars to crypto care first about economic security, they care about liquidity. And let me just share facts, but let me start with a preface. I actually have a tremendous amount of respect for Tushar Jain. I have a lot of respect for Lilly Liu who does a great job at the foundation. But let me just throw out some numbers for your listeners. Ethereum has over a million validators. My understanding the last time I checked is Solana has about 760 and declining. You look at the number of execution clients, which are really important for diversity. Ethereum has five, Solana has one with another one in development. The developer community is 2x in Ethereum, which is one of the reasons why people build on Ethereum. But if you want to use the word liquidity, there's about $308 billion of stablecoins today. Over 55 to 60% are on Ethereum and the L2s. I believe Solana has about a 7% market share. So you're right. Institutions will go where there's liquidity. And it's happening in the Ethereum ecosystem in tokenized assets in Davos. My old Boss Larry Fink had a great slide when he was talking about the future of finance and he had a slide that said Ethereum is the toll road to tokenization. Whether you use the word toll road or highway, there's a recognition from the largest, most sophisticated institutions in the world that Ethereum is going to be that global financial ledger because, because it has the trust, liquidity and security. I do think there'll be roles for other L1s. I think they'll be specialized. I think Solana does an amazing job on meme coins and altcoins and gaming and there may be use cases, but if you look at where the largest financial institutions in the world are building their money market funds, their trading applications, Robinhood, Coinbase, it's on Ethereum. So I'm not here to fud others. I think the Solana foundation did a great job over the past several years when there was a bit of a gap in the Ethereum narrative and leadership voice to steal some of that marketing thunder. But marketing thunder is not real world use cases.
- [40:17]
A
What do you think about what he said about how you felt like it wouldn't ever sorry that Ethereum wouldn't ever be as competitive when it comes to trading. And I think what he's talking about there is the block times.
- [40:31]
C
There's a lot there. Obviously when we talk about ZK VMs and we talk about the future that that may hold or will hold. I think there's, there's, these arguments become moot because Ethereum can scale and meet a lot of the same structures without sacrificing decentralization and still having that critical security. And L2s have a place. I, I firmly believe that L2s have a place. L2s are extremely competitive today with, with alternative L1s fast constructions while still inheriting the security and liquidity of Ethereum. I, I talk to people in Wall street back offices, I talk to CEOs, I talk to CTOs, I talk to COOs, I talk to traders, I talk to everyone in these massive organizations and we talk about upgrading markets and infrastructure from first principles and really bringing financial infrastructure into the digital age. And I'll say it again, there's only one answer currently and there's only one chain being discussed in those types of environments. And I think maybe once someone mentioned this other chain in these types of conversations and I have hundreds of them. So that's, that's my viewpoint and I think, interesting.
- [41:56]
A
So they, they don't, they don't actually ask you for comparisons with any other chains. Or really Solana in particular.
- [42:04]
C
I've had one person mention Solana ever
- [42:08]
A
and so that's so interesting. Okay, well let's talk about AI because everybody wants to talk about AI all the time.
- [42:18]
C
Time.
- [42:19]
A
And because it's obviously top of mind for everybody. Not just in crypto, not just in AI, but you know, in the broader world. So you know, we saw like openclaw kind of, you know, made waves. A lot of the agents were going to base, which was really interesting. You know, Ethereum clearly though has competitors, you know, you know, some percentage, I don't know the actual percentage, but some significant amount. We're going to Salon as well. You know. How do you think about how Ethereum should try to grow its market share amongst AI agents?
- [42:55]
C
Can you, can I ask what going to base means or going like making coins about themselves? Is that what you mean?
- [43:01]
A
Oh gosh, I think just like when they were transacting, they were transacting on base. But you're right that I don't, I
- [43:08]
C
don't really know what I think a lot of. So when I think of agentic finance, it's massive and profound. When we think about the stuff that was happening a year ago, I think it was a lot of like weird tokens around silly AI projects. And I think when we looking at some of the really high profile stuff so far it's been like again AI agents that are much more sophisticated now having like tokens and getting weird stuff in relation and that's, I think those are toys. I think that that is, you know, hype and that's like a fun way to cash out and dump on retail. But when we are thinking about agentic binance, agents speak protocols natively. What is defi? It's protocolized finance. And what do agents need? They need to trust and interact and make agreements with each other. For example, atomic swaps. You give me an asset, I give you the other one. How do we do that in a trustless way? Classically, you give me the asset and then I wire you the money. That's not going to work when we're talking about global agent finance. And so security matters, the guarantees of the interactions that they enter into each other matters. And again Ethereum becomes the answer. And I know a lot of people experimenting not with coin token weird agentic finance, but actually agentic finance, like creating poly market betting bots, creating bots that interact with each other and trade things dynamically. And that when you look at it, they go to where the applications are, they go to where the Liquidity is and I think depending on the type of interaction they're doing, they're going to go where the security is too. Right. If they're doing massive transactions, they're going to go to Ethereum Mainnet. I think it's the only answer right now. Yeah, sorry. I've been thinking about this a lot. I think the world is changing and changing very fast, but not in toy ways and fundamental computers making agreements with each other ways.
- [44:59]
B
Yeah, if I can double click on that, I want to take a step back and then and move forward. We're going to look back at 20, 24 and 25 as the years where AI assistants were helpful. We're going to look at 26 and 27 where you have task specific agents running on ERC 8004, the Ethereum trustless agent and registry protocol. Where they are going to start building essentially an autonomous AI agentic machine economy. They're going to be building communities, they're going to be your digital twins. And if you want to know the type of things we expect them to do, it's going to be pretty remarkable. I think users in 2026 and 2027 are going to have autonomous market makers that essentially act on their behalf on chain, even off chain to trade, rebalance portfolios, build liquidity positions, execute strategies. They're going to essentially reason across different signals and constraints. I think you're going to have a programmable asset manager in your pocket. You give them constraints, risk tolerance, yield targets, regulatory rules and your intent and they're going to start investing on your behalf. For those who participate in DEFI in their humans leading DEFI activities, these agents are going to basically be able to have access to your wallets, select and move capital across different protocols. If you're staking or lending, they're going to optimize your staking, lending and liquidity provisioning. They're going to monitor your smart contract risk, they're going to do governance for you. You know, imagine a world where a protocol is failing instead of you waiting to see that on Twitter. Your AI agents monitoring the smart contract in real time and based on your risk tolerance, they're pulling your assets before any human can get involved. So I think it's going to need to be an agentic machine economy. It's going to happen where the liquidity is and where the stable coins are and that's Ethereum. And I don't think it's going to be separate an institutional chain and a retail chain and an agentic chain. These things are going to converge. It's going to happen where the security and the governance is and that's Ethereum. It's going to create a machine economy.
- [47:16]
C
And I'm so excited about this. In particular, like holy shit. The UX of interacting on chain is incredible. I'm like, I want to trade this done. Like I want to monitor this protocol, interact this way. It just becomes like I can communicate in English and we can handle the things underneath the hood. And you know, some of the failed, potentially failed construction of the past are going to start making sense. Like a dao arbitrated by humans and having to vote and pay attention and whatever. Most of the time has been kind of a failed construction. A dao where I have agents that are empowered with my goals and decision making and they're operating and optimizing these like distributed organizations. That's starting to make sense, you know. And someone on Twitter said this and I, maybe it's not so profound but it really spoke to me. It was just like, oh, we're the beta users for blockchains and AI agents are the actual users.
- [48:14]
B
Imagine it crosses back to traditional finance. So for you listeners, if you own AN S&P 500 ETF, you technically have the ability to vote the proxy for each of the 500 issuers and the five votes a year. No one does it and they rely on these giant asset managers to do it for them. If you just train your agent that I am this, I have this position on environmentalism, I have this position on pay, I have this position in on leadership comp, you could train it. It will vote your proxies as if you're in a dao based on your preferences. You won't even know that the questions came up. You just need to give them your preferences, tolerance and ideas. And it's actually going to be much more participatory and democratic than what you see today.
- [49:02]
A
Yeah, I love it. I love it. Danny, as a non technical person, what you talked about just giving human instructions and getting what you want. I was like, yes, yes, please give me that.
- [49:13]
C
Non technical friend has created a, an AI agent poly market betting farm in like four days. Because he's talking in English, he's talking about his preferences and what he wants to see happen and, and the different types of things he thinks happens in basketball, you know, who knows? But like, but it's very cool. It empowers people to, to control computers and to control finance and to like express themselves in very natural ways.
- [49:41]
A
Yeah. So Joseph, I know you have to run, but since we have you here. Just last question because obviously DATs have been a huge thing in crypto for the last like year and change or if you want to go all the way back to microstrategy, like even longer. But obviously at this moment in time they're largely down. You know, many of them are trading below nav. I did see Sharp link is a little bit below an m nav of 1. I think it's like 0.9. Despite that, I saw you talking about how Sharply's ETH is all productive. You're staking 100% of it. I'm just curious, what are you hearing from institutional players when they're looking at DATs? How are they differentiating between different dads? Just like what is the conversation that you are having with different institutions?
- [50:29]
B
Sure. First of all, thank you for not asking about what it feels like to be in DAT 4.0. It feels like every interview I get we're in DAT 4.0 and then 5.0. We're in the non Bitcoin space. We are about 7 months old as an industry and there's a purpose to it and I want to take a step back. The purpose is for those who believe in our case that there's a massive Ethereum opportunity ahead and owning Ether is a really good long term but volatile economic choice. You have three ways to get access to it. You can try to own spot, you can try to stake it and make it productive yourself. That's very hard for most institutions. Second is you can buy a Ethereum etf. I launched one of the largest ones when I was at BlackRock, but they're not going to stake 100% and it's not as composable from a yield perspective than if you own a debt. And why do I say that? The really interesting about DATs is we're the only people in crypto who own permanent benevolent capital. Just let that settle in for a minute. Most of crypto is either short term money trading or speculation or a fund that literally has to provide daily liquidity.
- [51:41]
C
Liquidity.
- [51:42]
B
If you have permanence of capital and we own billions of dollars of ETH on behalf of our shareholders, you can actually take long term decisions. You could stake, you can restake and you could deploy this capital into protocols on Ethereum to beat the Ethereum staking rate. So you can stake 100%, you can get better risk adjusted returns and you could do something that's never been done in defi before. You can put the L in tvl, meaning you can Lock your capital, you can get better incentives for your investors because you're getting term structure and duration benefits. And then you could do something that doesn't happen in defi. You could do it within the constraints of your qualified custodian. So you can deploy to defi to a liquidity staking token. Do it in a qualified custodian like Anchorage. So you're pushing the efficient frontier of the yield. You can get better than the Ethereum staking rate, but you can do it by reducing operating risk. Only actively managed people with sophistication and permanent capital can get those benefits. And that's why I think dats are a great investor vehicle to get exposure to ether. And the beautiful thing is whether the markets are ripping or the markets are consolidating, if you haven't encumbered your eth and we have not, we have no debt, you could make long term decisions. And while your stock may go up or down, you can actually provide benefits for your investors in any market. So I'm actually very bullish. Not because I'm relying on the price to go up of ether because we're making our assets productive. And by the way, that's how you respect investors.
- [53:23]
A
All right, well you guys, this has been such a great conversation. Joseph, I know you have to run. I'm so glad we were able to to get both of you because I know you both have very busy schedules. So thank you so much for coming on. Unchained.
- [53:35]
C
Cool. Had a blast. Thank you.
- [53:37]
B
Thank you Laura.
- [53:38]
A
And thanks everyone for joining this live stream. We will catch you later. Want to see your brand on tv? Roku Ads Manager makes it easy to launch targeted ad campaigns in minutes, track results in real time and drive on screen purchases with just a click of the Roku remote. Get a $500 match on your first $500 spent with code ROKU500@ads.roku.com that's code ROKU500s.roku.com Terms apply.