Ep 173: Feelings Check-In on a16z's State of Crypto 2024 report with Evin McMullen, co-founder of Privado ID

[00:00] The Feelings Check-In is a podcast for people who love to listen to two women overshare about the challenges of building a business, navigating careers in tech, and trying to have a personal life. I'm Natasha Hoskins. I'm Dina Burke. And this is Boys Club. Wait, is it just Boys Club? It's just Boys Club. The Boys Club podcast? No. No. [00:20] Just sports club. [00:22] We have a special episode for you here today. It's just going to be me in this introduction. Natasha is taking a little break this week. I have with me Evan McMullin. [00:31] who is the chief strategy officer and co-founder of privado id she is going to be chatting with me about the a16z crypto state of crypto report it's their third annual state of crypto report it is a doozy i'm going to link it in the show notes here and evan and i are going to chat through it unpack it and talk about our feelings on it so stay tuned [00:56] you [00:58] Hey Natasha, so a question we get asked a lot is, what do you look for in a crypto platform? So let's talk about it. Well, Dina, I look for a secure, no fuss platform that I can dive into right away. That's why I love today's sponsor, Kraken. If you're waiting for the right time to get into crypto, Kraken makes it super easy and intuitive to get started. Plus, if you get stuck, they have an award-winning client support team that's available 24-7, along with a bunch of educational guides, articles, and videos to help you along the way.

[01:27] go to kraken.com backslash boys club not investment advice crypto trading involves risk of loss and is offered to us customers through payward interactive inc [01:39] We have a dear friend of the pod, Evan McMullen with us here today to talk about the state of crypto report from A16Z. Welcome to the show, Evan. [01:50] GM, GM, Dina, another beautiful day on chain. Thank you so much for inviting me to the party. There is literally no one else that I would rather have than you to come and talk about the zoomed out view of what's happening in crypto right now. I almost want to call you're a crypto correspondent. I almost want to bestow you with that title because I feel like you're the only one who's worthy, to be honest. Well, it is a great honor to be lead crypto scout for the boys. [02:20] when it comes to big moments in the market like we're at now, I'm happy to demystify and explore so that we can make sure everyone is as stoked as we are about what's going on in crypto. Amazing. Okay, I feel like I do need to give your updated bio because you've had a big move recently, a big change recently. So I'm excited to share with folks where you're at. So for those who don't know, Evan McMullen, Chief Strategy Officer and Co-Founder of PrivadoID. [02:48] which is enabling unified identity across blockchains and legacy systems. Previously to this, Evan served as CEO and founder of verifiable data platform Disco.xyz. Prior to that, director at Berkshire Hathaway, ConsenSys, advisor to Boys Club, dear friend, early everything to Boys Club, and a graduate of Yale University. So Evan, welcome to the show. Excited to have you.

[03:18] And yeah, really appreciate the opportunity to share with the broader ecosystem of boys that Disco, which is a project started early on and it has evolved many, many opinions and perspectives from the boys over the years. [03:30] has evolved to join forces with the Pravado ID team. [03:34] So we are pursuing this vision of verifiable data across protocols. And now with the most GigaChad team you could possibly imagine, you know, building out these capabilities across chains. [03:46] So Feelings Check-In, how has it been to evolve in that way? It has been, I think, one of the great honors of my career to be validated with the opportunity to work with some of the most creative and talented technical leaders in our industry. [04:03] what's on the roadmap so on the roadmap right now we are currently preparing to launch the unified identity protocol meaning that we can enable a seamless experience of identity across chains starting with the polygon linea and ethereum ecosystems little alpha leak there and then progressing to incorporate many different blockchain protocols working closely in partnership with those ecosystems [04:27] So EVM, non-EVM, legacy database, doesn't matter everywhere you go, so too do your qualifications and traits. So being able to collaborate with the co-founders of Polygon, co-founders of many other big protocols out there has really been an exciting supercharge to our focus and ability to deliver. Amazing. I'm so excited for you. You have been the bearer of this flag for so long, and you have been doing this work and very much in the trenches for years.

[04:57] to see that sort of acknowledged, I suppose, within this transition that you're going through. But also, it seems like you have a lot of horsepower behind really seeing through this big vision that I know that you have for on-chain identity and reputation. So I'm really excited for you. Thank you, Dina. And I think that leads us very nicely into what we are here to talk about today, which is the state of crypto, how we are scaling and what big unlocks immediately on the [05:27] mature our space. Perfect segue for folks who aren't just living on crypto Twitter like both of us are. A16C crypto, one of the biggest, if not the biggest venture fund that's deploying capital into the crypto industry, $7.6 billion in committed capital across several funds, has been investing in the category since 2013, very early under the direction and leadership of Chris Dixon, who we have also had on this podcast. And this is their third annual state of [05:57] report. So they've been doing it since 2021. And it was, I don't know, 75 slides, a lot of ink spilled around sort of where crypto is at here in October 2024. And I want to go through the highlights of the report with you. But I want to first sort of zoom out. The report as a whole is quite optimistic. It's very positive about what's happening. And, you know, I do want to say from

[06:27] acknowledging the bias that ACCNZ crypto has in putting out a supremely optimistic report about the state of crypto, given they're deploying capital into this industry. They're talking their book, as many people would say. And I would say that the very optimistic tone in this report doesn't necessarily match the vibes that we're feeling, I'm feeling on crypto Twitter. And so I want to start there and get a feelings check in with you. Does that track? How are you feeling about it zoomed out? [06:55] So zoomed out, I would express gratitude that the sentiment of [07:00] People who spend all day on Twitter, [07:02] is not the ultimate indicator of market movement technical development and institutional adoption thank god [07:09] So our colleagues over at A16Z, I think, do an outstanding job of observing these market movements from the protocol layer all the way on up. [07:18] and being able to take a snapshot of this moment and put it into the context of, as you mentioned, their own investments and their own thesis. Even if we minimize the bag bias and limit the adjectives we use to describe our level of enthusiasm, [07:34] the amount of traction, volume, and value that is moving on chain is undeniable. So my feelings check-in is bullish and also, one, inviting nuance, because now the market is substantial enough that we can have many different takes on the same information, all of which seem to be pointing in an upward direction. So that upward direction, I just want to bring some data here into the

[08:04] executive summary. All-time highs for active wallet addresses. So they set a figure that's at 220 million active wallet addresses. They mapped this chart of active wallet addresses against early internet usage chart, which looked very similar. And we've heard Chris Dixon and we've heard folks from A6 and Z talk about that sort of parallel before where early internet adoption is [08:34] milestones like the ETFs, the Bitcoin ETF, the ETF, mobile wallet usage is up globally, bigly. They cited Nigeria, India and Argentina as the major countries to watch there. And then major infrastructure improvements have reduced transaction costs on Ethereum at least by 99%. Those were sort of the big headlines. I'm curious if anything else like high level before we get into sort of the different segments jumped out to you. [09:00] So I think all of those elements that you've outlined are valuable takeaways. [09:05] to take in context as well. [09:07] So if we start with the first, thinking about 200 million plus active addresses, [09:13] Dina, what is an active address? Yeah, I don't know. You know, there's an implicit opportunity [09:20] for us to be able to differentiate. [09:22] between, for example, bots and people. [09:25] the explosion of AI, which we'll get into later, I think [09:29] is an indicator [09:30] of the ability to conduct more transactions on chain that aren't necessarily all click trades from human beings. So with greater volume, greater activity and an absence of a clear identity layer,

[09:44] I think that this starts to show a market opportunity, Belide, and some of the other points you mentioned, which is mobile adoption first. [09:51] in emerging markets, as well as institutional adoption at scale, enabled by privacy-preserving technologies and more robust infrastructure. [09:59] Now Evan's talking her book. Exactly. Now I'm talking my book. All of this ladders up to a more mature version. [10:06] of the permissionless offshore casino that we started with. Yeah, I found it interesting. There was an asterisk in the slide that talked about that 220 million top line number that was [10:18] Basically like, hey, yeah, it is 220 million, but these might not all be individual people. [10:23] Meaning to the bot story, there's likely to be people using many addresses or bots using many addresses to sort of just speak to that nuance. [10:31] And we love bots. [10:32] In fact, I'm willing to bet that the vast majority of transactions on chain by this time next year will be executed by bots. But making sure those bots have the appropriate permissions, enabling them so that they can actually act on our behalf and our best interest is going to require a little bit of additional data. OK, so what are those bots going to be doing? Just to dig in there for a second. [10:53] Rather than manually choosing where to swap a token, instead, imagine an army of bots searching for the best possible price for you and then making that transaction on your behalf. [11:06] So essentially being able to discover more efficient opportunities for your capital or even apps that have incentives or rewards that are well suited for you instead of you needing to hunt around the corners of the decentralized Internet.

[11:21] and find these opportunities. Instead, you could have a bot army working on your behalf 24/7 to identify the right ways for you to spend your time and attention and capital. [11:33] Sign me up. I want my bot army. But in order to have your bot army, you've got to figure out... [11:39] Well, how do I decide which bots want to work on my behalf? How can I ensure that those bots are going to go rogue, are going to misbehave or misuse my data? [11:50] the sort of identity layer that we think about for people. Where are you located? How old are you? Where are you a citizen? We need that level of complexity for bots as well. You know, who sent you? What privileges should you have? Where are you located? What kinds of access are you permitted? [12:06] Hmm. So one thing I will say, just looking at the report as a whole, I did not get much identity chat in the report. And I'm curious if you felt like that was a missing piece given the story or sort of painting for us here. [12:18] So I feel like [12:20] The identity chat was implied at the end of every single statement that you just shared. [12:28] That it is... [12:29] a glaring omission [12:31] because the maturity of these tools is only just on the cusp of existing. [12:37] Chris Dixon mentioned at a conference recently that the infrastructure is here and the regulatory environment is catching up. We have the technology. [12:45] And now we are in the rooms with the regulators experimenting to implement it at scale, supporting institutional use cases beyond just this permissionless casino.

[12:56] for the very first time. [12:57] So if we want to be able to differentiate between which information comes from a bot or a person, [13:03] if we want to enable networks of bots to work on our behalf. [13:07] if government institutions, banks, family offices, and enterprises [13:12] want to be able to transact on chain, they need to know [13:16] that they can guarantee the level of compliance that their business requires. And all of these different use cases, including even the infrastructure that enables their scaling, like zero-knowledge proofs, [13:26] are pointing toward a missing interoperable layer of connectivity, that unified identity principle that can be applied in the same way that we think about unified liquidity, financial value across chains. [13:39] Okay, so let's jump into policy. So I think there was seven sections in the report. [13:45] Policy was number two. [13:46] So it was very much the priority bit that they wanted to focus on. And I think that that is [13:54] smart because when you zoom out we've actually there actually has been quite a lot of milestones achievements positive movement from a policy perspective over the past year and it's hard to keep that perspective when you're in the day-to-day grind of crypto twitter and the crypto industry and it was a really useful reminder for me to look at it and be like oh wait actually [14:20] Oh, yeah. [14:20] there's been a lot of stuff that has happened this year. We've gotten the, there's all the SEC approvals for the ETFs, as I mentioned before. I think they cited the MECA EU's regulatory framework and then FIT21. These are US centric and then MECA is EU. But it was a nice reminder that like, oh yeah, there's actually a lot of stuff afoot. And then obviously all of that can and probably will change with the election that we have coming up in a couple of weeks. But I'm

[14:50] lays out the policy conversation in crypto, if you're feeling as bullish. The regulatory environment defines the plane of play. [14:58] for crypto and decentralized technologies. [15:01] And so [15:02] a more aggressively expanding frontier [15:06] from our regulatory bodies means a larger range of potential use cases and potential businesses that can be built on chain. [15:16] So yes. [15:17] Yeah, so definitely yes. And to that end, we... [15:22] from the PravadoID side are seeing similar progress around the world. [15:27] whether it's leadership from Middle Eastern, North African countries working in collaboration, such as Saudi Arabia and UAE's joint stablecoin project, [15:37] or in Asia, where both Singapore and Hong Kong have made great progress on stablecoin projects of their own. We've also seen that organizations like the Bank for International Settlements, bringing together central banks across Europe, have been experimenting with Permission Layer 2 and ZK Layer 2 technologies in demos of different ways to allow countries to transact with one another on-chain. [15:59] So not only are we seeing progress from a regulatory development perspective, but we're also seeing literal development, technical development from leadership such as the European blockchain services infrastructure team actually building out some of these tools. [16:13] That's cool. Yeah, I will say that I feel like my view is totally skewed towards only seeing and consuming US news, US centric news on sort of the policy and regulatory front. And I always love to be reminded on how much movement and progress there is.

[16:28] is elsewhere in this great big world that we live in. And so it can be easy to feel limited when you're just looking at like sort of the local news, basically on what's happening. But there's yeah, there's so much happening elsewhere. And it's really exciting to see. How are you feeling coming into the election in a couple weeks? [16:47] Well, I am delighted to see that both major political campaigns in the United States are embracing a discussion. [16:58] about crypto, both in terms of cryptocurrency and in terms of cryptography and other on-chain enabled technologies. [17:05] Do I think they are the most... [17:08] informed, technically adept and gracious displays of expertise I've ever seen from a political campaign. [17:15] I think, you know, as ever, leaves room to be desired. But... [17:19] the [17:20] extent of consideration. [17:23] that this technology is receiving in the race right now, I think means that no matter how the campaign proceeds, crypto has won. [17:32] That was a very diplomatic answer. I respect that very much. I saw something the other day and we had talked about it in a pod a couple weeks ago. And it's mentioned in the report as well from A16Z that they talk about the number of Americans that own... [17:47] cryptocurrency i think it was like 44 million or something that they cite in the report and [17:53] how that's kind of like banded about as, wow, it's a really powerful, potentially very powerful voting block and that how all the energy that especially the Trump campaign was putting towards the crypto conversation, you know, Trump going to Bitcoin Nashville and making that big speech and sort of laying out his policy stuff around crypto had been in an effort to sort of court those presumably 44 million people who own crypto in America and who want a clear regulatory

[18:23] that was like, actually, those 44 million people are not single issue voters by any means, nor should they be considered a voting block. The speculation was part of Trump's strategy for going so hard on crypto was that it actually represents more of a fundraising block than it does a voting block for individuals. It represents a fundraising block for the organizations who, I won't name any names, but for whom it's in their [18:46] best interest to have friendly regulation. And I'm curious if you have any takes on that. And also you could say no comment. [18:52] It sounds like the crypto ecosystem [18:55] is being considered in the same way that other industries have been historically. [19:01] And that... [19:02] just functionally being invited to the table [19:06] and being seen as a potential both source of value and worthy conversation partner means that we've made a ton of progress since the last election, certainly since elections before then. I would be surprised if all 44 million individuals who hold crypto consider themselves to be single issue voters with no other considerations. And so the fact that even a portion of [19:31] of those individuals might be considered to believe very strongly and vote according to their crypto views is remarkable. [19:39] Yeah. Okay. I love that. Let's keep that there. Okay. Next one. You mentioned stablecoins. Let's transition over to the next big section in the report. Headline here, stablecoins have PMF, product market fit. We've found it with stablecoins. There's a story that the report lays out around how the US dollar is slipping in terms of its position as the global dominant reserve currency. But that dollar stablecoins...

[20:08] actually help strengthen it. Talk to us about this idea of redollarization. [20:13] So yes, thank you. That's a meme. I think we can make it happen. You've heard of de-dollarization, but are you familiar with re-dollarization, which I believe is the phenomenon occurring right now with stablecoins as you described? [20:25] So if you remember from back in the day, perhaps the concept of American Express travelers checks, [20:31] These are pieces of paper that you would receive in the United States from American Express and that you could essentially redeem like vouchers for U.S. dollars to be spent in other countries. And it was a more secure way to be able to represent the value of a dollar backed by an issuer, in this case, American Express. [20:50] And I think that stablecoins today have many similar traits to those American Express travelers checks. [20:56] They are secured by an issuer. In the case of USDC, for example, Circle and Coinbase. And they represent the value of a U.S. dollar that can be leveraged in markets that do not interact or transact natively or directly with the United States or the issuer of that original U.S. dollar currency. [21:14] So in this manner, stablecoins offer an on-chain native and fairly familiar form factor for institutions, for businesses that are trying to receive payment. So stablecoins, I think, represent a really awesome set of progress, both in terms of familiar form factor, but also in terms of a stable, you know, to use the term, or a non-volatile asset to allow for more risk management.

[21:41] Speaking of risk management, there is a chart that showed stablecoin usage in Argentina, which we know has rapid inflation. And it was just totally up and to the right in terms of the stablecoin usage. And that implies that people are leveraging it to offset the risk of an inflating currency. It did have me thinking. [22:02] Who... [22:03] benefits from stablecoin adoption? You mentioned Circle Coinbase, who are the issuers. I actually don't even know really what the relationship is there. And I'm curious if you can speak a little bit more to like if stablecoins have PMF, if stablecoins do have product market fit, like who's on the winning side of that trade? So I think the winning side of stablecoin adoption is felt by the parties most who are transacting with those stablecoins. So for example, [22:33] transact on chain with minimal fees or trying to minimize fees that they might receive from credit card providers instead. Individuals who are transacting across borders globally can minimize the extent to which they're getting hit by usurious fees by leveraging stablecoins. We also see that stablecoins offering a smart contract enabled way to transact on chain allow for businesses that transact in U.S. dollars or can learn to transact in U.S. dollars to have a [23:03] and receive payment as well. One sort of interesting [23:07] thing that I've started to see in the stablecoin market, of course, is that they're really well suited for payments. And so, you know, beneficiaries of that network include teams that are willing to pound the pavement,

[23:18] to show up at the front door of mom and pop shops and teach them how to utilize stable coins for payments. So I have to give a shout out to Justin Sun and the Tron team, whose work in Latin America, whose work in Southeast Asia, has turned the phrase USDT on Tron into basically one word that can be often heard to describe different payment mechanisms in the same way that MasterCard or Visa might in certain parts of the world. [23:43] Yeah, I feel like the Tron story gets really overlooked, at least in the in the US, but certainly not in the places where it's being actually used. And it is remarkable when you look at some of those stats around around usage and adoption there. It's incredible. Okay, infra is next, which I know is your sweet spot. There is a lot that's discussed in the infra section, some highlights here to pull out. We're very much living in a multi chain world. [24:13] from Ethereum is moving to L2s, which from the perspective of A16C crypto is healthy because it reduces costs for users. I know there's a lot of debate around the L2 and Ethereum stuff that's happening on Twitter right now. But at least according to this report, it's net positive transaction costs are down 99% since 2021. They have deemed looking at the data that Solana is [24:43] And the other L1s really trail by comparison in terms of transaction volume. Account abstraction up big. They name base really as the leader here that is leveraging that tech. A lot of ZK stuff. I'm curious what you find most exciting here or most surprising. First, we called it.

[25:04] So when we talk about, you know, ZK technologies, often you'll hear sort of two traits. One, scaling. Zero knowledge proofs are great for scaling, effectively and cheaply transmitting large amounts of data in their state, as well as privacy, not having to disclose data completely in order to still use it for informing in-app or on-chain logic. So my colleagues over at Provado ID, some of them actually were the authors of the early libraries that much of this is built on, such as Snark.js and Sircom. [25:34] 6,000 live production projects built on top of tools such as these, I think it's indicated in, you know, the data that you shared that the thesis that our ecosystem had around how we can scale effectively and how we can build privacy-preserving systems at the same time is coming true, that trilemma be damned. So with that in mind, our infrastructure scaling, you know, [25:58] has prepared us to play with the big dogs, to be able to handle more data than just demo capability, to be able to support millions, tens of millions, hundreds of millions of users, as well as billions of dollars worth of value. So what I see here in terms of scaling an infrastructure is preparation for the sophisticated use cases that we've always talked about in Web3, but have never had a sufficiently compliant or secure tech stack to build on top of. [26:28] Okay, I heard someone say this at one point, and I can't remember who exactly said it, but I would credit this person if I remembered. But we were having a conversation about infrastructure, and they were like, I just can't shake the feeling that we're building a 10-lane highway for what is three cars on the road. And I got to say, I do sometimes have that feeling when I look at, especially all the resources, the sheer amount of money that's being put towards

[26:55] this infrastructure work without what I feel like is enough validation, market validation to support it. What comes up for you when I say that? Your feelings are valid. So let's dig into that metaphor. So if we've got a 10-lane highway that's being built, [27:11] We've got three cars on the road. And then I would ask, [27:14] Where is the DMV? [27:15] Who is licensed to drive? [27:18] Because today, the vast majority of capital in the world is sidelined and not able to transact on shame. [27:25] As we discussed earlier, we've got ETFs. So we've got a couple billy worth of space on ETFs. Some recent legislation and progressive action by financial institutions has allowed some parties to be able to hold tokens. [27:40] But as far as on-chain yield goes, even as far as stablecoins are concerned, most regulatory environments are still not in a position to embrace and enable participation on-chain in this way. And so I think we need to build the 10-lane highway. [27:54] to anticipate that the DMV is about to start slaying in driver's licenses to institutions, to governments, to parties that are operating at size, that do not have the privilege of small scale interaction, but for whom regulatory security is a prerequisite to allowing them to get on the on ramp. [28:13] I love that. And look, I mean, that's that's the bet that we're all making here. And that's why I'm still here. So I do believe in the vision that you lay out. But it's just sometimes, especially in moments like this, where I'm sort of struck by just how much is being put towards the infrastructure layer that it's like, wow, okay, we just got to keep the keep the faith alive.

[28:34] Well, and I think actually there's a new there's a new infrastructure flavor in town. [28:40] because as we see the proliferation of hundreds, thousands of blockchains, [28:45] and the struggle that applications have to build on top, especially accruing and maintaining value, lowering switching costs for users, I'm starting to see the emergence of a middleware infrastructure layer. [28:57] So similar to ZK virtual machines, ZK VMs, you know, certainly where we build with ProvadoID and our cross-chain identity contracts, but essentially infrastructure that sits on top of blockchains or interacts with blockchains that makes it easier for applications to interact with that data and to drive value back down to the protocol layer, as well as enable that value to trickle up efficiently. [29:20] So I find that the reuse of data and focus on interoperability means a new emergent category of infrastructure, something that's sitting in between blockchain and app. Well, we are back after a short break. [29:32] Thank you. [29:33] It's time for a more open, inclusive, and transparent financial system. A system that serves nearly everyone, everywhere, all the time. That's why we love today's sponsor, Kraken. Kraken is a crypto platform that provides a super simple on-ramp to the world of crypto with a 24-7 support team. Crypto transcends physical and imaginary borders. No matter where you are, you can send funds easily and quickly to almost any part of the world. Plus, forget about waiting times and waiting lines. You can send, receive, and trade crypto anywhere near instantly. [30:02] kraken.com backslash boys club not investment advice crypto trading involves risk of loss and is offered to us customers through payward interactive inc no third-party transfers available

[30:15] Let's talk about apps. That's the next big section here. The app section is really all about how crypto is being used. So we're going sort of up a layer from the infrastructure to actual usage. The report shows a chart in which DeFi and stable coins account for really 65% combined in terms of how crypto is being actually used with DeFi interest really growing. And as we talked about stable coin interest growing as well. And then the remaining being this [30:45] know what they mean by that. Centralized exchanges, some gaming, and then NFTs and social representing less than 2% combined of that app activity. Does that track for how you see it? Yes. And don't worry about the complexity of some of the phrases you just shared. Overall, what we're talking about there is on-chain financial transactions. So DeFi flavoring and adjacent, not explicitly social, [31:15] Anyone is surprised to see that the NFT market has functionally collapsed in the same way that the ICO and DeFi summer markets did before. We are seeing a cyclical evolution of degenerate gambling capital or rather, you know, risk on capital.

[31:45] or consumer retail financially related regulation. [31:48] within this section we're also getting into ai so ai has entered the chat in the app section there's a sort of thesis that you can tell that the folks at a16z crypto are quite excited about which is about how crypto could solve some of ai's most pressing challenges so blockchain fixes it a few things that they know one of course we're seeing a content explosion with generative ai [32:18] authenticity of content. They also noted access to compute and user-owned services and basically just underlining how AI is a deeply [32:29] centralized industry and that with the sort of introduction of a crypto or blockchain layer that could really help to solve for that which I think is an exciting prospect I had a great conversation with Jared Barnes from NIR who is the NIR ecosystem is doing a lot of really great work at that intersection but I'm curious when I say AI and crypto what comes up for you [32:52] Immediately nearer. [32:54] But in addition to that, yeah, definitely want to recognize the near ecosystem's leadership in really being ahead of the curve to recognize both the need for compute and an understanding that these converging technologies are going to come to a head right about now. I think. [33:08] blockchains do not need AI, AI needs blockchains. [33:13] Meaning that the provenance of data, the identity and capabilities of different agents and our control.

[33:21] over those preferences, our ability to change them over time, that is what separates us from the bots and will enable, you know, decentralized technologies to work in service of agents as opposed to, you know, necessarily being in, you know, in opposition. [33:36] I think that blockchains are how AI agents will transact. [33:41] in the future. And we're already starting to see that with intent frameworks. Also, the source of data required to train AI models is quickly gobbling up the world. We know that we need more data that is structured and appropriate to contribute to these models in order to hone and improve them. [33:58] but without a method of being able to attribute this data to its source, where did it come from? [34:04] then we're going to run into what's called model collapse. [34:07] or AI models that are built on a combination of synthetic and authentic data that start to have difficulty telling in between those two differentiations. [34:16] What you're speaking to is this idea that in the future, there will be some premium that's placed on data that's used that's before 2022 or whenever generative AI, 2021 or whatever, where that data set will be considered much cleaner because it won't have had the synthetic product. [34:34] sloth that's now been sort of unleashed on the internet. And that when you start training the LLMs on synthetic data, that things get kind of wonky. [34:44] At PravadoID, one of the biggest requests we've gotten over the last couple of weeks is support for proof of machinehood and machine reputation. So being able to confer the same kinds of privileges or capabilities that we might on a person or a company, but instead to an agent or even a network of agents. And so both for creating data as well as consuming it.

[35:07] that type of provenance is going to be really valuable for us in the very near future. [35:11] Yeah, I see that. I think the one thing that comes up for me around the AI and crypto conversation is AI is a deeply centralized industry. My understanding of deeply centralized things is that they don't like to give up that centralization very easily. And that there are a lot of things that get put into place to avoid a loss of power and a loss of centralization. [35:41] perhaps we're too far gone with some of these bigger players that are so capitalized, so well resourced, and have, like you said, gobbled up all the stuff on the internet already and have these really powerful LLMs that, yeah, I just don't, that's my fear is that maybe we're, [35:55] we're too far gone down a path to really course correct it towards a more sort of decentralized AI future, which I think we can all see the benefits and why that would be a net positive for society. That's my concern. [36:09] I think that concern is valid. And I would invite you to remember that data is decentralized, meaning that the sources of where it can come from, where it goes to sleep at night, who has access to it, are continually emergent. [36:24] And so as long as those sources, those original fonts of data, continue to exist, [36:30] the way that we consume and structure and utilize that data can be, you know, similarly evolutionary. [36:36] I mean, even to call out our colleagues over at OpenAI and WorldCoin, their position of how they manage data and how they interact has evolved pretty dramatically, even in the few years that they've been operating. So.

[36:47] I believe that systems will move toward capital efficiency. [36:53] And that even if every aspect of future AI models is not wholly decentralized, [36:59] I'm hard pressed to find a better way for agents to transact than on chain. Yeah, I buy that too. I believe that too. Okay, so some other big hits from this section, meme coins. [37:10] 10,000 meme coins launched every day. And really, this is kind of tucked into a story that's around scaling blockchains. It's unlocked a whole new [37:18] slew of apps, use cases, possibility, potential, meme coins. Get one slide. I am curious where you are in the meme coin conversation. I love a good meme coin because really what is any coin but a meme coin when we really think about their functional utility and public representation of our affinities or preferences? [37:40] I think the explosion of meme coins is the air apparent to the ICO NFT DeFi cycles that we've seen. [37:50] I also think it's [37:52] Interesting that clones or forks of Pump.Fun and similar platforms have not received the same amount of enthusiasm at scale. [38:01] as the novelty and tip of the spear once did. So it is, to me, an indicator of post-capitalist peak dopamine. But that dopamine wheel and the associated capital are going to continue looking for more engaging, more readily available opportunities. And I think that's also where the Asian market has done a really great job of observing that pattern and capitalizing on it.

[38:26] I saw once the fees generated by pumped up fun. [38:30] Make your eyes water the daily fees. It's insane how much they're they're basically taking a [38:36] Off of these 10,000 meme coins that are launched every day on their platform, tiny piece of that adds up. It is admirable the way that Pumped Up Fun and other teams have observed this. [38:47] natural patterns of human behavior, [38:50] and created swift channels to capitalize on those moments of delight and moments of intention. And I think that's also a moment for us to reflect on the speed with which you can use these platforms to achieve outcomes like launching a meme coin. I think that's really a testament to improvements in Web3 UX across the board. Nice. Okay. Prediction markets get a mention. Depin gets a mention. There's a slide on the far caster universe. [39:20] are beginning to be discernible. What's your take on the social crypto intersection? [39:25] It's giving [redacted address] that, you know, in the same way that we heard from folks like Joe Lubin early on. The infrastructure underpinning our, you know, decentralized experiences in the future would give rise to human connectivity. We're starting to see this, you know, at larger scale. [39:43] In the same way that ZKVMs are providing middleware infrastructure, so too do Farcaster, do Lens, these protocols that sit in between blockchains and applications and make that data a little more straightforward to interact with and provide a pretty strong opinion on how it can be organized and presented. From, you know, larger ecosystem perspective, I think...

[40:03] It is important for us to not maintain a US-only viewpoint. There are exchange wallets such as that from BitGet that have multiple times the number of users as MetaMask. There are native wallet ecosystems tied to device manufacturers and other spaces that have multiple scale of users as well. So this kind of ties into the mobile first approach that we talked about earlier, that this is really kind of hitting around the world in places where mobile native interaction are familiar. [40:32] Yeah. Besides this mobile and wallet piece, anything else you feel particularly that is missing from this application section? [40:40] the presence of [40:43] enterprise chains. [40:45] I think will also have a big impact on the application ecosystems we see built on top. For example, looking to base or unichain that are functionally enterprise chains from some of our favorite on-chain companies, [40:57] they're obviously going to take a very opinionated bend. [41:00] on the types of applications that are in their ecosystems and with which they're optimized to interact. And so I think the application ecosystem will start to take cues from or be directed more by the opinionated enterprise chains underneath, whereas more neutral or unopinionated block space, such as from roll-up ecosystem providers such as the OP stack or Arbitrum, I would imagine be less so. [41:25] What's an opinionated app that would live on Unichain, for example? [41:28] So, for example, Uniswap frontends that are tailored to specific regions or for specific use cases.

[41:36] or for even institutional compliance with KYC. [41:39] I see. [41:40] I see. Interesting. You also have a note here, chain abstraction and account abstraction. Talk more about why you feel like that deserves a mention here. [42:10] or more exchange-related implementations of account abstraction, or Gnosis Safe and their research-based approach in the ecosystem, we're seeing a lot more control and friendly UX enabled in this way. This premise of chain abstraction, where not only can you abstract the account, but the entire blockchain experience altogether, [42:29] Seems to be a logical conclusion of that train of thought, this assumption that there is an inevitable multi-chain present. And so that's also a space where NIR has definitely been a leader, a leader in development. [42:40] I cannot wait for that day. Personally, I spent, I want to say an hour this morning trying to go from USDC on cello [42:49] to my goal was to get it ultimately into my fiat bank account. [42:54] And... [42:55] You would not imagine the journey I had to take to get there. It was a crazy experience. Truly crazy. I think if you were to look at like the transaction history on our boys club wallet, you'd be like, what this is a crazy person's doing. I bridged, I swapped, I went here, I went there. And I got to say, it felt like we're not there yet. And then I was sitting in my lunch, and I was sort of reflecting on the past hour of work that I had done and how I felt like I had

[43:25] the bank account and I was like well you know what in the night early 90s I'm sure it felt just as hard to send an email but 10 to 100 times as hard [43:34] to send an email from like my server to someone else's server because not only would I be trying to send my an email from my server to someone else's server but that person may have had to go and get a cord to get the internet into their university and then buy them like there was so much more that had to be solved for so I kind of was trying to find some grace but I got to say like the the bridging and the swapping and the chains and this and that is um [43:59] It's not it for me personally. And imagine that set of tasks for an institution or for a country. [44:06] I think, you know, the comparison you draw is a really important one for us to think about, you know, what is the actual lived experience of interacting with these protocols? You know, there's a reason that it took until I think it was 1994 that Sun Microsystems was the first company to have internal email in between their employees, let alone being able to distribute it outside to other parties. [44:36] of a single chain environment and then broadening it to multiple protocols. [44:40] Well, I'm into that. Okay, the last thing here was the builder energy dashboard, which was basically looking at sort of stats for ecosystem where people are building why people are building a different ecosystem Solana is a big dog after Ethereum near is up there. Talk to us about your reactions to the builder energy.

[44:57] dashboard. [44:57] So in addition to being, you know, evidence that the sole community is cooking with like a hundred million monthly active addresses, it's also evidence of effective work and leadership by, I believe, the Solana Foundation and their associated network of communities that are called the Solana Super Team. [45:18] Simply having a group of individuals whose charge is somewhere between business development and developer relations. [45:26] not only focused on enabling resources and connections, but also basic information, guidance, and a sense of belonging, I think has brought a really intentional purpose to what it means to be part of the Solana ecosystem. And to sort of see that as part of your identity as a builder has been really cool to watch evolve. [45:46] Yeah. [45:46] Well, that's it. Any other final thoughts? My general takeaway is we built it. [45:52] They came. [45:54] And now we have a ton of capital that's sitting on the sidelines waiting for our regulatory environment. [46:00] to flood this infrastructure ecosystem with value. And we're kind of looking at the clock and counting down the seconds. [46:08] So it's a little bit of hurry up and wait energy. [46:11] because of all of that builder interaction, all of this prepared infrastructure and readiness for volume. But as A16Z so often does, I think they've called it well and early also as a call to action. [46:26] to invite others to see this way forward the way that they do and to build in a logical and composable manner.

[46:34] Nice. Perfect conclusion. Evan, thank you so much. This is so wonderful to chat through this with you. Thank you so much. And I, you know, I'm happy to join the boys on chain any day. Amazing.