Pod Insights Bankless ROLLUP: Ethereum Absorbs Alt-L1s | SEC vs. Stoner Cats | Mark Cuban's -$870k Wallet Hack About this episode WRU 4th Week of September
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TIMESTAMPS & RESOURCES
0:00 Intro
2:50 MARKETS
9:15 Fed Rate - No change! (5.25-5.5%)
https://www.nytimes.com/live/2023/09/20/business/fed-meeting-interest-rates
12:10 U. S. Americans Own Crypto?
https://www.coinbase.com/blog/a-call-to-action-mobilizing-52-million-crypto-owners-into-an-army-of-1
15:20 Ethereum’s 1st Merge anniversary!
https://twitter.com/sassal0x/status/1702629393984803041?s=46
16:25 Bye bye ultra-sound money?
https://ultrasound.money/#gas
17:30 L1 is shrinking, but layer-2 networks are maintaining healthy activity
https://l2beat.com/scaling/activity
20:39 Are all the chains moving to Ethereum?
Rollup Migration to Ethereum - 3 New Ethereum Rollups coming from non-Ethereum ecosystems
21:00 1.1 - Astar Network
Sandeep Take
https://twitter.com/sandeepnailwal/status/1701990949319254345
23:00 1.2 - Canto
https://twitter.com/CantoPublic/status/1703809950290718871
24:00 1.3 - Eclipse
https://twitter.com/EclipseFND/status/1704178668543824309
27:35 Ryan Take
https://twitter.com/RyanSAdams/status/1703882356468117703
28:40 Mert Take
https://x.com/0xMert_/status/1704229795079365101
30:00 Frankie Take
https://twitter.com/frankieislost/status/1704262750405587248
37:58 SEC is coming after the Stoner Cats - Gary. V. Cats
https://www.sec.gov/news/press-release/2023-178
https://x.com/MikeSeligEsq/status/1701978172487606665
https://twitter.com/loopifyyy/status/1701966597445874124
44:00 Hester Pierce Dissented! - Chief Disenting Officer
https://twitter.com/NFTherder/status/1702057933389836293
46:25 SEC warns more charges coming to exchanges and DeFi
https://www.coindesk.com/policy/2023/09/19/us-secs-crypto-enforcement-chief-warns-more-charges-coming-to-exchanges-defi/
49:13 New Airdrop! Optimism also announced OP Airdrop #3
https://twitter.com/optimismFND/status/1703837786703335672
50:10 POL Token is coming! MATIC becoming POL.
Polygon 2.0 implementation kicked off!
51:00 https://twitter.com/0xPolygonLabs/status/1702280764677578755
1st PIPs: MATIC to POL and launch of Polygon’s new staking layer!
https://polygon.technology/blog/polygon-2-0-implementation-officially-begins-the-first-set-of-pips-polygon-improvement-proposals-released
51:25 Arbitrum is restarting Odyssey
https://twitter.com/arbitrum/status/1704173003825615353
52:10 Conduit opening Support for Arbitrum:
https://x.com/KAndrewHuang/status/1704848429883732256
53:18 Coinbase earned 570 ETH of MEV as a result of Curve hack. Should they return it?
https://www.coindesk.com/tech/2023/09/15/coinbase-inadvertently-earned-1m-due-to-hack-but-hasnt-reimbursed-victims/?
57:10 Is Ethereum finally getting a privacy L2? Maybe soon?
https://twitter.com/aztecnetwork/status/1704433376525242474
58:25 Infura in its progressive decentralization era
https://blog.infura.io/post/progressive-decentralization-of-the-rpc-layer-centralization-to-federation?
59:10 FTX sues SBF’s parents - eating their own aims to claw back some of the $26 million in gifts and property
https://storage.courtlistener.com/recap/gov.uscourts.deb.188450/gov.uscourts.deb.188450.2642.0.pdf
https://www.cnbc.com/2023/09/19/sbfs-parents-sued-by-ftx-for-millions-of-dollars-in-misappropriated-funds.html
1:00:30 Mark Cuban lost $870,000 in a wallet hack - everyone’s getting hacked
https://twitter.com/WazzCrypto/status/1702820716343624168
1:03:38 New ETH ETFs
https://twitter.com/JSeyff/status/1701612412456280467
1:03:45 Grayscale ETH Futures ETF
https://cointelegraph.com/news/grayscale-files-for-new-ethereum-futures-etf
1:06:25 Questions From The Nation
1:15:30 Takes
https://x.com/matthuang/status/1704608186723119329
https://www.paradigm.xyz/2023/09/casino-on-mars
Where do you store your wealth?
https://x.com/TrustlessState/status/1703986421378245024
1:19:50 What Are We Bullish On
https://www.bankless.com/choose-your-bull-market-character-class
1:24:55 Meme of the Week
1:26:15 Risks and Disclosures
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Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures
Transcript 16,565 words · 5 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 David Hoffman? Layer two somewhere is getting hotter and hotter. Three new rollup ecosystems have joined Ethereum Justice last week. This isn't just another OP stack. It's not just another Arbitrum or ZK Sync. These are brand new ecosystems coming into the Ethereum Layer two rollup fold.
0:16 Ryan Sean Adams? Bankless Nation, it is the fourth Friday of September. David, what time is it?
0:20 David Hoffman? Ryan, it's the Bankless Friday Weekly Rollup, where we cover the entire weekly news in crypto, which is always an ambitious endeavor. This week, no exception. Yet, we persevere into the frontier nonetheless. Nonetheless, how are you doing this week, Ryan?
0:32 Ryan Sean Adams? I'm good, man. Back from permissionless, feeling energized. It was great to meet the community last week in person. Get some proof of humanity.
0:38 David Hoffman? One time a year that Ryan manifests.
0:40 Ryan Sean Adams? Yeah, some hugs. Well, handshakes, high fives, stuff like that, fist bumps. Yeah. It was great. Anyway, okay, we got some topics of the week, David. The SEC, they're coming after the celebs, man. Mila Kunis, Ashton Kutcher, Gary Gensler does not like what they did with their NFT project. We're going to talk about that. What else we got?
0:59 David Hoffman? But why this NFT project? Is it because of the celebrities? We'll talk about that. Coming up after that, Ethereum collects three new rollups this week. Two of them previous Layer ones, now Layer twos on Ethereum. And the third, based on Solana, Solana on Ethereum as an L2. What is going on with that? We're going to cover that. And then Ryan, what's after that?
1:20 Ryan Sean Adams? We got Coinbase. Apparently, they have a 570 ETH work of Alchemix's money. How in the world did that happen? And should they give it back? This is kind of an MEV question.
1:31 David Hoffman? Legal question, moral question, some big questions.
1:34 Ryan Sean Adams? It's a quandary. It's a real quandary we got on today's episode. And then, speaking of quandaries, Mark Cuban, he lost almost a million dollars in a wallet hack. Not good news. We'll tell you a bit more about that. David, before we get in, we got a message from our friends and sponsors over at Bridging Protocol Platform, Layer Zero. What do they want people to know?
1:53 David Hoffman? Layer Zero and Google Cloud have partnered up, and they are ready to bring the interoperable cross-chain apps of the future to you. This is what they want to do. So, of course, what is Layer Zero? It's a simpler, simple modular framework for applications to use the Layer Zero smart contracts that exist. On 15 different chains and then Google Cloud as the default Oracle between these different smart contracts are the service provider for passing messages. So that apps on different chains can start to be woven together. So Google Cloud is the latest option of oracles for layer zero is serve as the default. But of course, layer zero, if you want to pick your own Oracle, that is something that you can apparently do.
2:33 David Hoffman? So visit layerzero.network for more information if you are working in the world of cross-chain interoperability.
2:40 Ryan Sean Adams? Cross-chain, we're moving from this world of cross-chain to a multi-chain, which is different. You deploy once and you got it across many different chains. So very cool stuff there. David, let's get to the markets, though. Speaking of cool stuff, how are we looking on Bitcoin price? Is that cool?
2:53 David Hoffman? No, it's not cool, not cool stuff. Bitcoin lost $100 in the week, which isn't that crazy.
3:00 Ryan Sean Adams? No, that's not that crazy at all. I mean, it's not cool, but it's not like bad.
3:04 David Hoffman? Not cool.
3:05 Ryan Sean Adams? Yeah, it's something in the middle. How about ETH?
3:07 David Hoffman? It's worse, definitely not cool, down 3%. Started the week at 1640, currently at 1590. I think I saw a low of 1575. Not, not cool. It's not cool.
3:17 Ryan Sean Adams? Thanks to Kraken for these charts, though. And if I press reload, does the price go up at all?
3:22 David Hoffman? You should try that a few more times.
3:24 Ryan Sean Adams? How many times do you do that per day? Just like, you know, if you don't like the price, you just reload?
3:29 David Hoffman? That's never worse for me. That only works in the bull market where you legitimately reload and all of a sudden you're like, you know, a few bits more wealthy.
3:37 Ryan Sean Adams? There are those days. Do you remember them? It was distant in the past, but those days.
3:42 David Hoffman? Large green candles. Man, we haven't had a stupid, large, green candle in a long time.
3:46 Ryan Sean Adams? I miss them. I'm starting to miss them.
3:48 David Hoffman? Absolutely deprived of dopamine, man.
3:51 Ryan Sean Adams? Double-digit days, right? Where you just like, you'd look at the charts and it'd be up like 10% and you look at it again and be up like 15% and you look at it again, it's like up 19%. You look at it again, it's down to like back to 12%. It's just the whole day.
4:03 David Hoffman? You go into work and I'm like, what am I doing here? I remember that. I remember my first cycle.
4:08 Ryan Sean Adams? I'm not saying it's healthy. Okay, I'm just saying.
4:10 David Hoffman? No, it is. It's bad for your mental health, but it's temporarily good. You know, it's just a drug, you know, just like cocaine.
4:17 Ryan Sean Adams? Oh, wow. Yeah, I wouldn't know anything about that, David, but maybe that's for a different show. Here's your tweet.
4:27 Ryan Sean Adams? ETH has spent almost 500 days between 1,100 and 2,200, that's 2X bottom and top. Compared to 2017, ETH spent 700 days between 80 and 320, that's 4X bottom and top. Okay, it's getting dangerous because David is charting. So, tell me about the chart, man. What's your TA analysis here?
4:48 David Hoffman? I mean, it's just a comparison of time, right? It makes sense that in 2017 to 2020, that bear market, that it was a 4X bottom to top range. Things were less liquid, they were lower market cap, that's just the nature of markets. And now 700 days, that is the thing I'm comparing here, the thing I'm trying to get apples to apples. So 700 days was the bear market of old. Today, we are passing 500 days of this current bear market between 1,100 and 2,200.
5:15 Ryan Sean Adams? So have we paid our dues? Is that what you're telling me? Or we got 200 more days to go?
5:19 David Hoffman? I think the left's curve, bell curve take is we got 200 more days to go. Also, I will say like, we're at the top of, the closer to the top of the range. So like, where Ether is falling down to like 1575 right now? Like, 1575 and 1,100, there's a gap there. So in that 200 days, like, not necessarily clear skies.
5:40 Ryan Sean Adams? 200 days to go would put us in 2014, right? Maybe like mid 2014, or sorry, god, 2014. 2024 is what I meant, the wrong four. But what if this cycle is a little bit longer than the last cycle? Isn't there some truth to the idea that every cycle takes a little bit longer? Lengthening cycles? How about that theory?
6:03 David Hoffman? Correct, yes. The cycles have tended to lengthen out a little bit. There's also the conversation of like, well, was it even crypto's four-year cycle? Or was it the liquidity and the macro four-year cycle? Lots of variables here. I think just like, this stupid brain take is like, yo, 500 days, last time was 700 days. You can start to see the light at the end of the tunnel. You don't have to think too hard about it. Maybe 300 days, which is a year.
6:29 Ryan Sean Adams? Yeah, 300 days more, maybe 400, maybe just 200, maybe 150, right? We're in the range, we're in the zone. Let me ask you, because I feel like, at this point in the market... We are our most sober ever. I know you're talking about [BLEEP] earlier, but the truth is, you and I are very, very sober.
6:47 David Hoffman? Well, yeah, this is the very depressed range. Like, no one's getting excited. No one is like happy. Have you seen how much fighting there's going on on Twitter right now?
6:56 Ryan Sean Adams? Everyone's angry.
6:57 David Hoffman? Everyone is angry and irritable because we've got no serotonin in our system. We've got no dopamine.
7:02 Ryan Sean Adams? Is that why? Okay. Well, I'm gonna ask you, in this very sober moment that you're in, call the top. Next cycle top, okay? 300 days away, or whatever. ETH price, give me the top.
7:14 David Hoffman? 15 to 17,000 dollars.
7:17 Ryan Sean Adams? Wait, wait, what?
7:18 David Hoffman? 15 to 17,000 dollars.
7:20 Ryan Sean Adams? 15 to 17,000 dollars. That's a big bump from here. So you think we're going 10 to 15 X?
7:28 Ryan Sean Adams? Wow.
7:28 David Hoffman? I mean, it's a pretty sober come down from like the last call, last cycle's range, which we called for 10K. And we got not anywhere close.
7:36 Ryan Sean Adams? Yeah, I guess last cycle's range, you know, it was really hanging. This zone was like...
7:41 David Hoffman? Anthony Cezana was calling for $10,000 and Ether was $100, which is like, he was the, I think he was the first big like person to like, put a very confident flag in the ground saying like,
7:52 Ryan Sean Adams? Road to 10K?
7:52 David Hoffman? Ether's $100. So I'm calling for a $10,000 ETH K. I mean, we didn't get to $10,000. We got to $5,000. But like, in a logarithmic term, Anthony was right.
8:02 Ryan Sean Adams? I think, so my take on that is 10 to 15K. This is pretty close, but above 10K? Cause the theory is it's a lengthening cycle, maybe, but it's also like a dampened. Like, we're not always gonna get like, Yeah. And what was the last cycle?
8:19 David Hoffman? Oh, I'm hitting sell at 15,000, by the way.
8:22 Ryan Sean Adams? Are you? You sell ETH?
8:24 David Hoffman? Well,
8:24 Ryan Sean Adams? How dare you?
8:25 David Hoffman? Yeah, at some point.
8:26 Ryan Sean Adams? Is that allowed? Is that allowed on the bankless program? Are you allowed to sell ETH?
8:30 David Hoffman? Sure. At 15,000? Yeah.
8:33 Ryan Sean Adams? Just all of it?
8:34 David Hoffman? None.
8:35 Ryan Sean Adams? I'm out. See you later.
8:36 David Hoffman? Yeah, I'm out. Job here is done. Bankless is closed.
8:39 Ryan Sean Adams? We got you to 15K. See you later. Close for business.
8:42 David Hoffman? You're on your own now.
8:43 Ryan Sean Adams? No. You know, here's the secret about my co-host David. He is addicted to the podcast, you know, almost as much as I am. So, we'll just change podcasts. Anyway, okay. Wait, do you have a top call for Bitcoin? Or do you not care as much?
8:54 David Hoffman? I don't care. Below 15K.
8:58 Ryan Sean Adams? 100K? 100K.
9:01 David Hoffman? 100K Bitcoin, yeah, sounds about right. Yeah, shooting from the hip.
9:04 Ryan Sean Adams? Ratio, anything on the ratio this week?
9:06 David Hoffman? It's down 3%.
9:07 Ryan Sean Adams? And total crypto market cap, we're above a trillion.
9:10 David Hoffman? Almost 1.1 trillion, not dead yet.
9:12 Ryan Sean Adams? It's close though. David, you want to talk about the Fed a little bit?
9:16 David Hoffman? Can you do it?
9:17 Ryan Sean Adams? I can talk about the Fed, sure. The Fed leaves rates unchanged. That was news of this week. So, you know, the rate of 5.25 to 5.5, they were scheduled to maybe think about changing that right now, and they decided not to change it. So there's no change. This is the chart over time, David. All the way from the 1970s, Fed Fund Target Rates. And 19, good old 1970s, it was between like 8, 9%. And then by the early 80s, remember Paul Volcker? I mean, we don't remember him, but he existed. He's a name that we know.
9:49 David Hoffman? I did not exist when he was in his leadership position.
9:52 Ryan Sean Adams? Well, way before your time, David, he increased. Yeah, no, I didn't. But he increased prices, sorry, market Fed Fund Rates to 19%.
10:02 David Hoffman? That is insane.
10:04 Ryan Sean Adams? Like, this is the story of the 90s, it was just down. And then the story of like post 2008, it was like zero. It was very, very low. And now here we are back to 5.25%. This, when I look at this chart, it does not look organic at all. I don't know what to make of it. It's very controlled. It's not an organic chart, for sure.
10:23 David Hoffman? Yeah, yeah, yeah. This does kind of look like the interest rates last stand. It's like, this is the first time interest rates have gone higher than they previously were. Like, were marginally higher than the second to last most previous interest rate. And that's just because we just did helicopter money, right? I feel like, you know, interest rates last stand before. Well, I mean, I don't know. As inflation does increase, capital controls go up, interest rates might go up. Maybe it does get worse. I don't know.
10:50 Ryan Sean Adams? Well, this is what the Fed projects, is one more increase this year, two cuts in 2024. So one more increase, and then we start cutting in 2024. Again, these are just projections. And also, the Fed does not expect a recession, if that was on your weather report. And GDP will grow. So we'll see how that works out. That's the prediction coming down the pike for the Fed.
11:11 David Hoffman? They're not expecting a recession, and they're expecting GDP to grow.
11:16 Ryan Sean Adams? Yeah.
11:17 David Hoffman? Okay. So they're expecting only good things.
11:20 Ryan Sean Adams? Good things, good things.
11:21 David Hoffman? My cynical take is like, yeah, sure, like, you know.
11:25 Ryan Sean Adams? I mean, but it hasn't been catastrophe. A lot of people calling for catastrophe. Remember Bology, you know, 1 million Bitcoin and all the banks are going to fail? Hasn't happened yet.
11:33 David Hoffman? Yeah, yeah, yeah. You're totally right. Like when we were doing all the micro stuff a little bit over a year ago, like everyone was giving us doom and gloom. And it hasn't been terrible. Kyla Scanlon, who I think has been the most tapped into this, has called this a vibe session. So people feel worse than the actual fundamentals of the economy. People report negative affect about inflation and their prospects. But the actual metrics of the economy don't support that alignment of negative sentiment towards the economy. So she's calling it a vibe session.
12:02 Ryan Sean Adams? That's really interesting.
12:03 David Hoffman? Yeah.
12:03 Ryan Sean Adams? Yeah, I don't, I'm sure there's theories on what causes that, but we don't have time to get into them. Here's something we do want to get into though, David, a question for you. How many Americans do you think own crypto right now?
12:14 David Hoffman? There are 330 million Americans or 350 million Americans.
12:20 Ryan Sean Adams? That includes all the kids, you know, so.
12:23 David Hoffman? Five, 10 million, 10 million?
12:27 Ryan Sean Adams? More? 5X that.
12:29 David Hoffman? Oh, 50 million?
12:31 Ryan Sean Adams? 50 million. 50 million crypto owners. Let's see what the stats are here. Yeah, Coinbase says 1 in 5 Americans own crypto right now. And that is 5X more Americans than own an electric vehicle. You know that?
12:50 David Hoffman? That's a weird stat. I mean, I get what they're saying.
12:53 Ryan Sean Adams? It's a weird stat, but it's a cool stat because they're putting, they're putting the crypto users into like political cohorts. So here's another one. 3.5X more Americans own crypto than belong to a trade union. Okay. There are 2.75X more Americans that attended an NF. This is 2.75X more Americans than attended an NFL game seat. So bigger than the NFL tribe too, bigger than the football tribe. And this is 2X more than American families who hold stock. That's unbelievable. That can't be right.
13:25 David Hoffman? Who directly holds stock, is that an important?
13:28 Ryan Sean Adams? Yeah, maybe who directly holds stocks, so not through mutual funds, okay.
13:32 David Hoffman? Who, how do you, I don't even know how you directly hold stock.
13:35 Ryan Sean Adams? And this is more Americans than use Uber every month or ride sharing apps.
13:40 David Hoffman? Crypto is more popular than Uber? That's kind of cool.
13:42 Ryan Sean Adams? That's what Coinbase does.
13:43 David Hoffman? Okay, here's a question to you. How many, at least, this is on Ethereum specifically, how many addresses hold USDC?
13:51 Ryan Sean Adams? How many Ethereum addresses own USDC?
13:53 David Hoffman? Yeah.
13:55 Ryan Sean Adams? I'm gonna call 1.2 million.
13:57 David Hoffman? Wow, pretty good, 1.7. It's not exactly relevant to what we were talking about, but I think it's a nice metric to talk about.
14:04 Ryan Sean Adams? Well, do you want to know what the spread is in terms of demographics here? So I said 1 in 5 adults own crypto and 75% of them have an income less than 100K. Alright, so this skews under, you know, 6-figure salary. 60% are Gen Z or millennials, which probably not surprising, but also like 40% are boomers and Gen X.
14:27 Ryan Sean Adams? 41% are racial minorities and 63% of crypto owners agree that the system unfairly favors powerful interests.
14:36 David Hoffman? I'm not surprised about that. I feel like that should be higher.
14:39 Ryan Sean Adams? So Coinbase is basically channeling this into like a political motivation. It's basically saying, hey, we have a cohort, go out, vote, download the app, look at your candidates and, you know, get out there. And this is a message as much to crypto users as politicians, like we're a powerful cohort and force if we choose to use it. The one thing I would say is, I wonder how many of those 52 million Americans feel kind of down bad about crypto?
15:04 David Hoffman? Moving on.
15:05 Ryan Sean Adams? You know what I mean?
15:05 David Hoffman? Next.
15:07 Ryan Sean Adams? How many of them are like, I own crypto and I'm proud of it and I can't wait to tell you about it? No, they're probably ashamed.
15:14 David Hoffman? I own crypto and I'm a bag holder.
15:16 Ryan Sean Adams? They're probably like, yeah, mistakes were made.
15:18 David Hoffman? At least 50%. At least 50%. Can we move on to some happier news? I got some happier news. We have an anniversary to celebrate. Ethereum's first merge anniversary. So the first anniversary of full proof of stake. Well, not full proof of stake. Proof of stake Ethereum happened on Friday, September 15. So here's some numbers. Since the merge, almost a million Ether, 980,000 Ether burned, 11.6 million Ether staked and 362,100 validators. So pretty cool. Congrats to Ethereum for having your first merge anniversary. You know what is the? This is the third anniversary of September, September 2023. Right? Bankless LLC.
16:00 Ryan Sean Adams? Oh, wow. When we started, we were like, oh, we got a podcast.
16:03 David Hoffman? Podcast is going well. Let's put a ring on it. Yeah.
16:06 Ryan Sean Adams? Yeah, let's register in the state of whatever, Virginia, Delaware, something like that.
16:10 David Hoffman? Yeah, some stupid nation.
16:11 Ryan Sean Adams? Make this real.
16:12 David Hoffman? Yeah, I always forget about that.
16:14 Ryan Sean Adams? Yeah, well, happy anniversary to you then.
16:16 David Hoffman? Likewise.
16:16 Ryan Sean Adams? Bankless.
16:17 David Hoffman? Likewise.
16:18 Ryan Sean Adams? But let's not overshadow the merge. Okay, the merge is a little bit more important.
16:24 Ryan Sean Adams? But, okay, I got a flip. Maybe some bad news? Depends on how you interpret this. Bye bye ultrasound money, David.
16:30 David Hoffman? It's gone.
16:31 Ryan Sean Adams? Ultrasound money.
16:32 David Hoffman? Forever.
16:33 Ryan Sean Adams? Yes, forever. This was Ethereum's first inflationary month. I think we're talking about the month of September or the last 30 days or something. So some history from October 2022 until now, there's only been one month in loss. There's only been one month where Ether, the asset, was not ultrasound money. Overall, there's been a gain of 414 million in 2023. But in September 2023, Ethereum block spaces only had one single profitable day. So in September so far, there's 15.9 million in losses. David, does that kill ultrasound money meme? Are we gone?
17:12 David Hoffman? It's totally dead.
17:14 Ryan Sean Adams? What are the reasons for this?
17:16 David Hoffman? It's the bear market. It's just like on-chain activity is super low. No one's minting new NFTs. No one's doing any sort of de-gens stuff. And simultaneously, Layer 2 activity is up only. So I think the Layer 2 stats, the activity on all Layer 2s are 6X versus the Ethereum Layer 1. So like, this is what is expected from the Layer 2 rollup-centric roadmap thesis. We take Ethereum's economic activity and we move it on to the Layer 2s. So I don't think there's any coincidence in looking at the aggregate Ethereum Layer 2 economic activity and the reduction of gas of Ether being burnt on the Layer 1. This is what you would expect.
17:53 Ryan Sean Adams? Yeah, Layer 2s are very healthy. This is the highest we've seen at the scaling factor, 6.21 this week. David, we have a question later in the episode, at the end of the episode, about whether this is actually bullish or bearish for Ether the asset. So we'll talk about that. What else we got coming up?
18:08 David Hoffman? Coming up next, we have a very important part of the answer to that question, Ryan. It's always going to be inside of the world of rollups. Layer 2 summer is getting hotter and hotter. Three new rollup ecosystems have joined Ethereum just this last week. This isn't just another OP stack. It's not just another Arbitrum or ZK Sync. These are brand-new ecosystems coming into the Ethereum Layer 2 rollup fold. So we're going to talk about all of these. We're also getting our first privacy-enabled Layer 2, so one that's already in the Ethereum ecosystem, but this one private. Tons of things to talk about. And Mila Kunis and Ashton Kutcher, everyone's favorite NFT celebrities, in the hot seat from Gary Gensler. There's just a lot, so much more to talk about even beyond that. All of that is coming up and more. But first, I'm going to talk about these fantastic sponsors, especially Kraken,
18:51 David Hoffman? our preferred crypto exchange for 2023. If you do not have an account with Kraken, consider signing up in the show notes below. Kraken Pro has easily become the best crypto trading platform in the industry. The place I use to check the charts and the crypto prices, even when I'm not looking to place a trade. On Kraken Pro, you'll have access to advanced charting tools, real-time market data, and lightning-fast trade execution, all inside their spiffy new modular interface. Kraken's new customizable modular layout lets you tailor your trading experience to suit your needs. Pick and choose your favorite modules and place them anywhere you want in your screen. With Kraken Pro, you have that power. Whether you are a seasoned pro or just starting out, join thousands of traders who trust Kraken Pro for their crypto trading needs. Visit pro.kraken.com to get started today. Mantle, formerly known as BitDow,
19:35 David Hoffman? is the first DAO-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle Network, a brand-new, high-performance Ethereum Layer 2, built using the OP stack, but uses Eigenlayer's data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle Network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest DAO-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 on-boarded, like Game7 for Web3 gaming, and Bybit for TVL and liquidity and on-ramps. So if you want to build on the Mantle Network, Mantle is offering a grants program that provides milestone-based funding to promising projects
20:19 David Hoffman? that help expand, secure, and decentralize Mantle. If you want to get started working with the first DAO-led Layer 2 ecosystem, check out Mantle at mantle.xyz and follow them on Twitter at @zeroxmantle.
20:30 Ryan Sean Adams? We've got a narrative watch this week. Are all the chains moving to Ethereum? Are all the chains becoming Layer 2s? That's a question we're posing this week. There's been some, maybe, evidence of movement this week, or at least support for the Layer 2 ecosystem. I think we've got three examples here. What are we talking about?
20:47 David Hoffman? Astar Network from Polkadot, Kanto from Cosmos, and Eclipse, not necessarily from Solana, but using Solana technology. These are all brand-new ecosystems coming to launch different Layer 2s powered by different technologies, all on Ethereum. So Astar Network from Polkadot will launch a ZK-EVM Layer 2 powered by Polygon's technology. And so, a quote out of Sand Deep here, "Aster is the leading blockchain of Japan," he says, which is probably why I'm not familiar with it. "After launch, it quickly became the most notable parat chain in the Polkadot ecosystem, focusing on owning the Japan market." Japan, with a large entertainment and gaming ecosystem, has the potential to become one of the biggest hubs of Web3 in the world, especially with the most crypto-friendly regulatory environment. Jealous.
21:31 David Hoffman? So with the Polygon CDK, the Chain Development Kit, this is the OP stack of Polygon. Aster will be able to build a ZK-powered Layer 2 with a trustus bridge straight to Ethereum. This is the Polygon subnet. The Polygon SDK, CDK. So this is Polygon taking a win from Polkadot. So that's the first one. You ready to move on to the second one?
21:51 Ryan Sean Adams? Yes, yes, but before we do that, so they're taking a win from Polkadot, I would say, in a way, but also not. So I was corrected by the Polkadot community. Aster is not totally migrating Polkadot. So they're gonna actually maintain their Aster pair chain on Polkadot. And this is like an expansion move. Yeah, I guess two chains. I don't know.
22:10 David Hoffman? I don't, that, that, that doesn't under, doesn't fit in my understanding of how this works.
22:16 Ryan Sean Adams? And you know, I don't know how this will change long term, right? Whether, you know, they're gonna have to pick one chain or the other. But yeah, that's what the founders reached out and said to me after I tweeted something super salacious. We talk about that tweet later. Anyway, that's my caveat.
22:32 David Hoffman? Okay, but one, Polkadot and Ethereum are both trying to be settlement layers. One activity, activity from this chain, it has to pick one, like one chain, you can only be enshrined to one chain.
22:45 Ryan Sean Adams? One chain to rule them all? Where are you, Sauron, the Dark Lord?
22:48 David Hoffman? You can't, you can't be poly. There are no poly chains.
22:54 Ryan Sean Adams? This is Polygon though. You tell me I can't be poly.
22:56 David Hoffman? Polygon settles to Ethereum. Okay, I will have to go get my.
23:00 Ryan Sean Adams? Confuse everyone.
23:00 David Hoffman? I will have to go get my learn on and we will talk about this next week.
23:03 Ryan Sean Adams? Cool. What's the next one, though? You know that one a bit better.
23:06 David Hoffman? Canto, yes. Canto, it was previously a Cosmos chain. It was Scott Lewis's project. It's the, what is it? The contract secured revenue model as a layer one. Now moving to a ZK layer two, poly powered by also Polygon's chain development kit. So Polygon taken some dubs this week. So Canto from a layer one to a layer two.
23:27 Ryan Sean Adams? My understanding, by the way, in the size of this, Aster is about 500 million total locked value. Not necessarily that's all migrating, but that's a lot. Canto is about 40 million in terms of market cap. It was, it was way up there and then it's.
23:39 David Hoffman? Right. It had, it had like, it had like a moment and then it died back down. So additionally with this pivot into a layer two on Ethereum, they are also pivoting into the world of real world assets. I know Scott Lewis is very bullish on real world assets and so.
23:54 Ryan Sean Adams? And where are they pivoting from, David? It's not, it's not.
23:57 David Hoffman? It was a Cosmos, it was a Cosmos chain, wasn't it?
23:59 Ryan Sean Adams? Yep.
24:00 David Hoffman? Cosmos chain, Cosmos chain. Yep, yep, yep. Okay, ready for the third?
24:03 Ryan Sean Adams? Yeah.
24:04 David Hoffman? Eclipse. We did a show on Eclipse with the founder Neil this week. And so this is the Solana virtual machine. Inside of an Ethereum layer two, but not just Solana technology here. We are using Celestia for data availability and then Risk Zero for fraud proof. So we have Ethereum for settlement, Ether for gas and payment tokens, the Solana virtual machine, Celestia for data availability, and Risk Zero for fraud proofs.
24:30 Ryan Sean Adams? What?
24:31 David Hoffman? What the hell is that?
24:32 Ryan Sean Adams? It's a platypus chain. What is it? You had a meme about that. I don't know if it made the agenda, David, but about like...
24:39 David Hoffman? Yeah, it's in there. It's further down. Oh, no, I don't see it on the agenda. We'll get it. Sorry. It's on my Twitter. It was a good meme. It's the family guy. What the hell is this meme with four different animals all kind of like slapped together? Okay, so why Solana VM? Why the Solana virtual machine? Like, I don't even think Ethereum people will argue that it is just a great piece of technology. The EVM is custom-built to do certain things. It's meant for security. It's not meant for execution. It's also made in the year 2015. It's got improvements, but it's just not built from the ground up.
25:11 Ryan Sean Adams? It's single-threaded rather than multi-threaded.
25:13 David Hoffman? Right. So multi-threaded, parallelization is what the SVM's got. It's also got localized fee markets to help with hotspots is what they call them, where people are just using the same state and that needs to be jacked up in fees, but nothing else does. So now the Solana virtual machine, that piece of technology, is now a roll-up on Ethereum, a layer two on Ethereum. Celestia for data availability, just because it's got more bandwidth than Ethereum, and then Risk Zero for fraud proofs, of course. So there, I thought the episode that we did with Neil was extremely informative. I think this is a very strong validation of bankless theses where, I remember an old 2019 tweet, 2019 tweet of mine, wow, was just all about how Ethereum is gobbling up
25:58 David Hoffman? all useful bits of technology. And this is one of the main reasons why I've never been able to fully understand the investment thesis behind Sol, because Sol and the SVM are different pieces of technology, and now the SVM is settling on Ethereum. So if Solana is as good as it purports to be as an execution layer, well, that can be settled on Ethereum. And so now it's Eclipse versus Solana in my perspective.
26:23 Ryan Sean Adams? Yeah, there's a full episode on that. And by the way, I'm clicking through it right now. Is this what I look like the whole freaking time when we interviewed people?
26:30 David Hoffman? This is why I tell you to sit up every single time we start recording.
26:34 Ryan Sean Adams? Well, first of all, I'm super low. But look at that face!
26:38 David Hoffman? And your camera sucks.
26:40 Ryan Sean Adams? It's just like boring into you, the guests. Like, that's not hospitality at all.
26:44 David Hoffman? That's just a particular, one particular frame.
26:47 Ryan Sean Adams? Really?
26:47 David Hoffman? Yeah. If you, if you updated the camera that I gave you, the camera makes you smile more.
26:53 Ryan Sean Adams? Oh, really?
26:53 David Hoffman? Yeah.
26:54 Ryan Sean Adams? Alright, I'll get to that, David. I'll get right on that. It's only been four weeks.
26:57 David Hoffman? Bankless Nation, I shipped Ryan a camera almost a month ago, and all he has to do is take the old camera off and put the new camera on and plug in the HCM, and he hasn't done it yet.
27:08 Ryan Sean Adams? Hey, we'll get done. Uh, next rollup. Maybe I make a promise, a public commitment to the Bankless community. Next rollup, I will have a newly improved camera, and you can, you can hold me accountable on that.
27:18 David Hoffman? You wouldn't, you wouldn't fail the Bankless Nation, would you?
27:20 Ryan Sean Adams? I would never do that. Wouldn't ever do that.
27:21 David Hoffman? You're...
27:22 Ryan Sean Adams? Bankless has never disappointed the bands.
27:24 David Hoffman? Anyone. Everyone talks about how good your skincare is, Ryan, and so I think people are like, they would love to attempt to see the pores. You know, maybe, maybe we can get you closer.
27:32 Ryan Sean Adams? We'll zoom in. We'll zoom in. Um, this is my comment from it.
27:35 David Hoffman? Yeah.
27:36 Ryan Sean Adams? That was a weird segue, whatever.
27:37 David Hoffman? Weird, weird segment.
27:38 Ryan Sean Adams? Hope you guys enjoy the rollup. Um, this is my comment on it. The largest chain from Polkadot just moved to Ethereum. That's Aster. The largest public commons chain, uh, from Cosmos just became a Polygon Valenium, Validium. Uh, it's Kanto. And I hear the world's first Solana virtual machine SVM, Layer 2 is dropping. Uh, Ethereum rollups are eating the world. That's my kind of ETH sort of centric type, uh, take, I guess. Uh, I'll amend this a little bit, because Aster didn't move to Ethereum. They just opened up a new residence, I guess.
28:09 David Hoffman? I disagree with that, but I need to learn more.
28:11 Ryan Sean Adams? Kanto definitely moved completely.
28:13 David Hoffman? Kanto's moved. Kanto is now an Ethereum Layer 2.
28:15 Ryan Sean Adams? And, uh, there's some debate. There's some debate in the community as to whether the Solana virtual machine deploying as a Layer 2 is actually bullish for Solana or bearish for Solana. I mean, there's, there's a question of relative to Ethereum, and there's also a question of relative to other Layer 1s. And of course, like you and I have our take on that. But before we get to kind of like our take on that, uh, we should hear out some members of the Solana community. What's their take on that, David?
28:43 David Hoffman? Yeah, so this is Mert, who does a Solana podcast, also the founder of Helium on Solana. He says, "Seeing some awful takes about Eclipse, an SVM-based Ethereum layer 2, and how it is, quote, 'bad for Solana.' Please don't fall for such non-serious comments. This is extremely bullish for Solana. This is open-source software. It's as if, as great as we say, it'll be much more concerning if it weren't being adopted." So he's saying like, "This Solana, the SVM is so great. It would be weird if it wasn't adopted." And it is being adopted, so it's validation about how great Solana tech is. "Solana's bottleneck has never been tech. It's been mindshare. And now with Maker forking Solana and Eclipse and EJECTIVE adding SVM rollups, you can see Solana is gaining mindshare.
29:28 David Hoffman? Not only does this open the door for more developers, it also de-risks those wanting to build on Solana, because now they can deploy in multiple environments versus just the Solana Layer 1." Layer 2s are inevitable. Ethereum isn't going to just stop working on them because you disagree with their roadmap. So he's talking to the Solana people here, kind of in the same way we talk to Ethereum.
29:45 Ryan Sean Adams? Yeah, but he's basically saying that the point is that any propagation of the SVM is good for Solana, because it gets the SVM into more developers' hands, more ecosystems, and then they kind of come back to Solana. So that's certainly a take. Here's another take. Who's this? Frankie?
30:01 David Hoffman? I don't know this Twitter account, but they write very well in the short of the tweet that this is, and I love history. And so I think this is, I agree with this take. This is my perspective as well. He starts the tweet titling, "SVM Rollups and the Elgin Marbles." Elgin? Elgin Marbles. "In the early 19th century, the Earl of Elgin removed a collection of Greek sculptures from the Parthenon and placed them in the British Museum. At the time, some Greeks justified the removal, saying that the placement of the marbles is, in such a prestigious museum, validated their artistic value. And indeed, to this day, the Elgin Marbles are displayed in Britain, a testament to Greek culture and artistry. Yet, every time a museum ticket is sold, profit flows back to Britain, not to Greece.
30:45 David Hoffman? And 200 years later, you'd be hard-pressed to find someone in Greece who thinks that this was a good trade." This is my perspective.
30:53 Ryan Sean Adams? What does that mean? For people who aren't into like the metaphors and historical significance of this, like, please link this.
31:00 David Hoffman? Yes, so like I said, I would say even everyone and all the developers in Ethereum, the debate between Ethereum and Solana is not about the EVM versus the SVM. I think everyone in Ethereum will say, yes, for execution purposes, the SVM is a marvelous piece of technology. The debate relies on the properties of Solana as a settlement layer versus Ethereum as a settlement layer. So Solana and all of its hard work has created the SVM. A lot of technical expertise has gone into the SVM. Now Eclipse is taking that technology, because it's open source and free to fork, and saying, hey, since this is so good at execution, we're going to use this as a layer two on Ethereum, and we're going to tap into Ethereum's network effects, Ethereum's assets, Ether as money, the liquidity.
31:44 Ryan Sean Adams? I think we forgot to mention that, by the way. Eclipse is using Ether as money.
31:48 David Hoffman? Yes. Yeah, I did mention that. Yes. So yeah, the native currency of Eclipse is Ether. And so, you know, it gets to tap into the liquidity of Uniswap, any of the other activities that are now adjacent to all the layer twos. And so it's making a bet of taking Solana technology, but saying it's going to be able to be better expressed, connected to Ethereum. And when we talked to Neil, his philosophy on Eclipse is similar to the philosophy of Solana, which is one single shared state is very valuable, one single composable layer. So Eclipse wants to absorb a ton of economic activity and put it all in the same spot. So is Eclipse going to compete with other Ethereum rollups? Certainly. Optimism competes with Arbitrum. Arbitrum competes with Polygon.
32:32 David Hoffman? And now all of these things will have to compete with Eclipse. But there is a, in terms of like flow and diffusion and osmosis of economic activity, the difference between like how much SVM-based activity is there on Ethereum versus Solana? Well, there's all on Solana and none on Ethereum, but now there is a place to express Solana activity on Ethereum, which is the new SVM-based rollup. And so I think it's really Eclipse versus Solana. And this is what the Ethereum rollup-centric roadmap thesis has always said, like Solana competes with layer twos because it competes on execution. This is so much of the thesis that we've had about the Ethereum rollup-centric roadmap playing out to a T. Whatever technologies that's out there that's useful, if it is useful, you can just plug it in as a rollup to Ethereum.
33:17 Ryan Sean Adams? Yeah, and I guess hence the yet every time a museum ticket is sold, profit flows back to Britain, not Greece, right? That's how that that relates is basically it's flowing back to Ethereum, not Solana. I think what's interesting here is you could say in a world that it's sort of bullish for both.
33:33 David Hoffman? But it is bullish for both. The pie is growing here. The real question is who is taking a larger slice of the pie?
33:40 Ryan Sean Adams? I think that's true. And also, so I'll say, my take is it's bullish for both. Solana in a way, maybe, but it's more bullish for Ethereum than Solana. But it's more bullish for Solana versus some other competing virtual machine type of technology, right?
33:57 David Hoffman? It's bullish Solana versus the long tail of other Layer Ones.
34:01 Ryan Sean Adams? Yeah, so it's kind of complicated. And I think people, you know, people would say, we see this. Like, every tribe sort of sees what they want to in this story. And, you know, people see, say that, you know, yeah, you guys like Ethereum so much. And so that's obviously why you think this is bullish for Ether. But I would just say, I think if you believe in the thesis of moneyness, that's the big departure. The big difference, I think, between the Solana community or other communities and kind of the, you know, the tactic that we've taken on Bankless is we believe very much that all Layer Ones are competing as monies, as monetary assets, as store of value assets.
34:41 Ryan Sean Adams? Whether they like it or not. And so we see Ether being used as money and to pay for, you know, block space, fraud proofs for this new Eclipse SVM chain. And we're like, oh, bullish ETH relative to everything else, because actually, I think all the rest of it is kind of a commodity. The technology is open source, anyone can use it. It's sort of like, for me, I saw this at play with Cosmos in the beginning. Like, Tenerman is used freaking everywhere. It's all over the place. And yet-
35:10 David Hoffman? It's an open source piece of technology.
35:11 Ryan Sean Adams? How much of that value accrued to Adam?
35:14 David Hoffman? I would say effectively zero.
35:15 Ryan Sean Adams? There's not very much, right? A little bit did, but not like a moneyness type of quality, not massive appreciation, not, you know, many hundreds of billions of dollars into the trillions of value. So it's just a different way of, you know, the thesis playing out. Anyway, we've talked about this a lot.
35:34 David Hoffman? I would also, I think if we're going to talk about who's like taking wins and who's taking Ls right now, Celestia is taking a win here.
35:40 Ryan Sean Adams? Yeah.
35:41 David Hoffman? And so if Ether gets more money-ness, and this is a roll-up centric roadmap, a theory thesis is that actually Ether flows and why there's less burn going on this week is because activity is going to Layer 2s post 4844. Layer 2s have to burn much less Ether than previous because that is the benefit of call data moving into blob space. So all Layer 2s are going to be burning less Ether. And why is this bullish for Ether? Well, you're enabling more networks that all use Ether as money. This is already true in Eclipse, which is already using Celestia for data availability. And so Celestia is taking some of the fees of the Eclipse Layer 2 that would have otherwise
36:25 David Hoffman? burnt Ether, otherwise gone to the Ethereum Layer 1. And so Celestia is taking a win here. Ether is taking a win here because it becomes the money of Eclipse. And I think Solana is far, is behind these three in terms of like the value captured.
36:38 Ryan Sean Adams? One thing I'll say is, some people say this is all pedantic and like, who cares? Layer 1, Layer 2, like who cares? Just build some apps, guys. Like, we don't have any apps that the world can use, so these are all stupid academic kind of conversations. The only reason I do think this is important is because one thing we're trying to do is actually understand how these assets should be valued.
36:58 David Hoffman? Yes.
36:58 Ryan Sean Adams? And like, we're trying to create an investment thesis, right? We're trying to understand, well, is this asset more than, like, worth, going to be worth more than this asset? And if so, what are the drivers for that? So to me, it's just like a capital allocation type of decision. It's an investment type decision. That's why it's worth discussing. But I agree largely that the point is moot. If we don't have apps that will consume this block space, then who cares? I'm just, I see that as an inevitability. And then, then you have to track through, okay, where is value actually going to accrue in this stack? And that's why it's important and worth talking about.
37:32 David Hoffman? Yeah. And I think to tie a bow on this, Risk Zero is the big non-capture of value here. It's even behind Solana, I would say. Sorry, Risk Zero.
37:42 Ryan Sean Adams? Well, I think they got something there, though. Anyway.
37:44 David Hoffman? They got something, yeah.
37:45 Ryan Sean Adams? That's a discussion for another time.
37:46 David Hoffman? The phantom, for example, didn't get anything here. At least the risk zero was in the.
37:51 Ryan Sean Adams? What's phantom?
37:52 David Hoffman? Phantom.
37:53 Ryan Sean Adams? Beside you?
37:53 David Hoffman? FN, yeah, the, the, the layer one that's not even relevant to this conversation.
37:57 Ryan Sean Adams? Alright, I forgot they existed. Alright, um, David, Gary G versus the cats, what's going on here?
38:04 David Hoffman? SEC is charging the stoner cats, uh, the stoner cats NFT project. This is the project that, um, remember that video that Mila Kunis and Ashton Kutcher, uh, made where Ashton Kutcher was like, married to Mila Kunis? He goes, "Hey babe, uh, what's..."
38:18 Ryan Sean Adams? Should we play it? Why don't we just play it?
38:21 Speaker 02 Hey babe.
38:21 Speaker 03 Yeah.
38:23 Speaker 02 What's, uh, crypto?
38:27 Speaker 03 It's digital currency.
38:32 Speaker 02 Hey, hey babe.
38:33 Speaker 03 Yeah?
38:34 Speaker 02 What's blockchain?
38:38 Speaker 03 It's like what information's stored on. So like, it's, you know, what information is stored on?
38:45 Speaker 02 Hey babe.
38:46 Speaker 03 Yep.
38:49 Speaker 02 What, what's, uh, decentralization?
38:53 Speaker 03 Oh, there's not one person in charge of anything. So it's, everybody keeps everybody else in check.
38:58 Ryan Sean Adams? I mean, it's not bad.
38:58 Speaker 03 There's not one big, like, unit or entity to uphold everybody to the same code. It's the people holding each other responsible.
39:07 Speaker 02 Hey babe.
39:07 Speaker 03 Yeah?
39:09 Speaker 02 What's Ethereum?
39:14 Speaker 04 So Ethereum is a general purpose blockchain. So unlike, um, other blockchains like Bitcoin, for example.
39:21 Ryan Sean Adams? I don't care.
39:22 David Hoffman? Okay, so for big listeners who are not watching, Vitalik is actually in the living room, hanging out with Mila Kunis and Ashton Kutcher.
39:30 Ryan Sean Adams? Is that like promotion, though, for stoner cats? Is that why it came out?
39:33 David Hoffman? I don't know how this came to be together. I remember after Stoner Cats came out, I was like, "Hey Vitalik, can you intro us to Ashton and Mila so we can get them on the show?" Um, we never had that show happen, but he said, he did say like positive words about like Mila and Ashton and what they're doing. Um,
39:49 Ryan Sean Adams? This is Stoner Cats, by the way, is what they look like, just little cute cartoon cats.
39:53 David Hoffman? Oh yeah, I forgot about the story that we're even talking about. Okay, so Gary Gensler is coming after the cats. And so he's charged them with offering unregistered security. Surprise, surprise, is Gary Gensler's favorite move. And so like, looking at the PFP offerings as akin to 2017 ICOs, same marketing mistakes.
40:13 David Hoffman? One aspect of this is that the fact that the NFTs were not CCO was relevant to the security status analysis.
40:19 Ryan Sean Adams? Oh, really?
40:20 David Hoffman? The marketing and manner of the sale was similar to vintage ICOs, they say. Another relevant is that the issuer received a 2.5% royalty on secondary sales. And also, the issuer advertised the team's credentials and expertise when marketing the NFTs, and indicated potential increase in value. So more or less, kind of all the reasons about why NFTs we consider to be good and powerful for the margins and for the everyday man is why these are being deemed by, and security by Mr. Gensler.
40:51 Ryan Sean Adams? So what was the punishment? A cease and desist order, a civil penalty of a million dollars? And like, I guess you can't, can no longer do the Stoner Cats if you are the issuer, the creator of the Stoner Cats? So what are the implications of this, David?
41:05 David Hoffman? Lupify put out a good tweet about this. They're saying, well, Stoner Cats have to return the $8 million raise. That's a new precedent. I haven't heard that before. Maybe that's normal. And pay their $1 million fine. They also follow up and says, I think the NFT space is missing something really scary happening right now. Saying that I don't see how 99% of projects aren't in trouble. So this is kind of the danger of this. Yes. Why is Gary Gensler going after this project? It's because of Mila and Ashton. We know Gary Gensler is an influencer. We know that it is his game. That is why Stoner Cats are going, being targeted here. Yet, the foundations that support Stoner Cats are the same foundation that supports your desirable NFT that you probably own, Bankless Listener.
41:47 Ryan Sean Adams? Oh, right. Like, so if Stoner Cats is a security, then all NFTs are security?
41:54 David Hoffman? Right. Any NFT with a roadmap is a security. So if there is resale royalty value, that's- That goes to the team and also if the team is saying, hey, we have a roadmap with plans to increase value to these NFTs, that's a security. So there's a quote from the director of the SEC's Division of Enforcement, regardless of whether your offering involves beavers, chinchillas, or animal-based NFTs, under federal securities laws is the economic reality of the offering, not the labels you put on it or the underlying objects that guides the determination of what's an investment contract and therefore a security, which I agree with, by the way. Remember my whole hot take about like bored apes are a security. That's what I'm talking, that's this, like resale, royalty, team that does promotion. But we all know that what is the fifth prong of the Howey
42:39 David Hoffman? test? Does the SEC want to regulate it?
42:42 Ryan Sean Adams? Yeah, but I don't agree, I don't agree with it. Like, so I don't understand what makes this an NFT and why doesn't this Director of Enforcement show up to like my kid's school at recess and go, you know, grab their Magic the Gathering cards and Pokemon cards as unregistered securities? I mean, NFT is quite clearly a collectible. Yeah, I don't understand how, yeah, like what's the framework for this? This is, it is the fifth prong of the Howey test.
43:11 David Hoffman? Yeah, that's what I'm saying. All of a sudden, the SEC has determined that there is enough desire for them to regulate NFTs and they're using cool cats, or not cool cats, Stoner Cats to do it.
43:22 Ryan Sean Adams? It's just so frustrating, man.
43:24 David Hoffman? It's easier to make the argument against NFTs than it is Magic the Gathering cards because like upside and liquidity and royalties are just baked into the smart contract, by the way.
43:32 Ryan Sean Adams? They're just hyper efficient, you know, Magic the Gathering cards and digital Magic the Gathering cards. Like, what's the difference in an open DeFi account? The difference is-
43:41 David Hoffman? Magic the Gathering cards are just so many more steps removed from the financialization of crypto.
43:46 Ryan Sean Adams? I would love to see that tested in court and hopefully with Stoner Cats or some NFT project, it gets to be tested in court because to me, there is no distinction between like physical collectibles like this and what we're talking about on the NFT side. A collectible is a collectible. And does Gary Gensler want to like regulate all collectibles?
44:03 David Hoffman? Yes.
44:03 Ryan Sean Adams? Probably. That's the, that's the problem.
44:05 David Hoffman? That's the problem. That's what we're talking about. So Hester Purse- Once again, dissented, Chief Dissenting Officer, along with another Commissioner Yueda, U-Y-E-D-A, apologies for not being able to pronounce the name, they released a joint statement saying they disagree with the SEC's actions against Stoner Cats, comparing these NFTs to 1970's Star Wars collectibles, which is exactly your point, Ryan, stating that we need to protect artists' abilities to create without excessive legal constraints. There's some also just sort of really great quotes in here. They say that it carries implications for creators of all kinds, rather than arbitrarily bringing enforcement actions against NFT projects, we ought to lay out some clear guidelines for artists and other creators
44:47 David Hoffman? who want to experiment with NFTs in a way to support their creative efforts and build their fan communities. Artists of all kinds have long struggled to support themselves, and NFTs offer a potentially viable way for them to monetize their talents. Yes, this is why NFTs are good. The fact that money is involved does not transform NFTs into securities. Basically saying like Hester Pierce saying like, "You are killing creative endeavors, Gary Gensler, by trying to regulate all of these things." Like, don't regulate artists, regulate Wall Street.
45:17 Ryan Sean Adams? And I think that sentence at the end is important. The fact that money is involved does not transform NFTs into security. So what you just said previously, because it's liquid, because it can go up in price, because it's digital, because it's DeFi, does not make it a security. Has nothing to do with it. Collectibles also fit that criteria. Anyway, I don't know where we're going in the US with all this stuff, David. It's just, man, they keep attacking. Like, Gensler's gotta go. The bottom line is that. Gensler's gotta go in order for crypto to continue to have a strong future in the US. It'll have a strong future everywhere else.
45:54 David Hoffman? Somewhere, yeah. It is just a shame that NFTs, and the power of NFTs, like, I see goodness in NFTs. I'm a relentless optimist. I see the power. Like, remember the story I was telling you of the NFT that I bought and the creator, the Kath Simmered photographer? Like, that is a story of an NFT. It's not a security. And if you deem it as security, it's just fundamentally bad for the universe. Sadly, those stories are few and far between in NFT land these days. There are more stories about like rug pulls and stuff like that. So that makes that just a more, a bigger uphill battle.
46:27 Ryan Sean Adams? Well, speaking of uphill battles, last thing on the SEC this week, and we, I want to move on. The SEC's crypto enforcement chief, the same guy I think we're quoting, he warns more charges are coming to exchanges in DeFi.
46:38 David Hoffman? Great.
46:39 Ryan Sean Adams? Yeah, can't wait for that.
46:40 David Hoffman? Awesome.
46:41 Ryan Sean Adams? That's just like a not so available threat. We're coming for you.
46:45 David Hoffman? Yeah. Absolutely ridiculous. Okay, ready to move on. Coming up next, new optimism airdrop. Yes, for real optimism airdrop number three. You should go get it. Actually, you already got it. It's already in your wallet if you qualified for it. So we're talking about that. Infura decentralizing, a very hard thing to decentralized, going down the progressive decentralization route. And then there's a moral dilemma. Coinbase earned 570 ETH of MEV as a result of the Curve hack that happened not too long ago. Should Coinbase give it back? What are the legal implications of this? And of course, Mark Cuban's wallet exploited for almost a million dollars. PR and crypto at the absolute floor, but we're going to talk about all of that stuff and more. But first a moment to talk about some of these fantastic sponsors that make this show possible, especially Metamask Portfolio.
47:31 David Hoffman? If you've not opened up your Metamask portfolio at all, it is a sexy piece of software. Go check it out. Metamask Portfolio is your one stop shop to manage your crypto assets and to tap into DeFi all in one place. And the most important part of that experience, buying crypto, obviously. Metamask Portfolio's buy feature enables you to purchase crypto easily without going through centralized exchanges. Designed with you in mind, you can fund your wallet directly in just a few clicks with convenience and simplicity. What happens when you press the buy button? Rather than being limited to a single payment provider, Metamask brings together a bunch of vetted trustworthy providers to present you with customized quotes for your crypto purchase. Once you've funded your wallet, you'll be able to plug into DeFi with all the money verbs like swapping, bridging and staking. But first things first, you need skin in the game.
48:13 David Hoffman? Head over to metamask.io slash portfolio to buy crypto the easy way. Arbitrum is accelerating the Web3 landscape with a suite of secure Ethereum scaling solutions. Hundreds of projects have already deployed on Arbitrum One with flourishing DeFi and NFT ecosystems. Arbitrum Nova is quickly becoming a Web3 gaming hub and social dApps like Reddit are also calling Arbitrum home. And now Arbitrum Orbit allows you to use Arbitrum's secure scaling technology to build your own Layer 3, giving you access to interoperable, customizable permissions with dedicated throughput. Whether you are a developer, enterprise, or user, Arbitrum Orbit lets you take your project to new heights. All of these technologies leverage the security and decentralization of Ethereum and provide
48:55 David Hoffman? a builder experience that's intuitive, familiar, and fully EVM compatible. Faster transaction speeds and significantly lower gas fees. So visit arbitrum.io where you can join the community, dive into the developer docs, bridge your assets, and start building your first app with Arbitrum. Experience Web3 development the way it was always meant to be. Secure, fast, cheap, and friction-free. Airdrop coming in, Optimism Airdrop number three. 19 million OP tokens allocated to 31,000 unique addresses. That's almost $30 million given out, meant to reward positive-sum governance participation in the collective. Directly distributed to addresses. There is no claiming going on. If you qualified for the airdrop, you got the airdrop.
49:36 David Hoffman? If any website or Twitter or whatever says "go claim your Optimism airdrop," that is a scam. Don't do it. People got allocated these OP tokens if their current holdings of OP were delegated to a governor and they got a bonus if that governor was active, really doubling down on OP governance. So that's the Optimism airdrop. Also, Optimism Retroactive Public Goods Grant Funding Round 3 is also live right now so you can submit your project to receive retroactive public goods funding from Optimism as well. That is Optimism. Ryan, anyone want to take next?
50:11 Ryan Sean Adams? Yeah, they're sprinkling that airdrop to a lot of people over time, I guess, with these OP grants. The next is about the Pol token. So the Pol token is coming. Do you know Matic? The token is becoming Pol in the future. So there's a Polygon 2.0 implementation that is happening in Q4, the beginning of Q4, it looks like. And one of the main implementations here is Matic is going to become Pol. There's some new token economics behind this, so there's going to be a yearly emission added to the Matic, aka Pol, issuance schedule. It was a fixed 10 billion in total supply, and the yearly emission is going to increase to 2%,
50:54 Ryan Sean Adams? and that will be equally distributed between the validator community and a community treasury to fund Matic Polygon moving forward. I guess we'll call it Polygon moving forward. There's also a native Matic bridge.
51:08 David Hoffman? In addition to the upgrade to the token, we're also getting an upgrade to the bridge. Of course, Polygon proof of stake has always been a sidechain. It is now becoming a rollup, and so that means we need to build a bridge. So there is a new canonical bridge for Polygon being built, and these are basically the main two upgrades to Polygon.
51:26 Ryan Sean Adams? I guess we're on the Layer 2 track right now. So Arbitrum, what are they doing? They've got some quests. They've got an Odyssey going on. What's this?
51:34 David Hoffman? Yeah, the Arbitrum Odyssey was a thing that they were doing pre-airdrop, and everyone thought that like this is the surface area for qualifying for the airdrop. They weren't wrong, actually, it kind of was. And then they stopped the Arbitrum Odyssey because it was so popular that it crashed the network. And then they had to install Nitro, and then that was the upgrade. And then they airdropped the token anyways. And now Arbitrum Odyssey returns. So seven weeks of an on-chain excursion, completing missions, exploring some communities. Oh, there's some music that I wasn't expecting from Ryan. Wow. The purpose of the Odyssey is to explore Arbitrum 1's diverse set of applications and introduce you to the protocols that you might not have used yet. I don't know what the incentive is now that the token is already out there, but hey, I mean, crypto pays you to learn it. It's probably going to be beneficial some way.
52:17 David Hoffman? And then also the last bit of Arbitrum news, Conduit, which is a rollup. As a service provider, previously just focused in the optimism ecosystem is now being supported by Arbitrum. So how like it's great that we have the OP stack, but just launching an OP stack chain takes infrastructure. This is what conduit provides to the OP stack world, public goods network, Zora, these all launched with conduit. Now Arbitrum Orbits is also a part of the conduit offering. And so Arbitrum is going to, it's just how it's easier to deploy Arbitrum.
52:48 Ryan Sean Adams? It's like, it's just like a cloud provider for.
52:51 David Hoffman? A provider for roll up stacks.
52:52 Ryan Sean Adams? Layer two infrastructure.
52:53 David Hoffman? Yeah, that's right. This is just a part of a growing story as to like the growth of the optimism superchain, the growth of Arbitrum Orbits, but also the growth between these two things. As soon as you get conduit to do some shared sequencing, all of a sudden these things start to blur together and that's.
53:08 Ryan Sean Adams? Is conduit a shared sequencer too?
53:12 David Hoffman? It has the properties that are required to make shared sequencing powerful.
53:17 Ryan Sean Adams? Interesting.
53:18 David Hoffman? Yeah, we will do a show on this soon, TM.
53:20 Ryan Sean Adams? Let's talk about the Coinbase moral dilemma. So Coinbase apparently earned a 570 ETH as a result of the curve hack. Do you remember when we were talking about the curve hack?
53:31 David Hoffman? Yep.
53:31 Ryan Sean Adams? Months back, maybe? Well, Coinbase earned some MEV as a result of that. And here's the headline Coinbase received 570 ETH, the second largest payout tied to MEV in Ethereum's history to process transactions related to the curve exploit. Okay, so this is like perfectly legal and it's legal in the sense of.
53:52 David Hoffman? The random lottery winners who got the big MEV block, it happened to be Coinbase.
53:57 Ryan Sean Adams? And it's legal in the sense of like, it's not illegal in the kind of the nation state, but it's also in the code is law sense. I mean, they're just playing by the rules of the game. They got this 570 ETH allotment, but it was like hacked money. It was like exploited money.
54:09 David Hoffman? Yeah, it's not the greatest reason why.
54:13 Ryan Sean Adams? So what's going on with this story? What's the dilemma here?
54:15 David Hoffman? Yeah, so there is a call for Coinbase to return the hacked money. This is Alchemix's Curve Pool money. And so the Alchemix pool that got hacked, this MEV happened as a result of that. And so there's a call for Coinbase, like, hey, give the money back. Like, you guys got the money, give it back.
54:33 Ryan Sean Adams? But did Coinbase give it to all of its stakers, basically? Was this part of?
54:36 David Hoffman? Yeah, so this is part of the legal dilemma. It's like, well, is it really Coinbase's? Or is it part of CBE? The first question that came up in my mind is like, okay, if Coinbase, the validators for CBE, Coinbase's liquid staking token, if they got it, well, that actually belongs to the people who operate the LST, the Coinbase LST. And this article doesn't say that the validator is linked to Coinbase's LST program. I kind of would assume that it would, but it might just be an independent validator that happens to be Coinbase.
55:05 Ryan Sean Adams? Yeah, but does it? Does it belong to the CBE holders?
55:10 David Hoffman? I don't know. That's not clear. So it's a matter of like, who owns that? Who operates that validator and why? Coinbase can operate validators outside of the CBE program that's not connected to the program. And then there are the actual validators of the CBE program.
55:22 Ryan Sean Adams? I'm just saying, in any case, you know, couldn't you make? You could certainly make the legal argument that Coinbase should give it back.
55:28 David Hoffman? Uh, no. If it is the CBE holders, it is, it belongs to the people that own CBE. And Coinbase, as a fiduciary.
55:37 Ryan Sean Adams? Why do you think that? I don't know that that's, is it true? Is that true?
55:41 David Hoffman? Yes. Yeah. Because the power, the might of Coinbase's validators is thanks to the people that have staked their ether with Coinbase. It belongs to the people that own CBE, not Coinbase's validators. Coinbase can't just, of their own decision, take money.
55:58 Ryan Sean Adams? But what I'm saying is, why wouldn't the CBE holders be like legally liable to give it back then? Right? Well, Coinbase is kind of the intermediary for the CBE holders. Like, I, I.
56:08 David Hoffman? Well, there's so, there's so many of them.
56:09 Ryan Sean Adams? This is very clear in Rocket Pool, I think, right? Where's RPL got some of this MEV as well as part of the, and it's decentralized. So everyone gets it. And there's no call to kind of like, give it back. But because Coinbase is a centralized entity, operating this validator service, they kind of can give it back, right?
56:25 David Hoffman? That's why this is a story is people can see the trail of money go to Coinbase and be like, "Hey, we know Coinbase. Brian, hello. Please give the money back."
56:34 Ryan Sean Adams? It's interesting. So what do they do? What do you think should be done here? Do you have a solution?
56:38 David Hoffman? A statement from Alchemix 2 CoinDesk says Coinbase has shown no willing list to return the funds despite knowingly benefited directly from the exploit. Coinbase representatives have sold that there's no legal requirement to reimburse anyone. And also, it's like if they do reimburse the money, then it also is kind of a legal precedent of just like that we don't want to enforce. Granted, MEV burn totally removes the power to give back money.
57:03 Ryan Sean Adams? We should do that. We should do MEV burn. Yeah.
57:05 David Hoffman? Let's just do that. Yeah, just maximum credible neutrality.
57:09 Ryan Sean Adams? Yeah. Well, then all ETH holders are equally culpable.
57:12 David Hoffman? Yes, yeah. Everyone is a part of the firing squad. Yeah.
57:15 Ryan Sean Adams? David, this is some cool news from Aztec. What's going on?
57:18 David Hoffman? Yeah, Aztec announces their Sandbox, a local developer testnet for smart contract privacy. The Aztec project and the fullness of it has been described as like one of the most ambitious cryptography projects of all time. They want to be a fully decentralized, privacy preserving layer two. They want to go from just like not having a live in production environment to a full in-production, fully private, fully decentralized shared sequencer layer two in one big go.
57:44 Ryan Sean Adams? That's a thing we don't have yet. We don't have a private layer two. We don't have privacy on the base chain. This is a thing that we need.
57:49 David Hoffman? Yeah. So this is the first step in getting a fully fledged, fully private, fully decentralized layer two. Again, very ambitious project, making steps along the way.
58:00 Ryan Sean Adams? Is the government going to let them? Dun dun dun. To be determined, right? What happens here?
58:06 David Hoffman? Well, okay. So why did Coinbase? Why is this not illegal and tornado cash is illegal? Well, because North Korea used tornado cash.
58:14 Ryan Sean Adams? Well, and like more than that, I would say because OFAC, you just said, you know, tornado cash is illegal, right?
58:21 David Hoffman? Well, yes, but
58:22 Ryan Sean Adams? As a result of North Korea using it.
58:24 David Hoffman? As a result of North Korea, yes.
58:24 Ryan Sean Adams? They didn't have to do that, though, is all I'm pointing out. OFAC did not have to say that. That was an option to not do that. In Fura, becoming more decentralized, that sounds like good news. What's going on here?
58:34 David Hoffman? Yeah, so Infura, they are the RPC endpoint service provider for your MetaMask. By default is one of the centralization vectors that I don't think is massive because it's easy to change your RPC, but yet nonetheless, it is a centralization vector. They are entering their progressive decentralization era, if you will. And so they are looking to decentralize part of the Infura stack. So this is a consensus project. The idea, I would assume at the end of this, is now a DAO with different federated modular parts of Infura. So that Infura, a very important part of Ethereum, is now decentralized.
59:08 Ryan Sean Adams? I think regulatory may be driving some of this, too. I don't know, but more centralized infrastructure providers are looking towards decentralization. Speaking different types of centralization vectors, back on FTX. You want some FTX gossip this week, David?
59:22 David Hoffman? I'd like nothing more.
59:23 Ryan Sean Adams? FTX is suing SBF's parents.
59:26 David Hoffman? I love that. I love that. That's great.
59:29 Ryan Sean Adams? They're all eating their own now. So what's this lawsuit over? Did you see this?
59:32 David Hoffman? Yeah, so $26 million in gifts and property have gone to SBF's parents from FTX.
59:39 Ryan Sean Adams? They were in it, man. They were just as dirty as SBF was.
59:44 David Hoffman? For sure, yeah. Like, where did we just... Sam goes to his parents like, "Mom, Dad, I'm so successful. I'm going to just give you $26 million and a house." So, okay, so the suit is looking to claw back property and millions of dollars in, quote, "fraudulently transferred and misappropriated funds from SBF's parents." Yeah, so also, since 2019, according to this article, Sam's father also directly participated in efforts to cover up a whistleblower complaint that threatened to expose the FTX group as a house of cards. Yowzer. So, parents, just as bad as Sam.
1:00:20 Ryan Sean Adams? Stanford ethics professors, by the way.
1:00:22 David Hoffman? Oh, my God, dude.
1:00:24 Ryan Sean Adams? That's what they were.
1:00:25 David Hoffman? Takes one to know one.
1:00:26 Ryan Sean Adams? Are no longer. This is SBF's mom right here. Look at it a lot like SBF to me.
1:00:31 David Hoffman? Honestly, that's kind of the image that I had in my mind of SBF's mom.
1:00:35 Ryan Sean Adams? Wow. Things could get more ugly in that Nick Carter calls them the crime family. It's probably accurate. The crime family of SBF. David, this is sad. Mark Cuban's wallet got drained, it looks like, for almost $1 million. What are we looking at here?
1:00:51 David Hoffman? We are looking at Mark Cuban's wallet getting drained. That's what it is.
1:00:55 Ryan Sean Adams? On chain, you can see.
1:00:56 David Hoffman? On chain, yeah. You can see the move happening in live. Yeah. So the wallet was inactive for 160 days and I think maybe Mark Cuban just decided to do some spring cleaning, but in that time, it looks like he downloaded a malicious form of MetaMask. And as soon as he typed in his password, then boom.
1:01:13 Ryan Sean Adams? That's bad. So this is what Cuban said, his direct quote, "I went on MetaMask for the first time in months. They must have been watching. I'm pretty sure I downloaded a version of MetaMask with some shit in it." That's what he said.
1:01:24 David Hoffman? That's what he said. I'm sorry, Mark.
1:01:26 Ryan Sean Adams? I think that's what happened.
1:01:27 David Hoffman? Do you remember when Mark came on our show the last time? It's like a little over a year ago?
1:01:31 Ryan Sean Adams? I do.
1:01:32 David Hoffman? He was extremely jaded by crypto.
1:01:34 Ryan Sean Adams? I do. And this is definitely not helped. Can we talk about that then?
1:01:38 David Hoffman? Like, yeah.
1:01:39 Ryan Sean Adams? This is not only bad PR, it's really bad UX.
1:01:43 David Hoffman? Yes, it's bad UX. Yeah, getting hacked is bad UX.
1:01:45 Ryan Sean Adams? This is kind of the worst UX possible. Imagine like you think you have funds somewhere and you're being your own bank and then you just get...
1:01:52 David Hoffman? Your bank gets robbed.
1:01:53 Ryan Sean Adams? Your bank gets robbed.
1:01:54 David Hoffman? Yeah. Can you produce a safer vault than your home bank? Probably not.
1:02:00 Ryan Sean Adams? And again, like Mark Cuban wasn't a... He knew his way around crypto decently well.
1:02:07 David Hoffman? He was better than most, for sure.
1:02:09 Ryan Sean Adams? Yes. I mean, he did all, like, he did stuff with his MetaMask wallet. He did DeFi stuff.
1:02:15 David Hoffman? He had funds on the Polygon layer two that he was actually able to save because the MetaMask didn't point to Polygon. So he saved a few million dollars that was on Polygon.
1:02:24 Ryan Sean Adams? So what do we do about this, David?
1:02:26 David Hoffman? I was, I saw this headline go out on Twitter while I was just hanging out with some friends and voice chatting on crypto friends. I just read it out like, oof, Mark Cuban just got his crypto wallet drained. And they were all like, yeah, it's duh. Like crypto is broken. You can't use it. I'm never touching it. And like, when that's the PR of crypto for the last like two years straight, like I had nothing to say.
1:02:46 Ryan Sean Adams? Yeah, I don't know. We've got to improve UX in this area. It's just fishers and hackers and scammers. It's true. It's true. And I mean, this can happen to people for sure. So I don't know what the solution is.
1:03:00 David Hoffman? What is the answer? Just like, oh yeah, don't touch, don't do anything with your crypto? Like, that's not the future that we envisioned.
1:03:07 Ryan Sean Adams? Smart contracts that, I don't know, validate, that check things. I don't know. If you bankless nation-
1:03:14 David Hoffman? The answer is account abstraction, but we've been saying that for a while.
1:03:17 Ryan Sean Adams? If you guys have a solution for this or Nova Project, I think it'd be really interesting to get them on the show at some point to talk about this in more depth. Wow.
1:03:26 David Hoffman? Call for startups.
1:03:28 Ryan Sean Adams? Yeah.
1:03:28 David Hoffman? Call for startups. We'll fund it, bankless ventures.
1:03:30 Ryan Sean Adams? Back to good news. There's two new Ether ETFs that are going through the gauntlet of the SEC. What do we got here?
1:03:38 David Hoffman? Hashdex mixed Ether ETF. What's a mixed Ether ETF? It's a mix between futures, cash equivalents, etc. Just a hodgepodge of Ether exposure. So that's where it files with the NASDAQ. And then grayscale, of course, much more familiar, Ether Futures ETF. So two new Ether-related ETFs in the pipeline to get denied by the SEC.
1:04:00 Ryan Sean Adams? But eventually they will be approved.
1:04:01 David Hoffman? Eventually, we'll just de-doss them.
1:04:03 Ryan Sean Adams? Do you spot Bitcoin ETF? I still think it's happening within the next six months.
1:04:07 David Hoffman? I was being facetious. There's a pretty good chance that they get approved.
1:04:11 Ryan Sean Adams? Yeah.
1:04:11 David Hoffman? Just not soon.
1:04:12 Ryan Sean Adams? It takes some time. Not soon. Not soon. David, what do we got coming up next?
1:04:15 David Hoffman? Coming up next, we've got some questions for the nation. That question that we talked about earlier. What are the implications of five cent, sub-five cent transaction fees on Layer 2s and on Ether Layer 1s? All this stuff. What happens if Blockspace gets so cheap? What happens to my ETH bags? That's a big question. We'll ask that. And then also there's another one. And then some hot takes from crypto Twitter. We got some good takes this week. And then, of course, what Ryan and David are excited about coming up. All this and more as soon as we talk to some of these fantastic sponsors that make the show possible. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world. And now, something big is happening. Introducing the Cello Layer 2. It's a game-changing proposal that's going to bring Cello's rapidly growing ecosystem home to Ethereum. Vitalik has shared his experience- Excitement for the Cello Layer 2 on the Cello Forum, so has Ben Jones from Optimism.
1:05:00 David Hoffman? But why? The Cello Layer 2 will bring huge advantages like a decentralized sequencer, off-chain data availability, and one-block finality. What does all that mean? Rock-solid security, a trustless bridge to Ethereum, and more real-world use cases for Ethereum without compromise. And real-world adoption is happening. Active addresses on Cello have grown over 500% in the last six months. With the Cello Layer 2, gas fees will stay low, and you can even pay for gas using ERC20 tokens. But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello Forum. Follow @celloorg on Twitter and visit cello.org to shape the future of Ethereum. You know Uniswap. It's the world's largest decentralized exchange with over $1.4 trillion in trading volume.
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1:06:30 Ryan Sean Adams? Question this week from 0xNater. What are the biggest implications for blockchain apps in a post-EIP 4844 world where transactions cost less than 5 cents? What will become possible that wasn't before? Okay, this EIP number, an episode we did earlier this week on BlobSpace. This is the next Ethereum hard fork. It's probably coming in the next three months or so, plus or minus, you know, one or two months, something like that. And it's going to make Layer 2 block space really, really cheap. According to the ETH researcher we had on the podcast, Domathy, he actually says like, basically free? At least at first, effectively free or really close to free and could be maybe subsidized by the Layer 2 as well.
1:07:13 Ryan Sean Adams? So the question is, what are the implications of this? What does that mean for apps? Are there new things that are possible?
1:07:20 David Hoffman? So it's not just about getting cheaper fees. There's a threshold that is crossed when you get fees cheap enough. There's like a zero to one moment when we get real, real close to zero. And that, remember the episode that we did with Antonio Garcia's from Spindle Project, who worked in the web two ad space? His take that immediately just merged into my brain as knowledge about how this whole system works was that the ad model of web two and web one paid for the development and growth and adoption of the internet. Because third-party ads, third-party service providers paid for the maintenance of websites, for the utility of websites.
1:08:02 David Hoffman? And they just paid for in aggregate eyeballs for people's views to go to websites. And that was just the big engine that powered the growth of the internet. What did it take to get there? We needed some certain level of bandwidth to get there. And then all of a sudden, once things were sufficiently cheap, third-party ads subsidized development and growth and innovation and utility of the internet, which caused even more traffic, which produced the utility of the ads. That was how web two grew. Web two was never going to grow if you needed to pay $5 a month for your Facebook. Like, that was never going to work. Instead, we have the ad model, and that's why Facebook is valuable, that's why Twitter is valuable, that's why web two is the way that it is. Without ads, we wouldn't have YouTube.
1:08:41 Ryan Sean Adams? The point that you're making is there's some large third-party, in this case ads, or like model, that is funding all of the user activity.
1:08:51 David Hoffman? Right.
1:08:51 Ryan Sean Adams? And that drops the user activity cost to like zero, basically.
1:08:55 David Hoffman? It drops the user activity cost to the user to zero.
1:08:58 Ryan Sean Adams? Yeah.
1:08:59 David Hoffman? Using the internet costs someone money.
1:09:01 Ryan Sean Adams? Yes.
1:09:01 David Hoffman? It costs the operator of the website, who's making the website in the first place. It costs them money to have users. Instead of users paying for it, ads paid for it. And that was just more efficient, and it paid for the growth of the internet.
1:09:11 Ryan Sean Adams? Because we are the product.
1:09:13 David Hoffman? Because we are the product, yeah. But again, in the beginning of the internet, that was a good thing, not a bad thing. It's just now in this day and age, it's kind of turned into this like maladaptive thing. Okay, move forward into web three. When you get fees like below five cents, below one cent, you know, point one cent. All of a sudden, new business models are unlocked by people paying for their users' transactions. Websites, like apps, anything. Like imagine if like, I don't know, your favorite app that you use all the time just paid for your transactions. That app would be more useful. And so we do not know what new use cases are unlocked when transactions are so cheap that third-party businesses or you know, third parties can subsidize users' transactions when they're free.
1:09:56 David Hoffman? And so that is a, that is just like a massive playing field that we have not unlocked yet because we've been existing in the internet where users have to pay for everything. And we know from web one and two that that doesn't work. We all know that Facebook wouldn't have worked if you have to pay for that service. And so now there's new use cases where third parties pay for you to use them. And all of a sudden like UX is better, economics are better. And this is just like the paradigm shift that happens.
1:10:21 Ryan Sean Adams? Yeah, it is hard to predict what those apps might be though, right? What the high bandwidth apps might be.
1:10:26 David Hoffman? Yeah.
1:10:27 Ryan Sean Adams? Yeah, but you know, we might look to some apps that were tried at first that just fell on their face because transaction fees were so high and too expensive, right? And so that might be a class that we could look at. Here's a related question. I think that's important.
1:10:41 David Hoffman? The next question, yeah.
1:10:42 Ryan Sean Adams? Bearburrito asks, if the base gas fee is, let's say, 20 Gua for us to be in the ultrasound territory, what happens in the L2 world where transactions are occurring on layer two? And gas fees on layer one continue to drop below the ultrasound 20 Gua barrier? Does this reduce the impact of the burn? What is the value in ETH in a layer two world? I think that's the meta question here. So free transactions, practically free, less usage of main net. We're not deflationary anymore. And by the way, for the last month, we haven't been deflationary. We opened the show with that. What is the role for ETH? Does ETH price go down in this world? What is, is there still a value accrual mechanic?
1:11:22 David Hoffman? Yeah, I still think in the fullness of time Ether will, the Layer 1 will be expensive. Like, it's currently not expensive because of the bear market. In the fullness of time, we're going back over 100 gateway gas prices. So you still predict deflationary ETH, basically? Yes, yes. But overall, there is a large transfer of economic activity from the Layer 1 to the Layer 2s. And the Layer 2, the rollup-centric roadmap, the reason why 4844 is a big deal, why we call, giving rollups first-class citizenship on Ethereum, why we are saying like, "Hey, Ethereum is super credibly neutral, but we're still going to prioritize Layer, uh, rollups." And what does that mean? We're not charging rollups for call data or data availability.
1:12:05 David Hoffman? So we're making that resource effectively free so that rollups can be their maximally independent own network and just do the minimum amount of payment to the Layer 1 to exist. So, rollups pay the minimum amount of value to the Layer 1 in order to exist. So, rollups burn the minimum amount of Ether to access the security and decentralization of Ethereum. This is taking away from the burn of Ether, and it is giving it to the moneyness of Ether, because these rollups are adopting Ether as money. These are all satellite networks of the Ether monetary system. And so, the bull case for Ether goes, it's not not the burn, because like I said, there will still be burn,
1:12:50 David Hoffman? but it will, it's a transfer of, Ether will be bullish because of it being adopted as money and less of it getting burned. Just more people will have reservation demand of Ether on these Layer 2s, then Ether will be burnt. So there's a trade-off here, and one is creating the other. And the trade-off is saying that there will be so many Layer 2s that will all use Ether as money, that that is going to, that is going to be a bullish trade-off.
1:13:15 Ryan Sean Adams? Yep, that's basically it. So the two reasons ETH is valuable is one, because Ethereum sells block space, and that turns Ether into a productive asset. So it's a capital asset. There's some return on that asset. It's yielding positive cash flows. That's number one. And the second is because it's a monetary unit. It's a store of value. It's a medium of exchange. It's a unit of account. These things, it's collateral for a loan. It's economic bandwidth. And what you're saying is, in the short run, maybe even the medium run, well, the block space demand goes down and kind of the productive asset, the capital asset, utility value of Ether, the asset, might go down and Ether might turn inflationary.
1:13:58 Ryan Sean Adams? That's more than compensated by Ether's use as a monetary unit inside of these networks. And you just look at Eclipse, for example. They're launching with Ether as the money for block space, for their gas, and as the unit of exchange, the unit of account. And all of these Layer 2 networks will require a very strong decentralized monetary unit in order to operate. And the default is probably going to be Ether. The default for their DeFi and their collateralized loans, their economic bandwidth, and all of these things is probably going to be Ether. And that's the bet. And it's as simple as that. And so you could believe that happens or not. And that's your entire thesis for Ether the asset. It's actually kind of simple, I think.
1:14:41 David Hoffman? It's very simple. Yeah. Ether is a monetary network, and it's the rollup-centric roadmap that is carrying the money of Ether to the corners of Ethereum. And then I also will say, like, Layer 2s are going to trade with each other, and they're going to settle through the Ethereum Layer 1. So instead of like individual users going from like one Layer 2 through to the Layer 1 to the second Layer 2, they're probably going to bridge. They're probably not going to touch the Layer 1. But then like massive, big shipping containers of value are going to flow from one Layer 2, settle down through Ethereum, use Uniswap, use Aave, whatever. And then that new state will be uploaded by a different Layer 2. And that is the net economic activity that's going to stay at a basal level on the Ethereum Layer 1,
1:15:21 David Hoffman? where you're going to get Ether burn. And it will be burnt. It will be deflationary, is my prediction. It'll just be not like maximally deflationary. Instead of trading maximum deflation, we're trading for maximum monetary network size.
1:15:34 Ryan Sean Adams? There you go. Takes the week. David, what's this one?
1:15:37 David Hoffman? This came out from Matt Huang of Paradigm, it came out last night, Wednesday night. He calls this "The Casino on Mars." This is actually a full blog post, but he does a shorter condensed version along with a fun, cool little graphic. So I'll read out the blog post while Ryan puts the graphic on the screen. He says, "It's useful to think of crypto as a new planet that's being settled. Skeptics see a desolate planet without purpose, or worse, a haven for an unsavory casino. Optimists see the planet's potential, a blank slate on which we can build an upgraded financial system and an internet platform. Early settlers are a mixed bunch: explorers drawn to the frontier, speculators, some rough and disreputable, innovators and researchers attracted to what's newly possible, and ordinary people, especially those marginalized
1:16:22 David Hoffman? on Earth. Governance remains ambiguous, some earthly jurisdictions prohibit their citizens from visiting, others seek a foothold in the new world. A history of speculation and hype cycles have cast a social taboo over the new planet, leaving many to wonder what is its future. Today's casino-like speculation is a part of the bootstrapping process. Much like the gold rush of the 1849 transformed San Francisco from a quaint village into a major port and ultimately the heart of tech innovation, today's speculative frenzy in crypto is attracting the settlers and catalyzing the infrastructure necessary to turn a barren planet into a thriving crypto civilization." Probably the longest take we've ever read out here, but the accompanying visual I thought was also very cute and fun.
1:17:04 Ryan Sean Adams? You know what this looks like? Do you ever play RTS games like Starcraft or Warcraft?
1:17:10 David Hoffman? There's the Command and Conquer reference in the bottom left corner of Paradigm.
1:17:13 Ryan Sean Adams? Oh, is it really?
1:17:14 David Hoffman? Yeah, yeah.
1:17:15 Ryan Sean Adams? That's what this looks like to me. So we're looking at a graphic and there's kind of a city in the middle and it's got Ethereum and this is it. Bitcoiners were first to settle here. Exchanges like Coinbase and Binance get you on and off the planet. Ethereum is the largest city depicted here where Uniswap is the best way to get around. Very cool.
1:17:31 David Hoffman? Uniswap is a monorail system in the Ethereum city. And there's some other like cameras. Yeah, there's the FTX exchange right next to the Coinbase exchange and Binance exchange and the FTX exchange is just burning. Coinbase exchange has a rocket that is launching. Because of the base layer two, then on the other side, there's the Cosmos ecosystem with all the independent satellite cities. And then there's Luna that's just on fire. The nuances in this illustration I thought was great.
1:17:59 Ryan Sean Adams? The nuance and also some of the paradigm bias you see, I don't see any Kraken right here, you know, that would be Fred. Fred Arisum is like coinbase maxi, I'm sure, right?
1:18:07 David Hoffman? I don't see Arbitrum in here. Yeah, so there are investors in optimism, but there's no Arbitrum. Yeah.
1:18:12 Ryan Sean Adams? It's out of frame. It's probably in the full picture. It's just out of frame in this picture. David, here's a take from you. Let me start with Mike Epilido tweet.
1:18:20 David Hoffman? It's a take with him take.
1:18:22 Ryan Sean Adams? Cosmos for interoperability, Ethereum for security, Solana for execution. That's similar really to the episode we just did recently with him, where he basically said that. There are three different approaches trying to solve the same problem and coming from three different perspectives and angles. And your tweet on top of the tweet was, now, which one do you store your wealth on?
1:18:43 David Hoffman? Yeah.
1:18:44 Ryan Sean Adams? What do you mean?
1:18:44 David Hoffman? Which one do you store your wealth on? Interoperability, security, or execution? Where do you store your wealth? Interoperability, security, or execution?
1:18:53 Ryan Sean Adams? If you're just saying those words to me, I want security because like money vaults. You have security with like armed guards and I don't want it to leave my wallet the way. Mark Cuban's $1 million left his Metamask wallet. It's a different type of security, but anyway, I want security. That's the thing I want.
1:19:11 David Hoffman? Right. Money is secure. Money holds its value over time. Interoperability, you suffer from the MV equals PQ problem. Solana, well, we saw the execution of Solana, moving on to the security of Ethereum. Security is money. That's my take.
1:19:26 Ryan Sean Adams? Yeah, it's the classic bankless money thesis take, okay?
1:19:30 David Hoffman? Yeah.
1:19:31 Ryan Sean Adams? MV equals PQ? Where'd you pull that one out? I haven't heard that since 2017, my friend.
1:19:36 David Hoffman? Yeah, right. Yeah, the velocity. Remember the velocity problem?
1:19:39 Ryan Sean Adams? Money? It's old school Chris Berninski talk around here.
1:19:41 David Hoffman? That's, yeah, that velocity problem, that was the OG tokenomics. Remember supply syncs?
1:19:46 Ryan Sean Adams? Yeah. Wow. We've come so far. Now it's very simple. Blockchain sell blocks, like money. All layer ones compete as money. That's what you need to know. David, what are you bullish on this week?
1:19:58 David Hoffman? I'm Bullish on choosing your own character class. We, Bankless has its own illustration to bring to the table, just like Paradigm's. Our Paradigm has the cities in this new planet. We've got the character classes, the character archetypes. I put out an article this week in the Bankless newsletter, and this is a metaphor that we've used like since inception of Bankless, I would say. When you come into crypto, you choose your character class. Like, what do you want to do in crypto? Do you want to be a trader? Do you want to be a yield farmer? Do you want to be a token degenerate? You want to airdrop some, a hundred some airdrops? You want to be a content creator, Twitter influencer? Or you can be like, Brian, just be the silent staker. You're also a content creator. So like, I just, I just made this fake universe, talked about the archetypes of each. It's like the sorting hat article. This is, I think we're going to reference this article in the future.
1:20:43 David Hoffman? This is like the sorting hat. So when your friends inevitably get into crypto during the bull market of 2024 and 2025, this is, I think, a very useful piece for people to understand how crypto operates, why crypto Twitter is weird, and it will help them just like move through the crypto rabbit hole faster and quicker.
1:20:59 Ryan Sean Adams? I think we've made this point before, but the worst thing you can do is try to play all of these at the same time.
1:21:05 David Hoffman? Yes, right. You do not have to be good at all of these. I very quickly realized I was a bad TA trader when I tried in 2017. And I was like, oh, never again.
1:21:15 Ryan Sean Adams? Yeah. It's one, one other thing I'll say, shout out to Gordon from our team, who put these graphics together. Absolutely fantastic. And I guess if Paradigm is playing that like Starcraft, this is like a, you know, Diablo two or something, or Diablo three type of reference, right? Because you really, it's a role playing game. And I think it's really important for people to understand what they're, what, what game they're playing in crypto, right? You don't have to follow all of the token trends. You don't have to be degenerate NFTs. You just be that shout out silent staker class. Okay, you could just like dollar cost averaging to assets that you know, like Ether, like Bitcoin, every single week and stake it as well and play that game. Just know what game you're playing.
1:22:00 Ryan Sean Adams? Choose your character class. It's the most important thing you can do in crypto. That's a great content piece, David.
1:22:05 David Hoffman? Yeah. And also, like all good games, there is an expansion pack. We already have the expansion pack ready to go. But we couldn't put 15 character classes in the first edition. So these are the base, these are the base characters. There are more characters. And I will say this to everyone out there who started critiquing us for saying like, where is the dev character type? The dev character type is not a base character. That is in the expansion pack, folks.
1:22:29 Ryan Sean Adams? No, wait, do they have to send money to buy the expansion?
1:22:31 David Hoffman? Comes out. We got the on-chain wizard. We got the researcher. We got the high priest. We got the trade influencer. We got the dev. Everyone calm down. God, everyone's fighting these days. Christ.
1:22:41 Ryan Sean Adams? It's just Twitter. Everyone's actually happy outside of Twitter.
1:22:43 David Hoffman? I keep forgetting that.
1:22:44 Ryan Sean Adams? Unhappy.
1:22:45 David Hoffman? Listeners of the Bankless Podcast are like, why are they always like, fuck talking about Twitter fights?
1:22:50 Ryan Sean Adams? It's because we spend too much time online. Sorry, guys. So that's how we bring the content to you. So it's a double-edged sword.
1:22:55 David Hoffman? Okay, Ryan, what are you excited about?
1:22:56 Ryan Sean Adams? You want to hear something super nerdy about what I'm excited about?
1:23:00 David Hoffman? It's always nerdy.
1:23:01 Ryan Sean Adams? Well, this is actually, I feel like, yeah, you're right. Okay, but this sounds nerdy. Non-EVM virtual machines. Yeah, that's what's getting me going this week.
1:23:10 David Hoffman? It's pretty nerdy. All right. Okay, tell me about them, brother.
1:23:13 Ryan Sean Adams? The Slana virtual machine, the SVM. Okay, we haven't had an opportunity to explore it in depth. And we've wanted to, right? But like, the truth is, the EVM is kind of like, it's legacy technology. It's pretty, I wouldn't say it's legacy. It's just old technology. It's single-threaded. It's not optimized for execution. And the SVM has really been optimized for execution. Solidity is kind of, so I'm told, from the devs, a janky type of language. Like, it's a derivative from JavaScript with.
1:23:45 David Hoffman? From a previous era of crypto.
1:23:47 Ryan Sean Adams? Yeah, with SVM, you can use like Rust, really optimized for execution. And I guess I'm just excited about not only the SVM and Eclipse and kind of layer twos. But there's not, there's other non-EVM, like multi-threaded projects being developed as well. There's one that I'm aware of. It's called Monad. They're actually developing something that is kind of an EVM and.
1:24:10 David Hoffman? Closer to the EVM. Yeah, it's like parallel, parallel EVM.
1:24:14 Ryan Sean Adams? Yes. And so that's. Being developed. Anyway, this whole puzzle piece of the virtual machine is finally getting some love and attention. It's also happening, by the way, in the EVM community with Arbitrum and Stylus, right? They're giving the EVM a little bit of love. So we're
1:24:28 David Hoffman? And for what it's worth, start to hijack your shit.
1:24:30 Ryan Sean Adams? Yeah, no, go.
1:24:31 David Hoffman? Starkware is a non-EVM layer two. Aztec is a non-EVM layer two. Fuel is a non-EVM layer two. And so there has been a splattering of these.
1:24:40 Ryan Sean Adams? Yeah, so it's a, it's a nice new space that we're experimenting and developing in. So yeah. Sorry to be nerdy, but that's the whole show. You're right about that. Non-EVM virtual machines are getting me going this week.
1:24:50 David Hoffman? Cool. Yeah, I know also, but that is the roll up centric roadmap is useful pieces of technology can just plug in to smart contracts.
1:24:58 Ryan Sean Adams? David, what do we got meme of the week?
1:25:00 David Hoffman? Meme of the week. This one's from Udi Worthheimer. This is about NFTs. And this is the guy riding a bicycle who sticks a peg through his bicycle and falls over and blames something else meme. So first panel, NFT MFers. Second panel, scamming each other and nonstop until everyone's poor. And then third panel where he's falling on the ground and grabbing his knee and goes, effing blur. Blaming it on blur. Yeah, because blur is the reason. Yeah, blur is the reason why all of our NFTs are down bad.
1:25:28 Ryan Sean Adams? David, are we just nonstop scamming each other and then blaming other things for that? Is that, is that, um, is there some truth here?
1:25:35 David Hoffman? Yeah, as, as much as I think Udi's a big, big fat troll. He is also generally like on target sometimes about stuff.
1:25:46 Ryan Sean Adams? Oh, man. How are we going to stop the scams, David? You got a solution for that?
1:25:50 David Hoffman? Just stop scamming people. Stop doing it. I don't know, man. I'm not doing it. You're not doing it.
1:25:59 Ryan Sean Adams? Yeah. Anyway, that, that's the simple solution is just scammer.
1:26:03 David Hoffman? Call it, call to action. Everyone stop scamming.
1:26:06 Ryan Sean Adams? Yeah, one, two, three, stop scamming.
1:26:08 David Hoffman? Stop doing it.
1:26:10 Ryan Sean Adams? Let's get to disclosures. We're going to end with risk in a minute, but first we disclose, David and I are both advisors and investors to Optimism. I'm an advisor to Polygon. I'm also an investor in Arbitrum and Monad, the project I mentioned too. And we're both investors in Aztec, of course. Both David and I hold Ether. We are bullish, Layer 2s and the entire ecosystem. We are long-term investors. We're not journalists. We don't do paid content. There's always a link to disclosures in the show notes. And you know this, and Cuban felt this this week certainly, but crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone. You got to be careful, but we're glad you're with us on the bankless journey. Thanks a lot.
1:27:12 David Hoffman? Are you sitting up as much as possible?
1:27:16 Ryan Sean Adams? I'll come down.
1:27:17 David Hoffman? Yeah, you will.
1:27:21 Ryan Sean Adams? You got me. I'm trained. I'm programmed. All right, ready?
Previous SVM L2 on Ethereum: Bullish or Bearish SOL? with Neel Somani, Founder, Eclipse Next 189 - Taking Treasury Bills Onchain with Martin Carrica Page updated October 26, 2026 · transcript and summary are machine-generated
