Key Takeaways:

• Campaign Preview: Preparing a campaign with UniversalX to enable users to buy Solana memes with Bitcoin and vice versa, along with a tutorial to guide them through the process

• Merlin’s AI Integration: Focus on AI agents, multi-chain liquidity, and using ELISA for Bitcoin-based AI applications.

• Market Trends: Rapid market shifts require quick moves; long-term holding may be less rewarding now 「as punishing」.

• Liquidity Solutions: Cross-chain functionality and abstraction are key to solving liquidity issues.

Q: With the recent AI news coming out of China impacting both traditional and crypto markets, do you think this will halt the current bull run, or is it just a temporary pause?

Jeff: I think in general, it's a positive development to see different frameworks emerging for dealing with AI. Right now, we have an incubator for AI projects, and it's clear that more than half of them are still using older solutions, like DeepSeek, because the costs are so much lower. For example, if you're building an AI project—whether it's an agent, framework, or app—using OpenAI is about 900 times more expensive than DeepSeek, even though they offer similar functionalities. So, of course, using DeepSeek is an obvious choice.

I'm a bit surprised that this news just came out this week; I thought it would have been bigger earlier. However, more people seem to be talking about it since last weekend. But overall, this is a good thing because reducing costs enables more builders to create AI products. And competition is always healthy. With major companies in the U.S. spending billions—perhaps even trillions—this could serve as a wake-up call for them.

Q: Given Merlin's push to integrate AI, especially with the recent use of the Eliza framework for BTC.Fun, could you share more about this development and its significance?

Jeff: In my view, there are three key aspects when it comes to AI.

First, you need to determine the type of project you're building. At this early stage, most are focusing on AI agents because they are tangible, interactive, and something people can engage with daily. I’ve seen various projects trying to build on this, with multiple AI agents being integrated. ELISA is just one framework we're currently exploring, but we are integrating more. Right now, if you're building an AI agent on Bitcoin via Merlin, you can use ELISA to launch tokens, facilitate trading, and manage wallets controlling private keys. This is just the beginning.

Second, there’s the issue of multi-chain liquidity. Recently, I came across data that showed Solana currently accounts for 93-94% of total trading volume across all chains. Ethereum holds around 3%, BNB has about 2.5%, and other chains like Tron and Bitcoin have very little. Given this dominance, it’s clear that multi-chain liquidity is essential, no matter what project you’re building. If you're creating a Bitcoin agent, it has to be deployed on the Bitcoin mainnet or another Layer 2, but you'll also need to tap into liquidity from other chains. This connects to what we discussed earlier about abstracting the mainnet.

I believe we need this type of product, though I'm not entirely sure what that product looks like yet. Chain abstraction and similar solutions are essential for achieving this. The next step will be identifying the real utilities behind these products.

Currently, we see a lot of buzzwords and concepts around AI agents, but I believe AI can do so much more than what’s being shown now. We’re looking forward to the future developments.

We've been gathering feedback and suggestions from the Merlin community, and the most common request has been for AI-driven online learning. We are, of course, working on that, but as I’ve mentioned before, building AI isn’t a one-day task. It’s not like creating and launching NFT using AI tools. It’s about developing infrastructure and building meaningful applications. I have high expectations for AI and its potential, especially in the learning space. There is so much that AI can accomplish.

Q: I think it’s exciting that you guys are constantly pushing forward, regardless of whether the space is up or down, by adding the latest innovations to the chain. In terms of abstract perception, how do you see this evolving?

If you look at traditional finance, such as the stock market, there’s no need for different types of currencies to interact—it's all about USD or whatever you deposit. Would you agree that this simplicity is one of the reasons traditional liquidity works so well?

And in the context of crypto, do you think the rise of account abstraction and cross-chain functionality is the key to solving the liquidity problem? Is it less about which chain has the better tech stack, and more about eliminating the siloed nature of ecosystems?

Jeff: Next week, we are planning to host a space focused on using the product, as we are launching a campaign with UniversalX. As mentioned before, we’ve observed significant data showing that many users are spending Bitcoin to buy Solana memes. The trading volume is substantial, and their bridge with us is often congested, though this is neither good nor bad news—it simply shows that users are exchanging Bitcoin for Solana to buy memes.

However, this process can work both ways. If, at some point, Bitcoin assets can be purchased using Solana, it would create a reciprocal flow. We are preparing a campaign around using Bitcoin to buy Solana memes and vice versa, as well as offering a tutorial to guide users on how to do this.

Currently, the X interface is quite user-friendly, displaying all the necessary data. You can easily view meme coins across multiple chains without needing to check their chain IDs. By reviewing the relevant data and holders, you can decide whether to purchase or not. We’ll be rolling out this campaign and will likely do a short tutorial next week.

Three years ago, if we had predicted that Solana would capture 93% of the trading volume, no one would have believed it. Back then, Solana was valued at around $8, and the market was down. However, Solana spent time building its infrastructure—platforms like Jupiter and others—and its ecosystem has grown steadily. The decentralized finance (DeFi) projects weren’t born just last year; they’ve been in development for a long time, with significant effort invested. Moreover, their ecosystem fosters collaboration, with a competitive spirit balanced by cooperation.

This is something we can learn from the Solana ecosystem and apply to Bitcoin. People should be united and actively collaborate to build liquidity from day one. However, I don’t think something as complex as Base can be built in a month. It’s a long journey.

Q: Before we bring Jay from Timon onto Merlin Mondays, I wanted to get your thoughts on the drama over the weekend with Runes. Rune Toshi launched a Runes token on Solana, criticizing Bitcoin’s volume. With Runes struggling and BRC-20 2.0 launching in Q3, what’s your take on the future of fungible tokens on Bitcoin? Do you think Runes still has the edge?

Jeff: Over the past three months, I’ve met with many Bitcoin ecosystem builders, and most people are feeling disappointed, not just because of the price, but due to the ongoing division within the community. One common sentiment I’ve heard is that there’s too much politics and polarization. If you’re involved with Bitcoin and claim you’re not frustrated, I think that’s untrue.

Logically, during a bull market, liquidity tends to flow to chains with the fastest transaction speeds and the best liquidity models. For example, I trade on Solana daily to learn from their ecosystem. When I buy a token, the average time before I sell is about two minutes. Typically, I invest around 2,000 in a token, and within about two minutes, I make a return. Two months ago, people would hold tokens for about a week, and a month ago, they would hold for a few days. But now, the competition has become intense. If I hold a token for more than 10 minutes, I risk being outpaced, as millions of tokens are traded daily. I might invest 1 or 2 Solana and make a 10% return, selling instantly, sometimes even within seconds. This isn't necessarily a good or bad sign, but rather reflects the behavior in a bull market. Traders want their money to move quickly, both in and out. In contrast, during the bear market of 2023, there was little activity, and you didn’t hear much from Solana or Ethereum.

When you have some capital and are trying to learn, you see active communities like ours. We host daily Twitter Spaces where people discuss topics like NFT, fungible tokens, mana protocols, and debates around runes and address 20. This is the kind of scenario you typically see during a bear market. I’m just being honest here. If the bear market continues, it could be a positive sign for runes. However, if a bull market comes, most of the attention will likely shift to Solana, as traders prioritize liquidity and the ability to move their assets quickly and easily.

Q: Given the current market conditions and the extreme PVP activity, do you think this behavior is sustainable, or do you believe that, in the earlier stages of the bull market, like in 2021 and early 2022, the retail presence led to longer holding periods and more stability in trading behavior?

Jeff: This time is very different from the last. In previous markets, buying assets like Luna, SOL, Polygon, BNB, or UNI was widely seen as a consensus play, where holding them could yield 100x returns. If you bought and held Shiba or Doge, for instance, selling too soon meant missing out on the profits. But now, if you buy and hold assets like MERL, Magic, Fractal, or Trump, you're essentially punishing yourself. It’s disheartening, as we're supposed to be ‘diamond hands,’ but now no one talks about that anymore. Holding is now being punished, leading to the risk of significant losses.

Q: Given the dynamics of the market right now, where PVP is dominating and quick flips are key, do you think that once retail returns—perhaps in Q4 of this year—the market will revert to the more typical bull market behavior of 2021 and early 2022, where buying and holding assets for longer periods made sense? Or do you think this shift in market behavior is permanent?

Jeff: I hope that this shift happens because markets should reward long-term holders. Those who dig into projects, believe in the team, and trust that the market will improve deserve to see their efforts pay off. Holding assets, becoming part of the community, and building together should eventually lead to profits, which would be a healthy outcome. Unfortunately, what's happening now is quite the opposite—holding assets seems to only result in punishment.

Q: I'm happy because I finally understand what's going on, but I'm also sad because as an investor who prefers buying and holding for the long term (3 to 12 months), I feel like this market is moving without me. Do you think we're just at an early point in the cycle, and eventually, things will shift back to favor long-term investors like myself?

Jeff: The market is always balancing, shifting between diamond hands and dynamic hands. People hope that the market will eventually favor a diamond hand approach to trading. However, it's impossible to predict what will happen, and this is something we all hope for. That's why we're still discussing all these revolutionary ideas. That said, the reality is that my portfolio is currently facing significant losses, and many assets are declining rapidly, which is disheartening. Still, I remain hopeful that someday the market will return to a more successful and stable state.