ROLLUP: Wormhole Hack | Wonderland Follow Up | Justin Bieber Bored Ape | Gamestop X Immutable

1st Week of February 2022 ------ 📣 ZERION | Trade Across 7 Networks and 500+ protocols https://bankless.cc/Zerion ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🍵 MATCHA | SMART ORDER ROUTING https://bankless.cc/Matcha 🚀 SLINGSHOT | LAYER 2 SOCIAL TRADING https://bankless.cc/Slingshot 🏦 GEMINI | TURN FIAT INTO CRYPTO https://bankless.cc/Gemini 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ Topics Covered: 0:00 Intro 4:20 MARKETS 4:22 BTC Price 4:51 ETH Price 5:14 ETH BTC Ratio https://www.indexcoop.com/bed 6:21 New ETH Burning Categories https://ultrasound.money/ 9:21 The Fee Flippening https://twitter.com/cburniske/status/1488346430271934467?s=20&t=8jnMFEGTcxKL4BUOgak8tA https://twitter.com/cburniske/status/1488346430271934467?s=20&t=8jnMFEGTcxKL4BUOgak8tA 11:56 DCF Price Forecasts ​​https://docs.google.com/spreadsheets/d/1_IqNzqm-_Jlk-cK4twQ-bzhJKrsOhrckdQA2isTwKRA/edit#gid=0 https://docs.google.com/spreadsheets/d/1vqKJlqAmccQOvgzzgy_asz2QVGUYf4Wdfn2nNSDj3cA/edit#gid=1299381756 16:18 Visa $2B Transaction Volume https://beincrypto.com/visa-records-over-2b-in-transactions-for-crypto-linked-cards-in-2022-q1 16:55 Stablecoin Big But Still Smol https://coinmetrics.substack.com/p/state-of-the-network-issue-140 24:00 RELEASES 24:03 Aave v3 https://twitter.com/AaveAave/status/1486793032544493577?s=20&t=gVjc4WzEBdvCemwcOddr0g https://twitter.com/AaveAave/status/1486793032544493577?s=20&t=gVjc4WzEBdvCemwcOddr0g 25:02 Predicting Hacks on Polymarket https://twitter.com/PolymarketHQ/status/1486792651567472642?s=20&t=0TAKgnyChvZR8E8fg9JEeQ https://twitter.com/PolymarketHQ/status/1486792651567472642?s=20&t=0TAKgnyChvZR8E8fg9JEeQ 26:21 Kuiper Index Protocol https://thedefiant.io/kuiper-index-protocol-launches/ 27:10 RAISES 27:12 Dune $69,420,000 - Nice https://dune.xyz/blog/series-b 27:53 Solana Wallet Phantom https://decrypt.co/91574/solana-wallet-phantom-raises-109-million-bringing-valuation-1-2-billion 28:49 MyCrypto MetaMask Merger https://medium.com/metamask/welcoming-mycrypto-to-metamask-8ee46e2ae740 30:14 FTX > Coinbase https://twitter.com/RyanSAdams/status/1488235646800080904?s=20&t=LthLbxyfyM7Gx_TRS7FGhw https://twitter.com/RyanSAdams/status/1488235646800080904?s=20&t=LthLbxyfyM7Gx_TRS7FGhw 32:23 Castle Island https://blockworks.co/castle-island-ventures-raises-hundreds-of-millions-for-new-fund 33:40 Jobs https://pallet.xyz/list/bankless/jobs 35:02 NEWS 35:37 The Bridge Hack https://twitter.com/RyanSAdams/status/1488979604362649602?s=20&t=ZsCXhj2PyjdtXJv-KUMjvQ https://twitter.com/RyanSAdams/status/1488979604362649602?s=20&t=ZsCXhj2PyjdtXJv-KUMjvQ 36:26 Wormhole Failure https://twitter.com/wormholecrypto/status/1489001949881978883?s=20&t=jmTVlJmMtkIo1wYfLXj1jg https://twitter.com/wormholecrypto/status/1489001949881978883?s=20&t=jmTVlJmMtkIo1wYfLXj1jg 38:41 Getting Messy https://twitter.com/tony_intern/status/1488979589602840581?s=20&t=Yxwn9ebgfQD0H9Z4Es6paA https://twitter.com/tony_intern/status/1488979589602840581?s=20&t=Yxwn9ebgfQD0H9Z4Es6paA 39:28 Cascading Effects https://twitter.com/gakonst/status/1488980822568886279?s=20&t=8swuB2G9HV7HnMk6V-Nlzg https://twitter.com/gakonst/status/1488980822568886279?s=20&t=8swuB2G9HV7HnMk6V-Nlzg 40:42 TLDR https://twitter.com/samczsun/status/1489044999211823107?s=20&t=u8aDeLzUhX9FZ8_kVn5k3g https://twitter.com/samczsun/status/1489044999211823107?s=20&t=u8aDeLzUhX9FZ8_kVn5k3g 41:30 Wormhole is Back Up https://twitter.com/wormholecrypto/status/1489232008521859079?s=20&t=YzMwd8rxxeHYJmAZtxmwsw https://twitter.com/wormholecrypto/status/1489232008521859079?s=20&t=YzMwd8rxxeHYJmAZtxmwsw 42:31 Takeaways 50:34 Follow Up Trouble in Wonderland https://twitter.com/danielesesta/status/1487826195978899457?s=20&t=4qIFl89g1cjmbeOjOD-IIg https://twitter.com/danielesesta/status/1487826195978899457?s=20&t=4qIFl89g1cjmbeOjOD-IIg 52:53 Sifu Exiting? https://twitter.com/PeckShieldAlert/status/1488504262443540480?t=Y9hIG9vU2zdIQp3BtWra4Q&s=19 https://twitter.com/PeckShieldAlert/status/1488504262443540480?t=Y9hIG9vU2zdIQp3BtWra4Q&s=19 53:18 Directly Managing a DAO https://twitter.com/genie_trades/status/1488312967716216836?s=20&t=oAxIi76vMcePZPJMYRGUZg https://twitter.com/genie_trades/status/1488312967716216836?s=20&t=oAxIi76vMcePZPJMYRGUZg 53:48 Governance Sucks https://twitter.com/fozzydiablo/status/1486724691024756751?t=StLVrY3RJF_3FyYQrGY79Q&s=19 https://twitter.com/fozzydiablo/status/1486724691024756751?t=StLVrY3RJF_3FyYQrGY79Q&s=19 54:31 Take https://twitter.com/0xMoral/status/1488112276343345154?t=1WkzDvDqVfCDARQjDJJdkw&s=19 https://twitter.com/0xMoral/status/1488112276343345154?t=1WkzDvDqVfCDARQjDJJdkw&s=19 L222 54:38 Gamestop X Immutable https://twitter.com/Immutable/status/1489209166010847232?s=20&t=4r04eo5ozPx_LKHn6UHkHw https://twitter.com/Immutable/status/1489209166010847232?s=20&t=4r04eo5ozPx_LKHn6UHkHw https://venturebeat.com/2022/02/03/gamestop-launches-nft-marketplace-on-immutable-x-creates-100m-dev-fund/ 55:40 Bankless Livestream: https://youtu.be/fne4XMhtVf4 56:13 Arbitrum Drains Binance’s ETH https://twitter.com/dmihal/status/1486823203632820225?s=20&t=eQcWA4eWW7vcTpLvi8vBqw https://twitter.com/dmihal/status/1486823203632820225?s=20&t=eQcWA4eWW7vcTpLvi8vBqw 57:23 Polygon NFTs on Rainbow https://twitter.com/rainbowdotme/status/1488966386059776005 58:17 NFTs 58:18 Crypto Down, NFTs Up https://newsletter.banklesshq.com/p/crypto-down-nfts-up-lite 1:00:30 The Only Trade That Matters https://news.bitcoin.com/pop-star-justin-bieber-buys-bored-ape-nft-for-1-29-million-pays-more-than-300-above-floor/ 1:01:38 Kat Dennings Crypto Coven https://twitter.com/OfficialKat?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor 1:02:10 Bored Ape New Huge Valuation https://www.ft.com/content/acc635d6-bb05-4af6-b4da-b8462c06466d 1:03:50 Coachella NFTs https://www.theblockcrypto.com/linked/132706/coachella-partners-with-ftx-us-to-launch-nfts 1:05:19 Contrarian NFT Take https://twitter.com/cburniske/status/1487852519610929152?s=21 1:06:58 Regulation 1:06:59 Facebook’s Diem Selling https://www.coindesk.com/business/2022/01/31/silvergate-bank-confirms-diem-tech-acquisition/ 1:08:51 The GMI PAC https://www.theblockcrypto.com/linked/132171/crypto-leaders-launch-political-action-committee-to-back-congressional-candidates 1:09:25 SEC vs DeFi https://twitter.com/RyanSAdams/status/1486818724887805959?s=20&t=zvPKSxtRhj2TahA9Ztwrig https://twitter.com/RyanSAdams/status/1486818724887805959?s=20&t=zvPKSxtRhj2TahA9Ztwrig 1:10:27 Biden’s Crypto Agenda https://decrypt.co/91301/federal-reserve-crypto-regulation-plan-stablecoins-big-banks 1:14:39 IRS vs. Staking https://twitter.com/nohardforks/status/1489222500848484354 https://twitter.com/JTheAccountant/status/1489034212778950656?s=20&t=h07eSeIIkQRkz2_MxrIdSA https://twitter.com/JTheAccountant/status/1489034212778950656?s=20&t=h07eSeIIkQRkz2_MxrIdSA India 17:07 Governments Capturing Crypt https://decrypt.co/91662/india-proposes-30-tax-crypto-income-announces-digital-rupee-launch 1:18:49 Taxing at 30% https://twitter.com/CryptooIndia/status/1488482797064888322 TAKES 1:21:20 Right-Click-Save https://twitter.com/cdixon/status/1487258007155232768?s=20&t=Tee_y2QEKF2AMfrR8EjoyQ https://twitter.com/cdixon/status/1487258007155232768?s=20&t=Tee_y2QEKF2AMfrR8EjoyQ https://twitter.com/scott_lew_is/status/1487857870494486529 1:25:21 Blue Chips are L1 https://twitter.com/gabusch/status/1488724132007067648?s=20&t=eauFsFqWMIzpFQ8_YGQtZg https://twitter.com/gabusch/status/1488724132007067648?s=20&t=eauFsFqWMIzpFQ8_YGQtZg 1:26:29 NFTs are a Scam https://twitter.com/katxlev/status/1488869476707807233?s=20&t=05s3Q_5yxTQGjWKhH-dFvA https://twitter.com/katxlev/status/1488869476707807233?s=20&t=05s3Q_5yxTQGjWKhH-dFvA 1:27:29 DC Investor - Conviction https://twitter.com/iamDCinvestor/status/1489249513478885376?s=20&t=yekYSfdsYZtnK4-ktEvGlg https://twitter.com/iamDCinvestor/status/1489249513478885376?s=20&t=yekYSfdsYZtnK4-ktEvGlg 1:28:57 Can’t Cancel RSS https://twitter.com/ryansadams/status/1487965015772733443?s=21 1:31:56 What David’s Excited About 1:32:00 ETH Denver https://twitter.com/TrustlessState/status/1489265843133243393?s=20&t=4r04eo5ozPx_LKHn6UHkHw https://twitter.com/TrustlessState/status/1489265843133243393?s=20&t=4r04eo5ozPx_LKHn6UHkHw 1:32:41 Brooklyn https://twitter.com/TrustlessState/status/1488373341295501312?s=20&t=4r04eo5ozPx_LKHn6UHkHw https://twitter.com/TrustlessState/status/1488373341295501312?s=20&t=4r04eo5ozPx_LKHn6UHkHw 1:33:37 What Ryan’s Excited About 1:33:40 DCF Model 1:38:15 MEME of the Week https://twitter.com/smilinglllama/status/1488256713493032970?s=20&t=-jGsNQ65JnNiKI_EM9OEJw https://twitter.com/smilinglllama/status/1488256713493032970?s=20&t=-jGsNQ65JnNiKI_EM9OEJw ----- Not financial or tax advice. Do your own research. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:00Ryan Sean Adams?

  It was like Groundhog Day yesterday, too, wasn't it? Do you know if the groundhog saw a shadow?

• 0:03David Hoffman?

  I have no clue.

• 0:04Ryan Sean Adams?

  You don't track this?

• 0:05David Hoffman?

  No.

• 0:06Ryan Sean Adams?

  Is there no DeFi prediction market on this?

• 0:08David Hoffman?

  For Groundhog Day?

• 0:12Ryan Sean Adams?

  Hey, Bankless Nation, it's time for the Weekly Roll-Up. David, first week of February, how you feeling, man?

• 0:18David Hoffman?

  Absolutely stoked. There's so much that happened in this last week. I say that every single time, but again, it's always, always true. And at the same time that so much happened, there's always also so much to be excited about. And we are going to talk about all of those things. What happened in the week? And also, what are we excited about moving forward? Because there's a bunch of shenanigans going on in crypto, as always. And we're going to cover it this week on the Bankless Friday Weekly Roll-Up.

• 0:42Ryan Sean Adams?

  Oh, my God, so much to discuss. Largest exploit ever. Okay, this might be a $300 million exploit, and it happened on a bridge. This was actually the second largest in DeFi history, I should say. We're going to talk about this. This happened on Solana. It left 120K worth of ETH on Solana?

• 1:00David Hoffman?

  No, no, no, 120K ETH on Solana.

• 1:03Ryan Sean Adams?

  Yes, yes. Backed by nothing, potentially. Okay, so we're going to dig into that. Why did that happen? What's going on? What are the takeaways? Also, GameStop partnering with Immutable? So this is the Wall Street Bets love, GME, and they're partnering with Immutable to do $100 million fund. We'll talk about that. More trouble in Wonderland as well, an extension of the conversation we started last week on this DeFi project that was managed by a convicted felon. Also, the IRS, are they taxing staked income as income? Or maybe not? Maybe they're not.

• 1:38David Hoffman?

  Only you would include that as a hot topic of the week, Ryan.

• 1:41Ryan Sean Adams?

  This is super hot, okay? I mean, I want to know if my staking rewards are income or not. There's a potential they might not be. And some guy named Josh is suing the IRS to push that, which is awesome.

• 1:52David Hoffman?

  Ryan just thinks this is the coolest thing.

• 1:54Ryan Sean Adams?

  My best, my new best friend is Josh. He owns a fitness center, too. We're going to talk about that. Also, David, NFT season, I know you want to get to that, too. January's been a hot month, right?

• 2:03David Hoffman?

  NFTs are up, NFTs are in vogue, NFT season has been in, it's not the old NFTs, it's a bunch of new crops of NFTs, some new celebs, Justin Bieber is included in the new celebs that are aping into NFTs. What NFTs did Justin Bieber buy? I'm sure everyone listening to that is on the edge of their seat waiting to hear exactly what Justin Bieber is up to in the world of the NFTs, yeah.

• 2:27Ryan Sean Adams?

  You just gotta front run the beeps now, that's the objective in NFT trading. So, so much to discover, to uncover, as usual. It was like Groundhog Day yesterday too, wasn't it? Do you know if the Groundhog saw a shadow?

• 2:38David Hoffman?

  I have no clue.

• 2:39Ryan Sean Adams?

  You don't track this?

• 2:40David Hoffman?

  No.

• 2:41Ryan Sean Adams?

  Is there no DeFi prediction market on this?

• 2:43David Hoffman?

  For Groundhog Day?

• 2:44Ryan Sean Adams?

  Does this not matter to people?

• 2:46David Hoffman?

  I don't think the overlap is all that big.

• 2:48Ryan Sean Adams?

  Okay, alright, Groundhog Day is a thing of the past. Guys, we're gonna talk about all of these things. Before we do, we should talk about some updates from our friends and sponsors at Zirion. Zirion is something we've talked about on Bankless often. It's like an app that I check almost every day to see my DeFi portfolio, and they're adding some cool things. David, what are they adding?

• 3:11David Hoffman?

  Oh, so, so many things. They've added this fantastic graph that I actually really, really appreciate, just to see like all the different tokens, the aggregate value of my entire portfolio. But as we expand into the multi-chain, multi-L2, cross-chain ecosystem, Zirion is being the one-stop-shop to get all of your money in all the places that you want it to go. So they have included all of the EVM-compatible networks that we're familiar with, Optimism, Arbitrum, Avalanche, and they also have other Layer 1s coming soon into, into the, integrated into Zirion. So you can easily just put your money in the places that you want it to be through the Zirion user interface, just drop down and select the network, and it's really just becoming the terminal to access all your

• 3:55David Hoffman?

  money on all the bridges and all of the chains, all at once, all from one single spot. So, go load up your wallet into Zirion and start doing your cross-chain L2, L1 transfer shenanigans today.

• 4:08Ryan Sean Adams?

  They got some bridging as well. This is a great place if you've got assets scattered all across different chains to see them all in one place. So you guys can find out more, the invitation is to connect your wallet and see what's up with Zirion at bankless.cc/zirion. Alright David, let's get to the markets, man. Bitcoin price, what are we looking at this week?

• 4:27David Hoffman?

  Yeah, started the last week, started this week at $36,500, hit a high of $39,000 and fell back down to 36,770. So yeah, just up, up less than a percent on the week. But you know, at some point in time, when everyone's talking about bear markets, being flat is good. So that's what we saw out of Bitcoin this week. And then turning to Ether, Ether started the week at $2,500, hit a low of $2,350-ish dollars, hit a high of $2,800, but then bounced off that high, a little bit of resistance at that $2,800 mark, fell back down to 2,620 where we are right now. Overall,

• 5:09David Hoffman?

  up seven-ish percent on the week, six to seven percent. So, strong week for Ether. Love it.

• 5:14Ryan Sean Adams?

  Bitcoin flat, Ether up. What does that imply for the ETH to Bitcoin ratio then?

• 5:18David Hoffman?

  Yeah, ratio, I think it was last week, it bottomed at .065. We are currently at .071, almost 72, excuse me. So, significant ground, like, recaptured by the ETH-BTC ratio. And gosh, look at that, just, look at that, just floor being printed. Oh my gosh. Like, higher highs, back in July, we hit .055. A few months later, but in October, November, we hit .06 as a floor. Just last week, we hit .065 as the floor. So, for the last, like, coming up on almost a year now, the ETH-BTC ratio has hit higher lows consistently, which is really cool.

• 5:58Ryan Sean Adams?

  Very interesting as well to track, especially going to the merge. We'll talk a little bit more about that later. The Bankless Bet Index, if you want a third, a third, a thirds, a little bit, a third DeFi, a third Bitcoin, a third ETH, this is the index for you. What's that looking at, like, on the week, David?

• 6:13David Hoffman?

  Yeah, marginally up on the week, start of the week at $98, currently coming in at $101, so up a little bit more than 1% on the week.

• 6:22Ryan Sean Adams?

  There you go. Get exposure to those things. David, let's talk a little bit about ETH, all right?

• 6:27David Hoffman?

  Just a little bit.

• 6:28Ryan Sean Adams?

  Because up 7%.

• 6:29David Hoffman?

  Just a little bit.

• 6:29Ryan Sean Adams?

  The ratio going up. It's going to be a big year for ETH, we think. And part of the reason why is because we have the EIP 1559 burn in full effect. Market is discovering that. Of course, we have the merge, hopefully later this year. But one of our favorite websites, ultrasound.money, has added some new, really interesting displays where you can see what the burn is doing by category. So this is the burn over the last day, and it splits it in categories. NFTs, DeFi, MEV, L2, and miscellaneous. And what's really interesting here is NFTs as a category, looks like it's consuming 47%

• 7:11Ryan Sean Adams?

  of Ethereum block space in the burn. So it's contributing to 47% of the total burn. DeFi is 21%, okay? And those are the big categories. Like, everything else is, you know, after that. But NFTs are the product market fit for the product that Ethereum sells right now, which is block space. What do blockchains sell? Blockchains sell blocks. Really interesting to see that breakdown in the burn categories here. And it's more clear on what you're betting on when you're betting on ETH, the asset. It's product market fit for NFTs and for DeFi and some of these other things as well. Any thoughts on this, David?

• 7:52David Hoffman?

  Yeah, this is a 24-hour timeframe. What happens if we zoomed out to like a week? Can you... There you go. Okay. And it stays about the same, about the same. So it's relatively stable. And yeah, even going zooming out to the 30 days, about the same. Pretty cool breakdown. Pretty cool to see these categories. I expect the L2 category to grow significantly, especially as things like NFTs and DeFi move on to Layer 2. The Layer 1 burn rate of these things is going to go down and be replaced by L2 burn rates. And so this is actually kind of a proxy metric for how much activity is going on on L2 versus L1. And so that will be the thing to watch over the long term. Eventually, L2 will start to just gobble up some of the block space share because

• 8:37David Hoffman?

  when you make an NFT or DeFi transaction on Layer 2, that will consume block space on Layer 1 ultimately, but via a Layer 2 bridge. So that's what's going to happen there.

• 8:47Ryan Sean Adams?

  Totally agree. These are the users of Blockspace. Many of them will be Layer 2s. And by proxy, maybe your transaction will be rolled up into this.

• 8:54David Hoffman?

  You, as an individual, will not be able to compete with an whole entire Layer 2 blockchain for Blockspace on the Layer 1. So just capitulate now and move your stuff on to Layer 2.

• 9:04Ryan Sean Adams?

  Hey, stop making assumptions, David. I'm sure we have some massive whales in the Bankless listener group that'll always remain on L1.

• 9:11David Hoffman?

  Well, they can only remain on L1 if other people are also on L1. Humans want to be around other humans.

• 9:17Ryan Sean Adams?

  It's just you and the robots, Will. So you might as well migrate.

• 9:19David Hoffman?

  No company there.

• 9:21Ryan Sean Adams?

  This is cool, too. I love how ambitious this website is. Monetary premium track, and it's tracking a percentage of market cap of Ether versus some other monies. One is Bitcoin, of course, and Ether is about 44% of Bitcoin in terms of value. But the next is gold. And so Ether, right now, is only 2.6% of gold. It's tracking the flipping.

• 9:45David Hoffman?

  So everyone pull out your calculators and multiply the price of Ether divided by .0026. I'm bad at math. Anyways, pull out your calculators and do the math.

• 9:57Ryan Sean Adams?

  Yeah, it could get a lot bigger, is what David's saying. Also, it's 1.49% of US dollars. And I think that's probably US dollars, I don't know, it's probably, you know, one of the M0s or M1s of US dollars. So anyway, interesting to track that over time. Another chart that I think is pretty bullish for Ethereum and paints this picture in a different way, Chris Berninski tweeted this out, is the percentage share of fees over time. Okay, this is Blockspace sales. And again, what do blockchains sell? They sell blocks. This is Bitcoin in red and ETH in green. Look at this chart, David. This tracks from

• 10:38David Hoffman?

  Incredible.

• 10:39Ryan Sean Adams?

  inception of Bitcoin, basically, where it was all red. It was 100% Bitcoin were all the sales. Of course, ETH was not a thing, and it's just tracking these two assets side by side. Then ETH comes along, 2016, about like less than 1%, I would say, of the of the market share of block space between these two. And look what happens. 2017, you can see. And now look at it. 2022, okay?

• 11:04David Hoffman?

  Happens so fast.

• 11:05Ryan Sean Adams?

  This is what's blowing me away. And Chris Berninski says, "Almost didn't believe it when I saw it. Bitcoin currently at 1% of ETH in terms of the amount people pay to use the network. It's 1% of ETH in terms of blockchain sales." And look at how fast this happened. Absolutely mind blowing.

• 11:24David Hoffman?

  The reason why this happened so fast is because of expressivity. When you have a turn-complete platform, you can generate infinite reasons to use the blockchain, and that is turns into fees. Ultimately, at the end of the day, it turns into demand for block space. If you have infinite use cases, it turns into infinite demand.

• 11:42Ryan Sean Adams?

  I just, I mean, it's something we said very early, but you can now see it very clearly, is if you're betting on ETH, you're betting in an economy. And if you're betting on Bitcoin, you're betting just on an asset, which is very interesting to see this dichotomy. Also, David, this was cool. You and I did a State of the Nation episode where we went through a dollar cost average for Ether, the asset. And that was very well received. Can you just give the TLDR of that episode? And then I want to talk about this after you do.

• 12:14David Hoffman?

  Yeah, so a discounted cash flow model is a tried and true model that is just used by all of finance like ever. That's what that's what finance uses to evaluate the the capital assets of the world based on a discounted cash flow model. How much money is this thing going to spit out into my hands over time? And we can come up with a model for evaluating that. Ether is the only asset, you know, only L1 crypto asset that has the metrics that are needed in order to actually create inputs into a DCF model. And so with that, we brought on Ryan Alice, who has done a very robust DCF model for Ether. And we can actually

• 12:57David Hoffman?

  Using comparable metrics, comparable PE ratios to other, like depending on how fast you think Ethereum as a network is growing. Like, do you think it's growing faster than Amazon? Do you think it's growing faster than Facebook? Do you think it's growing faster than Netflix? Making some assumptions as to how fast the Ethereum network grows. We can actually come out with some sort of justifiable model for the price of Ether. And let me tell you, it's bullish. If you're surprised, it is a bullish output of a model. And the cool thing about that is that is just one aspect of Ether that makes it so cool is the cash flow analysis of Ether. There's also reservation demand by locking it up in DeFi and that's not even included in that model.

• 13:40David Hoffman?

  So definitely go, just watch that State of the Nation. It's on the video, it's on the video on the YouTube, it's also on your podcast feed. And if you just have any people from TradFi world that wear ties.

• 13:51Ryan Sean Adams?

  Send them that model.

• 13:52David Hoffman?

  Send them this model. This is the language that they speak. This is how Ether is going to be understood by TradFi. And how is, how it's going to be justifiable to invest hundreds of millions of dollars into this asset coming from people that wear ties.

• 14:06Ryan Sean Adams?

  Send the bottle to your tie wearing friends is what David's saying. And what's cool here is we say all this to also tee up this. There are other takes on a discounted cash flow type model, a DCF. And so after that episode, one Bankless listener messaged me and said, hey, I've got some, an even more DCF, more precise DCF estimation here and passed me his spreadsheet. And it's an even more bullish prediction.

• 14:36David Hoffman?

  Oh, I love it. I like this one now.

• 14:38Ryan Sean Adams?

  And it's not just more bullish. This listener says it's also more accurate because it looks a bit more at the monetary side of things and the demand side. It's a bit more precise with respect to issuance in the future. I think that Ryan Alice's DCF was sort of a floor model based on some more static assumptions. And this gets a bit more dynamic. With Ryan Alice, the, the model spit out an ETH price of 10 to 12K at about like 3.5 to 4 trillion dollars. Market cap. This one's spitting out an ETH price of 73K. All right.

• 15:13David Hoffman?

  But the thing is like, that's such a high, crazy, high number that I feel like if you sent that to your Thai wearing friends, it would just break their brains. Like, is that even allowed?

• 15:21Ryan Sean Adams?

  Then check the numbers. Tell them to check the numbers. Like, put your own variables in the spreadsheet. Anyway, optionality here, guys, if you like these types of analyses, we'll include this link to this DCF model in the show notes. You know, the listener also mentioned to me, because we said, we asked Ryan, hey, do you model other layer ones this way? I know you're bullish on layer ones, Ryan Ellis. Do you model other layer ones this way? And he's like, I've never done that, actually. Well, this listener did. He modeled Cardano based on its DCF, and the fair price of Cardano was about 1 to 2 cents, which is interesting because it's trading above a dollar right now. I'm, I'm, look, not knocking anything.

• 16:02David Hoffman?

  This is what the models say.

• 16:03Ryan Sean Adams?

  I'm just, it's just a model. Plug your own numbers in, and you can assist the fundamentals for yourself and choose what you invest in. That's all we're saying. Love you, Cardano. Love you, Charles. Visa.

• 16:18Ryan Sean Adams?

  Visa, 2 billion in transactions on their crypto-linked cards.

• 16:23David Hoffman?

  That's a lot. That happened really fast.

• 16:25Ryan Sean Adams?

  It's a lot. Yeah. Do you have one yet?

• 16:27David Hoffman?

  I do not. No, no, I don't.

• 16:29Ryan Sean Adams?

  Waiting for the Gemini one?

• 16:30David Hoffman?

  Yeah, waiting for the Gemini one.

• 16:32Ryan Sean Adams?

  I have a BlockFi one that I use a little bit. Also Coinbase has like a debit card that I have. It's like blue. Looks kind of cool. I don't know. I don't know how many of these I'm going to collect.

• 16:46Ryan Sean Adams?

  It's pretty good for Visa. Yeah, it's really good. We did that episode of Anchorage where we talked about the bull case for all of this. I think this number will go a lot higher. David, some stablecoin numbers reminding us that stablecoins are big yet small, but what is this number we're looking at here?

• 17:01David Hoffman?

  Yeah, we're looking at total value settled with stablecoins per year. So every single year, the graph resets back to zero, and you can just see how much more money is being settled by stablecoins. So like at the end of 2019, we settled like, I don't know, 0.2 trillion dollars. By the end of 2020, we settled a whole entire $1 trillion. By the end of 2021, we settled $6 trillion. So we went from 0.2 trillion to 6 trillion inside of three years. And then you can just look at how steep the curve is at the start of 2022 and compare it to how steep it is at the start of 2021. And it looks like we're just going to have another record-breaking year in terms of stablecoin value settled. So, cool.

• 17:44Ryan Sean Adams?

  It's just another like 5X per year.

• 17:46David Hoffman?

  Where are all these fees coming on Ethereum? I don't know.

• 17:49Ryan Sean Adams?

  5X per year, right? So next year, maybe 30 trillion. You could be larger. Another chart reminds us that while it's a lot settled, there's only $140 billion in stablecoin supply outstanding. So still lots of room to grow, still very small. If you compare that to like money markets, which some people compare as sort of like quasi-stablecoins, like some people say shadow bank stablecoins. Money markets are like 5.5 trillion. And the euro dollar is in the large trillions. I don't know, it's like 3 to 5 trillion or more. So just a ton of room to grow on stablecoins. And I have kind of a thesis, I don't know if you agree with this, David,

• 18:34Ryan Sean Adams?

  but I feel like when we've seen stablecoins grow, they often grow faster during kind of bear or crab markets, where people are like, "I want to hold some USDC and I want to harvest some yield on my USDC, rather than having all of my cash deployed into crypto-native assets." So like, during bearish markets, people tend to collect more stablecoins. They might sell their assets and wait for the bear markets and then have stablecoins. But you got David's skeptical face on. What do you think about that?

• 19:11David Hoffman?

  Yeah, that's not what I've seen. I've seen that stablecoin supply grow really high during times of bullishness, because that's when yields are super, super high. And also, people are being de-gens and borrowing against their crypto assets more and more and more. And so there's twofold demand. There's more demand to borrow and also because of higher yield. And I think that's what we see in the charts during times of number go up. Stablecoin supply also goes up. Jim Bianco actually thinks that it's actually stablecoin supply. That's really a leading indicator towards bull markets as in like more.

• 19:44Ryan Sean Adams?

  For DeFi anyway.

• 19:45David Hoffman?

  For DeFi, yeah. More stablecoin supply makes bull markets easier to happen because because the costs to borrow are low. And we see that out of the Federal Reserve, right? Like whether the problems that we're having today is that the markets have been so bullish because the cost to borrow has been so low that people have been taking out infinity leverage. And that's been pumping up the value of assets. So I've taken the other side of that. I have one more thought about this chart, but I'll let you respond.

• 20:09Ryan Sean Adams?

  No, I, I, I think that there's some give and take, so I don't feel strongly on that. I think it just tends to go up regardless.

• 20:16David Hoffman?

  Telling me I'm right.

• 20:18Ryan Sean Adams?

  Yes, you're right, David. I know you wanted to hear that today. You're right, David. What's your other take on this chart, though?

• 20:25David Hoffman?

  Look at, look at all the different colors. Look at them. It's so balanced, like, look, look at how. Yeah, it's a very pretty, pretty rainbow. Nothing is really too dominant, but also look at the, as soon as what, around like, I don't know, May of 2021 happened, tether growth really tapered off in favor of USDC growth and other, other stablecoin growth. So this is starting around May 2021 was when USDC really started to take the lead in rate of growth. And now we, just a couple of weeks ago, we saw USDC finally pass, pass a tether supply. And so regulated stablecoins really taking the lead versus, you know, more black box, unregulated stablecoins.

• 21:05Ryan Sean Adams?

  I would like to see more DeFi native staple coins take the lead. And we still haven't seen that yet, but we'll see. We've got some regulatory information coming on staple coins as we get to the news section. But guys, so much more to cover. We're going to hit releases. We're going to talk about the big news items that you have to know in crypto. But before we do, we want to thank the sponsors that made this episode possible.

• 21:27David Hoffman?

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• 22:10David Hoffman?

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• 22:55David Hoffman?

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• 23:39David Hoffman?

  If you're a user, keep an eye out for your favorite DeFi apps or NFT projects building on Arbitrum. Many of your favorite apps are already live, with many more coming over soon. You can find these apps at portal.arbitrum.1, and you can bridge your assets over to Arbitrum using bridge.arbitrum.io in order to experience DeFi and NFTs the way it was always meant to be: fast, cheap, and friction-free.

• 24:00Ryan Sean Adams?

  Alright guys, we are back with the releases of the week. David, DeFi's favorite lending and borrowing protocol is getting ready to launch. Its V3 has just been deployed to test net. This is AVE V3. What's going on here?

• 24:14David Hoffman?

  AVE V3 deployed to seven test nets.

• 24:16Ryan Sean Adams?

  Seven?

• 24:17David Hoffman?

  Yeah, that's what, yeah, look at the tweet.

• 24:18Ryan Sean Adams?

  They're deploying everywhere.

• 24:19David Hoffman?

  Yeah, deploying everywhere. And I think that's just lending themselves to how they're going to deploy. I think AVE is about to become a cross-chain, multi-chain ecosystem play. And so like, I mean, look at that graphic. There's Avalanche, Optimism, Arbitrum, Polygon, Phantom, I think is that one? Harmony? So AVE going everywhere, turning into a protocol of protocols. And so, pretty cool. There's gonna have just probably a lot more cross-chain features, capital efficiency features. Because the fees are lower, you just get more optionality with what you can do in the protocol. So just like rejiggering and rebalancing your portfolio without incurring like bajillion-dollar gas fees. So, cool. I'm really excited for AVE V3.

• 25:00Ryan Sean Adams?

  Yeah, same here. Great protocol. David, let's talk about some of the exploits, okay? I think that's the main message of the week, or the main news item, is this massive exploit. But this is cool, from Polymarket, there's a way to actually trade and hedge against this risk. Here's a question on Polymarket. Will this DeFi protocol suffer an exploit by March, the end of March 31st, 2022? And you've got prediction markets for all of these protocols. Uniswap, MakerDAO, Compound. So people think there's a 5% chance that Uniswap could suffer an exploit by March 31st.

• 25:35David Hoffman?

  It seems really high.

• 25:36Ryan Sean Adams?

  You could bet against that. You know, I'd love to see a market like this for bridges, especially on the back of this week.

• 25:42David Hoffman?

  Right, right, right, right. Five, yeah, the problem is like, I would love to put money into this market and just collect that 5%, you know, winnings, because Uniswap's not gonna get exploited by March 31st, 2022. But also, the reason why I'm not gonna do that is because Ether, I think, is gonna go up more than 5% in that same timeframe. Like, I mean, I always think that, but like, so like, what's the point of holding USDC to get 5% by March or the end of March, when I'd rather just hold ETH?

• 26:10Ryan Sean Adams?

  Well, it's, you know, it's free money, if you're right, I suppose.

• 26:13David Hoffman?

  It's free money, yeah.

• 26:13Ryan Sean Adams?

  But yeah, but I kind of feel like that, like ETH and other assets like it are kind of a black hole for all of my available cash, too.

• 26:21Ryan Sean Adams?

  Let's talk about this, David. This is a new protocol release, Kuiper. Kuiper like the belt, the Kuiper belt. This is kind of like Set, maybe kind of like Index Co-op, but also a bit different. What's your take on this? It's an index protocol of some sort, right?

• 26:36David Hoffman?

  Yeah, it's a governance minimized, like trustless, more trustless index protocol being established by some of the guys over at DeFi Pulse and a few other just independent developers. They're just trying to go the very, very dense protocol sync route by just being permissionless and uncensorable from day one. So going to be keeping tabs on that.

• 26:59Ryan Sean Adams?

  Yeah, me too. I think it's interesting. Still looking at like how different it is versus Index and Set and some of those things, but it feels like it's a bit closer to the metal, deeper in the protocol sync, as we might say in bankless terminology. Let's switch to raises of the week. We got some unicorns we got to talk about. Here's one. Dune Analytics is now a unicorn.

• 27:19David Hoffman?

  Congrats.

• 27:20Ryan Sean Adams?

  $1 billion valuation, above $1 billion, and they raised an amount. What did they raise here?

• 27:25David Hoffman?

  $69,420,000. Nice. Nice. I just love how like, Dune Analytics is a very serious, very in-depth analytics platform, and then they just go the meme route of raising $69,420,000. And I just think it's great. We're just making a farce about like money, and I'm kind of here for it.

• 27:45Ryan Sean Adams?

  Yeah, you know, crypto sometimes is just hilariously irreverent, and I just love that. That's part of the fun for me. Solana, their wallet, anyway, Phantom is raising $109 million. This is another unicorn, so $1.2 billion valuation, pretty cool wallet. And I guess a MetaMask competitor-ish, except for one thing, it's only on Solana at this point in time. What do you make of this?

• 28:12David Hoffman?

  Yes, MetaMask, same niche as MetaMask, but not a competitor because they're just, they are in completely different ecosystems. I've heard fantastic things about Phantom. Wallet and people wishing that Phantom Wallet were in the Ethereum ecosystem. At the rate that MetaMask is printing money via their native swap feature, I would imagine that Phantom has incentives to try and penetrate the Ethereum market. But they might be Solonamax's.

• 28:35Ryan Sean Adams?

  Yeah, well, I'm not sure. And they've talked about deploying to Ethereum. Yeah, I've heard rumor that maybe second half of next year. But it's kind of, they're kind of busy on Phantom at the same time. So that could keep getting pushed back. Meanwhile, MetaMask is making some moves. What do they do this week?

• 28:53David Hoffman?

  They acquired MyCrypto. So MyCrypto is this very old reputable team that was working on wallet infrastructure, led by Taylor Monahan, who's a veteran of the ICO era. Imagine Ryan Bing, the founder, CEO of an Ethereum wallet during the ICO era where like

• 29:11Ryan Sean Adams?

  She was a veteran of keeping people safe during ICO era, we should say. She was one of the good guys, right?

• 29:16David Hoffman?

  Yes, yes. And but also just like, imagine like, imagine being responsible for like 80% of the inbound support requests for ICOs. Because no one knows where else to get customer support. So they go to the wallets and that was Taylor Monahan.

• 29:31Ryan Sean Adams?

  Her team was like basically Ethereum support.

• 29:33David Hoffman?

  Yeah, it really was. Like, and in the same way that people complain about MetaMask and how like, oh, like, where did my money go? Help me MetaMask team. And like, the MetaMask team was like, yo, we just are the wallet infrastructure. Like, we don't know where you've sent your money, dude. Anyways, MyCrypto is teaming up with MetaMask, getting acquired by MetaMask to help them build out the MetaMask ecosystem. And we are having both Dan Finley and Taylor Monahan on the live stream on Tuesday to talk about this acquisition and where MetaMask is going from here. It just makes a ton of sense. So congratulations to both teams. Looking forward to chatting.

• 30:09Ryan Sean Adams?

  I do want to hear where MetaMask is going next. That'll be an interesting conversation. So make sure to tune in. David, this was weird this week. Do you know FTX is now more valuable than Coinbase?

• 30:19David Hoffman?

  How? How is that possible? They're not even publicly listed. Where did they get all the valuation from?

• 30:23Ryan Sean Adams?

  It's, you know, private valuation. So it's on the private market. And so if you add up the private valuation most recently of FTX, and then also you add FTX US, which is a separate subsidiary, which, I don't know. Didn't we talk about that last week? It's like worth $8 billion on its own. And you take the cumulative amount, it's worth more than the public price of Coinbase on the market, which like surprised me. Does that surprise you?

• 30:50David Hoffman?

  Yeah, it definitely does because like, you know, FTX is a gargantuan in this space and they're doing a lot more and they move a lot faster than Coinbase, but they also just don't have the same branding. Like when people, when you ask people like, yo, like, where should I go get my crypto? Should I just get a Coinbase account? Like, that's always what they ask first. Like, oh, like, do I just sign up with Coinbase? And like, obviously like, yeah, sure. Great. It's a great spot.

• 31:10Ryan Sean Adams?

  But somebody said, so a couple of things when I tweeted this out, somebody said, one, one is that, well, there's a difference between private and public markets. And when you go public, you're going to be marked down. Okay. So maybe there's a discount when you go public, which would be interesting. I don't know. And then the second thing was, okay, the difference with FTX is derivatives, huge focus on derivatives, which is a massive market. And also international focus where they're stronger. So you might tell your retail friend like, hey, start with Coinbase. But if it's a, you know, fund of some sort and they're getting into like more exotic derivative type products, pushing a lot of capital, FTX might be the go-to spot. I don't, I don't know what this all implies for Coinbase, but it's a, you know, the battle of crypto, crypto banks is a real thing.

• 31:55Ryan Sean Adams?

  And it's going to keep ongoing.

• 31:57David Hoffman?

  If you told me back in like 2018, 2019, that there would be a, an exchange that would be rivaling Coinbase and that hadn't existed yet because FTX wasn't around back then, I'd be like, you're, you're absolutely crazy. There's no way like the exchange marketplace is like way too competitive. There's no way a new exchange can come back to, to dethrone Coinbase. Turns out that's what happened.

• 32:16Ryan Sean Adams?

  Well, if it happened once, can it happen again? Making any exchange bets, David? Do you say this?

• 32:20David Hoffman?

  No, I'm not. DeFi exchanges.

• 32:23Ryan Sean Adams?

  There you go. Also, big congrats to our friends at Castle Island. They just raised hundreds of millions for a new fund. This is Nick Carter, who's been on the podcast, I don't know, five, six times.

• 32:33David Hoffman?

  Yeah.

• 32:33Ryan Sean Adams?

  Something like this. What does Castle Island invest in? You keep up with their pod?

• 32:38David Hoffman?

  Yeah, yeah, I do. They, they invest in, they're pretty heavy in Bitcoin infrastructure investment, but they also do DeFi investments and, and are really big in the stablecoin world. And so they, they kind of span themselves out pretty well, I'd say, with emphasis in the Bitcoin ecosystem. And they are definitely just true crypto believers through and through. They understand how this industry works. I get so much of my knowledge from Nick Carter. I wish that likeness of him was actually better.

• 33:08Ryan Sean Adams?

  You don't think this looks like Nick?

• 33:09David Hoffman?

  I think Nick looks way better than that in real life.

• 33:13Ryan Sean Adams?

  It's not terrible, though, but yeah.

• 33:14David Hoffman?

  It's not terrible. Yeah.

• 33:16Ryan Sean Adams?

  But yeah, I could tell it's Nick, I guess. It's just like Wax Museum Nick.

• 33:19David Hoffman?

  Yeah, Wax, that's exactly right. Anyways, congratulations to Castle Island. Looking to, looking forward to hearing where you guys put that money on your pod. Fun fact, the, their weekly roundup was the inspiration for the Bankless weekly rollup. And that's how that happened.

• 33:36Ryan Sean Adams?

  So it means we stole that from you, Nick.

• 33:37David Hoffman?

  Yeah, we totally stole that.

• 33:40Ryan Sean Adams?

  Jobs.

• 33:40David Hoffman?

  Jobs.

• 33:41Ryan Sean Adams?

  Get a job in crypto. Look at all these companies raising. They're all hiring. We put this strategically in our rollup agenda where it's like, look at all the money these protocols and companies have. And then we're like, jobs.

• 33:52David Hoffman?

  Jobs.

• 33:52Ryan Sean Adams?

  This equals jobs.

• 33:53David Hoffman?

  Go get it.

• 33:54Ryan Sean Adams?

  New jobs on the job board this week. A senior product engineer at Moment ranks. Go check that out. Also, a slew of DYDX positions. Some technical, some not. You want to be a community manager at DYDX? Do it. Governance growth lead as well. Business operations and finance associate. Marketing associate. See, all of these don't require technical skills. Fantastic. All of these jobs are open for you now. Accountant, smart DeFi, a Web3 engineer, solidity and react at Goldfinch, a senior go Rust engineer at Syndica, a smart contract tech lead at StarX. That's just the start. I could keep David dancing for this entire episode if I read all of these off, but I'll leave you to do that at the Bankless job boards. It's banklist.pallet.xyz. Sign up.

• 34:39David Hoffman?

  If you want to learn more about Goldfinch, which is a company that Ryan just listed off as hiring, we did a meet the nation with them. That YouTube video is on, that video is on the YouTube. If you want to learn all about Goldfinch, they're doing under collateralized lending via DeFi, via a DAO type organization. And they have funded some really, really cool things all across the world.

• 34:59Ryan Sean Adams?

  There you go. Very cool. Cool companies. David, news time.

• 35:03David Hoffman?

  News.

• 35:04Ryan Sean Adams?

  Here it is. We got to start here.

• 35:05David Hoffman?

  Oh, yeah, right. Okay.

• 35:06Ryan Sean Adams?

  The bridge hack.

• 35:07David Hoffman?

  Bridge hack.

• 35:07Ryan Sean Adams?

  Yeah. $300 million. Is it $300 million? I heard 250 to 300.

• 35:11David Hoffman?

  Somewhere between 250 and 300, you know, depending on the price.

• 35:14Ryan Sean Adams?

  A lot. Okay. I said 200 million this, but it was more. And this, maybe we'll start with kind of a.

• 35:21David Hoffman?

  First off, that's big. That's very, very big. That's a big number. That is the second biggest DeFi exploit of all time.

• 35:27Ryan Sean Adams?

  Yes, it is. Yes. Millions. When you get in the hundreds of millions, that's very big territory. It's a nice bank heist.

• 35:33David Hoffman?

  Yes.

• 35:34Ryan Sean Adams?

  Bank heists keep getting bigger. I'll start here with it's kind of a prediction that I feel like Bankless has made and not happy about this prediction, but like it felt like an inevitability in 2022. This is a tweet that I put out earlier in January. Sad prediction, there will be some monster bridge hacks in 2022 that will make people question their multi-layer-one-chain thesis. I feel like that's a little bit what happened, right?

• 36:04David Hoffman?

  This came through really fast.

• 36:06Ryan Sean Adams?

  It did, okay? And then I probably doubled down on that prediction, which is again sad. Okay, sadly, this exploit is just the start. And I feel like that's the case too. Although hopefully everyone with bridges is double checking their code right now to make sure this thing doesn't happen. But we'll start there. Tell us actually what happened. This thing is called Wormhole on Solana, I believe. Give us the scoop here, David.

• 36:32David Hoffman?

  Yeah, so everyone's attention got raised when Sam Z's son, who's a famous white hacker, who can like almost like fix any exploit before everyone knows about it, tweeted out that Wormhole is not having a good time. And it turns out by the time Sam paid attention to it, it had already happened. So the Wormhole network, which is an Ethereum 2 Solana bridge that lets you wrap up your Ether on Ethereum, put that Ether into a smart contract on Ethereum, and then that smart contract pings another smart contract on Solana to tell the Solana chain that some Ether just got deposited into it and they can mint new

• 37:12David Hoffman?

  Ether, fake Ether, wrapped Ether, Solana Ether on the Solana chain. And the reason why that will have value is because you can go back and forth and that's how bridges work. What happened allegedly, from what we are understanding from all the people that know how to code and uncover these things, is that The smart contract on the Solana side had an exploit that allowed the exploiter to mint a bunch of Solana Ether, a bunch of IOUs for Ether on the Ethereum chain. That was, and so they just minted new ones, kind of in the same way that Federal Reserve would print new money. If you can get a hold of the money printer, you can print a bunch of new monies, but that doesn't mean that there's actually more Ether backing it on the Ethereum chain. So the exploiter minted a bunch of Solana Ether and then sent that Solana Ether back

• 37:57David Hoffman?

  through the bridge so that they could take the Ether on the Ethereum side out of the Wormhole smart contract. And that came out to a tune of 120,000 wrapped Ether. And then that 120,000 wrapped Ether is now in the exploiter's wallet, and I don't know if they're actually washing it through tornado cash yet, but I would imagine that's just kind of the only way that they can get that value cleaned.

• 38:20Ryan Sean Adams?

  This happened, as we're recording it, this happened, I don't know, 12 hours before we're recording this, maybe, maybe a bit more. So the story, the story and what's happening is kind of still developing as we're doing it. But yeah, exactly what you said, right? So you've got these fake IOUs on Solana, and then the hacker just caches these IOUs for real ETH on the Ethereum side of things. But this causes some downstream effects, doesn't it? What are the downstream effects, the cascade of effects when something like this happens?

• 38:48David Hoffman?

  Right, so Ether is fantastic collateral. And so it's used as collateral and liquidity inside of Solana DeFi. And so all of a sudden, the Ether collateral in these DeFi applications, like providing liquidity to other tokens, becomes unbacked. And so it kind of goes from like an IOU to Ether to an IOU of nothing. And so all of a sudden, like the value in these things just evaporates, right? Because it's like if somebody, if somebody like stole all the gold out of a bank that had issued IOUs against that gold. Well, if there's no gold there, like you can't issue any IOUs for it, or the IOUs that you do have are worthless. And so it has cascading impacts on DeFi. Liquidations happen because if...

• 39:33David Hoffman?

  Value of the collateral goes to zero, then like people need to get liquidated. But also, how can you liquidate anything if there's no actual value there? Like the IOUs aren't worth anything. And so it really just, it just messes up everything. It's a systemic risk to have all of this unbacked collateral in Solana DeFi. And so like, this is exactly, this is what Georgios Konstantopoulos from Paradigm says. Domino effect of now under collateral, uncollateralized loans against Wormhole ETH is severely undermentioned. That was yesterday. This has been fixed, actually. As of like literally one or two hours before recording, somebody, we think Jump Capital, has footed the bill, footed, footed, footed the bill.

• 40:15David Hoffman?

  I have a hundred foot the, they, they coughed up in all the ether. And so now the Wormhole Bridge is actually whole again because we think Jump Capital coughed up.

• 40:27Ryan Sean Adams?

  Is it Jump Capital?

• 40:27David Hoffman?

  I think so. That's what everyone's.

• 40:29Ryan Sean Adams?

  Cause that's still developing, right?

• 40:30David Hoffman?

  That's unconfirmed, but that's, that's kind of the only people that we can really consider to have this much money. $250 million? Just like, okay, here, like we'll, we'll make Wormhole whole again. Absolutely crazy.

• 40:43Ryan Sean Adams?

  Yeah. So, so basically we had all of these IOUs that were minted. This causes a cascade of problems everywhere this wrapped ether on Solana and the Solana DeFi ecosystem is used, right? Because now all of these assets that you thought were backed by ETH are no longer backed, right? So it's a lot of problem. All of the while Wormhole is saying, hey, look, guys, we got this. Like they were tweeting out, we're, we're finding a way to restore funds. In the background, they were negotiating with the hacker, I believe. And they sent messages to the hacker saying, hey, if you just return the funds, we'll give you $10 million. It'll be a white hat, right? You'll be helping us out for this.

• 41:22David Hoffman?

  $10 million bug bounty, yeah.

• 41:24Ryan Sean Adams?

  Yeah. And who knows, there's probably lots of other conversations that we're not, not privy to, right? And so, but now what's just developed, it seems like, and what you're saying, David, is Wormhole is back up. They somehow procured the funds.

• 41:38David Hoffman?

  Amazing.

• 41:39Ryan Sean Adams?

  And you think it was, this was from Jump Capital?

• 41:42David Hoffman?

  That's what, that's what. Yeah, so Jeff Garzak asked that question. Where do the funds to refill the bridge come from? And so if you click on that tweet and scroll down, you'll see a lot of speculation that it was Jump Capital. Kyle Smalley says Jump is covering because they believe in the future of crypto and what they're building. So Jump Capital, I think, maybe had some like, maybe where their investors in Wormhole or something like that. Jump Capital is a trading desk, I think, and they just print money from doing trading stuff. So they're very well capitalized, obviously, but I mean-

• 42:14Ryan Sean Adams?

  They could pay for this if they wanted to.

• 42:16David Hoffman?

  At the end of the day, $250 million is nothing. I'm sorry. Even George Soros will notice $250 million missing from his treasury, I think.

• 42:26Ryan Sean Adams?

  Yeah, that's incredible. You know, I guess so that, you know, what do we learn from this episode here? There's maybe some lessons that are starting to emerge. I feel like the first thing we're learning is that bridges are dangerous.

• 42:42David Hoffman?

  Bridges are dangerous.

• 42:43Ryan Sean Adams?

  And they're dangerous, they're dangerous in two ways. They're dangerous in, one, the smart contract code for a bridge can actually be hacked. And that's what happened here. There's a smart contract code hack. It happened on the Solana side.

• 42:56David Hoffman?

  Which Ryan is differentiating from the bridge. It's like, so yeah, you have the, you have the bridge that spans two endpoints, two structures, and the bridge can break and be broken in the middle, or the two structures on the end can also break. And those are the smart contracts on either side of the bridge. So the bridge was fine, because even the exploiter was able to transfer assets across the bridge. It was the entryways of the bridge that got exploited here, and these are each individually weak points.

• 43:25Ryan Sean Adams?

  And we've seen hacks like this, not for a bridge, but like this in DeFi, many different times, right? You know, the famous Parity multi-sig hack is, you know, smart contract code is basically hacked. So that's the first category. The other category that we haven't yet seen, but Vitalik has been talking about for a while, and particularly for the last month, is economic attacks. So this is like, you're sort of dependent on the multi-sig signers, or you're dependent on the security of- You know, the Solana chain or any side chain to actually secure this bridge. And that's another iceberg, I think, under the water a little bit that people aren't seeing. You know, for my perspective, it's good that people are paying more attention to bridge security.

• 44:08Ryan Sean Adams?

  So there is a, I guess, a sunny side at the like, at the other side of this. I think it's important to note that both layer ones like this, bridge layer ones like this, and layer two bridges can have the smart contract vulnerability. Though they probably don't, layer twos don't have the same economic attack surface area that these layer one bridges have. So I'm happy to see that bridge security is coming into focus. It seems like it's good that there's a happy ending where maybe a big capital provider like Jump is reimbursing all funds.

• 44:46Ryan Sean Adams?

  I do think that, look, this bridge was talked about as if it was, you know, safe and secure. And I think a lot of people thought it was safe and secure. And I think there is some troubling, I guess, market pressure for everyone to say their bridge is secure when it's really not. And that is troubling, and I hope we we see the lessons of security from this, and we take those lessons and we apply them. We look at these bridges with a lot more scrutiny moving forward. What do you think the takeaways are, David?

• 45:19David Hoffman?

  My, the biggest thing I'm surprised about is I had no idea how much ether was on Solana via this wormhole. Like, a quarter billion dollars is a lot. Over a hundred thousand, a hundred thousand units of ether is a lot. Reminder, there's 118 million ether in existence. A lot of that's locked, a lot of that is lost. So maybe like, you know, 10 to 15 million of that is actually lost somehow, somewhere. But like a hundred, over a hundred thousand ether is a lot. Like, that is not trivial. And so that's what I'm surprised about. I'm surprised that a bridge in such a nascent part of bridging's like story with crypto had that much ether wrapped up in its contracts.

• 46:02David Hoffman?

  And it also like whenever Solana goes down, like we have Kyle Samani and Anatoly come out and say like a main net beta, Solana is in main net beta, like, you know, we got DDoS, it's going down. I'm sorry, what kind of main net beta has a quarter billion dollars of value in it? Like, we need to pick, we need to pick a lane, guys. Is this, is this a beta or is this a live ecosystem? Because if people are getting liquidated, it's not really a beta. There are very, very, the whole Solana ecosystem is very, very fortunate that Jump has the means and the reason and the ability to actually cover the losses here.

• 46:36Ryan Sean Adams?

  Part of me wonder if we get the wrong lesson out of this as well. Like, I'm glad that users are going to be made whole for this. I think that's a great thing and I'm, you know, I'm happy individually. But I feel like it's a dangerous precedent for bridge users to expect that any hack or economic attack is going to get bailed out in the future. Because just because this ended with a happy ending, doesn't mean the next one will. You know, there's not necessarily a Jump Capital who's going to like step in and reimburse everyone.

• 47:10David Hoffman?

  Especially when these bridges and layer twos and everything decentralize. Like, there's not, there's supposed to be no one there.

• 47:18Ryan Sean Adams?

  Exactly. So there's, there's some brittleness in the structure that we're building, in particular in the bridging structure. I think we talked a lot about this with Rune Christensen on the episode that we did with him. So go check that out. That's somewhere in the archives as well. And yeah, bridges are going to be a main topic of discussion. This won't be the last hack that we see of 2022 sadly. And yeah, we're gonna, we're gonna continue talking about it.

• 47:44David Hoffman?

  So what is this exporter gonna do with all the money?

• 47:49David Hoffman?

  What does one do with 250 million dollars? Well, okay, so they can't touch USDC, they can't touch USDT.

• 47:58Ryan Sean Adams?

  It'll get frozen.

• 47:59David Hoffman?

  Because it'll get frozen. So like, they can touch DAI if they want.

• 48:03Ryan Sean Adams?

  You're going straight to ETH.

• 48:04David Hoffman?

  Yeah.

• 48:05Ryan Sean Adams?

  And then you're going to tornado cash.

• 48:06David Hoffman?

  Yeah, right. But like, you can't, you can't just wash 100,000 units of ether through tornado cash. Like, you can maybe do like a couple hundred ETH a week. But like, if you, you have to pull it out into different wallets. You can't, because, but then also, like, sure, you can start to liquidate, like, the trickle of ETH that you push through tornado cash. So yeah, you hack, you exploit something for a quarter billion dollars. And then maybe over the course of one year, you can discreetly withdraw 1 million dollars across, like, you know, spreading it out and off you skating and.

• 48:39Ryan Sean Adams?

  Just wait a long time.

• 48:40David Hoffman?

  Yeah, exactly. Just wait a long time. But like, what the hell do you do with the remaining 249 million dollars?

• 48:46Ryan Sean Adams?

  You just keep it in ETH. You take out some loans, use it in DeFi. I don't know, that's an option.

• 48:50David Hoffman?

  To do what? You can't do, where is it? It's stuck there.

• 48:54Ryan Sean Adams?

  Yeah, I guess it is. Although, like, I think a lot more will be built. Like, you could just, um, expect that there'll be more privacy preserving solutions in the future, more off ramps, this sort of thing.

• 49:06David Hoffman?

  Sit on your hands and so you can get your money here. If they're, if they're inside of the United States, like, they, where are they gonna, how are they gonna tell the IRS that where they got their quarter billion dollars from?

• 49:18Ryan Sean Adams?

  Oh, I don't, it's very, it's gonna be very difficult for them to exit. That's why if I am the hacker, I'm, like, I'd be pretty tempted to be like, oh, okay, yeah, no, this, just a prank, guys. Look, I'm a white hat. I'm, it's, I'm a white hat.

• 49:33David Hoffman?

  Because they, because they offered the exploiter 10 million dollars.

• 49:36Ryan Sean Adams?

  I'll take the 10 million, free and clear.

• 49:37David Hoffman?

  Right.

• 49:38Ryan Sean Adams?

  And, but although I do wonder, is that really free and clear? Even though you hack something, can you just be like, ah?

• 49:46David Hoffman?

  Yeah, can you like remove yourself from all like courts and liabilities? Yeah, just by just taking the $10 million bribe to give it all back?

• 49:55Ryan Sean Adams?

  Yeah, or maybe, maybe you're supposed to play coy and pretend that you were just a white hat all along. Maybe that's the way to do it and maybe that makes it free and clear. I don't know. Look, I'm not a hacker, okay, David? Do you want to interview a hacker on Bankless?

• 50:08David Hoffman?

  Yo, if a hacker wants to come on Bankless, let me know. I will throw you a Zoom link.

• 50:13Ryan Sean Adams?

  We're just curious.

• 50:14David Hoffman?

  We're just curious.

• 50:15Ryan Sean Adams?

  Any hackers out there?

• 50:16David Hoffman?

  What are you gonna do with the money? That's all I want to know.

• 50:18Ryan Sean Adams?

  Just want to know what you're gonna do with the money.

• 50:21David Hoffman?

  DM me.

• 50:23Ryan Sean Adams?

  Yeah, but also I don't want to draw attention to us with hackers, David.

• 50:27David Hoffman?

  Right, sure, yeah, right.

• 50:29Ryan Sean Adams?

  DM Anthony Sisano. He'll be our go-between.

• 50:34Ryan Sean Adams?

  David, let's talk about this. There's trouble in Wonderland still. There was trouble last week, there's more trouble. Update us on the story that was developing. So this was, as listeners will remember, this was a felon in charge of the treasury.

• 50:49David Hoffman?

  Of Wonderland, yeah.

• 50:50Ryan Sean Adams?

  Yeah, Wonderland, so what's happening now, David?

• 50:52David Hoffman?

  Yeah, so the community has been in turmoil, I guess, trying to figure out how to continue, what to do with the Wonderland project. Now that one of the core developers, core founders, one of the multi-sig signers was discovered to be the ex-Quadringa guy who's a convicted felon for identity fraud and stuff like that, and then also discovered that Danny Sesta just knew about that and didn't tell anyone. The community has been reeling about like, well, okay, what, how do we, what are the next steps?

• 51:22Ryan Sean Adams?

  And that's where we left the story last week. There was like a governance vote of, you know, should we boot this treasury? Should we continue the project? It was, it was that, that's the to be continued from last week.

• 51:31David Hoffman?

  Right, and what's also not helpful is all of the very, very depreciating asset prices. Time and spell and MIM, there's just, and all the curve. A bunch of money has moved around because of, as a result of this turmoil. So the state of things is unclear. Asset prices are down. And so the community is, you know, very stressed. And so Danny, the leader of the whole Wonderland project says- Tweeted out in a tweet thread that got over 2,000 likes, so a lot. Wonderland Experiment is coming to an end. It's clear from the vote, uh, from the vote that the community is divided. The core and heart of Wonderland is still the community. If we cannot find agreement on whether or not to continue, it means that we failed.

• 52:13David Hoffman?

  The duty of the team is to enact the will of the token holders as the vote is so close to 50 50. There is only one path forward. The vote was to, uh, keep, uh, Zero X Sifu as a treasury member or to oust him. And so Danny says-

• 52:28Ryan Sean Adams?

  Why does anyone want to keep him?

• 52:29David Hoffman?

  I have no clue. I may, I hope that's the right vote. As the vote is so close to 50 50, there's only one path forward. It is to reimburse unwind those who do not feel a part of Wonderland and, and can find, so they can find a new home who feels attached and in line with a frog nation vision. And so that is what the community of Wonderland is currently reeling with. Kind of, uh, oh, also at the same time, uh, Zero X Sifu, the, the ex-Quadringa guy is pushing all of his ether through tornado cache. And so has put-

• 53:02Ryan Sean Adams?

  Actively exit scamming on chain.

• 53:05David Hoffman?

  Yeah, just like watching, like disappearing through a puff of tornado cache. And so like that, so he, his address is becoming outwashed. So there's that. And then Danny inside of the, um, uh, inside of the Discord, he said, he said, this was on January 31st. He goes, this DAO is going, going to be managed directly by me. The circus needs to stop now and we need to gather more serious proposals and structure to move forward. So, I mean, Danny just really pushing himself as, I mean, at some point, like in times of turmoil, like some leaders need to step up and like, who else is it going to be other than Danny? He has the most at stake here. But like DAO is saying, like Danny's kind of saying this DAO is going to be managed by me. It's like, well, let's take the D out of that DAO at the moment.

• 53:46David Hoffman?

  Yeah, so some, some mess, some mess going on.

• 53:48Ryan Sean Adams?

  Yeah. How do you think, uh, this resolves? I mean, some people are saying like, oh, governance is so messy. It's a mistake to even do this. You know, I don't know. How does this end in your mind?

• 54:00David Hoffman?

  I have no clue, but I'm definitely reminded of that, uh, Thomas Jefferson quote or George Washington quote, which that said, like, the biggest argument of, against democracy is a conversation with the average voter.

• 54:12Ryan Sean Adams?

  Is this the biggest argument against the Dow? It's actually Dow votes?

• 54:15David Hoffman?

  Yeah. Yes, it is.

• 54:17Ryan Sean Adams?

  Yeah, I get it.

• 54:18David Hoffman?

  Well, look, the project will, you know, hopefully come to a good resolution.

• 54:22Ryan Sean Adams?

  We'll see. Just a quick update. Danny did not get back to us after saying he would come on the Bankless Podcast. We have DMs open, did not get back to us. Here's a tweet, someone saying, being a part of Wonderland is like living with a schizophrenic person. No comment following that from me. Let's move on to other things.

• 54:40David Hoffman?

  All right. Cool things, yay things, happy things.

• 54:43Ryan Sean Adams?

  Immutable and GameStop, the team up. GME investors have been waiting for on Layer 2. What is happening with Immutable and GameStop, David?

• 54:52David Hoffman?

  Yeah, so there was a ton of speculation that GameStop was going to be using Looper to issue NFTs and bolster their gaming.

• 55:00Ryan Sean Adams?

  They still might be ish.

• 55:01David Hoffman?

  Really?

• 55:01Ryan Sean Adams?

  But I don't know.

• 55:02David Hoffman?

  I think, I think this is a pretty, pretty strong commitment to the Immutable ecosystem. So GameStop has publicly announced that they're going to be issuing NFTs using the GameStop, like all the, all the games that GameStop own and all their platforms and all their IP are going to be issued as NFTs on the Immutable X Layer 2, the ZK Rollup Layer 2, along with, in partnership with the Immutable team, establishing a $100 million fund to help grow the gaming ecosystem on Immutable X. So huge partnership. This is making a ton of big news. We are, you guys, by the time you hear this, we'll have already done this, but we are, Ryan and I are about to go on a live stream with Robbie, the co-founder of Immutable, to talk about all of this.

• 55:46David Hoffman?

  Oh, my God, people are like, it's hours away and people are already waiting for this. That is crazy.

• 55:50Ryan Sean Adams?

  It's just because it's the Wall Street Bets community.

• 55:52David Hoffman?

  It is.

• 55:52Ryan Sean Adams?

  Very excited about this. It's like a different community.

• 55:55David Hoffman?

  Yeah, so if you guys want to learn more about everything that GameStop is doing with Immutable, go to YouTube, check out that, that video, and then we'll probably put it on the RSS feed this weekend or something.

• 56:06Ryan Sean Adams?

  Meme stocks, meme crypto, producing NFTs. I don't know. It sounds kind of fun. I'm in. Gonna ask Robbie about that. David, what's happening here?

• 56:14David Hoffman?

  More L222 stuff. Okay, we talked about this last week where Binance ran out of ETH to deposit onto Arbitrum Layer 2. Binance, by the way, you can you can take your Ether and deposit it from the Binance exchange. You can get it deposited on Arbitrum. Like two weeks ago, after rolling out that feature, they ran out of ETH because everyone deposited their Ether on Arbitrum from Binance. And so they had to, they had to, Binance had to put more Ether from the L1 into their optimism, or excuse me, their Arbitrum Layer 2, so that more people could use that Arbitrum Layer 2 ETH to withdraw onto Arbitrum. They ran out of ETH and then they resupplied it. And then it happened again. It happened again. In less than 20 hours for Binance's new ETH supply to get drained.

• 56:58David Hoffman?

  And so there's clear demand. I said it last time. There's clear demand to deposit money on Layer 2s coming from centralized exchanges. Coinbase, once again, please take note and open up withdrawals onto things like Arbitrum and Optimism and all the other Layer 2s.

• 57:12Ryan Sean Adams?

  So we can drain you Coinbase.

• 57:13David Hoffman?

  So we can drain you.

• 57:16Ryan Sean Adams?

  Well, look, man, bankless. That's what this whole thing is. Let's, ultimately, we got to get a lot of these assets off of exchanges. That's, that's the reason we're here. This is cool, too. On Layer 2.22, Rainbow is now deployed on Polygon, displays Polygon NFTs. Rainbow Wallet's pretty awesome, David. Do you use this?

• 57:34David Hoffman?

  I haven't downloaded it. I don't use it too much, although I think we might be doing a show with them in the future.

• 57:39Ryan Sean Adams?

  Yeah, we should. And I guess they are deploying on, you know, on all Layer 2s. It's definitely one of the best NFT wallets out there.

• 57:47David Hoffman?

  The NFT Layer 2 ecosystem is definitely not very strong, is not as strong as I wish it to be. And it's, the reason why is like, stuff like this hasn't been like deployed yet. So, you know, wallets, user-friendly wallets that allow you to check out and do NFT stuff on Layer 2s is definitely one of those stories. So, nice drop Rainbow Wallet.

• 58:05Ryan Sean Adams?

  Yeah, it's like the Ethereum mainnet sells 90% of all NFT traffic, right? It has like 60% of DeFi, but it has a total locked value, but it's 90% of all NFTs, which is pretty insane. But look, NFTs are doing well.

• 58:19David Hoffman?

  It's NFT season.

• 58:21Ryan Sean Adams?

  It's NFT season.

• 58:22David Hoffman?

  How?

• 58:22Ryan Sean Adams?

  I thought bear markets, I thought all the liquid JPGs would just evaporate in a puff.

• 58:26David Hoffman?

  I know you're not the biggest NFT guy, Ryan, but like when I cope with down prices, I go and look at like pretty JPGs on OpenSea.

• 58:35Ryan Sean Adams?

  You do?

• 58:35David Hoffman?

  And I think other people.

• 58:36Ryan Sean Adams?

  You think that's what's happening?

• 58:37David Hoffman?

  I think that's what other people are like, oh yeah.

• 58:38Ryan Sean Adams?

  People are sad, they buy JPGs?

• 58:40David Hoffman?

  Go away CoinGecko, open up OpenSea. Like, I don't want to look, I don't want to look at crypto prices. I want to look at my JPGs. I mean, that might be a little bit reductive, but that's definitely my behavior. And, you know, at the same time, January has absolutely broken, like smashed through records in NFT volume. Just wild. And then there's a bunch of brand new NFT projects that have really just caught people's attentions. And that's what we put in the Market Monday for this week. We just kind of ran through all the NFT projects that have really captured a lot of attention. Board Apes has a floor of like 115 ETH, absolutely insane. Justin Bieber bought a floor ape for something like 5X the value of it for some reason.

• 59:20David Hoffman?

  Justin Bieber also bought doodles. These brand new doodles things have a 15, like 10 to 15 ETH floor. And where just a couple of weeks ago, they were 2 to 3 ETH. Azukis are these like anime style profile pictures that are really hot with those, that are really into anime and other Asian culture type stuff. Cool Cats and their cool pets, I'm a big fan of the Cool Cats. They have their cool pets launch that happened earlier this week, kind of like a Board Ape Kennel Club type derivative project. And then there's a bunch of other NFT projects that have captured my attention that aren't necessarily pumping, but I decided to include those. Crypto Covens, a new celebrity just bought one of those and that we'll talk about in a second. And then also MFers, which I think are just like.

• 1:00:03Ryan Sean Adams?

  These things are janky.

• 1:00:04David Hoffman?

  Perfectly, offensively simple. It's like, it's like Ryan's, it's Ryan's turtle brand, but a little bit better than the turtles, but not too much better than the turtles in terms of the drawing. And just like, it's just like. So offensively simple. It's just like, yes, like this thing does cost a thousand dollars.

• 1:00:21Ryan Sean Adams?

  It's so basic. Yeah. Definitely my brand. David even convinced me to get one of these. So I don't know what I'm a MF'er too. It's like, look, is the game now we're trying to just front run Justin Bieber? We're trying to front run the next celebrity because what's interesting is they're buying NFTs, but it seems like they're not, they're not buying tokens.

• 1:00:41David Hoffman?

  Right.

• 1:00:42Ryan Sean Adams?

  Right. I guess that's because when you buy an NFT, what are you actually buying? Are you buying some clout? Are you buying some signal? You're buying things you can't get from.

• 1:00:49David Hoffman?

  You're buying clout and community love.

• 1:00:52Ryan Sean Adams?

  That's what you're buying. You're buying a community. Or didn't you say, it's like, um, this is like a social media experiment. When you buy an NFT that has a robust community around it and you said, hey, I'm now part of this MFT. I'm now a cool cat. I'm now a bored ape. I'm now a punk. I'm now a MF'er. Then like instant community love.

• 1:01:12David Hoffman?

  Right.

• 1:01:12Ryan Sean Adams?

  You like instant followers, instant clout.

• 1:01:15David Hoffman?

  It's like, uh, it's sort of like people that don't know the Twitter world, like you can go and buy followers on Twitter and like, it's super obvious that you do. But like in the NFT world, you can kind of in a roundabout way, buy followers by buying an NFT. And then that community just follows you. It's actually really interesting.

• 1:01:34Ryan Sean Adams?

  It's composable communities. It's like, oh, he's one of us. That's what's going on. All right. So here's another celebrity. Cat, official cat. This is Kat Dennings.

• 1:01:43David Hoffman?

  Kat Dennings from Two Broke Girls and also Thor. Uh, she brought a crypto coven, which is, uh, this, uh, female-led NFT project that has all these very cool drawings of different witches. I think that you're just scrolling through her, her Twitter feed at this point.

• 1:01:59Ryan Sean Adams?

  I'm trying to see what I recognize her from and I don't like, but she's in Thor, I guess.

• 1:02:03David Hoffman?

  Oh yeah. She's in Thor and a few others. Yeah.

• 1:02:05Ryan Sean Adams?

  Yeah, definitely seen her around. Uh, not in real life.

• 1:02:10Ryan Sean Adams?

  All right, Board Apes. Okay, maybe this is why Board Apes are worth, what, $5 billion? And it's not Board Apes. Sorry. Not Board Apes. The Yuga Labs, the creators of Board Apes, the startup behind Board Apes, is receiving this $5 billion valuation potentially from A16Z.

• 1:02:29David Hoffman?

  $5 billion?

• 1:02:31Ryan Sean Adams?

  $5 billion!

• 1:02:32David Hoffman?

  What? That's insane. What, how is that happening?

• 1:02:36Ryan Sean Adams?

  I guess you're betting, I guess what you're betting is like, um, that Board Apes are sort of like Marvel Comics level IP, that they're going to be used in the future across like movies, they're going to be part of pop culture. That seems to be like a unicorn level, 5X unicorn, uh, level bet. And what you're doing is like, you're buying the, uh, the Marvel, you know, the, the company that created, uh, like the Marvel characters essentially. I guess that's what you're doing. But I don't, I don't, I can't, I have a hard time wrapping my head around $5 billion for this. It's like a lot of assumptions.

• 1:03:15David Hoffman?

  Well, I mean, it's A16Z, so they kind of just like pile into anything that they do and really inflate valuations. That, I, I want that unpacked by somebody more smart than me, because that is perplexing.

• 1:03:26Ryan Sean Adams?

  Carly Riley, Carly Riley, over at Press JPEGs. I'm sure she's on it. Fantastic NFT podcast, by the way, if you want to hear more about this stuff. David and I just, you know, we tinker. At least I do. David, David's all in.

• 1:03:37David Hoffman?

  Ryan just buys when I tell him to buy.

• 1:03:39Ryan Sean Adams?

  Buy an MF'er. What? Okay, this looks stupid.

• 1:03:43David Hoffman?

  I saw like very rudimentary drawings plus low floor price and I was like, oh, Ryan's totally gonna get one of these.

• 1:03:49Ryan Sean Adams?

  Yeah. All right, Coachella. They are partnering with FTX. They're gonna launch NFTs, maybe tickets? Is that what they're doing?

• 1:03:56David Hoffman?

  Uh, no, I think, I think they're doing, yeah, they're doing the whole like NFT collection type thing. So Coachella, I mean, I feel like is the right kind of ecosystem to do an NFT style project, like all these very, very like, you know, hip, young kids that stay up with the times. Like, they, maybe they want some NFTs for going to Coachella. Like, anyone who goes to Coachella likes to flex. Like, that's kind of why you go there.

• 1:04:20Ryan Sean Adams?

  It's interesting. It's like, the headline is Coachella partners with FTX to launch NFTs. Where are they launching them? On Solana? It's kind of like, whenever you see FTX, you see Solana. It's like, Solana is to FTX what Binance chain is to Binance. I very much feel like that's the case. And you know, when we talked to Brian Armstrong? It's like, they haven't launched a Coinbase chain, have they? They haven't picked like a winner. And he seemed like, ah.

• 1:04:46David Hoffman?

  It's Ethereum.

• 1:04:47Ryan Sean Adams?

  Oh, okay. That's what you're saying?

• 1:04:49David Hoffman?

  Yeah, yeah. FTX is just a line. Coinbase is through Ethereum.

• 1:04:52Ryan Sean Adams?

  Well, ETH would, like, he can't get the value on top, like, he can't extract the value from that in the way that, you know, FTX can from Solana.

• 1:05:00David Hoffman?

  But remember, Brian was like, oh, I like open permissionless decentralized protocols.

• 1:05:04Ryan Sean Adams?

  And I respect that.

• 1:05:05David Hoffman?

  Yeah.

• 1:05:06Ryan Sean Adams?

  But I wonder if that's not the profit maximization take.

• 1:05:09David Hoffman?

  Oh, certainly not.

• 1:05:10Ryan Sean Adams?

  Definitely not. It's already not. And that's why FTX is maybe greater valuation than Coinbase right now.

• 1:05:15David Hoffman?

  Yeah, at this present moment.

• 1:05:17Ryan Sean Adams?

  You gotta do the right thing, though, Brian.

• 1:05:19David Hoffman?

  All right. Okay, so that was a lot of exuberance. And Chris Bernisky, who's one of my favorite people ever, but also has been a bear lately, has tweeted this out. A downer. A big downer. NFT volumes and prices in January 2022 have been strong. Many say this shows how everything in crypto may not crash simultaneously again. I would rephrase that as how everything in crypto can be in different bull markets at different times. Sometimes.

• 1:05:45Ryan Sean Adams?

  Super cycle.

• 1:05:45David Hoffman?

  Some sectors go up while some sectors go down. Chris says that one could say that NFTs are at the furthest end of the risk spectrum, the most illiquid, and so the last to pump with a euphoric gasps of a dying bull.

• 1:06:00Ryan Sean Adams?

  Oh, last gasp of the bull market.

• 1:06:02David Hoffman?

  Chris.

• 1:06:03Ryan Sean Adams?

  In January.

• 1:06:03David Hoffman?

  Chris, come on, we're trying to be bullish here. Chris will not be bullied into being bullish, unlike most people on crypto Twitter. So he's always, he's a very independent thinker. And when I hear these bear tweets out of Chris, I just like, oh, damn it, Chris. Like, God, did you have to say that?

• 1:06:20Ryan Sean Adams?

  He might be right, though. I mean, there's always a chance he's right. What do you think?

• 1:06:24David Hoffman?

  He's wrong.

• 1:06:24Ryan Sean Adams?

  You're betting against it, obviously.

• 1:06:25David Hoffman?

  He's wrong. Couldn't be, couldn't be a bear market. It couldn't be.

• 1:06:29Ryan Sean Adams?

  It's possible. It just doesn't have.

• 1:06:31David Hoffman?

  Ryan.

• 1:06:32Ryan Sean Adams?

  Look, we said it last week. I'm gonna double down on this. This is not, this does not feel like, you know, 2018. It's different.

• 1:06:39David Hoffman?

  Different.

• 1:06:39Ryan Sean Adams?

  It's different. Bieber's here.

• 1:06:40David Hoffman?

  You're not Bieber in 2018.

• 1:06:43Ryan Sean Adams?

  Does that make you feel better, Chris?

• 1:06:44David Hoffman?

  Oh, no, that did not make me feel better at all.

• 1:06:46Ryan Sean Adams?

  Oh, shoot. What have we done?

• 1:06:49David Hoffman?

  Oh, no.

• 1:06:49Ryan Sean Adams?

  Anything can happen, guys. Reminder, Bankless listeners, anything could happen. We don't know. Bull market, bear market, we're not sure.

• 1:06:57Ryan Sean Adams?

  Chris reminds us of that.

• 1:06:58David Hoffman?

  All right.

• 1:06:58Ryan Sean Adams?

  Hey, let's talk about this. DM is selling. This is Facebook's Libra-turned-DM project, Staplecoin project. You offered a bid last week of $5,000. Apparently, that wasn't enough, okay? Because Silvergate outbid Bankless for DM and is now, I think they paid $132 million for this?

• 1:07:15David Hoffman?

  Oh, that's, that's, that's a lot. That's more than I would pay.

• 1:07:19Ryan Sean Adams?

  Yeah, that's a lot. But actually, it makes sense for Silvergate. Do you know, so Silvergate is like the, the actual bank behind USDC and Coinbase. There are some other banks, but it sort of gave Coinbase and other exchanges a bank account when no other banks would support them. Now they're publicly traded.

• 1:07:36David Hoffman?

  And that's true for a lot of companies in the ecosystem.

• 1:07:39Ryan Sean Adams?

  Oh, for sure. Silvergate has been like the, the traditional bank for...

• 1:07:43David Hoffman?

  A pillar.

• 1:07:44Ryan Sean Adams?

  Mm-hmm. Because everyone else, everyone else, you know, gave, gave exchanges Dear John levels, you know, letters and said, get out of here. We don't want your business. Silvergate didn't. And they have an exchange as well, like sort of a, a bank-to-bank kind of crypto network exchange called the Silvergate Exchange Network. So I feel like this kind of makes sense for them, David. It's just DM has pivoted to a private company-owned blockchain that's going to do bank-to-bank style transactions. And maybe Silvergate can do something with it. Yeah.

• 1:08:16David Hoffman?

  Still wouldn't, still wouldn't pay more than $5,000 for it, though.

• 1:08:19Ryan Sean Adams?

  Yeah, there goes. The ETH killer is, uh...

• 1:08:22David Hoffman?

  Getting bought by a bank. The ETH killer got bought by a bank.

• 1:08:27Ryan Sean Adams?

  Two years later, or three years later. I should go back and read some tweets.

• 1:08:31David Hoffman?

  For those that don't know that context, DM was originally, uh, it was an EVM fork, I actually think. It was a Geth fork or something. And then people were talking about like...

• 1:08:40Ryan Sean Adams?

  They built their own code, but it's like gonna kill Ethereum, right?

• 1:08:42David Hoffman?

  Yeah, right. That was definitely one of the branding. It's like, oh yeah, this is gonna kill Ethereum. And then meanwhile, it gets bought by a bank.

• 1:08:47Ryan Sean Adams?

  It's Facebook. What are you gonna do?

• 1:08:49David Hoffman?

  Oh, God, the irony.

• 1:08:51Ryan Sean Adams?

  Look at this. Crypto leaders are launching a political action committee to back congressional candidates. So this is a PAC, right? Crypto-funded PAC. Framework Ventures is in there. FTX is in there. Blockchain Capital, Messari, multi-chains, big money.

• 1:09:06David Hoffman?

  Dan Matijus, I can't pronounce his last name. Dan, the guy that donated a bunch of money to Gitcoin for us to host Udi on the podcast.

• 1:09:14Ryan Sean Adams?

  Ah, CMS Holdings. Thanks, Dan. That's awesome. Anyway, they're spending 20 million on crypto-friendly politicians. And, you know, that's cool to see.

• 1:09:23David Hoffman?

  That is cool.

• 1:09:24Ryan Sean Adams?

  I think that's the backdrop where we get to some of these other stories. Last week, and this happened, I believe, last Friday after we recorded, word came out about the SEC dropping a rule, a proposal for a rule, a proposed rule. This is kind of like executive order, so it's not coming from Congress. It's not a law. And possibly broadening the definition of what a securities exchange is to include automated market makers and DeFi protocols. All right? It's unclear if that was really their intent. But they only gave the industry and everybody involved 30 days to comment. So this feels very much like trying to slip the vote through.

• 1:10:06Ryan Sean Adams?

  And Hester Purce, of course, dissented on this. But it feels very much to me that crypto is under attack. Maybe in the executive branch, coming out of Treasury, coming out of the SEC, coming out of some other agencies there. And I don't know what to make of it. So there's that. And then you couple that with, there's a great story in Decrypt. And if you're curious about this, we'll include a link in the show notes, about the plot to hand the crypto industry to the big banks. And the TLDR of this story is, people think, and it seems it could be the case, that the Biden administration, directed by Treasury and others in the executive branch, they don't like stable coins very much.

• 1:10:50Ryan Sean Adams?

  They don't like the freewheeling, uncontrolled, like, you know, nature of stable coins. And you can understand when you see things like Tether. But they're worried About this industry getting too big and you know getting outside of the US regulatory control. So their plan, according to this article, is actually to give it to the banks. Like make the banks responsible for it. If you want to issue stable coins, you have to go through the same steps a bank would be go through. It's unclear whether this would apply to decentralized stable coins as well, how far they would push this in the DeFi stack. But that is kind of the

• 1:11:30Ryan Sean Adams?

  the plot that might be uncovered. And we're going to see a stable, I believe, a report from the Biden administration, like this month about crypto and the actions that they intend to take with respect to this growing industry. What do you think about that, David?

• 1:11:46David Hoffman?

  Yeah, it makes me think that this very significant amount of success by USDC and Tether has actually taken wind out of the sails of decentralized stable coins. Because why do we need decentralized stable coins? Like, look at how much USDC we have. It is pegged to the dollar so well. Maybe this is the thing that really puts the brakes on things like USDC and Tether, and really, really incentivizes true decentralized stable coin, stable coin projects that we really, really need, because we need more stable coins. But we also don't want them to be issued by banks. I mean, even even DeFi has some amount of systemic risk in USDC alone. And so like, we

• 1:12:29David Hoffman?

  need to get out of out of that. For just a little bit of context, the USDC model, and also the Tether model of issuing stable coins, and then allowing anyone to buy those stable coins internally in DeFi, is a great gigantic shift in a paradigm. And so that allows banks who issue USDC, like Circle, to have some of that money be held by users that never KYC'd with the bank. Unlike PayPal, unlike unlike, you know, any Wells Fargo or Zelle or whatever, if you want, if somebody needs to send you money in PayPal, both people need to have accounts.

• 1:13:10David Hoffman?

  Sender and the receiver and that is not true with USDC or stablecoins and DeFi. The buyer can buy USDC off of the secondary market and send it to someone.

• 1:13:20Ryan Sean Adams?

  It's so much better.

• 1:13:21David Hoffman?

  It's so much better and there's no KYC for either of those two people. And that's what really triggers.

• 1:13:26Ryan Sean Adams?

  Like cash, by the way.

• 1:13:28David Hoffman?

  Like very much just like cash.

• 1:13:29Ryan Sean Adams?

  Physical cash.

• 1:13:30David Hoffman?

  Yeah, and that's taking the power out of banks. It's taking the ability for banks to capture us away from them. And then it's also taking the ability for nation states to know where all the money is and to tax all of its individuals away from them. So there's friction here. And so USDC is this, in my mind, a very amicable middle ground. Between the desires of the nation state wanting to push dollars into all corners of the world. And the desires of the individual to freely and permissionlessly transact dollars between their friends and family and whatever. But the banks and the nation states are saying like, no, no, no, like it's our way or the highway. And so they are fighting to.

• 1:14:13Ryan Sean Adams?

  And we'll see.

• 1:14:13David Hoffman?

  Right.

• 1:14:14Ryan Sean Adams?

  It's like, let's hope they don't screw it up. I think is the message here and there are lots of ways they can screw it up, particularly by giving this entire industry over to the incumbents.

• 1:14:23David Hoffman?

  Right.

• 1:14:23Ryan Sean Adams?

  Rather than the crypto natives.

• 1:14:26David Hoffman?

  I hope you guys are ready for a banked future if they get what they want.

• 1:14:29Ryan Sean Adams?

  I hope, I hope not.

• 1:14:30David Hoffman?

  I'm not ready for that.

• 1:14:31Ryan Sean Adams?

  I'm not ready for that.

• 1:14:32David Hoffman?

  I would leave the United States.

• 1:14:33Ryan Sean Adams?

  Yet. You would?

• 1:14:35David Hoffman?

  Oh, yeah.

• 1:14:37Ryan Sean Adams?

  Where'd you go?

• 1:14:38David Hoffman?

  Portugal.

• 1:14:39Ryan Sean Adams?

  Well, look, this is one guy who's pushing back. His name is Josh Jarrett.

• 1:14:42David Hoffman?

  Josh.

• 1:14:44Ryan Sean Adams?

  Quality Fitness. He is the owner, the owner of Quality Fitness, also a crypto staker, Tezos. And what's he doing? He is suing the IRS.

• 1:14:54David Hoffman?

  Yes.

• 1:14:54Ryan Sean Adams?

  All right, this is insanity wolf stuff. And why, why is he suing them? It's because he doesn't think that staking rewards should be treated as ordinary income. Which is sort of maybe the posture of the IRS so far. And if you are staking in an exchange, they'll issue you a tiny 1099 and they'll consider anything, you know, that's staked. Any of the staking rewards, ordinary income. Josh is saying that we don't have clarity on that. It's actually new property and you shouldn't have to pay taxes on staking rewards as ordinary income. You should only have to pay capital gains when they're sold. And so apparently he had a favorable in his district.

• 1:15:38Ryan Sean Adams?

  He had a favorable interaction with the IRS. The IRS offered him at first a refund, saying, okay, it's not ordinary income, you know, staking rewards. And then he refused the offer. And then he went to court and said, no, I want more than that. I want some additional clarity. So, kind of cool. It's like, it's, you know, it's small because it's in, I believe, some sort of district court, but some precedent is being set. And this is what Jake Trivinsky says about this. Josh sued the IRS for clarity on taxation of new tokens created through staking. The IRS tried to pay him off to drop the suit. He turned down the money to continue the case and seek building precedent for all of us. King!

• 1:16:23David Hoffman?

  How many times do I have to play this soundboard?

• 1:16:26Ryan Sean Adams?

  You're done with me talking about it. That's what that means, I think.

• 1:16:30David Hoffman?

  No, no, no. Great. Dude, we need more heroes like Josh. We need more people with spines to stand up and say, hey, the way that this is working is bad and wrong and we should fix it.

• 1:16:42Ryan Sean Adams?

  You're a citizen. You have rights.

• 1:16:45David Hoffman?

  Yes.

• 1:16:46Ryan Sean Adams?

  Push back against this stuff.

• 1:16:47David Hoffman?

  Yes.

• 1:16:48Ryan Sean Adams?

  Use our court system for what it's made for. You know, some CPAs are saying, like, some people are saying IRS will not tax unsold staked cryptos income. It's far, far too much, it's far too early to say that right now. And so, we can't say that. But what we are doing is establishing some precedent in court and can continue to fight this.

• 1:17:06David Hoffman?

  Meanwhile, in India...

• 1:17:09Ryan Sean Adams?

  In India? What's happening?

• 1:17:11David Hoffman?

  India is proposing pretty aggressive taxes on just all crypto activity. So, 30% tax on crypto income in addition to, I think, like a 1% tax on like crypto transfers. So, I think what that means is like, if I were to send you like USDC, Ryan, and I send you $1,000 of USDC, I gotta pay, if I was in India, I would have to pay them $10.

• 1:17:33Ryan Sean Adams?

  What?

• 1:17:34David Hoffman?

  Yes.

• 1:17:35Ryan Sean Adams?

  Like they're at the Visa network or something?

• 1:17:36David Hoffman?

  Yes, exactly. Yeah, so like, everything about, India is just going like, hey, that crypto thing that you did, tax. Like, or that other crypto thing that you did, tax. And so, they're just trying... Trying to capture all the activity, the native Indian activity in crypto as much as possible.

• 1:17:54Ryan Sean Adams?

  Do you see what it's paired with? So this headline is paired with, they propose a 30% tax on crypto. Meanwhile, they announced the digital rupee launch.

• 1:18:01David Hoffman?

  Yeah, probably no taxes on the digital rupee.

• 1:18:04Ryan Sean Adams?

  Not at all.

• 1:18:05David Hoffman?

  Taxing freedom to try incentivize you into coercion.

• 1:18:09Ryan Sean Adams?

  This is something that, you know, remember when we had Eric Peters in the podcast? And we asked him the question, are you worried that like, uh, big governments will ban crypto? He's like, no, I'm not worried. They're not going to ban crypto. What they could do and what they probably will do is tax the hell out of it.

• 1:18:25David Hoffman?

  Yeah.

• 1:18:26Ryan Sean Adams?

  They'll try to disincent you from using crypto, using all of their traditional means. And that's what we're seeing India do here.

• 1:18:33David Hoffman?

  India is doing it aggressively, by the way. That's kind of the news. It's not just like, oh, India is taxing crypto. Like, no, they are taxing crypto.

• 1:18:41Ryan Sean Adams?

  Yeah, uh, it kind of sucks as well. I mean, some people are saying it's good that there's some additional clarity. But like, the clarity to me, to my mind, is bad news. Now, David and I aren't from India, so there might be some listeners who have better information on this. We'd be interested to hear from you, what you think about this. Does not seem like great news. Seems like a little nation-state hostility towards crypto. Guys, we're going to be right back with the takes of the week, get to the meme of the week as well. But before we do, we want to thank the sponsors that made this episode possible.

• 1:19:10David Hoffman?

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• 1:19:52David Hoffman?

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• 1:20:36David Hoffman?

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• 1:21:20Ryan Sean Adams?

  All right, guys, we are back with the takes of the week. David, why don't you start with this from Chris Dixon?

• 1:21:24David Hoffman?

  Yeah, I really, really like this take. Chris Dixon says, "If you think right-click and save is a dunk, you really don't understand NFTs. The more copying, the more valuable." And the reason why I like this take, Ryan, is because the same is true for how blockchain networks need to be anti-fragile and resilient, is blockchain networks need as many computers to download the chain as possible. Bitcoin, Ethereum, these things survive by self-replication. And what that means is can they self-replicate like evolution and put their DNA on all the computers in the world? And the more that they do that, the better. And so when someone says, like, "Oh, I just right-click saved your NFT," I tell them, Thank you for doing that. Make sure you print it out and frame it as well.

• 1:22:06David Hoffman?

  Because I want my NFT, which is mine, not yours, to be like propagated all around the world. And so the more that that's why you see like cool cats on the Times Square and bored apes on Times Squares. Because we want these things to be right click save. Like we want to lean into the right click saving. Please right click save my NFT. Please download it. Make it your phone background. Uh, make it your profile picture. Please, please do that.

• 1:22:30Ryan Sean Adams?

  It, it, it, it makes a lot of sense, right? And this is not, uh, this is not foreign. I mean, we, we see it in kind of traditional art markets as well, right? It's like if the Louvre was selling Mona Lisa, uh, posters in their gift shop, does that decrease the value of the Mona Lisa? No, you're propagating the Mona Lisa. You're making it more valuable by doing this. You're making it a cultural icon and a staple. So not, not surprising that this is the case, but it's a very basic criticism that really doesn't understand things. Why don't you do this? Uh, this is sort of a follow up related tweet from Chris Lewis, uh, Scott Lewis.

• 1:23:01David Hoffman?

  Yeah. Scott says, for any, for people active on social media, a hundred thousand dollar NFT profile picture will get so many more impressions per month than a wristwatch that costs a hundred thousand dollars. Of course, more people choose to spend more on NFTs than watches. And Scott says, for me, over a decade, it might be point 0003 dollars per impression for his super expensive NFT versus three dollars per impression on your super nice, awesome Rolex. So really it's just a matter of like, what lets you flex more? That super expensive watch or that Crypto Punk as your profile picture? And how, and what is the ROI on the number of flexes that you can get per person versus your Rolex?

• 1:23:44David Hoffman?

  Where you can only wear your Rolex in real life, where on the metaverse, you can flex your NFT profile picture to everyone on, on the internet. And so the value per impression, while these NFTs are in these JPGs are super, super expensive. The dollar price of an impression is really, really cheap and that's why NFTs are so hot.

• 1:24:05Ryan Sean Adams?

  I feel like you're selling me on that five billion dollar bored ape valuation.

• 1:24:08David Hoffman?

  I've been trying to get you to do a Crypto Punk for a while now, Ryan.

• 1:24:12Ryan Sean Adams?

  This is, uh, this is a really good take. This is like, I, I've never thought about it like this is what I would say. I guess the other value is like a Rolex, uh, can break, can, you know, deteriorate.

• 1:24:23David Hoffman?

  You can lose your private keys though.

• 1:24:26Ryan Sean Adams?

  I guess.

• 1:24:27David Hoffman?

  Have you ever lost your private keys before, Ryan?

• 1:24:29Ryan Sean Adams?

  Um, I have never. No, I've never lost my private keys.

• 1:24:33David Hoffman?

  I have never had a wallet error before.

• 1:24:35Ryan Sean Adams?

  I have also never done the thing where you send money to the wrong wallet, except one time.

• 1:24:39David Hoffman?

  I have done that.

• 1:24:40Ryan Sean Adams?

  Okay, I've done that once, and I did it to my own wallet, though.

• 1:24:44David Hoffman?

  Oh, I also did that. I also did that. It was like, I sent, I sent money to an address and like, that's not the address that I wanted to, but I recognize that address. Where are the private keys for the address?

• 1:24:54Ryan Sean Adams?

  I double-checked, and I was like, oh shit, oh shit, it happened. And I was like...

• 1:24:59David Hoffman?

  You did it to your own wallet.

• 1:25:00Ryan Sean Adams?

  It's my wallet.

• 1:25:02David Hoffman?

  Dude, I was tearing apart my, like, my, all the places that I had, this was like a while ago. And I was like, where the god, where the hell is this goddamn private key for this goddamn wallet? And it took me like an hour and a half to find it, and I finally did.

• 1:25:15Ryan Sean Adams?

  Awesome. Well, I mean, knock on wood, right? Uh, it can happen. I guess that's your point.

• 1:25:21David Hoffman?

  Yeah.

• 1:25:21Ryan Sean Adams?

  Let's see this. Another, man, it's, all the takes are NFT. This must be NFT week. What's this NFT take?

• 1:25:26David Hoffman?

  Yeah, this is from Gabby Disen, Disen from Yield Guild Gaming. He goes, "NFT blue chips are the L1s of IP. Interesting comparison." I think he's saying stuff like CryptoPunks, Bored Apes, uh, whatever other NFT projects you consider to be blue chips, I'll throw in Cool Cats, "are the layer 1s of IP." Kind of, I think it's kind of a riff off of like the FAT protocol thesis, where like these NFT blue chips are just like these blockchain native brands, like Bored Apes, like CryptoPunks, like, like, uh, Doodles, I guess, are now in a blue chip, like Cool Cats. These are these, the, like, OG, like, L1s, but for IP, internet native IP.

• 1:26:06Ryan Sean Adams?

  Well, I, I think he's saying this is, this is Mickey Mouse, right? I think he's saying this is, uh, Marvel. This is DC Comics. This is that kind of IP that people are going to build against into the future, and it could turn into, you know, shows, cultural icons, movies, cartoons, action figures, all sorts of things. I guess that's partially what you're, you're betting on, too. Uh, we've also seen that in the past. Here's another NFT take. What's this?

• 1:26:32David Hoffman?

  Okay, so this is a facetious take. So this is a person who's being sarcastic. NFTs are a scam. I prefer to pay artists real money, like .000478 cents to my favorite musician for my Spotify listen, or $20 for a photography print on a website that gets seven hits a day, or my favorite, one Instagram follow to a digital artist whose work I absolutely love. So this is just like, there's a lot of NFT haters out there. But then, like, we have to remind where we're coming from. Like, the alternative is like, oh, I'll pay you in likes, or I'll pay you in followers. Oh, are you a really, really cool artist? Here's 10,000 followers on your Instagram. Good luck paying for dinner. Like, and so, you know, this is this facetious take about how like,

• 1:27:16David Hoffman?

  you know, actually, NFTs are a great way to monetize art, which there's a lot of people out in the world that are not ready to hear that take, I don't think.

• 1:27:24Ryan Sean Adams?

  Money directly to the creator. That's where the money's going. And so people don't understand.

• 1:27:29David Hoffman?

  Is this one NFTs? No, this is, well, this is DC Investor who's NFT periphery, but great take. Want to read this one?

• 1:27:36Ryan Sean Adams?

  This is more about, this is more about conviction, I think. I'll read it. "One of the partners at my old firm used to call me blockchain, used to call him blockchain. That's funny. After 2017 bubble popped to remind me of my misplaced exuberance for the technology, he got fired three years ago. Meanwhile, I quit one year ago because I no longer needed to work because my exuberance was correct." There's DC Investor. "Looking at history, I guess, maybe getting a bit of a..."

• 1:28:04David Hoffman?

  Schadenfreude?

• 1:28:04Ryan Sean Adams?

  Yeah, Schadenfreude. My German is not great. "Out of this..." What do you think? Did you get made fun of in 2017, like 2018, after the, were people like, "Why are you still in crypto, David? It's dead. You led us wrong."

• 1:28:17David Hoffman?

  I don't think I really was made, made fun of back then, but I definitely had a harder time of convincing people to come into crypto. No, I didn't, I didn't really get made fun of.

• 1:28:27Ryan Sean Adams?

  People don't want to listen to you when prices are depressed like that. The very time they should be buying, they just think you're, you know.

• 1:28:33David Hoffman?

  Click on, click on Eric Connor's meme that he drew. So here's DC Investor's profile picture, drawn as a restaurant, receiving a poured glass of champagne while somebody in pain, some waiter in pain, has to pour it for him.

• 1:28:49Ryan Sean Adams?

  Yeah, I, uh, yeah, I, I, look, it pays to invest with conviction. At least when you're right.

• 1:28:55David Hoffman?

  At least when you're right. All right, this is your take, Ryan. What's your take here?

• 1:28:59Ryan Sean Adams?

  Yeah, my take is, uh, this is just, you know, not about Joe Rogan at all, but it's about the protocol. So people want to cancel Spotify over Joe Rogan. I saw a lot of this conversation, but no one ever called for the cancellation of RSS. That's because one is a company and the other is a protocol. When Rogan switched to Spotify from RSS, he gave someone else the ability to deplatform him. I think that's an interesting take because like RSS is a protocol. It's a standard. So we distribute the bankless podcasts, lots of podcasts, podcasters do via RSS. And any third party, a Spotify, Apple iTunes, whatever podcast listener you listen to podcasts in, can subscribe and can aggregate our feed or any other podcasters feed, but they don't control RSS. Why? Because it's a protocol. It's a credibly neutral

• 1:29:44Ryan Sean Adams?

  protocol. So, Apple can't deplatform us from RSS. And when there's some controversy about a particular podcast, like as there, as there has been lately with Joe Rogan over, you know, some of his, um, uh, COVID, uh, conversations and stances there, um, no one calls for the deplatforming of him on RSS because RSS can't deplatform you. It's credibly neutral. It's a free speech protocol. Meanwhile, if you're Spotify, you have governance, you have a management team, you have shareholders, you absolutely can be deplatformed, right? And whether you agree with what Rogan is doing or not, it's like, it kind of completely beside the point here. It's not irrelevant. It's just illustrating the difference between

• 1:30:29Ryan Sean Adams?

  a protocol that is credibly neutral and a platform which has a set of decision makers that can deplatform you and relegate you to the sidelines for, for whatever reason. So I think that's a good thing because a lot of things, it's a good thing to realize because a lot of things in crypto, they talk about themselves as if they are censorship resistant, credibly neutral protocols. Really are they, all they are, if they don't preserve those qualities, they're just platforms. They're kind of like companies rather than protocols.

• 1:31:02David Hoffman?

  Yeah, I remember when Definity, I think, took down some NFT project because it violated IP copyright laws.

• 1:31:08Ryan Sean Adams?

  Yep.

• 1:31:08David Hoffman?

  Well, that's kind of the same thing. And this is, this is why a lot of, you know, Cypherpunk fans all chant the chant that code is speech. RSS, the RSS feed allows for free, free speech to happen. Say, for example, the United States nation state decided to get super authoritarian against crypto and demanded the deplatforming of every single crypto podcast. Bankless would still be able to get out its podcast via RSS feed.

• 1:31:36Ryan Sean Adams?

  Spotify.

• 1:31:37David Hoffman?

  RSS and that protocol is free speech. Spotify is not free speech. That's permission speech. And it goes down to exactly what Ryan's saying, down to our crypto protocols. True decentralized permissionless protocols are equivalent to free speech. Others that aren't done, that don't have that property are not.

• 1:31:54Ryan Sean Adams?

  Yeah, great illustration there. David, what are you excited about, man?

• 1:31:58David Hoffman?

  Oh, man. I'm excited about East Denver, Ryan. I got my East Denver shirt.

• 1:32:03Ryan Sean Adams?

  Oh, man, I didn't even notice.

• 1:32:05David Hoffman?

  Right? Yeah.

• 1:32:05Ryan Sean Adams?

  What year was that?

• 1:32:07David Hoffman?

  This is, I think, 2018. I think 2018. Yeah. Actually, this might be 2019. But Ryan, did you know that there are 25 East Denver? And East Denver 2018 POAPS, and I own one of them.

• 1:32:21Ryan Sean Adams?

  How many?

• 1:32:22David Hoffman?

  Only 25.

• 1:32:24Ryan Sean Adams?

  My god, that is rare.

• 1:32:25David Hoffman?

  One, yeah, it looks very rare. Yeah. And I also have the 2020, or 2019 one. I did not get the 2021 because that one didn't happen. It was live stream. But only 13 sleeps until East Denver. 12 sleeps for you guys since they were recording this a day early. And so that is one of the things I'm excited about, Ryan. And then the other thing I'm kind of excited about, also super excited about, I haven't, haven't totally committed to this yet, but I'm more and more every single day. My lease in San Diego ends at the end of May, and I'm real, real thinking about moving to Brooklyn, Ryan.

• 1:32:55Ryan Sean Adams?

  No way. Why?

• 1:32:56David Hoffman?

  Yeah.

• 1:32:57Ryan Sean Adams?

  You running it on the East Coast time zone, huh?

• 1:32:59David Hoffman?

  Yeah, yeah. This is, all of a sudden, we're going to be synced up in our time zones. That's going to be weird. You're going to have to get used to how early I wake up.

• 1:33:06Ryan Sean Adams?

  You wake up early.

• 1:33:07David Hoffman?

  Yeah. Just the amount of friends that I've meeting that live in New York City and Brooklyn is just through the charts. Looks absolutely astronomical. And there's a lot of cool things being built out there, and I want to be there for it. So I might F around and move to Brooklyn at the end of May.

• 1:33:23Ryan Sean Adams?

  There you go. We'll see. Is David coming to Brooklyn? Should he come to Brooklyn?

• 1:33:26David Hoffman?

  Yeah.

• 1:33:27Ryan Sean Adams?

  What do you think?

• 1:33:28David Hoffman?

  Leave a message in the comments on YouTube if David should move to Brooklyn.

• 1:33:32Ryan Sean Adams?

  Yo, David, you can sleep on my couch. I'm from Brooklyn, man.

• 1:33:37David Hoffman?

  All right, Ryan, what are you excited about?

• 1:33:38Ryan Sean Adams?

  Look, this is gonna sound super nerdy, but I'm pretty excited about the DCF model, discounted cash flow model that we just saw on the podcast we recorded. But I'm excited for different reasons, right? It's like, we knew this model existed and, you know, people have modeled this in the past. The reason I'm excited is because I feel like part of the purpose of Bankless when we started this podcast and when we started the newsletter was to explain the value of DeFi and the value of Ether. That's honestly why we started it, all right? We started it in the bear market because we were like, "Look what's happening. Look at this thing called Ethereum."

• 1:34:12David Hoffman?

  Why aren't people paying attention to this?

• 1:34:14Ryan Sean Adams?

  Why do people keep saying crypto is only Bitcoin and also that it's dead? That's all people were talking about. And I feel like it's working, okay? So, we had a Bankless listener, Ryan Alice, who came up with this great discounted cash flow model. How did he come up with it? Well, after being inspired from listening to our ultrasound money episode with Justin Drake around last year at this time, okay, that seeded, like, the seed of the idea for him and he created a discounted cash flow on top of that. Now, and he's saying, you know, 12K is conservative fair value now for the price of Ether. And then we saw earlier in this episode, a Bankless listener on Reddit who did a riff on Ryan Alice's discounted cash flow model.

• 1:34:57Ryan Sean Adams?

  More improvements for the model. And this is how it kind of works its way up. Like, an idea, a good idea, a narrative that sticks, kind of goes through the forges, the meme forges and works its way up. Goes through the crucible. And it starts with shows like Bankless, but then other smart investors are like, "You know what?" Like, I'm looking at the numbers and there's something here.

• 1:35:19David Hoffman?

  I am bullish on Ether.

• 1:35:20Ryan Sean Adams?

  Yeah, these guys aren't just like the other, you know, shills we see on YouTube. There's actual like numbers and fundamentals backing this stuff. Uh, and then big name analysts start to step up and pretty, pretty soon, like the banks and like the, you know, the JP Morgans of the world, they're like, oh, we're running the numbers too. And here's our price prediction for this asset. And then you get to mainstream acceptance, wearing their ties. And you get to mainstream acceptance for this stuff's on, you know, CNBC, and that becomes part of the, the narrative. So the cool thing I think is that, uh, you know, we've been part of this. If you've been a bankless listener, you've been part of this. And this is an opportunity to participate in the story, to front run everybody else. And like, I'm not saying this is the last chance.

• 1:36:01Ryan Sean Adams?

  There'll be tons of opportunities for this in crypto, but this is probably the most obvious chance to do that. Okay. Like the merge for ETH is happening in like six months and no one's running this discounted cash flow analysis. No one's actually looking at supply and demand for this asset and being like, well, if this comes true, what is going to be the price of ETH? Uh, so you get to front run these opportunities and you get to say probably to your kids and grandkids, you were here listening to Bankless while ETH price was below 3K. That to me is exciting and, um, yeah, it's, I'm, I'm just like, education is alpha. We talked to Kyla about that. That's our podcast coming out on, on Monday. Um, you just keep educating yourselves, keep, keep being curious about this.

• 1:36:45Ryan Sean Adams?

  It's always going to be alpha and, uh, you know, we're glad you're here. And the other thing I would say is like, what's nice about this is we're not shilling ETH. We're just saying like, hey, run the numbers.

• 1:36:56David Hoffman?

  We're just showing the numbers. We have the receipts.

• 1:36:59Ryan Sean Adams?

  Come and see, go check it out.

• 1:37:01David Hoffman?

  The, and the numbers and the metrics and the ability to evaluate these things is, uh, unprecedented in the world of Ethereum, uh, and specifically with Ether. That is why Ether is so cool is that the amount of supporting numbers that you can generate to back up the things that we are saying is more than, stronger than any asset in history. And so the, ultimately the level of confidence that Ether, the asset will be able to instill once people get over the hump of like, oh, crypto's a scam, uh, is, is going to be, uh, massive. Um, so you're right, Ryan, I'm also excited about that. You know, somebody could start a podcast, a once a week podcast on just Ether, the asset.

• 1:37:42Ryan Sean Adams?

  So that is ours.

• 1:37:43David Hoffman?

  No, it's not. We don't do that enough. Somebody could like go really do a deep, the deepest dive into Ether, the asset. What happened in last week? You should buy ETH, this is why. The metrics, like the updates, the global perceptions around it. A once a week podcast that just dives into the metrics and numbers behind Ether is ripe for the taking. I would be a frequent consumer of that podcast. Well, message to another Bankless listener who feels inspired to do that. We're going to stop talking about Ether now. We can't have pushups sometimes. Well, let's talk about NFTs. Let's talk about the meme of the week. What are we looking at? Meme of the week, David? Meme of the week. It's a bunch of lines, a bunch of lines all going down into the right. A bunch of different colored lines there alluding to a price, prices of your NFTs.

• 1:38:27David Hoffman?

  And your NFTs are the ones that always go down, except there's that one line that goes up into the right. And that's the NFT that you didn't mint.

• 1:38:36David Hoffman?

  Oh, man, it's bittersweet, huh? I guess, you know, turtles are the ones on the downward side.

• 1:38:44David Hoffman?

  Yeah, the green one is the bored apes. That's right. I did not mint the bored ape. Guys, thanks for hanging with us again. Of course, none of this has been financial advice. We have no idea which NFTs or crypto assets are going to pump next. And we won't pretend that we do. ETH is risky. So is DeFi. So is all of this crypto stuff. 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. Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence.

• 1:39:24David Hoffman?

  We recommend joining our daily newsletter, podcast and community as a Bankless premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks and exclusive content, and even the Bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings and weekly rollups where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless nation.