Hivemind: AI Frameworks, Bitcoin L2s, and Death of OG Memes

There is a small number of people in Silicon Valley and tech circles and determinately online who understand what AI is going to do and what it means for the, for the world, how big it is. And I think over the next few years, the rest of the world is going to realize that. And I really think it's going to be the biggest bubble in financial, like, like history.

We basically made a bet when it was like $2 or something.

$2. Yeah.

Go above $3.40. And after the week after the election, I got crushed. So I said I would, I would wear this. This is a good time. I would wear this on the podcast. So right now you look good.

Yeah, you look cute.

You look really good, dude.

Nothing said on The Hive Mind is a recommendation to buy or sell securities or tokens. This podcast is strictly for informational purposes only, and any views expressed by anyone on the show or are solely our own opinions, not financial advice. Hi everyone, and welcome to another episode of the Hive Mind podcast. The goal of the podcast is to provide an inside look into what we like to call the Delphi Hive Mind, bringing together some of our brightest minds from each of the divisions to share insights Alpha and Shitposts. Today, Jan's at a wedding, so we have an unusual crew. I think it's the first time we've had us four on together. Ceteris paribus, heads up our institutional research arm, regular on the Hive Mind. Jan's not here. Then we have Duncan, the prodigious shitcoin scavenger and investor, and Jason Yanowitz, who is head of markets for the research division. And obviously me, I head up Delphi Labs, our protocol R&D arm focused on incubating and accelerating new Web3 primitives. So it's been a very volatile week in crypto. Maybe we can start by just talking a bit about markets. Like right now we're recording on Wednesday at about 4 PM GMT. Bitcoin's back up near $100K. We've had a bit of a bounce from the lows where it touched below below 90. Uh, maybe Jason, you want, you want to kick us off with like just, just quickly what happened with, with the macro, why we're pumping today, the CPI? I know it's not particularly interesting. Maybe we can rush through it and then just get everyone's takes on where we are and whether anything's changed for you and your, and your thesis.

Yeah, for sure. Um, so yeah, like Jose just said, it's been a pretty volatile couple weeks actually, right? Uh, pretty much dating back to the start of the year. We had we had to sell off pretty much with the FOMC at the end of December. Uh, we were at $108K. I'm pretty sure I was— those— maybe one of the last times I was on, I was like, yeah, markets look great. And then within a couple hours, within a couple hours, we nuked from like $100K down to low $90K. And then to start the year, we had a nice little pump which sold off. Everybody got liquidated.

And the last Hive Mind, we were like, had the most bullish targets ever for crypto in '25 and proceeded—

the market proceeded to dump pretty much the same Yeah, we have a, we have a, we have an excellent track record when it comes to bull posting on here.

Well, I think we were both bull posting the AI frameworks and stuff and then they all got cut in half in like the next couple of days.

Wait, when was that? They're so bad now.

They're so bad now. My biggest takeaway from the dump and sorry, we kind of like we're whatever digressing here. My biggest takeaway from like the dump and this rebound here is that like nothing has changed fundamentally. With like sectors and what people are interested in. Like the things that are outperforming the most on the bottom are virtual and AI 16Z, right? You're still seeing Bitcoin outperform most things. You're not really seeing like some broad DeFi rotation. Old memes are still not really doing much. It seems like that's kind of a sector that people aren't interested anymore. So from my perspective, it's just, it's, it's same old. It was just, we had this wipeout and some of it was MACD related, and then other, like, the other stuff was— we talked about this last time— a lot of these charts were kind of nutty over the past few weeks. And it, like, people, you know, things that go up a lot have to come down by a decent chunk too. It's just like, these are the way things go. So yeah. I don't really think there's been any material changes from my opinion, from my point of view. And like, now, you know, Trump's coming in Monday, so yeah, I generally agree.

I mean, we had that like pretty big liquidation— what was it, I guess on Monday this week— where we kind of tested like 89 or something like that. And a lot of that was like positioning. You, you kind of had like the news last week of like the DOJ trying to sell $6 billion of, of their shares, which was like fake or regurgitated or like— yeah, still not exactly sure what, what was going on with that. But right, like the closer you get to the inauguration without anything like materializing from that obviously is probably bullish, right? Because if, if it was real and they were planning on selling but they don't sell by the time Trump comes into office, they're most likely not gonna sell. So that's, you know, uncertainty removed from the market. Right, like kind of what Sutter said, like I don't think anything's really changed. I think most of what you've seen from the start of the year to now has just been kind of like really jittery positioning, trying— people trying to like, I don't know, either front run the inauguration, front run news, uh, getting wiped out because of the, you know, heightened volatility. You've, you've had like volatility in TradFi too with like the S&P too, so it's not just crypto. It's been, it's been a pretty volatile couple weeks. I just, yeah, I don't think anything's really changed, and I think with, you know, the, the macro prints coming in today, like, uh, better than expected. I think it kind of increases, you know, more near-term targets. I am slight— like, it's kind of— I guess it's like kind of counterintuitive. Like, the more you run up into like an event, like, the more likely the event becomes like a more like a sell the news in the short term, right? So like, in terms of like the inauguration on Monday, like, if Bitcoin keeps running up from now until then, like, I would be kind of worried that like it materializes in some kind of like immediate-term de-risking, kind of like what you saw with the ETFs. We ran up into the ETF approval, a couple days later we sold off, and then we resumed, uh, you know, up only, back up to like, like $60,000, $70,000. So like, if, if we continue running up in the next couple days, like, I'll probably be more worried about an immediate-term sell-off on the inauguration versus if we kind of just like putz around and maybe like do a little bit of consolidating beforehand. Um, but then again, right, like Trump could come in and just like start off with a ton of executive orders like he did in 2016, some of those aimed at crypto, which will move the market. Like, market's not that liquid compared to everything else, and if he, if he was able to move tradfi markets last time around, he, he'll be, he'll move these markets much, much more.

Yeah, people like are asking me my outlook and I'm just like sending them the photo of Donald Trump Jr. with Saylor and like the fact that like Barron Trump's like into crypto, like all of his kids and his like entourage is into crypto. And it just feels like, um, I don't know, I saw this thing on Twitter, could totally be not true, but kind of seems to check out if all of his children are in crypto where like Trump looks at the Bitcoin price and he kind of sees it as like the stock market for young people. Um, Yeah, again, I don't know if that's true or not. I think it's a pretty believable story given all of like his kids and like young people he's very close to are into crypto and the ability for him to move, you know, the stock market versus crypto, you know, it's a lot easier, like Jason Yanowitz said, for him to move crypto. And if he like uses that as like a scoreboard for like young people, talks about being the next crypto, the first crypto president or Bitcoin president, I think that there's like a lot of levers he could pull to help crypto out. But obviously we've had like a massive run-up after the election and we're just digesting it here. And I think, yeah, really the magnitude of the move we'll have is kind of dependent on what Trump actually does with crypto and then also the levers like he has, like people. Appointed pull within, um, like the bigger macro market, like the, like Scott Benson, what he does as a Treasury Secretary and stuff.

Yeah. Um, I'm, I'm pretty much on the same page. It felt like a pretty good kind of buying opportunity having this dump before Trump, Trump gets elected. I think the, it's like pretty easy to just take a left curve take on Trump being elected. There's a lot of easy wins he can have with crypto. There's literally a crypto bull happening in Washington. Like, this thing went from the industry that no one wanted to touch, that was just like overwhelmingly hated. Now there's a crypto bull. There's going to be like a crypto advisory council. We have a crypto and AI czar. Just don't overthink it, I think. It feels like Trump is definitely bullish crypto. I mean, obviously the bear case is that he doesn't deliver anything, which would be not unheard of for a politician to make promises that they don't keep. It's sort of the playbook. And Trump in particular, it doesn't seem like the most trustworthy guy. But I just think it aligns with his interests to do so, most likely. So I'm pretty bullish. And I actually bought a bunch of the AI framework coins that I missed on this dump just because, yeah, I don't know. My take on it remains the same. Like, I think there's a lot of vapor with the AI agentic framework things, but I just think AI itself is going to be the biggest narrative of 2025. Like, my overall take is just that we're going to get AGI in 2025. Like, the CapEx numbers by the hyperscalers are just absurd. Like, Microsoft on their own are going to spend $80 billion. Pretty much all the other hyperscalers are spending every single dollar of free cash flow on CapEx to build out compute to train AIs. You have inference time compute now, and I just think the progress in 2025 is actually going to accelerate from 2024. We're going to get AGI. What does AGI mean? So AGI to me means like matches or exceeds human level capability across a variety of fields and, and probably also has like some agentic capabilities, which means they can take actions on, on your behalf. But like basically like a PhD-level intelligence across like every field, uh, that can act as a research assistant, like an investment analyst, like this kind of thing. And to me, it's like right now there's a small number of people in Silicon Valley and tech circles and determinately online who understand what AI is going to do and what it means for the, for the world, how big it is. And I think over the next few years, the rest of the world is going to realize that. And I really think it's going to be the biggest bubble in financial, like, history, just because, like, it has the strongest fundamentals, right? And it's easiest to tell big stories around the things with the strongest fundamentals, right? You've never had a technology with, I think, this strong fundamentals this early on, like the revenue that OpenAI is generating. And I think the revenue that the coding assistants in particular are going to generate And so I just think like even with strong fundamentals, humans can always obviously like get— will always get overexcited about things. There will always be cycles. And I just think AI is in the beginning of like— I think that big AI bubble is sort of yet to come. And to me, it's inevitable that that just— even if you assume that crypto AI has no fundamentals whatsoever, which I don't think is the case, like we've made the case for the fundamentals of them. We've published research about it. Don't need to go over that. But even if you think It has no fundamentals. I just think the flows on their own, like, how do you play this AI narrative? Like, the Mag 7 are really overpriced. You can't, like, gamble. Well, they're not overpriced, but they're actually pretty cheap compared to telcos in 2000. But you can't really gamble your way out of the underclass by buying big tech, right? And then stock picking is really hard. People think it's kind of a rigged game. VC is not available to 99.9% of the population. So what's left? Punting on crypto AI coins. And I just think the sector, like the agentic sector, is it $10 billion? The crypto AI as a whole, is it $50 billion? And I just think it's going to, as we said in the predictions episode, it's just going to keep going up. And you want to have on the, just a basket of the fastest horses, I think.

I mean, this has been my thesis on it from the beginning. Yeah. Is I didn't have a good thesis on it, but it just seemed pretty obvious that it was going to get a lot bigger. And it's kind of like, you know, like ape first, research second. It's kind of, it's kind of like get exposure to whatever seems hot, and then when something real comes, make sure you like identify that within the sector. But you're kind of just like betting on the sector to grow. At the same time, what you saw over the past like week before today is a good What's the word I'm looking for? Like a good thing to keep in mind that, you know, I think a lot of people have this thesis that they're not really sure how these things are going to keep value. And so when you see sell-offs, especially when they run up a lot, like they are pretty vicious. And so I imagine throughout this year, like, you know, I'm definitely not diamond-handing AI coins like all year. I think you're going to get some pretty vicious wipes like you've seen. There's been some pretty nasty rotations on-chain. Like, I've seen people talking about this one framework 2 days ago when the other coins were down a bunch, and now those ones are all up a lot, and this one's down 50% in like 2 days, right? And so it's definitely, uh, yeah, I don't know. It's, again, I agree. I think it's going to get a lot bigger. I still think it's kind of it seems like the leaders now are, you know, Virtual and AI16z, but I don't think that they have some insane, like, stronghold on it. Uh, it seems like it can be challenged pretty easily to me. And it's like the TAO thing, right? It's like, why aren't people buying TAO? And it's like, TAO was the only game in town for a while. And now there's a lot of things that actually people are using. And were valued less and don't have the crazy emissions, right? And so I think the same thing goes for like Virtual, AI16z, all the other ones, um, that I don't think they have some insurmountable moat or something. And so it's, uh, yeah, you just gotta be like paying attention all the time.

What do you think the moat currently is for things like AI16z or Virtuals? Because obviously like they are the current leader right now. Like it's kind of undisputed, at least from from where we stand today. So like, what is that? Is it just that, you know, AI16Z, GitHub, everybody's using it? Like virtual-based proxy?

Like, I think Virtuals is probably a strong— I think like Virtuals is safer of the two. Um, Virtuals has like, it actually has built-in value accrual. Like today they announced over the next 30 days they're swapping like $30, $40 mil at like current prices of the agent tokens. Um, they have this, you know, they— I don't think the pairing with virtual is like that big of a value sink, but the fact that like you need to pay in virtual to launch these agents and everything, um, is good. AI-16z is totally— it's just like pure— you're just kind of betting on the fact that Eliza is a very used framework and that, uh, there'll be a way to like monetize that. It's definitely AI-16z is definitely overall just like more of like a shizo. It's like the cathedral and the bazaar, right? And so cathedral is virtual and bazaar is AI-16z. And that also kind of just goes with like base or like Ethereum versus Solana too, right? Solana is definitely more like bazaar type. It's a bit more all over the place. So yeah, I don't know. At the end of the day too, it's like these agents, this is the first narrative too that you've kind of seen people not really care about what chain it's on. I mean, obviously there's always going to be people that care about that, but you're seeing more and more people like not care too much because at the end of the day, what are you really putting on chain with these agents? It's like for AI16z, it's just their fund or whatever. Uh, for Virtual, it's like the liquidity pools and stuff, but you know, a lot of the agent, a lot of the code is like off-chain and there's no real, like these, these agents can do things on different chains. So it's mostly just like where you're trading, trading the tokens and everything. Right.

So, I think it's just attention basically is the main moat, right? Like, cause your, your ability, like the launchpad is the, is really the thing that captures value here and your ability to charge value as a launchpad. Is based on how many users and eyeballs you can bring to the token, right? And whether that's more than what you're charging. That's the reason Binance can charge projects 3 to 10% of their supply to do launch pools, right? And Virtuoz is proving that they're able to do that. And I think that's really the only moat. And that's going to be very, very, I think, fickle. So I agree with you, Cedars, that there's going to be brutal rotations. Not sure I'll catch them. I'm hoping that there will be time to sort of see different things coming, different platforms emerge and be able to kind of de-risk. Because, yeah, like Tao, I think, is a really good example. And I think the current leaders will get Tao'd. Like, you know, there's— right now they're the way to bet on this narrative and there's going to— like, better ways are going to emerge. And also new narratives within AI are going to emerge. And so once you see that happen, um, I think it's, it's wise to kind of keep reallocating. So it's definitely like a trade here rather than something I think you can, you can safely hold for the, for the long term. At least for me, I haven't seen any of the teams for various different reasons that I'm like really confident backing, um, for the long term.

Yeah, like I think you can say, oh, I want to own the picks and shovels, but you can't be certain that these picks and shovels are still the picks and shovels. Yeah, by the end of the year, right?

Yeah. Like PumpFun has had like— is pretty, pretty dominant on that side of the launchpads. Like, why you don't think Virtuells can, can keep that up for a while?

Or— well, from what I understand, their actual frameworks aren't really that good. And so it's more so the ease of launching them. That has been the reason a lot of people have used it. But a lot like the 1000x guys, they launched an agent and they launched it through Virtuals, but they switched to Eliza framework recently. So it's still in— it's still a Virtuals agent, right? And it's still like paired with Virtual and it's still on base and everything. But the actual framework, the actual tech they're using is Eliza.

The worst thing you can do with this stuff is go use the products. Yeah, like, uh, I think like you saw that with 1000x, like there was super bullish virtuals and then they like used the product, they switched to AI-16z, and like on the last pod they sounded way less bullish virtuals. And I think that's a mistake a lot of people are going to make in this, in this market, which sounds ridiculous, but, um, unfortunately or fortunately, it's, it's sort of, it's sort of true. And like the other thing with virtuals and the AI coins is I kind of tweeted this today, But I was like, uh, bearish, and, uh, just for the reasons that we've discussed on the pod. And then I spoke to a bunch of other people, smart people, and I saw a lot of others were bearish too. Um, and that's when I realized I was on the middle of the bell curve, and, uh, and there was a lot of people still left to buy this thing. Because at some point on Twitter, it looked like this was all people were talking about and everyone had, had bought. Um, but actually, when I spoke to people, I realized there was actually a lot of sidelined kind of bears, uh, people who didn't really believe in the narrative. And that also gave me some more conviction to, to sort of, to ape.

The narrative is definitely there. It's just like, there's definitely money, like you said, going to be chasing this stuff. It's just like, right now, these are the only like credible things to buy, that like perceived as credible things to buy. So it's kind of like all the money's flowing into them versus if there's more credible things that launch in the future that like actually have more of a long-term business or are better, more of a moat. I think like those will probably do really well.

Yeah. We had a podcast like, I don't know, 2, 3 months ago or something. We were talking about meme coins, you know, if they're good, bad, whatever. My thing then was like, I think this meme coin capital is waiting for something to buy. And it's not like it always wants to trade meme coins and it's kind of just playing this hot potato game until something comes. It does seem like the AI stuff is, is this. And I'm curious Jason's take on like the OG memes because it's like objectively they have been quite like weak. And I also don't really see people— I see Maraud on Twitter still, you know, talking about believing and stuff, but I don't see a ton of people talking about the like OG memes anymore. Right. And maybe, I don't know, maybe this is like a temporary thing, but it does seem like a lot of attention has shifted from those.

Yeah. Real quick before I give you my thoughts on that, I know we, we kind of had a little discussion in some of our Delphi chats yesterday or the day before around Larry's tweet. And I kind of wanted to get your guys' take on it because you guys are more in the weeds with this stuff. And he pretty much said I'm going to read it right here. It said the crypto AI agent frameworks have little to no technical merit. Any big tech company can recreate the same functionalities in no more than a few weeks. Uh, Vercel AI, for one, is strictly better tech. AI-16 doesn't even break into the top 10 in GitHub starts, uh, yet valued at over $1 billion. So kind of curious, like, do you guys like agree with that? Do you think it's like directionally right, but it doesn't really matter because there's no way for anybody to get exposure to this stuff outside of, like Jose said, Mag7 or these types of, uh, crypto-related projects.

Yeah, I think it's like kind of what I just said. It's like there's— these are the only things to buy that seem credible. And like so much money, because this is such a big narrative, wants to chase this. Um, and especially like so much money relative to how big these things are. And the liquidity on them.

Yeah, that's basically my take too. And for what it's worth, we're currently doing— and again, I'm not a dev, but we are currently doing a deep dive into all the platforms, us in research, so Labs and Research, and we have some devs looking at it. So looking to get a lot more conviction on this kind of over the next few weeks as we dive deeper and figure out like what the actual technical trade-offs are between some of these platforms. Larry's probably right, although it's not saying much that like a big tech company can recreate it in a few weeks, right? Like that's sort of a pretty, pretty high bar. But yeah, I kind of agree with Duncan. And then on memes, I sort of share the same. My opinion at the time was that AI is just a bigger meme than all of the— than a dog with a hat, right? And it's easier to tell big stories and get people excited about memes that have at least some possibility of fundamentals. And I kind of still think that. And I do think you're going to see just like a shift, not just from memes, but from most kind of sectors in crypto towards— I think most flows will go into AI in 2025. But I think memes more so just because it's sort of more direct. I don't know. I think people were like, I just think AI agent memes are sort of superior to traditional memes. And I think the memes you can tell around this, these are much bigger, but I'm very curious to hear your take, Jason Yanowitz.

Yeah. So I think probably generally agree. Like, I think it's like not necessarily like maybe a function of them being better memes. It's just like I just think the market got tired of, like, to Cedric's point, just kind of got tired of aping memes for a year, right? Like over a year almost. There's only like so much fun you can have buying Fwog or Dogwifhat or Bonk or whatever, right? Like, it's like great to make money. Everybody loves doing that. It's fun. Yeah. But like, at the end of the day, most people like I generally think want to buy something that at least has like a tangible value or at least a path to it, right?

What?

No, I, I do. Like, just because I think that doesn't mean I'm going to buy those things when the market is obviously telling you that's not what people care about at the time. Like, you can hold these two beliefs at the same time, right? They're not mutually exclusive. And I think that's generally what makes a a decent tactical trader is like, it doesn't really matter what I believe or want to be true. What matters is what the market is telling you, right? And so for like most of 2024, the market was telling you like, for whatever reason you could ascribe any reason to it, that it preferred memes. Whether or not that's because you didn't have new people coming in, is that because people are front-running what they saw in previous cycles, is that because the regulatory environment sucked, like whatever it is, whatever the actual reason is nobody will ever like fully know. It's just like the market was telling you this is the sector it liked. And since November, or, uh, I guess mid-November roughly, with, with like GOAT, um, the market has clearly been telling you it, it likes AI. And I kind of agree with Jose, like back then I was talking like, I'm like, GOAT is not an agent. Like Truth Terminal is an agent, but GOAT the coin is a meme, right? Like I was getting it not into arguments, but I was getting into these long like back and forth in our Delphi chats. I'm like, it's not a— it's not— it's nothing other than a meme. And I do hold that belief for most of these things still. Like, most of them are still just memes with more complex stories, I guess, like Jose said, that you could tell. Um, does that mean OG memes are dead forever? No, I, I don't think so, right? Like, I think a bunch of OG memes are probably going to do generally well.

What do you mean? Like the memes that were popular in March, I think are kind of cooked.

No, no, not like— I think most memes and I think most of these agents too are going to be cooked, right?

Like someone needs to tell the Coinbase listing team that memes are kind of dead at this point. I— yeah, yeah. Everything you're saying makes sense to me. I think, I think honestly, yeah, a big part of it is just it's a new game. People like having new games, right?

That's a good way of putting it. Yeah, but just like look at like a Doge chart, for example. Like, Doge doesn't look topped to me.

Well, Doge I feel like is a bit of an exception too.

Uh, I think it's, I think it's a good benchmark for general memes.

I know, but like Doge has fundamental drivers, sir.

The meta has like—

no, the meta's definitely shifted.

Has shifted and the easy money is in agents and AI for sure.

But I, I don't think like, does that mean I would be buying Bonk above $2 billion or WIF above? No, probably not. But does that mean all memes are done? No, I just, I don't think they're going to be like kind of what I wrote about in the year ahead. Like I just don't think they're going to be the only sector that's like worth putting your money in this year. I think there's going to be others and by definition, that's bearish relative for memes, right? Because they were the only thing that people really were aping last year. And now, for whatever reason— oh, Trump's coming in, so you could buy fundamental coins because now a bunch of people are gonna be more okay with investing in crypto. So I could maybe look at DeFi coins or, or things like Athena, or, you know, now that we have a crypto and AI czar in the White House, like, maybe I just buy all the AI coins. Because there's going to be some bullish catalyst there, right?

Like, yeah, well, yeah, I think that, you know, over a long enough period of time, anything that doesn't have an actual business, like outside of a few things that have like reached escape velocity and like mindshare velocity, like Bitcoin or Doge, right? Like, yeah, but like there's, I like, they're trying to do something, right? But like for the vast majority of things, You know, if you don't have a business behind them, they are probably going to trend towards zero over time. And especially with the rate of which new launches are happening. That being said, I have lost a bet to Jason Yanowitz even though it's at $1.70 right now. So I got, we basically made a bet when it was like $2 or something. So $2. Yeah. Go above $3.40 and after the week after the election, I got crushed. So I said I would, I would wear this. This is a good time. I would wear this on the podcast. So hopefully it's on right now. You look good.

Yeah, you look cute.

You look really good, dude.

Jason, are you happy? Dunkin' hat.

Wasn't there a full Doug suit that was discussed at some point?

There was. I couldn't find one.

Like, he just ordered me the hat.

So I just—

but it's at $1.70 now, which is like You know, to me, all this stuff is going to get crushed.

I do know that.

That's why I have the hat on.

I do believe so. I do agree with your point about in the long run, stuff without like an actual fundamental case isn't really going to last. I think with infra, we are fully entering this era with infra that if there is not a long-term revenue story, like people are not going to buy the token. I really do believe that like L1s and infra tokens are starting to get valued by the actual economics that they generate. Right. I think that, you know, you look at Blockworks put out some of these charts yesterday. Out of all the applications in crypto, over 50% of revenue now is driven by Solana applications. From an REV perspective, like economics to a specific chain, Solana is like 40, 50% or something like that. If, if like by the end of the year Solana is like 80% in both of these metrics, it's very hard for me to believe that, you know, these softer intangible, non-quantifiable metrics, um, like I'm starting to actually believe in SOL potentially flipping ETH, whereas I was— I never really believed in that before. I thought SOL was definitely very undervalued versus ETH. Um, but I do believe that it could happen because when— if, if it gets to the point where it's like 80% of revenues are coming from Solana, it's like— so you're just telling me what are the metrics?

What are the two metrics?

Like revenue that applications generate, which isn't, uh, that's not like too one-to-one, but it's a good— it's like chain GDP, people are kind of terming it. The other one's REV, which is the most objective measure of like economic value that a chain is generating, right? So like if Solana is doing 80% of the industry's— if 80% of the like revenue being generated in the industry is on Solana, it's very hard for me to see like why would it not actually flip at that point? Because then you're just, you're just going off of these softer, you know, well, Ethereum has more developers or Ethereum is more decentralized or, you know, Ethereum has all these rollups, but none of these things are direct hard metrics that actually specifically are linked to the token, right? Like the only thing linked to the token is the fee, like the, the economics that it generates, right? Everything else is like a softer metric. And so I am very curious if like these metrics keep going, they're just going in one direction. It's very hard to see, like things can definitely change on a dime. It happens a lot in this industry and it could definitely happen with Solana. Maybe like their, their, their scaling hits a bottleneck or maybe Fire Dancer is a big disappointment or something like that. But if they do continue on this track, I don't know, there's like a real discussion that ends up happening when it's doing so much more revenue than everything else.

I think what you're saying makes total sense. And we saw like a bubble in infra tokens, like high FTV, low float in memes. Now maybe it's going to be in the current AI meta. Obviously AI as a whole is not like it could be really big, but like the current tokens that, that are going crazy right now, it just like over time the market is going to return to like some sort of equilibrium. And like these fundamental coins are going to have buyers at a certain floor price if they're generating revenue versus like these meme coins or these like insanely overvalued infra tokens. Like, you know, it's very hard to put a floor on them because they make like no money and you have to use these more like subjective metrics versus the market can like rally around more objective like data. For these other things. So I completely agree with you, and I think it's like a good sign of a maturing market that these like infra tokens that were insanely overvalued, or these high FDV low flow tokens, or these meme coins are losing steam, and then people are focusing on things that actually have more real businesses attached to them and make fundamental sense.

I do think though, like, first of all, I think there's a lot of flaws with the metrics, like revenue generated by apps. Um, like I looked into it, it looks like it's just mainly accounting for, for DEXs and like on-chain money markets and stuff. Um, and like, or is— do you know if PumpFun, for instance, is, is accounted for in that? Okay. And is Athena included on the Ethereum side?

Yeah.

So, and what they're taking, like, what's— where are you getting the stat from actually?

Blockworks has a dashboard.

Okay. Yeah, I need to look into that.

See what's— what's Ethereum? They have at 17.9%. Solana is 56.8%. Base is 8.7%. BNB 4%. Arbitrum 1%. But it's just like you see the Solana, like the percent, it just keeps going big. It just keeps growing more and more. And the same thing's happening with REV with Solana.

It's like, it's like, because, you know, first of all, it doesn't all accrue to Solana, right? Like, part is, is accruing to—

no, uh, no, that goes to Solana. Jito takes a small sliver off to like They're on, but that's not included in REV. All of that is directly attributable to like stakers.

But then there's also like the fact that, you know, as Solana MEV actually gets fixed, you have something like PBS or whatever. Won't this REV go down quite a lot?

Well, if you do like app-specific sequencing, then yeah, theoretically, like the— this will go down because more will go to the applications. Versus Solana, right? Um, I think people are— I think app-specific sequencing is this new meme that like crypto researchers love this thing. And I think it's kind of oversold in the sense that people believe that apps will just take 100% of the economics that they generate on the chain. But to me, it's pretty clear that it's not that— like, there is a, there is a synergistic relationship between the application and the L1 and the validators. And there's some sort of like bargaining here. And right now, yes, the L1 takes all 100% of it. That's not going to last. But even if the L1 takes like 30% of that and the app takes 70% of that in the long run, and then you just get way more applications anyways because you keep scaling the chain, they still— the math still works out that it's like very beneficial for the L1, right? So I do believe that in the long run, apps and apps— I do, I do like app-specific sequencing more than app chains. Um, because you do keep it on the same shared state. But there's still a lot of trade-offs with that specific— this fucking term. Um, there's still a lot of trade-offs. Like, you are inventing— it's like, you know, every time you invent one of these new kind of like, um, mechanisms, it's another like centralizing force in, in a sense too, right? And so yeah, I do think that Like Unichain is the first one that is doing pure app sequencing from like day one. So that's— I'm very interested to see like how Unichain does because, you know, as we talked about before, the main reason people always say to make app chains is to like capture all your own economics, right? And it's also like when you look at the, like the GDP chart, you know, all the most profitable apps are on Ethereum and people will look at that and say, yeah, they should make their own app chain. It's like, What? Like, you're literally going against what the fundamentals are telling you. Like, the most profitable apps are on Solana. Like, why would they leave? Like, because— oh, because they can capture more MEV. You're not thinking about the trade-offs of doing that. And like, if Pump went and made— like, Pump works well just because it's on Solana. Like, yes, maybe in like a hypothetical perfect world, in the long run, it'll be better as its own chain or something, but it's just like, yeah.

Yeah. Like you're tapping into that pool of capital on the shared state and just like, I do think that's probably a big part of it.

It's really, it's like what this is all about, right? It's like the shared state, like who is the majority?

I don't know how much the shared state matters. I think, yeah, I don't know. I just don't think you see that mattering that much. I think Solana mainly is just a great product. Like it's fast, it works well. Like I'm definitely bullish. So, but I do think L2s are like L2s had a great year. When you look at L2s as the aggregate, it's just that there is no token to ape and it doesn't benefit ETH, right?

Base had a great year.

As a product. Yeah, but you had a bunch of, I mean, TVL across L2s like doubled. I think it started off at something like 22 and it's at 45 million.

Base puts customer deposits on Base. That's the majority of their TVL.

I don't think so. Like, where'd you get that from?

Them. They put customer deposits on Base. That's where they do the accounting. So like, how is that like a real fundamental driver? That's just a centralized exchange doing their accounting on their own proprietary blockchain. It's like, well, and then Hyperliquid is a big reason for— I guess Hyperliquid is like a couple bil. It's not crazy.

Yeah.

Yeah. I don't know.

Like, and you had a bunch of L2 announcements, right? Like there's, it's just proving to have product market fit with builders who have successful, ambitious builders have successful products and want to build an ecosystem, whether it's like Pengu or like Athena Network. Like there's, there's a bunch of, I think, examples. I think people are going this route more and more.

Yeah. None of those are live though.

Wait, I have a question. For Setters, if you, if there's like a wallet that has really good chain abstraction UX, do you think that this stuff matters less?

Like that's my argument basically. Yeah. I do think it's mainly UX rather than actual shared state.

You can never, I mean, you can never do chain abstraction. You can never, it'll never be the same as if everything was on one state machine, because there's inherent latency between using different. So it would be nice to like, yeah, do everything. For instance, like the Lighthouse app portfolio, portfolio tracker. That's like chain abstraction in a sense. You don't do anything with it, but it consolidates all your stuff across all these different chains, right? That's like very nice. And so it's very nice to, yeah, if you could use all your different chains from one thing.

Front end.

From one front end, yes. But if you're, but still, if you're ever going to go between state machines, it's, you're always going to have degraded performance, right?

Because that, that definitely feels like the end game is like for at least like consumer crypto, like if monetizing.

Yeah, I do think it's, I do think though chain abstraction is more of a problem than a solution. Like I think that it, it is, it has become because of bad design choices that have led the industry to this path basically by like not creating performance scalable blockchain systems. But I don't think so.

It just, even if you had a performance scalable blockchain system, that's never going to be able to house everything, right? Like you're, you're going to have. Some amount of sharding that needs to happen. Like even on Solana, this is happening. So yeah, you do need it. Like, I don't think it's— I mean, Ethereum clearly made some bad design decisions, but I think you would end up here regardless. Yeah, I don't know. I'm bullish Solana and I'm bullish L2s. And I think in 2025, we're going to have like at least one big financial institution announced they're doing their own L2. And I think it's going to be the preferred path for most like successful builders who want to build an ecosystem and for like institutions going, going.

Why, what's the, why is like, so why is it like, why is it, why is it like, okay, let's say BlackRock makes an L2. Like, why is that interesting to you?

I mean, they could put like a bunch of tokenized securities on there, right? A bunch of their, like, they could do a bunch of stuff they couldn't do anywhere else.

But it's basically just this like private blockchain narrative coming back.

It's like, yeah, but there's, there's gonna be— clearly it's gonna be, um, like transfer restrictions on, on tokens and, and all of that. But there's going to be a lot— like, if securities are to go on-chain, that's how they're going to be put on-chain. Like, you can't, you can't have securities trade permissionlessly on-chain. And I think NL2 is like a really good solution to do that and a bunch of other stuff. So I just think both are going to grow. Um, and I think L2s had a, had a good year. I need to go look at the base stuff to see how much of TVL growth came from, came from Base.

I know the Arbitrum guy was going off on Twitter on this for a while because he was really pissed at like how disingenuous it was saying that they were like the leaders in TVL because they were just putting customer deposits on it.

All right. So I guess like what's the, what's the takeaway for people from this?

Like, I don't know. How did we get into, how did we get into this? I'm bullish on the I think that like, I think it's clear, like performing chains is what everybody realizes now is you want something with like low latency, high throughput, and that's it. And so, you know, all these new chains coming out are basically like this. I think the last gen L2s are going to really struggle. That is my biggest takeaway. There's a lot of them that do. I wrote about this in the Infrarearhead. There's only 3 L2s that do more TPS than Ethereum. Like, think about that. Yeah, that's kind of insane. Ethereum is very limited in its throughput. It does like 12 TPS, and that's just telling you that it's not a technical reason why they're lower. It's a demand reason, right? And you just see these, these economies of scale where the winners just keep winning.

What do you mean by that? It's— I mean, the demand is the reason why they're not doing more TPS, right? Like, they can do more TPS.

They can. They just aren't because there's no demand for them. And like, you're, you're going to see, you know, I think MegaETH will probably do pretty well when it comes out. And where's a lot of that capital going to come from? It's probably going to come from a lot of the existing L2s, right? There's not a lot of ETH that— John Sharp wrote about this recently too. Like, there's not even a lot of ETH that's actually bridged to L2s yet.

Yeah.

It's like 2.5%.

Yeah. Super interesting.

So Sadrus is bullish Sol/ETH. Jose, what are you bullish? So either you're like, how are you like, I understand your opinions nuance, but like, is there really a way to express that in the market or not really?

Not really. I mean, Initio is probably the cleanest way to, to express it, but it's not available to people.

I'm also just bullish on like apps, people like the AI agent stuff. This is like a non, it's kind of, it is infra, but it's also not. It's like when I said earlier about, about people not caring about if stuff is on like Base or SOL. That's kind of what this is. And I'm excited for stuff like that. I like, I am excited to not care about the, like the tribes as much. Right. The weird thing for me has always been like a lot of people didn't think Solana was going to do well because they thought like tech didn't matter, which was always like a really weird point of view to me. And I think that like the tech clearly matters now and you're seeing the entire industry going to these making performance systems. So I think like my main takeaway is like there's, we have no excuses not to create like good apps, right? So let's see. Yeah. Let's see.

Yeah. Like I like that last line in the, the Infra Year Ahead Report.

Yeah.

I can tell that Cédric wrote that. He's like, the infra's built, let's build some kick-ass shit or something like that. I think. Switching topics to, yeah, the Bitcoin dominance stuff, just some market things. Like what's everyone's take going into 2025? You know, regulatory environment easing up. Is there going to be more of an alt run or are we still like this? Bitcoin dominance has been a relentless march up since If anyone wants to pull it up for themselves, they can just look up BTC.D on TradingView or CoinGecko has a tab for it. But it's been a relentless march up since 2022. It was at 40% in 2022. It peaked at 61% a couple of weeks after the election. Right now we're at 58%. And we had a little bit of an alt season between November and the start of December. But it's kind of like what we saw in, in March. Like, is that going to be the new regime where Bitcoin puts in kind of a temporary top? In March it was at like $72K, then it just chops around between $70K and $60K, uh, while alts, uh, kind of all bleed out. Or do we think this is like a more powerful cycle that's going to bring in new capital and, and have alts actually outperform?

Yeah, I don't really know. I think BTC DOM could like stay the same and you still see alts like way outperform just because you're seeing the smaller stuff do well. Yeah. And like if BTC does what we all kind of predicted it would do this year and in the end of year, then alts will like absolutely rip just even if BTC dominance goes up. Right. So I don't know if it matters as much, honestly. Going forward. But, but, um, I do think—

like, so you think it's like, what's going to be different from March? Like, when BTC puts in its top, like in '21 and '22, like, we kind of saw alts go really nuts there, right? Versus in March, we saw BTC put in his top and then most alts just get crushed as BTC consolidated. But that's typically when, like, alt season happens.

So I don't think we have an alt season again. I think that concept is like over. I just think you have like massive dispersion of, of, uh, of performance on stuff that, that has like strong fundamentals and narratives and stuff that doesn't.

Yeah, I agree with that.

Yeah, I think that's a pretty good take. Um, I don't know how long ago this was, but it was on some podcast or something, Rick we recorded probably like 5, 6 months ago, we were all like kind of going around just giving our predictions for what BTC dominance's top would be, which is really just like pretty much ETH, BTC, right? Like it's mostly that.

Well, it's becoming less of it. Like, you know, XRP's up there, BNB, SOL.

Yeah, sure. Obviously it's mainly Bitcoin versus like 3 other coins, right? Like you could have the whole AI sector 10x and start making a small dent in BTC DOM, right? Um, so it's mainly just like, like, the way I think about it is like, what's your outlook on that kind of ratio, right? And when I think about it from that perspective, like, I do think Bitcoin probably outperforms ETH this year, um, especially like, especially if you get some kind of like actual executive orders around, you know, SBR, things like that.

Um, which is a very bold prediction considering what has happened. It—

yeah, it's, uh, I mean, I predicted that last year too, right? And like, it did. And I, I think you— I don't think it'll be as wide of an outperformance. I do think ETH will do much better this year, uh, by virtue of, uh, like the regulatory environment, crypto-friendly president, etc., etc., right? You're already seeing that with flows, with ETF flows. Um, but I think, I don't know, I initially thought it would top around like, like 66 to 68%, and this was like 6 months ago. I'm not sure we get that high, uh, because I think the, you know, outperformance or whatever will be significantly less than it was this past cycle or this past year. Um, but I'm not sure the top is necessarily in. Like, I, I could see BTC dump going back up to like 62-ish, 63 before rolling over. Like if it goes like 125, 150, like I could, I could see that happening, uh, and, and BTC DOM making a move like that. But I kind of agree with Jose, like I don't think it's going to be like, like, you know, that like chart that's been going around for like 6 years now where it's like phase 1, phase 2, phase 3, phase 4, like alt season, whatever. Like I, I don't, I don't think that's gonna happen. I think it's mostly what we saw last year, right? Like except you're going to have more than just one sector doing well, which was means you're going to have a couple because risk appetite is higher across the board.

And just for context, so BTC dominance peaked in like January 2021, 73%, and it got all the way down to 40% versus like the biggest run we've had in the past few years is this run that just happened from November to December. Which was 61% down to 55%. So it's like the magnitude of the run was like literally nearly 10x the size, 8x, 10x the size in 2021, which is when we saw like all the L1, all the alt L1s just going absolutely bananas. So it's kind of crazy, like the difference in the magnitude of the move that we've experienced.

Yeah, um, I also think Bitcoin L2s could be a dark horse this year, honestly. Like, you've never seen Bitcoin— and I think that could like do a lot of damage to ETH if it takes off. Um, like, you've never really seen Bitcoiners do anything with their Bitcoin. I think WBTC peak was like 0.6% of Bitcoin supply was like what they got, and you had pretty attractive— and that's arguably like the most trustworthy multisig in crypto with BitGo and stuff. At least it was at the time. I think all these current L2s that are pretty much multisigs haven't gotten that much adoption. But I do think in 2025, we might see some actual like stage 2 ZK L2s launching on Bitcoin, whether it's like Citria, which is a portfolio company, or like Alpen Labs. And I know there's a few others. Working on it too. And I think the effect of that could be huge because Bitcoiners really do seem to care about security. And like, the TAM for this is massive. Yeah, John Charb has a good post on this, but like, obviously Bitcoin is like 5 times bigger than ETH. So, you know, TAM is 5 times bigger there. But like, Bitcoin L2s don't just enable scalability like the ETH L2s do. They also enable programmability, right? Like on ETH L1, you can still do stuff. You still have smart contracts. You can't do anything on Bitcoin L1. So like Bitcoin L2 is such a bigger unlock because not only do you get much greater relative gain in scalability, you also gain like programmability. And so I think even if you had like 1 or 2% of Bitcoin go on-chain and start doing things, like that is a massive— that would like flip in ETH L2 TVL by like a few multiples. And so I don't know, I think that's a pretty interesting thing to watch.

The first— so I think it was from Gort like 6 months ago or something. He was the first one I heard make the point about how like Bitcoin rollups are actual just extensions of Bitcoin because at this point, like you do have the programmability and everything. And so they are very different. It is a very different like construction than Ethereum rollups who just essentially do the exact same thing as Ethereum. Right?

Just faster.

Um, yeah. And so it is— yeah, I am excited to see how Bitcoin rollups do. I've never believed in the— people would always say Bitcoiners don't want to use DeFi, Bitcoiners don't want to do anything with their Bitcoin. And like, that's always been kind of nonsensical to me. Like, sure, there's some loud people on Twitter who would like never do that, but this is a $2+ trillion asset. There's a lot of people that want to You know, even just getting loans, like just have a— be able to get a loan against your BTC on-chain, like without doing any wrapping, you know.

Can I ask you a question? To my current understanding is the— like you can— you still need a trust, like a trusted bridge right now if you want to do this. But if OP CAT goes through, then you can do a trustless bridge with some of these altcoins?

You use like validity proofs and stuff. So like ZK.

So you still need a change to Bitcoin to make it fully trustless?

Yeah, there's some other stuff that's like not using OpCAT, which off the top of my head, I can't— don't remember exactly. It's like some separate off-chain process, I think.

But yeah, but the OP CAT's been in like Bitcoin testnet for like a year or something. So some people are saying like it could come in 2025.

Yeah. I mean, so it was in the protocol, I think, at the beginning. Right. And then it got taken out because there's some like catastrophic bug that it enabled. But now it's not— that's like not a concern anymore. So now there's all this energy to kind of bring it back. I think StarkWare, StarkNet. Is a big dark horse for Bitcoin L2s. Like, obviously there's all these new ones coming out, but Starknet is doing a lot with the OpCat and that's a pretty easy, you know, once that goes through, they can just start posting proofs to Bitcoin. So yeah, there's definitely tons of energy in this sector, which is cool to see. And it's like only beneficial for Bitcoin. There's there's like no, even if people use, even if people don't use Bitcoin DA and they're just posting proofs to Bitcoin, you know, because using Bitcoin DA, they're going to be pretty shitty rollups. But yeah.

So when do you think we'll actually see it? Like, is there the tools right now to see it now or no, the bridges are still trusted?

I think you'll have non-OPCAT stuff this year.

I think so. I think that's the plan. I'm not sure what stage they're going to come out on. Actually, this would be a good report, like a good catch-up, like where all the various Bitcoin L2s are. I know we have a Bitcoin L2 report.

It's like almost a year old though now.

Yeah, it'd be nice to get an update because I do think it's like super important. It'd be a good report. I need to catch up on this anyway. That would be super bearish. That's another like thing that would be super bearish ETH if Bitcoin L2s took off, I feel like. Or yeah.

What percentage of Bitcoin holders do you think want to use these things? Like put their Bitcoin in smart contracts, take loans against it? Obviously, there are risks associated with doing so.

But if it's a trustless bridge, I feel like a lot more people becoming—

there's no such thing. Let's say, let's say 2.5%, that's $50 billion right there. It's like you don't need a big percentage to do it. Also, also, people will buy Bitcoin to then do it too, that, you know. Yeah, so it's not just like the current holders that—

I think there's like 10,000 Bitcoin right now in the current Bitcoin L2s, like the stuff. Yeah. And like Bob and all the other ones. So I do think that can like 10x or something with, if it's not a multisig. Yeah, I think Bitcoiners actually really care about this. And because a lot of these are going to go EVM. So you could literally have, if you had like a ZK bridge or something trust minimized, even an optimistic bridge, and then like some really proven codebase, like an Aave codebase or a Morpho codebase where, you know, you could just deposit your Bitcoin and borrow like USDC or something like that, or even like a MakerDAO like CDP on your Bitcoin. I do think that stuff would get some traction.

Yeah, I guess you don't really need that much to make it super worthwhile, right?

Yeah.

I'm always interested in this one because, like, I could see the argument for people not wanting to, you know, put their Bitcoin in and things, but also like anybody who's in finance, like, you know, borrowing.

What did BlockFi get up to in terms of— yeah, that's deposits.

Yeah, that's kind of where I was going. Like, I wonder, like, I mean, with, with, you know, Bitcoin ETFs going live, obviously there's crypto custody solutions that exist with like, you know, CeFi, or not even CeFi, just like traditional finance, right? I would imagine they're also going to They're also going to extend credit solutions for crypto assets, specifically Bitcoin. So I'm curious, like, what the, what the breakdown is going to be like. Are more people going to gravitate towards these more crypto-native solutions, or are they going to go to places like JP Morgan where, you know, it's centralized, obviously, but you do have more recourse if something, God forbid, goes wrong, right? Like, will, like, will all the people who are like in tradfi buying Bitcoin now, either through ETFs or whatever, like, will they, like, what will they go towards? Because I think that's the majority of where Bitcoin demand is coming from in the next, in the future generally, um, not really crypto native. So I'm just curious. It's not something that's like actionable in any way. I'm just kind of interested to see how it plays out over the next couple years because it's something that like I think about, like I have all this, like, not all of this, like, I don't have that much Bitcoin, but like, I have Bitcoin, like, I don't know what the best way to get liquidity on it in the future is because I never want to sell it, obviously. Um, kind of like Sailor, but getting liquidity on it.

I'm kind of like, say, like that.

Yeah, you know, pretty much the same with, with our stacks. Uh, uh, but like, getting liquidity on it in, you know, tax-advantaged ways is like Yeah, obviously.

So right now, if I go to bitcoinlayers.org, there is $32 billion that is off Bitcoin in like twos. That sounds high. There's, I mean, a lot of these have very light, there's still like Merlin has 21,000 BTC, which is a good amount. There's like, you know, this is counting everything, like the amount on Ethereum, right? The amount on Arbitrum Base, Solana. What's interesting is that they don't have Babylon on here. Yeah. Like Bob. Bob is this Bitcoin rollup. It has 2,600. Yeah. Bitcoinlayers.org has—

this is actually quite a bit.

Yeah. It's like $32 billion. And these are— none of these are like real Like, except for Lightning Network, which it's like, it just has like Lightning Network issues, their usability and everything. But security-wise, it's like, it's actually, it's good across the board. These are all like very insecure things. So then like, think about if you actually get real solutions that come out, right?

Yeah, that's actually a lot. All right.

Do we wanna, we wanna wrap it?

Yeah, let's wrap. Um, nice. This is, this was a good one in the end. Didn't seem like we had much to talk about, but, uh, we, we did it. Although we didn't have our revenue debate really. Uh, we can continue that maybe next time. It's also a shame we didn't have Jan here for the AI framework, uh, stuff, cuz he's, he's been all over this.

He's definitely deep.

But, uh, yeah. Thanks guys for joining and Jason for filling in for Jan. Another great episode and I'll see all you guys again in 2 weeks.

Yeah. See everyone. Bye.