ROLLUP: U.S. Crypto Task Force | Ethereum L1 Is Scaling | Microstrategy's Record BTC Buy | Uniswap v4 | Berachain's Massive Airdrop

This week on Bankless Weekly Rollup, we explore major crypto updates from Berachain’s mainnet launch and the rollout of its BERA token, to Uniswap V4’s new features and hooks that are shaking up decentralized trading. The episode delves into market dynamics including SEC moves led by Hester Peirce, Microstrategy’s rebranding, and the impact of US tariff actions on global trade. We also unpack Ethereum’s scaling upgrades and discuss the innovative strategies behind emerging DeFi protocols. Tune in for an in-depth look at the evolving crypto landscape and the key developments driving the space. Thanks to Mike Ippolito for joining us: https://x.com/MikeIppolito ------ 📣 MORPHO | GO-TO LENDING INFRASTRUCTURE https://bankless.cc/Morpho ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | BUG BOUNTY PROGRAM https://bankless.cc/Uniswap-Bug-Bounty ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum https://%E2%81%A0https//bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🌐CELO | BUILD TOGETHER AND PROSPER https://bankless.cc/Celo 🎮RONIN | THE FUTURE OF WEB3 GAMING https://bankless.cc/Ronin ----- ✨ Mint the episode on Zora ✨ https://zora.co/collect/base:0x4be6cd4d402fed49eb2de95fbc8e737e8ffd3e7f/29?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E ------ TIMESTAMPS & RESOURCES 00:00:00 Start 00:03:57 Why We Dumped, Again https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/ https://x.com/benbybit/status/1886393172152156604 https://x.com/KobeissiLetter/status/1886373316249649437 00:15:33 L2 Updates https://x.com/ak47ink/status/1882228296626458970 https://blog.kraken.com/product/staking/new-us-staking 00:18:06 Microstrategy Rebrands to ‘Strategy’ https://www.bankless.com/read/microstrategy-rebrands-to-strategy https://x.com/saylor/status/1887229546199462309 00:19:28 The $20 Billion Dollar Bid https://x.com/MikeIppolito_/status/1887274787677913457 https://www.tradingview.com/chart/V7YvdegA/?symbol=NASDAQ%3AMSTR https://x.com/SemlerEric/status/1886764609924948349 00:26:31 US Lawmakers Plan For Digital Assets https://x.com/BanklessHQ/status/1886876049113588156 00:28:06 New Stablecoin Bill https://x.com/SenLummis/status/1886887005113790866 00:35:07 SEC Creates Crypto Task Force https://www.sec.gov/newsroom/speeches-statements/peirce-journey-begins-020425 https://x.com/HesterPeirce/status/1886864054477815861 https://x.com/AlexanderGrieve/status/1886869439293067404 https://x.com/EricBalchunas/status/1886910308762980788 https://www.sec.gov/newsroom/press-releases/2025-36 https://x.com/NateGeraci/status/1886870066924245297 00:42:42 Uniswap V4 Is Live! https://x.com/Uniswap/status/1885329579495080248?t=Twla8zs17AxKhHl4DKSkQA&s=19 https://x.com/Uniswap/status/1885329579495080248?t=Twla8zs17AxKhHl4DKSkQA&s=19 https://x.com/TrustlessState/status/1885349829091459354 https://x.com/angstromxyz/status/1885011791761068427 https://x.com/flaunchgg/status/1878879274566107323 https://x.com/whetstonedotcc 00:49:41 Berachain Token Launch https://x.com/berachain/status/1887178672995537236 https://www.coingecko.com/en/coins/berachain 00:57:51 ETH To Increase Gas Limit https://x.com/data_always/status/1886573645687935463?s=46 https://x.com/VitalikButerin/status/1886579901039337759 01:01:38 Loss Of Ultra Sound https://ultrasound.money/ https://x.com/drakefjustin/status/1887108667675124174 01:08:02 Thanks To Mike ------ 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.

• 0:03David Hoffman?

  Bankless Nation, welcome to the weekly roll up where we cover the weekly news, drama, and developments in the crypto space. This is the second week of February and today on the show, I have the pleasure of being joined by Mike Eppolito, co-founder of Blockworks and another relentless podcaster. Mike, how you doing, my man?

• 0:18Speaker 01

  Doing very well, doing very well. Thanks for having me, David.

• 0:20David Hoffman?

  Yeah, yeah. This is gonna be exciting. Before we get into the details of the week, maybe just give me your vibe of the week. Give us a vibe check in. How did this week feel for you?

• 0:30Speaker 01

  I feel like right now, the vibe for crypto in general is a little bit split. You know, there's, I feel like the word of the last couple of months has been dispersion and people are describing this is a very dispersed cycle in terms of returns. There are more coins than there have ever been. And for the first time, really, outside of these, in sort of the history of crypto cycles, there are big winners and big losers after this last cycle. And people are pretty split in general. If this is the top, if we're down only from here, if this is the beginning of a golden bull and, you know, a new era of DeFi and crypto in the United States. So I think there's a vibe of general uncertainty if I had to try to put my finger on it.

• 1:05David Hoffman?

  Yeah, maybe to say that another way, there's so much more noise and maybe each, like you can parse apart that noise into many different bits of signals, but the signals are conflicting with each other. And I think this is probably just a sign of the fact that there's a lot of market participants and there's a lot of different sectors of crypto to focus on. And I feel like this is what you would expect if crypto were to keep on growing. It would grow just so large that the market itself of crypto becomes, like you say, very dispersed.

• 1:35Speaker 01

  I feel like that's healthy, though, as well. You want some amount of dispersion and you want certain sectors to be able to outperform. There's been a very strong beta correlation of, you know, everyone who's been in crypto for a long time knows Bitcoin runs first and then ETH and then the new L1s and then Alts and then Finn for the cycle. And, you know, that implies a not super healthy market structure or people aren't allocating capital truly on the basis of performance. They're allocating on the basis of just risk. And I think it's actually very healthy for there to be more dispersion and, you know, for you to have asymmetric outperformance. And yeah, just more coins probably just means more of that going into the future.

• 2:07David Hoffman?

  I think that's right. And speaking of more coins, Berachain has finally launched its main Q5, baby. ...net is up and running. Yeah. I don't know what Q5 is, so that's gonna be one of the questions that I ask you. I think many of the listeners are probably also asking, what is Berachain? What's proof of liquidity? And then also, there's an airdrop. So who is eligible for BERA? That's gonna be one of the topics of the week. Hester Purse is making moves with the SEC's brand-new crypto task force. There's a new website and a new statement from Hester, gives us some insights as to what's happening over there as it relates to crypto in the SEC. MicroStrategy is now just strategy. Drop the micro, it's cooler. And also, Mike informed me of this this morning. Did you know that half of all MicroStrategy's

• 2:52David Hoffman?

  Bitcoin that it owns, that has on its treasury, was bought in Q4 of 2024? We'll talk about the implications of that. Uniswap V4 is live. Uni V4 hooks are bringing a bunch of new toys to the yard. Will it bring all the boys to the yard, too? Mike and I will discuss that. And then lastly, Ethereum is scaling the Layer 1. Validators have signaled that they are pushing the gas limit up to include more transactions into Ethereum Layer 1 blocks. Ethereum Layer 1 blocks are bigger than they've ever been. So that, and a bunch of more topics as well. Before we get into all of that, a message from our friends and sponsors over at Morpho. If you are a user or a builder interested in lending, borrowing, lending, you should listen up, because we have a message from Morpho. The first and

• 3:32David Hoffman?

  only DeFi protocol integrated by Coinbase, Coinbase.com. You can go get a Morpho Bitcoin-backed loan on Coinbase.com. That is pretty cool. And so if you are building any product that would benefit from a lending or borrowing feature, consider Morpho's infra. You can also get Morpho rewards on top. There is a link in the show notes, banklist.cc/morpho, if that just piqued you. Mike, let's start with Monday. The markets on Monday, which saw a bunch of liquidations, multi-billion dollars of liquidations on the back of Trump's 25% tariffs on Canada and Mexico and 10% on China. We thought we were going into a trade war. That trade war ended very, very quickly, when both Canada and Mexico just

• 4:15David Hoffman?

  folded. And Donald Trump said that he's gonna pause his tariffs for 30 days. And then things rocketed back up, but not after liquidating over $2 billion in the crypto markets. Crypto markets fell, I think, by something like $600 billion in total crypto market cap. What was your read on the situation on the markets on Monday? How did you interpret things?

• 4:36Speaker 01

  Yeah, I think that the the last couple of weeks, we've had a couple of spooks just in more traditional markets. So we had the deep seek scare, which led to a one day sell off from Nvidia of, I think, seventeen or eighteen percent, which was $600 billion worth of value, AKA one Ethereum and one Solana combined, which is the largest sell off of a single stock in absolute terms in the history of the stock market. And then you also had these fears of trade wars that Trump spoke. So the question that I think that people were asking was, is this a posturing tactic? People who have read The Art of the Deal know that, you know, I've heard his strategy described as madman theory, which is if you think your opponent is crazy or irrational, then you might actually be more concede a little bit more than you otherwise would. And it seems like

• 5:18Speaker 01

  within 24 hours, there had been, you know, joint tweets from the president of Mexico and Justin Trudeau up in Canada that there was going to be at least a 30 day pause on tariffs. So, you know, I would say that you have to treat Trump and AI relatively similarly here in the sense that you really just don't know what either is, what the impact of either of these things are going to be. Yeah, there could be some new weird open source model coming out of China tomorrow that will take the wind out of the sails of Nvidia, which has been a bellwether for the S and P. And same with Trump. It's very difficult to know how he really feels about tariffs long term. There is a great piece by a guy named Joseph Wang, Fed guy, why he thinks that Trump has not been posturing about tariffs, but 24 hours after that, you know, we actually had him

• 6:01Speaker 01

  make some pretty early concessions. And it seems like the stock market has been appeased. So I think this is just going to be something that makes, there'll be some noisy headlines about this, which will lead to some sell offs. But until you get much more, a much stronger signal that this is going to be permanent, I would probably, I don't know, feels like a dip to buy.

• 6:20David Hoffman?

  Yeah. Yeah. Do you have any opinions as to whether, like, who came out on top here? Like China, excuse me, Canada and Mexico both made some concessions with regards to the border. But they also responded with threatening their own tariffs as well. Trump, I think, will wave his flag, saying that he like got a victory here, he got a W here, but he also just immediately paused his state, his plan to actually follow through on the tariffs. Do you have any indication as like who actually came out on top? Or like, what was the actual like fallout of this tense

• 6:51Speaker 01

  It's probably a little bit too early to say now. It's hard to say that certainly Mexico or Canada came out on top here, especially if you're Canada. I think the imbalance of trade is, you know, Canada is an exporter and they do an enormous amount of trade with the United States. And, you know, I saw estimates that if Trump were to enact the tariffs that he was discussing, it could lead to, you know, a massive, a 2% decline in GDP, which is sort of recession territory for Canada. And so just imagine you're a Canadian. So Donald Trump has been saying he wants to make you the 51st state. He's publicly bullying your prime minister on Twitter. And there's an immediate concession and they appointed something called the fentanyl czar. And if you've looked at the data, the amount of fentanyl coming from Canada is absolutely de minimis.

• 7:36Speaker 01

  So you can't really be feeling too good as a Canadian here or feeling like this was a big win for your PM, I don't think.

• 7:43David Hoffman?

  Interesting, interesting. All right, let's get into crypto prices. Bitcoin down 7.5% on the week. This was largely caused by that Monday market sell-off that we talked about. Started the week at $105,000, ending the week at $97,100. ETH doing something even worse, starting the week at $3,260. Town 16% on the week to where it is now at $2,720. In the middle of the week, I think if you measure the very bottom, if you go to some of the centralized exchanges like Kraken or Coinbase, Ethereum even whips it down to something like $2,200. There was a bunch of analysis on the on-chain markets and just the centralized exchange markets too about Ether.

• 8:27David Hoffman?

  And heavy shorts were laid on Ether in the middle of that sell-off. And so in addition to global crypto market sell-offs, there are some actors who are shorting Ether and selling Ether. And so Ether just took a brunt of the market sell-off and did not rebound to the same degree as other crypto assets did. Bitcoin, Bitcoin got back above $100,000 after the market sell-off pretty quickly. It's since, you know, fallen back down to $97,000. But on Tuesday and Wednesday, it was over $100,000 after the sell-off. ETH has not since Recovered, which of course brings us to ETH BTC, which is at lows that we have not seen since January of 2021,

• 9:09David Hoffman?

  which is basically as bad as it gets. That is erasing the entire gains on Bitcoin that it made throughout the 2021 bull market. And so we are now into territory that we haven't seen since I started to get into crypto. At point 023 is where it touched. I think we're at point 026. Mike, commentary on Bitcoin price, ETH price, ETH BTC ratio, anything that comes to mind?

• 9:33Speaker 01

  Yeah, I think the story here is Bitcoin's strength. It's been pretty remarkable how long into this last cycle Bitcoin dominance has extended its gains. And then there was a massive WIC during the sell off of like a 10% WIC here in Bitcoin dominance had to get peaked at 65% or something like that. And, you know, I think part of that story is Bitcoin's acceptance as a global macro asset. I think we'll talk about it a little bit later. I think a huge part of this, which I didn't understand until I looked at these Q4 results for MicroStrategy, is just exactly how much MicroStrategy has been buying here. So that's probably a huge part of the story of Bitcoin's outperformance. And then, yeah, I think ETH's, you know, you got to call a spade a spade. I think this was a tough last week for ETH.

• 10:15Speaker 01

  You know, pretty massive sell off. There wasn't the bounce that you would have hoped as an ETH Bowl. I'm not 100% sure what's behind that story, but I think it's basically kind of a good week for Bitcoin, maybe a little bit of a tougher week for Ethereum.

• 10:28David Hoffman?

  It was a tough week for Ethereum, but inside of like a tough, almost coming up on like three years for ETH BTC as it relates to Bitcoin. My attitude here was like the market volatility that really happened on Monday really just sped up time in a way, brought forward time. And so it just hastened some of the continuing trend that we've seen with ETH BTC. And for some reason, somebody just decided to pile on a bunch of shorts right in that moment. And in that short, those shorts have been working out.

• 10:57Speaker 01

  Has Udi done another death of ETH party so that we can finally reverse this trend or?

• 11:01David Hoffman?

  I think he has, but the thing is, is like now it, now it came true. If he did do it, I think, I think he did it at point 03 and we're at point 026. And so if he did a death of ETH party, like he's still, he's currently on the right side of that history.

• 11:17Speaker 01

  All right. Well, we would have hoped for a jinx, the death of ETH party.

• 11:21David Hoffman?

  The ETF inflows, to tell a little bit of a different story, we had some very strong days and especially on the 4th of February for the Ethereum ETF inflows, $300 million on the 4th alone, $500 million, almost $500 million in the last five days. The Bitcoin ETF also pretty strong as well. It's had one day of red in the last seven and we can kind of more or less count $1 billion of inflows into the Bitcoin ETFs. And then last thing on the market section, when we talk about tokens movers of the week, we usually talk about tokens that went up, but now we're going to talk about tokens that went down. So this is going to be losers of the week.

• 12:00David Hoffman?

  Athena down 35%, official Trump coin also down 35% and it's been about 35% ever, down 35% ever since it launched. And then I'll call out those two as the big losers of the week, but Tia, maybe one last one is Tia, down 32% of the week. Tia has almost erased all of its gains that it had since its launch in November-ish of 2023. It launched at like a $2, $2.5 price, went up to $20 in February 2024 and we are currently below $3 for Tia. Mike, what do you think about Tia at $3?

• 12:36Speaker 01

  I, I mean, not financial advice, I'm not a trader, you shouldn't listen to what I say, but I like Tia. You know, I think I've been listening a lot to Chris Berninski's takes and I think Tia basically, one way that you could look at Tia is I think they're doing a lot of the stuff that people would like to see from Ethereum and that they've got single slot finality. They are laser focused on larger blocks packed full of data and it's still very early days and people are trying to back into numbers of how much can you really charge for DA over time? But you know, at least the number is going up and I think that people will eventually see that over time. If you, even at very low transaction fees, if you get enough volume, there's a compelling amount of fees that Tia can generate.

• 13:16Speaker 01

  And yeah, it's obviously in a little bit of a challenged situation here, but you know, if you want to take a punt here, this feels like a pretty good, pretty good level. I got a question for you, David. On the Trump loser of the week, what do you think in the alternate universe where Melania didn't launch her coin? Where would Trump be at the current moment? Because that thing had so much momentum behind it and now it has just been. An absolute stinker and it feels like it's gonna be pretty tough to recover from here, but I'm curious what your take is.

• 13:46David Hoffman?

  I think I agree with you that it is down only from here. I much desire to be in that universe where Melania was never launched. Cause if you look at the Melania, Melania coin, it is pretty, pretty damn terrible. Is this the one?

• 14:03David Hoffman?

  I think maybe this is the one, yeah. 1.5 billion dollar fully diluted valuation on the Melania coin with a 225 million dollar market cap. I think as Trump was launched, there was this Schrödinger's position of this is the president adopting crypto. He's the crypto president. He's going to promote this meme coin. It's going to be great. This is just, sure, he gets to make money, but this is really good for our industry. Solana jumped by like 33% Bitcoin jumped by like three or $4,000. And so there was this like harmony between, well, you know, maybe it's a little bit of a grift, but it's really good for the entire industry.

• 14:42David Hoffman?

  And then as soon as Melania launched, all, all like, all the rosy colored glasses just came off. And we're like, this is, this is a grift. The momentum is gone. Now I don't want even, I don't want to play this game anymore. And like, I don't know why they did it because no, like Melania, I'm sure she's a great lady. No one cares about Melania. Donald Trump is the meme. Melania is not the meme. So they, they destroyed tens of billions of dollars of capital by trying to launch the Melania coin. That's kind of my take on it.

• 15:16Speaker 01

  Yeah, I would agree. I think the whole market said, okay, this might be a grift, but it's at least probably good net good for crypto. And then the Melania coin launched and then they were like, ooh, it's an incompetent grift. So less good.

• 15:28David Hoffman?

  Incompetent grift. No one, everyone hays an incompetent grift.

• 15:31Speaker 01

  Yeah, yeah, not the best.

• 15:33David Hoffman?

  Real quick, a Layer 2 update brought to you by our friends and sponsors over at Krax. Kraken Inc. has officially launched at Stage 1, is already at Stage 1. They have one last red slice on the Layer 2 B on their exit window. And so the Kraken Inc. Layer 2 is at Stage 1. I think it's becoming more and more commonplace for rollups to launch at Stage 1. The uni-chain is launching Day 1 at Stage 1. And so being a Stage 0 rollup is now pretty inexcusable these days. It's the threshold to be is Stage 1. And then also, speaking of Kraken, they have reintroduced staking, ETH staking, a staking product for their US clients. And so this was, of course, a very famous United States company, Kraken, versus the SEC.

• 16:16David Hoffman?

  The SEC bullied Kraken out of their United States staking product. So they had to shut that down, and they have brought it back. So a sign of the times. Any comments on these two things?

• 16:25Speaker 01

  Yeah, I think it's great that they're bringing staking back in general. And yeah, it feels like they were unfairly bullied out of that line of business. So that feels good. On Inc., I'm very curious to see what they ultimately end up doing with Inc. You know, I think if you're launching an L2 today, obviously, Base has done extremely well. I'm sure Kraken is trying to replicate some of that success. And Inc. has a leg up on anyone that's launching an L2 because they have a massive, massive distribution through the Kraken sex. But I'd be curious how they're thinking about where the L2 sits in relation to their legacy business and what they're going to try to encourage in terms of activity. So on the one hand, I could see, basically, one of the advantages that DEXs have had

• 17:08Speaker 01

  over this last cycle is that, you know, there's been a massive amount of tokens that have been brought to market, and the frictions of issuing onto a DEX are, you know, two orders of magnitude lower than issuing onto a sex. And so you've actually seen Brian Armstrong of Coinbase come out and say, we need to think, rethink bottoms up what our listing criteria is in light of the amount of assets that are coming online. And so I could see The Inc. Inc. basically being a place where there's a DEX and they're getting some amount of sequencer fees before that they can actually list on the main platform. I also saw a couple of weeks ago, there was an Apollo distressed debt credit fund, which is getting issued on the mix of Solana and Inc. actually. So I'm unsure really of

• 17:47Speaker 01

  where that sits in their strategy. It's probably good to have some more stable TradFi-based collateral for big DeFi apps that might want to deploy onto Inc. But I'm a little bit curious to just understand what Inc.'s strategy is and I'm very hopeful. That'll be something cool.

• 18:04David Hoffman?

  Yeah, yeah, totally agree. Let's get into MicroStrategy, which is now just a strategy. They had an official rebrand and Michael Saylor tweeted this out, a picture of him in front of JustStrategy. So this is the MicroStrategy offices, which again is now JustStrategy. But it's strategy with a B, strategy with a little Bitcoin, a superset Bitcoin right at the end. So they are formally integrating the Bitcoin logo into the Strategy logo. And then this is a tweet from you, Mike. I'll go ahead and read it so you don't have to. "Just learned that MicroStrategy almost doubled their Bitcoin holdings in Q4 2024. Acquired $20 billion of new Bitcoins, bringing their total up to $44 billion. Seems like this might be the real reason behind the Bitcoin strength."

• 18:48David Hoffman?

  Now, it's hard to say how much $20 billion of buy pressure actually impacted the Bitcoin price. Certainly, it was good for the Bitcoin price, but how good, I think, is up for analysis, up for debate. I think you're on the side of things that it represented a very large chunk of the Bitcoin price action, the positive Bitcoin price action, especially in Q4. I will say, in addition to that, there's probably a lot of social posturing that $20 billion of Bitcoin buys that creates probably much more than $20 billion of follow-on buys, like people FOMOing into Bitcoin as a result of MicroStrategy's being very loud about it. What was your analysis here on this take?

• 19:28Speaker 01

  I guess I was just blown away by how much buying they've actually done over a relatively short period of time. And if you had, I guess now we spoiled it for people, but if I were to just ask you to close your eyes, and I did several people yesterday, and try to estimate, how much Bitcoin do you think MicroStrategy might have acquired in Q4? The numbers range from on the low end, 1 billion, to on the high end, maybe 5 billion. But I don't think many people knew they had bought just this much. 20 billion, yeah. Yeah, 20 billion dollars. It's also something that's a little bit funny about MicroStrategy is, I don't know how often it is that you have the largest buyer of Bitcoin outside of the ETF complexes directly announce their plans to buy. It just seems like a very easy front-running opportunity, especially when there's such

• 20:13Speaker 01

  a large part of the market still. And I also saw that MicroStrategy introduced a couple of new KPIs, which is BTC gain, which is just the amount of Bitcoin that they have at the end of a period versus the beginning in Bitcoin terms. And then there is the dollar amount gain as well, which you kind of just have to laugh at. That's going to be the noisiest KPI of all time, I would imagine, because they had a great yield on it this last year. But it's going to be tough just based on how volatile that asset is. The rebrand to strategy is interesting. There's a lot of jokes that you could make there. I'll stay away from the jokes, but I am curious as to why they thought it was necessary to do. I was talking with one of the guys over at VanEck, Patrick Bush, who theorized that

• 20:57Speaker 01

  this would make it easier for them to sell BTC treasury management services to other companies, just strategy, which ultimately I could see. I don't know too much about Bitcoin or MicroStrategy's legacy business, but they're not, my understanding is that they're sort of a middling or plateauing software company. They did about 120 million of top line in Q4, and they're sitting on 300 some million in cash. So it's not like the legacy business is throwing off a ton of cash or it's a huge revenue business. They're entirely valued at this point off of their Bitcoin buys. So, yeah, I mean, this is Michael Saylor just doing what Michael Saylor does, right? He's also gathering headlines, which has got to be positive for. Strategy.

• 21:41David Hoffman?

  For strategy, yeah, it's gonna be hard to not say MicroStrategy. Yeah, it does seem just like a formal bookend of the MicroStrategy side of the growth of the company. Micro just would refer to the actual software product line that they have. And also Bitcoin, it's not micro, it's definitely macro.

• 22:02Speaker 01

  Macro strategy would have been a good name, too.

• 22:03David Hoffman?

  Macro strategy would have been a great name.

• 22:06Speaker 01

  But I think that you have to probably look at some amount of Bitcoin's strength here, which has been the story that everyone's been very focused on for the last couple of months. And a huge portion of that, right, has been sailors buying here, which, yeah.

• 22:21David Hoffman?

  Sailors buying directly, but then also, like I said, his posturing. I saw this very MicroStrategy, now strategy, styled graphic of an announcement of a company buying Bitcoin, but it's not MicroStrategy, it's Semler Scientific. And so this might as well have been copied and pasted from a previous Michael Saylor tweet about a MicroStrategy purchase of Bitcoin, but the company and logo have been changed to reflect this new company. Semler Scientific acquires 871 Bitcoins for $88.5 million and has generated a Bitcoin yield of 152% since July 1, 2024, now holding 3,192 Bitcoin. And then there's a graphic that, again, is a MicroStrategy-produced graphic,

• 23:05David Hoffman?

  but it's not MicroStrategy, it's Semler Scientific. And so we have this company, and maybe you're asking, what is Semler Scientific? It is a healthcare tech company. I don't think the healthcare tech company side of the thing matters. It is now a copycat, a MicroStrategy, now strategy, copycat, doing the same exact thing and now announcing their Bitcoin purchases. And so while one side of the equation of strategy announcing all their Bitcoin buys is like very front-runable, if it generates, if the hype generates a herd, well, then that's exactly what MicroStrategy, Michael Saylor, wants from that dollar KPI,

• 23:43David Hoffman?

  the dollar KPI that he's trying to measure for. Like, he needs to generate like a stampede towards Bitcoin. And so being very loud about it is doing stuff like this. And clearly, it's working, at least for Semler Scientific.

• 23:53Speaker 01

  Yeah. I don't know about the whole strategy of holding Bitcoin on company treasuries, which I know is sacrilege to say in crypto, but I just think that the, an asset that's that volatile, the whole point of treasury management of a, of a company, I think the finance function is to support the operating function of the company. And generally, the people that control the treasury of companies are super risk averse and you're basically just holding, you basically just want to not get diluted through inflation, for the most part. You're not really trying to generate much of a return there. So I just, my gut says that Bitcoin is not super well suited for most public company treasuries. Also, you get these crazy swings on your P and L based on the appreciation or, you know, depreciation of Bitcoin over periods of time. So, but it's been working for a micro strategy, or for a strategy, so.

• 24:38David Hoffman?

  For a strategy. Alright guys, so that's the market section. Coming up next, David Sacks announces the priorities for digital assets in the United States. Hester Purse has shown some details about the new crypto task force. Uniswap V4 is now alive on 12 chains. We're going to get through all this and more, but first, I want me to talk about some of these fantastic sponsors that make this show possible, like Uniswap, which you're going to go hear from right now and later when we get back. Are you ready to swap smarter? Uniswap apps are simple, secure, and seamless tools that crypto users trust. The Uniswap protocol has processed more than $2.5 trillion in all-time swap volume, proving it's the go-to liquidity hub for swaps. With support for growing numbers of chains, including Ethereum, mainnet, base, Arbitrum, Polygon, ZK Sync,

• 25:22David Hoffman?

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• 26:04David Hoffman?

  symbiotic and many more making CME the most efficient and most composable LRT solution on the market metamorphosis season one dropped 7.7 million dollars in Cook rewards to M ETH holders season two is currently ongoing allowing users to earn staking restaking and ABS yields plus rewards in Cook M ETH protocols governance token and more don't miss out on the opportunity to stake restake and shape the future of M ETH protocol with Cook participate today at meth dot mantle dot XYZ AI and crypto czar David Sacks called digital assets some of the most important opportunities of our time he gave a statement a speech or a four or five minute long speech on Capitol Hill about his plan as crypto czar proper regulatory clarity

• 26:46David Hoffman?

  stablecoin protections many many other things but in addition to that the chair of the House Financial Services Committee representative French Hill announced that lawmakers in for House and Senate committees will also be part of a working group on a bicameral basis to move forward with legislation on a crypto regulatory framework and stablecoin so this is in addition to David Sacks crypto czar working group a second bicameral members from both House and Senate from four different committees will come together to make some priorities and so what we can what can we expect from this new group they want to finalize fit 21 which the House passed in 2024 and support a stablecoin bill introduced by Senator Hagerty which we will talk about in

• 27:29David Hoffman?

  a minute so those are the top two priorities in addition to other things David Sacks again on CNBC and talking on Capitol Hill talked about that how they are very committed to moving legislation through the House and Senate this year moving legislation through Congress takes time but I think it is something that we can do in the next six months he said and then I think the thing that the crypto industry was looking for the most is details around a Bitcoin reserve a crypto reserve a crypto stockpile and then he said that the team is evaluating this which I think is just a big old punt down the road saying we're not going to make any moves anytime soon so let's talk about this new stablecoin bill this is the genius act Cynthia Lamas tweeted out creating a

• 28:14David Hoffman?

  Regulatory framework for stablecoins is critical to maintaining the United States dollar dominance and promoting fiscal responsibility and innovation. This legislation goes a long way towards protecting Wyoming's regulatory framework for digital assets and ensures stablecoin issuers have a real choice when it comes to a state or national charter. Here is a tweet from Eleanor Territt, who tweeted out some of the, kind of the main points of the Genius Act. It defines stablecoins as digital assets pegged to the United States dollars. It establishes licensing and reserve requirements for issuers, and it applies federal regulation rules for issuers if the supply of the stablecoin is above $10 billion, but only states rules for if the supply of the stablecoin is below $10 billion.

• 28:59David Hoffman?

  And so, in addition to that, I'll also read out some of the comments from Martin Krieka from Mountain Protocol, who's intimately aware of these things. He says, in short, "Some of the good things here is that this mirrors a two-tier banking system. You can be regulated by federal or state regulators, depending on the supply of the stablecoins. It provides clear outcomes in the case of insolvency. Reserves for stablecoins are held on pristine assets that we know work, which are T-bills, insured bank deposits, overnight repos, which are no risk to users." And then also, interestingly, no banning on yield-bearing stablecoins, which he says, "We can allow issuers to compete on distribution and features. It doesn't make sense to ban yield if it does not add risk to the stablecoin.

• 29:43David Hoffman?

  Paying yield to distributors versus holders does not make a stablecoin riskier." And for maybe added context on that, there have been attempts to pass on the treasury yield to stablecoin holders, but passing it on directly to holders has previously made that stablecoin a security. Under the eyes of the SEC, this is removing that fact. And so, we are opening up larger conduits between the treasury backing things like Tether, or things like USSEC, or things like Mountain, and the ability to give that to stablecoin holders on-chain in a way that doesn't make this a security. And so, I think we're gonna watch this bill quickly move through Congress.

• 30:23David Hoffman?

  This has been given a loose thumbs up from people, and they know that both the Senate and the Congress are behind this. But we actually will need to watch that move through to confirm. Mike, any comments on this?

• 30:36Speaker 01

  Yeah, I think that what the market really wants to see and what will probably have a bigger impact over price, especially Bitcoin in the short term, is these ideas of a strategic Bitcoin reserve stockpile, or there's a new sovereign wealth fund, which is getting Trump signed an executive order to create a sovereign wealth fund for the United States. We can debate about whether or not that makes sense, being in a persistent fiscal deficit.

• 30:58David Hoffman?

  The fact that we're in debt.

• 30:59Speaker 01

  Yeah, so not really sure if that makes 100% sense, but a lot of people are excited about it. I saw Senator Cynthia Lummis tweeted out that there is a B, what are we going to buy with the Bitcoin B, and Howard Lutnick is going to be involved in that alongside Scott Besson. So, you know.

• 31:15David Hoffman?

  Very pro crypto individuals.

• 31:17Speaker 01

  Pro crypto, yeah. He went on Anthony Pompliano's show this week and mentioned that he had hundreds of millions of dollars of exposure to Bitcoin. Again, you can debate if that's a conflict of interest, but you might imagine that some of that, they're certainly trying to hint at something there, and I think that's what the market cares about in the shorter term. In the longer term, I think that what we're talking about here with this genius act and the Fit bill is much more impactful, but it's the type of thing that's probably not going to be reflected in prices anytime soon. I think it's significant that they committed that the Fit bill, they were going to have something passed by end of year. I think the devil is going to be in the details there. So, you know, the crypto industry for a very long time has been asking for clear rules of the road and regulation. We are most likely about to get those in the next year, and it's very

• 32:01Speaker 01

  possible that some of that stuff we are going to like and some we are not going to like quite so much. And so I think it's very important to just, there might be a little bit of a, I think it's overall a massively positive net good, but it's probably important to be plugged into things this year. And Coin Center and the Chamber of Digital Commerce, you know, etc. do a really good job of basically being Advocating for the crypto community, what is being talked about these bills? And you might have to call your senator or congressperson or whatever it is throughout the course of the year. In terms of the Stablecoin Act, I think this is extremely positive, right? There's still, there's a lot of, they're basically keeping their two-tier system of banking that people are used to in the United States.

• 32:43Speaker 01

  It seems like they've solved a lot of the pain points and this is sort of the easiest, this was the most straightforward part of the crypto market to regulate, probably. And I think what you will see from this is you'll have a bunch of new fintechs and more traditional, you know, more trad-fi issuers try to bring stablecoins to market. And, you know, you've seen, I'll just pull out two examples. I think the types of companies that will have success here are the ones that have distribution. So it's interesting that PYUSD, so PayPal's stablecoin, hasn't really done all of that much. Whereas if you look at the stablecoins that have worked in the past in crypto, USDC and USDT, they essentially leveraged centralized exchange distribution.

• 33:26Speaker 01

  So that was the center consortium with, in the partnership with Coinbase for Circle. And for Tether, it was really most of these centralized exchanges where there was a ton of trading activity. You know, Tether was kind of this actually ironically neutral kind of dollar type stablecoin that people could trade. So I think that in order to, you know, make a dent in the stablecoin game, you're probably going to need some form of distribution.

• 33:47David Hoffman?

  Yeah. As it relates to the compromises that we are going to probably have to have in order to get this legislation through Congress, that's normal. I don't, I know any sponsor, writer, creator of a bill has to make compromises in order to get that thing through to the finish line. So I would say that's a normal part of the process. So I don't think we should be too disappointed about that. And nonetheless, you can still call your senator and make those compromises not as big and more favorable to us. But I think it's pretty expected that we're going to have to acquiesce something here and there in order to, to fit into the traditional world.

• 34:23Speaker 01

  Well, I wonder how David Sacks is finding working in a government administration here because he's very used to the world of private markets and Silicon Valley and move fast and break things. And then he has, you know, just started out in DC. And I was excited. I actually watched this press conference and I kind of walked away saying, okay, we've got a committee of committees here and there's a new bicameral committee. But I think that's just the pace that things generally happen in Washington DC. Although I will say this administration seems like they're moving at a pretty breakneck pace. There have been a lot of executive orders signed. It seems like they're trying to, it seems like there is genuine momentum. I also think the, um, the perception of momentum is extremely important to President Trump. So, yeah, I mean, it'll just be interesting to see at the pace that all of this stuff continues to happen.

• 35:07David Hoffman?

  Something that I think is right alongside that is the pace of the SEC's pivot towards crypto. And so Hester Peirce put out this tweet saying, "The Crypto Task Force webpage is live. Join us for the drive toward crypto clarity." And so she made two links, one to the actual webpage, but then also another one to a speech, a statement. I guess it's a statement because she actually never gave the speech, but we all read it. It reads as a speech. And it's a very long speech and anything that Hester Peirce writes is always just a pleasure to read. So I highly suggest that everyone go and actually give this a read. But I'll give you the spark notes here. It's basically she acknowledges past regulatory uncertainty in crypto and presents the newly formed crypto task force as an effort to bring clarity

• 35:52David Hoffman?

  structure and investor protections to the space. She's using this road trip analogy, like we're going on this road trip that, and in the past, this trip that they were on, the SEC's relationship with crypto was chaotic and enforcement heavy, while the task force aims for a more practical and transparent regulatory framework. The statement emphasized collaboration, legal precision, and balancing investor innovation with investor protection. And then also signaling a shift towards structured engagement rather than reactive enforcement. However, at the very end, she also warned that this process will take time because she has been left a mess and that the crypto market should remain diligent. In addition

• 36:33David Hoffman?

  to all of that, Eric Balchunas tweeted out, "The SEC is scaling back its crypto enforcement unit." Some in a special unit of 50 lawyers and staff that have been dedicated to bringing enforcement actions are being reassigned to other departments. And so we're dissolving the crypto task force, the crypto task force 1.0, which was to go after crypto. And then Hester Purcey is creating crypto task force 2.0, which is to help collaborate with crypto. And maybe one thing that really emphasizes this is that there is a contact email, crypto at sec.gov. So it seems to me that it's very real that the SEC is opening the door to crypto by creating dedicated conduits of conversation between the crypto industry

• 37:14David Hoffman?

  and the SEC. And then one last thing, Acting Chairman of the SEC, Mark Ueda, announces executive staff and other appointments. A bunch of senior advisors to chairmans have been appointed. So we're getting maybe a new advisory board, but specifically one individual person came from Coin Center. So Landon Zinda has joined the commission as counsel and senior advisor to the crypto task force, which is a lawyer that came out of Coin Center, which if there's anyone who I want to represent crypto in government or in a regulatory body, I think it's Coin Center. Mike, any comments about all of this?

• 37:51Speaker 01

  Yeah, I think just imagine that you've been working at the SEC over the last four years. Imagine the types of morning meetings and standups in the culture that Gary Gensler created, the mission that he instilled, and then imagine the sea change that has happened over the course of the last couple of months. And maybe you've seen the writing on the wall. There has been an exodus of SEC employees, but man, it is just hard to overstate what the whipsaw effect must be like if you're working at the SEC.

• 38:19David Hoffman?

  It probably feels like an unclenching.

• 38:21Speaker 01

  Yeah, I think it probably does. I think it probably does. And there's clearly been a change in the winds. And you know, you've got the appointment of the new chair, but also you've had voices that have persistently been around the SEC like Hester Purcey get elevated. And you know, there are a couple of other passages, you know, from this, you know, from this document that she put out recently, which stood out to me. There's a great quote here that I really liked, which was, "In this country, people..." Generally have a right to make decisions for themselves. But the counterpart to that wonderful American liberty is the equally wonderful American expectation that people must decide for themselves, not look to mama government to tell them what to do or what not to do, nor to bail them out when they do something that turns out badly.

• 39:05Speaker 01

  And that is just so absolutely different from the nanny state sort of bland idioms that you would get from the previous administration. And look, it's just completely in line with my own personal ideology, which is you treat people like adults, both in the sense that you allow them, you know, to take risks, but also you don't bail them out when, you know, when they inevitably do stupid things as well. So I think it's a very welcome shift away from the previous administration's posturing towards how involved they wanted to be in terms of letting people make their own decisions. So, and then I agree, I think a lot of this stuff in government is just ultimately, right now, everyone is very encouraged by the words and the posturing, but I agree with you that it's just going to take a certain amount of time here.

• 39:46Speaker 01

  And she indicated that there's been a lot of, you know, there's been this wave of requests for non-enforcement and things like that. And she just said, please be patient. It's going to take a long time to process all that stuff.

• 39:57David Hoffman?

  Yeah, yeah. I actually record with Hester Peirce on Monday for an episode that I think will come out the following Tuesday. So Hester Peirce is going to speak directly to the crypto industry on Tuesday. So you will hear from her then. All right, fam, coming up next, Uniswap V4 is live and new applications are already taking root. So we're going to, Mike and I are going to go through some of the applications that we think are cool. And then we're going to also talk about the Ethereum Layer One. Is it actually scaling? Layer One blocks are bigger than they've ever been before. What happened and what are the plans for scaling the Layer One even more? We're going to get to these two topics, but more as well. But first, we're going to talk to some of these fantastic sponsors that make this show possible, starting with Frax and the Frax USD stablecoin, which offers some of the best yields in DeFi.

• 40:37David Hoffman?

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• 41:39David Hoffman?

  Cello is transitioning from a mobile-first, EVM-compatible Layer 1 blockchain to a high-performance Ethereum Layer 2, built on OP stack with EigenDA and one-block finality. All happening soon with a hard fork. With over 600 million total transactions, 12 million weekly transactions, and 750,000 daily active users, Cello's meteoric rise would place it among one of the top Layer 2s, built for the real world and optimized for fast, low-cost, global payments. As the home of the stablecoins, Cello hosts 13 native stablecoins across seven different currencies, including native USDT on Opera MiniPay, and with over 4 million users in Africa alone. In November, stablecoin volumes hit $6.8 billion, made for seamless on-chain FX trading. Plus, users can pay gas with ERC20 tokens like USDT and USDC and send crypto to phone numbers in seconds.

• 42:24David Hoffman?

  But why should you care about Cello's transition to a Layer 2? Layer 2s unify Ethereum. L1s fragmented. By becoming a Layer 2, Cello leads the way for other EVM-compatible Layer 1s to follow. Follow Cello on X and witness the great Cello-havening, where Cello cuts its inflation in half as it enters its Layer 2 era and continuing its environmental leadership. And we're back. Uniswap V4 is live. This is a pretty highly anticipated update from Uniswap to go from V3 to V4. I think the big feature of Uniswap V4 is the V4 hooks, which we'll talk about in a second. But there are some other things as well. Cheaper fees. Pools are now 99.9%. 99% cheaper to create native ETH support as well.

• 43:07David Hoffman?

  And so what this does is that swappers can probably expect a very significant savings from going in multi hop swaps. So finding and routing liquidity through Uniswap pools becomes just a much, much cheaper because there's no additional gas cost for adding new sources of liquidity. But really, it's all about the hooks. It's all about the hooks. Hooks, Uniswap hooks are kind of like smart contract plugins that allow for anyone to customize parameters around Uniswap. Customize pools, customize swaps, fees, LP positions. For example, a hook could dynamically adjust swap fees for whatever reason. It can lend unused liquidity for added yield for whatever reason, MEV protection strategies. And I think hooks have really opened up a bunch of new possible white space for building.

• 43:52David Hoffman?

  And so these are the new toys that I think everyone is very, very excited about.

• 43:57David Hoffman?

  These are the three toys that I've highlighted that I think are very, a big deal. Doppler is one that comes from inspiration from Mike here, so I'll let Doppler, Mike, talk about Doppler. But in addition to that, there's also Flanche and Sorrela. And I'll say all three of these different apps, which again are Uniswap V4 hooks, are doing very different things. So Flanche is a meme coin token launchpad with a couple of extra bells and whistles to make it more than just something that's an inert meme coin, makes it a little bit more of a live project. Sorrela is MEV protection for Uniswap LPs to help them not get eaten away by MEV, but actually to be able to capture MEV to increase the liquidity of Uniswap.

• 44:38David Hoffman?

  And then Doppler, maybe we'll stop with Doppler. Mike, what's Doppler and what about it gets you excited?

• 44:44Speaker 01

  Yeah, well, let me just, let's back up for a second and just trace the, the history of Uniswap and how we got to V4. Because I think it's a super interesting trend which is happening outside of Uniswap as well. So the history of Uniswap is transitioning from an application with a very simple user interface and one type of customer that they were serving well, to much more of a platform play where there's much more complexity. So you need V1, you had ERCs trading against ETH, then you enabled with a couple of other things as well. ERCs trading against other ERCs. And then for V3, ultimately, they allowed you to provide something called concentrated liquidity. So much more active management for LPs.

• 45:25Speaker 01

  Also much more complexity in terms of use of LPing on Uni V3. And now on V4, you essentially have this platform where they've allowed any new AMM designers to come in and build whatever type of AMM they want. And on top of that, they've got their front end. So they've got the web app and they've also got the wallet, which they're going to route liquidity and traders through. So, you know, the advantage if you're building a hook is that already you don't have to worry about security, audits, anything like that. And the audit process and the, first of all, the cost of doing that, but also just the time that it takes to do that is massive. And so there's a huge advantage to building a hook versus building your own AMM. And what Uniswap is unlocking here is rather than trying to guess at one type of customer

• 46:07Speaker 01

  or a couple of types of customers or building an AMM in-house, they essentially can create competition and inspire a whole new generation of AMM designers to come in and build very cool stuff. So yeah, Flanche, Sorrela and Doppler are all solving very different things. So Sorrela has been pretty laser focused on preventing LVR, which is basically sexta dex arb's in between the price of Binance and AMMs, which are generally stale because of Ethereum's 12 second block time. So Sorrela's running this very cool auction to return some of that value to LPs, which is, which is very interesting. And Doppler is taking a look at, is actually, you can think of it maybe a little bit in

• 46:50Speaker 01

  contrast to Pump Fun, where Pump Fun is designed for a very specific type of meme coin creator, where you basically, it's very low friction to create a meme coin and it's going to go up, but there's probably not the expectation of long-term value there. So the way that it actually works on the backend of Pump is that there's a bonding curve. Once you get to, and you put a very small percentage of the token supply into that curve, it gets filled immediately by sniper bots and then it gets transferred over to radium on the backend. The, it actually migrates. And so that's why you get these crazy, like crazy, you know, exponential price charts, especially in the beginning. And so that's very good if you're just, you know, You know, you don't have much technical savvy. You don't have a long-term plan to create value. That's good to just create something very easy to punt.

• 47:35David Hoffman?

  You just buy the picture.

• 47:37Speaker 01

  Right, exactly. But if you're a team that has a very different, you know, if you're a team that has a plan for longer-term value creation, then that's a bad market structure ultimately for you. So Doppler has a much more sophisticated strategy of how they LP in the beginning. They basically release tranches of supply onto the market to try to control for that crazy, you know, that crazy price appreciation that you see in the beginning. So, yeah, I mean, you're kind of Doppler's kind of solving for long-term value creation. Seems like Flanche is an upgrade or, you know, different take on meme coins. And then you've also got Sorella, which is lever mitigation. So already, right, with with those three kind of headline hooks, I'm sure there are many, many more that are waiting in the wings. Yeah, it's a super cool platform and it's a design pattern that

• 48:21Speaker 01

  you see across other. So Lido V3, maybe to tease that a little bit, is coming out that's going to kind of adhere to a similar sort of philosophy. You've also got Morpho on the lending side of things, which as opposed to kind of a one risk-return profile of Ave, it's a much more modular product, which relies on curators to create different vaults. So I feel like this trend of being more modular to accommodate different customer types and becoming more of a platform is going to be a massive trend within DeFi over the course of the next couple of years.

• 48:52David Hoffman?

  Yeah, I think that's right. The trend is pushing complexity to the edges by opening up as a developer platform rather than more of a top-down rigid protocol and just opening up, opening up endpoints for developers to get creative with, which to me is very exciting because then there's, I mean, there's more toys to build, more things to do. And, you know, when we can migrate things towards becoming a platform, that just means that there's more and more surface area to build cooler and cooler things. And ultimately, that means more startups, more jobs, more casino games if you're a DGEN, more fundamental like sustainability about this whole industry. And so I think we're all pretty excited about

• 49:35David Hoffman?

  it. So congrats to Uniswap and Uniswap Labs and Hayden and all the other people that contributed to Uniswap V4. All right, Mike, are you ready to talk about a subject that neither of us know anything about?

• 49:44Speaker 01

  Let's do it, David.

• 49:46David Hoffman?

  All right, Berachain enters Q5 and announced their mainnet and also the BERA token airdrop. Q5, I do not know what that is. That is just the notes that are in the agenda that I'm reading that Christie puts together for me every single morning. Thank you, Christie. What the hell is Q5?

• 50:02Speaker 01

  I think Q5 is a little bit of self-deprecation that it's taken them longer to launch than they thought they were going to. I think there was the idea that they were gonna launch in-

• 50:11David Hoffman?

  It's like quarter, quarter five.

• 50:12Speaker 01

  Yeah, it's quarter four and now it's actually Q5.

• 50:14David Hoffman?

  Quarter five never actually comes because you never get to Q5.

• 50:17Speaker 01

  Yeah, so anyway, I'm not 100% sure with the references, but I think it's a little self-nod to that. It took a little longer than they ultimately have liked. That's bullish, as we know, in crypto.

• 50:27David Hoffman?

  Okay, so the Layer 1, the mainnet is up and running. 80 million BERA tokens will be distributed to users. So, okay, what is Berachain? Berachain is a high-performance EVM identical Layer 1, so EVM equivalent, that utilizes what they call proof of liquidity, which, you know, there's proof of stake, there's proof of work. Berachain is proof of liquidity, which is, I'm gonna call it similar to proof of stake, but instead of staking, you have to provide liquidity and that counts as staking. And so it helps bootstrap the liquidity of the Layer 1. There's a two-token model. There's the native gas token, BERA. So that's like the ETH of Berachain is BERA. That's used by validators who secure the network. And then a soulbound governance token, BGT,

• 51:11David Hoffman?

  and that is awarded to users who provide liquidity. And you can provide liquidity using protocols like BaraSwap, and then receive tokens, receipt tokens, the BGT token as a proof of contribution. And then as BGT token holders accumulate, they delegate them to validators to directly influence the validators' boost, which I think is where the edge comes from, the yield comes from. Okay, so with 80 million tokens airdropped to the community, well, what does that mean? There is a total supply of 500 million BERA tokens with 10% annual inflation. The core contributors are getting 17%, investors are getting 34%, and the airdrop holds 16%. 16% airdrop? I would call that a sizable airdrop.

• 51:55David Hoffman?

  Up. Testnet users are getting it. Berachain NFT holders are getting it. Ecosystem NFT holders, social supporters and then applications and more. Claiming starts today, this Thursday. TBD on when the final claim deadline is up, even if there is a final claim. I'm in the United States, so I'm not available to claim an airdrop. I didn't even know if I got one. But you can also use bankless.com slash claimables to check your Berachain airdrop as well. Mike, comments about Berachain were climbing in at $9 a token. That gives it a fully diluted valuation of $5.3 billion with a $1.1 billion market cap. We are in the first like just six hours of trading.

• 52:37David Hoffman?

  So price discovery is currently happening. Any broad takes, broad strokes?

• 52:41Speaker 01

  Yeah. So in terms of the token debut here, it's too early to make any long-term claims. I would say within the first couple hours of trading, it's a success. I think that most people probably would have taken the under on a $5 billion FDB out of the gate. That could obviously go way down or way up from here, but I think overall opening hours of trading, that's not bad. I think the proof of liquidity mechanism that you just described, I'm not an expert on the mechanism itself, but I think they're tackling an interesting problem, which is in proof of stake blockchains, what is the right amount of stake that you want locked up? Because you can view it as inert capital. And this was actually an issue with Cosmos chains where there was native stake delegation

• 53:26Speaker 01

  and you had extremely high stake rates on most Cosmos chains. You have the same thing with Solana, same thing with Celestia as well. And so you're starting to see people act and liquid staking is penetration is much, much lower on those networks as opposed to something like ETH where there's no in protocol delegation. And so what you're starting to see is people realize that there's a trade-off in between the amount of capital that gets locked up to stake and secure the network and the amount of yield that gets paid versus if that capital were out in the open, it could be flowing into DeFi protocols, etc. And so you actually saw similar motivation, Celestia this week. There was a proposal by Dean Eigenman and someone else, I'm blanking on right now, to reduce the inflation and disinflation rate of Celestia by 33%. And part of what they cited there, outside of

• 54:09Speaker 01

  just overpaying for security, was that Tia right now is just being staked, it's not doing anything. They want it out in the ecosystem. And so I think this is an attempt to maybe, you know, obviate that trade-off. And it's clear that the bearers want people actually doing things in DeFi. And then lastly, I think that Berachain, together with Monad, these were the two big L1s that were going to come to market end of year. I, my gut sense is that there's not many new flows coming into crypto at the moment. So if BERA does well, it'll probably be at the expense of something else. You're kind of just at the PvP hot ball of money rotating into different things. And so I think it's going to be, probably my guess would be that it's going to be a little

• 54:52Speaker 01

  bit challenging for BERA and Monad when it launches to sustain that amount of momentum. So, but it's also interesting to just understand how the BD and marketing meta has changed over the years as well. If you look at, you know, the amount of coordination and how, I mean, Bitcoin obviously did, there's no centralized marketing entity whatsoever, basically same with Ethereum. And over the years, the BD and marketing function has moved up and up and up and now happens far before there's any network launch or token that goes live. And both Berachain and Monad here, I think, have been building communities and they've been doing parties and obviously a lot of very legitimate developer activities as well. But we'll, we'll see how effective that BD push has been.

• 55:35David Hoffman?

  Yeah, I think that that is the, the sign of just a theme that's been going on is just like BD ahead of, I mean, even for Monad before the testnet is even launched. I think Monad released the date of their testnet, but right now it's been in like a closed devnet for a while. But nonetheless, Berachain and Monad had generated enormous hype as just communities before the chain even launched. Haseeb tweeted out this, "I'm officially declaring February to be International EVM Month." I'm pretty sure what he means is both Berachain mainnet and Monad testnet. It's interesting to see Berachain Mine Share has flipped Solana in the Layer 1 sector. Now, I mean, that makes sense because it is the day of the airdrop and so this is

• 56:19David Hoffman?

  going to be a local peak of Mine Share. But Berachain is really just entering into the Layer 1 competition game pretty aggressively. And we will see if we, it can hold on to that.

• 56:31Speaker 01

  There's a funny, so I actually had sort of forgotten about this, but one of the early things that Barrow Chain was known for was this collection of NFTs that they dropped, the Bong NFTs. And there was a mechanism there where you could rebase your NFTs. And if you had held, I'm looking at a post here, so I haven't verified this myself, but from RenGMI on Twitter, where if you had held on to your Barra and your Bong NFTs and you had rebased every single time, then you would have returned 3.86 million, assuming a 7.5 billion FTV. So just under 3 million per NFT at the moment. So, pretty

• 57:12Speaker 01

  wild. Yeah, I guess that's a pretty decent reward for some of the early, you know, totally insane hodlers who've been holding on to your Bong NFTs. So that's the airdrop that you would have gotten in Barra.

• 57:24David Hoffman?

  Right, right. Okay, so if Barrow Chain's coming in at $5.3 billion valuation, where do you think Monet comes in at?

• 57:31Speaker 01

  It's, oh man, if you make me, I'm just gonna sound like an idiot here. It's so hard. Yeah, I would guess roughly the same, probably. And a lot of it depends on what there is to do on the chain in the beginning, and like how many different apps that they launched with. It also obviously depends on the tokenomics, how they've structured the airdrop, etc. But probably roughly the same.

• 57:51David Hoffman?

  All right, let's get into some Ethereum topics to round this out. The big topic of the week is Ethereum's gas limit, which is basically the size of Layer 1 blocks, is poking above 32 million, 32 million gas. Gas is just this unit of measurement for like basically throughput. It's been at 30 million, 30 million gas for a very long time, but recently there's been this push to increase the capacity of the Layer 1. And the way that this works is that Layer 1 validators actually get to vote on the size of Layer 1 blocks that they think is appropriate. And so it turns into a wisdom of a crowd, a wisdom of the crowd mechanism. So we are now poking above 32 million for the first time. And this has been celebrated by a number of people, Dunkrad, Vitalik, Justin Drake have always commented on this. Vitalik tweeted out,

• 58:36David Hoffman?

  Layer one is scaling. A big shout out to all the developers working on EIP 4444, statelessness, client efficiency upgrades, and other features that will make higher layer one gas limits decentralization friendly. So Vitalik both supporting layer one scaling while also supporting layer one scaling under the constraint of being decentralization friendly, very true to Ethereum. And then overall, I think Dankrat is aggressively asking for 45 million in the gas limit. So we still, going from 30 to 32 is great. Dankrat wants 45. And then Anthony Sazano put out this update about Pectra, which is apparently scheduled to go live in mid-March. This will be one of Ethereum's

• 59:18David Hoffman?

  largest upgrades in terms of the sheer number of EIPs and features that get included. And I think what we're really asking for is an increase of blobs, but I do not think we get more blobs in Pectra. So we're still waiting for further updates to Ethereum to get more blobs. Mike, any comments about Ethereum layer one scaling?

• 59:40Speaker 01

  I think it's great. I think it's really positive. I don't have many unique takes here. I think one of the things that I would love to see is, I think Jesse at Base does a really good job about this, which he's laid out his sort of North Star goal for Base in terms of scaling, which is gigas gas. And they've committed to regular incremental increases. And I think that's probably what the Ethereum community would want to see here. I think there's a lot of broad base support, both bottoms up from the community, from stakers, or from validators, rather, and then also from the leaders, the spiritual leaders of the Ethereum community. So I think the next step here would be, these changes don't have to happen overnight, but committing to some sort of, you know, just giving the community like a little more transparent signaling about when these

• 1:00:24Speaker 01

  increases are going to happen, or when they can expect that would be the next step.

• 1:00:28David Hoffman?

  I need to issue a correction from what I just said. There will be increased blobs, so the blob count will be increased from three to six as the target, and then the max blobs will be increased from six to nine. So there will be a doubling, a doubling of blobs, which is pretty damn cool. We are already at capacity with blob consumption from Layer 2s.

• 1:00:48Speaker 01

  One thing as well, by the way, just to add there, because there's been talk about introducing some sort of tax or tariffs on Ethereum L2s and...

• 1:00:57David Hoffman?

  Nonsense, of course.

• 1:00:58Speaker 01

  I think it's not, I just, yeah, I don't think it would work.

• 1:01:00David Hoffman?

  That's not a real concept.

• 1:01:02Speaker 01

  Not a real concept. I think that the, I think that you might get some very different results if you were to do that, right? Like ultimately, you know, in the rollup-centric roadmap, you want to make scaling as cheap as possible here. So I just, I just view it as a pretty, I don't agree with that as a concept, basically.

• 1:01:19David Hoffman?

  I have, I'm pretty sure that is a psy-op. I'm going to call that a psy-op.

• 1:01:25Speaker 01

  I think Justin Sun was the first one who introduced it when he threw his hat in the ring to be the head of the Ethereum Foundation.

• 1:01:34David Hoffman?

  Oh my god, alright, we're just gonna leave that one there. One of the reasons why people are talking about tariffs on Layer 2s, though, Mike, this is going to be a very big moment in the arc of Ethereum. The reason why is because ETH has been inflating ever since we introduced blobs, EIP 4844 into the Ethereum mainnet, and a bunch of scaling moved off of the Ethereum Layer 1 and onto the Ethereum Layer 2. That happened around April, I think, April 2024, maybe March 2024. So we're coming up on one year of blobs and the ETH supply has been inflating ever since. Yesterday, the ETH supply has been net inflationary since the introduction of proof of stake.

• 1:02:15David Hoffman?

  So proof of stake went live in September, mid-September 2022, and we aggressively started burning Ether because of EIP 1559 and the reduction of proof of work, and the ETH supply ended up burning almost half a million ETH. We have reissued over half a million ETH now, and we are net inflationary. Ethereum ETH, ETH ultra, quote unquote, ultrasound money is net inflationary at the rate of 0.001%.

• 1:02:41David Hoffman?

  Over a two-year, 145-day basis. So ETH is, you cannot really say that ETH is deflationary anymore. Well, in my mind, ultrasound money is a mechanism. We have to say that ETH has inflated 0.001% of its supply over two years and 145 days. Mike, what's your take on this?

• 1:03:01Speaker 01

  Well, I think there's a take here, which is, you know, there's this kind of ultrasound money meme, which it seems like has gone away. And there's been a lot of, I know Justin Drake did a long thread or a long post this week as well, maybe expressing some concerns. I can't remember the, yeah, exactly, all of the thread, but there was a comparison ETH versus Bitcoin here, and he was specifically, you know, bringing up this security budget debate, which people have long worried about when it comes to Bitcoin. And, you know, he has correctly pointed out that the vast, vast majority of issuance that gets paid, or the fees that are, that go to Bitcoin miners is from issuance, not from transaction fees.

• 1:03:41Speaker 01

  However, I do, and I do think that Bitcoin's monetary policy here is superior in the sense that you know what it is and it's not going to change. I think that the actual amount that, of inflation that Bitcoin has, which by the way is far, far more than all of the other L1s combined, just in dollar terms, because of its market cap, but also because of its inflation rate. But people care about that a little bit less than understanding when these changes in inflation are going to happen and that they're going to be persistently low. So I think this was always a little bit of the criticism of the ultrasound money idea,

• 1:04:19Speaker 01

  which is it's less important for there to be net, like a disinflation, right, or deflation than it is for you to just know what the monetary policy is going to be. And this is probably, this week shows a little bit why that is, because even though it looked for a long time that it was going to be deflationary, we sort of swung back to inflation. And I also think in terms of goals for Ethereum here, the, just rewinding back to how people originally talked about the rollup centric roadmap in general is, I think it is good for Ethereum to target, you know, a deflationary, to be deflationary in general. Like you hear TradFi folks talk about this a lot. I think it's going to be a big selling point, so. Yeah, I think the goal should basically be to scale the amount of transactions and blobs

• 1:05:01Speaker 01

  that rollups are consuming back to a point where Ethereum is deflationary. That and making the L1 usable enough that people that don't want to migrate up to L2s ultimately end up doing that. But I don't have many takes other than that. What do you think?

• 1:05:13David Hoffman?

  Yeah. Yeah, I think there has been this focus on ETH being money and moneyness. And this is something that I was inherently interested in, just as a concept. In 2021, I think people came into crypto with a focus on crypto as tech. And then me and Ryan, I were like, but also no, it's about money. And money is like the largest, one of the largest hams that exists. And if you fix the money, you can fix everything else. And inherent focus on moneyness as like a big concept. And I think there's been a pushback against that. Whereas like, well, I think younger, the moneyness conversation and being attracted towards moneyness, I think is more of like a Gen X, older crypto side of things.

• 1:05:55David Hoffman?

  And the younger crypto side of things, like the zoomers are really interested in crypto as a technology. And they don't really necessarily care about like these moneyness conversations. And they just want to, they just want to have useful apps and make things go fast and have useful blockchains. And they don't really care about like the connection between the tech and the money. And I think they're totally satisfied with Bitcoin and the 21 million, even though like you can poke open the hood, as Justin Drake loves to do and poke holes in it. I think the market cares less than what I expected two or three years ago.

• 1:06:30Speaker 01

  Yeah, I think that it, look, who knows what can happen in the future? Anyone that speaks really definitively about this, I would say that the only coin right now, which is verging on this moneyness use case is BTC. That does not necessarily mean that that's going to be the case into perpetuity in the future. And it's very possible that these L1s, the ones that are sufficiently decentralized, become a type of new category here that we haven't necessarily seen before. That doesn't neatly fit into the bucket of a tech company versus a money. So, you know, I think that people like to hem and haw about, is it money? Is it not money? Because you would naturally fit into one TAM versus the other. I would just say, you know, I think the L1s that are going to do really well are focused

• 1:07:14Speaker 01

  on providing with users what they, what they want. And, but I do think that we should stop.

• 1:07:22Speaker 01

  We should question, and the verbiage is important about using words like moneyness and collateral and or like settlement and things like that. I do think it's important to have be laser focused on why people are actually using Ethereum today, why L2s are actually building on Ethereum today, or banks and TradFi institutions might spin up their own L2s and its users and liquidity. And maybe over enough time, if Ethereum generates a healthy yield on top of, you know, for stakers, then it could become a monetary like asset in the future. But I don't think it's the right thing to focus on that today. I think the right thing to do is to focus on what users actually want.

• 1:07:55David Hoffman?

  Yeah. Moneyness has always been a concept that emerges rather than is built.

• 1:07:59Speaker 01

  Right. I completely agree with that. Yeah, well said.

• 1:08:02David Hoffman?

  Mike, that is the end of the roll up. Thank you so much for taking time out of your day and helping the Bankless Nation digest everything that happened this week. Really appreciate your time, man.

• 1:08:10Speaker 01

  Always, my friend, always. We'll have to do it on that bell curve real soon.

• 1:08:14David Hoffman?

  Yeah, I was gonna ask if people like your takes or just like the sound of your voice, where can they go hear more of you?

• 1:08:19Speaker 01

  The sound of my voice, yeah. You can listen, I host a podcast myself called Bell Curve, so head over there, check it out.

• 1:08:25David Hoffman?

  Yeah, we'll put a link in the show notes. Bankless Nation, you guys know the deal, crypto is risky. You can lose what you put in, but nonetheless, we are headed west. This is Frontier, suffer everyone, but we are glad you are with us in the bankless trading. Thanks a lot.

• 1:08:36Speaker 01

  Thanks for having me, David.