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A

Bankless nation. Happy Friday. We got an unscripted conversation coming at you live. Me and Mike Ibalido are just gonna go at it. Whenever we talk a bunch in real life, it's always super. I always learn a ton from Mike at Bolido, and so I'm going to do that again today, but this time live on the stream. So we're going to get into that conversation. But first, I'm going to talk about some of these fantastic sponsors that make this show possible. How's it going, Mike? How you doing?

B

Doing very well, man. Doing very well. No complaints. Almost end of the week. What about you? Yeah, we never have.

A

We never ever talk. Like, what's up with that? The joke is we actually, we talk quite often, but we never get to talk, I think open ended.

B

That's very true.

A

When we do, it's usually in some sort of like, crowded, loud environment and not as productive as it could be. So I hope. I hope we can kind of change the game a little bit with what we talked about today.

B

Yeah, I agree. Well, where do you want to start first? I mean, it's been an interesting week.

A

It's been an interesting week. It's been an interesting quarter. I think things are crescendoing in their interests. Maybe we could start just as where we left off when we had you on the podcast, like half a year ago now, and you had, I think, one of the most banger podcasts that we had in a while. Really just talking about the Solana thesis, the ethereum thesis, the cosmos thesis, and how they're all kind of like representative of different points to enter into becoming a blockchain, and how you were saying, like, everything is kind of converging. That was like banger episode, everyone loved it. And I'm just wondering, like, that was six months ago. There's a lot of stuff that has happened since then. Maybe that can just present that to you and see where you want to go with it.

B

Yeah, I think since then we've started to see even more convergence. And I. One of the. There's actually a great. This is basically anything that Vitalik writes is gold, right? But he's got this great, very nicely summed up, very nicely summed up diagram, which is basically three different ways that blockchains are evolving, and the common component of that is centralized block production, but decentralized proofs and verification. And there are three different ways that that's playing out across whole bunch of different ecosystems right now. So lets take two of these examples, which would be Ethereum where theres Ethereum and there are centralized builders and a couple of different rollups, or there are maybe lets call it one large roll up where theres one centralized sequencer thats doing a lot of the block construction up there. Or theres many different roll ups, which is what were seeing now. But MEV is ultimately what ends up recentralizing that block production because you have MeV that gets extracted with very expensive proposition to build blocks across all these different fragmented roll ups, that requires a big centralized builder to stand the way. And then on the Solana side of things, this would be the high TPS chain, which is the third leg of that stool. You've got obviously higher bandwidth and hardware requirements for validators. But you actually saw, this was pretty cool from sovereign labs. You saw the very beginnings of a, of a light client over there, an SPV type light client. And we know we're going to get tiny dancer on the Solana side of things. So I think that Vitalik, as per usual, said it much better than I ever could in a million years. But additionally, like we just saw Polygon release something pretty cool this week called the AG layer, which is this, we've been talking a little bit about aggregated ZK proofs, which do something very similar. Celestia, which to be honest at the time I didn't really get too deep on the design, is also very similar kind of big blocks, a few chunky validators, but they've got these light nodes which verify and have special powers than the chain. So I think if anything, it's, it's pretty live and well.

A

So I think like the before bankless, I did this podcast with my old buddy uh, christian caroles, who then went on to work at bitcoin media. And my, my arc in that role was like the everything guy. So I, I'm all the chains, the multilayer ones, the, the cosmos, the interoperability, uh, the bridges, uh, and then he was bitcoin. He was the bitcoiner. And then slowly over time, I kind of morphed my thinking, my, like my, like, uh, just like ideas for how this base would converge. And then I converged into the ethereum, uh, camp and then became like a bitcoin versus ethereum podcast. And now I'm kind of like going back a little bit the other way where just like you're seeing the writing on the wall, like, solana's not going away. There's so, there's always so much excitement on, like newer change, no matter what era you're in. Like right now, Celestia is super hyped and actually getting real, real adoption. Monad isn't even live yet, and people love it already. There's always going to be the move towards just like newer chains. I think people are always going to enjoy new chains. And so I'm kind of like waving the flag on just like one central chains that will gobble up everything, even though I do think that there are forces that push towards that direction, and there always will be. But there's also like push forces that push away from that direction. And there likely always will be, because we've definitely seen that over the last, like, you know, eight years in crypto.

B

So, David, what do you think? If you had to outline, what do you think the forces that push us towards that direction of one chain to rule them all? And what are the forces that disperse us from that consequence?

A

Well, I think the very, very simple one is like the bigger that the, the top dog chain is, like the one chain to rule them all. The bigger that that one is, the stronger of an incentive there is to fork off from that chain and try and build a new one. A better, like a better bitcoin. Build a better bitcoin, like an ethereum killer. So, like, there's like this natural equilibrium that is set in between. Like, it doesn't matter how successful you are, the larger, the more successful you become, the stronger the incentive it is to be to dethrone you. And then you get into like, the VC's playing like the alt layer one games, which, you know, retail also loves. Retail loves that game too. And so, like, there is. I don't know if there's ever. And then also, like, there, there was that meme that John Charbonneau tweeted out that I think you retweeted maybe. And it was like, generalized chain wants to become more specific. More specific, or app app wants more sovereignty. So it becomes an app chain on a generalized chain. And then app wants more features, becomes more generalized. A new app comes and is born on that slightly more generalized chain. And then now that app wants more sovereignty, so it makes an app chain. And there's like a cycle. There's always just like, you can't have too much of anything because there will always be some sort of opposing force to check on that. And so that's kind of what I'm saying. I'm just ready for the new crop of layer one. So gain of attention in this bull market, and the cycle repeats.

B

I'm with you. Another way of saying that VC's and retail love new layer ones is entrepreneurs love it, too. That is, I think, the single driving force, which is just that entrepreneur sees inevitably with these. But blockchain architectures, you have to make trade offs. And there's always, like, one smart person who's like, I don't really like that you made this trade off. I actually think there's a market for someone who made the opposite side of this trade off, and then they go do that. So every experiment ultimately ends up getting run. And again, I think that's. I think that's a positive thing, but that's a. That's a funny meme, because I think also one thing that might be changing at least my worldview about how I used to think about things, I used to think about the world. Very black and white between general block space versus app specific. So, like, general is like Ethereum, right? Like, you can do anything you want. It's the world computer. And then osmosis is an example of an app specific chain. It just wants to be a Dex. That's what its block space is optimized for. But it's kind of converging in both directions. And even the general blockchains, like Ethereum's roadmap now looks like the main chain is a bulletin proof or a bulletin board for ZK proofs, and it's exporting money, and it's like, well, bitcoin kind of started general, but now it's the app chain for money. Ethereum looks like it's heading in that direction. So Ethereum is specializing, but then some of those Dex is like osmosis. Like, hey, yeah, we've got a Dex, but you should come build a Dex on our decks and say, like, yeah, we're actually, you know, we're building, you know, sector specific block space. So all of our validators have to run their own order matching engines. Like, you know, we're kind of converging on it, probably both sides that, you know, once you have an app that reaches some amount of product market fit, you want to expand. But the big, really general ones are like, actually, the world is just too big. We need to specify. So we're kind of converging there as well, I'd say. Are you.

A

Are you saying that there's no such thing as actually truly general block space?

B

I think, yeah, I think I'm landing on that. I don't think. I think it might be a myth similar to bridging.

A

Okay, so. But Ethereum at block, at the Genesis block in 2015, and then before it became, had any sort of like actual real, uh, applications on it. That was general blast, right?

B

Yeah, yeah, yeah. Unmorphed and then had to specialize at some point.

A

And then had to specialize. Yeah. But is Ethereum specializing now? I guess now it will still be pretty general, um, until Deng kun. And that is the first intra instance of Ethereum specializing with blob space. Right. Like, it's still pretty general up until that point. It's just like the apps have started to force it into being more dedicated towards specific reasons, but not anything inherently at the base protocol.

B

I think ultimately every, even like Solana, which is the, you know, it's the light speed, it's the world, it's consensus of the speed of Nasdaq, global, all that stuff, it's probably going to have to end up specializing. I'm not technical enough to be like at this level of throughput, this many transactions, this globally distributed, is when you'd have to start specializing. But I sort of do trust the modular camp that eventually, not the entire Internet can sit on one layer with one set of validators. Ultimately you're going to need to start specializing. So I think it's coming for Ethereum and Solana, and not in a bad way. It's just, hey, we have product market fit on these certain things. We should double down on this and really expand.

A

Yeah, I think we just did this super long podcast with Mike Nooter and Domothy, 2 hours, 45 minutes around on the Ethereum roadmap. And that's kind of like when like, once again it was impressed upon me that the long term conclusion of Ethereum is this like, super lightweight layer, one blockchain that just receives and verifies proofs of what could be anything at higher levels. And then that's also what the bitcoiners want bitcoin to be like. That is if you're a bitcoin builder, if you're a bitcoin renaissance, not a bitcoin maxi, then like, you're really interested in bitcoin being like the truth layer for any sort of expressive alternative layers. They've just never been able to figure out how to get bitcoin to become that. But that is what bitcoin wants to be according to them. Um, and the thing is, like, if bitcoin achieves that, like, there's a lot of focus on the bit VM right now. Uh, if bitcoin achieves that, then, like, it's actually achieved that faster than Ethereum did and without all of the like, technical debt that Ethereum has, which is just kind of funny.

B

It would, it would be hysterical if they wound up doing basically the same thing. But I also think here's a challenge, or here's just something I've been trying to think through when it comes to bitcoin. You let me know. So the great thing about Ethereum from a monetary standpoint is it's this very large, very liquid asset. And people historically want to do things with that asset. It has this culture of like, hey, I have my ethereum, then I buy an NFT, or I deposit into this defi protocol, or I'm going to restake it and loop up. Probably not financial advice, maybe don't do that so much. But still, there's this culture of, like, once you have this crypto native capital, ethereums tend to want to unlock that capital, whereas that's much less proven out in the world of bitcoin. Bitcoin is the largest. Bitcoin is the largest form or pool of crypto native capital. But, and there, there was early product market fit through blockfi. Like you saw, bitcoiners wanted to earn yield on their bitcoin. There is a culture there of not wanting to do things. Like, the culture in bitcoin is like, I bury this shit deep in cold storage, you know?

A

Right?

B

It's like arctic tundra cold storage. So I. How much of that unlocks into these new cool use cases on drive teens that. I have no idea. I have no idea. And that's the big question.

A

Okay, yeah, I think I have some sort of, like, not answer, but just like, I think why there is that culture in bitcoin is because they haven't been given the tools to express themselves in their desire for more productive asset in bitcoin. And so, like, all of the people who are like, I'm going to dig a five foot hole inside my backyard and bury my bitcoins in it and not touch it. Those people have all of the tools to, like, broadcast their culture and their preferences because bitcoin hasn't been expressive. But now we actually have, like, ordinals as a tool for bitcoin to be like, no, I want to play with my bitcoin. And there's actually been a bunch of deals that we're looking at, the bankless ventures. Do you actually know that? Who's the largest custodian of bitcoin? Like, who's got all the bitcoin binance? Because people just trust binance with their bitcoins binance custody. And so there are deals who are working inside of this realm of just like, actually there's a lot of bitcoiners who have given up their private keys because that's whatever. And so they're trying to build, like, utility around that whole part of the world. And so I think once bitcoiners have, like, the tools to be degens, then they will become degens.

B

I think so, too. So one of my we going into this year prediction episode, one of my highest convictions bets was actually bitcoin jpegs for exactly this reason. So I've been cheering on just because when CeFi blew up, it eliminated the tools for bitcoiners to do anything with their bitcoin. Right. But I think basically blockfi and Celsius was proof positive that people do, bitcoiners do actually want to earn yield on their bitcoin, do fund things. I just don't know enough about the limitations of building on bitcoin to know if bitcoin still, those blocks are tiny and there are ten minute block times, not 12 seconds. Like, the twelve second block times are tough enough in Ethereum. Like, I just don't have a good enough sense about what the actual technical limitations are of that. But jpegs are just so easy. It's like, yeah, I want to buy this monkey JPEg. This looks cool.

A

It is kind of funny how fast JPEG culture got inception into bitcoin. I feel like they have a bigger JPEg culture than Ethereum does these days.

B

They do. And low key magic Eden, they pivoted away from Solana, but they basically own. They have super dominant market share there. If you want to trade a bitcoin JPEG, you basically go to magic Eden. So props to them for doing that. What do you think, David, about there have been a lot of hot takes on the death of the 10,000 PFP collection. What do you think about that?

A

The death of the 10,000 pfp collection? What was the last 10,000 pFP collection to really come out?

B

Well, I guess you had, like, mad lads. I don't know if it was actually 10,000, but that was some mad lads was.

A

Yeah, it counts, right? Mad lads was like a year ago.

B

Yeah, yeah.

A

There's like, there's like the Brian Armstrong one on base, but that's never really exploded beyond base.

B

Right, I agree. Yeah. I wouldn't count that. I mean, in Solana there have been a couple. There have been tensorians I would put in there as well. There was a bitcoin. I don't know how many there? There are, but there's node monkeys, and there's, there's also. There's the bitcoin wizards, right?

A

And then quantum cats was like the new one, which minted out 0.1 bitcoins. And our got up to, like, I haven't checked the price in the last, like, week or so, but, like, the last I checked, it was like, 0.27 bitcoins.

B

That's what node monkeys was trading at. I was like, I just can't make myself do that.

A

Yeah, that's too high.

B

That's too high. Yeah. So, but what do you think about that as a concept? Because, you know, the. If you were against that concept, you'd say this was ridiculous. These JPegs aren't worth very much, and there's no reason they ever should have traded at that valuation. But I think there's maybe another case there, too.

A

I mean, in a digital world, I've always thought, like, the PFP like, utility on your profile has immense utility. Like, me too, to the point where I'm, like, meeting people at a conference and I'm, like, trying to get a grapple, like, a grasp on who they are. And then they showed me their twitter and I recognize immediately their PFP. And, oh, that hasn't seemed to be, like, taken up lately. I think people care a lot less about that now, and people are just ignoring that aspect. But that was, like, the big thing last cycle, and I don't know why that would, like, go away. It didn't seem like a flash in the pan.

B

They've got built in distribution. There's a guy named Scott Galloway who's kind of this talking head, but he also, he's pretty good on brand, not so great on crypto, but he's really good on brand. And he talks about basically every, all the great products out there. They end up applying, they tap into this very primal human desire. So it could be like sexual fitness, it could be survival and security, whatever. And pfps kind of have that. It's a flex, right? Like, some people just don't get that.

A

And some people have a fucking crypto punk right here, baby.

B

There you go. Yeah, I've been saying for months that I'm going to get, get art here and hang it up, but I haven't done it yet. But every time I go over to your place, I'm like, yeah, I actually got to do this. But, yeah, I think it's a. I mean, it definitely taps into that. The other thing, they have really native built in distribution, like, better native virality than maybe any other product that exists. And here's an interesting thing that started to happen as well, is have you been noticing that these PFP collections, like bad kids or pudgies are getting airdrops?

A

Yeah, yeah. Certainly pudgies would love to tell you all about the airdrops that they're getting, but that can't be, there's limited ammo there, right?

B

So let me just, so here's why it makes sense from the perspective of protocol. That's airdropping. Imagine you are about to launch your protocol and what you want to do is you might have multiple different objectives, right? Like Starkware is pretty interesting. They wanted to do, they want to bring, they want to reward their early users, they want to attract new users. They want to reward and continue to incentivize the developer community. They want to transition some people who are staking on ETH to be like restaked operators on Eigen layer so they have all these objectives. The problem is siblers, that's the big thing. You don't want just these industrial airdrop farmers to come in and take everything. So NFTs communities are this really interesting intersection of both those things where they're sibled, right? So you're not going to be dumping that to airdrop farmers and they're wealthy new community members, right? Like if you have the floor of Pudgy's like $50,000. So if you're dropping to the Pudgy community, you know, if you get even a really low conversion rate, that's probably worth it. You know, you've probably got acquired some really high value customers. So I feel like we're a couple months out from all these threads being like, I paid for my pudgy with XYz airdrops and. Yeah, so I could see that being a huge, and there's going to be a million airdrops this year as well.

A

So, yeah, there are going to be a million airdrops. It's actually kind of nuts. Um, but, okay, but Pudgy's got like two airdrops though. Like, I don't know if we have enough data to say that this is, this is, maybe you're just saying is does data doesn't matter. This is just what makes sense to you.

B

This is what makes sense to me, I think.

A

Yeah, but like pudgies are just so far away from just like Starknet.

B

Yeah, I, so Starknet, Starknet didn't do this. But like dimension, like the dimension air drop. The dimension airdrop got targeted pudgies and bad kids and some of the other NFT questions I've already.

A

Did you know about dimension before? It's airdrop.

B

I had heard of it, but I couldn't have articulated what it did because.

A

There are these tokens that are getting airdropped, and all of a sudden, these protocols are, like, between, like, two and $10 billion that I've never heard of before.

B

Yeah, I'm on this page for the. Dude, if you have a logical explanation for why dimension is trading where it's trading, I would.

A

No clue, dude. It's just like, I lost my, like, well, I need to go find it. It's somewhere. I sent it to an address. I need to go find which address, but I haven't been able to actually, like, sell my dym. That's what I've heard is, like, people just, like, can't figure out how to actually sell the tokens, but it's not the only one. Right? Like, alt layer also drops into some sort of insane valuation, and I don't think anyone heard of it, like, a month prior.

B

Yeah, I mean, even the FDV of Starknet is. I mean, Starknet's obviously a super credible, very attractive project, but, like, that's super high. I mean, these are. Some of these are great projects, but even, like, Jitto and Jupiter, like, great projects, you know, but they're launching a multi billion dollar fdvs. Crazy. And I know people say that at this point, FTV is a meme in the cycle, and then people don't care until they do. But I think people watch ftbs.

A

I look at FTV exclusively, and I. Sometimes I feel like an asshole for doing that because everyone says that FTD is a meme, but I'm like, what is the most rational number that exists?

B

Yeah, well, here's the other. I mean, the other.

A

I'd love to get Vance's take on that. Can you. Next time you have a podcast with Vance, can you ask him about that?

B

Yeah, actually, in one of the early Bell curve episodes, he was like, wait, what do you guys look at? Market cap or fDv? And we paused, and he was like, please, for the love of God, there's a right answer here. So I know he's on the FDB train, but, yeah, I don't really have a great explanation for it other than just, like, risk. There's just a. The market is just kind of risk on again.

A

Right? Yeah, that's. That's kind of like, yeah, people just are not hitting the sell button. People are hitting the buy button. Yeah.

B

No, and to be fair, I mean, maybe to assign, like, some amount of rational thinking to this. Like, are you selling anything right now?

A

No.

B

Yeah.

A

Okay. So, like, the. The two airdrops that I got, which I'm big fans of, alt, layer, and dimension, both of them, I'm like, well, if I keep them, it might qualify me for a future airdrop if I don't sell.

B

So I'll sell market. Yeah, you probably just answered that question. So. Yeah. And just on the margin, people like, well, you know, I feel like everyone is in the same crypto. The total market cap right now is at, like, 2 trillion. Right. Bitcoin is 2020, 5% off its all time highs. I think most people have the same framework that we're going to slowly grind up from here, and then it really gets on. You know, the party really starts when we cross the all time high. So I guess, to answer my own question, why are you selling anything at the current moment? You probably, probably don't. And I. Everyone has these stories, too, right? Of, like, an airdrop that they flipped and, you know, they tweet out, oh, I would have had one and a half million dollars. So that's definitely the mindset that I have. I'm just holding on to everything for the most part right now. So.

A

Dude, I think everyone is trying to be Celestia right now ever. Like, there are future projects that are going to airdrop their tokens, and they're like, how do we airdrop our tokens at a low valuation so that it can pump for a long time afterwards? Like, how do we do that? I'm like, you guys can't force the market to do anything. But, like, the fact that Celestia dropped and it just rocketed and did a ten x to airdrop holders, kicking off, like, the bull market. Like, blowing up the whole, like, modular money meme into, like, this new mind share that everyone has and I. And then actually gaining adoption by some of the Ethereum roll ups, and it was airdropped to a bunch of, like, random people, and then it pumped ten x. That's like, the bar that everyone will remember that, that they're like that. This airdrop could be that. This airdrop could be that. And, like, the next year of airdrops, we're all going to hold our airdrops. Cause it could do a celestia.

B

But even when Celestia launched, I don't remember thinking, that's particularly cheap. You know, like, it was launched at a $2 billion FTV I was like, oh, it's like, a lot, you know, but it just rips, and it was.

A

Did not stop.

B

Yeah, I mean, celestial is a phenomenal project, and they deserve it. But, like, that. That initial price action was, I'm sure, massive for the general psychology product.

A

Right?

B

So. Yeah, right. But, you know, Celestia is also kind of, like. Celestia is also, you know, going back to this convergence thing. Know, bitcoin bulletin board, where you can poke, like, really small blocks, doesn't even support smart contracts. That's where Ethereum headed. That's what Celestia is doing as well. Celestia is actually really similar to bitcoin and its construction because it also. You can't. It doesn't support smart contracts at the, you know, at their layer. So, yeah, in a lot of ways, like, that's all. That's a super interesting ecosystem, I would say, as well.

A

Yeah. I have not yet been able to, like, categorize Celestia very well in my brain, like, in the big blocker category, but no virtual machine, so no settlement. I don't know how to think about Celestia.

B

Yeah. So the way that I think about Celestia is they have found a way to obviate a lot of the negative trade offs of what was this huge argument back in the day of the block science war. And there were two very different camps of thinking about blockchains, which is one you want to keep the. Ironically, actually, the small block camp is not the way that Satoshi thought about it. I know it's gotten a rebrand, but the original vision of the bitcoin white paper is digital peer to peer cash, which required scaling hardware. Eventually, you came to this disagreement about how big do we make the blocks? The miners wanted bigger blocks. The core devs did not want as big of blocks. And ultimately, bitcoin, I think, made the right decision and went the small block route. I think a lot of that design inspiration has found its way into ethereum, the ethereum way of thinking, as well as just the next large, successful blockchain post bitcoin. And I think Solana and Celestia had put in this camp of the Solana approach is that we're going to have larger validators. Now. They don't even really have a concept of block building. It's a continuous building, but it's basically like, allow for larger validators. Now, letheme, what's that law where Moore's law. Hardwick Moore's law to catch up on costs. And eventually we'll be able to decentralize that way. And Celestia has a different approach where they say, we're okay with big blocks. We actually are going to have fewer validators that are bigger and more expensive, still permissionless, but there's a barrier to entry. But what we have that the bitcoiners didn't have at that other time is these things called light nodes and this technology called data availability sampling. So what the light nodes do is they basically can call a check on the few chunkier nodes that are producing these very big, very cheap blocks to keep them honest, to talk about it at a very high level. So it's a cool, best of both worlds type thing. And that's the architecture.

A

Right. And it goes back to what you were saying about Vitalik's vision of just like big blocks being checked by small blocks, basically. Big block philosophy being checked by small block philosophy.

B

Exactly. Yeah. And I do think, honestly, Polygon has done a really good job of this. I'm not actually a huge fan of the ag layer branding, but I think they've kind of nailed it with that design.

A

Yeah, I actually have not looked into that. I think we might have a show scheduled or something like this. What is the ag layer?

B

Brandon is the guy.

A

Yeah.

B

Basically the idea, like my brain breaks around ZK proofs that moon math is just beyond left side of the bell curve. Guy like me. Basically the idea is that, all right, if you, you know, take, take the example that you want to do things on, like you are on chain x and you want to do things on chain y, maybe that's a swap or something like that. That requires multiple different legs to ultimately end up getting completed. You need proof somehow. You on chain x need proof that this thing happened on chain Y. So the, that's what these execution proofs are. They get posted to the central layer. So everyone knows that everyone has done the action that they said that they were going to do. The big question about ZK proofs and these ag layers in general is what is the setup of the proving? Is it decentralized? What is the cost? What is the latency? Because obviously, if you can only send one of these proofs once a year, then that's not useful to anyone. But if you could do it every one or 2 seconds, which is where polygon wants to get pretty freaking useful, actually.

A

Is it just a settlement layer that's on top of ethereum, but below the layer twos?

B

I would think of it almost as next to the layer twos. It basically just allows you to take there are all these different execution environments which are super different from one another, right. And originally we thought it would be really nice if these execution environments all could directly pipe into each other and talk to each other. But now what the AG layer concept asks is, I'm just going to let you do things the way that you would like to do them in your layer. I'm going to do them the way that I would like to do them in my layer. I'm going to create a proof that the outcome, the important outcome here, don't really care how you did it, but the outcome here that you said that you were going to do is right. And that all goes to this common layer. So I don't know if it's on top of or below or next to, but like it's complementary, I think, to the roll ups.

A

Yeah, there's a lot of these composability technologies that's being innovated on in the Ethereum landscape, and some of them overlap, some of them don't overlap, some of them are solving their own problems in different ways. And there's like eight of them, eight different categories of ways of solving a theorem, composability. And they're all happening in parallel and coordination between, because in order to actually get perfect composability, it's going to need to take the best of all of these things and put it into one more seamless solution, which sounds like a massive coordination lift. But the only thought that I have about Ethereum composability is that it dies, 1000 cuts, there's no one gold and silver bullet. It just dies in a bunch of small different ways.

B

Or what if the best solution just wins?

A

Or once, but I don't know, I haven't seen one solution actually be able to encompass all types of composability issues. I haven't seen that.

B

Well, all right, here's the, maybe to move into some spicier waters here, but I think the challenge with the eth roll up landscape as it exists today is actually that the roll ups don't have as much of an incentive to be composable as you might think. I think everyone would say that they want to, but really the economic incentive is to keep people they want to.

A

In spirit, but not in their bags.

B

Yeah, they want everyone else to do the thing that I'm doing. Like we should all interoperate, right? I've got these great standards. Take my standards.

A

Yeah. Polygon, come be an op. Stack, shade.

B

Come on, come on. I've been working so hard for this you know, come and do my thing. But I think they'll get. But, so I think that's the challenge, is. I think what you're alluding to, David, is it's not necessarily a technical challenge. There are probably multiple different tech solutions that could work, but it's kind of a social. It's a social challenge. And I ultimately think the market is going to end up proving out, like, here's a question that I've been asking myself. So, Ethereum, what it's trying to do as a protocol, is to export its currency. Where it's exporting itself, is its roll up environment. Where is the ether going to go? Is it going to go evenly distributed to every roll up? Do optimism and arbitrum end up taking the lion's share of that ETH? Do weird schemes like blast end up taking a shit ton of ETH because they're offering yield when no one else is? How do you think, I'm curious. There's a ton of Eth out there. How do you think, when it gets pushed up to these roll ups, like, how's it going to shake out?

A

Where are the final sinks for ETH in the grand scheme of things?

B

Yeah.

A

And so we're not talking about Eigen Lair because it's still on the layer one.

B

Yeah, well, that'll be another sync, too, I think.

A

Are you asking me, like, pick your chains? Like, is the optimism, is arbitrum, or are you kind of.

B

Yeah, we don't have to. Basically what I'm getting is what I would guess is there's this power law where the bigger, let's just say there's a couple different sinks for ETH. There's the roll up sync, which is probably where most of the ETH, I would say, is going. Then there's probably this sort of weird sink for people that want to wrap their ETH and use it on solana, which I guess is a really small market. And then there's this kind of restaked sync where you stake it in lido or something like that, and then you go into this crazy liquid restaking ecosystem and do a bunch of yield type activities. But I think people that want to use eth the way that you and I have thought about using eth in the past, they want to do stuff like buy NFTs or trade or whatever. I think they'll end up on these roll ups. And I'm guessing a huge amount of ETH is going to migrate up there. It already is. So is it going to evenly distribute, like, two eth for arbitrum, two eth for optimism, one eth for scroll? Or is it going to accelerate and more ETh is going to pour into the roll up that already has the advantage?

A

It really depends on the categories of composability solutions that we come up with. Uh, because, like, if there is so, like, say there's like, a sliding scale of composability across roll ups, and, like, on the zero side, we just can't figure it out. Like, bridging takes, you know, you know, minutes and days. There's, like, you know, asynchronous uniswap pools that take forever to settle. There's, like, high arbitrage between these things. Composability sliders at zero versus composability sliders all the way at 100. And there's, like, perfect synchronous universal composability. It's one single state. Even though there's many different chains, like, cross chain contract calls are perfectly seamless and they never fail. And so, like, we're. We're at. We started at zero. We're already marching somewhere further away from zero. So we're already off of zero in composability. Maybe we're at 510, 15 something, still pretty low. And really, the question is how far down the slider of perfect synchronous composability can we get? And can we get to 100? And if we can get to 100, then there is no sync. There is no chain that dominates all of the Defi. There's no defi chain. If we stayed closer towards zero, my answer would be the defi chain. All of the liquidity, all of the capital would aggregate into the defi chain. And then you would have systems like Starknet, which would be, like the fully on chain gaming chain that doesn't really need that much eth. It just need payments, right? And then there'd be, like, the Zora. It doesn't need that much eth. It just needs payments, right? And so, like, there would be, like, the one single defi chain and then 10,000 payments chains, and the payment chains would be for different purposes, like gaming or collecting or whatever. But then as we start to slide on down the scale, like, if we get past on the composability scale to the point where, like, uni chain is its own chain and not a deployment on arbitrum and optimism and polygon and whatever, and we get that far, and, like, trading on Uniswap is a contract call to uni chain. And that can happen in settlement across rollups then all of a sudden capital will be much more diffuse across the roll ups, because then you'll have uni chain, maybe you'll have compound chain, then you'll have, like, the general purpose chains, like arbitrary and optimism attracting, like, whatever activity they're going to attract. And then there's going to be a lot more of, like, application specific roll ups doing whatever the hell they want, and then it'll be a lot more diffuse. So my answer is, like, it really depends on that slider when, where we end up.

B

Hmm. Yeah. I don't know. I think that composability stuff is going to take a while. So I would bet, yeah, it's going to take a while. So I feel like there's a path dependence thing here where it's a little bit of a race. Like, if I was sitting in the, if I was sitting in the driver's seat of one of these big frameworks, I'd be like, how can I get as much eth onto my platform as I possibly can right now? Because I feel like that's going to be a colossal moat.

A

So is that what you think blast, explicitly what blast was doing?

B

Yeah. Yeah, I do.

A

They thought in your terms, and they're like, we are just going to do whatever we can to get as much eat as possible because the door is shutting. And so we're going to play whatever game possible to make that happen.

B

I am. I look, I don't know, Pac Man. I actually like, I like the way he thinks a lot. I'm not 100% sure if I'm a big fan of blast yet, but here is the logical series of events as I saw it. He launches blur. Right? It's NFT trading. Very, very successful in taking market share from Opensea, just like every other exchange operator that's ever operated on. Ethereum says these gas fees suck. Oh, this is great. We have these new things called layer twos, which have cheap gas fees. Man, why would I take this app where I have a ton of product market fit on and go launch it on someone else's l two? I'm going to create my own l two. Here's the problem, though. I'm going to launch this l two and there's going to be no liquidity. Get the liquidity on. Oh, I know. I'll allow people. I'll do it with yield. I'll allow people to earn yield. And I think that was the series of events that, if I had to guess. Yeah.

A

I've never understood the blast yield incentive, because I have ETH in aave on optimism, except. And like, and then I have, like, stables borrowed against it, and it's staked ETH. It's lido steak teeth. So I'm getting the same ETH on optimism that someone else is on blast. So what's the fucking deal?

B

Well, I probably a lot of these people are. Airdrop farming is right now, right? That's what I would guess. So they're probably airdrop farming. And it's kind of this idea, like, I really think crypto people love yield. Trad five people love yield. I had a conversation with someone who works at a big, very crypto native, but very tradfi type trading desk, and they were describing to me. So most of the liquidity still exists in bitcoin and eth round trading pairs, right? So if you want to trade in and out of something, the highest likelihood is that I, you're going to have the most liquidity on an ether bitcoin cross, like 70%. But what they don't like doing is just holding ETH or bitcoin on their balance sheet because it doesn't earn any yield. So now what they have is they're swapping out their non yield earnings stables for, there's a new compliant yield earnings table that has note just launched this week, and they're going to hold steeth. And when they want to make a trade, they move from steeth into EtH back into the yield bearing thing. And they're trying to literally, David, reduce the amount of time that they're in. Non yield bearing stuff. So this is, this is, the yield thing is not a story that's going away. And, I mean, it is kind of nice, right? Like, I could just, I don't even have to think about it on this l two. Just whenever I'm in eth, I'm just earning yield on it. That's kind of nice.