Logan Jastremski: Solana vs Hyperliquid - Who Wins The Global Exchange Race?

**Tommy Shaughnessy** (0:01)
You're now plugged in to The Delphi Podcast. Hey everyone, I'm Tommy. Welcome back to another Delphi Podcast episode. Today, I'm in person with Logan who runs Frictionless, a incredible fund down here in Miami. Logan's been on the podcast before. Was it two years ago?

**Logan Jastremski** (0:21)
I think so, about two years ago. We talked about ETH and decentralization and low throughput versus high throughput.

**Tommy Shaughnessy** (0:28)
Was it the worst podcast appearance of your life?

**Logan Jastremski** (0:30)
No, it was good. I think it was very factual. If you look back at it now, I feel like a lot of that would still be evergreen content, which is hopefully the goal of how we approach investing. If our thesis changes a lot, then we're probably pretty wrong.

**Tommy Shaughnessy** (0:48)
I don't remember too much of that episode. I remember it being a lot of fun, but I wonder what we got wrong, what we got right.

**Logan Jastremski** (0:54)
I should have watched it.

**Tommy Shaughnessy** (0:57)
We should just post that episode and see if people pick up on the differences.

**Logan Jastremski** (1:01)
I remember distinctly that we talked about Ethereum L2s, why L2s, in my opinion, were not going to win, why you needed high throughput, why decentralization was objective and measurable, and that the fears were overblown about high-throughput blockchains not being decentralized was kind of the main things that I remember.

**Tommy Shaughnessy** (1:29)
So when we spoke then, you were full in on Fund 1, now you're moving on to Fund 2, and we talked a little bit about your thesis for Fund 1 versus what you want to do with Fund 2 What's the difference in thesis between Frictionless 1 and Frictionless 2?

**Logan Jastremski** (1:44)
That's a good question. I think we got a lot of things correct in terms of our understanding that blockchains really needed to scale.
And so understanding that you had to transition from low throughput blockchains like Ethereum, that were amazing in terms of kind of turning completeness and kind of pushing the industry forward, but kind of maybe optimize for the incorrect things. I think we got that fairly directionally correct. I think we also kind of, if my memory serves me or if I'm just knowing myself, we probably touched upon the modular versus kind of monolithic. We definitely did. And I'm assuming my point there was that the monolithic chains were the correct architecture design. And that the modular design was going to be incorrect. And so in large part, a lot of the things that we probably talked about a couple years ago, I think has panned out. I think the thing that we've gotten much more of an appreciation for, as kind of Fun 1 continued, was that throughput definitely mattered in terms of you need scale for application engineers to build more expressive applications. But the thing that we have really come to appreciate now is that throughput only mattered in a sense that it enabled scale. But the other part of that for at least the underlying infrastructure was execution and trading. And so, I would say our Fun 1 portfolio definitely has some trading related portfolio companies within there. But I would say for Fun 2, we've definitely have a full appreciation now for the things that make revenue and where is the value going to grow. And just kind of doubling down on our current thesis. But in large part, it's more of a continuation than like a pivot by any means.

**Tommy Shaughnessy** (3:47)
So just to recap, like with Fun 1, your thesis was high throughput, monolithic chains will win, pressure on ETH, L2s, the modular thesis. And now with Fun 2, you want to stick with the high throughput thesis. But you want by extension, like the second order, you want to focus on apps and projects that lean into that and make real revenue based off trading and execution.

**Logan Jastremski** (4:12)
Yeah. So we actually plotted this. And we showed Raj and Anatoly this in Abu Dhabi. And they're like, why haven't we seen this? But it was a chart from essentially the time from an application to get to 100 million or revenue. Zero to 100 million and how many days it took. And a lot of those companies are now currently being built on Solana. And this is not just like crypto companies, this is across AI as well. The fastest zero to 100 million dollar revenue companies in the world are crypto companies. And this has been stolen and remade multiple times. I'm kind of pissed off about it, but it is what it is, I guess.

**Tommy Shaughnessy** (4:54)