ROLLUP: The Debate | 1st DeFi Congress Hearing | ENS joins PayPal/Venmo | Coinbase’s cbBTC

This week in crypto, the Trump vs. Harris debate sparked chatter, but did the markets react? DeFi had its first U. S. congressional hearing—how’d it go? Friend.tech burned its keys—abandoning? ENS integrated with PayPal and Venmo, while Coinbase launched their cbBTC, and Sony might release a stablecoin. Plus, did we see “war mode” Vitalik this week? ------ 🔥The Bankless Summit | 70% of for Citizens | 20% code WRU20 https://x.com/BanklessHQ/status/1832085867483083211 https://www.bankless.com/join ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap ⚡️ CARTESI | LINUX-POWERED ROLLUPS https://bankless.cc/CartesiGovernance 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/62 ------ TIMESTAMPS & RESOURCES 0:00 Intro 5:21 Markets https://farside.co.uk/?p=1518 https://x.com/biancoresearch/status/1832806811088638440 https://x.com/matt_hougan/status/1833149076722081906 https://www.cbsnews.com/news/inflation-cpi-fed-readies-to-cut-rates-next-week/ https://www.tradingview.c om/symbols/FRED-WALCL/ https://x.com/sonyasunkim/status/1832114732326957274 18:02 House lawmakers ended up divided in 1st Congressional DeFi hearing https://financialservices.house.gov/news/documentsingle.aspx? DocumentID=409354 https://x.com/fund_defi/status/1833556632027955694 https://x.com/coinage_media/status/1833593592373243915 https://x.com/NeerajKA/status/1833530974212387228 https://x.com/rohangrey/status/1833543531228762323 https://x.com/jchervinsky/status/1833557017023459526 27:29 The Debate - they didn’t mention crypto! https://x.com/CNN/status/1833703753179857334 https://x.com/erikvoorhees/status/1833705605045051850 https://polymarket.com/event/who-will-win-the-debate-according-to-polls https://polymarket.com/event/presidential-election-winner-2024?tid=1726028429396 https://x.com/shayne_coplan/status/1833127734844789106 https://x.com/Polymarket/status/1833679653191512442 https://www.theblock.co/post/315808/presidential-debate-risk-off-crypto https://x.com/MikeIppolito_/status/1833874331539034448 36:49 War mode vitalik? If its not stage 2, its not a rollup https://x.com/vitalikbuterin/status/1834061075970683367 39:01 zkSync Stage 1? & New CMO? https://blog.zknation.io/zksync-governance-system/ https://x.com/the_matter_labs/status/1833894141052494218 42:41 Sony Stable Yen https://x.com/delzennejc/status/1833243834563650038 43:21 Friend. Tech team renounces control of smart contracts https://x.com/friendtech/status/1832581118165709140 https://x.com/functi0nZer0/status/1833178200685318213 https://x.com/MacroMate8/status/1833393620407488542 https://x.com/friendtech/status/1833259362711986335 47:06 EigenLayer announced Season 2 Stakedrop! https://blog.eigenfoundation.org/season-2-stakedrop/ 48:55 ENS was integrated with PayPal and Venmo! https://x.com/ensdomains/status/1833536140529570039 https://x.com/brantlymillegan/status/1833568986547818820? 50:16 Coinbase Bitcoin - cbBTC released! https://x.com/coinbase/status/1834208544247144949 https://x.com/jessepollak/status/1833603913888764064?s=46&t=2ZINVXJQKx6xO_6Wiiu_2gb https://x.com/jessepollak/status/1833603913888764064?s=46&t=2ZINVXJQKx6xO_6Wiiu_2gb 55:04 David Fighting at Permissionless 58:01 Closing & Disclaimers ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

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

• 0:04Ryan Sean Adams?

  Bankless Station, happy 2nd week of September. It is time for the Bankless Weekly Roll-Up. David, you and I are back to our natural habitat, which is looking at each other through screens rather than being in person together.

• 0:14David Hoffman?

  That's right. I got a moment of 3D Ryan this last week, and man, it was weird. It was a little too real.

• 0:20Ryan Sean Adams?

  It's weird. It's not great, is it? There was like, "Quick, let's leave, let's go back to screens, make this normal again."

• 0:26David Hoffman?

  Can we just chat over Discord, please?

• 0:28Ryan Sean Adams?

  And you're actually in Lisbon, so you're all the way in Spain now, so...

• 0:31David Hoffman?

  Yes, yes. I have gone from Argentina to New York to Lisbon. Haven't done a weekly roll-up in New York, actually.

• 0:38Ryan Sean Adams?

  You and I live very different lives, let me just tell you that with respect to our travel. It's great. Okay, but I know you caught this, this is a question for the Bankless Nation. One of the things we're going to talk about today is the Trump versus Harris debate. Did you enjoy it? Did the crypto prizes enjoy it? That's the question.

• 0:55David Hoffman?

  DeFi had its debut in the first hearing around DeFi, specifically DeFi, in the United States House of Congress. How did it go? We introduced DeFi to Congress, did they like it? In the world of crypto natives, Friendtec has burned their keys governing over the app. Are they abandoning the project? Or is this fulfilling the cypherpunk values of decentralized protocols? What's going on over here?

• 1:18Ryan Sean Adams?

  Not your keys, not your app, I guess. Maybe it's everyone's app. I'll have to find out. Also, BNS was integrated into PayPal and Venmo this week. That's a pretty big freaking deal. And Coinbase released a tokenized version of Bitcoin just this morning, as we're recording the roll-up. And Sony is launching a stablecoin? Lastly, David, did we just catch a glimpse of Vitalik? War Mode Vitalik? Is that what's going on on Twitter?

• 1:42David Hoffman?

  Dude, he's crescendoing in something. Spiciness.

• 1:47Ryan Sean Adams?

  Something. We'll talk about that spiciness. David, we got an announcement. Speaking of Ethereum and spiciness, there's a spicy event coming up for you. Tell us about it, because you've been planning this. David is the mastermind. I haven't had almost nothing to do with the Bankless Summit. What is the Bankless Summit, David?

• 2:02David Hoffman?

  Yeah, I'm achieving a lifelong crypto-long crypto-career-long bucket list, which is hosting something like TED Talks for Ethereum, which we're calling the Bankless Summit. This is the day after DevCon. It is a one-day event, one-stage event with no panels. And so I have recruited some of my favorite speakers, some, I think, the best speakers in Ethereum.

• 2:24Ryan Sean Adams?

  Who you got? Give us some names. Name some names.

• 2:26David Hoffman?

  Justin Drake, of course. Up-and-coming EF researcher Mike Neuter, Amin Soleimani, one of my personal heroes, Matt Cutler, who I've watched him give multiple presentations. They're always fascinating. Eric Wall from Bitcoin Land.

• 2:39Ryan Sean Adams?

  Wait, Eric Wall?

• 2:40David Hoffman?

  Eric Wall.

• 2:40Ryan Sean Adams?

  A Bitcoin guy, huh?

• 2:42David Hoffman?

  Yeah, Bitcoiner, yeah. We got Anthony Sazano opening it up. He's going to open up the whole entire thing.

• 2:49Ryan Sean Adams?

  Sazano keynote, huh?

• 2:50David Hoffman?

  He's going to give the opening speech. Yeah, exactly. Talking about just actually how well Ethereum is doing. He says it's all very bullish.

• 2:56Ryan Sean Adams?

  Yeah.

• 2:57David Hoffman?

  My friend Janine Ledger, who's going to talk all about this pop-up city revolution that she has been spawning ever since Zuzalu, Epicentury Plan Zuzalu, now is creating this whole edge-city movement. You've been hearing about all these pop-up cities, right? She's at the epicenter, so she's going to tell that story. Mainly, the idea is like really good content. The speakers that I've chosen, I am charging with making the most interesting content possible. There, I know you don't go to conferences, Ryan, so I have to kind of fill you in on the conference meta, but there has been this like massive side-event meta of like, instead of people buying booths, they just, they host a side-event. And these people also don't tend to know how to like curate good content, in my opinion. And so I am doing something that's a little bit of the opposite

• 3:42David Hoffman?

  of the kind of content that I find at these side-events, which is like six-person panels that are like just not optimized. And so, no panels. The only time there's going to be two speakers in where Onsgar and Casper are presenting their ideas about the Ethereum monetary policy, because that's what they care about. That's what they're passionate about. So all these speakers have been charged with producing the most interesting content possible about the thing that they are most passionate about. So six hours of the most interesting content that you can enjoy. If you are a Bankless citizen, you have 70% off.

• 4:16Ryan Sean Adams?

  Wow, really?

• 4:17David Hoffman?

  Current, current ticket price is $100. It goes up as we sell out waves and waves and waves. There are, is only 600 person capacity in this venue. So there's only 600 tickets. The first wave of 125 tickets we released this Monday. We're already like 50% sold out and they're also the cheapest that they will ever be. If you are a, not a bankless citizen, but you are a bankless weekly roll up enjoyer, you get 20% off.

• 4:41Ryan Sean Adams?

  A little discount.

• 4:42David Hoffman?

  There is a link in the show notes. Also, if you're a daily Guey member, there is a Discord for you somewhere in the daily Guey Discord. Go find it and then a few other communities as well. You will know them if you are in them.

• 4:54Ryan Sean Adams?

  You almost got me, David. I, I was almost.

• 4:56David Hoffman?

  You almost came out.

• 4:57Ryan Sean Adams?

  I was briefly thinking about maybe going to another in-person event, but I might have to live vicariously through you yet again.

• 5:04David Hoffman?

  There'll be some pretty cool perks if you are there in real life, because at the end of every single talk presentation, there will also be an audience Q and A as well. And so there is actual utility of going there and being in person.

• 5:16Ryan Sean Adams?

  Yeah, we like our tokens with utility, don't we? Our conferences too.

• 5:19David Hoffman?

  Utility tickets.

• 5:21Ryan Sean Adams?

  Let's talk about prices, David, and we've got to thank Kraken for providing us these fantastic Kraken Pro charts. And I guess fantastic because we're up on Bitcoin? Tell me about that.

• 5:31David Hoffman?

  2.3% on the week, started 56,000, ending 57,650. So yeah, up a, up a little bit.

• 5:39Ryan Sean Adams?

  I'll take that. And how about ETH price?

• 5:41David Hoffman?

  Currently at $2,330.

• 5:44Ryan Sean Adams?

  I swear this market hates ETH right now, doesn't it, David? I think that's turning around though. It's going to turn around this quarter.

• 5:49David Hoffman?

  We're getting close. It can't get that much worse without something materially breaking.

• 5:55Ryan Sean Adams?

  And now we got war mode Vitalik, maybe? We'll go get to that later, but let's go check in on some more bleakness, which is the Ethereum ETF flows. Haven't been great, still kind of draining out of Ether E.

• 6:07David Hoffman?

  We did break that, that red phase. We did have one day of inflows on the 10th of $11 million. So we finally broke that like 10 day long streak. And then the next day, September 11th, half a million dollar outflow, which I'm called nothing.

• 6:19Ryan Sean Adams?

  All right. So we just need.

• 6:20David Hoffman?

  Blackrock, yet to sell. Blackrock has not had any ETH go out.

• 6:24Ryan Sean Adams?

  To break even though, David, we just need 50 more days, exactly like September 10th. That's it. Then we're even.

• 6:31David Hoffman?

  It's not that many.

• 6:32Ryan Sean Adams?

  It's not that many. Could be worse.

• 6:34David Hoffman?

  Like we haven't, we haven't seen the TradFi reflexive FOMO into crypto assets yet. I would like to see how much foam they have.

• 6:42Ryan Sean Adams?

  You know who disagrees with you, though, is Jim Bianco. Jim Bianco had a take this week.

• 6:46David Hoffman?

  He's been a little bearish lately.

• 6:47Ryan Sean Adams?

  He's bearish ETFs specifically. So what's Jim saying here, David?

• 6:51David Hoffman?

  He's kind of implying that the tides are turning with the ETFs and not in the direction that we want. He's saying TLDR inflows have now turned into outflows. Holders have recorded losses now for the first time. Advisors hold less than 10% of all the ETF holdings, which he's saying implies that boomers never came. This is all going to like kind of retail and investors. Like, Brian, you have Bitcoin ETF in your retirement account, right?

• 7:16Ryan Sean Adams?

  And I'm a crypto native. It's not the majority of my funds. So I'm old money, I guess. I'm not a net new buyer of ETFs.

• 7:25David Hoffman?

  You're not doing the thing that the ETF was said it was going to do, which is like attract new capital, attract new buyers. And then lastly, he also says the average trade size is less than $12,000. Also, what he's saying is an indicator that the participants of these ETF markets are just not in size. It's more individuals, not like, you know, multi-billion dollar institutions. So his conclusion is not an adoption vehicle. He says it's a small tourist tool and on-chain is returning to TradFi. So we're actually just kind of getting an outflowing of people being on-chain to people being on BlackRock.

• 7:59Ryan Sean Adams?

  Yeah, he has some supporting evidence for this, too. But he basically kind of says like, check back in 2028 is the TLDR.

• 8:08David Hoffman?

  Yikes. I think that's like, okay, but that's like, okay, tides are turning. It's bearish now, but also I'm like, what? Like boomers never came? That means they still haven't bought our bags? That's just great.

• 8:18Ryan Sean Adams?

  Matt Hogan actually disagrees on some of the points that Jim makes. So he says, Jim is wrong here. Investment advisors are adopting Bitcoin ETFs faster than any new ETF in history. And investment advisors is kind of the class of investors that Jim was saying is not really here, right? These are, you know, third-party, maybe baby boomers, like older retail investors that go through some sort of registered investment advisor. And then he looks at the data and says, per this table, the BlackRock ETF has attracted 1.45 billion in net flows. Investment advisor. Jim calls this small because it's a fraction of the 46 billion that has flowed into Bitcoin ETFs in total. But if you excluded all of their flows and just looked at the 1.45 billion linked to

• 9:01Ryan Sean Adams?

  investment advisors, that would be the second fastest growing ETF. The BlackRock ETF would be the second fastest growing ETF launched this year out of 300 launches. So he's saying he agrees with Jim that yeah, the these registered investment advisor purchasers are small in the context of all of the Bitcoin ETF flows. But actually, it's pretty large compared to every other ETF. So Matt Hogan, who is somebody, by the way, didn't he tell us? He talks to 20,000 like Bitwise talks like 20,000 registered investment advisors. He's he's still is saying that the demand feels pretty strong here. So a bit of a back and forth going on on the ETF story.

• 9:42David Hoffman?

  There is just this big conflation of the grayscale trust that really just queues up the purity of the data here. Like, we don't really know how much is like organic adoption versus just people swapping out of grayscale and going into an actual real ETF. But nonetheless, like being bearish on the ETFs, I think, is just categorically wrong. It's just about of like, what are your expectations? And how do they compare to those expectations?

• 10:05Ryan Sean Adams?

  You want to talk about the ETH Bitcoin ratio? Or is that still sore?

• 10:09David Hoffman?

  Speaking of expectations.

• 10:10Ryan Sean Adams?

  Yeah.

• 10:10David Hoffman?

  Okay, well, now the ETH Bitcoin ratio is so bad that I am just like, fuck it, make it worse. And just just break it.

• 10:21Ryan Sean Adams?

  Yeah.

• 10:21David Hoffman?

  Just just go down to point 0.3. We are currently at point 0404.

• 10:27Ryan Sean Adams?

  Yeah.

• 10:27David Hoffman?

  So we are fingernails above breaking into point 3 territory.

• 10:31Ryan Sean Adams?

  Okay, okay.

• 10:33David Hoffman?

  Just go down to just go down to point 03 and bounce back up. Like, just just break it, make it hurt.

• 10:38Ryan Sean Adams?

  In my experience, in my experience, that is the actual end stage of capitulation. You're not capitulating until David Hoffman is like, actually, I want it to go lower. Make it make it hurt more.

• 10:50David Hoffman?

  Yeah, make it hurt more.

• 10:52Ryan Sean Adams?

  That is actually.

• 10:53David Hoffman?

  Punch me in the face.

• 10:54Ryan Sean Adams?

  So we may have we may have bottoms on this or we may be about to bottom. We'll see on that.

• 10:58David Hoffman?

  I mean, I feel like that was partly my interest in bringing Kyle Simon on the podcast. He was like, just make it make it hurt, dude. Tell me what I don't want to hear.

• 11:06Ryan Sean Adams?

  Crack another rib.

• 11:08Ryan Sean Adams?

  All right, crypto market cap, what are we at on the week?

• 11:12David Hoffman?

  2.12 trillion, still keeping our head above that $2 trillion level.

• 11:18Ryan Sean Adams?

  You want to talk about inflation, David, in broader markets?

• 11:20David Hoffman?

  Sure.

• 11:21Ryan Sean Adams?

  So inflation has dropped to a three-year low. Consumer, Jerome Powell did it, victory, mission accomplished.

• 11:28David Hoffman?

  Honestly, you can't hate Jerome Powell, we were shitting on him so much, they kind of nailed it.

• 11:33Ryan Sean Adams?

  Well, yeah, I mean, he got this part, right? Consumer prices rose 2.5% in August from a year earlier, that's down from 2.9% in July. And from July to August, prices just rose 0.2%. So can anyone out there say that inflation is still running hot? I don't think so. They could say it might come back months from now, years from now, but I think they've got to give credit to Powell.

• 11:57David Hoffman?

  Dude, there has been like, under 1% inflation for like, four months.

• 12:02Ryan Sean Adams?

  Right, okay, so what this means, of course, is that the Fed is going to be looking at unemployment, which we've talked about in this section a number of times. And we're looking at, by the next roll-up, Jerome Powell will have already given his guidance on what the Fed plans to do next, and everyone is anticipating, the market is anticipating a rate cut of about 2.25% to 0.5%. And that could happen on September 17th, 18th, that's kind of the time horizon.

• 12:30David Hoffman?

  So many eyeballs are watching this right now.

• 12:32Ryan Sean Adams?

  Yes.

• 12:33David Hoffman?

  The whole, all, all financial markets are watching this right now.

• 12:36Ryan Sean Adams?

  And expecting it, so we're expecting some easing in rates. So if he doesn't, can you imagine if he doesn't?

• 12:41David Hoffman?

  Oh my god, that would be so bad.

• 12:43Ryan Sean Adams?

  No rate cut. We're just fine. I think that's a very low probability of playing out. But Ben Cowan actually had a good perspective, and his perspective was, don't just look at the rate cuts, that's important, but if you want sort of a turnaround in the crypto markets, particularly, he linked this to Ethereum, and then down the stack of other altcoins, you got to look at the Fed balance sheet as well. So this is the balance sheet, and look at this spike from 2019, 2021, COVID, balance sheet expansion at the Fed, and we got all the way up to like, almost $9 trillion. And since 2022, look at this period of time, you remember what happened? You know, April, June, like, May, May, June of 2022, as the, the balance sheet,

• 13:27Ryan Sean Adams?

  the Fed balance sheet unwinds, you remember what was happening in crypto at that time, David?

• 13:31David Hoffman?

  All of our liquidations and frauds and

• 13:33Ryan Sean Adams?

  Oh, yeah. You know, the, the three hours capital Terra Luna got liquidated and it's because the tide

• 13:39David Hoffman?

  The traditional markets sneeze and then we have the three biggest financial frauds in crypto history all I could expose at once.

• 13:47Ryan Sean Adams?

  Yeah. So anyway, Ben Count's perspective is yeah, look at interest rates, but also look at the balance sheet. And the question is, will, um, will Powell continue to constrict the balance sheet? Or will the balance sheet kind of reverse course and begin to expand? And if it expands, and plus you have interest rates going down. That is, my friends, what easy money monetary policy actually looks like from the metrics perspective. So be looking at that.

• 14:09David Hoffman?

  Remember when, um, when the Silicon Valley banking crisis happened and everyone was like, something broke. Now they're going to pivot. And you see that little blip upwards in the balance sheet. Like we gained like maybe 200,000, 200 billion dollars on the balance sheet. And everyone's like, they're going to pivot. This is the sun pivot. Something broke. And then like the Fed just called the bluff. It was like, no, no, we're keeping interest rates high. And we've gone down like a trillion and a half since then. Like they're doing, they're calling the bluff left and right and they're getting them. They're getting it right.

• 14:41Ryan Sean Adams?

  They totally are. All right, David, we got more coming up. DeFi just had its first hearing in front of Congress and it turned out to be, of course, a partisan battle. But we also got some pretty bullish statements from some of the lawmakers and politicians. And, and the crypto lawyers showed up, man. They were so on point.

• 14:58David Hoffman?

  Have you thanked a crypto lawyer today? Everyone thanked a crypto lawyer today.

• 15:02Ryan Sean Adams?

  They were doing fantastic work. Also, uh, Trump and Harris met for the first time and lots of meme coins were made. Prediction markets were going crazy. Cats were being eaten, all sorts of craziness. We'll talk about all that and more when we get back. But before we do, we want to thank the sponsors that made this episode possible, including Kraken, our recommended exchange to go buy some crypto.

• 15:21David Hoffman?

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• 16:06David Hoffman?

  whether you're a complete beginner or a seasoned pro. Go to kraken.com/banklist to see what crypto can be. Not investment advice, crypto trading involves risk of loss. Have you ever felt that the tools for developing decentralized applications are too restrictive and fail to leverage advancements from traditional software programming? There's a wide range of expressive building blocks beyond conventional smart contracts and solidity development. Don't waste your time building the basics from scratch and don't limit the potential of your vision. Cartesi provides powerful and scalable solutions for developers that supercharge app development. With a Cartesi virtual machine, you can run a full Linux OS and access decades of rich code libraries and open source tooling for building in Web3. And with Cartesi's unique rollup framework, you'll get real-world scaling and computation. No more competing for block space.

• 16:49David Hoffman?

  So if you're a developer looking to push the boundaries of what's possible in Web3, Cartesi is now offering up to $50,000 in grants. Head over to Cartesi's grant application page to apply today. And if you're not a developer, those with staked CTSI can take part in the governance process and vote on whether or not a proposal should be funded. Make sure you're vote-ready by staking your CTSI before the vote's open. The Uniswap extension is here. The self-custody wallet, created by the most trusted team in DeFi, Uniswap Labs, designed to make swapping feel effortless. This extension lives in your browser's sidebar, letting you swap, sign transactions, and send or receive crypto without ever losing your place on the internet. Plus, with human-readable transaction messages, you'll always know exactly what you're signing.

• 17:31David Hoffman?

  Navigate a multi-chain world effortlessly with support for 11 chains like Ethereum Mainnet, Base, Arbitrum, and Optimism. No more chain switching or token importing. All your assets are right where you need them to be. The Uniswap extension is designed to level up your swapping experience with other Uniswap Labs products as well. Easily onboard to the extension using the Uniswap Mobile Wallet to begin Managing your assets across platforms and take advantage of smooth seamless synergies with the Uniswap web app. So go and download the Uniswap extension today by clicking the link in the show notes. Just another way Uniswap is helping you swap smarter.

• 18:02Ryan Sean Adams?

  Something historic happened this week for the first time ever. We've of course had many congressional hearings about facets of cryptocurrency, about Bitcoin, about stable coins, all sorts of things. We've never had a meeting specifically in front of Congress about decentralized finance. And that changed this week. It was historic. So DeFi was on the menu. This is a hearing to break down the future of decentralized finance. And it was hosted by Representative French Hill. He's been on the Bankless Podcast before. He's a crypto advocate. And he leads this subcommittee called the Subcommittee on Digital Assets, Fintech and Financial Inclusion that reports under the House Financial Services Committee.

• 18:43Ryan Sean Adams?

  So it's a committee inside of a committee. There's not everyone in Congress, but there are a lot of familiar faces. And the subject matter was something near and dear to our heart. Bankless topics, DeFi.

• 18:56David Hoffman?

  And we had some of our best representatives there. Amanda Tummanelli, Peter Van Valkenburg from Coin Center, Rebecca Reddick from Polygon. I think they all just killed it. So there's like a round of applause for all of the crypto lawyers. Like I said, you can't thank a crypto lawyer enough. Let's hear some of Amanda Tummanelli's statements because I think that they were awesome and everyone should hear them.

• 19:17Speaker 02

  That brings me to my second point. The existing approach of trying to apply rules for TradFi to DeFi will not work. The traditional financial system requires intermediaries to function. Brokers effect stock trades and clearinghouses settle transactions. And that means that we need to trust intermediaries to do their jobs reliably and honestly. And the existing rules evolved to prevent the abuse of our trust. But DeFi doesn't use intermediaries. If I want to swap two digital assets using a DeFi protocol, there is no broker and there is no clearinghouse. DeFi's existence, the very reason that this technology was developed, was to eliminate the need to rely on intermediaries

• 19:59Speaker 02

  and empower people to transact directly with their peers. Existing law assumes that there is some identifiable entity that can take possession of my funds, collect information about my transaction, and even block a trade. But that entity does not exist in DeFi.

• 20:17Ryan Sean Adams?

  This point that Amanda makes, David, is so important. This is the thing that the entire US government, regulators, Congress, the White House, everyone needs to learn. The big difference here and why all of the previous rules cannot apply in the same way for DeFi is DeFi does not have centralized intermediaries, guys.

• 20:36David Hoffman?

  It's the one thing that makes the world of difference.

• 20:41Ryan Sean Adams?

  And that's basically the neck that they strangle. That's how they regulate the traditional financial industry. So I'm so glad Amanda started with these comments. David, there was some opposition, though, from some of the people we've heard from in Congress from the past. Maxine Waters, what did Maxine say about this?

• 20:59David Hoffman?

  Maxine Waters and then also Representative Brad Sherman as well, they were basically making the same points, which is highlighting the risks of DeFi, but also really talking about, but how do we control this thing? How do we surveil the financial system? How do we make sure there aren't scammers and fraudsters and terrorists and drug dealers using these systems? And they were just caught up on that point. Like, well, how do we control it? How do we surveil it? How do we get to 100% surveillance? And you could just really see the perception difference between the Democrats and the Republicans, where the Republicans are like... The freedom of peer-to-peer money and finance. And the Democrats are like, how do we control it? And like, it's just such a stark difference, man.

• 21:44Ryan Sean Adams?

  Yeah, it was. Maxine Waters specifically, she called out some of the Trump projects, the Trump DeFi projects. And she, she made the point that, I guess there was a hacked Twitter account of some sort that traded a fake scam coin for a fake Trump coin. And, you know, thousands of people lost money on this. Happens all of the time. And she's like, the government has to step in and help protect people. That was her point. Brad Sherman was caught up on this idea that only like tax evaders are billionaires. The billionaire class is rampantly using DeFi to avoid paying taxes. Which, I think they have lots of ways to avoid paying taxes.

• 22:20David Hoffman?

  Completely unfounded.

• 22:21Ryan Sean Adams?

  I don't think any of them involve DeFi. Like, DeFi is just like not a good way to avoid paying taxes.

• 22:27David Hoffman?

  DeFi is such a terrible way to avoid paying taxes.

• 22:31Ryan Sean Adams?

  So there's that. And then, of course, they brought in their kind of key witnesses, the opposition did, one of which was an analyst at the Americans for Financial Reform. His name was Mark Hayes. And he basically, this is a quote, "Crypto and DeFi industries is highly volatile, scam-laden, and extremely predatory, which exposes investors to substantial financial losses." And he also believed that the current security law paradigm should totally apply to DeFi in the exact same way.

• 22:59David Hoffman?

  Another person who did just a bang-up job, Peter Van Valkenburg from Coin Center, who I think you and I truly appreciate, Peter, because he makes the right points, but he connects it to American history.

• 23:11Ryan Sean Adams?

  Hell, yeah.

• 23:11David Hoffman?

  In this really just like precise, sharp way. And of course, he delivered just beautifully here. So let's go ahead and listen to Peter.

• 23:19Speaker 03

  So what Member Foster suggested, where the problem with anonymity is that we don't have 100% identification and control over our financial transactions in the economy.

• 23:30Speaker 03

  I don't think we'll have 100% identity and control over DeFi transactions, and I think we will have robust anonymity, and that's an American constitutional right. So you have a constitutional right to anonymous transactions that support organizations and causes that defend against discrimination and violations of our constitutional rights. We fought about this during the civil rights movement in the 1970s. As Thurgood Marshall said with respect to the Bank Secrecy Act, the law that actually requires financial surveillance of custodial intermediaries, though not non-custodial intermediaries, Marshall dissented from the constitutionality of even that level of surveillance. He said, "The fact that some may use negotiable instruments for illegal purposes cannot justify

• 24:14Speaker 03

  the government's running roughshod over the First Amendment rights of the hundreds of lawful yet controversial organizations like the ACLU. Congress may well be correct in concluding that law enforcement would be facilitated by the dragnet requirements of the Bank Secrecy Act, but those who wrote our Constitution recognized more important values."

• 24:34Ryan Sean Adams?

  Hell, yeah. Go Peter.

• 24:37David Hoffman?

  More important values.

• 24:38Ryan Sean Adams?

  Yeah.

• 24:38David Hoffman?

  God, it just sends goosebumps down my arms.

• 24:40Ryan Sean Adams?

  It's just so good. Imagine somebody in Congress saying, "Hey, guys, you actually don't have the constitutional right to financially surveil all of your citizens."

• 24:49David Hoffman?

  No, you can't do that.

• 24:51Ryan Sean Adams?

  The Bank Secrecy Act was probably unconstitutional, he says, but beyond that, how are you now trying to expand the Bank Secrecy Act to all peer-to-peer transactions? That's clearly a breach of the Constitution, like bringing it back to the basics here. And it shouldn't be up to DeFi to defend itself. I mean, we should be saying, like, we have a right, default, de facto, under the Constitution, to be able to do peer-to-peer commerce.

• 25:17David Hoffman?

  It was pretty cool to see friend of the pod, our favorite statist, Rowan Gray, retweet this speech from Peter, who says, "This is the correct position, and it's really embarrassing that an unforced error, how many liberals and center-left people have embraced propaganda to the point of dismissing payments anonymity as something bad or pro-crypto-coded, rather than the obvious defense of civil liberties that it is." I love Rowan. I love Rowan so much.

• 25:43Ryan Sean Adams?

  Do you really? I disagree with him on so many things, so many things, but I appreciate his consistency.

• 25:49David Hoffman?

  Except on privacy. On privacy, we are 100% aligned.

• 25:52Ryan Sean Adams?

  Yeah, 100% aligned, except with respect to the tactics, because Rowan Gray somehow thinks, like, you can just pass legislation and suddenly...

• 25:59David Hoffman?

  The government will give us privacy? Yeah, we'll just build a CBDC that gives you privacy.

• 26:04Ryan Sean Adams?

  Yeah.

• 26:04David Hoffman?

  I disagree with that.

• 26:05Ryan Sean Adams?

  We could pass that in Congress. Yeah. Anyway, yeah, so I do agree. He's right there. So how would you kind of summarize this? So we talked about the Congress not understanding intermediaries and this delta, it seems like, between those who want financial surveillance and complete surveillance, very uncomfortable with ceding that control to protocols and to code, and those that are just like much more open to it. The title of the subcommittee is Digital Assets and Financial Inclusion. Look at all the benefits that this can bring. How would you summarize how this went?

• 26:38David Hoffman?

  I think, well, we have our crypto lawyers, right? Like, all the three that I mentioned, who I think made some of the best points that we would want them to make. I don't really think these hearings do all that much with moving the needle. At the end of the day, like, party lines are drawn before these hearings even start, like, bills are drafted, regardless of these things. But it is an educational moment, and we get to have some of our best educators, crypto lawyers are some of our best educators, in front of the people that matter the most, and make really strong points. And honestly, it teaches us how to also use those same points as well. So it's just a moment of education, and with the right people that need it the most.

• 27:16Ryan Sean Adams?

  This is zooming out from Jake Chervinsky. "I remember years ago when DeFi was like 10 projects that no one thought would amount to anything. Now it's on full display in the halls of power in DC." I think that's a fantastic take of, look how far we've come.

• 27:29David Hoffman?

  My how far we've come, but it might all end soon as well. Did you watch the debate?

• 27:33Ryan Sean Adams?

  It might all end? What do you mean, like, America might end?

• 27:37David Hoffman?

  I don't know, man. I was just watching the debate and I'm just like, how is this real life?

• 27:42Ryan Sean Adams?

  Yeah, not feeling great about the options here. Well, one gentleman's bet that you and I had, and you should have put some money behind this, David, was like, I was

• 27:51David Hoffman?

  I'm right every single time.

• 27:52Ryan Sean Adams?

  I was thinking that crypto might get mentioned. Like, there's some probability and you were like, hell no, there's no chance. And indeed, we got dogs and cats and eating them mentioned, but we did not get crypto mentioned inside this debate, so congrats on your

• 28:05David Hoffman?

  Dogs and cats got getting eaten, got mentioned before crypto.

• 28:08Ryan Sean Adams?

  Congrats on your win. There was a lot of things that, you know, like, weren't discussed in this, including, as Eric Voorhees pointed out, and this might be the most bullish indicator for crypto yet, which is the US debt

• 28:20David Hoffman?

  The national debt.

• 28:20Ryan Sean Adams?

  Was not talked about at all. He made this point in every

• 28:24David Hoffman?

  But that's not a problem. Just ignore it, just ignore the debt. We can just get more debt.

• 28:29Ryan Sean Adams?

  It's worked so far. This is Eric Voorhees. "In every presidential debate, there's always been a question about the national debt. Coming from the moderators, the debt is materially higher now. It is no longer being asked about."

• 28:41David Hoffman?

  Huh. We can just print money. We can just print money. We've solved the debt problem.

• 28:45Ryan Sean Adams?

  The absence of that as a topic, like, probably speaks volumes. So I think he makes a great point there. The question of who won, I watched in the aftermath of this, there was all sorts of political analysts. I think most of them were skewing on the side of, like, Harris kind of like won that debate. But the great thing about crypto is we actually get to see the market reaction for this.

• 29:07David Hoffman?

  I think, like, previously to polymarket, anytime anyone ever said who won the debate, it was always loaded and you couldn't trust it because of the bias of whoever is giving that particular take. For now, for the first time, we have immediate, present, objective answers

• 29:24Ryan Sean Adams?

  Yeah, it's so much better.

• 29:25David Hoffman?

  As to who won the debate.

• 29:26Ryan Sean Adams?

  You're right, it's so much better. Like, because blue media will tell you one thing, they'll have their candidate and they'll skew it in one direction, red media will skew it in another direction, but like, prediction markets? They're just like

• 29:36David Hoffman?

  Prediction markets.

• 29:37Ryan Sean Adams?

  Yeah, they just want truth.

• 29:38David Hoffman?

  With $1.5 million on the line, it is given a 99% chance that people will decide that Kamala won the debate. And that is the oracle. That is the oracle. To me, that is the deciding factor.

• 29:50Ryan Sean Adams?

  Wait, so what happened? So I was, I was kind of looking at charts the next day, the polymarket. And I think going into the debate, Trump was ahead. It was something like 52% on polymarket or 53%.

• 30:01David Hoffman?

  Oh, no, you're looking at it right here. So, leading up to the debate, Kamala had a 75% chance.

• 30:06Ryan Sean Adams?

  This is winning the debate. But I was talking about like, winning the presidential election. So you know, on polymarket, there's-

• 30:11David Hoffman?

  Ah, he's winning the presidential election, yes. So I think it came into like Kamala was like 48 and Donald Trump was 53.

• 30:19Ryan Sean Adams?

  Yep.

• 30:20David Hoffman?

  And now Kamala's at 50 and Donald Trump's at 49. And you watch that happen live. And I was actually sending that to my family. It's like, yo, watch, watch this reaction in real time. Like Donald Trump has lost 3% odds as a result of this debate.

• 30:32Ryan Sean Adams?

  It's great because it's quantifiable. And it's like, oh, it's 3%, it's not the end of the world for his campaign. He can come back. It's just like, not a big deal. But there's a quantifiable loss in his probability of winning as a result of this debate performance. And by the way, probably the Taylor Swift endorsement that probably factored into these numbers here too. But that wasn't the only thing being bet on.

• 30:52David Hoffman?

  There is almost a billion dollars on this market.

• 30:54Ryan Sean Adams?

  Isn't that crazy?

• 30:56David Hoffman?

  $896 million between Kamala Harris and Donald Trump.

• 31:00Ryan Sean Adams?

  Yeah, it's, it's a huge market and it's receiving like massive attention. But this is not the only market. They weren't just betting on who, like who won the debate or the presidential election winner. There's like these smaller sub-markets that you've been tracking too. Like, what are these?

• 31:12David Hoffman?

  The DGEN markets. These are, these are DGEN markets. Yeah. So like, people were gambling as to like, what words will be said on the debate? And so there were words like Springfield, because that's where the pets were getting eaten. And so like Donald Trump just won, the people were betting whether Donald Trump would bring up Springfield, which they did. I, I watched a video of a guy, I think this was on Instagram or like TikTok or something. And a guy was like, he saw the lead up to it and he was like, say Springfield, say Springfield. He's like dancing, he's like jumping in front of the TV, like, say Springfield. And then Donald, Donald Trump says Springfield. And he goes, let's fucking go, let's fucking go. I just won $5,000.

• 31:48Ryan Sean Adams?

  $5,000. Yeah.

• 31:50David Hoffman?

  So people are just like live betting in real time about like whatever the hell like is being uttered on like cats and cats and dogs. I think we're definitely on there as well.

• 32:00Ryan Sean Adams?

  They were also betting whether there would be a handshake, I think. So all of these like

• 32:03David Hoffman?

  There was a handshake.

• 32:04Ryan Sean Adams?

  Micro markets being bet here and a poly market is going mainstream, David. Do you see this? So poly market markets are now being quoted on CNN in a pretty big way.

• 32:14David Hoffman?

  Well, this isn't just being quoted. This is an actual interview about poly market. Like this is them doing a feature of poly market.

• 32:22Ryan Sean Adams?

  What did they say here? Oh, they're going through. I see this in this clip.

• 32:25David Hoffman?

  They have, they have poly market streamed on their like on their, on their screen.

• 32:29Ryan Sean Adams?

  You know, it's actually hilarious. So last, the last week we were talking about poly market being integrated in Bloomberg. And here you see it, you know, CNN anchor like download, putting all of these metrics. This is like, you're on CNN, you're on Bloomberg. This is legitimacy.

• 32:42David Hoffman?

  Will they shake hands? 28% say yes.

• 32:45Ryan Sean Adams?

  See, it's so interesting. Media cannot help it. Trad media cannot help these numbers. Will they shake hands?

• 32:50David Hoffman?

  It's candy. It's content candy.

• 32:51Ryan Sean Adams?

  Who will gain more in the holes? What will Harris say at the debate? It's all on poly market. What's also crazy about this too, and ironic as, as much legitimacy as poly market is receiving these channels? US users still can't use it.

• 33:06David Hoffman?

  They can't.

• 33:06Ryan Sean Adams?

  It's geo blocked.

• 33:08David Hoffman?

  We're actually talking about foreigners betting on our prediction.

• 33:11Ryan Sean Adams?

  You can see it in the market, right? So you could go to the website, you'd see in the market, but if you have a US IP address, it doesn't allow you to deposit and partake in these markets. Because, because the laws are so dumb here.

• 33:24David Hoffman?

  Because it's dumb. That's so funny.

• 33:28Ryan Sean Adams?

  That should have been brought up in the DeFi congressional hearing, I think, but wasn't.

• 33:33David Hoffman?

  Okay. So let's talk about the reaction to the, in the crypto world, to the presidential debate. So there is people going back and forth about whether or not the Bitcoin price is an oracle about the Donald Trump presidency versus the Kamala presidency. In the middle of the debate. While Kamala is like, will Kamala win the debate was going up to 99%? You actually saw Bitcoin sell off by like $800 and Ether sell off by like $100. Who knows that?

• 34:00Ryan Sean Adams?

  Yeah, so that was, it's at like 3%, something like that, in that range?

• 34:04David Hoffman?

  Yeah, like 3% or something like that, which ironically like the odds of how much Kamala increased versus Donald Trump in the presidential election odds on poly market. But not everyone agrees with that. So Mike Palito says, "The coins don't seem to care about Trump's performance last night. I'm gaining conviction that this election matters way less than everyone thinks. Markets hate uncertainty. As soon as that gets removed one way or another, the prices will respond." Because they did bump back up the next day.

• 34:30Ryan Sean Adams?

  What do you think about this?

• 34:31David Hoffman?

  People are kind of undecided. It's like, I'm unsure, I could use some more data here. Like, it's really hard to imagine, like, Donald Trump says he's gonna put Bitcoin on the balance sheet.

• 34:40Ryan Sean Adams?

  This is what I mean. This is what I mean. If Kamala Harris wins, maybe it's not disaster scenario for crypto. But if Trump wins, how is that not the most bullish thing ever for crypto? Given what he's said, like, previously? I don't know. Well, I guess we'll see how this plays out. But it's a coin flip at this point in time in terms of who might win. What do we got coming up?

• 35:04David Hoffman?

  Coming up next, Friend Tech no longer updating the app. What happened? What will we do with the app now? And also, you can use your ENS name to send Ether, stable coins inside of Venmo and PayPal. And also, my favorite part about this agenda, Vitalik just laying down the law on layer twos. We're gonna talk about all this anymore, but first, I'm going to talk about some of these fantastic sponsors who make this show possible. New projects are coming online to the Mantle Layer 2 every single week. Why is this happening? Maybe it's because Mantle has been on the frontier of Layer 2 design architecture since it first started building Mantle DA powered by technology from EigenDA. Maybe it's because users are coming onto the Mantle Layer 2 to capture some of the highest yields available in DeFi and to automatically receive the points and tokens

• 35:47David Hoffman?

  being accrued by the $3 billion Mantle Treasury in the Mantle Rewards Station. Maybe it's because the Mantle team is one of the most helpful teams to build with, giving you grants, liquidity support, and venture partners to help bootstrap your Mantle application. Maybe it's all of these reasons all put together. So if you're a dev and you want to build on one of the best foundations in crypto, or you're a user looking to claim some ownership on Mantle's DeFi apps, click the link in the show notes to getting started with Mantle. Launching a token? Don't let complex legal and tax issues slow you down. Toku provides specialized support to optimize your launch and ensure that you as a founder and your team and your investors get the most tax-efficient outcomes. The Toku team understands the crypto space inside and out and will ensure your token launch is fully compliant while maximizing tax efficiency. Toku can connect you with the best attorneys if you need them

• 36:32David Hoffman?

  to make sure that you have the best advice. And Toku can help to optimize your taxes so you pay the least possible amount of taxes while still maintaining legal compliance. With Toku's guidance, you can concentrate on building your company while Toku handles the logistics. Token launches don't have to be complicated. Talk to Toku today to get a free initial token valuation. Vitalik, more active on Twitter now than he has been in like many years past. Tweeted this out earlier. I take this seriously. Starting next year, I plan to only publicly mention in my blogs, talks, et cetera, layer twos that are stage one plus with maybe a short grace period for genuinely new, interesting projects. It doesn't matter if I invested or if you're my friend, stage one or bust. Multiple ZK rollup teams have told me that they're on track to be stage one by end of year.

• 37:17David Hoffman?

  I'm excited to see that happen. Of course, we should not be throwing away training wheels because we were actually confident that the proof systems are secure. That would be irresponsible. But stage one, which is a 75% threshold on the security council to override a proof system, plus 25% of that council must be outside of the rollup team, is a very reasonable, moderate milestone. The multi-sigs I'm in have not had a single liveliness failure in years, let alone 26%. The era of rollups being glorified, multi-sigs is coming to an end. The era of cryptographic trust is upon us. So Vitalik saying, hey, like, if you are not a stage one multi-sig, you are not worth mentioning to me.

• 37:58Ryan Sean Adams?

  Wow.

• 37:59David Hoffman?

  Which is dope, which is dope.

• 38:00Ryan Sean Adams?

  Yeah, so this is applied social pressure, I would say, from the most prominent leader in the Ethereum space. He's not going to mention your project unless you get to the first stage of decentralization for your layer two. Do you think this will work? Do you think that this will push layer twos in a positive direction?

• 38:19David Hoffman?

  I mean, I think it was heading this way anyways. And maybe it was heading there kind of, maybe perhaps, lackadaisically. Is that, did I pronounce that right? Maybe it was heading there slowly or something.

• 38:31Ryan Sean Adams?

  Yeah, yeah, yeah.

• 38:32David Hoffman?

  And, but, but it's definitely like, within reach by these teams. Like, if these teams want to be stage one, they can be stage one.

• 38:37Ryan Sean Adams?

  Yeah.

• 38:38David Hoffman?

  And so Vitalik, Vitalik is saying, just get there. And then I will continue to mention you.

• 38:42Ryan Sean Adams?

  Did you see?

• 38:42David Hoffman?

  Whenever it comes time for me to mention you.

• 38:44Ryan Sean Adams?

  Did you see, I saw this on Twitter, like Kane Warwick and others, sort of memeing, this is war mode Vitalik, it's great to see it.

• 38:49David Hoffman?

  War mode Vitalik, yeah.

• 38:51Ryan Sean Adams?

  Basically, being a bit more assertive.

• 38:52David Hoffman?

  He was also, he was also just dunking on people who were like,

• 38:57David Hoffman?

  didn't deserve to be in Vitalik's, like, replies. And Vitalik's like, get out of my replies, basically.

• 39:01Ryan Sean Adams?

  Well, interesting, but the very next day, or the same week, he tweeted this. We've got an update from ZK Sync. So what is this?

• 39:10David Hoffman?

  Yeah, ZK Sync blog pro saying, welcome to ZK Sync on-chain governance. And so ZK Sync has released their on-chain governance system, which might put them at stage one. They are currently in review process on Layer 2 beat. But there are some things that are now true about the ZK Sync governance system. Protocol upgrades to ZK Sync are approved exclusively on-chain. Protocol upgrades cannot happen without token holder approval. So the token is actually the object doing the governance. All protocol upgrades go through the Security Council review. That's pretty normal. That's the training wheels that Vitalik is talking about. And governance can assign a new sequencer. So if a sequencer starts to become a censoring sequencer,

• 39:54David Hoffman?

  governance can give them the boot, as well as another, other, other things as well. They call this three-body governance. Now, so you have the, the token assembly, which is the token holders, the Security Council, which is like the sophisticated people who can review code and would overcome a fraud proof if we ever needed to. And then ZK Sync Guardians, which makes sure that governance proposals are consistent with the values of the ZK credo that ZK Sync holds so dear. So this just got put out today. This could potentially turn ZK Sync into a stage one. They need to release details about the Security Council. Thresholds for how much it takes for the Security Council to overcome a proof.

• 40:34David Hoffman?

  And also depending on if the ZKSync Foundation is considered an outside entity to ZKSync, the platform. And so there are some nuances that are being reviewed here by the Layer 2B.

• 40:45Ryan Sean Adams?

  And by the way, Layer 2B can't say enough great things about that. They are doing the hard. This is actually what-

• 40:50David Hoffman?

  One of the greatest public goods.

• 40:51Ryan Sean Adams?

  This is actually what regulation looks like in crypto. This is a regulator, basically, doing the thing-

• 40:56David Hoffman?

  The most effective regulator, yeah.

• 40:57Ryan Sean Adams?

  Yeah. Gary Gensler, you should be doing this. Actually, we don't want him anywhere near this.

• 41:02David Hoffman?

  Actually, no, get out of here. Get out of here. Don't tell Gary Gensler about Layer 2B.

• 41:04Ryan Sean Adams?

  This is Layer 2B. We're looking at it right now, and you can see there's two prominent Layer 2s that are Stage 1. And they're trying to get to Stage 2, of course. This is Arbitrum and OP Mainnet. But most of the rest are not. I guess DYDX V3 is here, but like Base is not, Blast is not, Mantle is not yet. Scroll, ZKSync, Era, working their way towards it. So a lot of work needs to be done in order for Vitalik to mention your project next year.

• 41:33David Hoffman?

  Can you hover over the ZKSync? Because they actually have a little question mark over their pie. I think their pie on the right, I think that just means, yeah, project under review.

• 41:41Ryan Sean Adams?

  Under review. It's already updated.

• 41:42David Hoffman?

  They update this so fast. That's great. Okay, which is the thing that gets the next Stage 1, do you think?

• 41:48Ryan Sean Adams?

  I think Base. I think Base is hustling.

• 41:52David Hoffman?

  I mean, ZKSync might get it like next week.

• 41:55Ryan Sean Adams?

  Yeah.

• 41:56David Hoffman?

  And then after that, I think it would be Base.

• 41:58Ryan Sean Adams?

  Yeah. Base has multiple. You know, another driving factor that people don't often talk about is not just social pressure, but also I think there's some regulatory, there's going to be some regulatory pressure.

• 42:08David Hoffman?

  There's so much regulatory pressure.

• 42:10Ryan Sean Adams?

  As a Layer 2.

• 42:11David Hoffman?

  That's kind of like the bigger, biggest incentive beyond just internal crypto pressure.

• 42:14Ryan Sean Adams?

  Yeah. Do you want to be fully on the hook for all the activity that happens?

• 42:19David Hoffman?

  Do you want to be considered a money transmitter? Do you have a money transmitter license?

• 42:22Ryan Sean Adams?

  No, you don't. Oh, hi. Matter Lab is doing some other things. ZKSync, they just hired the former Solana Foundation Chief Marketing Officer. Is that right? A little snipe action going on?

• 42:34David Hoffman?

  Yeah, sniped by ZKSync. The Meg Hughes, Megan Hughes, going from Solana to ZKSync. So congratulations on the hire, ZKSync.

• 42:41Ryan Sean Adams?

  Not the only Layer 2 news this week. This was interesting. Remember, we talked about Sony's Layer 2. There's not a lot of information about it, but something new emerged, which is actually Sony is going to create a stablecoin, a Japanese yen stablecoin. Sony apparently has a bank called the Sony Bank, and so the Sony Bank is going to... Sony has a bank? Yeah. I mean, I guess they have everything. There's like, you know, Japanese mega corp. They do everything. It's not just Walkman. The Japanese yen. Walkman and banks. Yeah, Walkman yen. Sorry, Walkman, banks, stablecoins and Layer 2s now. So they're going to put this on their Layer 2. So we'll see how that emerges, but it looks like development is happening. It's a pretty smart, um, it's a pretty smart move here.

• 43:21David Hoffman?

  All right, so this was going around crypto Twitter this week. Friendtech has renounced control over the smart contracts. They called a function which transfers the control to Ethereum's null address. The null address is 0x00000. It means that no one, no one owns that. So they cannot change. The Friendtech team cannot change the protocol going forward. Doesn't affect the web client. The web client is still like the, uh, operational by the team. So the platform will obviously still work. They can still add new features to the, like, the web app, but the actual underlying smart contracts are like now immutable. This has come with like a bunch of pushback of people saying like, you guys are abandoning the project. Like, you guys earned like $44 million in fees, and now you guys are just saying goodbye.

• 44:05David Hoffman?

  Friendtech, the actual Friendtech official Twitter account saying like, we're not doing that. We're actually still going to develop the protocol. We're just like locking the smart contracts because of like decentralization and immutability. And like, what more do you expect? And so this goes to show like, once again, that if you make any money in crypto, you become vilified. That's kind of like a meme that happens in crypto Twitter.

• 44:27Ryan Sean Adams?

  Oh, do you think that's true? Do you think that's true? I don't know. So I don't know about Friendtech.

• 44:31David Hoffman?

  It's very much so. People who, people who make money in crypto. Often find themselves having to defend the fact that they made money.

• 44:38Ryan Sean Adams?

  Okay, and also, there is this history of crypto founding projects, particularly DeFi, that abandoned their project too early. Like, all these orphan projects that I see, which is basically in the name of decentralization, they're kind of like, release the token, sell some of my token, get wealthy, bye bye. Have I created any value? Like, not sustainable value. So on the other side of this, and part of the narrative, I think, is coming from people who are just tired of all of the orphan DeFi projects, who quit too early in the name of decentralization. So that's kind of like another... I don't know what's going on in Friend.Tech. I guess, you know...

• 45:16David Hoffman?

  Yeah. For what it's worth, they didn't sell any tokens.

• 45:18Ryan Sean Adams?

  Yeah.

• 45:19David Hoffman?

  They accumulated $44 million of Ether in fees. So they actually didn't mint and sell a token. They did mint a token, they gave it to people, but they didn't profit from selling the token.

• 45:28Ryan Sean Adams?

  I see, but this also, like, they did profit from the hype, right? And I guess my question is, like, did they create anything sustainable?

• 45:35David Hoffman?

  Well, no, they didn't profit from the hype. I would say if they sold the token, they profited from the hype.

• 45:40Ryan Sean Adams?

  Do you think, David?

• 45:41David Hoffman?

  They profited from the fees that came because of the hype.

• 45:44Ryan Sean Adams?

  Let's create a new benchmark. Do you think in 10 years, like, what will Friend Tech be to the world? Will it have been just like one blip? That decentralized and just like, you know, founders didn't work on it again? Or will it be like, oh, they decentralized, and now all of this entire... Like, this whole app community is building on top of it, and is actually providing some utility and value to the world? Like, which outcome is more likely, do you think?

• 46:08David Hoffman?

  I think statistically, the outcome of just like, it's a blip, is going to be true.

• 46:11Ryan Sean Adams?

  That's what I mean, it's like...

• 46:12David Hoffman?

  But that has nothing to do with Friend Tech, though. Like, that's just startups. Startups statistically are always blips.

• 46:18Ryan Sean Adams?

  Yeah. I mean, it's whatever. I just feel like, it would be nice... Here's one thing I will say. It would be really nice if we saw the Friend Tech experiment completely play out, and the team... Maybe they're still doing work on it, but I would love to see, a year from now, two years from now, like, an entire social ecosystem built on this thing. Because it had so much... Do you remember? It was a year ago. It had so much promise when it was released. They were doing kind of like, the user experience felt clean. They were doing something new. They had the full attention of like, the crypto social community on it. And that opportunity just feels somewhat squandered right now. And I'm hopeful that they just don't allow it to just kind of like sink into oblivion and nothingness.

• 47:02David Hoffman?

  Sure. Yeah, I think it's a little bit of like a Schoninger's position here. Okay, moving on to other news. Eigenlayer, the second stake drop for season two. So reminder, we've already had season one. Season one had phase one and two. Those are both over. Those were over forever ago. Season two of the Eigenlayer stake drop is upon us. This is going to be 5.2 of the initial Eigen supply. I think 5% was for season one, 5.2% is for now. And it's also kind of similar. If you are an Eigenlayer restaker or through an LRT protocol, you have Eigen that you need to claim. You can claim, if you are restaking through a specific LRT protocol, you can claim your Eigen through that respective protocol.

• 47:44David Hoffman?

  The claims open on September 17th, so that's five days from the day of recording. Four days if you're listening to this on Friday. Claims.eigenfoundation.org. Be very careful about phishing links. And then there'll be some other edge cases as well for people who are just beyond staking. So 70 more million Eigen tokens. Congrats to all Eigenlayer restakers.

• 48:03Ryan Sean Adams?

  Wait, what?

• 48:04David Hoffman?

  I'm going to pat myself on the back there.

• 48:05Ryan Sean Adams?

  What's, what's?

• 48:06David Hoffman?

  Hard earned tokens.

• 48:07Ryan Sean Adams?

  Yeah, oh yeah. You've been working hard for those. What's the time horizon for season two eligibility? Was that like April or something through August, it looks like?

• 48:18David Hoffman?

  Yes. Okay, so if you were restaking in Eigenlayer, if you had ETH in Eigenlayer, between March 15th and August 15th, you are eligible.

• 48:24Ryan Sean Adams?

  Now, you can get the tokens, you can pick them up, but you can't move them, right? So they're locked tokens.

• 48:28David Hoffman?

  You can't move them. They're still locked. I'm guessing that these tokens are going to be unlockable by?

• 48:34Ryan Sean Adams?

  End of year? January? Here's a sentence for you.

• 48:37David Hoffman?

  My guess.

• 48:38Ryan Sean Adams?

  "As we approach unlock of the Eigen token." "As we approach unlock of the Eigen token." That's in the official blog press. So we're approaching it.

• 48:45David Hoffman?

  These are, those are Eigenlayer's words.

• 48:47Ryan Sean Adams?

  Not ours, yeah.

• 48:48David Hoffman?

  Eigenlayer said that we are approaching the unlock. They said it in their blog.

• 48:53Ryan Sean Adams?

  Up for interpretation. All right. ENS now integrated with PayPal and Venmo. That's a big deal. This feels like, this would be absolutely huge. If you went for it in 2019, when we were very excited about .eths, and you said, "Hey, like five years from now, this is going to be in Venmo and PayPal." I would have been over the moon excited. And I'm still excited. This is a pretty big deal. So what does this actually mean practically, though? If somebody has a Venmo account?

• 49:20David Hoffman?

  Yeah, so like there's been stablecoins and either Ether and other cryptocurrencies inside of Venmo and PayPal for a while now. And now you can just send outbound to ENS. It's just like very legitimizing to ENS.

• 49:30Ryan Sean Adams?

  Yeah.

• 49:31David Hoffman?

  If you have valuable ENS names, like they're probably a little bit more valuable today as a result.

• 49:35Ryan Sean Adams?

  It's like getting Polly Market and Bloomberg. That's the kind of thing.

• 49:38David Hoffman?

  Yeah, that's right.

• 49:40Ryan Sean Adams?

  Legitimizing. This is Brantley dot ETH saying, "It's been a tear this year for ENS. A recap for everyone who's been asleep. Google search recognizes ENS names. So if you type trustalstate dot ETH, I guess, we'll see all your accounts, see all your money. Is that right, David?" GoDaddy supports.

• 49:56David Hoffman?

  Yeah, all of it. I held all of my money at Davidoff and Daddie.

• 50:00Ryan Sean Adams?

  GoDaddy also supports DNS names in ENS. That was a big deal. Coinbase and Uniswap have issued hundreds of thousands of subnames. Oh, that's right. You can get all of your like base subnames, Uniswap subnames. And now PayPal and Venmo support ENS for sending crypto. So Brantley, pretty excited about the traction here.

• 50:17David Hoffman?

  Big release out of Coinbase. They were teasing it a while ago, but CB BTC is now released. Coinbase Bitcoin is now a token. I'm assuming being issued on Base and also Ethereum. Yeah, also Ethereum. And so this was, I don't know how long they've been working on this project, but especially when the whole BitGo WBTC drama happened, Coinbase was like, I see an opportunity here. And so now Coinbase CB BTC is now out and about. Also, there's already a proposal to get it into Spark. And so that's pretty cool. Spark is a lending facility that's part of the MakerDAO system. And so you can now put Coinbase, there's a proposal to put Coinbase BTC inside of Spark, so you can put BTC

• 51:00David Hoffman?

  in withdraw, die. And the cool thing here, this is actually just from the press release, "When users send BTC from Coinbase to an address on Base or Ethereum, the BTC will automatically be converted to CB BTC and vice versa." So you can send CB Bitcoin to Coinbase and it'll show up as Bitcoin inside of Coinbase, not as CB Bitcoin.

• 51:25Ryan Sean Adams?

  Oh, interesting.

• 51:26David Hoffman?

  As a vanilla, organic Bitcoin. If you have vanilla Bitcoin, you can send Bitcoin to Ethereum and it comes out as Coinbase Bitcoin.

• 51:33Ryan Sean Adams?

  Yeah. And of course, the value of this is now you can use Bitcoin in the DeFi ecosystem more readily. Of course, there have been products like this in the past. Wrapped Bitcoin was one of them from Bitco. That's been a pretty popular one, but now this has kind of like Coinbase backing behind it, which is a big deal.

• 51:50David Hoffman?

  Question for you, Mr. Taxman. If I have Bitcoin and I haven't touched it in years, I send it to Coinbase, and then I send it to Ethereum and it comes out as CB Bitcoin. Did I just incur a taxable event?

• 52:02Ryan Sean Adams?

  Yeah, so what's your... First of all, I know this is hypothetical because my man David Hoppin does not own any Bitcoin, at least last time I checked.

• 52:11David Hoffman?

  That wasn't part of the question.

• 52:12Ryan Sean Adams?

  Purely hypothetical. All right, so imagine if somebody like David owned Bitcoin, who went and did this. It definitely depends on the jurisdiction and what your tax folks will say. I think personally, not tax advice, not financial advice, all of these things, there's some uncertainty when you do something like you stake your ETH on Coinbase. If you take Vanilla ETH and you turn it into Coinbase ETH, right? So CEETH, a lot of accountants will consider that a taxable event. That means you have to pay on the gains in that incursion, okay?

• 52:46David Hoffman?

  Accountants are kind of like lawyers where they're protecting themselves, not you.

• 52:51Ryan Sean Adams?

  No, I think they're... I think that, I mean, they're not necessarily liable. I think that you get more conservative and like accountants' interpretation of the tax. The problem is, and by the way, this came up in DeFi, the DeFi congressional hearings, is like the IRS has provided no clarity how to treat these things. Anyway, but what I do think is an absolutely asinine idea and not a position that I would ever take is, let's say you take ETH, Vanilla ETH, and you turn that into tokenized ETH, so it becomes WETH, right? It's not a third-party custody, it's just like a token wrapper. How in the world could that be a tax event? There's like no way. You're just wrapping it in some smart contract code, okay? So there's like some ambiguity here.

• 53:35Ryan Sean Adams?

  I guess all this to say is like, you should talk to... Depends, do you want to take a conservative?

• 53:40David Hoffman?

  Don't listen to your podcasters for your tax advice.

• 53:43Ryan Sean Adams?

  Yeah, this probably take away too. Oh, one other thing I'll say is, people should know there's a trade-off here. This is not like Bitcoin on the Bitcoin blockchain. This is custodied by a third party, not your keys, not your crypto, okay? Also Coinbase, because of regulations, they have... Have similar whitelist blacklist ability to freeze capabilities that they do on USDC. So if you think this is like a completely permissionless asset, it's not. You want a permissionless asset, you gotta go get vanilla ETH, not a custody ETH. Or ETH on a layer two or Bitcoin on Bitcoin blockchain. So I just want to be careful that the custodied banks don't start to take over this space. And we forget like the reason we're here and why we're going bankless.

• 54:29David Hoffman?

  Right. Say, for example, what was the executive order that forced people to turn in their gold in the 30s?

• 54:35Ryan Sean Adams?

  Yeah, the FDR executive order. It's got a number. I can't think of the number off the top of my head, but yeah.

• 54:39David Hoffman?

  Yeah, imagine that there's an executive order to everyone needs to turn in all of their Bitcoins and sell it for dollars. And you had to do that because of an executive order. If you have CB Bitcoin, that's being done for you on your behalf.

• 54:51Ryan Sean Adams?

  You don't have your keys.

• 54:52David Hoffman?

  By Coinbase, you don't have the keys. If you have your Bitcoin, it's still under your control. You can still hide your private keys under your bed.

• 54:59Ryan Sean Adams?

  That where David hides them.

• 55:01David Hoffman?

  That's where I keep my private keys.

• 55:04Ryan Sean Adams?

  All right. So as we close out this roll up, we are now, and this shocked me because I can't believe we're almost in, I mean, we're close to permissionless. We're close to the conference. This is almost October. So there's less than 30 days between now and your fight with Kane Warwick. Okay. And I knew you were on like a training program, but like you're going, you're flying all over the world, doing all these things. I didn't realize that you actually had to put on some weight for this.

• 55:31David Hoffman?

  Oh, yeah.

• 55:32Ryan Sean Adams?

  And a large amount of weight. So this is, by the way, this is going to happen on October 11th in Salt Lake City.

• 55:41David Hoffman?

  Friday, October, the last day of permissionless at the very end. So you have to stick around to the end of permissionless if you want to see this.

• 55:45Ryan Sean Adams?

  You are fighting Kane Warwick and he is significantly.

• 55:49David Hoffman?

  Everyone's favorite villain. Everyone hates Kane Warwick. Everyone wants for him to win. Everyone wants for him to win. Everyone's talking about it. I really want David Hoffman to win.

• 55:55Ryan Sean Adams?

  Okay. So, but you have to gain some pounds because he is, he's a much bigger dude than you, right?

• 56:02David Hoffman?

  He's way bigger. Yeah.

• 56:03Ryan Sean Adams?

  This is your tweet. All right.

• 56:04David Hoffman?

  He's like 6'2"?

• 56:06Ryan Sean Adams?

  6'2"?

• 56:07David Hoffman?

  Yeah, he's way bigger than me, dude.

• 56:09Ryan Sean Adams?

  All right. I have 30 days to gain 10 pounds before my fight with Kane. I need to do it in a way that doesn't allow me to use agility. Doing hell of sprints is making this hard. I need ideas. Okay. What ideas did you get from this and are any of them good?

• 56:21David Hoffman?

  No, they're all pretty bad. I mean, like I saw kind of like the basic, basic stuff. 10 pounds in 30 days isn't that hard. I just have to like. Basically be eating every single day. And I also have this like gentleman's agreement with Kane where like I don't want to have this fight completely take over my life. But also like, I don't know how hard Kane is trying. And he's got, he's got brothers, bro. I don't have a brother, I have a sister. I didn't fight with my sister. He fought with his brothers.

• 56:47Ryan Sean Adams?

  Yeah, you didn't like punch each other in the face growing up. I'm sure Kane did this. Wow, man.

• 56:54David Hoffman?

  I did, I did spar with the guy who broke my rib the other day, though. He said I got a lot better since him and I had last sparred.

• 57:03Ryan Sean Adams?

  So crazy.

• 57:04David Hoffman?

  That's a true story.

• 57:05Ryan Sean Adams?

  It's so crazy that that's normal in like the, the fighting. You just like, if somebody broke your rib and then disappears for a few months and pops back and I'm like, sorry, I did that, but let's fight again.

• 57:14David Hoffman?

  Yeah, that's right. That's exactly what happened. He's like, oh, it's you, you're back. And I'm like, yep, I'm still here.

• 57:19Ryan Sean Adams?

  All right, David, we're cheering for you and looking forward to seeing the poly market up on that one to place our bets. Gotta end with this, of course.

• 57:25David Hoffman?

  If you have a permissionless ticket, you automatically have a ticket to Fight Night. So come, come watch me, come watch somebody get their ass kicked on October, on October.

• 57:35Ryan Sean Adams?

  I'll be there. I think I'm gonna, I'm gonna stream it, I think. They've asked me to provide some commentary.

• 57:40David Hoffman?

  Ryan Trant is gonna be commentating the fight. It's streamed on Bankless. Ryan, Ryan is nervous about commentating the fight.

• 57:48Ryan Sean Adams?

  I try to get out of that. I, I keep trying to get out of that. I'm like, I don't want to comment on it. And David's like, I'm fighting a dude, okay? Least you can do is show up and comment. All right, so I'm doing the absolute least, as usual. Okay. Risk and disclaimers, of course, you know crypto is risky. You could lose what you put in, but we are headed west. This is a frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.