podcasts
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A | Bankless nation. We have a bankless takes episode for you today. I think it's a continuation from our episode last week, David. Maybe by popular demand, a lot of folks liked that episode. So what we're going to talk about today is seven investment narratives for the 2024 bull market. We touched on one of those investme... |
B | Before we get there, a message from our friends and sponsors. As we get into this episode, I want to just kind of, like, zoom all the way out and look at the crypto industry from like a satellite's view. Every single bull market, there are narratives, and there are many narratives in every single bull market. And every... |
A | That is especially true. I think it's great if you have not a lot of capital to play with. So if you're second cycle or first cycler, right. You can, like, earn your way into these opportunities as well. So that is a nice feature. |
B | So let's go ahead and get into the seven different investment themes that are going to define the 2024 bull market. But first, a moment to talk about some of these fantastic sponsors that make this show possible. |
A | David, before we get into the seven narratives, do you mind if I give him the quick dad talk, please? |
B | We all need a good dad talk in crypto. |
A | All right, so quick dad talk here. The lens we are approaching this episode is not the typical bankless lens. And we said some of this at the end of our previous episode where we talked about AI tokens and narratives. But just a quick summary. There are three ways you can make money in crypto. You could be a trader. Mo... |
B | One thing I'll say, we have, of course, like, just a pyramid here. Ryan laid out the three layers of the pyramid. Traders on top, narrative investors in the middle, and fundamental investors at the very, very bottom, the longest term holders. The narrative investor section is kind of like speculation on what might beco... |
A | There are also two sources we pull from. One is a fantastic article from one of a bank list writer, Arjun, called the 2024 crypto investing narrative Glossary. Okay, he's got a bunch of narratives here. We've kind of consolidated some of them and simplified. But we'll include a link to the show notes for that article i... |
B | Let's go ahead and get right into it. Coming in at number one. The thing that I think, I think Ryan also agrees is going to dominate the entire crypto cycle. The narrative is decentralized. AI. The description is AI by the people, for the people. AI, of course, is all the rage both inside and outside of crypto, capturi... |
A | Yeah, I think that's a great point. I mean, look at OpenAI. It's closed. Doesn't have. Yeah, it's closed. Right. Anthropic closed. Like, all of these things are completely closed. What is open as far as things that you can buy that can capture some of this narrative? It's not actually, you're not necessarily getting fu... |
B | Yeah, certainly. Yeah. So a lot of these things, I think, are going to be hot air, but there are already projects that have just painted in some absolute insane gains over the last years, like bittensor, I think, is the big one. Render. Just a few other crypto projects that are working to improve the AI space. Like ren... |
A | I think for me, Casey Caruso wrote probably the best distillation of some of the more fundamentals when it comes to this category of decentralized AI. Let's say. Not to say that this won't get completely out of hand, but it probably will. But a few of her categories are crowdsourced compute. Okay, so this is the idea o... |
B | One of the reasons why I think this particular narrative is so fun is because there are a lot of different parts of AI that make AI a thing. Like there is the development of the model, there's the consumption of the data, there is the incentivization of the model layer, which is where actual crypto money can come in an... |
A | Yeah, what's really like, so here's an example of this. And Coingecko, by the way, has a few categories that are useful. So you can look at top AI coins by market cap here where you see bittencer and render and look at that category. That gives you a sense of what projects you can begin to filter for. Here's another ca... |
B | One could spend hours trying to go down all the different rabbit holes that is AI and how crypto will innovate and help AI. And as we kind of wrap the section, I'll just zoom all the way back out and just say like, hey, in crypto you can mint tokens. AI is very exciting at the very least. Like this is just all that's h... |
A | Yes. What David is saying is when you're narrative investing, don't mid curve the thing, okay? You don't have to think too hard about this. |
B | AI tokens, slap them together. |
A | What's the next one? So that was number one. |
B | What's number two coming in at number two? Restaking. What's restaking? It's when you stake your ETH and then you stake it again. So if ETH staking, Ethereum staking is the protocol enshrined bond market, the native bond market for Ethereum Eigen layer restaking is the surrounding corporate bond market around Ethereum.... |
A | Yeah, I think that's right on. People love yield. And one reference point is Defi summer was really the summer of yield. That was 2020. And so we've called this as well, restaking summer, because this is another market about, like, airdrops, token, and yield. I'll just add some more context to that number you said was ... |
B | Concentric circle outside of Eigen layer, right. |
A | This is like yield on the potential AVss later. And there are a ton of these Etherfi, Kelpdao, Renzo, Puffer, finance, Eigenpi, Genesis, swell, bedrock, inception. There's a dune board that we'll link in the show notes where you can see a bunch of those. And again, most of these do not have public tokens yet. So the wa... |
B | Are part of the financialization layer around lrts. Yes. So like LRT applications. |
A | And then there's going to be a future category that doesn't have any tokens yet, but that you just mentioned of all of the AVss, all of the applications that will build on, which is. |
B | The point of eigen layer. AVss are the point of eigen layer. |
A | And then Avss themselves, they, they haven't, I mean, there's no, there's no public traded token for any AV's. It is still in just this very early stage. And AV's could be like oracles, could be various coins, there could even be other networks like, that resembles chains that could bootstrap using Eigen layer economic... |
B | Yeah, the excitement around Eigen layer really crescendos to the point of avss. There are 30, 40 different avss that are all working to come online. Some blue chip Avss, some long tail AVss. This will be kind of the final phase of the growth of the Eigen layer ecosystem. First, Eigen Lair Mainnet is going to hit someti... |
A | All right, give us number three, David. |
B | Number three, the bitcoin renaissance. There is a lot packed into the bitcoin renaissance. These are bitcoin layer twos. These are bitcoin ordinals, and also bitcoin restaking. Bitcoin is also getting restaking as well, just like what we were talking about with Eigen layer on Ethereum, but now with bitcoin. So the tagl... |
A | Yeah, I think one macro theme of bitcoin renaissance is it's basically following the path of Ethereum. So you see ordinals. These are sort of bitcoin's version of nfts. You heard about layer twos, right? This is something where Ethereum has already explored the frontier here. And this is bitcoin following along. And yo... |
B | Yeah, basically, if you have bitcoin, then a lot of projects are coming online that are going to compete for your bitcoin in addition to the ETF's. One of the just. This is probably the second biggest source of excitement in the bitcoin space. All right, moving on. Number four, new infrastructure is what I will call th... |
A | I think one thing to point out is that when we're talking about infrastructure, we're often talking about protocols and, like, new networks that need to be bootstrapped, which of course, that is one thing that crypto does fairly well is decentralized networks and protocols with tokens attached to them. And so that's wh... |
B | Yeah. For me, the first bit of advice comes to the people who are really trying to become extremely knowledgeable in crypto. The most knowledgeable possible. All of these different sectors of infrastructure, like the execution layers, the sequencing layers, the data availability layers, the layer two frameworks, the ro... |
A | That's a double hit. That's two narratives. We got restaking. And also Eigen layer has a data availability layer, right? |
B | Yeah. So it's really mainly about like, how can I grow my footprint? These are all deep infrastructure. And your wallet with transactions can establish like a presence on a lot of these bits of infrastructure just by leaving traces of your activity on chain. And growing a footprint is kind of like growing a net. Genera... |
A | So many layer twos to explore. I mean, this is one of the most exciting areas, I think, to explore the frontier on. And the wallet experience has improved a lot. You know, one wallet I've been using a lot recently is Rabih David, which provides a much more seamless interface for navigating across chains. You don't have... |
B | Coming up next, we're going to talk about the oldest pastime in crypto, that is the alt layer one trade. And then we're also going to talk about deepin decentralized physical infrastructure, real world assets as well. But first, a moment to talk about some of these fantastic sponsors that make this show possible. The o... |
A | High transactions per second. |
B | That's a great yes. Train. Yeah, we're the chain for mainstream consumer adoption. That's a very hot line that many, many have leveraged. Some we've seen like, oh, we're the real world asset chain. We'll talk about that narrative in a second. They're all narratives. Understanding how each one captures attention and why... |
A | In all these things, you got to be very careful about token lockups, of course. So all of these chains, this follows with many of the infrastructure investments we were just talking about as well. They raised a whole bunch of money from VC's, and the VC's are looking for an exit. At some point in time, retail can be th... |
B | For some reason, as a layer one, the market valuation of your token just gets the layer one premium layer two, in my opinion. I think, in our opinion, has much stronger fundamentals, because as a layer two, they simply don't have to pay for their own network security. That's what a layer two is. They leverage Ethereum ... |
A | So it's kind of a narrative trade because you can stomp against something like Ethereum. So if Ethereum is worth $400 billion, right? |
B | Well, we have should be at least $4 billion. |
A | Exactly. Cause we're going to capture just x percent of Ethereum. And we're not a layer two. We're not selling on Ethereum. We are an alternative to Ethereum. Why this class has often been called in the past the Ethereum killer type class, because at some layer they have to go against in order to get the valuation that... |
B | Like Solana, I would say Solana extended the alt layer one trade by like another ten years, bought it some time because it worked. |
A | I've also had a thesis. I don't know how this will play out, but over time, some of these will switch categories. You might see a layer two like transform become an alternative layer one. And you might see alternative layer ones become layer two s. In fact, we have seen many former class of 2021 alternative layer ones ... |
B | This is the category that has definitely captured attention now because like I said, the Solana is set in stone, the parallelized virtual machine meta. And so now there are a bunch of Solana copycats trying to wedge themselves between Solana and Ethereum. And so this is why both say and Monad are doing parallelized EVM... |
A | That's the base case. |
B | That's generally how it plays out where it starts. Capturing a community and building a community is like the next hardest thing for an alt layer one to actually gain, like real users and real adoption. And so, like, the thing is you can become a multibillion dollar VC ghost chain. And what I mean by ghost chain is tha... |
A | Yeah, I'll also say there's a danger here. Parallelized virtual machine category is definitely something that layer twos are pursuing as well. And why parallelized virtual machines? It's because you can max out transactions per second on these things. Layer twos will also compete against this category in the alternativ... |
B | Number six, DPIn, decentralized physical infrastructure networks. The meme of this one is coordinate the world's computer resources together using crypto so we can build novel use cases. So the DPIn narrative actually has been around for a long time. |
A | Remember helium or foam? Was it foam, not foam. |
B | Helium is the one that's working. Foam actually still around. Also, Golem. Golem was a 2017 project where people who want to use collective GPU power from, like, consumer GPU's can tap into Golem. And so you, as a GPU owner, can contribute your GPU hash power to this, like, cloud of GPU's, and then GPU power. Consumers... |
A | I mean, would you also say that, like, something like. And this is where coingecko classifies it, Filecoin would be DPIn. |
B | Yeah, you could really open up the sector. What dpin could be? |
A | Yeah, but this new class of DPN, can we get into that? It's not Filecoin. It's like, what does helium do, for instance? |
B | Yeah, helium, I think, is perhaps, like, the thing that really kick started this. Helium is just like a decentralized data, and so you can buy this helium node that local cell phones in your area can tap into your node for data. And this is like very proximate. So, like, we're not talking like miles here. We're talking... |
A | As I was mentioning, Filecoin also render is here, which has kind of like AI project, right cross section. So it's like Dpin meets AI plus crypto, right? And so no wonder these things are doing quite well. What's your overall take? I know we're not really weighing in on the fundamentals here, but I got to confess, I've... |
B | Yeah, I'm a skeptic on this category. |
A | Projects like, just because you are really maxing out token incentives, and it works really well when number goes up, and generally these types of things work a lot less well when number is going down. I wouldn't necessarily put this in the category of DPIn, but something like stepn, where you get paid tokens for just ... |
B | Well, the problem I think that you're articulating is that just slapping a token onto these infrastructure networks doesn't mean that there's demand for the token. So there's a difference between producing a token and having that token be truly investible in the fundamental sense of the word. It's in like, well, who's ... |
A | But look at us, we're using the f word again. This is not how you should view any of these narratives. Right? It's not necessarily about the. |
B | I was just saying a deeper narrative is perhaps the most fleeting that I can identify AI. |
A | I can see a lot of fluff in the AI for sure, too. All right, let's get to the last one. David, what is this? Something very tangible, something very real. |
B | Right. Real world assets are Washington also a narrative that has been in crypto since the inception of crypto. But as we are becoming more mainstream as an industry, as there are more suits in our industry, as people like Blackrock and Franklin Templeton are playing around on chain, there is a growing excitement aroun... |
A | There's a lot of projects in this category too, some of which are kind of like private and startups. The Mountain protocol is a treasury tokenization project, but it doesn't yet have a public token. Ondo is one that's doing something similar with us treasuries. It does have a token, so you could see fully diluted value... |
B | Huge token boner. He's got a huge token bone. Yes. |
A | He is very excited about this. And he has all of the assets that can be tokenized inside of Blackrock. He has all of the connections. I sort of think that there's going to be some successful startups here, but edge to the incumbents when they start to kind of enter the space. One project that never gets any love that i... |
B | Like we are some narratives that are so large that they deserve their own episode. |
A | Like what? Like game five. Yeah, gaming. |
B | They have gaming here. It's just such a large category, and it's. It's just too real. You know, these are narratives gaming. Extremely real. |
A | Yeah, it is real. And there'll be narratives inside of gaming that are sub narratives of gamefi. There's also nfts. Are they gonna make a comeback? There's also social fi, which seems to be poking its head up in various ways. We talked about Farcaster, for instance. There could be a friend tech had a brief blip. Maybe ... |
B | I made my selection. I made my choice long ago. I am a big restaker narrative player. Like I said at the very beginning, you need to find the narrative that speaks to you the most and double, triple down your knowledge. That's how you. I think how you play this game the best. I have elected to double down on restaking.... |
A | It's ether, David. It's ethereum. |
B | All of these airdrops is using ether. The Dena asset that I denominate in. It's the one that speaks to me the most. |
A | Yeah, I'll agree on that. And I'll also add a plus one to modular infrastructure. I mean, we've been long term proponents of this as a direction for crypto. So there's a whole bunch of space for infrastructure that I didn't really know we needed. And now I sort of know that we need, given all of these change. Shared se... |
B | You. |
A | Our channel. |
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