The Path to Trillions: Ethereum's Institutional Dominance | DAS London 2025 | Day 2 | Main
Summary
Market Insights: The podcast discusses the recent crypto market crash, highlighting issues of centralization and asset correlation, and emphasizes the importance of understanding leverage and risk in decentralized finance.
Super Cycle and Decentralization: It is suggested that the current monetary debt super cycle is ending, necessitating a shift towards decentralization to build trust and resilience in financial systems.
Ethereum's Role: Ethereum is positioned as a key player in the future financial ecosystem, with its decentralized and reliable infrastructure making it a preferred settlement layer for global finance.
Institutional Adoption: The conversation underscores the growing maturity of crypto markets, with institutions increasingly participating through ETFs and other investment vehicles, focusing on high-quality assets like Bitcoin and Ethereum.
Investment Opportunities: The podcast highlights the potential of Ethereum as a long-term investment, driven by its role in tokenization, stablecoins, and decentralized finance, suggesting a flight to quality over speculation.
Technological Advancements: Ethereum's continuous development is noted, with advancements in scalability and security expected to further integrate traditional finance with decentralized finance.
Future Outlook: The speakers express optimism about the potential for blockchain technology to enhance global prosperity, advocating for collaboration and innovation to maximize economic benefits.
Transcript
Hello everyone. Thanks so much for joining us today and for all of you watching online. My name is Arjent Karpo. I'm the senior technology correspondent at CNBC and I have two wonderful guests here who can unpack everything that's happened over the last few days and what we're expecting in the future. So I think we got to kick off with what happened over the weekend on Friday, all the action. There was one headline that said that crypto crash showed there was a market littered with pitfalls. Just want to get your your take on what went on. So I I think personas really matter and it depends. Are you a gambler? Are you a speculator? Are you a trader or are you an investor? Because I think the perspective is completely different. I think fundamentally you had a few problems. You had a centralization problem which I know Joe double click on where >> not a fan of centralization >> where you had hardwired prices and you had oracles that were highly centralized. Um, if you take a step back, I I came from traditional finance. I spent 20 years at BlackRock. We understand very clearly when there are correlated markets and many of these assets were highly correlated. When you had a single pricing dislocation in DeFi, it extended to the centralized exchanges. And I spent the last few weeks in Asia in Korea, Hong Kong, and Singapore. And the word pers came up. If I had a drinking game and I drank every time I heard the word pers, uh, I wouldn't be here right now. But I think we need to be very, very clear. If you're talking about more than two to three times leverage, institutions are not coming to per saw, which was sadly closed out, was insidious leveraged garbage. Like, you can quote me on that. Most people did not understand what they were doing. But there's a casino for everyone. So I think the lessons to be learned are around centralization. The lessons to be learned are around correlation of assets and understanding that people thought they were safe by diversifying assets and venues and cross margining. It turns out that was a pitfall, not a position of strength. And if you take a step back, my lesson would be there are a couple of assets that weren't affected. they were the quality growth assets and that's Bitcoin and Ethereum and I think you're going to see a significant differentiation going forward and if you believe in growth and you want growth assets maybe go to highquality growth assets that can stand the test of time that have a real fundamental value and are productive. >> Joe, I'd love to get your take. uh what happened Friday was a but in traditional markets and in in crypto or more decentralized markets uh was a s symptom of what's been going on in the world for a while. Um we are at uh the end of a super cycle. It's a monetary debt super cycle. It's a Strauss and how generational super cycle. Um it's been the American super cycle essentially because America came out of World War II strongest. Um and um the super cycle has run out of fuel in the sense that uh there's just way too much debt in the system. Uh and so um too much debt um geopolitical instabilities um technology getting so strong that uh it's hard for for people to um manage their lives. uh in the context of very powerful technology run by big tech essentially centralized organizations. Uh and so we're we're going to see things crack apart as this super cycle ends and as the next super cycle um continues to take shape and continues to establish itself as the next system of the world. Um and so what we need in that next system of the world um is decentralization. Uh we've certainly lost trust in in centralized authorities and centralized systems. Centralized systems have become abusive. Um we need um censorship resistance um which you get from uh rigorous decentralization. Um and uh we need a system in the world uh that makes use of uh artificial intelligence, decentralized protocols um and probably uh something that ends up looking like nation states uh becoming more and more politically important. um in the period um the formative period of of the next super cycle uh we in our ecosystem really need to focus on on rigorous decentralization. Um there are companies Binance is one of them uh that does a really great job of treating their customers well. Uh they don't do a great job of of treating uh the idea of decentralization very well. Uh and so uh we need to all get with the program. Uh Binance has done some great things to to onboard people to our ecosystem, but uh uh centralized versions of of decentralized Binance and decentralized protocols um really should get with the program. Otherwise, we're going to see um when the hits the fan, we're going to see correlations go to one or negative one, and we're going to see um uh more uh great difficulties in traditional and non-traditional or decentralized markets. >> Joe, can you just expand on what you were saying about we're going to see cracks in the system and also uh the end of the super cycle? What exactly does that look like then? Is that markets crashing? I mean, we talk about a public equity markets at this point in time. there's so much discussion around bubbles forming etc. So I just want to get your take on just if you can expand on that. >> So so it's loss of trust in the system. Uh for millennia we've operated with top- down command and control. Um top down command and control is very efficient. It's great for building civilizations. It's not very good for 99% of the people in those civilizations. In 2008 2009, Satoshi Nakamoto invented this profound new form of trust, decentralized trust, and showed us how to operationalize it in a new kind of database system, the blockchain. Um, over the next few years, we in Ethereum and other projects have taken that uh to the point where um we've built a new trust foundation for the planet. this database that's inspectable and usable and upgradable by anybody. Um, and we spent some years building decentralized finance so that we can essentially replace some of the uh um the um more dangerous elements of centralized finance. Uh that there's so much that we can learn from centralized finance obviously and we're we're learning it quickly. Uh but essentially upon this new trust foundation for the world and upon uh this new global decentralized infrastructure uh we can start taking a look at all the different sectors of the economy and we can start uh disintermediating uh the rent seekers and building more efficient systems, more effective systems. Uh when builders come into our ecosystem, they uh appreciate the fact that they can use decentralized primitives to build of by and for the community uh rather than building in the traditional um method which is essentially in an adversarial relationship between the company um and the customer or even between the nation state and the citizen. And so, uh, we need, uh, we need to lean into this decentralized trust thing or or we're going to continue to be in a lot of trouble. Imagine big tech getting stronger and stronger with AI. >> Joseph, just before we dig a bit more into Ethereum, just want your final take on the markets because one of the the thing we've heard is that crypto markets are getting more mature and then we have episodes like we saw on on Friday. Um, is that true? Are markets getting more mature? >> 1,000%. I started in uh I spent 20 years at Black Rockck. My first fora into crypto was running a blockchain team in 2018 and we hired a young incredible group of people. I think pound-for-pound some of the best people in the ecosystem. We waited two and a half years until the market participants were ready for institutional and uh we invested in circle. We managed their reserve. We connected our fintech platform which has tens and tens of trillions of dollars of tradi assets to Coinbase. We broke their stock that day because it was a message that institutional believe they were now participants and market infrastructure that was good enough. We launched ETFs that brought over $125 billion of retail wealth management and institutional into Bitcoin and ETH. And I want to be clear, if you look at the long tale of ETFs, it's all Bitcoin and ETH. And there was a view that this was not a fad. It wasn't going to zero. That every single person in the world and every portfolio should have some Bitcoin in it. And everyone who believes that we're going to change finance and trust that it's going to happen on a decentralized programmable network should make that bet on Ethereum. that this is going to be the trust layer, the trust commodity, the highest value money that's going to transform finance. So 100%. Are there cracks in the system? Yes. It's usually because of avarice and it's usually because of points of chokeold in the system that are interdependent that people didn't understand. And at the end of the day, you can blame regulators, but we all have free will to understand what we're doing. And if you didn't understand that on certain chains their sequences and validators are going in and out first, shame on us. If you didn't understand that oracles can misfunction and misfire, and if you didn't understand this idea of auto deleveraging, shame on us. I will tell you when people in this room talk about institutional adoption if you're talking about all caps capital I institution with the real assets they are not going to fully enter with both feet in until they understand the risks in the system so Friday actually was a terrible day for humans a lot of people lost their skin people took their lives but unfortunately if the ecosystem can't self-pol itself leverage works itself through in any market but institution ions are here. They're ready to go. But I'll tell you, they're going to be there's going to be a flight to quality, not a flight to speculation. >> So, moving that on to what this is. >> Can I add a little? So, we spent 10 years um maturing and scaling the Ethereum technology. Um and we're now at our broadband moment where affordable, scalable, usable enough. Um it's legal in the United States to to use and build blockchain systems and tokenization. Um and um we um need to continue to uh support the technology um and uh digital asset companies are are an element uh that uh that can supercharge this technology. >> So so when we talk about uh the path to trillions uh as this talk is is titled uh Ethereum's institutional dominance just lay out your stores. Joseph, I'll start with you. What does that path to to trillions look like for you? >> Sure. Um, Bitcoin is an incredible network. It's an incredible asset. It does one thing exceptionally well. But if you're going to transform the entire financial ecosystem to go from T+1 T plus2 settlement to a human trust layer that costs maybe 10 trillion dollars of ISDS and insurance contracts and counterparty risk and you want to open up the system, it's going to need to be done on a trusted decentralized platform. And I don't mean a a monopolistic vendorowned L2. I mean a system that is prepared to treat everyone the same mutually with atomic settlement with programmability with composability. So what is the thesis for a trillion dollar Ethereum market cap? It's very very simple. Most of financial services recognize that they're trying to ek out basis points of efficiency on one of the most broken inefficient engine called the market structure. Happens everywhere. Stable coins right now are about $300 billion. It's a bit of a duopoly. Tokenized funds are only about $30 billion. And DeFi access, pools of liquidity, and I mean high quality liquid assets, borrowing, lending, marketmaking, is where institutions are going to gravitate. But they're not going to do it in a scattershot way. I know from experience, and I'm not a know-it-all, that institutions care about three things deeply. trust, security, and liquidity. And Ethereum is has 10 years since its genesis block in July of 2015 has never gone down. It has the most validators. It has the most economic security. It's monop not monopolistic. It's decentralized. That is where the settlement layer, the global settlement layer of finance will go. And if you think we're in the very early innings of tokenization, stable coins, DeFi, that is where I would be investing. And that's why Joe started uh an ETH debt that I run because now is the time to accumulate as much ether as possible at the lowest price because that is what's going to power and secure the settlement layer of finance. That is my base case. And you think about some of the products we launched in my previous life. The largest tokenized fund in the world, Biddle, is 3 billion. Wait till you see an ETF or an S&P 500 fund with 300 billion of assets tokenized and all of public equities tokenized. You're talking about a multi- trillion dollar adoption curve happening soon. >> Joe, when I look at uh the competition as well, there are a lot of blockchains coming up saying we can do what Ethereum does better, faster, cheaper. What do you think is going to keep Ethereum ahead? Um so decentralization uh for as I said before for 10 years we we've been moving towards this this mainstreaming moment. Um and um uh as as Joseph uh mentioned Ethereum has been running non-stop reliably for over 10 years. Um, and you know, as the traditional world cracks up and the more decentralized world uh gets more and more capable, uh, we're starting to see traditional finance um, and DeFi merge into one. Um last week um or a couple weeks ago um uh uh we uh I was in Frankfurt uh at the Cyos conference, Swift's conference and uh um to start the conference the the CEO of Swift uh Javier Peristaso announced that uh Swift would be moving away effectively from this sort of brittle um correspondent banking infrastructure um and building using um using uh technology that uh >> Joe just say it just say it Joe >> uh building a prototype um with our company consensus which makes use of the Ethereum technology and the Lineia technology um and so that that is a it's a mechanism designed um to move their their financial messaging system uh onto a blockchain. Um they also mentioned uh that there there might be settlement in the not too distant future on that blockchain. So um uh the sentiment at Cyos was pretty remarkable for this idea that no longer did we have to keep uh the DeFi rail and the trad parallel uh and that never should the two meet. um there was real acknowledgement uh and even uh from central banks and major banks after um his talk uh that hey it's about time uh we have this great new technology and we can make use of it and so that that is Ethereum's advantage its reliability uh its lacks of of censorship censorship resistance etc um this follows the DTCC in the US um building on blockchain systems again it's Ethereum technology. Um this follows NASDAQ's announcement uh that they're going to tokenize all their equities again on Ethereum technology. Uh and so uh the difference is that uh there are some other great technologies out there. There are different kinds of database systems that that are somewhat decentralized but but nothing approaches the uh the rigor of uh decentralization on Ethereum and on Bitcoin. >> When we talk about institutional adoption, there's a couple ways we can think about it. One of those is, you know, what big financial institutions are up to. And I've spoken to City and JP Morgan over the past few days talking about what they're doing in custody, in deposit token, stable coin, uh, and thoughts on that. And then there's the sort of investor side, institutional investment into into digital assets as well. Joe, just from the point of view of more traditional financial institutions building on um Ethereum, what do you expect are going to be some of the big things um that we're going to see over the next couple of years? >> Um well, I think that um in terms of the broad information um technology architecture of the world, I think we're going to see uh Ethereum layer 1 be the main digital asset settlement layer for the planet. Um, we think of it as trustworth. Um, Mark Andre uh 25 years ago said that software was going to eat the world. It did. It was good and then it turned not so good. And so what we really need is for uh trust uh to reaturate the technology landscape. Um and so um upon Ethereum layer 1 essentially we believe very strongly that we got the architecture correct and that uh we need one base layer uh and we're going to um rapidly improve it in terms of scalability etc. Uh but then it's really important to have a lot of execution networks that inherit um the um security guarantee of layer 1 and in this way we can get more and more scalable at layer 2, layer three, etc. And so we're seeing these corporate chains um and some of them are going to start out at layer 1. Uh that that's fine. Uh it's not going to be affordable uh to do that. it it will be affordable if you stay very centralized and that's that's just like having somebody come to your website and use your services. But if you want to build something that is sufficiently decentralized so that other entities can trust it, um you're going to have to either attract a huge number of validators for your network or you can get the same level of security by just um doing a a properly formulated roll up usually using zero knowledge technology and and getting that essentially free um best-in-class security from Ethereum. Joseph, and from your perspective, when we think about investment uh from the institutions, um you said they're not going to jump into this with two feet unless they really understand what's going on. Um you believe the digital asset treasury is is a way to perhaps do that. Um why do you think that is a is a good model for now? >> Sure. Let just go backwards before we go forwards. In 2018, you actually had a lot of institutions who wanted to express their interest in Bitcoin. They still thought it could go to zero, but they knew it was an uncorrelated asset that had really right tail asymmetric positivity in a portfolio and they were intrigued by Ethereum because they thought of it as a store of value but also a network effect. The problem is they couldn't own spot. So what they did is they put a lot of money, billions of billions of dollars into basically crypto venture funds. It became a bubble and those venture funds actually underperformed Bitcoin and ETH, but they got exposure. Um I think January 11th last year was a seminal moment moment when 11 firms got permission to launch an ETF. Black Rockck, Fidelity and a whole bunch and you had institutions for the first time able to actually own the spot through a wrapper in a vehicle. The challenge is last July firms launched an Ethereum ETF um and they weren't able to stake. The SEC hadn't given approval. Um the SEC just gave approval I believe last week to Grayscale, but it's a real problem to get the full staking yield. And let's just be clear, Bitcoin, great asset, is not productive. Ethereum by definition has more V and Ethereum has staking yield, but if you want to own it and get that yield, the ETF is pretty constrained. A, it needs permission to stake and B, it needs daily liquidity for redemptions for investors. And that was fine when the um unstaking queue was four days. When the unstaking queue is 40 days, how much of your fund are you willing to stake? So if you want the full exposure, the full production and productivity of Ethereum, a DAT is a very simple way. Buy it with a click. And um in the long run, we have an ability to make Ethereum even more productive than basic staking. We have a partnership with consensus. We understand risk management and we understand where there are pockets of returns where you can get um enhanced returns, promotional returns, token level returns on a really good riskadjusted basis. Um the ETFs which are great products, I launched some of the largest are not going to be able to give you that exposure. But I think the more interesting thing is great, you're going to accumulate a lot of ETH. What can you do with that ETH to be benevolent and to actually promote decentralization and trust in the ecosystem? And at Sharplink, that's what we're going to do. It's not about accumulating ETH, staking it, and becoming a dividend hedge fund. It's about figuring out ways to bootstrap and find 50x opportunities, 100x opportunities in the Ethereum ecosystem. And that is part of our mission. >> Yeah. Are you concerned, sorry, just very quickly, Joseph, are you concerned at the moment about the number of debts that are coming to market, the wobbles we've seen with, you know, Meta Metanet for example over the weekend? Um, just just is is it in is it a bit frothy right now? >> It's a flight to quality. And is it frothy to have a DAT on token 144 that doesn't have any revenue? I would suggest instead of a DAT, make your token productive, build a business. But uh I think in each of these ecosystems, you'll have people who do it the right way, who treat investors well, who are very clear what their goal is. And we want to be one of those winners. Uh we're the second largest Ethereum DAT. But coopetition is good. It means you have smart people with similar missions and you can compete and you can cooperate at the same time. So I'm not concerned. >> Jeff? >> Yeah. So the the DAT companies are a profound new construct. Uh I think of uh the good ones uh and there will be a few good ones in the Ethereum ecosystem and and in maybe a small number of other ecosystems. I think of them as a flywheel uh where they can uh continue to light fires under the the Ethereum ecosystem by by continuing to absorb uh Ether uh and they're an accelerant of the technology. uh meaning we will continue to raise money, we will continue to purchase Ether, we will continue to find the best risk adjusted ways to earn yield on Ether. Um and then in the longer term um we're going to get to a point where we don't where it's uncomfortable to buy more Ether and so will some of our um cooperators uh and competitors. Um, and at at that point, we're going to focus all of our effort on identifying the most powerful and the most lucrative protocols that we can invest in, stake in, king make. Um, and in our case, in Sharplink's case, we're going to be 100% Ethereum aligned. So, we will find the best protocols um that grow value in the Ethereum ecosystem, and that's going to be enormously valuable for our shareholders. We got a minute. So just quick 30 seconds from each of you. Joseph, I'll start with you. What is the way you're thinking about how to value Ether and what that means for where you think the price is going? >> Sure. Um there are people in this room who I admire, including someone in the front row, who wrote um for consensus, our sibling company, a Trustwware report, and it gave you a very simple assetbased valuation model. And if you look back at the last 5 years, these are rough numbers. As you've seen over 60% of stable coins, over 80% of RWA and most of the highquality DeFi migrate onto Ethereum, there's a very high correlation between dollars of assets secured and transacted on Ethereum and the price of Ether which is securing those transactions. And I'm not suggesting as the adoption J curves it'll stay linear, but it's an assetbased approach. If you believe there's going to be more stable coins, RWA and highquality DeFi, and it's continued to be dominated on Ethereum, you want to own Ether, the token, because it's a simple input and output. I'm not going to stand here and tell you it's going to be at 5,000 or 50,000, but I believe very strongly there's a multi-deade adoption transformation opportunity. Now is the time to own the token because it's going to secure the future of finance. >> Yeah. So trustwware is a new kind of software. Um trust uh is a new kind of commodity, a virtual commodity and ether is the highest octane version of the trust commodity. Uh if you can um using Ethereum smart contracts, if you can move all of your transactions, all of your agreements, all of your processes uh to this um infrastructure uh that is guaranteed to to run valid software and guaranteed to execute um all of those things, agreements, etc. um you will squeeze out um the expenses in the economy and you will accelerate uh all the different transactions in the economy and you will compound value creation events much more closely in time uh and maybe we will be able to grow our way out of this um debt issue that that we're all embedded in. >> Can I make one last point? This industry is often a FUD and zero sum game industry. People are fundamentally underestimating the amount of prosperity that we can create in this world. And I would just ask like it is not we're going to win, they're going to lose. If we do it the right way, we're going to 10x prosperity in this world. And it's just um I would be very optimistic. I would be very collaborative. And I would hope we all win together. That's where the prosperity is going to come from. It's not going to come from a zero- sum game. >> Thank you both for your insight. There's so much more to unpack here. We'll have to try to do it again next year. Round of applause for our wonderful panel here.
The Path to Trillions: Ethereum's Institutional Dominance | DAS London 2025 | Day 2 | Main
Summary
Transcript
Hello everyone. Thanks so much for joining us today and for all of you watching online. My name is Arjent Karpo. I'm the senior technology correspondent at CNBC and I have two wonderful guests here who can unpack everything that's happened over the last few days and what we're expecting in the future. So I think we got to kick off with what happened over the weekend on Friday, all the action. There was one headline that said that crypto crash showed there was a market littered with pitfalls. Just want to get your your take on what went on. So I I think personas really matter and it depends. Are you a gambler? Are you a speculator? Are you a trader or are you an investor? Because I think the perspective is completely different. I think fundamentally you had a few problems. You had a centralization problem which I know Joe double click on where >> not a fan of centralization >> where you had hardwired prices and you had oracles that were highly centralized. Um, if you take a step back, I I came from traditional finance. I spent 20 years at BlackRock. We understand very clearly when there are correlated markets and many of these assets were highly correlated. When you had a single pricing dislocation in DeFi, it extended to the centralized exchanges. And I spent the last few weeks in Asia in Korea, Hong Kong, and Singapore. And the word pers came up. If I had a drinking game and I drank every time I heard the word pers, uh, I wouldn't be here right now. But I think we need to be very, very clear. If you're talking about more than two to three times leverage, institutions are not coming to per saw, which was sadly closed out, was insidious leveraged garbage. Like, you can quote me on that. Most people did not understand what they were doing. But there's a casino for everyone. So I think the lessons to be learned are around centralization. The lessons to be learned are around correlation of assets and understanding that people thought they were safe by diversifying assets and venues and cross margining. It turns out that was a pitfall, not a position of strength. And if you take a step back, my lesson would be there are a couple of assets that weren't affected. they were the quality growth assets and that's Bitcoin and Ethereum and I think you're going to see a significant differentiation going forward and if you believe in growth and you want growth assets maybe go to highquality growth assets that can stand the test of time that have a real fundamental value and are productive. >> Joe, I'd love to get your take. uh what happened Friday was a but in traditional markets and in in crypto or more decentralized markets uh was a s symptom of what's been going on in the world for a while. Um we are at uh the end of a super cycle. It's a monetary debt super cycle. It's a Strauss and how generational super cycle. Um it's been the American super cycle essentially because America came out of World War II strongest. Um and um the super cycle has run out of fuel in the sense that uh there's just way too much debt in the system. Uh and so um too much debt um geopolitical instabilities um technology getting so strong that uh it's hard for for people to um manage their lives. uh in the context of very powerful technology run by big tech essentially centralized organizations. Uh and so we're we're going to see things crack apart as this super cycle ends and as the next super cycle um continues to take shape and continues to establish itself as the next system of the world. Um and so what we need in that next system of the world um is decentralization. Uh we've certainly lost trust in in centralized authorities and centralized systems. Centralized systems have become abusive. Um we need um censorship resistance um which you get from uh rigorous decentralization. Um and uh we need a system in the world uh that makes use of uh artificial intelligence, decentralized protocols um and probably uh something that ends up looking like nation states uh becoming more and more politically important. um in the period um the formative period of of the next super cycle uh we in our ecosystem really need to focus on on rigorous decentralization. Um there are companies Binance is one of them uh that does a really great job of treating their customers well. Uh they don't do a great job of of treating uh the idea of decentralization very well. Uh and so uh we need to all get with the program. Uh Binance has done some great things to to onboard people to our ecosystem, but uh uh centralized versions of of decentralized Binance and decentralized protocols um really should get with the program. Otherwise, we're going to see um when the hits the fan, we're going to see correlations go to one or negative one, and we're going to see um uh more uh great difficulties in traditional and non-traditional or decentralized markets. >> Joe, can you just expand on what you were saying about we're going to see cracks in the system and also uh the end of the super cycle? What exactly does that look like then? Is that markets crashing? I mean, we talk about a public equity markets at this point in time. there's so much discussion around bubbles forming etc. So I just want to get your take on just if you can expand on that. >> So so it's loss of trust in the system. Uh for millennia we've operated with top- down command and control. Um top down command and control is very efficient. It's great for building civilizations. It's not very good for 99% of the people in those civilizations. In 2008 2009, Satoshi Nakamoto invented this profound new form of trust, decentralized trust, and showed us how to operationalize it in a new kind of database system, the blockchain. Um, over the next few years, we in Ethereum and other projects have taken that uh to the point where um we've built a new trust foundation for the planet. this database that's inspectable and usable and upgradable by anybody. Um, and we spent some years building decentralized finance so that we can essentially replace some of the uh um the um more dangerous elements of centralized finance. Uh that there's so much that we can learn from centralized finance obviously and we're we're learning it quickly. Uh but essentially upon this new trust foundation for the world and upon uh this new global decentralized infrastructure uh we can start taking a look at all the different sectors of the economy and we can start uh disintermediating uh the rent seekers and building more efficient systems, more effective systems. Uh when builders come into our ecosystem, they uh appreciate the fact that they can use decentralized primitives to build of by and for the community uh rather than building in the traditional um method which is essentially in an adversarial relationship between the company um and the customer or even between the nation state and the citizen. And so, uh, we need, uh, we need to lean into this decentralized trust thing or or we're going to continue to be in a lot of trouble. Imagine big tech getting stronger and stronger with AI. >> Joseph, just before we dig a bit more into Ethereum, just want your final take on the markets because one of the the thing we've heard is that crypto markets are getting more mature and then we have episodes like we saw on on Friday. Um, is that true? Are markets getting more mature? >> 1,000%. I started in uh I spent 20 years at Black Rockck. My first fora into crypto was running a blockchain team in 2018 and we hired a young incredible group of people. I think pound-for-pound some of the best people in the ecosystem. We waited two and a half years until the market participants were ready for institutional and uh we invested in circle. We managed their reserve. We connected our fintech platform which has tens and tens of trillions of dollars of tradi assets to Coinbase. We broke their stock that day because it was a message that institutional believe they were now participants and market infrastructure that was good enough. We launched ETFs that brought over $125 billion of retail wealth management and institutional into Bitcoin and ETH. And I want to be clear, if you look at the long tale of ETFs, it's all Bitcoin and ETH. And there was a view that this was not a fad. It wasn't going to zero. That every single person in the world and every portfolio should have some Bitcoin in it. And everyone who believes that we're going to change finance and trust that it's going to happen on a decentralized programmable network should make that bet on Ethereum. that this is going to be the trust layer, the trust commodity, the highest value money that's going to transform finance. So 100%. Are there cracks in the system? Yes. It's usually because of avarice and it's usually because of points of chokeold in the system that are interdependent that people didn't understand. And at the end of the day, you can blame regulators, but we all have free will to understand what we're doing. And if you didn't understand that on certain chains their sequences and validators are going in and out first, shame on us. If you didn't understand that oracles can misfunction and misfire, and if you didn't understand this idea of auto deleveraging, shame on us. I will tell you when people in this room talk about institutional adoption if you're talking about all caps capital I institution with the real assets they are not going to fully enter with both feet in until they understand the risks in the system so Friday actually was a terrible day for humans a lot of people lost their skin people took their lives but unfortunately if the ecosystem can't self-pol itself leverage works itself through in any market but institution ions are here. They're ready to go. But I'll tell you, they're going to be there's going to be a flight to quality, not a flight to speculation. >> So, moving that on to what this is. >> Can I add a little? So, we spent 10 years um maturing and scaling the Ethereum technology. Um and we're now at our broadband moment where affordable, scalable, usable enough. Um it's legal in the United States to to use and build blockchain systems and tokenization. Um and um we um need to continue to uh support the technology um and uh digital asset companies are are an element uh that uh that can supercharge this technology. >> So so when we talk about uh the path to trillions uh as this talk is is titled uh Ethereum's institutional dominance just lay out your stores. Joseph, I'll start with you. What does that path to to trillions look like for you? >> Sure. Um, Bitcoin is an incredible network. It's an incredible asset. It does one thing exceptionally well. But if you're going to transform the entire financial ecosystem to go from T+1 T plus2 settlement to a human trust layer that costs maybe 10 trillion dollars of ISDS and insurance contracts and counterparty risk and you want to open up the system, it's going to need to be done on a trusted decentralized platform. And I don't mean a a monopolistic vendorowned L2. I mean a system that is prepared to treat everyone the same mutually with atomic settlement with programmability with composability. So what is the thesis for a trillion dollar Ethereum market cap? It's very very simple. Most of financial services recognize that they're trying to ek out basis points of efficiency on one of the most broken inefficient engine called the market structure. Happens everywhere. Stable coins right now are about $300 billion. It's a bit of a duopoly. Tokenized funds are only about $30 billion. And DeFi access, pools of liquidity, and I mean high quality liquid assets, borrowing, lending, marketmaking, is where institutions are going to gravitate. But they're not going to do it in a scattershot way. I know from experience, and I'm not a know-it-all, that institutions care about three things deeply. trust, security, and liquidity. And Ethereum is has 10 years since its genesis block in July of 2015 has never gone down. It has the most validators. It has the most economic security. It's monop not monopolistic. It's decentralized. That is where the settlement layer, the global settlement layer of finance will go. And if you think we're in the very early innings of tokenization, stable coins, DeFi, that is where I would be investing. And that's why Joe started uh an ETH debt that I run because now is the time to accumulate as much ether as possible at the lowest price because that is what's going to power and secure the settlement layer of finance. That is my base case. And you think about some of the products we launched in my previous life. The largest tokenized fund in the world, Biddle, is 3 billion. Wait till you see an ETF or an S&P 500 fund with 300 billion of assets tokenized and all of public equities tokenized. You're talking about a multi- trillion dollar adoption curve happening soon. >> Joe, when I look at uh the competition as well, there are a lot of blockchains coming up saying we can do what Ethereum does better, faster, cheaper. What do you think is going to keep Ethereum ahead? Um so decentralization uh for as I said before for 10 years we we've been moving towards this this mainstreaming moment. Um and um uh as as Joseph uh mentioned Ethereum has been running non-stop reliably for over 10 years. Um, and you know, as the traditional world cracks up and the more decentralized world uh gets more and more capable, uh, we're starting to see traditional finance um, and DeFi merge into one. Um last week um or a couple weeks ago um uh uh we uh I was in Frankfurt uh at the Cyos conference, Swift's conference and uh um to start the conference the the CEO of Swift uh Javier Peristaso announced that uh Swift would be moving away effectively from this sort of brittle um correspondent banking infrastructure um and building using um using uh technology that uh >> Joe just say it just say it Joe >> uh building a prototype um with our company consensus which makes use of the Ethereum technology and the Lineia technology um and so that that is a it's a mechanism designed um to move their their financial messaging system uh onto a blockchain. Um they also mentioned uh that there there might be settlement in the not too distant future on that blockchain. So um uh the sentiment at Cyos was pretty remarkable for this idea that no longer did we have to keep uh the DeFi rail and the trad parallel uh and that never should the two meet. um there was real acknowledgement uh and even uh from central banks and major banks after um his talk uh that hey it's about time uh we have this great new technology and we can make use of it and so that that is Ethereum's advantage its reliability uh its lacks of of censorship censorship resistance etc um this follows the DTCC in the US um building on blockchain systems again it's Ethereum technology. Um this follows NASDAQ's announcement uh that they're going to tokenize all their equities again on Ethereum technology. Uh and so uh the difference is that uh there are some other great technologies out there. There are different kinds of database systems that that are somewhat decentralized but but nothing approaches the uh the rigor of uh decentralization on Ethereum and on Bitcoin. >> When we talk about institutional adoption, there's a couple ways we can think about it. One of those is, you know, what big financial institutions are up to. And I've spoken to City and JP Morgan over the past few days talking about what they're doing in custody, in deposit token, stable coin, uh, and thoughts on that. And then there's the sort of investor side, institutional investment into into digital assets as well. Joe, just from the point of view of more traditional financial institutions building on um Ethereum, what do you expect are going to be some of the big things um that we're going to see over the next couple of years? >> Um well, I think that um in terms of the broad information um technology architecture of the world, I think we're going to see uh Ethereum layer 1 be the main digital asset settlement layer for the planet. Um, we think of it as trustworth. Um, Mark Andre uh 25 years ago said that software was going to eat the world. It did. It was good and then it turned not so good. And so what we really need is for uh trust uh to reaturate the technology landscape. Um and so um upon Ethereum layer 1 essentially we believe very strongly that we got the architecture correct and that uh we need one base layer uh and we're going to um rapidly improve it in terms of scalability etc. Uh but then it's really important to have a lot of execution networks that inherit um the um security guarantee of layer 1 and in this way we can get more and more scalable at layer 2, layer three, etc. And so we're seeing these corporate chains um and some of them are going to start out at layer 1. Uh that that's fine. Uh it's not going to be affordable uh to do that. it it will be affordable if you stay very centralized and that's that's just like having somebody come to your website and use your services. But if you want to build something that is sufficiently decentralized so that other entities can trust it, um you're going to have to either attract a huge number of validators for your network or you can get the same level of security by just um doing a a properly formulated roll up usually using zero knowledge technology and and getting that essentially free um best-in-class security from Ethereum. Joseph, and from your perspective, when we think about investment uh from the institutions, um you said they're not going to jump into this with two feet unless they really understand what's going on. Um you believe the digital asset treasury is is a way to perhaps do that. Um why do you think that is a is a good model for now? >> Sure. Let just go backwards before we go forwards. In 2018, you actually had a lot of institutions who wanted to express their interest in Bitcoin. They still thought it could go to zero, but they knew it was an uncorrelated asset that had really right tail asymmetric positivity in a portfolio and they were intrigued by Ethereum because they thought of it as a store of value but also a network effect. The problem is they couldn't own spot. So what they did is they put a lot of money, billions of billions of dollars into basically crypto venture funds. It became a bubble and those venture funds actually underperformed Bitcoin and ETH, but they got exposure. Um I think January 11th last year was a seminal moment moment when 11 firms got permission to launch an ETF. Black Rockck, Fidelity and a whole bunch and you had institutions for the first time able to actually own the spot through a wrapper in a vehicle. The challenge is last July firms launched an Ethereum ETF um and they weren't able to stake. The SEC hadn't given approval. Um the SEC just gave approval I believe last week to Grayscale, but it's a real problem to get the full staking yield. And let's just be clear, Bitcoin, great asset, is not productive. Ethereum by definition has more V and Ethereum has staking yield, but if you want to own it and get that yield, the ETF is pretty constrained. A, it needs permission to stake and B, it needs daily liquidity for redemptions for investors. And that was fine when the um unstaking queue was four days. When the unstaking queue is 40 days, how much of your fund are you willing to stake? So if you want the full exposure, the full production and productivity of Ethereum, a DAT is a very simple way. Buy it with a click. And um in the long run, we have an ability to make Ethereum even more productive than basic staking. We have a partnership with consensus. We understand risk management and we understand where there are pockets of returns where you can get um enhanced returns, promotional returns, token level returns on a really good riskadjusted basis. Um the ETFs which are great products, I launched some of the largest are not going to be able to give you that exposure. But I think the more interesting thing is great, you're going to accumulate a lot of ETH. What can you do with that ETH to be benevolent and to actually promote decentralization and trust in the ecosystem? And at Sharplink, that's what we're going to do. It's not about accumulating ETH, staking it, and becoming a dividend hedge fund. It's about figuring out ways to bootstrap and find 50x opportunities, 100x opportunities in the Ethereum ecosystem. And that is part of our mission. >> Yeah. Are you concerned, sorry, just very quickly, Joseph, are you concerned at the moment about the number of debts that are coming to market, the wobbles we've seen with, you know, Meta Metanet for example over the weekend? Um, just just is is it in is it a bit frothy right now? >> It's a flight to quality. And is it frothy to have a DAT on token 144 that doesn't have any revenue? I would suggest instead of a DAT, make your token productive, build a business. But uh I think in each of these ecosystems, you'll have people who do it the right way, who treat investors well, who are very clear what their goal is. And we want to be one of those winners. Uh we're the second largest Ethereum DAT. But coopetition is good. It means you have smart people with similar missions and you can compete and you can cooperate at the same time. So I'm not concerned. >> Jeff? >> Yeah. So the the DAT companies are a profound new construct. Uh I think of uh the good ones uh and there will be a few good ones in the Ethereum ecosystem and and in maybe a small number of other ecosystems. I think of them as a flywheel uh where they can uh continue to light fires under the the Ethereum ecosystem by by continuing to absorb uh Ether uh and they're an accelerant of the technology. uh meaning we will continue to raise money, we will continue to purchase Ether, we will continue to find the best risk adjusted ways to earn yield on Ether. Um and then in the longer term um we're going to get to a point where we don't where it's uncomfortable to buy more Ether and so will some of our um cooperators uh and competitors. Um, and at at that point, we're going to focus all of our effort on identifying the most powerful and the most lucrative protocols that we can invest in, stake in, king make. Um, and in our case, in Sharplink's case, we're going to be 100% Ethereum aligned. So, we will find the best protocols um that grow value in the Ethereum ecosystem, and that's going to be enormously valuable for our shareholders. We got a minute. So just quick 30 seconds from each of you. Joseph, I'll start with you. What is the way you're thinking about how to value Ether and what that means for where you think the price is going? >> Sure. Um there are people in this room who I admire, including someone in the front row, who wrote um for consensus, our sibling company, a Trustwware report, and it gave you a very simple assetbased valuation model. And if you look back at the last 5 years, these are rough numbers. As you've seen over 60% of stable coins, over 80% of RWA and most of the highquality DeFi migrate onto Ethereum, there's a very high correlation between dollars of assets secured and transacted on Ethereum and the price of Ether which is securing those transactions. And I'm not suggesting as the adoption J curves it'll stay linear, but it's an assetbased approach. If you believe there's going to be more stable coins, RWA and highquality DeFi, and it's continued to be dominated on Ethereum, you want to own Ether, the token, because it's a simple input and output. I'm not going to stand here and tell you it's going to be at 5,000 or 50,000, but I believe very strongly there's a multi-deade adoption transformation opportunity. Now is the time to own the token because it's going to secure the future of finance. >> Yeah. So trustwware is a new kind of software. Um trust uh is a new kind of commodity, a virtual commodity and ether is the highest octane version of the trust commodity. Uh if you can um using Ethereum smart contracts, if you can move all of your transactions, all of your agreements, all of your processes uh to this um infrastructure uh that is guaranteed to to run valid software and guaranteed to execute um all of those things, agreements, etc. um you will squeeze out um the expenses in the economy and you will accelerate uh all the different transactions in the economy and you will compound value creation events much more closely in time uh and maybe we will be able to grow our way out of this um debt issue that that we're all embedded in. >> Can I make one last point? This industry is often a FUD and zero sum game industry. People are fundamentally underestimating the amount of prosperity that we can create in this world. And I would just ask like it is not we're going to win, they're going to lose. If we do it the right way, we're going to 10x prosperity in this world. And it's just um I would be very optimistic. I would be very collaborative. And I would hope we all win together. That's where the prosperity is going to come from. It's not going to come from a zero- sum game. >> Thank you both for your insight. There's so much more to unpack here. We'll have to try to do it again next year. Round of applause for our wonderful panel here.