150 - Bull Case for Ethereum IV with Justin Drake, DCinvestor, & Anthony Sassano

Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Guys, one of the greatest ways to go bankless is to hear the bull case for ETH. And then I think at the end of this episode, if you are bullish, to do something about those bullish feelings. We have the bullish panel here, the ultimate bullish panel, Justin Drake, Anthony Sassano, DC Investor. We've done this like every six months or so, David, since late 2020, the ETH bull case. And this is another episode of this type.

Yep.

Installment number four. And uh Ryan, while you were doing that intro, you said this is Ryan Shawn Adams here with David Hoffman, and we are here to help you become bullish ETH because if you're not already

But I

No, but you should have. But you should have. Because that is what this episode is designed to do. We want to get back to our roots and get back to what we are good at, which is becoming bullish. And I think everyone is perhaps scared right now if you're a first cycler and they're flipping, they're going from optimistic to pessimistic. They're just like pessimistic on the future of crypto. Things hurt right now. I would just like to remind listeners that when the prices are in the tank, that is the time to be bullish. The time to be bullish is not actually at the top, it's at the bottom. It's when the most of the opportunity lies. And so I think out of all the installments of the bull case for Ethereum that we've ever done, Ryan, I think this might be my favorite. This is Justin Drake's first bull case for Ethereum. I think he's definitely invited back to episode number five when we eventually do that.

Oh man, he is fantastic and completes the panel because he has technical reasons to be bullish, which is super important too, to kind of ground this. And then also, well, we'll get into it. His description though of the total market cap was just crazy. Chills. Some housekeeping before we get into this episode as well.

And with that, Bankless Nation listener, I hope you are ready to get bullish. Welcome to the Bull Case for Ethereum, episode number four, a recurring series that we are doing on Bankless. Today, on the episode, on the fourth episode of the Bull Case, we have Justin Drake, Mr. Ultra Sound Money himself, the guy who created the most bullish meme to ever come out of the entire crypto space. Justin Drake, welcome to the show.

Thanks for having me. And as always, ultra bullish.

As always, coming up next in the left corner, we got Anthony Susano, the man who is literally the most bullish person about Ether. He is so bullish that he makes a 30-minute YouTube video every single day because he can't stop talking about Ethereum. And then after he's done doing that, he writes another newsletter also about Ethereum because he is so goddamn bullish. Anthony Susano, welcome back.

Hey David and Ryan, thanks for having me. Uh I'm also ultra bullish.

And DC investor, last but not least, the ultra great bull. Not just bullish on Ethereum, but also bullish on NFTs. He's got an NFT portfolio that blows all of ours out of the water. Yet his Ether portfolio is also just as strong. DC, welcome back to the show.

Thanks for having me on, guys. Excited to join today's discussion.

I'm really looking forward to this one, guys. I think this is going to be some great end of year content on what was a very destructive year in crypto, yet the Ethereum blockchain continues to produce blocks. I want to start the conversation here because this is something that has been a frequent theme about Ethereum up until recently that I want to start this conversation with. And that is the general conversation of has Ethereum fulfilled its original promises that it made even before it was a live blockchain in 2015? Has Ethereum fulfilled some of its original promises? Are we done yet? Justin, can I start with you on this one?

Yeah, for sure. So the way that I see it is that you know Vitalik, when Ethereum got started, was a bitcoiner. You know, he basically wanted to see Bitcoin evolved. And I I was a Bitcoiner in 2013 and I had the same feeling. The reason I was building on Bitcoin specifically is that I had this common understanding, this almost social contract that Bitcoin would evolve, and I felt rugged. And I feel Vitalik kind of also felt rugged. And so from that perspective, I think Ethereum has fulfilled its mission in being like the continuous place where innovation is pushed to its boundaries and the frontier of what's possible is pushed forward. I guess you know, now that we have some hindsight, seven years of hindsight, I think we can kind of more crisply define kind of the end game, kind of the mission of Ethereum. And for me, it's you know, Ethereum is meant to be a settlement layer for the internet of value.

And I think in order to get to that end game, we still have a lot of work to do, you know, on the order of maybe one decade. But I think the most important thing is that we have the culture, we have the people, we have the mentality, you know, that is basically innovation friendly and will get us to this very ambitious endgame.

Anthony, you came into the crypto space a little bit later than Justin. I believe you came in twenty sixteen, twenty seventeen. So you're fully aware of the promises that Ethereum has been making ever since it was originally accepted. How do you feel about where Ethereum is on its original intended purpose?

Yeah, I I think I agree a lot with what Justin said there. I also think that Ethereum has been executing on its long-term roadmap. It's just taken longer than I think anyone would have thought, especially things like major upgrades like proof of stake, right? That had been talked about since day one, and it really only, I guess, like fully was realized this year, right, in September when we did the merge. So obviously it's not something that happens overnight in Ethereum when we have these roadmap items that are kind of major changes that have been promised for quite a while. But I think we eventually get there, which is, I guess, one of the reasons why I'm so bullish on Ethereum, is that we can actually ship, right? But in terms of, I guess, Ethereum's changing use cases and narratives and what it was known for over time, it has changed pretty substantially, right? I mean, originally it was called this world computer where people could execute this arbitrary code on and build whatever they wanted on. And then obviously we ran into lots of issues with scalability and we didn't actually know what people were going to build and what people were going to use. DeFi was, I mean, talked about here and there. I mean, I think Vitalik actually was talking about DeFi still back then, but it wasn't called DeFi back then. And I think that the people back then had a general idea of what they wanted to see built on these things, but I think some things got way more popular than others, like DAOs and Web3 stuff didn't really take off like DeFi did, and I think that was due to scalability and also just the frameworks not being in place for those things. But as I said, Ethereum does take a while to ship certain things, but eventually it does ship, and I think that's very important. And I think what Ethereum is useful for has has evolved so much over time that it's actually come to a point now where we understand it a lot better and we can actually see like a kind of a clear path rather than meandering through the many use cases that we were talking about. We actually see, okay, you know, this works, this works, this works. You know, how do we optimize for for these use cases? But how do we ensure that we can actually have new use cases pop up over time as well?

DC, as one of Ethereum's heaviest power users, how do you feel Ethereum has stood up over the years?

Well, I think it stood up well. And I think to start with Anthony's point, you know, there was this discussion around Ethereum certainly as a world computer early on.

And I think at that point people had a different conception of perhaps what Ethereum, especially Ethereum layer one, might become. I think it's fair to acknowledge that the vision for layer one has shifted a bit. And I don't think that's a bad thing necessarily. I think it's accepting the realities of limitations in the technology. I think it's accepting the role that Ethereum can play in the current environment.

And you know, a lot of

Bitcoin maximalists would probably crucify Ethereum for being bold enough to say that. Because like, oh, you didn't deliver every promise you ever had in the white paper. Although if you go back and read the white paper, by the way, it's actually aged really well. A lot of the most interesting use cases that we focus on today were actually identified in that white paper. But where I think Ethereum has succeeded is it's become the most important multi asset decentralized ledger of record in the entire world.

And I think that is a huge accomplishment. And even through this crop of new layer ones that came into the market during this cycle, I think that record kind of remains unchallenged. As far as opportunities and things that Ethereum still needs to do, look, Ethereum does need to scale further. And it needs to be more accessible to more people and for more use cases. And I think we are seeing that through.

The heavy activity that's starting to emerge on Ethereum layer twos and the scaling roadmap that still exists for Ethereum Layer One. So I, you know, what is long-term success for Ethereum Layer One? I think if we ever reach a point where nobody wants to change it anymore, then it's probably succeeded in what it meant to do. And I do think that day might come at some point, maybe decades from now, because things are being built on top of it and people don't want a layer that might be changing. But we're a long way from there, and there's still a lot for Ethereum to do. And so I'm excited about that as well.

DC, you mentioned kind of a pivot and like a a little bit, right? And maybe some pushback from other communities on Ethereum pivoting. In what ways do you think it's pivoted from maybe its original vision, right? I know there's this meme of the world computer. Right. I'd argue that was always a dumb meme. Like that was never what people meant by a world computer of like being like a decentralized Amazon AWS. But in what ways do you think the critics have a point on this about sort of a pivot and maybe not living up to its promises?

I think in the earlier days there was a lot of um perhaps delusion about how much activity layer one could accommodate, particularly. And so for a lot of these newer monolithic blockchains that have emerged over the past um, let's say four years that have promised higher transaction throughput and cheaper transactions and so on, they make huge sacrifices in terms of decentralization. They make huge sacrifices in terms of liveness and ability for people to use them at certain times when it really matters. Ethereum has made a different set of trade-offs. Ethereum layer one is like a honey badger. It's like a tank. It's it doesn't go down. It's never really gone down. And that is what the community and the engineers prioritize more than everything else. So I think that vision of like, hey, everybody's gonna be on layer one around the whole world, and we're all gonna be buying coffee for, you know.

super cheap transactions on layer one, that's not realistic. I do think the shift to thinking about Ethereum more as a settlement layer has been a productive one. I think it's kind of changed the conception of how people think about it a little bit.

But I think, you know, now Ethereum is really emerging as this trust layer, as this base layer of trust that these other layers then build upon.

So I don't know if that's necessarily a pivot. I think it's we can call it a refinement. I think there's probably some change there. And again, I don't think that was a bad thing.

So a question for all the bulls, and maybe I'll start with Anthony on this. So like 2022, like what a freaking crazy year that was. And yet there's an element where I feel like I'm ending 2022 and it's almost like a Michael Bay movie, like there's like explosions and cars blowing up and like airplanes crashing behind me and a helicopter's just gone down, you know, fireballs whirling to the sky. And like we're just kind of the Ethereum community is just like walking away from that. Like everything's fine, clean, crisp suit, sunglasses on, just like walking ahead. And you know, I guess the reason for that is sort of like.

Look, ETH the asset didn't take a massive hit when we look at prices. I mean, it is down, but it is down comparable to what Bitcoin is from all time high anyway.

Last I checked, it was actually up one more percent versus Bitcoin.

And we're talking about like the 75% from all-time high range, which like people who are new to the cycle are like, oh my God, 75%. We're like the bear market? Okay. It's just a flesh wound. But then also like other communities are down far harder. Like alt layer ones are completely wrecked. I mean, we're already talking about down 95% plus from all-time high. I also think that look, if you kept custody of your keys and used DeFi, you didn't get absolutely wrecked. If you went with some of kind of like even members of the Bitcoin community who are like, yeah, this crypto bank is probably fine. Well, it turned out not to be fine. If you gave someone your custody of your private keys, like you're also feeling the pain. And so DeFi, decentralization, Ethereum, the merge last year, like it feels kind of okay in the Ethereum community coming out of 2022, and yet there's a massive amount of destruction behind us. Anthony, what do you say to that sentiment? Is that me being too bullish? Or like, what do you think about all of this?

No, I think the sentiment is very accurate. And it's funny when like the analogy that you use because so much stuff happened this year that was negative, and then we had the merge, which was like the most positive event in Ethereum's history happening among all that negative that was happening to the rest of the crypto ecosystem. And I know in Bitcoin our land, they love to make this distinction between like Bitcoin and crypto, right? And as much as I kind of hate them for doing that because they put Ethereum in the crypto bucket and never make the distinction about Ethereum, I think there's something to that. Because there's a lot of crypto that is hot air, that is just crap, right? We've seen a lot of it blow up. And there are things that are kind of labeled crypto that shouldn't be. Like a lot of these C Fi services that people say, oh, this is crypto. It's like, no, it's not crypto, right? It's kind of a service that works with crypto, but it's not what we know as crypto, right? The on chain stuff that we do, the networks behind this industry.

So I think from that perspective, you know, sometimes the Bitcoiners have a point that there should be a little bit of a distinction there between those things. But in saying that, I think on top of all of that as well, in terms of market action, yeah, I mean it's quite surprising to an extent of like how I guess resilient ETH has been, I think, for a lot of people. It's not surprising to me, I should be clear. Like I I fully expected it to play out like this given the uh position ETH is in right now, not just on the fundamental side, but also with EIP 1559 and the merge having that massive issuance reduction, which definitely impacted ETH's performance this bear market. I mean, without that, I think post-FTX collapse, ETH would have gone to triple digits again. It would have been pushed down by all that extra minor sell pressure because miners were capitulating on the Bitcoin side, and there's no reason to believe they wouldn't have been doing the same thing on the Ethereum side. So I think that a lot of the fundamental work that has been done has come to home to roost, so to speak. Like this is years in the making. As I mentioned earlier, Ethereum has a long roadmap. It takes years to do things, but it does things that are extremely impactful and continue to impact the network and the community and the ecosystem over longer periods of time. Whereas a lot of these old-tell ones, they try to take shortcuts, right? They they try to get to a position where they think that they can be as dominant as Ethereum, and sometimes they can get to a position where they grow really, really quickly, right? Both on the price side and see some kind of adoption. Maybe that's because they have a massive liquidity mining program. But then it's all short-term games. It doesn't last very long, doesn't even last a year, really. I mean, we saw the old L One mania happen basically the second half of last year, and then we saw it all fall apart this year, and it fall apart in a very spectacular way. Uh, not just on the prices, as you said, a lot of them are down 95%, but their network activity is down even more. And even the biggest competitors that people considered to be, you know, actual Ethereum killers, like we always hear that term, but people were really serious about it this time. Like, no, you know, Ethereum's finally done it, they've failed to scale, so now these other networks are going to take over. I mean, just to name one, Solana, for example, they have less kind of TVL than chains that I haven't even heard of before. So, like, to put that in perspective, Solana last year was considered the ETH killer. It was going to be the thing that finally dethroned Ethereum. But as DC mentioned, these other L1s have taken shortcuts, they've compromised on specific things, and Solana is definitely a poster child of that, compromising on decentralization to achieve this scale. And in my opinion, they've they've gone the wrong way about it, and I think we've seen that. But, you know, you can take the other side of that and say, okay, well, this is just Solana and the other old R1s trial by fire. And I'm like, uh, I don't really buy that. I feel like Ethereum is in such a strong position now. Ethereum is solving its scalability issues, and it's never just been about scalability, it's been about so many other things. But Ethereum is in such a strong position compared to what it was last bear market. I mean, 2018 and 2019 was very brutal for Ethereum and for ETH as an asset. But this time around, people can see that ETH, as Ryan said, is not down like anywhere near the amount the other coins are down, right? And it's even up or performing better than Bitcoin. I mean, the ETH BTC ratio is flat on the year. In 2018 and 2019, it went down like 90 plus percent, which was just crazy compared to now where it's flat on the year. So taking all that into account, Ethereum is in an incredibly strong position, even though there has been so many blow ups this year of just all the crap like C Fi and within the uh on chain ecosystem and other altar ones, as you mentioned. Yeah, it's kind of hard for me not to be like stupidly bullish on Ethereum. I was really bullish in the bull market, and I'm even more bullish in the bear market, just given how resilient Ethereum has been.

We should have warned you guys at the outset. This is not for those who do not wish to be bullish on this entire episode. We should have put a full warning on this. But Dustin, what's your take on this question? Do you think uh Anthony over here is just kind of grave dancing? You know, is he like uh other alt ones down, but my favorite asset is not down is bad, and that's a good thing? Or do you think there's merit to what he's saying here?

Right. So I guess one thing I want to do is kind of

Maybe highlight the good stuff about Ethereum before talking bad about the competitors. And I think I would agree with Sasano and you, Ryan, that you know, we've come out unscathed. Not only have we had a perfect uptime since Genesis, we've never had downtime. 100%. This almost never happens in software. And it's even better uptime than Bitcoin. But you know, now we're in a position where we've also removed a lot of the FUD. You know, there was this execution risk FUD around the merge, and that's completely gone. And not only has it gone, but we're in a position where we have five consensus clients, none of which had really any issues. And the fact that we have so much redundancy makes Ethereum even stronger than it's been in the last seven years. So one of the reasons why we've had so much uptime in the last seven years is because we've had two clients. We had Geff and Parity. And sometimes Geff would go down and parity would kind of be the fallback, and vice versa. But now we're in a position where we have five clients, and like arguably now Ethereum is like potentially the most secure piece of software infrastructure ever built.

Now, in terms of kind of coming out on scale, another thing that I'll note is that you know Ethereum continues to be a talent magnet. I'm just seeing this year after year after year. And not only that, like it has a very low churn in the sense that all the settlers, all the people who really understand are here to stay. And not only that, but it seems to be attracting talent beyond its reach. We have you know the Phantom Wallet, for example, from Solana, and I'm I'm seeing more and more projects kind of regrouping around Ethereum. Now, in terms of the competition and all the other stuff, I actually think it's good from an experimentation standpoint, right? Because some of the technical ideas, for example, we're able to inspire ourselves and use that to improve Ethereum.

So, you know, Bitcoiners have this kind of this meme, or at least had this meme in twenty fifteen or whatever, saying like Ethereum is the testnet of Bitcoin. And this has failed miserably because they've been completely incapable of you know even copying one single you know good idea from Ethereum. But I think we're in a position where you know we can really use the rest of the ecosystem as inspiration. And you know, I'm very grateful for that.

Justin, if we could actually hang on that one moment really quick, because an elaboration of that meme that many, many Bitcoiners would echo in my early days that I remember is that they would say that if it's useful, it will eventually come to Bitcoin. If something else that's not on Bitcoin, some other chain invents something, then we can just apply it to Bitcoin. That was a frequent meme that they were chanting. And this meme, I think, is a great meme. It's a great narrative. And it's something that does speak to some very fundamental truth about the way that network effects in the crypto industry work. And I think that this meme is correct philosophically because of just the broad aggregation of network effects. And this is what has always made me so bullish about a general purpose, Turing, complete, fully expressive blockchain because that meme can actually become true on Ethereum. And so this meme started to wane off from the Bitcoin space and has started to become true with Ethereum. Zcash, shielded transactions, oh, we've got that. That's Aztec. If you guys remember EOS, we tried that on Ethereum. It was Loom network. Turns out that idea didn't really work. But there's so many things that have been created in the generalized crypto space that eventually got plugged into Ethereum. And this is one of the things I will always give Bitcoiners credit to.

Correct in ideology, correct in philosophy,

Missed the execution. Like missed just the wrong chain. And so Justin, I'll hand the mic back to add anything to that.

Yeah, 100%. Like Bitcoiners have all the memes correct. They are visionaries. They're able to see a decade into the future, but unfortunately, they don't have the fundamentals to back it. Now, in terms of being able to copy ideas from the ecosystem, there's various layers at which these ideas can be incorporated. They could be incorporated at the service layer, you know, basically the centralized layer. Like the, for example, you know, we've seen lending in Bitcoin. We've seen all sorts of you know C Fi, and there has been innovation at that layer.

I think the other two layers would be the application layer. Now, unfortunately, Bitcoin is you know, this its UTXO model with almost no scripting is just completely inadequate for the application layer. Like people have tried to build stacks on top of it, people have tried to build all sorts of hacks. It just doesn't work. Like in theory, you could use IO, which is like indistinguishability obfuscation, a very, very fancy piece of technology, and you can run the EVM on top of Bitcoin, but that will happen for another maybe three decades.

And then like the final place where kind of innovation can come in is at layer one in consensus.

You know, it the way that I think of Bitcoin is basically a social experiment in premature ossification at the consensus layer. And so really like the only place where they can innovate is at these like really higher levels, you know, including the meme layer. This is why maybe they're so good, because this is the only thing that they can work on meaningfully.

Whereas, you know, we have an ability to evolve the layer one over time, and we have this notion of escape velocity at the application layer. So all like the centralized lending, all of that stuff, you know, actually we're capable of building much more decentralized alternatives within the application layer.

DC, I want to throw this one to you because you're the veteran investor in the room. And as someone who's like sharpened their teeth in traditional equities markets before coming to crypto and then seeing all the shenanigans that we do in the crypto room, uh one of the things that I try and convince people who are like thinking about leaving the space right now, or like they have flipped from bullish to bearish. And right now, at the price of $1,300 Ether and like $17,000 Bitcoin, they're now bearish. My response to them is like, well, no, no, no, no. This is like all the pain's already passed. Like, this is the time to be bullish. You actually wanted to be bearish at $4,800 Ether. That would have been the time to be bearish. And so this is time to put on the bullish cap. But I want to also draw some attention because I know we are just all, you know, five of us here have a decent amount of our portfolio in Ether, and we're gonna talk about that for the rest of the podcast. But I just want to play devil's advocate for one moment. In that same vein where, like, okay, Solana, alt layer ones, they're all wrecked, right? They're all down. Well, is the risk to reward of Ether right now justified in comparison to some of the deals that we can see in the public markets in the crypto space? For example, Cardano at $11 billion is 14 times cheaper than Ether. Polka Dot at $6 billion is 26 times cheaper than Ether. Solana at $5 billion, 31 times cheaper than Ether. Avalanche at $4 billion, 40 times cheaper than Ether. So in this moment, at the depths of the bear market, when perhaps some of these alt layer ones are as wrecked as they were ever been, is the risk to reward for Ether justified in your opinion?

Not only do I think it's justified, I think it's actually far superior to all of the assets that you just mentioned. Despite the fact that they've had bigger drawdowns,

that's no guarantee that they're going to make up the magnitude of those drawdowns. And I, you know, first I want to start with the broader point.

Crypto goes through cyclical bear markets. It is an asset class with a lot of potential. There's a lot of potential around what's being built on networks like Ethereum.

And when you have that kind of potential, market excitement tends to sometimes get ahead of itself. That's why we get these really exciting bull markets. We are now seeing the reverse side of that, and the consequences of that are we are seeing the bear, where we have people who are in this space as tourists. They've left, you know, we've had this spectacular collapse of multiple trading funds and now FTX, you know, one of the most prominent consumer exchanges.

It's bad. I mean, it's definitely bad just from a market sentiment point of view, not from a fundamentals point of view. But from a market sentiment point of view, things are very bad. It reminds me very much of the early days, like 2013,

when Mt. Gox kind of got hacked and had their issues. The market just lost confidence. You had a lot of lower information people get flushed out.

So I want to put that on the table, but I think that what differentiates Ether from all of those networks that you just discussed is that Ethereum is a successful multi-cycle asset.

Ethereum is a network that has proven itself time and time again and continues to gain users, it continues to gain developers. Sure, interest is down during this bearish period, but Ethereum isn't going anywhere. I actually feel a lot more confident

about Ethereum and Ether this year than I did in 2019.

In twenty nineteen, you guys all know, we were all there together, it was it was bad. That was rough times, and there were some existential questions like

Was Ethereum gonna survive? I mean, I had confidence, but it was just that. It was confidence. I didn't have that degree of surety. I feel like with Ether and Ethereum now, that surety is much, much stronger. With a lot of these other networks, look, I'm not saying that they're all gonna die or go to zero, but some of them very well could, right? Most of those are first cycle assets. To the extent that they aren't first cycle assets, they never delivered anything of value before the cycle. And you could argue some of them didn't even deliver anything of value this cycle, to be perfectly honest, not to be too harsh. But you know, when I look at Ether and Ethereum, I think it emerges with actually a much stronger and more exceptional and unique value proposition. Ether, right now, is the most decentralized programmable asset in the world, period. We've taken this incredible step of moving it to proof of stake, which was one of the big clouds hanging over Ether and Ethereum. Like, is it gonna successfully do this? We did it, and we did it without a hitch. We've moved Ethereum to become a network that is economically secured by Ether, which is also incredible. So I suspect that during the next cycle, Ether is actually gonna get a lot more market interest. It's gonna be sought after by financial types who want to earn a yield from the staking. It's going to be sought after by people who want an alternative store of value to something like Bitcoin, which is secured by proof of work. And it's gonna become an increasingly popular medium of exchange for things like NFTs and other digital goods and services. So I'm hyper bullish. And I and I and after the FTX collapse, I kind of came out on Twitter and I said, I'm gonna start buying again now.