SotN #14 - FUNding with Kevin Owocki (Gitcoin #7 BEGINS, DeFi protocols compete 4 Gitcoin, StableCredit USD, CeDeFi = real or joke?)

STATE OF THE NATION #14 - Tuesday, September 15th, 2020 Watch on the Bankless YouTube Channel https://www.youtube.com/c/bankless The State of the Bankless Nation is.... FUNding It that time of year.... GITCOIN TIME!!! Every quarter, 4 times a year, Gitcoin Grants rolls around. This is one of the few times where the money in your wallet means 10x more than it used to... IF... AND ONLY IF.... you donate to your favorite DeFi and Ethereum infrastructure. We bring on Kevin Owocki, el presidente of Gitcoin, to discuss the role of Gitcoin in funding the DeFi ecosystem and the technology behind funding public goods. ----- GO BANKLESS WITH THESE SPONSOR TOOLS: 💸 UNSTOPPABLE DOMAINS https://bankless.cc/unstoppable - HUMAN READABLE NAMES FOR ETHEREUM AND CRYPTO ADDRESSES 🌈 ZAPPER - ULTIMATE HUB FOR DEFI http://bankless.cc/zapper - ZAP INTO DEFI 💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith 💸 AAVE - BORROWING AND LENDING DIGITAL ASSETS ON ETHEREUM https://aave.com/ - DID SOMEONE SAY YIELD FARMING?? ------ STATE OF THE NATION #14 - Tuesday, September 15, 2020 The State of the Bankless Nation is.... FUNding Special Guest... Kevin Owocki @owocki on Twitter TOPICS: GITCOIN with Kevin Owocki 1) Gitcoin Round 7... START 2) This round is different... WE'RE IN A BULL MARKET 3) DeFi protocol, DeFi farms, DeFi teams are SENDING GITCOIN $$$ 4) Gitcoin is out of the shadow of Consensys, the EF 5) Decentralized Identity, Sybil Resistance of Gitcoin StableCredit USD 1) Bankless Video was helpful https://www.youtube.com/watch?v=SkTuMVBLBNQ... still need more help in understanding Andre Conje's new StableCredit USD system 2) Aave + Maker + Uniswap + Synethix = StableCredit USD (?) 3) Yearn needs a place to park its capital; it filled all the other protocols 4) Contracts done, UI soon BTC and ETH are the crypto monies that matter MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M https://www.coindesk.com/microstrategy-buys-more-bitcoin Bitcoin’s prisoners dilemma ETH just passed BTC on total value transferred and that’s huge https://twitter.com/RyanSAdams/status/1303706247900934144?s=20 Fake DeFi doesn’t cut it (CeDeFi) Binance Smart-Contract Chain https://www.binance.com/en/blog/421499824684900933/Binance-Smart-Chain-Launches-Today 100m fund Binance Block Explorer https://bscscan.com/ Token Sets Introducing the DeFi Pulse Index on TokenSets | by Anthony Sassano | Set Labs | Sep, 2020 https://medium.com/set-protocol/introducing-the-defi-pulse-index-on-tokensets-79f87c6b295b ----- Don't stop at the video! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit the official Bankless website for resources http://banklesshq.com/ Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState Follow DeFi Dad on Twitter https://twitter.com/DeFi_Dad ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

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

• 0:00David Hoffman?

  The.

• 2:10David Hoffman?

  The.

• 4:20David Hoffman?

  The.

• 6:30David Hoffman?

  The.

• 9:07David Hoffman?

  The bankless state of the nations are brought to you by AVE. AVE is a borrowing and lending protocol on top of Ethereum, where you can deposit some of your favorite assets in order to borrow other assets from AVE, which is particularly well-suited to yield farming. If you don't want to sell your Ether, if you don't want to sell your YFi, you can deposit them into AVE and borrow stablecoins so you can use them in these various DeFi farms. What's cool about AVE is that it will give you a variable interest rate based on market conditions, but you can also pay a fixed interest rate to help you plan into the future. Check out AVE at ave.com. If you want a better way to understand your DeFi portfolio, I recommend you go to zapper.fi and plug in your Ethereum addresses

• 9:51David Hoffman?

  to get a comprehensive report as to your currently owned assets and where they are in Ethereum. If you were around for the 2017 bull market, it was characterized by refreshing Blockfolio over and over and over again. And anytime you would ever make a trade, you would have to manually update your Blockfolio to make sure that your portfolio was accurate. With Zapper, you don't have to do that because Zapper looks on-chain at your Ethereum addresses to see the assets that you have in various DeFi protocols. Not only does it tell you the assets that you own, but it also tells you if they are deposited into AVE, into Compound, what yield farm they're in, your predicted APY, and it'll even let you make investments into DeFi protocols right through their zapper.fi portal,

• 10:36David Hoffman?

  making it really easy to compare and contrast different places as to where you can deploy your capital. Check them out at zapper.fi.

• 10:48Ryan Sean Adams?

  Hello, Bankless Nation. Welcome to another episode of State of the Nation. This is episode 14. David and I have a lot to cover today. We also have a special guest, Kevin Owocki, that will be coming on later. Really excited to be here. David, how you doing, man? How are things?

• 11:07David Hoffman?

  Absolutely fantastic. It's that time of year again where I just get really optimistic about Ethereum's future, as if I'm ever not, but this is kind of where the rubber meets the pavement. And so when Kevin comes on in a second, we're going to talk about what it's like to fund the future of Ethereum. So that's what's going on this week. It's a Gitcoin themed week, and I'm pretty excited to talk about it.

• 11:27Ryan Sean Adams?

  Awesome, man. And I am seeing our production quality escalating ever since you've been full-time Bankless, my friend. So like, these commercials are going great. This is going to be a special episode. Thanks for DJing. So if it's your first State of the Nation episode, we do these weekly. And what David and I like to do is talk about what's happening, the events that are going on in the space, and relate it to big picture themes that we talk about in the newsletter, that we talk about in the podcast. We hope to always drop some insight and action items. This comes out on Tuesday, but we've changed the time. So now you can watch this live at 2:00 PM, weekly, Eastern Time. So that's 11:00 Pacific Time, and I can't do the other timestamp block times in my head,

• 12:13Ryan Sean Adams?

  but you guys can figure out what UTC time that is. And hopefully, this is a good time for all of you, so you can watch live, get your YouTube, get your questions into YouTube as well. And then on Wednesdays, we release this to the podcast. I guess a couple of announcements before we begin, or things that are going on in the nation. We dropped an insanely cool podcast with Kane on Monday. David, what were your thoughts on that podcast, man? Like, I was blown away by the roadmap. What did you like about it?

• 12:44David Hoffman?

  Yeah, I really liked going into Kane's personal background because no one has done that yet, right? And I've been obsessed with the idea that where there is code, there is social contract, and where there is social contract, there is like a reason behind it and a personality behind it. And Kane, as one of the leaders of the synthetic movement, kind of has his DNA written into the Synthetix protocol. And so, no one's really explored that side of things. And so, that's something that we definitely were able to peel back the layers on with Kane and with Synthetix. So, I thought that was particularly fascinating.

• 13:17Ryan Sean Adams?

  Yeah, so check out that podcast. It's on your podcast feeds. That came out on Monday. Also, David, you've been super busy, my friend. So, you've been churning out another show that we call Meet the Nation. Can you talk about what Meet the Nation is and a few of the other shows that you've covered so far?

• 13:34David Hoffman?

  Yeah, yeah. So, keeping up with DeFi is difficult, right? Like, every single week, there's a new announcement. Every single week, there's a new farm. Every single week, there's something new, right? And so, this is a place where people can, from teams, can go and meet the nation, right? Like, teams will come on, explain what they do, explain why they're doing it, explain who they are, and explain what their, like, future roadmap is, right? There's a ton of innovation going on. And frankly, people like to learn visually and with auditory, whatever the sound version of that is. And so, like, YouTube is a great place for this, right? And so, we're gonna start churning out the Meet the Nations. We have Bright ID coming on later today, which actually fits really well with this

• 14:17David Hoffman?

  Gitcoin-themed week, because, and Kevin will talk about it in a second, but Bright ID is this decentralized identity solution, which is really important for this space, right? Like, Ryan, you had a fantastic tweet that was super short, super simple, where you said, "The first phase of crypto is we take back our money, and the second phase of crypto is we take back our identity." And we need a decentralized identity solution like Bright ID in order to do that, right? So, that's gonna be fascinating. We also have the Base team coming on, maybe later this week. There's a little bit of complication there because the DeFi founders are trying to remain anonymous, and so, there's gonna be a little magic going on behind the scenes there. Anthony Sassano. Coming on on Thursday to talk about the token sets index, which is brand new, which I'm

• 14:58David Hoffman?

  super excited about. We just have some great projects lined up. And so if you want some team, some project that you don't understand, or just want to give them more exposure at me on Twitter, I don't ask for being added very frequently. But if you want to see somebody on the meet the nation, let me know and we will get them on the books.

• 15:18Ryan Sean Adams?

  Yes. And if you want a taste of meet the nation to check out the episode on stable credit with Andre that David put out on Friday. David is keeping his promise of going full time bankless and like just churning out this excellent content. So meet the nation is a great way to learn about new projects and what's going on. We've got a lot coming on the podcast too, including an episode with Hugh Carp that's gonna ship next week, an episode on NFTs, an episode on Moloch, just, just a lot of stuff going on. But David, let's start with the question I always ask at the beginning of these state of the nation episodes. What is the state of the nation this week, my friend?

• 15:56David Hoffman?

  The state of the nation is fun ding, funding. We are having fun while we are funding things. And again, this is like the Christmas, except it happens four times a year. So thank you Gitcoin for making Gitcoin a four, a four times a year thing. This is where, and especially this particular, particular quarter, I think is going to be particularly fun, because this is the first quarter that Gitcoin has been a thing during a quote unquote bull market, right? Like, and in addition to this treasuries, DeFi protocol treasuries are also making money and therefore also donating to Gitcoin. So I think this is going to be a particularly fun time in Ethereum in DeFi. This is when the Bitcoin maxies just get super salty that we are just being able to

• 16:39David Hoffman?

  fund ourselves with our own money. And I think it's something that everyone should kind of stop and reflect about Ethereum, because the first thing Ether Ethereum did was it made Ether, it made its own money, and then it made it valuable. And now it's using its own money to fund its own projects, right? So like total self sovereignty, like total independence from anyone else, like, don't need to ask permission, don't doesn't need to go to the banks and say, hey, will you please fund me? We will do it ourselves with Gitcoin.

• 17:07Ryan Sean Adams?

  Yeah, super cool. All right, man. Oh, I think that's the perfect lead in to our first topic. And we're going to talk about also stable credit again, and then a grab bag of other interesting things that are going on in the space. But the main event is talking about Gitcoin and what's going on there and the sustainability of Ethereum. So we brought on the best person we know to talk about this firsthand. So this is, you know, there's, someone told me, David, there's an Apple event going on, right? So I think Kevin O'Wakki is the Steve Jobs of open source grants. So take that, Apple. I hope you're tuning in here, guys, instead of, instead of watching the Apple keynote. Kevin, are you there? It's super awesome to have you on Bankless State of the Nation, my friend. How are things?

• 17:52Speaker 02

  Oi, oi. Hi, Ryan. Hi, David.

• 17:55Ryan Sean Adams?

  Hey, Kevin. Welcome.

• 17:58Speaker 02

  Great to be here. Not very comfortable with the Steve Jobs comparison, but we'll roll. Forgot my black t-shirt and my asshole-ish attitude, but yeah, we'll roll with it. Things are good. Yeah, we just launched Gitcoin Grants over the last 24 hours, round seven. Got 360K of matching funding that we will be distributing to the Ethereum community. And we're going to be distributing it according to quadratic funding, which is a formula that optimizes for the poor and the many and not the rich and the few. So I'm really excited to enable the community to fund itself and to, and, and hopefully, we can create some freelancers who just work for the open internet. I'm really excited to

• 18:43Speaker 02

  be facilitating that with Gitcoin Grants round seven.

• 18:45Ryan Sean Adams?

  Well, that is awesome. We want to talk about all of that. But first, have you got any sleep in the last 24 hours? I know it's like a ship day for Gitcoin, but how are you doing on the sleep side?

• 18:55Speaker 02

  I haven't gotten much sleep, and it's partially because of Gitcoin Grants, but it's also because I have two kids. So used to no sleep already as well.

• 19:06David Hoffman?

  So Kevin, if no one, if somebody's new to the DeFi space and they haven't yet participated in Gitcoin, what is it and why are so many Ethereum people so excited about it?

• 19:17Speaker 02

  For sure. Gitcoin started in 2017 and we never did a token, we never did an ICO or anything. It's just a place where you can get coins in exchange for doing software development. And so we've got a couple of different ways that you can do that. We run a bunch of hackathons that allow you to get coins in exchange for working on hacks that our sponsors put up. And then Gitcoin Grants is kind of like a crypto Patreon where anyone in this space who's doing work that is helpful to the community can create a Gitcoin grant. And then, once per quarter, we put together a matching round of about 300K and we match the contributions to those Gitcoin grants. And what's cool about that is that as funding is coming in from your peers,

• 20:02Speaker 02

  the people who know you best and are funding it, the Ethereum Foundation and other people in the space are matching those contributions. So it's a really great way to raise some money once a quarter for projects that you're doing in the Ethereum space. So far, we've done $6.5 million worth of funding for open source in the last two years. So I'm starting to get to the point where people can quit their jobs and work for the open internet. And so in addition to going bankless, people on Gitcoin are going jobless, which I think is pretty cool.

• 20:33Ryan Sean Adams?

  Yeah, that's super awesome. Okay, so maybe we could talk, so this is the seventh that you've done, the seventh actual grant round. And you mentioned something in the intro there, Kevin. You talked about quadratic funding. What is quadratic funding? How, like, why is it unique? And how does the funding process, I guess, get calculated in these grant rounds?

• 20:57Speaker 02

  Sure. Yeah, with quadratic funding, so typical grant matching campaigns will be one-to-one, which means that if you give $1, then the matching pool will match with the dollar. And quadratic funding is... Actually, can I use a visual aid? I'm not sure how many of the audience actually has visual versus like audio.

• 21:21David Hoffman?

  Yeah, yeah, if you want to share your screen, we can do this.

• 21:24Speaker 02

  Yeah, so, alright, sounds good. So, um, one of the problems that I've had recently is that it's really hard to describe quadratic funding. And one of the things, and like, because it's a math formula. It's basically this math formula that is the mathematically optimal way to fund public goods in a democratic community. And this math formula is that the amount of matching that you receive is proportional to the sum of the square roots of the contributions. Which is, you kind of have to be mathy to really understand why that's powerful. But we released this quadratic funding calculator at wtfisqf.com,

• 22:04Speaker 02

  where I can just quickly demo to you that if I have a grant that is funded with $10 from one contributor and another grant that is funded with $10 contributions, then the matching amount of that second grant that is more democratically popular is going to be way, way, way higher than the one that raised the same amount but from one person. So we have a matching formula that basically optimizes for the poor and the many instead of the rich and the few. And, you know, if you're trying to push power to the edges and remove intermediaries, that's the way you do it with small donations, not from mega funders and not optimizing for whales.

• 22:43David Hoffman?

  So this is like splitting the difference between one person, one vote and $1, one vote, right? And so, like, let it be known that the whole $1, one vote is as old as time. And maybe it's not formalized in any real democracy, but like, purchasing votes is a real thing. And what Gitcoin is doing is just kind of formalizing this as a, in relationship to one person, one vote, right? And so, the cool thing is, if there are a bunch of people that all want to fund this one thing, but maybe for some reason, this one thing is like giving money to poor people. It's like, well, poor people are really interested in that, right? And so, but they don't have the capital to fund that. But this Gitcoin is like the democratizer, the equalizer,

• 23:27David Hoffman?

  that allows for, you know, the people that can only throw a dollar, a couple of dollars, to have a much louder, much more amplified voice.

• 23:36Speaker 02

  Yep, that's pretty much it. And you know, in the blockchain space, I think that we're all about creating more digital democracy and pushing power to the edges, removing intermediary. So it's kind of walking, walking the walk, not just talking the talk. And I'm really super proud that the Ethereum community has started to fund itself this way. Because it's a great way, it's a great way to get new people in the ecosystem that, that are just starting out, get them, get them wet their whistle on, on starting to do Ethereum stuff. In fact, I know that one of our Bankless hosts maybe had gotten their start on Gitcoin grants.

• 24:10David Hoffman?

  No, that is for sure. Before I was Bankless, I was an independent content producer. And I got, and like for me, Gitcoin was the place where I got signaled that my work was actually valued, right? Like, I would post my articles on Medium and then I would get some claps and people would say, hey, nice, nice article. But that's not really the same as like receiving $5,000 in Gitcoin grants. That's a different kind of signal, right? That told, that told me is like, oh, this is something that I can like sustain myself with, right? And so, yeah, I actually recently closed my Gitcoin grant because I no longer need it. And, and I kind of graduated. I consider myself like a Gitcoin graduate.

• 24:50Speaker 02

  There we go. We'll have to, we'll have to meme that eventually.

• 24:53Ryan Sean Adams?

  Do you, do you have like a lot of stories like that, Kevin? Or is David's case fairly common, right? So I've seen some startup teams even, you know, come out of this, Zapper, who is now a Bankless sponsor, is actually, actually one, I recall, funding one of their early Gitcoin grants and they've, they've spun that up and now they have an entire company. Is that a pretty common scenario?

• 25:15Speaker 02

  Yeah, there's, there's certainly a handful of people that made it through the bear market partially on their Gitcoin donations. One of the things that, one of the things that Vitalik is really passionate about is this idea of a quadratic freelancer. So basically, once quadratic funding gets up to enough money, then there's going to be this threshold where anyone making over X thousand dollars per quarter off of Gitcoin can just like quit their job and work for the open internet. And that's kind of our mission is to enable people to quit their jobs and work for the open internet. And it's more important to be able Would provide that funding during a bear market, I think, than during a pool market where people are making money to quit their jobs off of their bags. It's about providing that sort of foundation for people to be able to quit their jobs because their peers respect what they're doing.

• 25:58Speaker 02

  And yeah, there's, there's on the order of six to 12 people that are Gitcoin graduates. And then there's, there's three or four quadratic freelancers right now. So I want to 10x that in the next, in the next three or four years. And you know, I'd really like it if, if we can 10x the number of people who can come into the Ethereum space and do meaningful work. Because we have this, this, this funding mechanism. So still working on that, but right now we're doing about 500K per quarter through Gitcoin grants. And my vision is to be able to do 5 million per quarter through Gitcoin grants. You can do way more quadratic freelancers when that happens.

• 26:33Ryan Sean Adams?

  Okay, can we talk about this? So I am, I'm showing a tweet, or I was showing a tweet, Kevin, where you were talking about the, the current. Let's see, let me click over to it. The, the current quadratic funders, I suppose, who are, you know, funding a lot of this activity and putting their, their money up front. As part of it, and in previous rounds, you've had a couple of, I guess, whale kind of entities that have funded these grants. Consensus has been one, also the Ethereum Foundation has been another.

• 27:13Ryan Sean Adams?

  But what is incredibly exciting to see, at least for me, is that this round, round seven, we're starting to get donations outside of those two core entities. So we're starting to get them from DeFi protocols. Wired, we've talked about a lot on, on Bankless, is actually allocating a percentage of, I believe, their, their entire capital pool to this. Can you talk about that? Like, how did all of this come about? Who are the, the current donors in, in round seven? And how much are we talking? Like, how much growth are we seeing?

• 27:52Speaker 02

  Yeah, for sure. Yeah, so we'd get coin grants was just getting. Off of the ground, a lot of our funding came from the Ethereum Foundation. And small amount of it came from consensus. I think people use those two interchangeably, but it's actually mostly been the Ethereum Foundation. And the, the, the thing, the thing that has been really promising this round is that the mechanism is sort of validated. I mean, Vitalik's written four blog posts about it and we know where the words are and it gets better every round. And so I think we've reached a level of legitimacy in the community where it's like, oh, Gitcoin's not just talking about funding these, these public goods. Gitcoin is actually doing it and they've got this mechanism that's scalable and secure that can do it. And, and, and the other thing that has happened is that ETH is not at $80 anymore.

• 28:37Speaker 02

  So we actually have a lot of protocols that are doing pretty well financially. And so one of the things that, that I, I've been proposing in the governance proposals of Wi-Fi and Yam and other DeFi protocols is, hey, why don't you give back 1% of your treasury to Gitcoin? And not, not to Gitcoin the team, but like to Gitcoin grants. And so, you know, Andre is a Gitcoin alumni from Wi-Fi and several other people in the Ethereum community are Gitcoin alumni. And so there's an opportunity to, to pay it forward and to create the next generation of entrepreneurs who are going to be in the, in the Ethereum space. And also to fund core infrastructure in the Ethereum space.

• 29:21Speaker 02

  And I think that's a rational economic act is if your bags are built on top of Geth and Parity and Lip P2P and ETH1 and MetaMask. And all of these DeFi apps that are open source and maybe some of them don't have business models. It's a rational economic act to make sure that the infrastructure underneath your bags is, is funded. And so we started to see not only DeFi protocols, but major whales in the space like Andre. Robert Lesnar recently donated to, to Gitcoin grants. And so we've actually reached a threshold where more money is coming from the community to fund public goods than the Ethereum Foundation. And that, that makes me really, really happy because the Ethereum Foundation, as great as they are, is not going to exist forever.

• 30:05Speaker 02

  But the DeFi community is going to exist forever. And so if if we can kind of create that altruism as a standard, as a social norm in the Ethereum community, we could potentially fund our public goods in perpetuity. And so, you know, in a blockchain world in which there is no taxation in order to fund public goods, and I don't think there should be taxation, I don't think we should do coercive stuff like like tax people in order to fund our public goods. Then, you know, these donations from these DeFi protocols and from these whales are a super important thing. And, oh, you've pulled up Gitcoin Grants and you can you can sort of see the fellowship of Gitcoin of Gitcoin funders.

• 30:46Speaker 02

  And so it's it's pretty exciting to see these people on on Gitcoin Grants funding the the rounds. Urn Finance has funded 155K Future Fund, Defiance Capital, Mariano from Maker. All of these different people have been giving back with Gitcoin Grants and it's been super promising.

• 31:04Ryan Sean Adams?

  That's huge. And you mentioned some of the, I guess, social norms that are being created, right? So here is here is Kane from Synthetix, who said, let it not let it not be said that I'm susceptible to public shaming. Synthetix is in. And he is he is responding to Andre's lead, who is inviting basically all of these DeFi protocols that, let's call it what it is, have gotten rich in the past, their treasuries have gotten rich in the past six months, to go give back to the the public goods that made all of it possible. So Andre kind of took some some lead and threw down the gauntlet and said, you know, like, wirens in, we're doing this.

• 31:48Ryan Sean Adams?

  It's past our governance, 1%, and now you guys should do it too. And he made the call to like Ave and Balancer and Robert Lechner, and now Kane's jumping in. So it's starting to be sort of this social social norm, as you said, Kevin, that like, hey, if DeFi protocols are getting rich on top of Ethereum, then they need to give back. And it should be opt-in, right? It should be, it's not a forced taxation. Station of public goods, it's it's an optional donation to these public goods. And that's been phenomenal to see. This is really, I think, correct me if I'm wrong, Kevin, but this is the first time we've seen that in in such such a magnitude.

• 32:29Ryan Sean Adams?

  Do you think it's just kind of the the bull market? People have more money to spend and they're they're now able to do that with the success of these D five protocols?

• 32:39Speaker 02

  Yeah, I think that it's partially the bull market. People are feeling a lot more fortunate and, you know, the bull market is not spread evenly. There's a lot of assets from twenty seventeen that are still a bear market, but the ones that are breaking new ground like Wi Fi and compound are certainly doing well. And I think that they feel need to to give back. And I also think it's just the legitimacy of quadratic funding. It's no longer just a paper by Vitalik and Glenn anymore. It's been proven to to work in in the wild. And so it's about having that scalable, credible, credibly neutral mechanism for funding public goods that I think is really important. And, you know, we could get into how that scales later, but to the tens and hundreds of thousands of dollars, it actually has been working pretty well so far.

• 33:21Ryan Sean Adams?

  Well, I just want to talk one one second about the numbers here. So if we had every D five protocol following wirens lead of taking one percent of their treasury and periodically giving that back in the form of of a Gitcoin type donation, right? I mean, have you done the math? Like, how much? How much would that be as these protocols grow?

• 33:45Speaker 02

  Yeah, it's tough because, you know, the the metric that everyone can track is market cap. And I think that for most of these proposals, what we're looking at is how much of their treasury would actually go to fund public goods. And I just don't know what the aggregate amount of treasuries are in in the space. But I I think that it's probably quite substantial and we're talking about the millions of dollars per quarter. So it's possible that I could get to my goal of five million dollars per quarter of public goods just by using treasury funding alone through these D five protocols. But let's not forget, there are also founders who are D five founders and D five whales who are contributing a stake. And that is not connected to to any protocol, protocol related funding.

• 34:28Speaker 02

  And so there's other ways to to pull donations for these things other than just the treasuries. It's just the treasuries are really attractive because they'll exist in perpetuity, which creates, you know, that that stable baseline, I think, is really important.

• 34:42David Hoffman?

  One thing I'm really excited about is the fact that at some point, like we call these Gitcoin grants and donating to Gitcoin. But at some point, especially for the whales, it's straight up rational for them to fund things in Ethereum, right? Like if you are some like 10,000 ETH plus whale, like at some point you need to make sure that the ecosystem surrounding your ether, making your ether more valuable gets funded, right? Can you talk about that a little bit, Kevin?

• 35:10Speaker 02

  Yeah, for sure. You know, we're in a crypto ecosystem which fundamentals increasingly matter. And so if you want Ethereum to have value, it's in your best interest to make sure that there are no black swan events that happen on the Ethereum, in the Ethereum space with the infrastructure layer. But it's also in your best interest to make sure that new DeFi apps are coming out. And because of composability, when you have this compounding value creation in the Ethereum ecosystem. And so if you're a whale and you want to see the Ethereum community succeed, giving to Ethereum public goods is a really great way to do that. Because it just prevents those black swan events and it helps those dApps succeed.

• 35:54Speaker 02

  So Ethereum is growing for many reasons and community is one of them. And I think the community funding the community is a really positive bullish trend for the Ethereum space.

• 36:05David Hoffman?

  Kevin, we have a question coming in from YouTube saying, "Do projects need to get approved to be eligible to get into a Gitcoin grant round? Is it up to the community to weed out projects that do not meet the requirements of a public good?"

• 36:19Speaker 02

  Yeah, so Gitcoin is doing our best to not be a central intermediary that you have to curry favor with in order to be on the platform. Anyone can submit a grant to Gitcoin and we'll probably take a look at it just to make sure it's not outright fraud. And other than that, there's not an approval that you need from me or anyone on my team. And we do have a flagging system wherein people can say, "Hey, I think..." This is maybe a private good, not a public good. And, and you can follow at Gitcoin Disputes on Twitter if you want to get out your popcorn and, and see where the disputes are on the platform.

• 37:03Speaker 02

  A lot of levered out, cut and dry. And so I think that maybe one of the things you'll see from us in the next three months is introducing some sort of governance layer in which the community, community, particularly the community that has funded public goods on Gitcoin can decide whether or not a grant is breaking the rules or not. But for now, you know, for now, it's just, we kind of keep an eye on Twitter and see roughly what the sentiment is. And if someone's doing something that's an outright lie or fraud, then we'll remove them. But it's pretty thin from a governance and approval perspective right now. That's because we don't want to be an intermediary. We want to be credibly neutral. We want the community to decide what to fund. And the great thing about quadratic funding is that it optimizes for what the community sentiment is. So it's already got that built in, that built in resistance to crappy projects.

• 37:48David Hoffman?

  So Kevin, talk about.

• 37:50Ryan Sean Adams?

  Did you, did you guys?

• 37:51David Hoffman?

  Sorry, go ahead, Ryan.

• 37:53Ryan Sean Adams?

  Oh, I just, a quick question on that. I was, I was just wondering, Kevin, did you guys, I used to call it hate voting, right? Which was, you could actually give a negative donation. Is that still in Gitcoin? I know it was in one or two of the previous rounds. Did that work out or not so much? And maybe you could describe what that is. I'm sure you don't call it hate voting.

• 38:12Speaker 02

  Yeah, if I, if I did, then I think we would have rebranded it by now. So the idea, so this is straight out of Glenn and Metallic's paper with, for the quadratic funding paper. And it's called negative voting. And the idea is that the example that I showed you earlier is that if a grant gets 10 contributions from 10 different contributors, then its match will grow much higher. And, and so there's this problem where that can optimize for more controversial figures. Basically, like if, if you're creating a bunch of noise and, you know, 51% of those people really love the work that you're doing, but 49% think that you're being an asshole.

• 38:54Speaker 02

  Then there's no way for those, those contributors who are against you to express their preference other than funding every. Single other grant on the platform except for you. And and so basically, negative voting is just an automated way to fund every other grant on the platform except for you. And we call it negative voting. The idea is that you could you could you could vote with your dollars against a grant. And that money, the money that you pay with would go to the matching round. And it would count against your match total. So those those 10 contributions of $1 are used in my example earlier. If they were 10 negative contributions of $1 each, then it would really reduce your your match amount. And that what that does is it dampens controversial actors.

• 39:39Speaker 02

  And it sort of weeds out from a mechanism design perspective. The people who are not only creating public goods, but creating public bads. Which is, you know, I don't know if Vitalik would approve of the word public bad. It's something I just made up. But it turned out that in in practice, like people are emotional creatures and me voting against you. Kind of goes against the spirit and the ethos of Gitcoin. And so we ended up removing it because of the because it it sort of violated the ethos of Gitcoin. And we haven't, yeah, it's still on, it's it's it's still an unsolved question of basically, how do you dampen the controversial actors? And I think you'll see us evolving our governance in rounds eight, nine, 10, 11, and 12 in order to figure that out.

• 40:22Ryan Sean Adams?

  I can see psychologically how it just felt like that from from a like a human perspective, like you could receive 30 positive contributions, like saying, hey, your freelance work is fantastic. And then that that one negative comes in. And it just it just almost takes away from the 30, right? Like, just in your head, it just it feels like it hurts more, like somebody's actively trying to vote against you. Feels more painful for for whatever reason. I guess that's how we're wired.

• 40:53Speaker 02

  Yeah, and I remember there were some people who were like, it's it's not like a personal thing. I just.

• 40:58Ryan Sean Adams?

  Yeah.

• 40:59Speaker 02

  I you it but like, but then you get tagged in these Twitter threads and like everyone's debating it and it becomes like a a giant thing. And so we just decided the the overwhelming community sentiment was Kevin, please remove this. And so we haven't done it since round five.

• 41:14David Hoffman?

  I'd actually like to express the opposite opinion where, um, gosh, I can't, I can't remember. I was receives the recipient of some negative votes, uh, last time and, you know, again, like it hurts because like, oh, well, that's money. But also at the same time, and what is a part of the ethos of, of, you know, quadratic funding is funding via the market. Right. And, uh, uh, oh yeah, well, maybe I shouldn't, I, I do remember the guy, but maybe I shouldn't name his names. But like he's, I would consider him a friend and I really value the work that he does. And he voted negative on me simply because he perceived the value that I was receiving to be above and beyond the value that I should have received in relationship to others. Right. And so there was no ill will.

• 41:56David Hoffman?

  There was just like, you know, I think the market, the, the guy, the individual said that he thought that the market was overvaluing my work and that other work should be more valued. Uh, and I think that does kind of go in line with the ethos of quadratic funding because that whole thing is trying to get the market to determine how much value should be sent where. So you can actually chalk me up as a pro on the negative voting side of things.

• 42:20Ryan Sean Adams?

  I'm sorry. I negative voted you that one time, David, but thanks for not doxing me.

• 42:26David Hoffman?

  There were actually like three or four people.

• 42:29Ryan Sean Adams?

  It wasn't me.

• 42:32Ryan Sean Adams?

  All right. So, okay. Um, so I guess, you know, how do you, how do you guys prevent some of the cartel activities that are going on? I'm seeing a bunch of questions coming on YouTube about that. Like, so there could be sort of a, a group that, that seeks to promote only their cartel group members on Gitcoin and channel all of kind of the gifts through them. Has that been a problem so far? Or are you just at the scale where you haven't felt that kind of problem? Or do you expect it in the future? What do you, how do you take precautions against it?

• 43:05Speaker 02

  Yeah. Well, let me answer your question with a question. Um, is the meta cartel a cartel?

• 43:11Ryan Sean Adams?

  Well, they have cartel in their name, so yes on that one.

• 43:16Speaker 02

  Okay, but so they're kind of named that in a fun way. But you know, what I meant when I asked that is like, are they doing cartel behavior as in like, when I think of cartel, I think of like trafficking drugs into the country. Whereas I think Metacartel has done some pretty some pretty bomb stuff in the space. And so, you know, the question for me is like, if there's a group of people who like consistently work together to produce value, is it, is that something that that the Gitcoin grants formula should optimize for? And I should say that like, the Metacartel grants do well every single round. And I think that that's a good thing, not, not a bad thing. And I, and I think that the reason why the Metacartel grants do a really good job every

• 43:58Speaker 02

  round is because they're actually providing value, value to the, to the ecosystem. And like I said, medic, quadratic funding optimizes for the poor and the many, not the rich and the few. That's Metacartel. Metacartel is like, other than equal, that's like the entry point into, into the Ethereum space. And so I think it's a good thing that, that Metacartel and groups like that are really done well in quadratic funding. But I do think it's really bad if there is a quid pro quo or some sort of collusion or bribery wherein a person X could say to all of their, all of their Twitter followers, hey, I'll give you each a dollar and contribute 50 cents to my Gitcoin grant and we will,

• 44:43Speaker 02

  and, and I'll give you, you know, you can keep the other 50 cents, but I'll get all this matching fund. And that actually happened two rounds ago. We, we saw that there was a grant that was rising in the rankings really, really fast, especially like relative to its social capital that it had in the ecosystem. And then we looked at all the transactions and it was just one Ethereum account funding 100 people, the money going back. And so we're like, oh, this is, this is a collusion attack. This is a bribery attack. And so we posted this whole long tweet storm about how we were going to consider each of those contributions, or sorry, each of those actors to be one actor. We just collapsed the identity vector down to that one actor because it was just. One person and funding them all. So that's like an example of collusion attack that we aim to prevent.

• 45:27Speaker 02

  And we have some some tripwires built into the system to prevent that. But we also have this thing called a pairwise bonding that Vitalik came up with. And and it's a automatic way that doesn't require like Kevin can sleep through the night and pairwise bonding just works without me having to think about it. Parallels bonding works is that it looks at every group of end contributors in the Bitcoin grants round. And if they are only contributing to the same grants as each other, it realizes that they're colluding and it dampens back their their their contributions. Whereas if everyone is contributing to different grants, like if there's entropy in that um in in that set, then it's considered to be more democratic.

• 46:11Speaker 02

  Contribution pattern. And so pairwise bonding is a way of bonding contributors to each other and figuring out if they're only contributing to the same grants. And if they are, then dampening those those contributions. So there this is an ongoing area of research, but Vitalik is like galaxy brain. Dropping like pairwise bonding stuff on us. We're building a thing called civil rank and collusion rank where we can test what which grants are colluding and which ones are. And we're providing data back to the researchers in order to solve this problem. And and I the way I look at it is as an iterative problem. Right now, we can we can absolutely ward off unsophisticated attacks. We're working on sophisticated attacks. And then like the next level is like nation state level like North Korea, like stopping the

• 46:55Speaker 02

  I don't I don't think that we're doing enough money right now for North Korea to care about Bitcoin grants, but like when we're doing $5 million per quarter, maybe we will be. And it's about it's about every iteration climbing that civil resistance, that collusion resistance stack. And so we've built some sophisticated technology to to take care of it. I don't know if that'll satisfy all the questions that you're getting on YouTube, but we're definitely taking it seriously. And I think that that's that's the TLDR.

• 47:18David Hoffman?

  Absolutely. Any anytime there is a crypto economic protocol, and I would consider quadratic funding and Bitcoin one of those, there is a way to attack it, right? And so this seems like your challenge. So where does Bright ID and decentralized identity fit into the Gitcoin stack?

• 47:35Speaker 02

  Yeah, so Bright ID is an investment that we made this round. And the exciting thing about Bright ID is that it's really hard to forge an identity. So if you remember earlier, I said that 10 contributors that are contributing $1 each to a grant will fare much better than one contributor who is giving $10 to a grant. And that, of course, creates a cryptoeconomic incentive to make up new identities. And so basically, that new identity attack is a sock puppet account. It's called a civil attack. And so basically, there is an ongoing effort to create what's called civil resistance in these systems.

• 48:15Speaker 02

  And Bright ID is this really, this really, really cool mechanism in which you can have DIDs, decentralized identities, that verify each other. So basically, I don't know if you guys, if y'all have Bright ID on your phone, but if you do, I could create a, I could, I could give you my QR code right here. And I could say, hey, scan QR code and let's connect to each other. And identity asserts that your identity is real and your identity asserts that my identity is real. Let me just take off my virtual background so that we can actually scan each other. And so it's about creating identity mechanisms that are, that are not reliant on the government,

• 48:55Speaker 02

  that are reliant on decentralized technology in order to, in order to verify each other. So it looks like David's connected. Oh, you're so connected. Look at this. Look at, look at how clean-shaven and young.

• 49:09Ryan Sean Adams?

  Oh, my God.

• 49:10Speaker 02

  Before he got into the, before he got into the crypto.

• 49:12David Hoffman?

  Fun fact, I'm standing outside of the Wells Fargo Bank headquarters in downtown Seattle.

• 49:18Ryan Sean Adams?

  In that, in that photo, if you zoom out.

• 49:20David Hoffman?

  Yeah.

• 49:21Ryan Sean Adams?

  One day, we'll release the uncut version of that photo, David.

• 49:24Speaker 02

  There you go. I'm your first Bright ID connection, David. So you got to get your DID, your DID rolling.

• 49:30David Hoffman?

  Well, we're doing the Bright ID team on Meet the Nation later today. So I'll have.

• 49:33Ryan Sean Adams?

  Yeah, I want to, I want to watch that, guys. Because what, I feel like Ethereum has talked about decentralized identity for a while. There've been another number of projects that have kind of come and not really gotten traction and kind of gone. Is Bright Idea kind of a different take on this? I guess we'll find out on Meet the Nation, right? But like, what's the, what's the 30 seconds on it?

• 49:56Speaker 02

  And so, Bright ID is an iPhone and Android app that allows you to just sort of assert that you vouch that someone's identity is a real identity. And so through the Gitcoin Grants round, we're going to be populating Bright ID's social graph with them by giving a match bonus to every person who verifies on Bright ID. And we're also going to be hosting Bright ID matching parties every single day in which you can kind of hang out with people, talk about Ethereum, and get each other's identity validated through the app. So I see this, I see Gitcoin Grants as an opportunity to populate Bright ID's social graph. And I am really, really long on taking social graphs and pulling them out of Facebook and giving people control of their own social graph.

• 50:40Speaker 02

  And I think that it's actually a huge, huge, huge, huge investment in digital democracy to be able to tell the difference between humans and bots online. And we can create civil-resistant DAOs and better digital democratic systems once Bright ID takes off. So I'm pretty pumped about Bright ID and the impact it could have as we go west, as we go more bankless. And I think that Bright ID is going to have a pretty strong social graph after this Gitcoin Grants round.

• 51:09Ryan Sean Adams?

  Okay, and so that social graph, the thing you just did with David, right? What that is doing is it's basically tying David's identity, which you have attested to and maybe a number of others in the social graph attest to it, but it's tying that to an Ethereum address, right? So it's saying, this particular decentralized bank account, bankless bank account, is David's. He owns it, he has the private keys. That's what it's doing, right?

• 51:31Speaker 02

  So it's connecting what's called a DID to each other. And, you know, just because we don't want to dox bank accounts, like, people can choose to associate their DID with an Ethereum address, subject to like, Gitcoin will not ever publicly connect your Ethereum address to your DID address because we don't want to dox you. But, um, but, but yeah, it's a DID network.

• 51:52Ryan Sean Adams?

  Very cool. Yeah, that's powerful stuff. Okay, so another, I guess, tech improvement that you guys have come up with this round, Kevin, is you started to incorporate some layer-two payment-type solutions. So, you know, we're saving resources, we're saving gas this round. Can you talk about that?

• 52:11Speaker 02

  Yeah, absolutely. So, gas prices have been high on the Ethereum network for the last month or so. And one of the things that we really wanted to do was make it super easy to transact on Gitcoin grants this round. And so, basically, when you check out, like, say you have a bunch of Gitcoin grants in your cart, you can go and we basically will give now two checkout options for you. You're able to either check out on Layer 1 on the Ethereum network, or we allow you to deposit some funds into Layer 2, this technology called ZK Sync. And once you've got the funds in ZK Sync, it is almost free to contribute on Gitcoin grants.

• 52:56Speaker 02

  And so, I've been loading up 100 dye at a time into ZK Sync, and then every time I check out, I can check out for pennies, which is really an amazing thing. And I don't think, I think that when people complain about Ethereum not scaling, they don't realize that Layer 2 is here today. Like, we integrated Layer 2 without having to wait for ETH 2, without having to wait for starting, without having to wait for proof of state. Layer 2 is here today, Ethereum is scaling today, and we've proven it by putting ZK Sync on Gitcoin grants. So, yeah, check out once or twice with each checkout option and compare and contrast the experience. I think that the technology is ready today. And the cool thing about ZK Sync is not only is it faster, but it also has almost the security guarantees of Layer 1.

• 53:40Speaker 02

  These optimists, or these zero-knowledge rollups have like a pretty strong, have a pretty strong security guarantee in them. So, I'm pretty pumped on that as well.

• 53:49Ryan Sean Adams?

  And this is all from the Loopring team, right? ZK Sync?

• 53:53Speaker 02

  ZK Sync is a zero-knowledge rollup, and Loopring is another zero-knowledge rollup protocol. We're actually planning on doing Loopring in round 8, which will be in two months. So, they're different projects.

• 54:04Ryan Sean Adams?

  Gotcha. Okay, so, I've got a screen up right here, Kevin. So, can you kind of show how it works, how it's different? So, EIP1559, big fan. I'm a big fan, Kevin. I want to give some money to EIP1559 because I want that sweet ETH scarcity engine to start getting activated. Do I just add this to cart and then I have an option to check out? Is that what I'm doing here?

• 54:29Speaker 02

  Yeah, that's right. If you click add to cart, then you'll see a little sidebar that will load a that grant into your cart. And then typically, people will go shopping and add a couple of different grants to to to their cart. But when you're ready to check out, you click that checkout button. Right there. And then that should take.

• 54:51Speaker 02

  And then that should take you to the cart page in which you'll be given an option to do ZK checkout or bulk checkout.

• 54:57Ryan Sean Adams?

  Okay.

• 54:57Speaker 02

  It's it's loading right now.

• 54:59Ryan Sean Adams?

  So I've just decided to give $1 to EIP1559, which hopefully will get quadratically matched with tons of other.

• 55:06Speaker 02

  Yeah.

• 55:07Ryan Sean Adams?

  Likely. Givers. Likely. Very likely.

• 55:10Speaker 02

  Yeah.

• 55:11Ryan Sean Adams?

  Popular one.

• 55:12Speaker 02

  So this is actually a bad one to do as an example, because I've been talking to Tim and he was like, we raised enough money in the last round, and we're not going to be participating in this round. So there is a CLR match for EIP1559. Um, but but yes, in general, that's the general use case. Um, seems like your cart is a little bit slow, and I'm wondering if that's on our end. I've been doing a lot of performance hacking the last week or so, but you also have a lot of tabs open, so I don't know.

• 55:37Ryan Sean Adams?

  Yeah, I do, and it slows it down. All right, so we can maybe imagine I'm getting a bad gateway, so we can maybe imagine what happens. So anyway, I got to the cart, right? And then I'm just presented an option to either check out, like, you know, to to to do the transaction on main chain or ZK sync. And if ZK sync, then there's an initial fee, right? Like, I have to pay some gas costs to to create this new ZK sync account.

• 56:02Speaker 02

  Here, um, let let me actually, I'll maybe fund the bankless grant right here. Um, and and by the way, on that, on that gateway that you got, I have to, I have to admit that I'm deploying something right now. And that may be why, that may be why you got the the gateway. Anyway, so, yes, add a couple of grants to your to your cart right here. I'm going to add ETH hub and crypto economics study to the uh, to my cart as well. Of course, bankless, because I want more people to go west. And and as I go to the cart right here, I will see the three grants that. I added to cart right here and I am going to tell Bankless, great job.

• 56:45Speaker 02

  ETH Hub, great job. And I'm going to tell Crypto Economics Study that I love the mission of their project because I love crypto economics. I'm going to fund each of them with 15 DAI instead of five DAI. And then, as promised, I will have the option to checkout with ZK Sync, which is the Layer 2 technology. Or I can checkout with the standard checkout, which is the Layer 1 technology. And so basically, the way it works is that if I if I check out with ZK Sync, which is the Layer 2 technology, I just have to sign a couple of messages. And these are just signatures. They're not actually Ethereum transactions. They're just me signing that I own the Gitcoin account.

• 57:28Speaker 02

  And then I click this donation transaction button, which is also a signature that is going to be going to broadcast to the ZK Sync network. And so basically, the estimated processing time for this transaction is under one minute. And I'm barely going to pay any gas because it's a Layer 2 piece of technology. Look, sending transfer one of four, and it's going to take less than a minute to do. So I think that that's the sort of the power of Layer 2 is that I'm able to check out in a matter of 15 seconds without paying a ton of gas fee. And this is, of course, live in the Ethereum network today. So I'm pretty pumped about that.

• 58:11Ryan Sean Adams?

  That is awesome. That sounds huge.

• 58:13David Hoffman?

  Beautiful. Beautiful. Kevin, if people want to go donate, where should they go?

• 58:21Speaker 02

  Just go to getcoin.co/grants if you want to fund public goods in the Ethereum ecosystem and send us a tweet on Twitter at @getcoin.

• 58:31Ryan Sean Adams?

  Thanks so much, Kevin. You know, the last thing I just want to say about this is it feels like what you've created and what the Ethereum ecosystem is creating is a sustainable way to fund Ethereum development protocol, public goods, without issuance, without increased issuance, without a forced taxation. And it strikes me that entire ETH killer projects have been born based on this premise, that there needs to be a mandated public goods funding process and kind of a dev fund as part of the core protocol. Ethereum has always said, no, like that's, that would remove the credible neutrality of the system, right?

• 59:15Ryan Sean Adams?

  We can't, you know, park issuance into a dev fund because then who votes where the money goes? And, and this is essentially creating an opt-in way to do that, to fund public goods without increasing the issuance or supply of Ethereum. It just seems super like, like a big deal that this is happening all organically. What's your take on that?

• 59:40Speaker 02

  I think that you're, you're right that it's a positive thing to fund public goods without coercive taxation. One of the things that I've been trying to do is sort of break, when people hear, let's fund public goods, they think of, they think of coercive government taxation. And I think that that's a relic of the industrial era. In the information age, we're going to be able to fund our public goods without taxation. Doesn't feel, it feels, it makes real organic from the outside, but for me, it's not like pushing a boulder uphill for three years. And like, thankfully, we're finally starting to get over the hill and it's starting to get some momentum with Andre and Kane and Brian Lester and all these amazing people donating

• 1:00:19Speaker 02

  to public goods on the Ethereum ecosystem. But yeah, I think it's a super positive thing that people are realizing that they're standing on the shoulders of giants. And we're all building on top of open source software and we're starting to support each other because that's the kind of community that I want to live in. I want to live in a world in which, in which there is open source software that, that I can clone it down. For free and those other public goods that I'm just really passionate about, you know, clean air has been a real big one in the United States for the last for the last couple of weeks with the entire West being on fire. I think that you don't realize that you don't have public goods until they're gone, until you're until you're breathing smoky air or, you know, you're stuck with Windows XP phone. You don't realize how much value you get out of public

• 1:01:04Speaker 02

  goods. And so I just want to make sure that that my kids grow up in a world where public goods are well funded and and that's kind of what we're doing with Gitcoin. It's been a super satisfying project to work on.

• 1:01:15David Hoffman?

  Kevin, I want to take a moment and tease our future upcoming episode on the Bankless Pod. We're going to bring you on to talk about meditations on Moloch and how human coordination failure is the biggest threat to humanity and how Gitcoin and a couple other interesting strategies going around in the crypto world can offer a tool to slay Moloch. There is a lot of things I just said that we haven't yet talked about on the Bankless Pod, but get used to it because we're going to be talking about these things. Also, Amin Soleimani, respond to my messages because we want you on it.

• 1:01:52Ryan Sean Adams?

  All right, awesome, Kevin. Thanks so much. Thanks for spending the time. So we have Bankless Nation. We have a couple more topics to cover, but before we do, we're going to get to some additional sponsor ad slots that David has put together.

• 1:02:05David Hoffman?

  Cool. All right. Thanks, Kevin.

• 1:02:09David Hoffman?

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• 1:02:50David Hoffman?

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• 1:03:32David Hoffman?

  And this works for not just Ethereum, but for Bitcoin, for Litecoin, for any blockchain that works with Unstoppable Domains. You can even tell Bitcoiners to send you Bitcoin to davidhoffman.eth. They even allow you to set up uncensorable websites that are always accessible, even if the Chinese nation-state doesn't want them to be. Check them out at unstoppabledomains.com.

• 1:03:56Ryan Sean Adams?

  All right, David, that was just fantastic with Kevin. I'm super bullish on what the Ethereum ecosystem is creating there, and its sustainability moving forward. You know something else I'm bullish on? But I'm not sure exactly all of the details, but is this a stable credit system that Y earn is rolling out? You did a video with Andre from Y earn about this on Friday. I watched the video. I think I like, I 80% feel like I understand it, but not 100%. What is this thing? How would you summarize it, David? What is the stable credit system that Y earn is putting in place? It seems like some kind of a stablecoin. Is it more than that, too?

• 1:04:41David Hoffman?

  Yeah, it is a whole bunch of things, and that's why people are having such a hard time explaining it. And I think we're not really going to know what it is until it's out in production, right? Until it's actually deployed on mainnet. But yes, at the end of the day, it is a new stablecoin, and it is a new protocol for generating that. stablecoin, right? And so it's kind of a it's just a collection of many different primitives that we've all seen in the DeFi space stuck together, right? And this is the beauty of composability and open source engineering, right? And so what it is, I've kind of in my mind, considered it like a Maker Dow 3.0, right? Sorry, sorry to call it the new and improved Maker,

• 1:05:26David Hoffman?

  but it kind of is what it is. And so it's Maker, it's a new multi collateral depositing system that balances assets organically using the bonding curves à la Uniswap, right? And so it's like Maker multi collateral DAI in the sense that you can use many different assets to deposit into a into a protocol. And then that protocol incentivizes or disincentivizes assets that are under or overutilized, right? And so if too many people have done had have submitted link and not very many people have submitted Ave, it will incentivize a rebalancing of that. And and as

• 1:06:07David Hoffman?

  a result, it will produce stable credit USD, which is a stablecoin that is pegged to the dollar via the chain link oracle system. And so this is highly dependent on chain link oracles, which kind of makes me a little bit nervous, but so far so good with chain link. And so think of it like a combination of multi collateral DAI of a borrowing lending protocol like compound or Ave, mixed with an AMM utilization market that also produces a new stablecoin using chain link oracles to price the stablecoin. So it's all three of these things all at once.

• 1:06:46Ryan Sean Adams?

  Okay, all right. So I'm gonna try to wrap my head around what you just said. So first of all, there's a stablecoin that comes out the other the other side of this, like a DAI, basically, right? And that that stablecoin is a asset backed stablecoin like DAI. So it's, you know, it's not like a USDC, which has Actual dollars, US dollars in a bank account somewhere that Coinbase maintains and owns. This is backed by other tokens, other DeFi assets in the same way that DAI is, right?

• 1:07:21David Hoffman?

  Exactly.

• 1:07:22Ryan Sean Adams?

  Okay. All right. So I'm with you so far. And then like multi-collateral DAI, you can put basically any asset that the protocol supports inside of it. So

• 1:07:32David Hoffman?

  Yes.

• 1:07:33Ryan Sean Adams?

  I could put USTC in, I could put ETH in, I could put DAI in, I could put LINK in, whatever I want that is an ERC20 that the protocol accepts. Is that true?

• 1:07:43David Hoffman?

  Yes. And the protocol accepts things that have chain link oracles. So you can't just mint your own brand new token.

• 1:07:50Ryan Sean Adams?

  Got it.

• 1:07:51David Hoffman?

  You can't just randomly just mint shitcoin and a trillion supply and then drain the whole system because that that thing won't have a chain link oracle. So it needs to have a chain link price oracle.

• 1:08:00Ryan Sean Adams?

  So it has that oracle, I guess, dependency or weakness, right? But to be fair, so does DAI. It's just, um, DAI is dependent on maker's oracle system rather than, rather than chain link.

• 1:08:11David Hoffman?

  Right.

• 1:08:11Ryan Sean Adams?

  Okay. So I'm with you there. So we produced this, this stablecoin and it, it, it's also a, um, a credit system, I suppose. So if I have some asset that I don't want to sell and I want to borrow against that asset, uh, anything that chain link supports, I can deposit that into a collateral debt position, a CDP, right?

• 1:08:32David Hoffman?

  Mm hmm.

• 1:08:33Ryan Sean Adams?

  Uh, of some sort and I can, um, then borrow against that. Is that correct?

• 1:08:37David Hoffman?

  Yes, that's all right.

• 1:08:39Ryan Sean Adams?

  Okay. All right. And then the, the rates of this thing, like, um, how, how does that work? Like, so, uh, who determines what the, I guess, the interest fees should be? Is that all algorithmically determined by like Andre's money robots?

• 1:08:54David Hoffman?

  Yes, it's algorithmically determined. And I think that's where the AMM style utilization ratio comes into play. And so, uh, it, and it also uses Uniswap directly, like the actual Uniswap exchanges. I don't know how that works. That's kind of where I get lost, right? But it also uses this utilization ratio to incentivize, uh, depositing of one asset that's underutilized and not depositing the one asset if it's overutilized. And I'm assuming there's variable interest rates as we've gone to expect from Compound and Ave, integrated with that as well. But that's kind of where I'm, I'm a little bit confused as to how the whole system works.

• 1:09:31Ryan Sean Adams?

  Okay, so I'm increasingly a big fan of this Urine Finance newsletter. It comes around weekly and it's sort of, it's almost a full-time job to keep up with everything that Urine is doing just in and of itself. So this does a good job of that. And they described it as stable credit as a synthesis between what you're describing, synthetic debt, like a DAI.

• 1:09:53Ryan Sean Adams?

  But it's also like synthetics because it's all one, I guess, pool of collateral. That you're borrowing against and kind of synthesizes all of these things. And it's also like a lending protocol that we talked about. And it's also like there's an automated market maker that comes embedded inside of it. So what's the source of demand for this new stable credit dollar system? Is that like, adoption has been tricky for DAI.

• 1:10:24Ryan Sean Adams?

  How is adoption of stable credit going to work?

• 1:10:27David Hoffman?

  Yeah.

• 1:10:28Ryan Sean Adams?

  Is it embedded in Urine in some way?

• 1:10:30David Hoffman?

  So this whole stable credit system is actually totally agnostic from Urine. So it doesn't have any specific relationship to Urine, except for the fact that Andre created it, right? And he created it because he needed a place to deposit all of Urine's capital. Because Urine has been so incredibly successful that it's overflown all of the various places to like get yield from, right? And so Andre just solved this problem by making this stable credit system. Except the whole point of the USD new decentralized stablecoin is actually a byproduct, an afterthought. It's not the whole point of the protocol. The whole point of the protocol is to just be a place to submit assets and capital to.

• 1:11:15David Hoffman?

  Which is actually something that I'm just, I just think that's hilarious. Because like, Urine Finance is so incredibly successful that it has too much capital. So the guy that made Urine Finance just created his own protocol, a brand new protocol to submit all this extra capital to in order to further yield, right? And so, and again, I don't know where kind of these numbers come from. We'll figure it out when it's actually live in production. But with Urine, this is- This is now a fantastic, no ceiling place to submit capital, right? And, and so like, what was limiting prior was Maker DAO had a limited amount of DAI it can produce, which is why the DAI part price is so high. Uh, and so it couldn't, it couldn't leverage all that much capital, right?

• 1:11:59David Hoffman?

  The Y ETH vault received like $300,000 or 300,000 ETH in like the first three days and maxed out the utilization of Maker DAO, right? And so Andre is like, well, all the, I've maxed out the utilization of all these other DeFi protocols. So I'm going to make my own that doesn't have a cap on utilization. It only, the only cap is the balance.

• 1:12:20Ryan Sean Adams?

  Okay, that's, that, that, that feels like that's really a big deal.

• 1:12:24David Hoffman?

  It is a big deal.

• 1:12:25Ryan Sean Adams?

  Because, because the, the prop, the challenge with Maker and with DAI, uh, to this point, aside from governance challenges and those sorts of things of like having people have, have been sort of tweak the knobs. Uh, when there's, you know, demand or, or supply changes with, with DAI. But scalability has been the, the, the main issue, right? And you're saying that, you know, so the scalability of DAI always has kind of a cap based on demand for, uh, CDPs, for instance.

• 1:12:55David Hoffman?

  Right.

• 1:12:56Ryan Sean Adams?

  But this doesn't have that. Risk parameters for me, but this doesn't have that.

• 1:13:00David Hoffman?

  Right. This doesn't have governance, which is insanely awesome thing. There's no governance over this thing. It just is. If it has a chain link oracle, it works.

• 1:13:10Ryan Sean Adams?

  Okay. Okay. So, and the reason it can have no, it doesn't need governance is because it has this AMM embedded inside of it that essentially like market adjusts everything on the fly.

• 1:13:22David Hoffman?

  Yep. Mm-hmm. And, and, and I mean, chain link to some degree is itself a governance platform, but also not really. And so like all of these non-governance tools are all available to Andre, who just stitched them all together to create stable credit USD.

• 1:13:36Ryan Sean Adams?

  Okay. So like, you know how we're always talking about, um, if only, if only we had a decentralized, highly scalable, uh, stablecoin, like, um, that, that would be the holy grail, right? Vitalik's talked about this and, and the, the key being that it would be also governance free.

• 1:13:55David Hoffman?

  Yep.

• 1:13:55Ryan Sean Adams?

  Right? So that it would be more scalable.

• 1:13:57David Hoffman?

  Yep.

• 1:13:58Ryan Sean Adams?

  Um, is that what this is? I mean, like,

• 1:14:01David Hoffman?

  I think so. I think that's what this is. Again, I can't say for certain because I'm not a 150 IQ genius like Andre is. But like, that's what it seems to be? Question mark? I guess so. We'll find out.

• 1:14:17Ryan Sean Adams?

  Wow. If so, if so, that could be huge. And when we say we'll find out, the contracts, Merck contracts are already written.

• 1:14:27David Hoffman?

  Right.

• 1:14:28Ryan Sean Adams?

  It just looks like there's some-

• 1:14:29David Hoffman?

  Already built. We're just waiting for the UI. It's insane, dude.

• 1:14:34Ryan Sean Adams?

  Okay. So this is a, this could be a really big deal then. It's basically a new decentralized stablecoin that has no governance. Its only dependency is this chain link oracle. But aside from that, which is somewhat apples to apples with Maker, just a different oracle system. It, it doesn't have a ceiling in terms of its scalability.

• 1:14:53David Hoffman?

  Yeah.

• 1:14:53Ryan Sean Adams?

  It can just kind of algorithmically adjust and go up or go down. I guess the only scalability limiter would be the, the amount of ERC 20s.

• 1:15:02David Hoffman?

  Yep.

• 1:15:02Ryan Sean Adams?

  Essentially, the economic bandwidth of the Ethereum chain.

• 1:15:07David Hoffman?

  Right.

• 1:15:08Ryan Sean Adams?

  Which is like aggregate of all ERC 20s plus aggregate of the value of ETH. That's essentially the economic bandwidth of Ethereum.

• 1:15:16David Hoffman?

  Yep.

• 1:15:17Ryan Sean Adams?

  And that's the only scale limiter.

• 1:15:18David Hoffman?

  Right.

• 1:15:18Ryan Sean Adams?

  Now we just scale out the value of all of these things.

• 1:15:21David Hoffman?

  Literally hit the internal capacity ceiling. There is no, there is no ceiling other than Ethereum itself.

• 1:15:30Ryan Sean Adams?

  That's pretty bullish, man. That's pretty, that's pretty huge.

• 1:15:32David Hoffman?

  Like, again, like I'm trying to contain myself because I don't want to like get a little bit out over my ski tips with like something I only understand like 80% of. And maybe 80% is generous, but like, it could just be like the biggest thing of, of the last like 12 months.

• 1:15:49Ryan Sean Adams?

  Wow. Okay. We'll have to see. We'll have to see when it, when it ships. That could be super exciting. I mean, it's been sort of the holy grail we've all been looking for. In terms of a decentralized stablecoin that didn't have a, you know, scalability limiter. So-

• 1:16:01David Hoffman?

  And how it came about is just so incredibly hilarious. Andre was like, I kind of need this. And so I'll just build it.

• 1:16:08Ryan Sean Adams?

  Yeah, and what's cool, though, is it is, it is, there's an element of standing on the shoulders of giants, right?

• 1:16:14David Hoffman?

  Yes, very much.

• 1:16:15Ryan Sean Adams?

  Like, you're stitching together concepts that are in synthetics, that die, and Maker pioneered, and then also Uniswap. Without those three components, this would not have been possible, right? It's back to that analogy of like, you're in a video game and there's a tech tree and you have to like unlock these three things before you can unlock that other thing that comes later.

• 1:16:34David Hoffman?

  That's right.

• 1:16:35Ryan Sean Adams?

  This is that other thing.

• 1:16:36David Hoffman?

  That's right, that's right.

• 1:16:37Ryan Sean Adams?

  All right, man, that's cool. All right, well.

• 1:16:39David Hoffman?

  It's hilarious.

• 1:16:40Ryan Sean Adams?

  Yeah. Yeah, very good, very good. I mean, all we have to do is just like, you know, track what Andre is doing and then that seems like the solutions just emerged from his brain. He's just like a melting pot of all that.

• 1:16:51David Hoffman?

  Yep.

• 1:16:52Ryan Sean Adams?

  All right, cool. Let's talk about our last thing, and this is like a smorgasbord of, I guess, a few topics that have come up recently. But one is this, so just this morning, MicroStrategy, which is a publicly traded US company, they're in the business analytics, intelligence space, kind of a B2B company. They're, they're piling on more Bitcoin on their balance sheet, right? So of course, all of these publicly traded companies, they have balance sheets, generally, they have like, you know, T-bills, bonds, sovereign debt, some cash positions.

• 1:17:28Ryan Sean Adams?

  This, this company and its CEO has decided to take that balance sheet and actually buy Bitcoin with it rather than fiat-based, fiat-based bonds and, and, and cash. It's, that seems pretty crazy. Like, what's going on here?

• 1:17:46David Hoffman?

  Yeah, the crazy thing, this is the second time that this has happened with MicroStrategy, right? And so like, maybe it was a month ago or so, kind of hard to tell, and during COVID times, but COVID and DeFi times, but roughly a month ago. MicroStrategy announced that they are going to put like, something like 300, 250 million dollars worth of Bitcoin on their balance sheet. It's like 0.1% of all Bitcoins, right? And that was, that was like the biggest news, and I wrote a whole entire article based off of it, Bitcoin and Bitcoin's Prisoners' Dilemma, good article, go read it. And the whole idea is that like, how many companies does it take to purchase 0.1% of all Bitcoins out there before there turns into be like a supply-side liquidity crisis of Bitcoin, right?

• 1:18:28David Hoffman?

  And like Paul Tudor Jones did this, and then and then MicroStrategy just did it. And then before before we hear about a third company doing it, MicroStrategy just does it again, right? They just added more onto their balance sheet of Bitcoin, right? And so here here's what's going on, is that the CEOs or the people in charge of this company, MicroStrategy, are just huge Bitcoin bulls, right? Bitcoin, the mind virus of Bitcoin is infiltrating companies and leadership of companies with balance sheets who are seeing the money printer go brrr. And they are saying, you know what? Putting Bitcoin on the balance sheet, buying 1%, 0.1% of all the Bitcoins out there, those are ours. Uh, we're never gonna give them up, um, never gonna let you down.

• 1:19:09David Hoffman?

  And then all and then all like, how many times does this does this need to get repeated? Before there turns into just like a massive scarcity event of Bitcoin? Because all the all the people, all the companies are having uh, strong interests in protecting themselves from inflation.

• 1:19:27Ryan Sean Adams?

  So it's this guy right here, this guy, Michael uh, Saylor.

• 1:19:31David Hoffman?

  Looks like a Bitcoin bull.

• 1:19:33Ryan Sean Adams?

  He is super bullish, so he, as you said, they already purchased a whole bunch of Bitcoin, but now they just added 175 million more for an aggregate total of 425 million. This is a publicly traded company that has decided to enter the the game, that is, the scarcity game that is Bitcoin, essentially, like, you know, you might call it a Ponzi game, but I mean that in kind of a good way, it's definitely a scarcity game, there's only 21 million. Everyone's kind of playing, publicly traded companies are doing this. How soon until central banks start to do it, right? So this is maybe the first one that's starting to to meet headlines, other publicly traded

• 1:20:13Ryan Sean Adams?

  companies may join, and then do we have small nation states that start to play this game too?

• 1:20:20David Hoffman?

  It's a game of musical chairs, sir. Whoever wants to go first. And it seems like, I don't really think people saw that publicly traded companies would be the first to go. I think that's kind of a surprise and that's kind of why this is big news. Because I think you're right. I think some people, for some reason, thought that nation states and central banks were going to go first. But no, I think it's a much more of a bottom-up revolution, right? And in that bottom-up revolution, companies with balance sheets come before nation states and central banks, right? And I think they're going to be the last ones to buy Bitcoin, right? They're going to be the bag buyers who are buying million-dollar Bitcoin, right? And companies with treasuries and balance sheets are just going to go first. They can move faster, they can move quicker, they can deploy capital sooner. And so they're adding Bitcoin to their balance sheet.

• 1:21:05David Hoffman?

  The Bitcoin's working its way up.

• 1:21:07Ryan Sean Adams?

  That feels bullish. Feels bullish crypto, feels bullish Bitcoin. All right, let's talk about something else too. So another metric that I've been monitoring for quite a while is this metric that CoinMetrix puts together. So a great analytics company, CoinMetrix, they have like charts you can go see. They're free. But they put together this metric for adjusted transfer value. And this is a comparison of Bitcoin in red versus Ether in green. And adjusted transfer value, it basically just means the amount of Bitcoin that was transferred or the amount of Ether that was transferred in the network in dollar value, right?

• 1:21:49Ryan Sean Adams?

  So something interesting just happened recently that hasn't happened since, I think briefly, in 2018, like the first quarter of 2018. And that is the value transferred on the Ethereum network in Ether, native units of Ether, has exceeded the value transfer on the Bitcoin network of Bitcoin. So the reason that is so huge is because this value transfer is happening without any bank, without any sovereign nation state. It is a pure trustless transfer from like one, I guess, peer, like one...

• 1:22:29Ryan Sean Adams?

  Smart contract or individual or capital pool in the network to another. And it's also with a non-sovereign store of value. So that's what Bitcoin is on its network and what Ether is on its network. So it's it's essentially the the most bankless value transfer besides maybe like moving blocks of gold.

• 1:22:49David Hoffman?

  Right.

• 1:22:51Ryan Sean Adams?

  That like can occur. And I think it's it's bullish for Ether that it is starting to exceed the adjusted value transfer of Bitcoin here. And I'm going to continue to to monitor that. But to me, that is the story of Ether's trustless collateral fueling DeFi. That's why you're seeing a lot of this growth. This is the story that we talked about a lot on Bankless of Ether's money in the same way Bitcoin is is money on its network. So yeah, really cool data point to see and I think bullish Ether on this one.

• 1:23:24David Hoffman?

  You can you can see the rise of DeFi, right? And right at the end of this graph here, you can just see it. And and like that is the power of an internal ecosystem versus an external one like Bitcoin is five plus years older than Ethereum. And so it has the the tailwinds of people of like companies putting it on their treasury. And Ethereum's equivalent of that is its internal DeFi ecosystem with, you know, unsatisfiable demand for Ether.

• 1:23:54Ryan Sean Adams?

  Yeah, yeah, we'll see how this plays out. It does. It does seem like some of the Bankless thesis is is coming through in the in the data here in the in the metrics here. But here's kind of a bear case for Ethereum. I suppose that's a narrative that's running rampant. I want to get your take on it. So CZ, here's my take right here, but CZ, who is the CEO of Binance, is has created an Ethereum killer, right? Essentially. So this is a Binance smart contract platform called the Binance Smart Chain, I believe. And it even has its own EtherScan, basically, BSC scan, where you can kind of see it is it is run by.

• 1:24:40Ryan Sean Adams?

  Yeah, you could see like this looks just like EtherScan, but it is Binance Chain. And CZ basically makes the argument that, hey, gas prices are too high. I'm going to put together a hundred million dollar ecosystem fund and go lure DeFi apps here. You've got Yams, you've got, you know, these, you know, games in the Ethereum world. You could just play those on Binance at a reduced price. And all you have to do is trust our 21 validators, right?

• 1:25:09David Hoffman?

  21?

• 1:25:11Ryan Sean Adams?

  Yes, so this is, these are the validators.

• 1:25:16Ryan Sean Adams?

  Yeah, and there can only be 21, so it's a delegated proof of stake style network where BNB, which is the Binance issued, I guess pseudo security loyalty coin, you might call it, is essentially the, the reserve currency asset and the thing that is securing this entire network. So CZ makes the case that you should come to the Binance Chain. It is a better version of Ethereum because it is, it is more scalable. And I think he's making the case that essentially it's, the projects can be vetted. It's not bulletproof, but you know, less, less frauds, less scams because CZ and Co vet it. And then you get like, I don't know, ultimate rewards because you could do something with staking

• 1:26:00Ryan Sean Adams?

  your BNB and earn multiple rewards simultaneously. Hard to ignore, he says. What's your take on this, David?

• 1:26:07David Hoffman?

  Yeah, so I, I don't want to, there, there is room for something like this. Like, there's room for C-Fi and there's room for whatever C, DeFi is. Call it decentralization theater, but call, or call it just what it is. It's just a more centralized version of Ethereum. Maybe it also has customer support too. So like, you know, people like that, right? And maybe, maybe this is what Tether is, like somebody accidentally sent a million dollars to the wrong Tether contract or the wrong Uniswap contract. And then Paul, Paulo Arduino of Tether was like, yo, DM me and I will get you your money back. Right? So there are advantages to C, DeFi.

• 1:26:49David Hoffman?

  It's just not going to replace Ethereum. It's not going to replace the whole, the actual real thing, right? Like for some, for some certain use cases, I'm sure that it will be beneficial. But no, it's not going to replace DeFi. It's not going to replace like, I, I often view this whole world as a landscape. And there are different peaks and valleys of value along this landscape, right? And so maybe there's a peak on some pseudo DeFi-ness with some like centralized backstops, like being able to retrieve funds or, or have, have customer support or whatever. I'm sure there's value there. But according to the protocol sync thesis, which has literally never been wrong ever, the, the value peak at the DeFi end of the spectrum is just way too high to ignore.

• 1:27:32David Hoffman?

  So like, again, tip of the hat to CZ for building. He, he's done, he's built something cool. Uh, and it's going to remain over there where the DeFi zone isn't. So that's my take.

• 1:27:44Ryan Sean Adams?

  Yeah, that, that, yeah, that's a good take. Yeah. It's kind of like the, I guess we've used the AOL analogy, right? So, but, but also according to the protocol sync, like the way we would expect this to play out is it's basically a, a bank centric, far less credibly neutral chain than something like Ethereum, right? So like art, art, I think the protocol sync thesis take would be that Ethereum remains kind of the, the base, settlement layer, right? So if you're a, if you're a competitor to Coinbase, say you're a Gemini or, or if you're a competitor to Binance, say you're a Gemini or you're a Coinbase or you're a Kraken, uh, you are not incented to build on Binance's, uh, Binance chain with BNB

• 1:28:28Ryan Sean Adams?

  as the reserve currency, the money.

• 1:28:32David Hoffman?

  Somebody else's like equity token, basically.

• 1:28:35Ryan Sean Adams?

  Exactly. You want to build on the most credibly neutral system. So like unless Binance kind of runs the world, uh, and is the only chain in existence, um, the protocol sync thesis would, would predict that a much more credible, credibly neutral settlement layer will, will persist, right? We'll have to see how that plays out. I guess the, the counter argument to that or the bear. Argument to that is that basically like people don't care about decentralization, David. They care about like permissionless programmable money, whether that's BNB or whether that's something else. It doesn't really matter. They just want fast transactions and they want to be able to to build on top of it.

• 1:29:16Ryan Sean Adams?

  In, you know, in the composable way that that something like Ethereum has allowed them to to build on top of. So that would be the bear cases. I guess we'll have to see how it plays out. I mean, I.

• 1:29:27David Hoffman?

  Yeah, it's gonna be. Yeah, you're right. It's gonna be a patiently wait and see. And we've been playing this game ever since like, I think EO started it in 2017, where like the faster, quicker, slightly more, not slightly, significantly more centralized versions of Ethereum are going to come and take all of Ethereum's economic activity, you know? And like, I guess we're going to continue to, we've been waiting and seeing for three and a half years now. I guess we'll continue to wait and see for the next three and a half years. At some point, some further people are going to capitulate, like over the last like six months, a lot of Bitcoiners have capitulated to DeFi. And I think that a lot of Ethereum killers of the 2017, 2018, 2019 class have capitulated to becoming Ethereum's L2 or sidechain.

• 1:30:13David Hoffman?

  And I guess we have this new wave of Ethereum killers who I guess we're just gonna have to wait and see. But like, I've been waiting and seeing for a while now, so I already know where I'm at.

• 1:30:23Ryan Sean Adams?

  Yeah, hasn't happened yet, so we'll have to see. Critical sync thesis has held up pretty well so far. We'll see if that continues. Hey, last thing we should chat about is this really cool index that Set, Token Set just came out with. So this is the DeFi Pulse Index. So you talked about capitulation here. You know, this may help retail, I guess, and even institutional investors capitulate into DeFi. Can you talk about what this is?

• 1:30:54David Hoffman?

  Yeah, also, Ryan, your camera is frozen on my end. If you are sharing your screen, I'm not seeing it. But I'll talk about what it is. The DeFi, this is coming out of Set Protocol and Anthony Cizano is coming on the Meet the Nation on Thursday to talk about this. But this is something that I think is really, really cool and could be an asset that becomes foundational. There we go. Now I see it. Could become like foundational to the rest of DeFi, right? A DeFi index token, right? And there's so many conversations to have about this.

• 1:31:26David Hoffman?

  But like something that a single asset that tracks the general value of DeFi is fantastic. And in the same way that Urn simplifies things for yield farmers, I think this DeFi index will simplify things that, you know, people are hot on DeFi. I'm getting texts about DeFi from friends. You're getting texts about DeFi from friends. Now we don't have to tell anyone it's like, hey, like this is, this is what Urn is. This is what Eastland is. This is what Synthetix is. This is what Compound is. It's like, you know, shut up. Just go buy the index. Like you're hot on DeFi. Go buy the DeFi index. This is a product for you.

• 1:31:59Ryan Sean Adams?

  And people are, people are used to like ETFs, right? Index funds, exchange traded funds in their brokerage. And this is basically a token that you buy. There's, here's the current price right now. It's $119 and it gives you exposure to all of these underlying assets. According to, is it according to David, the total value locked on DeFi Pulse? Or is it according to the market cap of these respective tokens?

• 1:32:26David Hoffman?

  Hmm, that is a good question. I think it's the market cap of the token because I'm pretty sure Ave is number one on total value locked. I think it has double the amount of whatever Urn has. So I think this is just an aggregate of the value of the market cap of these specific tokens.

• 1:32:41Ryan Sean Adams?

  Yep, that's what, that's what it's saying in the summary here. So it's basically like overweighting 26% of what you'd be purchasing is Wi-Fi right now because it is 26% of the market cap of these top DeFi tokens. And you have Ave, you have Synthetix, you have Compound. It's just a great way to kind of buy the, the DeFi market in one fell swoop. Super cool stuff.

• 1:33:02David Hoffman?

  This is, excuse my, excuse my wordage here, but this is such a big dick move from SET because like, we know that in like the S and P 500, like companies are like two, fighting tooth and nail to get included in the S and P 500. Because if you're in the S and P 500, that means you can be included in a lot more funds and a lot more investment strategies. If you're outside of the S and P 500, you're kind of like a nobody, right? And so now there's like this curated list of approved DeFi tokens that everyone's going to be, I feel bad for Anthony or whoever's doing like support at. Token sets because they're going to be like, hey, people are going to be knocking on the door. Hey, will you let us into the DeFi token set like index because we want to be in there.

• 1:33:44David Hoffman?

  This is going to be a hot commodity and I would expect that that these specific tokens get some sort of a pump just because maybe over the over the long term, not over the short term. But you know, just the fact that this index includes these tokens is bullish for these tokens specifically.

• 1:34:01Ryan Sean Adams?

  Yeah, you'll notice, for instance, a link isn't here. So I bet the link marines might have something to say about that.

• 1:34:08David Hoffman?

  Spicy, spicy.

• 1:34:09Ryan Sean Adams?

  We'll see. All right, David. Well, we have covered a whole bunch of things today from Gitcoin all the way to MicroStrategy buying Bitcoin all the way to token sets here. So I think we should we should wrap it up for this state of the nation.

• 1:34:22David Hoffman?

  Absolutely. This was a this was a long one, but absolutely jam packed full of good content. So thanks, everyone, for listening to this week's State of the Nation. This State of the Nation is funding. We are having fun funding.

• 1:34:36Ryan Sean Adams?

  All right, man. Risk in disclaimers. ETH is risky, of course, so is crypto. DeFi is risky. Even assets like ETH and Bitcoin are risky, but so are smart contracts. You could lose what you're putting in. But as Kevin said, we are headed west. This is the frontier. It's not for everyone. But we're excited you're with us on the Bankless journey. Thanks a lot.