Kyle Samani - Why SOL Will Flip ETH - TOKEN2049 Singapore 2024

uh my name is Kyle samman I'm a co-founder and managing partner at multi-coin Capital today I'm going to talk about why we think soul is going to flip e in market cap some of you may already believe this um some of you may think that's heretical uh or you think it's just not going to happen my goal here is to help you at least reconsider your priors this presentation is going to have three parts first I'm going to talk a little bit about the history of ethereum because I think that provides important context for understanding the state of ethereum today and a lot of its problems then I'm going to talk about why salana is positioned to succeed and then we'll wrap up by looking at some of the key metrics in which salana is either already passed or is you know close to passing ethereum that are really key onchain metrics that we look at at multicoin um before we get started I do have couple quick legal disclosures first uh my commentary today uh is are my own personal views and not those of M M coin uh and second legal disclosure is that uh nothing in this presentation should be investment advice or should be construed as an offer of multi coins investment advisory Services all right so uh let's start off with the history of ethereum ethereum is 9 years old main net launched in July of 2015 um I think that's really important to emphasize and I'm going to emphasize it a lot through this presentation they this thing's been around for N9 years they've had a lot of time to figure out how to deal with their problems and even figure out what they want to be and I'll touch on these themes so it's been 9 years what's happened in that time I think there's been kind of three major things that have happened first is the emergence of defi as the most important use case of of asset ledgers and of blockchains uh obviously there was a lot that happened prior to 2020 but you know like defi summer happened and I I'll kind of call that like the birth of modern defi um so that took 5 years after ethereum launch to have that happen uh second really important thing that happened was the commitment to the rollup Centric road map and that decision was made in October of 2020 just a few months after uh D5 summer uh I think that's also really important to note because uh the rollup Centric road map one of the most obvious shortcomings of it is that it is just bad for defy it's created all these fragmentation issues bridging issues all this other stuff and you know defi summer happened and then two months later they're like roll up road map which is going to be bad for defi uh and then I think the third major transition has been of course the transition from proof of work to proof of stake which was in 2022 and that was 7 years after main net launched again I highlight the S years because they knew they wanted to make the switch before mainnet launched in 2015 so they knew they wanted to do it and it took seven years to actually do the thing that they said they wanted to do um this community has been slow they've never known what they wanted to do and and that's kind of the point I'm trying to emphasize here um next we're at uh am I here we go um I want to talk briefly about the scaling road map um quite frankly the road map has changed more times than we can count um in the early days of ethereum there was a whole bunch of talk of sharding plasma State channels if you really go back far enough you'll remember hyper Cube routing bunch of other crazy ideas uh all of these things obviously haven't panned out took them five years and they committed to this rollup Centric road map thing in October of 2020 uh today now that road map even seems to be in question or at least partially in question if you've been following along in kind of the public discourse there's been a lot of talk about hey should we scale the L1 should we do multiple con block proposers a lot of these other things that have been kind of more salana or near Centric in their approaches are now being reintroduced to the ethereum discussion uh we have no idea what decisions the EF is going to make on these front it may take him three more months may take him six may take him nine more months who knows but my point to you is that the road map that was committed to four years ago today is at least partially in question and perhaps entirely in question um and so it's just like okay you've been around for 9 years you're back to the drawing board like you know what's going on last thing I want to say about ethereum before get into salana is that eth is not acre value the the transition to this rooll OB Centric road map has very explicitly surrendered fees both transaction fees and me fees that used to go to the L1 and now they're going to l2s l3s l4s whatever they are um the intent of this road Ro rollup Centric road map was of course to push transactions from L1 to L2 and they've done that but in doing so they also just moved all of the actual value accretion to e the asset away from the L1 uh you know the E people will tell you well oh you can still use eth for da and that's true but as I'm going to show in the next few slides da rounds to zero um there's plenty of Da to go around in ethereum and elsewhere um and of course the last thing you'll hear people say about you know value AC cruel for eth is that eth is money uh and this is nonsense um this is a circular statement it is non-falsifiable therefore like they're just subjecting you to their religion you can't reason about this at all the litmus test for is something money is go to the coffee shop and ask them hey how do you price the coffee if they say e then eat is money if they say dollars then dollars is money like that's that's the litmus test for money there is no other litmus test and so if we look at the data of this whole L2 thing um here we're looking at the percentage of transactions that have moved from L1 to L2 over the last three 4 years uh and it's obviously very clear basically everything is on L2 at this point 90% plus is on L2 this is by Design which is great they they accomplish their objective but to what end they talk about this da value acral here we're looking at you know you talk about da value ACU well in fact the l2s are the ones making all the money um the blue this is the revenue and expenses for base which is the largest L2 by most major metrics uh and you can see here very clearly uh Bas is making a lot of money this is like on the order of a million dollars a week plus or minus and uh their expenses are effectively zero and an expenses here is eth paid for da to the L1 um as of March that went to zero and you know it's probably going to stay at zero um the other thing I really want to highlight here is that this whole talk of alignment people have been saying oh l2s are aligned with l1s but actually this chart really emphasizes the fact that they are actually um anti-aligned base uh is owned by coinbase and the point of base is to produce profits for coin bases shareholders and so they want to maximize revenues and minimize expenses and so in fact the incentives are base are the exact opposites of the incentives of eel1 because Bas wants to minimize the cost it pays um if we look at some of the other major l2s like optimism you see the chart looks more or less the same uh I don't want to highlight just bace you optimism looks more or less the same and arbitrum again more or less is the same uh so you can see this pattern consistently across all of the l2s uh I'm going to say the Qui part out loud ethereum has never really known what it wants to be uh it it launched as you know a world computer n years ago uh and that was never defined still isn't defined and to be clear I don't think they have to Define World computer like whatever it's fine it's a marketing term but it's been n years so like tell us what this thing is useful for um obviously there's been you know defi there's been nfts there's been web 3 there's been decentralized identity storage whisper whatever all these things that you know it could have evolved into um but right now it's kind of a mish mash of all of the above and is quite frankly therefore nothing because nothing actually stands out um even as of as recently as a few weeks ago vitalic and others from the EF were publicly basically saying def5 is just circular nonsense like do other stuff with ethereum and like great I would love it for ethereum to do more too but like hey it's been n years like you know provide some guidance like where do you think we should go have some opinions and it's just like the the the lack of urgency of wanting to figure out what it's useful for and pushing the ecosystem that direction has created a tremendous amount of really bad inertia in the system as a whole defi is the most important thing that happens on blockchains today you see this on ethereum you see it on salana you see it on Aptos you see it everywhere you look and ethereum people are telling you eh defi whatever okay well if you're not going to optimize for defi that's fine then tell us what you're going to optimize for and they fail to do that because they don't know so that's recap ethereum thing is N9 years old it took 5 years to commit to a scaling plan and then it took seven years to commit to to actually do the proof of work to proof of stake transition this thing has never really known what it wants to be scaling plan continues to change there's no Northstar they don't know what they're optimizing for and because of this rollup road map they've effectively taken all of the value ACC cre out of out of the E the asset and sent it off to the l2s like base and others meanwhile e still trades at like 300 billion this is one of the largest assets in the world probably number 40 asset roughly by market cap in the world and this thing doesn't know what it wants to be this asset is just structurally broken all right now we're going to turn to salana um it's important we started with the history of ethereum so now we're going to get into the history of salana whereas ethereum has never really known what it wants to be salana has always been very focused Anatoli founded salana in started thinking about salana in 2017 cuz he was riding trading Bots um using a service in the US called interactive brokers Brokers is like Robin Hood kind of a thing but a little more advanced you can do some more powerful trades he was writing trading Bots and he realized that he could not get realtime Market data of what was trading on the New York Stock Exchange or on the NASDAQ um to ride his trading Bots and obviously it's well known that you know vertu jump Citadel Jan Street all these guys have access to real-time data from the major stock exchanges and he found that to be fundamentally unfair and unjust he's like wait a minute it's if Market I should be able to trade just like them and he has you know physically unable to even get the information to be able to trade and and so this was the core Insight that led to the development of Solana that anyone in the world should be able to uh have fair and open and permissionless access to Market data 24 hours a day s days a week the system of course then needs to be optimized to propagate this information to anyone who has computer and internet who can obviously receive that market data in real time um this of course kind of turned into the vision that we've now been talking about for for 6 years which is uh building this decentralized NASDAQ kind of a concept and this has been the north star that has guided salana from day one to build this Global realtime exchange that anyone can access it's been a lot more difficult to build this exchange than any of us thought it was going to take Anatoli myself and many others included um they started working on it in 2018 and launched 1.0 in 2020 uh and uh you know if has had a lot of public failures Network's gone down I don't know 10 times since Inception there's been congestion issues all kinds of weird stuff has happened uh but the reason I highlight all of this is that I want to emphasize even once you pick a North star a vision and you say okay we're going to go commit to this Vision it then takes a lot of time to actually get there I I think salana really only since like May of this year has been able to kind of credibly say it fulfills the vision that it's set out for cuz only after the8 upgrade in May that salana actually the limit orders and cancels worked on chain transactions go through meme coins were firing or mining I mean everything was working Oracle updates were working and the fees were effectively zero and you know it's like right and it took years of battle testing the system to get there um and of course the beauty of this model is that they committed to this really difficult and ambitious vision and it took a lot of time to get there and they failed a lot on the way and uh but the beauty of that now is that the user experience is amazing no bridging no liquidity fragmentation none of that stuff um and you also get to a crew value to so the asset so today depending on the day you look at it's earning between 500 million and a billion of Revenue annualized um and that's all coming from MV uh and so this is really the beauty of of salana is that it took you know we had this focus and we executed on it for six years and this is really why we believe Sol is going to flip Ethan market cap um now next few slides I'm going to dig into some of the metrics um on CH metrics that we think are really the critical ones we look at uh to kind of Judge hey is the thesis playing out here uh first of course blockchains are Financial systems I've been talking about trading for the last few minutes um and and onchain trading is in RV the most important metric for a blockchain uh over the last year we've seen Salon dexes basically come to rival ethereum dexes some weeks I believe every data point here is weekly so some weeks we're seeing salana is higher than ethereum other weeks it's less than ethereum but it's today effectively on par with ethereum in terms of daily trading volumes on chain um we think this is the most important thing to look at because that's the whole point of NASDAQ is to trade next I want to look at actual Direct Value acral to so the asset versus Direct Value acral to East the asset um and as of today's salana again is effectively caught up to or is rivaling eth on this metric this is the looking at the total validator tips paid to e stakers and soul stakers in these respective systems um some weeks along is high or some eth sire but again these these metrics are more or less neck and neck right now uh and then the third metric I want to look at is stable coin transfers um here salana is still well behind ethereum but I want to look at the relative ratios here um about a year ago salana was at roughly 110th or 12th of daily onchain stable coin transfers to relative to ethereum today it's roughly half so it's caught up by a ratio of roughly 5 to 10x depending on exactly how you want to measure it um and again we think this is key to show that hey money is moving around on chain um and of course if you then look at the last three charts and look at the shape of those um it's actually no surprise to see the shape of the so e chart looks more or less the same and so if you believe that the metrics on the prior three charts are going to continue in the same direction then it's pretty reasonable to conclude that the ratio of this chart is also going to continue in the same direction all right now I want to talk a little bit about the future for salana and why we think it has a couple of really three unique advantages that we think are going to be basically impossible for the ethereum community to recreate and why we're even more excited about this thing going forward the first is token extensions um token extensions went live earlier this year on mainnet uh token extensions provide a lot of features that Wall Street companies want or that uh payments companies want or any major asset issue around the world those include features like interest bearing tokens so like if you want to have stable coins on chain uh that earn yields uh if you want to be be able to have confidential transfers so you can hide sender and receiver if you want to do uh ability to issue and revoke assets and a whole bunch of other uh features that that in this kind of bucket of of ideas um and all of these features were developed based on Direct input from payments companies and Wall Streets over the last few years uh and all of this is live on mainnet today it's 100% free 100% open all the documentation is is open and available uh and I highlight this because uh I think that you know we have meme coins we have defi assets we have dpin assets we have all of these things that are Crypton native obviously us and most of you all probably are following a lot of that stuff but then there's this whole other world of Finance which is regulated finance and regulated Finance is only ever going to come on chain at scale if they have all of these collect features um and all of this stuff is just built into salana L1 natively and it's ready to go uh we think this is super important and we think it's going to be basically impossible to recreate this in the ethereum ecosystem because the evm itself is fragmented what do I mean by that well there's a lot of different flavors of the evm out there there's the different optimistic flavors there's different ZK flavors there's the polygon side chain flavors there's the JP Morgan internal blockchain flavor and all of these versions of the evm are not the same they're like 98% the same but they're not 100% the same and so if you're going to try and create a common set of Standards to have interest bearing stable coins to have confidentiality work through Bridges across these systems it's going to be really really hard to make all of those pieces talk and connect to each other again it is possible that there's no physics limitation or software limitation it's it's a people problem you have to get all of these different groups of people to sit down and agree and that's going to be very very difficult to do um the first major token using token extensions is live now it's called PUSD it's PayPal stable coin it went live a few months ago uh on mainnet uh and so we we're really looking forward to seeing token extensions roll out it's been a little slow you probably heard about it and kind of forgot about it but I would say keep your eyes on token extensions I think in 3 or four years time it's going to be like one of the defining things that makes salana really stand out next I want to talk about fire dancer um fire dancer is a new salon client I expect it to go live in the next few days or next few weeks uh I think they're announcing the dates tomorrow at that breakpoint for those of you who are unfamiliar fired aner is a new uh Salon client being built by jump trading jump trading is one of the largest hft firms in the world uh and of hft firms jump is actually known for being the fastest um and we think this is really important because the jump team is taking all of their accumulated knowledge and wisdom from building high performance trading systems uh and they're building all of that into the salonic code base um this system again from day one the vision was decentralized NASDAQ and we're now taking one of the preeminent trading firms and applying all of that wisdom to making the world's fastest permissionless exchange um this thing is going to scale SC it's going to be fast and it's going to allow everything that we like about salana the composability the no the no bridging all these things will just magically work even better under fire dancer um and of course the last thing I want to talk about then this kind of built on fire dancer is scaling with Hardware one of the foundational design principles of salana is the focus on scaling organically with parallel Hardware an has been talking about this since day one I've been talking about this for years um and the idea is very simple is if you double or triple the number of cores in the system you would hope that the performance would double or triple of the system very straightforward idea um this is obviously a generically a good idea because of Moors law over the last 50 years um as core counts have grown especially over the last 10 or 15 years um systems that can take advantage of that have have gotten better in terms of performance uh but this is actually particularly important today because of the Renaissance happening in AI um there's now more Capital going into the entire silicon uh value chain from design through manufacturing uh and that's growing at the highest rate in both percent terms and absolute terms in the last 30 years uh and this is all because of this AI Renaissance and all of these AI chips that are being built by all of these different startups Nvidia AMD everyone all of these chips are massively massively parallel chips uh not all of them will work for salana but it doesn't matter you only need a couple of them to be to be applicable and those are going to be help Drive the performance of salana even further what's so amazing about this a Renaissance is it has absolutely nothing to do with crypto no one in the salon ecosystem has to know or care about any of the stuff going on in AI land and you just have like an incremental 30 4050 billion dollar of R&D happening across all these various companies and all of that labor and energy is going to produce a better Salon Network and like those are the kinds of really foundational bets that you have to make at the core of the design of the system in order to win what is going to be one of the largest markets in the world which we think is decentralized NASDAQ the EV m is a single threaded processor they've been talking about paralyzing it for 9 years done absolutely nothing um and like we think this kind of full embrace the parallelism is going to again really become more evident over the coming years as we scale the assets on chain uh to wrap things up we really could not be more excited about the future of salana the community has coalesced around a common Vision uh and that is and everyone's rowing in the same direction everyone's working towards this decentralized NASDAQ we have the teams building we have the asset issue we have the token extensions we have the new uh performing clients all of this m works together cohesively to produce a network that scales and to produce an asset that can acue value as it scales we're really looking forward to seeing Soul flip e in the coming years ahead thank you