Hivemind: Are L1s Still Overvalued, Hyperliquid’s End Game & State of The Market

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 are solely our own opinions, not financial advice.

Hello everyone, welcome back to another episode of The Hive Mind podcast. I'm your host, Seterus. I'm the head of research at Delphi Digital. With us, we have, as usual, Yanowitz, ventures partner at Delphi Ventures, Jason Yanowitz, head of markets at Delphi Research, and LTR Markets, on-chain sleuthing at Delphi Research. So we're recording this. It's, it's 10:45 Eastern. Wednesday, February 4th. Markets are just looking disastrous again. Um, we're at $74.2K. ETH is at $2.15K. SOL went under $100. Um, Hyperliquid, not bad, $33.70. So Hyperliquid's had a good past few days there. It's had some good announcements that have come out. Um, stocks are also selling off a good amount today too. So Seems like more of the same. Well, I guess it's like accelerated the past week, um, especially within like Bitcoin land. Uh, so how are we kind of feeling about this right now? I think, um, everybody likes to say like, I don't know about short, medium term, but long term I'm bullish, right? Um, but it does— I mean, it does kind of feel like this is a fine getting back to like fine levels for like Bitcoin, right? If you're looking— I'm not talking altcoins and stuff because I really think that that market is completely changed for the good in some respects. But, um, I don't know, what are we thinking about, uh, last few days? Obviously Galaxy had earnings yesterday too and was quite disastrous. It was down 20% on the day. Uh, there's a lot of quantum talk that came out of that as well. Uh, so yeah, how are people kind of feeling about And actually, one more thing. I think, uh, Matt Hogan, was it, or somebody else, um, said that we're currently in like a 2022 bottom with Bitcoin right now. Um, he thinks we're near the end of it. We'll see. Um, yeah, so how are people feeling about this right now?

Um, well, yeah, obviously it sucks. But, uh, yeah, no, so like we, we kind of got the meme right where we were gonna go to Saylor's entry price and, uh, clearly we overshot that by a few thousand dollars and seems like we're, uh, we're not stopping right now. Um, I still do. I mean, I was all— I, so like, I think like my, like my meme case scenario was like, we'll both like hit Saylor's entry price and new new Bitcoin highs in the same year. Um, and I still think that could happen. Like, I do really think like we will— like the administration will run it hot into midterms. Um, I guess the question does then is like, okay, like if that is what happens generally for markets, like how much of that appetite flows through to crypto? Mo— or like I guess Bitcoin, and then to, you know, crypto more broadly. Um, in that scenario, I do think Bitcoin could catch a bid. And like, I don't think it's like, um, you know, like price is obviously like the, the best, the best driver of, of narrative, right? Like price leads narrative. So like you get like a, you know, a week or two of just like good Bitcoin flows, ETF flows come in strong, like you get decent reclaims of, of like people's like important psychological levels of some kind, right? Like, I don't think you're that far away from, from like some kind of risk appetite returning to Bitcoin. Um, I am worried about equities. Like, I think if equities kind of like puke, uh, like, you know, alts are going to zero again, like zero again. Uh, I think Bitcoin, um, I think it'll be really interesting to see like what Bitcoin does. I'm not expecting it to be stronger than equities if equities pull back, but like If it is, it's clearly something to pay attention to. Um, and I think you just have some like big, like, like big levels that just like make sense from like long-term time horizons, right? Like $60K isn't that far away. Like, I don't want to see Bitcoin go to $60K, but like you have a lot of things at $60K, you know, like 200-week moving averages, like tons of shit, um, that like might entice some longer-term buyers to step back into the market. I think like pretty much like anywhere between like yeah, $16K here just like makes a lot of sense for like, yeah, like long-term strategic Bitcoin buys that like you just buy and don't look, look at for a while. You could go lower, but like, I don't know, like, yeah, like my, my, my base case is like I just don't see this year— I just don't see how with, with new incoming Fed chair, with midterms, like they— there isn't some kind of broad risk rally, you know, engineered some way, and Bitcoin would probably be a part of that. So I'm not— I don't think it's over. Definitely closer to a bottom for me than, than not. I'm definitely looking to probably buy, buy like spot holdings for the first time in a long time. Um, and yet hype, like you said, is like very clearly showing strength in a depressed market. So the thesis is clearly like the market stops being so shit, the coin that was doing the best should probably continue to do the best, right? And, you know, there's a lot of like actual like reasons why that could be the case. So like, yeah, that's kind of how I'm looking at crypto. And like, those are pretty much the only things I hold at this point.

Yeah, I think on the initial, you know, BTC weakness going back, you know, from the previous top was just SAILOR kind of going away and then broader market weakness. And I think the, the recent leg down, um, was a combo of equities and quantum risk. And, and we touched on it last week, and I'm sure we'll touch on some more, but, um, that definitely has some impact on price as, um, you know, weakest— yeah, weakest hands bail, and then, you know, the individuals that are next in line in terms of strength act accordingly knowing that the weakest are going to bail. And, and so you doubt you have a domino effect there. Um, on the equity side, yeah, it's a tricky one. Um, I think recently especially, but, but broadly you've seen a lot of blood in, in software names, um, with just the growth of, uh, all these agents and, and, and being able to kind of Claude code your way into solutions that, that take away from the pricing power that a lot of these software companies had. And you're starting to see that show up. I think you saw Jensen speaking, I think it was today, discussing this situation. And his basically counter was that if when you're— these agents aren't going to be rebuilding these tools from the ground up, they're going to be using them. So in the same way, you know, a robot won't create a new form of screwdriver, it'll just use an existing screwdriver. Same way these software, uh, these agents will use software via API rather than recreating from the ground up. You know, naturally he has to— he wants to say that, but I think that the truth is probably somewhere in the middle where, um, yes, you know, the best products will get used, but at the same time, um, some of these simple tasks and some other things will kind of get rebuilt. And so you'll see, you know, loss of pricing power. And I think just that broader uncertainty is forcing a repricing of that entire market. And I think even if you look at equities in 2015 versus late— or sorry, the first, like, through most of 2025 compared to Past couple of months you've seen, you know, that you had the Mag 7 really driving returns in the beginning of that year, and, and that's since shifted away. And you saw the bottom whatever driving the bulk of the returns, which I think was probably counter to what a lot of people thought, uh, or perceived the AI trade to, uh, how, how that would impact markets. So you've just seen, you know, efficiency gains at the bottom names and a lot of these low-margin businesses benefiting from those improvements because there's a lot of kind of, you know, margin to get rid of or cost to get rid of to improve margins. And then at the same time, you know, we saw the slowdown in the buildout of the data center stuff and kind of just the exorbitant costs that weren't being matched with revenue, but rather you know, you ended up seeing the effects more downstream and then in the users of the tools rather than the makers of them. Uh, but yeah, so all of that kind of creates scary environment for equities. Um, and, and, and yeah, crypto is because kind of we had underperformance when equities were doing all right, and, and then it's hard to see a world where crypto does well if equities don't, you know, to Jason's point. Uh, I guess the counter is that you've seen many times crypto kind of bottom first, uh, but you've generally seen that in an environment when, um, crypto was the fastest horse, right? And so I think if it remains the fastest horse, then you probably see a similar dynamic. But that's been the concern is, you know, whether, uh, this reintroduction of liquidity and, and, and risk appetite will materialize in a bid in, in this asset class. Um, and, and so, you know, you've seen metals rip and crypto didn't really do much. Um, at a certain point, I think there's a relative value trade that exists, right? So, you know, regardless of whether you think crypto is going to reach massive new highs, I do think there's some relative value trade that will exist after, you know, one asset's very overextended to the upside and this one's very overextended to the downside. I think you see some degree of rotation. And then anecdotally, you know, people who I know have cash are kind of waiting for lower levels, right? And I think you typically see that. It's just a natural human phenomenon. You know, you can In your head, you could set bids lower when price is much higher, but as price comes down, you know, people kind of pull those bids and think it's going to keep going lower and lower and try and get to that bottom point. But, you know, I think bottoms are much more obvious in hindsight. And so that ends up resulting in a big chase scenario where those with bids start to realize that maybe the bottom's in and they just can kind of concede and end up buying much higher. So, uh, all that to say, I don't really have high conviction in, in crypto going in either direction right now, but I, I do think that at a certain point you kind of do see a gap up because I think people are still ready in position to bid it. I, I think like on the, on the large asset side, there's been, you know, continuous shift to revenue-generating assets, and, and at the same time, that takes away from the, uh, the value of L1. So we'll see, you know, like Solana at 90s looks really good, um, just based on, on, you know, recent price history. But if enough sentiment has shifted away from their— just, just the general acceptance that an L1 should be massively valuable, then, you know, you can see a scenario where things price quite a bit lower on the ETH side. I know there are a lot of on-chain, uh, liquidation levels in the high— in like in the $1,700 to $1,900 price range, I think. Um, so as we get closer, you can— there's always a risk that those start to get hunted. Um, and, and those are pretty sizable 9-figure, multiple 9-figure positions if I remember correctly. So those tend to be a magnet as well.

So yeah, we'll see.

I've started deploying. I was, yeah, I've started bidding some more here and kind of happy for it to go either way to some extent, but would rather see, yeah, a bounce.

Yeah. I think on the stocks, one thing too is like you've seen software get crushed too. I don't know if you said that or not. Yeah. But, uh, that's all— that's just like another sign of kind of like, um, it's definitely not— it can feel like it's, it's like stocks and the indexes are still making all-time highs, you know, but there's been a lot of pockets that have been getting absolutely crushed, right? Um, and you see like the uranium stuff just going bonkers and software going to zero. Uh, and as you said, some of these, like the broad base gains for everybody, um, within crypto. Yeah. On that, like Solana versus the Solana looks cheap here. It's like, for me, it's just, I don't see how you can hold ETH over SOL at these levels, but that doesn't mean that SOL goes up to your point, right? Like there is the possibility that the L1 trade is just kind of like over and ETH is just more overvalued than SOL, but that doesn't mean SOL is going to do well. Like, I forget what podcast I was listening to, but they were talking about how like, like last cycle Avalanche got to like $100 billion, right? And look at something like Monad today, which can't hold $2 billion and its tech is objectively a lot better. And, uh, it's kind of just like, I mean, there's, there's multiple L1s now under a billion dollars now, right? Which is, that was like unheard of. Like having an L1 was always at least a billion dollars for the longest time.

So yeah, I mean, it's, uh, I think just the, yeah, the revenue meta has, has impacted that, right? Not directly from the sense of, um, of, uh, SOL doesn't really make money because it was always going to be based on, on kind of network effects and holders and usage of the platform, but, but traded at some, some silly multiple. I think it's more so that, you know, I think there's been— and you saw Kyle say today, but generally it's dictated our venture investing as well, where I think it's much harder to invest in Web3 apps that don't have a, a direct kind of financial component where you're providing, you know, yield or access to assets that can appreciate, or like a second-order effect where, you know, you're providing a service, whether it's, you know, sports betting or prediction markets or something like that, where the, the platform itself generates a lot of money. And so if there's a broader shift to that as the investment, as, as what's like a reasonably investable, then I think the, the surface area of apps that will get funded and built out kind of comes down. And without, you know, if you're just limited to these financial apps, I think the L1s themselves will gain less and less adoption because you also have the risk of like the, you know, the app themselves becoming one if they get big enough. But, but broadly, I think it just means that there are going to be less viable apps. And, and that in particular I think hurts, right? If you have something where you have a social network and games and, and all the stuff that exists on L1, that, that can drive a lot of the value. But I think if the, the market begins to kind of coalesce around the idea that only these financial apps can actually, um, thrive, then, then the L1 premium kind of needs to re-rate lower.

I think people are just apathetic. Like, there's a lot of apathy. Nobody's interested anymore. Like, previously when we had big dips or whatever, people were still objectively interested in future stuff, or like the future prospect of crypto as a whole, whether that be L1s, L2s, whatever. Like, you know, Murad mode. But there was something to believe in, per se. Um, whereas like right now I think a lot of people are like, okay, yeah, I mean, blockchain techs can be used, it's going to be a backend for a lot of finance, but that doesn't necessarily mean that drives any value. To our existing L1s, L2s. I mean, I think that's pretty apparent with like Robinhood building its own chain, and then, you know, Stripe and Tempo building their own chain. And you're having all this stuff where it's like people are just going to make their own stablecoins, make their own business chains. And sure, blockchains are going to be used as a technology, um, but they're not going to pay rent to existing, um, companies, quote unquote. And like, you know, we can talk all day about like L1 valuations, but objectively, like, you it's pretty hard to value these things for one, just because they don't act as a normal business. But also like on paper, I mean, ETH was what, like $300 billion or something? Anthropic on secondary is like $350 billion. I mean, if you're telling me that ETH is near as valuable as Claude, which is like the number one AI right now and is everywhere and growing rapidly, I think you're out of your mind. So I think it's more that like more things are overvalued. And yeah, maybe SOL is less overvalued compared to ETH, but I just don't see how you can make a case case for, for those kind of valuations again, especially if we are moving more towards like a TradFi convergence within crypto, which I think we are, where more and more stuff like Hyperliquid per se are being valued more as normal companies, um, as a result of their business model. Um, so we'll see.

I still think the main, like, the big upside case does remain for SOL. It's just like, um, you gotta like, like people are no, are not willing to dream as much and like give the benefit of the doubt of like future plans. They just kind of want to see it happening more. That's probably one of the biggest changes I would say over the last few years. Like, you know, Monad, if it went live 3 years ago, would be trading much, much higher, um, based on the story that it's telling and like the tech that it's developed, right? Whereas now it's kind of like, okay, this is cool, you built this like performant decentralized EVM chain, but where are your apps, right? Um, what does this really give us over what we, we already have, right? Um, And that is, that is healthy that like we're being more critical, right? And that's why you do see pockets of money like, you know, Hyperliquid. You can say that it's overvalued, right? But it is the one protocol that's just doing so much like consistent revenue and volume and continues to like bring on these new markets. That even if it might be overvalued, it's like if you want to allocate to crypto, it's easier to make the case that probably you still would just rather own hype, right? Than other stuff and trying to pick bottoms on stuff that's just been grinding down forever. So yeah, I still think, I don't know, it's like we always think that things aren't going to change. We get these kind of like long drawn out bear periods. Um, and then something usually even ends up changing it.

But, uh, yeah, I also think it's like a function of like Hyperliquid is objectively one of the only teams shipping meaningful new improvements. Like HIP3 and Trade XYZ is like, it did a ton of silver volume and people were able to trade perps on metals and largely catch moves there 24/7. And now they're integrating prediction markets using—

yeah, they did over a billion dollars in volume on silver.

Yeah, but like no other crypto team— and I, I'm not trying to like be generalist here— but is like doing stuff that's like, wow, like I really need that, that really fulfills my need right now, like wow, you're, you're shipping something that I'm actually going to use like right now or tomorrow. Um, and Hyperliquid's doing that and at a pretty freaking fast rate. Hyperliquid or Unit or, you know, Hyper EVM-adjacent, um, ecosystem companies. Whereas like, you know, on Solana we get another meme coin launchpad, and then on ETH we get some new, you know, prediction market that's standalone with some new, you know, etc., etc. And it just kind of feels like stale. Um, and I think that's come to a head. Maybe this forays into like another topic with the L2 thing Vitalik was talking about. Um, but yeah, I think it's just like a lot of apathy around the other stuff. It's like it's the same old same old, whereas Hyperliquid is fulfilling needs now. Um, and so there is a case to be made that you can kind of justify a larger valuation because the future EV is better because like you have faith that they'll continue to improve or add more stuff or, you know, do stuff that's like going to be very valuable in the future. Whereas like I can't say the same right now about other things. I mean, ETH wasted however many years pursuing the L2 thesis, 4 years, 5 years, and that hasn't come to stuff. And now the CEO of, or the creator of ETH is like, yeah, that was all, you know, bullshit, we shouldn't have done that. It's like, well, great, we wasted like 5 years. So yeah.

Yeah.

I mean, I don't know what you want to go into first, Sutterus. I was curious to kind of get like your take on— because I know I think you've been pretty, pretty like balanced with your takes on, on Hype, right? As somebody who didn't really own it initially, I don't know if you still don't or whatever, but How do you feel about HyperEVM?

Yeah, I feel like they just should like not even do HyperEVM. Like there's no need, right? Like think about all these EVM chains that are out there today, right? What do they get? They get like an Aave or Morpho fork, right? So money markets, they get some Uniswap fork or a new Uniswap type thing, right? Maybe they get a clob like Monad has a clob. Um, then what, what else are they really getting on these chains? Right. And the thing is Hyperliquid, you could build the money market right into Hyperliquid Perp Exchange. Right. Um, you don't need the Hyper— you don't need like lending markets on HyperEVM. Right. It, it, it's kind of like redundant. And there's just like so much more money to be made on just like Hyperliquid's main chain and they're doing, you know, HIP3, HIP4 and whatever future HIPs are. It just seems like that's the way, if there's anything we've learned in crypto, it's like the liquidity, you gotta build around the liquidity, right? And like HyperVM.

But doesn't that kind of, isn't like the, like kind of part of the point, like building on HyperEVM will eventually allow them.

But it will never be the same as just building directly on HyperLiquid, right?

Like, I think they know that though. I mean, I think that's why they keep their team tiny. I mean, like, compared to their centralized exchange equivalents, like, their employee count or whatever is like minuscule. And so like, I think they want to keep it that way, um, for whatever reasons. I know not per se, but like, I think they're like, yeah, if we don't have to hire a ton more, you know, bring on more company risk by building it internally and we can just make sure our core product is good. And then we have people who are maybe better at certain things building it instead of us trying to find someone like Shoku, who, you know, has so much experience within equities and all of that. Like, he's probably the best person to build Trade XYZ. And if he's already a top HYPE holder and already so aligned, I think I, I do agree with your point to an extent. Like, is there some stuff I think they should have done themselves, like possibly like USDH. Should that have been an internal thing? I agree, yeah, that probably should have been like their own thing, and they could have owned their own stablecoin yield on top of the Hyperliquid. But with a lot of the other stuff, I think it does almost give them a shipping power that Binance, Bybit don't have, just because it doesn't necessarily fall on Hyperliquid Labs themselves. And so all these people can basically build out the ecosystem and vampire attack the exchanges without it coming necessarily from, from one company or one thing.

Um, yeah, but a lot of these things are done on the HIP, like, 3, like, you don't need the HyperEVM, right?

Yeah, not, not for those things, but like, if you want to do like actual, you know, like decentralized lending and like, you, you would, but, um, but you can just build that directly into HyperLiquid.

I guess my point is like, if we've come to the conclusion that blockchains are good for like finance and trading, then the, the having an EVM chain is like less exciting because you don't need all that. You don't need this Turing complete, like general purpose thing. You, you basically just want to hold in on the finance and that's what Hyperliquid is. It's just, you just like build everything directly on top of like within Hyperliquid. So it just works like more seamlessly and everything. I mean, we'll see. I agree that like you launch this and you can have other people come in and build on it, but it would still always work better directly on Hyperliquid. Like a money market on HyperEVM is not going to work as well as just being on Hyperliquid.

Yeah. Um, I mean, like, as of now, like, I, I think the criticisms are definitely valid. Um, but I still think it's very early, uh, to, to, to make a full judgment on it.

Um, yeah, I mean, there's no downside of them.

Like, I was gonna say, like, what's like the real downside to it? Like distraction, distraction, right? Um, But I think this is the way to approach it if you're going to approach it like this. And like, I don't know, like clearly like the Jeff's, Jeff's goal is to have, to have, right, like house all of finance, which would include those things that you like don't want to do directly on Hyperliquid that you just might want to do on something like the EVM and just tap into their, their liquidity or order books or whatever. Um, I don't know, I'm interested. It's, it's, it's, it's the— to your point, it's one of the only things I'm actually interested in, in crypto at the moment right now is, is watching, um, watching all these, you know, people go for what's clearly the, the end goal of like the global exchange, right? Like, um, just do— just housing everything, doing everything, trading all types of assets. Um, and I don't know, uh, I think, uh, I think Tommy, Tommy and Logan talked about it on, on the Delphi pod a few days ago or whatever. Um, it's just like, uh, it's one of the only, like, one of the, the really big interesting races going on right now in crypto is, um, and, you know, competing with TradFi with Robinhood and places like that. And I don't know, I don't know if Hyperliquid is overvalued or undervalued relative to TradFi. Things. I don't know how the regulatory aspect will eventually play into it. At some point, there will have to be a conversation probably around the KYC thing.

Um, so the KYC thing, to interrupt you, is something I've been thinking about recently. Um, it's actually interesting. I think when you implement KYC, it can either be bearish or bullish, right? I think that if Hyperliquid had to implement KYC like a year ago, or even right now, it would probably be bearish, right? But once you, once you basically get all like the retail activity that you kind of want, right? And like all the retail activity that's on Binance and Coinbase and all that, then you want like the big money to start coming on. Then you actually need KYC and everything to get them on, right? And so If you add it too early, you never build up the liquidity with retail, right? Uh, but you reach a point where like you kind of stay kind of like this offshore bucket shop in a sense if you never get the real institutional money on, right? And so there will be a point, and I don't know, maybe it's getting closer now, uh, I don't think it's there yet, but like there will get a point with— for Hyperliquid, it's probably like, oh, adding KYC and compliance actually now is going to take our product from this level to this next level in like a good way, right?

Um, that's definitely the, you know, the bull case for it. I don't know, it's like I said, it's the one position I continue to hold and actively am buying more in. Um, I do think it re-rates higher when, when appetite returns. Um, they're just doing too many— they're shipping too many good things. And I think, like I said this last time with Flip, I think Um, like the lighter TGE, I think is going to be pretty, like, was pretty telling of, I think, what, what will happen to flows when you see all of those other TGEs. Um, I just, the vacuum seems to be flowing one way right now. Um, so I don't know, I missed, I missed Binance when Binance, like BNB, was such an obvious thing back in like 2018 and stuff. Um, completely missed it and fumbled that so bad, uh, even though like, you know, the exchange token was just so clear. Like, this is such a good thing, like such a good business, right? Like, um, even without like buybacks and stuff. But I don't know, not, not missing this one. So that's, that's like, yeah, big lesson. Clearly one of the best businesses in, uh, in the industry and Yeah.

Yeah. Um, did we want to talk about the Galaxy Quantum thing or do we want to talk about Vitalik L2 thing? I know LTR, you, you had some things on the Quantum thing, right?

I mean, not much aside from, I think it was just like people grasping at any negative news right now to, to try and explain. Um, I think they did it to CZ as well, like just why crypto has been nuking, why it's been underperforming.

Coming.

And so anytime there's any sort of headline about someone sold X amount, or this is happening, or CZ said he's calling off the bull run, like supercycle, like supercycle's canceled—

yeah, he did.

And they're just gonna cling to that right now because I think they want some semblance of, oh, that's why, um, versus like the worst possible scenario, which would be people just aren't believing, you know, and they're just selling because they like don't want Bitcoin anymore, um, versus maybe Quantum or something. Like, I think Quantum is more digestible to people who still hold Bitcoin as like a reason to sell, and they're like, oh yeah, I can see why you would sell because of Quantum, but you know, I believe it's not going to be a big deal, so I still believe in Bitcoin, and they'll hold and they feel more confident in it. Versus like if some OG seller is just like, nah, Bitcoin's over, dude, I just don't believe it anymore, um, and I'm gonna dump 9 bill. Like, I think that scares them more. Um, because maybe there's like some info asymmetry or something that may— they may know. Um, but yeah, I think that—

yeah, I think that like if the selling is primarily due to Quantum, that would be a good thing. Because while I do think that it is like a real risk that people are taking more seriously, uh, it's like if all this selling really was due to Quantum, that would be kind of like a massive overcorrection in the short, medium term due to that. Because still pretty far away, still unclear if it's even going to happen or not. Um, and there are still things that, you know, I still think that at the end of the day, when it comes to it, the coins will just be like burned, or they'll just use for tail inflation or something. I don't know. But I think that the resolution from it will happen. And there are, there are a lot of people working on Quantum within Bitcoin. Um, it's not like everybody working on— it's not like there's no team focused on Quantum. So I think that if, if a lot of this selling was really Quantum, that would be a good thing. Um, I don't really think it is, like, because, like, I don't know, the disconnect from 10.10 is just so glaringly obvious that something systemic really did happen there. Um, and again, you hit that $100K psychological number, it makes sense to sell all this. So yeah, we'll see. I mean, Novo had this interesting comment the other day and like people aren't really agreeing on his interpretation of it, but there was like some $9 billion seller and it seemed like part of the reason this person was selling was because of Quantum. Galaxy came out after and said that, no, no, that's not what Novo said. I don't know if you read the transcript, it kind of looks like that's what he said. But regardless, it's like, it's, it's something that is, if you're like a margin, if you're on the margin, if you're going to sell or not. And then you're like, ooh, Quantum seems pretty scary. That can tip you, right? And same on the buying side, that can tip you to kind of hold back a little, right? So, um, we'll see. We'll see. As I said, yeah, yeah, I got—

I say it's useful from like a decision-making framework also. If, if, you know, people are selling for a wide variety of reasons, then, you know, you kind of want to assess each of those and, and think about how many other people will believe that and whether they're right or wrong. But If you have one, then I think it's just easier to kind of quantify whether you think the selling, the magnitude of selling is appropriate or not. Granted, it's a very difficult one to quantify.

Yeah, it's like chance of zero in X years is like your math that you got to do. Just what's the discount rate you use on that, you know?

Yeah, no, the EV is definitely different, whereas before it was, you know, Uh, just, just money supply reduced by concerns around long-term security. And the, and the thesis was pretty straightforward.

Now it's, yeah, I mean, the thing is for me, Quantum can fix the long-term security if they actually just use Satoshi's coins for tail inflation. Like it could actually be a bullish thing in that sense. Right. Um, because like, I don't think the, the, the purest angle of you can't change the 21 mil. Will matter in the long run, uh, not when you get all the institutions and everyone involved. If like you can do something good with Satoshi's coins where you use it just to like put back into the system to increase inflation for another like 200+ years, uh, I think the market will take that as like that's a very good, um, fundamental change to Bitcoin, right? So we'll see. I guess the other big thing was like Vitalik came out with this L2 post basically saying that, you know, they need to scale the L1, that the L2 roadmap, you know, these things being like brands of Ethereum are not exactly correct and that they need to focus more on the L1. I think this was kind of like a long time coming from some people. We saw a lot of victory laps on the timeline yesterday. It's just funny though, because like SOL is like getting hammered today, even more so than ETH. So even if you're right about the, like, they're wrong on the L2 roadmap, it's like everything is just getting kind of crushed right now. Um, I think this just goes back to though what I was saying with like the HyperEVM stuff too. Like all these EVM chains obviously just like does not Makes sense. Um, we're kind of just getting the realization to this. I do think it is kind of sad that like we did waste so many years and, and so much money on so much of this stuff, but it is what it is. Like, you can complain about it, but that's also how like free markets and capitalism work, right? You, you spend money on stuff and it either works out or it doesn't, right?

Um, yeah, I think the annoying thing about it is just how generally consensus it was that they don't make sense. Like, they're— I— as it's not like, uh, an overly intellectual take, that was what most people believed. I think, you know, obviously you're going to have some people that supported, but I'd say if you polled in general, um, you know, people have been in the space for enough time investing, researching, majority of them would have been pretty bearish on the economics of the L2 thesis.

Yeah, I don't know. This is why for me it's like if I have to pick an L1 token, especially if Ethereum is just going to focus on L1 execution now, it's kind of like, I don't know, man, they're in such a tough spot with that to come back from that. Yeah, I don't know if there's like much more to say on this. As I said, there was enough like victory lapping and stuff on Twitter the last day or so. Um, I think it's good that it's finally happened.

200 mil of ETH right before posting it.

I think it's also funny that all the L2s are like, nah, it's not about us. Like we're hyper-specialized. We're what he's talking about. And it's just like, no, I don't think, you know, 67 instances of Uniswap forked on your chain just make, make you like valuable in any sense. So yeah, I mean, I do agree with Vitalik. You know, a lot of people thought he just said like L2 shouldn't exist, but it was more like they should be hyper-specialized, which again, like I think was everyone's point from the beginning. Um, but I think that's like a good thing about it. Like if you do want, you know, Ethereum to be like the L1 base, you know, it makes more sense to have these like skyscraper tower L2s rather than I mean, like Optimism, Arbitrum, all these L2s were basically just ETH part 2. Like they were, you know, trying to go horizontal rather than vertical. And it, yeah, it just made no sense. But I think everyone agrees with that.

Yeah. Well, I think part of it too is like you literally saw people from Optimism and other rollups just saying like, yeah, we're never going to move past stage 1.

Do—

there's no point.

Is, is there like— I, I don't know. It's very rare that you see like, just like consider all of these things businesses, right? It's very rare that you see like a, a pioneer in a, you know, an industry go in the wrong direction for 5 years and then like kind of recover. Um, it's just hard, right? Because you have so many other things that have popped up while that, you know, was going in that direction. Sol, right? Like Do you see it? What would have to happen for you to want to own like, you know, ETH or something?

You have to believe that it's like a hedge against Bitcoin Quantum, right? And it's got like the Quantum angle and ETH is money and all of that. You can't buy it at this valuation based off tokenization and re-bringing execution back to the L1. In all this, right? Like it's still 2, it's still like 260 today, 260 billion, right? So just a big number. Uh, it's interesting. I was listening to one podcast. This guy does like venture. Apparently, uh, the thing is, I don't know if you want to call ETH a startup anymore, right? But apparently, uh, startups that pivot one time have a higher success rate as startups that don't pivot ever. Um, and then 2 pivots is like kind of similar to, to, uh, to zero. And then once you go past like 2 pivots, it like drops off a cliff, uh, your success rate. Um, so I don't know, better late than never. They have been scaling the L1 a bit more recently. The thing is, it's just like never, even in Ethereum's wildest scaling dreams for the L1, it's still not even going to get close to even just what like Solana is today. And Solana is going to get so much more over the next few years. And, you know, Hyperliquid will probably get a lot better over the next few years, right? And like Monad, Monad basically is what Vitalik is saying here, right? This is kind of the Monad people's point the whole time. Now that doesn't mean that people are going to go build on Monad now, right? Um, I mean, Ethereum could just like fork the Monad design and just use it. They're not going to do it, but like they could. Theoretically, I guess, right? Um, so I don't know, man. It's just, I, I, if you, if you, a lot of these liquid funds, uh, I think they just like don't even touch like L1 tokens anymore in a lot of respects too. At least like someone like Thea, um, So they're just so expensive.

It's so hard to like—

yeah, like I think it's a lot easier to underwrite, um, specific apps or something. Yeah, yeah, like I think it's easier to underwrite Pump still than ETH, MetaDAO than ETH, um, Hyperliquid, right? Um, it's just like a lot of stuff has come down so much, you know, um, like I've been looking into Helium recently and I bought a little as a disclosure. I haven't really bought a lot. I'm just like kind of thinking about it, but it's like some, some of these things like DePIN, for instance, is one sector that just got completely destroyed. Like these, these, some of these tokens, like Helium is down, I don't know, like 99% or something. But it's actually like making money now. It actually has traction and they're like launching in Mexico and stuff, right? And it's like $200,000,000 valuation or something, right? And so I don't know if, I don't know if Helium's going to be one of these turnaround things, but I feel like you're getting more of these kind of investments that are much more, that have a fundamental angle that are much more interesting for liquid funds to start thinking about. Than to be like, yeah, we're going to try and time the bottom on a $260 billion asset right now. You know, that's just like my perception of, of stuff. Um, because it's like you got to price the upside, right?

Yeah.

Well, there's a lot of downside risk. What's the upside unless you're like a believer? But you need everybody to be a believer. Right?

I mean, yeah, that's, that's where I've been at with ETH. But it's always good to double-check to see if I've ignored it for too long, and it doesn't seem like, like I have.

Yeah, it's always good to update and be like, is this pivot like a good— is this actually a good time? I've seen some people say like, oh, this is like bullish for ETH, and I try and like hear them out and listen to the opinion, but it's just still hard. It's like I kind of just—

at what valuation would ETH be something you would be interested in buying, just like from a valuation perspective?

Well, I think it's like what happens to SOL during the same, because in my, in my, like, the way I kind of look at it is I have like some part of my portfolio I want invested in L1, right? And like if ETH goes down 50% from here, but then SOL also goes down 50% from here, it's like, yeah, I think I still would I would just rather hold the SOL, and maybe they'll keep going down to zero, but that's kind of like the one that—

the one you'd rather ride.

I would still rather ride to zero.

Yeah, something just beeped. Yeah, it's a price alert.

So it's a good one.

It's a hype alert.

We'll see. And like, you know, the, the Tom Lee thing, like, there's no steam left there, right? There was a— there's a moment there where it was a— it hit a new all-time high, right? Um, for like a day or two. And there was a— there was a day there where it's like that momentum could have— you know, if you were going to go to $10K, like, that was the period where it's just— you've just seen it try and break out and get crushed so many times.

I also feel like ETH just does this every few years. Like, we had that alliance with ETH that I think Paradigm was a part of, and like, it seems like every year or two there's some like, let's make ETH great again. And then they get together and they, they post a bunch of bullish stuff and they have a new direction for the foundation and they're pursuing this or pursuing that. And then it just feels like the US government as far as like bureaucracy and bloat. And then it's just like nothing happens and then they do it all over again. Um, and so like, I just don't know how you have any faith that even if Vitalik says this in his blog post that anything is gonna change. Like, these L2s aren't something to shut down their business because Papa said so. You know, they're still going to launch tokens, they're still going to inflate salaries. And like, yeah, it's like at this point, for, for ETH to have any sort of provenance or any sort of trust within the ecosystem again, they just need to like actually do stuff, um, which sounds crazy obviously because they just don't. Um, but I think almost that their, their decentralization blinds them a bit in that regard where they feel like they're— they need to be arm's length away But like when it comes to this, you at some point you got to step in and be like, yeah, we really need to, to change something.

I just think that like, and I felt this way for a couple of years now that, and this is why I've tried to like not critique Ethereum as much over the past year or so, is because I genuinely do not think that you can actually fix it. And when I say fix it, I mean fix the market cap to the, to the product. Like, I just don't know what they can do that you start thinking about like trillion-dollar targets again at this point, because they can't just become like a Solana type. Like, people, people really underestimate how much like work goes into making Solana Solana and like the mindset and every— it's like a complete culture shift. It's not even Like Ethereum people are talking about getting 6-second block times in like 5 years, right? Solana is like, we need to get to 25 milliseconds or like we can't compete.

Well, it just feels like the difference between like an actual business versus like a research experiment, which is like what ETH has felt like to me. Like it's like this nonprofit, you know, New Mexico lab that's just like one big research paper. Um, it's like Vitalik's, you know, Vitalik is some professor that just like wanted to experiment, and so he did all this.

Yeah, I don't know, the, the ETH guys always talk about how like Bitcoin holds the industry back and there's so much market cap in Bitcoin that like we'd go higher if it wasn't for Bitcoin. Maybe it's ETH, man. Like, maybe like a lot of market cap in ETH needs to get distributed into a lot of other stuff within the industry. Um, I don't know, we'll see. Like, the thing is, I'm— I, I— you're seeing the, the validation that a lot of this tech is going to be used for, for, for finance, right? Um, And it will have completely overhauled the financial system in like 10 years from now, right? So there will be tons of opportunities over the next 10 years, which makes me remain bullish and optimistic. I mean, yeah, I mean, yeah, you just gotta be like more critical about the valuations of stuff you're buying basically.

Also, like I had that write-up in, in the Delphi Alpha feed yesterday, it's like, even if this is gonna be That's all it does, right? Financial changing, FinOps technology since like internet computing. This could— like, our existing L1s and L2s and like crypto projects could be the AOLs. And like, there's a, there's a valid chance that like 5 years from now, even crypto could be ingrained in every single business, and it could be some totally different chain that like doesn't exist yet, or So like, yes, I agree with you. I think there's like going to be tons of opportunities, but I don't think that necessarily means by default that, you know, it's going to go to existing tokens or existing projects.

Um, or yeah, I just hope it stays in like the public markets.

I would say, yeah, totally agree. Totally agree.

Because that's like, if they're new chains and stuff, as long as they're public and all the games aren't just privatized, because that has been like the main beauty of like crypto's entire history is that all the games, for the most part, early days, not like later with all these high FTV bullshit launches and stuff, but like for the majority of its history, the games were all public and that was like great, right? Um, so if it's like, oh yeah, Tempo just becomes this like massive chain and then the token launches at like, you know, $20 billion or something and all this. That would suck. Or like things don't even launch tokens, right? Like you have some, I don't know, Canton's a good example of this. Like Canton is this TradFi insider club, right? That you have these super validators, which are all these trusted old guard TradFi institutions, right? Like, I don't know, like, what if Canton in 5 years is like used, is one of the most used chains, right? A lot of those gains just went to like the old guard.

Yeah.

I mean, if it's one of the most used chains, I think there have to be a bunch of things it's used for and those would likely be investible.

Yeah. Hopefully.

And you see the growth of, you know, Legion-like platforms that have opened up the investment universe to non-institutions at an earlier stage.

Yeah, I just hope we still keep all, like, the thing that public blockchains are really great for is all like the weird kind of like risky stuff, right? Like pumped-out funds never being created on Canton. DeFi summer is never happening on Canton. And so I hope we're still able to create these like crypto-native new things. Like I hope that we haven't exhausted all of those. And I think a lot of the apathy right now is because people think that we have exhausted a lot of that. Because if it's just, yeah, if it's just building products that we already know of, then you can build those on like these private chains and everything. But all like the new risky stuff is still going to need the Ethereums and the Solanas of the world to kind of like test them out. So I don't know.

I mean, if you're building a product that is standalone useful, then you would likely opt for the non-private chain unless you have some serious geo or KYC restrictions that you want to implement.

Yeah, all right, um, I think this kind of exhausts all the topics. Yeah, we wanted—

we started at $74,200, we're down $1,000.

We're—

we're—

that's not bad considering what it's usually like. Usually we're down like a few thousand bucks. Now, yeah, the price has gone down a lot.

$30,000 running out of thousands.

Yeah, we're— $1,000 moves are actually starting to be a lot, man. Um, so at least stocks are down today.

So that's what, that's what I told Dion. I was like, like, at least stocks are also down. Yeah, we got to get Duncan back on here one time though to, uh, revisit the Galaxy thesis and defend his honor from all the, uh, the trolls in the comments now that Galaxy's been walloped.

Yeah, I don't think it's changed much.

No, I don't think so. I just wanted to, uh, yeah, revisit now that Hype is doing better than Galaxy. It was a rough couple months.

Yeah, we'll see. Maybe Galaxy just needs to sell the crypto business.

Yeah, they're just going to become an AI data center business. Yeah, and they'll do better.

Unfortunately, do a spin out. All right guys, well, this is good. I don't know, 2 weeks from now, let's, uh, we'll be back, we'll be back over 82 weeks from now, you know. So it's the way I'm gonna start, uh, nibbling. Hopefully works out for me.

The dip keeps dipping.

Yeah. All right, well, yeah, good, uh, good episode, guys. Um, see everybody in a couple weeks.