Coinbase Launches Base | SEC Sues Terraform Labs & Do Kwon | Spotify Token Gating | OpenSea vs. Blur

Bankless Weekly Rollup Last Week of February 2023 ------ 🚀 JOIN BANKLESS PREMIUM: https://newsletter.banklesshq.com/subscribe ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken 🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🚁 EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi 👻 PHANTOM | CROSS-CHAIN WALLET https://bankless.cc/phantom ------ Topics Covered 0:00 Intro 4:33 Markets 6:18 Total Crypto Market Cap 6:28 FOMC minutes https://www.federalreserve.gov/newsevents/pressreleases/monetary20230222a.htm 7:43 ETH Burn take https://ultrasound.money/ https://twitter.com/data_always/status/1626397473559261186 12:10 Arbitrum Hot https://twitter.com/purplepill3m/status/1628205181836963841 https://twitter.com/BFreshHB/status/1628211402174345219 13:55 Coinbase Q4 earnings https://twitter.com/moosecryptos/status/1628191828569735168 17:57 Base https://twitter.com/BuildOnBase/status/1628759581353549825 33:45 Apps on the move https://twitter.com/MacroMate8/status/1628762951435051008 34:20 Jesse Tweet https://twitter.com/jessepollak/status/1628765413289996288 35:55 SEC Sues Terraform Labs and Do Kwon https://cointelegraph.com/news/sec-sues-do-kwon-and-terraform-labs-for-fraud https://www.coindesk.com/consensus-magazine/2023/02/17/4-huge-revelations-in-the-secs-charges-against-do-kwon-and-terraform-labs/ https://twitter.com/RyanSAdams/status/1627662054722097157 https://twitter.com/cyounessi1/status/1627881740290097153 https://twitter.com/MikeSeligEsq/status/1626976949766684675 49:05 Spotify rolling out token gating https://twitter.com/apoorvlathey/status/1628496224818184192 51:51 The Shapella network upgrade scheduled https://twitter.com/TimBeiko/status/1628145316271894528 52:32 Flashbots announced MEV Shares https://twitter.com/bertcmiller/status/1625878260025380865 54:30 Layoffs https://www.theblock.co/post/213586/polygon-labs-cuts-staff-by-20-in-consolidation https://twitter.com/CoinDesk/status/1628316333015179264 55:44 NBA Top Shot Moments NFTs May Be Securities https://www.coindesk.com/policy/2023/02/22/nbas-top-shot-nfts-may-be-securities-judge-rules-in-dapper-labs-case/ 57:15 OpenSea pushing back to Blur https://twitter.com/opensea/status/1626682043655507969 59:35 BTC https://twitter.com/paddi_hansen/status/1628002503932657664 1:01:53 Regulation Caitlin Long’s shame on Washington https://twitter.com/CaitlinLong_/status/1626661344316473346 1:03:35 Jesse Powell https://twitter.com/jespow/status/1626744111498940417 https://twitter.com/jespow/status/1627415364111040513 1:06:20 Collab.land launching COLLAB token https://twitter.com/Collab_Land_/status/1626253185210884101 1:07:08 Superfluid Vesting just went live https://www.superfluid.finance/post/Superfluid-Vesting-Liquid-Composable-Vesting-Solution 1:08:10 Phi raised a $2M seed round https://twitter.com/phi_xyz/status/1626642707597910016 1:10:17 Jobs https://pallet.xyz/list/bankless/jobs 1:13:00 Questions from the Nation 1:1:21:50 Elon Musk https://twitter.com/elonmusk/status/1628086895686168613 1:25:08 Frank DeGods https://twitter.com/frankdegods/status/1626132578020528128 1:25:45 When shilling tokens is justified https://twitter.com/trustlessstate/status/1626359069547065347 1:27:45 “Can you stop people from being dumb?” https://twitter.com/0xEdgar/status/1626363432743190530 1:30:12 Web2 vs Web3 me https://twitter.com/pacmanblur/status/1628223367487848451 1:31:04 What David’s Bullish On 1:32:08 What Ryan’s Bullish On 1:35:55 MEME of the Week https://twitter.com/autismcapital/status/1626708728019046400 1:37:08 Risks & Disclaimers 1:37:23 Moment of Zen The Ballad of Alexey by El-Coco-No https://opensea.io/assets/ethereum/0x495f947276749ce646f68ac8c248420045cb7b5e/81421613810573034294030626655533735961574085130976774099250220325335449207784 ---- Track: Flume Type Beat [Futuristic Future Bass] by MokkaMusic / No Rules https://www.youtube.com/watch?v=fsZ_RHBDP2Q&t=0s https://www.youtube.com/watch?v=fsZ_RHBDP2Q&t=0s Music provided by "MokkaMusic" channel and https://inaudio.org ---- 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 I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures

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

• 0:00Ryan Sean Adams?

  David, you're not gonna fire me, are you? Not gonna let me out?

• 0:04Ryan Sean Adams?

  I think it does take two people to do this podcast, at least you and I.

• 0:07David Hoffman?

  I was not prepared for that question.

• 0:11David Hoffman?

  Ryan, well, can I see you in my office after this?

• 0:15Ryan Sean Adams?

  I'll be better, David.

• 0:20Ryan Sean Adams?

  Bankless Nation, happy 4th Friday and the final Friday of February 2023. David, what time is it?

• 0:27David Hoffman?

  Ryan, it's the Bankless Friday Weekly Roll-Up. Where we cover the entire weekly news in crypto, which is always an ambitious endeavor, yet we persevere into the frontier. Nonetheless, like we always do, with coffee. You got coffee?

• 0:39Ryan Sean Adams?

  I've got coffee, let me tell you. I can tell you, and I don't know if that's the coffee speaking right now, David, or that excitement in your voice is just like all of the incredible things-

• 0:48David Hoffman?

  The awesome news that we're gonna talk about.

• 0:50Ryan Sean Adams?

  That have happened this week?

• 0:50David Hoffman?

  Yeah.

• 0:51Ryan Sean Adams?

  Like, what the hell? This is a, it's a good day to be going bankless, my friends.

• 0:55David Hoffman?

  It's a good day to be in crypto.

• 0:56Ryan Sean Adams?

  You know what? We shouldn't tease them any longer. We should just get into some of the headlines that we're going to discuss in this epic weekly roll-up, the 4th Friday of February. David, what's on the agenda?

• 1:07David Hoffman?

  Coinbase drops the base, a new blue layer 2 on the scene. Yeah, that's right. Coinbase has its own dedicated layer 2.

• 1:16Ryan Sean Adams?

  A new blue layer 2? I love that.

• 1:18David Hoffman?

  Yeah, you like that one? And so, we're gonna talk about all those details. What does that mean? What does it mean for Coinbase to have its own layer 2? How did they, how are they building that? What are all the implications behind that? So, we're gonna unpack that and more, because Bankless got the scoop. So, coming up after that, and it's sad, sad news. SEC sues Terraform Labs and Doquan, which, I mean, that's not a surprise, but the implications of what that lawsuit might imply are bad, so we gotta talk about the details, the precedent that that might set if that goes forward. And then, third, Spotify. The app that some of you are using right now to listen to this podcast is gonna have tokens in it soon.

• 2:00Ryan Sean Adams?

  Yeah.

• 2:00David Hoffman?

  Which is pretty cool.

• 2:02Ryan Sean Adams?

  Seems like it. Seems like maybe podcast NFTs.

• 2:04David Hoffman?

  Podcast NFTs.

• 2:06Ryan Sean Adams?

  Music NFTs are a thing. Token gating. We're going to get into all of that and more. David, before we do, we've got to talk to folks about something we don't often talk about on Bankless, and that is, what does it mean to become a citizen of the Bankless Nation? I'm going to close that URL. Do you know why? Because that was the... This is our new beta site, by the way. This is going live in about weeks' time. I think our dev team might kill me. Soon TM. Week, two weeks, and you have the opportunity to become a Bankless citizen. It includes our token reports, where we dive in, our analysts talk about token ratings for all sorts of popular tokens.

• 2:43David Hoffman?

  Which is getting... These tokens are getting an update, by the way, as a result of today's news. So these token reports always stay updated as the meta shifts.

• 2:52Ryan Sean Adams?

  Yes, and it's because David and I are... Look, we're not plugged into the day-to-day. We hired a talented team of analysts to actually put these together, and they're smarter than us. Okay, these are on the frontier. Yeah, David and I are losing our reflexes, all right? We were top of our game three years ago. We are no longer, but we have the best people who are doing this. We also have a Bankless Nation member-only Discord, we talk about a lot, a premium podcast feed with a ton of goodies. And David, just this week, we released the debrief on the premium podcast feed. We also released a special Q&A Twitter session that we had with...

• 3:30David Hoffman?

  Eliezer.

• 3:30Ryan Sean Adams?

  Eliezer Yudkowsky, of course. And that was the Q&A that we had promised after that crazy episode that we recorded. So all sorts of goodies come on the special premium podcast feed. You can only unlock that when you become a Bankless citizen.

• 3:44David Hoffman?

  All the extra content that we have, that we don't have space for in the normal RSS feed, all the extra content gets on the premium RSS feed. But those are only some of the details. You get to go to our in-real-life Denver meetup. You get to go to all the future meetups that we'll have at ECC and Permissionless. You'll get to unlock future access for things that we can't yet talk about. There's a bunch of reasons to become a citizen of the Bankless Nation. You can also join my Q&A channel and ask me questions if you want to pass for me.

• 4:11Ryan Sean Adams?

  Well, I've never done that.

• 4:12David Hoffman?

  In my Q and A channel, sure.

• 4:14Ryan Sean Adams?

  Just I can't in real life. I have to reserve it for the Q and A.

• 4:17David Hoffman?

  That's what the channel is for.

• 4:18Ryan Sean Adams?

  It. Yeah, okay. Fair enough, David.

• 4:22Ryan Sean Adams?

  Anyway, all this $17 a month. It's like a Netflix subscription. That much Netflix costs. And anyway, we think you should become a member of the Bankless Nation. We'd love to have you on the journey with us. David, let's get in the markets this week. What is Bitcoin price doing for us? And we're viewing this, of course, on our favorite place to exchange tokens. Kraken.

• 4:42David Hoffman?

  Kraken.

• 4:43Ryan Sean Adams?

  Our number one recommended crypto exchange. These are the charts for Bitcoin and the dollar. What are we looking at on the week?

• 4:49David Hoffman?

  Looking at on the week, start of the week at $25,000, ending the week at $24,000, which means Bitcoin is down 4%. You are zoomed super far out. You are looking at like a year's timeframe. But that's what if you zoom in, that's what we are now. We are down 4% on the week, lost $1,000 off of the Bitcoin market cap.

• 5:08Ryan Sean Adams?

  All right. How about Ether? What's that doing on the week?

• 5:10David Hoffman?

  Ether down 3.3%. Started the week at 1725, currently ending the week at 1650.

• 5:17Ryan Sean Adams?

  1650. Yeah. So, wait, you said is it up or down?

• 5:21David Hoffman?

  Down, down 3.3%.

• 5:22Ryan Sean Adams?

  Why are we down? Doesn't feel like we should be down.

• 5:25David Hoffman?

  Like seven days ago was like the top tick of last week. So like sometimes we just fall victim to unfortunate timings of what was exactly 24 or 77 days ago.

• 5:36Ryan Sean Adams?

  So it was basically a flat-ish week, but it just looks kind of down.

• 5:41David Hoffman?

  We dumped it down like Ether hit $1,600. Bitcoin also kind of hit a recent low, but then we bounced right back off of that. And so the the bulls and the bears are in a very strong game of tug of war right now.

• 5:51Ryan Sean Adams?

  Look, I'm not even using the browser tabs for this. I'm using the Kraken tabs for this. ETH Bitcoin ratio, what's that looking at like on the week?

• 5:58David Hoffman?

  0.069, which is relatively unchanged on the week, up about half a percent.

• 6:03Ryan Sean Adams?

  All right, but still not up in the like to the recent highs, right?

• 6:07David Hoffman?

  Below 0.07 is like kind of a low for Ether in the ratio in local terms.

• 6:12Ryan Sean Adams?

  Bitcoin having a bit of a recovery, we might say. Some people are really celebrating that. We'll see if that lasts. Total crypto market cap, what are we, above a trillion?

• 6:21David Hoffman?

  Above a trillion, down on the week, but 1.15 trillion dollars.

• 6:25Ryan Sean Adams?

  All right, David, let's cover what's going on in the Fed real quick because I just really want to get to some of the crypto news this week. The first is this, the FMOC had their meeting. Here's what you need to know. All officials, almost all the officials favored moving 0.25 percentage points or bips. Point 25 bips. In the next meeting, I'm just saying bips, bips, bips because David hates that.

• 6:52David Hoffman?

  Yeah, but you also fumbled it, which it kind of goes to my point.

• 6:57Ryan Sean Adams?

  Bips are dumb. The next meeting, anyway, we'll probably see a 25 bips basis point increase in March. And then some of them want a 50, a 0.5%. Never mind, I'm not doing the bips thing.

• 7:13Ryan Sean Adams?

  Some of them want a 0.5% increase and they're probably not going to get it. But the Fed says basically, forget about the pivot. We still got work to do on inflation. We're not pivoting now. And the market doesn't expect the federal funds rate, the inflation, sorry, the interest rate to increase beyond about 5.3%. So we're kind of close to peak, at least according to the markets. That's what's going on there. The interest rates aren't hiking as fast as they used to be. We might get close to a top. What is going on in the world of ultrasound money, though, David?

• 7:44David Hoffman?

  It's at all time lows in supply since the merge. So that's just great. I think, how much Ether have we burnt since the merge? So 35,000 Ether. Wow, in 160 days. So almost 35,000 Ether in half of a year. That's, that's just great. That's just great. Down only on the supply.

• 8:03Ryan Sean Adams?

  Yeah, this is all time lows.

• 8:05David Hoffman?

  Big time. Every single week, we've hit all time lows every single week for like over a month now, I think.

• 8:10Ryan Sean Adams?

  We are negative 6 bips, David. Can you see that?

• 8:13David Hoffman?

  I hate that you just said that. 6.6 pips, to be precise. Yeah, so yearly deflation is 0.066% negative. That's pretty cool. Why, why do we always talk about this? Is there some context for this? Here's a tweet we pulled up. What does this say? Yeah, so this is from Data Always, who has been pushing back on the focus from ETH influencers, if you will, about the burn. Just say bankless. So Data Always retweets their own tweet. The first tweet says, "The ultrasound money cult really confuses me. If we match the highest ever yearly average burn, we see a supply decrease of 2% to 3%. With constant, fully diluted value, it's an insignificant price pump. Deflation is a meme, the bull cases flows."

• 8:58David Hoffman?

  And then they continue and say, "Most of their responses to this just go to show how few people understand flows and how much information asymmetry still exists. The issuance reduction matters a lot. The nuance is that the rate of burn deflation means almost nothing for flows." Okay, what do they mean when they, when they say this tweet? What they're basically saying is that the real price catalyst was the merge, not the burn. As in, the elimination of proof of work issuance is the thing that changed the flows. As in, killing all of that issuance killed the outbound flow away from Ether, the asset. As in, the sell pressure was eliminated. They are saying that the burn, the thing that you and I talk about at the start of every

• 9:39David Hoffman?

  single weekly rollup, Ryan, is much more insignificant because in comparison to the actual total market cap of Ether, how much we are burning is insignificant and it doesn't impact the flows of the sell or buy pressure of Ether. So they're saying that the deflation is a meme. The people that focus on the burn are focusing on a meme and not the fundamentals. The real fundamentals is the flows, which is a combination of eliminating the proof of work issuance, which I said, but then also just net new buying pressure. So just because like we're burning Ether doesn't mean anyone's buying it. So that is the pushback from Data Always here. I just heard ultrasound money cult and I stopped listening, David. Are we in a cult? What's going on here? Hey, but you know what? I think we're pretty reasonable about it.

• 10:23David Hoffman?

  I think this point is a good point, of course.

• 10:27Ryan Sean Adams?

  And yet, it's also what I think many in the so-called ultrasound money cult, I don't know what cult, I mean, when people refer to cult, I don't know who they're talking about, but at least on Bank List, I think this is pretty consistent with what we've said from the very beginning. The reason we talk about this and are celebrating this is not from a flows perspective and numbers go up. It's because, guys, look, Ethereum has a monetary policy now, and it's pretty badass. I think takes like this, don't remember the time from 2018 and 2019, when ETH as money was in complete dispute, and the 21 million hard cap was the only way you could design a hard-money cryptocurrency market cap.

• 11:05David Hoffman?

  It's the only way that we knew, it's the only mechanism we had.

• 11:07Ryan Sean Adams?

  Yeah. What we're celebrating is this mechanic, and what we're trying to spread is the knowledge of how this works. That is the purpose of the ultrasound money meme. So I don't dispute the facts in this case, but I'm gonna, you know, continue to talk about this and celebrate it until more people understand.

• 11:23David Hoffman?

  Click into that tweet and then scroll down, because I think I gave a response to this tweet. Oh, yeah. And so, here's what I said. It's less about the raw numbers of deflation, and more about the fact that Ethereum is a self-governing economic system that's able to capture its own energy. So like, the ETH supply chart, the thing that we look at, is a cool way to illustrate the activity of Ethereum. If there is a strong, vibrant economy, that means Ether is deflating, and so deflation is a symptom of high activity on the Ethereum app layer. So that's why I celebrate deflation. It's because like, oh, there's activity happening. The crypto's not dead yet. Like, if we are deflating, crypto's not dead yet.

• 11:59Ryan Sean Adams?

  Yeah. Well, Dato always replied and said, "All I want is for people to stop worshiping the chart." So stop worshiping the ultrasound money chart, maybe. We'll try.

• 12:07David Hoffman?

  I'll do my best.

• 12:08Ryan Sean Adams?

  No promises. What do we got today? This is a big week for Arbitrum. They just passed an important milestone. What did they accomplish?

• 12:16David Hoffman?

  Oh, just transaction volumes through the absolute roof. So the new all-time high in transaction volume for Arbitrum, I think 2X its previous all-time high. So just really healthy activity. Speaking of healthy activity on an app layer, Arbitrum passed Ethereum. Arbitrum, a Layer 2, by itself, passed the Ethereum L1 transaction capacity.

• 12:36Ryan Sean Adams?

  First time this has happened ever.

• 12:38David Hoffman?

  Ever, ever.

• 12:38Ryan Sean Adams?

  And it won't be the last.

• 12:39David Hoffman?

  Definitely not.

• 12:40Ryan Sean Adams?

  I mean, these L2s are gonna go sky-high relative to Ethereum transactions.

• 12:45David Hoffman?

  I'm gonna guess a new Layer 2 is gonna come onto the scene and absolutely blow past all other Layer 2s in transaction capacity. And my prediction for this will be talked about in a short

• 12:55Ryan Sean Adams?

  What do we got here, David? Here's another take on Arbitrum, getting some details of this data.

• 13:00David Hoffman?

  Yeah, same conversation. Take a look at this efficiency, says Hunter, who I know is an Arbitrum fan because he's got the small brains, PFP. February 24th on 2022, which was pre-nitro upgrade, Arbitrum's nitro upgrade, Arbitrum did 106,000 transactions, which cost $165,000 in fees. A year later, February 20th, 2023, post-nitro, Arbitrum did basically a million transactions with $155,000 in fees. So basically a 10x in total transaction volume, 9x, and then basically a zero change in the actual fees it took to get that done. So, yeah, 8.7x increase in capacity with $10,000 saved in fees.

• 13:41Ryan Sean Adams?

  And that's because they are able to compress more things in an Ethereum transaction in a like piece of Ethereum block, right? So their compression technology has gotten better over the last 12 months. That's what that means.

• 13:55David Hoffman?

  That's exactly right. And then the last thing in the market that we'll talk about, Coinbase's Q4 2022 earnings are out. And an interesting note here is the how much each asset, Bitcoin, Ether, or other coins, represented of the total trading volume on Coinbase. And so if you zoom into that little graphic, Ryan, so last year in Q4 of 2021, it was 16% Bitcoin, 16% Ethereum, 68% all other crypto assets of trading volume. This year, it's 35% Bitcoin, 33% Ethereum, 33% other crypto assets. So I think this just shows that like speculation on the long tail of crypto assets has kind of gone out the door and people have flown towards blue chips.

• 14:38Ryan Sean Adams?

  Totally. And Ethereum and Bitcoin neck and neck for that title of trading volume king, at least on Coinbase. That's pretty big. David, but we got some bigger stuff coming up. Give us a tease.

• 14:49David Hoffman?

  Coinbase drops the base. We're going to talk about the brand new Coinbase Layer 2, which there's so much to talk about there. And so we're going to unpack all of those details. Not only did we have the opportunity to interview Jesse Pollock from Coinbase about this vision. Bankless Zoomer analysts were able to put in some alpha report, so we'll talk about all of that and more. Four huge revelations in the SEC's charges against DoKwon and Terra Labs. Why so late? Why didn't they do this earlier? Maybe they were waiting for a more warm climate for them to push past more precedent that's stricter, perhaps? We'll talk about all of that. And then royalties caught in the crossfire of the NFT marketplace wars. We got an update on withdrawals. We got to talk about Spotify. So much to talk

• 15:32David Hoffman?

  about. But first, a moment to talk about some of these fantastic sponsors that make the show possible, especially Kraken, our strategic sponsor for 2023. Check them out. Kraken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Kraken puts an emphasis on security, transparency, and client support, which is why over 9 million clients have come to love Kraken's products. Whether you're a beginner or a pro, the Kraken UX is simple, intuitive, and frictionless, making the Kraken app a great place for all to get involved and learn about crypto. For those with experience, the redesigned Kraken Pro app and web experience is completely customizable to your trading needs, integrating key trading features into one seamless interface. Kraken

• 16:13David Hoffman?

  has a 24/7 365 client support team that is globally recognized. Kraken support is available wherever, whenever you need them, by phone, chat, or email. And for all of you NFTers out there, the brand new Kraken NFT beta platform gives you the best NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers the way that Kraken does? And if not, sign up with Kraken at kraken.com/bankless. Hey, Bankless Nation. If you're listening to this, it's because you're on the free Bankless RSS feed. Did you know that there's an ad-free version of Bankless that comes with a Bankless Premium subscription? No ads, just straight to the content. But that's just one of many things that a Premium subscription gets you. There's also the Token Report,

• 16:57David Hoffman?

  a monthly bullish, bearish, neutral report on the hottest tokens of the month. And the regular updates from the Token Report go into the Token Bible, your first-stop shop for every token worth investigating in crypto. Bankless Premium also gets you a 30% discount to the Permissionless Conference, which means it basically just pays for itself. There's also the airdrop guide to make sure you don't miss a drop in 2023. But really, the best part about Bankless Premium is hanging out with me, Ryan, and the rest of the Bankless team in the Inner Circle Discord, only for Premium members. Want the alpha? Check out Ben the Analyst's DGEN pit, where you can ask him questions about the token report. Got a question? I've got my own Q&A room for any questions that you might have. At Bankless, we have huge things planned for 2023, including a new website with login

• 17:42David Hoffman?

  with your Ethereum address capabilities, and we're super excited to ship what we are calling Bankless 2.0 Soon TM. So if you want extra help exploring the frontier, subscribe to Bankless Premium. It's under 50 cents a day and provides a wealth of knowledge and support on your journey west. I'll see you in the Discord.

• 17:58Ryan Sean Adams?

  Guys, it actually happened. Coinbase is going to be the first exchange, the first US publicly traded company to launch a Layer 2. David, that Layer 2 is called Base. It's based on Optimism technology. It settles on Ethereum. It is fully EVM compliant. David, what are the details here?

• 18:19David Hoffman?

  So the Base testnet is live today. That is what is being announced today. The Base testnet Layer 2, mainnet Soon TM. There's no date launch for the mainnet. We'll get this out of the way. Base, the token, does not exist. There is no Base token. There is no Base currency. There is no airdrop. There is only a testnet for a rollup called Base from Coinbase that is built on the OP stack from Optimism. But there are significant second order effects of this. And like, first off, just like, think about this from first principles. Coinbase is building an optimistic rollup to enter the arena alongside Optimism, Arbitrum, Polygon, and now Base. And so like, you can add Base to that list.

• 19:02David Hoffman?

  It is going to be the official chain of Coinbase. So this is kind of like the Binance Smart Chain, but for Coinbase. It is fully permissionless for developers to build on. So Uniswap, I will expect to see governance votes from like, things like Uniswap, Aave, saying, "Hey, we should deploy our application on Base." I expect all of those votes to be a resounding yes. You're going to see other like optimism native infrastructure to also want to go over to base. There's going to be a huge land grab for DeFi apps to be on base. So I think that is what we're about to see. So how did this project even get started?

• 19:42David Hoffman?

  And so both Coinbase and optimism were both working on EIP 4844 proto Dank Charting. Also proto Lambda, which proto Dank Charting is named after, is on the optimism team. And then there's a few other developers on the Coinbase side of things. They were all working towards 4844. So they were all in the same room together. And that's when the conversation started about like, hey Coinbase, we, there's this thing called the OP stack. If you guys just wanted to, I don't know, perhaps fork the OP stack and make your own OP chain. You could easily do that. And that piqued the interest of Coinbase. And when we interviewed Jesse, Bankless, we have an interview with Jesse for more details. He said that Coinbase had been interested in starting their own chain twice before. They looked at doing this endeavor twice before.

• 20:26David Hoffman?

  They already had the base name for years now, apparently. But it was the OP stack technology and their partnership with optimism, their collaboration with optimism that really unlocked the door. And so really that's the news. There's so many more things to talk about. Some percentage, some unknown percentage of all base transaction fees are going to the OP collective. We don't know that this percentage, but some percentage of transaction fees are being routed towards adding to the OP collective treasury. To support public goods. To support, well, that's actually up to optimism governance. That is what optimism governance tends to do is to support public goods, but that will be for OP governance. How will you pay for gas on base? You will pay for that for gas with Ether.

• 21:11David Hoffman?

  Coinbase is going to be the only sequencer, the one of one sequencer of the base chain. But Jesse, in our interview, did say that the long-term vision of base was to be a fully permissionless network, not just from a builder perspective, but also from a validator perspective. So they have the same aspirations as optimism and Arbitrum to eventually become a fully permissionless chain with a fully permissionless validator set. Now, Ryan, we explicitly asked Jesse, is there going to be a base token? And he said, no. And then I specifically asked Jesse, well, is base going to be a permissionless validator set in the future? And he said, yes. And those Ryan's are conflicting statements. So one of these things has to give.

• 21:53Ryan Sean Adams?

  I, is that true?

• 21:54David Hoffman?

  I could so.

• 21:55Ryan Sean Adams?

  Could you not?

• 21:56David Hoffman?

  How do you do a permissionless validator set without a token?

• 21:58Ryan Sean Adams?

  Well, don't, don't, isn't the only thing that you need is some sort of collateral to stake? So couldn't you, could, could you use ETH as part of your sequencer set?

• 22:09David Hoffman?

  I guess that's true.

• 22:10Ryan Sean Adams?

  Rather than a native token?

• 22:11David Hoffman?

  I guess that's true.

• 22:12Ryan Sean Adams?

  Or something like Eigenlayer, maybe, right? Where like, I, I wonder, I think the design space is broader than just L2s that are spinning up tokens. But anyway, look, you did all of the details. So I, I bet that answered like 100 questions for the bankless nation. I want to zoom out and, and talk about this from a high level perspective because I think that this is a really big deal for crypto. I think this is like top five things that have ever happened since I joined crypto, David.

• 22:41Ryan Sean Adams?

  It's definitely behind the merge, it's behind a few other things, but like this is top five. And I think people are probably asking why, like, why are Brian and David talking about this so much? Why do they think it's such a big deal? So another, you know, exchange launches a chain, like, who cares? It's not, it's about how they launched the chain, all right? That's the big difference. When we had Brian Armstrong on the podcast in October of 2021, we asked him the question, when Coinbase chain? When's that going to happen? He said, when the technology is ready, we'll do it. When we feel like we can launch in a way where we can maximize, maximize decentralization. And when the technology is available to do that, then we'll launch a chain. They're launching a chain now. The technology is here, David.

• 23:24Ryan Sean Adams?

  And the way that they're doing this is different than the way, say, Binance launched their chain, right? Binance controls the validator set. Binance, if it has, you know, two thirds majority, it could do all sorts of nefarious activity on chain. Coinbase launched with a layer two. They are a sequencer on the layer two, but they cannot steal funds on chain. They have limited powers. Why? Because this entire chain settles to Ethereum. So this is a maximally decentralized way to actually launch this chain. And it's the maximally bankless way to launch this chain as well. So it's aligned with those values. The other thing I'll say is Coinbase has like 110 million verified users. Okay?

• 24:09Ryan Sean Adams?

  A tiny, tiny fraction of this, maybe like 1%, maybe 1 to 2% are actually going full bankless.

• 24:18Ryan Sean Adams?

  And going on chain after they create like a Coinbase account. Why is this? It's because the tools are really hard today, David. It's like, we talk about this every, like, the user experience isn't there. It's, it's, it's difficult to get into crypto. Coinbase is going to onboard a vast majority of their verified users. And let's say they, they onboard, you know, maybe 20%, right? It's 20 million, 20 million new people. We, we will have like 10x'd the amount of people on-chain using crypto. And of course, this was not possible a couple of years ago. Transaction fees were, were too high.

• 24:59Ryan Sean Adams?

  But now that you have a layer two, now that you have EIP 4844, transaction fees can be fractions of a penny. So the technology is here and it's ready. And I think that they are going to set a cookie cutter for other publicly traded companies to start going down this path to other, other crypto exchanges, other crypto banks. We start to get rid of the, the overhang of why do you have to use a centralized lending provider like a Celsius or a BlockFi? When you can have an easy onboard experience into a layer two with completely open source, auditable code on the backend? Anyway, so many reasons this is so exciting. But, but that is the big picture of, of why this is a big deal.

• 25:43Ryan Sean Adams?

  It's the way that they are launching this chain. I mean, using ETH as the money rather than doing like a pump and dump token? It's, it's just a really fantastic way to, to approach this and exactly what we've predicted that exchanges would do over the long run.

• 26:00David Hoffman?

  Yeah, so we put, we have so much more information. We have a YouTube video, an interview with Jesse Pollak. I put in a Twitter thread. We have a newsletter release on the, on the Bankless Newsletter, which goes through some of the, the implications of this. Just some of the stats that are in the tweet thread. 110 million users on Coinbase with $80 billion in assets. So some reaction to this like, oh, a brand new optimistic roll-up alongside Arbitrum, Optimism and Polygon. And basically. Is it in testnet? Like, how is it going to fill up its chain? How is it going to compete with all these fully developed layer twos? Arbitrum only has half a million unique addresses on it. Coinbase has 110 unique verified users.

• 26:45Ryan Sean Adams?

  110 million.

• 26:46David Hoffman?

  110 million, yes. And so like 1% of Coinbase's users, if they can get them onto the base chain, is already more than double the most used layer two on Ethereum today. And so, don't like, we have all the apps on layer twos. Coinbase has all the users and all the money. And so this is going to, we asked Jesse the question, like, how will Coinbase present Base to their users? This is going to be the Coinbase-approved layer two. And so, so many people come into this industry through Coinbase, and Coinbase is going to be like, "Oh, would you like to withdraw your assets from this centralized crypto bank that we are? Feel free to deposit it onto Base, a layer two on Ethereum."

• 27:29David Hoffman?

  And so, like, this is aligned with the crypto idea. And so, the tweet that I wrote in the tweet thread, I say, "Base makes Coinbase bankless, because Coinbase can encourage its users to withdraw from Coinbase and deposit onto Base while still being inside of the Coinbase ecosystem." So it's adding in a layer two into the product offering from Coinbase.

• 27:51Ryan Sean Adams?

  It's proof of reserves.

• 27:53David Hoffman?

  Yeah, it's automatically proof of reserves on the whole entire chain. So with Base, it's still a Coinbase product, but users are self-sovereign and self-custodied. So it is the bankless version of Coinbase, which is just so awesome.

• 28:08Ryan Sean Adams?

  There's gonna be haters, David, that say, "But this is all AML KYC'd." You know, this is...

• 28:14David Hoffman?

  It's not. It's a permissionless network.

• 28:16Ryan Sean Adams?

  It's not now, but like, every account that withdraws, of course, is AML KYC'd by Coinbase because they have to be. I care a lot less about that right now than I do about this massive amount of users that are being on-boarded into self-sovereign technologies. All right? Like, if this is still... Yeah, in fact, I don't even know how you get around that problem at this stage and still use a centralized exchange in some nation state.

• 28:47David Hoffman?

  Right.

• 28:47Ryan Sean Adams?

  But I still think this is like, this is going to onboard millions, tens of millions of people into the bankless money system that we all love. And I do think it's, it's just, there's also some symbolism here in that like, there's so much crazy crap that went down in 2022 with centralized entities stealing the funds, right? This is the answer to 2022. Okay, we'll use decentralized technology where you can audit the code completely, where we can't steal your funds, has proof of reserves right out of the box, and DeFi will facilitate this. I do kind of wonder, do you think this will eat up the Coinbase exchange business model a little bit?

• 29:28David Hoffman?

  Not zero, but I think the net value add, I think, is significant. And Coinbase is always looking for new products that are providing revenue beyond exchange activity because they need to diversify their income because like 90% plus of their like quarterly revenue is always exchange activity. So that's why staking, Ethereum staking is so valuable to them because it's a diversified revenue source that puts less risk on exchange activity. And this opens up so much surface area for on-chain products. This is one of the things that Jesse was really hammering in our interview. Base is where Coinbase is going to put all of its on-chain products. And so they have their own little domicile network to play favorites.

• 30:12David Hoffman?

  They get to play favorites because it's their own network and they're going to put all their products there. And so this is just opening up a massive new world of opportunity for Coinbase. I wanted to take this conversation into why optimism? And so, like I said, Jesse and the optimism team started collaborating on EIP 4844 and that's, I'm assuming where OP stack conversations happened. So the OP stack is the scaffolding for optimism chains. So optimism's bedrock upgrade is built with the OP stack. Base is built with the OP stack. The OP stack is this like open standard, this scaffolding for, you know, build your own layer two, build a layer two workshop.

• 30:52David Hoffman?

  And so when all and when more and more layer two chains are built using the OP stack standard, because they're all standardized, there is more synergies between interoperability, composability, just fluidity between these different chains. So as more and more OP stack chains come into existence, the boundaries between all of these chains can start to blur. So Coinbase is making a bet on this super chain vision. The optimism team calls this the super chain vision. So Coinbase seems to be in on this vision that the more and more chains that build on the OP stack, the boundaries between these things blur. And this is part of the ethos as to like, why layer two is in the first place?

• 31:35David Hoffman?

  Like, why build a layer two chain instead of your own customized blockchain like BNB chain or your own app chain? It's because it apparently is Jesse's and Coinbase's philosophy that building a layer two is building a bridge, not an island. That's a line from Jesse in our interview. Coinbase wants to build bridges, not islands. And so the layer two, building a layer two network on Ethereum allows base to be connected to all the other layer twos on Ethereum and all the assets on the layer one and all of the users. And so they are bridged right into Ethereum's ecosystem. But in addition to that, the OP stack also provides that same interoperability with the optimism super chain that is slowly being built.

• 32:17David Hoffman?

  And so not only is it building bridges into Ethereum and all of its layer twos, but it's building more direct bridges into optimism and all of its other future chains that are totally going to come because the OP stack codebase is the most forked layer two codebase that exists.

• 32:31Ryan Sean Adams?

  Yeah, I guess like optimism basically wants all the forks. So they develop some sort of network advantage for super chains.

• 32:37David Hoffman?

  All the forks.

• 32:38Ryan Sean Adams?

  I am hopeful that super chains can talk to other super chains in the future. I know we've sort of like hinted around this.

• 32:42David Hoffman?

  Slowly they will.

• 32:43Ryan Sean Adams?

  I want the ZK sync to be able to talk to the optimism, to be able to talk to the arbitrum and all of that. You know, one other side product of this too, we mentioned that Coinbase is not launching a token. And the cool thing about a layer two is because you don't have to. That's what's cool about it, right? If you're launching your own Layer 1 sidechain, you have to have a token because you have to inflate that token to pay for security budget. A Layer 2 already comes with its own security intact. It's a less expensive, it's a cheaper way for Coinbase to do this. And part of our conversation with Jesse was like, hey, the reason we couldn't do this two years ago is because it was infeasible, like the tools weren't there. But then when we tried to get support for this project internally at Coinbase, like

• 33:26Ryan Sean Adams?

  in 2022 with OP Stack, the code is ready. It's like, here's a chain out of a box, just fork it. And by the way, it comes with its own economic security. You don't even have to launch a token. The tools are getting easier. This is like, this is why we're going to see an explosion of chains too. Anyway, we could say more and we probably will throughout this episode. But that is the news for you. Actually, one thing though, I'm already seeing some apps start to...

• 33:51David Hoffman?

  There's a land grab.

• 33:53Ryan Sean Adams?

  Okay.

• 33:53David Hoffman?

  Apps are trying to grab as much real estate on Base chain as possible.

• 33:57Ryan Sean Adams?

  This is Euler Finance, right?

• 33:58David Hoffman?

  This is Euler, yeah. So Euler is saying Euler can become the main trading venue for CBE. I think it kind of already is. First off, what is Euler? It's like Compound or AVE, but with a few other extra governance-free mechanisms. And so they are already planning their migration onto Base. And so the land grab has started.

• 34:17Ryan Sean Adams?

  And not a migration from another chain, but more a additional support, right?

• 34:21David Hoffman?

  A deployment, yeah. So this is Jesse. Jesse tweets out, "Today I become, I join 100-plus contributors from Coinbase to launch Build on Base. Base is the builder's chain for Coinbase, the builders of the world." And he is also, Coinbase, as a result of this announcement, also becomes the second protocol dev development team of the OP Stack. So now it's OP Labs and Coinbase, which are collectively building the OP Stack. So that's pretty cool. Just congratulations, Jesse. Also, just shout out to Jesse, who not only pioneered this effort, but also pioneered the KZG ceremony being prompted to all Coinbase users. Just like the alignment that Jesse is creating between Coinbase and the Ethereum decentralized

• 35:06David Hoffman?

  ecosystem is so strong. So it's like... Well done, Jesse. Well done, Jesse.

• 35:10Ryan Sean Adams?

  That's really cool.

• 35:11David Hoffman?

  And so if you have, if you want to learn more, we interviewed Jesse. That interview is available already on the YouTube. I'm sure some of you have already watched it. We are also live streaming with the optimism team at 10 a.m. Eastern time this morning, Friday morning, the 24th. And so we're going to get the optimism perspective on this as well.

• 35:27Ryan Sean Adams?

  No shortage of content, guys, from Bankless. I should mention, in the interest of disclosures, both David and I are advisors for optimism. Support that project, think it's wonderful. Also, early investors in Euler Finance as well. Full disclosure, you can always find that at bankless.com/disclosures. I don't own any coin, though, like the actual stock, do you?

• 35:50David Hoffman?

  I don't own Boomer assets.

• 35:54Ryan Sean Adams?

  All right, well, that's it, man. Let's talk about the SEC, shall we?

• 35:58David Hoffman?

  Here we go. We tried to hold off the SEC as long as possible.

• 36:00Ryan Sean Adams?

  Okay, here it is.

• 36:01David Hoffman?

  So, breaking news, SEC sues Terraform Labs and Doquan. Terraform Labs, of course, the protocol team behind Terra. Why so long? Like Terra collapsed almost a year ago. Why so long? Ryan, is it perhaps the political environment is more conducive for the SEC to get away with more things now that FTX has collapsed? Is that possibly why?

• 36:23Ryan Sean Adams?

  I don't know.

• 36:23David Hoffman?

  I don't know.

• 36:24Ryan Sean Adams?

  That's pretty cynical, David.

• 36:25David Hoffman?

  That's pretty cynical. SEC files a lawsuit against Terraform Labs and Doquan for allegedly orchestrating a multi-billion dollar crypto asset securities fraud by repeating false and misleading statements to build trust before causing devastating loss for investors.

• 36:38Ryan Sean Adams?

  Good so far, though, right? That's what they should be doing. He's a scammer, go after the scammer.

• 36:42David Hoffman?

  Yep, yep.

• 36:43Ryan Sean Adams?

  Okay, good job, SEC, right?

• 36:45David Hoffman?

  Yes, Gary Gensler says that Terraform Labs failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities. Gensler commented the SEC staff on their investigation, adding, "The defendants attempted to prevent us from obtaining important information about their business. This case demonstrates to lengths to which some crypto firms will avoid complying with securities laws." Okay, so trying to paint all of crypto as just as bad as Doquan. I'll throw a flag on that, but this is what we get into when we're a bunch of D gens who ape into algorithmic stablecoins. Also worth noting that Doquan was actually served by the SEC at Mizori Mainnet in New York in 2021. So this story has actually been going on for a while. Okay. What does all of this mean? So here's a CoinDesk article that says,

• 37:30David Hoffman?

  "Four Huge Revelations in the SEC's Charges Against Terraform Lapse." "SEC findings describes the entire Terra system as a fraud, similar to Sam Bankman-Fried's FTX." So I'm going to read out all four points and we'll go into each of them here. Number one, Terra USD's stability was a complete and conscious fabrication.

• 37:51Ryan Sean Adams?

  Conscious, intentional, that means.

• 37:53David Hoffman?

  Yes, intentional, yes. Two, Do Kwon and his allies were cashing out big time the whole entire time.

• 37:58Ryan Sean Adams?

  Shady.

• 37:59David Hoffman?

  Three, the Chai deal was even faker than we thought. I don't know what the Chai deal is.

• 38:04Ryan Sean Adams?

  Chai Payments Platform, an e-commerce system in South Korea, that's right. It was, it was sort of the, um, the pump around this. See, retail's really using this. We have adoption, we have real world adoption in South Korea. That's what Chai was.

• 38:17David Hoffman?

  Okay, and then fourth, it turns out US regulation does matter, is again the headline from this article. "Kwon and his team are accused of committing crimes in the United States that affected several US victims." Yes, I'm sure. Are you ready to take these one by one?

• 38:31Ryan Sean Adams?

  Yeah, sure. So what's number one? The stability was a complete farce, apparently. It was never stable.

• 38:37David Hoffman?

  Yeah, so Terraform and Kwon secretly arranged for a third party to purchase massive amounts of USD to restore the $1 peg when Terra USD experienced a small de-pegging from $1, from its $1 target price. When was this? Was this when Terra started to wobble in 2022? No, this was a year ahead of that in May of 2021. So, uh, this, the narrative of USD being rock solid was a complete fabrication because the Terra USD price was wobbling in as early as May of 2021. So the SEC compares this fake to the fake laboratory tests that led to Elizabeth Holmes' decade-long prison sentence.

• 39:12Ryan Sean Adams?

  I can't disagree with that, David. I mean, they, they were advertising a product that was stable and they knew that it absolutely wasn't. They were just propping it up.

• 39:20David Hoffman?

  By the way, who is that third party that purchased the massive amounts of USD to restore the peg when Terra was in trouble? Who was that? Who did that, Ryan?

• 39:28Ryan Sean Adams?

  I don't know, it's a four-letter word, I think, starts with a J. Am I right about that?

• 39:31David Hoffman?

  Jump.

• 39:33Ryan Sean Adams?

  Jump!

• 39:35David Hoffman?

  Jump capital.

• 39:35Ryan Sean Adams?

  We'll get to them, yeah.

• 39:36David Hoffman?

  God damn. Okay, so Do Kwon and his allies are cashing out big time. A variety of tentative attempts to trace funds flowing out of Terraform Labs after the collapse found that Do Kwon cashed out hundreds of thousands of dollars worth of Bitcoin while he's in Serbia, and that was after Terra collapsed. The SEC claims that Kwon and his accomplice transferred over 10,000 Bitcoins from Terraform and the Luna Guard Foundation and converted over $100 million of that Bitcoin into fiat withdrawals through a Swiss bank in June of 2022.

• 40:08Ryan Sean Adams?

  Do you remember the Luna Guard Foundation? This was the non-on-chain, like, a group of actors, like, "Just trust us with the money. We're gonna purchase this Bitcoin with Luna, and then we're gonna use that to prop up the price of USD."

• 40:22David Hoffman?

  Remember when we suggested that, why does your algorithmic stablecoin, which is apparently perfectly stable, need an external agency to help maintain the peg?

• 40:32Ryan Sean Adams?

  Off-chain with just a few set of key signers that we have to trust, and apparently they were taking that?

• 40:39David Hoffman?

  Weird.

• 40:39Ryan Sean Adams?

  Huh.

• 40:40David Hoffman?

  Huh.

• 40:41Ryan Sean Adams?

  Who could've seen that? What else we got?

• 40:43David Hoffman?

  Anyways, okay, so a chai deal even thicker than we thought. SEC describes that not only did Do Kwon exaggerate the chai-Terra relationship in his own statements, he created an entire fake server to move fake money around to stimulate fake transactions with the clear goal of deceiving investors.

• 41:01Ryan Sean Adams?

  Wow. Wow. Look, I'm grateful for the SEC for doing this part of it.

• 41:07David Hoffman?

  Dude, you can't even hear it, man.

• 41:08Ryan Sean Adams?

  It's great. No, it's like, this is, the public didn't know this. We need to know this. Good job. I mean, we want the SEC to help us prosecute the scammers.

• 41:16David Hoffman?

  Last but not least, evidence suggests that Kwon used his Twitter account to promote Terra USD to Americans and insult critics who warned of flaws that led to the currency's collapse.

• 41:27Ryan Sean Adams?

  Insult critics?

• 41:27David Hoffman?

  Wow, I, that...

• 41:29Ryan Sean Adams?

  I was personally insulted.

• 41:30David Hoffman?

  I was there.

• 41:30Ryan Sean Adams?

  Were you insulted too?

• 41:31David Hoffman?

  I mentioned in that sentence.

• 41:33Ryan Sean Adams?

  Are you, are you named in this whole, you know, court document here?

• 41:37David Hoffman?

  I...

• 41:38Ryan Sean Adams?

  They insulted David Hoffman.

• 41:39David Hoffman?

  And insult critics who warned of flaws. Yeah, that was us.

• 41:42Ryan Sean Adams?

  All right.

• 41:44David Hoffman?

  God damn. Okay, moving on, who got rich?

• 41:48Ryan Sean Adams?

  You know, we found out who got rich. Apparently, according to these documents, Jump Capital.

• 41:54David Hoffman?

  Jump Capital, say the name.

• 41:55Ryan Sean Adams?

  Jump Capital. It's actually Jump Crypto, which I think is a subsidiary of Jump. They made 1.2 billion from Terra. 1.2 billion. Retail got destroyed, David.

• 42:09David Hoffman?

  They were also the ones responsible for helping maintain the peg after it was known that the peg was unstable.

• 42:15Ryan Sean Adams?

  I'm just so tired of the sharks and the mercenaries in this space. Like, they should be called out. Guys, this is not okay. This is, do you remember, like, this was kind of like peak finance bro culture in crypto? That I absolutely hated. Which was just like, "Yeah, let's just make tons of money." It was just like Wall Street infecting us. Look, we have nothing against making money, right? Like, we're all crypto investors. We, we just think you can do that by betting on things early.

• 42:44David Hoffman?

  Right.

• 42:44Ryan Sean Adams?

  And waiting until something is built that's useful. And then receiving the upside after the useful thing is built. Kind of, the traders, the mercenaries coming in here, don't care about that. They made money. They're not even, they're, they're named in this report? No charges against them? They didn't do anything illegal, David.

• 43:04David Hoffman?

  Right.

• 43:05Ryan Sean Adams?

  Technically.

• 43:06David Hoffman?

  Yeah.

• 43:06Ryan Sean Adams?

  1.2 billion dollars. I ask you, does that feel fair? Retail gets completely destroyed by this and they made, they made out fine.

• 43:17David Hoffman?

  Jump Capital.

• 43:18Ryan Sean Adams?

  It incites them to do it again, David.

• 43:20David Hoffman?

  Give it back.

• 43:22Ryan Sean Adams?

  Anyway.

• 43:23David Hoffman?

  So there are a bunch, it says a tweet from Cyrus, who's like one of the most savage people on Twitter, and he's always right, in my opinion. "Jump, jump trading propped up Terra after it almost broke early on. Instead of letting it die in the early stages, they covered it up, letting the bubble grow significantly larger than it needed to get, exacerbating the pain for the entire crypto community." And this, he's retweeting Fat Man Terra, who's a Twitter account that focuses on the Terra news. And Fat Man Terra says, "The SEC filing also indirectly confirms the fact that Jump secretly bailed out the USC project without disclosing to Retail, leading to the scheme ballooning even further and destroying many people's lives in the first place." Okay, so this is only half the story because the other half of the story is the implications

• 44:07David Hoffman?

  of this lawsuit against Terra because there are precedents being set. And so this SEC case against Doquan and Terraform Labs says that UST, the stablecoin UST, is a security because it is redeemable for Luna, which is a security. So I think implying that like the stablecoin itself wouldn't have been a security, but it had this enshrined formal relationship with Terra or with Luna, the equity asset of the Terraform ecosystem or the chain. And so because UST was natively convertible to Luna, the SEC and the SEC determined Luna to be a security, then UST therefore becomes a security because of this enshrined formal relationship.

• 44:47Ryan Sean Adams?

  And not just UST, all potentially algo stablecoins in the future.

• 44:52David Hoffman?

  Not just that, Ryan, all wrapped assets. And so what Mike Selig says is that this precedent, if set, means that any wrapper can make an asset into a security.

• 45:02Ryan Sean Adams?

  Are you talking about like wrapped ETH?

• 45:04David Hoffman?

  Well, not necessarily not wrapped ETH because of how.

• 45:07Ryan Sean Adams?

  Stake ETH.

• 45:07David Hoffman?

  Stake ETH, yeah. So A ETH in AVE, C ETH in Compound.

• 45:12Ryan Sean Adams?

  S ETH.

• 45:13David Hoffman?

  ETH derivative tokens, anything with a wrapper that has some sort of like, you know, Money Lego component to it could potentially become a security.

• 45:21Ryan Sean Adams?

  This is the thing that is so pernicious and so insidious is, you know, thank you SEC for helping investigate and take down a scammer, but you're using this.

• 45:32David Hoffman?

  Exactly what they should have been doing.

• 45:33Ryan Sean Adams?

  Gensler is using this as a land grab opportunity to get more control over crypto and he's setting a precedent. It's evil genius. I tweeted this, Gensler's next strategy is to go after Doquan and UST because he knows no one will defend them. How can we defend them?

• 45:47David Hoffman?

  How can we defend it?

• 45:48Ryan Sean Adams?

  We didn't, we didn't defend them at the time. And if he wins, he'll establish broad precedent for more control over crypto. It's evil genius. Uh, I don't.

• 45:57David Hoffman?

  Thanks, Do.

• 45:57Ryan Sean Adams?

  I don't see a friend here. Uh, yeah, Doquan, a bunch of others screwed this up. By the way, you know what? We should do is go back and listen to that Lunaterra debate that we had in, was this April?

• 46:09David Hoffman?

  April of 2022.

• 46:11Ryan Sean Adams?

  Of 2022, before the thing blew up.

• 46:12David Hoffman?

  Like two weeks or three weeks before.

• 46:14Ryan Sean Adams?

  We said this would happen. We said in the exit, like there was a bull bear case. We were quite clearly on the bear case and we said, hey, we're just worried if this whole thing blows up. The regulatory backlash on us will be severe and significant. And Daquan and the lunatics and the terrible won't have to pay that cost. But we will because we believe in this technology and we're settlers.

• 46:37David Hoffman?

  Still be here, yeah.

• 46:37Ryan Sean Adams?

  And that's exactly what's happening. And it's so frustrating to see. It's just so frustrating to see.

• 46:42David Hoffman?

  Daquan's got $100 million and he's hiding in Serbia somewhere and now we have to clean up his mess. Sick.

• 46:48Ryan Sean Adams?

  All right. Well, look, a little bit of good, a little bit of bad. I'm choosing to remain super optimistic this week because we've got a lot more to talk about. David, what's coming up next?

• 46:57David Hoffman?

  Update on the Ethereum withdrawals. Got some good news on there. Spotify is going to get some tokens inside of it. Our NBA Top Shaw NFTs securities. So much more to talk about. Got some flashbots update as well. So we're going to get to all of this news and more, but first a moment to talk about some of these fantastic sponsors that make the show possible. Uniswap is the largest on-chain marketplace for self-custody digital assets. Uniswap is of course, a decentralized exchange, but you know this because you've been listening to Bankless. But did you know that the Uniswap web app has a shiny new fiat on-ramp? Now you could go directly from fiat in your bank to tokens in DeFi inside of Uniswap. Not only that, but Polygon, Arbitrum and Optimism Layer 2s are supported right out of the gate.

• 47:42David Hoffman?

  But that's just DeFi. Uniswap is also an NFT aggregator, letting you find more listings for the best prices across the NFT world. With Uniswap, you can sweep floors on multiple NFTs and Uniswap's universal router will optimize your gas fees for you. Uniswap is making it as easy as possible to go from bank account to bankless assets across Ethereum. And we couldn't be more thankful for having them as a sponsor. So go to app.uniswap.org today to buy, sell or swap tokens and NFTs.

• 48:15David Hoffman?

  Arbitrum One is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web3 landscape. Hundreds of projects have already deployed on Arbitrum One, producing flourishing DeFi and NFT ecosystems. With the recent addition of Arbitrum Nova, gaming and social dApps like Reddit are also now calling Arbitrum home. Both Arbitrum One and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM compatible. On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitrum Nitro, it's also now 10 times faster than before. Visit arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets,

• 49:00David Hoffman?

  and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be: secure, fast, cheap, and friction-free.

• 49:08Ryan Sean Adams?

  David, is Spotify rolling out token support? I don't know, but that's what this screenshot looks like. What are we looking at here?

• 49:14David Hoffman?

  That's what it looks like, yeah. So here is a screenshot. It says, "Welcome to Spotify's token-enabled pilot. We're happy you're here." So what we are looking at is a sign-in with a wallet, MetaMask, Rainbow Wallet, Ledger, Xerion, inside of a Spotify mobile experience.

• 49:31Ryan Sean Adams?

  Wow.

• 49:32David Hoffman?

  And then, once you connect to your wallet, you get to connect to your... And then, apparently, it changes the behavior of Spotify and unlocks certain experiences. So this is available for Android users in the US, UK, Denmark, Australia, and New Zealand, I think?

• 49:51Ryan Sean Adams?

  Yes, good job.

• 49:52David Hoffman?

  Cool, thank you. And so, token-gated access to music content in Spotify, that's awesome.

• 50:01Ryan Sean Adams?

  It's so cool. Podcasts, NFTs, music NFTs, token-gated content. This is a huge boom for creators. I wonder a few things. Like, first of all, implications of this. It's like, does Gary Gensler want to control music NFTs too and all of the tokens on Spotify that unlock it? Like, does he really want... He probably does.

• 50:20David Hoffman?

  He probably does.

• 50:21Ryan Sean Adams?

  Should we give him that power? Come on, it's so stupid. The other thing I would say is, the experience is for Android users only, not Apple. And I almost wonder...

• 50:29David Hoffman?

  Well, that's a pilot. It's a pilot.

• 50:30Ryan Sean Adams?

  It's a pilot, but I almost wonder if Apple is... Maybe it's not going to be available for Apple. You know, Apple wants to tax. They want to do their 30% tax on all NFT transactions.

• 50:41David Hoffman?

  But yeah, I don't think there's, I mean, I don't know anything about this, but I can't imagine that there's like actual trades or transactions going through. You're just loading up token gated access.

• 50:49Ryan Sean Adams?

  That's just the start, though. Like, there's gonna be a button in Spotify of like, yeah, I wanna download that, like, buy this Drake NFT.

• 50:57David Hoffman?

  I'd like to get access to this.

• 50:58Ryan Sean Adams?

  Why are they not? Of course they would. And, and, and Apple wants to take a charge. I just think that these sort of stupid, like, gatekeeping just cannot stand because a competitor will just be like, fine, if you want to charge, we'll just support Android. And then maybe I'll get rid of my iPhone because I want to do NFTs. And then Apple will have to submit and bend the knee. This is, it's, it's a competitive dynamic. And, you know, the, the gatekeeping is just not sustainable with Web3. That's just not what we do here. We can't charge rent on all this stuff.

• 51:31David Hoffman?

  I 100% agree with you. I just find it kind of funny and ironic that you're talking, "Gatekeeping will not stand. I want token gated access in my app."

• 51:39Ryan Sean Adams?

  Creator gatekeeping is totally fine. This is power to the creators. It's decentralized. It's distributed. So.

• 51:47David Hoffman?

  Cool. Nice job, Spotify and whoever is leading that. Really, really good work there.

• 51:51Ryan Sean Adams?

  But we got here, David.

• 51:51David Hoffman?

  Okay, withdrawals. The Supolia Chapella scheduled for February 28th. Say that three times fast. What is Chapella? Chapella is a combination of Shanghai and Capella, because we just love our words in the Ethereum ecosystem. It is the upgrade for withdrawals for the Supolia testnet. And that will happen on February 28th. So that's pretty cool. Granted that this, I can't imagine that this upgrade is all that complex. We're really just enabling withdrawals. But we have a testnet for that.

• 52:21Ryan Sean Adams?

  This is March. Is, do you think it's gonna go, we're gonna go live in March?

• 52:23David Hoffman?

  February 28th.

• 52:24Ryan Sean Adams?

  But do you think we're gonna get the next Ethereum upgrade in March, then? Is sort of what this means?

• 52:28David Hoffman?

  Late March, early April. Sounds about right.

• 52:30Ryan Sean Adams?

  That sounds right. That's bullish.

• 52:33David Hoffman?

  Flashbots announces MEV share, a programmably private order flow that empowers users, redistributes MEV, and takes a step towards decentralized block building. Okay, so what is this? MEV, Flashbots, of course, we know Flashbots. They are the people that help actually reduce some of the gasses on Ethereum by creating a private off-chain marketplace for block building and block proposing. Now they are doing the same thing for users and putting their transactions into blocks that allow for users to recapture some of the MEV that they might be creating. And so, how does this work? Users can choose exactly what transaction data of their transactions to hide and then

• 53:17David Hoffman?

  also reveal through programmable privacy. So, searchers, if you are familiar with this whole like how a block gets built, searchers build in a competitive order flow auction for the right to execute against users' private transactions, selectively revealing transaction data can help searchers better optimize their bids, which means higher payments back to the user. So, because users can keep their transactions private, users can bargain for the MEV that they create without permissioning searcher competition. Basically, your transaction on Ethereum through this thing called MEV share will create some sort of MEV. By keeping your transaction data private, you can actually force searchers to pay you

• 54:00David Hoffman?

  for the MEV that you create. And so, this is a way to get back some of the value that you put into the Ethereum ecosystem.

• 54:08Ryan Sean Adams?

  You know, this whole time you were talking, I was just admiring these heart messages. Who's the graphic designer that came up with this? Okay? The day after Valentine's Day, and we got these hearts. MEV, you, matchmaker, 0x81 babe, relay on me.

• 54:23David Hoffman?

  I wish these were real.

• 54:24Ryan Sean Adams?

  I would buy these.

• 54:25David Hoffman?

  I would buy these for sure.

• 54:27Ryan Sean Adams?

  David, some layoffs that came down the pipe this week. Polygon Labs cut staff by 20%. So, a 20% cut for Polygon Labs. Also, Immutable has reportedly laid off 11% of its staff. What's your take on some of these layoffs? It's, you know, we saw a whole bunch toward the end of last year, some more early this year. Do you have a high-level take on this?

• 54:53David Hoffman?

  Yeah, laying off people when the markets go turn down, it's just a symptom of just like when you've optimized for growth. And so when the markets turn away, turn against you, you have to trim and cut back. This is just the natural process of things. It doesn't mean that like Polygon is doing badly. It doesn't mean Immutable is doing badly. It just means they hired a lot during the bull market and now resources have dried up and so they have to cut back. A lot of companies over hired. And so in order to optimize, they are cutting back. This is just a normal part of the process.

• 55:25Ryan Sean Adams?

  David, you're not gonna fire me, are you? Not gonna let me out?

• 55:29Ryan Sean Adams?

  I think it does take two people to do this podcast, at least you and I.

• 55:32David Hoffman?

  I was not prepared for that.

• 55:36David Hoffman?

  Ryan, well, can I see you in my office?

• 55:40Ryan Sean Adams?

  I'll be better, David. NBA Top Shots moments. They might be securities?

• 55:46David Hoffman?

  Moments of time are now securities?

• 55:48Ryan Sean Adams?

  Well, awesome. Yeah. What, what, what else? Everything's a security. This podcast could be a security if we tokenize it.

• 55:56David Hoffman?

  Bankless podcasts are, oh, I don't even want to say that out loud.

• 55:59Ryan Sean Adams?

  Don't say it. Don't say the words. That will be used against you, my friend. But what is this headline and what does it mean?

• 56:05David Hoffman?

  Yeah, NBA branded Top Shot moments, NFTs may be securities. Judge rules in Dapper Labs case. Ultimately, the court's conclusion was that Dapper Labs offered was an investment contract under Howey, the judge wrote. So we're gonna have to follow this story, but it turns out where the scope of what a security is, is in expanding itself to Top Shots moments.

• 56:29Ryan Sean Adams?

  Great. So basically, we have even less clarity on what's a security and what's not a security as this is going through the court system.

• 56:37David Hoffman?

  Digital collectible of a moment of time is a security.

• 56:42Ryan Sean Adams?

  Okay, so a video game item that drops if it's an NFT, is that a security?

• 56:46David Hoffman?

  Totally a security.

• 56:47Ryan Sean Adams?

  You think so?

• 56:47David Hoffman?

  Yeah, that flaming long sword of fire that does 172 damage.

• 56:52Ryan Sean Adams?

  It needs a 10K report. It needs filings.

• 56:56David Hoffman?

  Little Bobby shows up and little Bobby picks that up off the ground and Gary Gensler shows up at your door and says, hey, hey, that's a security.

• 57:03Ryan Sean Adams?

  Hey Bobby, do you know what you just did?

• 57:05David Hoffman?

  Put down that security, Bobby.

• 57:09Ryan Sean Adams?

  Look, and if you have questions, just go to Gary Gensler's office hours. He's happy to answer any of your questions and then throw you in jail. All right, OpenSea versus Blur. What's going on here, David?

• 57:20David Hoffman?

  Yeah, so OpenSea, as a result of the Blur dominance in the NFT marketplace, has changed their OpenSea fee to 0%. So OpenSea now charging 0% on trades for a limited time. They have also moved the optional creator earnings a half a percent minimum for all collections without on-chain enforcements. And then lastly, marketplaces with the same policies will not be blocked by the operator filter. So this is really just the collapse of margins in the NFT marketplace.

• 57:50Ryan Sean Adams?

  When you have a competitor, is this because in response to Blur? Is that what's going on?

• 57:54David Hoffman?

  Yeah, because Blur volumes are eating OpenSea's lunch. And so they had to drop all their fees in order to stay competitive.

• 58:00Ryan Sean Adams?

  Like, didn't Blur exceed OpenSea volumes last week?

• 58:04David Hoffman?

  Yeah.

• 58:05Ryan Sean Adams?

  For like, the first time?

• 58:06David Hoffman?

  That's right. Yep. Yep.

• 58:08Ryan Sean Adams?

  This is a take from Frank de God's "A harsh reality. NFT marketplaces are trying to maximize market share so they can raise bigger VC rounds. And the best way to get market share is to have the lowest fees for high-frequency trading. Godspeed." "I don't care about that because the users benefit. Bring my fees down to close to zero."

• 58:24David Hoffman?

  Except for artists. This does shoot artists. Artists are caught in the crossfire because artists really, really like royalties.

• 58:31Ryan Sean Adams?

  Does this, so this cuts royalty? Or is it just OpenSea's?

• 58:35David Hoffman?

  So Blur is trying to minimize royalties because they want to maximize the value to NFT traders. And so they're routing around creator royalties because that is an extra fee that traders don't want to pay.

• 58:46Ryan Sean Adams?

  I still think that creators will just respond in kind. And they'll just like, do a thing where I mint 100 and then I keep 100 and then I sell those back.

• 58:54David Hoffman?

  That's one option. There's also the option for creators to make a NFT contract that enforces royalties at the contract level. So you have to pay a royalty. That will make it harder to be composable into other NFT marketplaces, but it is an option.

• 59:09Ryan Sean Adams?

  Very cool. I like the competitive dynamics, David. Yeah, there's that tweet about Blur dominated this month. It's a whole month of January or it's February, accounting for 46% of January's total, that's January. January's total NFT volume outpacing OpenSea. So OpenSea was 40%, Blur was 46%.

• 59:28David Hoffman?

  Granted, this is the month that Blur dropped their token, so that is going to be a very hot month.

• 59:33Ryan Sean Adams?

  Yeah, that probably skews things. David, do we have any Bitcoin news, maybe?

• 59:38David Hoffman?

  I did look at the Ordinals data. Ordinals volume is down. And so it's trending down to the downside, but it's been a very, very healthy no matter what. So it's definitely not dead, but Ordinals activity down a little bit. The only other Bitcoin news that we have is this tweet from Patrick Hansen. This is a take. Patrick is at the EU side of Circle, so he believes in stable coins, of course. So that is his bias. He works for USDC, basically. Patrick tweets, "In El Salvador, after hundreds of millions of top-down public investments, only 1.6% of remittances are sent via Bitcoin.

• 1:00:17David Hoffman?

  Meanwhile, driven by natural bottom-up demand, 1/3 of Latin American consumers have used stable coins for everyday purchases. The market is loud and clear." So this has been a growing sentiment, again, like an indictment against Naibukele of El Salvador, of just like really forcing Bitcoin on its citizens, using a lot of El Salvadorian capital and money to buy Bitcoin and make Bitcoin investments, when the critique is that that money could have been used to support, you know, public goods for El Salvador.

• 1:00:48Ryan Sean Adams?

  Wasn't the remittance use case always dumb for Bitcoin? I mean, I never understood this because it was just basically like, "Hold Bitcoin. Just hold it. It'll go up in value." The use case of Bitcoin is you hold it while the money printer is printing.

• 1:01:06Ryan Sean Adams?

  If I'm holding my money, like, that's the last thing I actually want to spend. I want to spend my inflating currency. I want to hold my Bitcoin. And the same is true of Ether, really. It's not a good medium of exchange.

• 1:01:18David Hoffman?

  Right.

• 1:01:19Ryan Sean Adams?

  It's not a good unit of account. It is a fantastic store of value. So it wasn't destined to fail from the beginning?

• 1:01:25David Hoffman?

  I would, I would say so, yeah, because like the whole, you use Bitcoin for remittances. So like, actually, I'm not a believer in the whole blockchain, not Bitcoin thing, but that's what a blockchain is for, is for remittances.

• 1:01:35Ryan Sean Adams?

  David, if I could pay my gas fees, my ETH gas fees in USD, I would. USDC. I would just have it like, because then I don't have to be like, ah, well, you know, I paid in ETH and now do I have to buy that back?

• 1:01:46David Hoffman?

  Now I gotta do taxes.

• 1:01:47Ryan Sean Adams?

  Yeah, I gotta do taxes. Thank you. Exactly. What's this from Caitlin Long? This was interesting last week.

• 1:01:53David Hoffman?

  Yeah, so moving on to a new subject. Caitlin Long tweets out this tweet. "It's time for me to review a few, reveal a few things. I've just published a post, shame on Washington DC for shooting the messenger." And so Caitlin tweets out, "Today, I'm publicly disclosing for the first time that, A, I handed over evidence to law enforcement of probable crimes committed by a big crypto fraud that started months before that company exploded and stuck its millions of customers with millions of dollars flosses."

• 1:02:22Ryan Sean Adams?

  Is she talking about FTX?

• 1:02:23David Hoffman?

  She might be talking about FTX there, Ryan.

• 1:02:25Ryan Sean Adams?

  She doesn't name them by name, though.

• 1:02:26David Hoffman?

  No, it does not. And then, B, "I also warned bank regulators of a mounting bank run risk inside banks servicing the crypto industry before the bank runs ultimately hit." So Caitlin Long saying, "Hey, I told regulators and law enforcement about the FTX fraud, and then I warned banking regulators of all the contagion that might happen." What happened as a result of that? Well, her bank, which is a fully custodial, this is a custodia bank, which is like a full, fully backed, reserved bank out of Wyoming. What happened to custodia? Custodia's banking license, banking charter, I believe, was denied and now disparaged for daring to even come through the front door. So Caitlin Long, founder of this custodia bank, who's trying to be a responsible,

• 1:03:10David Hoffman?

  fully custodied crypto bank, reported to law enforcement about it. FTX talks about all the incoming contagion and then gets the door slammed on her face.

• 1:03:20Ryan Sean Adams?

  So she actually went to the regulator's office and asked and not only did they not help her, they actually didn't listen when she was trying to whistleblow on the things that she saw going on in the industry.

• 1:03:31David Hoffman?

  Yeah. So Jesse Powell retweets this and says, Jesse Powell of Kraken says, I can't tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years. Quote, they're offshore. It's complicated. We're looking at everybody. End quote is what Jesse's saying that the regulators are saying for years. And then, and then to be used as their example. So like, I mean, this is obviously hitting very personally for Jesse. Because you know, Kraken just got staking inside of the US shut down by the SEC, even though it's a relatively low risk good product. And Jesse's been doing some of the similar stuff as Caitlin for years now.

• 1:04:13David Hoffman?

  And then all of so like, this is what our complaint about Do Kwon Ryan is like, all the bad guys come in. They make a bunch of money. They cause a bunch of destruction. They cause a bunch of chaos. And then they go hide in Serbia and all the people who believe in this industry take all of the blame, take all of the hit.

• 1:04:28Ryan Sean Adams?

  The good people like Jesse, right? Who is actually like whistleblowing, talking about the red flags. Two regulators actually showed up to Gary Gensler's office to talk to him. What does he get for that? A $30 million fine? And sorry, you can no longer have a staking product.

• 1:04:42David Hoffman?

  Yep. Meanwhile, Sam Bankman Fried is watching football on his VPN.

• 1:04:47Ryan Sean Adams?

  Is he watching football or playing video games?

• 1:04:50David Hoffman?

  Probably moving assets around.

• 1:04:52Ryan Sean Adams?

  If you're Sam, watch him. He would if he could. We know this.

• 1:04:55David Hoffman?

  That's what, that's what the claim is. It's like, the court is like, hey, why are you on a VPN? And Sam Bankman Fried was like, I'm watching football.

• 1:05:02Ryan Sean Adams?

  No way, really?

• 1:05:03David Hoffman?

  Yeah. You haven't heard this part of the story?

• 1:05:04Ryan Sean Adams?

  No.

• 1:05:05David Hoffman?

  Yeah. So he got in trouble for using a VPN when he shouldn't be. And he just said, yeah, I'm watching football. He's like, dude, you're at home. Turn on the TV. You don't need a VPN for this.

• 1:05:14Ryan Sean Adams?

  Oh my God.

• 1:05:17Ryan Sean Adams?

  The grift don't stop. Oh, this is more Jesse. He says this, "I have a theory. Regulators let the bad guys get big and blow up because it serves their agenda. Number one, destroy capital, resources and crypto. Two, burn people, deter adoption. Number three, give air cover to attack good actors. The bad guys are actually onside. Good guys are the enemy." Man, it does feel like that sometimes, doesn't it, David?

• 1:05:41David Hoffman?

  Yep.

• 1:05:42Ryan Sean Adams?

  Doesn't it?

• 1:05:43David Hoffman?

  Yep. Yeah, so Gary Gensler is trying to say like, Jesse of Kraken, that man sold an unregistered security. He's bad. And meanwhile, like, our perspective is like Jesse, Caitlin, many others, calling out the actual frauds, the actual risks, and that if, like, they're our heroes, they're our good guys. But from the outside in, like, Gary Gensler and his, like, office hours campaign is trying to paint, do the same thing that Elizabeth Warren's trying to do, which is paint us all as like shadowy super coders.

• 1:06:09Ryan Sean Adams?

  But Jesse's saying, "And that's all intentional. That's all part of the evil genius play."

• 1:06:13David Hoffman?

  Mm-hmm.

• 1:06:13Ryan Sean Adams?

  Uh, I hope that's not true, but it feels like it is. And it, you know, the evidence is weighing on, and that being the possibility here. David, Collabland launched a token. What is this? What does it mean?

• 1:06:25David Hoffman?

  Yeah, so people who are familiar in the DAO space or in the Discord space will definitely know Collabland. It's basically very, very important Discord infrastructure. So Collab is a governance token and used within the Collabland ecosystem. So holders will be a part of the Collabland DAO, feature requests, bounties, create the marketplace. Token claim will begin on February 23rd, which is today, so that was yesterday if you're listening to this on Friday. And so, if you are an Earnify subscriber, I'm sure you'll be getting a notification of your eligibility for this. So if you're not an Earnify subscriber and you don't know what that is, go to earn.fi and sign up to get notified of airdrops like this one.

• 1:07:06Ryan Sean Adams?

  David, what's going on at Superfluid? Did they introduce a new feature here?

• 1:07:11David Hoffman?

  Yeah, Superfluid vesting. So what is Superfluid? Superfluid is streaming payments. So micro pennies per block, cents over time, just super fluid payments. So like instead of just...

• 1:07:23Ryan Sean Adams?

  Streaming money, baby.

• 1:07:25David Hoffman?

  Streaming money, yes, thank you. And so the Superfluid vesting is a way to vest using the Superfluid contracts over time. So you can now put in vesting contracts using Superfluid. So the tokens for a specific protocol or whatever stay in the sender's wallet until the very moment that they are vested in a stream directly to the recipient's wallet with or without a cliff. So there's no token lockup in a smart contract. These tokens can be...

• 1:07:52Ryan Sean Adams?

  This is the thing DYDA should have done. Remember a few weeks ago, like ago, when we were talking about they made, you know, promises, investors made promises and we could have just done this on a smart contract? That's what Superfluid is doing. It's enforcing vesting at the code layer, which is like, hey, that's a good use of smart contracts.

• 1:08:10David Hoffman?

  That's a great use. And then also, out of Fyland this week, we've talked about Fyland before, but they've announced their $2 million seed round. What is Fyland? It gives you this like little 3D landscape to place little objects and you can only place the objects if you have done the thing in Web3 that enables you to claim those objects. So for example, you can place a Uniswap object on your land if you've traded on Uniswap.

• 1:08:36Ryan Sean Adams?

  What's yours look like?

• 1:08:38David Hoffman?

  David Hoffmann.eth, brother.

• 1:08:40Ryan Sean Adams?

  How do I find you?

• 1:08:42David Hoffman?

  Search accounts right there.

• 1:08:43Ryan Sean Adams?

  David?

• 1:08:44David Hoffman?

  David Hoffmann.eth.

• 1:08:44Ryan Sean Adams?

  Hoffmann.eth.

• 1:08:45David Hoffman?

  My little Fyland, yeah.

• 1:08:47Ryan Sean Adams?

  Yeah, I know. This was included, just so David could brag about his Fyland here.

• 1:08:52David Hoffman?

  Yeah, exactly. Yeah. And so if you've traded on Uniswap once, you can get the Uniswap land. But if you've traded on Uniswap like 10 times, then your Uniswap icon like grows bigger. It's like the level two version.

• 1:09:02Ryan Sean Adams?

  Super cool. You have 16,000 experience points here.

• 1:09:04David Hoffman?

  Whatever. And so I can use that experience to buy other things in the Fyland ecosystem. Fyland is on Polygon.

• 1:09:12Ryan Sean Adams?

  Look at these quests you've achieved.

• 1:09:14David Hoffman?

  Right? Look at all my, look at all my achievements.

• 1:09:16Ryan Sean Adams?

  Man, a busy little bee over here.

• 1:09:18David Hoffman?

  There we go. There's my Fyland. Look, I got a bunch of little trees. I got my open sea ship.

• 1:09:22Ryan Sean Adams?

  It's a chessboard.

• 1:09:23David Hoffman?

  You can even, like, I've linked in the YouTube channel, which goes to Bankless. So not only can you do your Web 3 achievements, you can also put in your Web 2 identity and you can link like your Instagram, your YouTube, your Substack. So this is just a fun, cool little experiment in on-chain identity that I thought was pretty cool.

• 1:09:39Ryan Sean Adams?

  Yeah, social signaling. You can connect.

• 1:09:43David Hoffman?

  With the best wallet ever.

• 1:09:44Ryan Sean Adams?

  The best wallet ever?

• 1:09:45David Hoffman?

  The best wallet ever, of course.

• 1:09:47Ryan Sean Adams?

  Thank you, MetaMask, for sponsoring this.

• 1:09:49David Hoffman?

  Yes, thank you. And so you can go in and like you will have your land out of the gate. I think you do need to have an ENS name. So you log in with MetaMask into your ENS wallet and then you can start building out your Fyland. And then, of course, just as a disclaimer, both Ryan and I are investors in both Superfluid and Fyland.

• 1:10:07Ryan Sean Adams?

  No, I'm not in Superfluid, just you.

• 1:10:10David Hoffman?

  Oh, that's right. You forgot to sign.

• 1:10:15Ryan Sean Adams?

  Moving on, jobs this week. Bankless.pallet.com/jobs. Uniswap Labs is looking for a senior software engineer. Bankless is looking for some writers, some social growth leads, overpriced JPGs. Needs a producer. Bankless needs a growth marketer, consensus, a director of engineering. Adidas Global Head of Web 3 Strategy and Planning, pre PO, Senior Web 3 Front End Engineer. I could go on, even though some companies are laying off, many more are hiring. Crypto just keeps getting bigger. Go look at the job opportunities at bankless.pallet.com and check that out. David, what do we have? Coming up next.

• 1:10:54David Hoffman?

  Coming up next, we got questions from the nation. Hey, Ryan and David, what do you think Vitalik would be working on if he wasn't working in crypto? Great question. We'll talk about that, as well as some takes from the week, as well as what are Ryan and I bullish on moving forward. And also, one of the best moments of Zen that we've ever had, ever. So stay tuned for all of that and more. But first, a moment to talk about some of these fantastic sponsors that make this show possible. The Phantom Wallet is coming to Ethereum. The number one wallet on Solana is bringing its millions of users and billions of Loved UX to Ethereum and Polygon. If you haven't used Phantom before, you've been missing out. Phantom was one of the first wallets to pioneer Solana staking inside the wallet and will be offering similar staking features for Ethereum and Polygon. But that's just staking. Phantom is also the best home for your NFTs.

• 1:11:37David Hoffman?

  Phantom has a complete set of features to optimize your NFT experience. Pin your favorites, hide your uglies, burn the spam, and also manage your NFT sale listings from inside the wallet. Phantom is of course a multi-chain wallet, but it makes chain management easy, displaying your transactions in a human readable format with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked. So get on the Phantom waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes, or you can go to phantom.app/waitlist to get access in late February. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all? Maybe you missed one. So here's what you should do. Go to Earnify and plug in your Ethereum wallet,

• 1:12:20David Hoffman?

  and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does PoApps and mintable NFTs. Any kind of money that your wallet can claim, Earnify will tell you about it. And you should probably do it now because some airdrops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new airdrop for it to make sure that you never lose an airdrop ever again. You can also upgrade to Earnify Premium to unlock access to airdrops that are beyond the basics and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just one airdrop. So plug in your wallets at Earnify and see what you get. That's E-A-R-N-I dot F-I. And make sure you never lose another airdrop.

• 1:12:59Ryan Sean Adams?

  Questions from the Bankless Nation Discord. Here we go. Question from Proxy. People always say layer twos do inherit the security of their layer one when compared to sidechains. But what does that actually mean? That's a very relevant question this week, given the base announcement. So. The difference between Base as a Layer 2 and Base as its own sidechain is what? What does it mean to inherit the security of Ethereum for a chain like Base?

• 1:13:30David Hoffman?

  Yeah, so a Layer 2 has a formal and specific relationship with its Layer 1 in a way that a sidechain does not. And so a Layer 2 makes certain cryptographic commitments to a Layer 1 that binds itself to the Layer 1 to follow certain sets of rules. And so it makes promises, commitments, cryptographic commitments to the Layer 1 that it will abide by the rules that it sets for itself. And those rules are things like being able to make a transaction on the Layer 2 from the Layer 1 and all the other cryptographic assurances that you need to make a blockchain a blockchain. And so basically, it allows people on the Layer 1

• 1:14:13David Hoffman?

  to make transactions happen on the Layer 2. That means that the validator or sequencer of that Layer 2 does not have more power than the Layer 1 has. And so if the sequencer for a Layer 2 on Ethereum goes rogue and they stop processing transactions, they stop propagating blocks, and you are, as a user, left abandoned and cut off from interacting with the Layer 2, you can use the Layer 1 to go get your money. A sidechain does not have that power, does not have that relationship, because a sidechain is just another blockchain that posts data to a bigger chain, a Layer 1 chain, but doesn't make any formal cryptographic commitments to that. How was that explanation? Does that check out for you?

• 1:14:57Ryan Sean Adams?

  Yeah, that checks out. You know, one analogy I use in my mind is I think of like these chains as like, imagine these big cities in the cloud. Okay, so Ethereum is like the biggest city of all in the clouds. It's a city in a cloud, all right? Sidechains do not have a bridge back to Ethereum that is like everlasting and eternal, and that can't be broken, okay? They're their own independent cities. So if the sidechain goes down and like someone takes all your funds, something bad happens, there's no way to exit back. To the big cloud city of Ethereum. With a layer two, like Arbitrum, or Optimism, or now Base, there is an everlasting, cannot be broken, no other dependencies,

• 1:15:42Ryan Sean Adams?

  bridge back to Ethereum. So if bad things happen in the cloud city of Base, or the cloud city of Optimism, users can always run back over that bridge back to Ethereum. And I'm saying users, but I mean like the assets. There's always an escape hatch. That is one big difference from a user perspective.

• 1:16:05David Hoffman?

  Yeah, the escape hatch, I think analogy is really right. It's the escape hatch exists. And the power, who has power over that escape hatch? Is the layer one to Ethereum.

• 1:16:15Ryan Sean Adams?

  Yep.

• 1:16:16David Hoffman?

  So what is really the difference between a layer two and a sidechain? Is that a layer two gives up certain authorities to a power that is stronger than itself, which is the Ethereum layer one. And so that's how users always have assurances that they can be bankless if they need to be, even in the event of a rogue layer two operator.

• 1:16:35Ryan Sean Adams?

  Yep, absolutely. And layer two is really the only configuration that kind of, you know, takes this form, right? So it's much different than a sidechain from that perspective. All right.

• 1:16:45David Hoffman?

  Well, it gives a layer to its name. As in like without, without creating that relationship, it's not a layer two, because a layer two implies that you can't, you can't jettison the layer one. The formal cryptographic relationship is what makes something a layer two. Because it's, it gives itself, it gives power to the layer one.

• 1:17:03Ryan Sean Adams?

  It's corruption resistance too. It's like, so if the, if the city in the cloud gets corrupt and if you're on a layer two, you're fine. Cause you can always go back to Ethereum. Another, that was a great question, Proxy. A question from Palu.

• 1:17:15David Hoffman?

  Proy actually is the name that we've written it down. Proy, P R O Y, yeah.

• 1:17:19Ryan Sean Adams?

  Sorry, Proy. Hey, Ryan and David, what do you think Vitalik would be working on now? If he weren't in crypto? What about both of you? That is Palu asked that question. David, what do you think Vitalik would be working? Have we ever asked him that? If he wasn't in crypto, what would you be working on Vitalik? I don't know if we have.

• 1:17:36David Hoffman?

  Yeah, I mean, we'll take a whatever podcast with Vitalik that we can get. So maybe we'll offer this prompt to him. Vitalik does a lot of things outside of crypto.

• 1:17:44Ryan Sean Adams?

  Let's just do a Vitalik podcast, but we can't talk about crypto the entire time.

• 1:17:48David Hoffman?

  But no crypto, yeah.

• 1:17:49Ryan Sean Adams?

  How cool would that be?

• 1:17:52David Hoffman?

  So Vitalik does a lot of things outside of crypto. A lot of people don't realize this. He's very interested in longevity. He's very interested in AI and he's very interested in charity and charitable giving and impact, basically. So it would probably be something, maybe all three of those things. And so he's, he's very tapped into the longevity world. So maybe he would be like helping promote research in longevity science.

• 1:18:18Ryan Sean Adams?

  What about the public policy type stuff, quadratic voting and that kind of thing? He's like very interested in sort of the, the underlying protocols and mechanics.

• 1:18:29David Hoffman?

  That govern society.

• 1:18:30Ryan Sean Adams?

  That govern society and I think help us coordinate. I mean Ethereum is one gigantic coordination technology unlock that you're creating in the protocol layer. But he's done other things like quadratic voting could be applied to a nation states or, you know.

• 1:18:45David Hoffman?

  Yeah. I think the Denver, city of Denver is experimenting with quadratic funding for its own public goods.

• 1:18:55Ryan Sean Adams?

  Yeah, it'd be very interesting. How about you? If you were in crypto, what would you be doing?

• 1:19:00David Hoffman?

  I think, let's see, how many years have I been crypto? I would have graduated from PT school. I would have a lot of debt and I would be working as a physical therapist would probably be my answer.

• 1:19:12Ryan Sean Adams?

  Really? Is that what, but like?

• 1:19:13David Hoffman?

  That was the path that I was on prior to crypto.

• 1:19:15Ryan Sean Adams?

  That's the path you were on. But, but let's say, maybe another phrasing of this question is if you had to do something right now that wasn't crypto, what would you be doing? And it's probably, is it physical therapy? Is that your, you know, passion?

• 1:19:28David Hoffman?

  Okay. So that would have been, that's the path that I jettisoned in 2017. Probably, okay. So if crypto deleted, but I had all my same skillsets.

• 1:19:37Ryan Sean Adams?

  Yeah.

• 1:19:37David Hoffman?

  It would probably be like content production and writing.

• 1:19:40Ryan Sean Adams?

  A food podcast. We know this.

• 1:19:42David Hoffman?

  I would feel, yeah, just like I'd be a podcaster in a different field, I guess.

• 1:19:44Ryan Sean Adams?

  What field?

• 1:19:46David Hoffman?

  Maybe AI, maybe AI, like some, some future, yeah. Exercise was definitely a part of it. But like, I don't know, I think I would have landed on some like futuristic sci-fi technology to be some sort of content producer about. That's probably the easiest answer.

• 1:20:01Ryan Sean Adams?

  That was gonna be my answer too, especially after that Eliezer episode is like, AI podcaster? Should we pivot the podcast, David? But seriously, should we?

• 1:20:09David Hoffman?

  We have more AI content coming, so maybe this future is actually going to manifest.

• 1:20:15Ryan Sean Adams?

  That's a great question. All right, let's get some takes.

• 1:20:17David Hoffman?

  Wait, was that, is that, that was your answer? Is like, AI podcaster?

• 1:20:19Ryan Sean Adams?

  I, look, it would have to be some, you know, nothing quite like, there's nothing like crypto on the planet. It's just like, it's just, it ties so many of my interests together. It's just like finance, investing, startups, economics, politics, social theory, like psychology is just everything.

• 1:20:36David Hoffman?

  Right, yeah.

• 1:20:37Ryan Sean Adams?

  I think I would be an investor, though, no matter what.

• 1:20:40David Hoffman?

  Sure.

• 1:20:41Ryan Sean Adams?

  Like, there would have to be some cross-section of entrepreneurship and investing, and it'd probably gravitate more towards that than content production. I mean, you're the one who is like, David, Ryan, we should start a podcast. And I was like, ah. So I don't have quite the-

• 1:20:53David Hoffman?

  I don't really see it.

• 1:20:54Ryan Sean Adams?

  Yeah, I don't have the content-producing gene, but there's something I love about investing, and that is like, investing is just, you get rewarded when you're right. It's this like, so many fields, it's impossible to ever find truth. Like, how do you find truth? How do you know if you're right?

• 1:21:14David Hoffman?

  Right.

• 1:21:14Ryan Sean Adams?

  Investing fulfills that gratification for me of like, you're in the game and you're playing, and you can be right and you can be wrong, and there's like some underlying truth to it. And I don't think I could, I could leave that side of things. And that's more, more interesting than the investing side is just, you think about something, apply a thesis, and you get, you get an answer to the hypothesis, right, if you're right or not. And investing, I think, rewards that more than just about anything else. Maybe science does, but I don't have the patience for science, I think.

• 1:21:49David Hoffman?

  Yeah, yeah, I think that's a good take.

• 1:21:51Ryan Sean Adams?

  Elon Musk, that's a take of the week. What's he saying?

• 1:21:54David Hoffman?

  "Okay," says Elon, "what should we do about it?" question mark. What is he talking about? He is replying to a tweet from Lyran Shapiro, Lyran Shapiro, who tweets out, "What if AI is going to literally slaughter every living creature on this planet in the next three years? Watch Eliezer Udalsky's new interview on Bankless and see why that's not even a joke." And then he makes a tweet thread with clips and, and other threads, and then Elon responds to this tweet. Okay, what should we do about it? Which, Ryan, when I saw that tweet, I'm like, oh, I thought, I thought you knew, bro.

• 1:22:25Ryan Sean Adams?

  Isn't that what you said?

• 1:22:26David Hoffman?

  Yeah. Isn't that your job, Elon?

• 1:22:29Ryan Sean Adams?

  Yeah, I mean, what should we do about it, David?

• 1:22:34David Hoffman?

  My only solution, Ryan, is to help further this conversation. That's my only contribution I have to solving this problem is making more content about it so people can know about it.

• 1:22:43Ryan Sean Adams?

  So that will not be the last word on AI that you hear on Bankless. All right, David and I are thinking through some next guests. We've got some names in mind. We'll be doing some reach out. Eliezer, I think, had a really interesting perspective, but it's not the only perspective in this in this space. And I think, look, we're not going to pivot the podcast into a an AI alignment podcast, but we are going to explore this topic. What did we just say earlier? Crypto touches everything.

• 1:23:09David Hoffman?

  Everything, yeah.

• 1:23:10Ryan Sean Adams?

  And certainly touches artificial intelligence and artificial intelligence touches it. This is, I think, between crypto and AI, these are the most interesting technologies, at least to me, for the next decade. No question about it, they will intersect in all sorts of interesting ways.

• 1:23:24David Hoffman?

  Yeah, and it was interesting. We put out the this podcast with Eliezer titled "We're All Gonna Die", which talks about the AI alignment problem, which in TLDR is like, if we make a super intelligent AI, we don't know how to make it care about our existence. It might consider us completely, it might be just be completely indifferent to us and it might use us.

• 1:23:44Ryan Sean Adams?

  Eliezer thinks that's the base case. It's not a probability. He thinks that's like the very likely.

• 1:23:49David Hoffman?

  And so far, no one has really been able to argue against that. Some people diminish how big of a deal that question is, but that is, I think, the issue. We released this episode a week early and then the Bankless Nation Discord was an AI Discord for a week, because that's all they would talk about it in there. And then there's like another Discord that I'm in and like I brought up some of these questions in here and they started talking about AI. And then this this this episode goes public and all of crypto Twitter for at least a day starts talking about AI. And so, Ryan, I haven't told you this, but Vitalik messaged me this morning. He goes, "By the way, I'm not sure if you realize the extent to which that one episode has made a huge public impact, raising the awareness on the AI safety issue."

• 1:24:32David Hoffman?

  And so like this is how much this conversation, the Eliezer's like warnings, have been like pushed to the back of people's minds. And so like now it's actually kind of good that I think a non-AI podcast is promoting this conversation because no one else is doing it.

• 1:24:48Ryan Sean Adams?

  Yeah, so absolutely. We're also privileged with the ability to ask the really dumb questions.

• 1:24:53David Hoffman?

  Yes.

• 1:24:54Ryan Sean Adams?

  Which I think we did. The dumb questions are what's on everyone's mind, too.

• 1:24:58David Hoffman?

  Right.

• 1:24:58Ryan Sean Adams?

  So I actually, like, I was in a bad place after that episode, but at the same time, I'm very glad that we did it. And I think there'll be more from that too. Okay, David, what do we have? A tweet from Frank DeGods, who's also a podcast guest this week. "What problem do NFTs solve?" That's in quotes. "People want to buy digital goods." That's it. That's the problem sauce.

• 1:25:20David Hoffman?

  Mic drop. Like, I think it's so, like, people who think, like, "Does that really need to be an NFT?" I think is an invalid question. It's like, why not? People like buying stuff.

• 1:25:28Ryan Sean Adams?

  Sometimes you must like this guy Frank DeGods, because like, sometimes I hear you say this sort of thing. People like the JPEGs. Like, "But why is the JPEG going up?" This is the early days. People like JPEGs. That's all it is.

• 1:25:40David Hoffman?

  Don't think about it.

• 1:25:41Ryan Sean Adams?

  Isn't it?

• 1:25:42David Hoffman?

  You don't have to overthink it. Okay, so this is a take that I put out that I want to get your judgment on, Ryan.

• 1:25:48Ryan Sean Adams?

  Can I read it?

• 1:25:49David Hoffman?

  Yeah, you can go for it.

• 1:25:50Ryan Sean Adams?

  Okay, this is from you. "If you bought a token on the open market, you're allowed to shill to your heart's content. Any other form of acquiring a token probably requires disclosures in order to promote. A token that you specifically issued, it's never appropriate to promote." Okay, let me look through that again. Three rules, three Hoffman rules here. If you bought it on the open market, you can shill it. Number two, "Any other form of acquiring a token probably requires disclosure in order to promote." Okay, so if you got it as an advisor, or you got it as a gift, or something like this, or as a sponsorship. Number three, "A token that you specifically issued, it's never appropriate to promote."

• 1:26:28Ryan Sean Adams?

  I agree with all of those. One thing that I might put an asterisk on in number one is not just if you bought it on the open market, but if you bought it on the open market and you have some kind of, like, a bias in that, like, let's say you own over, like...

• 1:26:48Ryan Sean Adams?

  2% of the supplier, 5% of the supply. Or let's say that it comprises like a substantial portion of your net worth. Like it's 50% of your net worth or something like that. Then that's the asterix I would also put that that also probably should be disclosed. Or people should be generally aware that that's the case, too. Otherwise, I think that these are Hoffmann rules are fantastic rules for disclosures. And I think more people should be following them.

• 1:27:15David Hoffman?

  Yeah, thank you. And I would say that these are all just rules of thumb. There are plenty of instances where like some of these things won't apply. For example, a token that you specifically issued. If you're an artist and you're making NFTs and that's your like income, absolutely shill that. If it's art, shill that to the nth degree, you're an artist. This is more about like these things as financial assets, I would say.

• 1:27:39Ryan Sean Adams?

  I agree. And then even then you're shilling the art, which is the product. And you're not necessarily shilling the price. David, here's a take here. What's this?

• 1:27:47David Hoffman?

  Oh, God. So this is Zero X Edgar, who's tweeting out the SEC case against Terra Luna. By the end of May 2022, UST, Luna, Raps Luna and Mir were essentially worthless, wiping out more than $40 billion in combined market value. Domestic institutional investors experienced billions of dollars in losses in market valuations. Countless retail investors lost their life savings and ended up in debt as a result of collapse. Here's the punchline. For example, a pharmacist in California borrowed $400,000 against the value of his home to purchase UST and lost his entire investment. A painter in Vermont invested $20,000 in UST he set aside for his son's college education, but lost it all when the Terraform ecosystem collapsed. Oof.

• 1:28:33David Hoffman?

  Don't do that.

• 1:28:36David Hoffman?

  Don't, I mean, yes, Doquan is at fault. Also, take some responsibility and don't invest your college son's education or your home to buy a financial asset.

• 1:28:48Ryan Sean Adams?

  What do we do about this, David?

• 1:28:49David Hoffman?

  I don't know. Like at some point, this is, this is always how frauds and like scams and Ponzi schemes like work. For some reason, they just attract the reptile brain of so many people out there who don't know how to think about these things. And then they do stupid stuff like mortgaging $400,000 against the value of your own home to purchase UST.

• 1:29:10Ryan Sean Adams?

  One, one take, I think, is just you have to have a investor mindset and that includes like an investor psychology. So you can like feel yourself falling into something like that is a, that is a feeling.

• 1:29:22David Hoffman?

  You know that feeling, yeah.

• 1:29:24Ryan Sean Adams?

  If you start to feel rising up in you, this feeling of like, get rich quick.

• 1:29:29David Hoffman?

  I need it now, yeah.

• 1:29:30Ryan Sean Adams?

  I need it now. This could be an overnight thing, like buy, buy, buy. You should always cast doubt on that feeling. Go, go for a jog, take a hot shower, like really consider it, give it due diligence, wait three months and see if you still feel that way. Like it's, we can't, no one can protect you. Gary Gensler can't protect you against all of the different ways that you can kind of like think you're investing your money and you're actually investing it in a scam or a scheme. So that's on you. And my hope is that people just develop better instincts and better defense and better investor psychology around this stuff. That's, that's the only protection. What else do we do?

• 1:30:13David Hoffman?

  Okay, this was a fun thread. This is Pac-Man from Blur. When I did my interview with him, he was the person on the right. This AI-generated, not AI-generated, but just like cartoon version of him.

• 1:30:28Ryan Sean Adams?

  Anime, yeah.

• 1:30:29David Hoffman?

  But it was also animated. So when he opened his mouth, the anime person opened his mouth and also moved around. But then, so this is a web two me versus web three me person tweet thread. Yeah. And so Pac-Man and most of the Blur team have all been anonymous, but Pac-Man puts out this thread doxing himself and telling a little story about how Blur came to be and who he is. And so I always think it's a fun story of when Anon founders decide to un-Anon themselves, to dox themselves. And so if you are curious to hear that story, a very human story of the founder behind Blur, there's a link in the show notes.

• 1:31:01Ryan Sean Adams?

  Very cool. All right, David, what do you bullish on this week, my friend?

• 1:31:08David Hoffman?

  So I'm bullish on layer twos. I'm bullish on the OP stack. I'm bullish on so much of this being proving a lot of the bankless theses that you've been beating the drum with for years now.

• 1:31:22David Hoffman?

  What's more to say, I'm also bullish though, East Denver, which in about one hour, I'm taking a flight out to East Denver to go. And so I will see all of you there, especially those going to the bankless meetup. I have never missed an East Denver. It is the most magical time of the year. And so I'm bullish on all of these things, Ryan.

• 1:31:37Ryan Sean Adams?

  More magical than Christmas, David?

• 1:31:39David Hoffman?

  Yes, it is.

• 1:31:40Ryan Sean Adams?

  The most magical time of the year for David. Wow. It's definitely go say hi to David. He'll be wearing a big bankless shirt. I think a lot of the the bankless folks will be too.

• 1:31:49David Hoffman?

  We have nine bankless team members going to.

• 1:31:52Ryan Sean Adams?

  But then there's huge representation in the bankless nation. I count the number of.

• 1:31:57David Hoffman?

  Bankless shirts that you see?

• 1:31:58Ryan Sean Adams?

  Yeah, bankless shirts that you see.

• 1:32:01David Hoffman?

  Dow punks, bankless Dow shirts. Yeah.

• 1:32:03Ryan Sean Adams?

  A lot of culture there. Exporting culture.

• 1:32:05David Hoffman?

  Exactly. What are you excited for, Ryan?

• 1:32:07Ryan Sean Adams?

  I agree with you. And look, you promised not to front run me this time. And then, you know,

• 1:32:12David Hoffman?

  I did it. I got front run. But you kept it shorter.

• 1:32:16Ryan Sean Adams?

  It's a great day to be going bankless. I think this is, you know, with with with the launch or the announcement of the launch of base, this is further proving out a lot of the theses we've had in this space for a while. Protocol sync thesis. Okay, this idea that the most credibly neutral technologies and coordination structures will kind of sync to the bottom and form the base of everything else. They'll be forced to build on top of this. The idea being like a Ethereum, for instance, or a DeFi protocol that is incredibly decentralized, like like a Uniswap, for instance, will be at the basis. That's a thesis that we've talked about from the very beginning. We've been bullish on layer twos for a very long time.

• 1:32:59Ryan Sean Adams?

  In fact, David, we predicted that a major exchange would launch on a layer two when people thought that that was stupid and foolish. And like, why would they? Why wouldn't they all launch their own chains and create their own tokens? And isn't that the game theory of it? Turns out it's not. The DeFi mullet, this idea that we'd have. Kind of banks in the front, fintech in the front and DeFi in the back. Ethereum, the network, being a settlement layer for the world, a settlement layer for other crypto banks first. And then for all banks, that bank ledger systems would essentially become either layer twos or side chains on Ethereum. I mean, this is how we go bankless. This is how this movement wins.

• 1:33:40Ryan Sean Adams?

  And it's just very gratifying to see this thesis playing out. Like, the bankless thesis works.

• 1:33:48David Hoffman?

  Yep.

• 1:33:49Ryan Sean Adams?

  Sometimes you just gotta wait.

• 1:33:50David Hoffman?

  Yep.

• 1:33:50Ryan Sean Adams?

  Right? And like, I don't know, I'm just, I'm very excited about this, this movement, some of the ideas that, that we've talked about from the very beginning, actually coming to life. And this week was just a major event for that. So a major exchange, 110 million users now launching a layer two. So essentially bending the knee to Ethereum, in the process bending the knee to decentralization, bending the knee to the people. And doing, doing kind of the right thing, embracing crypto values. And it's really cool to see. So this is another, this is getting me out of the funk of 2022. You know, it's like, it's just such a hangover from 2022. It just, I felt gross at the end of 2022.

• 1:34:31Ryan Sean Adams?

  And this kind of thing, this builder's momentum, it's not even about prices. Who cares about prices? The prices aren't pumping on this news. I don't care. I don't care at all. It doesn't matter. Wall Street doesn't understand this. Why, why would we expect the price of Coinbase stock to pump? I don't even think the crypto market understands how big this is.

• 1:34:49David Hoffman?

  Coin price is down 1.5%.

• 1:34:51Ryan Sean Adams?

  Good. That's great. Like, that's the thing. I don't even care anymore because I know that this thesis is going to play out in, you know, in kind of the right direction. And anyway, it's just,

• 1:35:03David Hoffman?

  Yes.

• 1:35:03Ryan Sean Adams?

  Slowly, slowly. It's not overnight. Again.

• 1:35:06David Hoffman?

  Get rich slowly.

• 1:35:07Ryan Sean Adams?

  Yeah. And anyway, I'm also very excited for, for these things. And that's all I have to say about that.

• 1:35:14David Hoffman?

  I'm excited for just millions of more Layer 2 users.

• 1:35:18Ryan Sean Adams?

  Right? Maybe we can get our grandma to use Layer 2s.

• 1:35:23David Hoffman?

  That is the bull case for Base, is that Coinbase is the front end for its own, yes grandma, is the front end for the Base chain. And they just fix all of the UX and UI issues that are plaguing.

• 1:35:35Ryan Sean Adams?

  I'm working on my parents. You know, my parents had just, they have funds on an exchange. They've never really done much in crypto, right? Like in crypto, they're not.

• 1:35:43David Hoffman?

  That's like the base case, yeah. Yeah, most parents.

• 1:35:46Ryan Sean Adams?

  Yeah, I don't know about grandma. She might be a little, you know, I'll help grandma.

• 1:35:50David Hoffman?

  It's okay if grandma doesn't.

• 1:35:52Ryan Sean Adams?

  Sorry.

• 1:35:54Ryan Sean Adams?

  That's it. Meme of the week time. You ready?

• 1:35:56David Hoffman?

  Let's do it.

• 1:35:57Ryan Sean Adams?

  What do we got?

• 1:35:57David Hoffman?

  Do it. This is the change my mind format. And we got Gary Gensler sitting real comfy, drinking some coffee, saying, everything's a security. Change my mind.

• 1:36:07Ryan Sean Adams?

  I can't change his mind.

• 1:36:07David Hoffman?

  I don't, I don't think I can change his mind, but I can hopefully help people make that invalid. Not that the opinion of the United States government, Gary.

• 1:36:17Ryan Sean Adams?

  I remember my wise co-host once saying, Gary Gensler, if everything is a security, then nothing is a security. I think that is the truth. You can't have everything be a security, Gary. That's where we'll end it. David, we got a really cool moment of Zen coming up that I think you should tease and provide some context for.

• 1:36:36David Hoffman?

  So this is the second song put together by El Coco No, who is a bankless nation citizen, also part of the bankless DAO. They, this is a ballad, the ballad of Alexi, the, of course, software developer behind Tornado Cash, who is still in jail. And so it's a very long song. It's like four plus minutes, written by El Coco No, all by himself. I think you are absolutely going to enjoy this one. And if you are interested in collecting this, this is an NFT that is available on OpenSea. If you really enjoy this song.

• 1:37:07Ryan Sean Adams?

  Guys, I should end with the wrist and disclaimers. As always, before we get to the moment of Zen, crypto is risky. You could definitely 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.

• 1:37:35Speaker 02

  Holland is simping for the US For the big, strong government they're trying to impress And they don't give a shit about the scared young kid That they've locked in a cage When all he did was fight For the fundamental rights For which our ancestors paid the ultimate price The trial's not over There's still time to fight For Alexei and all mankind

• 1:38:04Speaker 02

  Inequity just grows and grows And often this results, god knows, In rebellion and war against the bourgeoisie And all kinds of things we don't wanna see Till we said, "Instead of starting a fight, We'll build a city in the sky where we treat people right And you can keep your banks and your powers that be And we'll pay your taxes and if need be, We'll contort our dowels into LLCs And we'll create your CBDs seized for free And help undermine totalitarian regimes And we'll even jumpstart your economy And give you what you need to withstand the Chinese Even before it's something you know that you need

• 1:38:48Speaker 02

  And we'll help to build a future maybe less captured by greed"

• 1:38:54Speaker 02

  And you didn't say stop when we started to build And we thought it was because our city fulfilled All the freedoms, ideals, and rights That speak to human nature of all types But as it turns out, that wasn't it You just ignored what you thought wasn't a threat And then you went and broke down Alexei's door And you drug him off like a prisoner of war And for three long months, there was no charge As you've patted each other's backs and your heads got large But you didn't realize, when you snagged your prize, That history will write you as the bad guys Our tech is neutral, but our movement is not And personal sovereignty is what we want

• 1:39:39Speaker 02

  You crossed the line, now make it right Cause we're an enemy you won't know how to fight

• 1:39:48Speaker 02

  But Holland is simping for the US, for the big, strong government they're trying to impress. And they don't give a shit about the scared young kid that they've locked in a cage when all he did was fight for the fundamental rights for which our ancestors paid the ultimate price. The trial's not over, there's still time to fight for Alexei and all mankind.

• 1:40:30Speaker 02

  A lot of folk struggled, fought and died so certain rights wouldn't get brushed aside. And when we think back, we're filled with pride: citizens, politicians, side by side. But there's a hungry beast that we just can't sate, and that monster's name is the nation-state. And no matter how much we all want to believe, the monster just grows without reprieve. Well, we have a new weapon to fight this fight, and we ask our officials to do what's right: forget your power and your fucking greed. The world's changing quickly, and we need for you to fight for humanity instead of destroying people's lives just to bolster your career,

• 1:41:15Speaker 02

  because that's a shitty way to get ahead. So, Holland... Go tell Alexei, go home to your wife. She loves you and is afraid for your life. We overreacted, and that's on us. We hope the rest of the world will trust that they can still visit Amsterdam because we're actually not an authoritarian regime. And we regret our actions regarding Alexei to the extreme.