Wall Street Is About To Pour Into Ethereum [Here’s Why] — Transcript

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1. 0:00I think the asset is the only asset in
2. 0:02crypto that has the ability to become a
3. 0:04store value alongside Bitcoin and even
4. 0:06bigger than Bitcoin. I think we're going
5. 0:08to see a tidal wave of capital coming
6. 0:09into the blockchain ecosystem ASAP.
7. 0:11>> Vivek, welcome.
8. 0:13>> Great to see you and thanks for having
9. 0:14me.
10. 0:15>> Thank you for coming on. Now, let me
11. 0:16just introduce you real quick to
12. 0:17everybody. So, you are the co-founder
13. 0:19and CEO of Etherealized, the
14. 0:21institutional marketing and product arm
15. 0:22focused on driving Ethereum adoption
16. 0:24among financial institutions. Now,
17. 0:26formerly of Wall Street, a high-yield
18. 0:28credit trader working at Morgan Stanley,
19. 0:30UBS, Deutsche Bank, Nomura, and
20. 0:33previously worked in the crypto
21. 0:34investment banking and DeFi research.
22. 0:36So, of course, Etherealized is backed by
23. 0:38the Ethereum Foundation and by Vitalik.
24. 0:40So, you are at the epicenter of
25. 0:43everything happening in the Ethereum
26. 0:45world when it comes to getting the suits
27. 0:47interested and getting Wall Street on
28. 0:49board. So, this is going to be super
29. 0:51interesting conversation. Thank you for
30. 0:52your time today. I appreciate it.
31. 0:53>> Really excited about it. So, it's it's a
32. 0:54good time for it and it's a good it's a
33. 0:56good setup for Ethereum to finally have
34. 0:58its have its really big moment.
35. 0:59>> I've been thinking about Ethereum a lot
36. 1:01recently, and now Tom Lee is almost at
37. 1:04his 5% target. He's got 70, 80,000 ETH
38. 1:07left to stack, and then we got to find
39. 1:09some new bid. Is Wall Street going to be
40. 1:12that bid for us?
41. 1:13>> I think Wall Street is so it's it's it's
42. 1:15a good first question. I think that Wall
43. 1:17Street is a very big place. I mean,
44. 1:20there's there's banks, um there's asset
45. 1:22managers, there is wealth allocators,
46. 1:24there's private wealth, etc. Overall, no
47. 1:27one is allocated to crypto yet. So,
48. 1:28that's that's the one thing we have to
49. 1:29notice is like it's the crypto and
50. 1:31blockchain asset class is still very,
51. 1:34very early in its institutional adoption
52. 1:35cycle. You don't see crypto assets as a
53. 1:38meaningful part of portfolios, whereas
54. 1:40you see things like gold and stocks as a
55. 1:41big part of portfolios. The world's
56. 1:43going digital, and so those allocations
57. 1:45are going to shift. And so, yes, I
58. 1:47believe the the flows that will come
59. 1:49into assets like Bitcoin and Ethereum,
60. 1:51and I think they'll overwhelmingly go
61. 1:53into Ethereum, are going to be very,
62. 1:55very outsized relative to even what Tom
63. 1:57Lee did. So, Tom Lee's an amazing
64. 1:59spokesperson. He sort of led the charge
65. 2:00and he likes to go first and he's he's
66. 2:02been right about Bitcoin. I think he's
67. 2:03going to be right about Ethereum, but I
68. 2:05think we've seen the tip of the iceberg
69. 2:06of what institutional interest in
70. 2:08Ethereum really is going to look like.
71. 2:10>> Nice. So, Wall Street has been kind of
72. 2:12moving past just the pilot phase. I
73. 2:16remember years ago we'd covering all
74. 2:17these stories about, "Oh, well, we got
75. 2:19this pilot program where this is being
76. 2:20tried." But now we're moving deeper and
77. 2:23beyond just, you know, actual capital
78. 2:25allocation to ETFs and things like that,
79. 2:26but what's the shift to you look like in
80. 2:30practice? Is it just the sort of
81. 2:32conversations that are starting to be
82. 2:33had? Is it those pilots turning into
83. 2:36real production at some kind of scale?
84. 2:39You know, a lot of RWAs have come on
85. 2:41chain, for example. Or is it just the
86. 2:43capital commitments itself actually
87. 2:44starting to come into the space and
88. 2:45people deploying RWA capital on chain on
89. 2:48chain, but also actually buying ETH as
90. 2:50some kind of a strategic asset to own or
91. 2:52a necessary asset because they want to
92. 2:54be involved in that permissionless
93. 2:55ecosystem?
94. 2:56>> So, it's it's twofold. One is let's
95. 2:59start with the the second part. The
96. 3:01wealth management allocation. Crypto
97. 3:03allocation portfolios was zero, then it
98. 3:05was 1%, now it's 1 to 5% and it's going
99. 3:08to keep growing. And that split was
100. 3:10initially Bitcoin cuz Bitcoin was 5
101. 3:12years earlier than than ETH in its
102. 3:13adoption curve. Now it's Bitcoin and ETH
103. 3:16and that's going to start to become more
104. 3:17like 50/50 and I think at some point
105. 3:20that allocation might even flip for some
106. 3:22allocators because ultimately the
107. 3:24ecosystem with most utility and the
108. 3:25ecosystem with the most institutional
109. 3:27adoption is going to have the asset that
110. 3:28has the best store value. So, productive
111. 3:31money versus store value inert money is
112. 3:34going to be a debate that keeps going
113. 3:36on, especially as Ethereum keeps growing
114. 3:37and it's in its universality. So, I
115. 3:39think that's where the capital flow is
116. 3:41starting to come in in earnest and it's
117. 3:43it's been exciting. But zooming out,
118. 3:44like the part that excites me personally
119. 3:46cuz I came from the Wall Street trading
120. 3:48floors, I I think we're in an age of
121. 3:49absolute abundance. I think the capital
122. 3:51needs for this next era of humanity are
123. 3:54going to be absolutely enormous. You
124. 3:56have AI coming at the same time as space
125. 3:58exploration coming at the same time as
126. 3:59robotics. I mean, all of this is going
127. 4:01to create incredible new industries and
128. 4:03need for capital. But, I saw how capital
129. 4:05is created on Wall Street. It's It's
130. 4:07pretty manual. Like I said, it's it's
131. 4:08pretty um it's using technology from the
132. 4:10'80s. So, everyone knows that
133. 4:12operational efficiencies are
134. 4:15blockchain's actually answer. And for
135. 4:18the last 10 years, there's been pilots
136. 4:19of trying things and testing the waters
137. 4:21on private permission chains, bank
138. 4:23chains, internal chains. The flip to
139. 4:26public is the moving from is a movement
140. 4:29from pilot to production saying, "Now
141. 4:30everything's to connect. Now we actually
142. 4:32need real dollars, real money market
143. 4:33funds, real tokenized deposits, real
144. 4:35world assets on public chains so you can
145. 4:38actually unlock the distribution and the
146. 4:39operational efficiency." So, that's
147. 4:41happening in in full force across across
148. 4:43everyone. I mean, across banks, across
149. 4:45asset managers, across wealth managers.
150. 4:47Everyone has a mandate now to deploy
151. 4:50products in in the blockchain space. And
152. 4:53I continue to believe I believe since
153. 4:54day one that the only platform that can
154. 4:56become universal like the internet is
155. 4:58the most neutral global platform that's
156. 5:00been around the longest. I think right
157. 5:01before I came on the interview, you you
158. 5:03started and said that people should
159. 5:04allocate their capital to the protocols
160. 5:06that have been around the longest, that
161. 5:07have been battle tested. That's
162. 5:08Ethereum. I mean, Ethereum's been around
163. 5:10the longest and you don't get points for
164. 5:12being for moving fast and breaking
165. 5:13things for the financial system. You get
166. 5:15points for having 100% uptime and for
167. 5:17having the most amount of precedent, the
168. 5:19most amount of institutions, the most
169. 5:21amount of capital. And that de-risks it.
170. 5:23So, I think that's why we're going to
171. 5:25see Ethereum become the default platform
172. 5:27for the financial sector. And again,
173. 5:29you're you're absolutely right. It's
174. 5:30moving completely from pilot to
175. 5:32production the quickest I've ever seen
176. 5:34it.
177. 5:34>> It's been really interesting to watch
178. 5:35all these different stories playing out
179. 5:37in the Ethereum ecosystem. All the
180. 5:39BlackRock bring it bringing all this
181. 5:40money on chain, for example. They're
182. 5:42bittle funds.
183. 5:44This is stuff that if you went back to
184. 5:46like 2017 when I first got into crypto,
185. 5:48and you said, "Hey, this is happening."
186. 5:49People would say, "Yeah, you're crazy.
187. 5:50BlackRock's not deploying billions of
188. 5:52dollars of funds on Ethereum. That's
189. 5:54ridiculous. It's just an ICO casino."
190. 5:56And now, look where we are. Things have
191. 5:58changed. And
192. 5:59Ethereum has been continued to develop
193. 6:01itself, and there's been all kinds of
194. 6:02challenges and
195. 6:04delays in that development process over
196. 6:06time. And of course, investors have been
197. 6:08very frustrated with the price action on
198. 6:10Ethereum over the last 5 years. But
199. 6:12there's all these new catalysts that are
200. 6:13coming to find very interesting. And
201. 6:14something that Tom Lee's talked quite a
202. 6:16bit about is that Ethereum is going to
203. 6:18be one of the next recipients of the AI
204. 6:21trade. Do you agree with this thesis on
205. 6:23that?
206. 6:23>> I I think Tom Lee nailed it. I think
207. 6:25that um that I'm focused on the part
208. 6:28which is Wall Street infrastructure,
209. 6:30capital markets infrastructure. I think
210. 6:32it's very very important to digitize
211. 6:33capital markets infrastructure. But
212. 6:35we've been blessed with this new
213. 6:37technology, AI, that right now it uses
214. 6:40information unbelievably, and it's
215. 6:42changing people's lives with
216. 6:43information. But AI doesn't have access
217. 6:45to money yet. AI doesn't actually isn't
218. 6:47able to transact autonomously on behalf
219. 6:49of people. And that's such an obvious
220. 6:52use case for for AI to facilitate better
221. 6:55commerce, to do auto investment
222. 6:57rebalancing, to spend on behalf of
223. 7:00consumers. AI needs a monetary asset,
224. 7:03but more than a monetary asset, it also
225. 7:05needs an ecosystem that's programmable
226. 7:06so you can use that asset. And so, it
227. 7:08really comes down to what's the safest,
228. 7:10most battle-tested, the most
229. 7:11decentralized, the most neutral and
230. 7:13non-censorable place that AI agents can
231. 7:15actually have access to money and store
232. 7:16their value. And that's Ethereum by far.
233. 7:19And don't ask me. I mean, I actually ask
234. 7:21the AI agents this all the time. Like,
235. 7:23where would you store your money? And
236. 7:24it's it's always Ethereum across all of
237. 7:26them. And again, the reason is is
238. 7:28because even things like stablecoins are
239. 7:30censorable. So, everything in the crypto
240. 7:32ecosystem is censorable to a degree,
241. 7:34except for the native assets of the
242. 7:36network tokens of native chains. And so,
243. 7:38Bitcoin, non-censorable, amazingly
244. 7:40decentralized, but it's not
245. 7:41programmable. So, AI can't really use
246. 7:43it. You can't transact with it. If you
247. 7:45want to convert from Bitcoin to USDC and
248. 7:47spend, you can't do that unless you're
249. 7:49on a smart contract chain.
250. 7:50>> Like Ethereum. Using wrapped Bitcoin on
251. 7:52Ethereum.
252. 7:53>> Well, exactly. Exactly. But with ETH you
253. 7:55can. So, I mean, I know it's been again,
254. 7:57I'll be the first to admit it's been in
255. 7:59terms of price action it's been very
256. 8:00frustrating. In terms of adoption and
257. 8:03looking back 5 years I was like, it's
258. 8:05not just BlackRock, it's JP Morgan, it's
259. 8:07Fidelity, it's uh Baillie Gifford, it's
260. 8:09Amundi, it's Robinhood, it's Base, it's
261. 8:12uh it's it's European players like
262. 8:13Revolut. All of them are on Ethereum in
263. 8:15full force. That's adoption. I mean, and
264. 8:17that's the tip of the iceberg. I think
265. 8:19the asset is the only asset in crypto
266. 8:22that has the ability to become a store
267. 8:23value um alongside Bitcoin and even
268. 8:25bigger than Bitcoin. And the store value
269. 8:27is for AI agents. The store value is is
270. 8:29as a digital version of gold. And so,
271. 8:32that's that's the upside I'm waiting
272. 8:33for. So, that's kind of a call option. I
273. 8:35think when it happens it's going to be a
274. 8:36ridiculous repricing and it hasn't
275. 8:37happened yet. But um the world needs a
276. 8:39digital store value more now more than
277. 8:41ever.
278. 8:41>> Where's Solana sitting in all this?
279. 8:43Because Solana's got, you know, a lot of
280. 8:45adoption and a lot of users. And
281. 8:47obviously, if you look at things like
282. 8:48DeFi TVL, then ETH's way ahead. So, is
283. 8:51there a situation where do you guys see
284. 8:53Solana overtaking the Ethereum
285. 8:55ecosystem? Is that even relevant? If it
286. 8:57does, does are they just, you know,
287. 8:59they're one's an apple and one's an
288. 9:01orange they're in the same basket, but
289. 9:02they are fundamentally different things
290. 9:04and they both can be there at the same
291. 9:05time. How how do you think about Solana,
292. 9:06which is basically your main competitor
293. 9:08Ethereum right now?
294. 9:09>> I wouldn't actually say that's the
295. 9:10that's the main competitor. I'd say pulp
296. 9:12permissioned private bank style chains
297. 9:15are more of the competi- are more of the
298. 9:17competition because those are the ones
299. 9:19that have been running in the in the
300. 9:20background for the last 10 years. Those
301. 9:22are the ones that they check a lot of
302. 9:23boxes, they quote unquote work, they're
303. 9:24fast, they're private, but they don't
304. 9:26connect to any other chains, right? I
305. 9:28mean, like so, if you have a JP Morgan
306. 9:30chain, a Goldman Sachs chain, and a
307. 9:31BlackRock chain, no one's going to use
308. 9:33one neutrally across all of them and
309. 9:35they're not going to be able to talk to
310. 9:36each other without without trust
311. 9:38options. So, they're recreating the
312. 9:40financial system. That's the biggest
313. 9:41thing that we see, but people understand
314. 9:43the public is the future because it's
315. 9:45it's again, it's like the internet. So,
316. 9:47so coming back to Solana, Solana did a
317. 9:49lot of things right. I mean, it
318. 9:50optimized for speed, it
319. 9:52optimized for throughput, but at the
320. 9:54cost of
321. 9:55centralization. And so, when you look at
322. 9:58I think you need more of a track record.
323. 9:59I think that I think because Ethereum's
324. 10:01been around the longest, because it's
325. 10:03never had downtime, because it has max
326. 10:05security and it literally no point of
327. 10:06centralization versus I would argue
328. 10:08Solana and other chains have a lot of
329. 10:10centralization. It's harder to get
330. 10:12institutional trust there. I don't want
331. 10:14to be complacent. Like Ethereum has to
332. 10:15keep getting better, it has to keep
333. 10:16getting faster, it has to keep having
334. 10:18wins on the L2 level and the L1 level,
335. 10:20but yeah, Solana's created different use
336. 10:22cases, right? It's it's they're not the
337. 10:24institutional use cases that we see for
338. 10:26Ethereum. And yeah, we'll see. I think I
339. 10:28I also think that you're going to see a
340. 10:29lot of competition for for Solana from
341. 10:31the L2s that that can ultimately uh
342. 10:34crank up throughput even more and be
343. 10:35faster and be cheaper. So, anyone
344. 10:37optimizing for speed in this AI era is
345. 10:40is going to optimize for a commodity. I
346. 10:42think the the rarest commodity is
347. 10:45security, scarcity, and
348. 10:46decentralization.
349. 10:47>> It's an interesting thought here about
350. 10:49Ethereum's price. Cuz obviously, people
351. 10:51are investors, they buy the asset cuz
352. 10:53they expect at some point that they're
353. 10:55going to be able to at least, you know,
354. 10:57do something with that or have it go up
355. 10:58in price. And so, there's a situation I
356. 11:01see here where we have the fundamentals
357. 11:03of Ethereum, which have never been
358. 11:05better. The tech has just continued to
359. 11:07grow. It's continuing to get better all
360. 11:09the time. Overall adoption, layer the
361. 11:11layer two ecosystem. I was covering just
362. 11:14before you came into the the green room
363. 11:16there a story that the base total value
364. 11:18locked has actually exceeded Solana in
365. 11:21the last day or two, now second only to
366. 11:23Ethereum itself.
367. 11:24>> It's amazing.
368. 11:25>> So, that's very interesting. And so, you
369. 11:26see all these sort of things happen
370. 11:27where okay, there's so much happening
371. 11:29and you have you know, BlackRock out
372. 11:30here tokenizing stuff on it and so on
373. 11:33and so forth. All these big things and
374. 11:34yet the price of Ethereum right now is
375. 11:37the same that it was when the
376. 11:38fundamentals were a tenth of what they
377. 11:41are right now. So, the question to you
378. 11:43is, what is actually needed for a
379. 11:45repricing to happen for the price to
380. 11:48catch up with the fundamentals?
381. 11:50>> It is a great question. I I don't want
382. 11:52to be the one that ignores price and
383. 11:53says, "Oh, adoption's great. So, we're
384. 11:55winning." No, it's important. ETH is I
385. 11:57mean, Vitalik said it himself, ETH is
386. 11:58one of the most important applications
387. 12:00of the Ethereum ecosystem, right? So, I
388. 12:01mean, so there is ETH is used as
389. 12:04collateral. ETH is staked to secure the
390. 12:06network. It's an extremely important
391. 12:07asset and applications. So, I think two
392. 12:09things. First, ETH is the best
393. 12:11performing asset of the last quarter.
394. 12:13ETH has outperformed Bitcoin
395. 12:14tremendously. I think that we've been We
396. 12:17have to separate the macro side from the
397. 12:18actual asset fundamental side. So, we've
398. 12:20had two, three years where AI has taken
399. 12:23every single ounce of capital from the
400. 12:26entire global economy and that's where
401. 12:28all capital's been deployed. So, so
402. 12:29blockchain crypto has sort of been on
403. 12:31the sidelines while we've been building
404. 12:33a lot, right? I mean, adoption's only
405. 12:35gotten better, but um but you haven't
406. 12:36seen new capital allocated into the
407. 12:38blockchain space or the crypto space
408. 12:41outside of the existing crypto
409. 12:42ecosystem. It's all gone to AI. I think
410. 12:44that's going to flip. Tom really thinks
411. 12:45it's going to flip. I think that uh the
412. 12:47AI trade has been unbelievable, but now
413. 12:49there's a lot of new wealth created and
414. 12:51if blockchains are the neutral
415. 12:53infrastructure that AI agents and the
416. 12:55financial industry is going to use,
417. 12:56you're going to see capital flow back
418. 12:57in. So, first off, I think we're going
419. 12:59to see a tidal wave of capital coming
420. 13:01into the blockchain ecosystem ASAP.
421. 13:03Second thing is, we finally have
422. 13:04regulatory clarity on all fronts. Um
423. 13:07genius was last year so stablecoins are
424. 13:08allowed. Even without clarity, the SEC
425. 13:10and the CFTC have given a green light to
426. 13:12a lot of innovation um in the US on
427. 13:15blockchains. That's going to bring a lot
428. 13:16of capital, too. And then third, I think
429. 13:18that people will actually start
430. 13:19allocating to to different digital
431. 13:22assets as part of portfolios. Again,
432. 13:24that's it's that's starting at basically
433. 13:26zero. I mean, crypto's been a very very
434. 13:28circular economy where capital just
435. 13:29rotates from one asset to another, from
436. 13:32Solana to Zcash to Near to something
437. 13:34like that's all existing capital. The
438. 13:36new capital coming in is going to flow
439. 13:38to Bitcoin and ETH. And and so as that
440. 13:41becomes an allocation and it becomes a
441. 13:43global allocation for global portfolios,
442. 13:45that's how you get these numbers like
443. 13:47$60,000 ETH because if you're playing
444. 13:49for store value, that's in the trillions
445. 13:51and so that becomes kind of a call
446. 13:53option. So that that's that's where I
447. 13:55think we'll see the real adoption.
448. 13:56First, fundamental, second, regulatory,
449. 13:58and then finally, last but not least,
450. 14:01it'll be, okay, well, the underlying
451. 14:03asset, the productive money of this
452. 14:04whole ecosystem is going to be ETH. So
453. 14:06let's have some percentage of our
454. 14:08portfolio in it. Multiply that by every
455. 14:10human on the planet and it becomes quite
456. 14:11substantial.
457. 14:12>> Final question here for you for today.
458. 14:14What is the one thing that you think is
459. 14:16coming for Ethereum no one's really
460. 14:18talking about yet, but you think could
461. 14:20be absolutely huge over the next maybe
462. 14:21one or two years?
463. 14:23>> Over the next one or two year I mean I
464. 14:25think the thing that people need to zoom
465. 14:27out for is that world computer vision is
466. 14:29where Ethereum is the financial internet
467. 14:31and the TAM of that is is a whole new
468. 14:33global economy. But in the next one or
469. 14:35two years, I think it's ZK-based
470. 14:37privacy. And I think that is No one
471. 14:39talks about it because because on Wall
472. 14:41Street and institutions, it's assumed
473. 14:43that transactions and assets will all be
474. 14:45private because that's how the system is
475. 14:47today. So it's table stakes. And then
476. 14:49for the blockchain ecosystem,
477. 14:50blockchains have not solved for it at
478. 14:52scale yet. So that's why you see bank
479. 14:55private permission chains currently in
480. 14:58in in the running because they have
481. 15:00privacy. I think Ethereum has been so
482. 15:02far ahead on the ZK roadmap and has
483. 15:04innovated so many different ways on ZK.
484. 15:06I think ZK is as exciting of a
485. 15:08technology as AI. I think it actually
486. 15:10complements AI quite nicely um across a
487. 15:13[clears throat] bunch of use cases.
488. 15:14Privacy is the biggest use case. So I
489. 15:15think once you start to see privacy
490. 15:17universally programmable on a public
491. 15:20chain like Ethereum, that's when it gets
492. 15:22really cool. That's when you see a mass
493. 15:24mass migration of assets on chain, and
494. 15:26we're going to be facilitating a bunch
495. 15:28of that, too. So, I mean, that's that's
496. 15:29the use case that that I think will come
497. 15:31much faster than people think, and
498. 15:33that's what will unlock capital flows
499. 15:35and and real commerce, and yeah, privacy
500. 15:38on public chains, HTTPS on HTTP, and
501. 15:41that's going to be a fun moment to see.
502. 15:42>> Zcash bros, watch out. Ethereum's coming
503. 15:44for you.
504. 15:46>> [laughter]
505. 15:47>> Oh, it's fantastic. It's true though,
506. 15:48it's true. But the this one thing I've
507. 15:50said about Zcash is that all you know,
508. 15:52Ethereum's bringing out privacy. Where's
509. 15:54where's the use case for Zcash? But
510. 15:55that's a whole other conversation for
511. 15:57another day. But back, I appreciate your
512. 15:59time. It's been a super interesting
513. 16:00conversation, so I hope everybody in the
514. 16:02chat has enjoyed it, and thank you so
515. 16:04much for coming on today and sharing
516. 16:06your insights with us, you know,
517. 16:07straight from Wall Street to everybody
518. 16:09here at the audience. So, it's
519. 16:10absolutely appreciate it. Thank you so
520. 16:11much.
521. 16:12>> Thanks again for having me. It was fun.
522. 16:13>> Every week, 100,000 people get the trade
523. 16:15idea before the crowd does. You could be
524. 16:17one of those people for free, or you
525. 16:19could find out after the move's
526. 16:20happened, after it's already played out.
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