Meme Coins Pay Ethereum's Bills

[00:00:00]SPX6900 is kind of like Ethereum's uncle. I know how ridiculous that sounds, so give me a few minutes to explain this. Follow the money for a minute. In the first week of March 2024, Ethereum generated roughly $193 million in network [music] fees.

[00:00:17]Around 33,000 ETH, worth about $125 million at the time, was burned. But why? People were frantically trading meme coins like Pepe and SHIB and [music] Faky. The assets supposedly sitting at the bottom of the Ethereum hierarchy created one of the [music] best revenue weeks for the assets sitting at the top. That should immediately make you question the hierarchy. The conventional argument is simple. Ethereum is the infrastructure.

[00:00:50]SPX is just a token living on it. If Ethereum disappears, SPX disappears.

[00:00:55][music] If SPX disappears, Ethereum keeps running. Technically, that's true. But technical dependency and economic dependency are not the same thing.

[00:01:06]Coca-Cola depends on trucks to reach stores. That doesn't make the trucking company economically senior to Coca-Cola.

[00:01:14]The truck is the infrastructure. [music] The product creates the reason for the truck to move in the first place. And that's the distinction people miss with Ethereum. To be clear, I'm not talking about legal seniority in a bankruptcy.

[00:01:29]I'm talking about economic dependency, which means who creates the demand that pays [music] the rest of the stack. A user wants to buy SPX, so they open Uniswap. They submit the trade. They pay gas and ETH. Part of that ETH is burned.

[00:01:45]Part goes to validators. The user gets SPX. Validators get paid. ETH supply gets tighter.

[00:01:52]Everybody in the stack benefits because somebody wanted the memecoin. [music] The demand did not begin with Ethereum.

[00:02:01]Ethereum monetized somebody else's desire. Now, when you remove that desire, imagine every memecoin trade, every NFTt mint, and every speculative DeFi rotation stops tomorrow. Yeah, Ethereum still works, but fee revenue collapses. The burn weakens. Validator income from fees and mev drops. The security e economics get worse. The roads still exist, but the traffic is gone. And a road without traffic is not economically senior to the destination people were trying to reach. That's why saying spx can't be ranked above ETH because it runs on Ethereum is false.

[00:02:41]You're using the technology stack to rank the economic stack and those are two completely different maps. The technology stack tells you what happens on what. The cash flow stack tells you what pays for what. Ethereum supplies block space. Memecoins create demand for it. And supply competes for demand, not the other way around. This is why chains constantly compete to attract speculative activity. You have faster execution, [music] lower fees, better wallets, liquidity incentives, memecoin launches, launchpads.

[00:03:18]They're not doing that because speculation is some worthless side effect. They're doing it because speculation is one of the largest customers in crypto. The chains are suppliers fighting [music] for the customer. Now, here's the obvious counterargument.

[00:03:33]Ethereum doesn't need SPX specifically.

[00:03:35][music] If SPX dies, another token can take its place. The strongest version of this argument is at the category level.

[00:03:44]Memecoin demand is economically senior to the chains [music] competing to process it. But that doesn't make individual memes irrelevant. The tokens [music] that build the strongest culture, the deepest liquidity, and the most durable belief become recurring sources of economic activity. And at that point, they're no longer just contracts sitting beneath the chain.

[00:04:07]They're products people cross the chain to reach. Investors constantly assume infrastructure must be more valuable than whatever runs on top of it. But infrastructure is only valuable when people have a reason to use it. An empty building is still a building. It's also a cost center. The tenants create the rent. The customers create the revenue.

[00:04:34]The traffic gives the road value. So, does this guarantee SPX outperforms Ethereum? Absolutely not. A sound structural argument is not a price guarantee. But when someone says Ethereum automatically outranks SPX because SPX lives on Ethereum, they're confusing physical position with economic importance. [music] Ethereum provides a service. The memecoin trader pays for it. Service provider does not create the customer.

[00:05:02][music] The customer creates the business.

[00:05:05]Ethereum may be the road, but the road is not the destination. And without traffic, it's just asphalt.