EIP1559 SmartCon Panel | DC Investor, SquishChaos, James Wang

Smart Contract Summit, hosted by Chainlink Labs, is the biggest smart contract event of the year with leading speakers and projects across DeFi, the NFT economy, and the larger blockchain industry. Check out the other discussions here: https://www.smartcontractsummit.io/ ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap ------ 📣 PoolTogether | DeFi's No-Loss Lottery Protocol https://bankless.cc/PoolTogether ------ Resources: DC Investor on Twitter: https://twitter.com/iamDCinvestor?s=20 SquishChaos on Twitter: https://twitter.com/SquishChaos?s=20 James Wang on Twitter: https://twitter.com/draecomino?s=20 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:07Ryan Sean Adams?

  Hey guys, this is Ryan Sean Adams. I'm here with David Hoffman. We are broadcasting live at the SmartCon Summit. This is, if you're here with us now, this is the EIP 1559 panel, the perfect day to do it. The Ethereum network has just hard forked its London upgrade and deployed a number of features, including EIP 1559, which is a feature that's been long awaited by the Ethereum community. And we have three EIP 1559 bulls here to talk about it on the panel. So this is a panel with three EIP bulls moderated by two other EIP 1559 bulls. It's David and myself.

• 0:47Ryan Sean Adams?

  Guys, this is broadcasting, as I said, live at SmartCon. We also have this broadcasting live on Bankless YouTube. It'll be available in a Bankless podcast as well. We couldn't be more excited to be here. I want to introduce our panelists to you now. The first is James Wang. James is previously an analyst at Ark Invest. He's written a number of works, many that emphasize the real world financial reporting that Ethereum offers to the world. He's argued that Ethereum is not just a cryptocurrency, but a global software platform with applications, customers, and revenue. You may have read one of his previous quarterly reports for Ethereum that he publishes on his Substack.

• 1:28Ryan Sean Adams?

  He recently joined Amun as the head of tokens and Amun builds a crypto index products for the Ethereum ecosystem and beyond. James, welcome to the panel. It's great to have you, sir.

• 1:41Speaker 01

  Thank you, Ryan. Love everything you guys have done for Ethereum and DeFi and can't wait to chat with you guys.

• 1:46Ryan Sean Adams?

  Well, we love what you are doing, sir. I want to introduce our next panelist, Squish Chaos, internal medicine resident at University of Colorado. But you may have known him because he wrote this fantastic, almost 80-page report on Ether. He famously coined the phrase "triple halving" to describe the upcoming upgrades that Ethereum is getting to its monetary policy. He also wrote one of David's favorite lines, I think, "Ethereum should dream bigger dreams," is what Squish Chaos said. Here's the dream of EIP 1559 here today. Squish, it's great to have you on the panel.

• 2:19Speaker 02

  Great to be here. Thanks for having me.

• 2:21Ryan Sean Adams?

  Our third panelist as well, DC Investor. DC is a longtime Ethereum bull. He's also an NFT collector, maybe connoisseur. DC was the first to put a Crypto Punk as his Twitter avatar, one of the very first. And even before that, he was emphasizing the importance of ETH as an asset. I don't know now whether he's more bullish on ETH or NFTs. Hopefully, we find out. I know he's bullish on EIP1559, and maybe they all tie together in some way. DC, it's great to have you on the panel.

• 2:50Speaker 03

  Thanks, Ryan. Thanks, David. Excited to be here.

• 2:53Ryan Sean Adams?

  Oh, man. We are excited to have this panel because just this morning, EIP1559 went live. It's been live for about six whole hours. It's in the rearview mirror now. We are actively burning ETH. I'm just looking on a website called ultrasound.money. We're almost at 2,000 ETH that we've burnt in the last six hours. I want to start with this question. How does it feel to be in Ethereum at this point? Like, how do you feel about this upgrade? DC, why don't you start?

• 3:20Speaker 03

  I'm feeling great. And to me, it's incredible. Ethereum is just hitting on all cylinders. And it started when we got the ETH2 beacon chain live. And now, we have, with EIP1559, we've dramatically improved user experience, and we are further hardening ETH as an economic asset, which I think is critically important to the future of Ethereum and to the utility of Ethereum. And now, you know, we're going to be laser focused on ending proof of work and moving to proof of stake. So I couldn't be more optimistic on Ethereum at this point.

• 3:54Ryan Sean Adams?

  James, what do you think? Do you share that optimism?

• 3:57Speaker 01

  Yeah, totally. I view this as a product launch. You know, my background is a product marketing guy. I worked in the field for about nine years. And you know, you always knew ahead of time when you're preparing for something, when you're about to release a new product that's going to fundamentally change the trajectory of your business. Like, when we launched the first CUDA GPU and Nvidia became a generalized processor, and it could be used for everything, from like, embodied simulations, eventually, to crypto mining. But you knew that ahead of everyone else. What makes Ethereum unique is that it is a software platform that you can build upon, and there is a group of super talented people. Led by a Messiah that is able to actually execute on that vision. I know, you know, we've had a lot of questions about the execution ability of Ethereum and this really puts that to rest.

• 4:40Speaker 01

  You know, Nvidia was such a key lesson in what execution means. When we were competing, there was like 50 other companies making graphics cards. Nvidia is the only one left today that does that, right? So being able to execute and really launch ambitious products, that's the biggest predictor of your long-term success. Not any static notes. So to me, this is such a milestone release. And it really puts to bed those discussions about execution and allows us to look forward to kind of the merge and everything else down the pipeline.

• 5:09Ryan Sean Adams?

  There you go. Massive product release for Ethereum boils out some of the execution risk. Squish, what's your take on this? How does it feel to be in Ethereum at this point?

• 5:19Speaker 02

  Yeah, it's pretty amazing. I'm fairly new to the Ethereum community. Really getting into things just a few months ago when I published my report. And so I haven't seen a lot of the execution from that's been done previously on the network. It's the first major upgrade that I have been able to see. And obviously, like I wrote about it a few months ago, but this is an idea that was in the works years ago. Before I had any clue what was going on in the Ethereum world. So just to see it all pan out and to see it panning out in the midst of this big drawdown we've had. Just see that kind of engine of innovation just keep chugging. It's been pretty remarkable. And just to echo what James was saying.

• 6:03Speaker 02

  The way that you know the difference between a product that's going to succeed and fail is by these kind of milestones where you can say, okay, like this is a concrete achievement that shows that the development team can actually get things done. And I think that that evidence already existed and that was a big part of my thesis. But to see a milestone kind of come out after I got into Ethereum and became a real big part of this, it's just, it's fantastic to see.

• 6:30David Hoffman?

  So gentlemen, I want to actually ask this very open-ended question, especially to this panel specifically, because we have such a broad range of people that have come into the Ethereum ecosystem, the Ethereum community at different phases. And so, in your opinion, now that EIP 1559 is such a major upgrade, it's in the rearview mirror, it worked, we're burning Ether, and we are now having like one of the two very important ingredients for Ether as ultrasound money. And overall, the Ethereum ecosystem is also growing in its own direction. In your opinion, where are we in Ethereum history? And which is such a broad question, I want to kind of leave that to you, the panelists, as to how you want to define that. And DC, as the person I think came here earliest out of anyone on the panel, I want to throw that to you first.

• 7:14David Hoffman?

  Where are we in Ethereum history?

• 7:17Speaker 03

  So I think we're actually a super interesting and pivotal moment in Ethereum's history. And I would actually chalk up the implementation of EIP 1559 as one of the four most significant events in Ethereum history. And the other ones are the DAO fork, which I think people are probably familiar with very early on in Ethereum's history, the rejection of EIP 999, where there was a move or a suggestion that the parity multi-sig funds would be recovered. So that was kind of a rejection of this idea of tampering with the chain in situations like that. The third was probably when the Ethereum community rejected the inclusion of Prague Pao as the hashing algorithm.

• 8:01Speaker 03

  And now, the implementation of EIP 1559, which I think that why this is notable is because, one, this EIP had tremendous community input and support. And it's been through a long process, years long, of being vetted and analyzed to determine if it's worthwhile. And now that it's implemented, it's finally, finally created this positive feedback loop, where usage of Ethereum now directly accrues value to Ether as an asset. And not necessarily price, financial value, we don't know what that looks like, but it creates economic value for Ether as an asset by making it more scarce. I think this is a critical moment that will be reflected on for decades from now, to

• 8:46Speaker 03

  be honest.

• 8:47David Hoffman?

  James, who used to be an analyst over at Arc Invest, which I've always appreciated Arc's more nuanced take as to new technologies in this world. So from your opinion, where are we in Ethereum history?

• 8:58Speaker 01

  The first thing that Ethereum reminded me of, the reason why I kind of quit DeFi, or quit C-Fi to join DeFi was really, it was so obvious that Ethereum was turning out to be a computing platform and a technology. But you know, the most successful cloud computing platform is AWS. It's not a perfect analogy, as I kind of dug into the details, but it does give you a sense of the scale and potential. AWS didn't start as a computing platform, it started as a storage platform. The first service it launched was a service called S3, Simple Storage. And this is like, you know, one of the things that AIP 1559 achieves, that it gives this kind of elastic block size, right? It's able to absorb more computation based on demand. I think this is just like the very, very beginning of building up a

• 9:43Speaker 01

  compute infrastructure. Right now Ethereum itself hasn't scaled. To scale, it needs to go to ETH2. This is really an optimization for ETH1 right now. And that to me is how early it is, right? Right now Ethereum, the amount of developers building on it is tiny, is almost not visible compared to the number of programmers in the world. So for me, it's like Ethereum has made a very important software change that makes the system much more robust and self-regulating. But ultimately, like, the really amazing applications that's going to be built on top have barely begun. We have like a handful of them. We have like Uniswap and Maker and Chainlink. But like, the real ecosystem takes off when the value

• 10:25Speaker 01

  of the software above the ecosystem is worth more and more, takes up more mind share than the base layer itself, right? Nobody thinks about AWS today as a consumer. We just use Netflix and the bits just stream through like, you know, like water. We don't think about it. That's the moment of success and we're like not even 2% there. That's why I'm so excited to like wait for that future to arrive.

• 10:48David Hoffman?

  Squish is one of the younger members in the Ethereum community, yet also one of the people that's written the most lengthy and in-depth report on Ethereum and Ether. Where would you say that we are in Ethereum history? And also, where do you see us going?

• 11:01Speaker 02

  Yeah, I would definitely agree. I think it's it's early. And one of the coolest things I've gone through just learning about it is seeing all of the different elements of the Ethereum kind of infrastructure kind of be developed and see how people are thinking about it. And so I guess I would point to like five different elements. There's the security model, scalability, it's the second one, the user experience, the product infrastructure, what you can kind of do with it. And then the fifth thing would just be adoption. And when you look at all of these elements, it's very clear to me that kind of throughout Ethereum's history, people have been thinking about all five of these elements. But today, we're at this pretty incredible junction,

• 11:46Speaker 02

  where moving forward, a lot of really pivotal events are going to happen for each for each angle. So for security, we're moving from proof of work to proof of stake. And then you can kind of see beyond that a little bit to see staking derivatives and trying to further decentralize through those. For scalability, layer twos are already coming out right now, but we're already seeing direct layer two onboarding and sharding is kind of on the horizon. For user experience, obviously, EIP 1559 is a huge part of that. But we're also seeing future EIPs like 3074 and app

• 12:25Speaker 02

  level improvements as well. Infrastructure, we're seeing new products, whether you can collateralize everything now, you can fractionalize NFTs. And then we're starting to see the beginnings of some regulatory infrastructure, which some people are really worried about. But if I want in the future, an NFT to hold legal rights or legal value, we're going to need some of that regulatory infrastructure, too. Finally, adoption. I think DC spoke to this, but for ETH as an asset to be adopted, kind of as an investment asset, EIP 1559 just changes the way that it accrues value. And as a project, you know, when I got into this, I thought it was all about DeFi. And just in the last month, I

• 13:10Speaker 02

  Started to see there's a huge aspect of adoption around NFTs that doesn't really require the DeFi engine to be perfect before it gets off the ground. And so I guess this is all just to say that we're just in the thick of things. There's so much more in the future than there's been in the past, but we've already come so far. And so it's really great to kind of see where this whole project is going.

• 13:36Ryan Sean Adams?

  You guys are awesome. Just fantastic panels so far. I want to ask this next question. Maybe we'll start with you, Squish, but you know, you wrote a paper called The Triple Havening, right? And you clearly know the importance of narratives. You know, James talked about Ethereum as, you know, and framed it through the lens of, you know, if you were valuing this as a company with quarterly earnings, what would it look like? And DC has been talking for a long time about ETH as an asset, ETH as money, store of value. So I want to ask you about a narrative question. James was talking earlier about the execution risk that has maybe been boiled out of Ethereum. And I think that's interesting because it strikes me that Ethereum has had a negative narrative. Ethereum doesn't ship. Where is proof of stake?

• 14:21Ryan Sean Adams?

  Like where EIP 1559, it's been three years. Where is it? And I want to ask you a question about how the execution narrative has changed. But even more broadly, maybe how has the narrative for Ethereum changed within the broader markets? The importance of narratives in crypto, like no one has to tell anyone listening how important they are with analysts, with investors, with like the developer community. So Squish, my question to you is, how do you think the narrative changes for Ethereum post EIP 1559 shipping?

• 14:57Speaker 02

  Yeah, I mean, I think the first thing I would say is I completely agree. I think narratives are incredibly important, but it's not just because we want Ethereum to be better as an investment asset, because that's not really what we're looking for as Ethereum investors. We're not really looking for the asset price to far outpace the actual value of the network. We just think the network is incredibly valuable. And so we just want it to be fairly priced and we think that's much higher. So in in my view, the narrative plays a role, not really in convincing investors so much, but actually just convincing like culture. We want adoption of of the network as a part of society, and we want people to build that infrastructure. And if they're only going to build that infrastructure, if we show them why it's interesting. As far as how EIP

• 15:42Speaker 02

  1559 changes the execution narrative, I think execution is a really tricky subject. In the real world, we see this all the time, and people, I guess, somehow forget when they're applying it to crypto. You can have failed product launches, and that really sets projects back. So, you know, if if you roll out a new car and it starts exploding, like that's you're done. And so you you have to test things, you have to validate things before you roll them out. And if that takes extra time, it's time well spent. And we've seen that a little bit recently. And there's a project called Thor Chain that recently went through a number of of kind of highly publicized hacks. And so I think EIP 1559

• 16:27Speaker 02

  and and honestly, like a number of the the prior updates show that the the Ethereum team is taking its time, but not because there's nothing there. They're taking the time because they're building something valuable. Right? And so we've had I and I actually just posted a thread on this, but there's been a number of articles about kind of fast merge options where developers, including Vitalik, have talked about, look, if we want to merge tomorrow, like, we can make that happen. It's just not a good idea if we want to avoid errors. And so if we really prioritize the value of the network, we should take our time. So I would encourage people to look at the time it's taking to

• 17:05Speaker 02

  ship as just an important part of like responsible process and see EIP 1559 as evidence that progress is being made. If you're not seeing it, it's not because it's being hidden from you. Look at the developer meetings, like, watch the meetings, like, become a part of this ecosystem. It's all public and decentralized. So nothing's being hidden from you, but products take time to launch. And I'm really glad that the developers are taking the approach that they are.

• 17:35Ryan Sean Adams?

  James, how about you? I'm interested, same question. How do you think the narrative changes in a post-EIP 1559 world for Ethereum?

• 17:43Speaker 01

  First, I'll agree with Squish that, you know, 1559 took longer to develop, but for good reason, right? The risk is now higher than when Ethereum was just a child. And it's funny, because it took three years from Vitalik's first post to now, because it had this three-year, like, debate and research in the public process of vetting out this idea. Because you don't know if the idea is good, even if it's coming from Vitalik, just with a post. And, you know, a protocol that is always touting its process for vetting out, like, theories, Cardano, right? Cardano is like, "Oh, you know, we have this peer-reviewed process with university professors." Now, I will take a bunch of squishes in a forum debating each other, actually writing

• 18:25Speaker 01

  code, over any bunch of ivory-tower university professors writing peer-reviewed paper. Because this is real skin in the game, right? You're building protocols that actually affect economic livelihood for yourself and for others in the system. And you're, like, affecting changes, whereas professors are, like, mostly in a zero-sum status game. So I think this three-year process has been very healthy. On the execution front, I would just say that execution is not something that is mostly interesting, looking back. It's mostly looking forward. The reason why Nvidia beat everyone was because it shipped new chips every six months for, like, five years. So the real question is, going forward, can Ethereum's developer community continue to ship every six months, or whatever cadence it is, right?

• 19:07Speaker 01

  Like, whether it hits the merge date, how well that goes is going to be very telling. You build up execution credibility by repeatedly hitting it, not by, you know, retrospectively hitting a few milestones. So I think that's very key. At some point, you know, people talk about the protocol ossifying, and maybe, you know, just because the low-hanging fruit is picked, the rate of innovation will slow down a little bit. At that point, the determinant of success is going to shift from purely kind of shifting or shipping new code to almost like more boring, like biz dev and onboarding the rest of the world's GDP. That's a very different skill set. I think Ethereum has been okay at that skill set, but it's no one's been fantastic. Maybe some of the more

• 19:51Speaker 01

  tradFi companies or Ripple has been a little bit more better at that in spirit at least. But at some point Ethereum is going to have to like just do like the integrations with the boring offline world. And things like chain link are really important to do that, those integrations. So I think execute until we get to ETH to prove the economic model. Maybe we'll have some better ideas to put in and then, and then concurrent with that, really ramp up the sensibility of we have to integrate with reality and the rest of the economy. So that we can bring the whole internet base onto Ethereum.

• 20:21Ryan Sean Adams?

  You see, how about you? So how does the narrative game change for Ethereum post EIP 1559? We've talked a lot about execution risk, but aside from execution risk, how does the narrative change for ETH as an asset?

• 20:32Speaker 03

  I think the narrative is don't bet against Ethereum. And I think what we've seen is how Ethereum has really become an emergent phenomenon. And when problems arise, there is a really diverse and resilient ecosystem that steps up to solve it. And you can't say that a lot about a lot of ecosystems in the space right now. I think Ethereum is very special in that regard. Now, did I, did I ever doubt that EIP 1559 would be implemented? To be honest, yeah, even 1.5 like a year and a half ago, I was like, you know, oh, is this going to happen? Are we going to see it? Or is ETH one kind of ossified in a way where it can't get a change like this implemented? And we're just going to have to wait for ETH two. But I think what we saw was the community stepped up.

• 21:17Speaker 03

  Some key developers stepped up and we got it done. And I do want to kind of reinforce like, because I know from the outside, it's easy to look in Ethereum development and say, oh, it's so slow and it's so time consuming. But what you have to understand is this kind of decentralized development is extremely tricky. This is, this is not like a company developing a software product. It really is about building consensus among researchers, among the community, among the node operators. And you have to get everyone on the same page and agree that a change is worthwhile and valuable to the network. And you have, you have to do that, not, you have to do that across multiple clients. As well, and that is part of the difficulty of doing things in Ethereum, but that is also

• 21:59Speaker 03

  the bedrock of its legitimacy. And that is why Ethereum is so legitimate and is valued as this decentralized network. So if anything, to me, it's kind of reinforced that point of view about Ethereum as that decentralized, truly decentralized network, especially versus some of the other participants that are in the space. And I think fundamentally, this really does change the value proposition of Ether as an asset. I talked about it earlier, but now you have usage that is directly driving value back to Ether as an asset. And when we see the use cases that have gained the most traction, a lot of it boils down to that decentralized economy. So the more strong of a decentralized asset we have,

• 22:41Speaker 03

  the more uses we can find for it in DeFi and in other applications. So I'm hugely bullish on this for Ether and the Ethereum ecosystem as a whole.

• 22:50Ryan Sean Adams?

  So I know David is about to ask a question about ETH asset, but I'm curious because what you said just triggered something there for me, DC. So like, there was a time you were skeptical that EIP 1559 would ship. I'm just wondering with the rest of the panel, show of hands, who also went through times where they were skeptical EIP 1559 would ship?

• 23:12Ryan Sean Adams?

  James and Squish.

• 23:15Speaker 03

  Just you and me.

• 23:17Speaker 01

  We're young and foolish, you know, we came in relatively early. We've never seen what sluggish like narratives look like.

• 23:23Ryan Sean Adams?

  I love it. I love it. Us old guys, DC, that's us.

• 23:27Speaker 03

  I know, that's how it goes.

• 23:29David Hoffman?

  All right, you guys are violating the one rule of don't bet against Ethereum, but I guess it took us a while to learn that.

• 23:35Ryan Sean Adams?

  Learned my lesson, sir. Just inform me now.

• 23:39David Hoffman?

  The answer is that I just heard out of the panelists just talked about various, in my mind, just talked about various different ways that the Ethereum process and the Ethereum community is just like a very magical, rich environment. But in the world of crypto, it's hard to illustrate that to the newcomers, especially in such a short, like, short succinct argument. When people come into the world of crypto, they pull up websites like CoinMarketCap, and then they see Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash.

• 24:08David Hoffman?

  How do you guys explain the difference between Ether and the rest of the assets in the Ethereum or in the crypto world? And how does EIP 1559 help or change how you guys explain that? And James, I'll start with you. How is Ether a different asset from all the other assets we find in the crypto world?

• 24:29Speaker 01

  It's a very tough question, honestly. And I agree, this is like the first thing that comes up. I think maybe the first point is to delineate between Bitcoin and Ethereum. And we've done this many, I mean, you've guys done this many times over at Bankless. But essentially, it's a difference between a very fixed value proposition with Bitcoin and store value and Ethereum, which is a call it a moderate, moderate plus programmable software platform. And it's like, I don't think we should try to sell people on Ethereum per se. We should just give them things to do that will make the value self-evident to them. So instead of trying to tell them, hey, here's the difference between Ethereum and EOS or, you know, Tether, sorry, or Tezos.

• 25:14Speaker 01

  I'll be like, hey, would you like to deposit 1,000 US dollars at six, I don't know, whatever is the prevailing rate, 10% APY? That is possible and it takes about five clicks. And that actually triggers a much more productive process with them because it's something they can understand because they've interfaced with the bank. They know the interest rate is 0.5% in the US or some minus percent in Europe, right? Which is absurd. And then you get them to move the money from their bank account to MetaMask. And then next thing they're in a year vault or compound and it is going 5, 10%. And the next question, of course, is why? And then we can get to the mechanism of where the yields come from in DeFi and what does blockchains have anything to do with this?

• 25:57Speaker 01

  The other thing you can do is just to have them experience the magic of ENS. I've been just trying to onboard my friends to ENS and it's remarkably hard. I would think it's super easy. I'm like, did you want the first Hotmail account? Did you want to be called like, I don't know, [email protected]? If, you know, if you had it, that was awesome or Gmail like, but if you didn't, now you're, you know, One two three at gmail dot com. Getting the first like E N S account with a name without a number is actually still possible, which is incredible, right? You can get a five character E N S address that works not just for sending ETH from point to point in the world, which is impossible before, but it even works across Bitcoin and Litecoin. It's a multi coin address. It is email for money that's instantaneous and and is small enough.

• 26:42Speaker 01

  You can put it on your business card. So I try to expose people to these use cases. That's why I wrote that article, five actually useful things you can do with Ethereum with crypto in 2021. And then you can, if people are interested, backstep to theory. Starting from theory, I think is very challenging.

• 26:58David Hoffman?

  Squish, you wrote 80 pages on Ether, the asset. So in those 80 pages, how do you, how did you separate Ether, the asset from all the other tokens and coins and currencies that we find in this industry?

• 27:11Speaker 02

  Yeah, I mean, Ether, the asset is different because of its ecosystem. It has, it has just the most vibrant economy. It's being used. And ultimately, unlike a lot of the other assets, the activity on the network is going to drive asset prices and has driven asset prices today. So I think that's the biggest difference. I think when you buy a lot of these smaller tokens, you're buying kind of like hopes for the future. When you buy Ethereum, you're buying like current people who are today choosing to burn. How many ETH has been burned already?

• 27:48David Hoffman?

  Probably over 2000, yeah.

• 27:49Speaker 02

  Right. And that's like in the last few hours, based on just organic network activity. That's what you're buying. It's proven they're taking their own dollars and they're burning it to get the value out of the network. And then just kind of going back to like, what makes Ether, the asset different? E I P 1559, right? So just very concretely.

• 28:10Speaker 02

  Before EIP 1559, if you bought Ether not as an investment asset, but you just bought it to pay as gas, the act of buying it, that's demand and that's going to push up the price. But then if you're using that Ether as gas, that gas goes to miners and miners have to sell it and that pushes down the price. And you don't get this very high, very efficient value transfer. The fees aren't really going to the asset very well. And with EIP 1559, when you buy one ETH and you spend it as gas, miners are only able to sell 0.7 ETH, you know, something like that. There's a net positive effect from using Ether as gas that wasn't there before.

• 28:52Speaker 02

  And so where before, I think a lot of these assets were being driven primarily from buyers who were buying as an investment, holding it and kind of net allowing the price to increase. EIP 1559 really makes Ethereum different than all the other tokens because now we're seeing that Ethereum, the network, has more activity than everyone else. And that activity is going to efficiently trickle into the ETH asset itself, which is just fundamentally distinct than anything else.

• 29:24David Hoffman?

  EC, I'm super interested in hearing your take on this. How is Ether different and unique from all the other assets you find on CoinGecko or CoinMarketCap? And maybe also, how does EIP 1559 help differentiate it as an asset?

• 29:36Speaker 03

  So as an asset, I think Ether is unique in Ethereum and in the space overall. Because, and I've talked a lot about this idea of this natively programmable asset with minimal trust assumptions. And you really can't find, I don't think the broader market has realized this, but I wrote a tweet yesterday saying, pretty much my entire investment thesis is underpinned by this idea that the market is mispricing these natively programmable store of value assets. Because I think they're going to offer tremendous utility to the world of DeFi. And as the lines blur between DeFi and just normal finance, having that bedrock collateral asset is going to be hugely important and valuable. And really Ether is the only candidate for.

• 30:20Speaker 03

  For that because everything else basically has some kind of like trust assumption or you're expect there's some kind of roadmap, especially if we're talking about fungible tokens. This is very often the case. Anyway, actually, I think NFTs are like an interesting in the middle case where they don't necessarily have additional assumptions, but Ether is unique for those reasons. But secondly, it's also extremely liquid. I mean, there are days when Ether volume exceeds that of Bitcoin regularly now, and you need that kind of liquidity for that kind of asset in order to drive significant economic activity. So those are a couple of the things that I'm thinking about, and I expect we're going to see even more use of Ether for those purposes on the heels of EIP 1559.

• 31:03David Hoffman?

  DC, allegedly, you are a big fan of NFTs. And so how does the NFT world, which for all of its intents and purposes is largely an Ethereum native phenomenon and recently over the last few weeks or so, and I think we're actually watching one right now, we've seen the gas, the great price for Ethereum spike up to levels as high as 1500 Gwei, which is absolutely insane. And overall, NFTs have become really alive lately in the last few weeks and months or so. Tell us about the intersection between EIP 1559 and the NFT economy. When you combine those two things, what do we get?

• 31:39Speaker 03

  So yeah, I've got a couple of NFTs, and I think the first thing that I'll say is EIP 1559 makes the chain much easier to use for a newcomer. And I'm much more inclined now to recommend even to newcomers who have never used Ethereum before to go on, try, submit a transaction, do something where that's grabbing ENS, buying the NFT or whatever. Before I had trepidation in doing that, especially for someone who wasn't that technical, because 80% of the time their first experience was a stuck transaction, and it might not clear for a long time. Sometimes, like not ever, I mean, it feels like not ever. And so that is going to go away for the most part. There are still situations where that can happen, but it's going to be the exception,

• 32:20Speaker 03

  not the rule. But I think I do want to kind of reinforce this idea because I know NFT auctions have gotten a bit of a bad rap because like, well, it drives up gas prices. That Ethereum's It's actually the fault of the way that the NFTs are being issued in a lot of cases. What you see happening is they're using a gas price auction as the buyer selection mechanism. So rather than pricing their NFTs appropriately, so that people buy them and people are get people are paying close to the value that is provided by them. They are instead seeing, oh, this NFT is really valuable and I can buy it for point one ETH, but I can also sell it for one ether directly after the drop, right? So that basically gives them point nine worth of ETH that they could spend on gas or and still net a profit or something like that.

• 33:06Speaker 03

  That is the problem. And that's why you see gas prices surge during some of these. I think that kind of model is actually going to be phased out, so I don't see that persisting. And I know we've talked about this a little bit, but I think it is important to note that EIP one five five nine is not really expected to affect gas prices in like a meaningful way. Though it will reduce the incidence of these bidding wars where people keep bidding on top of each other, because if people mostly pay the base fee, that's going to be more accessible to more participants. But during periods of high demand, I do think it reinforces this positive feedback loop on ETH that we've talked about a lot. And I I know we just talked about this a second ago, but it's just this idea of ether as this scarce programmable asset.

• 33:46Speaker 03

  I think you're going to see some more demand around NFTs for some of these really high value NFTs. You're going to see them increasingly used as economic collateral, which is just like totally untapped space that a lot of people are not ready for yet. But Ethereum is going to be the best fundable version of that, but you'll have NFTs alongside that as well.

• 34:07Ryan Sean Adams?

  As I want to ask this next question to Squish. So what what's interesting, of course, is the Ethereum roadmap doesn't end here, right? In fact, we have another major catalyst sometime in the next maybe six to 12 months or so. That is what we are calling the merge and the end of a proof of work issuance and the full migration to the beacon chain of proof of stake. Squish, you put out this idea of the triple halving, right? And I I want to like find out from you at what point we are in the cycle and what's coming in the future. So is this the the first halving in the triple halving? Or like, where are we now? And what's coming ahead for the Ethereum roadmap as part of the framework that you've laid out?

• 34:52Speaker 02

  Yeah, so first, this is a 30% reduction in cell pressure. So it's around half of the effect of a Bitcoin halving. And then the other 2.5 halvings come from the proof of stake merge, which is why the merge is such an important thing for price. And obviously, it's the linchpin of my thesis. I think it's the linchpin of a lot of Ethereum investors' view of the asset is that this proof of stake merge is so important. And then as far as what's going to happen going forward and how that'll affect price, I would encourage people to think about the supply of these assets in terms of their circulating supply.

• 35:35Speaker 02

  And so what that means is for Bitcoin, it's famously a fixed supply, 21 million that will ever exist. But I would encourage people to think about it in terms of the amount in circulation, which is not fixed. That's actually increasing because of the block reward. Right? And the reason I think that's important is because you would never look at the amount of oil in the whole world that's inaccessible. So like if I discovered a new oil reserve far away that no one could ever get at, it's not going to reduce the price of oil. But if I discover a new oil reserve that people can actually add to circulating supply, that would. And so circulating supply is what counts. And the thing that's pretty wild to think about is that for both Bitcoin and Ethereum and their entire history, with the price going up as much as it has,

• 36:19Speaker 02

  it's done so in the face of an increasing circulating supply. And for Bitcoin in particular, this has been the case because it's already been through three halving events. And so the rate at which that supply increases has been cut by 50% three times. So that is an 87.5% reduction. Kind of if you do all three of Bitcoin's halving events together, 83.5% reduction in the inflation rate of circulating supply.

• 36:52Speaker 02

  And Ethereum has gone through none of that. So the inflation rate for Ethereum has not gone through halvings, and yet the price has continued to go up. So what does that mean? It means when Ethereum supply is increasing, there are enough new buyers, they just keep buying the new Ether, and they buy it at the same or higher price so that the overall price can keep going up. And so with EIP 1559, suddenly there's going to be 30% less selling pressure from the miners, which means there's just going to be less ether out there to buy. That's the ether that's been burned, right? And so if if people have been buying this ether and buying it so much that the price was going up, even if this new supply is coming online, now those same buyers don't have ether to buy.

• 37:37Speaker 02

  And so that's kind of the catalyst that's going to affect the supply. And my argument for the triple halving is that the proof of stake merge kind of accentuates this even further. It brings us to a total 90% decrease in circulating supply, which is more than three halvings worth of decrease. And that's a huge catalyst for the price. And the last thing I want to point out is that in the history of Ethereum and Bitcoin, the circulating supply has always been increasing. Obviously Bitcoin has a fixed supply, but the amount in circulation is always been increasing because of the block reward. After the merge, it's incredibly possible that Ethereum will be a deflationary asset.

• 38:22Speaker 02

  And it's important to note, that means that for the first time ever, there will be a crypto asset that actually has a static or decreasing supply. Ethereum will actually be able to claim something that Bitcoin has not been able to claim. Because while Bitcoin has a fixed supply, Ethereum, Bitcoin, sorry, while Bitcoin has had a fixed supply, the circulating supply has always been increasing. For Ethereum, circulating supply equals the total supply. And when that's decreasing, I think we're going to see something we've never seen before. We've never seen the price of these assets when the actual total supply has gone down. And so models for what the price is going to do based on how the price action has happened in previous cycles,

• 39:07Speaker 02

  I think are going to fly out the window because the supply demand dynamics are completely different.

• 39:14Ryan Sean Adams?

  What's also crazy about this squish is that this is not happening like once every four years. This is happening during a very consolidated period of time. We're talking about in the next six to 12 months, all of these triple happening events will happen. Right. This is today, 30% of the way or you know, 30% of one happening, as you said. And then we're like, once the merge goes, then that's the rest of it you're talking about. James, I'm curious to hear from you. So your perspective at ARC might be interesting here. There has been a lot of talk about cryptocurrency, of course, among the institutions. Bitcoin, though, has definitely been the lead asset, right? So you go into crypto, if you're an institution, you buy Bitcoin first.

• 39:56Ryan Sean Adams?

  Does some of this narrative around EIP 1559, the actual successful deployment, decretion of the decrease of the execution risk, upcoming merge, does that change things? Are the institutions going to start seriously thinking about ETH as an asset to add to their portfolios and their balance sheet? What are your thoughts here, James?

• 40:16Speaker 01

  Yeah, at ARC, we were famously the first ETF to actually buy Bitcoin exposure through GBTC 2015. And definitely the store of asset narrative has been the driving force behind that because it's so easy to understand, right? Digital gold. I don't think 1559 itself is the biggest catalyst for institutional adoption. I think the one is just the one they can most easily understand, which is the search for yield. Right? Ethereum is unique, you know, back to David's question, what's unique about Ethereum versus everyone else? Ethereum is the only one that is like that has apps, you know, when you care about computer system, you don't care about the one with most elegant design or whatever. You care about the one that has the most applications. Ethereum has the most applications for DeFi and the only really effective platform for NFTs.

• 41:02Speaker 01

  So that's very important. And when institutions look for yield, the most natural place to go is Ethereum. Because all the top DeFi protocols are on Ethereum. And secondarily, when the merge happens, Ethereum itself becomes a proof of stake blockchain, which is a is whose tokenomics basically generates yield, right? The staking rewards is a form of yield and that is completely understandable. So I think that's what makes Ethereum very attractive from an institutional perspective. And once you can express yield like that plugs in so naturally. To so many of the products that that exists in kind of C5 banking, any kind of borrowing,

• 41:44Speaker 01

  any kind of lending protocols, like they can plug into Ethereum, the whole DeFi ecosystem as a source of capital. That to me is like far more exciting than there is a fixed pile of money for gold. How do we divide it between gold and Bitcoin?

• 42:00David Hoffman?

  Guys, as we come down to the end of this panel, first and foremost, thank you for joining us and having such a fantastic conversation. This has already been so rich. And if you're on the YouTube, make sure to like and subscribe. And if you're watching on Chainlink, make sure you go subscribe to the Bankless YouTube before we finish off this panel. And I want to end the conversation with one last question. And we are running out of time. So I'm going to trim you guys up to about 45 seconds each. So open ended question, how has Ethereum changed your life? And Squish, let's start with you.

• 42:30Speaker 02

  I think the biggest thing is Ethereum's got me writing. It's got me thinking. There are so many new ideas that the Ethereum community brings to the table. And so I'm just more like intellectually active than I was before. And so personally, that just makes me really happy. And I'm just really proud to be a part of this big story.

• 42:49David Hoffman?

  As somebody that also got into this world via writing, I can definitely resonate with that. James, how has Ethereum changed your life?

• 42:55Speaker 01

  It got me a new job. I was working at Ark Invest, greatest job probably in TradFi you can get. And now I'm working at Amo, right? And I joined Amo because I think this could be the future. This could be the Ark Invest of DeFi. We're building DeFi products on top of Ethereum. It's a single token that gives you access to all the top DeFi protocols. And we have so many more great products in the pipeline, talk about execution of product pipeline. So it's great to move from a kind of a like invest mindset to a builder's mindset. And that's what drew me here. And yeah, without Ethereum, if it were just Bitcoin or some other thing, I don't think this would happen. So really excited about that.

• 43:34Ryan Sean Adams?

  Well, DC, the first two panelists definitely did not go on too long. So you have a little bit of extra time if you want it. So DC, how has Ethereum changed your life?

• 43:43Speaker 03

  So likely is the oldest member of this panel. I grew, I grew up literally like with the consumer internet emerging. So a little bit before you guys probably, I remember when it was all super hard to use and you had to dial up and do all those things. And now I feel like the same thing is happening in this decentralized space. And so for me to have been a early participant, mostly observer in that time before, and now getting to be a part of this global community that is really working to advance this decentralized economy that is emerging on Ethereum and feel like I'm playing a small part in it. It's really just incredible to me. And I wake up every day

• 44:23Speaker 03

  and I'm just grateful to be a part of the Ethereum ecosystem and community. And I'm always looking forward to what's coming next. So it's been incredible.

• 44:33Ryan Sean Adams?

  Well, we are grateful for this panel. We are grateful for the community and the developers that shipped EIP 1559. We are grateful to the SmartCon conference organizers and Chainlink for getting us all together on this panel. So excited about the future that is to come. So thanks, panelists, for joining us.

• 44:53Speaker 03

  Thanks, Ryan. Thank you.

• 44:54Ryan Sean Adams?

  Guys, as always, none of this was financial advice. Crypto is risky. DeFi is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 45:09David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcasts, and community as a Bankless premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where

• 45:52David Hoffman?

  we summarize the week in crypto and other fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless.