Hivemind: What UniChain Means, Return of Memecoins, and Crypto’s AAA Gaming Moment

For me, this is just an inevitable thing that the biggest brand in crypto was going to make their own chain. The industry doesn't make sense if you can't build an app and keep the value. Like, yeah, right.

I think they're going to try and position this as like the Solana on ETH, right, where most of the liquidity sits for meme coins, for assets, like a bunch of the probably OG Uni LPs will move over. It's definitely an app chain. 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. Alright, hi everyone and welcome to another episode of the Hive Mind Podcast. Today with us we have the usual gang. Myself, Josemarie Macedo, Jan Lieberman, Duncan, aka Flood Capital, and Ceteris. So news just dropped, Unichain, probably the hottest thing on the docket for us to talk about. So yeah, for a bit of background, Uniswap just announced Unichain. It was built in partnership with Flashbots and the Optimism team. It features these flash blocks, which are like 250 millisecond partial blocks based on— they've taken some stuff from Solana architecture. And it's also going to have the ability for apps to have custom logic, which allows them to internalize MEV and a bunch of other stuff. So pretty big news kind of goes into the thesis that I've been harping on for a while, that every single successful app will eventually have its own execution environment. And I think it's basically now all of them, right? Like, I mean, Compound never launched their chain, but pretty much every successful app in crypto has moved to this model. And Uniswap is just the latest one to do that. Curious, yeah, what are you guys' takes on this?

Yeah, so first of all, I think there's a lot of nuance in this because Unichain is not making the Uniswap AMM an AppChain, right? This is like Uniswap taking their brand and wanting to become— and this is something that like I've kind of talked about for a while, how like I think the end game of Uniswap is just to be this complete like consumer finance, uh, platform, right? And that's why like they've done the wallet and now they're doing this chain too, and they can kind of just own, um, the entire part of the stack. Like it's not like UniChain is just going to be their AMM, right? And that's it. It's like they're using Wraith. It's like EVM chain. They're going to get a bunch of applications built on top of them. Um, this is just them, I think, like using their brand to kind of just own the entire stack, right? And I don't think every application can just do this. You have to be extremely successful, like Uniswap. Um, and like, I do think this chain will probably be pretty successful. I think it's— my first take is like, it's bearish for a lot of the other L2s. Like, Base already took— Base already took like most of the activity on L2s. Um, I feel like this one is going to do the same. Thing and just take more of that, especially because it's going to be way more performant than the other ones. And that seems to be like what people kind of care about, right? So yeah, what's interesting though is like obviously there's a lot of front running in this efficient market hypothesis vindicated because like it didn't really move from the announcement, but it was up like 10%. Or so over the last day. But if this came out, I feel like if this announcement came out in, you know, 2021 or something, UNI token would be flying, right? And so it seems like people don't— I don't know if they don't care, like maybe they got to like read through it more. But yeah, it's—

they mentioned they're passing through Sequencer, revenue to the UNI token. So I don't know if AMM fees will be passed on, right? So I don't think they're using this as a kind of Trojan horse to turn on a fee switch, but they're basically, they're creating a new source of fees, but they're passing those fees along to the UNI token, which is, you know, finally some form of value accrual there.

Yeah, they're also, they have this native interoperability solution, right? It's like leveraging the the Superchain stack, but you basically get sub-1-block ERC-20 transfers. And then they're trying to push this initiative called ERC-7683, which is basically trying to extend that Superchain interoperability to all other chains. And I'm guessing they're going to try and funnel a lot of users to just keep their assets here and then do all their swaps through through Uniswap X, right, where they can just get you the best liquidity wherever it is and then funnel the asset back here. Pretty, pretty interested to see how that plays out actually.

Outside of other L2s, joking around, one of the other big losers is Jared. What share of his MEV comes from Uniswap? It's got to be.

Yeah, but do you think that people— do you think this actually impacts Uniswap like trading activity on L1?

I mean, I guess how much liquidity do you think moves over?

It seems like the applications will want to move over, right? Because they have this ability to internalize some of the MEV. And so there will be, it'll probably be the place that applications themselves want to encourage people to trade, which in turn will probably move a lot of, a lot of the volume and liquidity over there, or a lot of liquidity and volume over there.

Applications launching on Unichain have the ability to internalize their MEV.

That's what I understood. Obviously this has just come out, uh, half like an hour ago.

So doesn't that go against the white paper? Doesn't that kind of go against the AppChain thesis then? If you're, if the application on a chain can just internalize the MEV, then you don't need to create your own chain.

Well, it's through this, through this like stack they've created with the trusted execution environments and stuff where you can basically have applications put in logic that enforces certain ordering that allows them to capture some of the MEV. I just read it on the blog post announcement. I'm like 25% of the way through the white paper. So, but I think that's the idea is that you can enforce any kind of sequencing through the trusted execution environment.

Yeah. So that goes, that to me is like against the AppChain hypothesis. If a lot of reason why people think you need AppChains is because you can internalize all this. And if you can just as like get like app-specific sequencing as a contract, then you don't need to create an AppChain, right? So for me, this is just like, for me, this is just an inevitable thing that the biggest brand in crypto was going to make their own chain. Right. But obviously other applications are going to launch on this chain now. And if they can internalize their own MEV, then it's something like those applications will need to make their own chain. Right. Um, and so I don't, that's why I don't see this as an app chain because it's like, it's just Uniswap brand creating a new performant chain for people to use. Right. It's just like another, it's like competing with MegaETH, I would probably say. If I had to pick like the main L2, right?

Cedrus, you got an interesting comment on one of your tweets. I think this guy listens to our shows pretty frequently from Ate My Bags. Cedrus, am I taking crazy pills or is ETH becoming the Cosmos hub? Like with kind of like announcements like this, you know, do you feel like it's moving more towards that?

No, I don't know. Because like, no, because ETH at one still is like general purpose contracts, right? It still has like all the restaking stuff. I mean, Uniswap stakers are still going to be there. They're actually staking on L1. I mean, there's some of that though, for sure. But it's kind of just an inevitability, I guess. The Cosmos hub literally does nothing. So I don't think that the comparison is totally fair. And ETH actually like cemented itself as I mean, it's got like $300 billion market cap or something, right?

And it's like, you know, the role of settle to ETH, like that, that doesn't happen.

Yeah.

Atom secure is like two, two chains, right?

Um, yeah. As far as I get the analogy, I get it like a little bit. It's not completely accurate though. I think this is just like neutral for ETH though. Like, you know, it's, uh, unless you think, I mean, you can say it's Because I don't think, I don't think Uniswap on L1 is really going to lose too much activity because it's kind of just like base infrastructure on Ethereum L1, right? It just facilitates, like a spot AMM has to be on a general purpose chain, right? That's why, like, I think calling this like an app chain is not really correct because it's not an app chain. It's just Uniswap is creating this performant chain with their brand. Right.

That is an appchain though. That's like, and like they couldn't, they couldn't do this anywhere else, right? Because this, this module that they've, that they've written, they'd have to get integrated by whatever chain they wanted to deploy on. In addition to the other stuff that they've, they've put into the chain that we don't even know about. Like the, I mean, one of the points of appchains is sovereignty, right? You can, you can implement whatever changes you want to the execution environment, to the transaction ordering without having to go through an EIP or convince, you know, the Optimism team or whatever to implement it. And I assume, I mean, yeah, I don't know where this is going to go, how they're going to attract liquidity to trade here instead. But yeah, I agree MegaETH is the biggest competitor, although all other L2s are, I think, too. Base chain, probably like Athena chain too, to some extent. But I think they're going to try and position this as like the Solana on ETH, right? Where most of the liquidity sits for meme coins, for assets, like a bunch of the probably OG Uni LPs will move over. There's probably going to be some incentives to do so as well. Not sure if the MEV will be enough or if they'll use actual incentives, but yeah.

Yeah, like I do—

it's definitely an app chain.

Like, okay, so, so we can call it, we can, okay. We can call it app chain, whatever. What I think is really happening is, is like a successful app gets to create their own kind of like customized specialized chain because they have this strong app that they can like integrate in. But then the, like the chain itself is not necessarily an app chain. That's like what Athena is doing too.

Right.

It's like they've got this like stable that is everywhere and now they can use that product to just create their own. Chain. And I think you'll see the successful ones are able to do that where they have a successful app, but then when they move to their own chain, it's not like the chain is just their own app. It's using that as like the pillar, but then you're bringing in all these other applications as well. Right. And I think, yeah, you could kind of see this being like, maybe it shifts away from just having these purely general purpose L2s in it. It's like you create these chains around, you know, custom, whatever, right?

Yeah. That's always been my, like our modular thesis, I guess, of why we think everything ends up as an AppChain and why there will be thousands of them. And I do think it also, I mean, this definitely doesn't validate that there'll be thousands of them, cuz as you said, you have to be a successful application to really pull this off. but it does, I feel like, affect the L1, the monolith thesis. If you just end up being a testnet for successful apps, basically, because as soon as you succeed, you migrate off to your own chain to capture the MEV and whatever else, users and stuff like this. Yeah, I don't know. This is why I'm— I mean, Solana has its own modular stack that's developing now and stuff. But yeah, this is kind of where I think most successful apps will end up, honestly, and why I'm so bullish on stuff like Anisha that's trying to build with this in mind from, from the get-go. And Superchan, I mean, I think Superchan is doing a really good job too, probably the, the leader.

Yeah, so, so it's interesting, like, OP versus ARB, like, Arbitrum has way more activity than Optimism, right? Optimism is kind of like ghost town now, but Optimism seems to be getting all of these big wins on like the BD side. Right. And it's like, what is more, I mean, what token is more like the OP token has nothing to do with this Unichain, right. And the OP token has really like nothing to do with Base. Whereas, so I don't know, it's like an interesting to see how like the OP and the ARB token will diverge over time if Arbitrum they have these Orbit chains, sure. Orbit chains, sure. But the most of the activity within Arbitrum Eco is on Arbitrum and then like, I guess Hyperliquid, right? But for Optimism, it's like, it's really these other chains now, these other chains that are going to start like taking over all the activity. And so what does OP like mean? What is OP? What's the point of that token, right?

Yeah, the bear case is that it just becomes like, you know, the Cosmos SDK has been hugely successful, But Atom hasn't really benefited from that. I think the OP stack could be somewhat similar where you have Base and Unichain and a bunch of others that end up using your stack. But how do you benefit from that? I do think owning this interoperability standard, basically having an inbuilt bridge and then offering these value-add services at the Superchain level will end up being pretty valuable. Because you will— that they're just best positioned to coordinate across all the projects using their stack. But it's definitely like a lot of execution risk in doing that. But I do think that will be like pretty valuable.

I don't agree though that with the thesis that like applications will keep all the MEV in the long run because there's a lot of benefits to launching on a shared layer. And like, again, the UniChain is kind of goes in with that, applications launching on Uni will take some of the MEV, UniChain will take some of it. There's kind of like this bargaining, like if you launch on a general purpose L1, it's kind of like this bargaining you do with the validators because there's a lot of benefit to sharing state with other applications. And so right now validators are taking like all the MEV and stuff.

What are the benefits? Because like when we did the analysis on it, we haven't redone it, but when we did it like 2 and a bit years ago, there was very little of the state that actually touched each other on both Solana and Ethereum.

Well, it's the users and the liquidity, basically.

Yeah. But that's more UX, right? Theoretically, that could be solved with chain abstraction or UX abstraction.

Sure. Theoretically.

It's been theoretical for a few years. I'm not like— but still, there's nothing fundamental about about—

did you guys see Synapse?

Here comes the shill.

Did you guys see Synapse launching Cortex? Seems like it's solving exactly what you're referring to, Jose. It's been in the works for years.

We, so we've heard.

Chain abstraction is one of these things where it's like, sure, yeah, everybody knows we need it. That's like a solution and everything. But it's like unclear how good you can actually make that and like how long that's going to take.

I just love how all these conversations come back and then the answer is is the Synapse chain, now called Cortex, if it launches, if it can execute on the vision. That's what I've been invested in for 2 years.

Wasn't it going to look— yeah, anyway, let's— I'm not going to give you more rope on this show. So segue to this, do we want to talk about like the applications versus infra? Ryan Watkins had a great post just sort of pointing out how applications are now pretty strongly flipping infra in terms of revenue, but not so for valuations. And yeah, his conclusion was that infra would probably still command higher valuations, but only a few L1s will be able to do that because they're basically competing for money. Yeah, I'm curious what you guys thought of the post and where you guys sit on this.

Yeah, I mean, it's, it's a sum of the parts thing, right? So, um, it's not— I mean, you have some that are outpacing, uh, like less used chains, but, but, you know, there's no one really competing directly with, with ETH and SOL. But if you do sum of the parts on, on, on all of them, that makes sense. I guess like it seems pretty inevitable that more of the dollar spend of users will shift towards apps because, you know, to some extent you assume that they would move to a cheaper chain, right? If like every dollar of spend on an app was sending more towards the L1, then there's an opportunity for that activity to shift to a cheaper chain. There's, you know, realistically it shouldn't be that prohibitively expensive. To transact on-chain relative to what you're spending on the app. I guess it really depends as well on if you're thinking about the type of app too, right? If it's an exchange, the fee is pretty fixed in the form of gas, but the amount you spend is based on volume, right? So if it's a lot of small transactions, you'll have the makeup will shift more towards the L1. If it's a lot of large transactions, then the fee shift will go towards the app. So I think you kind of break it out by app by app and do some of the parts, but it seems inevitable that over time as scaling improves, the amount that's spent on the L1 or just the on-chain fees should decline, whereas the Yap fees are pretty standard.

I think there's like, there's two main. So the easiest example, I guess, look at like a money market. So money market has like its internal fees, which is just like interest spread, basically net interest margin that they make. And that's like something application just accrues, right? But then there's like where the real value is and that's in the liquidations and those are like execution and sequencing fees, right? And those go to validators now. And so, yeah, this just goes back to my earlier point, like, as a money market, you want to be on a chain with a lot of liquidity in it. And so you benefit from being on a shared state layer with a bunch of activity. And so right now, yes, validators of the L1 are taking all that MEV. They'll probably need to give some back to the money market, right? Like, just competitively. But Again, I don't think like money markets, a money market, unlike a shared L1, will just take all that MEV because validators still need to get paid at the end of the day, right? So I don't think, yeah, I think people like to take extreme views on like the two sides of this. And I think that yes, I think that both like apps will, yes, start to accrue a higher portion of like MEV and like execution fees in the long run. But if you just think that like overall activity on these L1s just grows even more than Right, it kind of like balances out.

But his point is that they're way overvalued if you're just looking at activity, right?

Like, oh, they probably always will be, right?

Like L1s are—

well, they're never valued.

His comparison is like to, uh, which is one people have made many times before, just telecoms in the late '90s, right? There was like, there was no model to value them. People were extrapolating out like absurd numbers. And then like 20 years later, they're like very uninteresting businesses that are valued on a multiple. And like L1s could be the same, right? This cycle where it's just like the only way to bet. It's like the best proxy to bet on crypto. And it's all like a relative value trade to Bitcoin. It's like, oh, these things might be money that like I'm bullish on crypto. I'm going to ape like ETH and SOL or whatever. But over time, as you get applications that win and like generate more fees emerge as the clear winners, like a lot of that capital could shift away and L1s could just become boring infra that's valued on a multiple. I agree they have some pricing power based on like the value of the state on there that you want to access. But I just think that's way less than like money markets is pretty much the only example I can think of. And even there, it's like the stuff that like there's not that many people using LP shares as collateral on money markets or anything like that anymore. It's just really like you just need it for liquidations, right? To be able to liquidate the collateral quickly, like within a block or whatever. I don't know that there's that much. Yeah, the composability thesis, I feel like just hasn't— I think if you think about why people want to launch on a monolith on an L1, much more of it is the UX and user base versus benefits from, from composability compared to what we initially posited in like 2020, 2021.

Yeah, yeah, for sure. Everything you do is basically async. Like, you know, yeah, exactly. Borrow something, you then swap it for something, you then deposit it into a pool. Like those are all async, right? But like the UX and liquidity is a big, it's kind of like a big deal. And I don't think it's as easy to solve as people will kind of pitch and make it out to be. And if you can just keep scaling the L1 more and more, like how Solana and some of these other high-throughput chains are trying to do, I think these chains will continue to see more relative activity share go up over the next couple of years.

Yeah, I mean, I think the value path they're certainly pegged to BTC, as is everything in the space, right? And so that— there's that element. And then there's also kind of front-running their path to becoming eventual utilities, right? In a world where ETH is whatever its steady-state value— let's just, you know, call it $10K, everything works out, like, you know, assuming everything goes well— I don't I think it basically front runs the activity that's supposed to get there, then the activity gets there, then it operates more like a utility where it's slightly more volatile, but it's less of a front running the beginning of the internet type of play. So, like, you know, that's why I think all these valuations are mega stretched on these L1s, because, you know, the TAM that you're hoping to price— you're pricing in this optimistic large TAM in the future. Um, and, and so yeah, that gets front-run, and then eventually they kind of hit steady state, and then ideally it's the apps that start to do well. And yeah, I think that the proxy of utilities from back then is apt here, but it's tough to draw like exact parallels.

Yeah, it's just with telecoms, they didn't hit— well, they front-ran activity that didn't end up happening, right? And there was like a big crash. Like, I think most of them haven't even hit their, their 20, their 2000 peaks. I'd have to go look at a chart, but I think Cisco and stuff like only recently, or maybe it hasn't even hit their, their 2000 peaks.

Like 20 years ago. It's like networking though. Telecoms is like your Verizon, AT&Ts more so. And they basically, because they sold off the tower businesses and those became utilities is more capital efficient basically. For the towers to be standalone and, and for multiple telecoms to use the same tower versus each telecom owning their own tower.

And yeah, yeah, I mean, AT&T and Verizon are both below their $2,000 price.

Yeah, I mean, I used to—

obviously it doesn't take—

it's okay, it's a very boring business. It's just crazy because you hit pretty much like— there's a decent amount of saturation and growth is from children aging into adults being able to use phones and immigration, right? Like that's your— otherwise you're just saturated and you're just trying to steal market share from each other through promotions and all of that. And so they become just yield-based products.

You know, you've saturated your revenue when you're waiting for children to age. Yeah.

I feel like on the application side, it's just, I think the easiest point in the stack to extract value seems to be just like distribution to users, which probably comes as like a form of, you know, some sort of regulatory moat or just like having that distribution. So it's like, like, is this a setup for— no, I'm not. I'm just saying like it, that just like the wallets, any, anything, right? Like even Base and Coinbase and like, you know, just funneling their users there, extracting fees there. Like what Uniswap is doing. They have a brand, they can bring their users to their chain. Um, any, anyone with users, that just seems like the maximum point of, of value to be extracted is you own the users and then you can take fees from them. Like a lot of the infra pieces will just kind of compete each other, uh, on fees and that'll get grinded down over time. And yeah, I think you have to hope the, like the L1s do capture some sort of monetary premium because it's really going to like, I just, the easiest point to extract fees is going to be at the user level.

Did you read Robbie's fat wallet thesis?

Yeah, I think that that's probably where we're going.

For a while though, and like it hasn't really played, like we started investing against this thesis in like 2020. Also thinking that not just wallets, but like the Zappers of this world would, you know, whoever owns, whoever's closest to the user, whoever the user Like, because our theory is just people aren't going to be interacting directly with these protocols. There's going to be some abstraction layer, which might be a wallet, it might be a portfolio dashboard, it might be a trading terminal. And, and like, they would own the user and be able to capture value. But it hasn't really played out. Like, MetaMask is the only one that's really like managed to do that, I think.

Yeah, but I think that the idea that front ends are capturing value It's true. At least if you just look at valuations and we saw this with like Jupiter and Uniswap who were both like the front ends of their respective ecosystems. Yeah, they're both making a lot of money. They're both like $7, $10 billion valuations or something.

Like Uniswap market share barely dropped after they took the front end fee from 0 to 25 basis points because they have just such like brand recognition and the users. I can pull up the data quickly, but it dropped like maybe from like 40% to like 30% or something. And a lot of those users are sticky.

Just how many people are using MetaMask and paying those fees is a testament that people aren't super fee sensitive.

I mean, even people that are smart enough to, to phish iGet into giving them $6 million of tokens are using MetaMask to swap. Like, that's how many— that's just how many people just like value that convenience, right?

Especially when this stuff is so volatile and it's like, okay, like this stuff swings 10% a day, 5-10% a day. To make sure that you're getting like trustworthy, reliable execution for 25 bips, um, is really like such a relatively low price to pay versus, you know, your transaction failing and or, you know, using a website where is hacked or compromised or something and potentially losing your funds. I think that crypto is so trust-oriented and execution is so important because these assets are so volatile that, you know, whoever is going to be the biggest trusted brand offering the best execution and like safety and like cultivates that among their customers is going to be like very sticky in the marketplace.

There are some counterpoints, right? Like Tether is, I guess, a counterpoint, like in terms of someone that doesn't have— I mean, I guess they started by having one, like they kind of grew it through Bitfinex initially when Bitfinex was dominant exchange. But nowadays they really are like a headless, you know, there is no Tether front end or anything that's attracted through and they just print money off being used by others. I think stablecoins are an example where like you can actually pull that off. Although to grow, you do kind of need to like try and own the user as, you know, Frax and Maker and everyone found out and having to build out their own DeFi primitives. But there are like a few examples, I'd say.

They built the moat. That's liquidity. Yeah, liquidity is the moat.

Every—

like, the most liquid trading pair on every major exchange is Tether.

Yeah, it's like if you don't have a network effect, you have to own the user, right? If you don't have like some kind of economy of scale, you sort of have to own the user.

There's also the comfort of not using USDC and the stigma that being associated with, you know, the thought that they can freeze your assets. So if you're an irrational you're just not gonna— you're gonna opt for Tether over USDC.

Yeah, I think like just front-end and capturing the users is one moat. Like, there's definitely other moats in the business, but as Jan said, like USDT has just grown to such an enormous size that they do own a lot of users in terms of like, you know, the trend, like the currency of, um, these exchange pairs. And then also just like people hold Tether and use Tether in like commerce and a lot of places across the world. Like, they've kind of built that up through, um, just like being the only real competition or just having so much distribution. But it does kind of come back down to owning the user. They're just not really like an exchange front-end business. They're more focused on that stablecoin.

Yeah, so TL;DR, we're bullish applications.

Oh, I do think, I do think like just on a final point, it's like the industry doesn't make sense if You can't build an app and keep the value. Like, yeah, right. Like, what's the point? Um, you know, people aren't going to build apps just so that they can like push the L1 token because they own big bags of it. Like, that's not how you get new developers and stuff.

Yeah. And this kind of leads us nicely to the, to the next point on, on memes. So like, memes have seen a resurgence. We saw SPX 6900, which Murad showed me at Token2049 and I didn't buy enough of, have like an absurd sort of WIF-like run. And in general, like, there's sort of been another meme season last week and there's been a lot of takes on Twitter about this, about how people saying memes are good because they're, you know, all the reasons, like, yeah, equalizing the playing field and all this.

I think the interesting one and the one that like Jan disagrees with too, but I kind of agree with, and this was done by the guy at— I forgot, it's like Thea Research.

Yeah, yeah, like Felipe Montalegre.

His point, his point—

also a banana gun bull.

All right, so his point was that meme coins are good because they divert capital away from like pure narrative trades, right? Um, and so you have these kind of trades a lot throughout crypto where it's like, oh, the L2 trade is on and people are just going to bid L2 tokens indiscriminately. And then, oh, there's like restaking trade or something. So maybe you'll get a bunch of like those tokens or like a DA trade, right? You get a bunch of DA tokens going. And these kind of have no semblance for, I guess, valuation or fundamentals. It's just kind of like chasing narratives. And so his point is that With people bidding meme coins, that capital that would chase narratives now is not there. And so real projects need to actually create, um, like a useful product with like real fundamentals in order to get like liquid funds to buy them because you don't have that indiscriminate capital just chasing these narratives anymore.

But like, no, yeah. So I was gonna say, like, even in the crazy scenario where 1% of narrative, like 99% of narratives are vaporware and 1% are— there's some— something useful to the space, that's still more productive than chasing memes because you're at least getting 1% something.

Shiberium L2, have you heard of that?

But like, you know, typically with the narrative chases, it— you'll have like— it's, it's as you see with most stuff, right? It's something quality that'll kick things off and then you'll have a lot of these parallel EVM and like all of these other narratives that really have no teeth that are following, which I agree are vaporware, but they're, usually catalyzed by something that's productive infra. And so people just need to create narratives around catch-up trades. And so if the byproduct of, of this is like, you know, annoying kind of vaporware catch-up trades, but you're still having some productivity that, that catalyzes it initially, I think that's more productive than the, you know, the meme side.

I strongly agree. I just think like that The narrative, the idea, and it also depends how you define these narrative trades because like the internet was a narrative trade for like a decade, right? Like the valuations didn't make sense for the, for like the multiples, the revenue multiples. And any new technology is going to be a narrative trade where like the price is going to get ahead of the fundamentals. Like, in fact, if it's trading like an appropriate multiple, it's probably a very boring business with no growth, right? That's just sort of sort of how it works. And like in crypto, of course, everything is going to be mostly a narrative trade, right? Like most of this stuff is— the cash flows are far out in the future if this thing works. And I don't know, for me, the meme thing is really like an admission that, yeah, none of this stuff will ever have value, right? You're kind of like throwing— I mean, at least the Morad thesis is basically that. The Morat thesis is utility tokens were just meme coins, right? It's just that their meme was complicated to understand, whereas the meme coin meme is simple to understand. So a lot more people are going to ape that. And to me, that's just like not true. I mean, I respect Morat a lot, obviously, but to me, that's just not the case. Like, I think a lot of this stuff is going to be incredibly valuable and wouldn't be in the space if I thought that it was all just memes.

Yeah, I think he's just, you know, being hyperbolic. For the sake of, of getting attention, and, and it contributes to it. And I think he's, you know, he's knowingly doing this, right? He— I don't think he 100% believes what he's saying. I think he, he's— it's intentional, it's, it's marketing. I, I like and respect Murata a bunch, um, but, you know, even going back to the, uh, argument around it being productive for, uh, incentivizing good builders, I, I think that even falls apart because I would say meme coins are a disincentive. They like Good builders are just like, wait, they just launched this shit. Yeah, what the hell? And then it pumped whatever and they made how much? And I'm gonna be here building for 2 years to get just shit on on Twitter for like, you know what I mean?

I think this is a negative catalyst for—

And then get sued by the SEC. Yeah, I think meme coins, you know, are just like, where am I gonna spend my time? I can try taking 100 shots on goal with one of these meme coins and keep kind of iterating and eventually one will hit and I'll make a bunch of money. Or I can try building and who knows, you know, this spatial shift. I just think it skews our, like, the reward mechanism, mechanics for builders and skews incentives.

If you get, if you create, if you create a new good primitive with a good token, you know, not a bunch of shitty unlocks and everything, not a crazy high FDV, this meme coin capital is gonna, like, bid the fuck out of that narrative. And so the meme coin capital, I don't think is like just always going to be in memes. I think it's kind of waiting for something that's like worthy of a bid. And we haven't really had that. Like, it is very hard to bid a lot of these new tokens that are coming out. It's just like, it doesn't really make sense. But I guarantee you when we get like some new good organic— and most of the good things to bid historically in crypto have been like organic random things that have popped up. Like, obviously a lot of the DeFi Summer stuff, Telegram bots, right? Those just came out of nowhere. Like, there's a lot of kind of examples of that.

The other kind of argument I thought was really good was the Alexander Goode one, just that like the TAM, and this is like my problem with the Murad sort of narrative too, it's just these things are not cults, like they're not religions, like religions develop over like hundreds or thousands of years and like they're not united by a coin going up. They're united like by deep cultural and like spiritual beliefs. And like these things, the only time where they seem to have that is when the token is going up, right? And then like, obviously when token goes down, that veneer disappears. And to me, like the TAM Like if you're going to tell a good meme, it's a good story, right? It's just a good narrative. And the meme around something like AI, but even around crypto, around like a permissionless global financial system is just so much bigger than the meme you can tell about like, I don't know, even like Retardio or whatever the meme of the month is. Like the TAM is just so much bigger. It's so much easier to tell a bullish story about Tao or some AI coin. Than it is about memes that I just think memes just aren't thinking big enough. They're like, oh, look at Doge, traded at like $90 billion in May '21 or whatever. Like that's where these memes will trade at. And it's like the TAM for some of the AI stuff, even some of the crypto, the pure crypto stuff is just so much bigger that I think, yeah, a lot of people will end up missing the—

I think you could argue that both ways though, because, you know, part of what helps memes is there is no fundamental value. So the ceiling is somewhat uncapped there, whereas for some of this other stuff, eventually fundamentals come into play and, and they tend to anchor price a bit. Uh, granted, yeah, I think it'll be hard for memes to, to surpass previous valuations just because of the— so there's like opposing forces. On one hand, you have like the dilution, right? Now you have multiple 9-figure meme or 10-figure memes, so many. And then, and then on the other hand, memes are much more consensus, and I think they represent a larger percentage of people's portfolios than they ever have, right? And so those are kind of offsetting. I do think they're really useful to bring in capital into the space, though.

Yeah, that's what I was gonna say. I was just waiting to say that. It's like memes, that the thing that they're good for is they're onboarding people. Like, you know, apps like Moonshot and stuff, it's like these are actually onboarding people. And like, yeah, you can throw some money in it, it's fun, but then, you know, you learn what a token is, you learn what a wallet is. You start transacting with this stuff, you're like, oh wow, like there could be a lot more here beyond, um, just the meme coins. And obviously that's making the assumption that you're going to graduate from just like chasing these meme coins to like, you know, appreciating this technology for what it is. But I do think it's bringing a lot more attention around the space. And I think it was Cedrus who shared, you know, like the amount of like by broken out by generation, like how many people, like, or what percent of the generation owns crypto. And I definitely think, you know, as Zoomers and kind of the younger generation spending more time online, getting more comfortable with digital value, like meme coins is a good foray into that. And then, you know, as they understand the technology more, they might graduate beyond them. But I definitely think that's positive for bringing in users to like just get comfortable with the technology in itself. In a fun way.

Like, but yeah, every cycle, like, people buy some token— like, buying tokens brings in users. Like, it doesn't have to be meme coins, it could be any, for sure.

But it's like this, um, the simplicity of it is nice. Yeah, the simplicity and these apps like Moonshot is like— that sort of stuff is so cool.

Yeah, on like the, the good Alexander post though, I read that and I actually agreed with a lot of stuff he said. He had that chart too that was like NVIDIA trading volume versus like GME trading volume and just how much bigger. And you know, I've always kind of thought, I've always been just thought TAO was like, you know, not like a real thing. Um, and I still think it's like just incredibly narrative driven, but you know, every time I update those like sector performances, the, you know, We talk about how like everything is basically down, but the crypto AI stuff is always like actually standing out beside memes. And I actually kind of, I read that, I started thinking about it more. I actually considered buying like Tao for the first time. Because I actually kind of believe in that like big TAM and it's like Tao is basically just a meme, but it's AI, right? And so I kind of—

is there like a— it isn't just a meme though.

That's like, that's like super unfair. Like to, I mean, I get what you're saying, but it's a meme relative to its valuation.

It's a meme relative to its valuation. But yeah, I know it's not just a meme, but no, I agree with his point that like the, you know, you can dream a lot more, right? Like there's a lot more dreaming to be done with this like AI.

Uh, and then you start comping it to kind of private valuations too. If you believe in like the value of crypto and AI, you start comping it to OpenAI's $180 billion and things of that nature. And then there's also just the fact that there aren't too many quality AI coins, which is set to change over the next, uh, I'd say like 6 to 12 months. So it'll be interesting to see if, if how much of its value has been because it's the kind of canonical crypto AI bet that people can make right now.

Yeah, it's just what has more product market fit as a meme? Like whatever SPX, I guess XPX 6900 does have pretty good product market fit, but I mean like Retardio or like AI, you know, like replacing all human cognitive and physical labor. What's going to let people get more excited, speculate more? I don't know, it's just to me, and crypto has a bunch of memes like that that I just think are way more interesting than, than, uh, than anything. These—

there's a certain amount of people which will never like buy meme coins or take them seriously, whereas like you can kind of probably, you know, convince a lot more people on something like Tao where it's like this is the future of AI versus like a lot of these meme coins is like everyone at some level, or at least a lot, a large part of the, the capital that could flow into these things knows that like this is just a trade, right? Like, I don't know if this cult vision comes true because like the whole thing, like, it sounds very convincing and, you know, also a lot of respect for Murad, but like the whole idea is like, okay, we're all gonna get rich off these and it's all going to be a cult, but like to actually get rich or like make it, like, you need to sell at some point. So that's kind of where it falls part. It's like, is everyone just gonna like have millions and millions of dollars of unrealized gains and all these meme coins and never touch them to sell? And who is the eventual bidder for those things, right? Because like, I don't think any like super serious funds or people or like large portions of the capital are going to come in and like take really big positions in like something like a Doge or a SHIB and like as a long-term conviction bet, right? It's maybe more to play like the market dynamics. So it's like, I don't know who's going to be kind of like the exit liquidity for that cult if these people actually want to realize the whole vision of becoming wealthy. But it definitely is an intriguing narrative and, you know, says a lot about the space and people pissed off with the, the low float, high FTV stuff, which we've talked a ton about. Um, and probably will continue to do well as long as like Doge exists at, you know, multi-billion dollar, like $10 billion market cap, $20 billion market cap, and all these new meme ones like, you know, can launch and get to a billion or something. Like, there's so many memes about a billion now. Like, there's just going to continue to be more of them. But I do think it's good to onboard people. Um, yeah, I think they're different investment buckets though, right?

Like, I don't— you're not, you're not kind of putting money into TAO and expecting a similar degree of return over the same time period as you are putting into kind of some of these short, uh, these, these, uh, low market cap memes. So I think there's a different bucket. Like, it's not, I'm not, I'm not satisfying my meme exposure because Tao also has memetic value. I think I'm getting my AI exposure through Tao and, and I'm like, I, I'm happy that it also has memetic value that, that drives it. Right. So it's, it's, it's not, I don't see them being as the kind of, maybe I think it is a certain amount of money that will like, people won't just bid.

Yeah. Like a certain amount of people or funds or whatever just aren't going to bid. Means.

There's definitely a decision of like, more from the retail perspective.

No, but there's definitely decision of buying like WIF versus TAO, right? Like TAO is like double the circulating cap. Obviously the FDV is bigger, but like that is a real decision. Like, am I going to buy like WIF or Bonk or Pepe, or am I going to buy TAO, right?

Do you think for a fund that's a real decision? No, no, not for a fund. Serious capital? No, no, a fund. No, it's going to drive these things.

And that's why, listen, you get like the Grayscale. Grayscale has like some AI fund and they just increased their TAO exposure from like 2% to 26% or something. Yeah, 30%. 30%. So like, again, I'm talking myself into TAO. Yeah, I have a TAO bag.

Yeah. Speaking of fundamentals.

I might own TAO when this airs.

Do we want to chat about the Off the Grid launch?

I feel like that was one of the biggest One thing on crypto AI, we're doing like a 3-week, we're doing a huge like 3-week crypto AI thing starting next week. Tons of panels, like tons of different crypto AI protocols and everything. Some investors, this is a 3-week thing. We're going to have stuff coming out every day. We're going to have, we have an analyst on Delphi Pondering Durian who is writing writing a 4-part series on crypto AI. Tower in the Square is already free. He's done like infrastructure, middleware, and application soon. And these are all going to be unlocked too. So yeah, we got like a ton coming out on this whole sector that's just going to be like available starting next week.

Yeah, we think crypto AI is, or at least a lot of us think crypto AI is one of the most exciting, if the most exciting sector in crypto right now. So we're dedicating a whole month to it. It's going to be some really spicy debates too. Like, I think we've already had a really good TAO debate actually. With a very well-spoken Tao bear. And then, yeah, there's a lot of Tao bears to choose from, but I think we chose a good one. Then we're having like, is crypto AI vaporware debate with Kyle Samani, not exactly taking the bear case because they're bullish crypto AI, but at least like bearish on a couple of the sectors that people have been excited about. And then Imad Mostaq, the founder of Stability AI, on the other side. And then pretty much all the best builders from Ritual, from all the top sort of crypto AI projects are going to be there in different panels and stuff. So it's going to be a really good month. Tune in. Yeah. So speaking of fundamentals, I wanted to touch on the Off the Grid launch. Obviously that went live this week. It's a big investment for us at Delphi Ventures, obviously full disclosure. But it's pretty much the crypto game that we've been the most excited about that we've ever seen in terms of like AAA quality, something that we think could really bring in a mainstream audience. I think it's the most likely game to bring in 100 million users into crypto. And so far the launch has been really good. It was obviously 5 years in the making. They raised over $100 mil, went live on Tuesday, had some of the biggest streamers in the world, Ninja, DrDisRespect. A bunch of others streaming it for hours. Obviously some of this was paid, but most of them were staying for hours past what they were paid for. And a bunch of streamers that weren't paid like DrDisrespect and others were also streaming this publicly. There's a lot of really strong feedback. I think people were really enjoying the gameplay. There was, I think, 450,000 new wallets created on Avalanche over the last few days. And obviously they launched on a on a Tuesday to give time to like bug fix and stuff leading up to the weekend, which is the time where you're going to have the most, the most people online. Over the last few days, it was more streamed than games like Warzone. And the target is to make it the most streamed game on Twitch over the next, over the next 2 weeks. There was like, yeah, 350,000 hex decodings and like a bunch of— yeah, just I think people were all over the world. You were getting getting games in less than a minute. So there was, there was a lot of, a lot of activity. Uh, curious if any of you guys took a look at it and what you thought.

Yeah, I put a decent amount of hours in actually. Um, it's, it's a lot of fun. Uh, I think the, one of the unique elements is just the, obviously the, the firefights are really, uh, high quality, you know, good variety of guns. The land, the, the terrain is, is really interactive. And I think so the biggest thing, and kind of one of my initial gripes with battle royales, is, is kind of the ratio of time spent moving around and looking for weapons relative to firefights, which then makes firefights that you lose just more frustrating. Um, you know, just my— I spent most of my FPS days playing like Halo and Modern Warfare where it's you know, two teams and, and high, high action constantly. You know, there's a full, full map of players. And so what they've done a really good job of is, uh, making mobility, uh, a really important part of the game. And so you, you're able to traverse the, the map very quickly with various gear. There's kind of different elements of the map that, you know, like ropes that help you get to the top of a building. And so you're able to bounce around a map really easily, and, and which helps you, one, find users if you want to get into firefight, but also makes trying to get out of one a lot of fun too. And I think it adds a whole new dimension to the game in terms of just like—

and the limb stuff is crazy—

skill of mobility. Yeah, yeah.

Did you play with the limbs much? Because I know Ninja was just getting wrecked because he didn't know, he didn't know how to use it.

It's hard. I need to just like— I, I haven't done the top-down look of every single limb to figure out what's what, but yeah, the idea is You're a cyborg, and you have your torso, and your arms and legs are removable, and they provide different skills and abilities from jetpacks to shields to grappling hooks and kind of everything else in between, which adds a whole level of kind of dynamism to the game and creates so many permutations for firefights where you never really have a lot of kind of repetitive interactions and also provides a lot of really cool counters to what people are doing.

Um, yeah, yeah, it definitely feels like it's increasing the skill cap because, you know, the big battle royales that came out initially were, um, or like Warzone— wait, what were the other ones? What was the big one? Uh, Fortnite, you know, there's one before. Yeah, PUBG. PUBG and Warzone. Uh, like PUBG especially was like— why I feel like Fortnite was such a good upgrade is because PUBG lowered the skill cap so much in the sense where like you could just get screwed by the zone and then you're running across an open field and you just get shot in the head and you just spent like the whole game like looting up and doing that. And then you just like had a bad pull on the zone and you're just screwed. And then Fortnite like upped the skill cap in a way with building where it's like, you know, you could create shelter wherever you were. That building significantly increased the skill cap, but it also like, you know, for casual players could be a lot. Like if you face someone who's like a sweaty builder, like you're just screwed.

Yeah, dude, this kid's ridiculous.

They just sound like they're typing on a keyboard.

Yeah. Yeah. And I, and I feel like, uh, Apex Legends did like a good job with the mobility, but I think this is even like kind of an enhancement of that where you have this additional mobility. So it adds like a skill cap to the game, or like it raises the skill ceiling on the game where it's like, you know, if you get, um, put in a bad position, you can still get yourself out of it. And then with the limbs as well, it's a whole new element. So I think, uh, that's— it's, it's a pretty fun game. I haven't played yet, but I've been— I watched like a lot of of Twitch streams, like a few hours when it came out. Yeah, like it looks pretty sick. I need to get my computer set up.

I'm getting a PS5 actually just to play it. But, uh, yeah, I think also the on-chain stuff seems to be working pretty seamlessly, like their AVAX subnet. Yeah, I think they minted like 350,000 hex decodings yesterday, so like loot that's extracted from the game then minted on-chain. Um, and I think if it if it plays out, like, they've spent so much effort on that that it could also become like the winning sort of infra play, right? There's like a history in gaming of this being the case where the successful games end up also like building the infra that they need and then like commercializing that as its own thing, right? Like Fortnite with the Epic Game Launcher, Counter-Strike and Steam. We saw that to some extent in crypto with Axie and then Ronin, right? Like attracting a bunch of games because you get access to the Axie player base. I think if this is as successful as it could be, I do think there's going to be a lot of people wanting to launch games on the Godzilla subnet.

Yeah, let's see. It's competing right now on Twitch and stuff, and obviously there's a lot of hype around it. But the game looks and is just as fun and is getting just as many viewers as Warzone, Apex, any of those other battle royales. Obviously, this is like the initial hype. But it's pretty exciting to see a crypto game of this quality with like the real gamers and like those level of streamers play and have a good time. So it's exciting for the space.

I mean, this is big for Avalanche, I guess, too. I haven't really heard Avalanche a lot recently, right? So this seems to be a pretty big flagship thing for—

yeah, I just checked the chart. Avalanche isn't really up, but it would be cool if Like how much value really accrues to the subnet? Do we know or not really? To the subnet? Or like through the subnet to Avalanche?

Not, I wouldn't assume an insane amount because, you know, it still ends up being a function of volume of transactions, which, you know, the game itself doesn't necessarily operate on-chain fully. It's kind of the claiming of items. And so yeah, that happens. To a decent amount. But I think ultimately most of the value will come from, uh, secondary market volume on these assets, right? If you think about there's like tens of billions of volume that CS:GO did. And so it— that, that's really where a lot of these games will kind of capture a bunch of value, which is great because it, it's directly correlated with the kind of on-chain, uh, the, the, the the volume of the assets, which is, you know, a function of kind of excitement around the game and what people want to do. And so, and it's also not really related to any kind of pay-to-win type of dynamic, right? It's skins that are cosmetic and rare and just based on kind of what you've achieved rather than how much money you've put in necessarily.

All right, guys, I think this was a good one. Covered a lot of ground. Let's end it there. Thanks everyone for tuning in and we'll see you again in In 2 weeks.

Yep. Once again, Crypto AI starting next week, 3 weeks.

All right, say bye because, uh, we get complaints about our— bye!

See ya later.