Editor | Wu Talks about Blockchain
This episode of Good Game Podcast revolves around the latest trends in the crypto market, exploring the integration of AI and cryptocurrency, the rise of tokenization as a market strategy, and Solana's leading position in the ecosystem. The guests analyzed the reasons for the recent market downturn, the long-term impact of the Trump administration's favorable policies (such as the Strategic Bitcoin Reserve SBR plan) on the market, and the competitive relationship between Bitcoin and gold. In addition, the differences between Base and Solana in terms of user portraits, culture, and products, Coinbase's challenges in market strategy, and how memecoin and application tokens have become new tools for user growth were discussed. Finally, the Layer 1 competition landscape was looked forward to, and the role of AI in future startups was explored, emphasizing that AI and encryption technology will gradually be integrated into products rather than independent tracks.
Recent performance and sentiment of the cryptocurrency market
Imran: Obviously a lot has happened in the last few weeks. I remember the last podcast we did we were talking about Trump and the mood we were in. And the one before that, we felt like the tone we heard in the podcast, the atmosphere in the AI space was a little bit uninspired, and we could feel that mood in the podcast. I don't know if it was the market or the cryptocurrency space or the atmosphere on Twitter at the time, I think it was probably just the mood we were in at the time. And then in the past month, if you look at the market, it has basically continued to fall. So I think, although we didn't say it explicitly, our feelings were consistent with the market's performance.
Qiao: After I tweeted to express my market views, everyone should know what I think.
Imran: Yeah, I think if we talk about AI, there are probably some really good projects, which we mentioned before. But I feel like this is a general phenomenon overall, right? In my opinion, we went through TRUMP coin and MELANIA coin before, and I feel like the market is digesting that wave of liquidity now. At the same time, there is all the bullish news from Trump. I don't know how the market will go in the short term, but in the medium to long term, it is still bullish.
Qiao: What do you think? I think this is just a sideways market that will last for a while. We've had a lot of good news in the last two weeks, the executive order supporting cryptocurrencies, the repeal of the SAB Act, the stablecoin bill, David Sacks mentioning cryptocurrencies in his speech, and so on. There's a lot of good news, but the market hasn't reacted. That's bad, the market has reacted badly to the news. But at the same time, I think the economy is in good shape.
Strategic Bitcoin Reserve (SBR) may advance, Bitcoin is seriously undervalued
Qiao: Here’s someone I follow very closely on Bitcoin. He just tweeted yesterday, right after everything happened. He said “the market is totally misled”. Today’s press conference, the Strategic Bitcoin Reserve (SBR) is happening. It’s DJT’s top priority. They are convening top officials from across the country to come up with a plan in the next 80 days. Half of the working group are Bitcoin holders. SBR is happening. If SBR does happen in the next 80 days, then Bitcoin is currently severely undervalued and it cannot be priced.
Just like the Bitcoin ETF situation. Yes, when the Bitcoin ETF happened, everyone said it was bearish, sell the info, and so on. But what actually happened was that the Bitcoin ETF opened the door for financial buyers of Bitcoin. The SBR situation is exactly the same. If we get the SBR, we will have governments, not just the US government, but state governments and governments around the world, who will all try to move around the US government, or at least try to keep up. So we will have a new group of net buyers of Bitcoin, and that cannot be priced in.
Imran: You also need to consider the sovereign fund that the Trump administration created. It's run by Lutnick from Cantor Fitzgerald, who is also a heavy investor in cryptocurrencies, especially Bitcoin. If he's involved, he leads the sovereign fund. David Sacks also mentioned it, saying, "We can't guarantee it, but sovereign funds may hold cryptocurrencies." It's part of their strategy.
So it seems to me that the market is very confused right now. On the one hand, we have this huge memecoin bubble, and on the other hand, Bitcoin is at some all-time high, like $108,000. At the same time, you have all this extremely bullish news, and the market doesn't seem to know how to digest all of this information.
Qiao: I don't think the market is necessarily confused. I think the market has just priced in a lot of good news, except for SBR. So if SBR happens, we will go up a lot. But until then, I think it will be a sideways market for a while.
Imran: I mean, this is going to happen in 80 days, right? They are going to give us news in 80 days. So this sideways market is going to need to be resolved pretty quickly in my opinion.
Qiao: For those who need more optimism, Standard Chartered Bank, an $87 billion asset manager, said Bitcoin could hit $500,000 before President Trump leaves office. What do you think? $500,000?
Imran: That’s crazy.
Qiao: $500,000, almost more than half of gold. In fact, if Bitcoin reaches $500,000, I wouldn’t be surprised if gold falls a little. This means that funds may flow from gold to Bitcoin.
The uncertainty brought by Trump administration policies to the cryptocurrency world
Imran: Have you seen gold today or yesterday? It's hitting new all-time highs. It's doing really well, what do you think is driving it? Do you think it's just because of the huge uncertainty around tariffs around the world?
Qiao: It's a huge uncertainty about Trump because Trump 1.0 was basically complete chaos, with trade disputes with everyone, including its allies. It's a hedge against chaos and also a hedge against the fact that the United States has so much debt.
Imran: And there is huge volatility in all currencies. So, you better take the risk and invest in gold now. I see the Canadian dollar being crushed by tariffs.
Qiao: Yes. By the way, I am very surprised at the speed at which the government is moving right now, especially those… It’s crazy.
Imran: I did some back-of-the-envelope calculations, and they say they're able to save about $1 trillion a year in deficit. So right now we're running a $2 trillion deficit a year. If you can save $1 trillion, then in the long run, the nation's deficit is probably going to be reduced over time, right? That has huge implications for people in terms of interest rates, inflation, and so on. And that's not even taking into account the involvement of the Fed.
Qiao: The Fed may be rethinking their strategy because of all these influences from the government. This will change the speed at which they cut interest rates.
Imran: I would assume that they will do it sooner rather than later, that is my current view. Or will they take longer to balance the rate cuts? If there is a deflationary mechanism, will they just wait and see?
Qiao: I haven’t thought deeply about this question. I don’t have an opinion.
Imran: I'm very interested in how they do this. Trump sent a message a few days ago. At the beginning, he was talking about Powell. He said, "Powell needs to cut rates, I don't care, he needs to cut rates." Then a few days ago, he said, "I'm glad Powell didn't cut rates, I respect his decision very much." It's an interesting turn. I don't know how to interpret this, but it's also very interesting.
Qiao: Reducing government spending in the short term is deflationary because you're actually taking something out of the economy. Government spending is part of the economy, like a one-to-one relationship in macroeconomics. But tariffs are inflationary. They suspended the tariffs. But if they reinstate the tariffs, that's inflationary.
Imran: I think this is Trump's game. He did this in 2017 as well. He forced all the parties to sit down and renegotiate. To him, it's just news, right? Like he got 20,000 law enforcement officers from Mexico to monitor the border, which, in theory, will reduce the drugs and immigration coming into the market. And 10,000 from Canada. That's the Washington border. So in terms of illegal drugs, and so on. I saw on the news that a lot of the cartels have reorganized in Canada because Canada has not done a good job of stopping the flow of drugs into the country. So those two news items, I think, are really good for the fight against drugs in the United States. So I think it's just a trade issue. I think it's just him wanting to make a deal. China doesn't want to make a deal. So he stopped the flow of all U.S. mail.
So I think he's going to force them to do what he wants, that's how I look at it. So I think it's just a short-term headline risk, but in the long run, he's going to get what he wants.
Qiao: ETH rose 5% after Eric Trump tweeted.
Imran: It did go up, but it was around $2,100 or something like that. But anyway, in other news, did you hear anybody tweet that Justin Sun was affected?
Imran：Yes, there are rumors that Justin Sun’s leveraged ETH position was liquidated. This may be one of the reasons for the price drop.
Qiao: That could be him. We're not sure yet. But now he's trying to launch some kind of decentralized stablecoin as a way to recover his losses. This is just a rumor on Twitter and it's not confirmed, but it's interesting to see what's going on.
The future of AI and cryptocurrency: integrating into the basic functions of many products rather than being an independent track
Qiao: Last time we talked about DeepSeek...
Imran: Interestingly, we talked about this when DeepSeek was first launched, which was a few months ago. We talked about its impact, but didn't go into the recent news, which is their so-called "offer" for $6 million. Yes, but everyone is telling me a different story. Like David Sacks said they couldn't have done it with just $6 million. They have a lot of H100s, etc. I don't know who to believe.
Qiao: But anyway, the point is that inference and training will continue to become cheaper and cheaper. This is good news for the application layer.
Imran: For consumers, yes, in the field of AI.
Qiao: Obviously, there is a parallel story in the cryptocurrency space that we have been discussing. We have discussed this before.
Imran: You tweeted about this.
Qiao: Well, we have been building the argument that crypto is also moving from the infrastructure to the application layer because infrastructure is becoming cheaper. This is happening in both AI and crypto.
Imran: Yes, indeed. Even among the founders in the crypto space, I feel like to some extent, I was in a discussion yesterday with a few founders, but a lot of them are working in the AI space, and they were asking, where should we build in AI? Most of them said they are primarily focused on the consumer side. Of course, there are some exceptions on the infrastructure side, but I feel like there is a lot of competition on the infrastructure side.
Qiao: I just looked at the applications for our next batch of startups, and about 30% of the companies use AI in their products or in some way. But no company calls itself an AI startup or a cryptocurrency startup. So, to me, it looks like many use cases for AI are now cheap enough for consumers and are being widely adopted into products.
Imran: I think in the future, every startup will use crypto and AI in some form. Yeah, so they could be in any form. So they won't call themselves crypto startups or AI startups. I think they will just be "startups," and that will open up the total addressable market (TAM) of what you can build in crypto or AI, and the opportunities that exist there. In fact, as I said, some of our audience may not know that we are backing some startups that are purely AI, they are not in the crypto space. They are purely AI.
Qiao: I looked at 10 applications this morning, and about 7 or 8 of them were pure AI.
Imran: So what do you think is driving this? Is it, obviously, that could be part of our program. So, I looked at one of the applications the other day and this guy said, yeah, it's an AI startup, but I can see some applications for cryptocurrency and I want to explore that. But he knew nothing about cryptocurrency, he just wanted to explore it, which I thought was interesting. I think that adds to our thesis that every startup will have cryptocurrency and AI as a feature of their product.
Qiao: I feel like over the last two years, people have made a lot of arguments about AI cryptocurrency, trying to imagine what AI cryptocurrency would look like. A lot of these products feel far-fetched. They're trying to train AI with cryptocurrency, or trying to solve some cryptocurrency problem, and it feels far-fetched. I think what's going to happen is that people will build products that use some LLM (large language model) as a feature, and cryptocurrency as another feature. It's like they're very natural, and both the cryptocurrency and the AI are hidden behind the scenes, and the end user doesn't even know what's going on. The user doesn't need to know that this is an AI product, yes, or this is a cryptocurrency product.
Imran: You bring up a really interesting point, which is Peter Thiel, I listened to one of his podcasts recently, and he talked about how people thought about AI before, there were two views. One view was that AI was going to be definitive, and everybody thought that was the future of AI. And then there was this other view, which was irrelevant to day-to-day use, which was that AI was going to completely replace all of our jobs. But no one really thought about the middle path, which was that AI could improve our lives in every aspect of our daily lives and improve the way we do business. He didn't see that. So, like you said, AI and crypto, people will always have this worldview, but at the end of the day, they're just a feature that's part of our core product that improves the user experience 10 times. That's what I'm starting to see, there are no so-called cryptocurrency startups, there are no AI startups. They just become a way to make you more productive better or in some way. So, I think people always have this polarized way of thinking, but the truth is probably somewhere in between.
Vine and JellyJelly: A new paradigm for tokens as a user acquisition tool
Qiao: What else happened in the past two weeks?
Imran: The VINE token released by the founder of Vine.
Qiao: Oh, yes, VINE, JellyJelly.
Imran: VINE and JellyJelly are two of the most interesting things that continue to demonstrate the power of tokenization, which is going to be a huge opportunity for crypto. Application tokens, which I would call memecoins, and real world asset (RWA) tokens are all sub-areas of tokens. What are your thoughts on these?
I'll tell you the story. After the Trump coin was launched, people started looking at tokenization as an interesting market strategy. The former founder of Vine, sold it to Twitter for $30 million in around 2018. At the time, it was probably one of the most popular video apps in the world. Jack Dorsey took it over and shut it down. Obviously, he's a staunch Bitcoin maximalist and he wanted to build something different. But it turns out that given the discussion with TikTok and the possibility of TikTok falling into the wrong hands, there was an opportunity for another competitor to come in and compete for this business. So Musk had been tweeting for years about whether Vine should be brought back, and every few months he would call a vote. Then, Rus (the founder of Vine) went ahead and launched a token and said let's bring Vine back. If you look at the relevant documents, 5% of the Vine token supply will be allocated to Twitter. If Vine successfully returns, it will have more than 140,000-150,000 token holders. He is using memes and meme energy from the day of launch to rekindle people's interest in Vine. I think this is a very interesting use case. If you look at the private Vine groups on Twitter, you're starting to see people painting Vine on the streets around the world. People are taking pictures or printing out the Vine logo and putting it on their walls, and it's turning into this raw energy that's getting people interested in Vine again. So I think that's a really interesting use case. So I'd like to hear your thoughts on that.
Qiao: How much supply does he have now?
Imran: 5%, he said 5% of all supply will be donated to X. Technically, he actually has nothing.
Qiao: This means 95% is in circulation.
Imran: Yes. He launched it on Pump Fun.
Qiao: But how did you get 5%? Sniping?
Imran: I bought it myself.
Qiao: There is definitely something here, I don’t know how to look at it, but I think there is definitely something here.
Imran: I agree. It’s interesting because after this happened, I was contacted by two startups who said, “Hey, look, we don’t have a protocol, we’re not a SaaS business, but we’re in it, and I’m curious if we can simply use tokens as a go-to-market strategy?” I said, “Sure, why not?”
Another one was building a pure AI startup, AI Agent. He said, "Why not attach a token to it to fight my competitors? I don't have a token and this can help me get more users". So the insight that I took away from that is that tokens, or what I call app tokens, are essentially advertising fees. As more and more people become interested in it, based on the identity of the founder or whatever, you can use it as a way to acquire users or get some kind of market share, right? Just like advertising fees equal virality, memecoin is the token, app tokens equal virality, that's the way I see it. And maybe some kind of acquisition channel. Jelly did something similar.
Qiao: Things like this are not going to happen under Biden. By the way, I'm certainly not a legal expert, but there are definitely securities law risks, right?
Imran: I don’t know. I mean, as long as it’s a token that’s not tied to any future so-called equity or revenue, then…
Qiao: But I mean, at least, the perceived risk is much higher than it was under Biden.
Imran: Definitely. So, I think all startups will use tokens as a way to fund themselves in the future, or I see them using it as a way to acquire users. I think that’s a very likely future. I’ve had arguments with a lot of people on Twitter about why that’s not the case. I won’t name names, but you know.
Qiao: I know who you are talking about.
Imran: Yeah. He would say, “You can’t do that!” and then all the Ethereum Supremacists liked his tweets. I blocked him and blocked all the Ethereum Supremacists. Our worlds are very different and I understand that’s hard to digest and obviously you’re not happy with it. But that’s innovation.
Qiao: It’s similar with Jelly, right? What percentage of the supply do they own?
Imran: I don’t know how much they have. I didn’t buy that, so I have no clue. It happened so fast.
Qiao: Every time they launched a token, I was sleeping. Like they always launched the token at 9 p.m. I had a rule of turning off all screens two hours before bed. Yeah, I know. It was like that every time. Like Trump at 9, Vine at 9, Jelly at 9, every time. I probably missed out on an 8-figure fortune.
Imran: I kept texting you: Bro check this out! Hey! But no reply till 5am in the morning. But anyway, now is a good time to buy Trumpcoin or Jelly or any of these tokens.
Imran: But I mean, these are just experiments that are happening and I think it will get better over time. It will improve.
Qiao: There is indeed a change in consumer behavior. People now think it is normal to launch tokens. Since Trumpcoin, it is normal for anyone to launch a token.
Imran: Yes. Also, recently we launched Clout and Tribe, which are social tokens. We just talked about startup and app tokens, and now we are talking about Clout and Tribe. I think creator tokens are similar, the argument is that attention is cheap, you can get attention easily, but will people pay for social capital? Can people use social capital to show whether you really have influence, rather than cheap attention.
So we're running two very different experiments. One that's easier to use, more user-friendly, very easy for anyone to buy and hold. And the other one is more crypto-native, where you can interact with creators, you can do live streaming and interact with your audience, like a subscription model. So we're running these two different experiences right now.
Cryptocurrency is actually an attention asset
Qiao: Many tokens initially received a lot of attention, like they were hyped, but then gradually lost their popularity. I don’t know what we can learn from this.
Richard: It's very strange. I think we're going through a paradigm shift in how we think about assets. This is something we've talked about over and over again, that we're moving from a world of countable assets to a world of uncountable assets. In the traditional world, there are probably 30,000 US stocks, and maybe a few other bonds and other financial instruments. In the crypto and DeFi space, we've basically introduced uncountable tokens. What that means is that previously it was very difficult to launch a token with meaningful liquidity, and the emergence of Pump Fun and bonding curves has basically opened the floodgates for countless tokens to be launched. What that means is that instead of focusing on long-term speculation on a single asset, there will be countless moments like this where different assets will continue to emerge. So instead of thinking about how to trade a single asset for the long term, you think about how to rotate between different assets. I think that applications like Vector stand out in this context because there's always new content, new tokens being shared, and you can keep up with the trends.
Imran: I've tweeted about this before, and it's a very interesting phenomenon in itself to see people entering the crypto space through tokens. It can almost be seen as a marketing strategy to attract attention and acquire users through tokens. Take VINE, as we mentioned before, the founders of Vine launched a token to rekindle people's interest in Vine. It has become quite viral. There are more than 140,000-150,000 token holders around the world. There are also people graffitiing the Vine logo on streets around the world, and they are even posting pictures of Vine on different streets in New York. So, this actually created a phenomenon and rekindled people's interest in Vine. On the other hand, Jelly saw this and wanted to do something similar. But I think the way they launched it might not be the best choice.
Qiao: Wait, what do you mean? What do you think is wrong with the way they launched it? How do you think it should be improved?
Imran: I mean, you can’t fix a Christmas tree to solve the problem because when everyone rushes into the same project at the same time, you create this hype cycle, and it usually peaks in a matter of minutes. You have very little control over that hype. And you have to get away from the overly speculative crowd and try to build something that’s really organic. I don’t know how to solve this problem, but it’s part of the problem.
Another problem is snipers, who usually eat up 5% to 10% of the tokens in the first few minutes after the project launches. This happens with all projects. I've experienced this with Clout. So when you have all these problems at the same time, plus someone with a reputation like the founder of Venmo launching Jelly tokens, this is going to happen naturally. But you have to find a completely different way to deal with this. That's one aspect. The other side of it is that the people who haven't sold yet, the people who see the vision, end up staying, and then, they hold for the long term. But that's another issue.
But in the end, I think what’s happening is that you can get immediate attention and market share by launching an app with a token, rather than having credibility through other means like doing PR stunts, writing articles, or having venture capital firms back you. You just launch a token and get immediate attention. Then you have to leverage that to build a community and then move forward.
Finally, I just saw Vine in the early days, and I initially thought it was a scam. I thought you were hacked. It was like a $1 million dollar thing. And then, but this is Rus, right? He recorded a video of himself and so on, verifying that it was him. From there, the community took over. There's a Vine enthusiast group of over 8,000 people who talk about Vine all day long. This is not the CTO, he's just building a good community.
Qiao: Are they talking about it on Twitter or somewhere else?
Imran: On Twitter, you can create Twitter groups, or like Twitter groups. I was part of this Vine group and my entire timeline was about Vine. So, this phenomenon, I think what Rus is doing, and maybe what the founders of Venmo are doing, they are all ultimately using tokens as a marketing strategy. I think it's an app marketing token, that's it. That to me is a very interesting future direction. Well, I think the paradigm we're entering is that we're going to tokenize the world. If that's fair, I just sent you a tweet...
Qiao: They are tokenizing stocks and bonds.
Imran: They are building a platform that allows anyone to tokenize stocks, bonds, and ETFs on the blockchain. So, with the Trump administration coming to power, hyper-tokenization is on the agenda.
Iljia: Yeah, if you go back to the original blog posts and articles about cryptocurrency, they talked about basically two things. They talked about this idea that you can now have decentralized things that weren’t possible before.
And then they talk about this idea that tokens can be used to bootstrap the network. But remember, the network is not just about liquidity, it's also about attention. When you start out, you have nothing, and you're trying to power a two-sided market where on one side, like for Vector, you have traders, and on the other side you have investors.
Tokens are a great way to incentivize a cold start of a network because all of a sudden you have momentum, people start paying attention, they start caring, a lot of things start happening. If you build a product, people will stay. I think a really interesting arbitrage happening in crypto right now is that for the last four years, because of the last administration, everyone has been forced to believe that tokens are securities and the only thing that tokens are useful for is as assets. We've almost completely forgotten that actually tokens were not originally conceived that way. The whole point is not to make them securities. The whole point is to make them the mechanism to bootstrap the network into existence. I think the smart founders see that now and they're going to take full advantage of this idea. And 2 to 3 years from now, everyone will realize that and tokens will be everywhere.
Richard: Yeah, I think there are almost two kinds of tokenization happening right now. For a long time, people thought that the only things you could tokenize were financial instruments. It could be a representation of equity, right? It could be a form of ownership like rights to future cash flows, which might be more like a security. It could be a tokenized real world asset (RWA). So it's still a representation of some kind of asset or a commodity in the real world.
And then now we're seeing things that are actually tokenized that are meme-ized, where the value is driven primarily by supply and demand, where people believe that this thing should have a certain price, and I'm going to buy it because I believe other people will buy it. One thing I wonder is, how do these meme-ized attention assets perform between cycles? Because I think in a bull market, it makes total sense. There's a lot of bubbles, there's a lot of capital flowing around, and people want to spend that capital, speculate, and hope to make a profit. And I do wonder if attention assets can last through multiple cycles in this situation, if they can survive a bear market, and if this behavior ends up being a dominant behavior, where people do this for fun or to try to make a profit.
Qiao: I think attention assets have survived multiple cycles. In the first cycle, it was colored coins on Bitcoin. Memecoins are not new. They've been around for about 10 years. And then in the last cycle, we had NFTs. These are attention assets to a large extent. Now we have memecoins, but we just give these things different names, but fundamentally, they are the same thing, just in different forms.
In the last cycle, if we had large-scale blockchains and were cheap enough, the dominant form of speculation and user on-chain would be memecoin, not NFT. So, I think memecoin will continue to exist in the next cycle unless we find a new form of token to represent attention.
Richard: Obviously, we're very bullish on attention assets. That's how we built Vector. We saw trends in this cycle from NFTs to memecoins. If the last cycle was the new, this cycle is the princess cycle. So, I guess maybe the point here is that attention assets are fairly reflective and they're probably more dependent on the market. In a bull market, they do very well. In a bear market, they might get cut more, compared to RWAs, which represent financial assets.
Iljia: The point is, people still think of crypto as a financial industry. In a way, it is, but it’s much more than that. Crypto is actually an attention industry. It’s basically the new form of advertising.
And I think most people don't really understand that yet. And then you can create a lot of things with it, not just creating assets and prices. To me, I think the two really exciting products that can be built in crypto are stablecoin products built for the developing world, which is super exciting because it actually solves real problems, and then you have these crazy long-tail products, like these attention assets that have a lifespan of 13 seconds. I think everything in between is pretty boring. Like tokenizing equity on a chain, I don't think that's going to be much of an improvement. The most interesting, the biggest companies, in my opinion, are going to be built on these two ends of the barbell.
Startups should build products on Solana instead of Ethereum
Qiao: I do an experiment every year where I send out a tweet saying "Solana is the ultimate form of blockchain" just to see the reaction. The reaction this year was much better than last year. Because last year I was actually attacked by every Ethereum advocate. But this year, many of them broke down two weeks ago. So, the reaction this year was much better.
Imran: Much better. Okay, let's talk about this because I think this is something we just talked about earlier today. Alliance is, obviously, an unbiased startup accelerator. We try to invest in, we have a portfolio of, probably, 100 different layer 1 blockchains. That also includes layer 2 blockchains. And then you also have some of the new blockchains that are being launched, like MegaETH, Monad, Abstract, Story Protocol, Hyperliquid. So, they might help Eclipse Atlas, Celestia, et cetera.
So, you have all these startups, layer 1 and layer 2 blockchains. If you look at the quality of the products that these startups are building, we read thousands of applications. The quality of these startups is very different than the quality of startups that we've seen on Ethereum and Solana. What's going on? I mean, we have so many layer 1 blockchains launching.
Imran: I'm even tired of tracking and following this stuff. Yes, Blast had a so-called successful launch, but the feeling among users was that they felt ripped off or not getting enough support. Yes, in terms of user feedback.
Imran: On the other hand, I was surprised when Abstract was launched, it performed quite well, but people still didn't like it. They were more focused on the consumer side and so on. So now a lot of people are leaving Abstract. I think this continuous launch is becoming too complicated for users. So, I see less and less liquidity flowing to these new Layer 1 blockchains, that's my current view.
Qiao: Well, let's talk about this. This is important, for investors and founders. Because we work in the early stages of startups, we see information that other areas don't see because we are at the forefront. A year ago, I would have been neutral on the leading Ethereum Layer 2 and Solana. But after seeing all these startups launch products on both ecosystems, it's very clear now that you have to build on Solana. Because, I have seen too many startups launch products on Solana and launch products on Ethereum Layer 2, and the latter has no traction, no users. And the magical thing is that on Solana, it just works. I have seen so many examples of this that at this point, it would be irresponsible if I didn't recommend founders to build on Solana. The evidence is so strong.
Imran: Some support for your point: Two Base supporters have switched to Solana, Alex Masmej and Salvino Armati, who are building Yapster. You are right that these same people who supported Base are now building Solana. So, why do you think this is?
Qiao: Because on Solana, you can get users more easily. In fact, it is very difficult for EVM developers to build on Solana. They need to learn all the tools. It may take at least one to two months to get familiar with Solana's tools, Rust, and everything around Solana. But even so, they think it is worth it. By the way, I say this as a holder of the Ethereum genesis block.
Imran: Did you sell it?
Qiao: I sold it last year, but I had held it for 10 years. Imagine holding an asset for 10 years and then it ends.
Differences in users, culture, and products between Base and Solana
Imran: Yeah, I think Base has the best strategy because it has distribution channels, and Jesse's strategy is, I want to help builders spread like a virus. I watched a lot of his podcasts and recordings, and you shared some with me. The concept makes a lot of sense. But the problem is that when people launch products on their chains, etc., they don't get a lot of users, they don't get a lot of liquidity.
I call this speculative liquidity, which is what many of these applications need. It seems that users on Solana are more willing to try new applications, while users on Base are not.
Qiao: When we say speculative, it doesn’t just mean that these are traders who want to use a trading app. It means that these users are very open to new things. They are willing to try new things.
Imran: Yeah, you’re right. So it almost seems like the user profiles on Base and Solana are very different.
Qiao: Yeah, they're very different. And we've been talking about this for two years. Like, but initially, a year ago, it was just a guess, right? We had a guess that the user profiles were different. But now, there's real empirical evidence that these two user groups are completely different.
Imran: Is it cultural because obviously, Base has Coinbase, which is more corporate.
Qiao: I think it’s a cultural factor, but also a product factor. I don’t think any EVM wallet can compare to Phantom.
Imran: Okay, so Phantom is now an EVM wallet?
Qiao: They have EVM wallets, but they are still Solana-first. Can you think of an EVM wallet that is as good as Phantom?
Imran: Maybe Rabby.
Qiao: But on EVM, it is so fragmented, and as a new user, there are too many wallets to choose from. This brings a great psychological burden to Solana. On Solana, there is currently only one.
Solana has created a winner-takes-all situation through technological advantages, network effects, and ecology
Imran: It seems like, I hate to say it, but right now Solana is a winner-take-all. I'm not saying, the battle is not over. The battle may go on for decades, but Hyperliquid is an emerging force that is rising. There are some interesting startups building on it. They have a good narrative right now, along with Aptos, and some other blockchains in their final form.
Qiao: Did you see that? To me, the final form is about four or five chains. So Solana is clearly ahead, far ahead of everyone else. In addition to Solana, there are Sui, Aptos, Monad. To me, these are all in the final form because they take full advantage of modern hardware and maximize throughput while ensuring sufficient decentralization.
Qiao: Okay. And then at the other extreme, actually, this is kind of in the middle, you have Ethereum, which is trying to maximize decentralization, World War III resistance, complete government resistance, 100%, 120% government resistance, but at the expense of a lot of scalability. So, that's at one extreme. And at the other extreme, you have MegaETH and Fogo, which are trying to centralize nodes, right?
At the other extreme, you have projects like MegaETH and Fogo that attempt to sacrifice decentralization in exchange for speed by centralizing nodes, specifically to support co-location of market makers. It may be more beneficial for market makers when they can co-locate with nodes located in centralized data centers. They would prefer to provide quotes in such a system rather than in a decentralized system like Solana. This view is reasonable, but unproven, as these chains are not in production yet. So, we will have to wait and see. I think there is a 10% to 20% chance that these chains will be a threat to Solana, but my base case is that Solana is currently the leading chain, and it has a very durable pattern in terms of users and throughput. By the way, Jump Trading has the best engineers in the world on Solana, and it is hard for me to imagine any team that can compete when it comes to high-throughput distributed systems. Jump is also the team behind Firedancer. So, Solana has the advantage in terms of users.
Imran: And DoubleZero, right?
Qiao: DoubleZero is also, it’s very similar to the HFT community and DNA, it’s all about having the fastest possible communication between nodes. That’s what HFT is good at. Hyperliquid, by the way, also comes from the HFT world. So does DeepSeek. There’s a pattern here. Even when Anatoly (founder of Solana) originally came up with the idea for Solana, he was thinking about putting NASDAQ on-chain. That was the use case he originally wanted to build.
Qiao: Interestingly, of all the centralized exchanges I've experienced, Nasdaq actually has the best technology. Compared to other exchanges like the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange (CME), Nasdaq has the fastest, lowest latency, most deterministic matching engine. Market makers like to trade on Nasdaq precisely because of this.
Imran: So, it's almost like Anatoly is looking for the hardest problem to solve, right? Can you build a market maker or exchange that's on-chain? If you can solve this problem on-chain, then you can solve anything. I think that's his thesis. That's why he's so focused on this use case, because ultimately, if you can solve this problem on-chain, then you can solve anything.
Imran: Unchain, DoubleZero, Firedancer, network effects, applications coming into our ecosystem, like the founder of Clout, who is also the founder of Monkey, one of the largest social applications in Web 2. He chose to build on Solana first. This is not something we told him. This is how it has always been.
Qiao: I was asked, what is the distribution of founders between Solana and EVM (Ethereum Virtual Machine)? For example, what is the ratio of founders of Solana to EVM? Another related question is, what is the distribution of the top 1% of talent? For the first question, I think it is about 50-50, that is, 50% of the founders choose Solana and 50% choose EVM. But when it comes to the top 1% of talent, I think the ratio is more like 75:25. Do you see a similar situation? Yes, I agree.
Imran: And, I think that's a moat for Solana, right? Because those founders who find product market fit will tell their friends and family to build on Solana because they found product market fit there. So, that structural moat will grow over time.
I also want to talk about Coinbase's strategy. I'm not trying to judge from the outside, obviously, we respect Coinbase. They are a pioneer in the cryptocurrency space, I respect Brian Armstrong, and I respect the entire executive team, including Jesse. But in my opinion, maybe Base is not the best strategic choice for Coinbase. I may be wrong, but I just want to make this point and you can refute me.
Qiao: I think Base should build its own Layer 1.
Imran: I mean, Layer 2, Layer 1, I think because Coinbase is politically biased towards Base, they are a large company with a lot of internal links, they are politically aligned with Base, anything related to Base assets. So, they are not very supportive of other assets outside of the ecosystem, right? It's not because they don't want to, it may be because of political and resource constraints, they are more inclined to support Base, but this makes them weak in Solana. Yeah, to the point that they don't support a lot of the latest memecoins, etc.
Going back to Coinbase and Base, I'm making this point, but it's flippant. I don't completely subscribe to this point. But I just wanted to make this point and get you thinking about it. Coinbase's focus on Base gave them a tunnel vision structurally, politically, to be so focused on Base that they forgot about everything that was going on, or they weren't paying attention to everything that was going on, and it was mostly happening on Solana. So, because of that, you have emerging platforms like Moonshot, and it gave Moonshot a perfect opportunity to bring regular people into Solana and then capitalize on the huge retail adoption of the Solana memecoin. So, Trump ended up making a deal with Moonshot to launch his token with Moonshot as a window to buy the token. So, Moonshot brought 400,000 to 500,000 new users on-chain, and those people ended up getting ripped off. Just kidding. But those 500,000 users could have come to Coinbase. So, I think Coinbase is losing the macro view that they once had. That's the disruption that I see happening.
Qiao: I actually talked about this on Ivan's podcast. I talked about the hidden but very intense competition that we're actually seeing between two camps. One camp is Coinbase, and the other camp is Jupiter, Meteora, Moonshot, Pump, Solana. What's happening is a bottom-up disruption because there are so many tokens being minted and traded on-chain that centralized exchanges can't list all of them. So, they're losing a lot of business to decentralized finance. We're witnessing real disruption. Finance will be disrupted in the same category just like finance was. The same is true for Binance. Look, I don't say this lightly. If you asked me two years ago if Coinbase would be disrupted, I would have said no, absolutely not. They are the largest and most powerful company in this space. But I think now they are being disrupted.
Imran: Well, memecoin is at a market cap of 40 billion, 30 billion fully diluted valuation (FDV), right? Purely on-chain. I think exchanges start supporting them in the middle stages, but like coordination of capital is easier on a global scale than on these micro exchanges. Yeah, I think people will move more to on-chain and less to exchanges. I agree with you, in fact, in the memecoin community, Binance is now seen as a negative sign because once tokens are listed on Binance, their prices go down.
Qiao: Especially pre-listing. Pre-listing is now a signal of the top.
Imran: Yes.
Qiao: And then you see the same data on the App Store, like in this cycle, Phantom and Moonshot are often ahead of Coinbase. Yes, this should tell you that ordinary people are going directly to the chain, not to decentralized exchanges.
Imran: Yeah, 100% agree. Of course, Coinbase still has a huge business, so they will have a structural moat from there.
Qiao: Did you just see Ari's FUD?
Imran: Yeah, Ari, the founder of Block Tower, talked about something. He didn't directly say what he knew unless you read it. There's something going on, and it's about people losing funds. Or Zach XBT talked about this, that over $150 million to $300 million is lost every year because of social engineering attacks.
Qiao: I don’t have inside information, I don’t know what the facts are. But he said that what happened inside Coinbase was worse than Choke Point 2.0. Yes, that’s a crazy statement because there aren’t many things worse than that. FTX is one, and maybe Terra.
Imran: That's crazy. I don't know. I trust Brian Armstrong and his team. So I don't know. And one of the interesting aspects that we haven't really discussed is that he went from being a hardcore researcher to, how should I put it, now a "Bronze Age Milady". Now he's starting to embrace this community, which is a good sign, or embracing this user behavior, because it reminds me of what we talked about before, which is that the users on Solana are very different from the users on Base. I think there is a key advantage in satisfying these users or embracing these users because these users are speculators. So, the fact that he turned to Milady and responded to Malaysia's content in different tweets shows that he is now embracing this community, embracing this user base. Is it too late? Or is it too early?
Qiao: It’s too late. It’s a pity. A year ago, I wouldn’t say it’s too late. But now, I think it’s too late.
Imran: I think it's too late. We'll see how this competition plays out. But right now, Solana is in the lead and the other competitors are not far behind, but I think they are losing market share. I think in terms of market share, the one I can talk about is Hyperliquid, at least from a Twitter perspective, there are a lot of credible founders who are building projects on Hyperliquid. So I think they are attracting all the EVM developers.
This spot should have been Blast. And, because Blast was so slow to announce. I tried the Blast Wallet app, and I don't even know what the app actually does. Like, it gives you 20% yield, which is great. But the thing is, this wallet has to have some practical use. You can't just launch a wallet with yield, right? You can't do anything on it. So that's my criticism of Blast Wallet. I think they lost to Hyperliquid. I think they should capture the EVM developer community, even if it's just focused on trading, I think that's fine. And then there's Sui, Aptos, their total locked volume reached an all-time high today, which is about 1.86 billion or 2 billion, or something like that. I'm not going to completely dismiss them, they do have something. So, that's how I think about the competitive landscape at the moment. Do you agree, or do you disagree?
Qiao: I am totally willing to change my mind. But right now, Solana is way ahead of everyone else. I’m not saying the race is over. But I think the probability of other Ethereum Layer 1s, or any other emerging Layer 1s, disrupting Solana is much less than 50%. Maybe only 10% to 20%.
Imran: And also, how Layer 1 is launched is really important. So far, probably only Berachain has done well, which has built a huge TBL base through Boyco, like 1.2 billion or some amazing number like that, which is great for the narrative. But I know that a lot of the recent Layer 1 launches, I'm not inspired by, they're not inspiring enough. I hope that changes over time. And, I think it all depends on the type of products that are built on these chains. But that's how I think about Layer 1 and Layer 2 right now.
