The Ethereum Roadmap Wars | Will Ethereum Win?
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Vaginally is time for another bank. Less takes. We have been done one of these in a while.

And just as a reminder, these episodes are just like David in my pure, unadulterated takes, like taking a leave them. I mean, this is just how we're feeling, what we're thinking at the moment, not investment advice. You have any more disclaimers for the big change.

I think the vibe is like going and I do a ton of pocket together and then we need to reflect on the podcast that we've done over recent times. And so the big this takes is just kind of like a moment for me to ask, right hey, ryan, what do you think about the things that we've learned over the last month? And yeah for right to ask me the same .

also the topic today is the authorial road map wars, which I feel like we've been talking about since probably june or so. And it's part of this, this larger feeling that with encrypt, this is a sentiment type feeling that the theory is losing, that the road map is has gonna stray, that competitors are catching up, that a thereon and vital c beter need to get wartime serious and .

the thereon itself is perhaps off track yeah and we can need to be consider what track they are wrong.

And uh so we have evaluated this position. Uh v we've heard many of the the theory embarrass uh take this position, even folks that are internal to a serum inside the community who are also taking this this position. So I feel like now if we've considered this position and we've considered the um you like the counter evidence and the counter argument, so it's like maybe time to just talk and regenerate. So this is about the a theory road map wars and where we are and what we think about them and how they resolve and why I don't know about you, David, but why I at least i'm still bullish a theory.

of course, the only one that considering the large is considering this. And so even though some people are saying, hey, like actually the path that we're on, some people are saying that the path that were on is just the crash path. IT is still being articulated now differently as a result of the conversations.

So I think collectively, there's been some processing about the conversations that have been held. So we're going to get into all these conversations. But first, a moment to talk about our friends and sponsors over at b three. B three is a gaming ecosystem, a layer three gaming ecosystem built on base, but is also change.

Osc, think of IT like the op stack, but for games, uh and right now there are a plenty of just like kind of fun, quirky, addicting games, kind of like flash games, mini clip arcade for unities kids out there uh to go play uh and in addition to IT them being uh built on a chain, uh, there is also tokens, of course, but you can actually send some of these games to your friends and the b three basement dot on the website. We will spin up a wallet. They'll finger print your device in wallet so your friends can start immediately playing games and not think about cyp to. And then after earning XP, which is a token, and any other topics to go with the game, uh, that will be a crew to the wallet, that is, either you log in to or spend up for you and then you can go collect your token s so you can check IT out, bank to cc flash b three, uh, and started playing .

games that's called basement, get down to the basement. basement. Not fun and saw mood has A A crypto blockin game on here.

And I got to imagine, mood, how much moving XP have you required?

Well, look at all these tokens that is collecting. I imagine this r you can trade. So no, that sounds fun. Um alright, let's get to the main event here and talk about the red map wars, the theory, an red map wars. And I think we should begin this conversation to kind of recap the criticism so far.

find the problem yeah .

let's collect the criticisms and a the sentiment so far and let's do a good job of this. David, let's steal me in the case. And basically, if I to summarize the the sentiment and hyperboles kind of like a theory um is dead.

It's being squeeze. It's being outflanked. It's being squeeze on one side by you like bitcoin as a you like Better monetary .

bitcoin etf.

Yeah exactly. And on the other side by all of these alternative layer ones are kind of like fast later ones, which the cycle startling, has been as long up to this points as being out flat flinks as being. And I think there are maybe three reasons for this, at least categories of a reason that I wanted bounce by you.

And then, David, you and I should do A A good job of, like, I want to do a good job of steel manning the case here to get us up to speed. So the first is, this is an overall sentiment that a theoria doesn't have a north star. So some of other communities, like a song for instances, NASA on chain, does the vision. That's our north stars.

What are trying to build? What's the theory? Ms, can you articulate IT not digital gold like bitcoin is IT and that's the purpose of bitcoin.

Everyone kind of knows that he doesn't have a you like one line quip. Um you know there are alternative layer ones. This all about fast finance bitcoin, the digital gold competence just have a Better north star.

So this is kind of the collection. This is almost a vivie based narrative type of critique. Uh, and like that's that's the first.

The second big criticism is, uh, theer's road map. The creation of layer tools are creating these parasites. A layer tools are parasite to a serum is theory um the layer one once upon a time created a ton of value IT created a ton of east burn IT created a ton of revenue for stakers and now sense the emerge of layer tools and the migration of activity onto layer tools.

A lot of that value capture has started to approach zero has gone down quite a bit. Eat has been actually inflationary year over year. A defy activity has migrated onto layer tools.

Uh, there is less eat v capture for a serum on the layer one. And also later users, there are actually just distinct to block chains ah know centralize sequencers completely like differentiated block space. And so you base we report on this on the weekly prety frequently, base is making a ton of revenue and that revenue is going to coin base. Arbitron is making a ton of revenue and that revenue is going to the arbitrary um and uh in that same era in which the profits of layer tools are very large, those profits are coming out of the profits of of the year, year one as evidence by the net inflation that serum has had year over year.

yeah. And I think um the data sort of backs are at least to some of what you just said, but there's less free capture for a theory you use. The base is kind of making all the margin. They are really passing much onto eth holders and in the form of a like a burn or you know cash flows for if you're holder of east.

And then there is something to the case that altus, you know the theory community has been saying, hey, altus are a theory and they're right in one sense, but they're also like not correct in in other sense in one sense, I think they're they're right that altus are part of the a serum ecosystem, part of the a thorium economy. You know I I think there's may be lots of reasons to think they are net good for a the the network, but it's also not quite interchangeable. You know the blocks based on something like base, if it's A H your stage, stage zero or or stage one is does not quite give you the same a security and settle ministry. Ces as something on may IT doesn't in the reason why is because it's not all the way in your stage to so there is some potential ability to kind of like um you like for a you centralized actor to basically do something nefert's ous.

And I would also even to that even if base did become a stage to IT still would would be a theory. And like these are blocks. Bases are just different, their different block's chains.

They are not the same thing. They they are different fashion. And also, you know, the sequence CER is centralized, right? So so that's another a piece of the puzzle here. So I think that like there's some truth in in in the idea that a layer tools are not a theoria and also there's truth that layer tools are a theoria.

And so like this debates, they end up what is the theory um is up for debate.

okay. So we don't know the road map theo m doesn't have north star. These altus are looking parasitic at listen in the short run to either the asset.

And then the third one is uh a therion is fragmented. What what do people mean by that? We started talking about this uh earlier in the year with a like fixing fragmentation series. But what is the main criticism with theory feeling fragmented .

ah so the theory an road map which is to IT eventually produce hundreds of thousands of transactions per second, if not millions of transactions per second.

And we are achieving that scale by having a collection of scaling zones that when you add them up, maybe we can get to a million transactions per second, but maybe that's because you actually add ten different rolls ups that each have one hundred thousand transactions per second and then you an aggregate to get to a million transaction prosecution. And that is fragmentation is not exactly what people thought about scaling into a million transactions per second. We people want million to transactions processing like on the same network, in the same spot, in the same way.

Ah so well, the third road map is like, well, we can get a million transactions per second. But IT comes from these different corners of the internet is actually not in the same spot. And so this whole multi chain U X.

Has emerged, uh bridge hopping using a cross to go from one chain to another, which takes time. Ah IT creates like derivative assets. So there's like arbitrium m USD c there's optimism.

USD c there's optimism is and you can like accidently bridge over like an optimism derivation token onto arbitrary and then it's another diva's token. But then that token is also on the layer one and it's a different one. And so this fragmentation emerges uh and it's just a terrible U X.

Uh, also liquidity fragments, like when everything is in the same unit of pool, liquidity is much Better. But when we have like twenty different implementations of union across many different change across the theory, that's just like IT provides poor execution, is literally a worst financial product. Uh and then.

In addition to all of that, in addition to the fragmentation, like some of the best places to execute your defi trade or to do your activity or just somewhere else that you are not a and then you need to go take steps to get there. Uh, and IT doesn't really feel some people saying, well, this doesn't count in scaling. If you if you need to add in many, many, many networks in order to get a million transactions per second is actually count IT should actually just be this good, this one seamless network and we scale that to to a million transactions per second. And that's not what if the era is doing so that's kind of like the whole theory rag mental concern yeah.

the wallet you actually hasn't caught up to this throw is kind of like messy. I mean, you know that that can catch up but that this ve people's lived experiences is every layer to feels like a sort of as a separate chain and you like starting kind of from scratch.

Also add to this this feeling of like, well, you know in the old days when someone who was getting on chain for the first time, you had one place to drag them, just come to with here, right? Or now, where do you drag them? Where do I start? Is do I started in bed? I started on arbitrary? Do I start on k think stack? Or if i'm a developer, where do I depend my application? I have all of these different chain options. It's no longer simple as IT was in the days where there was one a thim chain and one may not. So from that new perspective is fragmented as well.

Yeah, application developers don't want to also have to make a bet on the which they which horse they think is the fastest in order to deploy the APP. They're up.

They just wanted deploy APP. okay. So all of this critics will say, explains the chart i'm looking at. This is the bitcoin eth biton ratio.

And IT has been going down for the last year of the day in the and the last two years, right? And so this is there in being being squeeze by bitcoin, as you like, a monetary asset. And then other side, if we were to look at the east sole ratio, the so east ratio, that would be in opposite direction.

So so solena and some set of alternative lair once have appreciated, uh, relative to either over the past like year to like twenty four months, you like some rather significantly. So this is an example of evidence for everything you just said. So you know the criticisms that we just likes said, well, the market degrees with IT because look at what you like, what's happening in the market. And if IT looks like either the asset is being squeeze between other uh assets and also importantly.

like you are actually getting this if B2C rat io fro m max rez nik, who is explaining that this is evidence as to like why the current theory an plan is actually fAiling. This is a twitter thread that says in a competitive environment with network effects, we cannot afford to tank for years and cross our fingers. IT didn't work for pocket t IT did not work for Cosmos, but maybe IT might work for us.

And he saying, no, they didn't work for them. It's not working for us. That's why we need to scale the layer one. And then his evidence for this is the either bitcoin ratio. And so people are using Price, but clearly Prices down, therefore, something is wrong.

yeah. And I think we've fading up with of gas that have made this case. Max resting is one there, as somebody by the name of bread on twitter, is just like very active in the space.

John sharbono, in some of those, the characters I would say I sort inside the community, inside the house they are working on theory related projects are traditionally friendly to a theme. We've made the case and have some compelling arguments around this. We've also had those that are like you, traditionally very antagonistic to the therm community.

People called money. Obviously you know making these claims may be for different reasons, people to argue. But um there have been some pretty good articulation of these claims.

I guess let me just ask you what we're in the steel man zone right here. Of those three, a theory doesn't have a north star. L ties are parasitic. A theory is fragmented.

What do you think are that like the most compelling? Like what what are the most accurate you like takes out there? And what are the sort of the, you know, most compelling arguments.

probably in the reverse order that we articulated them? So starting with a theory is raging ted. That is a real problem that needs to be addressed head on. Uh, later, tues are parasite to eat.

I'm not going to call a problem, although IT is worth noting the changing economics around either the asset and and just paying attention to what's going on there. I think we'll circle back around to that part of the conversation later. In episode theory, m doesn't in your star I think is actually the weakest um people like their means.

So like so long as nas dack on chain or decent as stack vision is like easy to articulate. But I also think just like it's one of those things were like if you optimize for decentish zajc, you accidentally ally are ignoring some things and then you actually just walk yourself off of a Cliff because you're ignore those things. Bitcoin is digital gold.

Bitcoin has also been very always been very simple. And so it's very easy to mean etherium has always gone for like one of the more complex visions, the most complex road maps. But that doesn't mean it's wrong. And just because you can't consolidate like a road into a mean uh, doesn't at all mean the north star isn't there. Yeah, in one thing I say.

I might praise a little bit differently rather than complex red maps. I might say ambitious read maps because when you look at the there in road map that truly is ambitious and and let's pause, well, we're still talking about this and acknowledge kind of a like a counterpoint to all of this because I want to access ledge this because I I want to get your assessment of how much of a factor you think this is actually playing in this.

And this is an alternative explanation for all of the criticism and sentiment. Eats is dead. He is being if is being out flying that we just heard above is basically, David, this Price drives narrative, all right.

And so like we are ah only talking about this and we only have this level of of criticism and sentiment because eat Prices down. And so we're looking for an explanation. Do you like trade? Five media does all this all the time. If you go on C N, B, C stock markets down, there's like you twenty analysts who have the reason why the stock market is the most.

Jason, reason why the Price moves in that move and .

sometimes IT is related to to that move. But like a lot of times, it's just part of the random of markets, right? Just like markets go up, markets go down, they don't perfectly reflect um all of kind of the accurate, unique fundamentals.

And so some people would say the only reason these criticisms are actually being surfaced is just because eat Prices down and this is all sicle. This is short term. There is not a long run and the conclusion is just be patient just way.

And some within the here and community are business saying, well, all of these criticisms, Steve en ryan, why are you even platforming them on bangles? They could be safely ignored like just ignore them is just food and like, you know don't worry about IT what's what's you're take on that? To what extent do you think that is a factory in here?

Well, the eb tc ratio has been tone for two years. So at some point you have to ask yourself, will have random of a walk. Is this like two years of a random? I do agree.

I do agree with the point. I like we are I actually kind of said this in various capacities of people have disagreement with with with me. But I we're in a bear market. We're in a bear market, maybe were on bar market Prices, which yes, that's technically what a bear market would be. But I we're a bear market of like user adoption, where in a bear market of mainstream attention, or at least .

we're not a bold market.

We're definitely not a bold market, right? And so inside of this kind of like insular two years of cyp, to of which there has been not any new users since twenty, twenty two, twenty, was time we got new users really like maybe people got pulled into mean coins, but not really. And so inside of that environment, we haven't had any fresh and new blood.

We don't know what the outside consumers want. And so I think there there is some great to the idea that like you can kind of random walk pretty far inside of that void of an adoption bear market. But nonetheless, two years is like a long time.

But I think it's irresponsible to say that because max resonate in my debate with him and permissionless made this point, we're like, uh, maybe maybe Prices are down, uh, because of this third thing, which is that the actual world map is on track, right? Maybe the road map is off track. Uh, maybe maybe the fragmentation and the Prices are actually related to each other.

Maybe those are down because of the same thing for the same reason. And I think like if we want to be proactive and not rest on our law als and lean into the fact that like guess, the theory has a road map that we need to execute change uh, and we have the opportunity to consider the changes that we are executing and reevaluate them on a case by case spaces. We are not bitcoin.

We are not setting a north star and the very genesis of our network and then tunnel vision our way there. We are considering steps along away. We pivoted the idea, romp pretty heavily in twenty and twenty.

Uh, we have this option to let consider the choices that we're making. And so therefore, we should do IT. And as two years of a downtrend of Price downtrend in the bitcoin etha ratio continues, we should be considering that more over time. And so at some point, Price does become signal, not noise.

You are talking me about the bitcoin eth bitcoin ratio, but how about the sole eth ratio as well or other alternative blaye ones, which you say the same?

yes. So the so east ratio has been going up for one year. The east back on ratio has been going down for two years. And so yeah, are you are seeing signal on different corners of the critical industry?

I mean, I have to agree with you there. I I think that would be and just like not in the best interest of a theory to just ignore all criticism and dismiss IT as food like IT, at least you have to um like. Look at that criticism and see where the merits are in steel man in the case.

And then kind of like access, though I will say like I could be up to seventy percent of is like actually you know Price driving narrative here. And we'd be having a very different conversation if Price was the the other direction. And so there might be something like going on and there might be some matter to that. But i'm just like not in a place to like ignore that.

Well, like why would you do that? What you then create is kind of a you know a environment in a culture that is like immune or criticism and you never pave IT, you never change and you never adopt and learn and I don't think that is a good place for um you like egypt or network to be. One other thing I add to this is I think there's some unrealistic expectations out there as well is actually something that Cosmo's said in our conversation and I somewhat like agree with he's like you either is a three hundred to four and a billion dollar asset right now OK.

And so like last cycle, a forty x gains from the board of the top, you know, like a hundred to, you know, four thousand and five hundred. Something like that was the, if IT IT rose that much, you can get forty five, forty x gains. Every single cycle is just like it's too big.

And so I think that there are some people that are first cycle ers and they're looking at either the asset and they're like, okay, I hear what you're saying about either being a good asset but is not going to like may be life changing money. And the reason I came to cyp tos as life changing money. And so like I think that there is some mismatch there.

I don't know that valid because that is A U. S. Dollar anchored Price reference point. And the anx coming from the authorities community is coming from the ratio of market caps compared .

to big coin a OK. But so I would say it's more accurate for the um the so show and like the lower market cap, alternative lair ones like basically your base case should be uh a hot l one that's alternative themes can pump more than a third cycle in any bull market environment. Ment coming off like five to twenty billion, something like this, right? I mean something .

to hate billion when a of cat IT .

s IT was so overall, right? And so you're coming off the bottom and is a much smaller market cap asset. So of course, that makes sense. Now I will agree with you though, David, that you you can't wave the .

the bigger billion exactly anyway.

You probably didn't drop below what you two hundred billion or hundred fifty billion or right. So like when you're four is four billion, of course you're going to fifty have much more upside potential. But but you are right in a IT doesn't um like know that argument doesn't hold sway with the ebit coin ratio.

The fact that bitcoin has been over performing is like like significant anyway. Um I guess we're both of the IPO ion that we can just feel like dismiss. All this is for approach .

things had on you do hard things. That is a generally the most proactive thing that's just general life advice .

is just like donor into the criticism I an to IT like, yeah okay. So as a result of all of this, some people are proposing road map solutions. And I would say both people internal to the american community say we might need the in and also people external. So when to talk about all that and more, but before we do, we want to think the sponsors that made this episode possible, including our recommended exchange for twenty twenty four that is cracking, go creating account .

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So we're back, I would say, inside the community were talking about the road map. Inside the community, the theory community, there is the montreal of make the l one great again. People like max ernie, are you repeating this often? And this is the idea of prioritize l one execution a little a bit more like we have on the the theme side, really prioritize layer tools and data availability and blog space for layer tools.

And that seems to be the continued trajectory of the road map. And so some within the serum community not come back to the layer one. There's some more work we could do here.

Let's not for sake execution on a thems layer once that's kind of the general philosopher of those inside the community. I would say those outside the community, those not a like invested and excited about a theory um are basically like a there was an old horse like just give up and die. It's a buggy.

There's all of these faster block chains and just like you know, you will be um legacy tech. It's all about the test. It's all about the tech, that sort of thing.

So they're just kind of give up and die. The center coming from outside the community. But that's how I would summarize the proposed solutions for the road map. But what do you think this these road map wars are are really about because you think there's a underlying logic to IT in some prize thing that were actually for here.

I want to reframe a lot of the conversations that we've had. Uh, the road map wars, a wars implies like something that we're fighting over. What are we fighting over? max? Resonate will say we're fighting over layer one execution. I think really a lot of the debate is should be reoriented around defy um and this is something that I think is very near and dear to both of our hearts uh if you're created defy, we both I think were very pilled when we both minted die for maker dell and like, well, this is amazing.

I mean, bank less itself is kind of this very special thing that is coming out of crapo uh the idea to break finance out of wall sty and democratize IT and put in on the internet as internet protocols is something that deeply motivates like me and ryan. I and I think this is just like fundamental essence is highly related to cyp. Do you can't really have cyp do without defy, like defy is so important. And so I wanted actually reframe the entire row. That s is like we are fighting over defy and being the home of defi.

And I also want to illustrate, dei is like, kind of this like one of one object, this this goldin guse that the theory um the serum layer one created currently holds but is potentially under threat of of losing uh and it's under thought of losing by its own design that's the kind of the role epson tric road map like we are going to give this defy one of one object up to our layer tools. Uh, or maybe we actually lose IT in that transition to layer tues, actually lose IT to sana in a different network as why is defy a one of one object? Uh, there is efficiency network effects when IT comes to defy liquidity but begets liquidity.

There's that me that like if if anything has the most liquid market is going to do attract further capital to exchange on that market. So liquidity bega's liquidity, capital efficiency, but gates capital efficiency composition order bigazzi sibling. And so when we were getting into defy, we had this concept of money like us, right? Like uni swap could work with, maker dow could work with, evy could work with, like anything else that's built on the a theoria layer one.

And this composition service is something that you could find encysted to, that you couldn't find, uh, in traditional y and so there is this idea that the the epic of the will just be in one specific spot, kind of, we've been wall street, be the home of finance. D I has this one home finance. And right now, IT took this day IT is the a terminator one like the metric just point to that being done no matter what.

But on the margins, we've seen the growth of defy happen elsewhere. So even even though that the ATM layer one is the dominant loki of defy, we've seen a lot of new defi be grown on arbitrary, a lot of new defi be grown on base, new that defy being grown on salona. Ah so even when there is this intense network effects around liquidity and just like dey capital efficiency inside of the year one, we are still seeing the net new growth of if I happen elsewhere and defy the reason why I call all the golden golden goose because IT IT has all of the value.

Defy has the largest transactions. IT creates the most M, V, IT produces the most reservation demand for a natural asset. They eat the asset for a serum salona for the salona, a later one. And an opinion the bank of thesis has been defined, actually can create money of the respective layer. One like defy is the thing that a theory um has that bitcoin does not and has been a huge component in the e has money theses like either will be able to have financial ze itself using its own home grown defy economy to be a Better money than bitcoin. Where is bitcoin kindi ds coin base or cracking or as a centralized Operators to financial ze bitcoin the this is kind .

of like professor mean idea of a either the asset being a high quality liquid asset for device specifically in the idea is when you have when you're layer one and when your like economy has to centralize finance IT doesn't have to sort of really languish custody to egypt to bank for for learning and and borrowing like a self cius for instance, or an F X for for trading, right? You can have a decentralized exchange to all of these things. And that's basically the bank less thesis.

What you're just describing here. And this is the thing, like I said, IT produces so much of the value that block chains really want to capture. IT produces IT, produces transaction demand and produces large transactions.

These large transactions produce second, third, fourth, fifth order consequences in terms of M, V transactions. So so much activity happens, which ever blockchain can be like the wall street for defy. And something that we've learned is that defy is also strictly Better with fast, cheap execution, fast block times, cheap transaction costs.

Uh, slow and constrained blogged chains actually don't produce good defy. Uh, slow constrained block chains produce more M, V than what's necessary. There are less effery ent markets, their slower liquidations.

There's slower liquidity bouncing and IT costs more for users, which constrains the total supply of active market participants that can participate in this like defy economy, which also therefore reduces the available capital for this economy. Some applications, like perps options, clubs, central element order books or anything complexity requires low a low fee, fast block times. Block chains, Better.

X is Better. U, X also just, users just low, enjoy the U, X is Better with low fees, fast block times. And so for this reason, this has been part of the push for, like the the max resident push. I've like making the number one great again. Optimize the authorities layer one for def I uh and uh well, going through this these like series of a episode des, I am kind of compelled by that where we have been very constrained at the a serum layer one and we have kind of really incentivized people to migrate to with their in where are and so arbitrium is proudly beating their chest to be the home of defy for a theory um uh and so it's if that is true, if arbon does take the one of one golden goose and IT captures the network effective of defy well then you kind of go back to that's good to still insist the a theory ecosystem is good for a theory um but is also not as good for a theory um because of kind of the concerns around the parish nature of a theoria relux well then the value of the I goes to the arbitron down which is less credibly neutral uh then if IT were the much more decentralized a thim layer one and so this kind of been like why execution has been uh a very prominent of the subject of these debates.

Uh but also I think why what we're really collectively fighting over is this golden guse of of defies who wins defy is that going to be sona is yarm giving IT up apparently because the road map is saying we are going to continue to have solo stakers at the layer one. We're going to continue to have twelve second block times for the foreseeable future. We're going to continue to to prioritize centralization.

So therefore that what people are saying is that choice means that if theory um is going to give up the layer one though the one of one golden goose and who captures that golden goose, IT could go to these VC funded ler tools because is arbitron optimism base are going to squabble over defy. Uh, so lona is also going to fight take after that one of one golden goose and so rare defy goes has been a part of perhaps why the east BTC ratio is down, the santa east ratio is up. H and then people are talking about their fragmentation of the layer to landscape.

I think there's one semantic inner definitional element that we have to talk about, which is when we say define, what do we actually mean? And I think there's like two types of a defy that people mean and trip down the'd sort of blends these things together. One is what i'll call like strong defy.

Like defy was strong settlement insurances. And the other is kind of like defied light, uh, light defied does not have strong nation state resistant settling insurance as strong defied does. And again, when we say settle and insurances and kind of like property rights and you know these types of things IT basically means the uh I like the inability for any third party actor to steal sensor in flat, cheat in some way the the participants inside of that network.

And when I say a strong defy, what I mean is at the nation state level, like a nation state actor does not have power to steal, sensor or inflate any the property inside of that blockchain network. okay. So it's like the highest grade security you can get because of the nation state level.

We're Operating in kind of the either the rule of the jungle and it's all against all. And so there is like incredibly powerful forces that would like to try to manipulate in control a property right system. And if they can't, then you are nation state sovereign resistance.

You have strong defy. And I would say that only two chains right now have passed into that threshold of of being able to hold strong defy. One is bitcoin as evidence by the fact that you have countries like l celador.

With bitcoin, the use case as a store of value on the central bank. So they're using bitcoin literally to defend against other nation states from a store of value perspective and then a therein which, in addition to the store of value properties, hasn't been picked up by a central bank yet. But as censorship resistance against even things like o fax sanctions, so of ax anions, a set of smart contract, those blocks are still built within a thereon.

Everything else besides a therein in bitcoin has not been tested at the level of nation state resistance um like sovereign ni. And so a lot of the other category of block chains are just Operating in kind of a defied light type context. Don't work as long as the nation states cool with IT, as long as it's not like illegal in some particular jurisdiction.

I would even say that um thorium has been tested in ways uh that bitcoin has not there has been coin join mixers, big coin mixers, bitcoin versions of tornado cash that are centralized companies that have been shut down in seized by the FBI.

A bitcoin has always been higher than the level of the nation's day for b tc, the asset, but it's also been a long time binkle is that will actually bitcoin defy is actually quite a neutral is actually quite stunted, hence why theory um defy is this very valuable place. So there's actually only one defy ecosystem with smart contracts that has been able to Operate antagonised above the level of a nation state and even a theoria layer tools and all other other ones have not pass over that threal. So there's actually only one economic zone, the a the liar, one that has a strong defy. Everything else is gonna be like weak defy is going to defy light. And then I think .

strong defy is necessary if you trying to create a store value or system for you like the the entire world. And so when you were talking about like defy strictly Better with fast, cheap shared execution, that is true holding all things equal. But if in exchange for that fast, cheap shared execution, you are making compromises and you are leading to a more centralized system that can only support like defy light, weak defy, well.

what have you really gained? Yeah, that's not really why we're here. That's not why bank class here, and that's not why we believe the cypher is here. So there is question.

I would say of, like, what does the rest of the world want? And I would contend that the core of crypto is always going to be something that Operates outside of the the nation state and provides, you know that great of security.

Or else, why do you not use like a permission fin tech, uh, database with a set of a and anyway, this all leads the question of what do we do with the road map and what are some of the like? So scale that l one continue with the l two course that a serum is on, taking all the context, everything we just went over, what are the what? What's of the what do for a serum? From a red mac perspective.

these two camps have divided inside themselves, but the two large camps are, we got to pick with their own map, let's ale. The other one that's one side that's like the next dress, excite of things. And then there's the stay, the course. This is just noise.

Just grow the layer to may maybe this is also, this is the noise camp is also the well, this is actually just the growing pains a camp this is the side of things really the going through beauty actually tough IT makes sense that the eat ptc ratio is down in this present moment of time because we're doing this weird transition, this weird hands off of defar from layer on a layer two um but actually that the Price actually make sense because we're doing this like evolution thing where we're shutting one a of here for another. Um the pivot, the road map has garnered increasingly more energy over the last like year or so and especially with max resident getting really spicy on twitter. Uh, so what about that? What about that? Can we just like juice the layer one? And there's like two different ways to do this.

Uh, there is the max reznik A F the solo s stakers path where he says solo sakers are unnecessary. We don't really need them. They're actually slowing down the network. Solo sakers have captured the theory and which is kind of funny. Um and then there's the variety in scaling the theory road map path um which turns out we actually are scaling the theory later, one that is actually the current plan and also is worth noting that pollentia, I think wrote the best etherium layer one scaling roadmap article all the way back in december of twenty twenty three. So coming up on a year ago.

And they just write a very conscious articular somewhat technical theory um layer one scaling plan where at the end of this road map, the part of the earth ian road map that scales they layer one uh that we end up with this uh nark fied mr one which makes IT which takes the power of Z K abuse IT into is a theory um and makes IT like zk theoria and at that point we can like really take off the breaks of the a theory layer one and I have very strong execution capacity at the very one, very fast block times, think like two second block times, far faster and firmly one. And that would be pretty powerful. That is the current plan, which then kind of goes back to like, okay, then what's the issue here? This is the plan.

We are scaling the aim later one. And then that resident say, well, yes, and we need to prioritize the layer one today, not tomorrow. And so what what do we need to do is we actually need to prioritize later one execution right now, instead of prioritising layer tools so hard, we keep on prioritizing layer tools.

Arbitrium is just taking the defied golden goose away from this year. Layer one we're giving to them for free. We don't get any of that value back. Why are we doing this less to scale the layer one right now? And that's kind of like the contention the point of contention, I would say, is like can we scale the layer one in the way the maxic once today?

And that conversation has kind of concluded in the idea it's actually banned with that is the reason why we cannot scale the a theme layer one without losing a critical massive solo sakers. It's actually not hardware that's the constraints is banned with. And so that is the current if eight like phase of the your own research right now is how much slack is there in the system, how much can we scale the layer one through put with without kicking off too many pet participants in the network.

So that's like part of like where this can conversation has gone to go research. And then there's the growth layer two path, which is, well, we also competing with celesta. And celestica has so much blocked blob space that they have influence, lack for all of these roll ups to come deploy on celesta and serum has three bobo bs purse slots as three blobs every twelve seconds.

And this is the vital c take, as well as we actually need to prioritize growing blog space because we want to prioritize the roll epson tric road map as we always have, because we are almost at target of hitting three blogs per block. And if we hit the target of three blobs per block, then blobs starts to can become expensive and roll up, start to have to pay higher fees, and then they are at risk of using a different data availability solutions. Blob space perhaps the less is just leaving the theory um lokey of influence and going elsewhere. And so we need to prioritize blog space because we want to prioritize roll ups because what does that do that creates more centuries of resistant blog space, block space and allows more roll ups to block them out of the atherley a one. And what is that north star that nor star is growing the total agreed economy of the theory um that is the four, four, four strategy that's what day charting is that was love spaces is that with blog space we can grow more chains to be secured by theory um inside of the a theoria umbrella a and that that is growing the a theory economy which is the correct way to grow the most value and so these are kind of the different directions that people .

are all kind of tugging serum in. Yeah I guess my taken in hearing all of that and all of the debate is like etherium is both scaling the l one and it's scaling the l two. But it's not um it's conciousness not for seeking sort of the the properties that make its validator set um like special to centralize, just things like a solo staking and being able to verify the client and like you like a pretty small eli card wear footprint, right?

So it's not giving up strong devi.

Yeah, exactly. And it's it's kind of always been doing that and but it's not following the path of alternative later ones. It's just like still more in the the vintage of of the bitcoin strong defy type of a mindset. So in this world where a theory um skills that are won and IT scales that all two but IT doesn't give up the centralization, what do you think the future of that back to that golden goose where where will defy be in this world?

yes. So this asked the very important question. And in the role of centric robot, where will defy be hosted? Um because we are prioritizing layer tools. So where's what's the role of layer tools in in the hosting of defy?

So there's one possible future which we're kind of currently at in the of human and scape now, which is a low number, few large scale generalized roles, maybe even one host defi, they are the home of defy. And right now this is like kind of arguably uh arbitrium m says it's the home of defi. Maybe arbitration has the one of one golden goose where all of the value of defi aggregates base is also a in contention for for defi here.

And I kind of find this outcome less desirable, not very desirable, all actually just because, well, we have the faster blocked times and lower fees that's really good. But neither arbitrary nor base are credibly neutral at all. Those are those are that's gonna be weak, defy like neither of these things have really been tested by the nation day arbitron.

The deal has not been tested by the nation state to sensor transactions, but coin basis, a publicly traded U. S. company. Like I don't I think not .

with the centralized sencer, right? It's not going to be you know strong defy with the centralizing CER. And when you're kind like stage zero, stage one on the ultimate right H D sexualization path.

yeah so so in the model of a few number of large scale generalized role PS, I I find that even with like stage to decentralized sequencing, like i'm still concerned that like having one single roller being the home of defy is not strong. Defy is not credibly neutral. L, S, definitely not credibly neutral defy.

And you can kind see like why the e salona easter ratio is up because maybe people are saying, like, well sanker's more defy and this can be a stronger form of defy, then arbitral mr. base. Uh, and so that's that's bullish soul.

Uh and so maybe I D answer that question there. That's one possible future, which is also kind of the current future, the current state of things, state of play in the theme roof center program. There's another possible future which are much more bullish on which i'm hoping is coming.

And there are signs of IT coming, which is a mesh network of APP chains. And we're seeing this with the deployment of the uni chain as well as the frontier of bed roll ups, which is starting starting to get underway. And I kind of see these two futures as opposite ends of of the same spectrum.

If there one resource costs are high, as in, like, could we have a constrained decentralized layer, one that we currently have, then this kind of favors the former, pushes a lot of defy activity to one layer to call arba trump. But if if we really scale the layer one, if the resource costs are layer one are low, that actually incentivises the latter, where all these APP chains can use the very strong execution of the a serum layer one to have stronger sequencing, stronger compose base. Um and so even with in the reason why I favoured this, a mesh network of f chains is if every single defy APP that's useful, call IT of a maker, dell uni swap, which now is uni shane.

If the applications that are defy all have their own chains, all independent chains, and they're not going to like one ecosystem, just they're not just going to arbitrary, then I think we preserve in that model credible neutrality. Uh and it's actually still a theory um that is holding that defy golden goose because it's a theoria. It's doing all of the sequencing, all of the composing of all of this mesh network of APP chains and especially as we get into bed rolls, which based rolph do have near perfect cross chain uh execution, a based roll up of application can instantaneously second based role application through the A C M layer one.

Ah and but then we go back to like what we actually good need to go back and scale the layer one because we need to have fast, cheap transactions for these APP chains to compose their defy. Oh, that's where I hope we are going. That's more credibly neutral to me, is strong defy, because in this world, a like of stage to APP chains h they are century resistant. They inhered the properties of the etheria layer one. And then, like the defy layer one, the defy golden goose is kind of obtained by the a theme later one.

Yeah I think it's super early. Is you like one thing i'd had to that the conversation I don't think any like chain is close to winning. There's also like these economic zones that are kind of forming like um even if, let's say arbitrium is taken to lead right now, we haven't seen what the kind of the Z K sink economic zone might look like in the future or like you know the optimism super chain with like base in our unit and the opp man, the whole bunch of others. So there is going to be a lot of growth here.

And I think also just like that, growth is good as long as kind of like many different parties and it's somewhat c there's no one party that kind of like a controls everything or one chain where where all of the the device state kind of a cruise. I guess the other question though is um what about either the the asset? So in a world where altus are maxed out and whether that's in the form of sort of altus with you know h centralize sequencers or if there the decentralize sequences in their bed roll ups, that kind of thing, what what about eat the asset? Like what's the future there? Because that that was part of what the the main critics criticism is. Ban is just like none of this world lup center grade map stuff is good for either the asset from a value of crew perspective.

So this is actually something I think I learned something from the coast moni episode where he he talks about how all the software, the software costs are going to zero. Execution is going to zero, data availability is going to zero. Um cause when he doesn't think that MV is going to zero, but I think he's wrong about that.

MV is also going to zero. At least when the protocols perspective. So blogg chains won't capture M V, applications will capture M V. And this is evidence by exactly why unus what made union chain sevilla is making applications specific sequencing.

So if all of these, like resource capture value captures, are going to zero, then what's left to capture value? And the that answer is, well, the apps actually capture the value. And the only thing left after the apps capture the value is like the equity tokens that govern the apps.

So the uni tokened that govern the uni chain and money the money that's flowing through these apps. And so the money IT becomes the money of these applications that are capturing value. And the applications are capturing value. Hopefully this like mention network of APP chains that I was talking about.

And so this is kind of why we I think I think the bank this is, is that all layer one tokens eventually converge on money as the model for their value capture, they turn into money for their ecosystem. And I thought this, uh answer from, uh, don't creat in the recent enterie researchers A M A uh uh M A on on redit was really interesting. He kind of played out the case that in order to in order to have eat value, a cruel and or the yes set, the authorities economy needs to create value.

And to me, what that means is that we need to grow the GDP of the theory m by scaling out blogs to host more block chains that settle to a theoria and that create valuable applications for apps to capture value and use either as money. And so i've kind of been piled on this idea that like the way the eat becomes money is that the a theoria economy just generates more value. We create more value.

And right now, like what we always talk about this, what's one of the best business models has been created ever since, batches, selling blocks, space. And so in order for either to become money, we need to sell as much blocks space as possible because it's going to be all the applications that after that capture value. And the only thing that left over is money because execution is going to zero. D, A, is going to zero. M, V is going to zero.

Yeah I mean, I I pretty much have sort of that's what i'm betting on basically that a later one tokens are actually like monetary assets in like a big way kind of big coin got IT right right? Which is like you, bitcoin being a store value type of asset. So I I think maybe to conclude this conversation, this is A A bull case.

Let's talk about the bull case for a three going to twenty twenty five. And for me there maybe like four, five things that really pop in my mind. The first is I think the theory bread map is stronger than people think. They there's a lot of uh people there that don't really understand what a theoria is building towards or don't understand its its north star and like Whites making the choices if it's making, but it's making very like long term choices with no shortcuts.

And you can really see that when you go through you know recently, the hotel has been posting about a blog post on the different you know faces over the different swiming es of the three roadmap that the surge, the charge in the perch and a lot of the considerations that we've talked about are kind of like embedded inside of the decisions that the theory road maps is is making. I also think that the plurality of all of these l two experiments where we're just not it's not just one evm execution layer, but all of this experimental the execution later, I think that's going to pay dividends in the future as well. Like it's just a cambrian explosion of different experiments.

And some of those will hit and some of those be incredibly successful and propelled innovation for IT. So that's the first thing. The second is a lot of the problems that we talked about early on, like particularly the fragmentation tight problems or the altus, are still decentralized, still centralize, the they're not stage to yet. I think a lot of that going to be solved in the coming like the next twelve months, right? So with lots of different bank less episodes on this.

But I can see in twenty, twenty five kind of this reconvergence of liquidity first in sort of these economic zones and super chains, but then there's technologies like a glaire we also mentioned like based rollers, which you if you if you become a based role of kind of solves the fragmentation problem of the box. And so we're going to solve that. I think we'll see a lot of altus move closer towards stage to as well for regulatory reasons.

They don't want all of the responsibility that um being centralized a kind of like requires. And then I see a bunch of major catalyst ahead for a third. One is we've got this nice healthy cycle of D A G because the theory um upgrade ds state availability um and then that induces more demand for later to b block space da availability which causes etherium fees to go up and then a theoria releases another no D A upgrade.

And this is kind of a virtuous cycle. We're going to get a future D A upgrades for a theoria with like a full charting and peer does that sort of thing. And all the while, this induce demand is actually doing what you just said, David, which is it's not only creating fees for blocks space, that's kind of like a temporary type thing that just uh absence flows, but it's creating in induced demand for uh either as money instead of these virginy l two economies.

So right now there's over like eleven billion in either being used as money inside of the l two economy, and I don't think people are looking at that. Um so that's huge. It's also notable that theory um is winning many the altus over.

I mean that is the l two chain, right. So it's it's building this uh complicated no l two economy on top. And I think people aren't seeing that um either is a monetary asset right now.

So that narrative is fully left the barn with a respective of bitcoin right ever knows bit on a digital al the ad non sovereign ore value. We have even scratched the surface of that narrative potential for either the asset. And I think we will as these types of things become self evident.

And then you just mentioned based rolph, I think next year's going to be a huge year for based reliable SE. Uh and uh again, out of the box, you know just drag called these, it's like a smart contract on the theory, but side on the theatre. But inside of that smart contract, you have cheap transaction fees.

That's one way of of viewing IT and is really interesting, more aligned through aligned like design for for roll ups. And then of course, you have like the fact that a theme just feels oversold right now. It's underrated.

This is the most bullish one.

The mean will revert. A lot of the criticism is is overplayed. And so you want to sort of be um looking at the asset when there's like panic but in the streets, eat is dead type tok.

Like if you did that when so soul was at its know four billion market cap, you be doing well and they're simple. It's not quite that level, but there's like you know similar sentiment going around about you are right now. So that to me positions uh either for upside in twenty twenty five of course none of this is financial advice uh and like having no idea but um I know you still filling coffee.

I think betting on a theory when a theory is contrarian feels like home to me like i've entertained to the idea of like, maybe I, maybe I just buy a used later one, you know, maybe, maybe I just bet on that horse and then I entertain that idea as far as I can, as long as I will go. And now with here is going, he's all going to come back the theory um so like i'm just going to get my way there.

I mean, I I really like the road map and if I would have summarized the road map, it's scale, the l one scale, l two scale. If you're economy scale either as a monetary asset inside of this economy and do all of this while preserving the decentralized, that makes cripe to special.

That's which has always been the plan. I has always been the plan.

but I feel like for me, that's what i've come at the end of this cycle of episodes on, kind of like a theory road map, like which way what do we do I mean, feeling it's actually in a pretty good spot.

I think I think I would agree. I think maybe there's one exogenous factor, which why is there is a whole episode to talk about here. But um what is the environment in which crypto industry is entering into as the industry entering into a more hostile maco geopolitical environment or a more dovish one? And I actually think a more friendly division environment is actually more bullish.

The juice layer ones that have compromised on decentralized and entering into a more hostel geopolitical macro environment is actually much more bullsh bitcoin in either that have transcended that gap. A but I can let that be up to the imagination of the listener. Let you guys answer that one about what you think they go.

Well, recent his claim as, of course, none of this has been financial advice as we mention cyp dos risky could lose what you put in. But we have had a west. This is the frontier. It's not everyone, but we're glad you with us on the benglis journey.

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