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ETH is about to embark on a face melting rally!🎙️
Recorded: July 23, 2025 Duration: 1:10:49Space Recording
Short Summary
Ethereum is witnessing a significant shift as institutional players like Sharplink Gaming and Bitmine Immersion Technologies ramp up their ETH holdings, signaling a bullish trend in the market. The potential for stablecoin integration and the implications of the Genius Act are set to drive massive adoption, with predictions of a 'face-melting rally' for ETH as it becomes a cornerstone of corporate treasury strategies.
Full Transcription
Thank you. Music Thank you. Music Thank you. Music Thank you. Music Thank you. Thank you. Thank you. Thank you. Music Thank you. Music Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Music Thank you. All right, let me get started.
I don't have anyone joining for the time being, so I just gonna go over i'm trying to get some friends
pop on here been a busy week just give some up some updates on eth right so
sharplink gaming that's sbet their eth treasury now holds 360,807 Ethereum, having purchased almost over 80,000 ETH at an average price of 32.38
last week. They've already earned 567 ETH since initially staking in their treasury strategy. And they still have $96 million
available via their ATM equity facility to fund further purchases. So that's Sharplink Gaming.
That's the biggest holder of ETH. Next, we have Bitmine Immersion Technologies. They continue to own over 300,000 ETH. And the stock movement shares have actually declined today, down about 1.5% on the launch of options trading under ticker BM&R.
the launch of options trading under ticker BMNR. Institutional backing, they have ARK Invest that
added $182 million via block trades, and Peter Thiel owns 9.1%. So this all will further boost boost their ETH allocation. And then I think their target is to accumulate 5% of the total ETH supply
and make it options accessible for investors. So that's BitMine, Immersion Technologies,
and Sharplink Gaming. Next up, we have BitDigital. That's BTBT. They increased their holdings to a
total of 120,306 Ethereum. That's around 436 million from recent purchases. And their strategy
is interesting because they're one of the companies that fully pivoted away from Bitcoin, focusing entirely on ETH accumulation and staking.
Now, I wonder if that's more of a cyclical rotation or a permanent one where they're just seeing more of a long-term upside in ETH.
ETH. I don't know. Structural demand surge is being seen, for example, with Bitwise CIO Matt
I don't know.
Hogan highlighting the demand from these treasury strategies and spot ETFs and how it's creating
notable demand shock for Ethereum. So I think that, you know, we saw something similar with Bitcoin
in 2020. It took some time for the market to catch up. And I mean, sure, you know, there is
micro strategy doing the Bitcoin thing back then. I don't think people got
as excited about it as Elon and Tesla announcing that they bought Bitcoin at around like 30K.
I can't remember the exact price.
But yeah, I mean, this is slowly happening and it's just the beginning.
And I think that as a result, ETH is going to go on a face-melting rally.
that as a result, ETH is going to go on a face-melting rally.
Sharplink has solidified itself as the largest corporate ETH holder,
and they have a lot more capacity to deploy.
Bitmine's options launch along with ARK and Thiel support
signals institutional commitment and ambitions.
For more ETH.
They want up to 5%.
And then aggregated institutional demand plus ETF flow
could continue to funnel the price movement.
This is all very bullish,
and I still sometimes wonder why ETH is sitting at under 4K still.
I guess there are a lot of people that are trading it
short term. I think there are a lot of people that despite all the talk just don't believe in
the asset either anymore or they never did. Like they just wanted to get in and get out.
And they're technical traders. So I hear a lot of TA guys say that this is a point of resistance for ETH, 4K.
I think it'll break through that.
And I think once ETH breaks its previous cycles, dollar all-time high, then it's going to probably just run.
You know, this isn't just speculation anymore.
This is the Genius Act being passed and what that means for Ethereum.
Right. You you finally have a framework and a pathway for corporations.
a framework and a pathway for corporations and I guess corporations and banks and any
entity that meets KYC and AML regulations to launch their own stablecoin. And I think that is just, people don't realize that
even if those things don't come on to Ethereum, if they go on an ETH L2, right, if different
companies start to move their parts of their financial models on chain onto their own
proprietary L2, that still funnels back to Ethereum.
And people can talk about how L2s are quote-unquote parasitic all they want.
If the activities on L2s increases by an exponential amount,
then Ethereum will, because of the posting on mainnet will eventually just reach a point where it's deflationary indefinitely.
And I think that's also very bullish.
I think this is just the tip of the iceberg, right?
Stablecoin issue, and people don't realize, you know,
apart from just being cheaper to transact with
and apart from having the benefit of the on-chain economy,
getting exposure to the on-chain economy,
you can now have companies like,
and I want to shout out to Leo on Twitter.
I'll drop his, he painted this
analogy out perfectly. But you can now have companies like Starbucks issue their own token
reward, and it can be done automatically in someone's account. Or it can be a special NFT for
every thousand coffees that you buy. You can have Amazon have their own Amazon bucks and
their own built-in. So they're not allowed to offer yield. The stablecoins aren't allowed to
offer yield, but they can have their own reward system built into their stablecoin. And I think
And I think a lot of people are going to be using stablecoins without even realizing that they're using them, which is the cool part.
a lot of people are going to be using stablecoins without even realizing that they're using them,
We always said that when this happens, when people are interfacing with Web2, or excuse me, with Web3, the way that they do with Web2, that's when you know we have massive options.
Yeah, Leo Lanza, he has an awesome platform on Twitter where he talks about ETH.
He's an ETH bull poster.
I'm going to see if I can pull up his thread about why he thinks ETH is going to go parabolic.
And yeah, look, Amazon launching a stable coin and dropping $25 in Prime coins is another one he mentions.
McDonald's airdropping free NFTs.
I just think that we're seeing the beginning of a paradigm shift.
And I think that a lot of these big companies are betting on it being on Ethereum.
betting on it being on Ethereum. And yeah, people say that the L2 model has its problems. I also
think the idea of a company having their own L1 is not something that they particularly might want,
right? L2 would be a lot easier to spin up, from my understanding. And they get the benefit of each security, of each network effect, of each history.
In the history, we know matters.
First mover advantage matters in the industry.
We've all seen this.
And so I, yeah, I genuinely think that we are about to see, if I had more cash, I'm squeezed right now,
but if I had more cash, I would be buying more ETH at these levels personally.
Now, whether or not I'm going to hold ETH through a bear market, I think I'll hold some ETH.
I don't know if I'm going to hold all ETH, because I do think that at some point things are going to get really frothy, as they've done in the past.
And when they get frothy, then that kind of is a signal that, you know, it might be time to get out.
I don't think we're there yet. I don't know. I'm really bad at predicting these things, by the way.
bad at predicting these things, by the way. I think the one thing I've been consistently
right about over the last seven to eight years that I've been around in this industry has
been Bitcoin. And I think everything else I've been right about in short-term periods,
but then in long-term periods, all coins are kind of hard. But ETH is, I think, carving out an entirely new section of its own.
And so because of that, because of this Genius Act and this influx of stablecoins and the fact that a lot of these companies will just launch their own L2s on Ethereum, like Robinhood, for example.
I know that they started on Arbitron, but they will eventually be their own L2s on Ethereum, like Robinhood, for example.
I know that they started on Arbitron, but they will eventually be their own L2.
Again, L2s are sure doesn't really matter at that point.
Because of EIP 1559, the net is going to just be deflationary, right?
It's going to continue to decrease. And people are going to want a piece of that on-chain, I guess, it gets compared to oil.
I'm hearing ETH being compared to oil a lot.
But people get a piece of that on-chain infrastructure
by holding ETH, by staking ETH, by securing the network.
It doesn't really cost anything, right?
It's not like having to buy expensive miners or having to dump your Bitcoin to cover mining
costs.
So I think that this is a lot more enticeous for a lot of companies that want to earn yield.
And they want to earn yield on something that they can see the growth
potential in. And so let me, let me just ping Leo's here. This is a, yeah, I would fall. I
would follow this guy. His name is Leo Lanza. I'm going to do an interview with him at some point,
a video interview with him at some point, but he wrote an awesome thread that I just pinned the top of, you know, the Genius Act passing and what that means and why that's extremely important
for Ethereum. So, and why a lot of these stable coins are going to be building in their own
reward systems. He highlights Starbucks, he highlights Amazon, he highlights Walmart,
and he also highlights the fact that from PayPal's stablecoin to Robinhood's L2
to the majority of USDC, it all runs on Ethereum.
I love Tron and the Tron team.
I'm under the thesis that the Tron team, though,
would probably not have as much USDT sitting on there had they not been there at the right time.
And so I think USDT would be mainly on ETH as well if ETH had grown into what it did in 2021, 2022, a little bit earlier. But I also think that ETH on, or sorry, USDT on Tron,
stablecoins on Tron are at an advantage in certain ways still, just because of the way that it's L1
works and how fast it is and how cheap it is and how it allows for transfers across different exchanges, as well as RWA transactions, IRL.
But anyway, that's another conversation from their time.
So, yeah, I mean, I think that the more network activity
over the next year or two years is going to just lead to more ETH
getting permanently burned. And the high layer two usage is just more constant.
It's more constant L1 call data, more constant burn.
And, and yeah, that's, that's my ETH thesis.
And I want to be having more conversations about ETH.
If anyone wants to come up now and now and say something, go for it.
But I wanted to get that all out there
because I think there's going to be a lot of debate going forward around ETH.
I know that Bitcoin maxis don't like ETH.
I know that Sol maxis don't like ETH.
I know that L1 maxis don't like ETH because of X, Y, and Z,
and I get it.
At the same time, I think that this is going to be
a different kind of cycle for ETH
because this kind of adoption, let's see how fast it happens.
It's a fundamental change in the way that the ecosystem is being used.
And it's a fundamental shift in the players that are using it.
So you're still going to have the old heads, but you have corporations now.
And these L2s are going to have insane amounts of transactions happening on them.
They just are.
Think about how many people shop at Walmart and Starbucks and Amazon.
Again, I don't know about Amazon specifically.
I was just reading Leo's thread.
But Wells Fargo, banks, right?
Wells Fargo, banks, right?
These are all, anything that uses an L2 is going to have a volume of transactions that we just don't see on any L2 today.
And I think that's a game changer.
So I'm keeping an eye on other companies that are buying ETH.
I think at the moment, the big ones are the ones that i
listed right sharplink at 360 870 ethereum bitmine at 300 657 ethereum uh and by the way, BitMine is, or no, sorry, BitDigital. BitDigital had 120,106 ETH,
and they're the ones that switched their Bitcoin treasury to ETH treasuries. Again, I don't know
if that's a cyclical trade on them, because they feel like Bitcoin's pumped a lot and ETH hasn't, or if they just see ETH as a better
asset to hold because of its fundamentals and everything that's happening with L2s and
stablecoins coming on-chain, new volume, new users coming on-chain.
And so we'll have to wait and see.
Massive price reduction.
Staking yield.
That's the other thing I actually mentioned is staking.
I think there was a lot of conversation.
There was a lot of conversation about whether going from proof of work to proof of stake was the right decision for Ethereum.
Excuse me.
I didn't know at first, right?
I wasn't sure at first.
But, you know, here's just some numbers, right?
So pre-merge, Ethereum's inflation was at 4.5% annually.
Post-merge, it dropped to 0.6%. So combined with EIP-1559, ETH is—and this influx of new money and new users, ETH is often going to be deflationary, if not always deflationary, right? So the supply of increased, sorry, the supply of ETH has decreased
by more than 430,000 since the merge as of mid 2025, right? So staking, right? Staking,
I think was another move in the right direction for who ETH is trying to target.
I know a lot of people, again, say that proof of work is the better consensus mechanism.
And I don't know if I entirely disagree or agree with that.
I am still trying to, I think, maybe for some assets, POW is better versus others, POS is better.
And so, like I said, when you don't have any native yield in POW,
you and miners have to sell to cover costs.
And it requiring miners and the whole energy usage talking point that is used against Bitcoin in the corporate, in the retail world, the plebeian world, if you will, I think ETH moves away from that with proof of stake.
And earning APY and staking rewards, again, is also enticing for the suits.
And so in the restaking, things like Eigenlayer expand that yield across the
ecosystem. And the energy efficiency, right? So the POS cutting Ethereum's energy usage by like
99.9% or whatever. So this does enable institutional adoption. This does enable ETF approvals. I mean, I think that I don't know
how easily the ETF would have gotten approved if it was also POW. I have no idea. I know that
because I know that Bitcoin, the understanding of Bitcoin has become a lot more mainstream.
The understanding of Bitcoin has become a lot more mainstream.
People seem to get it more so today than they did even two, three years ago.
And, you know, the ETF approvals for ETH, I think the regulatory, the eventual regulatory acceptance,
it just helps that they can say ETH is green positive.
It's a green crypto and makes it investable for a broader set of entities.
Security, right?
Security, they say that because of proof of stake, ETH, the security of nodes, or rather the allocation of nodes has become more centralized.
And I don't have a strong rebuttal for that.
I think that it's true. any ETH to cover costs and you don't have, if anyone can just spin up a node and there's no
cap and how much that they can, or I guess there's a cap, but there's a, there's a pretty high cap
in how much can be allocated. You know, you have Lido and Coinbase. And so there is kind of a
centralization concern there. I think people should be using solutions like RocketPool
instead of Lido. I think people need to be more conscious about how they stake their ETH or how they run validator nodes.
But still, with POS, the security is now economically aligned with ETH holders.
So attackers need to buy and stake ETH, raising the price of attacking.
ETH, raising the price of attacking. And so bad actors are slashed. It's more capital efficient
And so bad actors are slashed.
versus the hardware intensive POW mining. Again, I'm not saying that proof of stake is better than
proof of work. I'm just saying that there are some advantages. And when you want the asset and you want the ecosystem to align with certain values, then it might be better to have POS.
And it's not like a strongly held thesis on my end.
And despite the POS and despite people saying that it's more centralized, it's not significantly more centralized than mining.
And I think that over time they're going to try to make solo staking easier, running a validator easier.
They already increased the cap in how much ETH can be staked per validator,
so people don't need to run,
if someone has more than 32 ETH,
they have like 320 ETH,
they don't need to run 10 validators anymore.
They can just run it in one.
So that's also 100x larger,
and it's important to highlight.
And so, right, Like, you know, um, again, Lido,
I wouldn't stake with Lido.
I think that there are protocols like rocket pool and SSV and
even restaking, I think, or diluting Lido's dominance.
Yes. Proof of work is battle tested. and in a lot of ways it's better.
But at the same time, POS is more capital efficient
and doesn't externalize the costs, the environmental costs.
So miners have to spend, especially nowadays, miner costs are very high.
Miners have to spend, especially nowadays, miner costs are very high.
And just miners, the idea that miners are better aligned than stakers, I think it's a debatable point.
Miners are for sellers and stakers are long-term holders.
I think that's one thing to highlight.
Anyway, guys, thank you all for listening to the kind of updates that I wanted to share.
And thesis, feel free to go back and listen to this if you kind of want to get an idea of why I hold the thesis that I do and why I think that Ethereum is going to go to all-time highs and even beyond.
I just think it's different. I hate saying it's different this
time because I've heard it the last two cycles, but it does objectively feel different this time.
Now, does that mean that we're just going to keep going up? Probably not. No, I think these
treasury companies or these companies that are buying crypto and adding it to treasury and then issuing a stock and then another stock.
And I think this is – when we go back and do a diagnosis on what went wrong or how we entered the next bear market, that these companies will be at the center of that collapse.
Oh, there's one.
I was about to close it.
Man, mine.
I just went on a 30-minute update on ETH, everything happening with ETH.
And I was about to close things up.
But what are your, just like in a nutshell, what are your thoughts?
I can drop my thesis really quick.
Yeah, no, for sure.
First off, thanks for inviting me up.
And sorry I was a little late, but yeah, I'd love to hear the thesis.
And I'd love to weigh in a little bit.
And yeah, man, always a good time.
And especially in the current market environment, like, dude, what a weird, weird bull run.
So, yeah.
What do you got?
Yeah.
So, wait, why do you, first of all, why do you think it's a, not that I disagree with you, I actually very much agree with you.
Not that I disagree with you.
I actually very much agree with you.
Why is it a weird bull run?
Well, we've been saying for a little while, or I've been saying for a little while, a lot of us have been kind of agreeing that this is not retail's bull run.
This is absolutely the institutional bull run in which we're seeing, rather than saying, hey, which popular person or person in my family or single human that I trust is adopting some kind
of cryptocurrency. And more so like, oh, which company that I've been following is now crypto
friendly or which government that I care about is starting to create crypto friendly policies.
That's kind of like very much the institutional bull run that we're in. And retail is just like has been
shredded by massive money printing and manipulation. And, you know, feather in my cap, certainly feather
in your cap, I'm sure that we a lot of us were a lot of us were predicting this five years ago, man,
when the money printing, when the money printer went full tilt during a very contrived emergency situation, we granted emergency powers to start giving debt relief or start giving financial relief.
And we knew that there would be a price to pay and we're paying it.
So, like, yeah, retail is destroyed.
And this is the institutional bull run because retail is largely destroyed.
Like people are people are financing groceries for crying out loud.
Like people are, people are financing groceries for crying out loud, right?
Like people are putting groceries on credit cards and having to strategically default
on their vehicles and on their homes.
So this is not, this is not your uncle's bull run.
This is not your cousin's bull run.
This is sadly not your mom's bull run.
So yeah, that's why I say that.
Wow.
I didn't realize people were, I mean, I feel like I'm so out of touch.
I knew that grocery prices were insane, and I knew that Americans are living paycheck to paycheck.
And I'm not surprised that people are in debt because of needing to buy groceries to feed themselves, which I think is awful.
I wasn't aware that people were strategically defaulting on their, and would like to know,
it's a very briefly, brief tangent, what does the strategic default even mean on your home?
How can a default be strategic? Well, this is old verbiage, man. Strategic default is
language that we were using in the 2008 global financial crisis.
Strategic default just means that a person is very carefully deciding which bills will get paid first and which bills will not get paid at all. And then, of course, communicating with their creditors to say, oh, yeah, I'm not dead yet.
So you can still bleed me later, but you can't bleed me now, if that makes sense.
No, I understood. It does make sense.
Okay, so this is my ETH thesis, and it's not really unique to me either.
I feel like a lot of people are saying this, but you are seeing these companies start to do with ETH like they did with Bitcoin.
ETH like they did with Bitcoin. So from BitMine, which holds, I believe, like 360,000.
Sorry. So from Sharpling Gaming, which owns about 360,000 ETH, with BitMine, which owns about
300,000, and with BitDigital, that converted a lot of their holdings from Bitcoin to ETH.
They're at about 120,000 ETH. So they're starting to add ETH to their treasuries.
More companies are doing it. You have Cathie Woods, Ark Invest that bought into BitDigital.
bought into BitDigital, and Peter Thiel also owns, I think, 9.1%. So that's more money that they can
potentially put into ETH. You got Joe Lubin coming in and being more vocal than I think I've ever
seen him be about the Genius Act. And I think a lot of these companies are trying to front run what they think is coming with the Genius Act, right? The framework for banks and corporations and any entity which meets the AML and KYC regulations
or meets those requirements, being able to launch their own stablecoin.
meets those requirements, being able to launch their own stablecoin.
And we know why those stablecoins are bullish, right?
Not just cheaper for the companies, but they allow for different perks for the end user, right?
This guy, Leo Lanza, who's been bullposting a lot about ETH over the last year at least,
he put out a good thread that I pinned to the top of the nest and
basically says like Starbucks stable coins going to earn stars for free and Amazon, you know,
is going to be able to drop you 25 and Prime coins and Walmart and McDonald's and all, you know,
all these big companies potentially launching their own stablecoins, but also launching their own L2s as a result
of just wanting more control and also just wanting the security of something that's been
around for 10 years and has the network effect and has the stamp of approval.
And despite how L2s take a lot more profit for themselves than they give back to ETH, the astronomical increase in users and volume, right?
And a lot of these users aren't even going to know they're using an L2.
They're just going to be on an app on their phone.
But the astronomical volume is going to lead to a permanently deflationary ETH because at the end of the day, even if, let's say, even if each L2 is,
for the sake of the argument, giving $1,000 of revenue a day to Ethereum,
100x of that revenue is still a million dollars. And so I think that a lot of these companies are front running this.
And I think that this is going to be a face melting rally for ETH, at least for the cycle.
But I want to hear your thoughts.
Yeah, so I would believe what you're saying, except that ETH routinely since just before the merge has been
a sell the news proposition. Sadly, the value proposition in ETH has been if you were part of
the original ICO and disclosure, I was not part of the original ETH ICO, but I do know people who
were. And there are people who have just been biding their time. They were waiting until they
could stake. And then once they were able to stake,
they were staking the crap out of those tokens and just been extracting value.
So the name of the game for Ethereum
has been value extraction and rent seeking
for the longest time,
which is why since the merge,
and even EIP-1559 with the very
disingenuous narrative of it being hyper deflationary or it being, air quotes, ultrasound money.
That was the disingenuous line.
It's been sell the news, sell the news, sell the news, sell the news, sell the news.
Are we out of news?
Let's come up with some news.
Let's sell it.
Unfortunately, I think that's been a news. Are we out of news? Let's come up with some news. Let's sell it, right?
Like, unfortunately, I think that's been a problem.
So will it melt faces?
Maybe some people's.
Will it melt the faces of everybody in your audience?
Decidedly not.
That's my take on it,
is that there will be some people who,
I mean, and if you were acquiring below $100 on ETH,
by all means, dude, yeah, keep your bags packed.
Like, don't, I would never give you, like, never give you an indication of when you should buy or sell. But if you've had your bags packed since under $100 ETH or under $50 ETH, you're in really good shape for whatever the next move is, next leg up.
But for people who are just looking at it right now, like, well, is this going to be a rally that, you know, I can, I can really leverage
man only if you're really good with leverage trading. Um, but I think buying spot right now,
this is not going to be the rally that retires you. I'll put it that way. Will it melt some
faces again, some, but it's all going to be relative, right? You can get those last few,
last few X's on your bag.
But I don't know.
I'm still of the opinion that the winners and losers
have been chosen by the establishment right now.
One of the biggest ones is BTC,
despite having been co-opted,
rather because it was co-opted by institutions,
larger government institutions.
And ETH is going to be payment rails
with the L2s, like you said.
So will there be transactional volume?
For sure.
Will the fee ecosystem be as healthy
as it was back in the proof of work days?
Hell no, not even close, not even close.
So fees will be paid, infrastructure will be run.
But I think the opportunity to massively gain from it is going to be
different and this rally it might be good um i don't know man i just i can't get as hyped about
it this is that's that's kind of the i've been calling i've been calling this debate great bull
rug of 2025 because it doesn't feel like any other bull run we've been on, right, where it's like, okay, everything kind of is two steps forward, one step back.
So will ETH break new all-time highs?
Yeah, maybe.
Maybe.
Why hasn't it yet?
It's decoupled from Bitcoin so intensely.
So I think part of that is because of some of these other mechanisms.
The fact that the fee ecosystem became fragmented, the L2 narrative is not generating the fees that I think anybody from the foundation was hoping for.
And at this point, yeah, at this point, I think there's been a lot of faith lost,
or people just view it as established enough that it's like, cool, well, DeFi is running,
it's not broken. Why would we want to pay more for gas than we need to?
In the same way that like, whatever,
building a new interstate, new interstate highway,
once the infrastructure is built,
the last thing you want to do is pay a premium for the fuel that it takes to drive your car
over that interstate.
So if anything was just payment rails
or just infrastructure,
I don't think anybody's excited to have
the utility token that go up in speculative value.
I think there needs to be something else built on top of it, even with certain protocols.
At a certain point, some people might just say, well, isn't that just rent seeking, as
opposed to paying the bare minimum necessary to keep it secure?
So I don't know, man.
I think we're at an impasse.
I think we're at actually atasse. I think we're at actually
at a very, very weird inflection point for ETH.
It may go into price discovery
above previous all-time high,
but I don't have high hopes for Ethereum.
There were people who I had to douse
with cold water last bull run
who were calling for $20,000 ETH.
And I was like, whoa, slow down.
And so when we topped out at a little over 4K,
I was not shocked, but I knew many people who were ETH maxis who were. And I don't think that
putting ETH on the treasury of certain companies is going to change that fact now. Now, you may
have some people who are traditional finance players who, because they know how to move markets,
they engage in more hijinks than we could ever do. And they've got a way
stronger war chest, way deeper pockets than we can get access to. So who knows? Maybe I'll eat crow this time next year and we'll see if there's massive manipulation that does drive the price of
Ethereum up way past $10,000. But my contention is my thesis is that that'll be because of manipulation, man.
I don't foresee that happening in an organic fashion.
Or conversely, kind of like with Bitcoin, for us to see million dollar Bitcoin this bull run, you will not like the global conditions that require that Bitcoin achieve that value.
Because it will hint at global inflation somewhere else
that causes massive pain and suffering in other markets.
Like actual, not just loss of livelihood, but loss of life.
It's going to, it would be bad seeing Bitcoin go to a million dollars in this bull run.
And I contend the same thing would be true of Ethereum going to 15K.
So yeah, that was a lot, but
that's kind of my take, man. I'll end the plane there.
No, it's good to have
a contrasting
stream of thought after I went
on a bullish rant for like 30 minutes.
I just...
I wonder what you think, though,
when...
If McDonald's and
Burger King and Amazon and all these companies have L2s that are – I don't know.
They're going through millions of transactions a day, volume we've never seen before on L2s.
That's going to get posted back to eat.
That's going to funnel to eat, no?
Are we?
No, not necessarily.
And this was my, so that was my thesis, gosh, five, six years ago, was that we would be seeing those.
And we did for a short time.
There were small experiments that were launched on top of ETH in terms of tokenization projects.
But L2s don't necessarily have to commit value back to the main chain.
The way that the Ethereum Foundation is proposing
that they want partners to build L2s
is not necessarily the way in which partners
have to build L2s.
So people look at Polygon as an example
when they started off as Matic, right?
Which is not, strictly speaking, an L2.
It is a side chain scaling solution.
And it's open source and it's permissionless, man.
There's nothing preventing partners from operating exactly the same way that Polygon did,
being extractive and using the affinity scam like, oh, yeah, we're an EVM also. And we alleviate
congestion from Ethereum. But then they committed zero value back to the ETH token and had their own native
token, right? All of these different companies can do the same thing. Now, if they don't want
to be involved in the business of running their own token, sure, they can make an L2, but there
are ways to optimize the L2 as well to do being like a time chain, right? In the same way that
Polygon, I brought them up for a reason, the same with a polygon. Yeah, it committed some of its transaction history back to Ethereum as an L1 in order to timestamp their own chain and make
sure that they had proof of authority. But they wrote zero value back. And you can architect an
L2 to do the same thing. And so I'll ask you in return, you're McDonald's. You serve billions of people. You have the greatest ability to feed humans in the history of planet Earth.
You have economies of scale that define the category of how food is priced per calorie.
You really want to pay rent to Ethereum?
Fuck no. You want to own that category too,
if you're allowed to. Same with Starbucks. Category defining in coffee distribution.
Same with Amazon. Category defining in retail goods distribution. There is really no realistic
world in which those titans of industry say, you know what?
Yeah, Vitalik seems like a nice guy for me to go just pay rent to for no reason.
I don't see it, man.
I see.
But they're tapping into the EVM ecosystem, though.
They're tapping into an ecosystem that's had first mover advantage, that has most of the stable coin volume, that has most of the stable coin volume that has most of the users it i mean they could they could launch a side chain but we're seeing that robin hood is
using arbitram orbit and eventually going to have their own l2 right they chose an l2 for a reason
and this requires posting call data this requires posting proofs, and these posts pay gas in ETH.
So I'm just, I know that they're, like, I understand the parasitic talking point of them
being greedy and taking most of those profits for themselves. But if they're posting gas,
if these posts are paying gas, then if that 100xs, then ETH does become permanently deflationary, right?
No, not necessarily.
So again, you can do this in a way that – yeah, no, not necessarily.
Yeah, not necessarily. That's been the problem with the entire EIP-1559 narrative to begin with and the having their own MEV farming protocols or whatever,
having their own L2s that, like I mentioned before, use ETH for proof of authority in some
kind of a time chain fashion. I'm going to shout out Gary Cardone in your audience if that's the
actual. Yep, there it is. Gary, shout him out listening in. So he's a really sharp guy who definitely understands Bitcoin and is more than knee deep
into the crypto taxation scene with his company, Node40. So doing good work there. But as far as
an L2 that you can architect in a way that you are maximally extracting value, there's so many
ways you can do it. So many ways you can extract value
from these ecosystems. And I just, again, without calling these companies greedy, dude, look,
they're not charities. They're corporations. They have a profit motive, right? So I'm not
going to call these companies greedy. But when you're McDonald's, and again, you've pioneered
the category of calorie distribution for human consumption.
You're looking for every single way to add to your bottom line, including infrastructure for your financial payments.
I happen to have known somebody who was an IT manager for the McDonald's Corporation.
And man, they will pinch a penny.
pinch a penny. They will make a penny scream uncle. So I just don't see that being any different
They will make a penny scream uncle.
with ETH and with them creating new payment rail systems. If they can turn it into an additional
profit center even, they would. I'll put it that way. Not because they have any malice towards
crypto users or towards Ethereum, but because, again, they have a profit motive. They're not
running a charity. And they have efficiencies to be gained by using blockchain. And if they can do so,
not by cutting corners, but by utilizing the specifications of blockchain to their advantage,
they're going to do it 10 times out of 10, all day, twice on Sundays.
I see what you're saying. And I think that I agree with you. I guess I'm trying to wrap my head around. You're right. They could build their own L1 anditing ethereum security model immediately i i just don't i don't
see why if i may be building and securing their own l1 end up costing them more money why wouldn't
they just have enough yeah well that i think that's kind of where the the traditional wisdom
was before with like okay you can create an l1 but by any other name um an arbitrum clone or an
optimism clone or any other one of these Arbitrum clone or an Optimism clone
or any other one of these clones I mean we used to just clone Ethereum directly I mean I'm talking
like half a decade ago to a decade ago it was like all right that was that was the thing to do
take the code base clone it don't use any other transaction history and make it operate similar
to Ethereum um so using EVM is is really is really where the alpha, and it doesn't matter if it's an L1 or an L2.
Now, architecturally, if it is writing back to Ethereum and paying fees to Ethereum using some of their L2 specifications, then yeah, you can call it an L2.
But I'm going to try to drive this point home by talking about it a third different way now.
way now. You can architect your L2 in such a way that while you're inheriting some of the security
of Ethereum, you're not always writing back and committing back to Ethereum for every single
transaction. So base right now uses ETH, right? However, there's no base token as the utility
token. But every transaction that happens on the base network doesn't automatically write a transaction back to Ethereum every single time.
It's not a one-to-one thing.
There's a reason the fees are lower on the base network than they are on the Ethereum network.
And that has to do with the way that L2 is architected to simply optimize those transactions and write back, commit some of their transaction history back to the ETH L1
at specific intervals. And you can make those intervals a little more granular, right? It's a,
it is a subset, it's a subset of all the transactions that happen on the L2. And again,
I'm just, well, let's use McDonald's as the, as the King Daddy example, because dude,
because nobody does it like them.
Once they have the opportunity to extract the maximum utility from that network and not have to pay hardly anything, they're going to do exactly those two things.
Maximum utility, maximum value, and then write back as minimal as possible.
But you still have to pay something
if you're going to have an L2.
You're saying that,
like I get that not every,
and at this point I'm just,
I'm arguing the opposite side
for the educational purposes of doing so.
But you don't post each individual transaction,
but they are posted in batches.
You do have to post. Right. Yeah, absolutely.
But transaction bundling is also not new, man.
There's so many there's there's things we've forgotten about blockchain that that noobs will never know.
Right. In terms of like never learn. Yes. Yeah, exactly.
It's just I mean, there's no there's no incentive to educate the new the noobs because they, the noobs because it just helps us extract more value from them.
Ooh, hurts to say it out loud, but that's just the reality. And I think that's going to be the case here.
So yeah, to your point, you can absolutely, you can batch different times. You can choose to use Ethereum as proof of authority.
You can use it as your time chain. I used Polygon as the example before.
But here's the thing, man, it worked and it worked so well. The team that launched the Trump NFTs decided to launch them on Polygon as the example before. But here's the thing, man. It worked, and it worked so well.
The team that launched the Trump NFTs decided to launch them on Polygon.
There's proof right there.
So many little proofs that the ways that you can use blockchain to your advantage,
and a player like ETH, kind of like, all right, well, thanks for innovating all those new standards.
Thanks for creating all these new ERC token standards and wallet standards and NFT standards. I'll just kind of borrow that from the open source and not
pay you. So that's kind of what I'm getting at. I don't think that it necessarily follows
that these new L2s are going to automatically, drastically increase the transaction volume
on the layer one of ETH and automatically create a
deflationary fee environment. And even if it did create a deflationary fee environment, there was
a point at which it was, I mean, the point at which ETH failed one of its total supply audits
because the node software was just not up to par. I mean, we've had some crazy stuff happen in ETH.
And it was originally designed to be inflationary precisely because it's a fee ecosystem.
It's a utility token.
So I don't think it's necessarily a bad thing for it to be mildly inflationary.
Because it's not, at least originally, it wasn't supposed to compete with Bitcoin.
originally, it wasn't supposed to compete with Bitcoin. And so if it's still meant to fulfill
the original vision of the founder, Vitalik, of having low fees in perpetuity, you can't have it
both ways. You can't make it so deflationary that it creates positive price action and then also
hope that the fee ecosystem stays low. Those two ideas are just fundamentally incompatible.
When you say the fee ecosystem,
what are you specifically referring to? Because L2s are extremely cheap to use, regardless of whether the price of ETH is going up or not. Right. No, precisely. So I guess what I'm getting
at is burning the supply of ETH, hoping that it brings positive price action to ETH, eventually it will have a trickle down effect.
If there are any fees denominated in ETH, even if they are on L2s, at some point, if the 0.0001 ETH fee, so many GUEI fee that you pay on an L2, if that remains constant, just go back in time and look at the fee that
you paid last year. If that remains constant, but the price of ETH has gone up, then yeah,
the five cent transaction that you thought you made, you look back in time, it's like,
oh, actually that was 15 cents. Well, damn it. I got got. I thought I was only paying five cents,
but this utility token keeps going up.
Right?
I mean, it's a sunk cost at that point, so it matters a lot less. But the fact remains, the absolute price of ETH will have an effect on the absolute price
of fees for any ecosystem that uses ETH.
And the idea that like, okay, we're now hyper deflationary or eventually we're going to start burning down the supply and, you know, or whatever, or deflationary at all.
They weren't originally deflationary at all.
The IP 1559 was incredibly wrongheaded to start burning fees.
Had they started putting that towards a security budget of some type or towards a development budget of some type or hell, if they wanted to do something humanitarian and tie that instead and try to put it towards any kind of humanitarian cause, it would have
gone farther for them.
But I've long been of the opinion that the fee burning structure has been just pointless.
It's a pointless exercise in chest beating for how they can say that it's deflationary,
but it's not.
It hasn't been so far.
There have been short stretches where it is.
But if adoption increases on the L2 level even,
it will eventually be permanently deflationary
because of all the transactions being made on a day-to-day basis.
That's a big what-if though,
and the L2s actually dilute that though.
How does that? So the L2s make it harder. Well, because
they don't commit direct
transaction volume the way the L1
does. I actually need to jump because I have
it. Sorry, man.
I hate to cut things short, but I got
a 1 p.m. call, so I got to jump.
I really appreciate you coming on, man. We're going to close
things out anyway. Thanks for letting me
throw some counterpoint into the mix. It's always fun, man. We're going to close things out anyway. Thanks for letting me throw some counterpoint into the mix.
It's always fun, man.
I wouldn't have it any other way.
Thank you, everyone, for joining.
Remember that everything you hear on these broadcasts meant for educational purposes only.
Nothing is financial advice.
So be safe out there.
Amy, we'll see you all on the next one soon.
Take care.
