The ETH Merge: BULL OR BEAR? David debates Jordi Alexander

Bankless Nation, it's debate time. Debating, I think, the most interesting topic in crypto today. Is the merge overhyped? We get the bear case and the bull case for the merge. We try to answer the question on whether it's overhyped or not. Today, my role is a bit different in Bankless. Today, I am the moderator. I am the host of this debate. We have David Hoffman, who of course is taking the bull position. And we also have Jordy Alexander, who I'll introduce later, who is taking the bear position. He thinks the merge is overhyped, while David thinks it's probably still underhyped or appropriately hyped. And we will get into all of that. I think the market still might not understand the merge. It's going in both directions. And so hopefully this episode gives you some clarity on that. I'm going to introduce our debaters in just a minute, but a few quick announcements. All right, David, we're going to get to it. So we're about to introduce. I guess I no one needs to introduce you, but um, I I want to introduce uh Jordi Alexander in a minute. He is the uh merge bear in this episode today. And he put an excellent post out in Bankless on why he thinks the merge is overhyped. Jordy, welcome to Bankless. How are you doing?

Good to be here. I'm excited.

Uh David, you of course are the merge uh bull and you are bullish on the merge. Uh and you are also known to host a podcast in the space that is also well known to be very bullish on Ethereum and the merge. Uh welcome to the show, David.

Thanks, Ryan. Thanks for having me.

Um, I I gotta ask, maybe before we get in, just a little chit chat, David. Are are you a little bit worried about this debate? I mean, the last time we had Jordy on a bankless podcast for a debate, the coin that he was bearish on went to zero

in six weeks. All right. So uh are you a little bit worried about this one?

Uh well, you know, data point of one. Um, however, I I will say that uh the sobriety that it that one needed in order to be

like bearish Luna in the time of complete Luna

just the the narrative tailwinds behind Luna were the strongest was was hard and took a very smart and and per uh rational person to do so. Uh and so I think maybe I'm perhaps the person drinking the Kool-Aid this time, and now it's my turn to have to terrify up against Geordie. Yeah.

Uh J Jordi, just real quick before we get in, um, what was kind of like the aftermath? 'Cause I don't think we've we've talked to you much about this, but the aftermath after that debate and kind of the you know the the crash of of Luna, did you hear from anyone? Just uh what were the kind of the months after that event like for you?

Um,

yeah, obviously there were six weeks. So between that time, there was quite a big run up in Luna. I mean,

it went up up another 50%, I think, like to 120, 125. It really had like its uh its like an uh you know next surge there.

Um

I I got involved a little bit in trying to understand uh, you know, the exact mechanics of how Luna might be leaking because I kind of felt intuitively like it was leaking value.

Um, sadly, I didn't really, because there was so much other stuff going on. I didn't spend the time to really understand exactly what the what the switch, the kill switch was.

I did that work as it was falling apart. And then I'm like, okay, now I really need to like just not sleep the whole night, stay up the whole night, and really try to pinpoint like why is this happening? And I did, but it was too late. Like it was falling apart at that point.

But I realized that um

that design can never work

uh

ever because it basically

uh people can just like arbitrage.

Luna and get cheap UST. So they can mint UST forever

just by kind of buying low, selling high, Luna back and forth.

So that

means that no matter what, like it was doomed to fail. Like it was gonna go to zero at some point.

David and I have um talked about that episode a little bit and it was really funny sort of um as the episode was uh being live streamed and in the days after there was a lot of vitriol from uh the the lunatic community, I would say, about that episode. A lot of negativity, negative comments. And then what you see is like a couple months later, the comments begin to change, and there's there start to be like appreciative thank you comments, like thank you for airing both sides of this argument. I should have listened a bit more rationally to Jordy's take on it. I'm wondering if you got any uh thank yous in the aftermath because I know post that episode, uh, there was a lot of anger from a community who felt like maybe you, maybe bankless or at large, was kind of just you know trying to uh trying to knock down uh Luna, and we were just kind of haters of um something that was innovative and new.

Yeah, I mean, definitely like there was a lot of that. Uh it wasn't surprising or new to me. I mean, I kind of had my first go around with Olympus Dow people back when it was like over like a thousand dollars,

and um, they kind of crashed soon after. And

I saw a lot of the same thing where

Is Jordy just this reaper meme just going knocking on doors? Dude, you're in trouble, David. That's what I'm trying to tell you.

Um, you know, it's it's kind of like something that has opened my eyes a lot about you know the power of community when things are going well, where they're you know, it's just kind of

I don't want to say ETH

is is showing that as well now, but when things are going well, there can be like a huge momentum.

Um

and maybe like

less critical thinking. And then when things are badly, like people are trying to like reevaluate and see like you know what they missed.

This is uh an amazing setup for the episode that we're a bit about to have because I think the most valuable part of debates on Banklist specifically is uh to bust bubbles and to inject some of that critical thinking into some of our theses. So we're hopeful to do that. And we're gonna get to the debate in just a minute. But before we do, we want to thank the sponsors that made this episode possible. All right, guys, we are back trying to answer the question, debate the topic. Is the merge overhyped? And of course, I'm talking about the merge of Ethereum between proof of work and proof of stake. Uh, the entrance of ultrasound money, maybe. Uh, Jordy has some questions about that, and he is taking the case for why the merge is overhyped. He's taking the bear case on the merge and trying to deflate some bubbles. Jordy Alexander, of course, is the CIO of Celini Capital, which is a multi strategy trading firm. It's also a liquidity provider specializing in crypto assets. He's also a seasoned debater. He came on to make the case that Luna was on shaky ground. Uh, did that six weeks before Luna then collapsed to zero. Jordi, welcome back to Bankless. It's great to have you.

It's good to be here, guys.

Uh of course David Hoffman is i.e. leader of the bankless movement. He's the co-founder of a mood media studio of the same name. He's a well-known writer. He's also appeared on this podcast more than a few times. He's also known to be bullish on ETH. David, you ready for this one?

I'm indeed ready. I've been preparing for this one for a long time, Ryan.

All right. Well, let's start. Yes, you have. Indeed, for your whole crypto career, I think. Let's start with Jordi, with uh kind of the preamble and the question. Uh Jordi, you wrote a fantastic uh post that we actually published in Banklist that kind of goes through why you think the merge is overhyped. But why don't you start there with the preamble? We'll get into the details of all of your reasons and rationale for why it's overhyped, but give us the big picture. Uh, why is the merge overhyped in your mind? What are the the main reasons or the main things that are overhyped about it?

Yeah, I mean, you know, that people have different time horizons, but I think there's reasons on the short, medium, and long term to potentially be like concerned about certain parts of the narrative.

On the short term, I think people assume that,

you know, once this merge happens, price will just continue to flow up because it's happened. But in reality, I think very strongly that we will see the usual sell the rumor, you know, buy the rumor, sell the news

for many reasons, including the fact that it is such a huge catalyst that

people are really looking forward to it.

The price action on it is going to happen now as people are like expecting it.

After it's done, you know, in two months' time, people are going to be moving on to the next narrative and the next thing, as they always do.

And so I think that's that's like something to be mindful of in the short term.

In the medium term, what really concerns me is the fact that, you

know, ETH as an asset is supposed to be this like yield bearing,

you know, uh base interest rate financial instrument.

I'm very concerned about gas fees. I don't think they're going to recover to the levels that they were.

And that creates an unsustainably

uh

the expectation for yield being high is just not sustainable. Um, so I've kind of done a lot of work looking at you know what yields are actually going to be

once things settle down. And it's

it's it's less than treasuries. So it's it's not very exciting compared to like you know traditional market riskless rates.

And then lastly, on the long run,