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Which L1 is the ETHEREUM KILLER of the next bull? #CryptoTownHall
Recorded: Aug. 24, 2023 Duration: 1:02:09Space Recording
Short Summary
The discussion highlights significant trends and challenges in the crypto space, including regulatory actions against Tornado Cash, the potential market impact of FTX liquidations, and the evolving dynamics of blockchain scalability with layer twos and layer ones. Additionally, the conversation touches on the dominance of Ethereum in developer ecosystems, the decline in interest for certain altcoins like Solana, and the increasing use of blockchain in enterprise solutions. The liquidity issues in altcoin markets and the trend of using major cryptocurrencies as trading collateral are also noted.
Full Transcription
What's up, everybody? Just getting everybody up on stage.
Hope you all having a wonderful, what day is it?
Thursday morning, we're going to get ran up here.
Talk amongst ourselves a bit.
Ben, how are you doing, man?
Good. How about you?
I can't complain. I was just watching the NVIDIA price action. Still always blows my mind to see something with that large of a market cap moving in this manner. You didn't used to see that back of the day. I was talking about it this morning that we've had these huge gaps up on NVIDIA and the huge ones down kind of months ago on meta that you just would have never seen in the past.
Yeah, price action isn't pretty crazy for InVideo.
I don't really think, I think everyone's getting somewhat surprised by just how strong it's been.
It's crazy.
I mean, I've never seen the results that anticipated before in my life.
And then to over-deliver on results that are so highly anticipated, it was crazy.
I mean, I've never seen anything about that.
It was fun.
Yeah, of course it gave back all its gains first thing in the morning because major gap up.
I think it was a real profit-taking opportunity for a lot of people, but it's bouncing now.
The chart's actually impeccable when you take a look at it.
It dropped to like exactly, I think, 4888 today, which was the all-time high from July that had just been tapped.
a few days back.
Pretty crazy.
Remember yesterday we spoke about privacy
and we had the whole show about privacy
and I said it's not really a fight that I want to fight
because I think that the U.S. government's going to come down on it pretty hard.
And I think as soon as we finished the show,
the guys from Tornado Cash were charged.
The founders of Tornado Cash were charged.
They were put onto the sanctions list.
It's a pretty serious thing.
And I think it was a very, very sad day for crypto yesterday
because they charged them.
amongst other things with money assisting in one billion dollars worth of money laundering.
And that refers to, I think, the Korean hackers, the North Korean hackers who laundered
a billion dollars using the protocol.
And I think the scary thing is that, I mean, yes, these guys built the protocol, but they
destroyed the keys.
And they basically have no access to the protocol from a back end point of view, so to
speak.
They destroyed, they destroyed the keys.
And I think the message that the US government is sending here is that if you build a protocol and that protocol is used for illicit activities, you could land up like these guys.
And I think that I think it's absolutely crazy.
When I read about this yesterday, I was like, this is why I said I'm so scared of the privacy discussion.
Yeah, I was trying to dig into it a bit.
and I was actually couldn't get clarity and I was asking you around,
there are some claims that they were working directly with some of these people to launder money.
I'm not saying that that is substantiated or true.
But if the claim is literally that they just created something that was used for it
and that they are culpable or complicit in that, it is absolutely insane.
If they were actually like actively in some way directing people how to use
tornado cash to laundering money, that's a different thing. But see these guys put on the
sanction list, all of this. And then obviously the developer who already went to jail for this,
I think it's pretty clear that he was simply a developer, right? It is terrifying. It's terrifying
because it's very clear mandate here from the government to not allow these things to exist.
But if these guys are just like created an open source platform that allows you to remain private in your transactions and are going to end up on a sanctions list, that is, as you said, just absolutely terrifying.
Don't really know what to what to do with that.
But let's hope that it all gets cleared away.
But that's not today's topic, obviously.
It reminds me.
It reminds me of Ross Ulbricht.
This reminds me too much of Ross Orbis, which is crazy.
I mean, he's serving life sentence.
Also, before we get into today's topic, how are you feeling about your calling Bricks a Nassingberger, now that you've got the new nations that have joined, UAE, Saudi Arabia, now you've got the BRICS countries doing more GDP, bigger GDP than the G7, strengthening their ties a lot?
You still think it's a Nathenberger?
Nothing Burger may have been hyperbolic and I've got a lot of pushback for my attitude there
and for getting angry when they yelled about XRP.
Yeah, I don't think it's going to matter any time in our near future
where we're going to have any reason to be talking about it.
Yeah, I believe that the American dollar will continue to be the global reserve currency
for as long as it will matter to me.
I mean, you've got to think that because you're American.
Yes. Have you ever seen Team America? It's America. Fuck yeah, man. You know, no. It's really not that. I just like, I don't know. Maybe it's desensitization from a lifetime of hearing whether I'm American or not about de-dollarization and the Eurodollar and Bitcoin will be the global reserve currency. Yet here we are and everybody still wants dollars. And I think that that's a reality that's actually interestingly strengthened by crypto because of the proliferation of stable coins.
and the fact that their market caps are so massive and eventually will grow.
And that in most countries that have hyperinflation,
a lot of the problems that we think are solved
are actually solved by stable coins where people want dollars.
So listen, I think that these nations will find a way
to do some trade outside of the dollar.
But at the end of the day,
it's almost like in the crypto market,
where you look at you could trade in a stable coin or you could trade in a volatile currency,
you end up trading in the more stable asset, right? And I think that that's really what we're
good to see there. I've talked about the fact that it's kind of laughable that people talk
about settling trade in the Chinese yuan when the Chinese yuan is pegged to the United States dollar.
Like imagine depegging the yuan from the United States dollar and see what happens to the volatility of that currency and then watch people try to trade.
So if it's all backed by the dollar anyways, it seems like semantics.
Lastly, before we get into the topic of today, which I mean, I don't know who chose this topic.
But what do you think of the FTX liquidator potentially selling $3 billion or more worth of FTCS holdings, including Solana, Bitcoin, Ethereum, Matic, NIA?
I mean, I've got the list in front of me.
It's quite a big, I think in this liquidity, in this kind of liquidity, now, yes, they are working with Galaxy Digital, which I think will be a little bit more responsible in how they execute.
And yes, they claim that they want to add, they want to increase.
Staking.
Yeah.
Yeah.
Well, they want to increase creditors claim value, but at the same time, they've been paid one and a half million dollars a month for doing this, which is, you know, not a small sum of money.
Yeah.
Yeah, I was just literally reading the story as we were starting to sign on.
I read the kind of headline, which was they are looking for hedging strategies,
but we've seen actually kind of behind the scenes a lot of these platforms maybe with not as large of holdings.
dump on the market, right? I mean, obviously I have a Voyager creditor.
I watched Voyager effectively not only screw us in Chapter 11, but then time the market as
horribly as literally possible on when they liquidated assets and, you know, sell the
dead bottom of literally everything. But Celsius has been kind of was selling for a long time
and we didn't see massive movement as a result of that.
But for those...
I think it depends.
I think it depends who's selling.
Like, if you think about Celsius, Celsius has got responsible people behind them selling.
Voyager, sorry, had a bunch of monkeys selling there.
And I think that FtX, if they team up with Galaxy Digital, then I think it's not a bad result.
Interesting that they said that they want to return dollars to creditors and not return coins, which is like the Mount Cox where they're returning, they opted to return Bitcoin.
They are returning dollars to the to the creditors.
Yeah, and Voyager, you had the option.
So they basically gave you 30 days to withdraw in crypto from the platform, which was a bit jarring because for a lot of people who report, you saw your balance.
And since it was in crypto, and since like the day from the day that they calculated to the day that the price action opened, you were actually down another 7 or 8% on your claim.
Looking at the crypto balance, it ended up higher when Bitcoin went up to 31.
Now probably back to even, but then after 30 days, they went to become cash claims.
The way that they calculate what you get back in crypto, I don't know how FTX will do it, but it's kind of very misleading and complicated anyways.
Sometimes when the price of action goes up, it means you actually get less of the coin because they're pinning it to a U.S. dollar amount anyways.
So I don't think it's going to really matter.
It just has really interesting tax implications.
And I think you're much less likely when people get paid in dollars.
I think that they're out of the market, right?
So I think that for the market, it's better if these people en masse get paid back in coins
because then they have a decision to make, unfortunately, whether to sell or whether to stay in those assets.
But if you get paid back to your bank account and dollar, the odds of you are,
jumping back into an exchange and buying back, you know,
10% or 15 or 20% of what you owned, I think is a very, very unlikely.
Okay, well, that's where we discussed today on my show.
So anybody wants to watch, go and over watch.
But your take is that Bricks is not a nothing burger, right?
No, I think it's a nothing burger if you're looking at it for the next one year or two years.
But I think it's a bunch of nations, I think it's a bunch of nations that have been,
unfairly treated by the United States and the power the United States has.
And they've said, they've actually said as much.
And I think it's a bunch of nations that have had enough.
I've got a whole lot of quotes in terms of what Xi Jinping said and what Alula, the Brazilian prime minister.
Yes, you can brush it off and say, you know, this is a, he's a, you know, one is a criminal and the other one is a, is a dictator.
It doesn't matter.
They now have a collective of countries which are more.
more powerful in terms of GDP than the United States.
So Chinese leader Xi Jinping says it's necessary for BRICS countries to promote a reform of the international monetary system and financial system.
International rules must be written jointly rather than dictated by those with the strongest muscles or the loudest voices.
We need to accelerate the BRICS expansion process, which they obviously did.
Lula, Brazil's president, says,
we were always treated as if we were the poor part of the planet as if we didn't exist,
adding suddenly we are realizing that we can become important countries.
And if again, like, you know, the reason why this hits quite, quite hard is because they now have a
collective of countries which have a bigger GDP and a faster growing GDP than, then the G7 countries.
So look, again, I'm not saying that these guys are not going to take over the world, and I'm not pledging allegiance to the only, I'm just saying,
I believe that what they're doing came as a direct result of the way that the US is in inverted commas bullied them and bullied anybody using the dollar as a reserve currency.
I think that's fair.
Yeah.
I'll reassess as time goes on, obviously.
But let's dive in, obviously, to the topic today.
Which L1 is the Ethereum killer of the next Bull Run?
You kind of laughed.
You said, I don't know what this topic is because we hear about the Ethereum killer every single cycle, right?
Also, I mean, also, no one's going to kill Ethereum.
I think Ethereum is firmly in the number one spot.
And I think if you look at what's happening, there's a trend.
that, you know, there's a layer two trend on Ethereum,
and there's now a small trend of layer one's becoming layer two,
seller network phantom, becoming layer two's one on ETH.
So I just think this whole discussion of is which layer one's going to kill ETH
in the next bull market?
That's very much a 2017 type narrative when ETH was broken.
But I think now we've seen that the ETH developers can do pretty much anything.
If they pulled off, if they pulled off the merge,
they can pretty much do anything.
So, I mean, I don't really like this topic, but I'll leave you guys,
I'll be here and I'll leave you guys to hear if anybody does believe that there is a layer one out there
that is actually going to kill the theory.
We'd love to go to the guests here, obviously, and start to discuss it.
Ben's out, Ben, how are you, man?
Ben from Bybet, how are you, buddy?
It's good to see you.
Hey, guys.
Yeah, good to see you guys.
Yeah, good to see you guys.
Yeah.
Yeah, next time at Formula One, right?
Yeah, I won't.
This weekend is going to be pretty crazy.
I'm very, very excited for that, Ben.
Ben, I must say I'm very excited about that.
Yeah, for Singapore.
Yeah.
Awesome.
So, Ben, I mean, what do you think about this topic in general?
Do you kind of align with what Rand is saying here that it's an old narrative?
There is no Ethereum killer.
And then I guess...
If we all believe there's no Ethereum killer, I think the topic then or conversation becomes,
how do we become interoperable because we also know that none of these other chains are going away.
Yeah, yeah. To be honest, I really think the next program is going to be all about layer tools.
And I think all these kind of other layer ones have a fundamental flaw because literally the business model is flawed because you raise money through the initial token launch.
And then all we see is just burning, right?
You just spend.
And then the moment the project or the foundation spent all of his money,
then it's kind of the game for them.
So, and this is why a lot of the layer one face the exact same problem.
I think in the end is just the cash flow problem.
that the developers are on Ethereum and they will move to a layer one due to incentives,
but it's very short-termed.
And so once they gain the incentive, they move back.
You know, I always use example, you know, in China, everyone uses WeChat.
And you see a lot of people say, hey, I have developed this WeChat killer or whatever.
And people just go on there and say, hey, you know, nice to meet you and let's chat back in WeChat.
So the habit and, you know, all these developer community, I think, is really what matters.
And I think with layer two are probably the best.
the best shots for, and that's what we're probably going to be looking at with the next
bull run, yeah.
That's interesting.
Go ahead.
Somebody was about to speak.
Sorry, I guess not.
Yeah, I was going to say that that's an interesting take and I tend to align, but what
is that, where does that leave the other layer ones then?
I mean, if everybody's going to keep coming back to Ethereum, do you not view that we
will end up in a world of interoperability and literally everything, all of the value will somewhat
accrue or focus on Ethereum?
Yeah.
Yeah, I think you either be on top or below the food chain or, you know, of Ethereum.
So you're either helping it or supplementing it to some sort of issues that Ethereum might facing.
So I think the only way probably for other layer ones is definitely interoperable with Ethereum
and find an actual use case to supplement with Ethereum in order to, you know, have a extra broad use.
Because the story of really attracting everyone and move everyone to a layer one competing with the Ethereum, I think at this stage is very much unlikely.
And again, with what my hop off of this is from the business perspective, is that the moment you finish, you're burning all your cash, these guys will move back because they have new incentives.
They have whatever network that they are in now.
Right.
Ben, what do you think about the narrative or the thesis that we need at least one
layer one that settles directly onto chain cheap and fast. Like, you know, it's great. I mean,
I think the Ethereum's great and, you know, I'm a big believer. The Ethereum's definitely
won the layer one game, but it's still not a fast layer one that settles directly onto the
layer one. And I think there might be a need for a blockchain that settles fast, cheap, and
directly onto a layer one. Like, I give you an example, for me, Salana may be that layer one.
You know, I don't want to discuss the merits of each chain, but
You know, that's a fast chain that settles directly onto the layer one with very low transaction fee,
something that Ethereum hasn't actually been able to achieve.
So don't you think we need one, at least one chain in this revolution that settles directly to the layer one?
Yeah.
I think this is also an old hypothesis, right?
You know, even with Bitcoin, people assume that you need a faster thing.
But, you know, for us, I'm a exchange.
We are more or less centralized agents.
And we deal with projects.
And for example, we haven't seen any new projects going on to Solana.
Right.
So people behave and project behaves not purely based on the speed
or that kind of ideological things we're thinking of.
A lot of it is incentives.
A lot of it is...
weather is easier to really bring users onto them.
So, you know, from what I see, I don't think Salana is going to be as good as before
because this whole FTX definitely affect them.
And to be honest, after FTX, we just haven't seen any interest in Solana.
And projects are simply moving back into Ethereum.
Yeah.
What about Aptos, Aptu, Sui?
Yeah, Aptos sui, I mean, they probably have a short-term thing.
But again, we see the interest died down so fast after they launch, right?
And the kind of the community kind of goes in and because they're launching.
And again, it goes back to the same pattern.
The moment they launched...
You know, these projects are able to raise money.
But, you know, the longevity is what is really the problem problem.
You don't see projects going into them, and that's kind of the problem, right?
Yeah.
This is exactly the counterpoint that I was going to make.
I totally agree.
So I just started working on wormhole.
We're kind of neutral in the middle of all these chains,
which has given me an interesting view into all these ecosystems.
And I would totally agree that all of the narrative and focus right now is around the L2 space.
I mean, just look at what Coinbase chose to do.
They're the biggest and arguably most important company in the industry,
and they chose to go for an L2.
But at the same time, the comment about the cash burn on the Aptos and Sui comment, I would kind of push back on that.
If you look, Aptos raised $350 million and Sway raised $300 million, and that is probably very far from being gone down to zero.
So these teams, in my opinion, it's still yet to have their heyday.
And they have plenty of cash reserves to fund top-notch people to come onto their team.
The challenge they're going to have is that the entire industry of developers has also kind of centered around Ethereum and EVM and solidity for their coding language.
So Aptos and Suuia have the same issue that I experienced in the Pocodot ecosystem, which is just onboarding developers into something other than solidity is very challenging and takes years.
So I think L2s are definitely the trend now, but I do think teams like Solana, Suu, Apdos, and others will still have...
have their position in the market in the next run.
Hey, Dan, to your point about Coinbase choosing a layer two,
I totally agree that that's fundamentally a very clear signal here,
but also I think the other side of that is that
the only way that Coinbase could safely launch anything would be to be without a token,
which pushed them to the layer two decision, right?
Coinbase launching a layer one with a token and having to deal with the SEC
on a potential unregistered security offering probably wasn't even on the table.
Not necessarily.
We actually just launched a chain in the Cosmos ecosystem.
That is a permission chain, and we don't have a token.
So they could have just run a permission chain on a platform like Cosmos or even in the PocaDotot ecosystem where you don't necessarily have to have like a publicly available token.
to run transaction fees and what have you.
Sure, if I'm saying if it's a choice between a layer two or really like a, you know,
we're talking about Ethereum killers like launching.
Yeah, right.
They would have had to launch that layer one to your point on another protocol to make that work.
But I mean, I think it's pretty clear that there's a lot of things in crypto that probably don't need tokens,
but I think we can all agree that largely layer ones probably do, right?
Because you need to have some sort of way to secure the network and to pay transaction fees.
Yeah, especially if you want it to be like fully decentralized or on the spectrum towards that.
DB, you've had your hand up.
What do you think?
Hey, yeah.
So I'm probably here to play kind of the devil's advocate because I'm not a huge Eith and L2 fan, mainly for fundamental reasons.
There's still many, many issues with the structure of it.
And L2's with being centralized, fragmenting liquidity and Ethereum just having issues with the ERC token design.
And...
solidity, everything.
So do I believe there's an ETH killer?
100%.
Do I believe anything will kill ETH?
That's the question, because the network effect is hard to top.
But there are, without a doubt, chains, L1s,
that are far better in security, scalability,
and soon to be decentralization than Ethereum.
And that's that's not a question.
You say which ones?
Sure, such as, let's see, look at Ada, multiverse X, there's Algarand, some can argue for Avax, and because of their achievements.
I mean, I mean, hold on, can we just go through that list that you gave us with respect?
Like, let's look at Algarand.
I mean, to me, Algarand being, I'm an investor, and to me it's been an absolute flop.
I think it was, I think the, the chain took a long time to get off the ground.
I think it still actually didn't really get off the ground properly.
I mean, what's built on Algarand?
Nothing.
There's nothing built an Algarand.
For sure, yeah. If you're looking at the token price and possibly even the narrative right now, you can't debate.
I'm not looking at token price.
I'm looking at what's built. I'm not looking at token price at all.
I'm looking at what is being built on Algarand today.
What is the killer application?
Where is the VC funding?
I mean, to me, Algarans being a disaster.
You mentioned Cardano.
I mean, all respect to the Cardano holders, right?
Where are all the amazing developments on Kodano?
You mentioned EGLD or what did you call multiverse?
Multiverse called MultiverseX now.
Yeah.
I mean, I love the guys.
I think they're very, very, very smart guys, but they've been going for a long time.
Again, there's not many killer applications on it.
And they've kept the development of the protocol very centralized by the company in,
is it Romania or Bulgaria?
I think it's Romania, right?
Yeah.
Like, I'm just trying to understand, you know, are these your best East killers?
Yeah, no, that's a great point.
And if you're looking at that side of it, you can't really argue.
You're on tired of right.
What other side is there, other than looking at what's being built and what's being paid for?
Like, what other side is there?
the other side that we're still really early.
And people don't want to realize that.
We have less than half a percent of the world's population in crypto.
And are they going to come in and use a unsecure, expensive, possibly centralized,
ETHL2 scenario?
Yeah.
I don't believe so.
Are people going to drive there?
Define unsecure in this context.
I don't see how it's less secure than largely the other chains we're talking about,
many of which I'm a fan of, by the way.
Oh, sure.
Yeah, I've done a lot of content on this, too.
And the ERC token and the entire design is completely flawed.
The fact that you have to approve...
A token transfer, which gives someone entire access to your wallet, is a massive flaw in design.
Now, I know they're working on this with account abstraction, but it's not going to fix the problem.
And this is why you see on a daily basis, just search on Twitter, drained.
You see dozens of wallet hacks and drains every single day, and this is because of the ETH design, which is flawed.
The ERC20 token, and how it is designed, is seriously flawed.
And EVM compatible chains follow that as well.
And hopefully it's something they can fix,
but it's something that the L2s are also utilizing
because they're obviously built on top of it.
And then you bring in the L2s that are highly centralized.
And the fact that there's how many of them now,
over a dozen and probably growing every week
that are fragmenting liquidity,
it's not going to be a winner-take-all L2 market.
So until we get some solid bridges or...
interoperability, it's just not the
solution. Bill, I see your hand up. Go ahead.
Yeah. I lost Bill there. Can you guys hear him? Sorry. From a
Yeah, you got to call it.
Sorry, from very broad perspective, you know, yeah, you know, ETH came first.
And, you know, a lot of these problems, you know, like with ERC20, like, you know, with, you know, centralized sequencers for L2s, you know, a lot of these, you know, other, you know, alternative L1s, you know, including PolkaDOT that I'm, you know, sort of working on right now, you know, have fixed these things.
And that doesn't mean that any of these are, uh,
ETH killers, but people are, you know, coming to these projects are being built on them.
You know, to Dan's point, you know, PolkaDot has the second most number of developers, you know,
in the ecosystem compared to, except first as Ethereum, of course.
So people are coming to these and people are seeing the benefits of what you can do on this,
but it is a process, right? It does take time.
Yeah, I mean, it seems like,
Ethereum is far ahead. The only way... So this is what I was going to get at before.
So we Ben kind of dismissed all of these L1s outright initially and said everything will kind of come back to Ethereum.
I was of the mind certainly in the last market that maybe we would see very specific use cases explode on specific chains.
Like maybe...
And this was before sort of the proliferation of layer two's, but that, for example, Salana could become the gaming chain because it was tailor-made or faster for that or something else could be.
So do you think that we could see specific use cases blow up on a single one chain becomes the NFT chain?
One is the defy chain.
That'll be Ethereum, by the way.
But do you think that we could see any of these emerging use cases be?
find a home specifically on a chain and that could somewhat become that chain's use case.
Anyone can answer.
All right, guys, I can't raise my hand because I'm on the computer, so that's a bit.
Didn't want to jump in too early.
But I think it's interesting to see because this could happen.
It all depends on which massive Web 2 company would ever go to another chain, I would say.
And it, you know, the whole...
Coinbase thing that they go to eat.
Yeah, it has been there long as it's,
I don't want to say it's more secure,
but it has at least an established name,
and you know it's pretty steady.
But I think the moment the massive Web 2 company
moves into another chain, layer one,
even if it's on a layer two on that layer one,
which drives obviously the use of that layer,
whether it's a bank or whatever protocol it is
or whatever the layer does or whatever the company does.
I think that will actually drive quite a lot of shift because now people mostly go to eat
because it's just the easiest, probably the most developed most depths on there, et cetera,
and the use case is just the easiest where I think once a massive company in Web2 moves to another layer,
it might definitely become an eat killer because of all the flaws that I mentioned before by,
for example, B, B, that are there, which are already solved by so many other layer ones.
Yeah, I think that that's a fair point. I think what I'm getting at is that
Ethereum is not, first of all, I don't think anything kills Ethereum in any world,
but I do think that something could jump massively in use case if it found a very specific thing.
I think the problem that we have is it.
every, and we've seen it, especially through the last bull market, through
DFI summer, through NFT, right?
Every one of these chains or projects kept pivoting into whatever was the hottest thing
at any given time.
And to try to like,
compete with Ethereum on NFTs when it had the first mover advantage, well, I doubt that's going to work.
And to compete with Ethereum on Defi, so I think it has to be an emerging use case where Ethereum does not have the first mover advantage for any of them to have any chance of catching up.
That's sort of my base case.
DB, go ahead.
Yeah, I could see to your point at least one example that would have a specific use case and might completely control.
And that's HBarr.
And I'm not a HBarr bowl or a maxi or anything, but they completely have control of the enterprise market right now.
They've got massive clients and look at their transactions.
They found their niche and they're running with it.
And I don't see any other chain really overhaul.
overtaking them for that.
Whether we're going to have someone do that for NFTs or
defy,
that's not sure.
Defi,
I would think so for sure.
Because I don't think
ETH and Layer 2s are set up well for
Defi.
What enterprise is building on,
Hadera?
What do you say, Dan?
Sorry, I would interrupt.
What enterprises are building on
Hedera?
That's news to me.
Oh, not building on,
using the blockchain for,
like, inventory management,
supply management.
That's why they have billions of transactions.
Which one? Which one? Sorry, I've been following Hedera and I haven't seen this. I'm just interested to know where these, who these guys are.
I'll look it up. I'll get back to in a minute. I thought so. I know Boeing, I think, listen, and I never, I always take grain of salt with partnerships in crypto, right? Because how many people partnered with Google that were literally just like using Google Cloud Services and said that they were partners?
Well, I'm looking at up here. We have, uh,
Hold on, Cryptobanter is partnered up with Apple, actually this morning.
Me too.
I'm using my phone.
Yeah, well, I bought a laptop, so I partnered up with Apple.
Apple, I'm actually setting up my new laptop because Apple and I have got a partnership,
except in this partnership, I paid to buy their products and they don't even know about it.
I do remember I had Mance, yeah, I had Mance Harmon from Hedera on podcast maybe a year and a half ago.
We sat down at Consensus.
I think what's somewhat novel there is that their governance, I think, is from a council, which has like Boeing, let me look at it up, Boeing, Dentons, George Telecom, Google, etc. are all part of the governance.
So whether that means they're using it or not, they do clearly have...
relationships, I guess, with these large companies.
But like you said, I mean, we all know it can, I'm not saying it is,
but it can be smoke and mirrors in crypto when we talk about partnerships.
Yeah, so these aren't partnerships I'm talking about.
These are actual large enterprises that are using the chain, and that's where the transactions are coming from.
Their first is Avery Denison.
And Avery Denison is doing something around 2,000 TPS alone on the chain, just between supply management and inventory management.
So it's a use case.
And again, I'm not a HBarr Maxie or Bull, honestly.
But...
they found their niche. They're going after enterprises that are looking to use a blockchain for
data storage, basically, and they're great at it. Yeah, I think that's really interesting. I think
it's very clear that they don't need to be an Ethereum killer to be viable, right? And I mean,
I think that that's the main point there. Dave, go ahead. You have your hand up.
Sorry. Yeah, sorry. The thing that I find most interesting about, you know, the topic is really about whether or not there's value in the native token, which half the people probably, I'm way low there. The vast majority of investors in all of these tokens actually haven't really thought through whether there is a need for a native token or not, other than people kind of know they want to incentivize the market. But it.
There is a massive chicken and egg problem here with regard to liquidity of the actual
native tokens themselves.
I just hit a quick look.
$10 million if you tried to sell of BNB, you could knock it down 5%, 10%, and $15 million could
take it down 25%.
H-bar is even worse.
50% down would be where you would have to sell $10 million.
And in Ethereum, it's 0.3 of 1%.
Now, why do I mention that?
It's because there's a huge chicken and egg problem.
You can build technology that's incredibly well used, but if the thing that you're using to incentivize people is literally completely illiquid from any substantive institutional use.
people aren't going to want to own it for that purpose.
They may want to use the technology,
but that liquidity has to be taken into account.
And when you talk about network effective Ethereum,
that's really what you're talking about.
You're talking about network effective liquidity and value.
Ran, what he just said, I didn't realize the numbers were that aggressive.
Rand, that really makes you think about what you were saying about FTCS in this market.
Yeah, I mean, I didn't realize the numbers were that aggressive, to be honest.
Yeah, I mean, look, I've been looking at the BNB stuff because, you know, we've all been obsessing.
I know it's not today's topic about BNB.
It can be have at it.
You well, I mean, look, I would love to have Mike Alfred on and see why he really believes that that finance, which feels to me like it should be massively profitable, needs B&B to be above a certain level than to be solvent.
I'm not, I don't subscribe to.
I mean, I've been reading those reports all week, and to me they sound like absolutely misinformed.
I mean, it's not like FTX.
Yeah, I agree.
As I said, my point isn't to dignify them with and say that their right or spread fud.
I'm not saying any of that.
What I am saying is that anybody who thinks that B&B is good collateral should have their head examined because there's just no liquidity.
Right. You know, literally it just, the numbers are staggeringly different in terms of liquidity on the book. And if the entire Bitcoin rallied, you know, whatever, $500, $600 because B&B rallied, consider, you know, that whenever you have a situation where you can move a market.
in something that's very liquid
with something that's very illiquid,
people will do that.
It's called liquidity arbitrage.
It's literally the same thing that happened,
a different version of it,
when you do liquidations.
But we weren't talking about that.
But the point about all the other layer ones
is if there is not enough liquidity in the coin and people aren't accepting it, except for a niche, you need to broaden beyond the niche, but it's a chicken and egg problem.
And that's what I really want to get at because I find myself agreeing with RAN.
I guess it's your turn for me to agree with you on what you were saying, but that's the reason I believe that.
Yeah, go ahead, Bill. Those are great points. Go ahead, Bill.
Yeah, yeah, great points. I'm going to come at your question, actually, from more of a technical perspective about, like, you know, what would it take?
And I do think, though, I agree with Dave. It's all about niches. And, you know, there are certain niches that, you know, we know, we know,
Ethereum is just not well designed for, right? Like feeless transactions, you know, it's something that can be,
I guess sort of can be hacked around or like MEP prevention.
And so I think what we're going to see in terms of other L1s is from a technical perspective,
what are problems that Ethereum is not very well equipped to solve, right?
So things like IoT, like extremely fast transactions, stuff like that.
And so I'm not sure, you know, I never know.
what the future will hold, but I really think that, you know, we're going to see some niche that people want to have a decentralized solution for that they're going to find Ethereum is not a good fit for, just the EVM model, et cetera.
Agreed, Bill.
So, but then it becomes a competition between layer two's and these other layer ones, correct?
Because, I mean, the entire point of layer twos is to solve exactly what you just stated.
Well, right, but there are some problems with doing that on an L2, right?
So you do need to also have like, you know, your own mechanisms for, you know, for some sort of like decentralized sequencing or, you know, you can have something centralized.
And we see, you know, problems with that.
Ethereum wasn't, it's now being built for that.
You know, this is really what PolkaDot was designed for at the beginning.
It's actually very similar to like a whole...
system of decentralized optimistic roll-ups so that allows you to do more so it doesn't have to
operate you know on you know with with decentralized uh i think polka dot showed a lot of promise but i
think polka dot i think made a critical error when they made people bid or pay to be part of
their ecosystem through those those para chain auctions uh
And then, you know, when they, when Cosmos came and offered something very similar.
I mean, I know there are subtle differences between the way the technologies work.
But I think when Cosmos started offering the interoperability without the need to pay,
I think PolkaDard effectively put itself out of the market.
And I don't think that PolkaDoc can actually make a conduct.
I wish I did. I'm holding quite a bit of PolkaDot.
But I think that they made a fundamental design floor, unfortunately.
Yeah.
So actually, it's interesting you mentioned that.
You know, that's something we've seen also.
You know, so Gavin Wood, our founder just recently had a big talk about like the changes that are being planned, you know, potentially for PolkaDOT in terms of, you know, removing lease auctions and having your projects pay on a, you know, per block containment basis.
Right.
So there certainly were, you know, like some issues with this, but they are actually being worked on.
Yeah, but I think the problem is, you know, it's like you're running a marathon and the gun goes off.
And for the first 20 miles, you know, you guys are running in the wrong direction.
And now you're trying to run back and, you know, we'll make changes.
But I think the problem is that the pack's gone far ahead of you guys.
Well, I mean, there's still a lot of projects being built on Pocod, and a lot of these other projects have also went in different directions, right?
You know, Ethereum was proof of work for a long time and it became proof of stake.
You know, I think it is possible to make, you know, even relatively major changes to a project if there's good fundamentals to what is being developed on it in the first place.
I think it just comes back to the idea that somebody needs to have a killer app for all of this stuff somewhere.
I mean, that's the, at the end of the day, that's really all that's going to matter.
None of them are catching up to Ethereum just based on the tech.
I really don't believe that people care that deeply about it,
especially when you have such a strong advantage.
So somebody's just going to have to have some killer app that goes wildly mainstream,
a chat GPT moment for one of these chains if they're going to ever compete with Ethereum.
Maybe I'm wrong with that's what it feels like.
Go ahead, D.B.
Yeah, and I'm with you there.
And that's part of the reasons why I'm so big on multiverseX, EGLD,
because they have a huge focus on UI and UX.
And if you have ever tried X-Portle, you'll know.
Yeah, I'm a fan as well.
I think everyone should have for years.
There's no knowledge that can touch X-Portle.
Just try it.
You'll see what I mean.
It's the most easy to use, best-designed, functional offers far more than anything else in the market.
And they take that approach with all their products.
And they got a very user-first approach as well as security.
And I'm big on security.
And unfortunately, it's something that's really
really, really overlooked in the space.
Hence the eth issues and constant hacks and drains.
So it's not something people really care about.
But if you look at the really, really secure networks,
they're the ones that I think are going to pull out
and really show some major growth in the next coming years.
Well, I hope so. I want to ask Ben Cowan, since we have here, both Ben's actually and Dave.
I want to circle back to what Dave said because that's just sticking in my brain, and I find it shocking what this means for markets.
And so Ben Cowan, and then Ben, as an exchange, obviously, CEO, I want to hear your perspective on that.
But Ben Cowen, when you hear just how illiquid this is, just how much these can move, does that just sort of strengthen your general thesis on all coins right now?
Yeah, of course.
I mean, you know, you saw how old...
And we've talked about this, I think a few times on the space,
but we saw how weak the Alkoyne market was, you know,
in a general risk-on environment where they couldn't even take out their
their October, November, 22 highs.
And so you have to ask yourself,
how's the Alkoyn market going to perform if we go,
if we're in a risk-off environment where, you know,
asset prices are generally heading down.
And the Alkoyn market is just highly liquid.
I mean...
you know, Ethereum, I mean, to the topic of the space, I don't really think there's a such thing as an ETH killer. I mean, I think Ethereum has sort of proven itself and it will stick around. With that said, I think the Ethereum dominance is a bit high right now.
It's currently at over 19%.
I would actually expect that to fall back in to maybe like 10 to 15%, perhaps by the end of the year or early next year.
But again, I mean, you're going to see some auctions outperform Ethereum in the next cycle just because they're going to be like new all coins and they're just much smaller market caps.
But.
I fully expect Ethereum to hold on to its number two spot.
But I also, I don't think it's going to take the number one spot either.
I think it's just going to stay where it is at number two.
I think that's the safest bet.
Ben, yeah.
by bit. How do you deal with this in this current environment? I mean, you've been through,
we've obviously been through bear markets before where there's no volume and there's minimal
liquidity and things are extremely slow. I mean, how do you reconcile that when you're the
CEO of an exchange with market making? I mean, what prevents someone coming in with some huge order
and just rocking the market? Yeah, so definitely it actually happens. So what's pretty funny is
we're actually running the...
in the third year, our WSOT, the World Trading Series, World Series of Trading and you see that actually there was a few teams that tried to abuse our competition because the top price would probably give the top team about close to $1 million in price.
So they actually, there was, I think, one team from Czech Republic
that was simply trading all coins and manipulating the mark price.
Basically, they would multiply the mark price from all the exchanges
and then try to gain the yield here just to win the price.
So obviously, you can tell their cost.
has to be lower than the price, because otherwise it wouldn't make sense for them to do so.
So right now, the liquidity on these oil coins are just extremely low, and obviously...
there's probably market manipulation happening,
but because no one's training them,
so probably it wouldn't be so profitable.
And to the point that, you know,
such as WSOT, when we have a price pool on top of it,
then it makes sense to start manipulating
these type of things.
Yeah, so the market is different low and the outcoins are, you know, the liquidity is different, a huge issue that we see.
And all of the trading has been consolidated back to Bitcoin and Ethereum.
You know, as exchange, what we have noticed a very interesting pattern is that on ByBit, we have a unified margin system,
meaning that you can actually use any token to trade any pairs.
So I think since the past three months, all of the institutions and most of the even the retails are using non-stable coins to trade as margins.
So they would use Bitcoin and Ethereum as margin to trade.
And the recent number we got actually was about 70% of the trading margins.
Wow.
On Bible at least are Bitcoin and Ethereum.
So it's no longer Bitcoin.
I mean, stable coins.
But again, 70% because we have a lot of big institutions,
probably that's their preference that will skew the data a bit.
But that data surprised me quite a bit as well.
Yeah, that's really surprising to me.
It's like returning back to 2016, 2017,
when everything was trading on Bitcoin liquidity
because stable coins weren't really a thing yet.
Yeah, yeah.
Yeah, I find that very, very surprising.
And interesting what you just described, because Dave, Weisberger, you were on the stage, you were on the stage, was it Monday?
I think on Monday or Tuesday, and we were talking about the Bitcoin move last week, right?
And how we had seen this sort of move very quickly in five, ten minutes, all the way down below 25 on some exchanges and how that was likely just...
I hate to say manipulation, but, you know, basically somebody had accumulated a huge spot-bite.
It's likely manipulation, Scott.
Right, but it's exactly the same thing.
What he's describing is a microcosm of what we even see on the Bitcoin moves with bigger whales, correct?
Look, I just did a quick look.
And right now, if you tried to sell $10 million of B&B spot across the big four exchanges on the spot of BNB,
which are Ku-coin finance, Schwabee and Oakex.
Selling $10 million will literally knock the price from down to $200.
$10 million.
You'd get an average of about $208.
Now, if you try to sell $10 million of B&B pair, I mean, perpetual swaps, you get an average of 215 and you sell down to 211, which is a very big difference.
So whenever you have these differences, these differences, there's more speculators using margin to trade.
You know, and the perpetual swaps are more volume.
We understand that.
But what that creates is potential for what traders euphemistically call liquidity arbitrage.
In all these situations, you can do it.
Now, what happened in Bitcoin was more or less the same thing, just on a much larger scale.
And the perpetual swaps are more liquid there too.
But in Bitcoin, to knock it down, you know, the whatever 10% that it got knocked down,
took somewhere between, you know, around $500 million worth.
So you have to accumulate a position of a huge size.
And you're taking a huge risk because if a buyer steps in and you actually don't get to knock it down where you thought it was going to knock down,
you end up losing a lot of money because you get short squeezed.
In these all coins, it happens every day.
you have people who acquire positions with their longly all coin and they're short the perpetual.
You know, they accumulate slowly and then they reverse their position in a hurry and make money.
That from a trading point of view, most traders aren't real happy about that except for the ones who are doing it.
We're talking about like a million dollars versus $500 million.
Well, about $10 million versus $500 million.
But yeah.
But the point that's important from the by bit point of view is if Bitcoin and Ethereum are pretty good collateral, liquidity is pretty good.
It's not perfect.
It's not like a stable coin where it's perfect.
So as long as you take a haircut on that liquidity, it's a small haircut in Bitcoin or Ethereum.
I just told you on most all coins, if you accept that as collateral, and that was the real problem with FTT, for those who don't want to forget, I mean, we should never forget.
FTT should never have been accepted as collateral without a 90 to 95% haircut.
because of the same problem.
When I say haircut for those who are listening and don't know what I mean, I mean, the exchange is giving you the ability to trade based on that collateral.
If there's not enough liquidity, they should say, well, okay, you deposit $10 million of this stuff.
But, you know, it's really only going to be about $1 million worth of good collateral because of the liquidity haircut.
That's what the industry uses as a term.
it's hard to do, but it's important to have that done.
And I think most exchanges are doing that one way or another.
FTC claim they were doing it.
They obviously weren't.
but that's kind of a big deal.
And so I just want that to be clear to people.
I'm not against the idea.
In fact, I think the way that Biba is doing margining makes an enormous amount of sense.
And it makes for capital efficiency.
It's better for traders.
And it's a good thing.
But you do have to understand the value.
Yeah, I mean, you can look beyond centralized exchanges.
You can look right into defy and what's happening with Curve right now.
You know, I don't remember the exact numbers, but I think he posted three and a half to four times.
Curvement.
Curve and collateral to the loan, and that's at risk of being liquidated, right?
Well, I mean, Curve, same thing.
Literally $10 million.
I can just, in our software, just pull it up.
Curve right now is trading at 45 and, you know, 45 cents and change to sell $10 million,
literally $10 million of curve right now.
Do I have this right to...
47. I mean, it looks like there's only two and a half million dollars on finance, Wabi, and OECS together. That's where the bids are. There's just very little bid for that's in tether. Now, obviously, this curve in Bitcoin and other things. But the fact is, there's not a lot of liquidity out there. Those. And so, yeah, you can knock the price down and move it around as much as you want. I mean, taking that as good collateral is incredibly problematic.
That's so interesting because I can't quote the numbers.
I don't have it in front of me, but with the, and I know we're going a bit off topic here,
but I just find that so interesting.
With the curve situation when we saw the first drop after their hack,
They started doing these massive OTC deals on handshakes, right, saying basically, I'll sell it to you at 40 cents.
You know, it was trading like 50 something at the time after the first drop to 47.
We'll sell this to you at 40 cents. You won't sell it.
And I thought we were talking about like 30, 40, 50 million dollars purchases.
Maybe it was less.
Somebody, if I'm wrong, quote me.
But you're saying that with a couple million dollars, you can send this way down and liquidate these people in theory.
I don't know what to say.
I mean, you know, it's, we, people don't like to hear the word regulation in crypto,
but I tell you what people do like when they're trading.
They like to know whether the level, whether the playing field is level.
And there's a lot of liquid instruments in other asset classes that trade with less
stuff going on.
We'll just leave it at bat.
That doesn't mean that I'm for, I am, as you know, I'm hardly a fan of, of restrictive
regulation.
But.
The fact, this manipulation is still something that most people would like to see not happen.
Yeah.
I'm so glad you jumped on stage because they gave me so much perspective on this market and really does still apply to the topic because we can talk about the,
technology all day and what the people are building and ux and ui and all these things which i do think
will be important if and when we eventually actually actually get you know a few hundred million
people using this but none of that works if the token is so volatile and it's the base layer of it
Well, I mean, look, I want to be really clear here because, you know, we are certainly, I personally and my company, we are huge proponents of what's happening in DFI.
And for many, many reasons that we're actually working to solve some of those problems.
And we'll talk about that.
I want to do an advertisement for my company now.
But there are markets where DFI is a clearly better answer.
when everything is shaken out like whoever was talking before i missed who it was talking about
the issues with the draining and ethereum i mean these niche technologies could be very very large
i mean if you look at the the repo market you look at the securities or pretty much everything in the
world of securitization and the way that a lot of this stuff actually works there's an enormous
amount of economic rent being taken out of the financial system by people that defy can disintermediate
it just needs to grow up and
And it needs to have, you know, the technology keys to keep involving.
And I agree, we are really early, but the potential is massive.
I just want that to be very clear because it sounds like I'm a skeptic.
I'm just pointing out the facts.
I'm not saying, you know, where it is today.
But we are very early.
I mean, you can't get it very, very early.
I align with you exactly on that theory.
I mean, we were, I was digging into it with Josh Frank from the tie on my show yesterday.
And we were just kind of joking.
I mean, Defi, it's, now it's gotten to the point where, you know, curve.
These are huge names.
Obviously, Balancer had an exploit two days ago.
There were two exploits yesterday of platforms I'd literally never heard of that were like for $7 million.
And I mean, it's just pretty constant at this point.
So it's very hard to want to commit yourself to putting a massive amount of money in here.
If you have the known risk and then the unknown risks as well.
But to your point, we're just really early.
Well, but I actually listened to your talk with Josh, I say, which was great, by the way.
I mean, you know, I often lurk in your audience, Scott.
Sorry.
But the point that was coming to me is,
People always chase the last war in everything, right? Technology, whatever. I mean,
Defi as a tool for getting yield in a zero interest rate environment was what got
Defi off the ground. But that is not the ultimate use case for Defi. The ultimate use case for
Defi is really being able to swap assets in a much more frictionless manner.
And so the trading side of defy is not necessarily what you're talking about there.
There, if you're trying to chase enhanced yields, which is another way of saying, you know, frankly, you get what you pay for.
If someone's paying you 18% in a 5% environment, there's risk there and you should understand it.
And part of that risk is the, they, is crap security.
And so it's really important to distinguish.
Defi is not just yield chasing.
Yeah, that's an important point. And you made the real killer argument quietly in there, which is the 5% yield environment, right? And most of quote unquote safety, which still has its risk at this point is actually offering lower yields than a United States treasury, right? You can buy a two-year treasury for 5% and not worry about getting hacked.
I think that that's really, really important.
I saw Fidgital up here, but, oh, there, he jumped.
We're going to move towards rapping here soon, but Fidgital, I did have you up here, and I know you've been listening.
Is there going to be an Ethereum killer, or is this hyperbole?
Maybe his mic's not working.
It shows me that he's speaking, but not.
All right, guys, I mean, I think that we've done a great job sort of covering this topic.
I think the consensus is...
is that, or at least from my end, is that right now there's not going to be an Ethereum killer.
But what you're talking to?
I was trying to, and then you didn't talk back.
Stillerman was calling me.
He's annoying in the morning.
Yeah.
You and Mario are off doing something and ignoring us.
Yeah, he called me too.
So, yeah, what I was basically, I was asking you for a quick summary.
I know you've been listening along.
I mean, the notion of an Ethereum killer, are we, is it just crazy at this point in 2023 or is it a real possibility?
I don't know.
I don't see...
Whenever I speak to any other L1, their only explanation is how much market share they control.
They never talk about functionality.
So I don't see why any other L1 would have any impact on Ethereum long term.
I think they're way too ahead of the game to undermine in terms of adoption, functionality, and expansion.
So...
Unless we don't want to actually use blockchain for tech and for building products, I don't see anything.
And I don't see any reason why anything would supersede Ethereum.
I think that's the perfect summary.
I found it very interesting mostly because Dave, just the way that this conversation sort of shook out.
Yeah.
gave me more of an agreement of exactly what you're saying, especially when you look at the liquidity of these coins and what Benjamin Cowan's been saying for a very long time about what we're going to see with all coins.
But I do think in the next cycle, once the liquidity comes back and things start to build and we'll start to see all of the things that were built during the bear market, that there's going to be a lot of optimism and a lot of things.
and use cases that will come out of these other chains.
I just don't see any of them personally replacing Ethereum.
And we obvious, go ahead.
My last thought is I'm really, really bullish that base becomes the kind of the internet of blockchain.
And it's essentially, I mean, it's essentially Ethereum anyhow.
So with the winners built on top of it, it's not going anywhere.
Yeah, someone here, I mean, made the point very early in this conversation.
They said, look, I think it was Dan who's gone.
But he said, look, you know, base, we're talking about Coinbase choosing to build on
Ethereum, not building their own chain, right?
And that should tell you all you need to know, I think, about this argument.
I think you're absolutely correct.
And I would be remiss not to mention, first of all, it's not on stage at the moment, but you can see a pin tweet above from Crypto Town Hall. That's Crypto underscore Town Hall. It's that red logo up there. That is, I know we keep saying it, but we're waiting for the account to get bigger. We're going to.
start hosting these spaces eventually from that account.
So we need you guys to follow that.
And more importantly, the tweet that has been there,
and coincidentally, we have been here today,
but we are really proud that Bibit has been a partner along the way,
supporting us and you can sign up using our link.
I think it's probably, you can clarify for me, Ben,
but I think it's probably too late to participate now
in the World Series of Trading, right?
I know Ran has the banter team
that consumed Cryptotown Hall,
but you can still sign up, check out ByBit
and get all the incentives that go with that.
Is it too late to join a team now, Ben?
Yeah, it's closing.
We're finishing, the competition is finishing three days.
But we achieved the all-time high for enrollment and everything.
It's really...
Yeah, is it close?
I haven't checked the leaderboard.
How close is it at the top?
Who?
Who?
Banter team?
Well, banter in general, but like, is there going to be, is this going to be a photo finish, like, between any of the teams?
Is it really tight at the top?
Yeah, it's pretty tight on the top.
And we have 1,100 and 5,000 people participated this year.
So it's pretty close game.
That's insane.
That's insane.
Yeah.
Yeah, man. Awesome. Well, yeah, I think everybody, go check that out. I'm going to go check out the leaderboard. It's really fun to watch.
We were making fun of a banter they weren't winning.
You know, but I would love to see Rand's team pull it out at the end.
Ben, thank you so much. Thank you to all the other guests here. Of course, we will be back tomorrow at 10.15 a.m. Eastern Standard Time.
Once again, please follow Crypto underscore Town Hall and check out by bit. Thank you, everyone.
