 So I'll be focusing on the asset, not so much Ethereum, the protocol. And it turns out there's only one DEF CON talk about EFER, the asset. And that's the one right now. And I'm hoping that this time next year we'll have multiple talks about EFER, the asset. Because in my opinion, EFER, the asset is critical for Ethereum to be successful in its mission in becoming the settlement layer for the Internet of Value. We need to understand it, we need to nurture it. So yeah, without EFER there's no Ethereum. And if Ethereum becomes the settlement layer for the Internet of Value, then de facto, EFER will become something very special, namely money for the Internet, Internet money. And there's this deep friendship between EFER and Ethereum that I'm going to try and tell you about today. But before we get there, I want to give you a mental model around the temperature of money, or some people call it the velocity of money. I'm going to invite you to think of money as water, which can be in multiple states. It can be liquid, it could be solid if it's cooled down and frozen, and it can be in this gas state if it has extremely high velocity. And this is interesting because at layer one, we have mechanisms that explore these extreme temperatures. So you can take EFER, water, and at layer one, you can freeze it, you can stake it. And in the process of staking, you're reducing the velocity of that EFER because it's kind of put in a black box and can't move. And something similar happens with the burn. The burn is all about, you know, destroying EF, consuming it, vaporizing it, and turning it into gas vapor. And something very similar happens at layer two. So at layer one, all of this is enshrined in the sense that EFER has a monopoly. And at layer two, there's something similar happening, but it's more of an emergent ecosystem. It's more competitive. So what happens at layer two is that EFER or other forms of money get bonded and get used as collateral in the context of decentralized finance, and money can also be used as currency when you're transacting. For example, when if it flows through the pipes of Uniswap, and the word currency comes from the word current, and it's basically money that is moving. And most of the time when people hear the word money, they think currency, and they only think about the high-velocity use cases. But it turns out that, especially for Ethereum, we shouldn't be discounting the low-velocity use cases, as those are extremely important as well. Using EFER as collateral is a use of money. So just to recap, we have EFER, Programmable Money, which can be programmed to do various things that contribute towards Ethereum. A little bit like a stem cell. It can be fully programmed to be a brain cell or heart cell or liver cell. And EFER could be programmed to be steak, contribute towards security. It can be programmed to be base fees, and contribute towards the sustainability of Ethereum as a project, economic sustainability, economic security. It can contribute as economic bandwidth in the context of DeFi, and it can contribute to economic activity that is on top of Ethereum within the decentralized ecosystem. And one thing that I want to highlight again is that there's these two different economies. There's the cold economy of money, mostly collateral money, and there's the hot economy. And both are extremely important. And in this talk, we're going to go through the various uses of EFER that kind of help Ethereum become a settlement layer for the Internet of Value, starting with security. So if Ethereum is going to settle the Internet of Value, it shouldn't get crushed by the economic weight of it because the Internet of Value is going to be massive. It's going to be tens of trillions of dollars. And we can't have the Internet of Value be secured by a tiny amount of Ethereum economic security. And so there's this important concept of the security ratio, which is simply the total value secured divided by the economic security that Ethereum has. And right now we're at a point where the security ratio is very healthy. It's only 20, the lower, the better. And Ethereum is securing roughly $400 billion of value in the form of ETH, ERC20s, and NFTs, and because it has roughly $20 billion of economic security that gives us the security ratio of 20. $20 billion of economic security. Is that a good thing? Is that a bad thing? Well, in a way, it is a good thing, especially for Ethereum that is such a nascent project. And it's especially good that it's become, Ethereum today is the most secure blockchain, even surpassing its older brother, Bitcoin, by a factor of 2X. So if you want to do a 51% attack on Ethereum, that's going to cost you $20 billion. If you want to do a 51% attack on Bitcoin, that's going to cost you roughly $10 billion. But $20 billion in the grand scheme of things, is that a lot? No, it's not. We, I would argue that we want trillions of dollars of economic security for Ethereum, partly because we want to keep that security ratio relatively low, but also because we don't want any attacker, even the most sophisticated ones, like nation states, to be able to attack Ethereum. And if we have so much economic activity, then we'll be protected. Now, the economic security comes from these ETH deposits. And in the last two years, we've had a very healthy, continuous stream of deposits. On the order of 20,000 ETH every single day for roughly two years. And so now we're at a point where we have 14.2 million ETH staked. And we can ask ourselves, how much ETH can we expect to be staked in the long term? And the way that I think about it is by looking at what incentivizes people to stake, which is issuance. So there's two parts to staking. There's the cold economy, where you're freezing money at stake. But there's also the hot component, which is when you're issuing ETH as incentives for validators. And it turns out you can have a look, you can look at the yield from issuance. And there's this relationship, which is that every time the amount of ETH stake grows by a factor of 4x, the yield from issuance decreases by a factor of 2. So with 4 million ETH staked, the yield from issuance would be 8%. With 16 million ETH staked, it would be 4%. And with 54 million ETH staked, it would be 2%. And now it turns out that what we should expect is that the yield from issuance is going to have an equilibrium with the cost of money. And if the cost of money is, let's say, 3%, then we should expect something between 16 and 64, something like 30 million ETH staked. Now this brings us to the importance of the ETH price, because we have, let's say, 2x increase in the amount of ETH staked. Like how are we going to get trillions of dollars of economic security? So today we have 20 billion dollars of economic security. We want to get, let's say, to 1 trillion dollars. That's a 50x increase. We can get a 2x increase from ETH staked to 40 billion dollars, but we're going to need more than that. And specifically, we're going to need the price of ETH to go up 25x in order to get this really robust amount of economic security. Now one thing I want to mention at the end of this first section is this idea of minimizing the cost of security. So issuance has negative externalities because it dilutes all the holders. And at Genesis, we were issuing a lot of ETH, roughly 12.5 million ETH every single year. And now we're at a point at the merge where we've decreased that by roughly a factor of 20x. And we've reached a point where the issuance is extremely small and it's essentially optimal. And because we can't improve it, this is actually a forcing function for us to essentially ossify it because we've reached the best possible design. Great. So now that we understand that ETH is critical to the security of Ethereum, let's talk about sustainability. Now what do I mean by sustainability? We can think of Ethereum as a company. And the product that it's selling is block space, specifically secure block space, extremely secure block space. And as a project, it has income and it has expenses and that leads to profits. And we want profits to eventually be positive. We want the project to be successful, to be sustainable. So income is the block space sales, expenses is the security budget, and that's basically for Ethereum is the burn minus the issuance. And we can go further than that. We can actually look at P ratios, for example, and analyze Ethereum almost as if it was a tech stock. Now, since the merge, despite the massive reduction in cost of security, we are still not sustainable in the sense that Ethereum is still not able to pay for its security to compensate that with the income that it gets from selling block space. But the good news is that the amount of unsustainability is absolutely tiny. It's less than 0.1% per year. If we were to zoom out a little bit, because right now we're at a moment in history where the depth of a bear market and the transaction fees are very low, but if we were to zoom out even just a little bit, then we'll see that actually Ethereum is in a position to burn much, much, much faster than it is issuing. So if we take all the data that we have, since EIP 1559, we're burning roughly at a rate that's 3.5 times the amount that we're issuing today. And so the supply growth is expected to be negative. And so we have this shape of the supply which we should have, which is that during the first seven years of EFA's existence, the supply has grown very, very fast from this extremely high issuance. And the peak is this inflection point around the merge after which the supply will start decreasing and finding a new equilibrium. And this is what birthed the ultrasound money meme. If we call money, strong money that can't be debased, artificially, because they have a cap supply sound money, then surely something that has a decreasing supply where the money becomes stronger and stronger every single day should be called ultrasound money. And it turns out that bats produce ultrasound. And David, who's with us here, kind of innovated here at the memetic level and said, let's wear the bat signal to spread the ultrasound money meme. And this is where he started. We now have thousands of accounts on Twitter that are spreading the ultrasound money meme with the bat signal. And there's a community that is being built as we speak. Okay, so Ethereum needs security. It will almost certainly be sustainable thanks to all the fees that it's collecting and burning compensating for the cost of security. What about the application layer? What about economic bandwidth? So EF is used as economic bandwidth for decentralized applications. So two examples would be Maker, which uses 1.4 million EF as collateral to power its decentralized stablecoin and Ave, which is consuming roughly half a million EF for its decentralized loans. And the reason why EF is such a good choice as a collateral asset is because it's pristine. And what we mean by pristine is that it doesn't have a lot of these tail risks that other assets might have. It has no contract risk, no custodial risk, no oracle risk, no bridge risk, and no governance risk. But there is one downside to EF, which is that it is pretty damn volatile. And so one of the things that we can try and do is stabilize EF. And this is exactly what stablecoins are, specifically decentralized stablecoins that are backed by EFER. And here are three different projects that are using EFER to back that decentralized stablecoin. And right now we're using about 2 million EF specifically for collateralizing decentralized stablecoins. Now, I believe that we're at the very early days of EFER being used as a collateral. In my opinion, EFER is the perfect collateral money. And so today we may only have, let's say, 16 million EF that's used as collateral, but in 10 years' time it could easily be four times more. It could be something like 60 million EF that is used as collateral. Now again, I want to emphasize the importance of the EF price here in the context of economic bandwidth. Right now we have about 1 billion dollars of decentralized stablecoins that are collateralized by EFER, which is almost nothing. And really we want to be in a position where we have trillions of dollars of decentralized stablecoins. Right? We don't want to see a future where the economic activity is denominated in USDC or USDT, which are centralized stablecoins. Now let's say we want to get to 1 trillion dollars of decentralized stablecoins. We need to grow 1,000 EF from where we are today. We can grow the amount of collateral quite a bit by 15 EF, but that would only give us 15 billion dollars. We need the price to go up essentially. We need Ethereum to be successful so that we have a lot of economic bandwidth for decentralized stablecoins. Now one of the concepts I want to talk about here is the notion of illiquidity multiplier. So you know how I kept on emphasizing that there's two economies within Ethereum. There's the liquid economy, which is hot, and the illiquid economy, which is cold. And really, all the cash flows happen within the illiquid part. So if you think of the burn, it's liquid EF that is burned to pay for block space. And if you think of the issuance, there's like fresh EF that is liquid that is added to the liquid portion. And so really, one way to think about the Ethereum market cap is to focus on the liquid portion for which we have models. We have the discounted cash flow. We have PE ratios, et cetera. And then once we understand how much this liquid portion should be worth, the portion which is basically Ethereum as a business, as a tech company, then we can scale that out to the whole market cap. And the scaling factor is this illiquidity multiplier. And where we are today is that most of the EF is liquid. And so the illiquidity multiplier is actually tiny. It's just noise. It's like 25%, which is roughly the monthly volatility of EF. But things change quite a bit once most of the EF is used as collateral money. Let's say that 80% of EF is used as collateral money and only 20% is liquid. Here, then, the illiquidity multiplier is pretty big. It's 5x. So if the Ethereum cash flows, if the business of selling block space is worth, let's say, $1 trillion, then the whole market cap of EF the assets should be $5 trillion. Great. So we understand security, sustainability, bandwidth. All of these things are critical to the success of Ethereum and they all are tied with EF the assets. What about the last point, activity? So by activity, I just mean the amount of flows that are happening on top of EF. I'm thinking fluidity, liquidity, diversity, vitality, all sorts of applications, millions of transactions per second, something very vibrant. And the only way that we can get there is with scalability. Now, the good news is that I believe we will be able to scale Ethereum roughly a million x. We have this massive wave of scalability coming. We have the surge is coming. And just to give you a little bit more detail, there's basically three technologies that compound on each other, each of which give us roughly 100x in scalability. So we have roll-ups that will bring us to 1,000 transactions a second. We have shouting, which is going to bring us to 100,000 transactions per second. And we have Nielsen's law, which is going to bring us to 10 million transactions a second. Nielsen's law is basically the equivalent law to Moore's law, but for bandwidth. And it turns out that bandwidth is the only fundamental resource that blockchains need to consume. Now, as we scale Ethereum by a million x, there's this concept of the ultrasound barrier, which is how much each single transaction needs to pay for Ethereum to remain sustainable, basically for Ethereum to have enough income to pay for its security expenses. And so the ultrasound barrier is going to decrease by roughly a million x. So right now, we need to burn in base fees roughly three million GUI for every single transaction. But once we scale things up a million x, we only need to pay per transaction three GUI to be able to be sustainable. And the good news is that three GUI is an absolutely tiny amount of money. It's three billionths of an ether. And even if this ether is widely successful, even if it's worth a million dollars, let's say, three GUI would be still less than one cent. It would be $0.003, basically one third of a cent. And so basically, we're going to be in a position where Ethereum to remain sustainable requires transaction fees, which are essentially noise, essentially just dust. Now, one of the exciting thing about Ethereum as a business is that the secure block space is big business and it's been growing extremely fast. And this is basically the daily block space sales since the very beginning of Ethereum. And the y-axis is a logarithmic axis. So as time progresses, even though the per transaction fees might go down, the aggregate, the income should increase. And this is partly due to a concept called induced demand. As you improve things, as you reduce costs, then more and more users will come in, more and more decentralized applications will be built, and you're unlocking more and more activity. And I expect this to continue to happen. Of course, the block space is a very volatile resource. And so these peaks and troughs, they're highly correlated with bears and bull markets. And it could look like the aggregate fee volume has dramatically decreased by a factor of 100x, and it has 100x in the grand scheme of things is actually not much. Okay, so here's my last slide. And it's basically trying to give you a big picture summary, talking in terms of orders of magnitude, in terms of where I see a potential future for Ethereum. So I expect the supply to be roughly 100 million dollars in the long term. So right now we're at 120 million dollars, and the supply should decrease slowly, and eventually in the equilibrium reach 100 million dollars. Now where will these 100 million ether live? So they will live partly as stake, securing Ethereum, partly as collateral, providing economic bandwidth for DeFi, and partly as currency. For example, ether within exchanges like Uniswap or even centralized exchanges. If we have roughly 30 million ETH staking, that's going to lead to roughly 1 million ETH per year of issuance. And if Ethereum is going to be sustainable as a business, then the burn must match that at also 1 million ETH per year. Now the income, what I expect is, remember the previous graph, I expect the income for Ethereum to be billions of dollars every single day in selling block space, even though the per transaction fee will be less than a cent. So this is the success for Ethereum, where we can get the best of both worlds. On the one hand, we get tiny transaction fees for one single transaction, but in aggregate, because we're doing 10 million transactions per second, actually Ethereum has a huge amount of income and that allows it to have a huge amount of economic security. And then again, in the success scenario, I'm expecting tens of trillions of dollars of economic bandwidth for DeFi and correspondingly tens of trillions of dollars of stable coins that are being traded on top of Ethereum. And I think if we do reach this potential future, then undoubtedly Ethereum will have succeeded in becoming the settlement layer for the intent of value. Thank you. Hey, Justin, thanks so much for one making this a talk highly approachable. Thank you for that. So I had a question with respect to, from your talk, what I would now call the illiquid premium. And I think it was actually in David's talk where he had a friendly ultrasound debate where he gave up essentially the point that liquid staking derivatives, then I guess would reduce this illiquid premium. Could you potentially speak to that a little bit? Yes, so I wouldn't have given up so easily for a couple of reasons. Like the first reason is that one of the main uses of the liquid staking token is to have leverage. And so what you end up doing is you end up locking this liquid staking token. And so that liquid staking token is itself not liquid. But there's maybe another reason which is more important which has to do with the cost of money that I mentioned. So let's assume that the cost of money is fixed over time. Let's say it's 3%. The cost of money is going to dictate how much ETH is being staked. And what the liquid staking tokens do is they allow you to unsteak immediately as opposed to having to go through the execute. And you get this privilege of unsteaking immediately by basically paying a very small fraction to market makers or arbitrators who will go through the pain of unsteaking on your behalf. So you're going to sell let's say your one staked ETH for 0.9999 ETH, paying a little fee for the privilege of not having to go through the execute. Now what will happen is that these arbitrators, they will go through the process of unsteaking but when they do that someone else will come in and compensate for this removal of stake. And the reason is that in the equilibrium the amount of staked ETH should correspond to the cost of money. And so even if there's like a large amount of ETH that unsteaks then in the equilibrium more ETH will come in to bring things in. And so really you can think of the total amount of ETH really as being this illiquid iceberg that is essentially impossible to melt because if you melt a small portion another amount of ice grows on the other side. Awesome we'll move on to our second question. So in your future why would there be tens of trillions of dollars of stable coins instead of ETH or just having much less volatility and becoming like a stable coin? Right so you're really thinking ahead. So I'm thinking ten years into the future and I think it's going to take a long time to transition from fiat currencies that live in central banks to and commercial banks to basically stable coins that are settled on Ethereum. But I think you're right if you want to think much further than 10 years if you want to think 20 years, 30 years, 40 years then maybe there is a case for ETH asset to kind of be the stable money. I mean one possible counter-argument here is gold in the sense that gold never really managed to become this like perfectly stable asset and it's possible that there will always be like too much volatility relative to you know baskets of goods that people want to buy for ETH asset. So I think at the minimum we have to go through a transition period where we have these decentralized stable coins and it's possible that even in the end game ETH won't be stable enough. This is just an extra play on the last question. The debate was that ETH are locked in this taking contract has always been a fundamentally like bullish pillar of ETH. It's like the more ETH that's locked in the contract the more scarce it is more that more value it has and then Jordy in the debate was like well all these things are going to become staking derivatives so that you can easily sell so there's no such thing as locking anymore. But the counter-argument that I heard that I want to check with you Justin is that it doesn't matter whether you can easily sell it on a secondary market because the incentive to hold has always been through the yield and you can always you can always withdraw out of the staking contract. So is the 4%, 5%, 3% yield of ETH are equivalent to just like straight raw demand for holding this staking token regardless of whether you can unlock it or not. Are you saying that completely nullifies that argument? In my opinion it does yeah awesome. Well please give Justin a big round of applause. Thank you so much.