SotN#19: DRUMROLLING! w/ Jacob Cantele from Metamask, Q3 Token Report, Gradually then Suddenly

🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/ ✊ STARTING GUIDE BANKLESS: https://bit.ly/37Q17uI ❤️ JOIN PRIVATE DISCORD: https://bit.ly/2UVI10O 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 👕 BUY BANKLESS TEE: https://merch.banklesshq.com/ ----- GO BANKLESS WITH THESE SPONSOR TOOLS: 🌐 UNSTOPPABLE DOMAINS - HUMAN READABLE ETHEREUM & CRYPTO ADDRESSES https://bankless.cc/unstoppable 🌈 ZAPPER - ULTIMATE HUB FOR DEFI - ZAP INTO DEFI http://bankless.cc/zapper 💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith 🤖YEARN - YIELD-SEEKING MONEY ROBOT THAT FARMS DEFI FOR YOU http://bankless.cc/yearn ------ SotN#19: DRUMROLLING! w/ Jacob Cantele from Metamask, Q3 Token Report, Gradually then Suddenly MetaMask Exceeds 1 Million Monthly Active Users https://medium.com/metamask/metamask-exceeds-1-million-monthly-active-users-9da72a1e915d - How was this data collected? - How has this impacted or changed MetaMask’s priorities with its product? Introducing MetaMask Swaps https://medium.com/metamask/introducing-metamask-swaps-84318c643785 - MetaMask is aggregating the aggregators! - 0.875% fee for MetaMask saving you up to 5% on your trade! Then, we turn to the Q3 Token Report from Lucas Campbell! Bankless Q3 Token Report: https://bankless.substack.com/p/bankless-q3-token-report Rise of the Ownership Economy Lastly, David and Ryan discuss 'gradually, then suddenly' in the crypto revolution https://bankless.substack.com/p/gradually-then-suddenly-market-monday Five-star reviews to help grow the Nation! ------ Don't stop at the video! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit the official Bankless website for resources http://banklesshq.com/ Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState Follow DeFi Dad on Twitter https://twitter.com/DeFi_Dad ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Hoffman?

  The.

• 2:10David Hoffman?

  The.

• 4:56David Hoffman?

  The Bankless State of the Nations are brought to you by Wyarn. Wyarn is DeFi's first self-building, community-run project, which I just get really, really excited about. Wyarn is a system that seeks out yield in DeFi, and it does that in a number of different ways. A very aggressive way is with the vaults, where you can deposit your preferred asset of choice, and different DeFi experts will come in and generate a strategy for what to do with your deposited token. And so it'll go find ways to get yield in that deposited token in DeFi. For those who want to just earn yield on their stablecoins, the Earn system is for you, where you can deposit your preferred stablecoin, and Wyarn will go and figure out which money market on DeFi.

• 5:38David Hoffman?

  And DeFi is producing the best interest rate, whether it's DY, DX, it's Compound, or AVE. It looks around DeFi to see where the yield is coming from, and it directs stablecoins automatically, so you don't have to. Check them out at wyarn.finance to get started, and also check out the stats page to see what other people are doing as well. We're also brought to you by Monolith. Monolith is your cool new DeFi account, your DeFi savings account, your DeFi checking account. Except the cool thing about the Monolith DeFi account is that it gets software updates, right? You actually get to increase the usefulness of this over time. So here are some of the features. Monolith is a smart contract wallet with a lot of the features that you would expect if you've come to know DeFi and what it is.

• 6:19David Hoffman?

  You can add money to it, you can put that money to work in Compound and accessing yield. And you can also swap through Uniswap. What was cool with Monolith is that they will Send you a very sexy Monolith Visa card that connects to your Monolith Smart Contract Wallet on Ethereum. So it's a really awesome tool to live a bankless life with a savings account that gets software updates. So this is something that you're never going to find out in the real world, but you can still do real world things with, you know, real money and like buy your groceries. So that's just fantastic. Coming soon to Monolith, actually already here to Monolith is now you can buy, die and get it sent to your wallet directly, right? So it's also being an on-ramp. So you don't

• 7:03David Hoffman?

  have to go through your centralized exchange like Coinbase or Gemini or wherever. You can just go straight from your bank account right into your Monolith checking account, smart contract wallet. So check them out at monolith.xyz.

• 7:21Ryan Sean Adams?

  All right. Welcome everyone to State of the Nation. Thanks for joining us. This is State of the Nation, episode number 19. If you are new to State of the Nation, David and I do a couple of things. First, we talk about what's happening generally in crypto. Then we try to relate it to the big picture stuff that you hear about in the podcast and you read in the newsletter. And finally, we try to drop some hot insights and action items for you. Of course, this comes out live Tuesday on YouTube and you can watch it there. You can also get it on the podcast stream if you're an audio only type of person. We release it in both places for you. David, how you doing today?

• 8:03David Hoffman?

  Absolutely fantastic. There is always, as always, so much to talk about. The space continues to move at a mile a minute. And so we are going to get into some of the things that are on our minds in today's State of the Nation.

• 8:17Ryan Sean Adams?

  Yeah, David. So there's three things we're going to dive into. The first is MetaMask. So MetaMask recently hit this massive milestone, over a million monthly active users. And we've brought Jacob Cantel on to talk about it. He's from Product at MetaMask. That's going to be pretty exciting. What else we doing, David?

• 8:37David Hoffman?

  We are going to talk about the Bankless Q3 Token Report, which like I've been saying, Q3, it looks like, it looks different from all the other Qs. And so we're getting the author himself, Lucas, on to the State of the Nation after Jacob to talk about the Q3 Token Report. And then after that, go ahead.

• 8:56Ryan Sean Adams?

  Oh yeah, I was gonna say, this is a token report that we put together in-house. So Lucas Campbell is a fantastic editor and analyst on the Bankless team. He puts this token report together once per quarter and there are some fantastic insights there that we'll get to a bit later in the show. And what's the last thing, David?

• 9:13David Hoffman?

  Yeah, last thing is kind of what I was alluding to is, and what I wrote in this week's Market Monday, is this like gradually then suddenly idea of crypto adoption, right? First, it happens slowly, first progress seems to take forever, and then all of a sudden, like, adoption arrives, right? And we're like, we're there, right? And so there's this very like, you know, mentality of this is gonna take forever, and then all of a sudden it's here. And in my mind, on the gradually then suddenly timeline, we're at the then, right? We're past this, the gradually part, we're not at the suddenly part, we're at the then, and that's kind of what it feels like.

• 9:51Ryan Sean Adams?

  Yeah, absolutely, totally agree. All right, can't wait to dig into that. We should also talk about some of the things that are going on in the Bankless Nation. David, we just dropped this epic two-hour-long episode with Vitalik on Ethereum and ETH2, and that really struck at like, not so much the when ETH, or the how ETH, but the why ETH. What were your takeaways from that?

• 10:14David Hoffman?

  Yeah, yeah, my big takeaway is that some of the very original OG design decisions that were made around Ethereum, and specifically Ethereum 2.0, were fundamentally the correct choices. Like, no matter what blockchain, no matter what ecosystem, like, there were some design choices that are going to be correct, like, no matter what. And that's kind of the subject matter, the through line of that particular podcast with Vitalik. Like, why are we so committed to proof of stake? Why are we so committed to sharding? Like, why didn't we pick a different, like, version of consensus mechanisms, or, you know, blockchain scalability? And then on the other, on the flip side of things, a lot of things have happened in

• 10:56David Hoffman?

  Ethereum that, you know, no one could have guessed back in 2015, when Ethereum was really being like, kind of architected or designed in the first place, and that stuff like rollups and EIP15. Five nine. So to me, the my big takeaways was that, you know, there, there, there were some choices that we knew were correct at the very beginning. And there were other choices that we, you know, that we discovered through R and D that came out in the last five years. And what Ethereum two point O is looking like it's turning into is like a, an elegant combination of, you know, very early primitives that we had strong convictions of choosing, along with some of the stuff that we are indeed along the way.

• 11:34Ryan Sean Adams?

  Yeah, absolutely. And a perfect follow up, I think, to that Vitalik episode that that sort of spells out the why Ethereum and the high level is our Ask Me Anything for the Bankless Community with Danny Ryan that's coming up this Thursday. So this Thursday, 12 p.m. Eastern, you can catch it live on YouTube. We'll also be publishing that to the podcast, but that's really an opportunity for the community to ask the more intricate details of Danny Ryan, like when is the actual ETH two staking contract going to drop? How about the various client implementation teams? Perfect opportunity to get into ETH two there. It's, it's really become sort of an ETH two week, I think.

• 12:16Ryan Sean Adams?

  And then finally, David, we've got this new show and we, we put it out every Friday morning. It's called our Weekly Rollup Show. That's, that's really a kind of another cool way to plug into what's going on to crypto. Can you give folks a preview of what that is and why they should catch it?

• 12:32David Hoffman?

  Yeah, Weekly Rollups. So this is something that me and Ryan will always plan, plan like seven days of rough, you know, the up to seven days in advance where like something gets shared on Twitter, something gets shared on Reddit, something gets shared in the Bankless Discord. We grab the link, we stick it in the doc, and then on Thursday, we run through every single link that we grabbed for the prior seven days. Right. It's a roll up, right? And so it's about rolling things up into bite sized chunks. So that, you know, if you have a full time job and like not in the, in the crypto world, or you just maybe you're on vacation. How do you get, how do you sync your node over the last seven days of information? Especially when information in the crypto world moves so fast. So that's what the Weekly Rollups is for. We are rolling up a bu- a bundle of packets of information and injecting them right into your head.

• 13:17Ryan Sean Adams?

  Yep, five topics, 25 minutes. If you've got 15 minutes, you can listen to it on 2X speed and be done. Get crypto downloaded into your brain, the last seven days of it in 15 minutes. A super cool show. So that's coming Friday mornings, both on the podcast and YouTube. David, let's start with the question I always ask you at the beginning of State of the Nation. What is the state of the nation today, my friend?

• 13:44David Hoffman?

  The state of the nation is drum rolling. We are drum rolling. And once again, this has so many different meanings, meanings to so many different parts of the crypto world, right? You know, Ethereum 2.0 seems to be like, like right there. It seems to be right next door. We, some, some people are just waiting for the deposit contract to get announced. And at that point in time, like it's off to the races with getting the, the other phases finished and finalized. Meanwhile, in Bitcoin land, like the, the conversation around like money printing and MMT and Bitcoin as the asset that's diametrically opposed is really picking up steam, right? And so there seems to be just a lot of preparation and anticipating

• 14:26David Hoffman?

  excitement around what it seems to be coming around the corner. Like, so some things kind of just need to come to pass. So we can get them in our rear, rear view mirror. The US election comes to mind. Especially then this is kind of using a crypto centric viewpoint of the world. But like some things just need to come to pass. And then we can finally get to like the climax that we have been looking for. At least that's what I feel like.

• 14:49Ryan Sean Adams?

  All right. So this is like the drum roll before the, before the charge or like the, the drum roll intro before the band starts playing that, that kind of thing. That's what you mean, right?

• 14:58David Hoffman?

  That's exactly right. Yeah.

• 14:59Ryan Sean Adams?

  Very cool. All right. Well, let's dig into some of that drum rolling in today's episode. But before we do, want to talk about our fantastic sponsors that made this state of the nation possible.

• 15:13David Hoffman?

  We already did sponsors. We already did sponsors.

• 15:16Ryan Sean Adams?

  Oh, sorry, dude.

• 15:18David Hoffman?

  Unless you want to talk about Diversify?

• 15:20Ryan Sean Adams?

  Well, you know what? We should talk about Diversify, but let's get to that. So one sponsor, I probably had that in my notes that we should talk about is Diversify. They actually made the token report possible that we're going to get to a little bit later, but we'll reserve time for them when we get to the token report. So my mistake, you know what we should be doing instead is we should be introing Jacob Cantel from MetaMask. He is on the product team at MetaMask. Jacob, it's great to see you. How are you doing today?

• 15:52Speaker 02

  I'm doing great. Thank you so much for having me, Ryan and David. I really appreciate you guys.

• 15:57David Hoffman?

  Welcome, welcome.

• 15:58Ryan Sean Adams?

  Well, it's awesome to have you here. We are obviously huge fans of MetaMask, both ourselves, of course, you know, you know, super users maybe like use it every day. And also the bankless community I know is composed of a whole bunch of people that are daily active users of MetaMask. But I want to talk about like first, this impressive milestone that you guys recently reached, which is you have recently exceeded over a million monthly active users on MetaMask. Can you kind of break down what that means for MetaMask and how that data was collected, Jacob?

• 16:38Speaker 02

  Yeah, so, so thank you so much for saying that, Ryan. So I think a lot of people remember just a little over a year ago, we very first hit a million total installs. And that was just in general installs. We've been seeing compounding growth in MetaMask, especially towards the end of 2019. We saw a lot of growth of users who were in, who were using DAOs and who were playing games. Using using MetaMask.

• 17:17Speaker 02

  And then this this year, the the DeFi space has also has taken that previous growth and is compounding it again. And really, what you see is when a when a user onboards into one site, they start using one app that compounds and the value for the entire ecosystem grows. So we we sort of think of ourselves as a universal solution that's serving the entire ecosystem. We're not just a gaming wallet, or a DeFi wallet, or a DAO wallet, or a payments wallet.

• 17:57Speaker 02

  We're all of those things, and people are compounding into one are joining into one use case. And then they're going and discovering value and all these other things. And we think it's the same kind of feedback loop that you get with the internet generally. So, you know, like,

• 18:15Speaker 02

  there there's certainly a place for for niche apps that that focus on one use case or another. But we think that by by creating the most value possible for our users and the most universal and most interoperable solution, that we're going to be able to to do the best for the for the developer ecosystem and and for the community itself to to start discovering all these sites and apps. Oh, yeah, you were just showing other countries. Those are on our on our mobile growth. I I just want to point those out. We're seeing a ton of growth, especially in in developing countries where people are using this for payments.

• 18:59Speaker 02

  They're using it for for daily survival. They're using it also to try out DeFi in games and apps. And we're we're super excited to be able to provide those kinds of financial services to people who are who have historically been locked out of the traditional financial system.

• 19:19Ryan Sean Adams?

  So for people on the podcast who can't see what we're showing on YouTube, the top four countries in terms of MetaMask mobile volume were first the United States, but second, India, third, Nigeria, and fourth, the Philippines. These last three are pretty surprising, and I think maybe that demonstrates what exactly what you're talking about.

• 19:40Speaker 02

  Yeah, there's a, there's huge community growth and there's especially like mobile in a lot of those countries. Most people principally are using a cellphone. They're not using a desktop computer or something like that. So there's a lot of people who've been waiting for this to really, to really start joining the ecosystem. And our mobile launches really, really helped with that. It's also worth saying that the mobile app in its first month passed the peak of where the extension was for the, for the whole of 2019. So we're, we're really excited about that growth.

• 20:19Speaker 02

  This, this chart you're showing here, this is showing just the constant month over month growth that we're seeing in the, the compounding value that, that we're, we're seeing for the ecosystem.

• 20:31Ryan Sean Adams?

  It looks a bit like a hockey stick, I would say, Jacob.

• 20:36Speaker 02

  You asked a little bit about how we, how we get the data.

• 20:39Ryan Sean Adams?

  Yeah.

• 20:41Speaker 02

  So we're not using on-chain data. I want to be super clear that this, there's not duplicates or something like that. Some, some people were like, well, one person, it's probably just people making a bunch of accounts or something. We have an opt-in consensual thing that we call Metometrics. If people Google Metometrics, you can read in detail about our methodology for how we do analytics. We let the user opt in to, to analytics directly. We don't, even on the users who opt in, we don't track IP address. We're very serious about privacy and, and protecting, protecting the privacy of our users.

• 21:21Speaker 02

  We, we want Web3 to be an alternative to these companies like Facebook and, and Google that are treating people like products and that are treating data as.

• 21:35Speaker 02

  You know, as a commodity and instead we want, you know, we wanna, our, our mission is to democratize access to the decentralized web. We want the decentralized web to be available to everyone. We want a transactional layer on the internet that allows people to to consensually have interactions and permissions and privacy and to, to create a, a better internet. And we want to transform the internet and the financial system.

• 22:02Speaker 02

  So our, our metric solution, we take those who have opted into the metrics. And then we also track those who have opted out of metrics. We get one tracking event that tells us that someone has that someone tracked, that someone opted out. Um, and then we don't track them any further. So we have ratios about

• 22:25Speaker 02

  about uh, how many, how many total, uh, or what, what the percentages of people who are opted into the metrics are. And then we use the data that we have on people who have opted in and then we project that to the, the total number to arrive at a, a real monthly active user number.

• 22:43David Hoffman?

  So do, uh, do you know what percentage of people opt in? So like what, what's the sample size that, that is of the whole?

• 22:51Speaker 02

  So, um, it changes month to month. Uh, when we very first rolled it out, uh, the people who opted out was a higher proportion. It was like around a little higher than 25% um, and today it's, it's around 18%. Um, and we sort of, uh, grouped together, uh, the, the last six month of data, six months of data to get a, an accurate number of where we're at today. Um, yeah.

• 23:20David Hoffman?

  So sometimes it's, historically, it's really hard to like calculate how many people use DeFi, right? Because I have, I have at least 10 wallets that, that I've used, uh, you know, in the last like two years in Ethereum, right? However, I think MetaMask, it's actually a little easier to, uh, get rid of some of the noise because with MetaMask, it's really just the number of devices you have rather than the number of wallets. wallets you have, right? And so inside of MetaMask, I could have ten wallets, but I would only have one MetaMask, right? And so I, my intuition is to assume that some of the data that's coming out of MetaMask is a lot less noisy than like somebody that is looking at like unique addresses that have used Compound or MakerDAO or Uniswap. Is my intuition correct there?

• 24:06Speaker 02

  That's right. So we're, we're, we, when a person opts into Metametrics, we're just getting one event per all their accounts. So these are much more accurate. We're not tracking like, oh, you have ten accounts, so that's ten users. No, but we're, we're trying to, to do real, uh, real data and make this available for the ecosystem. And we want to use it to, to benefit the ecosystem.

• 24:31David Hoffman?

  Cool. Just one last little nuance on there. So like, if the MetaMask was like my first wallet, right? So I've had my MetaMask seed phrase basically since forever. And so I've used, I've actually put that MetaMask seed phrase in, in a couple of my devices. Would you guys count those as one, one user or like one, still one, uh, one user per device?

• 24:53Speaker 02

  So we don't, we, we will, for privacy reasons, we will not associate a, um, uh, the consensual tracking cookie with your seed phrase across multiple devices.

• 25:07David Hoffman?

  Okay.

• 25:07Speaker 02

  So if you did use, you know, two different devices, that would count as multiple monthly active users. Um, most people don't do that, um, although we do see a lot of people that have the extension in mobile.

• 25:19David Hoffman?

  Hmm.

• 25:19Speaker 02

  Um, so there, there is some element of, of duplication there.

• 25:24David Hoffman?

  And, okay, so what, what were you surprised about when you got some of this data? Was any of this data like shocking? Uh, you know, if I, if you ask me like, oh, MetaMask one, you know, one million monthly active users, coming hot on the heels of DeFi yield farming, I would have been like, well, yeah, that's because of the DeFi yield farming. But you're telling me that there's some extra stuff going on. Um, so was that surprising? Was that, was that new information for you guys? And like, and also how has that kind of changed the trajectory or priorities of what you guys are working on at MetaMask internally?

• 25:58Speaker 02

  So we do, we do get numbers on the DApps that people are using in a given month. So we have, we have, not, not that an individual is using, but we get,

• 26:10Speaker 02

  we get aggregate metrics about which, which DApps are more popular and stuff like that. So we, you know, the month over month changes of what DApps people are using very wildly. Like every month, and actually it's really fun in my role to like go in, I can just see like, oh, what's, what's the top 10 this month and go and try all of them. It's, it's been really, really fun for me.

• 26:39Speaker 02

  But, you know,

• 26:43Speaker 02

  most months, the most popular thing, thing that people do is send payments to one another or just send transactions to another wallet or something like that.

• 26:54Speaker 02

  After that, the DEX category tends to be the most popular. Then in, in most recent months, it's that and then the DeFi, DeFi use cases are, are number three. And then, and then games and then DAOs. And within each of those categories, the sites that are the most popular, they vary wildly.

• 27:21Speaker 02

  The, the space is just growing so rapidly and there, there's so many new use cases and new sites and new platforms that there's not just like a consistent, oh, this is what people do in MetaMask. And I think that by, by trying to be permissionless and give people a platform for innovation and to empower the developer ecosystem, we're, we're best positioned to, to, to serve those, those many use cases.

• 27:54Ryan Sean Adams?

  Another really cool thing, Jacob, about this metric is this is a very common Web 2 metric, right? Like if you look at like annual reports of a Facebook or the social, any social platform, they're going to report out in monthly active users and daily active users. And that's exactly what this is. They don't quite understand the other metrics that DeFi use, such as like, you know, maybe active wallets or amount of value, total locked. So that's pretty cool. But I'm also like, I just want to step back and think about 1 million users of a DeFi, a bankless DeFi wallet product. That is a fantastically huge milestone. I remember at, in the quarter one, the first quarter of this year, we were

• 28:39Ryan Sean Adams?

  talking about like, what's the size? What's the population of everybody who uses DeFi? And the numbers came out around, you know, 250,000 to 300,000 people, right? So the the size of a small US city, you know, like a Richmond, Virginia, or something like that. Now, here we are, six months later, and we've got metrics that are telling us there are 1 million monthly active users in DeFi. Well, now we've grown from a city the size of a Richmond, Virginia, and now we're a San Jose. Now we're in Austin, Texas. Like, that's a major metropolis at this point. I can't wait to see, as we extrapolate

• 29:20Ryan Sean Adams?

  that hockey stick forward, how it grows. Well, you know, how long until we're larger than a small nation, for example? And then how long after that until we're larger than the United States of America? So it's very exciting to see these numbers and congrats to, you know, your success for helping to onboard the world into a bankless money system. We really appreciate what you guys are doing at MetaMask. I want to transition to another exciting element, I think, that's coming out with MetaMask is you guys are, you drop the mobile wallet, which is super cool. A number of us, particularly, I would say that the DeFi super users among us, really love the desktop version. And love

• 30:04Ryan Sean Adams?

  the desktop version because it's so damn versatile. Like, you can do anything with it. So any DeFi app, it just kind of works out of the box natively. You can do things... Like connect your Ledger hardware wallet to it. So it feels like if you're prioritizing security, it is one of the most secure ways to actually use DeFi. You don't have to trust a smart contract wallet, which they're coming along, but they're somewhat new. So like MetaMask is fantastic for that. And you guys are starting to add some more features. I think I'm seeing to the desktop version as well. And that's starting with this idea of MetaMask swaps. Can you talk about MetaMask swaps?

• 30:47Ryan Sean Adams?

  And in general, what's kind of in store for the feature set of the desktop version here?

• 30:53Speaker 02

  Yeah, I'd also love, you mentioned hardware wallet. So I'd love to talk a little bit about that, too.

• 30:59Ryan Sean Adams?

  Yeah, please.

• 31:00Speaker 02

  I'll come back to that in a minute. But so, so we've launched this new swaps product.

• 31:09Speaker 02

  It is, it's funny, I'll tell you the whole story of it. So we started out with just the idea, let's pick a DEX aggregator that pulls in a bunch of liquidity sources and bring that to MetaMask. So there's a few DEX aggregators in the space. There's some really great ones. And we went out and we actually, we tried all of them. And we did a study internally on which was the best one that we were going to pick. And we ended up with this split that was like, all of these basically almost evenly compete with each other in different scenarios based on the order size,

• 31:54Speaker 02

  based on the specific token, based on their own unique approaches to gas. And so a team member made this like weird app called Aggregator Aggregator.

• 32:11Speaker 02

  And I was actually just looking at an old screenshot of it. But it took All of the Dex aggregators, and it pinged them individually. And it allowed us to get the best possible price for the user. And then to route the order through the specific Dex aggregator or direct Dex that made the most sense for the user. So, um, so we've rolled this out, um, now, and, and obviously it's, it's a lot more robust and, and beautiful than the original aggregator, aggregator was. But, uh, so, so we've rolled this out. Um, we're aggregating, um, many different Dex aggregators.

• 32:56Speaker 02

  We're aggregating APIs that are not, um, as readily available to people. We've also got, uh, uh, private market makers who are providing liquidity to it as well. Um, that, that wouldn't necessarily, uh, be available otherwise. Um, and we're, uh, we're, we're bringing this to, to end users. Um, and trying to, to really take, uh, that million monthly active users that you mentioned, many of whom have never even done Dex swaps, like they onboarded into MetaMask to play games, to, to be a part of a community, all, all kinds of different use cases.

• 33:38Speaker 02

  And to make that feature set more available to them, to make it more convenient. And then also to give them confidence that when they make a Dex swap, that they're actually getting a fair price for, uh, for the, the, um, for, for the swap. So that, uh, that's now available today in Firefox. Uh, we're looking to roll it out to Chrome very, very shortly, I think next week. Um, plus or minus. Um, and we'd love to bring this to, to mobile as well.

• 34:16Ryan Sean Adams?

  Fantastic. That was actually a YouTube question. Um, hey, you like, when, when is it going to release to the browser? So it sounds like next week for Chrome. Uh, it's fantastic news. And Jacob, you wanted to say something about, uh, hardware.

• 34:29Speaker 02

  Um, yeah, don't hold me to that date, by the way. That's speculation and affirmation. Never. User complex.

• 34:37Speaker 02

  But uh, yeah, um, well, I, I, did, did you wanna talk, ask me more about this? And we can go to the hardware wallets in a second. I didn't.

• 34:46Ryan Sean Adams?

  Well, okay, I guess so swaps seems pretty straightforward, but basically, uh, to maybe to summarize, and you can correct me if there's, you know, anything wrong. You, you open the extension, basically, and within the MetaMask wallet itself, there's some functionality that allows you to move from one asset to another, uh, and it gets you the best price using that aggregator of aggregators type of, of formula. So I could move from ETH to a DAI or a DAI to a, you know, Wify or something like that, just with a couple of clicks. Is that kind of it?

• 35:17Speaker 02

  Yeah, yeah, that's it. That's a good summary.

• 35:20David Hoffman?

  So the, the reason why I think this is such a big deal is because, uh, historically, at least from what I've seen, MetaMask has been a product that has pushed complexity out to the edges, right? It lets the websites take care of crazy logic and MetaMask just operates as this like coupler between your wallet and that website, right? And so this is like the first feature I've seen MetaMask rolled out, roll out, that has complexity on the inside of MetaMask, right? Which is kind of a big step for MetaMask outside of its, you know, previous, you know, keep things simple on, ke- keep things simple and secure, and then just, you know, make everything, you know, ask the user for permission if they want things to be more complex.

• 36:02David Hoffman?

  Um, so what, what was the thought process with, you know, adding in complexity into MetaMask natively?

• 36:10Speaker 02

  So I think the way that we think about it is we wanna be a wallet that serves the whole ecosystem and the whole community, uh, first. And we're definitely principally still focused on, on being a universal wallet. Um, that, that has not changed, uh, really at all. We're providing some additional, like where we see clear adoption of a specific use case, um, where we can make it easier for people to do. We are bringing some of those features into the wallet. Um, you mentioned swaps, but there's also another example of that. On mobile, we actually launched an aggregator of on-ramps.

• 36:55Speaker 02

  So a MetaMask mobile user can can purchase crypto through MetaMask mobile and be routed through the appropriate on-ramp to the country that they're in. So we're aggregating wire, we're aggregating Transact, which is itself an aggregator of other on-ramps, and bringing those two together. And so we're trying to make it easier for people to get ETH, to get DAI, and to do so in whatever country that they're based in.

• 37:36Speaker 02

  So I think that, you know, we want to make those kinds of things available,

• 37:42Speaker 02

  while principally, we're still focused on serving the entirety of the ecosystem.

• 37:48Ryan Sean Adams?

  Very good. Yeah, so maybe jumping to that hardware question. So the reason this is, I think, important is, you know, the reason DeFi super users love your product again is because it's so versatile, it just works with everything. But also, if you are doing things with larger capital amounts, larger capital pools, you know, you're most comfortable probably holding your own keys on some sort of a hardware device or some sort of multi-sig, right? There might be a handful of smart contract wallets that are mature enough to be trusted, maybe a multi, a Gnosis multi-sig, maybe an Argent wallet getting closer, right? But if it's large amounts, the safest place to do it is directly like self-custoding,

• 38:33Ryan Sean Adams?

  not in a smart contract wallet. We've seen, you know, issues like the Parity hack in the past. So can you talk a little bit more about hardware support? Because that's been kind of a killer combination. I know for many folks in the bankless community, you take a hardware wallet like a Ledger or Trezor, and you combine that with MetaMask, and now you have your own self-sovereign banking interface and can do anything in DeFi in a very secure way.

• 38:57Speaker 02

  Yeah, so, um, so, so thanks for that. So a bunch of, we, we have a bunch planned on the hardware wallet front. Um, and we're, we're, this has been one of the, the most popular things that we do, but it's also been,

• 39:14Speaker 02

  one of the more finicky things in some ways because of third-party APIs. So, um, a lot of the, the, a lot of hardware wallets were built around U2F and, and Webhead, which are APIs that force, or that, that give the, the browser or the operating system in different circumstances.

• 39:37Speaker 02

  The, they're dependent on, on those APIs. So in, you'll have some, some challenges for some users, like on, on Windows. Um, there's annoying pop-ups to use as APIs. So we're, we're working together with the Ledger team on a better, a better flow for, for that. I don't have anything to announce yet, but, uh, we'll have a much more versatile and universal solution there, I believe.

• 40:08Speaker 02

  We also have a pull request, um, that you can find, uh, where, uh, MetaMask is, uh, potentially going to be supporting,

• 40:21Speaker 02

  QR code-based hardware wallets, air, air-gapped hardware wallets. So we'd, we'd love to, you know, someone can use a device that doesn't go online anymore, an old phone without a SIM card in it. Um, you can use that as a hardware wallet and, uh, use the camera on your phone. There's other hardware wallets that are coming out with cameras and screens that, that are air-gapped. Uh, we'd love to be able to support a broader diversity of, of things and things that aren't dependent on third-party APIs.

• 40:54Speaker 02

  We are also coming out with a plugin system that is that's going to allow the addition of additional hardware wallets. So any hardware wallet manufacturer will be able to add their hardware wallets to MetaMask through a snap. Snaps, they get installed during the connect flow to a site. So, you know, the user could go out to the hardware wallet site, install a plugin that that will allow support for that specific, that specific hardware wallet use case. And we'd love to lower the bar of entry for for hardware wallets.

• 41:35Speaker 02

  And we don't want to be the gatekeeper of which integrations are in MetaMask or which ones are not. So we're increasingly moving towards this sort of permissionless

• 41:47Speaker 02

  platform for innovation and extension of MetaMask itself.

• 41:53David Hoffman?

  Jacob, one thing that really excites me is that MetaMask really offers this obfuscation layer, which, you know, maybe in different words, is kind of like this user aggregation layer, where you guys are, at least with this swap, with this new swap feature, you guys are the aggregator of aggregators, right? And so there's a lot of DeFi protocols that are operating behind the scenes to make the MetaMask swap feature work, right? So, you know, MetaMask looks to Uniswap for its price, it looks to Dex Ag for its price. When Dex Ag looks at Kyber for its price. To me, what I'm seeing is a manifestation of the Protocol Sync thesis, which, if you're familiar, the Protocol Sync thesis is protocols that are just, you know,

• 42:36David Hoffman?

  operate as infrastructure, agnostic, credibly neutral infrastructure, fall down to the bottom, and then surface layer, surface level interfaces, things like MetaMask, tap into those protocols in order to offer services to its users. And what you guys are doing is really clever, is you're adding on a 0.875% fee onto the swap for it to add to that service, which, to my knowledge, is MetaMask's first big step into actual monetization. Of the product from what I can tell. So are there few future like kind of you know, value added features that you guys are thinking about where you guys also take, take your guys' your fee, your cut to help support the MetaMask business?

• 43:18David Hoffman?

  And maybe grow this thing into something, you know, massive is are there few future products coming down the line that kind of fit in the same pattern?

• 43:27Speaker 02

  Yeah, so we don't have any other value added services to announce yet with the exception of the the other one that I the other one that I mentioned was the the on-ramp aggregator. So we have that on mobile today. We make a small revenue from that as well.

• 43:50Speaker 02

  And we've historically had just wire and a couple other solutions on the extension. But so the the two ways that we do make money are from the on-ramp aggregator and from the swaps feature. The I don't know what the the long term pricing of the swaps feature will be. We we had originally announced a 0.3% to 1.875% depending on swap size and different things like that. We haven't rolled out the dynamic pricing to to the to the Firefox version yet.

• 44:31Speaker 02

  And we're looking at a lot of data, thinking about what the the best the best way to approach it is. We we did intentionally set we did a lot of research on to how much money we were going to be saving people. And so it varies a lot depending on swap size, depending on different scenarios. But we've seen swaps where we're saving people 5%.

• 44:57Speaker 02

  We're we're able to really save the end user a lot of money. And it varies a lot based on the order size, based on different scenarios. But we feel really good that we have a really strong value proposition and that we're saving people, saving people money. We're not trying to do this as like fee collectors. It's not just like, I mean, convenience is a part of it, but we want to give people confidence that they're getting the best swap price. And so our our fees are sort of built around that.

• 45:28Ryan Sean Adams?

  Very cool. All right. I want to talk about this, this last maybe major feature set that we're starting to see rollups actually come into existence in a big way in DeFi. Even starting to see Ethereum rollups, actually projects deploy Ethereum rollups first before they deploy on mainnet, which is super exciting. Right now in MetaMask, you can kind of, you know, change from mainnet to a testnet to, you know, something like Ribson or, or some other testnet. Very easily. Yeah. X dye and just like a click of a button. Is that, is that, can you do the same thing for a rollup? Let's say this optimism rollup with synthetics and with Uniswap comes into existence.

• 46:10Ryan Sean Adams?

  Will, will that be, you know, able to natively plug into MetaMask as easy as a click of a button and you're on this new network?

• 46:19Speaker 02

  So, so I'll, I'll, so a few things that we have announced today. There's lots of, lots of things to talk about, but so we've announced our plugin system. Late last year, there was a developer preview of the plugin system that's available today. And that can support both EVM compatible custom blockchains and it can support non-EVM compatible custom blockchains. Layer twos, like, for example, Starkware, you can't just add Starkware as a custom network today. You, you need a, you need a wallet that's compatible with its name.

• 47:01Speaker 02

  So we're building this plugin system that allows the user during the connect flow to a site to add a custom blockchain.

• 47:12Speaker 02

  And to, to have that as a part of their MetaMask wallet. There's a lot of security things that we're figuring out with it. We're, we're also, we're doing some, some other, some, some other exciting stuff. With complementary blockchains that are being used for file storage. So yesterday you might've seen, got announced that Filecoin is, is doing us a plugin and Snap together with MetaMask. So you'll be able to do data storage and stuff like that from, from MetaMask. So we really want MetaMask to be deeply extensible.

• 47:55Speaker 02

  And to allow the developer community to start extending what MetaMask can do. We also, we want to have contract account APIs. So a wallet developer of a specific contract account standard can create a contract account wallet. You can import your contract account wallet into MetaMask. So even if you were using a different, you know, using a specific contract account.

• 48:28Ryan Sean Adams?

  Say like a Gnosis multi sig, for instance?

• 48:31Speaker 02

  Yeah, exactly. You'd be able to import that with the plugin system. So we're, we're really committed to that. It's, it's very important to us. It is technically challenging. We're doing a lot of really interesting stuff with security as well to make, to make it work. So we've got this product. It's a library called Lava Mode that sandboxes all of the open source dependencies to the wallet. So we're, we're really excited and proud of that. We take security extremely seriously and so we're, we're doing a lot of innovation in the space.

• 49:12Speaker 02

  Lava Mode also uses something called Sess or Secure Ema Script, which is a JavaScript sandboxing method.

• 49:22Speaker 02

  The, in, in terms of, we'll, we'll also have some other, some other announcements short of, of snaps to announce in, in the coming few weeks, but I'm not ready yet.

• 49:37Ryan Sean Adams?

  It sounds like you guys have a ton of stuff in the back pocket.

• 49:40Speaker 02

  Yes.

• 49:41Ryan Sean Adams?

  Absolutely. Well, that's great. Well, Jacob, thanks so much for your time. It's been a pleasure to have you. There's so much more we could get into. We haven't even talked about like Infura and/or MetaMask token or other future things, but we'd love to have you guys back on Stay the Nation to talk more about that as those exciting announcements come in. Thanks for, thanks for joining us though, Jacob.

• 50:04Speaker 02

  Yeah, thank you guys so much. That, that token one is a very popular request.

• 50:08Ryan Sean Adams?

  I bet.

• 50:10Speaker 02

  So anyway, thank, thank you guys so much and I, I really appreciate it.

• 50:16Ryan Sean Adams?

  Well, fantastic. Take care, Jacob. All right, David. Now, this is the point time where I'm supposed to announce sponsors, basically. So to the sponsors that made this possible, thank you very much. We're going to show a little bit about their tools in just a second here. And then we'll be back talking to Lucas Campbell about the Q3 token report that we just

• 50:36David Hoffman?

  Q3 token report.

• 50:39Ryan Sean Adams?

  Stay tuned.

• 50:39David Hoffman?

  Here we go. Zapper is this new tool that I use to check out all of my assets in DeFi. As you guys have known, DeFi has absolutely exploded recently. And so managing your assets is getting harder and harder because there's so many different places and so many different assets that it could be. So I'm going to put my Ethereum address in here and Zapper is going to tell me where all of my assets are across Ethereum, right? So here are all of the assets in this wallet. There's a decent amount of them. And it's also going to tell me where I've deposited assets into various DeFi protocols, right? So there's some yield farming going on. There's some liquidity pooling going on. We can also look more granularly at the specific protocols that it's involved with in this explore feature. So it's got some assets deposited

• 51:24David Hoffman?

  into Uniswap. It's got some assets deposited into Balancer. And also with Zapper, you can just exchange straight from the Zapper interface, right? So this is just another layer on top of Uniswap or other exchanges on Ethereum that allow you to swap assets, right? So check them out at zapper.fi. It'll give you a nice clean portal to invest your assets in DeFi. And you can also connect to multiple wallets if you use multiple wallets all at once, and it'll give you an aggregate of every single wallet that you own. Check them out at zapper.fi. Also, this is definitely not my wallet. Unstoppable Domains is helping the world become censorship resistant and permissionless. If you are looking for a censorship resistant website that no one can take down, go to

• 52:07David Hoffman?

  unstoppabledomains.com and type in the domain that you think that you want. So I'm going to type in the domain that I think that I want, trustlessstate, and it's going to tell me some of the options that I can get to get a permissionless domain, trustlessstate.crypto. And so what you can do with trustlessstate.crypto or whatever domain that you want is you can purchase it and then it can be a URL that you direct people to. That no nation state can take down. That's what unstoppable domains is all about. What's also really helpful with unstoppable domains is that wallets can integrate unstoppable domains so that the addresses that you send your crypto assets to can become human readable. And this doesn't work for just Ethereum. You also can do this for Bitcoin or Litecoin or any blockchain at all, where wallets can resolve to your human readable name.

• 52:52David Hoffman?

  So you can tell Bitcoiners to send you Bitcoin to trustlessstate.crypto or yournamehere.eth. Check them out at unstoppabledomain.com.

• 53:04Ryan Sean Adams?

  All right, Bankless Nation, we are back to talk about the Q3 DeFi Token Report. And we are joined by Lucas Campbell, who is a Bankless editor and analyst on our team, puts out these fantastic reports every quarter. Lucas, how you doing, man?

• 53:21Speaker 03

  I'm doing great. Thank you guys for having me.

• 53:24Ryan Sean Adams?

  Oh, well, it's great. It's great to have you, my friend. So we want to dig into this this token report. And of course, aside from yourself, the other party that really made this this possible is our token report sponsor, Diversify, which is a killer decentralized exchange for serious traders. It's private transactions, instant settlement, all the Bankless way. They are doing some really cool stuff with Layer 2, particularly Starkware, to make all of this really fast with solutions like Diversify. I feel like you don't even need a central crypto exchange anymore. We will include a link to Diversify where you can start trading on it in the show notes

• 54:07Ryan Sean Adams?

  and just want to thank them for making this report possible.

• 54:10David Hoffman?

  One of the first companies to really get on to a Layer 2 up and running. And I use their exchange like really quickly when they first like launched and like the UI was pretty pretty simple, pretty, pretty easy to use. But then it's all already like so become so polished over the last like two, three, four weeks. So big time Diversify.

• 54:29Ryan Sean Adams?

  You can't even tell they're a decentralized exchange. There was a time where you could like tell, oh my God, this is a decentralized exchange. Like, you know, brace yourself for a clunky user experience. It's not like that anymore. All right, Lucas, we've got the report open. We want to talk about some of the highlights, man, that you saw. So this is the report that we issued on Bankless. We've got it, of course, in a web version, but also this cool institutional Wall Street-grade PDF version. And you've called this report, Lucas, "The Rise of the Ownership Economy." Can we dig into that name? So why did you call it that?

• 55:07Speaker 03

  Yeah, I mean, I think that's a great question. So you guys talked about this a lot last week with Jesse Walden and the ownership economy. But really, the name came from this mania, this yield farming mania that happened in Q3, where the core idea was give ownership to the users, right? So it would be like the equivalent of like, let's say Uber distributing equity to anyone that gave or took an Uber ride, or let's say like Google giving out shares to anyone that used that search engine. So like, the equivalent of this in DeFi is how Compound gave comp tokens, which, you know, pretty much kickstarted the whole mania. They gave comp tokens to anyone that provided liquidity

• 55:49Speaker 03

  or borrowed assets from the protocol. And that pretty much just kickstarted this insane, insane quarter that we can kind of just see in the data. But, uh, yeah, I mean, the rise of the ownership economy is really just this core notion of giving ownership to the users and making them, you know, the stewards of the protocol over the long term.

• 56:10Ryan Sean Adams?

  All right, and it was an insane quarter. You know what? Let's just get right to the quarter. I want to come back to the shift from price to earnings, PE, to price to sales, because I think that's important, just, you know, as far as a takeaway. But let's get into this insane quarter that we saw. And here's kind of like the, you know, the money headline here. But we saw a quarter-to-quarter revenue increase for these DeFi tokens. We call them capital assets. Assets because they're similar to stocks in their ability to potentially in the future produce cash flows that can be valued as such, but the revenue increase was 26X from last quarter, right? So this is, this is the graph. These are all quarters here.

• 56:55Ryan Sean Adams?

  Q1, Q2, Q3, Q4, and then, oh my God, here's Q3. It's like massive. So we went from 3.9 million in revenue created by these DeFi protocol tokens to 108 million revenue created by these DeFi tokens in Q3. Is that the, the ownership economy? The yield farming mania that you were talking about is, is much of the growth as a result of that?

• 57:22Speaker 03

  Yeah, I mean, definitely it was a lot of that. I mean, Uniswap was like a big contributor to that. So a lot of people were, you know, trading DeFi tokens, were swapping in and out of tokens. You know, a lot of the yield farming protocols like featured Uniswap LP tokens. So like Uniswap is obviously like the biggest contributor with $67 million in that quarter alone distributed to liquidity providers.

• 57:48Ryan Sean Adams?

  Wow, wow. Okay. And then who are the big token winners for the quarter? I guess, is this a graph of, this is still a graph of, of quarterly revenues? Is this a change from previous quarter or is this just, you know?

• 58:03Speaker 03

  So that is the, yeah, so that is the DeFi price perform, or the token price performance throughout the quarter. So between July 1st and September 30th, Ave was the biggest gainer with 300% increase. I will caveat that with saying that YFI was probably the real gainer, but it effectively went from zero to, you know, a billion. So it was like an infinite gain.

• 58:31Speaker 03

  So I couldn't put that on the graph, but yeah, Ave kept kind of, kept its lead. It had a really awesome quarter in Q2 as well. And it just kind of kept going off the back of the Avanomics upgrade, which is like this major overhaul to the token economics and introducing decentralized governance and some yield farming mechanisms and a whole bunch of other stuff.

• 58:51Ryan Sean Adams?

  So Ave, again, with 300% revenue growth in their, in their DeFi token. What were a couple of the others? So there's, there's two more that are above 100% growth. What, what, what are the?

• 59:05Speaker 03

  Yeah, so the other second biggest one was Loopring, which I think a lot of um DeFi investors were kind of getting tired of the gas fees on Ethereum and we're definitely looking towards like layer two solutions. So like I think another notable one that wasn't necessarily uh depicted on the graph was uh like Omeesco OMG. Um had a really awesome quarter from what I remember. Um so I think like a lot of DeFi investors were looking towards later too as like an opportunity to like capitalize on like the increasing gas fees and just like the lack of usability for Ethereum during that time period. I don't know if you guys remember that, but like you're paying, you know, hundreds of dollars in gas fees to get in and out of like, you know, different yield farms.

• 59:47David Hoffman?

  Um. Absolutely.

• 59:49Speaker 03

  The last one was uh Synthetix there with a hundred fifty five percent gain. And um I mean, Synthetix is always just pushing out new stuff. They're constantly up, you know, releasing upgrades. They were the best performing token last year in twenty nineteen. They had like, you know, a meteoric rise. And they're just kind of um piggybacking off that momentum and and keep on keeping the keeping the train rolling here.

• 1:00:12David Hoffman?

  And also one of the first apps to also leverage layer two as well, right? So like Loopring, it's itself is a layer two, but Synthetix is an application, but is now kind of pushing the envelope with getting applications on to layer twos. So in interesting to see like, you know, no one's gonna, no one's gonna point at some price increase in Synthetix and say that's not because of exactly what Synthetix deserves. But also what they deserve is is, you know, because they they are the ones that push the envelopes and move really fast and get on to L twos as fast as possible when it's necessary. So, you know, tip of the hat to to those guys.

• 1:00:46Speaker 03

  Mm hmm. Yeah, I mean, they're they're definitely testing the optimism test net right now. Um and you can stake on it right now and they're incentivizing it, the whole work, so. Um definitely check that out and see if you're eligible.

• 1:00:59Ryan Sean Adams?

  It does feel like the tokens that are building more are doing better in general, like AVE, that team, just like always building, always releasing things. So same with synthetic. So I mean, the builders have really won over the past year. Really quick before we kind of talk about ETH as a DeFi asset as well, and then break it down, these DeFi tokens by segment. Let's talk about the shift from price to earnings to price to sales and what that sort of means, right? So when you're evaluating a capital asset like a stock, investors tend to use this price to earnings ratio, which basically tells you how much you are paying when you buy that stock for every dollar of earnings.

• 1:01:41Ryan Sean Adams?

  So a Netflix might be around 80, 80 price to earnings ratio. That means you're paying it around $80 for $1 of earnings. So you're anticipating that it's going to continue to grow in order to justify a price to earnings ratio of 80. And we've done a lot of work in the past, kind of looking at these DeFi tokens from that lens, because it can be evaluated from that lens. How much money are you paying for every $1 earned in, by the AVE protocol, for instance, right? And that can be a relative valuation metric that's useful. But there is kind of an asterisk there in that a lot of what we're looking at is not like bottom line earnings,

• 1:02:23Ryan Sean Adams?

  like profit, but when we're talking about revenue for these DeFi tokens, we're actually looking at top line revenue, actually their, their sales revenue. So that's sort of the lens. It's not so much price to earnings. It's really price to top line sales because there can be other costs, you know, before you get to sort of the bottom line revenue. Is that a good way to summarize it, Lucas? Or like, what would you add on that concept here?

• 1:02:50Speaker 03

  Yeah, I mean, exactly. I would say like, I think the best way to think about it is like price to earnings is the. Profit that is accrued to the protocol's token versus price of sales is really just the revenue generated from like usage of the protocol, right? So I think like a really good example of this is Kyber. So the liquidity protocol, you know, generated, I think it was like $10 million in revenue off of like a 0.2% trading fee. And right now governance dictates that 73% give or take is accrued to KNC holders via like ETH dividends and then a small amount of it's burned.

• 1:03:30Speaker 03

  Whereas the remaining 26.5% is distributed to like reserves, which are kind of like the Kybers like liquidity providers almost. So you kind of see that distinction, whereas like Kyber's price of sales is 21. Whereas their price of earnings is a little bit higher because only 73% of that revenue is accrued to the token. So the price of earnings is 29.

• 1:03:52Ryan Sean Adams?

  That makes perfect sense, right? So, but, but, but on that, so like we've got a price to earnings of 29, a price of sales of 21, a little bit lower, but price earnings of 29, by the way, that just seems super low. Right? Like high-flying tech companies right now on the NASDAQ are going for PE ratios of like, you know, 80, Amazon's like 160, 170. I don't know what Zoom is. What's Zoom, Lucas, these days? From a price to earnings perspective, like

• 1:04:24Speaker 03

  411 right now?

• 1:04:26Ryan Sean Adams?

  411 right now. That's, that's the, you know, the Zoom stock that we're using Zoom. So fantastic. For them, but that's a pretty high valuation metric.

• 1:04:36David Hoffman?

  Using, using their product to tell their, to tell them that their valuation's really high.

• 1:04:41Ryan Sean Adams?

  Right? Well, the product could be great, but the, you know, stock price could be high relative to, to what it's worth. But anyway, are, are we seeing a lot of very low price to earnings ratios like, like Kyber? I mean, just that seems super cheap still for the potential growth of DeFi's. Is that the case?

• 1:05:00Speaker 03

  Um, yeah, I mean, I would say so. Um, I would like, there's a couple that are like a little bit more nuanced, like Uniswap and Compound. And like, you know, a few others aren't actually generating any earnings for um, token holders. It's all revenue. Um, with that, like Maker was another notable one where right now they're generating like, you know, eighty thousand dollars per day. And they don't have the DSR on, so they don't have that die savings rate. So all of those revenues are being allocated or directed to MKR burns, right? So I think I, in the report, it was like, you know, they're at a new low of a P ratio of like thirty or something.

• 1:05:40Speaker 03

  Um, so you're definitely seeing like the protocols that do accrue value to token holders that have like that mechanism. You know, they're definitely hitting, you know, new lows or they're on the lower end, you know, especially when we're looking at some of these other tech stocks that are, you know, valued at like sky high valuations, you know?

• 1:05:58Ryan Sean Adams?

  Was there a place in the report, Lucas, where the P ratios are that we could see or the price to sales ratios?

• 1:06:03Speaker 03

  Um, there was a price of sales ratio. I did not do one on the price earnings, just because it was like a lot more nuanced to.

• 1:06:10Ryan Sean Adams?

  Where's the price of sales? What page?

• 1:06:13Speaker 03

  Um, should be, let's see, scroll up. It was in that first section, like the DeFi overview.

• 1:06:21Ryan Sean Adams?

  Ah, must have missed it. Okay. So, so what does that mean? I'll, I'll scroll up to find it, but what does that mean for a token like, like Uniswap, for instance? It's almost like a Uniswap is, um, clearly there's value there, but it's almost like pre-revenue. It's almost like Facebook, uh, while it was building network effect and acquiring users, but it hadn't yet turned on its ad modules and started making money. Um, is that kind of how you'd think about it? It just, all it needs to do is sort of flick a switch? And then, you know, they could start channeling some of the, the uh, fees to users and then it could be a capital asset that's generating actual earnings.

• 1:07:01Speaker 03

  Yeah. So Uniswap is actually a really interesting example because if you remember Uniswap and uh, Uniswap B two introduced this protocol charge with like an on off switch. We would just govern at the time with some like ambiguous governance thing. And now it's like, oh, it's governed by uni holders, right? So the protocol charge is switched on, the point three percent uh, swap fee, uh, zero point zero five percent of that. So.

• 1:07:29Speaker 03

  Quarter quarter basis point or point two five percent and then point zero five is directed to um a protocol treasury. So really what that money can be used for is really up in the air, right? That right now at the current earnings or the current revenue was about forty five million dollars um in annualized revenue to that treasury if the protocol fee was switched on.

• 1:07:56Ryan Sean Adams?

  Um hum.

• 1:07:57Speaker 03

  Um and you could use that in theory to burn or like distribute each dividends or whatever you want it to do. You could, you know, accrue that that capital to the token holders. Um, but that's not necessarily what's in like that social contract. I think like a lot of it's going to be used to like fund um and incentivize like community contributions in the long term development and growth of like Uniswap at large.

• 1:08:22Ryan Sean Adams?

  But what's interesting is like uh uh Kyber almost set a precedent there where like it did distribute over seventy percent. It is distributing over seventy percent to actual um K and C owners, right? I wonder if Uniswap will follow a similar path. They'd at least have to be competitive with some of these other protocols in terms of what they uh distribute. Here's the price to sales, by the way, that I was missing earlier. And Uniswap right now is a twelve price to sales uh ratio. Um, which is absolutely crazy when you think of a zoom at uh four eleven. Um, not quite apples to apples, but like

• 1:08:57Speaker 03

  Mm hmm.

• 1:08:58Ryan Sean Adams?

  Kind of close. That's crazy. Um, all right, well, let's break this down by sector a little bit, Lucas. So um maybe we'll we'll come to ETH at the end if we have time. But um decentralized exchanges, how did how did they do? What I guess, what are the the sections that you outlined in this report? And then maybe let's start with decentralized exchanges, but like that's the first. What are the other sections? You got like derivatives and something else, right?

• 1:09:25Speaker 03

  Right, yeah, so we did uh Dex's lending derivatives and then we did some like miscellaneous highlights, um namely Wi-Fi and the Nexus Mutual.

• 1:09:34Ryan Sean Adams?

  Okay.

• 1:09:34Speaker 03

  Um, so in terms of like the Dex sector. Pretty much led the charge, right, in Q3. Um, I think overall, the deck sector aggregated over forty billion dollars in volume in Q3. Um, with Uniswap, you know, comprising of like twenty-five billion of it. So a really solid portion of the revenue or the volume in Q3 was from Uniswap. I think like Curve was in second with eight billion and then Balancer with two point seven billion dollars in quarterly volume. Um, so the deck sector really led the charge, they killed it. Um, a lot of the revenue is attributed, uh, you know, a lot of the DeFi revenue at large is attributed to the deck sector.

• 1:10:15Speaker 03

  Um, I can't remember what the specific number was, yeah, ninety-one million dollars of like the hundred eight was from Dex's, so.

• 1:10:21Ryan Sean Adams?

  Wow, they crushed it.

• 1:10:24Speaker 03

  Mm-hmm.

• 1:10:26Speaker 03

  Um, do you want me to keep going on the, on the Dex's here?

• 1:10:29Ryan Sean Adams?

  Um, yeah, anything else on Dex's before we pop to lending?

• 1:10:33Speaker 03

  Um, we kind of talked about the Uniswap stuff, so that was kind of like my sector highlight, which was talking about Uniswap and how that protocol fee can be allocated towards like, um, accruing earnings for token holders. Um, so that was really the majority of it. Balancer had a really awesome quarter. I think they generated like sixteen to eight, eighteen million dollars in revenue to LPs, which given the launch back in like March, April, you know, spring of twenty twenty, now that's pretty, uh, pretty impressive, given the short time span. Um, but yeah, I mean Dex's crushed it this quarter.

• 1:11:07Ryan Sean Adams?

  Uniswap and Balancer, uh, so it seems like even in the deck sector, it was automated market makers that really dominated in terms of revenue.

• 1:11:14Speaker 03

  Exactly.

• 1:11:15Ryan Sean Adams?

  Very cool. All right, let's jump to lending.

• 1:11:19Speaker 03

  Um, yeah, lending was, had a comeback quarter here. Um, so let's see, Compound, I will say that like Compound and AVE, the way that the token terminal, who's the people that provided the data, the way they calculate, um, the revenue is the interest accrued to suppliers, right?

• 1:11:37Ryan Sean Adams?

  Ah.

• 1:11:38Speaker 03

  So it's, it's kind of a nuanced thing where a lot of the, um, the revenue is really just going to people that's applied assets to the protocol, you know, through interest. You know, with that said, there's obviously a uh an earnings mechanism that could be implemented there where like a portion of that interest is accrued to token holders, right, of Avey token holders or comp token holders. That's not the case right now, but I think that was just an important nuance to kind of understand about lending revenues. With that, I think Maker was kind of the biggest highlight. Um, they ended up turning on the stability fee after multiple months following like Black Thursday of zero zero percent stability fee, not earning anything. MKR was diluted, you know, it was a tough

• 1:12:21Speaker 03

  past couple of months for MKR. But you know, they're back on track now. There's nearly a billion dollars of dye um in circulation right now. They're earning, you know, somewhere around seventy to eighty thousand dollars per day with the entirety of that being accrued to MKR holders, right? Because a DSR is not online. So all of that is going to earnings. Die or MKR is kind of, you know, back on track to say the least, which is, which is a good sign.

• 1:12:48Ryan Sean Adams?

  David, just on that, do you remember when we had Mariano Conte on a few months ago, this is back in April or so? And he made the bold, crazy prediction that dye would hit one million or one billion, excuse me, in circulation this year. And that seemed absolutely outlandish and crazy.

• 1:13:07David Hoffman?

  Right.

• 1:13:07Ryan Sean Adams?

  And now here we are.

• 1:13:08David Hoffman?

  Here we are. Well, we're not, we're not there yet, but we are so close. You can, you can taste it, right?

• 1:13:12Ryan Sean Adams?

  So close.

• 1:13:14Speaker 03

  Yeah, I think we're at like

• 1:13:15David Hoffman?

  And I do want to make that distinction between Maker and the rest of the DeFi protocols. You know, the, the DeFi yield farming, it was really a thing because of token issuance, right? And you know, while there is revenue going through these protocols, the reason why there was this DeFi mania was that because like there, there was just a lot of issuance of valuable tokens, right? Uh, and I think what was going to come is a lot of those tokens, as Lucas just kind of alluded to, a lot of those tokens don't capture the revenue of the protocol. A lot of the revenue like, like the Uniswap versus Kyber example, like Uniswap captures a lot of revenue and then redirects it to liquidity providers, not necessarily to the uni token. And Maker had their token

• 1:13:56David Hoffman?

  Economics knocked from like day one where like revenue from the protocol went into the token itself. And it's really exciting to see that get turned back on. So like Maker as like a leader of the protocol that is both generating revenue. And also it accruing to the token, which it's supposed to be designed for. Is like the exemplar model that I think a lot of other DeFi protocols are either going to get to this point or not go anywhere at all.

• 1:14:21Ryan Sean Adams?

  Yeah, it's got like two, two to three years of maturity on these other tokens and you can kind of see that with it's going through its own cycles.

• 1:14:29Speaker 03

  I will rip on Maker for a second though, like I feel like their token economics is a little outdated, like you don't, they didn't. Yeah, I feel like you could improve a lot on it, right? Like they could be implementing MKR rebates for paying stability fees. Kind of like that yield farming mechanism for opening a die CDP.

• 1:14:48Speaker 03

  I feel like the auction, like the MKR auction for burning is like kind of not great. I feel like. If they had a uni swap with a ton of liquidity, like implementing open market buybacks and stuff like that would be like much more effective. But that's just like my personal opinion and like I would love to see interest rates being set algorithmically rather than by MKR governance. So they're, they're definitely killing it, but.

• 1:15:12David Hoffman?

  All good points.

• 1:15:13Speaker 03

  I go.

• 1:15:14Ryan Sean Adams?

  Yeah, they are taking this conservative approach at the same time. All right, let's talk about derivatives who are not traditionally conservative. Types of assets. So what happened here?

• 1:15:25Speaker 03

  Um, yeah. So the derivative sector, just in terms of the data that we had was largely almost entirely synthetics. Which they made a comeback. Um, their previous record of 1.9 million dollars in quarterly revenue. Was kind of um disproportionately reported due to like front running issues.

• 1:15:47Ryan Sean Adams?

  Yep.

• 1:15:47Speaker 03

  But they fixed that back in Q2, which is why you see that huge dip. And now they're kind of back on track. They almost succeeded that previous record almost all organically. And with that, like you saw like a pretty substantial increase in the outstanding SUSD, which is Dex's native crypto dollar.

• 1:16:08Speaker 03

  But yeah, I mean, Synthetix pretty much killed it. I will say like Augur B2 launched, um, and then Uma has been doing pretty well. We don't have the data on that, but um, just from what I've seen personally, like Uma's been, um, definitely doing some interesting stuff out of that, out of that camp.

• 1:16:24Ryan Sean Adams?

  Yeah, I wonder how, uh, UMA token, Uma token looks from a revenue perspective. There's a few other things that, um, I hope we get more data on in the future with Token Terminal, which is, um, like, uh, MC Dex, which they did something, uh, last quarter, uh, and they, they have their, their, their token as well. And then also, I kind of wonder what, uh, DYDX would look like if they actually had a token that accrued some of the value of their derivatives platform, because they're definitely doing a, uh, a large amount of volume. So maybe we'll see DYDX. Uh, I feel like Antonio maybe hinted about that on our AMA with him, David, but, um,

• 1:17:06Ryan Sean Adams?

  yeah, we'll, we'll see when, when these other new derivatives platforms get added, how Synthetix shapes up, because right now it's just dominating everything.

• 1:17:16Speaker 03

  Yeah, we'll put a pin on the DYDX thing. Uh, I have a feeling they'll come out with something, but we'll see.

• 1:17:22Ryan Sean Adams?

  All right. So now we've got, uh, yield aggregators. Of course, we just gotta talk about Wi-Fi. They just had a killer quarter. Um, some of those data are not in the data set that we were looking at, but, uh, what do you want to touch on with Wi-Fi?

• 1:17:36Speaker 03

  Yeah, I mean, Wi-Fi pretty much had this meteoric rise in DeFi, um, pretty much went from nothing in terms of like token value to over a billion dollars in less than two months. Um, was pretty wild to say the least. Um, and I think the most notable thing out of that was it kind of kickstarted or built upon the fair launch movement, which we talked about in a newsletter post, um, before. But it's essentially this token distribution mechanism where you're kind of just building off the altruism of Satoshi Nakamoto and Bitcoin and where everyone just has equal opportunity to earn the tokens. Like there's no founder allocation. There's no VCs. There's no, not, there's really no, um,

• 1:18:21Speaker 03

  favorable, you know, token, token allocation. It's really just equal opportunity for everyone. And I think that, um, that fair launch movement kind of.

• 1:18:31Speaker 03

  Got kickstarted and you kind of saw like Yan Finance and all these other fair launches where there was just, you know, equal opportunity for everyone to kind of um get a portion of that token supply.

• 1:18:43Ryan Sean Adams?

  And YFI is definitely a capital asset. We don't have the numbers in this specific report, but it is printing money, basically. And I can't wait to see as those numbers get incorporated, how much revenue it's actually throwing off to its uh to its holders, basically. Um, all right, uh, the last one is NXM. So this is Nexus Mutual. So they had a massive quarter in terms of premiums paid.

• 1:19:06David Hoffman?

  Wow, that graph is up and to the right.

• 1:19:09Ryan Sean Adams?

  Yeah.

• 1:19:10Speaker 03

  Yeah, Nexus Mutual killed it. It was actually interesting because like right at the beginning of Q3, like on like July 2nd or 3rd, they launched Pool Staking, which is like this new way for NXM holders to stake against contracts and earn those premiums that are depicted on that graph. And that had this, you know, um, transformational effect on Nexus Mutual. Um, and kind of what you saw was this massive, you know, run up in active covers and premiums paid. I think one of the interesting takeaways from that is Nexus Mutual right now has earned over $2 million in premiums from selling like insurance. Um, and it's only paid out $35,000 in claims, right?

• 1:19:51Speaker 03

  So like that is insurance right there at its finest. If you were like wondering how, how the hell like insurance companies make money, like this is the math right here. Like millions of dollars made, only a few thousand dollars paid out in claims. Um, and I think that's really interesting, a really interesting um takeaway when you're looking at Nexus Mutual.

• 1:20:10Ryan Sean Adams?

  Yeah, that's going to be exciting protocol to watch. I'm pretty bullish about its future, specifically having talked to uh Hugh Carp, who's the, who's the founder of of Nexus a few podcasts ago. All right, so there's also a number of untokenized protocols and applications. We mentioned DYDX, but there's also Instadap, which doesn't have a token, Open, Set, Zap, or Zuriion. What do you think? Over, under on whether some of these protocols are going to launch tokens? Yes or no? What do you think, Lucas?

• 1:20:38Speaker 03

  Um, I would say

• 1:20:41Speaker 03

  I'll take a while. I mean, do we count index for set protocol?

• 1:20:44David Hoffman?

  I do. I think, I think I would set launch a token in Q4.

• 1:20:47Speaker 03

  All right, we, we can cross that off the list.

• 1:20:50Ryan Sean Adams?

  One already has.

• 1:20:53Speaker 03

  I would assume BYDX would, I would put it like a sure bet. I'm not gonna say that, but. I would, I, I would strongly, you know, think that BYDX would put out a, a token just to get competitive. Just because he's lost a lot of the market share in Q3 to like Uniswap and all these other DEXs. Um, I'm interested to see how the asset management platforms kind of play out, like InstaDab, Zap or Zirion. Like, there's not like some sort of set model, token model for them yet. So I'm very interested to see what happens there and then open, we'll see, we'll see.

• 1:21:32Ryan Sean Adams?

  It, it's basically like to be competitive, a token needs to be part of the incentive mechanism. It seems like, uh, that's what Q3 really showed us. Um, conclusions, okay, so killer quarter, absolutely phenomenal quarter, but now we're down 50% on DeFi assets. Um, so people, people are like, oh, it was a mania, it's a one-time thing, bubble burst. Bye-bye DeFi. Now we're really excited about Bitcoin and everything else and they can't DeFi for a while. Is, uh, did the bubble pop, Lucas? Or is DeFi kind of, did it do its thing and now it's dead?

• 1:22:08Speaker 03

  Um, I will say, what I will say, and I kind of I'll lend this in the report, is that this is a multi-year market cycle. Um, Ethereum in the last market cycle had, you know, over half a dozen, 30, 40%, 50% drawdowns. Um, DeFi has only had one so far after this massive run-up. So I would say that if you are, you know, if you subscribe to that thesis of that we're, you know, at the beginning of a bull run. Um, I think DeFi is like, pretty much cemented itself that it's going to be, you know, a critical part of this bull run. Um, you know, that said, you just never know. Um, I think there's a lot of, you know,

• 1:22:48Speaker 03

  profound and valuable mechanisms and distribution stuff like as we talked about at the beginning, the rise of this ownership economy, I think will have, you know, profound effects beyond just DeFi and crypto at large. So I think this is just the first drawdown of many to come after multiple, multiple runups. So we'll see.

• 1:23:11Ryan Sean Adams?

  Very good, Lucas. Well, you crushed on this report, my friend. Um, this I think is one of the best reports, if not the best reports on DeFi in the space right now. It is institutional level. So you could send this to, you know, your, your investor friend who's tinkering with stocks and they should be able to understand the terminology. Uh, once again, you can get it on Bankless. Just type in Bankless Q3 Token Report in Google uh, and bankless.substack.com. Lucas, thanks a lot for, for walking us through that, my friend.

• 1:23:41Speaker 03

  Of course, this is a, this is awesome to do. So thank you guys for having me on.

• 1:23:45Ryan Sean Adams?

  I appreciate it. Looking forward to Q4.

• 1:23:47Speaker 03

  I appreciate it, guys. Thank you.

• 1:23:50Ryan Sean Adams?

  David, uh, killer quarter, man. And last thing we want to talk about is something that relates to that because you know what that felt like is we, we did, we did, we did years of DeFi, right? And then we did a Q1 of DeFi in 2020 and then a Q2 and it felt very gradual.

• 1:24:06David Hoffman?

  Right.

• 1:24:06Ryan Sean Adams?

  And then suddenly, oh my God, Q3, it explodes. It's, it's back to the gradually then suddenly mean that we're about to talk about, right?

• 1:24:14David Hoffman?

  Right. Yeah, that's, that's exactly right. And kind of DeFi to me kind of seems like a harbinger of, of things to come, right? Uh, the, what we just witnessed in this last quarter. Uh, and there's a lot of other like meaning and significance that we can pull out of what happened in DeFi in Q3 2020. But I think the, the main point that I think that DeFi triggered was that, you know, these, these markets are so reflexive and that's exactly what Lucas was kind of alluding to at the end. It's like, well, once, once more, uh, the, the, uh, morale of a market shifts and it goes from bearish to bullish. It doesn't just swap back. It doesn't just go backwards. Like we were like, oh, we're

• 1:24:55David Hoffman?

  down 20, 40%, like, oh, damn, turns out that wasn't the thing that got us out of the bear market. Like, no, like it's, it shifted. Like we are now in bull market mentality and bull, bull market mode. And I think Q3 was kind of the spark that lit the fire under, under the rest of the crypto market.

• 1:25:12Ryan Sean Adams?

  Yeah, absolutely. All right. Well, let's talk about this gradually, then suddenly mean because you wrote about it earlier this week. And maybe, maybe first talking about, you know, in 2017, you contrast, there was this euphoric mania around ICO tokens. And people probably, a lot of people in mainstream probably last remember crypto from hearing it on CNBC.

• 1:25:36David Hoffman?

  Right.

• 1:25:37Ryan Sean Adams?

  And all of these ICO do schemes and scams and that sort of thing. And a lot of people haven't thought about it. Until then, but there've been a ton of major changes, right? Even in the past few months. You, you outlined three of them. What are they?

• 1:25:51David Hoffman?

  Yeah. So this goes along the lines of like, back in 2017, and any sort of mania, you have, you tend to feel like the world, the world is about to enter this new paradigm, right? And like, I, as somebody that came into crypto in 2017, like, I definitely felt I succumbed to that mental model. So I, you know, I owned like 20 shitcoins, which I can't name anymore. And I thought that all of them were about to totally reorganize the way that humans like relate to each other.

• 1:26:20Ryan Sean Adams?

  Like right away.

• 1:26:21David Hoffman?

  Like right away.

• 1:26:21Ryan Sean Adams?

  Like next year.

• 1:26:22David Hoffman?

  Like, like all of a sudden, like my mom, my sister, my friends are all going to be like, having a wallet with tokens inside of it to buy their electricity or something like that. That was, that was grandiose thinking. That was euphoric thinking. And there's that Bill Gates quote where, you know, he says, "We overestimate what we can do in a year, but we underestimate what we can do in 10 years." And we're just three years away from that, that moment in 2017, maybe three and a half. And China is rolling out a central bank digital currency, right? Like, run of the square, the biggest payment processor in the United States is making an absolute killing of revenue from Bitcoin sales. And no other like, you know, sales company is doing that, right?

• 1:27:04David Hoffman?

  And also, commercial banks are okay, giving the green light to custody crypto. And there just seems to be like, you know, that, that quote I just said, where, you know, we overestimate what we do in one year and underestimate what we can do in 10. Well, I think with crypto with a rate of development, it's like we can shrink 10 down to like four, right? Like if things are really, really moving quickly and all of a sudden it seems like we are crescendoing into kind of the, the products that we are indeed back in 2017, 2018 are starting to come to market. And not the little products, the big products.

• 1:27:37Ryan Sean Adams?

  Yeah. So this is that gradually segment where all this stuff that mainstream doesn't see because they've been checked out of crypto for a while is, is being built and all of this infrastructure is being laid and all of this has been happening. And there's also this global macro trend, right? Like it, it seems like, you know, COVID may have accelerated this even, but it, government, central banks have, they're running out of options, right? So interest rates down to 0% QE. They've done rounds of QE already this year, right? And it's having diminishing returns and it's increasing populism because it's increasing

• 1:28:18Ryan Sean Adams?

  wealth inequality. We've talked about the Cantillon effect, right? So now they've got like one option left. And that option is modern monetary theory, something we call MMT, which is basically like printing money through fiscal policy and airdropping to people, right?

• 1:28:36David Hoffman?

  Exactly right. Yeah.

• 1:28:37Ryan Sean Adams?

  Yeah. So what, what happens in that world where central banks only have one option? Yeah. Like what happens?

• 1:28:45David Hoffman?

  Yeah. So I, I think in order to start that conversation, we should ask ourselves like, what, what doesn't happen if they don't do that, right? Like what if they sit on their hands and they say like, you know what? The dollar, it's going, there are no more dollars, like whatever, however many dollars there are out there, that's how many there are.

• 1:29:04Ryan Sean Adams?

  And we're just gonna sit on our hands. Jerome Powell gets real Austrian all of a sudden?

• 1:29:07David Hoffman?

  Real Austrian, like Jerome Powell turns into a Bitcoiner and be like, you know what, you know what would make the dollar better? To be hard, hard money, right? Imagine in that scenario, a number of absolutely terrible things happen, right? You know, businesses don't get support during a crisis, right? You know, there's no, there's no further unemployment support. We only can give out as much. much employment as we collect in taxes. You know, revenue for all states and federally, the revenue from taxes is down because the economy is like 50% shut off. Right? So we don't even, we can't even support ourselves. Uh, and you know, and, and then, you know, no more, you know, $1,200 checks for, for COVID stimulus.

• 1:29:46David Hoffman?

  Uh, and all, all these things are terrible. And so as a result of, you know, the decision of, of the Federal Reserve turning super Austrian. Society basically crumbles, right? Civil unrest happens because, you know, the people are under, there, there's too much wealth inequality. And the wealth isn't being spread around. And so, you know, i- if we want our economy to not crumble. If we don't want civil unrest, we have to print money, right? Like there's, this basically, if we want to retain the status quo. Basically, the central government or the, the Federal Reserve and the central government have to create money and push it into the economy one way or another.

• 1:30:23Ryan Sean Adams?

  They have no choice.

• 1:30:24David Hoffman?

  They have no choice. And also, there's no significant reason as to why it's really going to be long-term effective. This is just consistently a short-term solution, followed by another short-term solution, followed by another short-term solution, which is money printing. After money printing, after money printing, right? And so Bitcoin as an asset that is diametrically opposed to MMT. Along with how people are just going to become okay with crypto be throughout their, by increased understanding of what it does. I'm seeing, I'm hearing like a very loud crescendoing drumroll of like people clicking. As to what this whole crypto thing is really for and what it does and it's in its role in the world.

• 1:31:05Ryan Sean Adams?

  Non-sovereign assets that aren't dependent on those things that, that, that's the thing I think, um, people maybe don't understand, right? So let, let's say you and I are hardcore Austrians and, uh, our solution to Jerome Powell is just like, stop the money printing, buddy. Right? The problem with that kind of simplistic approach is basically like, it's almost not even Jerome's Powell, Jerome Powell's decision anymore. It's almost not even, you know, Donald Trump's decision or, uh, you know, V2 Donald Trump or Joe Biden's decision. Because they only make decisions on. Like a like a four to five, six, you know, eight year basis, right? They're trapped in this cycle. They're trapped in the wheel and they can't really get out of it.

• 1:31:47Ryan Sean Adams?

  I there, there's an element where, you know, what else do you do? They're, they're living with the decisions made by Nixon, getting off the gold standard in the 1970s. Right? And there's absolutely no other decisions that are politically tenable that that they can actually make. So MMT is happening regardless of which party wins, regardless of the way the election plays out. And it's not just happening in the US, it's happening in every country throughout the world.

• 1:32:17David Hoffman?

  Every country with a money printer is printing money, right?

• 1:32:19Ryan Sean Adams?

  And that's why they're so.

• 1:32:21David Hoffman?

  Based off of like Nixon's choices, like Nixon's choices to get off the gold standard happened because he was printing money. Like, that's how it happened.

• 1:32:30Ryan Sean Adams?

  Exactly, exactly. All right, so that's the Bitcoin story, right? And the macro story and, you know, not only Bitcoin, of course, but we think Ether is a a non sovereign asset as well and can be subject to these same headwinds as we're seeing. But let's talk more about Ethereum because that is also sort of a gradually then suddenly type of story. So what's building there?

• 1:32:53David Hoffman?

  Yeah, to me, the first part of the Ethereum story, which is the, the, maybe the smaller of two stories, or maybe the legacy of two stories, the legacy markets is the supply of stable coins, crypto dollars on Ethereum. And, you know, while we were just talking about, you know, money printing and the dollar and how the dollar is weakening, it's actually being incredibly strong versus other currencies, right? And so, you know, you're not, you would never, the last thing you would want to be is to be like a third world nation's fiat currency. Because especially in a world where more and more crypto dollars are available and becoming liquid on Ethereum, because the Ethereum payment rails for dollars extends into every single country that has the internet, right?

• 1:33:37David Hoffman?

  And so, you know, but before you, you know, if you are the Argentine peso or, you know, you know, insert your, you know, not very large fiat currency here.

• 1:33:48David Hoffman?

  If you are that, you want to be traded as a your constituents of your country want to trade you for dollars, not Bitcoin, right? You know Bitcoin, the narrative behind Bitcoin is great, but if you are from like, if you are a holder of the Argentine peso, you want to go into dollars because that's dollars are king, cash is king, right? Dollars are the most, you know, liquid asset in the world. And Ethereum is transporting, you know, incredible amounts of US dollar around its network every single day. And the amount of stable coins on Ethereum to support that use case has just exploded, right? And even with DeFi yield farming mania coming to an end, we are still seeing an absolute rise in stable coins. And especially with DAI being off its peg, I think that's also always something that's useful to pay attention to.

• 1:34:32Ryan Sean Adams?

  Yeah, I think it's interesting that you mentioned dollar, you know, dollar dominance versus other currencies. It is the strongest of all of the weak fiat currencies. Like an example of this is like, why are there no Euro stable coins right now or Chinese, you know? Remember, there would be if there was market demand, of course, we'll see those in the future. But the fact that we're not seeing them competing with the crypto dollar on Ethereum is pretty amazing. We're almost at 25 billion, there's almost no crypto Euros to speak of, it's all dollars. That is the preferred reserve currency, at least in fiat land right now, it seems clear. But so how does that tie into Ethereum though?

• 1:35:10David Hoffman?

  Yeah, so then we can, well, that's, that's how Ethereum relates to like the global macro environment, right? Like, that's how the relationship between Ethereum, COVID and MMT kind of fits in. But also there's its own, you know, its own narrative, its own track, which is the development of Ethereum 2.0, right? And so, you know, if you're watching from the sidelines and maybe you, you are thinking like, you know, you I'll, I'll check in with Ethereum 2.0 every now and then, and you hear this phase zero thing followed by phase one, phase two. You kind of think like, okay, well, we're gonna, you know, first we're gonna do phase two and then we're gonna do phase one. And then we're gonna do phase two, because that's how numbers work, right?

• 1:35:48Ryan Sean Adams?

  It's five years away.

• 1:35:49David Hoffman?

  Yeah, and so like, okay, great, like the Ethereum people are finally getting to phase zero. And so phase zero can finally start. That's actually not. How phase zero, one, two, and two work, right? These are actually things that go in parallel. And like, yes, we do need phase zero to get finalized before we can start on phase one. But the R and D behind phase one and the development behind phase one has been happening as long as it has for phase zero, right? These things are being parallely. These things are going to be being processed in parallel, right? And so phase one, phase two, and phase zero are all being worked on in tandem. And so what I think is about to happen is some sort of a compounding progress with Ethereum 2.0.

• 1:36:32David Hoffman?

  Like as soon as phase zero gets rolled out, like phase, phase one is not far behind it.

• 1:36:37Ryan Sean Adams?

  Yeah, and the really interesting thing, I think this was a huge takeaway from our conversation with Vitalik that we put out earlier in the week, is basically like in parallel to what you're seeing here on the timeline with phase zero, one and two. There's, there's work on Ethereum that had like scalability work on Ethereum. If the goal of Ethereum in phase two is scalability, right? All of this technology that's being developed and has been created over the past two years around rollups and ZK rollups, optimistic rollups, and you know, even you know, plasma with OMG and some of these things. They're going to feed into the, you know, the Ethereum two roadmap. So like that's going on concurrently with all of the ETH two stuff.

• 1:37:22Ryan Sean Adams?

  So that we can get to like a phase one and actually have all of the scalability or close to all of the scalability promise that that we need, that that would have only been available in phase two if it was just the ETH two roadmap, right? Does that make sense? Like you got all this stuff on existing ETH one scaling out Ethereum at the same time as this ETH two roadmap is being developed and those things are going to converge in probably a pretty sudden way.

• 1:37:51David Hoffman?

  Very sudden, right way, right? And as soon as people start to realize this, and you know, what's also going on in behind the scenes is that, you know, there's, there's been the depression of the ETH price based on the bearishness of ETH 2.0, right? That's been, that's been. A thing ever since like we started going downhill in 2018. At some point, that's going to turn around because it's not like the triple point asset thesis is like a curiosity. Like, no, there's, those are three really good reasons for why ether price is going to go up. And two of them are required by Ethereum 2.0. And as soon as all of these things get locked into replace, locked into place. I think the ether price is going to do something that is sudden, not gradual.

• 1:38:34Ryan Sean Adams?

  Yeah, I think you've summed up really well in this fantastic sentence. Gradually, then suddenly the price of ETH will begin to reflect the thousands and thousands of labor hours that have been poured into Ethereum 2.0. These last three years, so all of this work, it's been very gradual, it's felt very gradual. But that will all pay off in ETH price. You think when it suddenly ships and silences all of the critics who said Ethereum 2 isn't a thing, it'll never ship, it'll never work. Once again, looking forward to seeing that, David. Anything else on this?

• 1:39:09David Hoffman?

  Yeah, and to just to continue this conversation, I think everyone should tune into the Thursday AMA with Danny Ryan. Where we exactly talked about like where all the progress is on phase zero, one and two. Danny did a fantastic talk at the ETH online event where he kind of said, you know, ETH one, ETH two. These are kind of misnomers, it's not, they're not two different separate blockchains, one just kind of gets rolled into each other. It's actually more accurately reflected by two, two different places on the same tech stack. That's a really good talk, and so I would recommend to listen to that and then to tune into the AMA livestream with Danny Ryan on Thursday.

• 1:39:47Ryan Sean Adams?

  Yeah, I do think Ethereum is going to prove to be in the next decade, the most important open financial network in the world. So we are here early and we're watching it as it emerges. It's such a privileged position to talk to some of these folks like Vitalik and Danny about its development at the time it's being developed. So tune into that. All right, guys, this has been State of Nation number 19. We talked to MetaMask and 1 million users. We talked about Q3 and the explosive. Token appreciation and revenue that it saw. And then finally, we talked about gradually, then suddenly in with respect to the ETH price. Risks and disclaimers, guys, of course, the DeFi capital assets we talked about are risky.

• 1:40:32Ryan Sean Adams?

  So is ETH. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.