ROLLUP: Crypto Crash | Celsius Insolvent? | 3AC Su Zhu | Interest Rate Hike | Jack Dorsey Web5

3rd Week of June, 2022 ------ 📣 NOTIONAL | Real DeFi Yield https://bankless.cc/Notional ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🏦 ROCKET POOL | STAKE YOUR ETH https://bankless.cc/RocketPool 👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave ⚡️ LIDO | LIQUID ETH STAKING https://bankless.cc/lido 🔐 LEDGER | NANO S PLUS WALLET https://bankless.cc/Ledger ------ Topics Covered: 0:00 Intro 3:00 Markets 3:30 BTC Price 4:10 ETH Price 5:35 ETH BTC Ratio 6:35 Crypto Market Cap https://imgur.com/Khft6ly 10:04 ETH Gas Markets https://dune.xyz/hildobby/Gas 11:40 Capital D Depression? 15:40 The 5 Stages of Grief 23:06 The Fed 25:10 Inflation https://twitter.com/srust99/status/1535311767051685891?s=21&t=uylJWSACuCRyhn4c3X_4Pw https://twitter.com/srust99/status/1535311767051685891?s=21&t=uylJWSACuCRyhn4c3X_4Pw 27:40 Raising Rates https://www.cnbc.com/2022/06/15/fed-hikes-its-benchmark-interest-rate-by-three-quarters-of-a-point-the-biggest-increase-since-1994.html 31:15 Era of Low Rates https://twitter.com/pythianism/status/1537291975874883585?s=20&t=L-NPx2mHtEVnbQo7zXX9PQ https://twitter.com/pythianism/status/1537291975874883585?s=20&t=L-NPx2mHtEVnbQo7zXX9PQ 32:50 It’s a Gift https://twitter.com/ryansadams/status/1537158104114249729?s=21&t=dDY8P_LAR1_l4i7kHtYHsg https://twitter.com/ryansadams/status/1537158104114249729?s=21&t=dDY8P_LAR1_l4i7kHtYHsg 34:15 Forced Sellers https://twitter.com/spencernoon/status/1537118361741574146?s=20&t=rFijGueucmaFaUe8vAbFYw https://twitter.com/spencernoon/status/1537118361741574146?s=20&t=rFijGueucmaFaUe8vAbFYw 36:30 Celsius Insolvent https://twitter.com/celsiusnetwork/status/1536169010877739009?s=21&t=jPTE4Q71OVuWgL63RjqckQ https://twitter.com/celsiusnetwork/status/1536169010877739009?s=21&t=jPTE4Q71OVuWgL63RjqckQ 38:36 Explaining Celsius https://coinmetrics.substack.com/p/state-of-the-network-issue-159?s=r 44:47 Fake DeFi https://twitter.com/jonwu_/status/1536476104986267648?s=20&t=Vq6402VVpR6g6H27i7Xz4A https://twitter.com/jonwu_/status/1536476104986267648?s=20&t=Vq6402VVpR6g6H27i7Xz4A 53:21 Three Arrows Capital https://twitter.com/coindesk/status/1536993553301266434?s=21&t=BUJLJpC8IiMIFpvOmBVjKg https://twitter.com/coindesk/status/1536993553301266434?s=21&t=BUJLJpC8IiMIFpvOmBVjKg 54:40 3AC Thread https://twitter.com/Danny8BC/thread/1537224378554806272 57:48 Su Zhu Speaks https://twitter.com/zhusu/status/1536876343815983104?s=20&t=HHew8akRu1alggguMYy9NQ https://twitter.com/zhusu/status/1536876343815983104?s=20&t=HHew8akRu1alggguMYy9NQ 1:00:10 Robert Leshner Take https://twitter.com/rleshner/status/1536928363276812289?s=20&t=CwUW9f9evuUGwa5jRU8XXg https://twitter.com/rleshner/status/1536928363276812289?s=20&t=CwUW9f9evuUGwa5jRU8XXg 1:00:57 Controversial Meme https://twitter.com/BanklessHQ/status/1536905741763846144?s=20&t=BRC7aGq6m6LGboJZq_OwKg https://twitter.com/BanklessHQ/status/1536905741763846144?s=20&t=BRC7aGq6m6LGboJZq_OwKg 1:02:15 Not the End https://twitter.com/RyanSAdams/status/1537028975918125057?s=20&t=T-ZfuPh-m06xSIGoR1Xk4Q https://twitter.com/RyanSAdams/status/1537028975918125057?s=20&t=T-ZfuPh-m06xSIGoR1Xk4Q 1:03:05 Layoffs https://twitter.com/coinbase/status/1536682940347785216?s=20&t=34AeABxOaZm6K4-kgFBJaQ https://twitter.com/coinbase/status/1536682940347785216?s=20&t=34AeABxOaZm6K4-kgFBJaQ Binance Hiring: https://twitter.com/cz_binance/status/1537013824666095617?s=20&t=L-NPx2mHtEVnbQo7zXX9PQ https://twitter.com/cz_binance/status/1537013824666095617?s=20&t=L-NPx2mHtEVnbQo7zXX9PQ 1:05:30 Jobs https://pallet.xyz/list/bankless/jobs 1:08:00 NEWS 1:09:30 Optimism Exploit Returned https://thedefiant.io/stolen-op-returned/ 1:11:05 Difficulty Bomb Delay https://decrypt.co/102703/ethereum-core-devs-delay-crucial-difficulty-bomb-for-two-months 1:13:30 NYSE Prez to Uniswap https://twitter.com/Uniswap/status/1537081901839695872?s=20&t=2jKMZplOlLuYaxMvDnp6Lg https://twitter.com/Uniswap/status/1537081901839695872?s=20&t=2jKMZplOlLuYaxMvDnp6Lg 1:15:08 NFTs https://thedefiant.io/nft-roundup-goblintown/ 1:18:30 Jack Dorsey’s Web5 https://www.theblockcrypto.com/linked/151407/jack-dorseys-bitcoin-venture-tbd-unveils-proposal-for-decentralized-web-platform 1:22:25 Throwing Shade https://twitter.com/pmarca/status/1535375413630840832?s=20&t=Q-9W07htZY811X3QGj6Utw https://twitter.com/pmarca/status/1535375413630840832?s=20&t=Q-9W07htZY811X3QGj6Utw 1:24:18 Coin Center Sues IRS https://www.theblockcrypto.com/linked/151515/coin-center-sues-treasury-and-irs-claims-tax-reporting-rule-unconstitutional 1:25:40 Circle Euro Coin https://twitter.com/jerallaire/thread/1537421727625580545 1:26:20 RELEASES Lens Share: https://twitter.com/apoorvlathey/status/1536428243280007168?s=20&t=KPGASdjLzPuL6mrl8WoddA https://twitter.com/apoorvlathey/status/1536428243280007168?s=20&t=KPGASdjLzPuL6mrl8WoddA Hop Claim: https://twitter.com/HopProtocol/thread/1534963591698427909 Seaport: https://twitter.com/opensea/thread/1536756396158599168 1:30:00 Community Questions 1:30:30 stETH Lido https://twitter.com/KristinaKlaudy1/status/1537425505095385089?s=20&t=9J79BYVgOjRrdzG-u4-vOg https://twitter.com/KristinaKlaudy1/status/1537425505095385089?s=20&t=9J79BYVgOjRrdzG-u4-vOg 1:34:35 ETH Price https://twitter.com/dragondad123/status/1537424723063189505?s=20&t=9J79BYVgOjRrdzG-u4-vOg https://twitter.com/dragondad123/status/1537424723063189505?s=20&t=9J79BYVgOjRrdzG-u4-vOg 1:37:00 TAKES 1:37:20 Government Names https://twitter.com/VitalikButerin/status/1535211774697414660?s=20&t=ggAxpBT3HGy2Kyd0GGws2A https://twitter.com/VitalikButerin/status/1535211774697414660?s=20&t=ggAxpBT3HGy2Kyd0GGws2A 1:39:20 DeFi Takes https://twitter.com/TrustlessState/status/1537111461729902602?s=20&t=Um_PxwyiA4JfqLnUObMuhw https://twitter.com/TrustlessState/status/1537111461729902602?s=20&t=Um_PxwyiA4JfqLnUObMuhw https://twitter.com/RyanSAdams/status/1536179744638701570?s=20&t=6MVEsJtRhj-LxWS50gvz2A https://twitter.com/RyanSAdams/status/1536179744638701570?s=20&t=6MVEsJtRhj-LxWS50gvz2A https://twitter.com/mhonkasalo/status/1536837789345521664?s=20&t=GS6fjA8AGrPT7IASGpmFYg https://twitter.com/mhonkasalo/status/1536837789345521664?s=20&t=GS6fjA8AGrPT7IASGpmFYg 1:42:18 What David’s Bullish On https://newsletter.banklesshq.com/p/8-projects-im-bullish-on-this-bear 1:45:40 What Ryan’s Bullish On https://twitter.com/ryansadams/status/1537036424507432960?s=21&t=BUJLJpC8IiMIFpvOmBVjKg https://twitter.com/ryansadams/status/1537036424507432960?s=21&t=BUJLJpC8IiMIFpvOmBVjKg 1:48:10 MEMEs of the Week https://twitter.com/chrisjbakke/status/1536387971145867264?s=21&t=bY_7p77hrpQbvSu0Rko-IA https://twitter.com/chrisjbakke/status/1536387971145867264?s=21&t=bY_7p77hrpQbvSu0Rko-IA Transitory https://www.reddit.com/r/wallstreetbets/comments/vapx46/is_that_inflation/?utm_source=share&utm_medium=ios_app&utm_name=iossmf https://www.reddit.com/r/wallstreetbets/comments/vapx46/is_that_inflation/?utm_source=share&utm_medium=ios_app&utm_name=iossmf ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://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?

  This is what I did the last bear market and I came out with more conviction, stronger than ever, incredibly excited about the future.

• 0:11Ryan Sean Adams?

  Hey, Bankless Nation, happy third week of June. It is a bear market, officially a bear market. David, you feel embarrassed this week?

• 0:19David Hoffman?

  Well, I feel now that I am capitulated to the bear market, I'm like, well, do I continue to be bearish or are we done here?

• 0:27Ryan Sean Adams?

  What's the point of being bearish?

• 0:28David Hoffman?

  Yeah, what's the point of being bearish now? It's all the bearishness that's already happened, right? That could be wrong. It could be wrong.

• 0:34Ryan Sean Adams?

  Yeah, we'll have to get into that. And you're in your new setup in New York, the first roll-up, I think, we've done in New York. And you've got like a bear market vibes with the big brick wall behind you. Is this your new place? Are we always gonna have this brick?

• 0:45David Hoffman?

  Bear market jail is like, yeah, I'm in bear market jail time. Yeah, I was overly bullish to, I got punished for being a permanent bear. And now I'm in the bear market, perma bowl. So now I'm in a bear market jail. Yeah, exactly. That's exactly right.

• 0:58Ryan Sean Adams?

  Well, we got a lot to talk about this week, so I hope Bankless listeners have their morning coffee. It's Friday morning. Bankless ain't stopping in the bear market. Every Friday, this is gonna come at you. Actually, I won't be, I'll be out next week, but Dave's got it covered, all right? Every Friday, Bankless will ship a weekly roll-up, and this is yours this morning. We're gonna talk about a few things. The first, David, crypto is crashing. Why? We look at the historical precedence of that. What else we got?

• 1:23David Hoffman?

  We also got, of course, the Fed raising interest rates, which is definitely a part of the whole crypto crashing story. But also, there's, you know, everything's crashing. So this is actually a first for crypto. Crypto's ever crashed with, while also, everything else crashing too. And so we're going into the details around with that. The tide is out, part three of the topics of the week. The tide is out, and many, many people are caught swimming without swim trunks. So we're gonna talk about who got caught swimming naked. And then, last but last, not least, Ryan, take us home.

• 1:51Ryan Sean Adams?

  Yeah, Celsius is one of the people who got caught without swim trunks. So is one of the largest hedge funds, Three Arrows Capital. We're gonna talk about that story. It just came up in the last week from our last roll-up. And then, SeFi is breaking all around us, but DeFi didn't. We got some hot takes at the end, so stay tuned. Make sure you like and subscribe if you enjoy these episodes, of course, on YouTube and rate and review if you're listening to this on the podcast. Go ahead and do that. You know what, David? We're going to get to Celsius in our show in a little bit. But actually, our friends at Notional, they are a DeFi borrowing and lending platform. And the topic of C-Fi breaking, but DeFi didn't. Guess what didn't break, David?

• 2:34David Hoffman?

  DeFi and Notional. Notional still spitting out the yield, the fixed APY yield. So Notional is giving you 3.08% on your ETH right now, on your Ether. And you can, of course, also get USDC, DAI, or WBCC lending as well. So Notional, part of the whole, part of the crypto industry that's working just fine right now. Giving you your yield when you want it, where you want it. So you can check that out. There's a link in the show notes, bankless.cc/notional. If you want to get some of that dependable yield.

• 3:06Ryan Sean Adams?

  What I love about this is this is a fixed rate. So you can sign up for a fixed rate yield for a year. Also, there's no counterparty here. That's the problem. That's the thing that got Celsius in trouble is went into a black box. There were all sorts of counterparties. Who knows what they were doing with it? This is all on-chain. This is how DeFi solves some of the problems that are lingering in C-Fi. Anyway, go check that out. The link that David just mentioned. But David, we got to get into the markets, man. You ready for some Bitcoin talk? It's been a bloody week. Give it to us straight. Don't, don't hold any punches.

• 3:38David Hoffman?

  Don't hold back. Well, Bitcoin lost basically $10,000 in the last week, which, I mean, if it was at the highs of like $70,000, that would be one thing. But it was at $30,000 last week and it went down basically $10,000. It's come up from the low. So we're at $21,000 right now. But overall Bitcoin is down, you ready for this, Ryan? 30%, 30 and a half percent in a single week.

• 4:03Ryan Sean Adams?

  Wow. This is a bloody week. It's got to be historic in some ways, but tell us about ETH as well.

• 4:09David Hoffman?

  Yeah, Ether, another oof week, of course. I think that to state the obvious, started the week at $1,800. We are currently at $1,100. So last, lost $700, down 38%. Oof.

• 4:26Ryan Sean Adams?

  Can we talk about the lows here? So how low did Ether get?

• 4:29David Hoffman?

  Yeah.

• 4:30Ryan Sean Adams?

  Did it get into triple digits? Not yet, right? But close.

• 4:33David Hoffman?

  In DeFi markets, it actually did wick down on Uniswap below $1,000. So in DeFi, very, very briefly, it got wicked down, but it got right back up. So I don't really count it. It's more of an anomaly. So yeah, I would call the official low at about $1,020.

• 4:50Ryan Sean Adams?

  Of note, though, that is lower, much lower than the all-time high of the last bull market. So the all-time high of the last bull market was 14,000, something, 1420, 1430, 1440, something like that. And we are below the last all-time high. So this is uncharted.

• 5:07David Hoffman?

  Unprecedented.

• 5:07Ryan Sean Adams?

  Yeah, unprecedented. Of course, Ethereum's only had one cycle. So like one big bearish.

• 5:13David Hoffman?

  Well, it's got two now.

• 5:15Ryan Sean Adams?

  This is the second. Bitcoin, did it drop below its last high? Like just about. I mean.

• 5:22David Hoffman?

  Yeah, it's basically there.

• 5:23Ryan Sean Adams?

  Basically there. So its low is 20,166 on this chart. Well, this is the wick you were just mentioning on Uniswap, where we dropped into triple digits, but we're still hanging above, into the quadruple-digit territory for ETH. But what is the ETH Bitcoin chart telling us?

• 5:42David Hoffman?

  Yeah, we went down from 0.059 to 0.052, down 12%. So oof. And I'm going to chalk this up to a number of different reasons. Mainly ETH being collateral in DeFi and overall collateral across crypto. So that collateral, when we have liquidation events, that collateral gets sold off heavily. And so like 3Hr Capital was liquidating ETH. Celsius was liquidating staked ETH, creating that incredible discount between staked ETH and ETH right now. And so just like the ETH BTC ratio just getting absolutely hammered.

• 6:15Ryan Sean Adams?

  I'm going to add another reason to the list is you called the bottom on that ratio last week.

• 6:20David Hoffman?

  I don't, let's not bring that up. Let's keep on going, moving on.

• 6:24Ryan Sean Adams?

  That's another reason we knew we were headed down.

• 6:25David Hoffman?

  I was, I'll call the bottom every single week. The bottom's happening right now. This is the absolute bottom of the ETH BTC ratio.

• 6:31Ryan Sean Adams?

  You know what that means, guys.

• 6:33David Hoffman?

  I'm calling the bottom again next week.

• 6:36Ryan Sean Adams?

  How about total crypto market cap? We gotta be, are we below 1 trillion yet?

• 6:41David Hoffman?

  Yo, yes, sir, we are. We started last week at 1.3 trillion. We are down to 0.94 trillion. We lost 306 trillion, oh, excuse me, trillion, a billion dollars in total crypto market cap last week.

• 6:55Ryan Sean Adams?

  Fell out of the quadruple comma club. Look at that. I remember when we first surpassed that $1 trillion milestone and now we are back under it. So we are retracing a lot of the gains of the past year or two. How about this? Like, how unprecedented is this drop? Can you compare this to 2018 and look at the history here? Because this felt very fast and very steep.

• 7:18David Hoffman?

  Yeah, so look at this chart. This is the 2018 bubble of the total crypto market cap. This is an index of all crypto assets. So it peaked out at something like $80 billion, I think excluding stable coins. Although stable coins weren't that very, weren't that big back then. So it peaked out at basically $800 billion, fell down to below $100 billion, like $91 billion. And it took 350 days to do that, Ryan. That's, it basically took a whole year from peak to trough, top to bottom. It took a whole year of time. And inside that time, there were multiple like plus 40% like run-ups, like bear traps. And so, or excuse me, bull traps, because like it would go up and then people get really bullish.

• 8:00David Hoffman?

  Like, look at that run. I remember like Ether fell down from 1,400 down to 300 and then rose up to 900 and then fell back down to 300 again. And like Bitcoin did something very similar. And so like even in what was ultimately a one-year-long downtrend, there were periods of plus 20, plus 30, plus 40% price rises. We did not see that at all in this particular bear market. And in comparing this to the 2022 bear, we go down 70% in 217 days rather than 350 days. That is 40% faster. If we are calling the bottom right now, if this is the bottom, which it could be, it could also not be.

• 8:43David Hoffman?

  But if the, if this, where we are right now. Is at 217 days versus 350 days and right now we are down 70%, 70.6% in total crypto market cap versus where we were last, last time, which was, what was that percentage? 87%. So not, we have 17% less red than in 2018. And also, but also 20, like we're only 40% of the time or 60% of the time. So like if you are comparing cross-cycles, that could lean into like, we still got a little bit more to go. Like if we went down 50%, what would that put us down to? If we went down 50% right now, that would be at 85%. And so that would start to be comparable.

• 9:25David Hoffman?

  So like, there's plenty of evidence to suggest that the, the bottom is not in yet. Although there's also evidence to suggest that the bottom is in yet. So we'll talk about that further on in the show.

• 9:33Ryan Sean Adams?

  I think we might, what, who knows what'll happen again? This is prognostication, we're not traders, but like, I think we'll see some relief rallies. But I don't think this bear market is over. We definitely have a ways to go from my perspective. And then if you look at 2018, there was this recovery phase. So even though we bottomed in December 2018, it didn't feel like the bottom at that point in time. Cause then we just kind of, you know, crabbed out and just hung at a price point. You weren't sure whether we're going to dip or not. Anyway, this, this could be a, a long one and there could be some more pain ahead is what we're saying. But how did the gas market hold up in Ethereum? Cause this is interesting. You'd think this would be a big stress test. What are we looking at here?

• 10:12David Hoffman?

  Yeah. So the average gas price over the last week was about 38 Gua. You can see that if you scroll down a little bit, Ryan, the, which is kind of crazy. The gas prices by week peaked out at 32, scroll down a little bit more, a little bit more, a little bit more, a little bit more. There we go. Total gas distribution, that green curve on, on the right side. Yeah. 38 Gua, which is crazy. I remember in, during the COVID crash where ether prices, crypto prices on Ethereum crashed like 40, 50, 60% inside of 24 hours. Gas spiked up to 300 Gua, which was unprecedented at that time. We had never seen gas prices above like 10 or something and it went up to like 300. And we had in, we had just irregularity in the DeFi market.

• 10:56David Hoffman?

  Markets, we had Maker Vault being liquidated for $0 collaterals, which was bad. But like the DeFi liquidations right now were totally regular and the gas markets were totally balanced and nothing really got out of hand. And so this is a big story that is really being discussed right now is how efficient and regular the DeFi markets were doing one of the fastest drawdowns in crypto history. It's actually pretty crazy.

• 11:20Ryan Sean Adams?

  It's actually incredible. I think that's a theme of this episode, how well DeFi held up, how resilient it has been and the kind of the more centralized aspects of crypto's financial market have been the things that have been stress tested. And those are the things that have been, as the tide rips out, not wearing any pants. But David, let's get to kind of like how are people feeling because there's a lot of pain in the market right now. And especially for first like cyclers, maybe come in the last year or, you know, 18 months or so. They're not used to this level of pain. I mean, they've been born into a world that's been basically up only. And I've seen a lot of, I guess, pain type tweets on Twitter.

• 12:04Ryan Sean Adams?

  I mean, people very worried about the future of crypto, wondering if it's all over. I know we talked about this in our bear market, special edition bear market episode that we did on Tuesday. But how do you feel like the community is hanging in there and like, how are you doing with things?

• 12:18David Hoffman?

  I'm generally a pretty zen stoic individual. So if I really need to like, I really need to kind of like dive deep to figure out like my emotional state. I do have, I do have fear for, and this is very related to the Federal Reserve, the United States economy and just fiat ecosystems at large. And so while like crypto seems like the fundamental, like the prices and fundamentals are always incongruent. Fundamentals of the crypto industry are better than ever and they only continue to get better. And especially, and that's proven out in the regularity of the DeFi markets while we had liquidations in C5. C5 broke, DeFi didn't, and that's proving its use case, proving its legitimacy.

• 13:01David Hoffman?

  But it's going to take a while for that to settle in and meanwhile, like. The job of the Fed is to to control inflation and not send us into a recession. And I feel like we are already committed to a recession, which is one thing like we've been through recessions before. Many of us lived through the 2008 crisis, even though I was just a kid, I still still felt it. I am actually, I do have fear of an actual like D depression.

• 13:30Ryan Sean Adams?

  Wow.

• 13:31David Hoffman?

  Yeah. And and I don't know if this is just because I read a lot of like Radalio. And we've seen what happens to other fiat economies when they lose their legitimacy. Like the Fed is the Fed is losing trust. They're whiplashing the the world around. Like I don't like we also have the war in Ukraine. So like gas prices are are up and they're not going to respond to interest rates because that's a different part of the world's economic system. Food prices are up and they're only going to get worse as far as I can tell. I'm not an expert. I only see what I see the information that I see on like Twitter and and like, well, I do think that I know where to look. Doesn't mean that I actually that things can change. I don't I don't know, but like, I think there's.

• 14:17David Hoffman?

  I'm worried that food prices continue to go up and that continues to do harm to the American economy and to the global economy. Inflation can't really get under control because it's like 50% of inflation is energy and energy you can't control with inflation rates. And so like, I'm conflicted in that like, wow, there's so many cool things in DeFi. But like, it doesn't really matter if like the world burns down. And so I do have that fear.

• 14:43Ryan Sean Adams?

  Yeah, I get that fear and I think that's a fear a lot of people are are thinking about right now. One bit of one thought I have for listeners is if you want a take from somebody who's in macro and also studies crypto, go listen to our episode earlier this week from Jim Bianco. Jim shares some of the concern that you just stated, but he doesn't think we're headed for a depression. He thinks we're already in a recession, but he talks about kind of the the way out. We're going to be talking about a little bit more of the way out as we get into the Fed section. I, you know, one thing that's helped me. Through these times, because you know, been through bear markets before, as have you, David, and I'm wondering if this could help some of the bankless listeners is all of you guys are

• 15:25Ryan Sean Adams?

  probably going through like the five stages of grief here, right? Like you got the denial phase, you've got the anger phase, bargaining, depression, acceptance is the last phase. And you probably oscillate between some of these early phases, like back and forth in a given day. Like sometimes you're denying it. Sometimes you're angry. Sometimes you're like, well, it's not so bad. And then sometimes you're just straight out depressed. One thing I think we can help you with is getting to that end stage, which is the acceptance stage. And that's the stage you want to be in if you're going to get productive again. To get to that stage, you have to accept some hard truths. And I think one of those hard truths is you mentioned earlier, David, you're fully ready to capitulate and then we're in a fully like full on bear market

• 16:09Ryan Sean Adams?

  right now. That's getting to the acceptance phase. And I just want to say this out loud for people. We are in a bear market right now. Things will get worse before they get better. This will take a while. Okay. Hear us when we're saying this. We are in a bear market. Things will get worse for a while. And it could take a while. Now, once you've accepted that, then you can get to a phase where you can be productive again. And one of the decisions you have to make if you accept that truth and that reality is what do I do? What do I do with my crypto portfolio? And you have kind of three options ahead of you. Number one, you just sell it and leave crypto. My conviction's gone. You know, if we're entering at, you know, kind of

• 16:52Ryan Sean Adams?

  sort of a very sad global state, I'm better off with like food and supplies and like, you know, shelter and like, I don't know, gold. I don't know what you're going to do with your money, but maybe something else. Maybe that's an option for you. Right? The second thing you do. People could do is trade the pumps and the dips, right? So they see these and they're like, ah, you know, it's dipping. Now's the time to buy. And then they sell it, goes up another 200, 300, they sell. I think a lot of people choose to do that. The third thing you can do is just hold through the pain. All right. Of course, if, do the first one if you're not convicted on crypto. Right? It's like, and again, I think holding through a bear market requires conviction. You can't get conviction through listening to someone like David or myself. You have to develop that on your own.

• 17:38Ryan Sean Adams?

  So if you don't have conviction, maybe number one is the right option. It's not an option for me. I do have tremendous amount of conviction in this asset class. So that's not the one I choose. But a lot of people who have conviction in the asset class, they default to two. Where David, they start like trying to trade the dips and the pumps. And they try to think they can make money on that. So many people in these bear market scenarios get wrecked by that, David.

• 18:02David Hoffman?

  If you do not know that you are a trader, then you're not a trader.

• 18:06Ryan Sean Adams?

  Don't do it. That's what I'm saying. So like I'm, I'm, I'm kind of encouraging the bankless audience to be very careful before they start trying to trade these dips and the pumps and that sort of thing. If you're good at that game, maybe you could do it. But most people, 95% of people should not be playing that game. And so you come to acceptance in the third option, which is just hold through the pain. Is hold through the pain. You have conviction. And if you decide to hold through the pain, there's some things you can do for your mental health right now. Okay. One of the things you can do is delete your price apps for a bit. All right. Stop checking daily, hourly, every 10 minutes, every five minutes. Stop doing that. That is not good for your dopamine levels. All right.

• 18:49Ryan Sean Adams?

  It's like not good for your psychological health. It's not going to help you if what you're deciding to do is holding through the pain anyway. You're not going to trade any of these moves. So why check it? Number two, I think you can start working on yourself a bit more. And maybe this means hitting the gym. Maybe this means reading some books that you have on economics, on philosophy, on, on history. Maybe this means learning to code. There's so many disparate skills. That crypto requires to be really good and you know, you can draw these out and you start learning them during the bear market. The third thing is you can go build something. David, you mentioned like you and I started a podcast and a newsletter, the last bear market.

• 19:30Ryan Sean Adams?

  Maybe art, NFT scene is going to come back. It's going to boom again. Maybe learn to code, maybe get into a community. We talked about layer twos being incredible opportunities for the future. Maybe you decide to join governance in one of these layer two ecosystems. That opportunity is in front of you. It's way less crowded. There's way more signal. Go do that. Number four, you can level up. All right. Forget price. Just learn about the new DeFi protocols. David, you put out a great Alpha leak episode on Volt's protocol. How much do you know about interest rate swaps, guys? Because I don't know a ton, but I can level up through bankless content and start to use some of these DeFi protocols. And then number five, I think you get to a place in acceptance, you start doing these things where you're like,

• 20:13Ryan Sean Adams?

  ah, okay, we, it's not over. It's not actually over. Everyone in crypto went through this before. This is how you earn the crypto appreciation. People think you get lucky with prices of crypto going high in a bolt run. You don't, you do, but you also don't. This is very much about your ability to hold through these deep, dark crypto winters. And that, to me, is how you get out of this. This is what I did the last bear market and I came out with more conviction, stronger than ever, incredibly excited about the future.

• 20:47David Hoffman?

  No, I think those are some fantastic bits of advice, Ryan. And just to add on more clarity and color to that. My mental health is actually bad in bull markets.

• 21:01Ryan Sean Adams?

  Like Vance Spencer.

• 21:02David Hoffman?

  Yeah, things are noisy. They're hard to reason about. I'm confused. Like there, I can't keep, look away from crypto Twitter. Like there's, like, my attention is being pulled in every single direction. And like, what a bear market is, is a bear market is a return to fundamentals. And you can apply that same lesson to your own psychology and your own personal wellbeing. Like, take this opportunity to take a step back, go touch some grass. Go exercise because if you are exercising, it's hard to have bad mental health. That is a, there's a connection between these two things. And then just like zoom out and think about not like the forced one to four week timeframe perspectives of the bull market, but the one to four year perspectives of the bear market.

• 21:46David Hoffman?

  And that is how you like maintain your sanity. And so just to reiterate what Ryan said, what do you want to get done in the next one to four years? Do you want to like get fit and get out there and see the sunlight and get away from crypto Twitter? Get away from screens. And like, if you need help gaining conviction about like what we're here to do in this space, get educated, like understand why we're going through a bear market. Understand federal rate, federal reserve and like monetary policy and the choices that they're doing. Understand the history of fiat currencies and the choices that nations have made to, to manage those things, to get a long-term perspective and to prepare yourself and your family and your loved ones and your bags for the future.

• 22:31David Hoffman?

  And just so like, again, zoom out, get rational, get, get sober, the bull market's over. We got the time, the hangover is here. And so as soon as we can skip forward, like you said, into that acceptance phase, we can start to actually plan for the future and rebuild ourselves, our portfolios and like our, our industry.

• 22:51Ryan Sean Adams?

  There you go, guys. I hope that was helpful to some of you listening who are feeling the pain right now. That's how David and I get through it and cope and how many crypto investors do as well. Many of the OGs that, that you hear about in crypto.

• 23:04David Hoffman?

  People that stick around do these things.

• 23:06Ryan Sean Adams?

  Yeah, absolutely. Um, let's get to the Fed. All right. What are they doing this week? We're still on markets. That segue was important for our mental health, David, but let's talk about the traditional economy numbers. What's up first?

• 23:18David Hoffman?

  Yeah. So this is the Dixie, the DXY, which is a dollar index, which is comparing the value of the dollar compared to a basket of currencies. It's at all time highs. Uh, well, not all time highs. It's at a high since 2002, basically. And so all time highs for as long as I've been paying attention to money. And so what this means is that people People are really demanding the dollar and this is what happens when interest rates go up for the world reserve currency. They are making the dollar more scarce. They're making people with outstanding loans from the Federal Reserve pay back those loans at faster rates. Therefore, people need to get their hands on more dollars. So they're selling more assets. The Dixie at all time highs. So these are just correlated. The world, since the world's debt is denominated

• 23:59David Hoffman?

  in US dollars, demand for dollars is going to go up as the Fed increases interest rates. Therefore, things sell off to access dollars and that includes the bond market. Something that's unique that happened in the last few weeks, Ryan, is that both the equities market and the bond market have gotten hammered, which usually those things go in inverse correlation to each other. But in this week, the last couple of weeks, they are correlated with each other, both going down, both getting hammered because both markets are trying to get their hands on dollars. Everyone's trying to get their hands on dollars.

• 24:30Ryan Sean Adams?

  It's funny that with inflation so high, the dollar goes up, but that's exactly what happens when people are panicking and uncertain. Also, we could take a look at the gas, the gas markets. I'm not talking about Ethereum gas. I'm talking about traditional gas that used to fill your tank with. And we are at highs as well. So above $5 is the US national average per gallon. You know, part of this, of course, is COVID, right? Lack of oil refineries and processing in the US. A big part of this, of course, is the war in Ukraine. There's lots of issues, and this is one of the issues the Fed can't really fix. It can't print more gasoline, can't print more barrels of oil, and it looks in the future like it's going to continue to

• 25:13Ryan Sean Adams?

  rise. As long as we're looking at numbers, David, what is the third number that we have here?

• 25:18David Hoffman?

  Yeah, this is, of course, the CPI, the metric that really kicked off the last 40% downwards price action. Consumer prices up 8.6% year over year on ending May 2022. And so while people, and this is why crypto prices went down so violently and equities too, people were hoping, praying that inflation had peaked in April. And so we were going to see the CPI numbers in May be lower, hopefully in the Seven, ideally in the six range, eight, like the low eights would have been just like meh, okay, fine, but it was eight point six, which was a decent amount of inflation above what

• 25:59David Hoffman?

  expectations were. And so this goes from the last holdouts who thought that inflation was transitory capitulated. And so the entire market reorganized itself to go from transitory inflation to the long-term inflation plans. And so assuming that the Fed is going to raise interest rates faster than expected, that faster than the market had accounted for. And so that's why crypto prices and oil prices are down bad.

• 26:24Ryan Sean Adams?

  I do think eight point six percent is actually a lower limit of that, too. There's an interesting website that rolled out recently called Trueflation, which tries to predict like a better non-government inflation rate. And that was tracking, the website's not loading right now.

• 26:40David Hoffman?

  But You know it's bad when the private market comes up with its own inflation numbers because you can't trust the governments. This is this is classic end of stage fiat cycle things when the government says, oh, inflation, it's only this percent. And then meanwhile, the market understands it to be way higher.

• 26:55Ryan Sean Adams?

  Yeah, I found Trueflation really interesting. So they're saying annual inflation is about 10.8%. So already double digits. And if you look at things like housing, for instance, like housing is 12.3% and go to energy, do you see that anywhere? Health, transport, transportation's more like 18%. So that's reflecting it by category as well. And this is interesting. Nearly one in four homeowners would have to sell if interest rates rise even more. So there are some breaking points in this economy. And as we're talking with Jim Bianco, you only see those breaking points and those fracture lines when the market is in stress and in turmoil. So we're not sure where the next shoe it's going to drop in traditional economy, but we have some

• 27:36Ryan Sean Adams?

  glimpses of things. David, all of this, of course, the Fed has to respond in some way. And you were talking about what the Fed response is going to be. They just announced yesterday that they were going to raise interest rates by point seven five percent. And this is the biggest increase since nineteen 1994, they've not done this, high of a raise since 1994. People are projecting interest rates of 3.4% by the end of the year. The next time the Fed meets, likely in May, it's projected that they'll increase by another 0.75%, maybe 1%. That seems to be what they're indicating at this point in time.

• 28:21Ryan Sean Adams?

  But there's a problem here in that like the Fed, they're planning to fix inflation. They only have one tool in their tool belt and that is to raise rates or do quantitative tightening. And the Fed has made it clear that they have no impact on demand. Sorry, they have no impact on supply, but they only have impact on demand. So they're basically beating us all down, making us feel like we're in a recession and actually triggering a recession in order to decrease demand for products. And the hope is that that will tamp down inflation. So if you're an asset owner, your assets go down. If you have no assets, you're kind of living paycheck to paycheck. You might lose your job. That's what a recession is.

• 29:06Ryan Sean Adams?

  And the sign of reversal, like when will all of this reverse? I don't think it will reverse, and this is what we talked about with Jim Bianco, until we see the first signs of inflation actually reversing. So the beatings will continue until we see inflation maybe drop from that 8% to something closer to 6, 5, 4%. Who knows what the measure will be? Either that will happen, David, or something will break to require them to reverse course. What do you think about this?

• 29:35David Hoffman?

  The way that this bear market ends, the way that we get out of this thing, the way that we all feel better is that the Fed has, will, might decide that it has gone too fast, too far, too quickly, and it reverses course. And there are some grumblings about this, some murmurings about this possibility that by the end of the year, the Fed will actually stop raising interest rates because of, out of fear of the recession it's triggering being too strong. Because if you, if you kill demand, if you kill demand too fast, you kill people's jobs. And then that turns, and that can spiral out of control. And that can be even harder to get out of. And so like the Fed is trying to weave this, to weave this needle, to thread this needle by reducing inflation, but not triggering a recession.

• 30:20David Hoffman?

  And Ryan, like again, the window might not be open. And so the Fed just has to pick. Does it send asset prices through the roof? Because that's what would happen if we all heard that the Fed is going to stop interest rates. Or do we send asset prices to zero because of a depression that we triggered? And it seems to be like the likelihood that it's actually one of these things. And there's no middle ground. It's like pretty, the most likely outcome. It's one of these two things, up big or down big. And so there's some murmurings that the Fed is going to just be fearful of just having gone way too far. And it's going to reverse course. And when we see that, we're going to see markets just like pump off the floor. Because like, yes, it's over, like back to the easy money era.

• 31:02David Hoffman?

  They crashed the markets, we're all broke, but at least the markets can go up again. So like, there are some conversations about like this, predictions about this happening.

• 31:12Ryan Sean Adams?

  So how do we interpret all of this? This is what people want to know. This is Vance Spencer's interpretation. You know, some people are saying, hey, this is the end of easy money is era. Fed interest rates are going to rise. The last 30 years of low interest rates, we'll never see that again. But Vance has a contrary take. What is his take here?

• 31:31David Hoffman?

  Vance says, have seen a common take from VC investors that the era of low interest rates is over. Maybe for a few months, maybe a year, that's probably right. But long term, it doesn't seem like we can put the genie back in the bottle and reverse a 40 year decline in interest rates. And Ryan, as we rate, as the Fed raises interest rates, if the Fed raises interest rates by like 1%, it puts costs on the US government because the US government is in massive debt. The US government has more debt than any of us by a long shot. And so like 1% of interest rates turns into like hundreds of billions of dollars of monthly fees, payments that the government has to make. And it does, the Federal Reserve is just as insolvent as Three O's Capital is. Like, we'll get to that part of the story. But like, they have debts to pay.

• 32:15David Hoffman?

  And so like, this is going to the conversation of just like, at some point, they cannot raise interest rates. And it's lower than 5% probably. And so the era of easy money is on the horizon, whether it's in one month, one year, a few years. It ultimately will return back to an easy money situation just because we're in debt. And that's just what we, that's the paradigm that we live inside of. And we can't break stuff without triggering a depression. And so this is like the light at the end of the tunnel. Eventually, everything breaks so far that we have to go back to 0% interest rates. It's just a matter of when.

• 32:51Ryan Sean Adams?

  Yeah, I think that's that's probably true because the Fed, it's not in the Fed's interest or the US government's interest to actually break things and send the world or the economy into another recession. So, or depression. And so if that's the case, then you got to imagine this will stop at some point in time. When will it stop? Not sure. But there could be tremendous buying opportunities here. One thing that's interesting is, do you know Wells Fargo and Ethereum are the exact same market cap? Like, real close right now. Both of them are worth $146 billion. So as an investor, if you were like, you know, deciding to invest is like, where do I put this dollar? And I have the world's assets choice. I could put it in bonds, I could put it in stock. You could put it in Wells Fargo, or you could put it at ETH, and you're buying

• 33:36Ryan Sean Adams?

  those things at the same price right now. I think it's a total gift to be able to buy the future, things like Ethereum, at a low price point right now, at like, lower than the price of Wells Fargo, the same price of Wells Fargo stock. And some people don't like these comparisons of like, because Wells Fargo is a bank and Ethereum is a whole monetary system. Look, they're both assets. I know apples and oranges, but both are fruit. I think you can compare them. And the question is, coming out of this, where will people want to put their money? Will they put it in the old traditional banking system? Or will they put it in this new economy, this new financial system of Ethereum? And I know which bet I'm going to take personally. But again, you got to develop your own conviction

• 34:18Ryan Sean Adams?

  for this. David, we got some other things to explore that's coming in the next section. But Spencer Noon kind of teases that for us. What's he saying here?

• 34:27David Hoffman?

  Yeah, Spencer says, it's becoming increasingly clear that, one, the ETH move from $1,800 to $1,000 was the result of large forced sellers. And, two, the majority of forced selling is behind us. Cautiously optimistic that we found a local bottom. I heard a cool take, interestingly, recently, Ryan, that if 2017, the ICO mania was crypto's dot com bubble, 2022 was the 2008 housing crisis. And what that means is that the dot com bubble was a bunch of like, internet promises, which is what the ICO mania was. And the 2018 crisis, oh, to the 2020 2008 housing crisis happened because of an over leveraged, low money, easy money monetary policy and then over like and people just kept on cascading because they were leveraged on

• 35:11David Hoffman?

  leverage on leverage, which I think we're about to see Ryan is exactly the case on many, many of the crypto participants in the market. So that is the topics that are coming up next. SeFi insolvency, the three arrows capital caught swimming with no shorts and also layoff season as well. So some bear market topics coming up next, right after we get through some of these fantastic sponsors that make the show possible. Rocketpool is your friendly decentralized Ethereum staking protocol. You can stake your ETH with Rocketpool and get our ETH in return, allowing you to stake your ETH and use it in DeFi at the same time. You can get 4% on your ETH by staking it with Rocketpool, but you can get even more by running a node. Rocketpool is the only staking provider that allows anyone to permissionlessly join their network of validating nodes. Running a Rocketpool node is easier to set up than running a solo node and you only need 16 ETH to get started. Why

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• 36:38David Hoffman?

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• 37:10Ryan Sean Adams?

  Hey guys, we are back with our main event news items. The first is about Celsius. So Celsius is a centralized lending and borrowing platform. And they announced this week in a shock to the market that they were pausing all withdrawals. And so users could deposit funds into Celsius and receive interest as a result of that. They could also borrow from Celsius, accomplished what many of the DeFi protocols do. Only in a black box centralized model where you're not really sure how Celsius is generating that interest, you just know you're getting some interest back. It's kind of a black box for you. Well, they just notified the entire world that they were pausing withdrawals.

• 37:54Ryan Sean Adams?

  And so this is an indication of insolvency, that they can't actually honor all the depositors' commitment. And this of course sent the crypto world in a tizzy. One tweet from Bankless HQ that I think is right on is if they can freeze withdrawals, it's a bank. If they can freeze withdrawals, it's a bank. And so Celsius looking a lot like a bank right now. And of course, you know, the bankless position has been, any centralized lending and borrowing platform is actually a lot like a bank. But David, could you break down actually what happened here? What are some of the details of what Celsius is doing with the money? And why can't they honor the withdrawals right now?

• 38:36David Hoffman?

  So some details out of CoinMetrix, which has put out a great metrics on-chain database newsletter. They say as of May 17th, Celsius controls over $11 billion of crypto with at least 1,500 bitcoins. Sorry, I'm not used to that large number of bitcoins. Inside of their, like AUM, inside of the assets that they hold. They also have outstanding DeFi positions. So Celsius is an active depositor of users' funds into DeFi protocols. And they've also suffered some losses from hacks, right? So last December, Celsius submitted to losses of a hack of the Badger Dow DeFi protocol when Badger Dow was hacked. So they have losses that they, that they used customer funds for, which they have

• 39:20David Hoffman?

  To make up and so users don't even know if their if their funds were lost. It's because it's an aggregated pool of all users funds and so whatever funds was in Badger was lost. And so that stuff like that starts to chip away at the solvency of Celsius. Celsius also controls the largest vault of wrapped Bitcoin inside of Maker Dow. So as of June 13th, Celsius's Maker Vault held 24,000 wrapped Bitcoin worth about $500 million. As Bitcoin price fell below $25,000, Celsius Maker's Vault quickly approached its liquidation price of $22.5,000. And so Bitcoin price $25,000, if it went down $2,500 more,

• 40:01David Hoffman?

  the vault's collateralization ratio would reach the low ratio of 155%. For those that don't know, Maker Dow vaults get liquidated at 150%. So with just a few percentage more moves to the downside, all of Celsius is, not all of it, but a very large chunk of their Bitcoin would have been liquidated. On Monday morning, June 13th, the vault was topped up with an additional 4,000 wrapped Bitcoin, sending the new implied liquidation price down to $18,000 Bitcoin and a new collateralization ratio up to $185,000. As Bitcoin fell to $21,000, Monday night Celsius added an additional 2K wrapped Bitcoin to the vault, lowering the liquidation price to 17,000 and this is where we are today.

• 40:43David Hoffman?

  The situation remains precarious because if Bitcoin, like they can't keep on generating collateral out of thin air. And so as the Bitcoin price gets lower and lower and lower, they aren't paying down their loans, Ryan. They're putting more collateral in there, which is like saying, okay, we took the loss, but I'll just double my bet and put it on black, which is already crazy. But that is only one half of the story. The other half of the story is staked ETH. Celsius is also a large holder of Lido's staked ETH. June 13th Celsius held 445,000 staked ETH, $500 million. But there is less liquidity for staked ETH than there is on ETH for on decentralized exchanges. So there's only so much staked ETH that you can swap for Ether to allow for users to withdraw their assets.

• 41:29David Hoffman?

  Since the staked ETH/ETH Peg has started to slip, staked ETH has started to trade at a discount. Many people are facing insolvency issues and so they are liquidating their staked ETH to get Ether back to pay down their debts, Celsius being one of them. And so there isn't sufficient transparency to make authoritative claims about the solvency of Celsius and an unwind of this proportion would, if Celsius had to unwind further, would certainly impact all of crypto markets. And so, like we've seen before, if there was indeed Celsius allowed users to withdraw, there would likely be a run on the bank because users want to get their funds out before others, and so that's why Celsius had to halt withdrawals.

• 42:12David Hoffman?

  Basically, they are on the brink, Ryan, and if prices go down too much more, they would face just a, trigger a significant liquidation event, which might trigger further liquidation events, which is pretty damn scary. The scariest thing about this, Ryan, is that basically Celsius is like a yield farming, a centralized yield farming app. So you deposit your money into Celsius and then they go and farm DeFi with it, which is the same thing as a bank. You put your dollars in Wells Fargo and Wells Fargo go gets yield out in C-Fi with it, and then they pocket that yield and give you a little bit of difference. What Celsius is doing is they are leveraged yield farming. So they are juicing up the yields in order to attract deposits, and then they are going

• 42:53David Hoffman?

  engaging in very risky yield farming behavior in DeFi, which works great on the way up. And it's why Celsius has attracted billions of dollars of users' deposits, but it doesn't work so great on the way down, especially as yields come down. But also as they lock up users' deposits inside of things like Maker Dow and also staked ETH, which is a one-way deposit right now. So like, and so they're going, they leverage up, they get a ton of yield, and then they lock their positions and in a down, when prices go down too fast, they just can't unlock their positions to give funds back to their users. So like, if you have money in Celsius, users that currently have money in Celsius, because

• 43:38David Hoffman?

  of the whole staked ETH thing, because they can't withdraw staked ETH until post-merge and then about six months after that, when withdrawals are enabled on the Ethereum chain, they need to wait to get that money back. So there is money there. But like you can't access it. And so they are kind of in a rock and a hard place. And so they had to pause users' withdrawals to maintain their solvency, which is kind of crazy.

• 44:03Ryan Sean Adams?

  Yeah, in fact, they're probably they're probably insolvent right now, right? Is the case. They're probably underwater on the depositors assets. And so basically, that's what they're doing. They're generating yield and you just, you know, park your ETH here, park your USDC here, will generate yield. But they were taking those funds and doing all of these speculative risky things with it in order to generate that yield. Now, I'll note that that is actually the opposite of what DeFi does. Now, DeFi does generate yield, but it's fully transparent. It's fully on train. You can see an audit log of everything that backs an individual position or an asset. You can right click view source. Celsius, it was kind of just like, here, put it in the black box. We'll generate interest. Trust us, please. Trust us.

• 44:47Ryan Sean Adams?

  And we all know what trust us, how that ends up going. There were some takes here as well about the way Celsius positioned itself in the market.

• 44:58David Hoffman?

  So bad.

• 44:59Ryan Sean Adams?

  And where should I start this, David?

• 45:01David Hoffman?

  Tweet number eight, it goes, but even worse than the pseudo crypto vibe that is Celsius dangerous is use of meaningless platitudes and strident anti-bank rhetoric. This is a tweet from John Woo out of Aztec that I'm reading. So here's some of the marketing terms that John took from their white paper and website. Banking is broken. Unbank yourself. Replace Wall Street with Bitcoin 99% versus 1%. First off, those first three things is a complete farce because they're just a bank. They are using DeFi terminology, DeFi like memes, but for their C-Fi app. And so like it's disingenuous versus for what is actually going on. Like, these are the things that we chant about DeFi. Meanwhile, DeFi, again, highly efficient and highly orderly while all the C-Fi is breaking.

• 45:47David Hoffman?

  And then the whole like 99% versus 1% thing is just the populist tactics that we've seen so many times. Either the populist tactics that Do Kwon used to advertise Terra, it's the populist tactics that Danny Sessa used to advertise Wonderland. It's just a consistent red flag across so many things that all ultimately come to break. John from Asset continues saying, "Worst of all is this in-your-face focus on safety, security, and transparency, and most of all, trust. Military-grade security. Withdraw your crypto at any time. Keep your crypto safe. Next-level transparency." Like, these are DeFi words, and it's completely the opposite of what is true of Celsius. So they're using DeFi talking points for their SeFi app, which is malicious,

• 46:29David Hoffman?

  disingenuous. And so, again, people that do these things, like, this is called Icarus-ing, right? Where you fly too close to the sun. It's just a little ridiculous. And then, again, for this is the lesson to take away for those that are just unfamiliar with all these tactics that are going around in DeFi and crypto all the time. And even in centralized, this is a truth about the centralized world. John continues, "Therein lies the problem. The promise of sky-high yields, combined with a veneer of legitimacy with regulated on-ramps, premium access for creditor investors, and regulator logos. This cleared the way for Celsius to pursue truly degenerate trading strategies with investor funds." And again, something that we've seen

• 47:09David Hoffman?

  before, just a few days before pausing withdrawals on Twitter, the CEO, Alex Mashinsky, is attacking Mike, Mike Dudis, formerly CEO of The Block. And Mike says, "I hope retail can get out of Celsius. I am hearing about accounts being locked. That would be similar to Luna. We shall see." And Alex goes, "Mike, do you even know one person who has a problem withdrawing from Celsius? Why spread fud and misinformation? If you are paid for this, then let everyone know you are picking sides. Otherwise, our job is to fight TradFi together." And then, ironically, two days later, everyone had a problem withdrawing from Celsius because it was actually TradFi in DeFi's

• 47:52Ryan Sean Adams?

  This is the crazy thing too, is Alex's tweet got like three times as much likes as Mike's tweet. It's because you always in these cases have kind of an army of defenders that are saying, "Don't pick on Celsius." Right? And like, it's very sad for all of the people who deposited into Celsius without actually knowing the risks of doing that.

• 48:16David Hoffman?

  You know, fun fact, Ryan, I've been attacked by the Celsius trolls. It hasn't happened in a while. It was like back in 2019, 2020, maybe early 2021. But like, they were like, "Oh, have Alex Mashinsky. He's like, he's like, super into DeFi." And I would go and look at Celsius, like, "This isn't DeFi." And so Celsius had Celsius armies. It's crazy.

• 48:37Ryan Sean Adams?

  Yes, I agree. And that's always a red flag. Like, in the future, I mean, it's kind of feel like we've called it every time. Every time there's a red flag community, it's just like, it turns out like this. And it's just all happening all at once these days. The thing of it is, I'm not against centralized lending and borrowing companies either, right? Like, I'm not. Also, like, I know this show is called Bankless, but also not against banks. I do think DeFi is better, but if you are depositing into a bank, into a Celsius, or a BlockFi, or a Nexo, or anything else, you have to be aware of the risks. And just so happened, like, I don't think that this is going to happen to the BlockFi's and the Nexo's of the world.

• 49:21Ryan Sean Adams?

  We don't really know, to be honest. It just depends on how they manage the assets that you've deposited with them. And clearly, Celsius and Alex and his team were taking, like, he was more degenerate with his depositors' money than I am with my degenerate portfolio that I have. My little side pocket where I'm playing around, like, just taking extreme crazy risks that I don't understand why anyone would take with depositors' funds to generate interest. I don't think the BlockFi's of the world and the Nexo's are doing this, but the point is, we don't really know. That's the point. With DeFi, you know it's transparent, it's on-chain, you can see what the risks are. That's why we are advocates of DeFi. Also, like, you know, centralized lending has a place,

• 50:05Ryan Sean Adams?

  certainly, but I think we deserve more transparency and probably, and this might be unpopular with some, more regulation on the central, because if there is centralized trusted third parties, we need some transparency. And if they won't provide it on their own as part of the free market, right? We need the regulators to step in, right? This is a place for, but what I'm worried about, of course, is as always, is, you know, this all gets swept under. I saw some forums on Reddit and such, and people are saying, "Oh, all the DeFi advocates, look what just happened to Celsius." I'm like, "That wasn't DeFi. Stop." Don't get me wrong. We get hacked. There are bridge attacks. There are like multi-sig problems, but like-

• 50:46David Hoffman?

  Not this one, though.

• 50:46Ryan Sean Adams?

  Not this one, all right? And transparency is not a problem with DeFi-constructed decentralized finance, all right? We've got that one locked down. So anyway, how does this resolve? It's a sad story right now. I don't think it's the end for, if you are depositing Celsius, you have your funds in, just stay tuned, all right? I don't think this is a terrorist situation where, you know, it's, everything's gone to zero and you lose everything. I'm sure they are underwater, probably at some degree with their collateral, but some of these assets are like staked and just being held. You can't withdraw it, but because it's staked inside of ETH and withdrawals aren't enabled on the beacon chain yet. I do expect depositors to get at

• 51:27Ryan Sean Adams?

  least some of their money back, maybe the vast majority of it, maybe 80 to 90%. This is a hope that I have, but the proceedings are going to, like, it's probably going to go to bankruptcy court, or, or somebody could step in. And it appears like Nexo is another centralized lending company that's actually stepped in and offered to buy, buy Celsius. So that might come about to you. Anyway, hope is not lost.

• 51:51David Hoffman?

  Not buy Celsius, but buy Celsius's distressed assets. So take their illiquid assets off their hands and give them liquid assets so they can resume deposits, which, again, like, some people, like, yield farming is scary. Some people don't have enough money to pay for gas prices. There's a place for C-Fi lending, and there are good C-Fi lenders- And there are bad C5 lenders and after crypto has an 80% drawdown and Nexo has the capital to buy out Celsius distress assets. I think you can tell which one is the responsible centralized DeFi app here that has the funds to back up their users deposits. So pretty Chad move by Nexo. It would be interesting if Celsius basically does like bent the knee and it's like, okay,

• 52:34David Hoffman?

  competitor, here is our assets at a steep discount because you are responsible with your funds.

• 52:39Ryan Sean Adams?

  Do you know another fun fact, David?

• 52:41David Hoffman?

  Yeah, I'm ready for it.

• 52:42Ryan Sean Adams?

  I have a little bit of funds in Celsius.

• 52:43David Hoffman?

  No way.

• 52:44Ryan Sean Adams?

  Yeah. So as part of the like, just a very little, right? So as part of, you know, bankless journey and going like talking about centralized protocols and all of these things, reviewing BlockFi and Nexo, I have a little bit of funds in all of them. I've just kind of parked it to test it and like, you gotta try it. You gotta try things. I guess. So I don't know if I'm getting my ETH back, Alex and Celsius.

• 53:07David Hoffman?

  Nexo, well done. Nexo's the winner.

• 53:11Ryan Sean Adams?

  Yeah, it's a little bit. I'm not worried at all about it, but, um, but you know, I'm, I'm right there with you guys. If, if you're, um, if you're in Celsius and can't withdraw.

• 53:19David Hoffman?

  I can't wait for the breaking co-founder of Bankless.

• 53:22Ryan Sean Adams?

  Co-founder of Bankless. I also have some funds in BlockFi, full disclosure, right? It's like, I, you know, it's definitely far more in DeFi, but I'd like to use everything.

• 53:31David Hoffman?

  Someplace that you don't have your funds, Ryan, is with Three Arrows Capital also caught. Cause they don't do, I know that one.

• 53:38Ryan Sean Adams?

  Okay. You know, I have nothing in Three Arrows Capital. What happened to them?

• 53:41David Hoffman?

  Yeah. So, uh, prominent crypto fund Three Arrows Capital is facing possible insolvency after occurring at least $400 million in liquidations, CoinDesk reports. Uh, so a very useful thread got put together by Danny8BTC. So we're going to go through that thread because, uh, Ryan, I did not have Three Arrows Capital insolvency on my bear market bingo card. I thought they were extremely capitalized.

• 54:05Ryan Sean Adams?

  For people who don't know who Three Arrows Capital is, okay, these are like the legend, like, these are like the Chad's of the bull market, right? The biggest fund held in the highest esteem, like the biggest whales on the planet, moving the most money.

• 54:19David Hoffman?

  Respect.

• 54:21Ryan Sean Adams?

  Like by everyone.

• 54:22David Hoffman?

  Depends who you talk to.

• 54:24Ryan Sean Adams?

  Not in our, like, not in kind of the settler, builder, holder class, but definitely among the traders.

• 54:30David Hoffman?

  Yeah, they're big, big traders. Traders think they're Chad's and the long-term people kind of are frustrated by their constant rotations.

• 54:37Ryan Sean Adams?

  Exactly. So that's the context. These guys are a big deal. A lot of money.

• 54:41David Hoffman?

  So Danny EPTC, he puts a thread together and he goes, here's what happened between Three Arrows Capital and what we know so far. From November 2020, we entered, and so this is an individual that has a relationship with Three Arrows Capital. From November 2020, we entered an agreement with Three Arrows Capital in which we would pay them a fee to use, in which, yeah, to use their trading accounts. As a delta neutral market maker in the crypto markets, we are very sensitive to trading fees. When you're trading at nine figures USD per day, even a one BIP on $100 million is $10,000. If you're doing that every single day, it adds up very quickly. So our agreement with them was we withdraw whenever we want. 100% of the P and L belongs to us. They are to never move our funds out without permission because it increases the risk of our positions getting liquidated. And in return, we pay them fees for their service.

• 55:26David Hoffman?

  This was a mutually beneficial relationship over a year and a half. We have known them since 2018, thought they were competent and didn't think that they would be degenerate enough to lose billions and not employ basic risk management.

• 55:37Ryan Sean Adams?

  You hear that?

• 55:38David Hoffman?

  Oof. On June 12th, with the market dropping and needing some funds from the account for our positions on other exchanges, we asked for a withdrawal from the ops team, which was honored, the operations team, which was honored. On June 13th, with the continuation of the drop, we asked for a bigger withdrawal. There was no reply, but we didn't think much of it at the time. After a while, the market stabilized, so we just no longer needed the funds. We thought maybe they were just busy. Turns out they were just busy. Fast forward to, well, not just busy, they were busy, very, very busy. Fast forward to 24 hours ago, this came out a couple of days ago, or yesterday, actually. Our funds monitoring script noticed that $1 million was missing from our accounts with them. We reached out to Kyle Davies, one of the two co-founders of Three Arrows Capital,

• 56:22David Hoffman?

  and the operations team on Telegram about the missing funds. No replies. We tried calling them, they were online, because you can see the little green dot in Telegram, but they did not pick up. Then, our traders noticed that there were a few rumors circulating on Twitter about speculating on Three Arrows Capital's solvency. Since we were directly involved, we felt the need to tell the world about what had occurred and gauge the extent of the Three Arrows Capital contagion. A lot of people have reached out about what they know, many of whom have direct relationships with Three Arrows Capital as well. What we learned is that they were leveraged long everywhere and were getting margin called. Instead of answering the margin calls, they ghosted everyone. The platforms had no choice but to liquidate their positions, causing the markets to dump further.

• 57:04David Hoffman?

  However, they still have assets on a number of platforms, you know who you are in parentheses. "We call for you to freeze their assets so that Three Arrows Capital, to those that Three Arrows Capital owes money, can be paid back in the future after legal proceedings. For what it's worth, for the most part, they aren't speculating with clients' money like Celsius was, maybe a threat another day about our dealings with them in 2019." Oh god. However, they did use our funds, $1 million, to answer their margin calls. So Three Arrows Capital used this trading from its funds to answer their margin calls. "Losing a bet is one thing, but at least being honorable and not dragging others into your bets who have nothing to do with it is another. Certainly don't ghost on everyone since potentially they could have helped you." Oof, oof.

• 57:47David Hoffman?

  And then, of course, Su Zu from Three Arrows Capital put out a single tweet. After people noticed their complete silence on Twitter, which is generally, silence on Twitter is the sign of somebody's got their tail between their legs. Su Zu tweets out, "We are in the process of communicating with relevant parties and are fully committed to working this out." No context about like that, so assuming that other people know the context. The people who are working with, who are working with Three Arrows Capital totally knows the context. And so they confirmed Three Arrows Capital down probably the baddest out of anyone at the point. At the peak of the market, Ryan, no one really knows this number for verified fact, but the highest number I've heard is that at the peak of the market, when Three Arrows Capital was up the most, they had $18 billion.

• 58:30Ryan Sean Adams?

  Wow.

• 58:31David Hoffman?

  So they are closer to like maybe below half a billion dollars at this point in time. So imagine losing like almost $18 billion, dude.

• 58:39Ryan Sean Adams?

  Really? Like, some of these numbers are speculation. We're not entirely sure, but like these, definitely the order of magnitude, for sure. What's crazy about the story here, David, is so we've seen an algo stablecoin, a degenerate algo stablecoin, kind of backed by nothing, just, you know, meme potential die. We saw Celsius, which is basically gambling client deposits on degenerate DeFi yield activities. We saw that die. And we see Three Arrows Capital likely insolvent due to leverage, due to margin, right? It just seems like this bear market, and this back to Spencer Noon's tweet, and this cascade of liquidations that we've seen, and this very harsh dip, has been caused by like, things that are preventable?

• 59:22Ryan Sean Adams?

  Like, you don't have to go build a $15 billion algo stablecoin that's backed by nothing, just memes and promises. You don't have to take out margin the way Three Arrows Capital did. You don't have to go degenerate on a depositor's funds in order to juice your yields. That's called being greedy. That's called being irresponsible. That's called being like diving into the risk pool all the way to the bottom. It's not like, what's happening is some of these companies, these firms are just living with the consequences of this. Now, I think Celsius and Terra are probably the most egregious because retail gets caught left holding the bag. People, I'm talking about people who should like,

• 1:00:05Ryan Sean Adams?

  didn't know better, and they should have. And they learned a very harsh lesson through this exercise.

• 1:00:09David Hoffman?

  The people that regulators protect.

• 1:00:11Ryan Sean Adams?

  Right, right. This is a take from Robert Leshner. I'll read this out. "I became a DeFi, he's a DeFi founder of Compound, of course, a DeFi protocol. I became a DeFi founder in order to create a more transparent, autonomous, and safer financial system. Watching the implosion of UST, Celsius, Three Arrows Capital..." And more, all of which are opaque and trust-based reaffirms the need for decentralized finance more than ever. Bold at that. Decentralized finance more than ever. And this is back to the theme of the episode. David is like, "C-Fi down bad, De-Fi holding up."

• 1:00:46David Hoffman?

  Just fine. The protocols, I mean, sure, the tokens are down bad too, but the protocols are healthy and fine and collecting a ton of fees. So, again, C-Fi liquidated, De-Fi orderly and orderly and efficient. This was a great meme. I'm pretty sure you put this one together, Ryan. This is the Reaper coming to knock on the door meme where it's got three doors. It's already opened up and there's just blood flowing out. The first one was Luna, the second one was Celsius, the third is 3Rs Capital. The next, the door that the Reaper's knocking on right now is Tron, and the caption is, "Don't answer the door, Justin, Justin's son of Tron." And the reason why, I'm pretty sure you put Tron here on the door, Ryan,

• 1:01:26David Hoffman?

  is because Tron is copying the algo-stablecoin model of Luna, which is ridiculous because it went to zero.

• 1:01:33Ryan Sean Adams?

  Just like a couple of weeks before, Luna imploded, and Justin's son and Tron decide to duplicate it to pump the price of Tron, right? Some people were mad at this meme from Bankless, but we decided not to take it down because they were mad.

• 1:01:45David Hoffman?

  It's a great tweet.

• 1:01:47Ryan Sean Adams?

  They said it was insensitive, okay? You know what's insensitive, though? When people like Luna, like Doquan, like Celsius, like 3Rs Capital took ludicrous risks with investors' money because they were short-term and greedy. That's ludicrous, not this meme. They're just trying to like warn people about this. The risks of centralization, the risks, the trade-offs that you're making when you deposit into black boxes that you don't fully understand. I think it's a good lesson for the crypto space, but there might be some other shoes to drop before we're done. And this is my like final tweet on this subject, I guess, or final thought on it is, "A bunch of people got dumb and greedy during the bear market, the bull market, and are being liquidated now. This isn't the end of crypto. This is

• 1:02:30Ryan Sean Adams?

  how crypto gets healthy, okay?"

• 1:02:33David Hoffman?

  That's exactly right. This is what interest rates do. They burn the brush so that we can rebuild. Like Terra was never going to be long-term sustainable. It collapses the first moment that interest rates go up. Three Ours Capital levered to the absolute tits was never going to work. Sorry for the word, was never going to work with high interest rates. All the people that are getting liquidated because of high interest rates. We are returning to fundamentals. This is what bear markets do. We go back to the fundamentals, go back down to the basement and we rebuild the foundation stronger and stronger and stronger every single time.

• 1:03:06Ryan Sean Adams?

  There we go, there we go. Guys, we're going to burn through this to you. There've been some layoffs in crypto. That's our third story. Let's talk about a few Coinbase. They laid off 18%. That's a fifth of their staff. Crypto.com, 5% of their workforce, another centralized exchange. BlockFi cutting 20%. That's another big move. And then in the midst of this, here's CZ from Binance, another crypto bank. Let me remind you, but one that is in a pretty cash strong position, I say. CZ tweets this out. It was not easy saying no to the Super Bowl ads. Stadium naming rights, large sponsored deals a few months ago, but we did flexing on the other centralized exchanges. And he's saying today we are hiring 2,000 open positions for Binance.

• 1:03:51David Hoffman?

  So you know the funny story about this tweet, Ryan?

• 1:03:54Ryan Sean Adams?

  What?

• 1:03:55David Hoffman?

  Okay, good job, good job, CZ. I'll give you your praise for being responsible and opening position.

• 1:04:01Ryan Sean Adams?

  Wait, responsible? We don't know that, but like he's got some money.

• 1:04:03David Hoffman?

  We know that. Yeah. And so like for the podcast listeners, there's this photo of CZ in a blue button up shirt, reaching out his hand to shake your hand with a tag. We're hiring.

• 1:04:13Ryan Sean Adams?

  I want to work there.

• 1:04:14David Hoffman?

  It looks very much like a stock photo, blurry background, very corporate. Like you definitely know this, this is in Binance's offices. And so like people are like, what's up with this photo, dude? I remember, I think Mooney commented like, what happens if I, if I shake that hand? Just because it's like, you want to shake that hand? And then Kobe on Twitter, he finds the stock photo of this other guy who is not not CZ, who is actually a stock photo. And so what they did is they just took a picture of CZ's face and photoshopped it onto a stock photo. This is absolutely nuts. Oh my God.

• 1:04:53Ryan Sean Adams?

  I love crypto. Was this intentional? I don't know, man. It's just had to.

• 1:04:57David Hoffman?

  It's good Photoshop work.

• 1:04:59Ryan Sean Adams?

  Yeah, it's fantastic.

• 1:05:01David Hoffman?

  So yeah, big layoffs in the crypto space. But I will remind people that these are the old institutions, not old, old like crypto institutions. Coinbase has been around for a while. Coin, crypto.com has been around for a while. BlockFi has been around for a while. They have already scaled up bigly. They've already hit their point of saturation of growth. And so when the market turns over, because they were already saturated with growth, that actually does impact their ability to pay employees. That is, so really the layoffs are only coming from the big institutions that have been around for a while. There are newer startups that have a ton of cash, like we've been saying every single week, and those people are doing just fine. Interesting dichotomy in the crypto space right now. And of course, brings us to job time, because they're, like I said, there are people hiring jobs. And so this is coming

• 1:05:43David Hoffman?

  at you every single week. If you have a job, if you're hiring in crypto, go to banklist.pallet.com slash drops and post your job, because we're really good at getting people hired. And if you are looking to get hired in crypto, and you don't believe me about how many jobs there are, also go to banklist.pallet.com slash drops and look at all the jobs available to you, or go to the Talent Collective and post your resume so jobs can come hunting for you. The job, the labor market in crypto is hot. And so, yes, some parts of crypto are laying people off, other parts of crypto are hiring big. Ryan, who's hiring this week? Let me know.

• 1:06:18Ryan Sean Adams?

  Uh, there's a lot from Alliance Dow this week, which is a really cool company. I've learned much more about recently. They're hiring a CTO at Alliance Dow, also a software engineer, full stack, senior software engineer, full stack Alliance Dow, two of them, executive assistant, Alliance Dow.

• 1:06:34David Hoffman?

  That's non-technical.

• 1:06:35Ryan Sean Adams?

  A solidity engineer, that's very technical, Otter Space, and a front-end engineer at Abstract Ventures. We've got a founder and CEO.

• 1:06:42David Hoffman?

  You can you can hire a founder at Boolean Labs. We've got a Twitter specialist at Bankless. Come make memes for us. Research engineer at Blockchain Capital, a tech lead at Swell Network, solidity developer, unlocked senior product designer, streams, a whole lot more. Go to bankless.pallet.com/jobs and also sign up so you get these via email. You don't just have to hear it from David and I yelling at you to get a job in crypto every week. Guys. And just just for the record, those are only like the first like 25 to 33% of jobs that we read out on the jobs board. So there's so many more that you do not hear because we don't read them. Just a tip of the iceberg. That's great. And so like I say, fundamentals are stronger than ever and you can be a part of building that fundamental base. So we can kick off the next bull mania. So

• 1:07:25David Hoffman?

  we can all get liquidated then too. Coming up next in the second half of the show, second half, Jesus, so it's already an hour long. Optimism, Wintermute hacker update. There's an update there. Some drama, good drama, good news this time. Jack Dorsey releases Web 5, skipping right over Web 4. Okay. And also Coin Center suing the IRS. So interesting turn of events in many, many different parts of the crypto industry. We're going to get all to those stories and more right after we talk about some of these fantastic sponsors that make this show possible. There is a brand new staking feature in the Ledger Live app today. We all like staking the assets that we're bullish on and now you can stake seven different coins inside the Ledger Live app. Cosmos, Polkadot, Tron, Algorian, Tezos, Solana, and of course Ethereum. With Ledger Live,

• 1:08:10David Hoffman?

  you can take money from your bank account, buy your most bullish crypto asset and stake that asset to its network all inside the Ledger Live app. Through a partnership with Figment, Ledger also lets you choose which validator you want to stake your assets with. And Ledger is running its own validating nodes, offering a convenient way to participate in network validation, and it even comes with slashing insurance. Ledger Live is truly becoming the battle station for the bankless world. So go download Ledger Live. If you have a Ledger already, you probably already have it and get started securely staking your crypto assets. The Layer 2 era is upon us. Ethereum's Layer 2 ecosystem is growing every day, and we need bridges to be fast and efficient in order to live a Layer 2 life. A cross is the fastest, cheapest, and most secure cross-chain bridge. With Across, you don't have to worry about the long wait times or high fees

• 1:08:55David Hoffman?

  to get your assets to the chain of your choice. Assets are bridged and available for use almost instantaneously. Across bridges are powered by Uma's Optimistic Oracle to securely transfer tokens from Layer 2 back to Ethereum. A token proposal is being deliberated as we speak in the Across forum, where community members will decide on the token distribution. You can have your part of Across's story by joining the Discord and becoming a co-founder and helping to design the fair, fair launch of Across. If you want to bridge your assets quickly and securely, go to across.to to bridge your assets between Ethereum, Optimism, Arbitrum, or Boba Networks. And, Big Cliffs Nation, we are back! Optimism Exploiter returns 90% of stolen tokens, and here's a quote from this article out of The Defiant: "Over the past few hours, the address opened a line of communication

• 1:09:40David Hoffman?

  with Wintermute on-chain." That's pretty cool. "And 17 million of the 20 million OP tokens have now been returned," said Optimism. "The attacker has kept 2 million OP tokens as a bounty, and the 1 million OPs by the Exploiter were sent to Vitalik Buterin." So I'm assuming Vitalik just, like, sent it to him. Oh, and when the Optimism token hacker sent the tokens to Vitalik, he also included a message inside of the transaction. Fun fact: you can actually do that, by the way. "Hello, Vitalik. I believe in you. Just want to know your opinion on this. By the way, help to verify the return address, and I will return the remaining after you." I don't know what that means.

• 1:10:21Ryan Sean Adams?

  After you do that?

• 1:10:22David Hoffman?

  After you... Oh, okay. "And hello, Wintermute. Sorry, I only have 18 million, and this is what I can return. Stay optimistic." Interesting hacker, I guess.

• 1:10:32Ryan Sean Adams?

  So that was, like, a forced bounty. It's not like the Optimism team gave him. He just kept 2 million as a bounty. Is that the case?

• 1:10:39David Hoffman?

  I guess so. I guess the Optimism's like, "Hey, we will not pursue charges if you just give us most of the stuff back." I don't know. 1 million or 2 million tokens of reward is pretty damn good, I guess.

• 1:10:50Ryan Sean Adams?

  Yeah, it's... You keep 10%. That's the hacker fee. The white hat hacker fee? Black hat to white hat? I don't know what that is.

• 1:10:56David Hoffman?

  I think that's gray.

• 1:10:57Ryan Sean Adams?

  Yeah, that's a gray hat. That's pretty black, actually.

• 1:10:59David Hoffman?

  No, that's pretty black.

• 1:11:00Ryan Sean Adams?

  They stole the money. They just didn't steal all of it.

• 1:11:03David Hoffman?

  They definitely stole the money. All right, update with the Ethereum difficulty bomb. The difficulty bomb is being delayed for two months. And the difficulty bomb is coming at the end of August. What the difficulty bomb is, is it slows down Ethereum block times. It's been in Ethereum for, since day one, it's been the pressure, the fire under the butts of Ethereum developers to make sure that proof of stake ultimately gets shipped. It's a part of a ritual to kick this thing back over and over and over again. They are kicking it back one last time for two months. Because we cannot ship the merge fast enough before the difficulty bomb came. So that means that overall a longer wait for the merge. So from August, it doesn't really matter because we're in a bear market anyways.

• 1:11:43Ryan Sean Adams?

  August to when? November? Is that when it's going to be, it's pushed back to?

• 1:11:48David Hoffman?

  Yeah, the end of November, early October, I think, yeah.

• 1:11:50Ryan Sean Adams?

  Got it, got it, got it. Yeah, I guess that will have some bearing, but probably no bearing really. And what's this, this other thing? Maker adding our ETH as collateral? It's a decision?

• 1:12:00David Hoffman?

  Yeah, yeah. This is really, really cool. So our ETH from Rocketpool, Rocketpool's liquid staked ETH. So when you deposit your ether into Rocketpool, you'll get our ETH back in return. Same thing with staked ETH out of Lido. But Rocketpool, the difference between Lido and Rocketpool is that you can also add your own node to the Rocketpool network, which is the difference from Lido. There is a vote to add our ETH as a collateral type in Maker DAO, allowing you to deposit our ETH into Maker DAO and borrow DAI against it. And so I'm a big fan of competition in the staked ETH arena. Lido has a ton of staked ETH and people are worried about how much supply that they have. And in order to get other staked ETH alternatives, we need integrations into DeFi.

• 1:12:42David Hoffman?

  And this poll ended literally like 30 minutes ago at the time of recording, midday Thursday. And we have an overwhelming yes in 40,800 MKRs voting yes, 22,000 MKR tokens voting no. And so our ETH is going to be added as collateral in Maker DAO, probably with a really low collateralization ceiling. As in not that many DAI can be minted against our ETH to start. This is normal. But the idea is that this helps incur our ETH liquidity. And so as a result of this, this is a liquidity mechanism for our ETH. Puts more demand for our ETH, creates more DAI supply for Maker DAO, and ultimately will help our ETH become more liquid. So bullish, Ryan, on the competition between staked ETH derivative tokens.

• 1:13:27David Hoffman?

  I'm glad we have alternatives because we need alternatives because competition is always good for the consumer. Congratulations to Rocketpool DAO for getting that done.

• 1:13:34Ryan Sean Adams?

  Absolutely. And speaking of competition, it feels like centralized finance, traditional finances and a competition for talent with DeFi. This is Uniswap Labs announcing that they are welcoming Stacy Cunningham, who is the former president of the New York Stock Exchange as an advisor to Uniswap Labs. So taking her from TradFi to DeFi, and this is Hayden talking about that hire. "It's critical that DeFi learns from both the successes and failures of existing financial systems. Former New York Stock Exchange President Stacy Cunningham's experience and excitement, expertise and excitement in the transformative potential of AMMs.

• 1:14:15Ryan Sean Adams?

  Part of why I'm so thrilled to welcome her as an advisor to Uniswap Labs. Poaching from the New York Stock Exchange, that's what Uniswap is doing right now. Some people will call this like very corporate though, David. Do you like, what do you think of that sentiment? They'll be like, oh, we don't need TradFi people like, you know, let's leave this in the hands of kind of the geeky crypto nerds who really care about this stuff. What do you think?

• 1:14:38David Hoffman?

  No, I think there's a case where Stacy Cunningham is a frontier enthusiast. And so she's leaving the non-frontier and she's going off onto the frontier. You can actually see her Twitter account there on the right. She says in her bio, "markets enthusiast." And I'm a fan of that sentiment. I'm also a markets enthusiast. So Stacy Cunningham, welcome to the frontier and thanks for joining us.

• 1:15:01Ryan Sean Adams?

  Absolutely. We're going to take more from TradFi before this is all over. Speaking of frontier enthusiasts, Jim Carrey has now minted his first NFT called Sun Shower. And he has sold it as well.

• 1:15:14David Hoffman?

  Speaking of things I did not have on my bingo card.

• 1:15:16Ryan Sean Adams?

  Yeah, Jim Carrey into NFTs. Jim Carrey, of course, the actor. And I don't know, Ace Ventura, there's like some of his favorite, The Mask.

• 1:15:25David Hoffman?

  Pet Detective, yeah, The Mask, right.

• 1:15:26Ryan Sean Adams?

  Yeah, the classic 90's stuff. And now he's giving you the NFT world.

• 1:15:30David Hoffman?

  Bruce Almighty. I love Bruce Almighty.

• 1:15:31Ryan Sean Adams?

  Speaking of the NFT world, David, how's the NFT world doing? Like from a markets perspective, like Bored Apes, CryptoPunks? We gotta be down to, I haven't even looked at the JPEG prices because I've been consumed by other things. What's that looking like?

• 1:15:44David Hoffman?

  Yeah, I saw a report from the Defiant that I thought was pretty useful with that reported some numbers of common NFTs markets. So Board Ape Yacht Club down 14% to 76 ETH. CryptoPunks up 3% to 48 ETH. And that is the only NFT project that's up this week. Other Deeds down 35% to 2 ETH. Moonbirds down 30% to 15.5 ETH. CloneX down 34% to 8.2 ETH. Azuki down 20% to 9.4 ETH.

• 1:16:12Ryan Sean Adams?

  That's just this week, right?

• 1:16:14David Hoffman?

  Yeah, that's very recently, yeah. And so this definitely lends itself to the argument that NFTs are leveraged ETH, if you believe that. But also CryptoPunks, you know, return into fundamentals, right? Right, guys?

• 1:16:28Ryan Sean Adams?

  Wait, do you think that that's true? NFTs are just leveraged ETH? I guess it depends on the NFT, doesn't it?

• 1:16:36David Hoffman?

  I definitely think so. My jury is still out for that, but this is something that Eric Connor chants, and I'm waiting to be convicted on that more.

• 1:16:45Ryan Sean Adams?

  I think you can make that case for something like Nouns that has like actual ETH backing in its treasury. Maybe that makes more sense. But like, I know some people, a lot of people who've mentioned to me that they're waiting for some generational lows to go buy some of these OG blue chip NFTs, like a CryptoPunk, you know, when the time is right. But I always wonder about them. I'm gonna go like check back, because you say that now, but when you are in the depth of the bear market, and these NFTs are trading super low, will you have the guts to make those purchases at that point in time? Because that's where I always falter, because I'm like, it's just a JPEG. What do you think?

• 1:17:23David Hoffman?

  It's when Bitcoin had its first price run up and then crash. Imagine being in the first Bitcoin bull run, and then the first Bitcoin crash. There is no precedent for Bitcoin ever coming back. And so the people that bought the first Bitcoin crash down to like, I don't know what it was, $100, they had to have just brains of steel, right? Because there's no guarantees that these things come back. And the NFTs are the same. There's no precedent for these NFTs ever coming back in price.

• 1:17:53Ryan Sean Adams?

  Right.

• 1:17:54David Hoffman?

  Part of the future, or are they just a part of 2021?

• 1:17:57Ryan Sean Adams?

  Or will it be a new crap, oh, new crap, new crop of NFTs, right? That's the thing that's what people are.

• 1:18:02David Hoffman?

  Is that a Ferrian slip, Mr. Non-NFT?

• 1:18:03Ryan Sean Adams?

  Maybe. Look, I got an NFT right behind me, alright? This dude kneeling. That's an NFT, David. Not a CryptoPunk. You, by the way, you gonna put your CryptoPunk up somewhere in your new place?

• 1:18:13David Hoffman?

  Yeah, totally. As soon as I get my hands back on it, yeah.

• 1:18:16Ryan Sean Adams?

  You don't have your CryptoPunk?

• 1:18:18David Hoffman?

  No, it's with all my other stuff.

• 1:18:19Ryan Sean Adams?

  Oh, the image of your CryptoPunk.

• 1:18:21David Hoffman?

  Yeah, the image, yeah. Oh, I have my CryptoPunk.

• 1:18:23Ryan Sean Adams?

  Of course you do. It's in your brain wallet.

• 1:18:25David Hoffman?

  I can't hang my ERC 721 here. Alright, leaning into what's next. Jack Dorsey's Bitcoin venture TBD unveils new proposal for decentralized web platform. This caught crypto Twitter by storm and reignited the feud between Jack Dorsey and Andreessen, Marc Andreessen. And so Jack Dorsey releases, along with Square, releases Web 5? Web 5?

• 1:18:48Ryan Sean Adams?

  Web 5.

• 1:18:49David Hoffman?

  Yeah, so here's the presentation.

• 1:18:51Ryan Sean Adams?

  That's the actual literal name for it, right?

• 1:18:52David Hoffman?

  That's the, yeah, Web 5, the decentralized web platform and new evolution of the web that enables decentralized apps and protocols. So like, sounding a lot like DeFi, right? So here's the pitch deck, but Web 5 came from the math behind Web 2 plus Web 3 equals Web 5.

• 1:19:09Ryan Sean Adams?

  Oh, I see that math.

• 1:19:10David Hoffman?

  Right. Yeah, the math does check out. I ran those numbers myself. But really, the TLDR here is Bitcoin plus decentralized identity. And so decentralized identity is a thing that's a conversation outside of crypto. Decentralized identity was a topic of conversation and a topic of research and development before crypto was a thing. And many, many companies around this, around the world have worked on decentralized identity. There is a, there's an identity consortium, like identity standards, just like the worldwide web standards. This is a concept outside of crypto, so it's not native to crypto. However, decentralized identity pairs really, really well with crypto.

• 1:19:49David Hoffman?

  Our DeFi apps, our NFT orgs, our DAOs are definitely bolstered and enabled in just great fashion by decentralized identity.

• 1:19:57Ryan Sean Adams?

  Would you say this, David? Crypto gives decentralized identity a use case?

• 1:20:01David Hoffman?

  A huge use case. Not, it's not exclusive to that decentralized identity works. It would be great for web two because you can like the meme of owning your own data. And like charging Mark Zuckerberg for accessing your data. That is the meme of decentralized identity, Ryan, not crypto. And so decentralized identity is useful for web two and individual sovereignty aside from crypto. But when you marry web three, Jack Dorsey, with decentralized identity, you get an explosion. Like the Renaissance explosion that Josh Rosenthal leans into, like that's what we're talking about.

• 1:20:35Ryan Sean Adams?

  I think this is true. I think this is true of the money use case too, right? It's like Bitcoin is cool on its own. But when you have a non, like when you have a self sovereign money inside of a decentralized financial system, then you actually get a use case for that money. And that's what Ethereum is doing is giving a use case for Ether. I think that the same is true of decentralized identity. It's just like, where do you use decentralized identity in the real world? I mean, I have a passport, I have a driver's license, I have a Gmail account, I have an email, like I have a Facebook login, whatever. What do I need DID for? Well, you need it in order to like do pseudonymous governance in a DAO in order to actually vote, in order to like actually participate in some of these NFT communities.

• 1:21:18David Hoffman?

  You need it in the metaverse, Ryan. The metaverse requires decentralized identity.

• 1:21:23Ryan Sean Adams?

  Anyway, go on. What's Jack building here?

• 1:21:25David Hoffman?

  Yeah, so this is, this is why, like this is in my mind, a little bit skeuomorphic. You need smart contracts, you need a variety of tokens, you need metaverse real estate, metaverse land, all the metaverse things, metaverse games. And you need a decentralized identity in there to actually make a self sovereign metaverse. But Jack is trying to just add an identity layer on top of Bitcoin. And he somehow claims that he's making like DeFi, like kind of like decentralized finance apps, et cetera, et cetera. Once you add an identity to Bitcoin, I'm confused about that. But with like DIDs, decentralized identifiers and verifiable credentials, which are terms you might have heard from our recent show with Evan McMullin and Vitalik Buterin,

• 1:22:07David Hoffman?

  if you want to go down that rabbit hole, they are applying these things to Bitcoin and the Bitcoin blockchain. Just to create a world of self sovereign identity on a Bitcoin standard, which is confusing to me, although it is, it is the appropriate use of DIDs and VCs.

• 1:22:23Ryan Sean Adams?

  Yeah.

• 1:22:23David Hoffman?

  Again, not, not venture capitalists, verifiable credentials. But then it's like injecting it into the Bitcoin blockchain, which is where I get confused.

• 1:22:30Ryan Sean Adams?

  Yeah, I kind of, so I kind of like it. I like the concept of having a self sovereign identity. Now, whether it takes off, like, do you have the use cases to actually support it or not? Like, jury's still out, but I like that they're pursuing this. The weird thing about it is kind of the, the wrapping of the whole thing, which is very anti Web 3 and very, I would say like, it's wrapped in this like almost Bitcoin maximalist, like, all we need is the Bitcoin chain for everything sort of persona, which is just like, doesn't make sense to me. And there was this back and forth that you mentioned between Mark Andreessen, who came on Bangl's podcast recently, made the case for Web 3, and, and Jack Dorsey. He says, this is Mark Andreessen, wait, what happened to Web 4? He skipped right to Web 5, right? And then Jack says, same thing that happened to Web 3. I don't know what he means by that.

• 1:23:15David Hoffman?

  He just mean, he means like, it's irrelevant or gonna fade to existence.

• 1:23:18Ryan Sean Adams?

  Oh, I get it.

• 1:23:19David Hoffman?

  It wasn't a thing in the first place, right? Uh, which is, you know, definitely a Bitcoin maxi take. And so, and the thing is, like, people started just making fun of this. Like, the, the joke was not accepted by the, the, like, not even the inside of crypto, but outside of crypto. Melissa Chen, uh, she's actually somebody I respect, because she reports on China. She's not really a crypto person. She's just like a Chinese markets and commentator, critical of China. Uh, and she goes, can we just go skip straight to Web 69? Like, throwing a whole, like, farce out of the whole, like, Web 5 thing.

• 1:23:47Ryan Sean Adams?

  Did you see Snoop Dogg tweet?

• 1:23:49David Hoffman?

  No.

• 1:23:50Ryan Sean Adams?

  Oh, he tweeted something about getting ready to launch Web 8. Uh, he just tweets this the same day. It's got a lot of play.

• 1:23:57David Hoffman?

  Yeah, so the joke did not land, Jack Dorsey. So, swing and a miss on that one.

• 1:24:01Ryan Sean Adams?

  But the, uh, yeah, it's interesting, right?

• 1:24:03David Hoffman?

  The technology's real.

• 1:24:04Ryan Sean Adams?

  The technology's real, and I'm-

• 1:24:05David Hoffman?

  The joke is bad.

• 1:24:06Ryan Sean Adams?

  I would actually love to, um, to have somebody from Web 5 or Jack Dorsey on Bankless to explore this a little bit more as we're exploring, like, decentralized identity and verified credentials. Uh, David, um-

• 1:24:18David Hoffman?

  Yeah, real quick here, Coin Center suing the Treasury plus the IRS. Coin Center- Our favorite crypto lobbying firm filed a lawsuit against the Treasury Department and the IRS claiming a crypto tax reporting requirement contained in the infamous infrastructure bill is unconstitutional. The lawsuit claims in 2021, the Biden and Congress amended a little-known tax reporting mandate. If the amendment is allowed to go through, it will impose mass surveillance regime on ordinary Americans. The provision in the infrastructure bill regime last summer would require individuals and businesses receiving $10,000 or more in crypto to report that person's date of birth and social security number. So Ryan, if I send you $10,000 of crypto, I have to report your birthdate, your name, and your social security number, of which I do not know, to the IRS and the Treasury.

• 1:25:02David Hoffman?

  How would you feel about if I did that? How would that make you feel?

• 1:25:05Ryan Sean Adams?

  I think that would, that would suck. I think that is like completely needless, right? And do I have to do that if you send, if you hand me over $10,000 in cash? And this is very much surveillance state, like unnecessary. So I'm glad somebody is standing up to this. And this is why we need crypto lobbyists to protect our liberties.

• 1:25:23David Hoffman?

  $10,000 of your NFT sale? You gotta report your counterparty to the IRS, like, like whatever.

• 1:25:29Ryan Sean Adams?

  We can't AML KYC the entire world here. We don't need to either.

• 1:25:33David Hoffman?

  Also not the point. And the point is to not do that.

• 1:25:36Ryan Sean Adams?

  Have it at the fiat gateways, right? That's where we have it today. That's what makes sense. Jeremy Alair just announced Eurocoin. So Jeremy Alair, of course, one of the, the main people behind Circle and USDC, which is a very popular centralized stablecoin, now launching the Euro version of USDC. And what's cool about this is immediately, because it's Circle, they get Binance Bitstamp support, they get DeFi support, they get custodian support, wallet support. Kind of cool for Euro to have its own stablecoin. Also surprised it took this long. Feels like, you know, it should have already been there, but I guess US dollars is still the world reserve currency. So most people are holding it there. David, we got some releases this week too. What do, what do we want to cover?

• 1:26:22David Hoffman?

  Yeah, we got a vampire attack on Twitter. Lens, if you integrate your Lens protocol with your Twitter, you can automatically post your tweets to Lens protocol with Lens Share. So there's a link in the show notes. There is probably a Lens protocol token coming, Ryan. And so more footprints on Lens, the better. And so you can vampire attack Twitter by posting your tweets automatically to Lens and allowing people to consume your tweets on Lens protocol. So there's that. Coming up next as well, claim your hop tokens. Drop it like it's hop. You can now claim your hop tokens, ladies and gentlemen. There's a link in the show notes to get that done. And so that's app.hop exchange. Oh, Ryan, you're an Ethereum user, so you got 1,000 hop tokens. So congratulations on that.

• 1:27:03Ryan Sean Adams?

  Oh, wow, that just loaded up. Cool.

• 1:27:06David Hoffman?

  You didn't even know that. And then last release of the week, OpenSea has acquired Seaport. We covered this a couple of weeks ago. And now that is finally being migrated over. So OpenSea is now a front end to just like the Seaport protocol. And so as a result of that, we are saving a bunch of money on gas because Seaport is just so much more gas efficient than OpenSea. And so some of the details here, you can now make offers on items in an entire collection or buy items with a specific attribute, which is the first of its kind for Ethereum NFT marketplaces. You can display floor prices and percent rarity by attribute now as well. Also, there are no setup fees for Seaport accounts. When you made your first trade on OpenSea, you would have to initialize your account, which was an expensive, gas-intensive endeavor.

• 1:27:50David Hoffman?

  And so people are already saving money because they don't need to set up, initialize their wallet on OpenSea with Seaport, saving users at this current rate $1220 million a year in gas. And also, there's other features coming as well, like listing many NFTs in a single transaction and creators also being able to define multiple payouts on OpenSea. Basically, OpenSea getting a lot more expressive, a lot more composable, doing a lot more cool things. There's speculation, Ryan, that OpenSea will never do a token, probably because they're probably just not the right vibe for them. But Seaport, a different entity, might still do a token. I'm still kind of skeptical on that outcome, but the path is there for that. Interesting.

• 1:28:30Ryan Sean Adams?

  Guys, we got more coming up, including questions from the Bankless community. We'll get to some of those and of course, some hot takes from Twitter. Vitalik has his own take. We give you some takes about the bear markets. Make sure you guys like and subscribe. We'll be right back, but before we do, we want to thank the sponsors that made this episode possible.

• 1:28:48David Hoffman?

  Arbitrum is an Ethereum Layer 2 scaling solution that's going to completely change how we use DeFi and NFTs. Over 300 projects have already deployed to Arbitrum, and DeFi and NFT ecosystems are growing rapidly. Some of the coolest and newest NFT collections have chosen Arbitrum as their home, all the while DeFi protocols continue to see increased usage and liquidity. Using Arbitrum has never been easier, especially with the ability to deposit directly into Arbitrum through all the exchanges, including Binance, FTX, Quobi, and Crypto.com. Once inside, you'll notice Arbitrum increases Ethereum's speed by orders of magnitude for a fraction of the cost of the average gas fee. If you're a developer who wants low gas fees and instant transactions for your users, visit arbitrum.io/developer to start building your DApp on Arbitrum. If you're a degener, many of your favorite DApps on Ethereum are already on Arbitrum,

• 1:29:32David Hoffman?

  with many moving over every day. Go to bridge.arbitrum.io now to start bridging over your ETH and other tokens in order to experience DeFi and NFTs in the way it was always meant to be: fast, cheap, secure, and friction-free.

• 1:29:47David Hoffman?

  The era of proof of stake is upon us, and Lido is bringing proof of stake to everyone. Lido is a decentralized staking protocol that allows users to stake their proof-of-stake assets using Lido's distributed network of nodes. Don't choose between staking your assets or using them as collateral in DeFi. With Lido, you can have both. Using Lido, you can stake any amount of your ETH to the Lido validating network and receive ST ETH in return. ST ETH can be traded, used as collateral for lending and borrowing, or leveraged on your favorite DeFi protocols. All this without giving up your ETH to centralized staking services or exchanges. Lido now supports Solana, Kusama, and Polygon staking. Whatever your preferred proof-of-stake asset is, Lido is here to take away the complexities of staking while enabling you to get liquidity on your stake. If you want to stake your ETH, Sol or Matic, and get liquidity on your stake,

• 1:30:32David Hoffman?

  go to lido.fi to get started. That's L-I-D-O dot F-I to get started.

• 1:30:37Ryan Sean Adams?

  Hey guys, we are back with a new segment we call "Questions from the Nation." Of course, to get your question in, you gotta follow us on Twitter. Wait for this: every Wednesday, sometimes Thursday, we post a question to the community, which is: "Ask your question. Do you have a question for the weekly rollup?" And we try to answer some of the top questions. David, this was one of them. I'm gonna read this out, and then why don't you take a shot at the answer here? This is from clotty.eth Christina Clotty won. Hi, Ryan and David. I would love to know your opinion about staking ETH on Merge via Lido. Do you still consider it safe? Or do you think that Lido and so that ST ETH is in risk? Thanks to the problems with Celsius. So this listener is wondering whether we think that ST ETH and Lido,

• 1:31:20Ryan Sean Adams?

  that's the stake derivative ETH version on Lido is in risk, given Celsius and all of the turmoil. What do you think about this?

• 1:31:28David Hoffman?

  The answer is very definitively no. There's nothing wrong with Lido. This is only to do with Celsius. Staked ETH is trading at a discount to ETH right now because people like Celsius, entities like Celsius and other people that have used stake ETH as collateral, had to sell their staked ETH on the market to get ETH back to pay back their collateral. But that has nothing to do with the actual protocol of Lido itself. It doesn't, doesn't mean anything. So like they are completely immune from that. It's just market shenanigans that is a byproduct of the fact that Ether on the beacon chain is locked for the foreseeable future. So people that needed liquidity had to sell their staked ETH for a discount in order to access that liquidity. That does not mean anything about the solvency of Lido.

• 1:32:13David Hoffman?

  That is just completely irrelevant and just not related to anything to do with Celsius. And so this is, not only is this not a risk, this is an actual an opportunity. And so some people are forced sellers of staked ETH. I think the staked ETH rate right now is something like 0.94 staked ETH to ETH, when those things should be trading at one to one. And so you can actually take, if you have like 10 ETH, for example, and you take it to Curve, where you can get staked ETH liquidity, you can turn 10 ETH into something like 10.6 ETH. And so if you are, if you have a bunch of Ether and you're ready to be locked up until the withdrawals are enabled at an unknown time in the future, you can actually count, you can actually get that arbitrage and turn your 10 ETH into like 10.6 ETH for free.

• 1:32:54Ryan Sean Adams?

  You're basing that because every ST ETH is redeemable for one ETH once withdrawals are enabled, right? So you're kind of basing it on that. You're saying like ST ETH is de-pegged from the price of ETH. But if you're a long-term holder of ETH and you want staked ETH, you can just buy that. And you make maybe like 5% more, 10% more in terms of your ETH holding at the end of this. The only person, the only people that are really affected by this ST ETH de-pegging are some of the D gens, right? So if you have a collateralized loan, a synonym in ST ETH, because you're trying to get leverage on your staked ETH, you might want to check on that. Like, that's not a good, but if you're just a Lido depositor, right? As one ST ETH is still worth one ETH.

• 1:33:36Ryan Sean Adams?

  And once the merge happens, once withdrawals are enabled, there should be no problem withdrawing that at this point in time. That's kind of good news, right? Because people are worried about that.

• 1:33:46David Hoffman?

  If you have cash, this is an opportunity. So not only do you get like that 5, 6% premium because of the staked ETH discount, you are also getting the staking yields on top of that as well.

• 1:33:56Ryan Sean Adams?

  Yeah.

• 1:33:56David Hoffman?

  So bullish, bullish.

• 1:33:58Ryan Sean Adams?

  How about this question, David?

• 1:33:59David Hoffman?

  But, but note on that, actually, that doesn't mean you go and stake your ETH in Lido. You don't, because then you will, you will get, if you take 10 ETH and you go stake it in Lido, you will get 10 staked ETH in return, which are only worth 0.96. You should buy staked ETH. You should not go stake your ETH with Lido. That's a different thing. You want to go buy it off the secondary market because that's where the discount is. Okay.

• 1:34:21Ryan Sean Adams?

  There you go.

• 1:34:22David Hoffman?

  DragonDad.Eth.

• 1:34:23Ryan Sean Adams?

  One thing I'll say about that, though, is there might be some tax implications of doing that.

• 1:34:27David Hoffman?

  Oh, yeah.

• 1:34:28Ryan Sean Adams?

  I don't know. I don't know. Talk to your accountant as well.

• 1:34:30David Hoffman?

  Thank you, tax.

• 1:34:30Ryan Sean Adams?

  None of this is financial advice. What's his next question?

• 1:34:34David Hoffman?

  Next question. What should retail investors be doing now? Huddle? Borrow dollars and buy? Sell and buy back later? So this is a hard question because it always depends on facts and circumstances. Who you are, what your financial situation is, is going to depend on what the answer is. And I don't know your financial situation, DragonDad.Eth, but I do know, the only thing I do know is that Ether at $1,100 is a better price than it was at $2,000 and $3,000 and $4,000. And so it really depends on, what are your outstanding liabilities? How much you have to pay in rent? How much you have to pay for your mortgage? Do you have like, do you have to pay for your kid's college? Do you have to pay for your food?

• 1:35:18David Hoffman?

  Do you have to pay for? In my opinion, and it always will be, ether is the greatest asset of all time and the world is just slow to figure that out. So if you have everything buttoned down, I am a big fan of dollar cost averaging because we are down so bad that we're probably not going to rocket up off of the ground. I do not know the future, of course, but I would lean into you having long more time to dollar cost averaging to crypto rather than less. When there's so much pain in the markets, things just don't recover instantly. And so, again, I don't know who you are. I don't know your financial situation, but I would say that you have time to make slow and conscious and calculated decisions. How do you feel about that answer, Brian?

• 1:35:59Ryan Sean Adams?

  Yeah, I think that's a great answer. And I'm gonna be like, give the crypto dad answer that's gonna work best for like 95% of people, right? Which is like, absolutely hold is the question. So hold, yes. Borrow dollars and buy, no. Do not do that.

• 1:36:15David Hoffman?

  There are people that the answer of borrow dollars and buy, the answer to that question is yes, but it's not to the people that ask the question. It's people that know the already answer.

• 1:36:25Ryan Sean Adams?

  Just margin is just like, look at, look at experienced three hours capital, the best crypto fund managers, hedge fund managers, they just got liquidated because of margin. All right? So borrow dollars and buy, no. 95% of people, if you're listening to this, you're probably one of them. Sell and buy back in later, also a no.

• 1:36:45David Hoffman?

  That makes you a trader. That makes you a trader. Are you a trader? Or are you just, you know, an investor?

• 1:36:50Ryan Sean Adams?

  You got it. We've said this before. You gotta pick your character class. And as we were talking about the top of the episode, right? So like, if you're in the acceptance phase, you're gonna be tempted to like, trade these dips, the ups and the downs. I think a lot of people will lose a lot of money doing that. You're better off dollar cost averaging in, holding what you have at this point in time. None of this is financial advice, just our personal takes on it. This, this kind of thing probably works for the vast majority of bankless listeners. All right, David, let's get to some takes of the week. This is a hot identity take from none other than Vitalik. He's talking all about identity now, since he's come on the bankless podcast, you know, and this is a really interesting take. What does he say?

• 1:37:30David Hoffman?

  Yeah, he goes, "Please stop using real name to refer to your passport name. Your government doesn't get to define you who you really are. If you use a different name in most day-to-day interactions, that is your real name. Passport name, legal name, slave name, to be edgy, are all fine." And so basically, he's just saying like, "Yeah, your government doesn't dictate what your name is. You dictate what your name is."

• 1:37:52Ryan Sean Adams?

  Wow.

• 1:37:53David Hoffman?

  I so happen to have the same name that I have on my passport. But if the government told me that my name was different, I would reject that. And that's basically what Vitalik here is saying.

• 1:38:02Ryan Sean Adams?

  Yeah, I think that's a really interesting take. It just, I think it brings to light how much we are like, we are in the water we swim and we don't even recognize there's water around us, right? Like, what is our name? Oh, that's the state issue. It's the thing on my birth certificate. It's the state issue name.

• 1:38:18David Hoffman?

  It's also the name that your parents gave you, most of the time.

• 1:38:20Ryan Sean Adams?

  True, true. But let's say, let's say the state changed my name, but my parents didn't, right? And I didn't decide to. Then what is actually my name? A lot of us would default, "Oh, my real name is whatever it says on the birth certificate." Is that your real name? Wow, the nation-state and our institutions have a lot of hidden force exertion on how they're controlling us. And this does bring up a new avenue for decentralized identity. What, who are you as a person? Well, maybe it's about who you decide to be. Maybe it's about like what you're like consent and also the consent of your community. And maybe it doesn't have to be top-down nation-state pushed down to you.

• 1:39:04Ryan Sean Adams?

  Anyway, you know, just opening that up as an avenue of thought.

• 1:39:08David Hoffman?

  What is the source of truth of your name? Is it the nation-state? Because right now, we are in a, that is the actual source of truth. That is the paradigm. In a decentralized identity paradigm, it's whatever you put down.

• 1:39:18Ryan Sean Adams?

  Exactly right, exactly right. Okay, so here are some related takes as well. And this is kind of the silver lining of the bear market that we've seen so far. And that's, DeFi didn't break, David. This is the first take on that silver lining from you. What are you saying here?

• 1:39:32David Hoffman?

  Yeah, I say, "Take note. Everything breaking right now is centralized. Meanwhile, DeFi is orderly and efficient."

• 1:39:40David Hoffman?

  Not C-Fi. Like I said at the beginning, this is like one of the best tests of DeFi of all time. Billions of dollars getting liquidated. Gas fees were not that crazy. Gas fees were pretty reasonable. Everything got liquidated extremely efficiently, except for all the C-Fi companies. So if you're C-Fi, you're down bad. DeFi is down bad too, but at least DeFi is orderly and efficient. And it's the mandate of the SEC to have orderly and efficient markets. And so, doing your job, SEC. We took care of it. Like, we don't need you anymore.

• 1:40:12Ryan Sean Adams?

  Well, I do think

• 1:40:13David Hoffman?

  That's not true. We do need you in some instances.

• 1:40:15Ryan Sean Adams?

  We need you where things are centralized, right? And I think DeFi can be your best friend if you are a regulator, because you get to right-click, view source, what are, you know, what are the assets, what are they composed of? This is my take on the same theme. Two words Celsius and Luna had in common? Trust me.

• 1:40:32David Hoffman?

  Right, right.

• 1:40:33Ryan Sean Adams?

  Trust.

• 1:40:35David Hoffman?

  For those that don't follow me on Twitter, because they're not on Twitter, Ryan, can you tell them what my Twitter handle is?

• 1:40:40Ryan Sean Adams?

  David is at Trustless State. You gotta follow, okay? It's a great account. Tweet some good things sometimes, here or there. But like, okay, Trustless State, what did that, what did that come from? And I always wonder, David, and I've never asked you this, when this, I get the trustless part, right? It's obviously decentralized, just the opposite of trust, trust me, it's, you know, trustless, no trust required. The state part, are you talking about the state machine? Or are you talking about like, nation-state? Or is the answer to that question, yes? That's what you're about to tell me?

• 1:41:09David Hoffman?

  Yeah, the answer is yes, brother.

• 1:41:11Ryan Sean Adams?

  And did you plan that?

• 1:41:12David Hoffman?

  100% I did, yes.

• 1:41:14Ryan Sean Adams?

  Well done, then.

• 1:41:15David Hoffman?

  The state of being trustlessness and the nation-state in the clouds is created out of a trustless paradigm. Yeah, I created that Twitter handle in like 2018, when I barely understood crypto. And I'm actually like

• 1:41:27Ryan Sean Adams?

  But you got that.

• 1:41:28David Hoffman?

  I'm super proud of that, like, that understanding of like, very early in my crypto career.

• 1:41:33Ryan Sean Adams?

  Look, man, here I am with my Twitter handle, it's just my slave name, my nation-state slave name, Ryan S. Adams.

• 1:41:38David Hoffman?

  You gotta get your metaverse name, brother.

• 1:41:39Ryan Sean Adams?

  I know, I know. I gotta come up with that. All right, what's this last take on the same theme?

• 1:41:44David Hoffman?

  Yeah, this last take is coming from a Twitter handle, which I'm not gonna even try to pronounce, who says, "On-chain transparency is the biggest winner during the UST, that's Terra, Celsius, three R's capital, meltdowns. The parts we understand best are because of the blockchain data, and it gives incredibly valuable information to the market. TradFi will never have this. Niner, Niner, Niner, TradFi, you will never get this, you will never get this."

• 1:42:10Ryan Sean Adams?

  No, you won't, but come on over. We'll hire you. We'll help you out a little bit. And the bear market's a good time to come over, even though you probably won't be listening to this during the bear market. David, in all of this, this entire episode has been a bear market episode, but what are you bullish on? Where's the silver lining for you?

• 1:42:27David Hoffman?

  Well, Ryan, I am so glad that you asked because on this week on Bankless, I put this article titled "Eight Projects That I'm Bullish On In This Bear Market." And so I've literally listed these out, eight different projects that I think are both like, under-reported, underrated, under-acknowledged. Some of you might know them, but many of them, I bet you, you don't. And these are projects that span the entire crypto sphere. So we got ETH staking technology and Obal Finance. We have bridging the infinite number of chains and infinite number of apps across the infinite number of DEX aggregators with Lifi. We got interest rate swap AMMs. We got block natives, which is like predicting the future using the mempool. We got new money markets in Euler. We got Aztec, which is a privacy layer

• 1:43:08David Hoffman?

  two that lets you use DeFiOps on the layer one. We got Tracer DAO, which is a derivatives meta-protocol, and Disco, which is decentralized identity for the data backpack for the Metaverse and the Realverse. And I summarized all of these things into one great big article. And not only that, Ryan, I put in further resources for diving down the rabbit hole of every single one. If these have jobs, I put links to the jobs that they are hiring. And I also put the win conditions for how each one of these projects can win and claim market share and mine share in the future.

• 1:43:41Ryan Sean Adams?

  Is this what you wish someone did for you last bear market?

• 1:43:44David Hoffman?

  100% dude!

• 1:43:45Ryan Sean Adams?

  All of the stubs, like, took the notes and were like, "Hey, go here, go here, check this out."

• 1:43:49David Hoffman?

  Right. This is literally eight different rabbit holes from across the crypto space. DeFiOps, layer twos, cross-chain money markets, non-crypto stuff at all. And so, yes, like, and the thing is, like, I, okay, disclaimer, I'm an investor in all of these, pretty sure Ryan is too, but this is also why I know they're not going to rug me and they're not going to rug my readers or listeners who want trusted rabbit holes to go down. And so you can go down this rabbit hole with trust, with trusting there's not a trap at the bottom.

• 1:44:16Ryan Sean Adams?

  Wait, wait, I thought you were Trustless State. Who are we trusting here?

• 1:44:22Ryan Sean Adams?

  Do you know what's cool about this, though? All these things, when you say rabbit hole, you're not just talking about the project itself. You're talking about all of these are completely different categories, right? Bridges are going to be huge. So learn about LiFi, but then learn about HOP, learn about all of the other bridging protocols. And actually, LiFi is an aggregator on top of that. So it's even another category. Tracer, this is on Arbitrum, other layer twos, and it's a new spin on derivatives, like permissionless derivatives. Obol, this is a shared secret validator type technology. It's going to help our protocols. Like, each of these are categories of rabbit holes that you can go down that are typified by these projects, but open up a new door for you, like new areas,

• 1:45:03Ryan Sean Adams?

  new other projects to explore, new areas in the crypto space that you didn't already know. That's what's so cool about this.

• 1:45:10David Hoffman?

  Yeah, and I had a ton of fun writing this piece. I actually put out a tweet saying, hey, if you think there are other rabbit holes to go down, let me know. I'll go and research that project. I think I'm going to turn this into a semi-recurring, a regular, because I can't make promises, but I'll keep on doing stuff like this, because rabbit holes are fun. And Ryan, we are in a build market. And for the crypto newbies who are trying to gain conviction, for them, we are in a research and development market. And hopefully, resources like this can help those people gain the conviction that we have, Ryan.

• 1:45:40Ryan Sean Adams?

  Absolutely.

• 1:45:41David Hoffman?

  Ryan, what are you excited about?

• 1:45:42Ryan Sean Adams?

  Look, man, I'm excited because we're going to make it. Notice I didn't say we're all going to make it, because some people will quit. Like, the tourists leave, settlers stay.

• 1:45:51David Hoffman?

  Yep.

• 1:45:52Ryan Sean Adams?

  So I've never, like, we're all going to make it is a nice thing to say, but the reality is like, some of us will make it. Those that do are here because they have conviction. But like, what I really mean is this feels a lot different than 2018 to me. Some people, that's the number one question people ask of, like, those that were around in the last bear cycle is like, oh, is this 2018? How does this feel? How does this compare to that? And here's the difference. In 2018, we didn't have product market fit in crypto or DeFi. DeFi was actually nothing at that time. We had like Maker, maybe. It kind of worked. We weren't sure, though.

• 1:46:27David Hoffman?

  Only in the second, only on a downtrend, yeah.

• 1:46:30Ryan Sean Adams?

  Yeah, we barely had. NFTs, right? No one is actually like using these. We had CryptoKitties and that wrecked the entire chain. Ethereum had no path to scalability or staking. There were ideas like plasma state channels, no real path. Staking was distant. We didn't know how distant at the time, but like there was no pending merge that was actually going to happen with a beacon chain that was live. In 2022, we have all of this. The difference here is we've been punched down by macro and self inflicted leverage wounds. That's what you saw Celsius.

• 1:47:04David Hoffman?

  I don't feel self inflicted leverage wound from 3R's capital, by the way, just for the record. I feel like they inflicted that upon me.

• 1:47:09Ryan Sean Adams?

  Well, okay, so maybe they inflicted that on themselves and like you're getting like, I don't know, the backdraft of that. The collab, yes, the collateral damage of that. So in 2018, I was fearful and you know why I was fearful, David? Cause I wasn't actually sure if we were going to make it at that time because we didn't have the hardest thing, which is like product market fit. We had ICO, were people gonna come back after like the ICO things? And so I was a lot more fearful then, I'm not now, because now this is just a matter of macro. This is just a matter of like self inflicted leverage wounds. So they'll take some time to heal, but they will heal. Like we have product market fit now and I'm not, I'm not concerned in the same way I was in 2018.

• 1:47:52Ryan Sean Adams?

  In fact, I'm like, I'm like bullish going into this, this bear market. So it's a totally different vibe and a totally different feel, at least for me. I don't know if you, you feel some of that, but.

• 1:48:01David Hoffman?

  Yeah, you know, as a result of this treat, Ryan, I think I'll stick around for the bear market.

• 1:48:05Ryan Sean Adams?

  I convinced you?

• 1:48:06David Hoffman?

  I think I'll stick around.

• 1:48:07Ryan Sean Adams?

  Awesome, man. Well, let's see this again.

• 1:48:09David Hoffman?

  I'll see what happens on the other side.

• 1:48:10Ryan Sean Adams?

  We'll see this again. What do we got memes of the week? What are we looking at?

• 1:48:13David Hoffman?

  Memes of the week, this is life comes at you pretty fast and this is the man triggering a dominoes within the dominoes get bigger and bigger and bigger. Right? And so the first domino is a bat in China. And then the middle domino is I'm worth a hundred million dollars. And then the last domino is I'm homeless. And you know, good memes package up data pretty damn well. And this, what I hear is a bunch of whiplash. This is what I'll say back when I, I mean, we did our bear. Emergency livestream. I blame the Fed for just whiplashing this market around like spraying money everywhere. Say, hey, free money. Like, don't worry about the pandemic. We're giving you free money. And then they raise interest rates, like, give that money back. And everyone's

• 1:48:53David Hoffman?

  like, I spent it all. And that's then so like, I blame the Fed. And so, yeah, if you are homeless, sorry, if you're homeless, blame the Fed.

• 1:49:01Ryan Sean Adams?

  There the this meme encapsulates the three segments here. We had COVID. We had like meme stocks, money doesn't mean anything anymore. And now we're moving into like recession, hopefully not something worse.

• 1:49:13David Hoffman?

  We just we sped run that so fast.

• 1:49:15Ryan Sean Adams?

  Look, here's another another gift. That's a we'll end with this one, the meme of the week. This is about transitory inflation. What are we looking at, David?

• 1:49:24David Hoffman?

  Yeah. And so this is a bunch of people. I think this must be like, I don't know, the Swiss Alps or something. They're speaking English. Also, the sound on this is really scary, which is why we're not playing playing it. But you can definitely tell that all these people are looking at something over the mountain. They look like they're at a ski resort. And then you see the snow coming in. It's like, oh, wow, there's an avalanche happening over there on that mountain over there. And so they're all looking at this avalanche. And then they all, at the same time, realize that they are about to get blasted by this avalanche because it's coming for them. And it took them like, a really long time to realize that they were about to get blasted by this avalanche. And so the caption is, is that inflation? And then, yes, and it's transitory. We won't even notice. And then in the last frame, they are just completely blasted by snow.

• 1:50:03Ryan Sean Adams?

  Yeah, that's kind of how it felt. Like, we got blasted by an entire avalanche. Inflation not so transitory. Guys, we're gonna get through this. This has been our bear market episode. Hopefully, the worst down bad week of the year. But as always, got to end with this. None of this has been financial advice. Of course, Bitcoin and ETH are risky. As we've said before, you could lose what you put in. But we are headed west. This is the frontier. We're glad it's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

• 1:50:35David Hoffman?

  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. 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

• 1:51:20David Hoffman?

  fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless Nation.