Beyond Meme Coins: How Ethereum, AI and Stablecoins Are Quietly Building the Next Internet Rail
Everyone saw the meme coin fireworks. Almost nobody saw the plumbing getting rebuilt underneath. Under the hype, Ethereum is evolving into a shared computer where artificial intelligence, stablecoins and privacy tech run side by side.
Ethereum is quietly becoming a shared computer, not just a trading pit
Scroll Crypto Twitter on any random day and you will see charts, memes and flame wars over whose chain pumps harder. Listen closely to people who actually ship infrastructure, and you hear a very different story. In his conversation with Chainalysis on Public Key Episode 164, Ira Auerbach keeps returning to one theme: treat Ethereum like a giant shared computer that is still running on beta hardware.
Today, Ethereum can run smart contracts, but it is slow, expensive and far too transparent for most real world workloads. If you want gaming grade performance, serious artificial intelligence models or anything involving sensitive financial or health data, you hit hard limits almost immediately. Offchain Labs and the Arbitrum ecosystem exist to push those limits out: more computation per block, lower fees, better privacy and stronger decentralization, without forking off into yet another island chain.
That framing matters. When you stop thinking of Ethereum as magic internet money and start treating it as open, shared compute, the design questions change. You stop asking which token number goes up and start asking how we make this thing fast, private and censorship resistant enough that normal people and small businesses can trust it.
Arbitrum, Stylus and scaling without burning decentralization
Offchain Labs is best known as the core contributor to Arbitrum, a layer two network that sits on top of Ethereum. A layer two is essentially a fast lane: it batches many transactions off chain, proves them back down to Ethereum and gives users lower fees and quicker confirmations while inheriting Ethereum security guarantees.
Ira highlights work like Stylus, which expands the amount of computation you can squeeze into each block. Instead of forcing every developer into one narrow smart contract language, Stylus lets you bring in more familiar languages and run heavier workloads closer to how you would on a traditional cloud server. That is a big deal if you want to do things like risk calculations for large trades or inference for AI models directly on chain, not just settle final numbers after the fact.
The crucial part: Arbitrum is designed to scale without quietly recentralizing everything. The sequencer, the piece that orders transactions, and the security model are being pushed away from just trust this one company toward a world where more participants can verify and help run the system.
Why artificial intelligence suddenly cares about block space
Ira calls artificial intelligence a really shiny exterior wrapped around brutally hard engineering problems. On chain, almost all of those problems collapse down to one word: compute. Big AI models are hungry. They chew through GPUs, power and bandwidth. That is why you see Nvidia selling out of chips and tech giants elbowing each other for the next shipment.
If even a slice of that compute is going to live on public blockchains, we need to upgrade the base layer. That is where projects like Stylus come in. By increasing how much computation can fit into a block, Ethereum and its scaling layers can start to host more meaningful AI workloads: not full model training, but inference, verification, on chain scoring and value at risk style calculations that tie AI judgments back to verifiable, tamper resistant ledgers.
For builders, this unlocks interesting hybrids. Imagine user owned AI agents that hold wallets, sign transactions and operate under rules encoded in smart contracts, not opaque corporate APIs. Imagine AI models whose key decisions are logged immutably so auditors can see what happened, not just trust a black box. Those are the kinds of use cases this plumbing quietly enables.
Stablecoins: the first mainstream use case that actually makes sense
Throughout the episode, the conversation keeps snapping back to stablecoins. When Ira was at NASDAQ, institutions told him the same two things over and over: they wanted spot Bitcoin exposure via exchange traded funds, and they were long stablecoins, especially yield bearing versions that could slot into existing treasury operations.
The reason is simple. If you buy and sell United States Treasuries today, you wait days for settlement, longer over weekends and holidays. With stablecoin infrastructure, you can move value in block time: around twelve seconds on Ethereum. That level of speed and capital efficiency is hard to ignore if you run a fund, a payments company or even a mid size business doing cross border trade.
That is why you see players like PayPal and Stripe integrating stablecoin rails, and why lawmakers are finally treating stablecoin legislation as near term, not science fiction. This is a use case everyone already understands. We touch dollars every day. Swapping the underlying plumbing from legacy wires to programmable, auditable tokens is a logical next step.
Privacy on chain: fully homomorphic encryption and real world confidentiality
One of the biggest blockers for mainstream use is that traditional blockchains are too transparent. If you trade on a public chain today, everyone can see your activity. That is the opposite of how your brokerage or bank works, and it is a non starter for sensitive industries like healthcare.
Tandem, Offchain Labs partner studio and venture arm, has backed teams like Phoenix, which is working on fully homomorphic encryption, often abbreviated FHE. In plain English, FHE lets you run computations on encrypted data without decrypting it first. That means you could, for example, calculate portfolio risk, route payments or perform clinical research queries without ever revealing raw underlying data to the chain.
Combine that with scalable compute and you get the outlines of a system where confidentiality, not voyeurism, is the default. For a TNT Nerds audience that cares about a free but privacy respecting internet, this is not a side quest. It is how decentralized infrastructure becomes safe for everyday use.
Decentralized sequencers and censorship resistance
Another nerdy but crucial piece of the puzzle is the sequencer, the component that decides which transactions go into a block and in what order. Today, many layer twos rely on a relatively centralized sequencer. It works, but it is an obvious choke point for censorship and economic games.
Tandem has invested in Espresso Systems, which is exploring decentralized sequencing and better interoperability between projects building on top of Ethereum. The goal is to let more participants help order transactions while still keeping the system fast and coherent. That matters when you care about user rights: if one entity can quietly reorder or block your transactions, you do not really have censorship resistance.
Ira also hints at work around proving whether a message to the blockchain was censored or not. That kind of proof is the difference between trust us, we behave and here is cryptographic evidence that we did or did not block you.
From bear markets to builder markets
Ira has now seen multiple cycles: euphoric bull runs, brutal washouts, the FTX and Celsius collapses, and the slow rebuilding that follows. His advice is consistent: keep building. Markets swing. Infrastructure persists.
After the wave of centralized failures, capital and attention shifted toward decentralized finance and projects like Camelot, a native decentralized exchange on Arbitrum that Tandem backed. Camelot does not just handle swaps; it also runs a launchpad and supports a broad partner ecosystem. That is exactly how decentralized rails grow: one protocol at a time, offering real utility instead of just leverage.
The broader venture market is cautiously optimistic again. Some traditional investors left the room after the blowups. The ones still here tend to be more technical, more patient and more interested in hard problems like scaling, privacy and censorship resistance. In that sense, the bear market did what it always eventually does: it shook out tourists and left builders.
What this actually means for regular humans and small builders
If you strip away the acronyms, the venture deals and the conference buzz, this story is about something simple: who controls the rails of the next internet. Do we keep centralizing compute and payments into a few black box platforms, or do we push that power out into open, verifiable, user owned systems.
As a small business, indie developer or just a curious neighbor, you do not need to run an Arbitrum sequencer to benefit from this. You care that your future apps can move money in seconds, not days. That your data can stay encrypted while still being useful. That the AI agents you rely on can be inspected, constrained and audited instead of worshipped as mysterious oracles.
At TNT Nerds, we look at Ethereum evolution, Arbitrum scaling work and tools like Stylus, fully homomorphic encryption and stablecoin rails as building blocks for that future. They are not flashy meme coins. They are the pipes and wires you do not notice until they fail. Our bias is simple: we want those pipes to be open source, decentralized where it matters and designed so that everyday users, not just whales and megacorps, can plug in and own a piece of the stack.
We are still early. But if you want a free, user centered internet that does not treat you as the product, watching where Ethereum, AI and stablecoins intersect is a good place to start.
