This episode reveals why the traditional four-year crypto cycle is dead, detailing Ethereum’s aggressive scaling roadmap and the looming quantum threat that could reshape the entire digital asset landscape.
Market Analysis: Why This Cycle Is Different
- Anthony Sassano opens the discussion by challenging the relevance of the traditional four-year crypto cycle, arguing that market dynamics have fundamentally shifted. He points out that this cycle has not followed the historical pattern of Bitcoin rallying, followed by Ethereum, and then a broad altcoin season. Instead, Bitcoin hit an all-time high before its halving—a first—and has shown less volatility, exhibiting a "step up" pattern rather than a parabolic rise.
- Sassano attributes this change to new market participants like ETF buyers and the absence of widespread retail speculation, which has been largely confined to short-lived meme coin rallies. He also notes that crypto has been rallying despite high interest rates, contradicting the historical correlation with liquidity cycles.
- Key Insight: The absence of a classic altcoin season and Bitcoin's pre-halving all-time high suggest that the predictable four-year cycle, as traditionally defined, may no longer be a reliable model for investors.
- Strategic Implication: Investors should focus on fundamental ecosystem developments, like Ethereum's, rather than relying on historical cycle timing. Sassano believes Ethereum is well-positioned to capture incoming capital due to its dominance in stablecoins, DeFi, and institutional onboarding.
Tom Lee's Super Cycle Thesis and Market Liquidations
- The conversation references Tom Lee, who remains bullish and believes we are still in a "super cycle." Lee suggests that recent market downturns, particularly the sharp decline on October 10th, were driven by systematic liquidations rather than a fundamental shift in market sentiment. He posits that a capital-constrained entity was forced to sell reflexively, causing a cascade.
- Quote: Tom Lee, in a referenced clip, states, "He sees what looks like... engineered or systematic liquidation taking place. So there there is someone that is... capital constrained and is therefore bleeding or having to sell reflexively as price falls."
- Analysis: Sassano agrees with this assessment, highlighting that the October 10th crash was the worst in altcoin history, with some assets falling over 90% in two hours. He suggests that major players were liquidated and market makers vanished, potentially due to "funny business" on offshore exchanges. This forced the sale of liquid assets like ETH and BTC to cover debts, creating disorderly selling pressure.
The Role of DATs in Recent Market Volatility
- The host raises a popular narrative blaming DATs (Digital Asset Trusts)—publicly traded companies holding crypto like Bitcoin and Ether—for the market volatility. The theory is that these entities create selling pressure.
- Sassano's Counterpoint: He argues that blaming a single factor is overly simplistic in a 24/7 global market. While DATs for assets other than BTC and ETH can be "dodgy," the selling from major DATs is often a rebalancing mechanism, not a net negative pressure over the long term. He believes the search for a single cause is often a case of "narrative following price" during downturns.
Ethereum's Fusaka Upgrade: Scaling Layer 2s with PDS
- The discussion shifts to Ethereum's upcoming hard fork, Fusaka, scheduled for December 3rd. The headline feature is the implementation of PDS (Peer Data Availability Sampling), a technology that dramatically increases the data capacity for Layer 2 rollups. PDS allows the network to verify data availability without every node having to download all of it, unlocking massive scalability for blobs (data packets used by L2s).
- Phased Rollout: The upgrade will gradually increase blob capacity through Blob Parameter Only (BPO) forks.
- December 9th: Blob target increases from 6 to 10 per block.
- January 7th: Blob target increases from 10 to 14 per block.
- Strategic Implication: This is a direct stimulus for L2s like Base and Arbitrum, which are already nearing current capacity limits. The increased blob space will lower L2 transaction fees and enable higher throughput, with Coinbase projecting Base could reach 10,000 transactions per second (TPS) in 2026.
Scaling Ethereum's Layer 1: Gas Limit Increases
- In addition to L2 scaling, Ethereum's Layer 1 has also seen significant capacity growth. The L1 gas limit, which functions as Ethereum's block size, has already doubled this year from 30 million to 60 million. This was achieved through social consensus among node operators, not a hard fork, and is now the default in the Fusaka client.
- Future Scaling: Sassano highlights a consensus among core developers to aim for at least a 3x increase in the gas limit in 2026, potentially reaching 180 million. This will be achieved by repricing certain operations, such as lowering the cost of a basic ETH transfer from 21,000 to 6,000 gas, thereby creating more block space for other transactions.
- Actionable Insight: The continuous scaling of both L1 and L2s is making Ethereum more competitive on fees and throughput. Researchers should monitor the impact of these gas limit increases on network stability and fee dynamics.
The Next Ethereum Upgrade: Glamsterdam
- Looking beyond Fusaka, the next major upgrade is codenamed Glamsterdam, tentatively scheduled for late Q2 or early Q3 2026. Sassano expects this to be the only major hard fork of the year due to its complexity.
- Key Features:
- EPBS (Enshrined Proposer-Builder Separation): A protocol-level change to formalize the roles of block builders and proposers, aiming to improve decentralization and censorship resistance.
- BAL (Block Level Access Lists): A feature that enables parallel transaction processing, which will further increase L1 throughput by making block execution more efficient.
- Analysis: Sassano notes that while EPBS is widely desired, there is still contention around its implementation, particularly regarding trustless payments, which could affect the timeline.
The ZK Breakthrough: Lean Ethereum is Coming Faster Than Expected
- A major milestone was recently achieved by researcher Justin Drake, who successfully used ZK (Zero-Knowledge) proofs to verify Ethereum mainnet blocks without re-executing them. He accomplished this using just two high-end GPUs, a massive efficiency gain from the large GPU clusters required only months ago.
- What it means: This demonstrates the viability of the "Lean Ethereum" roadmap, where full nodes can be replaced by lightweight verifiers. This drastically lowers the hardware requirements to secure the network, paving the way for potentially hundreds of thousands of full nodes running from home or even on smartphones.
- Quote: Sassano emphasizes the significance: "A couple of years ago, if you had told someone that this was going to happen this quickly, they would have called you utterly insane... That's how crazy it was."
- Strategic Implication: This breakthrough accelerates Ethereum's scalability timeline. The goal of 10,000+ TPS on L1 is no longer a distant dream but a tangible reality within the next 2-3 years, positioning Ethereum to become a true world computer.
Takeaways from DevConnect 2025
- Sassano, fresh from DevConnect, shares his main takeaway: the transformation of the Ethereum Foundation (EF). He describes the new EF as a more open, user-facing organization that is actively engaging with the community and building what users want. The dominant technical themes at the conference were ZK technology—for both scaling and privacy—and the continued growth of DeFi.
Monad Mainnet Launch: A New Challenger?
- The launch of Monad, a high-performance, parallelized EVM (Ethereum Virtual Machine) Layer 1, is discussed. While Monad aims for high throughput by re-engineering the EVM from the ground up, Sassano questions its long-term differentiation.
- Sassano's Perspective: He argues that in 2025, high performance is "table stakes." New chains must offer something unique beyond speed and low fees, as established L2s on Ethereum already provide that. The key question for Monad and other new L1s is whether they can foster a unique ecosystem that attracts developers and capital.
Regulatory Update: Poly Market and the CFTC
- A positive regulatory development is the CFTC's approval for Poly Market, a prediction market platform, to be offered through registered U.S. brokerages. This marks a significant turnaround from the hostile regulatory environment of the previous year and opens a path for platforms like Coinbase or Robinhood to integrate prediction markets.
The Quantum Threat to Bitcoin and Ethereum's Readiness
- The episode concludes with a deep dive into the growing threat of quantum computing, referencing a detailed article by Nic Carter. The core problem is that quantum computers could break the cryptographic signatures used by blockchains.
- Bitcoin's Vulnerability: Bitcoin is particularly at risk. A quantum attacker could potentially steal up to one-third of the total BTC supply (6-7 million BTC) by targeting addresses where public keys are exposed. Even in a best-case scenario where Bitcoin upgrades to quantum-resistant cryptography, Satoshi's untouched 1-2 million BTC would remain vulnerable. The cultural resistance to hard forks in the Bitcoin community presents a major obstacle to implementing a fix.
- Ethereum's Proactive Stance: Ethereum is in a much stronger position. The "Lean Ethereum" roadmap already includes plans to upgrade to quantum-resistant algorithms within the next five years. Furthermore, a much smaller fraction of ETH supply (around 0.1%) is exposed to this type of attack. For Ethereum, the quantum threat acts as a forcing function to accelerate its existing security roadmap.
Conclusion
This episode underscores that crypto markets are evolving beyond predictable cycles, driven by fundamental technological advancements. For investors and researchers, the key is to focus on Ethereum's aggressive scaling via PDS and ZK proofs, which are set to redefine its capacity and competitive edge in the coming years.
