Tokens, DeFi, and Lending with Zack Pokorny

18:11Alex Thorn:And then the meme coin nihilism was like a reaction to that. Certainly.

18:15Zack Pokorny:Yeah, that did not help. But I think the...

18:17Alex Thorn:But it was also like a rebellion against the sort of venture-backed low float high FDV coins, right? Sort of by... It was like... I was giving a lecture this week at Columbia Business School. And I was explaining sort of the eras of crypto. And there's many vectors that have been interesting and many ups and downs, surely. But also it's this constant story of creative destruction where, like, you know, the argument in 2017 was that venture capital was not accessible for most investors. And so the token, the ICO, the initial coin offering might be a way not just that new blockchains would distribute coins to investors, to retail, and ultimately their users, but maybe even a deli would do an ICO to raise capital, right?

19:04Alex Thorn:And of course, that was deemed mostly illegal by the SEC at the time. And so as a reaction were these private placement rounds that the venture capitalists started doing as a way to get the coins out. And they necessarily had to design the token so that they had no economic value, basically, or themselves risk them being unregistered securities. uh and then the and then a reaction to the market getting upset with that over time was the total pendulum swinging the entire opposite direction total nihilism of useless meme coins and now are we swinging back i just want to say it that way because to me when you say ownership coins and tell us what those are but there have been many evolutions of what a token is right yeah no

19:51Zack Pokorny:certainly and i think we kind of like you said went through that era of low float high fdv but the difference this go around was we actually had a number of successful businesses built around these tokens you know companies are making billions to hundreds of millions of dollars a year on chain but if you were just looking at price charts you would have no idea you're talking about what like

20:13Alex Thorn:the great some of the great defy apps and stuff that they're generating lots of revenue but their

20:18Zack Pokorny:tokens aren't trading well exactly people started to bring into question like wait why is this a 500 million dollar a year business and my token is down 90 right and it sort of sparked this whole debate of like oh well the token is actually just kind of loosely associated with this company like

20:35Alex Thorn:there's a whole not receiving cash flow right it's not exactly and and in response to that we've seen

20:40Zack Pokorny:a huge demand for buybacks and burns and other, in my opinion, imperfect means of trying to draw economic connections.

20:49Alex Thorn:So that's another, you're right, that's been another step in the creative destruction was in response to the thing you're pointing out, some of the biggest apps started taking the revenue that they are generating, using it to retire the items out of their supply, right? To burn supply, which is kind of like, again, this is still, a lot of this feels shaped by the uncertain regulatory environment. And by the way, not just in some cases uncertain, really just one that they don't like, right? Because if they just like gave dividends to the token holders rather than using the money to buy back the supply, that would very much look like a security, I think a lot of them think.

21:26Alex Thorn:And they don't want to be a security, which is, I think, that it's not that there's uncertainty. It's that they don't want to be a security. So it's sort of a roundabout way.

21:35Zack Pokorny:You know, the design of the tokens that we have now, or at least the majority of them, are absolutely a response to...

21:42Alex Thorn:Yeah. You can't give any value to your investors or it might be a security. Exactly. Yeah. So they're like... I'm going to use like... It's like lower T tokens. They're like tokens you put in like a machine at a fair. Some of them, yeah. Right? Or they're like... And that's what they're trying to do is to bring some value to the token by making it scarcer over time proportionate to their revenue rather than paying you for holding it.

22:06Zack Pokorny:Yeah. And, I mean, it also just comes at a massive expense. It's like, imagine you make$200 million a year. You can invest half of that into growth and product and doing all these things. Like, there are multiple ways these buybacks are just imperfect. And actually, in some sense, it's negative for token holders and shareholders and the equity entities that sit behind them.

22:29Alex Thorn:And that's the other thing is a lot of these tokens have an associated nonprofit foundation and or… Well, that's like the whole issue. Right, yeah. So what is the ownership coin? What is the alternate model that you're talking about?

22:43Zack Pokorny:Yeah, the alternate model is essentially your tokens actually have a claim on the balance sheet.

22:49Alex Thorn:Doesn't that make them a security then, probably? I mean, I don't actually know, maybe. I mean, I'm not. Maybe or maybe not. Yeah, maybe or maybe not.

22:56Zack Pokorny:But the key distinction here is it's not like typical shareholding. It's mostly a reflection of ownership by way of control of resources.

23:05Alex Thorn:So it's governance over the balance sheet, basically? Because a lot of these apps have big on-chain treasuries.

23:13Zack Pokorny:Yeah, exactly. So like I said, it's not ownership in the typical shareholding sense. It's ownership in I control capital inflows and outflows from this DAO. And if I don't like the direction it's going in, I can raise a proposal to dissolve it and effectively claim the underlying.

23:32Alex Thorn:Interesting. So it is kind of just, it's kind of a reincarnation of the best of the DAO token idea that has always kind of existed. Because we've looked at DAOs for a long time, and there's interesting ideas that are sort of further afield. But at their core, the vast majority of DAOs are just an on-chain treasury. And the thing that the DAO voters, whomever they are, are usually voting on is how to spend the money or how to allocate the money.

23:59Zack Pokorny:Yeah, and even in some of those cases, the token holder's ability to actually raise proposals and do things is very limited. Yeah. With this sort of new meta, it's a dollar can't go in or a dollar can't come out without.

24:12Alex Thorn:So it's total control by the ownership coins.

24:16Zack Pokorny:Essentially, yeah.

24:17Alex Thorn:And are we seeing a lot of projects sort of launch like this now?

24:20Zack Pokorny:Yeah, they're slowly starting to drip in. We have six or seven of them now. um but you know this is a new mechanism that is going to take time to flush out but I fully expect there to be hundreds of these things over the next year year and a half and I don't see many projects actually being able like existing projects being able to cross over I was going to want you don't think they can convert really I think the way they're structured it's going to be too difficult like shareholders and the equity entity behind these things would have to take

24:53Alex Thorn:yeah a decent haircut so are these these are fundamentally like fully on chain there's no affiliated there is no equity there's no other entity there's just it's sort of okay interesting it's a more native dow structure it's also kind of like community driven in a meme coinish sort of way in that there's no off-chain entities right and there's no or the best of them no you just

25:14Zack Pokorny:have you just have token holders and operators token holders decide the like the direction and what our burn should be and then it's up to the operators to go is it kind of like what if there

25:25Alex Thorn:aren't operators it's like is there are there bounties does it sometimes go the other way like we get together and form a dow and just like say that we are allocating x number of dollars to build this app and then the devs show up or is it often been the opposite way where the operators

25:41Zack Pokorny:are the founders and yeah at this point the operators have been the ones leading the way which i think makes sense it's like i'm a founder i have this thing yeah i want to fund it and i want to give my token holder is a good shot at capturing the value i can create it's a crazy

25:57Alex Thorn:like i mean i i told this part of the way i viewed it as an it's really a saga it's a giant multi-part epic tale of these extremely high velocity permissionless markets constantly hunting new ways to design tokens and really trying and failing a bunch of remember like 3-3 or like uh the beloved 3-3 what were those tokens called um the uh there's a whole class of those tokens and then i mean it would just gone through so many it's just quite interesting but it's funny and and i think both it's both funny and reassuring that uh you see this as a new meta that's emerging because this is much more fundamentally sound yeah i think ultimately

26:42Zack Pokorny:this is how one good businesses get built and two you just create tokens that i think are more investable right where you don't end up going five years down the line and everybody's like wait the company has grown its revenue a thousand x and i've lost all my money literally some of the best

26:58Alex Thorn:defy apps ever created and most and with the most longevity had to design their tokens to be explicitly useless basically because mostly because of regulatory issues yeah no doubt so it'll be interesting too to see how um the sec which you know they've the crypto task force has talked a lot about some version of hester purse's safe harbor which is a way to do tokens that have equity like features without them being unregistered securities like what they do rule wise on the issuance side will be interesting. I know on, I don't know about my audience, but certainly I have spent most of my time as it relates to the SEC's forthcoming policy changes focused on tokenized securities, which is sort of the opposite of this.

27:47Alex Thorn:This question is when are tokens securities? And they've signaled that they're going to work on that, but that will, this will probably inform or certainly be re, uh, we'll certainly have to react in some way to what decide to do um very interesting we're gonna should we cover this is gonna be uh when we'll be writing reports about this you think more and more oh yeah 100 i'm excited it's always fun to find a new meta and it's nice when it's not nihilistic you know yeah yeah the the people

28:17Zack Pokorny:that are behind this movement i think are some of the smartest like most dedicated people in the space cool like i think this movement has stickiness so um i want to change gears you also

28:29Alex Thorn:published uh recently uh one of our best report series maybe the best one we've ever really done on a recurring basis but it was our q3 2025 crypto lending and leverage report um that report will give us just a high level overview of people who are watching haven't read this report yet just Like, what does that report cover?

28:49Zack Pokorny:Yeah, I mean, it covers the full stack of leverage from on-chain lending markets, CeFi lenders, DATs. So we cover a little bit of DAT leverage buildup and then perps. So kind of like the holy trinity of leverage.

29:09Alex Thorn:And I think one of the most interesting things you've done with that report is get the CeFi lenders to give you their data. because the on-chain stuff is there for all to see. It certainly requires – you've cut it up beautifully in this report. So if you want to get good looks at what debt markets look like and credit markets look like on-chain, go read the report because it's – but that data is available on a public permissionless blockchain. Yeah, it's technically public. Yeah, the CeFi data, however, is not – what's it been like working with them? And maybe also what is the sort of top line – who are the biggest CeFi lenders?

29:46Zack Pokorny:yeah i mean tether is just a giant they came in with like 14 billion dollars worth of open loans

29:53Alex Thorn:and this is we're just insane we're we're relying on their public attestation document for that

29:59Zack Pokorny:right yeah yeah we disclosed all this stuff in the report all the methodologies and where the data comes from yep exactly so we just pull tether straight from their public attestation as the entire industry does. And then Nexo and Galaxy round out the top three. So you kind of have big stablecoin issuer, Nexo, which I believe is a bit more retail focused. Retail lending for a long time. And then the more institutional view through Galaxy.

30:28Alex Thorn:It's quite interesting. And then I should shout out, I think, other third party. So Galaxy is also, we don't, believe it or not, take the information from the people we work with we we pull the information from galaxy's public financials same with coinbase we also pull from their public financials but there is a cohort of other lenders that uh including nexo that provide us their numbers um unchained uh arch signum lead in um i think primary figure in the past um and then you but you also to start that chart and And I'm going to, you know, we've shown the chart on the screen at this point. So we can show it again here.

31:11Alex Thorn:But the whole front part of the chart is, like, pulled from bankruptcy docs and stuff. Because the lender profile in CeFi has dramatically changed, basically. Like, Galaxy was around. Tether was slightly around during the prior era. Yeah, I mean, it was, like, the BlockFi's and... And Genesis. And Genesis, yeah. Voyager.

31:31Zack Pokorny:Was massive.

31:32Alex Thorn:Massive. Yeah. And you had to go pick through the bones of their restructuring filings to find data for those ones, quarterly data.

31:41Zack Pokorny:Yeah, me and ChatGPT reading and scanning through, yeah, maybe even close to 10 ,000 pages of bankruptcy docs. It's a very cool chart.

31:52Alex Thorn:It's one I know that makes me really excited because no one has ever published it before, and now we've got a pretty good role. I think the ones that are giving us their data are also seeing good value from it. So are we near all-time high leverage? Are we all-time high in notional terms?

32:11Zack Pokorny:That was sort of the irony of the Q3 report because we did make an all-time high quarter over quarter.

32:19Alex Thorn:But that ends September 30th.

32:21Zack Pokorny:Yeah, that was like the whole thing. It ended September, and then 10 days later we had obviously the huge liquidation event. and it was like, oh, all-time highs, but not for long.

32:32Alex Thorn:Yeah, exactly, but not for you. You know, that guy who's like, call an ambulance, but not for you, and he pulls out like a gun or whatever.

32:37Zack Pokorny:Yeah.

32:38Alex Thorn:Yeah. It remains to be seen. It'll be very interesting to see how it looks. I mean, we've pulled them. We know how things like OI and on-chain have been affected and declined and then stabilized since October 10th, but one that we don't know and will be interesting will be to see if there's any lasting effect on the C-Fi lending. space if it continues it's basically been on a steady march higher yeah for much of the last two two years and a half years yeah it'll be interesting to see with this uh both the leverage wipeout of october 10th but also just prices pulling back like where will they finish q4

33:14Zack Pokorny:will be interesting to see i think when we look at the lending landscape as a whole today it looks a lot different than it did three four years ago like uncollateralized lending is not as much nearly a thing maybe some lenders still practice this but i think it's kind of become like universal consensus that like we just can't do that yeah we just don't we just don't do that um and then even looking at the on chain side like 2020 2021 was people borrowing against random dow tokens to go farm 2000 apy fruit apps yeah like yeah we just don't really have that anymore like the the collateral composition and the things that people are doing with borrowed funds has has changed um so i mean i wouldn't be surprised to see c5 continue marching along especially with the divergence between sort of the institutional focused people versus like the crypto natives like there's a divergence in an opinion and agenda and i i could see see if i sort of continuing the momentum from the summer through and i wouldn't be surprised at least to see it on a market share

34:29Alex Thorn:basis so you sort of like break the lending the sources of borrow into three categories is CeFi, DeFi, and then CDP stablecoins, a.k.a. like Maker, any kind of vault stablecoin, where technically it is lending because you're borrowing this created stable off of collateral.

34:46Zack Pokorny:But it's just a synthetic.

34:47Alex Thorn:Yeah, it's a synthetic stable, basically. But it does involve borrowing off of assets, and they can get liquidated. So of those three categories, historically, CeFi in the past, and that prior was dramatically larger, what does the breakup now market share-wise between those categories look like? is d5 the biggest yeah i think it's like 60 or 65 percent d5 like including cdp stable coins

35:13Zack Pokorny:so i mean but that's just sort of a function of accessibility like when all of the c5s blew up

35:20Alex Thorn:like it's just so fascinating though like that's that's a just a regime change from 21 to and i feel like it speaks volumes about the stability um the the amount of trust people have for the on-chain environment obviously doesn't mean every app or anything like that but like that's that's a pretty important win for like blockchain permit like you know sovereign use of blockchains even if some person or business is using a custodian someone is operating directly on chain to facilitate that whether it's an individual or you know a third party doing it on behalf of someone

35:55Zack Pokorny:else like that's pretty impressive yeah i mean the apps just didn't go anywhere like yeah they did makers or sky now but still around ave 60 billion in tvl even compound like not used nearly as much anymore but been around since what like 2018 yeah 2019 like the og they still work pulled liquidity lending protocol still here still works yeah um i mean yeah i think it speaks volumes it's like conditional rules-based pooled lending actually works. Yeah, it works and it has a place. And with the blockchain as infrastructure

36:37Alex Thorn:having improved a fair amount over the years, I mean, both Ether and Solana, like, I mean, one of the big reasons that March 12th, 2020 had a big leverage unwind was because of like scaling problems on Ethereum, basically. The fees just spiked so dramatically that you couldn't get in any transactions to, say, top up your collateral and stuff like that. And it created, like, Cascades. And then I think even Oracles had gotten priced out of sending in the prices. We haven't seen a problem like that happen in a long time.

37:07Zack Pokorny:No, I mean, you have chains like Solana, now that you mentioned, that can handle a much bigger load.

37:13Alex Thorn:And, right, their localized fee market stuff makes it, like, even if there is congestion in one app or type of app, like, there's still other highways to go in.

37:21Zack Pokorny:Yeah, and just the baseline load that the network can handle is significantly higher. But when we think about lending markets, though, it's really more about the collateral assets, not so much the performance of the network. Like how often? That's what I'm saying, almost never.

37:38Alex Thorn:But we haven't had one. I mean, you had some outages in Solana over the years. But again, all of that stuff has improved.

37:46Zack Pokorny:It's pretty rare now.

37:46Alex Thorn:The sort of hub-and-spoke L2 model on Ethereum has performed pretty well for Ethereum. So, yeah, what do you mean the collateral? Why is the lending activity so much larger in the Ethereum world than in the Solana world?

37:59Zack Pokorny:It's really just a story of quality liquid collateral. There's just more of it on ETH. Yeah. It's like when you think about what lending is as an activity, it's not high velocity. You don't need to worry about, like, microstructure of the market, like execution price. It's do we have a lot of high-quality collateral? and that's i mean that's just the entire thing like if you're sitting on a chain that has 10 billion dollars of bitcoin that you can borrow at 70 ltv against or whatever ave lets you do now like you are by default just going to have significantly larger lending markets because the the collateral is the fuel it's not necessarily network performance it's not dex infrastructure whatever it might be it's do you have quality collateral that you can underwrite

38:48Alex Thorn:pretty aggressively and can it scale yeah very interesting and and so it's also a function of time then right ethereum's just built up a bigger market of collateral over the it's and that's is

38:59Zack Pokorny:that stuff sticky oh absolutely i mean part of what makes ethereum so successful this is one the amount of wrapped bitcoin it has how much does it have billions yeah i mean ave alone has a few billion dollars then you throw in morphe which has gained significant ground over the last year we're probably looking at every bit of eight to that's 10 billion dollars maybe you had once put

39:24Alex Thorn:out a chart and i don't you know i won't hold you whether it's still true now but that actually like bitcoin is the biggest yeah basically why yeah as an individual asset so like if you took like

39:34Zack Pokorny:every staked eth and yeah because there's like all these lrt lst like eth derivatives which also contribute to the success of ethereum it's like if i can have a an eth pegged asset that accrues staking apy that's five six billion market cap in liquid yeah like that's actually like pretty good asset by like on-chain defy collateral standards that's good that's very good and most networks don't have that privilege right um but yeah like but still the number one single asset is wrapped bitcoin yeah we i made that chart about a year ago i need to i don't know if it's still true i need to relook into it because now we have like pendle tokens and stuff which hit or like all like athena and pendle issued assets almost hit like seven or eight billion dollars as well so like yeah the story's definitely evolved since then but i think one of

40:24Alex Thorn:the interesting parts about it wasn't so much that it was and yes it may have been number one then but you combined like eth weth steth other lrt like all the yeah then they were certainly bigger but like why why would it be big i mean it's that that's quite interesting because you know whether it's wbtc or cbb tc which is coin bases like they they're rap you know i don't know as much about cbb tc's contract but but rapid coins quite permissionless for a centrally issued sort of stable coin type asset really interesting there's no admin key for that there's no they can't freeze or revoke that one we looked at this once just quite interesting like it's it's more permissionless than like a stable coin is actually.

41:08Alex Thorn:But like still it's issued by a central issuer. Like from a risk perspective as a lender, wouldn't you prefer to hold something like ETH than a wrapped version of Bitcoin? You know what I mean? It seems like that adds a vector of credit risk to the token that may not exist for an on-chain issued one.

41:27Zack Pokorny:Yeah, like investor protections as well. And like, I mean, somebody has to issue the thing regardless. yeah so like the the issuer risk i think kind of i do this broadly i do think that if we and

41:38Alex Thorn:the lenders don't typically disclose this to us the cefi lenders but i bet you the vast majority of cefi lending collateral is native bitcoin not native eth not native not wrapped other stuff i would bet like 60 to 70 percent of all lent uh of all collateral held by cefi for the lending that they do is Bitcoin specifically.

42:01Zack Pokorny:Yeah, I think that's probably a fair assumption. And even looking at what some of the DeFi protocols are starting to do, native Bitcoin is actually starting to become a demand-declateral type where the Bitcoin still lives natively on.

42:14Alex Thorn:Oh, so you just like they build some kind of like wallet that they have their own Bitcoin wallet and they somehow oracle that it's arrived back to the other chain. Yeah, like today it exists as a multi-sig.

42:24Zack Pokorny:Yeah, it's a multi-sig.

42:25Alex Thorn:but like they can still accept it yeah it's interesting yeah so we're starting i mean the demand for bitcoin is collateral is pretty wide so you zach you've been in the crypto industry for a pretty long time for for a younger guy um before you worked at galaxy you were at cx.io right which is a crypto exchange yep europe-based what's your sort of like backstory here on getting interested

42:49Zack Pokorny:and involved in crypto yeah it really started from the hardware side of things like i was super into like video games and building computers and all that stuff and had built a computer and it was like oh like well what what can you do with this thing and it's like oh well you can mine bitcoin and i was like oh that's really cool i started doing that and realized you don't actually make an overwhelming amount of money mining bitcoin off of a gpu um but then it was like oh you can mine ethereum and all these random like bitcoin cash like all this random stuff that started popping up um and just kind of went down the rabbit hole from there i had big uh gpu mining rigs in my off-campus house in college no way um yeah yeah got really got into it from the the hardware side and fell down the rabbit hole from there you work a lot with data um

43:41Alex Thorn:which is no surprise for a researcher in crypto how does the you know if we just think about the big three blockchains bitcoin ethereum and solana like how do we how would you characterize the sort of the differences in handling data for these because they're all those are three that are

43:57Zack Pokorny:quite different from each other yeah i mean bitcoin is kind of a dinosaur yeah with the data like there's not an overwhelming amount of stuff to look at um it's just inputs outputs like i actually find the most fun thing to do with bitcoin related data is like input output tracking so like seeing like where the coins go because there is like a privacy element to the whole input output

44:23Alex Thorn:yeah people don't realize the utxo model as it's called is significantly more private by it becomes quite hard then the account based uh like design that basically all the other blockchains

44:35Zack Pokorny:use yeah and like even like tracking um utxos like they can literally run forever just it like to one address yeah it gets emptied out it goes to another one um so it becomes i mean it's and

44:51Alex Thorn:they did it's kind of dinosaurs especially like criminals they the criminals that exist they use like sophisticated kind of like beautiful from a topographical standpoint like yeah they call it peeling and like these crazy things where they blow coins out into like to one new address and then take like 10 coins from it a thousand times and it ends up looking like in a sort of a

45:14Zack Pokorny:visualizer it looks like a centipede right yeah or just like this like galactic explosion i love making the the node charts with the the utxo data because you can create these beautiful labyrinths

45:27Alex Thorn:but to your point right it's there's no um like stateful like execution environment in bitcoin so You don't have whole on-chain businesses operating solely on-chain inside of an EVM. So then you get to Ethereum, and you've got all of this explosion of interesting applications to look at. But it's also still quite difficult, right? How do we aggregate the economic data from this endless explosion nebula of applications? If I ask you, and you do this for the lending report, I know. If I ask you, what is the borrow rate for RAP Bitcoin in DeFi on Ethereum? You can just go to Aave and find out, but there's more to it than that, right?

46:09Alex Thorn:Aggregating across all these markets.

46:12Zack Pokorny:Yeah, I mean, it's really just on a contract-by-contract basis. So it's like we can go to Aave's bull contract.

46:18Alex Thorn:You have to know from research all the ones to go to and aggregate. If you wanted to make an index, for example. Yeah, that's honestly the hardest part of observing Unchained Data is actually finding the contracts.

46:33Zack Pokorny:Knowing what to look at. Well, yeah, knowing what to look at. But we also have, I mean, it's like an industry-wide issue where documentation will tell you how the thing works, but it won't actually tell you where it comes from. But the beauty of what we do is it's still there. You want to know what contract your wrap Bitcoin goes to when you deposit into a random Morpho vault. You take five bucks and you go do it. And then you look at the block explorer and you go, oh, that's exactly where this came from. Yeah, that's so interesting.

47:03Alex Thorn:You have to like seed the chain and then track the little bits that you send off as a way to sort of discover. It's like almost like when you play one of those RPGs and it's like the map is not revealed until you walk there, right?

47:15Zack Pokorny:Yeah, you're just constantly discovering the map. Yeah, I mean that's at least... how i think about on the desk like you can do broad analysis of the network but i find it to be much more um beneficial to just go to the hot spots of activity and just drive as deep as you possibly can um but yeah eth is easy it's just go to the contract then i gotta ask you about okay so then

47:39Alex Thorn:we've got this behemoth of solana what is the issue i mean we've the people know this it creates a lot of data that's sort of the trade-off like it's expensive to run a node right that's sort of you know, Ethereum sort of falling in Bitcoin's lead has tried to make it very cheap to operate a node or a validator in service of widely decentralizing the node and validator accounts. Same idea with Bitcoin nodes, which are, you know, famously can be run on a Raspberry Pi and stuff like that. Solana took a different approach to this, right, in general. They said, actually, like, it's okay to have, like, the beefiest, to need one of the beefiest computers ever just to operate this thing.

48:18Zack Pokorny:Yeah, the nodes are like hypercars.

48:19Alex Thorn:Yeah, why is that? Is it because they're processing so much information or storing so much information? I mean, it's both. Yeah.

48:28Zack Pokorny:Like, there's a ton of data that the network produces.

48:32Alex Thorn:But surely, like, there's not, like, is there significantly more real economic activity? Or is it just, like, there's a bunch of junk data you have to, like, sift through to get to the information?

48:43Zack Pokorny:Yeah, I mean, if you think about it, it's like Solana does 1 ,500 to 2 ,000 TPS on a good day. Ethereum is doing 15 to maybe 20.

48:54Alex Thorn:So are those transactions per second, are they real economic transactions or user-initiated actions? Or are they also storing other information?

49:03Zack Pokorny:I mean, the transactions could be started by bots. They could be started by humans.

49:08Alex Thorn:Okay, but they are like transactions. It's not like votes and stuff like that by validators.

49:13Zack Pokorny:Oh, I mean, a portion of them, yeah, are votes. I'm talking, like, non-vote transactions, like actual, like you said. So it's just a lot more. It's just, yeah, I mean, the scale of the activity is...

49:25Alex Thorn:So why can't, are you able to run, I mean, we can run a whole Ethereum archive node and index the whole thing ourselves. A person can. Can a person not do that on Solana?

49:36Zack Pokorny:I mean, running the hardware is not an easy task. and then also when it just comes to the data structure and data organization of the chain like ethereum has this thing like anytime there's an event you just say get log get me the event with like the fingerprint of of the event solana doesn't really have an equal comparison it's a lot of like parsing strings like you can map things back to idls um which is essentially like a format for decoding and getting an understanding of what's happening in a contract um or a program but doing so is just not easy. The sheer amount of data and then finding the best way to organize it and keep it organized over anything is a real challenge.

50:23Zack Pokorny:Very few people in the industry have, in my opinion, found a good way to build a general index. We have a bunch of services that do it, but it's just very tough. And it shows. There's only a few data providers that have really figured

50:39Alex Thorn:it out yeah that's really interesting like it's interesting how different those three are bitcoin ethereum and solana from each other and i really like that they that those are sort of the three leaders and that they are different like there's reason for them to be leaders because they're differentiated from each other right it's not like because there was this whole period with the like in 21 when you just had like a you know a bajillion evm chains they're all basically

51:07Zack Pokorny:I'd like essentially an ETH fork with like a slight change. Yeah.

51:12Alex Thorn:And I mean, there are still, I mean, I guess the ones that people are interested in now are Monad, which has just launched because it kind of tries to take the best of ETH and the best of Solana like in a way, right? It's sort of the idea. It's parallelized execution the way Solana is, but it's an EVM. It's still EVM. So like, you know, it could theoretically make, you know, get easy access to developers that know Solidity or EVM stuff. and then Mega ETH is the other one which is also sort of a different approach that's an L2 right and they basically say it's kind of like they take Solana's approach to the central sequencer

51:45Zack Pokorny:massive beefy sequencer it's kind of like Eclipse I think in that sense which is an SVM roll up just like

51:51Alex Thorn:so one says I'm going to smash the Monad's trying to smash the two together Mega ETH say I'm going to do the thing that Solana does but as an ETH L2 kind of I mean, it's just interesting. Those are both new ways to think about it. I don't know that they'll be differentiated enough in the end to, like, earn one of those vaunted spots of being, you know, like a top differentiated blockchain. But I feel like it is interesting because there was a huge game of the L1 wars. The L1 wars have kind of subsided, right?

52:26Zack Pokorny:I think at least the general purpose L1 wars where it's like... That's a fair point. Solana, Ethereum, like, Solana is kind of running away with it. Like, they've built the flywheel of, like, we have the users, the developer activity is coming, and then they're also quite good at, like, marketing and comms and keeping, like, specifically the developers engaged. But I think there's a whole open ocean for this idea of, like, hyper-specific.

52:53Alex Thorn:So, like, it's almost like app chains are back, but do you think it's, like, is it corporate now? like is that because like you got tempo which is stripe arc is the name of circles that's gonna

53:05Zack Pokorny:launch it's gonna be now one yeah i mean i think those chains are also gonna be general purpose but theoretically like it can come from anywhere it can come from a crypto native company that just finds distribution like that's kind of the frontier of the competition now it's okay we have like most of the infrastructure and like the technical capability that we need to support current use but who has the users and who's going to bring them. That's, I think, the frontier of all the competition now.

53:36Alex Thorn:It's going to be interesting because, like, obviously Coinbase has base, which is 80 % to 90 % of all Ethereum L2 activity. Kraken has Inc., which I think is also basically, it is an optimistic roll-up also, similar to base.

53:52Zack Pokorny:Yeah, I think they're actually pivoting towards a base. That's what they said, which I think is good. Yeah, it's very cool.

53:58Alex Thorn:Because that would be more decentralized is the idea, or less centrally controlled is maybe a more accurate way to say it. And then didn't OKX, weren't they launching one? But I think it's an L1. I think this is like there's some –

54:11Zack Pokorny:I've honestly lost track of all of you. Yeah, there's a lot.

54:14Alex Thorn:And obviously of BNB. And it's just interesting that you've got some doing Ethel 2s, others doing their own L1s. No, I think OKX actually did it as like an app. It's basically an app on Solana, I think. It's not even its own L1.

54:28Zack Pokorny:It's like, remember that thing?

54:29Alex Thorn:We wrote about that or we looked at it.

54:31Zack Pokorny:Yeah, or it might have been Bybit.

54:33Alex Thorn:Maybe it was Bybit that did that.

54:34Zack Pokorny:Yeah, no, somebody just launched like a startup like smart contract application on Solana.

54:39Alex Thorn:It's like, cool, yeah, but I like the differentiation. It's so interesting. So you think the users are mostly the most important thing to bring? Yeah. We could do it as an L2 or an L1. It doesn't really matter unless we bring users.

54:56Zack Pokorny:yeah essentially it's like because like who's going to use this stuff like we can build this we could build anything we want more or less at this point like if there's nobody to use it then you don't have a business and that kind of ties into the conversation we had earlier about like what what is this token i'm investing in like what is the company behind it like are there real economics here so it's all kind of becoming like this self-fulfilling flywheel of things where it's like if you don't have users you're probably not going to win no matter how differentiated or fancy or whatever your chain might be like if there's no one to use it like you're just not gonna win there you go uh this has been a great conversation thank you so much zach bercorni from galaxy research i appreciate having me that's it for this week's

55:39Alex Thorn:episode of galaxy brains thank you to my guest zach bercorni from galaxy research and our friend bimnetta bb from galaxy trading everyone have a safe and happy weekend and we will see you next week for a special episode

55:56Alex Thorn:Thanks for listening to Galaxy Brains, the weekly podcast from Galaxy Research. If you enjoy the show, please like, rate, review, and subscribe wherever you get your podcasts. To follow Galaxy Research, sign up for our weekly newsletter at gdr.email, read our content at galaxy.com slash research, and follow us on Twitter at glxyresearch. See you next week.