12 Big Crypto Predictions for 2026 | Ryan & David
TRANSCRIPT
Ryan Sean Adams:
[0:04] Bankless Nation it is the night before Christmas. Instead of doing our weekly roll-up yeah it is right yeah it's Christmas Eve right where
David Hoffman:
[0:10] We are recording is the christmas eve eve and it will be distributed to your
David Hoffman:
[0:14] podcast player christmas eve happy christmas eve thank you guys for spending it with us.
Ryan Sean Adams:
[0:18] Yeah that's right uh i guess you think you think are you picturing families all around uh the world just gathering around and listening to the bankless podcast and christmas
David Hoffman:
[0:26] Eve instead There's a fireplace, there's stockings, people are opening their stocking presents, and then there's Ryan and David talking about the 2026 predictions for crypto.
Ryan Sean Adams:
[0:36] All right, so here's what we're doing. Instead of our weekly roll-up, we wouldn't leave you without a weekly roll-up of some form. This is the adopted version because there wasn't a lot to cover in the week, and we're recording this a little bit early, so we'll get a weekly roll-up out next week. But this week, we're going to do something different.
David Hoffman:
[0:52] We'll do the weekly roll-up for this week because it's very, very quiet. Here are their two things. Aave Dao versus Aave Labs currently in a civil war. And Nick Carter is riling up all the Bitcoiners talking about quantum computing
David Hoffman:
[1:03] and how it's a threat. That was everything that happened this week.
Ryan Sean Adams:
[1:06] There you go. So with that done, we thought we would zoom out and focus on 2026. In fact, David, you brought us some juicy content to this episode. You did a meta-analysis of all of the different predictions. So rather than give you just our predictions... What we thought we would do is we would look at all of the predictions that people have made for crypto in 2026 and draw some analysis from them. Yeah.
David Hoffman:
[1:32] Seeing where they overlap, seeing where they diverge, and any interesting tidbits that I can find. And so let's see, how many did I do? Bitwise, Coinbase Institutional, Galaxy, Grayscale, CoinShares, Fidelity, the A16Z newsletter, and then a Pantera article in CoinDesk. These are the sources that I aggregated and then tried to find where predictions were congruent, maybe where they were not perfectly congruent, but directionally similar, and then also where there were divergences. And so that is the three categories of the different types of predictions from
David Hoffman:
[2:06] all of these sources that I have aggregated for us on the show today.
Ryan Sean Adams:
[2:10] Thanks for doing that so we don't have to read all these predictions. This is like a best of the predictions.
Ryan Sean Adams:
[2:15] All right. Now, before we get into these predictions, we know next year is going to be a big year for stable coins.
David Hoffman:
[2:21] That's one of the predictions.
Ryan Sean Adams:
[2:24] I don't care what anyone says. The prediction I'm making. And we should thank our friends. All right. Predictions, David. Give us the, you said highly congruous predictions.
David Hoffman:
[2:33] Are these the predictions that- You like that word? $10 word right there?
Ryan Sean Adams:
[2:36] That's a $10 word. All right. So these are the predictions that sound really similar across all of,
David Hoffman:
[2:41] Across your meta-analysis of all of the predictors. Census predictions, correct.
Ryan Sean Adams:
[2:45] What are these? Give us the first.
David Hoffman:
[2:47] Stable coins shift from just basic crypto plumbing to real payment rails i think we started to see the beginnings of this in crypto and maybe think people will think local that was what happened this year and i wouldn't say that's what happened this year they are not yet real payment rails we are still building out the infrastructure for real payment rails the broad strokes of everyone's prediction is that the real payment rails comes in 2026 uh and so here are some quotes from four of the different predictors. Galaxy, stable coins will overtake ACH in transaction volume.
Ryan Sean Adams:
[3:20] Oh, wow.
David Hoffman:
[3:21] Yeah, large. Coinbase is institutional. We expect to see growth in cross-border transaction settlement remittances and payroll platforms. Pretty broad. A16Z, stable coins will fundamentally shift to the foundational settlement layer of the internet. Very A16Z of them. Probably was written by Chris Dixon. And then lastly, Bitwise, perhaps the most specific and interesting prediction, stablecoins will be blamed for destabilizing an emerging market currency. At least one is what they are predicting, which is certainly just a byproduct of the growth of the growth of dollar payment rails on the internet.
Ryan Sean Adams:
[3:55] Stable coins being a killer app. And it seems to me on the consumer front, I'm not sure that many consumers will actually notice what's under the covers here. Yeah, I guess if you're in a regime that's being disrupted, that's being destabilized, you'll certainly notice that. But in the developed world, you may not know you're even using stable coins. It'll be fused into the experiences that we have with our crypto wallets. I mean, an example of this is just the Coinbase wallet, right? You could send money to anybody. under the covers. It's USDC. It's a stablecoin, but it feels just like Venmo. I mean, Venmo adopting stablecoins too. I guess it's all the same and you won't really feel the difference except transactions go faster, lower fees. Maybe we start to like pay for things in stablecoins as well and bypass Visa altogether. All of that seems to be poised on the horizon for 2026 and beyond.
David Hoffman:
[4:51] Yeah, for the average consumer who just still will not interface with stablecoins, they can still be benefited by stablecoins by platforms that use stablecoins in the back end. And they just show you, you know, the normal integers on the website, but it's stablecoins in the back end. But like not everyone's going to adopt this. Like, Ryan, do you think Wells Fargo is going to because whenever I try and send money when my Wells Fargo, it's either Zelle or Wire and a Wire cost me $25, which is an insane fee to charge me to send $25. Do you think, You will be able to integrate stablecoin payments in Wells Fargo? I don't think so.
Ryan Sean Adams:
[5:26] No, I think they'll just be disrupted by
David Hoffman:
[5:29] Other apps there. By literally anyone else who's a little bit more innovative. And they can use stablecoins to transfer payments, but it's just a send money button that actually works in that app.
Ryan Sean Adams:
[5:38] One thing I like about stablecoins too is for the person, the skeptic who is always like, oh, crypto hasn't done anything. Crypto has no use cases. You're always just like stablecoins. It's a congressional bill. Like it's going to trillions of dollars.
Ryan Sean Adams:
[5:50] It powers everything. That's going to be the future. All right, what's the second?
David Hoffman:
[5:53] Second, tokenization goes from just experimental pilots to totally scaled issuance and collateral. I wouldn't call BlackRock Biddle's fund a pilot. That's a real product. Yeah. But I think everything else is still kind of in pilot mode in 2025 and in 2026. The broad stroke of everyone's predictions is that tokenization is going to be a breakout year. That's a literal quote from CoinShares. Galaxy says, a major bank or broker will accept tokenized equities as collateral. Thank you. Grayscale says asset tokenization is at an inflection point and they expect rapid growth facilitated by regulatory clarity. And then Coinbase says 2026 might be the year that tokenization makes a similar jump into the mainstream as stablecoins did. Nearly $20 billion already tokenized could balloon to nearly $400 billion is the prediction from Coinbase. And so everyone else other than BlackRock, I'll say, is still kind of in a pilot program. Still kind of experimenting, still trying to figure out what to do about it. But the broad strokes is everyone's predictions. Like these become real products that aren't just like inert tokens that you own in your wallet, but become actual like collateral utility across different lenders or borrowers or apps.
Ryan Sean Adams:
[7:02] What's the benefit for the crypto native, do you think? Or like how will people feel this change? I guess equities go 24-7. I guess maybe there's a world where we start to be able to use these tokens inside of decentralized finance. I don't know that that's 2026. It seems like there's still some fusion of TradFi and DeFi that are necessary to make that happen. I guess you can start to bring your own assets to your wallet and you're not kind of locked into the siloed garden of your brokerage, which is a really nice feature of DeFi. It's sort of just bring your assets to the interface that you want and the interface loads them up. We've enjoyed that in DeFi from the beginning. Those are some of the benefits, maybe.
Ryan Sean Adams:
[7:44] Are there others that you think average crypto users will feel?
David Hoffman:
[7:48] I think the average crypto user and also DeFi will be probably one of the most slow parts of this sector. I think the DeFi plus tokenized assets, security tokens integration will take the most amount of time because it's the most complex. And we might need more white glove, like specific verticalized DeFi apps in order to make that work. Because like, can you really put a tokenized security inside of Aave? Like maybe the big ones, like the Biddle Fund. But after that, then you start to need to account for more legal complexities. And so, like, I think it's still going to be pretty white glove and pretty narrow at first. But then maybe 2027 is that is the year of security tokens in DeFi.
Ryan Sean Adams:
[8:30] A lot of these predictions that I'm reading, it feels like it's a best of fusion between sort of the best of DeFi and the best of TradFi. One thing I'll give TradFi fantastic credit for, as you mentioned, the Aave debate, is they got their investor rights down, right? That's a huge benefit of securities. I know what I'm buying, and I know the management team behind what I'm buying has a fiduciary responsibility and legal responsibility to return securities. Their upside to the asset that I'm purchasing. We don't have that in DeFi yet. So we get kind of a best of of that, but DeFi has all of these features that TradFi doesn't, and hopefully that starts to come together in 2026 around tokenization. All right, what else we got?
David Hoffman:
[9:14] Number three, ETFs. Bitwise predicts more than 100 crypto-linked ETFs to launch in the United States this year. Galaxy said more than 50 spot altcoin ETFs plus another 50 crypto ETFs. What they mean by that is like non-single coin, so like basket ETFs, basket of crypto assets launched in the United States. So pretty congruous between Bitwise and Galaxy, just the explosion of ETFs. Galaxy predicts US spot crypto ETF net inflows exceed 50 billion in 2026, and a major asset allocation platform adds Bitcoin to standard model portfolios, which effectively means that Bitcoin ETFs get embedded into model portfolios at strategic weights, like half a percent one percent five percent hopefully five percent uh and then coin shares four big u.s wire houses open solicited bitcoin etf allocations in discretionary portfolios so that's like morgan stanley merrill ubs wells fargo actually puts pushes bitcoin in certain portfolios and then also one major 401k provider allows bitcoin allocations via etfs that's like people like Fidelity or Vanguard or Principal or Empower. They're not doing that yet?
Ryan Sean Adams:
[10:26] You can't get a Bitcoin ETF inside of your Fidelity 401k? I don't know.
David Hoffman:
[10:33] I don't know.
Ryan Sean Adams:
[10:34] All right.
David Hoffman:
[10:35] I don't know. I don't pay attention to my 401k too much.
Ryan Sean Adams:
[10:38] All right. So more ETFs and more saturation of crypto ETFs into mainstream.
David Hoffman:
[10:43] Yes. Yes. Is any of this a surprise to you, Ryan? So far we've got stable coins, tokenization, and ETFs.
Ryan Sean Adams:
[10:50] Not at all. That's more of the same. Okay. But a continuation,
Ryan Sean Adams:
[10:53] right? Of course. How about number four? Is that going to surprise me?
David Hoffman:
[10:56] Market structure legislation is plausible and the base case for 2026. So CoinShares, this is really about the Clarity Act or a market structure bill.
Ryan Sean Adams:
[11:07] Yeah.
David Hoffman:
[11:08] I've heard controversy around this, more controversy than what this meta-analysis of predictions says. CoinShares just straight up predicts that Clarity Act will pass. Well, it's just going to pass. Grayscale didn't name the Clarity Act, but they say expects bipartisan market structure legislation to become law in 2026. Sure. Coinbase Institutional says clear regulation is a core reason 2026 could become transformative and changes how institutions handle strategy risk and compliance around crypto. But Bitwise then specifically ties upside scenarios for Ether and Solana to Clarity Act passing and doesn't actually give a statement about if they think it will pass.
Ryan Sean Adams:
[11:49] I'm 50-50. This is a political prediction. I'm still 50-50 on it. And I think that it would make sense to pass it. I'm wondering if we have used crypto in general and Trump, the Trump administration and anyone pro crypto has used its political capital for the genius bill and has, I guess, levered up its political capital in the form of like meme coins and Trump crypto businesses to an extent that it becomes a bipartisan issue. And Democrats really push back on it. They don't want crypto legislation or particularly they say, fine, you can have your Clarity Act legislation. But, you know, politicians, Trump can't continue his crypto businesses. And if that's a deal killer,
David Hoffman:
[12:36] That's like, yeah.
Ryan Sean Adams:
[12:37] This is why I'm 50 50. It would make sense for it to pass. But I'm not sure the politics of the moment will allow for that in 2026. It's right. It's an election year.
David Hoffman:
[12:47] How much are we really banking on the fact that Trump has to agree to not start any more crypto businesses? Like what, to what degree does clarity reside just on that nuance?
Ryan Sean Adams:
[12:58] I mean, this is a whole political calculation. Midterm year, right? These things. And Trump is definitely losing momentum, right? Republicans feel like they lost us in the key elections in 2025. So they're maybe vulnerable. We'll have to see. That's why this is 50-50 to me.
David Hoffman:
[13:16] All right. Next one. Prediction markets. Pretty similar predictions here. Basically, everyone predicted billion-dollar-plus weekly volumes on polymarket throughout 2026. Not every single week, obviously, but like over one point, who Galaxy says 1.5 billion in weekly trading volumes on Polymarket. Bitwise and Coinbase Institutional both expect billion dollar plus weekly volumes on Polymarket and prediction markets. And so that Polymarket is just the poster child here. But I think everyone's just saying that like prediction markets are just going to continue to like become a staple of institutional actual usage is one of the nuances there.
Ryan Sean Adams:
[13:57] It's more interesting if these same firms predicted that like four years ago or three years ago or even two years ago than it is now. This definitely feels like an extrapolation type of prediction.
David Hoffman:
[14:06] This is a trend. Are we doing safe predictions this year?
Ryan Sean Adams:
[14:09] It's all safe predictions? Is that what you found in your research?
David Hoffman:
[14:12] Well, okay. So what we're doing is we're seeing where everyone agrees.
Ryan Sean Adams:
[14:16] Oh, this is the congruous category.
David Hoffman:
[14:17] This is where everyone agrees. Yes. There's a little bit, there's some debate further down. So maybe this is the boring section. We started with the boring section.
Ryan Sean Adams:
[14:25] Let's get to the next. This is actually interesting in the congruous section, quantum. This is a growing risk, but not a threat in 2026. So what are the predictors saying?
David Hoffman:
[14:37] Yeah, so this is Grayscale, BlackRock, and a couple others, basically all saying that quantum is going to become a growing subject, but it's not a risk in 2026.
Ryan Sean Adams:
[14:46] We know it's not a risk in 2026. That's also a very safe prediction. But a growing threat, what does that mean? Like a perception type of threat? Like you talked earlier in this episode, if we were going to do a roll-up, it would have been the Nick Carter article on this and sort of raising the attention. And he's very concerned about it. I mean, some have called him an alarmist in kind of a negative way. What's the sense, do you think, from the predictors around the quantum concern? Or do they all agree that it's a real concern, just not in 2026?
David Hoffman:
[15:18] I think Nick Carter would say and many other, he would say about the people that he is fighting on Twitter that they are saying that it's flat out not a concern. like the concern just does not exist that.
Ryan Sean Adams:
[15:29] Makes me more concerned
David Hoffman:
[15:30] How about yes whether that's true or not like maybe maybe they're they are on the side of not a threat in 2026 and so nick carter is like pulling the fire alarm like right now saying hey we need to deal with this and everyone else that he's debating with is like this is not real this is not a real concern, maybe it's just a difference on time frames because nick carter part of his assumption is that you know bitcoin moves so slow that is turning a gigantic it moves so slow and.
Ryan Sean Adams:
[15:58] Also this is a pretty big upgrade like this is the biggest upgrade bitcoin has ever done and will ever do
David Hoffman:
[16:07] Yes and it is at the most most calcified and decentralized point in bitcoin's history with the most amount at stake and so it's just just such a monumental task and so nick carter's like we need to deal with this today. We need to start dealing with this today because it's going to take five plus years for Bitcoin to have consensus. And if we get to 2030, we'll be able to do it. Then the amount of risk is very different than it is in 2026. So like it could be like a difference of time frame opinions, but like people are calling Nick Carter like an alarmist who's trying to sell his VC bags.
Ryan Sean Adams:
[16:39] I think I'm interested in your take on this, right? Just like your court take, because I think it is a big freaking deal. Like it's a really big deal, particularly if Bitcoin developers don't come up with solutions for this now and don't admit that it's a something that they need to navigate. Because there is this myth that Bitcoin, they've started to almost like believe their own narrative a little too much, which is like Bitcoin literally is gold. Okay. Gold is this element, this base element. It's not software at all. I guess it's the main software that the universe created, right? Which it has no changes. There is no social layer. There is no Bitcoin core. There is no quantum threat against gold. Like there's no developer who can go tweak it and change it. Bitcoin is not that. It is a social consensus technology like gold. But at the end of the day, it is software and it is vulnerable to something like quantum on the horizon. And there is a path towards fixing that if they take it or partially fixing it. But they have to take it. And I think there has been a movement within Bitcoin for a long time to sort of, let's say, gaslight people. But just to propagate this myth that Bitcoin is completely ossified. It doesn't need any changes into the future.
David Hoffman:
[18:00] Bitcoin is bestowed upon humans by God, and therefore it is perfect. Yeah, like it's some product of nature.
Ryan Sean Adams:
[18:07] Anyway, I think that could come to bite them. It's been a strength from a store value narrative propagation perspective, right? And that's why Bitcoiners are so hardcore, and that's why it feels so pure, and it propagates so easily. But it's also a weakness when it comes to quantum. I think it's a serious, serious threat. And it also is like if you start undermining the store of value nature of Bitcoin, how does that propagate through the rest of crypto? The good and the bad. It's a major subject. And I don't know if 2026 is going to be the time we fully discuss it or if it will be put back on the back burner for another year or two. But I guess we'll see.
David Hoffman:
[18:48] Yeah. Yeah, I think there's enough momentum to have it. Like if you want to be a specialist in this subject, you'll be consistently supplied with information to talk about over the next year about quantum. Like it's worth noting, I think it's both your and my opinions that like if Bitcoin does nothing, then it. Divides by zero when quantum eventually comes. Like if it truly just sticks its head in the sand and it makes zero changes, eventually quantum will come and it will like ultimately end Bitcoin. Like you won't find it in the top 10 market cap assets because quantum actually destroys Bitcoin wholly and completely if Bitcoin does nothing. And so it has to do something and it can't wait too long. Like it needs to do something sooner than a decade.
Ryan Sean Adams:
[19:33] Yeah, I completely agree with that. All right. So that's the consensus type takes. What's the next category?
David Hoffman:
[19:40] Broad strokes, broad themes, not things that are like specifically in agreement with each other, but things that are like, you know, directionally correct. There's three here. CoinShares coined this concept of hybrid finance. We also have to talk about privacy and also sex to dex transitions, the bankless transition. We're going to talk about all these and more, but first we're going to talk to some of these fantastic sponsors that make this show possible. Hybrid finance. This is pretty Congruous with everyone. Hybrid finances concepts coined by coin shares, coined by coin shares, which I think maybe we'll see it stick. I don't know how similar this is to the DeFi mullet. It's not perfectly similar, but they kind of call it just an intersection of crypto ecosystems, public blockchains, smart contracts, apps, et cetera, and TradFi infrastructure. So tokenized markets, stable coins, tokenized funds, custody, basically putting conventional TradFi services on blockchains. And I would say that was the broad strokes of everything above that we talked about. Stable coins, tokenization, basically these blockchains, public blockchains and smart contract tools become TreadFi infrastructure to do what they want to do. So if I would actually summarize the whole of everything about all these predictions, this idea of hybrid finance of like Wall Street learning to do business logic on chain is like the net sum of it.
Ryan Sean Adams:
[21:02] Yeah, you've got this line, the public chains become the settlement composability layer, while TradFi supplies the regulation scale distribution custody and product wrappers, right? I was thinking about this a little bit in the context of preparing for our conversation with the founder of the Canton Network. Remember we discussed that in the roll-up, this is blockchain, I don't really know what to do with, but the DTCC is like tokenizing securities
Ryan Sean Adams:
[21:26] on it in kind of a pilot type way. And what's interesting to me is like there are some things that are just in crypto that are incompatible with securities or with the way nation states want to like run things and one of those is you can't really have securities that are bare assets.
David Hoffman:
[21:47] Correct, you cannot. You cannot.
Ryan Sean Adams:
[21:49] Like this is a challenge and it's just like run through the scenario where Apple shares are bare assets, they get hacked by North Korea, North Korea now has 5% of Apple.
David Hoffman:
[22:00] Would never be allowed.
Ryan Sean Adams:
[22:02] And then Tim Cook's like, oh shit, we got North Korea on our governance board, right? It's like, that's not going to happen.
David Hoffman:
[22:11] You can't have governance and bear assets at the same time. Those two things don't work.
Ryan Sean Adams:
[22:16] And so that is kind of the TradFi layer. They're going to use smart contracts, but those smart contracts will be a bit more like stable coins in that there'll be some sort of logic that has reversibility or the ability to do something. It puts governance essentially in the hands of some entity that is not like a bare asset. Okay. But the contention of crypto is you can build centralized things on top of decentralization, decentralized settlement layer, but the opposite is not true. You can't build something decentralized on top of something that's centralized, right? So at the root of it, this is the way, you know, physical objects work as well. The root of it is bearer assets that are settled by something, right? In the case of the real world, it's ultimately, it's like settled by the nation state, but we've abstracted that. It's used to be settled by violence. I'm stronger than you, so I can go take your stuff, right? Well, now we have
David Hoffman:
[23:14] The nation state that does that. It's a bearer asset for me, but not for you.
Ryan Sean Adams:
[23:17] Right. Anyway, so that's an example of how these things are going to work together, but also So it's pretty bullish for crypto in that you have to have the most decentralized thing at the bottom, particularly when you have two parties that don't trust one another and they're trying to engage in some sort of interaction, right? Where's the place where China's securities can exchange with the United States' securities and their geopolitical adversaries? Well, the only place to do that, something decentralized, essentially.
Ryan Sean Adams:
[23:47] So that's an example of how these things come together, I suppose. Yeah.
David Hoffman:
[23:51] Next one privacy privacy was a pretty broad strokes theme that like everyone kind of agrees that we need it without too much similarity and how or what it that looks like uh coinbase says with institutional adoption rising users want greater control and confidentiality we expect to see continued build out of technologies like ck proofs fully homomorphic encryption as well as a meaningful surge in on-chain privacy usage which aligned with a grayscale's line of the The rising of adoption of confidential transactions on Ethereum and Solana. And then Galaxy predicted something kind of different. The combined market cap of privacy tokens will exceed $100 billion by the end of 2026 as investors park more money on chain. Wow. Different prediction of privacy. $100 billion in privacy tokens. I can name, Ryan, I can name two privacy tokens. Aztec, it's not Aztec, Zcash and Monero. Okay. And yeah, what do you look, what's the market cap of Zcash?
Ryan Sean Adams:
[24:46] $7 billion right now, which is incredible, like up a significant amount. From the beginning of this year, it was a billion. So it's, you know, no, actually. Yeah, just as the beginning of this year, it was, yeah, under a billion dollars.
David Hoffman:
[25:01] What's Monero?
Ryan Sean Adams:
[25:02] Oh, God. I don't, you know,
David Hoffman:
[25:04] I want to think about that.
Ryan Sean Adams:
[25:06] XMR. Monero is, wow, $8.2.
David Hoffman:
[25:13] $8.2. Wow, that is also doing a very strong price per price. form is. Yeah. Yeah. I can't name a single privacy coin beyond those. And like Monero is the... Well, as if it's part of the infrastructure.
Ryan Sean Adams:
[25:25] It's still a privacy coin, I think. Totally.
David Hoffman:
[25:27] What are these? Is as if it's a store of value? Because like Zcash and Monero, I consider it to be store of value privacy coins.
Ryan Sean Adams:
[25:32] They are, but like, why do you need a store of value? Do you know what I mean? Like, why, like, remember that it means Soleimani equip, which is just basically, I shouldn't have to invest in your Ponzi scheme, in your store of value in order to like get privacy, right? And so if you look at the utility.
David Hoffman:
[25:47] I mean, I agree with that, but like, nonetheless, people are doing that with Zcash. And there is something to the effect that, like, well, if you have a privacy app chain, which Zcash and Manero are, you have better privacy in that scenario than you do if it was, like...
Ryan Sean Adams:
[26:04] But that's what Aztec is. Which is sort of what I mean. Like, does something... Is privacy a feature? Does it need its own app chain? Right? So, like, a use case of Zcash right now is if I have Solana on Sol, right? I can use like Near Intense and convert my soul or any asset on Solana to Zcash, like through Zcash and the other side and get my privacy and then come back out. I don't have to keep my asset parked in Zcash. I'm just using the Zcash blockchain for some utility on an temporary basis. And you can use Aztec that same way. But if you can have your store of value be Bitcoin or Ether or some other crypto asset, do you really need to park in the local app chain store of value asset?
David Hoffman:
[26:47] Yeah, yeah.
Ryan Sean Adams:
[26:48] Is it a feature or is it like, I don't know that you need store of value in that case.
David Hoffman:
[26:52] The only people that I really think would really use that, use the value of that is like North Korea or people like them, like pariah states that want to do, park value inside of privacy for an ongoing basis.
Ryan Sean Adams:
[27:08] Sure. So I don't know, it could be an issues case. Anyway, but this prediction, the Galaxy prediction specifically says that's going to get to a hundred billion dollars, which is, I mean,
David Hoffman:
[27:17] We're a ways away from that. I wouldn't learn what they mean by privacy tokens. Like, do they, are they narrow to like privacy sort of value tokens or are they including things like Zama and Asset? I think they include all that. You think so?
Ryan Sean Adams:
[27:28] But even so, but even so,
David Hoffman:
[27:30] That's a huge, That's a huge, secular increase in privacy.
Ryan Sean Adams:
[27:35] Next year in a bear market. I don't know.
David Hoffman:
[27:37] That's a surprising... In a bear market? What do you mean in a bear market? Is that a prediction?
Ryan Sean Adams:
[27:43] I hope you have some predictions on whether we're in a bear market in 2026, but let's get to the next one. So that's privacy. What else?
David Hoffman:
[27:50] Wait, one more privacy quote that I thought was pretty interesting is from A16Z that is pretty nuanced. Privacy, it will be the most important moat in crypto, critical for world's finance to move on chain and almost every blockchain lacks it. They argue that privacy creates chain lock-in and network effects because bridging secrets is hard. And then they broaden privacy beyond payments into data and key management secrets as a service to end making privacy more core infrastructure. So I think they're calling for like, yo, whichever chain can solve privacy acquires a huge technological moat, which I can see that argument. That makes sense to me. That's interesting.
Ryan Sean Adams:
[28:28] I also think there's degrees of privacy in the same way that there's degrees of security? Like, do you need privacy that's nation state, like resistant privacy? Or do you just want it to not be public? Are you fine with it being confidential to some trusted entities?
David Hoffman:
[28:45] You and your service provider.
Ryan Sean Adams:
[28:48] Exactly. And so that all depends. That's also on a spectrum as well.
David Hoffman:
[28:51] And your accountants because you have like a reveal key. What are those called? Like a reveal key?
Ryan Sean Adams:
[28:56] Yeah.
David Hoffman:
[28:57] There's like on some privacy things, you can share a key with someone so they can view transactions so they can do your accounting for you. Zcash has this. Monero does not have this.
Ryan Sean Adams:
[29:08] Yeah, that's right. Okay. Nuance conversation there. We'll have to see how that
Ryan Sean Adams:
[29:12] evolves. But picking up privacy as a theme, certainly. What's this next one?
David Hoffman:
[29:16] Sex to DEX transitions. Galaxy says today's DEXs account for roughly 15 to 17% of spot volume. They say that by the end of 2026, DEXs will capture more than 25% of combined spot trading volume by the end of this year. Coinchairs directionally agrees DEX volumes are structural. DEX volumes will be structural, not the 2021 mania. They will exceed $600 billion per month, which is far beyond the speculative mania observed in 2021. So CoinShare is a secular structural increase in on-chain DEX trading volumes.
Ryan Sean Adams:
[29:51] This is bullish. I agree with this. A long-term trend, I think DEXs from a take rate perspective are so much lower than SEXs right now. And over the long run, sexes, as long as DEX liquidity and user experience increases, the centralized exchange business model for the actual trading of assets will not be sustainable over the long run. And so I even see sexes are pivoting away. A little bit i mean they still make the bulk of their revenue from
David Hoffman:
[30:24] Right trading.
Ryan Sean Adams:
[30:25] On the centralized exchange but coinbase going into base
David Hoffman:
[30:28] They're very happy to disrupt themselves yeah.
Ryan Sean Adams:
[30:31] I think they they see the writing on the wall if they don't do it then the dexes will eat their yeah eat their lunch
David Hoffman:
[30:37] Right which is why coinbase coinbase integrated solana and jupiter uh but on base they integrated aerodrome which they bought a ton of tokens of and so that is an interesting way to retain value by directing a lot of the volume to a DEX that you own 30% of or something, however much they own.
Ryan Sean Adams:
[30:56] That's right, yeah.
David Hoffman:
[30:58] Tokenomics was a noteworthy thing. Basically, tokenomics, all these people, Coinbase, Galaxy, CoinShares, Grayscale, all kind of predicts that the trend that value capture will become explicit. Grayscale called a focus on sustainable revenue as a top 2026 theme. Coinbase talked about tokenomics 2.0 protocols are leaning into value capture, fee sharing, buybacks, buy and burn, and a shift towards durable revenue-tied models. And then Galaxy said, application revenue to network revenue will double. The ratio will double from where it is. Accelerating value capture at the app layer. And they invoked the fat app thesis, which there used to be a fat chain thesis, fat L1 thesis, which is like the chain gets all the value. They are saying that this trend is going to the app layer. So at the fat app thesis. This one, I could critique all of them and say, this works, maybe this is a prediction, but it's also a hindsight 2025 year in review statement as well. Like this definitely happened in 2025.
Ryan Sean Adams:
[31:58] Well, it did happen, I think, but aren't they saying more than this? Aren't they saying that basically our crypto native tokens become value capture mechanisms and start returning the revenue to investors? Isn't this... The token reform that we have to do in crypto? Isn't this back to kind of the Aave Labs versus Aave types of debates that we've been having?
David Hoffman:
[32:24] I don't know if that's true, because Aave as a token has been capturing and returning value to Aave token holders for a long time now. Right, but how much value?
Ryan Sean Adams:
[32:33] And is that all of Stani's efforts and all of the Aave Labs efforts as well? I mean, if you buy an asset like Amazon, you're getting all of what Jeff Bezos puts into the thing, plus all of the product lines, plus all of the user interface. And it's not clear that you're getting the same thing with an Aave token right now. And I think investors like want that. Yeah. Or at least want that clarified.
David Hoffman:
[32:56] It's not clear that they're getting all of it. They're getting some of it. They're getting the on-chain components and then not the off-chain components. But I think that's a conversation that is currently being had and needs to be had. I'm going to have a conversation with Jake Stravinsky in next year about like-
Ryan Sean Adams:
[33:09] Does he have a solution to this?
David Hoffman:
[33:10] He has a yeah so his general broad strokes is like you know tokens get the on-chain value capture but if it's not on-chain then the then it goes to the the labs or equity entity, And there are some models, like Morpho, for example, that actually there is no off-chain equity. There's only the token because the equity is owned by the foundation, so that flows to the foundation. But then Jake says, well, that's not appropriate for all circumstances. So it is a very nuanced conversation.
Ryan Sean Adams:
[33:36] I would love to hear that conversation. I feel like the problem with that is with these models, you don't know where the value is going to accrue. So let's say, for example, with Aave. Let's say, for example, with Aave, that rule moves forward. And so they're completely within the realm of Aave Labs to take a cut on their interface because that's not necessarily, I guess that's not on-chain revenue.
David Hoffman:
[33:57] Or is it on-chain revenue? Interface is not on-chain revenue.
Ryan Sean Adams:
[33:59] Okay, so it's not on-chain revenue, right? And Aave gets all the on-chain revenue. There's a conflict of interest there. But then also you don't know which layer of the stack is going to have
David Hoffman:
[34:09] The value capture. Which one has more revenue, yeah.
Ryan Sean Adams:
[34:12] Exactly. And so it might be the case that the user aggregation layer captures all of the revenue and that completely limits the upside of the Aave token. And as an investor, what I want, I simply want to capture all of it. I want one asset that captures all of it.
David Hoffman:
[34:30] Yes, one asset to rule them all. And I want that.
Ryan Sean Adams:
[34:31] Asset to be on chain. So Jake's vision, well, that helps from a clarity perspective, I suppose. I don't love that as an investor.
David Hoffman:
[34:40] Yeah, because you are a token bull or want to be a token bull. And if I'm an investor and I have some capital to allocate and I look at TradFi and I look at Google and NVIDIA and Tesla, I'm like, oh, I get 100% of the value being created. And if I look at tokens, I look at like, oh, I get some of the value being created, but then there's another equity asset that I don't own if I buy this token elsewhere that is also sharing the value and I don't get that. And so just like it's impure, it's imperfect is kind of what you're saying.
Ryan Sean Adams:
[35:14] Yeah, and it's kind of frustrating, right? It's like imagine if Amazon, they spun off AWS and it was a separate equity vehicle. Oh my gosh, shit.
David Hoffman:
[35:22] Like I want all of that. Now I have to buy AWS.
Ryan Sean Adams:
[35:24] Exactly. Okay. What about the controversy or disagreements that you found in the predictions?
David Hoffman:
[35:32] Two core disagreements about DATS and about cycles. I think you can see why there would be disagreements here. That's getting interesting. Coinbase thinks that DATS will evolve.
David Hoffman:
[35:44] They call in calling for a DAT 2.0 model. Future iterations of DATs will move beyond simple accumulation and specialize in professional trading, storage and procurement of sovereign block space. The shift is predicated on the view that block space is a unique commodity and an essential structural input for the digital economy. Consequently, we think that a successful DAT business model will revolve around a deep understanding of the duration risks and cyclicality inherent in the block space economy. So basically saying that like if you're a DAT, you sell block space, because if you're an ETH that you stake and you sell some amount of blocks to the market. And so then what are the benefits of being able to do that frequently across time? And they are saying that they are not just accumulation, but you will start to provide value and services to the fact that you can produce a lot of blocks. That's what Coinbase says. galaxy on the other side says five or more digital asset companies will be forced to sell assets be acquired or shut down completely and grayscale says that's are a red herring and not a major factor in 2026 uh which there could be some overlap here so like the coinbase thing of like that's could evolve will be like yeah evolve one one or two will have successfully evolve and the rest are dying uh it's like maybe there isn't some controversy here yeah.
Ryan Sean Adams:
[37:02] I i'm not sure that there is a controversy because i i could see all three of these playing out right so uh dats will evolve it depends on the type of dat so if you're bitcoin you're not necessarily getting into the mining game are you as a as a dat i suppose you could right but that makes much more sense to be kind of infrastructure and validating and block production, the block production supply chain, if it's a proof of stake asset. Because then you're kind of getting yield. So maybe proof of stake assets is more so that way. I definitely think some DATs are going under. And I agree with Grayscale that DATs are not going to be a major factor in 2026, because I don't think 2026 is going to be a secular bull market. And when that's our that's will be a major factor in a secular bull market once again i don't think they're dying i
David Hoffman:
[37:56] Agree with that that they are momentum vehicles more than they are bear market.
Ryan Sean Adams:
[37:59] Vehicles a hundred percent and some of these dads are structured well and for the long term and they can batten down the hatches and weather a bear market without any problem whatsoever only the Meek ones will die.
David Hoffman:
[38:13] I mean, I think the big question is how many, what percentage are weak ones versus strong ones?
Ryan Sean Adams:
[38:18] Is that the big question? I mean, there's a percentage of how many, but there's also a percentage of like, there's a power law, right? And so the ones with, I mean, Tom Lee has what? I mean, he's got probably 3x all the other dats combined for either, at least. And he's continuing to stack. As long as that one stays alive, that's a massive
David Hoffman:
[38:40] Bull catalyst for the next bull market. Simply just consume all the little dots.
Ryan Sean Adams:
[38:45] And that will probably happen as well.
David Hoffman:
[38:47] Yeah, yeah, yeah. Okay, market cycles and macro trends. So two different positions here. Bitwise and Grayscale, pretty similar. Bitwise says Bitcoin will break the four-year cycle and set new all-time highs. Grayscale says we expect the end of the so-called four-year cycle and Bitcoin will likely reach a new all-time high in the first half of the year. So those two agree with each other. Galaxy and Coinbase. Galaxy's core stance is 2026 is too chaotic to predict with very wide price ranges even if new highs are possible.
Ryan Sean Adams:
[39:18] But I will add I did read the Galaxy predictions. They did say 2027 new all-time highs. It was like Bitcoin at 250k. So they took
David Hoffman:
[39:27] The pass of 2026. Okay, okay. And then Coinbase says 2026 is a macro-driven cycle with a plausible trading range between 110 and 140k as their central case.
Ryan Sean Adams:
[39:39] What do you think?
David Hoffman:
[39:44] Did you read my article that I put out called The Yearly Candles?
Ryan Sean Adams:
[39:48] Yes. I enjoy looking at the yearly candles, actually, on an annual basis. I like to look at them once a year. What was your divination from that?
David Hoffman:
[39:57] Yeah. So to visually describe to the listeners what the yearly candles. Actually, maybe you can pull up the article. Yeah. But for the podcast listeners who are going about their day not looking at a screen, again, Happy New Year's. Glad you're doing that. Excuse me, New Year's. Happy Christmas Eve. Glad you're doing that. The early candles is just like when one year of time comes into one candle. And Bitcoin has this pretty similar pattern of two or three green candles followed by one medium to large red candle.
Ryan Sean Adams:
[40:26] The four-year cycle in candle form.
David Hoffman:
[40:28] Yeah, four-year cycle in candle form. That's right.
Ryan Sean Adams:
[40:30] There's a red and then two greens and a red and then three greens and a red and three greens and a red and two greens. And now we have a red. So that could either be followed by another red.
David Hoffman:
[40:43] Usually red candles are large. This is the the 2026 year is the smallest red candle in Bitcoin history.
Ryan Sean Adams:
[40:50] So it's so tiny that if it follows the pattern, you're going to get another red in 2026, right?
David Hoffman:
[40:56] Uh, no, because there's only ever been one red candle in a row. And so, like, there's that interpretation, Ryan, where, like, there's only ever one red candle in a row. There's never ever two red candles in a row. And we just had the smallest red candle of all time, which means we got the red candle out of the way, and it wasn't that bad. And now we are primed for, like, it doesn't even have to be a large green candle to be good. We just need, like, you know, a medium. It could be a small, small to green candle, and we're all kind of happy. Or it was such a small red candle that we got more red to come.
Ryan Sean Adams:
[41:28] Maybe another tiny red candle.
David Hoffman:
[41:30] It's hard to see a big red candle next year.
Ryan Sean Adams:
[41:34] I'll agree with you.
David Hoffman:
[41:35] I agree with that. It's hard to see a big red candle next year.
Ryan Sean Adams:
[41:37] Okay, it's also hard to see a big cream candle next year.
David Hoffman:
[41:40] I think it's hard to see big candles with Bitcoin ever.
Ryan Sean Adams:
[41:45] What? I'm not sure about ever. I don't think ever.
David Hoffman:
[41:48] Yeah, like a... Look, dude.
Ryan Sean Adams:
[41:51] Gold went up 65% And that's like a, now it's a $30 trillion asset. That's a big ass green candle.
David Hoffman:
[41:58] Okay, so the first two big green candles, the one in 2011 and the one in 2020. We're not going to see that. We're not seeing that anymore.
Ryan Sean Adams:
[42:05] No, you're not going to see like a 10X in a year.
David Hoffman:
[42:08] A 3X, yeah, that's right.
Ryan Sean Adams:
[42:09] Yeah, yeah, yeah. Okay, so I could see that. So your prediction is basically baby green.
David Hoffman:
[42:14] My prediction is, my bear case is another red sliver candle. It just goes down just 5% to 15% up to plus 50% is my range.
Ryan Sean Adams:
[42:28] Okay. Yeah, I could see that. I mean, I guess that's what Bitwise and Grayscale are essentially saying. So from the yearly candle perspective, it's not that crazy.
David Hoffman:
[42:38] Yeah. Maybe an add-on to that prediction is that the red part happens in the first half of the year and the green part happens in the second half of the year.
Ryan Sean Adams:
[42:45] Okay. I can see that. Yeah. How about Galaxy?
David Hoffman:
[42:48] Uh galaxy uh, I think I said that. 2K I like to predict. 2K, yeah.
Ryan Sean Adams:
[42:55] Okay. Yeah, I could see that. Do you have any prediction for ETH? Is it just that it follows Bitcoin?
David Hoffman:
[43:00] Yeah, same predictions for both Bitcoin and Ether.
Ryan Sean Adams:
[43:04] Okay. Do you know...
David Hoffman:
[43:06] Oh, but I do really like Bitwise's asterisk, which is if the Clarity Act passes, that looks so good for Ethereum. Tokenization is so good for Ethereum. Like then the whole plan starts to really come together.
Ryan Sean Adams:
[43:21] But ben cowan had a take on eth uh next year that it could actually hit all-time highs even in a world where bitcoin does not and his take was basically like keep the ratio the same bitcoin has sort of a return to the 50-week simple moving average that it usually does even during kind of bearish years that takes bitcoin to 100k and like the ratio is about the same maybe improved slightly for ether and we see you know 5 000 uh k or your 5k plus ether for some brief window of time before it goes back down why
David Hoffman:
[44:00] Can't this stay there.
Ryan Sean Adams:
[44:01] Goes back down and resets again and then you know 2026 is kind of an off year. But he said that's a scenario that he thinks is possible anyway.
David Hoffman:
[44:12] That's been Cohen's sake.
Ryan Sean Adams:
[44:13] We should do. Those are the predictions. As we conclude this, David, maybe I want your thoughts on the core assets, the biggest assets in the space, the ones that we've been talking about on Bankless since the very beginning, the ones that we have called crypto monies and that we believe our story value assets, the layer ones, essentially, that settlement layer, the most important layer in the space. And the layer that's what's still like 80% of all of the value in crypto, at least. So let's talk about Ether. That is near and dear to our hearts. And I want to give you my takes. I want to hear yours.
Ryan Sean Adams:
[44:51] There's Ethereum, which is the network, and there's Ether, the asset. And I think you have to look at those at times independently, and other times they're interrelated. Looking at them independently, I feel like Ethereum, the network, had a good year. I will not say a great year. And here's how I justify a good year. Shipping, the momentum is back. There were two hard forks this year, and they fit in a lot that was beneficial to Ethereum. There's a much clearer roadmap in the priorities we're back to scaling the l1 and that feels really good and i feel like zk tech which has been almost the gambit bet for ethereum is starting to show up and is starting to compound it's in the early phases of that but the lean ethereum roadmap is all about that and it uniquely positions ethereum as a bet on ZK decentralization. And that's been their bet that they were hoping would happen. And it is starting to happen. Like there were some major breakthroughs in ZK this year. And I think those will compound in the future. And if Ethereum does ship the lean Ethereum roadmap, you know, in two years time, three years time, four years time progresses along that, I think it's incredibly bullish for the Ethereum ecosystem. Might I add all quantum resistant as well, right? So at a time And Bitcoin is going to struggle with that.
David Hoffman:
[46:15] Likely not a problem for Ethereum.
Ryan Sean Adams:
[46:17] So a good year from my perspective. Not a great year. I'm not going as far as saying that this was a great year.
David Hoffman:
[46:23] But this is not the merge year. What would have made it a great year? Why didn't it achieve great year status?
Ryan Sean Adams:
[46:28] I think there's still some malaise out there. I think that the EF is course corrected, but I don't know that we're fully there. And I guess I haven't seen enough on the ZK, a Lean Ethereum roadmap to just be like, oh shit, that was a great year. This was not, and great years I reserve for years like, um, for the network uh 2022 which was like the year of the merge that was a great year for ethereum yeah uh when when ethereum launched that was a great year for ethereum not every year can be a great year 2024 was a bad year from my perspective for yes the ethereum network i feel like there was some complacency there was
David Hoffman:
[47:08] Expressed in the social layer around hey it's been bad and we need to deal with that and so it was just a year of fighting.
Ryan Sean Adams:
[47:15] Yeah so uh i'm locking this in as a good year what do you think about that i
David Hoffman:
[47:22] Think it was a great year for the technicals of ethereum the technical protocol made some of the best advances that it has made fundamentally um it was a bad year for actual layer one usage so like the actual usage of the layer one like gas fees are down and new apps.
Ryan Sean Adams:
[47:46] But gas fees are down because but have you looked at active addresses active addresses are like spiking up it's all-time high like usage is actually up this is the thing go to like grow the pie like l1 has never been i don't recall l1 ever being better from the perspective of like low cost and all the things that you can do on chain, active addresses up, transactions up. The gas fees aren't up because there's more supply.
David Hoffman:
[48:18] Gas, it's flat on the layer one. I see active addresses as flat on the layer one.
Ryan Sean Adams:
[48:24] Yeah, but like in terms of transaction volumes, all of these things, like more people are doing more things on the L1. I guess it's not like NFT frenzy, if maybe that's some of the kind of the comparison.
David Hoffman:
[48:36] Uh, I just look at the low gas fees and low Eastbird and be like, yeah, you know, like, we made a mistake of trying to maximize that or like have that be the narrative. But like, it's still too low. It's still, I was like it to be higher than... And then in the future, we did not get any increase in block times in 2025 as well. And I think that is one of the big things that would be a necessary catalyst to actually increasing usage of the layer one. Like we can keep throughput the same and charge the same amount of gas. But if we get blocked speeds down to three seconds, which is possible, and we're trying to do that, then actually it would induce more usage of the layer one if we had faster block times. And we did not get that in 2025. My take on 2025 on the Ethereum protocol is like fundamental research turned into engineering and things are getting shipped to production that are like, again, a pilot-y and experimental, but are going to become in production in 2026. And so I expect 2026 to be leveraging a lot of the progress that we made on the layer one protocol level. But it did not yet get expressed, but it does. We are it does feel the Ethereum layer one is primed for a good year next year.
Ryan Sean Adams:
[49:54] Let's talk about ETH, the asset then. Right. So this is the other piece. We're talking about the narrative belief that Ether is a store of value. I would still say that's a minority belief. I mean, it could express itself in like, ETH does have a pretty high monetary premium. So maybe there's more hidden belief of that in the asset price itself than the narrative, the popular narrative begets. And I think that's true. um it was a good year for some things on ether the asset in particular tom lee that was a really big move this is a legitimacy style move him showing up and showing himself as a long-term bull you know three three and a half almost percent of all supply and he did that in like five or six months that's incredible But overall, I don't think it was a great year or even a good year for ETH, the asset. I mean, we traded down to $1,500.
David Hoffman:
[50:49] Yeah. In a year that we had Tom Lee, ETH price went down on the year.
Ryan Sean Adams:
[50:53] And it was down on the year, in a year with Tom Lee. And also the narrative around it, like it was not super successful. Now, I want to show you this, right? So this is kind of the sentiment. This is the ETH Val website, which takes into account all the different ways that people have proposed to value ETH or the asset. And I want to show you two things. If you value ETH, the asset, from a price to sales ratio, that is like from a does it generate enough fees, revenue capture side of things, the value of ETH, if you take 25X price to sale, is $39. Okay? $39.
David Hoffman:
[51:31] That's bearish.
Ryan Sean Adams:
[51:31] Short that thing. Short that thing. If you think ETH should be valued as a price to sales asset, short it. I mean, the same with Bitcoin, for that matter. That's the bottom side. Of course. I mean, like, what the, if you were doing price to sale on Bitcoin, it is worth, like, $10. Yeah.
David Hoffman:
[51:49] But Bitcoin doesn't even get the sales. It's the Bitcoin miners that gets the sales.
Ryan Sean Adams:
[51:53] Okay. My point exactly. Yeah. Now, that's the low side of the range. This website takes into account 12 different valuation models. That's the lowest valuation model. If you take the highest valuation model for either of the asset, Metcalfe's Law, which is just some sort of derivation of transaction, throughput settlement, active addresses, all of these things and the scaling of that, then ETH would be $9,400 ETH of the asset from a Metcalfe's law perspective. Think about that range, David, from $40 to $9,500. And that's why you see such a division in contention in narratives around ETH of the asset because there's a group that says Bitcoin
David Hoffman:
[52:40] Is worth $12. And there's another group that says it's worth $9,000.
Ryan Sean Adams:
[52:45] Exactly. And this is the war that's going on, I think, in the market. And we've seen that war play out because I am on the, for instance, Metcalfe's law side of things. I'm on the ETH as a monetary asset side of things in a similar way as Bitcoin. And there are others, the sellers or the bears for ETH that just think that ETH or the asset is a price to sales revenue generation type thing. And by the way, there's all of these other blockchains that are also that and only Bitcoin is the monetary instrument, app chain phenomenon. Ether cannot be a monetary instrument. And so the market's going to have to fight during the bear to figure out who is more correct and who is more right and that's the struggle and it's a narrative battle as well but my take as I conclude the year is still like Ether is a triple point asset, always has been from the beginning. The bulk of layer one value actually needs to come from monetary premium. I don't think in a world where you're expanding block space, that revenue generation is sustainable for any layer one blockchain. And that's not just a principle that applies to Ethereum. It certainly applies to Bitcoin. Also applies to Solana and Monad.
David Hoffman:
[54:05] Solana revenue is down significantly across the year.
Ryan Sean Adams:
[54:08] And will continue to drop, but then it will spike up and it will drop. It's just not a sustainable... These are not price-to-sales instruments. Assets, yes. At least if it's a layer one decentralized money type of asset. And so I'm still of the belief that ETH is either a money or bust or like go short it to, you know, $30.
David Hoffman:
[54:30] I think where ETH gets valued on the spectrum of like $12 to $9,000 is a function
David Hoffman:
[54:35] of the market dominance that it has as a smart contract platform. So in 2021, when ETH dominance, like the smart contract usage dominance was like 90 plus percent Ether, it was valued 90 percent of the expression of like a store of value, money, Metcalfe's law valuation. But when ETH's smart contract transaction market dominance is only...
David Hoffman:
[55:00] 50 or 60 percent wherever it is then it starts to move much closer to the price to sales end of the spectrum which is where you link up the fundamental growth of the technicals of the ethereum layer one like the lower transaction times uh zk the zk and the evm being able to just like outrace every other chain as a layer one actually becomes extremely relevant to where the valuation of ether shows up between price of sales versus versus metcalf's law and so i think we kind of actually have hit a bottom in terms of ethereum market dominance because like solana has done great but it's not growing secularly anymore uh and you do see a lot of tailwinds towards the ethereum layer one with when it comes to tokenization and stable coins and all the other stuff that we talked about and so uh i could see the combined institutional adoption of blockchains starting with ethereum mixed with the actual technical growth of the ethereum protocol, becoming very good for Ethereum's, the Ethereum network's smart contract market share.
Ryan Sean Adams:
[56:01] Well, so one of the things you might be saying is you favor some sort of TVL multiple, right? So the more value that's on chain on Ethereum, the better, the higher the ETH price, right? So you do the TVL multiple.
David Hoffman:
[56:14] But specifically a percentage of all TVL, not just the raw number.
Ryan Sean Adams:
[56:18] Right, and this is the thing. If you did a TVL multiple like this at ETH, you'd say ETH is worth about $4,000, $4K right now from a TVL multiple perspective. I guess the broader point is just like we still are arguing over how to value ETH, the asset. And that range is like $40 to $10K. And you get to pick how you want to value the asset. We don't have that problem with other asset classes as much. And that is what the market is trying to figure out moving forward. And I have my take on it, but other investors have their take on it. And you get to choose your own adventure here. Let's talk about Bitcoin. How do you think Bitcoin as an asset did on the year?
David Hoffman:
[57:03] On the year bitcoin is down six percent uh and it's like one of those things where like man if that was all it is and next year is green then that's a fantastic year to like if if that's what we had to endure.
Ryan Sean Adams:
[57:15] I'll take that yeah
David Hoffman:
[57:17] Yeah for real ryan here is still talking about bear markets next year and so maybe we haven't gotten out of the way um, I don't know if it was really all that exceptional of a year for Bitcoin. It started to like reintroduce itself as like a debasement hedge, but like that wasn't really a big macro theme across the year. And like, you know, granted, you know, Bitcoin is supposed to be this like debasement hedge, the liquidity asset as, you know, fiat currencies all devalue themselves. But like this is the one year where like our government did try to do austerity and trying to actually put value back into the money. And Bitcoin was down 6%. So if that was the outcome of that, like they can't do that forever. We all know like mathematically the fiat is going to zero. They can hold their breath and try and hold out as long as possible to get better yields on the bond rates and all that kind of stuff. And that's bad for Bitcoin. It was like financial responsibility by the Federal Reserve and by Congress is bearish for Bitcoin. And they actually did try to do that. And they tried to do some amount of that job this year.
Ryan Sean Adams:
[58:26] I think my take on Bitcoin is like maybe I'll zoom out from the year and look at kind of the cycle. It's had a really, really strong cycle. Like it is doing the thing that Bitcoiners had hoped it would do, which is like institutional belief is all time high. Every macro person I talk to now includes Bitcoin as part of the hedge against issuance, fiat issuance and inflation, right? And I just think the narrative market fit has been exceptional. I do think that it has some icebergs on the horizon in the form of quantum in particular. I think markets will front run. So if you look at prediction markets for quantum breaking cryptography, as that increases, as the probability increases or as the window of time when that is probable decreases, I think that will actually affect Bitcoin price. I think that will, like, this is not a small problem for Bitcoin. I think the security budget issues are still out there as well. But I think those could be navigated in a way that maybe is not so. Aren't a crisis? Yes, it's not a single crisis. It's more like kind of corruption type influence over time. And it's not going to be as noticeable as something like quantum. I think quantum is a big deal.
David Hoffman:
[59:46] Ironically, I do think the biggest bullish catalyst for Ethereum is Bitcoin's failure to deal with quantum.
Ryan Sean Adams:
[59:53] You think so? Like, I'm divided on that because I think that it could undermine the entire digital store of value narrative that is out there. Oh, I agree. If Bitcoin falls from grace.
David Hoffman:
[1:00:07] In the short term. In the short term.
Ryan Sean Adams:
[1:00:10] Okay, but how long is that short term? Is that short term like a generation of humans? Is it a decade?
David Hoffman:
[1:00:15] No, what? No, that's not the short term. That's long term. Short term is like one to two years.
Ryan Sean Adams:
[1:00:20] So you think that happens and then ETH could, are you calling it like?
David Hoffman:
[1:00:24] Yeah, like the Bitcoiners are like, even Nick Carter said this, like if Bitcoin fails, it takes the entire crypto market down with it. And I'm like, no, it doesn't. There's no technical dependency that any blockchain has on Bitcoin. In fact, the fact that the Ethereum project dealt with quantum ahead of time is going to provide an immense amount of investor confidence in Ethereum specifically, if that is how this plays out. And so people will look at like, well, Bitcoin didn't deal with the issue. Ethereum did deal with the issue. As an investor, I'm going to park my capital in the platform that can deal with issues effectively. And that has been proven out by the market. So Bitcoin's failings are not Ethereum's problems.
Ryan Sean Adams:
[1:01:10] I think I agree with that. I just don't know how long that period of short term this actually is.
David Hoffman:
[1:01:16] Yeah, it would take a while for that information to be digested by the market.
Ryan Sean Adams:
[1:01:21] All right. You know, where I see things ending the year is two worlds kind of emerging. And I'm wondering what you think of this, David. So there's like two visions in crypto at play, and you want to have some allocation across these two visions. The first vision is something that I think Bankless has been excited about since our inception, which is the United Chains of Ethereum type vision.
David Hoffman:
[1:01:44] Or not even of Ethereum, but just like the United Chains model.
Ryan Sean Adams:
[1:01:48] Shared security. Yeah. But it happens to be Ethereum. Which is Ethereum.
David Hoffman:
[1:01:52] It manifests in Ethereum. Yeah.
Ryan Sean Adams:
[1:01:54] So United Chains of Ethereum, where almost everything, 80%, 90% of everything in crypto is kind of rooted in this single credibly neutral chain. And you get all of the features and use cases on top of that chain, including store of value. And that store of value is not actually Bitcoin. It's Ether as an asset. If you want privacy, well, there's Aztec. There's Aztec. You have to go for Z to Zcash.
David Hoffman:
[1:02:17] Put your ETH on Aztec, yeah.
Ryan Sean Adams:
[1:02:19] Yeah, and if you want perps trading, you go to Lighter. That's on an L2. So it provides all of these things inside of one united chain, okay? And that's been the bet, I think, for ETH heads and for ETH maxis, let's say. That bet has not fully played out. It's partially played out, but hasn't fully played out. There's another bet that's going on, which is... The specialized app chain type of that where it's all of the app chains essentially and what is bitcoin that's an app chain for money value yeah and what is solana well that's an app chain for execution permissionless trade execution pretty much right and
David Hoffman:
[1:02:56] Then what is hyper liquid it's a app chain.
Ryan Sean Adams:
[1:02:58] Which is
David Hoffman:
[1:02:59] Revenue so basically it's all bitcoin is a sort of value and every other chain needs to have strong revenues and that's right.
Ryan Sean Adams:
[1:03:04] Zcash app chain for privacy like you could see it And that's the other version of things. And you want to have some capital deployed against that version. And this is why it often seems, I think, to people in Ethereum, like, God, why are all the other chains beating up on us? Right. Well, it's because Ethereum, you're trying to freaking do everything. Yeah.
David Hoffman:
[1:03:24] Who's picking enemies? It's like, well, Ethereum is trying to literally blanket
David Hoffman:
[1:03:27] the earth with all possible chains as layer twos. And then there's all other chains, which is like, I'm, fuck you guys.
Ryan Sean Adams:
[1:03:36] Yes a little bit there's a an element of that and why all the other chains are like well ether is not the store of value bitcoin is the store of value right i think the truth is both of these visions have played out from inception and will continue to play out in the future and i'm not sure that anyone can call which vision is going to like dominate right or if one vision is going to dominate i think they will both be present into the future and certainly in 2026 and beyond big
David Hoffman:
[1:04:02] Yin yang vibes like very order and chaos as in like ethereum is like the ordering of chains put them all together stitch them together make them interoperable and that's order and then there's chaos which is just like a blanket landscape of any chain from anyone from anywhere about anything and there's no there's no coordination or organization the coordination is actually just centralized exchanges allowing you to go from chain a to chain b.
Ryan Sean Adams:
[1:04:29] That's right That's how
David Hoffman:
[1:04:31] I see it.
Ryan Sean Adams:
[1:04:32] All right. Well, some predictions and some takes on the leading crypto assets. We'll leave it there for you. Happy holidays to everyone. Of course, you know, none of this has been financial advice. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.