[ { "speaker": "Speaker 1", "text": "Logan, welcome to the show, man." }, { "speaker": "Speaker 2", "text": "How's it going, gentlemen?" }, { "speaker": "Speaker 2", "text": "Good, man. It's good." }, { "speaker": "Speaker 2", "text": ">> Good, man. It's a little chilly up here." }, { "speaker": "Speaker 2", "text": "I I I need to make it first, guys. You guys are within half an hour of each other. I'm over here in New York." }, { "speaker": "Speaker 1", "text": "Arby, where are you?" }, { "speaker": "Speaker 1", "text": "Uh I am around the Fort Lauderdale area, so Okay, cool." }, { "speaker": "Speaker 1", "text": ">> uh it's beautiful around here, as you know. Uh Logan, man, we were just celebrating the uh the lack of World War III. Yeah. Um I mean, what was We were just talking about how it was difficult to focus and" }, { "speaker": "Speaker 1", "text": "concentrate yesterday. There was so much happening. We were monitoring the situation, and it didn't leave much time for much else. What what was going through your mind yesterday?" }, { "speaker": "Speaker 3", "text": "Um Honestly, I I I didn't think about it too much. Obviously, it's more fun when number goes up versus down. I think uh it's easier to kind of get distracted with short-term things. Obviously, you don't" }, { "speaker": "Speaker 3", "text": "want the world to blow up. I think there's some famous quote from an investor is like, you don't want to invest in the world going to end because if you're right, uh that's not a good outcome. And if you're" }, { "speaker": "Speaker 3", "text": "uh wrong, then it doesn't really matter anyways. So, just playing long-term games. I think uh as you guys know, crypto's uh very whiplashy. So, uh just trying to focus on the things that" }, { "speaker": "Speaker 3", "text": "I can control." }, { "speaker": "Speaker 1", "text": "Yeah." }, { "speaker": "Speaker 1", "text": ">> That's extremely reflexive. Which is why you know, we were saying, \"Look, you know, it kind of we felt like we needed a full reset in order for the the crypto reflexivity to sort of lead the way" }, { "speaker": "Speaker 1", "text": "again.\" Is Is that kind of how you're you're thinking about it as well?" }, { "speaker": "Speaker 3", "text": "Um I think about it more from a product lens. Uh my background, I was at Tesla and was running the software side of the supercharging network. Uh when I first got into crypto, I started asking, it" }, { "speaker": "Speaker 3", "text": "was like, \"Hey, what are the daily active users? Like, where's the revenue?\" And then I quickly learned you don't ask those questions. Um and that was in 2020. I think now it's much more" }, { "speaker": "Speaker 3", "text": "about the products and the revenues. And so, I think it's differentiated now in terms of people need to build real applications with real money. I think for us at Frictionless, we were fairly" }, { "speaker": "Speaker 3", "text": "early to the understanding that blockchains had to scale. And so, we were I would say one of the kind of few funds that understand that we had to go from low through put to high through put. Um I think that was" }, { "speaker": "Speaker 3", "text": "directionally correct. I think the part that we have gained a greater appreciation for over time was the fact that throughput enabled scale, but execution was how you monetize. And so," }, { "speaker": "Speaker 2", "text": "really blockchains are asset ledgers, and they're good for trading and money movement. And so, we've kind of been doubling down on that subsector. Yeah. Yeah, so this thesis ultimately is kind of centered around" }, { "speaker": "Speaker 2", "text": "the idea that trading is the number one use case of a distributed you know, uh set of nodes at scale. Scale this up as high and as fast and cheap as possible." }, { "speaker": "Speaker 2", "text": "Enable global trading. This is essentially the Solana thesis. Wanted to talk today about kind of the uh state of the high throughput chains versus more of the kind of like very specific perps" }, { "speaker": "Speaker 2", "text": "platforms, which are seemingly dominating on the revenue side uh on the kind of TPS side, less nodes, less redundancies. I'm just curious how you're seeing this play out. Let's just" }, { "speaker": "Speaker 2", "text": "start like super high level. Solana, Hyperliquid. How do you see the kind of state of execution, value, revenues, businesses when it comes to these types of uh basic products? So, you've got" }, { "speaker": "Speaker 2", "text": "like the very high throughput L1s, and you've got a you've got kind of like the uh perps platforms. Like I mean, app chain had haven't used that word in like a year and a half, but like kind of app" }, { "speaker": "Speaker 2", "text": "chains are very like specific use case products. How do you think about this right now at a high level, and then we'll get into some of the nuance." }, { "speaker": "Speaker 3", "text": "Yeah. I mean, if you go back to like kind of the start of the industry, Ethereum was very interesting because it enabled smart contracts and allowed you to build Turing-complete applications." }, { "speaker": "Speaker 3", "text": "The hard part is because of the limited throughput and the 12-second block times, it was not super useful for trading. And because it also didn't do parallel execution, it did not enable" }, { "speaker": "Speaker 3", "text": "kind of localized fees." }, { "speaker": "Speaker 3", "text": "And so, we had to really graduate from these low throughput chains to high throughput just to enable more expressive applications at the um really the product level. I think now though, the industry is really asking," }, { "speaker": "Speaker 3", "text": "\"Hey, why are these blockchains valued and call it uh tens of billions or hundreds of billions?\"" }, { "speaker": "Speaker 3", "text": "And the true answer is is I think really kind of boils down to the execution point, as you mentioned." }, { "speaker": "Speaker 3", "text": "I think on our side, how we're really approaching it is we call it kind of uh two schools of camp, where you have either colocation, which is the traditional TradFi system, which is why" }, { "speaker": "Speaker 3", "text": "we were never super bullish kind of call it layer twos. Um like I'd bucket like essentially base, Arbitrum, maybe ETH, all in that same bucket. Um Hyperliquid kind of as well." }, { "speaker": "Speaker 3", "text": "And the reason why we put those in the same bucket is because really the focus is more so on trading from the colocation standpoint. Um as a former engineer, I like to think of things in" }, { "speaker": "Speaker 3", "text": "the extreme. And so, if you push them to kind of the end state, what would they actually look like if trading continued to be successful? We know from traditional finance that you have um" }, { "speaker": "Speaker 3", "text": "market makers and TradFi firms wanting to colocate next to the matching engine because you get uh better information flow being closer to the execution engine. And so, this entire kind of uh" }, { "speaker": "Speaker 3", "text": "complex the setup for private fiber lines, microwave towers um to get information closer to the matching engine to be able to trade upon that." }, { "speaker": "Speaker 3", "text": "I would say this new system that is unproven and uh TBD if it actually works, but I think as the first principles correct solution, is kind of this what we call localized ingestion, where when" }, { "speaker": "Speaker 3", "text": "information that can be traded upon happens around the world, instead of propagating to that single place in the world, um if we use kind of the New York stock exchange as an example, that data center is in" }, { "speaker": "Speaker 3", "text": "New Jersey. Instead of propagating that trade information through private fiber lines and microwave towers to New Jersey, you'd actually be able to trade on that information in a specific" }, { "speaker": "Speaker 3", "text": "region. And I think this is a pretty profound differentiation in the market structure. Uh the crude analogy that I've been using is if you ask 99 out of 100 market makers what they want, they'll say" }, { "speaker": "Speaker 3", "text": "faster horses. What we really want is the car. And I I think this new kind of localized ingestion model is the car and the thing that's actually going to enable people to really participate at a" }, { "speaker": "Speaker 3", "text": "global trading level instead of these regional kind of exchanges that exist around the world." }, { "speaker": "Speaker 2", "text": "Okay, so um then Okay, so that's kind of like the high-level understanding of of how we should think about this kind of flow of information propagation of um basic alpha when it comes to being closer to a" }, { "speaker": "Speaker 2", "text": "colocated sequencer in the L2 model." }, { "speaker": "Speaker 2", "text": "Kind of arguing against that. Um So, first kind of angle of pushback here would be then then why is is Hyperliquid and Lyra doing so well comparatively to any other on-chain trading venue? Like" }, { "speaker": "Speaker 2", "text": "like no matter what other chain they're on, those two platforms are dominating um total volumes, fees, etc. Um So, how is this like not changing the way that you're thinking about how you see" }, { "speaker": "Speaker 2", "text": "trading on chain? Is Lyra doing well?" }, { "speaker": "Speaker 3", "text": "I mean, it they're number two in terms of volume OI pretty consistently. But I mean, I [clears throat] haven't been following Lyra as much. I don't know. Um So, I kind of view them as um they're great" }, { "speaker": "Speaker 3", "text": "products. Uh Hyperliquid especially. I think their unique innovation obviously was uh building a very good perps product. Um it's much easier to do that um in kind of a more centralized setting" }, { "speaker": "Speaker 3", "text": "like Hyperliquid is than to build a fully decentralized platform. I early on criticized them for being not decentralized. I still think they're not decentralized, but it doesn't really" }, { "speaker": "Speaker 3", "text": "matter if people don't if people like the product. Um and so, I think there's some legal aspects TBD on how that plays out longer term, but they're kind of just like a centralized exchange without KYC that" }, { "speaker": "Speaker 3", "text": "has built a great perps product. The The benefit of Hyperliquid and building kind of the exchange and the matching engine at the heart of the system is the ability to actually charge fees or bips" }, { "speaker": "Speaker 3", "text": "per trade. And so, I I think it's a more direct model. What others have done like Hyperliquid or sorry, Solana is focused more on um REV and priority fees. Um for Solana in 2025, that was I believe 1.5 close to 2" }, { "speaker": "Speaker 3", "text": "billion. Uh the current like last year uh revenue and REV is about 700 million." }, { "speaker": "Speaker 3", "text": "And so, I think if you peel back the hood, they're not too dissimilar, except Solana's really losing out on perps, but they're better on spot." }, { "speaker": "Speaker 1", "text": "Mm." }, { "speaker": "Speaker 1", "text": "Um Logan, a uh a bit of a tangential question here, but still thinking through what the on-chain landscape could look like for Solana." }, { "speaker": "Speaker 1", "text": "Um, you know, obviously a very unfortunate incident with Drift. Could have happened to everyone and anyone, right? Like, you know, this in-person wrench attack of sorts as a result of" }, { "speaker": "Speaker 1", "text": "uh, you know, them meeting up with some North Korean person at a conference, as they say. I I'm more so curious about how you think Solana's ecosystem is going to build back in terms of how they" }, { "speaker": "Speaker 1", "text": "can start to build, you know, a stronger landscape around both perps and spot, and ultimately build robust exchanges that, you know, have tighter security principles and take advantage of some of" }, { "speaker": "Speaker 3", "text": "the performance benefits that you talk about." }, { "speaker": "Speaker 3", "text": "I mean, Anatoly talks about there's only like less than, I think, a dozen of like smart contracts that are actually meaningful, and those can be over time immutable. And I think it ultimately" }, { "speaker": "Speaker 3", "text": "allows you to build more robust smart contracts. I would generally be in favor of that than a more kind of a grandiose virtual machine if it's really trading and payments related. I don't know." }, { "speaker": "Speaker 3", "text": "Obviously, it's unfortunate, and I think we need to continue to tighten security, but I don't know. I kind of chalk it up as a learning lesson, so to speak, where whether it's Solana, Ethereum," }, { "speaker": "Speaker 3", "text": "Hyperliquid, to your point, any of these can happen across any of these blockchains. I I think the more robust thing is can you have a kind of smart contract or specific protocol that the entire" }, { "speaker": "Speaker 3", "text": "ecosystem uses and taps into that are more robust than everybody kind of building their own implementation. Um, it is frustrating. I mean, you look at the amount of capital that's been lost" }, { "speaker": "Speaker 3", "text": "just through hacks or um, losses, it's it's a high number. Um, and this is kind of the Bitcoin maxi argument in the beginning that smart contracts were a little bit unsecure, but I don't know. I I think broadly like" }, { "speaker": "Speaker 3", "text": "these things I really don't get caught up in, if I'm being honest, because I think the TAM of trading and just moving all assets onto blockchains is just absolutely massive. When I look at how" }, { "speaker": "Speaker 3", "text": "much volume blockchains are doing, it's still relatively tiny." }, { "speaker": "Speaker 3", "text": "Um, Solana annualized today is doing about a trillion in trading volume. If you look at kind of the current centralized exchange landscape for blockchains, they're doing about 60 billion a day. If you look at the New" }, { "speaker": "Speaker 3", "text": "York Stock Exchange, it's 100 to 200 billion. Derivatives markets are in the trillions. If you include FX, you're doing like 20 trillion of on-chain trading a day. I think that is really to" }, { "speaker": "Speaker 3", "text": "me the North Star of how can you move more and more of finance onto blockchains, and I think the big thing outside of just like the market structure is going to be this idea of do you want colocation, which to" }, { "speaker": "Speaker 3", "text": "me is very equivalent to what the New York Stock Exchange does." }, { "speaker": "Speaker 3", "text": "I kind of have a little bit of a hard time saying how much different if like the New York Stock Exchange or the CME started offering 24/7 trading and then builder codes similar to Hyperliquid," }, { "speaker": "Speaker 3", "text": "how differentiated it would actually be in the long term." }, { "speaker": "Speaker 3", "text": "I think this idea of localized ingestion is one that people are not paying attention to and one that we're kind of increasingly beating the drum about, similar to how we did when we were" }, { "speaker": "Speaker 3", "text": "fairly early to the understanding of the blockchains transitioning from low throughput to high throughput. I view this kind of localized ingestion as important for blockchain architectures, and I think it" }, { "speaker": "Speaker 3", "text": "will be almost existential if you do not have it over the long term versus the one that continuously are more focused on colocation or single leaders." }, { "speaker": "Speaker 2", "text": "And could you describe how localized ingestion is different than a single sequencer blockchain, what Hyperliquid is doing with a very small amount of nodes, and then what something like" }, { "speaker": "Speaker 2", "text": "Solana has with much more nodes, and obviously all the way, you know, you have Ethereum on the on the entire other side of the spectrum. Like, is it a consensus thing? Is it a It's an" }, { "speaker": "Speaker 2", "text": "information asymmetry thing, but how does it kind of compare to the different models of trading that we have on chain today?" }, { "speaker": "Speaker 3", "text": "Um, if you boil it down to like the true kind of like fundamentals, a lot of trading is just order flow." }, { "speaker": "Speaker 3", "text": "Like, if you think about Robinhood and what they did, a lot of VCs early on were fairly confused about Robinhood's business model because they built a beautiful application, but how are they actually going to" }, { "speaker": "Speaker 3", "text": "monetize those users at the end of the day? And what Robinhood found was that they could partner with market makers like Citadel and others, and they could sell the order flow to Citadel and guarantee that those users" }, { "speaker": "Speaker 3", "text": "have better execution than they would if they just directly sent the trade to the New York Stock Exchange." }, { "speaker": "Speaker 3", "text": "So, this was actually net beneficial to the market maker, this was net beneficial to Robinhood, and this is actually better for the end customer because they're not trading against" }, { "speaker": "Speaker 3", "text": "toxic flow or PVP on the market maker side." }, { "speaker": "Speaker 3", "text": "And but you can kind of do that at a global level. Really, all of trading kind of boils down to where does the order flow originate, and do you have non-toxic flow or retail flow? Um," }, { "speaker": "Speaker 3", "text": "because otherwise, it's very PVP on the market making side, and then spreads widen, and then you get worse execution." }, { "speaker": "Speaker 3", "text": "And so, the thing that we broadly have been thinking about, and to kind of answer your question, has been around how does kind of this world of kind of new order flow, um, what does [clears throat] it look like?" }, { "speaker": "Speaker 3", "text": "Um, and I think if you continue with the TradFi model, it's really along the lines of um, colocation because you have to be next to essentially the sequencer in the blockchain terminology, or in TradFi," }, { "speaker": "Speaker 3", "text": "the matching engine, if you want proprietary kind of information edge." }, { "speaker": "Speaker 3", "text": "And I think this is fine. It's kind of like it's a very proven system, it works, and people know how to play that game. I think the opportunity in my mind, um, that Chris Dixon always talks" }, { "speaker": "Speaker 3", "text": "about broadly is that you kind of start with uh, kind of uh, when the internet first came about, like, we just put like newspaper like PDFs onto uh, the website so that people could" }, { "speaker": "Speaker 3", "text": "read them. But the first principles kind of perp solution would have been like, hey, let's redesign the website to actually take advantage of the internet native way. And I think we have an" }, { "speaker": "Speaker 3", "text": "opportunity to do that with blockchains and trading." }, { "speaker": "Speaker 3", "text": "Um, and so, I think what we're starting to see is these blockchains that are really single leader design or single boxes." }, { "speaker": "Speaker 3", "text": "Um, they'll look a lot like the traditional TradFi system. Um, they have some additional functionality where it's like 24/7 trading." }, { "speaker": "Speaker 3", "text": "Um, you can do spot and perps. Um, which is fine. I I eventually expect TradFi to be able to do that as well. But what's the unique differentiator that blockchain will actually be able to have" }, { "speaker": "Speaker 3", "text": "a competitive advantage on and actually make a better product? I think it's kind of this localized ingestion." }, { "speaker": "Speaker 3", "text": "Um, L2s are just colocation. Arbitrum, I believe, was selling colocation space, which was called Tie Boost. Um, Maggie Eat wants to do colocation and offer that as kind of a unique service. Um," }, { "speaker": "Speaker 3", "text": "Hyperliquid, if it continues to be um, dual, I expect more people to be colocate next to the matching engine." }, { "speaker": "Speaker 3", "text": "And that's fine. Um, I just don't know if that's a uniquely 10X better product. Um, they've been early to perps um, and listing assets, which I think is great. Yeah." }, { "speaker": "Speaker 2", "text": "But we'll see. I think there's a new way to do trading, and I would like to experiment with that. Yeah. And then another thing on Hyperliquid, do you think that there's a really substantial" }, { "speaker": "Speaker 2", "text": "regulatory risk right now to the protocol?" }, { "speaker": "Speaker 3", "text": "Um, I mean, I don't personally view them as super decentralized. The last time I checked, it had 16 nodes, um, and they're all in the same data center, um, or like two or three data centers" }, { "speaker": "Speaker 3", "text": "like in Tokyo. Yeah. Um, correct me if I'm wrong. Um, but I don't know. Like, I I more think about it, even if there's some regulatory crackdown, which I don't know if I have any unique insight in." }, { "speaker": "Speaker 3", "text": "I I think the goal in the largest TAM, at least from the investor perspective, is how would you actually get the most trading volume possible? If this is really kind of like on BIPs," }, { "speaker": "Speaker 3", "text": "or priority fees, which I kind of a view equivalent to BIPs, is you want to have all of trading possible be on the a single venue because you're collapsing kind of these global exchanges around" }, { "speaker": "Speaker 3", "text": "the world that almost act as their own unique databases or own ledgers, and you're trying to combine all that liquidity into one venue. And I think that was the really the unique promise of blockchains" }, { "speaker": "Speaker 3", "text": "originally was, hey, there's all these separate ledgers. Banks, Wells Fargo's has their own, JP Morgan has their own, and they don't talk to each other. If we can make them talk to each other, that's" }, { "speaker": "Speaker 3", "text": "where it gets very interesting. But exchanges around the world, you have the New York Stock Exchange, the London Stock Exchange, Japan, etc. They're all their own ledgers, and they don't talk" }, { "speaker": "Speaker 3", "text": "to each other. And so, I I really think from the kind of TAM perspective, the best thing in the largest market is figuring out how do you build this global exchange?" }, { "speaker": "Speaker 3", "text": "And I view Hyperliquid and really all these exchanges that have built thus far as really great regional exchanges, but if you're trying to go after global trading, why would I that someone in" }, { "speaker": "Speaker 3", "text": "India or uh I don't know um in Europe like want to trade on Hyperliquid systems if I'm getting kind of adversely selected because I'm further away. There's a reason why all these uh" }, { "speaker": "Speaker 3", "text": "kind of trading venues around the world have built their own is because they don't want to be disadvantaged to any other person. And so I more think about it is as you expand from the retail base" }, { "speaker": "Speaker 3", "text": "today that Hyperliquid has definitely captured to the market much more globally. Are all the institutions, not just in the United States, but globally going to want to be near Tokyo? Maybe." }, { "speaker": "Speaker 3", "text": "Um I don't know. Um I think there's an opportunity though to build this global exchange that almost disadvantages everybody equally where if you find alpha because information originated in" }, { "speaker": "Speaker 3", "text": "your specific part of the world, you were able to capture that. And I just think that's a more fair system and I actually think that system is going to be better for price discovery over the" }, { "speaker": "Speaker 3", "text": "long term. Um so I'm more excited about that system because I think it's just a larger total addressable market than what Hyperliquid is doing." }, { "speaker": "Speaker 2", "text": "Mhm." }, { "speaker": "Speaker 2", "text": "Interesting." }, { "speaker": "Speaker 2", "text": "Interesting. Anything Solana is going to be able to deliver on that system?" }, { "speaker": "Speaker 3", "text": "I think you have to If you think about a single leader system which most blockchains are today, really all you're doing is saying like, \"Hey, this is where we're propagating information to" }, { "speaker": "Speaker 3", "text": "to make that trade.\" Um it's kind of like again going back to the New York Stock Exchange and the sequencer is in New York Stock Exchange or or in New Jersey, I'm propagating my trade data to" }, { "speaker": "Speaker 3", "text": "New Jersey even if I'm currently in Singapore. Um and so as block times get faster and faster, maybe you're more disadvantaged because you're further away from that sequencer at any given" }, { "speaker": "Speaker 3", "text": "point." }, { "speaker": "Speaker 3", "text": "And I think really and you also get into a bunch of issues with like block builders that now I'm extremely bearish on. Um but you you you get into issues where one is sis generally entity can control" }, { "speaker": "Speaker 3", "text": "um what gets into the block and then ultimately reordering of transactions." }, { "speaker": "Speaker 3", "text": "As soon as you go from one leader to two leaders, that's where you start having interesting market dynamics because they're competitive. Uh every part of really the market stack you want to make" }, { "speaker": "Speaker 3", "text": "competitive. If you're giving anybody a natural monopoly, that's not good. Um they're going to be extracting their pound of flesh. And so I think all blockchains, if they want to be" }, { "speaker": "Speaker 3", "text": "competitive over the long term that are focused on trading, will move to this multi-leader system. And it's much harder in my opinion to start as kind of a centralized uh entity and move to" }, { "speaker": "Speaker 3", "text": "multi-leader than it will be to um kind of start as a multi-leader system and then focus more on trading. Um it's a much harder and more difficult engineering challenge." }, { "speaker": "Speaker 1", "text": "And and so you've articulated why Solana is in a better position to do this than Hyperliquid, but you know, Ethereum is also, you know, Ethereum is it's dead. And so what's the what's the" }, { "speaker": "Speaker 1", "text": "thesis as to why Solana is in a better position than Ethereum?" }, { "speaker": "Speaker 3", "text": "I mean, I haven't thought about Ethereum since 2021." }, { "speaker": "Speaker 3", "text": ">> [snorts] >> Like I don't think there's anything going on." }, { "speaker": "Speaker 3", "text": "Um L2s were a failed experiment. I'm curious like app chains were kind of failed experiment outside of Hyperliquid." }, { "speaker": "Speaker 3", "text": "Um I always viewed L2s as like data compression cuz if you think about blockchains that what they really are going back to like what is a transaction, all a transaction is a certain amount of bytes. I'm sending" }, { "speaker": "Speaker 3", "text": "10 USD to you, that's represented in five bytes. I have to propagate that to the entire blockchain and the entire quorum. And really all the L2 is doing is saying, \"Hey, I can compress that" }, { "speaker": "Speaker 3", "text": "five bytes from five bytes to one byte.\"" }, { "speaker": "Speaker 3", "text": "Um and L2s just never very made that much sense to me because if you wanted to use uh blockchain compression, why would you not use it on a high throughput blockchain because you could" }, { "speaker": "Speaker 3", "text": "compress more data. Um I think Ethereum is mostly an artifact of people making money off of it in the early days including myself. But from an institutional standpoint and from a um I'd say product use case Ethereum is" }, { "speaker": "Speaker 3", "text": "largely dead in my mind and I think it will continue to slowly die and I think it's the most overvalued asset in the world." }, { "speaker": "Speaker 1", "text": "It's interesting cuz it's it's up 50% over the last year and then Solana is down 20% over that same time frame. And so to to think about, you know, how this could progress, I agree that, you know," }, { "speaker": "Speaker 1", "text": "we need to get into a point if Ethereum's ever going to compete, you know, with the likes of Solana then it needs to get to a point where it can handle similar throughput. And they've" }, { "speaker": "Speaker 1", "text": "got, you know, a complex ZK-ification of the base layer to compress a lot of that data into a state where it's able to get settled more efficiently. Um and so you know, do you do you think that is a" }, { "speaker": "Speaker 1", "text": "reasonable path to sort of solve its its woes? If they are able to solve ZK and quantum and all these things, do they have a far enough advantage in that regard? Or do you think, you know, the lead that Ethereum" }, { "speaker": "Speaker 1", "text": "may have in quantum, Solana can easily catch? And the lead that Solana has in data compression, Ethereum won't get to with ZK." }, { "speaker": "Speaker 3", "text": "It's it's less about data compression and more about the flow of information." }, { "speaker": "Speaker 3", "text": "Um if you think about making a trade, um if I'm in New York, I really want to know that that trade happened as quickly as possible for like our friends in Singapore. And zero knowledge proofs" }, { "speaker": "Speaker 3", "text": "does not actually speed up um how fast that information gets propagated." }, { "speaker": "Speaker 3", "text": "Um if you compress the data, uh and you have like call it a 10 gigabyte line, that actually data whether it's one gigabyte or 100 kilobytes given kind of you have large enough pipes, so to" }, { "speaker": "Speaker 3", "text": "speak, will allow you to propagate that information at the same amount of time." }, { "speaker": "Speaker 3", "text": "But the zero knowledge proof will actually be slightly higher latency because you have to do the compression to be able to send that first. And so I think it's a fine technique. I mean, Ethereum" }, { "speaker": "Speaker 3", "text": "has always kind of optimized for World War III resistance and hopefully uh that doesn't happen soon, but I just don't think that's really what people want. I think blockchains have shown that people" }, { "speaker": "Speaker 3", "text": "really enjoy trading and trading is the primary use case and the primary revenue driver. Frictionless actually posted um this chart of zero to 100 million uh revenue applications. Uh a lot of people" }, { "speaker": "Speaker 3", "text": "stole our chart, but I'm not salty. Um and they're all um trading related products." }, { "speaker": "Speaker 3", "text": "And I think for us, it's just like what are the best ways to actually optimize for trading? Zero knowledge proofs and ZK does not actually speed up um that trading. If anything, it slows it" }, { "speaker": "Speaker 3", "text": "down because you have one extra step in the system even if you made it 10 milliseconds. That's 10 milliseconds less of latency that you um would have otherwise had if you just propagated the" }, { "speaker": "Speaker 3", "text": "trade data correctly. Um there's a reason why generally people have co-located is because there's information if you can get that information, there is an arbitrage because you can build a model and" }, { "speaker": "Speaker 3", "text": "exploit people that are 15 milliseconds behind. Um because you have 10 milliseconds. And so it's less about the proofs and more about, \"Hey, this trade happened in the world. This uh" }, { "speaker": "Speaker 3", "text": "an earthquake happened in Japan. Um I need to know about it as quickly as possible. Um please send me that data so I can make informed decisions on how to incorporate that into my model and so I" }, { "speaker": "Speaker 3", "text": "can start trading on that. And the longer that you actually um delay that information even if it's compressed, it doesn't actually do anything. So I I think I always thought Ethereum" }, { "speaker": "Speaker 3", "text": "probably had the smartest devs um and especially at least 100% on the research side, but they just always optimized for the incorrect thing. And then it became more of a religion. And" }, { "speaker": "Speaker 1", "text": "you can't really uh it's hard to argue with religion. Um it's more theoretical. And and couple follow-ups here. So, um despite Ethereum having a greater number of nodes distributed over the the world," }, { "speaker": "Speaker 1", "text": "the information propagation is actually slower because of the way in which they're doing the propagation." }, { "speaker": "Speaker 3", "text": "Um if you added zero knowledge proofs, uh it's just one extra step because like say I I want to make a trade, uh that trade is 100 megabytes. I need to compress that to 100 megabytes to 10" }, { "speaker": "Speaker 3", "text": "megabytes and that compression takes 50 milliseconds. Versus if I'm Solana or any other chain, if I have 100 megabytes, as soon as I get that information, I'm just forwarding it to" }, { "speaker": "Speaker 3", "text": "you and I don't have that 100 millisecond gap. Um and so it's just an extra step that is if trading as we know is generally latency sensitive, um just adds kind of unnecessary complexity" }, { "speaker": "Speaker 3", "text": "where Ethereum specifically was optimizing for reduced uh bandwidth costs and reduced bandwidth overhead. Um if anything, what we've seen is that technology generally improves and I" }, { "speaker": "Speaker 3", "text": "think you should uniquely lean into, \"Hey, your guys uh internet was maybe 100 megabytes a couple years ago. Now you're in New York and Florida, now it's probably 1 gigabyte, maybe even faster." }, { "speaker": "Speaker 3", "text": "In a couple years it's going to be 10 gigabytes. Why would you uniquely kind of hamstring the network because you picked this arbitrary line in the sand saying, \"Hey, we don't want" }, { "speaker": "Speaker 3", "text": "our network to go over 50 megabytes or 100 megabytes or what whatever Ethereum has chosen today.\" Um it's just a different set of optimizations. And and so it it thinking about it in terms of" }, { "speaker": "Speaker 1", "text": "centralization, decentralization is is not really the dimension in which to think about this. It's more so um in terms of the information propagation and the latency that it takes to propagate this information, of" }, { "speaker": "Speaker 1", "text": "which co-location is able to optimize that even further." }, { "speaker": "Speaker 1", "text": "Um and so I'm curious about your your perspective on something like Canton who's I think kind of broken a little bit of this centralization, decentralization model. Like how familiar are you with it and is there" }, { "speaker": "Speaker 1", "text": "something to say about how they've been able to structure this thing which is effectively a database? Does that make it so that this thing is quicker, more optimized to propagate this information? Um" }, { "speaker": "Speaker 3", "text": "shh I This may be slightly controversial. I I'm more I would say less of a decentralization maxi than I was in the past. Before I used to be like, \"Hey, like you're not decentralized, boo boo.\" Now I'm like," }, { "speaker": "Speaker 3", "text": "\"I really don't give a Build a product and create revenue and show me that people love your product.\" And I think there is an opportunity in my mind to create a better trading experience at" }, { "speaker": "Speaker 3", "text": "the global level that just so happens to be decentralized, but I don't think if you started out and said, \"Hey, this thing is decentralized, you should pay a premium to use this product.\" Time and" }, { "speaker": "Speaker 3", "text": "time again I think that kind of um experiment has been run and it's been failed to show that people actually pay for {quote} decentralization." }, { "speaker": "Speaker 3", "text": "I think you need to be sufficiently decentralized so that people like your product and use it, but I don't think decentralization by itself is kind of a unique attribute. Um so I've become much" }, { "speaker": "Speaker 3", "text": "more of a product maxi. I think with Canton specifically, I almost view it like um the crude analogy of like the you had the intranet and then the internet. Um and and this also goes the" }, { "speaker": "Speaker 3", "text": "same for like Tempo um and all the kind of like stablecoins that are popping up. Um I'm generally believe that these things will exist for a certain period of time." }, { "speaker": "Speaker 3", "text": "I think the value though generally is having these networks be open because people can contribute to them and move much more freely. And so without um um without specifically um commenting on" }, { "speaker": "Speaker 3", "text": "Canton, I'm broadly bearish kind of these chains that are um more permissioned in the sense that I think they're going to take a little bit more time to be widely adopted and have kind of the" }, { "speaker": "Speaker 3", "text": "most economic activity. And this is I would say goes the same to like why Hyperliquid I think is very cool, but I'm not sure if just like all the jurisdictions globally around the world" }, { "speaker": "Speaker 3", "text": "will start to agree to trade on on it, especially if it's not in their specific jurisdiction. Um why would I as Visa start using Tempo if it's controlled by Stripe? Like um I don't know. I" }, { "speaker": "Speaker 2", "text": "It's they're fine." }, { "speaker": "Speaker 2", "text": "Yeah, we've seen that same kind of concept with the intranet and internet be applied to something like Canton and a public blockchain and then similar idea with regards to the conflict of" }, { "speaker": "Speaker 2", "text": "interest, right? From like a JPM chain, um a Citibank chain, a Wells Fargo chain, same same idea there with Tempo, Stripe, etc. I I have a kind of separate question here on back to kind of the" }, { "speaker": "Speaker 2", "text": "sole versus hype idea." }, { "speaker": "Speaker 2", "text": "Do Do you think that Solana should just give up on perps, focus on spot, become the best spot trading chain possible at scale, focus entirely on that, leave perps to to Hyperliquid, to these other" }, { "speaker": "Speaker 2", "text": "chains?" }, { "speaker": "Speaker 2", "text": "Um how do you kind of think about where the focus should be for both Solana and Hyperliquid now? Like what do you think are the key Like like where do you think are the strategic strategic points of" }, { "speaker": "Speaker 3", "text": "focus for both the chains now?" }, { "speaker": "Speaker 3", "text": "Um no. I think you should win on all trading across all assets. I mean really the unique innovation recently on kind of call it the more decentralized change was this idea of the prop AMMs where it" }, { "speaker": "Speaker 3", "text": "builds in the logic of essentially the market maker if you will directly on the blockchain. And so what it negates is essentially that latency disadvantage that we were talking about which" }, { "speaker": "Speaker 3", "text": "essentially beds the market making logic directly into the blockchain which is actually even better than co-location of what you have in TradFi because instead of propagating your trades over a fiber line, um what" }, { "speaker": "Speaker 3", "text": "you are essentially allowed to do is kind of like stick a thumb drive into the matching engine itself and say like, \"Hey, this is my logic. Run it directly in your exchange.\" And I think that's" }, { "speaker": "Speaker 3", "text": "actually interesting. And so where I like start to come back to again is like a lot of these systems and if blockchains are primarily for trading which I think the data has shown that there's this kind of old guard way" }, { "speaker": "Speaker 3", "text": "of doing things which TradFi has shown." }, { "speaker": "Speaker 3", "text": "Co-location uh is great. It allows latency sensitive things. Um but on the flip side you have this new kind of idea emerging with uh localized ingestion with multiple leaders. And the" }, { "speaker": "Speaker 3", "text": "only reason why I'm interested in it is not because I think it decentralizes it more which is cool, censorship resistance and everything. The interesting part is I think this can actually make price discovery much" }, { "speaker": "Speaker 3", "text": "better. And it just so happens that to do this you just had to be globally distributed because the world's a large place and information that you can trade upon originates in multiple places" }, { "speaker": "Speaker 3", "text": "around the world. And so as a byproduct it's decentralized, but it was more so an happenstance that just enabled this better product. And I think if you push that even further to kind of like answer" }, { "speaker": "Speaker 3", "text": "your question, what we're going to start seeing is, \"Hey, that worked for spot with proprietary AMMs.\" Now we're seeing aggregators. One of our portfolio companies, Titan, just moved the routing" }, { "speaker": "Speaker 3", "text": "logic on chain as well. And so you have much tighter quotes at the time that you actually execute um the trade because there's a lag time from when you click the button of please trade to when it actually gets" }, { "speaker": "Speaker 3", "text": "executed on the blockchain. And so more and more of this logic is actually moving on chain and I think we're going to start to see that with perps. And that's where I think it's going to get" }, { "speaker": "Speaker 3", "text": "very interesting because today it's much better on spot versus Hyperliquid. I think if you can start being competitive on perps and then start adding assets outside of the traditional kind of" }, { "speaker": "Speaker 3", "text": "crypto assets, I think Hyperliquid says done a very good job at onboarding commodities. I think the next is equities, then you need uh kind of just broadly derivatives and FX. That's that's the interesting thing" }, { "speaker": "Speaker 2", "text": "to me. Yeah, interesting. Okay. Okay, so don't give up on perps, go for it, become the best trading venue for all areas there on the Solana side." }, { "speaker": "Speaker 2", "text": ">> [snorts] >> If you're Hyperliquid, what are you focusing on? Like what is you what what what are you What are holes in your ship that you're trying to crack? Um trying to patch. I think honestly they're" }, { "speaker": "Speaker 3", "text": "they've been doing a fairly good job. I I would try to focus more on if possible getting like fiat on-ramps and off-ramps and kind of like almost running the exchange playbook." }, { "speaker": "Speaker 3", "text": "Um you need like what assets do people want to trade? They've done a fairly good job of democratizing that. They built a pretty good trading product across perps. I'd probably focus on spot" }, { "speaker": "Speaker 3", "text": "a little bit more. I would continue to iterate on the virtual machine or add more open access which they're doing." }, { "speaker": "Speaker 3", "text": "I think the big question in my mind though is is this localized ingestion important? And I I think because it is new, there's not definitive data to say, \"Hey, this is uniquely better for market structure and" }, { "speaker": "Speaker 3", "text": "this is allows tighter spreads and this is a unique differentiator that's going to allow kind of people to around the world um in different countries to feel more comfortable with it.\" If that" }, { "speaker": "Speaker 3", "text": "doesn't matter, I think Hyperliquid's killing it. Um and this is a unique I would say bet that we're placing that, \"Hey, this weird unproven technology that allows you to have potentially better price discovery" }, { "speaker": "Speaker 3", "text": "is the first principles way to actually trade.\"" }, { "speaker": "Speaker 3", "text": "If that is untrue, then I think Hyperliquid will probably continue to dominate. If Solana doesn't ship this or there's too much infighting, then it's not going to be great." }, { "speaker": "Speaker 3", "text": "I'm curious though for you guys, how has your thesis changed? I know you guys are big bone proponents of kind of the modular roadmap and L2s." }, { "speaker": "Speaker 3", "text": "Over the last couple years, how has your thesis changed?" }, { "speaker": "Speaker 1", "text": "Rob? Yeah, I mean I I am also less of a decentralization maxi as I was." }, { "speaker": "Speaker 1", "text": "Um similar to what what you described. I think um you know, Vitalik's also come out and said like L2s are kind of cooked unless they have some sort of differentiation, like no surprise there." }, { "speaker": "Speaker 3", "text": "I think a lot of us sort of you know, Solana all that." }, { "speaker": "Speaker 3", "text": ">> a blog post called L2s are essentially just data compression and said that like hey you should have focused on that in 2022 and I kind of did like a small like internal like victory lap when he posted that" }, { "speaker": "Speaker 3", "text": "because I was like man we've just been lying to ourselves for many many years." }, { "speaker": "Speaker 1", "text": "Yeah. Yeah, so you know that was the case after a few of those came out I was like okay yeah we kind of see the writing on the wall here and you and I both have been you know big proponents" }, { "speaker": "Speaker 1", "text": "of Hyperliquid as well as the app chain thesis like we kind of talked about and basically hey build something that has product market fit if you can decentralize that great but if you have" }, { "speaker": "Speaker 1", "text": "something that is decentralized for decentralization theater or research fetish and it doesn't get any product market fit there's there that doesn't serve any value value to anyone besides" }, { "speaker": "Speaker 1", "text": "the religious you know I ideologists and so I think you know we're similar in that regard I I do still think I think Ethereum's not dead personally I think Ethereum still has some value to" }, { "speaker": "Speaker 1", "text": "contribute to the world Justin Drake co-authored that quantum paper and and I think Ethereum does have a bit of a lead when it comes to the quantum resistance path and it also has you know the most" }, { "speaker": "Speaker 1", "text": "distribution of its nodes as far as how they're able to propagate that information it may not be optimized maybe that's something that they can fix later on and still build a top the" }, { "speaker": "Speaker 1", "text": "distribution of their nodes um but you know that that's from the chain perspective and then generally you know it's all about apps these days you have to get distribution you have to get order flow" }, { "speaker": "Speaker 1", "text": "you have to get product market fit and then the best infrastructure is going to win I I think it's and the last question I had for you was like hey if you're polymarket what are you doing cuz" }, { "speaker": "Speaker 1", "text": "they've obviously found some distribution found order flow but they've continued to be on something like an L2 like they're still on polygon how have they not decided to go either build their own infrastructure or take" }, { "speaker": "Speaker 1", "text": "advantage of you know one of these faster pieces of infrastructure like a solana." }, { "speaker": "Speaker 3", "text": "This is a good question um if I mean as far as my understanding they work with market makers and kind of just internalize all that flow actually not a lot is hitting the fundamental" }, { "speaker": "Speaker 3", "text": "blockchain I think that another kind of interesting example is what Robinhood's trying to do with their own L2." }, { "speaker": "Speaker 3", "text": "I again I view these as just like their own databases um because that's actually what they are um arbitrum's a database solana's a database Hyperliquid's a database um some are more decentralized than others" }, { "speaker": "Speaker 3", "text": "I think the interesting part is where you can combine that liquidity and do um other interesting things with other applications um and as this past week we we learned there's some downsides to that with uh" }, { "speaker": "Speaker 3", "text": "[clears throat] [snorts] [clears throat] know more learning to do which you know I'm sure I do I do agree in part that I think it's all finance like I think we've seen that that's where the product market fit is" }, { "speaker": "Speaker 1", "text": "that's what it's best for but trading is a subset of finance is it not like we have non-speculative you know assets duration assets and there's this whole RWA tokenization complex coming on chain" }, { "speaker": "Speaker 1", "text": "now speed feels like it's important but maybe not the number one priority so you know maybe there's a give and take here and there's certain infrastructure design choices that are best for you know some of the some of" }, { "speaker": "Speaker 1", "text": "those pieces of finance but trading is best for you know some of the infrastructure and and you know rails that you've talked about today. Yeah maybe just to put that into a question" }, { "speaker": "Speaker 2", "text": "like if this tokenization idea that has been absolutely just the main topic for the last quarter or so if this is right right like we get tokenized equities bonds T-bills real estate aviation" }, { "speaker": "Speaker 2", "text": "leases car loans mortgages anything and everything that can be tokenized could and will be tokenized what would be the biggest kind of recipient of that value on chain right is it is it is it a blockchain is it a" }, { "speaker": "Speaker 2", "text": "lending protocol on chain is it an oracle is it an exchange like what is right cuz this is happening right like we're bringing all of these assets on chain so this kind of challenges the" }, { "speaker": "Speaker 2", "text": "it's only trading thesis because well maybe it's not just about trading for these types of assets how would you kind of answer that question like if we tokenize trillions of dollars of assets" }, { "speaker": "Speaker 2", "text": "bring them on chain what do you think is the biggest value capture investment there?" }, { "speaker": "Speaker 3", "text": "um both are good questions I kind of bucket them into one one is the underlying blockchain and I would say the value accrual for the blockchain itself and then one the other bucket is just the" }, { "speaker": "Speaker 3", "text": "applications and those applications making money." }, { "speaker": "Speaker 3", "text": "I think all blockchains are exchanges if you boil down to how does the blockchain actually making money um it's really contentious pieces of state that you charge a premium to access first which in like tradfi they" }, { "speaker": "Speaker 3", "text": "just run first come first serve and blockchain we do it slightly different and we just say hey you pay slightly more money to access the state and you can take that arbitrage opportunity that" }, { "speaker": "Speaker 3", "text": "is the business model of blockchains if you are not focused on that from an underlying kind of infrastructure standpoint I think you're seriously um I think your valuation will continue to" }, { "speaker": "Speaker 3", "text": "bleed people will wonder where's the revenue coming from you're no longer going to get the luxury of hey this is a uh sacred asset for the entire world maybe Bitcoin's the only special" }, { "speaker": "Speaker 3", "text": "snowflake in the world I don't think the other Ethereum included will get that for much longer um maybe it's a five-year time horizon maybe it's 10 but I think generally Ethereum is not going to continue to" }, { "speaker": "Speaker 3", "text": "have the monetary premium it has unless it generally focus on trading and execution um so because I think blockchains are really exchanges where they can either take or make revenue" }, { "speaker": "Speaker 3", "text": "from either bips or just priority fees I think the underlying blockchain needs to be optimized for trading. Now that's different from your guys what you pointed out on the application side" }, { "speaker": "Speaker 3", "text": "where you have tokenization or assets that are maybe not as um latency sensitive or um contentious where people want both want to access the same state but that's on the application level and I think those" }, { "speaker": "Speaker 3", "text": "obviously should make a lot of money and will make a lot of money and things that we're actively thinking at virtualist but that is different from the underlying infrastructure and I think" }, { "speaker": "Speaker 3", "text": "the whole goal of all this is just being able to run discounted cash flow models whether it's an application or the underlying blockchain and if you start to value blockchains similar to how you" }, { "speaker": "Speaker 3", "text": "do exchanges I think that's where you can actually run some pretty credible numbers and these things aren't super crazy um Ethereum maybe fairly high but uh others are not. Yeah. Yeah, I think" }, { "speaker": "Speaker 2", "text": "people are currently thinking about the protocols within the you know kind of atop the underlying chain as solely protocols for crypto assets meaning that we have these, you know, DeFi protocols on Solana, DeFi" }, { "speaker": "Speaker 2", "text": "protocols on Ethereum, etc. There, you know, you're able to collateralize your Ethereum, your wrapped Bitcoin, your SOL, your, you know, other assets on chain, borrow against them, do looping," }, { "speaker": "Speaker 2", "text": "do kind of interest rate, uh, you know, uh, things like things like what, uh, what what Pendle offers, things like what other kind of like actual on chain uh, protocols offer, and that this is" }, { "speaker": "Speaker 2", "text": "solely for the two, three trillion dollars of assets that we have. But, I don't think people are really thinking about this from, you know, there's going to be a lot more of other assets on" }, { "speaker": "Speaker 2", "text": "chain, and that they're going to be a part of these DeFi protocols, and that if you're thinking about these protocols from the TVL and the value that they're kind of, uh, overseeing today and" }, { "speaker": "Speaker 2", "text": "capturing today, you're thinking about it from like a very crypto like a crypto first centric view, and not like a actual assets in the world view. It's just like, I mean, especially I I think" }, { "speaker": "Speaker 3", "text": "we could kind of play some of these games like prior to like chat GPT and robotics and space and but there's just a lot more interesting things, I would say, potential interesting things to invest in. And if" }, { "speaker": "Speaker 3", "text": "you're telling me this story of, \"Hey, I'm a special snowflake. I don't deserve to be run on a discounted cash flow model because I made people a lot of money and I'm World War III is" }, { "speaker": "Speaker 3", "text": "resistance.\" I just think that's Um, and I think the world will think that's And so, I think because it made people so much money that it gets this special snowflake premium for a while, but I don't think" }, { "speaker": "Speaker 3", "text": "that's going to continue for a decade." }, { "speaker": "Speaker 3", "text": "Maybe I'm wrong. Um, I I've been saying Ethereum's BlackBerry and since 2021. Um, it was actually funny. I applied to work at a bunch of different venture funds, and no one would hire me because I said I was" }, { "speaker": "Speaker 3", "text": "bullish high throughput blockchains. Um, I I I interviewed at a lot of places, and they're like, \"Dude, if you don't like Ethereum, and you don't like L2s, you're wrong.\" And I was like, \"Okay." }, { "speaker": "Speaker 3", "text": "Um, we'll see.\"" }, { "speaker": "Speaker 3", "text": ">> [laughter] >> I mean, there's kind >> man. Well, Where you sending me off on that one? I mean, I'm just making a lot of flips for you guys. I We appreciate that flip for this. I mean, I'll respond" }, { "speaker": "Speaker 1", "text": "to that and say like, look, there's there's obviously the low latency trading elements to this, but then there's also like the connecting disparate ledgers part of this. Yeah. I agree. You know, some of this is path" }, { "speaker": "Speaker 1", "text": "dependent, and you've got significant network effects here, where Ethereum is connecting ledgers across the globe. A lot of, you know, those ledgers have a lot of high value uh, uh, uh, of assets" }, { "speaker": "Speaker 1", "text": "on them. Yeah. Maybe Ethereum is better at connecting those ledgers, but Solana's better at propagating the information from those ledgers. Like, there's there's multiple things going on" }, { "speaker": "Speaker 3", "text": "here, right? Yeah. I I mean, you're right. The world's path dependent. I think I just come back to what can a low throughput blockchain do that a high throughput blockchain cannot do better?" }, { "speaker": "Speaker 3", "text": "In every single aspect, it's better. The only thing that you're trading off is you're going to have to have faster internet connections between the nodes, and the nodes are going to cost a little" }, { "speaker": "Speaker 3", "text": "bit more. And I think if we are actually serious, to your point, Robbie, earlier about let's build better products, let's not hamstring ourselves and say, \"Hey, let's run this on internet speeds from" }, { "speaker": "Speaker 3", "text": "the early 2000s.\" Uh, let's not run them on Raspberry Pis that are $300. Uh, TradFi's just going to continue to laugh at us. I want to make revenue. I want to make money. Let's have the number go up," }, { "speaker": "Speaker 3", "text": "and let's make products that people are actually going to use, and get out of our way of the ideology, and start building things that people enjoy. And I feel like Ethereum's kind of heading" }, { "speaker": "Speaker 1", "text": "that direction. Like, they aren't easy >> Probably. on the node requirements Probably. And so, do you you don't think Ethereum, with its whole scaling road map, can turn itself into a high" }, { "speaker": "Speaker 3", "text": "throughput blockchain? They can, but like, it's like, um, I don't know. You're behind. Like, they definitely can. I mean, nothing's like 100% nothing 0%. Um, I just think the probability of the" }, { "speaker": "Speaker 3", "text": "Ethereum community wanting to do that is relatively low. And maybe it's because they've been losing, in my eyes, and I I would say the market's eyes for some time, maybe they're more open-minded to" }, { "speaker": "Speaker 3", "text": "doing that, and maybe they change, but I I I literally think of it as we have started to, um, re- really, the industry went from kilobytes, um, which for kind of context, dial-up internet" }, { "speaker": "Speaker 3", "text": "was 56 kilobytes, and Ethereum in the past was doing 10 kilobytes. Um, so, slower than dial-up internet. Broadband was where you start to get into the megabytes, which is a 1,000x difference" }, { "speaker": "Speaker 3", "text": "in performance. Um, if you start looking, and we're kind of today today, mostly in megabytes land. Um, when people say like block space is commoditized, I largely think that's Um, what what they really mean" }, { "speaker": "Speaker 3", "text": "is there is block space, and people can use it, but the way that you actually monetize block space is through execution and through trading for the underlying blockchain. And so, the thing" }, { "speaker": "Speaker 3", "text": "that we need to now do is go from megabytes to gigabytes, and that's another 1,000x difference in performance. And I think again, like, if you just start studying like trading and trading infrastructure, like, how much" }, { "speaker": "Speaker 3", "text": "throughput are trading systems actually doing? It's like hundreds of gigabytes." }, { "speaker": "Speaker 3", "text": "And so, when you look at like, what we will actually need if we're going to move finance on chain, Ethereum today is maybe doing a megabyte. Like, maybe." }, { "speaker": "Speaker 3", "text": "Yeah." }, { "speaker": "Speaker 3", "text": ">> as far as I know, they're still doing kilobytes. And so, like, they're many thousands of X's off of kind of the scale if you're actually going to modernize the entire financial system." }, { "speaker": "Speaker 3", "text": "And so, I wouldn't say like, it's not a zero probability. It's just like, it's a different set of engineering, and Yeah." }, { "speaker": "Speaker 3", "text": "I I care less about the engineering and more just like the products and how big of a market is it actually going to be if you're successful. And it's why I've appreciated kind of the opinionated" }, { "speaker": "Speaker 3", "text": "point of view of some of these more modern blockchains like Solana, because they say, \"Hey, we are focused on trading. We know trading is where the value is going to grow. And let's scale" }, { "speaker": "Speaker 3", "text": "that. We know that we're behind as well on Perp's.\" And so, I think I appreciate Hyperliquid for taking a more opinionated point of view and saying like, \"Hey, screw the decentralization." }, { "speaker": "Speaker 3", "text": "Let's just create a Perp product, and make a lot of revenue.\" Um, so, I don't know. Like, it's it's not a 0% chance. I just like Ethereum I think is only relevant because it made people a lot of money. Um, and I" }, { "speaker": "Speaker 3", "text": "appreciate now that it's moving less towards ideology debates, but there's too many people that are still in kind of the OGs of Ethereum that I think will hamstring it and just not enable it to" }, { "speaker": "Speaker 2", "text": "be the best product that it could be." }, { "speaker": "Speaker 2", "text": "The boys revisit Celestia. 2026." }, { "speaker": "Speaker 2", "text": ">> Yeah, we'll save that for next episode." }, { "speaker": "Speaker 3", "text": ">> Looking for gigabytes." }, { "speaker": "Speaker 3", "text": ">> Oh, I can I can talk about Celestia." }, { "speaker": "Speaker 2", "text": "Um, They don't have execution." }, { "speaker": "Speaker 2", "text": "I know. I know. That's what I mean. The The Celestia and Solana war that happened is actually far more looking like friends on a similar trajectory than enemies as it was painted. E It I" }, { "speaker": "Speaker 3", "text": "mean, there you can have throughput, but throughput by itself is meaningless, I think, as Celestia has kind of showed. They're not able to monetize throughput by itself." }, { "speaker": "Speaker 3", "text": "The value comes from who can access any given state at any given time. Mhm. And because Celestia has specifically foregone the execution part in favor of throughput, block space by itself, I" }, { "speaker": "Speaker 3", "text": "agree, is a commodity, because you're just paying for bandwidth packets. If you look at bare metal compute providers and saying like, \"How much are they actually being charged for a terabyte of compute or terabyte of" }, { "speaker": "Speaker 3", "text": "bandwidth speeds?\" Um, Latitude, which is a popular bare metal provider, offers one terabyte of throughput for 64 cents." }, { "speaker": "Speaker 3", "text": "So, why should I pay more to Celestia or like a premium over just pure bandwidth?" }, { "speaker": "Speaker 3", "text": "You're not actually paying for the bandwidth. You're paying to get the best execution quality possible, and that just so happens to be enabled because of this unique design. And so, I think the" }, { "speaker": "Speaker 3", "text": "modular road map was interesting. They had the throughput part correct, but because they forewent the the actual revenue generating piece, I mean, you've seen the price action." }, { "speaker": "Speaker 2", "text": "Yeah. It's looking like Hyperliquid's going to flip Solana. We just did a quick check here on CoinGecko after you left, and I'm a bit worried about your leading position here." }, { "speaker": "Speaker 3", "text": "Yeah. I mean, I think uh, the going back to what I said initially when we started the live stream was uh, the main thing that you can actually control is your time horizon. And so," }, { "speaker": "Speaker 3", "text": "I think I mean, hedge funds, if you look at or talk with them, I think you guys do, they're all pretty much piled into Hyperliquid, and it is making a good amount of money. They built a good" }, { "speaker": "Speaker 3", "text": "product. Um, not discounting that by any means. They're making a good amount of revenue." }, { "speaker": "Speaker 3", "text": "I think again, though, the idea is like, can you build something that's better?" }, { "speaker": "Speaker 3", "text": "And again, that's where I think from the venture standpoint, you're taking a little bit longer lens and saying, \"We're not playing quarter by quarter." }, { "speaker": "Speaker 3", "text": "We're not even like thinking in one-year time frame.\"" }, { "speaker": "Speaker 3", "text": "How How can you build the best product possible, and what would that look like?" }, { "speaker": "Speaker 3", "text": "And so, again, I think there is really a fork in the road where the conversation is do you go co-location or do you go localize ingestion? And localize ingestion is again unproven and TBD if" }, { "speaker": "Speaker 3", "text": "it works, but I think it's the first principles correct. I honestly wouldn't be super surprised if Hyperliquid potentially passes Solana over the short to medium term. I think it's who wins" }, { "speaker": "Speaker 3", "text": "long term is the more interesting question." }, { "speaker": "Speaker 3", "text": "It's time to sell your soul for hype, buddy. Thanks for coming on. We'll see you soon, [laughter] all right? Brought me back on just to say to sell." } ]