Coinbase (COIN) is presented as a top long-term investment due to its strategy of integrating its Base network directly into its app, creating a massive on-chain economy. For direct exposure to this ecosystem's growth, consider investing in its core infrastructure protocols which feature "DeFi 2.0" tokenomics. The highest conviction opportunity is Aerodrome (AERO), the leading exchange on Base, which distributes 100% of its revenue to token holders. Another key protocol is Moonwell (WELL), a lending platform on Base that also rewards its token holders with a share of protocol revenue. These value-accruing tokens are seen as superior investments to "DeFi 1.0" governance tokens like Uniswap (UNI), which lack direct revenue sharing mechanisms.

Coinbase (COIN) & Base (L2)

• The speakers are extremely bullish on Coinbase and its Layer 2 network, Base, believing it will become the "biggest on-chain economy in the world."
• Coinbase's Strategy: The company is pursuing a "DeFi mullet" strategy: a simple, regulated user experience in the front (CeFi) powered by decentralized protocols in the back (DeFi).
• Distribution is Key: The primary advantage of Base is its direct access to Coinbase's user base of over 100 million people.
  • Coinbase is integrating Base decentralized exchanges (DEXs) directly into its main app. This allows any token on Base to be traded by Coinbase users, effectively giving new projects an instant listing.
  • This removes a major hurdle for new crypto projects, which previously had to spend significant time and money to get listed on a major centralized exchange.
• Multiple Revenue Streams: Coinbase benefits from this integration in several ways:
  • It can charge its standard trading fee on transactions that happen on Base.
  • It earns additional revenue from transaction fees on the Base network (sequencer revenue).
  • It has a direct investment in key Base protocols like Aerodrome, meaning it also earns a share of the revenue generated by those protocols.
• Long-Term Vision: The speakers believe Coinbase is building for the long term (2035 and beyond), positioning itself to be the "crypto bank" that onboards trillions of dollars of real-world assets (RWAs) and global GDP onto the blockchain.

Takeaways

• The investment thesis is that Coinbase is uniquely positioned to bridge the gap between traditional finance (TradFi) and decentralized finance (DeFi). Its massive user base and regulatory standing give it a powerful distribution advantage.
• The growth of the Base ecosystem is a direct catalyst for Coinbase's business. As more activity, users, and assets move to Base, Coinbase captures value from multiple angles (trading fees, network fees, and protocol investments).
• Investing in protocols that are "Base-focused" is presented as a way to gain exposure to this growth, as they are the essential infrastructure for this new on-chain economy.

Aerodrome (AERO)

• Aerodrome is a decentralized exchange (DEX) described as a "Metadex" and the leading exchange on the Base network.
• "DeFi 2.0" Model: The protocol is highlighted as an example of a more sustainable DeFi model.
  • It redistributes 100% of the revenue it generates from trading fees back to users who lock their AERO tokens and vote on where to direct liquidity.
  • This creates a "sustainable flywheel" that incentivizes long-term holding and active participation, rather than short-term speculation.
• High Participation: This model has resulted in 80-90% of the circulating supply of AERO being locked, indicating strong community conviction.
• Strategic Position: Aerodrome is positioned as the essential "exchange-level infrastructure" for Base.
  • Because Coinbase is integrating Base DEXs, any asset with liquidity on Aerodrome becomes tradable on Coinbase.com.
  • Coinbase Ventures has purchased and locked AERO tokens, aligning the exchange with the protocol's success.

Takeaways

• AERO is presented as a direct bet on the growth of the Base ecosystem. As trading volume on Base increases, so does the revenue distributed to AERO token lockers.
• The tokenomics are designed to reward long-term holders and active participants, which the speakers argue is a more sustainable and valuable model than "DeFi 1.0" protocols.
• The protocol's ability to consistently take market share from competitors like Uniswap on other chains is cited as evidence of its superior incentive model.

Moonwell (WELL)

• Moonwell is an open lending and borrowing protocol on the Base network.
• Pivot to Base: The project initially planned to build on Polkadot but pivoted to Base after identifying its potential, becoming one of the first major applications on the network.
• Value Accrual: Similar to Aerodrome, Moonwell has implemented a "DeFi 2.0" model.
  • It has a system that returns protocol revenue to token holders who actively participate in governance and help secure the protocol.
  • Since turning this feature on, the protocol has accrued $1 million back to token holders in four months and seen a 10x increase in governance participation.
• Strategic Partnership: The Moonwell community has strategically acquired and locked AERO tokens to gain voting power on Aerodrome. The long-term goal is to hold at least 1% of Aerodrome's voting power, which would entitle the Moonwell community to a share of all trading fees on Base's main DEX far into the future.

Takeaways

• Moonwell represents another key piece of financial infrastructure on Base, focusing on the lending vertical.
• The investment thesis is similar to Aerodrome: it's a bet on the growth of Base with a token model that directly rewards long-term, active participants with real revenue.
• The protocol's strategy to accumulate voting power in Aerodrome is a sophisticated, long-term play to capture a share of the entire Base ecosystem's economic activity.

Uniswap (UNI)

• Uniswap is frequently mentioned as a "DeFi 1.0" protocol and a primary competitor to Aerodrome.
• Bearish/Critical Sentiment: The speakers argue that Uniswap's model is less sustainable.
  • They claim Uniswap subsidizes its high operational costs (hundreds of employees, marketing) by selling UNI tokens from its treasury, which primarily benefits insiders and VCs.
  • The UNI token itself does not have a direct mechanism for value accrual; token holders do not receive a share of the protocol's revenue.
• Incentive Misalignment: The speakers suggest that Uniswap's business incentives are to increase liquidity fragmentation across different chains and versions (V2, V3, V4). This forces users to go through Uniswap's own front-end to find the best price, allowing Uniswap Labs to charge a fee.
• Fee Switch Risk: The potential for Uniswap to turn on a "fee switch" to reward UNI holders is viewed as a move that would make it less competitive, as it would have to cut the rewards paid to liquidity providers, likely driving them to platforms like Aerodrome.

Takeaways

• The podcast presents a bearish case on UNI's tokenomics compared to "DeFi 2.0" models. The core argument is that value is extracted by the corporate entity (Uniswap Labs) rather than being redistributed to token holders.
• Investors should be aware of the differences in token models. While Uniswap is foundational technology, the speakers argue its token is not designed to capture value as effectively as tokens like AERO or WELL.

Investment Theme: "DeFi 2.0" & Value Accrual

• A central theme is the evolution from "DeFi 1.0" to "DeFi 2.0."
• DeFi 1.0: Protocols where the token is primarily for governance (e.g., voting on proposals) and does not entitle holders to a share of protocol revenue. The speakers argue that 90% of the top 50 tokens fall into this category and have "zero value accrual."
• DeFi 2.0: Protocols that build a "sustainable flywheel" by directly redistributing protocol revenue to token holders who actively participate (by staking, locking, or voting).
  • Examples cited include Aerodrome, Moonwell, and Hyperliquid.
  • This model is presented as fundamentally more sustainable because it aligns the incentives of the protocol with its users and token holders.

Takeaways

• The key investment insight is to analyze a protocol's tokenomics to see if it has a mechanism for real value accrual.
• Investors should ask: "Does the protocol's revenue flow back to the token holders?" Protocols that do are considered "DeFi 2.0" and are believed to be better long-term investments.
• The speakers predict a "very, very fast reordering" in the crypto markets, where protocols with strong value accrual will outperform those without it.