Why You Should Still Be Bullish ETH | Anthony Sassano

At that market cap, we we need that that bigger money marginal buyer to decisively move move ETH up. But I think as part of the regular market cycles as well, with a flood of new kind of money coming in from like retail investors, that can still move ETH up. But if you want ETH at like 10, 15, 20k, it needs to be the big money as well, like the Wall Street ETF money. It can't just be that regular retail buyer.

Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. We've done a lot of ETH episodes lately, some ETH episodes that have been more bearish. This is not one of those. This is an episode that is max bullish on ETH the asset and Ethereum the network. We got Anthony Sesano here. He uh took a couple months off on vacation and he came back with some bull fudbusting fury.

Pent up demand, pent up energy.

Yeah. I think he heard rumor of some of the episodes that that we did with, you know, like Kyle and Max, and he wanted to uh you know come on and basically refute some of the points made. So we've got three parts to this episode. First, him answering the criticisms, then him making the bull case for either the asset and explaining why he is still bullish, and then prognosticating on the future. Particularly the question that's in a lot of ETH holders' mind is like, uh when we going up, is this cycle gonna skip?

Win us.

My asset. What about Ether this cycle? Uh so we get it into all of that and more.

Anthony Susano just has an absolute wealth of knowledge. It kind of comes at you like a fire hose. So, listener, brace yourselves, because here we go. Let's go ahead and get right into our conversation with Anthony Susano. But first, a moment to talk about some of these fantastic sponsors that make this show possible. Bankless Nation, someone very special on the show today, a notable angel investor, uh, perhaps known as the ETH of ETH Bulls, the creator of the Ethereum podcast, The Daily Gui.

Anthony Susano. Welcome back to Bankless.

Hey David, thanks for having me. Hey Ryan, how's it going?

Going well. We got this is a uh long time coming this episode.

Yeah, yeah, definitely. I think it's coming at uh at the right time as well.

Anthony, I'm just curious. Um, are you still bullish ether? Just curious.

Oh man, that's uh that that's a funny question because like the default answer is yes, um, but like my today answer is also yes.

Okay, so I want to kind of zoom out before we get into some many of the questions that we are going to ask you, which are going to be uh some of the same questions that we have asked our other guests uh over a handful of episodes that we've done, both on the bullish and on the bearish side. We're gonna throw some of the same questions out your way, but I want to zoom out. The Ethereum project is a big project. Started in 2015. Uh, we are now in 2024. Uh some of that project, uh, which was once ideas, has now manifested into real life. Zooming all the way out, uh, if we went back in time when we all met, me, Ryan, you all met in 2017, 2018, and we were able to zoom forward to 2024 and see what's up with Ethereum, how would you think that it has gone? Like vet the progress, uh, the successes of Ethereum, the project as we once saw it in 2017, 2018.

Yeah. So I mean, just to give some context for listeners, I got into Ethereum in early 2017. So I missed things like the Dow. Um, and I missed a lot of those kind of, I guess, very early uh I guess years, 2015, 2016, which were pretty formative, I think, for Ethereum as an ecosystem. It really tested Ethereum. Like the Dow was was Ethereum's biggest test, I think, maybe ever at this point, in terms of uh the amount of controversy that it uh uh made for the Ethereum ecosystem or created for the Ethereum ecosystem, and then the fallout from that is still being felt to this day, actually. We still reflect back on the Dow in certain kind of areas of Ethereum as a kind of example of what not to do or what to avoid or how to build Ethereum so we don't have to deal with that ever again, sort of thing. And it all obviously informed a lot of uh smart contract development in terms of security because it was the first big hack from a smart contract. Um, and obviously it led to the worst case scenario, which was altering the chain within a regular state transition to quote unquote fix it, right? So there was a lot of lessons learned there. But when I got into Ethereum, the ICO mania was just kicking off. So my first kind of I guess impression of Ethereum was that everything was fucking awesome. We're getting proof of stake this year, like it's all gonna be great. We're gonna scale, we're more scalable than Bitcoin. It's gonna be amazing. So I think I got in at like a nice time because I obviously wrote it up that that yeah, ETH went from like $10 to $1400. Everything was amazing. Until obviously, like towards the end, we started hitting like real scalability kind of limits with crypto kitties clogging the network, the IC, the big ICOs clogging the network. And it became very clear, I think, to everyone, that a lot of extraction was happening in the ecosystem as well, where these ICOs were not novel ideas anymore. It was a scam dressed in a white paper, really. Um, and a lot of money got sucked out of the ecosystem. Billions of dollars of uh, of course. Uh tens of billions potentially got sucked out of not just the Ethereum ecosystem, but the crypto ecosystem because people were selling their other crypto assets like BTC to come into ETH to buy these ICOs. So that was my kind of first impression. But then during the bear market of 2018 and 2019, um, I stuck around. You know, I tried to do what what I uh what I felt was most valuable. I created ETH with Eric Connor. Uh, you guys created Bankless during that time as well. And we all kind of got together and started talking about uh Ethereum there. But what's funny is that while like there was all that optimism in 2017 that everything was coming like that year, nothing ended up coming from like another three years, right? Preview of stake didn't get delivered until December 2020. Um, DeFi didn't take off until really mid-2020 uh in a really big way, even though we had the protocols live for a while. Scaling was an absolute pipe dream at the time. We were still talking about like state channels and plasma. There wasn't really roll-ups yet that came later. So if I was to look back at 2017, I would say that yeah, because because the bull market kind of, I guess, put a shadow of all of this, it kind of hid it away for a little bit, but then it came to light in 2018 and 2019. So I would say that today, like thinking back, um, I I I I I'm actually amazed at where where we are today, given where we came from and like how everything was stacked against Ethereum at the time as well, considering that we had that brutal bear market after the bull market. Um so yeah, I would say that we've exceeded my wildest expectations at this point.

Then why in that case uh would you say ETH is down so bad now? Uh when you look at like some of the dominant pairs that people look at these days, uh we have the ETH BTC ratio down for two years in a row, uh Solana ether ratio up straight for a year in a row. Uh how do you account for this price action that you can't really call it like local price action anymore when some of the trends versus Bitcoin at the very least is is two years old now. Uh so how do you account for this?

I tr I try not to over-index on price ratios. I try to look at what ETH is is kind of valued as in in kind of USD terms, first and foremost. So yeah, it's a $300 billion asset. So it's obviously absolutely massive. It's one of the most valuable assets on the planet. I think it's worth more than Coca-Cola. I was looking at the other day, which is which is kind of funny when you think about the fact that like everyone knows who Coca-Cola is. It's a global brand. Like I'm pretty sure everyone has had at least one of their products in their lifetime. Whereas Ethereum, on the other hand, is nothing like that. Like most people haven't heard of Ethereum at all and definitely not bought ETH. So I think that's a pretty big achievement already. But in terms of ratios, the reason why I don't over-index on them is because they're a picture in time, I think. And you mentioned that against Bitcoin, it's it's less, I guess, like uh local and more kind of macro. It's been many years now. I understand that. But then against kind of like other assets, I think it's a picture in time of what where we're at. If you're gonna talk about like against Solana, for example, which obviously is Ethereum's kind of main competitor in the ecosystem today, in terms of like being a platform to build things, um I have other opinions about how I believe ETH and BTC are competitors as well. And ETH's main competitor is BTC to be money. We're gonna talk about that, of course. But in terms of like the actual platform itself, the technology, uh obviously Solana's had a great last, I guess, 18 months, you could say, maybe, maybe a bit longer than that. They've onboarded a lot of people into their ecosystem. They've kept building, they've kept grinding during the bear market, and they're basically experiencing a lot of what Ethereum experienced last cycle. Uh, but it's fresh ice, new lights, the shiny new thing, right? So that's why I don't like to over-index on this snapshot because you don't know what's gonna happen in the future. You don't know if the same thing's gonna happen to Solana where a lot of that activity washes out and goes somewhere else, maybe another competitor network, maybe it comes back into Ethereum layer twos because we're scaling up as well. So like Ethereum has sat still and done nothing. So I think it's just a picture of the current landscape, the time, um, what we're in now. And it doesn't really have any uh, I guess, like bearing on the future. I think that's one lesson we can take from a lot of crypto price action is that a lot of it reacts to the now, to the very short term, and a lot of it has a very delayed reaction to the long term. Because if you look at the players in the crypto ecosystem, a lot of them don't have a long-term, I guess, kind of mindset at all. A lot of them don't understand enough to have a long-term mindset. Um, because a lot of people who get into crypto, uh, for better or worse, are just in it to make money. They don't care about the technology, they're chasing where the money is. And there's nothing wrong with that. But you have to kind of take that into consideration and give context to understand what's happening in the market. It's just a very complex uh kind of beast there. But I think I saw a tweet, um, I think it was from Jill Gunter. Uh, I'm I'm I'm probably gonna get the actual tweet wrong, but she basically said that every other chain is living in Ethereum's past or Ethereum is living in every other chain's future. I think that's the best description I've ever seen of that kind of phenomenon there. Because every issue that Ethereum has today, or every perceived issue, will be an issue for these other chains in the future. And you're already seeing this as time goes on. The more mature an ecosystem becomes, the the more issues uh, I guess, um, rear their ugly head, especially when it comes to pace of development. The bigger an ecosystem, the slower your pace of development. And this isn't just for blockchains, this is true for centralized companies as well. Like a small nimble startup is going to move a lot faster than Apple, for example, when uh developing new products and new features and stuff like that, because it doesn't have all that bureaucracy, it doesn't have to go through different a million different product managers, so on and so forth, right? It doesn't have to make sure it doesn't harm the stock, so to speak. So there are complete differences between big and small. And I think that the Ethereum competitors, a lot of them are still very, very small today, right? And they can move very fast, very nimbly, shiny new thing. People love that and attracted to that. But then as they get bigger, they just fall into the same thing that Ethereum has fallen into in terms of like they're a really big ecosystem, they have to move slow now, they're mature, so no one, you know, people are like, oh yeah, that's been there for ages. Like that's old news. I'm gonna go uh bet on this shiny new thing. So that's gonna happen. And I and I and I and I'm I'm strongly confident in that because it has happened to Bitcoin. Bitcoin was the obviously the the shiny new thing once upon a time. Now it's the old boomer thing. Ethereum, same thing. Shiny new thing, old boomer thing, so on and so forth. It's happened to pretty much everything that's reached a certain critical mass here. Um and and the last thing I'll say, and the one thing that really excites me about the Ethereum ecosystem is that we're we're basically trying to have the best of both worlds. We're trying to have the old established kind of like uh mature chain with Ethereum layer one and the small nimble kind of startup, move fast, break things thing with L2s. And I know that there are trade-offs there with interoperability and things like that, which I'm sure we'll discuss. But the way I look at it is that we've essentially done uh done this thing where we're trying to thread the needle between uh being that old kind of like uh mature platform and being new and upstart and attracting those new people because that's that's the only way you're gonna attract new people is making it so that they feel like they're coming into something new and exciting and not something that's old and dated.

So there's a perspective out there that the choices of the Ethereum uh roadmap have led Ethereum into a path that has changed its fundamentals, right? The the fee burn of ether is down because the layer two roadmap took it away, right? Uh so as a result, the vibes on Twitter are bad. And the narrative around Twitter right now is bad because the price is bad. And some people are saying, well, this is actually a fundamental truth. This is a as a res is a reaction to the roadmap, which has is flawed and has led people down uh an not a very value accretive uh path for Ethereum. But I think what you're saying is is, well, actually, all of these chains are on kind of more or less the same paths. Uh and Ethereum, we had our kind of like euphoric fun times in 2021. Uh, and now we are kind of doing this very hard thing, which other chains will also have to do. And so the main dislocation between prices of Bitcoin, Ether, Solana is actually just a dislocation in the time frames of many of the market participants. Some people are looking kind of like looking in the in the short term, placing their bets in the short term, uh, and not really looking out into the long distant future horizon. Uh, and and as a result, there are dislocated market prices. Uh, is that how is that uh a summary of what you're saying?

Yeah, I I I think so. And and also like I don't know if I maybe use the word dislocated. It's it's as I said, more like a snapshot in time. You know, it's it's the market basically saying, well, we give this kind of platform percent this percentage of odds of succeeding uh uh over a certain kind of time frame, and this is how much we think it's worth against Ethereum. Maybe it's going to outgrow Ethereum, maybe it's going to outstrip Ethereum. And you mentioned kind of things like value accrual to the asset and a big reason why. I mean, especially with um with Solana, where they've been generating a lot of this fee revenue lately through uh priority fees, um, through things like MEV, which Ethereum has has done in the past. Ethereum did this in 2021, right? Our fee revenue was absolutely massive. We obviously had the burn go live, which made it look even better because, hey, deflationary ETH. But I think that long term, what seems to happen in every ecosystem, and Ethereum is the prime example here, is that that value is uh considered leakage to the L1, where the apps themselves look at that and like, hey, I want that for myself. You know, the MEV participants look at that and it's like, hey, why am I paying so much for this? Like, I want to pay less to extract MEV. I want to still extract MEV, of course, but I want to pay less for that because they're businesses at the end of the day, right? They're make their profit maximalist businesses, they're trying to make money. I mean, I think the most profit maxi entity in crypto are MEV-related kind of entities. Like that, their whole business revolves around making the most amount of money. So, we what you've seen with Ethereum over the over the last couple of years, um, and this isn't the only reason, but this is uh a big reason. The MEV on Ethereum has been minimized a lot for the user. The user's able to protect themselves through things like CowSwap, for example, there is private order flow, and there are trade-offs here as well. I'm not saying it's a good or bad thing, but it's what has happened. And that's taken a lot of this kind of fear of a new off and also smoothed out the fee market too, where if you have like these, uh I mean, 1559 did this as well, like the IP 1559, but essentially you have like a much more kind of orderly layer where essentially people are protecting themselves from MEV, the apps are potentially internalizing that leakage and accruing it to themselves rather than leaking it out to the L1. Um, and I think that's gonna happen to every mature kind of L1 ecosystem and even L2s. Don't, you know, it's not just the L1 here. So that's a big reason why I think that over-indexing on fear revenue for L1s is the wrong move. And valuing these things based on fear revenue is the complete wrong move. Because if we did that, um, Ethereum wouldn't be worth $300 billion, or ETH wouldn't be worth $300 billion. It would be worth a lot less than that if it was just valued on its fear revenue. Even in the times that if fear revenue was really, really high, it shouldn't be worth that much. But uh if you're if you're just valuing it based on that. But my strong belief, and and I believe you guys agree with this, and this is a belief that I've held since 2019 at least. So this is not a new thing. It's like five plus years of it. My strong belief is that every single L1 token, if it wants to be durably worth hundreds of billions, trillions of dollars, it has to be money. It has to be a store of value. There is no other path to that because of the phenomenon of there's no way these apps and these kind of MEV searches and anyone else in that pipeline are gonna leak all this value to the L1. Uh, it doesn't make any sense. The incentives do not go there. The incentives go the complete opposite way. And I think what we're seeing now as well is that more and more people are accepting of this because we have the evidence to back it up. It's all well and good for us to say ETH is money, ETH is a store of value, but people ask, you know, what is the evidence to back this up? Well, to me, the the clearest evidence is that ETH is worth $300 billion, Bitcoin's worth $1.3 trillion, and neither of them, especially Bitcoin, justify enough, uh uh, sorry, justify their valuations via their fear revenue. Not even close to that. So this isn't to say that Ethereum isn't going to be able to generate fear revenue at L1, and that shouldn't accrue value to ETH as an asset as well. But I think we're talking about where the bulk of the value comes from. It seems to, based on the evidence, not based on just me saying it, it seems to come from a monetary premium, from a store of value premium, and people believing this and wanting to actually hold the asset. And then you've got everything else that falls into that as well, which accrues value to ETH. But that's that's the kind of way I see it. And I think if we're talking about uh what's happening now where people are allocating money, I think people are seeing these high Solana revenues like they saw the high Ethereum revenues and being like, oh my God, I want a piece of that. Like that's really high. That's gonna keep growing. It looks really good. The charts are up only. And I think the same thing's gonna happen where with Ethereum, uh, a lot was minimized, a lot of that was uh a lot of that came down over time, just naturally. And I think that's what's gonna uh happen with every network. And I'm not trying to pick on Solana, it's just obviously the the obvious example here or or what to compare it to. Uh, but I I think that's the the end fate here because a lot of it is MEV as well. That's what people don't understand. A lot of it is MEV, which is harmful to users. And we want to internalize that. We want to make sure, uh well, the apps want to internalize that, and we also want to make sure users are protected from this um because they're losing a lot of money uh uh at the moment.

So uh let's do this, Anthony, because um you you are ETH bull of bulls. I mean they say like bankless is bullish ETH, and um you're like, I I think maybe we certainly are, and also we have nothing on you.

We don't we don't hold a candle to Anthony.

Okay. So um l let's divide uh the remaining portion of this episode into maybe like uh three kind of paths for us. Like first, let's have you directly answer the criticisms. Then let's have you give us kind of the the pure unadulterated bull take on ether the asset, and then finally we'll kind of end with with you maybe predicting what's next. But but first, answer the criticisms. So there have been a lot of criticisms of um ether and its value accrual and Ethereum the network. And let's start there. We'll kind of lightning round this, Anthony. So like I'll I'll just throw you know criticisms flood your way, and like you can kind of like you know, deal with smacking it down or addressing it however you see fit. And I want to start with the criticisms in kind of like uh three different sections. So like the first is the criticisms that come from outside the house, from outside the community, maybe the alt-layer one VCs, you know, outside of the Ethereum community. That's one one uh subset. Then those that are inside the house, internal to the Ethereum community that I see more often, and then kind of the the neutral parties, the market onlookers. So, first, criticisms coming from uh outside of the Ethereum community. This first one, this has uh been a main one and kind of like a narrative staple in 2024 uh against Ethereum, which is this idea. L2s are parasites. You're like all the L2s that have launched are primarily like clones of the L1, you know, where copy and paste uniswap. And so that results in taking of users' liquidity and DeFi from uh Ethereum and parasiting uh all of the like, you know, TVL uh value accrual. What what do you say to this idea that L2s are parasites?

The main reason this kind of narrative and similar narratives exist is because it's a really easy kind of bike shedding point that people can throw into like the Twitter sphere, the social sphere, and get people just like constantly debating it because it sounds like fun on the surface. Hey, L2s are parasites because they're taking users from L1 and hey, they're not paying much fees uh to the L1 yet. And go discuss this until you guys run out of breath, sort of thing. So I think that if you're a competitor ecosystem, the best thing you can do is basically sow confusion, right? And sow doubt in your competitor and get them talking about, especially when it comes to uh discussing this online, especially on Twitter in a very adversarial environment there. But I think that the whole premise is just completely flawed from the beginning, even for people who may believe it. Like let's discard the people who are just saying it to fight Ethereum and they don't actually believe it, they just uh want to sow confusion. But let's look at the people who actually believe this. The whole premise is is flawed because it's essentially saying that if Ethereum didn't have L2s, then Ethereum would be doing fine. Like that's what you're saying. And it wouldn't there would be no no parasites on it, there will be no one leaking, you know, taking users from it, which is completely false. The other L1s would be taking users from Ethereum. They did. When Ethereum, even the L2s before Blobs went live, were expensive. Users were going to other chains because it was too expensive for them. So so in in reality, there were parasites. The parasites are the other L1s, they're the other ecosystems. They're taking the users from Ethereum. And Ethereum L1 was never going to scale like the other L1s are. Like it has a completely different scaling roadmap for Ethereum L1. So I think the whole premise, just to begin with, is completely flawed. Because by saying the L2s are parasites, um, you're you're essentially saying that Ethereum would have been fine without the L2s. It would have been, you know, a growing ecosystem, Ethereum L1 would have been onboarding new users. When the fight, like what, even a year ago, was that oh, Ethereum L1 is so expensive, all the users are going to go elsewhere, Ethereum is dead. And now that we're keeping the Ethereum, I guess, users within the Ethereum ecosystem because these L2s are part of the Ethereum ecosystem, that's another narrative that they say. I don't know if you've got it on your list that um L2s aren't Ethereum. But like essentially, the the from the from the base premise, it just doesn't make sense. Like if you actually reason it out, it doesn't make any sense. And I think that um the people who actually believe it may just be confused about that and may just uh uh uh have like a wrong frame of reference here. But that's how I think about it.

So are L2s if they're not parasites, are they neutral? Or are they uh symbiotic? Are they net good for Ethereum the network and for ether the asset?

I think, like, if you if you look at each individual L2, like you could basically reason and say, hey, there could be an L2 that literally exists just to siphon off users of Ethereum, and its plan was always to become a new L1 or something like that and leave Ethereum. That is a possibility. That is always a possibility. But if we're talking about the current set of like L2s that have most of the activity on them, your base, your Arbitrum 1, etc., like I don't consider them to be parasites at all. Their ecosystems constantly give back to Ethereum, are constantly involved in Ethereum. I mean, team members from these L2 teams were involved in getting blobs over the line, which means getting involved in the core development process of Ethereum, which is not an easy process. Anyone who's paid attention to core development process knows just how hard it is to get things over the line and get things into the network. But they did this. They're part of the community, they give back. They do things like donate to the protocol guild. They're on Twitter defending Ethereum all the time. They're talking about why they're on Ethereum and why what they're building is only possible on Ethereum. So there's a lot of social kind of signaling around that. And yes, okay, they can be lying, but these teams like Optimism, for example, which is what base is built on, the OP stack, Arbitrum, off-chain labs, they've been around for a very long time. And they've been in Ethereum for a very long time and stuck with Ethereum for a very long time. So I think if you if you're just taking them on their word, you never should you should never do that. But you can also look at the supporting evidence as well. And then in terms of what they're actually driving, you know, objectively to the network, in terms of fee revenue and stuff like that, they are still driving fee revenues to the network. They're still interested in doing things like interoperating with other L2s. They're still interested in doing things like becoming a base rollup, which would drive even more revenue to the L1. So there is a lot of different things that they're doing that I consider to be symbiotic and not parasitic. But I think like if you use the general term that like all L2s are symbiotic, I think that's incorrect because that that is objectively false, because there are some L2s that will become L1s. Maybe they're smaller L2s, and or maybe they uh an L2 that becomes really big from incentives, and their whole plan was to basically become an L1 and be like, hey, look, you can survive as an L1 and do some kind of stuff there. Like the competition's fierce and people people do the these sorts of things here. But I think if you're looking at the ones that have succeeded and the ones that potentially are going to succeed in in the future, the the really big ones like um these these gigagas L2s, like uh Mega E people have heard of, uh Rise, there's a few others out there. If you look at what what they're doing, they're literally saying without Ethereum, we don't exist. So how can it be a parasite if like without Ethereum they don't exist? Then like it's a it's a symbiotic thing. Where with Ethereum, they exist, they thrive, and Ethereum thrives, so it's symbiotic. That's that's the way I kind of view it.

I want to see if I can actually strongman this argument uh a little bit more. Uh, because I think I think some people, uh some of the people who say like layer twos are parasitic to Ethereum or layer twos aren't Ethereum uh won't actually be totally satisfied by that answer. Uh and I think it definitely comes from the perspective that all blockchains are kind of maximalists of themselves. Uh so when we have a user who's transacting on the unis on Uniswap on the Ethereum layer one uh with whatever amount of capital that they have, uh, and then they decide to migrate to a layer two. Um, objectively, less fee revenue uh gets burned via either the Ethereum layer one gas fees, and it goes to Optimism base Arbitrum, you know, pick your layer two, and it goes into that DAO's treasury instead because they collect their fee revenue and Ethereum lost one user, Arbitrum gained one user, Ethereum lost like $10,000 of capital, Arbitrum gained $10,000 of TVL. Uh, and when uh Arbitrum captured whatever fee revenue that Arbitrum captured, it actually only gives one hundredth of a share of that fee revenue back down to the Ethereum layer one via fraud proofs. And in the Ethereum uh world, we look at that and be like, thumbs up, that's great, that's what we want. That's scaling. Uh, but then the the you know, the alt layer one camp will say, like, well, sure, you kept it inside of the Ethereum ecosystem. So you got a sh sliver of that fee revenue. So congrats, it didn't go to Celestia, it didn't go to Solana, it didn't go to Suissei, Aptos, whatever. Uh so yeah, it's in the Ethereum ecosystem, but you still lost the revenue and you still lost the user. The Ethereum layer one still lost those things. Uh and so uh how how would you because I think that perspective is a little bit different than the answer that you gave.

Yeah, and I and I totally understand that perspective, but I think it goes back to what I said earlier about kind of where would these users go? If they're not on Ethereum L1 and there's not an L2 for them to go to, where are they going? Well, we know where they're going, right? They're going for another L1. And that is a complete and total loss. It's not a 1-100th of a loss. That is a complete and total loss for Ethereum. Um, and uh because you've literally lost the user. It's like someone buying a Samsung phone instead of an iPhone. That is a complete loss. Apple didn't get the sale, Samsung got the sale. Same thing here. Ethereum didn't get the sale, Sana got the sale, for example, right? Like, and and and and I think when it comes to uh, I guess blockchains, um, there's a there's a stickiness to it as well. There is a very big network effect to it. So by losing that that kind of user, we're not only losing that user, but we're also reinforcing a competitor's network effect, which can potentially get them even more users that uh won't go to Ethereum because they're just going to to another network, because that's where the stuff is is kind of happening now. So I think that's that that's the first point on that. But then there's there's two other big things here. One of them is that.

The L2s as scaling ETH the asset as well as scaling Ethereum block space. So essentially scaling ETH as money. So the fee accrual fee revenue stuff, at least over the kind of short to medium term, is not a concern to me. It's basically us loss, uh, you know, doing loss leader, where essentially the L2s are very, very cheap. They're not paying much revenue right now because we're trying to keep Ethereum ecosystem uh Ethereum users within the Ethereum ecosystem. We want them uh in the Ethereum ecosystem, we don't want them going to these other ecosystems because even though it's uh, I guess you could say an objective loss in terms of fear revenue and like TVL to the L1, if you think of it as like a uh kind of like uh big, big thing with Ethereum at the center and other other chains orbiting Ethereum and and and kind of being part of Ethereum that way, then um to me it's it's not like a total and irrevocable loss. Like it's a it's it's still a net benefit, especially for ETH the asset, scaling that out as as kind of money there. Um, and especially when in the future we get more interoperability between these L2s, and when I mean some of them are gonna be based L2s. And what that that basically means for people who don't know is that they use the L1 for their sequencing. So they don't have their own sequencer, they actually use the L1 validator. So they're very tightly coupled with Ethereum L1 uh versus do, you know, maybe being a little bit detached by doing their own thing there. And I think kind of uh on that note, like I know we're gonna probably talk about more ETH's money stuff, but that also flows into the value of ETH as an asset. As I said, like I strongly believe ETH needs to be money. L2s are a really, really good way of promoting ether's money. They've been doing it for years now. And some people may argue, well, you can use ETH on on other chains, basically. You can use ETH on the other L1s, doesn't that scale ETH's money as well? And I would say that a little bit, but the ETH on the L1s is, I mean, even on the L2s, it's it's an IOU. It's not like complete and real ETH because ETH is issued on the Ethereum L1. And if you want like complete settlement guarantees and assurances for your ETH, it's on the L1. But on the on the L2s, it when they get to stage two decentralization, they have like an escape hatch. They're basically tightly coupled with the Ethereum L1, and you have this way back in case something happens to the L2. You have this way back home. But with the other L1s, you don't really have that. And also the other L1s are not incentivized at all to push ETH as the asset. They're incentivized to push their own native asset as the money of their ecosystem, um, which is kind of funny when people fight back against uh like ETH's money. It's like, well, you want everyone to use your native token, don't you? Right? Like, so isn't that the kind of the same thing here? Um, so so those are the kind of major points that I'd push back on there. But I I get like uh for a lot of people, they see the world as it is today, and it's very hard for them to imagine the future. And it's very hard for them to uh look at kind of the incentives and see, well, what's keeping the these L2s in Ethereum? Like if they're able to siphon off so much value, why not become an L1? And that becomes like a huge discussion as well from there. So I understand the argument. I do, and I understand um the argument from people who may not be aware of all the intricacies here. Um, but as I said, like you start analyzing it and breaking it down, and you eventually get to the point where you're like, okay, well, that doesn't really make much sense there. Um, but it does require a longer term, I guess, outlook.

You know, some some of the um like the L2s have a different token, and so they're going to be like reluctant to promote Etha's money type takes. Do you guys this this kind of reminds me of like, you know, back to uh everything in crypto we've seen kind of before? Do you guys remember back in the days of early DeFi when uh actually the first AMM uh automated market maker wasn't like Uniswap on Ethereum? It was this other protocol called Bancor. You guys remember Bancor? And like one of the the worries or concerns about Bangor from like the strong ETH bull community was like, hey, why why is Bancor um like basing all of its trading pairs in the Bancor token? Yeah, do you remember they were doing this?

Yep.

Uh and and so it was like, uh oh, like ETH should be the base pair because you're on Ethereum and like we want ETH to be money, not some like bank or token. And uh

Yeah, it was an alignment conversation. And there was like almost early discussion of like, well, is Bangor parasitic? And then like it was that it was that kind of a conversation. And then along came Uniswap, and of course, like it used um ether as its base pair, and then obviously, you know, like has massive stablecoin uh markets uh as well. But that that fit much more in the Ethereum ecosystem. Why? Because Ether was kind of the credibly credibly neutral money across all of the other DeFi apps. And so Ether was in Ave and Ether was in Compound, and now Ether made sense to be the dominant pair inside of Uniswap. I kind of think the same thing will play out in L2s. Like if you just think of L2s are what are they? They're kind of like apps, right? They're like it, it's almost the same fractal pattern of the early apps establishing ETH as money in DeFi. Well, L2s, the the most credibly neutral asset for them to um like uh to to uh use as a store of value is going to probably be ether. And those that don't will be kind of disconnected from this network effect. Anyway, okay. We're still uh outside the house, outside of the ETH community in terms of takes. This is another take that was given to us uh recently is basically like Ethereum is over provisioned with respect to um like its security, okay? And like other chains have kind of enough security. It's almost the idea of like economic security is a meme. I won't go so far as to that, but the basic idea that um Ethereum is like, you know, four nines, five nines with respect to its security. And all you really need for a global permissionless financial system is like 99.9% security and like uptime or whatever else, right? And so the idea that um it's over provisioned, we're not actually practically, Anthony, uh going to be like up against kind of nation state attack. And like if we are, anyway, neither Bitcoin nor Ethereum nor any blockchain existence can actually withstand that. So, like Solana or some alternative layer one uh security models is enough, and all the solo staker stuff, all of this max decentralization stuff, that's like way overkill for what we actually need. What's your take on this?

Yeah, I mean, I I think it goes back to what I was saying about looking at more longer term. I think that Ethereum has always been built with the mission of being as maximally decentralized as possible, respecting all the different vectors of that. Because it's not just the economic security via each staked, it's not just solo stakers, but it's also things like client diversity. And these things have downstream effects. Where with client diversity, not only do we get better defenses against, I guess, any potential attackers, but we get redundancy in the network as well. Where essentially if one client was to have a critical bug in it, it wouldn't take the whole network down. Whereas other networks, even Bitcoin, right? Bitcoin has one client. If that client has a critical bug in it and takes their network offline for whatever reason, um, there's no, I guess, recourse there in terms of other clients. So there are downstream effects here. And and as well with the with the clients, you have more and more people building Ethereum clients as well and getting involved with the Ethereum kind of core development ecosystem, which further decentralizes out the core decentralizes out the core development of of Ethereum. So there are a lot of different angles to kind of attack this from, but I would say it's it's basically a preference. Uh, it's not really a kind of argument or not really FUD, it's a preference. It's like, okay, if you prefer to be in an ecosystem that prioritizes the, I guess, like far end of the spectrum that Ethereum does in terms of being maximally decentralized, censorship resistant, planning for the potential worst case scenarios of nation states, but also of just like opportunists as well, wanting to break the network. Because it's not just nation states. If an opportunity sees, hey, like I could break the Ethereum network with a with a bug. Maybe I found a bug in the core protocol, I can break it and I can make some money on this, uh, whether it's in the markets or something like that. Well, there needs to be a defense against that as well. So I think from that perspective, uh, you can go in all the different directions of how Ethereum kind of does that. As I say, client diversity is one. There's a there's a bunch of others here. Um, but if that's not something you vibe with or it's not something that you really care too much about, then we can't force people to kind of care about that. We can't argue against them and say, hey, you should care about this, because it's it's really, I think, just that just a preference thing. But I think when it's tested is when it's most important. Like we had the OFAC sanctions against Tornado Cash, and that really tested Ethereum's claim to censorship resistance because I think people um don't realize that these networks have always been censorship resistant, not censorship proof. And this goes for every network in crypto, except maybe some of the privacy um layers, like Monero, for example, where it's default privacy. So you essentially get better guarantees because you don't know what's happening on the network anyway. So how can censorship happen? It still happens because you can have censorship at the centralized exchange kind of layer there, but we're talking about just the chain, right? And that really tested it. Essentially, what ended up happening is that 90 plus percent of the network was censoring uh Tornado Cash transactions at one point. And guess who wasn't? The solo stakers, right? Most of the solo stakers were not doing it. So they were the defense of last resort here. They were the final bulb against complete and total censorship on the Ethereum network. Now, imagine if the Ethereum network didn't have solo stakers. Imagine if it was only a big bunch of, I guess, like uh beefy kind of stakers that are part of all these centralized companies. And you had uh obviously on the block builder side as well, centralization there. But when it comes to validators, they were the last resort because a lot uh like 5-10% of them weren't building their blocks with these block builders. They were building them on their own here. So imagine we didn't have that. You can you imagine the the counterfactual world here is essentially that there would be total censorship of Toneda Cash on the network or much closer to that reality. So I think if you actually look at the objective evidence that we already have, um solo stakers are that final bulwark against this. And again, this is more of a kind of uh, I guess, preference thing, more of a long-term thing. Maybe you don't care that Tornado Cash is totally censored if you can trade your favorite meme coin still. That again is just a preference thing. But it has a lot of downstream effects, it has a lot of consequences because if you're building things on the network, it doesn't matter what it is, if you're building things and you think to yourself, wow, I could be censored one day by the whole network simply because the government doesn't like what I'm building, then you're probably gonna be like, maybe I'll go build this on a chain that actually has a chance of, you know, resisting this, essentially. Uh so that that's the way I kind of view it there. But as I said, this is like a very long discussion and we could spend the whole episode on this. Um, but I think it does come down to a personal preference thing as well.

Kyle Samani at Solana Breakpoint, uh, or no, token 2049, made a presentation about why Sol will eventually flip ETH. Uh, and summarizing that presentation down into just a few nuggets, it's more just like look at the metrics, transactions are up, dex volumes are up, economic fee revenue is up. Uh, and then also Ethereum has just been so slow. Uh the Ethereum projects nine years took them forever to ship proof of stake. What the hell were they doing? Uh, they took them forever to find a scaling roadmap, and they picked a terrible one. Uh so eventually Solana will flip an ETH. Uh mainly metrics uh and then timing. What what would you say to this?

I I say hindsight hindsight's always a beautiful thing, right? Like you can look back and be like, why'd they take so long to do this? It's like, well, I mean, no one else was doing it, guys. Like, I mean, Ethereum proof of stake is extremely novel. It's it's very different to the other proof of stake networks. I think people aren't aware of that. And and it also took so long because Ethereum is a truly decentralized ecosystem. It was a coordination issue of getting all these people to coordinate and build this thing is a lot harder because of the fact that Ethereum started decentralized. It very decentralized from day one, basically, um especially by um starting via uh proof of work, getting the community involved directly involved in mining. Like from day one, that was the principles there. So I think that's why a lot of things took long. Uh, one of the reasons, but also we had to invent a lot of things. We had to invent a lot of ways to do different things. And to be sure, Solana has also had to invent a lot of things to scale themselves up as well. They've got tons of normal technology that they've come up with themselves to benefit their own ecosystem. Um, and and uh and and to say that like they're so far ahead of Ethereum, and yes, they're a younger network, but to say that they're like all the way over here, or even to compare things like you know, Solana Proof of Stake to Ethereum Proof of Stake, I think is wrong considering that they're just different beasts, right? They have to do different things, they built differently, um, and they're different ecosystems altogether. In terms of metrics, I I think it's very dangerous for anyone to over-index on metrics at all. And we have very nice, uh I guess, evidence of that, nice uh uh within the Ethereum ecosystem where if you just take a snapshot of like 2021 Ethereum, just take a snapshot of that, look at the fair revenue, look at the activity, look at the D5 volumes, and say, oh my god, this is gonna continue. It's like the disco stew meme of like, hey, the trends are up and it's gonna keep going up. If you did that right in 2021 and then assumed that, um, then you'd be in a really bad place because all of those assumptions were completely wrong. That growth did not continue, obviously, because we went into a bear market. The fair revenue came down substantially, not just because of the bear market, but because of the things that I mentioned earlier. Um, and and of course, Ethereum took longer to get their scale to get the scaling stuff out, get the L2s live, get them mature enough to have cheaper fees and things like that. So I really don't think people should be like looking at the today's metrics or even like the last six months and and extrapolating that out to the longer term. That that definitely is not the case, no matter what it is within crypto, because things change very, very quickly. And I think Kyle likes to imagine that Solana exists to only compete with Ethereum when there are so many other competitors out there. Like, as you mentioned earlier, David, there is Suey and Aptos and say and Monad and BearChain, all these other L1s that are very serious about competing as well. They're not just like these scammy L1s that are like, oh, we don't care about competing, you know, we're just gonna do a token, cash out, whatever. I mean, I'm sure there's some of that, but like they're very serious about this. And they're they're not necessarily gonna be competing with Ethereum because they're not a roll-up kind of uh, I guess, centric uh chain. They're an L1 trying to scale up the L1. So for Carl to be like, oh, it's just Ethereum that we're competing with, it's like, bro, like look around you. Like there's all these other competitors. You shouldn't be just indexing on Ethereum here. So uh um for those reasons, I'm not gonna say whether like Sol's gonna flip Ether or not. I think that's like a wrong way to kind of think about it. Um I but I I will say, as I said, like overindexing on on metrics is always a very dangerous, uh, dangerous thing and extrapolating them out. Metrics are fine, we want them to be going up, but extrapolating it out as if that growth's gonna continue into the future is is a dangerous game, I think.

By the way, have you guys seen the the recent like mega ETH like um pro projections in in terms of uh transactions per second? It just like dwarfs

Availability, yeah.

like

Yeah.

it's like isn't it like something like ten thousand transactions per second?

They're they're quoting a hundred thousand, but I I take I I I take these things with a grain of salt because it's always fun to quote test net figures and internal figures, and then you go on mainnet and you're like, oh yeah, I mean, like, we're doing a bit less.

You can kind of see you can kind of see how the architecture, if you go full like TPS and you're an L2 and you just kind of centralize sequencers and you go kind of like all in the way Meg ETH is basically dialing that to max. How like it's almost impossible. It is impossible for an L1 to actually like exceed that from a transactions per second uh perspective.

To take a kind of, I guess, I mean, and then there's intricacies here to you here, but to take like a uh a note from the Solana camp where they they like to say that you know, Solana's as fast as the speed of light, right? All of the the validators communicate at the kind of speed of light here. They they process transactions at at or near the speed of light because they're using beefy nodes going over over fiber connections, you know, 10 gigabit per second connections. And you know, it looks like they're doing that to an extent. But then with the with the L2s, you don't have that issue because you don't have consensus. Like you don't need to come to consensus on anything. So as you said, an an L2 can be super centralized, and Mega ETH is claiming that they can have um transactions that kind of go through in like 10 milliseconds or one millisecond, because obviously.

I know.

Faster than the speed of light. But the way they're thinking about transactions and the way that Solana thinks about it, it's like, well, they're not technically finalized because they have to go through the Ethereum L1 pipeline. And I'm talking about finalization from a technical perspective, not from like an economic security perspective. So there are differences here. Like that could be reverted for whatever reason at the sequencer level. Ethereum L1 blocks are 12 seconds, you know, slot times are 12 seconds. So that's the the long period of time there rather than what Solana has with 400 millisecond target. So when you look at it from kind of that perspective, I I wouldn't say it's like one-to-one comparison here, but at the same time, you have to look at like what users are doing and where users are and what their experience is going to be. If they're getting a really amazing experience on Mega ETH where fees are just like dirt cheap, fees don't go up, there's so much TPS happening there, and that it drives activity to it, they're going to go there as well, of course, right? They're not going to care about the underlying kind of stuff. Not to say that we shouldn't still build that.

And as I just said, it's very important for us to prioritize decentralization here. Um, but there are there are kind of trade-offs here and and the users are gonna go where they're gonna go. And I think we have evidence that users are happy to to go to wherever gives them the cheapest kind of transaction fees uh and also has a lot of activity for them to do, like a lot of things to speculate on, of course.

Okay, let's go to the group of criticisms that are more coming that I'm seeing from uh inside the uh Ethereum community, at least like some members of the Ethereum community are kind of taking a look at all of this and saying, hey, like did we make a misstep with the roadmap? And kind of dovetails on some of what we were talking about, but uh let me sharpen these criticisms a little bit. And basically the idea is that it was a mistake to um pivot so much in the direction of uh Ethereum layer twos. And like, point taken that they're not parasitic, but um, if we outsource all of the DeFi, if we outsource all of the execution, if DeFi itself moves off of uh the Ethereum layer one and goes to these L2s, well, that's going to take both the value accrual uh from Ethereum, like Ether the acid itself, and it will uh be a case of kind of the tailwags the dog. It will, you know, like shift control and the nexus of power, the nexus of DeFi into these layer twos and away from uh Ethereum and uh be not like disastrous or or maybe like um net negative for ether's ability to exist uh as a money. And this goes on, which basically says that um the Ethereum community is kind of naive to trust these L2s. You address you like some of that. The the L2s themselves aren't actually going to decentralize, they're not going to get to stage two, they're not incented to do that. They like the the sweet uh MEV fees, and they're not going to decentralize their sequencer, they're kind of in it for uh themselves. They don't have full economic alignment. And so the the summary here goes uh you know, Ethereum should get back to its layer one and make the L1 great again, make sure that DeFi has a home on the L1 and not continue down the path of like increasing blob space, and it's all about L2s and the roll up centric roadmap.

Yeah, so this is actual good criticism and well thought out criticism. This is not like your garden, uh I guess, variety FUD, which is very nice. And I actually agree with a lot of it, to be honest. I think that we did over-index on roll-ups and layer twos. And I think that we should have more focus on the L1. But I think people are uh expecting us to do to Ethereum L1 what like Solana did to their L1, right? And that's never going to be the case. There's just completely different beasts here. Ethereum L1 is not going to scale up execution like that. But in saying that, we should do more things to scale up Ethereum L1, especially for uh for L2s, I think, because it's not just blobs. We can add more blobs and give L2s cheaper fees here. But by scaling up the L1 in terms of increasing the actual L1 gas limit, um we give more capacity to not just end users, but also the L2s. And by potentially doing things like reducing slot times from 12 seconds to even two seconds, which is a is a big ass. But if we do do that, that is extremely beneficial to L2s because they get faster finality, they get faster uh kind of transaction inclusion guarantees, and we make base roll-ups better because instead of having to wait up to 12 seconds to get your transaction included, it's it's maximum of kind of two seconds there. Um, and you don't have to use uh something called pre-confirmations as like a stop gap there. Um so I think from that perspective, absolutely we should be doing that. From an engineering coordination perspective, it's not an easy task. It is a longer-term thing. It is something that needs to be not only prioritized, but also uh that it has to be data-driven. Um, the the way the Ethereum core development process works with anything is that they want to see data on things. They want to see how is this gonna affect the network? How is it gonna affect the bandwidth usage of the network, which is a big concern overall for the Ethereum L1. How is this gonna affect users? How is this gonna affect apps? Um, how is this gonna affect people storing the chain and retrievability of it? There's all these things that we care about as an ecosystem that are prioritized. Um, and then we can think about doing this stuff that people won't want to do. So I think that from that lens, the reason why it may seem like we put too much emphasis on the L2s is it goes back to my former point where I said that they move a lot faster because they're smaller, nimble. They don't have to go through this process necessarily. They have their own kind of process that they go through there. Uh, and that's why the L1 has naturally moved slower and will always move slower than the L2s, I think. But that's not to say that we shouldn't put more effort on the L1. And there has been a lot of teams working on this, not just at the protocol level, but also at the client level. The um execution layer clients such as Nethermind and Reth are pushing very hard on scaling themselves up. Even if the network itself isn't doing that right now, even then if the network itself, like the protocol is limited in what it can do, the clients uh are right, they're ready to go. Like if we want to increase the scalability, the clients can handle that, right? If we want to increase the gas limit, the clients can handle that. So they're already working on this stuff. And then eventually, when it goes through kind of like the protocol level stuff, uh, we can do it and do it safely. So I think that that that's critically important to keep in mind is that we need to do it safely. Because I think one of the worst case scenarios for Ethereum is moving too fast at the L1, breaking something, and then all the L2s go offline as well. People don't realize that. The L2s go offline when the L1 goes offline. I mean, offline is a is a term you can unpack here, but essentially they rely on the L1. And it goes back to the parasitic symbiotic thing, right? So if you, if the L1 goes offline or something bad happens to the L1, it has massive downstream effects across the entire ecosystem. And that's why we prioritize uh stability over this scalability. But we can still do uh more at L1. I completely agree with that.

I've actually made this uh point on Twitter before. Uh, you know, if the layer one goes down, all the layer twos uh I think I said the words go down, which is actually in technically not perfectly true because the layer two blocks will still produce. So maybe you can kind of suss out that point because the layer twos they will still produce new blocks, so you can actually put more transactions into the layer two blocks. Uh so what do you mean by g let the layer twos go down?

Yeah, so it it it it kind of like is easiest to illustrate when we think about assets. So for example, if the kind of L1 goes down and your asset was issued on the L1, let's say you have ETH, ETH is issued on the L1, it's not issued anywhere else, and you've bridged that ETH into the L2s, that ETH is now worthless if the L1 is offline because there is nothing backing it. It's essentially uh an I an IOU, as I said before, but essentially you've got no collateral backing that ETH. So if you're on an L2 and you're saying, well, I can still kind of move my funds around, I can there's blocks being processed, I'm gonna send um some funds to a centralized exchange and cash out, send my ETH there. The centralized exchange is not gonna honor that because there's nothing backing that now. That's just a worthless token that that they don't want. But if you think about something like USDC, and if that is issued even on the L1, but if it's issued on the L2 especially, a circle can just say, well, this is the balance of USDC and this person's address. We have the collateral in a bank account, it's not on Ethereum L1. We can just zero it out on Ethereum L1, replenish this for our users, and just redistribute it out. So essentially there's no net loss there of the asset. But every natively issued asset on the L1 would become worthless on the L2 because you can no longer access the actual asset. So that I think is the the cleanest way to explain it. Then there's a lot of intricacies about what happens to DeFi positions, what happens to like NFTs, downstream of that, right? What are they worth now that you can't unwind them or you can't kind of settle them down? Um and then of obviously you lose like all your settlement guarantees now. Like you're literally just like a completely centralized server. There's there's no proof that anything happened on the L2 or on the L1. There's no verifiable proof of that. You're literally trusting the L2 to do what it says. So, and and there are other things that fall into this. It really does depend on how the L2 is constructed and what stage they're at in terms of decentralization. But the asset thing, I think, is the thing that people drive with the most is that you're not getting your ETH back if Ethereum goes offline because there is no, you know, there is no ETH anymore. Like Ethereum's offline, it's gone, and and it's worthless now.

Yeah, I think the point really to illustrate, to drive home, is that sure the layer two blocks can keep on producing, but if the property rights is severed between the layer one and then layer two, then just like you have this siloed database that's not interconnected with the rest of the ecosystem. So yeah, so like Jeremy Alair could reissue you your USDC. Uh, but like what are the odds that the L2 is gonna just kind of come back online and fix itself? Yeah, it's before he does that. Yeah, you're just gonna have to just wait for the link to be established, re-established between the layer one and the layer two. I'm gonna turn the conversation to um some concerns that the market might have. Call these um non-tribal neutral investors who are just looking to place bets in the space. Uh, and they might see ether being squeezed between Bitcoin's money narrative and Solana's DGen, Easy UX, and revenue positive layer one. Uh the Bitcoin ETF inflows are gar gargantuan. Uh the ETH inflows into the ETFs haven't actually been able to outpace grayscale outflows. Uh, and so we're actually still negative uh with the grayscale outflows. Meanwhile, Solana economic transaction fees are rivaling the Ethereum layer ones. So Bitcoin on one side getting the strong money premium. Uh Bitcoin definitely money. Uh Solana definitely getting the revenue. Uh Ether, kind of money, not much revenue. Uh so getting squeezed. How do you how do you think about this?

I think Ethereum and ETH as an asset, they've always been the middle child of the ecosystem, right? Where you have like ETH trying to compete with BTC as this money store of value that naturally makes the Bitcoiners not like Ethereum and ETH. And they already don't like Ethereum and ETH for other reasons. So they naturally attack it, discredit it, so on and so forth. And then you have the other side, which is the L1 competitors. And they're directly competing with Ethereum for, as you mentioned, like things like transaction fee revenue, DeFi volumes, user activity, stuff like that. They're not necessarily competing with ETH to be money, or they're not even trying to do that, whether it becomes money, it's up to, I guess, social consensus. But like they're not directly competing on that front. But that's that that's something they don't need to do because Bitcoin is handling that. So it's like this pincer attack where it's like, okay, you guys come at ETH as the money thing. We'll come at Ethereum as like a better platform because we can do more fear of when you have more activity. And we'll just like spread so much fight about Ethereum that people will think it's dead when it's worth $300 billion and it has so much user activity still, like, and it's growing, you know, so on and so forth.

It's actually I I just like I very much identify with that. Like it um this is why it feels like everyone hates uh Ethereum sometimes, right? It's like I I mean that's not

In our head. It's almost always been like this. I remember when it was like other, you know, blockchain ecosystems where there's like Bitcoin and Cosmos, where Cosmos said it's doing the app chain vision, but Bitcoin is like our money and our atoms like money. No, of course they're not money. We're just trying to build an app chain network, right? And so there was this alliance between like Cosmos and Bitcoin. And it it's always been pincer attacked. And I guess that's why it feels like it's a it's a hated asset from like uh for b across all the tribes.

Yeah, exactly. And I think it's impressive that even in the face of that, ETH can be still worth what it is. Ethereum still is, I believe, the biggest kind of ecosystem within crypto in terms of like to build within. It's still growing hugely, actually. Like the L2 is absolutely killing it right now in terms of growth. The L1 still has usage, but you know, contrary to popular belief, it still has like $44 billion or something worth of TVL. Like it's still a home to a lot of capital, a lot of DeFi, a lot of stuff going on there. So I think that even in the face of all of that, like Ethereum has just you know gone through that, has persisted through that, and it's been able to deliver things that people actually find uh valuable here. But I think that that kind of pincer attack is is always going to exist because yeah, you're stuck between those two camps. And and those two camps are quite quite strong, if I'm being honest. Like, especially the Bitcoin camp. Like, because of the fact that BTC is is is worth a lot and ETH hasn't uh outperformed BTC over the long term. And and as you mentioned, like ETF inflows just reinforced that kind of narrative there, it becomes a lot easier for that to stick for people. Where people are like, well, ETH failed at being money, it's all BTC now. So, you know, screw ETH. Ethereum's cool, but like screw ETH sort of thing. Where I I believe, as I said before, that's more of a shorter term outlook. I believe if you look longer term out, I think that ETH still has a very strong shot at at being, you know, potentially worth as much as BTC, or if not dethroning it. I'm not going to use the F-word here, but that's how I view it if we if we look longer term out, because I've always believed that, like, yeah, you can have that social consensus around something being money, a story value, which is incredibly powerful. But then to grow that beyond just a social consensus to use kind of like objective measures, you need to have like the user activity to back it up. So I'm not talking about things like fear revenue or anything like that. I'm talking about what I said before in terms of increasing the network effect of ETH as an asset. Because money is just a network effect at the end of the day, right? The more people that that hold and buy an asset, it's worth more. Like even if you look at something like a fiat currency like USD, for example, the reason it's worth more than everything else, or every other, I guess, like fiat currency in the world, if you actually chart this out, you can see this over time, is not because it itself is like a good store of value or a good asset to hold against maybe gold or against BTC and ETH, but it is against other fiat currencies now because it has the strongest network effect, right? It is like a reserve asset, it is used everywhere, people in countries like uh, and it is backed up by a really strong economy as well, which is, I guess, like the point that I'm making about the Ethereum economy backing ETH as an asset, as well as ETH having that social kind of monetary premium store of value story around it. So I think while we're getting pincer attacked by two different kinds of tribes,

We're also pincer attacking the money. And we're basically saying we can ha you can do both. Attack the money use case, get get it from social consensus, but also get it from economic activity.

Yeah, what what what's um interesting is like um uh Ethereum has always, I guess, fought against Bitcoin's monetary narrative. And Bitcoin certainly had a a strong, even stronger monetary nar narrative relative to Ether in like 2019, as evidenced by like the ratio. I mean, that was a really low point in the um ETH Bitcoin ratio. What feels a little bit different this cycle is the strength of the pincer attack from all the alternative layer ones, at least at this point in the cycle. And so at least going into kind of like 2021, you like and and 2022 and onwards, Ethereum had sort of the the big exciting on-chain use cases. Like it had DeFi. All the exciting things and NFTs and kind of the cultural narrative were also happening within the uh Ethereum economy as well. The one thing it didn't have is kind of this algorithmic stable coin narrative. And, you know, Luna and Tara took that and like they took it to their grave. But like it had the bulk of all of these use cases. And I'm wondering if this time around, in this cycle, you see a stronger cohort of competitors in some of these alternative layer ones, in particular Solana. And I'll say that the average like investor who looks at this uses this to kind of justify the barbell approach of like, all I need is a crypto money, and that I'll pick the the you know, the number one, which is Bitcoin, and then I'll I'll bet on these fast layer ones, you know, like alternative layer ones, primarily Solana, et cetera. And so they do Bitcoin and the all L1 overweight Solana plane, they skip ETH altogether. Do you think it's kind of different this time?

I do think it's different in that like we do have serious competitors this kind of time around. Like I'm not gonna sugarcoat that and say that I don't think they're serious competitors as competitors, they definitely are and objectively are as well if you measure it by what's um what's been going on in the ecosystem, uh which I think is great, honestly, for Ethereum overall. It pushes us harder. The competition is not a bad thing. Um and it but in terms of like the the barbell strategy or the kind of uh I guess like um money strategy or where do we invest your your money, I think if you if you look at it from like a barbell perspective, you kind of map this out towards logical conclusion of, well, if one side of the barbell is the money and the other side is like maybe your tech growth kind of thing, then that tech growth thing is just gonna go through cycles of being replaced by something else. Because if you're trying to get upside in an asset, right, you're not gonna go for the assets that are already big. Like if you're going for the growth upside, you don't want to bet on assets that are already huge in market cap. Like BTC, you're not betting on as a growth asset, you're betting on it as a story of value, as a money. It's gonna go up slowly over time compared to other things. And then you bet on like the hottest new tech play. So that will always get rotated out. So you're always changing that side of the barbell. So I think from that strategy, that's not a long-term strategy for the other side of the barbell. It's good for BTC, but that other side is always going to be rotated out for something else. So I think that ETH needs to just worry about the BTC side. I don't think ETH necessarily needs to worry about the tech growth side because of the fact that we were already on that side of the barbell at one point in time, right? We were there and then we got rotated out for something else because ETH matured as an asset, it got bigger. It is no longer something that looks like a pure kind of growth, like massive growth kind of tech play. It's more of a, yeah, more closer to BTC. So I would say that if it's a barbell analogy, ETH's kind of sitting in the middle right now, right? And it's trying to edge closer to the BTC side. That's where we want to be. We don't want to be on the left, like, because as you as I said, the left gets rotated out, and ETH's already been there and been rotated out. So we're trying to push ourselves to the uh the the right side, which is the BTC side there. So I think that as long as we can keep doing that, um, and as long as we can keep reinforcing that, as I mentioned, via economic activity, but also via the story of ETH's money, um, I think we can eventually succeed there. But yeah, it is a long-term bet. There's a lot of unknowns here. Depending on the type of investor you are, you're not gonna allocate to ETH if you're just in it for the the growth play, or if you just want to be really, really safe and say, I'm gonna go into BTC because that to me looks like it's already got, you know, everything. It's gonna go up only from here. It's got the ETF inflows, so on and so forth. But again, the upside is is very limited there in terms of like, I mean, you're gonna still get upside, of course, but in terms of other things, yeah, it's gonna be the the least upside you're gonna get, basically, I think.

Anthony, a bit of discourse that's been uh going around in crypto Twitter lately uh is Ethereum's uh lack of North Star, or maybe it has a North Star, but no one can articulate what it is. Uh Bitcoin has a North Star, it's digital gold. Uh Solana's North North Star is decentralized NASDAQ or consensus at the speed of light. Uh what's Ethereum's North Star? And or does it is it a problem that we can't really articulate one?

I go back to what I said earlier about getting involved in these kind of like bike shedding arguments. And for those of you who don't know what bike shedding is, it's basically this phenomenon of like when you have a group of people together and you have to decide on something small, it becomes like this huge thing. And the analogy is what's what color should we paint the bike shed? And there's like 10 people deciding this. Everyone's gonna just keep going in circles about what color to paint it if there's no, I guess, leader or no coordinator to have that final decision. Because if everyone's got the same say, then everyone just keeps going in circles. I think that's what happens with these North Star discussions. Because Ethereum is such a decentralized ecosystem, there is no single person or single entity that can define what Ethereum is. Like originally Ethereum had this, I guess, tagline of being the world computer. And that came from the early Ethereum kind of people where it was much more centralized because it was just starting out, like this world computer thing. And that didn't stick at all because it didn't really make sense on the surface. Like someone thinks of a computer, they don't think of something incredibly slow like Ethereum L1 is in terms of compute power, right? And it was mean to death essentially, and we don't use it anymore. But another reason why we don't use it is, well, the reason we don't use it is because of that social consensus of we don't like this thing. The more decentralized Ethereum became, the more people rejected that description of Ethereum. Then we had meandering through a bunch of different things, like Ethereum is the new internet, for example. Um, ETH is money is another one, which is obviously uh just for the ETH the asset, not Ethereum the network. Bitcoin went through this too, mind you. It started off as peer-to-peer money, now it's digital gold, right? And now the money thing isn't even discussed at all. People are saying, no, no, no, you don't use your BTC as money, like you keep it, it's a store of value. So it's just a social consensus thing when it comes to decentralized networks. It's not something that you're gonna be told what it is. And I think the same is gonna happen in in Solana as as time goes on as well. Like, yes, today it's decentralized NASDAQ or finance at the speed of light. I've seen another one, but that that's already two. I'm like, that's already like more than one. So the the bigger that ecosystem gets, and the bigger any ecosystem gets, the more you're gonna have this fragmentation of uh of a quote unquote North Star. So I think the the premise, again, is just like flawed. It doesn't really have any kind of meaning here. But what ends up happening is when you have like an absence of this, is you you essentially have a social consensus on what uh a thing should be. And I think within Ethereum, even though we haven't got like one thing to point to, we've coalesced around this roll-up centric roadmap of essentially keeping Ethereum L1 decentralized and then scaling by L2s. That is the closest thing I think we have if we're talking about Ethereum as as a platform. And that came naturally. Yes, Vitalik originally proposed the roll-up centric roadmap, but that was after people had already been working on it. All he did was say, hey, like this seems like the roadmap that we've always wanted. Here it is. And then people coalesced around that. And there have been some kind of like splinter factions, so to speak, that say, well, no, we need to scale the L1 more, or no, the roll up centric roadmap was a mistake. Uh, but that's fine. There were splinter factions in Bitcoin too. No, we don't believe that Bitcoin's block size should stay limited. We're gonna fork off as Bitcoin Cash and go.