Transcription
Hi everyone, welcome to Unchained, your knowhigh free source for all things crypto. I'm your host Lauren Shinn. Thanks for joining this live stream.
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Today's topic is Ethereum and where ETH can go from here. Here to discuss are Joseph Shalom, CEO of Sharplink, and Danny Ryan, co-founder of Etherealize. Welcome, Joseph and Danny.
>> Thanks, Lauren.
>> Ethereum's been on a path of a slow shift, I would say, over the past couple years, starting first with outside criticism, which kind of moved to community unrest, which led to changes in leadership, the foundation, also led to the founding of Etherealize. Um and this then has um you know resulted also in some changes in the speed and of development and shipping upgrades and we have now seen that the rollup centric centric roadmap is being abandoned. Um it seems like Ethereum is finally changing its culture a bit more. It's becoming more competitive. It's not as sort of like above it all as it has been in the past. And so we are seeing Ethereum to you know be more proactive than other chains in certain ways like facing the quantum threat headon in a way that Bitcoin is not or focusing on AI and who we'll connect with crypto. Um so you know you both talk to Wall Street quite a lot about Ethereum and I was wondering like are they perceiving these changes or are these just developments that are being noticed by crypto Twitter? you know, what kinds of questions are they asking about Ethereum or, you know, what do they tend to focus on in conversations with you? And Joseph, why don't we start with you?
>> Sure. I I think the largest institutions in the world are not monolithic, but they're very very consistent in what they care about. They care about security, they care about trust, and they care about liquidity. And as they're thinking of just a complete shift from, you know, 24 by to 24 by7 trading programmatically on decentralized platforms. The conversations are almost entirely about Ethereum and the layer 2 community around it because that's where you have 10 years of uninterrupted uptime. That's where you have the deepest pools of liquidity across stable coins and tokenized funds. And frankly, they don't want to go from one vendor lock in database system to another. They want a truly decentralized platform. And Ethereum offers all those attributes. So our conversations back when I was at BlackRock and even today leading Sharplink, Ethereum is really the platform that people are talking about and you don't hear about some of the other specialized L1s as much as you have in the past.
>> And when you you said that they also ask about the L2s so like what you know what are they asking and how do they perceive the difference or how do you even explain how you know the relationship?
>> Sure. I think if you look back a couple of years ago, frankly, from my time at Black Rockck when we were speaking to thousands of institutional and wealth advisers, they knew that tokenization of all assets were coming. They just wanted to make sure the future of finance had the throughput capability. And Ethereum mainet back then was still in building and scaling mode. And you had the L2s playing a really important role of providing that throughput while being built on top of the security mechanisms of Ethereum. With the advances and the step function increases in transactions per second and throughput on Ethereum mainet, you're hearing less about the L2s. You're hearing a lot more about, you know, living on the security platform and the decentralized nature of Ethereum mainet. So, it's not that the L2s are not significant anymore. It's just that mainet is catching up and and getting ahead.
>> Okay. And
>> L2, yeah, I mean on the L2 stuff, there's a lot of reasons L2 might exist, right? Like scalability is one one L2s are always going to be more scalable than than Ethereum mainet regardless of whatever technology is embedded in there because they are just essentially compression algorithms on top of that. Um, but then beyond that, there's a lot of other reasons that a an institution might want to maintain an L2 for its own infrastructural purposes, for its own business needs. And that might be one, you get the you get the security of Ethereum, you get the liquidity of Ethereum. Um, but you might need certain privacy features baked in to the the virtual machine for the applications that you need. or you might um want to have a more bespoke way that it interacts with the front ends that your users um manifest in. For example, you know, Bass Bass is a great business, great a great business built on L2 on top of Ethereum. You know, their differentiator there and the reason that it's so valuable to them is because the integration into their distribution mechanism, the integration directly into their applications. Um and so for institutions it becomes a tool in the in the tool chest on how to integrate with and connect into Ethereum.
>> And so Danny for you when you talk to institutions um if they end up choosing Ethereum like why do they choose Ethereum out of you know the other choices the other chains?
>> Yeah, I mean, Joseph said it. Um, but at a certain point, like Ethereum is the answer of like you don't lose your job for betting on Ethereum. It's the thing that's been around for 10 years. It's the thing that if they have internal teams and any sort of expertise, they have EVM and solidity teams. Um, it has 100% uptime. It has the best in terms of a programmable blockchain. Like the only compelling narrative of no one controls this, no one can censor me, I don't have take on counterparty risk for using this as a base infrastructure. Um, and I mean given all of these things, I I'm not I assets will go where there's demand for assets, but when we're talking about fundamentally upgrading financial markets and financial infrastructure, it's kind of the only game in town.
>> And I was curious, so how do you pitch people on the value of Ether itself? Like pretend that I'm an investor, you know? I'd love to hear how you're pitching the value of ETH, how you um you know maybe talk about like the tokconomics like you know how do you explain so if I'm if I'm an investor who's you know normally used to analyzing like equities a certain way or something how do you explain that framework to them how do you help them understand what the value is
>> sure I think if you take a step back the first thing we do is we explain the Ethereum opportunity which is stable coins which tear about 310 billion going to trillions. Tokenized assets today are about 32 billion going to trillions as well. You know, institutional DeFi adoption is happening like we've never seen before. We're going to get to Agentic in a minute. So, just first explaining to them and they agree wholeheartedly that Ethereum the ecosystem is going to be the future financial settlement layer for finance and a lot of value creation. That's the first step explaining that it is going to be the future world ledger. The second is to do the right thing and explain that ether the token is what's going to secure these transactions. As the Ethereum ecosystem grows, you need more ether to secure these and settle these transactions and therefore ether ends up becoming a trust commodity. So you start with the principles and the fundamentals. Let me say what we don't do. We don't make up numbers and talk about short-term price uh predictions for Ether. I think you're setting yourself up for failure. Most people who do that um really struggle when you look back at their predictions. And second is I feel very strongly that the second narrative that people use typically is that we're little brother to big brother Bitcoin and that Ethereum by definition is just some relative coefficient of the value of Bitcoin and they need to trade together. I think what we're trying to explain is there in there's intrinsic value and ether is going to be the trust commodity that's going to secure the future of finance and you should be owning this and it will appreciate in value. There are probably 12 different metrics that you can use to measure you know the intrinsic value of ether. There's a great website called ETH val which um which hashid put out which explains those metrics and lets you choose them. But I think the number one thing is not to make up numbers and number two we're not a derivative of Bitcoin. It has intrinsic value to the future of a financial system.
>> And Danny, actually, I wanted to ask you a variation of the same question, which is, you know, I'm sure you're aware in the ultrasound money days, there was this notion that the value of ether would be tied pretty tightly to usage on the network and, you know, now like once once they started scaling the L2s, then that also was kind of left behind. So nowadays, what do you see as the main factors that drive accrual and value to ETH?
>> I um I'm not a I'm not a big ETH pitch person. I focus on fundamental value of the platform. I focus on mass adoption of the platform in very um exciting ways. I do believe that um the asset sitting at the core of this has many value accrual mechanisms in relation to you know as we onboard the global economy. Um, as for you know, if we're going to if you only value it on ultrasound money and on essentially some sort of weird cash flow model, that's that's uh I think the way you you would value it is you look at the future when people when you've onboarded the global economy and not today and you focus on scaling today and I think that's what we've done. Um, but I believe as Joseph mentioned there are many many value accrual mechanisms in relation to the mass adoption of this platform.
>> Okay. And potentially we'll see more of them once the L1 starts scaling. Um, and we can go into some of the sort of interesting things that they're going to be doing in that regard. So, um, I phrased it as abandoning the L2 ccentric roadmap when I made my intro and I know Danny objects to that. I also, you know, said said something like that on Twitter and someone again tried to argue with me that they didn't think Ethereum was abandoning rollup centric roadmap. But I don't know if you guys Well, Danny, I know you don't listen to podcasts, but um even the bankless guys, they are admitting that Ethereum is leaving that behind is is maybe the most neutral way to say it. But um the point is, you know, so like even even athereum or not Ethereum, Vitalik wrote in his expost, quote, "The original vision of L2s and their role in Ethereum no longer makes sense and we need a new path." So
>> point is change. So if you read Vitalics one, Vitalic is one person. There are many voices. There are many perspectives. It's an open platform. You can do whatever the hell you want on top of it. There is blob scaling and you can use it. Um so if an L2 brings value to you, your business, how you want to construct the reality, build an L2. It's a trustless system. Um if you read Vitalik's post, I think it distills into two things. One, do better. What the hell? We're this many years in. We don't have fully trustless rollups. Like come on guys, what are we doing here? Why do we have these poor constructions? The technology is there. Two, there's going to be sufficient there's going to be uh a lot of scale in L1 given the way we can bring in uh all of the gains we've had with ZK VMs in this. That's awesome. Like we can trustlessly scale the the L1 without taking on you know the sacrifice of decentralization. And thus, if you're going to have an L2, you need to have a differentiator, which is one of the reasons I was so excited about L2s at the outset. I was like, this is going to like the EVM's the base. And then you can you can experiment with virtual machines, you can experiment with uh more constrained spaces, you can experiment with like things that are better for formal verification. You can do all sorts of stuff, but everyone just did the EVM because that was the naturally easy way to kind of uh begin to build this technology. But again, do better two, differentiate, have a reason for an L2 other than scale. Um, and I think we're going to see that like Bass exists because they have a great distribution, a great UX and can integrate deeply with their user base. Um, we're going to see L2s that exist, for example, like Aztec because they're a privacy first L2. You inherit the security of Ethereum, you get the liquidity of a security Ethereum, and you get a different environment. You get something that Ethereum doesn't bring. And so that's not an abandonment of L2s. That's a um let's look in the mirror. Let's think about, you know, we're this far into the into this.
>> No, no, but sorry.
>> I meant the abandonment of of the roadmap being tied to L2s like because now they're going to, you know,
>> Well, now it's now now there there's the L2s exist. we will continue to scale blobs through additional advanced technology on the L2 on the P2P layer and we'll scale the L L1. So I I think it's additive um if we look at these things rather than abandonment.
>> I agree with Danny. I just think that you know there was a period of time when many L2s were mo more focused on token appreciation than token utility. And I think what Danny's saying, and I agree with him, is that we're going to be in a flight to utility, a fright to differentiation, and a flight to quality. And if you're just L2 number 76 relying on your tokening and marketing and bisdev dollars, I don't think that is going to be the future because I think you're going to have a very hard time uh differentiating yourself. And token values now should be trading based on utility, not on marketing.
>> Okay. So yeah, let's talk about some of the tech upgrades that are coming to Ethereum. First of all, as I alluded to earlier, it's accelerated. It's tech road mapaps and that they can do two upgrades a year, which you know I think um people are very happy about. Um I even saw somebody has vibe coded a client. So that's kind of interesting. Anyway, so um in 2025 it deployed both Pekra and Fusaka. And this year we're going to see Glamsterdam and just gonna I'm just gonna take a stab at a pronunciation here. I'm going to say Hegata uh because I think Bogotaa is like part of the the name anyway. Um so a number of the tech upgrades that are being included in these look kind of interesting to me. One of the ones that stood out was encrypted meoles which can either reduce or even maybe prevent sandwiching and front running which are some of the more toxic form toxic forms of MEV. But I was wondering what you guys are most excited about in these upgrades and which ones you think will be especially appealing to institutional players.
>> Yeah, I mean I'm taking a look at so I I'm I'm not deep on Ethereum upgrades right now. Um I spent all my time talking to people on Wall Street and figuring out how to upgrade markets from first principles. But I'm taking a look at these. Um looks like in Glamsterdam and trying proposer separation. This is nice. This helps um reduce the reliance on these these builder markets or at least make them more resilient and also has some nice to have uh scalability that shows up. I think you know this this is continued nice improvement. I don't think institutions go oh my god I'm so excited about that but it does make this a better and more resilient platform. The block level access list is really cool. Um, that's going to be one of those dozen upgrades that allows us to scale the L1 um more so without even bringing in the ZKVMs that are going to allow it to scale orders of magnitude. Um, so again, these are all nice to these like from an institutional perspective, these aren't like, oh, that's the thing, but they they continue to show Ethereum can upgrade. They continue to show that Ethereum is focused on resilience and focused on, you know, the structure, the foundation of the platform. When we look at Hegota, uh the only thing I'm seeing in there right now is is Fossil. That's forced uh fork choice enforced inclusion list. Essentially, it's a censorship resistance um addition into the the layer one. It's interesting. Sometimes people are like, well, wouldn't institutions not want that? Actually, they they would. They want this open neutral infrastructure that has global guarantees no matter who you are. And uh the avoidance of being able to be censored actually is is a mega boost for that. So there's no world where my counterparty that's going to prevent me from getting transactions goes to for example a proposer, a validator bribes them to not includes my transactions because this becomes infeasible under certain assumptions as you as you layer this on. And so censorship resistance adds to the uh the reduction or elimination of counterparty risk at the infrastructure layer. Um, so that I think if we explain it properly and put it into the lens of what institutions really want out of this these open uh you know this open financial layer uh it's it's a huge value add. So I'm I'm really excited about that one. I would just add, you know, Ethereum has proven that because it has a really strong uh mechanism and development plan in its foundation, it can do multiple releases a year consistently without downtime. I am less focused on the individual major releases and just the multi-year scaling and throughput that we are seeing on the platform. And the reason why I say that is I came from Black Rockck. I spent 20 years. You have these giant institutions who really care about economic security and finality but in massive scale. So Laura, to your less cryptonative listeners, there is a day every year where the Msei index rebalances. It's a month end and it's a highly volatile day and you see the industry have to rebalance thousands of portfolios across, you know, millions and millions of trades. I think institutions want to know that when they have a day like that an index rebalance on a volatile day which is a month end that the networks they support will be available and two they can support the throughput. So just the multi-year roadmap to get step function increases in throughput I think is going to be what institutions are going to focus on most beyond the trust and security.
>> Yeah. Um, there was one other thing that was so interesting to me is yesterday Vitalik published a blog post talking about ways that the L1 will scale and one of them was something called multi-dimensional gas. I don't know if you guys happen to see that or if you like Danny could do you think you could
>> Yeah, we've been talking about multi-dimensional gas in the research forums for years. Um, and we actually do have multi-dimensional gas on mainet right now. Twodimensional, we have the EVM execution gas and there's a separate gas associated with blobs. Essentially, when a resource when two resources aren't fundamentally competing with each other, you could think about breaking them out and pricing them and having their own markets and their own limits because you can, for example, parallelize them. So the the processing the the load that comes from handling blobs is independent from the load that comes from handling the EVM. So these are separate uh gas markets. You can imagine uh the load with respect to state reads and writes which is disk is different than the load uh for computation like adding numbers multiplying numbers which is CPU. So we can get additional gains by breaking out these gas markets and allowing for um each one to handle kind of the worst case on that particular resource. So yeah, this is I mean I I teach a class at university. I think we've been talking I I remember talking about this about four years ago. So it's it's been in the lexicon. It's just bubbling up as as real.
>> Okay. And for a simpler for a simpler mind like mine, you know, you have a supply and economics on any network. When there are times that operations are too cheap, you could potentially have overloading bottlenecks. And when times that it's too expensive, you can limit throughput. This helps solve and balance that problem. And that's what's going to happen in the real world when there are days when there's massive amounts of transactions and days when it's much lighter. And you need to be able to be available on both days in an efficient manner.
>> Yeah, when I was reading about it, it honestly reminded me of the DOS attacks back when um in the fall of 2016, some anonymous attacker kept attacking Ethereum and they were doing it in this way where they were figuring out how um certain functions were mispriced in terms of gas. And when I described this in my book, I said it was like trying to run a bakery into the ground by buying a million of the one muffin that is being sold for less than it cost. And um and but this attacker did it for like literally every single thing that was mispriced, they would do one and then after they fixed that, then they would like do another. And um so anyway, so I was
>> great. It made Ethereum better.
>> Exactly. which I also mentioned in my book. I said that it was like set up for um to to to handle a lot more transactions which in my mind is what enabled the ICO craze to happen in 2017.
>> There's a good buyer drill honestly to happen then and not yesterday.
>> Yeah, I mean essentially it's it's very similar here where uh there's a maximum amount of like disk reads and writes that you're comfortable doing and not dossing the network but there's a independent amount of computation on the CPU you're willing to do and like let's just break these apart and think about them independently. That's what multi-dimensional gas allows us to do.
>> Yeah. So in a moment we're going to talk about some other upgrades and new priorities for Ethereum. But first we're going to take a quick word from the sponsors who make the show possible.
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Back to my conversation with Joseph and Danny. So, there's one other upgrade coming which looked really interesting to me. um the ZKVM which you know there's a certain redundancy built into a lot of blockchains and this just seems like it makes things so much more efficient without necessarily um you know uh having a big tradeoff in terms of you know decentralization or censorship resistance. um Danny can you talk about what that
>> Yeah. I mean, so the same technology that powers ZK rollups, which I think we've poured maybe billions of dollars into in the past five years, so reached some uh production capable sound constructions here that that have nice scalability. Essentially allows you to compress transaction execution um and verify a simple proof instead of running all the transactions. this technology now that is becoming so hardened um we can begin to think about what does it look like to integrate that into layer 1 Ethereum and get the same types of compression that we get out of the ZK rollups um and this is really nice in the past you just turn the if you turn the gas limit up naively on L1 you began to get a lot of centralizing pressures on L1 who can actually verify the chain um what types of resources do I need to run a node those begin to you at a certain point you're like oh I have to have a supercomputer in a data center um and I've made a super centralized uh component but if instead instead of running all of the transactions I can execute a succinct proof that shows me uh that the transactions execute correctly and what the resulting state is then I can cryptographically verify the block is correct and where it brings instead of having to execute everything myself. And that's what the ZKVM allows unlocks. And so we we get to essentially turn up that transaction knob without layering those same centralization pressures that if we did it, you know, a couple years ago, you would end up with a a very centralized chain and construction of the L1. Um, so this is huge. This is huge. And you mentioned no trade-offs. There are trade-offs. This brings in a new uh complex component into the L1, right? And uh complexity is evil when you're thinking about uh resilient distributed consensus systems. Um, and so we have to find the right path to ensure that it's resilient. For example, maybe layering multiple ZKVMs and having them to agree so if there's a soundness issue with one, it doesn't bring the whole chain down. um or the types of formal verification that we need to employ or all sorts of stuff. But it's going to be a very like rigorous process to get from okay this stuff works to it's time to deploy on mainet. But it's super super exciting.
>> So last week, Vitalik tweeted that Ethereum was now going to be focusing on what he called real DeFi. And he even also said DeFi is a central part of the value that Ethereum provides, which you know um a lot of Ethereum people commented that, you know, this was in contrast to an attitude previously that was more dismissive toward Ethereum. And in an Ethereum Foundation blog post, Charles St. Lewis and the app relations team wrote, quote, "The Ethereum Foundation believes in DeFi punk, not finance that's marginally better than Tradfi, but finance that couldn't exist without Ethereum." So, some of the priorities they mentioned were security, which I'm sure in the age of AI feels even more important, decentralization, privacy for everything from stable coins to trading to lending and more. So, you know, what would you like to see Ethereum support in terms of making DeFi better or what problems about DeFi do you feel like Ethereum needs to resolve?
>> Well, I think the the first thing is um if I I'm focused on institutional and if you think about what institutions really care about to come on chain, I think they've given up on permission blockchains. Like, let's just put a pin in that. We don't want to use that word anymore. But they don't fully understand permissionless unless there are confidential confidentiality and privacy features. And whether you talk about DeFi or just Ethereum mainet, I think there's incredible work happening at the Ethereum Foundation, there's a group called privacy scaling explorations team and they're doing four or five things that have never been done before. And to be honest with you, some of them were the domains of L2s who were privacy specific domains. And Laura, I'd love to give you three or four examples because I think it's going to change how people not only interact on Ethereum, but how people interact institutionally on DeFi. The first is just the idea that there'll be stealth addresses that you can create a one-time non-linkable address that makes it much much more harder to track transactions based to a user's identity. And then in DeFi, if institutions are going to participate, they're going to want anonymity. The second is you're going to start seeing encryption capabilities that are fully homomorphic. And to like the lay person look at a project like Zamma where you can keep balances on chain, transaction data encrypted, but still interact with it using these new mechanisms. You can almost think of it as the internet HTTPS for blockchain. and the idea of having privacy tools with Ethereum basically embedding these capabilities into the user experience. So instead of having to go offchain or build new applications, these privacy tools are going to build be built directly into wallets. You're going to reduce the need to bridge to specialized privacy chains. And the final thing is it's going to be shocking to people. you're going to have anonymized RPC uh nodes which means you can prevent metadata exposure but basically obuscating or obscuring user data from node providers and I know you asked a question about DeFi but just more generally when institutions are thinking of bringing trillions of dollars of assets and transactions on chain they want to do it in a more private manner and you're going to see Ethereum and mainet build these features just like day one security was the first feature. I think you're going to see privacy being the second feature. And going back to your question about L2s, those who only had one use case, you know, privacy, mainet may essentially swallow those capabilities because they're going to build them natively. So I think before you see safe DeFi or good DeFi take off, institutions are going to bring bring liquidity when they can do it through privacy features. And I think there's a whole host of things that are going to be a step function different than what we talked about before. I don't know if that's cipher punk, but it is something that allows large amounts of capital to participate without disclosing identity. And that's where liquidity begets liquidity. And um there's one other question that I had really here about DeFi because you know with the L2 ccentric roadmap we saw just liquidity was fragmenting um the DeFi experience was just kind of um yeah well DeFi ended up being like copying and pasting a lot of the same stuff just on different chains. So I'm just curious you know I'm looking at how base um you know became the top L2. It's now living the OP stack. I don't think I was the only person who was kind of reading the blog post and my mind was going to this place where someday base could just be its own L1 and um you know when looking at that I was thinking did Ethereum just end up kind of creating and supporting what will end up being one one of its greatest competitors? I don't know. Um, but I just wonder like how you think um, Ethereum kind of pulls things back and like makes DeFi and Ethereum really kind of the the premier place for for DeFi activity.
>> Yeah, I mean there's a lot there. Um, first and foremost, you know, I I truly believe cryptoeconomic security is a scarce resource. Um, and you can't just create it out of thin air. And if you are an L2 and decide to go off on your own, very likely you're not going to have much cryptoeconomic security or you're going to be relying on consortium security and other things that look like um you know, networks and technology of the past even for I think very large players that that so you know I think uh when you look at Robin Hood making the decision to to create an L2 um they're essentially acknowledging that they're like crypto economic security is it's tough. It's tough to bootstrap. Let's focus on apps. let's focus on the things that we're good at. Let's focus focus on finance. Um, and so, you know, if you're an L2, you're you're making that decision that that's a good a good value proposition. As for DeFi, um I think obviously with with uh additional scale at the L1 and reduced gas prices, we can see, you know, potentially a big boom there. Um, I'm also, I know we're we keep kicking it out, but agentic finance. Um, a lot of the problems of UX, a lot of the problems of where are my assets, what am I doing, um are honestly massively solved when you're talking about agentic finance, like and maybe layer a nice intense protocol and then agentic finance on top of it, and you're like, "Yeah, I want to trade some stuff. Yeah, I want 90% of my stuff in high security zone, 10% whatever." Um, and if we solve security in that layer, I think we're going to have a massive boon for uh DeFi, a massive boon for just chain usage in general. Um, and and some of the problems that we thought of, you know, that that were plaguing us in terms of UX, I think, are just going to kind of wash away.
>> All right. So, now let's talk about something that I know a lot of people in crypto kind of um see as an ongoing rivalry between Ethereum and Salana. Um, you know, Blockworks has this reputation, rightly or wrongly, of being considered pro-sana, but Mike Epito of Blockworks had actually been tweeting some more positive things about Ethereum in recent months. And he was on the show recently. I'm gonna that show was about Salana but um something that Mike did say and again so sorry he's been tweeting positive things about Ethereum but this quote is um more pro Salana he said quote in terms of what Ethereum doesn't have is it's never going to get to a level of scale and throughput that you could have like consistent trading activity and then he talked about I don't know if you guys have been following this thing about the prop amms on Salana um this is a really interesting development where the prop amms are taking what has traditionally been >> dexto sex arbitrage that is being done by bots and they're taking them onchain. So the protocol itself is benefiting from that and able to do that arbitrage itself. um Tar who was the other guest on this show to Tushar Jane of Multicoin he was the other guest on the show and he said quote I don't see how Ethereum L1 can be competitive for any sort of trading applications and if it's not competitive for trading applications I don't see how it can be competitive in the long run for borrow lend applications and then he said one of the most important if not the most important attribute of a money market is the ability to liquidate collateral in order to prevent bad debt and insolveny and in order to do that you need liquidity you need trading volume on that chain so you can liquidate that collateral at a reasonable price without incurring bad debt. Then so he basically said I think where you see the trading activity is where you will see the borrow and borrow lend markets start to migrate. So I don't know what you know those were the fighting words on >> I'm happy to take the first go. Yeah, start. >> But I want to be one of the most positive people in crypto because I think we're going to build so much prosperity and we should all win together. I think Danny used the words economic security. I am 100% certain that institutions who are going to bring trillions of dollars to crypto care first about economic security. They care about liquidity. And let me just share facts, but let me start with a preface. I actually have a tremendous amount of respect for Tarjane. I have a lot of respect for Lilly Louu who does a great job at the foundation. But let me just throw out some numbers for your listeners. Ethereum has over a million validators. My understanding the last time I checked is Solana has about 760 and declining. You look at the number of execution clients which are really important for diversity. You know, Ethereum has five, Salana has one with another another one in development. The developer community is 2x in Ethereum, which is one of the reasons why people build on Ethereum. But if you want to use the word liquidity, there's about 308 billion dollars of stable coins today. Over 55 to 60% are on Ethereum and the L2s. I believe Salana has about a 7% market share. So you're right, institutions will go where there's liquidity and it's happening in the Ethereum ecosystem in tokenized assets. You know, in Davos, uh my old boss, Larry Frink, had a great slide when he was talking about the future of finance, and he had a slide that said Ethereum is the toll road to tokenization. Whether you use the word toll road or highway, there's a recognition from the largest, most sophisticated institutions in the world that Ethereum is going to be that global financial ledger because because it has the trust, liquidity, and security. I do think there'll be roles for other L1s. I think they'll be specialized. I think Solana does an amazing job on memecoins and altcoins and gaming. And there may be use cases, but if you look at where the largest financial institutions in the world are building their money market funds, their trading applications, Robin Hood, Coinbase, it's on Ethereum. So, I'm not here to FUD others. I think the Salana Foundation did a great job over the past several years when there was a bit of a gap in the Ethereum narrative and leadership voice to steal some of that marketing fun, but marketing thunder is not real world use cases.
>> And what do you think about what he said about how you felt like um it wouldn't ever sorry that Ethereum wouldn't ever be as competitive when it comes to trading? And I think what he's talking about there is the block times.
>> There's a lot there. Um obviously when we talk about uh ZKVMs and we talk about uh the future that that may hold um or will hold I think there's these arguments become moot um because Ethereum can scale and and meet a lot of the same uh structures without sacrificing decentralization and still having that critical security. Um and L2s have a place. I I I firmly believe that L2s have a place. L2s um are extremely competitive today with uh with alternative L1's fast constructions while still inheriting the security and liquidity of Ethereum. Um I I talk to people in Wall Street back offices. I talk to CEOs. I talk to CTOs. I talk to COOs. I talk to traders. I talk to everyone in these massive organizations. And we talk about upgrading markets and infrastructure from first principles and really bringing financial infrastructure into the digital age. Um, and I'll say it again, there's only one answer currently and there's only one uh chain being discussed in those types of environments. And I I think maybe once someone mentioned uh this other chain um in these types of conversations and I I I have hundreds of them. So that's that's my viewpoint and I think
>> interesting. So they they don't they don't actually ask you for comparisons with any other chains or really Salana in particular.
>> I've had one person mention Salana ever. Um and
>> that's so interesting. Um, okay. Well, let's talk about AI because everybody wants to talk about AI all the time and because it's obviously top of mind for everybody um not just in crypto, not just in AI but um you know in the broader world. So um you know we saw like OpenClaw kind of you know made waves a lot of the agents were going to base which was really interesting. Um you know Ethereum clearly though has competitors you know uh you know some percentage I I don't know the actual percentage but a significant amount we're going to salon as well. Um you know how do you think about how Ethereum should try to grow its market share amongst AI agents. C
>> can you can I ask what going to base means or going to like making coins about themselves? Is that what you mean?
>> Oh gosh. Um I think just like when they were transacting they were transacting on base but you're right that I don't I don't really know what
>> I think a lot of so when I think of agentic finance it's massive and profound profound when we think about the stuff that was happening a year ago I think it was a lot of like weird tokens around silly AI projects and I think when we looking at some of the really high-profile stuff so far it's been like again AI agents that are much more sophisticated now having like tokens and getting weird stuff in relation That's I think those are toys. I think that that is you know hype and that's like a fun way to cash out and dump on retail. But um when we are thinking about agentic finance you know agents speak protocols natively. What is DeFi? It's protocolized finance. Um, and what do agents need? They need to trust and interact and make agreements with each other. For example, atomic swaps. You give me an asset, I give you the other one. Like how do we do that in a trustless way? classically you give me the asset and then I wire you the money. Like that's not going to work when we're talking about like global agent finance. And so um security matters the the guarantees of uh the interactions that they enter into each other matters and again Ethereum becomes the answer. And I I know a lot of people experimenting not with like coin token weird agentic finance but actually agentic finance like creating polyarket betting bots creating um bots that interact with each other and trade things dynamically and and that when you look at it they go to where the applications are they go to where the liquidity is and I think depending on the type of interaction they're doing they're going to go where the security is too right. um if they're doing massive transactions, they're going to go to Ethereum mainet. I think it's the only answer right now. Um, so
>> yeah, sorry. I've been thinking about this a lot. Like I think the world is changing and changing very fast. Uh but not in like toy ways and like fundamental computers making agreements with each other ways.
>> Yeah, if I can double click on that, I want to take a step back and then and move forward. We're going to look back at 2024 and 25 as the years where AI assistants were helpful. We're going to look at 26 and 27 where you have task specific agents running on ERC 80004 the Ethereum trustless agent and registry protocol where they are going to start building essentially an autonomous AI agentic machine economy. They're going to be building communities. They're going to be your digital twins. And if you want to know the type of things we expect them to do, it's going to be pretty remarkable. I think users in 2026 and 2027 are going to have autonomous market makers that essentially act on their behalf on chain, even offchain, to trade, rebalance portfolios, build liquidity positions, execute strategies. They're going to essentially reason across different signals and constraints. I think you're going to have a programmable asset manager in your pocket. You give them constraints, risk tolerance, yield targets, regulatory rules, and your intent, and they're going to start investing on your behalf. For those who participate in DeFi, and their humans leading DeFi activities, these agents are going to basically be able to have access to your wallets, select and move capital across different protocols. If you're staking or lending, they're going to optimize your staking, lending, and liquidity provisioning. They're going to monitor your smart contract risk. They're going to do governance for you. You know, imagine a world where a protocol is failing. Instead of you waiting to see that on Twitter, your AI agents monitoring the smart contract in real time and based on your risk tolerance, they're pulling your assets before any human can get involved. So, I think it's going to need to be an agentic machine economy. It's going to happen where the liquidity is and where the stable coins are, and that's Ethereum. Um, and I don't think it's going to be separate an institutional chain and a retail chain and an agentic chain. These things are going to converge. It's going to happen where the security and the governance is, and that's Ethereum. It's going to create a machine economy.
>> And I'm so excited. Like I about this in particular, like holy the UX of interacting on chain is incredible. I'm like, I want to trade this done. Like I want to monitor this protocol, interact this way. like it just becomes like I can communicate in English
And and we can handle the things underneath the hood. And you know, some of the failed, potentially failed constructions of the past are going to start making sense, like a DAO arbitrated by humans and having to vote and pay attention and whatever, but most of the time has been kind of a failed construction. A DAO where I have agents that are empowered with my goals and decision-making, and they're operating and optimizing these like distributed organizations, that's starting to make sense.
You know, and and someone on Twitter said this, and I maybe it's not so profound, but it really spoke to me. It was just like, "Oh, we're the beta users for blockchains, and AI agents are the actual users." Imagine it crosses back to traditional finance. So for you listeners, if you own an S&P 500 ETF, you technically have the ability to vote the proxy for each of the 500 issuers and the five votes a year. No one does it. And they rely on these giant asset managers to do it for them. If you just train your agent that, "I am this, I have this position on environmentalism, I have this position on pay, I have this position on leadership comp," you could train it. It will vote your proxies as if you're in a DAO based on your preferences. You won't even know that the questions came up. You just need to give them your preferences, tolerance, and ideas. And it's actually going to be much more participatory and democratic than what you see today.
Yeah, I love it. I love it. Um, Danny, as a non-technical person, what you talked about just giving human instructions and getting what you want, I was like, "Yes, yes, please give me that." My non-technical friend has created an AI agent polyarket betting farm in like four days because he's talking in English. He's talking about his preferences and what he wants to see happen and the different types of things he thinks happens in basketball. You know, who knows? But like, but it's very cool. It empowers people to control computers and to control finance and to like express themselves in very natural ways.
Yeah. So, Joseph, I know you have to run. Um, but since we have you here, just last question because obviously DAOs have been a huge thing in crypto for the last like year and a change, or if you want to go all the way back to MicroStrategy, like even longer. Um, but obviously at this moment in time, they're largely down. You know, many of them are trading below NAV. Um, I did see Sharp Link is a little bit below an MNAV of one. I think it's like 0.9. You know, despite that, I saw you talking about how Sharp Link's ETH is all productive. You're staking 100% of it. Like, I'm just curious, you know, what are you hearing from institutional players when they're talk when they're looking at DAOs? Like, how are they differentiating between different DAOs? Just like, what is the conversation that you are, you know, having with different institutions?
Sure. First of all, thank you for not asking about what it feels like to be in DAO 4.0. It feels like every interview I get, we're in DAO 4.0 and then 5.0. We're in the non-Bitcoin space. We are about seven months old as an industry, and there's a purpose to it. I want to take a step back. The purpose is for those who believe in our case that there's a massive Ethereum opportunity ahead, and owning Ether is a really good long-term but volatile economic choice. You have three ways to get access to it. You can try to own spot. You can try to stake it and make it productive yourself. That's very hard for most institutions. Second is you can buy an Ethereum ETF. I launched one of the largest ones when I was at BlackRock, but they're not going to stake 100%. And it's not as composable from a yield perspective than if you own a DAO. And why do I say that? The really interesting thing about DAOs is we're the only people in crypto who own permanent benevolent capital. Just let that settle in for a minute. Most of crypto is either short-term money trading or speculation or a fund that literally has to provide daily liquidity. If you have permanence of capital, we own billions of dollars of ETH on behalf of our shareholders, you can actually take long-term decisions. You could stake, you can restake, and you could deploy this capital into protocols on Ethereum to beat the Ethereum staking rate. So you can stake the 100%. You can get better risk-adjusted returns, and you could do something that's never been done in DeFi before. You can put the L in TVL, meaning you can lock your capital. You can get better incentives for your investors because you're getting a term structure and duration benefits. And then you could do something that doesn't happen in DeFi. You could do it within the constraints of your qualified custodian. So you can deploy to DeFi to a liquidity staking token, do it in a qualified custodian like Anchorage. So you're pushing the efficient frontier of the yield you can get better than the Ethereum staking rate, but you can do it by reducing operating risk. Only actively managed people with sophistication and permanent capital can get those benefits. And that's why I think DAOs are a great investor vehicle to get exposure to Ether. And the beautiful thing is whether the markets are ripping or the markets are consolidating, if you haven't encumbered your ETH, and we have not, we have no debt, you could make long-term decisions. And while your stock may go up or down, you can actually provide benefits for your investors in any market. So, I'm actually very bullish, not because I'm relying on the price to go up of Ether, because we're making our assets productive. And by the way, that's how you respect investors.
All right. Well, you guys, this has been such a great conversation. Joseph, I know you have to run. I'm so glad we were able to get both of you because I know you both have very busy schedules. So, thank you so much for coming on Unchained.
Cool. Had a blast. Thank you.
Thank you, Laura.
And thanks to everyone for joining this live stream. We will catch you later.