Dealflow Podcast
[Ep#9] CAN ETHER 2X IN 2024?… AND MUCH MORE Ft. @0xKDOT & @MehdiFarooq2
From Ethereum ETFs approval to smart contract platforms' long-term potential, our latest podcast covers it all!
🎧 Dive into price predictions and token allocations. Discover which projects are the true blue chips! 🚀
Timestamps :
00:00 Intro
00:56 Ethereum ETFs Approval & Impact on Inflows
03:38 Comparing Ethereum & Bitcoin: Market Cap & Growth Potential
05:10 Smart Contract Platforms & Long-Term Potential
09:35 Price Predictions & Investment Strategies
21:40 ETF & Security Debate
28:24 Token Allocations : Ethereum Ecosystem
33:55 Farcaster & Valuation Discussion
36:17 Virtual Machine Endgame
38:35 Coexistence of Virtual Machine Ecosystems
44:32 Solana VS Near Ecosystem
47:09 Which Projects are Blue Chips?
49:00 Investment Considerations for Blockchain Projects
53:27 Outro
Show some love on -
Youtube : https://youtube.com/@dealflowpodcast
Spotify : https://open.spotify.com/show/6s9tYwNlVkI4hPRh3nthyu…
[Disclaimer: It's important to note that the information provided here does not constitute financial advice. The views and opinions expressed herein are purely personal and do not in any way represent or reflect the official stance or viewpoints of the individuals company]
#Crypto #Ethereum
From Ethereum ETFs approval to smart contract platforms' long-term potential, our latest podcast covers it all!
🎧 Dive into price predictions and token allocations. Discover which projects are the true blue chips! 🚀
Timestamps :
00:00 Intro
00:56 Ethereum ETFs Approval & Impact on Inflows
03:38 Comparing Ethereum & Bitcoin: Market Cap & Growth Potential
05:10 Smart Contract Platforms & Long-Term Potential
09:35 Price Predictions & Investment Strategies
21:40 ETF & Security Debate
28:24 Token Allocations : Ethereum Ecosystem
33:55 Farcaster & Valuation Discussion
36:17 Virtual Machine Endgame
38:35 Coexistence of Virtual Machine Ecosystems
44:32 Solana VS Near Ecosystem
47:09 Which Projects are Blue Chips?
49:00 Investment Considerations for Blockchain Projects
53:27 Outro
Show some love on -
Youtube : https://youtube.com/@dealflowpodcast
Spotify : https://open.spotify.com/show/6s9tYwNlVkI4hPRh3nthyu…
[Disclaimer: It's important to note that the information provided here does not constitute financial advice. The views and opinions expressed herein are purely personal and do not in any way represent or reflect the official stance or viewpoints of the individuals company]
#Crypto #Ethereum
I think the perception matters. The first thing my mom did after that was hey, Mehdi, your Ethereum is legal now. So I think this creates, I think, more than flows. I think it's also about perception.
Speaker 2:On my screen right, because I've got a split screen. We're all stacked up on top of each other and Johnny's on layer one, mehdi's on layer two, and I'm layer three. So, like you are definitely Ethereum at the bottom Mehdi's base, and then I'm what's a layer three? You're Shiba Inu's new layer three. Mate, yes, I'm Shiba Shiba.
Speaker 3:That's where you are. Welcome to another episode of the DealFlow podcast. I'm your host, as ever, mixed Race Magic, chief Editor at BSCN. With me today our regular guest Cameron of MH Ventures, but also the founder of BSCN, and Mehdi, who is head of investment and partnerships at Animoca Brands. How are we doing today, boys?
Speaker 2:Very well. Thank you very much, Johnny, for asking.
Speaker 3:Nice, and you know it's got to start off with a disclaimer, so I'll throw that in there. This is a podcast. It is not financial advice or intended to constitute financial advice in any way. We'll mention tokens, we might give price predictions, we'll talk about our early project bets. We might even talk about our own personal portfolios. Please don't take anything as advice. It's all flippant. It's all in jest. Please, please, please, be aware of that.
Speaker 3:I think there's this week was really no shortage of good topics for us to eat into. I think the one that we want to kick things off with is probably the elephant in the room, which is Ethereum ETFs. Right, obviously approved on Thursday. It came at like 10 PM UK time, so that was definitely a late night with a cup of tea for me, watching those press releases and keeping an eye on the SEC website, but it came as a shock Thursday. If you'd asked me the Sunday before when when's it going to be approved, I would have said 2025-2026.
Speaker 3:We've had court cases galore right against consensus, uniswap and so many other parties often related around ETH, so the backdrop was all very much no, it's not going to happen. It's not going to be a repeat of BTC ETFs. We're going to be waiting a while here, but then on Monday, the first thing that happened and this is kind of the saga as it played out the first thing that happened is Eric Balkunas and James Safart, who are those sort of like very, very well respected Bloomberg ETF analysts that predicted Bitcoin ETFs, basically to the day they turned around changing their approval odds from 25% up to 75%, basically saying and it was very, very nondescript they basically just said we've heard whispers that it's going to happen this week, so we're going to increase our odds. Then, I think, literally less than an hour later, the SEC comes out with a public notice requesting that the ETF hopefuls, like BlackRock, fidelity, all the rest of it they submit their 19B4 forms at an accelerated rate. I've forgotten what the exact timeline was, but it was basically like come on, guys, if you want it to happen, let's get it in quickly. And then, obviously, thursday, it was van x official deadline. They were the first applicant.
Speaker 3:23rd of may, we knew that the sec had to at least say something, even if that was a no, sorry, fuck off, wait till 2025. We knew that something was going to come out and it was an approval. Now we had a massive, massive run-up. I think it was like the biggest single day price jump for ether we'd had in years and years and years definitely for the last few cycles in the wake of monday's news. But when the etfs were actually approved, we had very, very little.
Speaker 3:We had, um, it definitely felt like a bit of a buy the rumor, sell the news, even though the rumor had only come, sort of what, three or four days before. That bit underwhelming, and I wonder to what extent it was because, um, the etfs weren't actually ready to start trading immediately after. So you know, bitcoin etfs come through and the inflows for the first month or so were absolutely incredible. So I guess my first question to you guys and I definitely have my own sort of yeah, opinions, not advice around it are etf flows. When they do eventually get launched, are they going to be anywhere near bitcoin etfs? And my, my intuition is no. We'd be lucky to get 25 to 30 percent of the inflows that we've seen to bitcoin etfs. What do you guys think?
Speaker 1:I think the perception matters. The first thing my mom did after that was hey Mehdi, your Ethereum is legal now. So I think this creates this. I think, more than flows, I think it's also about perception, like a lot of folks will see this as kind of like okay, there's a future here and that has a network effect and spillover of its own. So I think we can all speculate on what the flows will be, but I think it opens up a door for higher like loads of imagination and kind of is a victory for the whole ecosystem. So things developing on Ethereum as well, I think, will benefit from this news. I also feel the time of Ethereum is way higher in the very, very long term than Bitcoin.
Speaker 3:Wait, so you think the TAM of and by TAM you mean, like, the potential capital that could flow into it you think that's bigger for Ethereum than Bitcoin. Yes, nice Well, I'm glad to hear that, because my bags consist basically entirely of ETH and nothing else. So I'm glad, but I think that's a pretty controversial thing.
Speaker 1:I would say smart contract platform more than, let's say, just like saying Ethereum. So I think this will lead to another question, but I feel like the TAM of a smart contract platform is much larger than digital gold.
Speaker 3:It's like the TAM of the internet versus the TAM of gold, I guess is one way that I would kind of articulate it. But yeah, I mean, I love that opinion. But so you're very much in the camp that thinks there will come a point in time, be it in a year or 20, where eth will flip bitcoin for market cap. You think that's going to happen a smart contract platform will?
Speaker 1:yeah, it could be. It could be, I don't know solana people have been saying, people have been.
Speaker 2:people have been saying this for years though there's going to be decoupling. Yeah, I remember 2021, the flippening.
Speaker 3:When's that going to happen?
Speaker 2:The flippening decoupling. All of that and it still hasn't happened. I think my take is that Bitcoin will always be dominating. It will always be number one. I don't see anything taking over. I think as the industry grows, bitcoin inevitably grows with it and will always be the the mover of that. I don't think we get a decoupling. Of course things will get. I mean there is slightly, but I just think it will be a massive, like a you know a massive decoupling.
Speaker 3:But go on what you're saying, johnny you could also, but also bitcoin is getting its own smart contract ecosystem. Now, like how nascent that is and how long it's going to take to, you know, get taken really, really seriously from at least a consumer or developed point of view, don't know, but there is, even if you look at it, johnny, even if you look at it, the ecosystem that's being built on top of btc, on top of l2.
Speaker 1:What are they like? A lot of them are doing EPM. Some of them are even doing SVM. Some of them.
Speaker 3:It's like a battleground. Yeah, mate, you and your virtual machine obsession. We had this penciled in for later, mehdi, come on Talking about ETTFs here. But no, it's a really good point. And the way that I see it is that because, like so, solana obviously very, very seriously ties to you know, one specific virtual machine same as Ethereum and same as, obviously, the move ecosystem projects as well. Bitcoin is like a carte blanche now like it, because it doesn't have that sort of native foundational uh architecture that those other smart contracts, specific L ones, have. It's almost going to be like a battleground, I think, in terms of like will developers end, end up, what will become the dominant, um, even just what will become the development, the, the dominant language on bitcoin, I think is a question on itself and it's probably a multi billion dollar bet in and of its in and of its own right at this point I would also.
Speaker 2:So, just talking about the price predictions, I don't, you know, I think there's two things. Yeah, of course, I don't think they're going to get the inflows as much as bitcoin has. I think people still see bitcoin as a, you know, as it was a store of value. So people, you know it's, I think it's an easier hold. I think the only downfall is and I guess this is how crypto or the community, has shifted as decentralization, and now we have an ETF, because they wanted an ETF. They think that's the only thing that's going to bring back the bull run. But then now we don't, you know, we don't get the burn right. Like Ethereum, has this burnt build in. So now, with the ETF, there's no, you know, we're not burning coins anymore, right?
Speaker 3:So the burn mechanism was introduced in the London hard fork in, I think, august 2021. And all that meant was it effectively meant that of gas fees, of transaction fees, a certain percentage was burnt, and I think it's quite a low percentage, I think it's like 30 million but it's a transaction-based burn mechanism. So there was a big story the other day, obviously before all the Ethereum ETF hype came in, when things were a bit suppressed, they said actually, ethereum is becoming deflationary again because for a long time after London hard fork, a lot of which was driven by NFTs Ethereum had had some real, real long term deflationary pressure, like it seems like so long ago now. But remember the the other side launch from yugo labs, that was like the single most ethereum burn in a single day or something. But a combination of the fact that you know transaction activity transaction activity is just lower, partly facilitated by, you know, layer twos and what they're doing but also the dunk, the denkin upgrade itself in terms of how it reduced, uh, transaction fees pretty much across the board, has really really lessened the deflationary pressure.
Speaker 3:But I don't think. But because it's an activity-based burn mechanism, I don't think necessarily the eth ETF should have any impact, unless you're saying that you know it's gonna, because there'll be so much ethereum locked inside the ETFs that people won't be using it to spend on transaction fees and stuff is maybe a case, but it is. I think it's a transactional burn mechanism as of august 2021. So hopefully I mean fingers crossed it won't have too much of an impact, partly because ethereum supply probably, you know, couldn't really hack it at the moment with the denkin upgrade and all the rest of it. But to go back to what we were saying just in, in one sentence each, can you guys give a 2024 all-time high ethereum price prediction, and we've already disclaimed, so no one's going to take it too seriously. But if you had to pick a number to the nearest hundred dollars, what would you say?
Speaker 2:I'm going to say five thousand dollars five, that's so bearish do you what it's?
Speaker 3:2024 what?
Speaker 2:we've got. What are we when we're in may?
Speaker 1:yeah, we've got more than half a year.
Speaker 2:I just, yeah, I just don't see it doing a 2x from here, like I really don't like what was all-time high this year 4,000 and 4,200 just on the 4,000 yeah all-time high 4,700 but that was back in 2021, I think this year it hasn't really pushed much above 4,000, if at all.
Speaker 3:I think 8K. I don't think 8K is unreasonable. In six months, yeah, in six months, like Bitcoin those days are gone in Christmas.
Speaker 1:The same breakfast as you had.
Speaker 2:I need that hopium.
Speaker 3:I need that hopium. I didn't, no, I need that hopium. I need that hopium. I didn't, no, but it's got. The market cap is what? A quarter of Bitcoin, maybe a third, something like that, and Bitcoin, I mean, let me whack up the price chart right.
Speaker 1:So Bitcoin is 1.4 trillion, ethereum is 400 billion right now.
Speaker 3:Yeah, so when was so? If, if, if bitcoin is 1.4 right now, when was it last 700 billion? And it was last 700 billion in? It crossed above 700 billion in november 2023. So in six months, bitcoin's market cap doubled. So why couldn't ethereum's? You guys laughed at me, told me I'm eating opium for breakfast, but I think it's feasible um, six months?
Speaker 2:I don't think it's six months. I just I look at this cycle's been really odd, right? Yeah, we've seen bitcoin move and we've seen a few altcoins do bits and you know, meme coins are the the the biggest thing that's going on. I just don't see how have we really been seeing a lot of new money inflow. I don't think we've seen a substantial amount of new money coming in is one and then two. Even users like retail come in. I don't think we've seen that Retail users are going to be like the biggest pusher of Ethereum doing a 2x. I would say, um, and we just haven't seen that yet. So I don't see that happening in the next six months. And then we can take into equation of what's actually going on in in the real world and how shitty the economy is and stuff. People would say that the economy is good, but I don't think it is, so I honestly don't see theorem being a 2x from here. I'm sorry, johnny, you just have to keep holding a bit longer, right?
Speaker 3:well, we're gonna have to get this bit cut out of the video, then, don't we?
Speaker 2:no, but I I also don't like personally. I know you guys said, oh, ethereum's a good hold or whatever. Personally I would rather have conviction on a another product. I don't know, I'm not, I can't name any right now, but you know a product that I believe is going to be, you know, gonna. It's a good company. That I think is needed and it's just a way lower market cap at fdv and put money in that and have high conviction in it. Rather than having my conviction in ethereum because I'm max, yeah, 2x. I'd rather 10x my money in the space of three to four or five years than 2x of money in three to four or five years you're not gonna lose all of you're very unlikely to lose all of your money betting on ethereum.
Speaker 3:Right, it's just a risk, it's a sharp, it's a risk reward balance. Right like, and for me, I'm so risk averse that, for a cryptocurrency investor right, for a cryptocurrency investor, I'm so risk averse that actually the prospect of having a steadier store of value in ethereum that might only do a 2x or so this cycle so do you stake your your Ethereum as well, then, or not?
Speaker 2:No, no.
Speaker 3:Absolutely not, absolutely not Right. I don't trust it. I don't have 32, so I can't set up my own validator, and I don't trust it.
Speaker 3:So you don't take participation in private deals huh, maybe with like a 1-2k check, but also right. So I really only hold Ethereum. But it also means that from a journalistic point of view, I can talk about whatever the hell I want. You know, there's never. I did also just hold ETH before I was working back in the media side, when I was still in VC and stuff. But I think that when I was working in VC and stuff like that, it was almost a value add to have someone that's so risk averse and so cynical of every different mechanism. But yeah, okay, it means that I'm unlikely to do 100x on my ETH holdings. I agree. Okay, let me ask you this.
Speaker 1:Have you had a taste of 100x?
Speaker 2:me ask you a taste of 100x. I, I, I did it a taste of 100x, even a 10x, from here do you, do you even see ethereum doing a 10x from here, like honestly saying, the next five years? Do you think ethereum does a 10x from here?
Speaker 3:oh, my god really yeah, I think absolutely yeah, 100.
Speaker 1:So basically, you're saying it becomes not 5 trillion, so basically market cap.
Speaker 3:You were just telling me that Bitcoin's, the smart contract ecosystem, is going to flip Bitcoin and that would be a 4x.
Speaker 1:It's because Ethereum does 10x. It could be a mix of both right Like Bitcoin contracting, ethereum growing in size. I see it becoming a trillion or $1.5 trillion, like something like Microsoft, over the period of time. That's like four or five X.
Speaker 3:But I think you're also going to see more of it being locked away and that there's going to be bigger supply shocks to Ethereum, but that's momentarily so.
Speaker 1:this is the thing about commodity like it's a clicker right, so you might have, let's say, three, x before like five days, six days, rather than like, let's say, how Apple or Microsoft are at, let's say 2 trillion for like years. So I think there's a difference.
Speaker 3:Yeah, no, I mean, I get it. And obviously every person that I speak to like pushes back like why aren't you FOMOing into tiny meme coins that are going to do 100x? It's also a time thing. It is also a time thing Like having a position that I almost treat like property, where I'm not going to touch it for X number of years and I have no intention of touching it for x number of years. I think also gives me a peace of mind right to focus on on making money and stuff in other, in other aspects, right I think my mental model for the space is everything is a call option.
Speaker 1:So I think I think cam might also share this opinion. Right, like my view of the whole industry is a call option. Whether are we taking a call option, liquid market or private market. And thing with call call option is we're betting on where the next mass adoption comes in. So we're okay for that call option to to go to zero, but what we're actually looking for is like 10, 15, 100 x's and bet on that next mass adoption. I think the thing with ethereum is it already has some sort of adoption, so the call option for it to be massively in the money is limited, whilst the downside risk is there. Let's say you have Sonana, you have Monarch coming, you have Baratheon.
Speaker 3:So I feel like risk adjusted is still difficult to but in terms of like, I think people underestimate the safety and the resilience of the ethereum ecosystem insofar as, like I think it happened a couple of months ago, but like l2s collectively had a, they reached a point where they had a bigger tvl than every other you know non-native project in the ecosystem combined and that critical mass, like I know, the tvl matter, like if you're in the private market, you'll, you'll realize tbl don't matter a lot of no, I know, I know, but in terms of resilience, can you can?
Speaker 1:you invest in us, I get it but here's my thesis I think tbl is the most retarded metric out there. It just doesn't mean anything. I think capital efficiency and volume are better.
Speaker 3:In my opinion fine, fine, but my thesis is this right, is that so?
Speaker 3:Like?
Speaker 3:I've done 100 x's before, but only on the institutional side, only in the seat of a vc, and it's partly because it's easier to do, because you get in at low valuations, and this is the truth.
Speaker 3:You guys are the bad guys, everybody knows. But equally like, I think it only makes sense to make those bets if you can spread them across across a portfolio of probably dozens of projects and as an I don't have the capacity to be managing those positions entering them, exiting right, staying on top of every single one, whereas a VC, with you know that's managed to build a team of maybe five to 10 people, if not more, suddenly does have the capacity to be managing that. I think the chances of me doing 100x are low and I think the chances of me doing 100x and exiting at the right time and managing that position are even lower as an individual. So, um, so I'm not saying that you should never invest in anything other than ethereum. I'm saying that for my personal lifestyle, which mostly revolves around doing stuff with bscm. I think eth is the only one that really gives me peace of mind in the background, if that makes sense yeah, you know.
Speaker 2:So I think your way of investing is like if you look at the stock market, your way of investing is preferred to go and invest in the stock market because there's so there's, you know it's not as volatile. You can get stocks that just constantly go up and they're good holes. They're good companies, they're established and they are going to do well for the course of the next 10 years. Then you look at crypto and something like ethereum. That is a good hold and is safe to hold does not. I wouldn't say there's that many of them. Of course there is some. You can name a few ethereum, solana, bitcoin, etc. But there's not many of them. What I would say to you is maybe you need to diversify your portfolio slightly, um into other blue chips, that in crypto to get those 10x's, because ethereum isn't going this is the thing in the next five isn't doing a 10x.
Speaker 3:That's just my preference and I believe you can have a better play or something safer ecosystems may well do yeah, certain ethereum ecosystem projects or l2s may do and that I think if I was gonna take the time and I really at the moment cam, you know I don't really have the time to be doing- yeah, but if I did, I think that's probably the way that I would go, um, but equally, you know, the truth is from a personal point of view.
Speaker 3:You know I'm less advanced in my career than you guys are and I don't necessarily have, like the holdings and I can't necessarily take a serious proportion of my portfolio to then sort of inject into into other old coins. It would be, you know, a much, much smaller amount. And also, I think my wife would kill me, I'd have to like I'd have to run it by her and all the rest of it. I think that's a genuine concern.
Speaker 3:But for sure I would do and I think, like you know, if suddenly, you know, if suddenly, like the world fell out from underneath me and I just had, like you know, my wife would kill me. I've spent so long explaining to her all the merits of aetherium and stuff like that. If I suddenly phone conviction, it's a serious concern. She would. She would kill me because I've I've spent the whole, the whole time explaining to her why ethereum is like ultrasound money did you read the white paper?
Speaker 3:no, the white paper's huge bro like this is bitcoin. One next question do we think that solana and xrp etfs are actually going to happen? And for me, the answer is absolutely no. They're like this in terms of the how we test and how security they look like. They just they just couldn't look any more like securities and it's almost like a spectrum as to where they fall. So like bitcoin at one end of the spectrum, very much not looking like a security whatsoever, like within a founder that could be dead for all we know. Then ethereum in the middle that has a foundation, some expectation of profit, but ultimately is probably in the gray area. Then you get to something like solana, xrp and it suddenly looks very much like security so, um, just going back to ethereum though.
Speaker 2:So the staked ethereum is that still, is that known as a security or not?
Speaker 3:now so, this is the thing, right, and I watched a bit of a podcast with james safart, um, you know one of those bloomberg etf analysts and apparently there's some expectation and this was bear in mind. This was this was a couple of weeks before even it came out that they were, you know, they were going to approve spot of theorem etfs was the idea that the sec would try and distinguish between spot eth and staked eth as uh security. So the idea being that, how familiar are you guys with the Howey test?
Speaker 2:I've heard of it, but I don't know it in depth.
Speaker 3:Effectively, it's a series of questions. It was proposed ages ago, like mid 20th century, like way, way out of date, and that's a big argument against the SEC. But it effectively decides whether an asset is security and it's effectively. From what I understand which again again, is very, very limited understanding is that if investors invest with the expectation that there's a third party that is working to deliver profit on behalf of that asset, then it's very much a security. So something like Bitcoin, like there is no centralized party that's trying to drive the value of Bitcoin or develop the ecosystem.
Speaker 3:You have some core contributors, but it's ultimately open source software. Then you sort of move along the spectrum and you have the Ethereum foundation, which is a bit ephemeral, very, very raised above, which is why the whole eigen layer thing is a massive big deal and a controversy. But then you have something like Solana, which still has, you know, massive VC positions in it. It's still vesting aggressively. It has, you know it has a not-for-profit foundation, but the members of that not-for-profit are very much going to be, you know it's, it's an understanding that they're going to be looking to drive profit and value.
Speaker 2:solano was um announced to be a security.
Speaker 3:If I'm correct, going back last year, I think I think in certain court cases, yeah, um, so when does that leave that they've tried?
Speaker 2:so how does that get an etf approval? Or can it still get an etf approval then, being known as a security I?
Speaker 3:think again getting into like very, very sort of you know, discussion of legal frameworks and stuff like that. I think security, if it gets dubbed as security, it will make it much, much harder for approval. But you're right in that there are court cases where it's already been dubbed a security. I think once against exchanges right for conducting unregistered security sales. But equally there have been court cases that have flipped. So the XRP case was probably the most prominent example of that, where actually it got decided I believe that it wasn't a security, in spite of claims that it was. So there's certainly plenty of room for things to flip-flop around and for cases to be made on either side of the aisle. But I think all of that brunt work is still very, very much to be done for any altcoins in a way that they're not necessarily for Ethereum, aside from when you get into the prospect that staked ETH could be considered a security, if that makes sense.
Speaker 2:So why is XRP in there as a, as a potential one?
Speaker 3:I've forgotten exactly who it was, but there was some expert that came out and said you know, could we? I think we could be looking at xrp and solid etfs as sort of the next in that train of altcoin etfs, um, which I think does make sense in terms of like, because obviously you're not going to have a stable coin um etf. Obviously so in terms of like the, because obviously you're not going to have a stable coin ETF, obviously so in terms of like the size of those altcoins and the market cap, those do seem like the most feasible. I mean, like, I don't think it's going to be BNP chain or DOT or ADA or anything like that. I think those are probably the most feasible candidates at this point, but I still think that they're years away, like, absolutely years away. Like I think 2025 is extremely optimistic for Solana and XRP ETFs.
Speaker 2:Okay, I don't know, at least you couldn't say, because it's a regulatory one.
Speaker 3:Yeah, because like.
Speaker 2:I don't understand the point of you get an ETF approval on Ethereum, but if your Ethereum is staked, it's potentially security. I don't get that how you split those two. Ethereum is staked it's potentially security. I don't get that how you, how you split those two up because you can trust it with a third party.
Speaker 3:Um, but that's anything.
Speaker 3:I can go and earn if I can go, and you know, I don't know put it in as an lp is that now a security, then I think you can make a case to say that, like an ste type token, would be a security, because you you're holding that token on the expectation that the validator, I, either the, the centralized third party service is going to work to deliver you profit or yield. I think is probably the argument that they go down. Having said that, I haven't a scooby-doo and I haven't spoken to the experts about it, but that to me, surface level makes makes some degree of sense. But I'm sure people will laugh at me in the comments, sure, but it does sort of lead us on to one that I do think is worth spending a little bit of time on, even if it's just five, ten minutes, which is the eigen layer controversy. So what I'm really talking about here is the eigen layer controversy, with those two researchers taking on uh token incentivized positions despite being at the ethereum foundation. But actually, to me, the eigen layer controversy goes way back to when they announced their token and airdrop. Because that was the point at which, you know, having loved eigen layer and everything that they do and the benefits they're bringing to to not just the ethereum ecosystem but the industry as a whole, that was the point at which I started to question their motives and how able to execute those guys were and stuff like that. Just sort of like the lack of acumen around. Like I just don't understand how they could not have seen the backlash that was coming when they announced their token details with the allocations and all the rest of it, and it did seem um, and again, it's just an opinion I've seen floating around on social media and all the rest of it. Don't want to slam anyone, but there was a lot of like greed accusations there, so that was sort of where the issue started.
Speaker 3:That was a few weeks ago, which means that and I think that because there was so much controversy around their token drop, that's why it was such a big deal that when justin drake and one other ethereum foundation researcher, they came out and they announced that they had taken advisory positions and token allocations with Eigenlehr, but they only admitted it in response to, you know, kobe. Kobe was talking to Vitalik Buterin and he seemed to have insider information and brought it up and asked whether it was an issue which then triggered those two researchers to come out and admit effectively that they had incentives, right, conflicts of interest with you know, other Ethereum ecosystem restaking projects. But interestingly, I think it was when Justin Drake came out and admitted his position. He said that there were two advisors and one investor in Eigenlehr, and the investor in Eigenlehr, who is clearly part of the Ethereum Foundation, has yet to come out, so they haven't admitted it yet, so potentially there's still a conflict of interest there.
Speaker 3:Then you had the executive chairman, or the executive director of the Ethereum Foundation came out with a statement publicly saying we appreciate the issues, we understand that they are issues and we're working on internal policy to make sure it doesn't happen again. So my question to you guys and I think I already know what you'll say is should Ethereum Foundation researchers be allowed to take token allocations advisory token allocations of projects that are so pivotal to the Ethereum ecosystem like that? Should that even be allowed?
Speaker 1:In my opinion, similar to investment right. Let's say, you're writing a research report and you have invested in something. As long as you give the disclosure, I think it's a fair thing to do, and I think advisors do bring a lot of value, especially on the early start of things. I think here the concern was since the advisor himself criticized some of the risk of staking and restaking and how Eigen layer could be a risk to Ethereum. I think what people are worried about is that that objectivity might be compromised. But if you kind of remove that from the equation, if you just philosophically ask whether there should be advisors in crypto or whether equity should be given to advisors, I think it's a common practice globally. Even businesses do that. If you're helping with go-to-market or if you're helping with getting some business done or partnership, I think it's an easy hack. Even businesses do that. If you're helping with go-to-market or if you're helping with getting some business done or partnership, I think it's an easy hack. Easy hack, especially in the early, early, early stages.
Speaker 3:It's easy money for some people and even public projects that are publicly listed.
Speaker 1:They get consulted all the time. So instead of giving advisory, they're just giving them fiat. But sometimes with startup they are fiat poor but token or equity rich. So I think it's a smart way to kind of leverage what you leverage existing resources to to expand. So I'm I'm yeah, I think it should be done. I think the best thing to do would have been okay, allowing him to invest, but at a slightly better terms for his advice, so the interests align. But then what happens is it's kind of forcing him to actually compromise his objectivity, because right now he can say certain things as an advisor and also remove himself, but if he has invested he has more skin in the game. So I think it becomes tricky. But my stance is, all in all, I think this industry is okay with advisory. I think it's a business.
Speaker 3:So advisory, 100%. And it's really really useful to early stage projects to be able to incentivize someone with network or experience or whatever it is. The difficulty for this one is the fact that it's the ethereum foundation. So I heard someone, I think, just in, like I think in a tweet. They wrote it but basically analogizing.
Speaker 3:So if you think of the ethereum ecosystem as kind of the nation state in which a lot of these different call them businesses but really protocols they operate, and you think of the ethereum foundation effectively as the government, of that in terms of they control the ecosystem, they control the rules and regulations within that ecosystem, you wouldn't necessarily allow a government employee or an elected politician to come on as an advisor for a for-profit company. They do, obviously, we know that happens, but that's a big whole scandal and controversy in and of itself and I I think that's the difficulty, because they're deciding, effectively, the direction of the Ethereum network. Of course, they could manufacture that to suit their invested projects, so to speak. So advisory allocations, I think 100 percent. It's a massive, massive bonus to the ecosystem. The question is whether Ethereum devs or Ethereum researchers should be allowed to take them on for sure this is not the first time, you know they've taken advisory positions or made an investment.
Speaker 2:It's not. It's not the first time it happens. Do I believe that, um, it's wrong? I don't. I think that it's not wrong. I think it should be allowed, uh. However, what I will say is that there shouldn't be, you know, from a journalist perspective, that there shouldn't be any compromise of you know, if they need to cover it in whatever format, is this bad or good? They should be allowed to do that and that shouldn't jeopardize their advisory position or what. From a journalistic or research point of view, they should be allowed to do that advisory position or what. From a journalistic or research point of view, they should be allowed to do that, but assuming that they're in taking an advisory position is based on that. They, you know, um, they like the project and they believe that you know what they're building is, uh, something for the future. But, yeah, I don't see the issue with them doing that because they're building in the ethereum foundation. Why shouldn't they? You know, in a way, there is probably go.
Speaker 3:I mean, there is. There is just a small part of me that thinks the only reason there's been so much controversy and it's blown up into such a big deal is because it is eigen layer specifically, which is a just such a big yeah, um a because of its size and how significant it now is in the industry, but also because of the controversies that happened before.
Speaker 2:I think if everybody had been very, very happy with the airdrop and all the rest of it, I think potentially it wouldn't have been such a big deal I mean I think it would have happened anyway, just because, like you said, just because how big the project is, that's what any big project that gets a lot of risk and it poses a risk right it's a disease to ethereum, so.
Speaker 1:So I think people were concerned, and I think a lot of ethereum folks are idealistic as well, like they have their ethos, they have their ideology, um, so it kind of made sense. I think this would have happened. What I really liked was all of this was disclosed and happened on twitter, uh, so I think this kind of improves the situation. I think it would have been a bad look if this was done secretly.
Speaker 2:I just had a kind of side question, because Mehdi just said he's glad it happened on Twitter. Do you think there'll be a time where we'll say we're glad this happened on Forecaster?
Speaker 1:Good question. Good question. I haven't started using Wopcast yet, but I was thinking about experimenting when I have time Could happen, I don't know, I just feel it's been retarded. That project with 100K DAUs, maus can raise at a billion and raise. Oh, my goodness yeah, especially if it's an equity, play a billion, but like raising with the Dune analytics, I think yes, you know what's gonna happen open. C 2.0 maybe, maybe, yeah, no, but openc was 13.4 34, but it was different, it was otc, it was peak bull market and yeah and they were the biggest nft marketplace and at that time they fumbled so hard, they fumbled so, but I
Speaker 2:had the, I had the.
Speaker 1:The founders exited anyway on secondary, yes I heard they exited at 500 million, but all these are like hearsay on twitter. Um, yeah, but but again I I feel like open c is something I still use.
Speaker 3:I still haven't used forecaster, so I don't know right yeah, I mean this is the thing, like when open c was raising and was it was early 2022, they they announced it um, they did have, like I, I didn't question that. I mean I thought that valuation was a little steep but I was like it's bull market times. They're the biggest in a niche that's expected to grow. Kind of get it. Farcaster is I saw some tweet basically slamming I think it was a16z saying that they're playing a management fee game where they just want to take in as much capital. Um, because they're such a big vc at the moment and they find it so difficult to move it's like steering a cruise ship they want to pocket the management fees, right because they should play the liquid markets, and same goes for paradigm.
Speaker 1:There's so many good opportunities. Maybe buy a bit more sweet and near and aptos and ethereum, so they could be buying ethereum we can 10x and they could stake it as well in 10x and they could stake it as well, nice, real nice.
Speaker 3:Thanks guys. Medhi, you were saying about the virtual machine end game and how we see that playing out um next there, or if you do, then yeah.
Speaker 1:so I've been like speaking with a lot of vcs and speaking with a lot of devs and I've been like thinking about this question a lot. So I kind of feel like my thesis is EVM, svm and Move these will be the three virtual machine consensus. There won't be any one that would be as big. And I've been thinking about this Like, if you kind of think about it logically, anything in order for the dev to move from an ecosystem apart from these three, there has to be 10x improvement, and I don't see it happening anytime soon because move was 10x improvement, evm and 5x improvement svm. I just don't see 10x improvement across another virtual machine apart from these three. Right, so it's very difficult.
Speaker 1:And devs have their tooling. They'll have to learn coding, so they're going to be just sticky around these. And another thing is exchanges also have operations. They have to work on the blockchain explorer. There's a lot of backend work that goes on as well in terms of listing. So I kind of feel like there's a consensus building that these will be the three virtual machine. So it has a huge implication for funding, right? 40% of Web3 funding went to network, not infrastructure, networks L1s, l2s and all of that I think there will be a huge implication there and I think you'll also be observing this trend that we're not seeing a new l1 emerge with a new virtual machine, and what's happening right now is let's take these, these virtual environments and just start a l2 either on solana, bitcoin or ethereum. So I think that is a trend that will be happening, rather than people starting with new L1 with a new virtual machine. There will be a bit more focus up the stack now yeah so we'll see.
Speaker 1:Potentially, rather than seeing new L1s, we'll see L2s, or we'll be seeing maybe sector specific L1s, but not kind of innovating on the virtual machine side, but just like using either one of these three. I think as industry, we are settling on this and I think that's a good news that means there will be network effects and and being gathered around these ecosystems but can?
Speaker 3:can evm, svm and move vm? Can they all coexist indefinitely? Do you see that as feasible?
Speaker 1:I mean, even right now there are the multiple programming languages. Um, just, I think the conflict, like the multiple programming languages, whether Java or Python, that coexist and people are comfortable using right. So I think they can coexist.
Speaker 3:Amr, the Internet, guy 2, but they often have different uses though. So, like rust, for instance, is a very, very low level, granular language, whereas Python is like hype, super high level, very accessible, but very, very slow calls. Isn't that how you see it? With move, evm, svm? Just the respective advantages.
Speaker 1:I just feel like the devs have started using this. They learn about this. It takes them years to kind of specialize. It just will be very difficult for them to move away unless there's a 10x improvement. So this is it. This is it, unless there's something that brings 10x improvement. If there is something that brings 10x improvement, then I'm happy to be wrong yeah, fair that makes.
Speaker 3:I think we're also at a point now where maybe we weren't there three or four years ago, where the cross-chain infrastructure really does exist now to make things pretty smooth, like the ui, the front end could definitely do with a lot of development, but fundamentally, like in terms of the actual efficiency, it it kind of does exist now, not prolifically across every little niche of the ecosystem, but it's a point now where different languages and different ecosystems coexisting does seem much more feasible than it did a few years ago even. I don't know, do we see, do we see, a winner out of evm, svm and movie? I know we've spoken about them coexisting, but at the moment coexisting very difficult.
Speaker 1:I think there'll be like five, six big winners and there'll be tailwind of like small, like small sector specific or app specific chains, but general purpose l1s. I think there'll be like three, four big ones and I'm guessing you're.
Speaker 3:You're talking here. You're talking about solana, ethereum, and what else are you thinking about at the moment?
Speaker 1:the, the few contenders right like uh, you have sui, you have aptos, you have barrett chain, you have monad, yeah, so there's some consolidation okay.
Speaker 3:so here's the question do you think that those three or four, right so sui aptos monad, all the rest of? Do you think that those three or four RiceOSWI Aptos Monad, all the rest of it? Do you think that they can coexist? Do you think that makes sense?
Speaker 1:Even if they don't, what's the worst that can happen? They've invested so much money, they have so many devs. They can move as L2 to maybe one of the bigger ecosystem, so I think there isn't a part where anybody loses. I think what they're going for is the prize money of being like Ethereum or Bitcoin, like internet matching, internet money which everybody uses.
Speaker 3:If they fail to do that, they can just compliment by becoming L2, in my opinion, I mean, we've seen some monolithic L1s from the 2020 era are already doing that, like I think CeeLo is a pretty clear example of what was meant to be a sort of consumer-facing L1 that ultimately has realized that probably its future is best served as an L2.
Speaker 1:So, yeah, that does make a lot of sense, or maybe if they don't want to become an L2 because of political reasons, because of the community. They can just start a sector-specific. I think Nier is going down that route. Yeah, so Nier basically is focusing a lot more on ai and focusing on data availability um and we have already seen there was a new project that raised as l2 plume, as rwa.
Speaker 1:Then we had peak network, then we had revolving game the other day that wanted to like be l1 with gaming focus. So I think so I think there will be some sort of consolidation. If you can't become that global magic internet money, you can become a sector of that and carbon niche or become L2. But I feel like these are the three big virtual machines that I don't see any other kind of out-competing them in the next 10 years.
Speaker 3:I think that's a pretty reasonable position to hold, cam. What do you think? Is there a big winner here, or does that seem feasible to you?
Speaker 2:I think I've always been a bit of an Ethereum maxi for a long time Good man.
Speaker 2:So I've been an Ethereum maxi for a long time, good man, good man. So I've been at ethereum maxi for a very long time. Then we saw, you know, sui um aptos come around. I didn't really think that they were going to get any traction, um, just because I just didn't believe people were going to take the, the move language. Uh, seriously, we were going to be able to onboard that.
Speaker 2:That was me reflecting on looking at Solana Solana being using Rust and there is Rust developers already out there in Web 2 and they already found it hard to adopt Solana devs.
Speaker 2:So I was looking at the move ecosystem as like, okay, if Solana can't do it, how is the um aptos and su, we're gonna be able to do it. So I guess I was bearish on them. Um, but then solana, I've always again, I've always liked um, but then you know, kind of still thought ethereum was always going to be the winner. But now, seeing them evolve this cycle, let's say that's really changed my, my thoughts and I I'm gonna say I definitely believe that they there is room for all three and they will all like, like midi said, they will all coexist. Um, I still still do think that there's a developer shortage on both sides being Solana and the Muvu ecosystem, that there needs to ramp up them, bringing in developers to want to build, and I think that's the hardest part. I think Solana's doing a better job, I would say, but I don't know the official numbers and I haven't seen that for maybe six months now do?
Speaker 3:I heard, just just like, a word on programming languages. I heard a really really interesting anecdote and this was maybe I think this was peak bear market someone's talking me about it but both solana and near launched almost identically. They were both, uh, scalability focused l1s in response to ethereum. They launched, I think, like two months apart, on CoinList. Their main net launches were like very, very close together.
Speaker 3:I think Solana was like just ahead of Nier on all of these and they were both Rust based and very much competing for that small pool of Rust developers that were going to be willing to do blockchain stuff. And part of the reason, from what I'm told, that Solana did so well is because Nier was European based project all over Europe and all the rest of it. Solana was very much a West Coast US SF type. You know it was named after a California beach and that was, ironically, partly why they were able to bootstrap their ecosystem so well is because geographically, they were just located near more of the developers, like in terms of, like you know, poaching new grads that are really really familiar with rust and stuff. It just became a, you know, a downhill battle compared to near, which so like I think, even like minutiae, like that stuff that, like you know, as an investor, I would very, very rarely consider can have a really potentially, a really, really big impact other reasons as well.
Speaker 1:Right, solana was just dead on focus on becoming the fastest train, and that's it. Yeah. Yeah, I feel like Nier, in terms of their BD, has tiptoed around a little bit with different narratives. Right now, they're doing data availability, they're doing things with AI. Solana just was like Ethereum killer that's it. Speed, yeah, that's it. Nasdaq on chain that was their motto. Still at it. But Nier is again not financial advice another very strong project. I have big bags and I think it's also a very novel architecture with sharding.
Speaker 1:So I think they have multiple things going for it.
Speaker 1:I think there is a little bit of mispricing there. But again, in terms of my desk getting deal flow, I'm not seeing many deals from Nier ecosystem, seeing a lot of account abstraction stuff from near. But majority of the deals that are coming on are either on Solana, maybe Monad, maybe BarraChain, maybe few L2s on Ethereum. And another interesting thing is nobody is building on Ethereum, building on L2s of Ethereum, building on ethereum, building on l2s of ethereum. So one issue I think I've highlighted this before is project. When they're thinking about going ethereum they have like overload with choices. Oh, blast, arbiter, optimism, polygon, imx.
Speaker 2:Like with solana, or near or sweet, simple, like okay, solana three after is done or near done so you can call a question, a question for you at the end, maybe john as well, so you can call like ethereum a blue chip, you can call solana a blue chip. Would you then put uh, aptos, sui, uh and or near, in a in the blue chip category and not by its market cap?
Speaker 1:now, yeah or yeah in terms of I would say they're road story.
Speaker 3:Okay, I would say they're blue chips already for me, so you would say that holding them in your portfolio.
Speaker 2:There's more of upside, you know, and they could go down 30, 50%, but still in the long run they're always going to outperform.
Speaker 3:Of course there's more upside. But even ones like near, like I know that you know even going I mean, I've been out of the vc world for a good year or so now but very, very few near deals would come across my desk and the ones that are are always have some angle um, but equally, you know, grayscale launched their near trust last week. Same with stacks like. There are these sort of like. From an institutional perspective they're getting this sort of blue chip status. This is if we just push away market cap for a minute, if we, if we decide that every token above five billion is a blue chip like, forget that.
Speaker 3:If you're speaking like narratively, I think, yeah, you could make a case for um, you know. But equally, if you're going to say that like near, uh, for instance, or aptos or sui are blue chips, then you're sort of tied to saying that certain defi protocols in and of themselves are blue chips as well. Like a lot of those ethereum based defi projects are definitely blue chips if you consider, just in terms of like, the development they have around them. They have as much as some of those l1s is the truth, um, which is not to do down those l1s, it's probably to to. You know, speak volumes of certain DeFi ecosystems that really are doing exciting stuff, but I think, yeah, in my mind undoubtedly Sui Aptos near Blue Chips, okay.
Speaker 3:So here's a question for both you guys as investors, before we wrap up when you invest, are you tied to certain ecosystems? So I know that you guys will both do deals on Ethereum or Ethereum Layer 2s and Solana, for instance. If a near protocol deal came across your desk, would you be looking at it purely, as you know, we're assessing the quality of the protocol that we are. You know, like you would if you saw a Solana or Ethereum project, or are you talking a little bit? You know an investment committee and stuff about the risks or benefits to investing in.
Speaker 1:There's a platform risk. Yeah, that's one of the risks in crypto there's always a platform risk. So, actively, there are certain ecosystem we look for we are bullish on. So from a top-down filtering perspective or funding perspective like, okay, monad, barachain, these are the upcoming ecosystem. It could be higher beta play on, let's say, some of the crypto itself, bigger call option to be in the money. But we, let's say, certainly will not discount the near deal if it comes to our desk and bottom up it's really good. So bottom up, I mean, the valuation is good, they're doing something groundbreaking and they understand that there is that platform risk, right, so we want to discount them. But actively, there are a few ecosystem that we'll have our own bias on, because we feel like the dApps right now will have cheaper valuation but once these L1s launch they could trade at a premium or basically do interesting composable stuff within the ecosystem. So I think that's how. I think I would never discount a bottom-up deal if somebody is doing something interesting.
Speaker 3:Cam carry on. Do you think in a similar kind of way?
Speaker 2:No, we only invest in Algorand ecosystem projects.
Speaker 3:Oh well, of course. I mean that's the most exciting one for sure over the next 24 months. I'd say hey they came out with. Did you see the advert?
Speaker 2:I thought that advert was pretty good.
Speaker 3:It was a good advert. Like it was clever, they just picked a different issue for Bitcoin, ethereum and Solana, which ironically shows more blue chips. Yeah, but like they got attention, like that was the first time it's crypto Twitter man.
Speaker 1:This is the thing.
Speaker 3:It's crypto. Twitter faded, don not going. Yeah, but algorand, I think they had some early issues which I think have haunted them ever since. Like they, they had one of that. They were in one of the best positions ever from a funding and narrative and timeline standpoint and sort of dropped the ball there pretty dramatically, I think, um, but equally, it worked as a marketing strategy, was the first time in probably weeks, if not months, that we'd mentioned algo explicitly or done a story on algo, and it got us writing about them for sure.
Speaker 1:So it's like a unicorn. I mean, I'm just looking at the market gap.
Speaker 3:Yeah, well, this was what I was gonna ask is because because, medhi, you said that you know you would not shy away from a near ecosystem project Now, near, the token itself, I think, has a market cap of like seven or eight billion. But what is the single biggest ecosystem token on near and how big is it? That's the, that's the question I've seen.
Speaker 1:I've seen few account abstraction, but it has to be good bottoms up, but it has to be good bottoms up.
Speaker 3:I personally invest in Aurora which was one of the shards of Nier yeah EVM it depends on deal by deal cases.
Speaker 1:The issue with platform risk is exchanges would not support it, so it becomes really difficult. The liquidity would be low. So I'll give you one observation do projects launch nfts on ethereum versus, let's say, immutable? Even though both have marketplaces, both can support nft, ethereum has way more liquidity and exchange support whilst and on ramps and off ramps. Imx doesn't have that to a certain to that degree. So I think similar risk here.
Speaker 1:So let's say with near, if you have amazing deal, if they're launching on something, let's say Solana versus Near, that deal has to be lower valuation, better vesting and trying to do more de-risking than, let's say, solana project. So I think those are some of the nuances and they really need to have a reason why they're launching on Near. Maybe one of the reasons why they're launching on here is maybe because they wanted to own the whole shard. Or maybe they wanted to do some interesting ai ai stuff and wanted this to like be the effort from um, the co-founders of near. So if they have a unique reason, why not? But typically that hasn't been the case fair enough, fair enough.
Speaker 3:Thanks everyone so much for joining. I hope you've enjoyed our latest episode. Just a reminder to say that nothing was in any way intended to constitute financial or legal advice in any way. Everything is opinions, subjective in nature, so please don't take anything too seriously. Bye.