2021 ROLLUP: Top 20 Crypto Moments in 2021

As the year comes to a close, it's time to ask ourselves: What are the Hottest Stories of 2021? This has been an unquestionably historic year for Web3, and massive events happened both in and outside of the space. From NFTs to the Infrastructure Bill, we narrowed down this year into 20 overarching themes and narratives. What will take the #1 spot? Spoiler: it's not Ryan's Tiny Turtle. ------ 📣 HASHFLOW | POOL & TRADE OTC https://bankless.cc/Hashflow ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🍵 MATCHA | DECENTRALIZED EXCHANGE AGGREGATOR https://bankless.cc/Matcha 🔐 LEDGER | SECURE YOUR ASSETS https://bankless.cc/Ledger 🧙‍♀️ ALCHEMIX | SELF-PAYING LOANS http://bankless.cc/Alchemix ------ Topics Covered: 0:00 Intro 6:30 20 | New All Time Highs 8:33 19 | GME & Memestonks https://markets.businessinsider.com/news/stocks/gamestop-stock-short-seller-squeeze-losses-reddit-traders-citron-gme-2021-1 11:17 18 | Michael Saylor & Tesla https://www.virginiabusiness.com/article/microstrategy-buys-414m-more-bitcoin-in-q4/ https://www.cnbc.com/2021/02/08/tesla-buys-1point5-billion-in-bitcoin.html 12:58 17 | Rise of Layer 2s https://l2beat.com/ 14:54 16 | DeFi over CeFi https://twitter.com/haydenzadams/status/1361356927226310668?s=20 https://twitter.com/AntonioMJuliano/status/1442234625120608256?s=20 17:03 15 | China Ban https://youtu.be/Cz14dpWxgKk 20:12 14 | El Salvador https://www.npr.org/2021/09/07/1034838909/bitcoin-el-salvador-legal-tender-official-currency-cryptocurrency 22:25 13 | Beeple $69M Sale https://www.businessinsider.com/art-auction-nft-beeple-top-selling-most-expensive-sale-millions-2021-3 25:01 12 | Punks, Apes, and PFPs https://www.theblockcrypto.com/post/116715/collection-of-bored-ape-nfts-break-sothebys-estimates-with-3-days-to-go https://www.sothebys.com/en/digital-catalogues/sealed-cryptopunks-five-punks-on-paper 29:28 11 | Axie Infinity https://twitter.com/Psycheout86/status/1423719170315800581?s=20 32:00 10 | OpenSea Sales Volume https://beincrypto.com/opensea-crosses-10-billion-in-all-time-sales-volumes/ 36:50 9 | Coinbase IPO https://www.theblockcrypto.com/linked/100235/coinbase-direct-listing-april-nasdaq 40:15 8 | Gary Gensler https://www.theblockcrypto.com/linked/101595/us-senate-confirms-gary-gensler-as-joe-bidens-sec-commissioner 44:25 7 | Constitution DAO https://www.theverge.com/22820563/constitution-meme-47-million-crypto-crowdfunding-blockchain-ethereum-constitution 47:20 6 | EIP-1559 https://blockworks.co/eip-1559-is-live-thanks-to-ethereums-london-hard-fork/ 50:20 5 | Ultra Sound Money https://ultrasound.money/ 53:50 4 | Gas Fees https://twitter.com/drakefjustin/status/1392556085941350400?s=20 57:03 3 | Alt Layer 1s https://defillama.com/chains 1:00:12 2 | Infrastructure Bill https://www.theblockcrypto.com/linked/112877/white-house-says-crypto-tax-enforcement-will-help-pay-for-bipartisan-infrastructure-deal https://twitter.com/jchervinsky/status/1421150344051048451 1:04:45 1 | Inflation https://twitter.com/LynAldenContact/status/1414948397233082372?s=20 https://twitter.com/biancoresearch/status/1469722686939140101?s=20 1:09:40 Honorable Mentions 1:14:20 Closing & Disclaimers ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:00Ryan Sean Adams?

  That gets us to number one, David. Number one. Do we have a drum roll?

• 0:04David Hoffman?

  Ryan buys a turtle.

• 0:08David Hoffman?

  All right, no, okay, actual drum roll. All right. You ready for it?

• 0:11Ryan Sean Adams?

  Actual drum roll. Yeah. I kind of heard it. There's something. We'll add it in post. We'll put it in post. Sound effects in post-production. Number one, coming in at number one.

• 0:26Ryan Sean Adams?

  Hey, guys. Welcome to another Bankless Estate of the Nation episode. This one's gonna be a fun one. I got my Christmas hat on, David, and, you know, I'm in the holiday spirit. And I'm also in the spirit of, like, recapping everything we did in 2021. So what are we doing in this episode?

• 0:41David Hoffman?

  We're going through the top 20 things, top 20 big things that happened in crypto in 2021. Going down, starting from 20, going down all the way down to number one, because that's how a countdown works. And then we will, of course, finish off with some honorable mentions as well. These are loosely ranked in some kind of combination of chronological order, but also with significance. So as we go down the list, the things get bigger and bigger in deal, but also later and later in the year. So there's some sort of, some sort of method to the madness there.

• 1:13Ryan Sean Adams?

  Guys, you know the Spotify yearly wrap-up, you know, it tells you what music you listen to, how many hours you spent, all that sort of thing? That's what we're doing. These are all stories that we talked about on the weekly roll-ups. And so this is like a wrap-up of the year in crypto.

• 1:27David Hoffman?

  A roll-up of the roll-up.

• 1:28Ryan Sean Adams?

  Aggregated. It's a roll-up of the roll-ups. This is sharded roll-ups right now, I think.

• 1:32David Hoffman?

  Did you know, Ryan, that you can actually settle a roll-up onto another roll-up? That's actually technically a thing you can do. And that is what we are doing with the yearly roll-up.

• 1:42Ryan Sean Adams?

  My brain's not ready for that, okay? I was just getting modular blockchains implanted in my brain. Now you're talking about, like, roll-ups on top of roll-ups. I'll leave that for 2022, okay, guys? Hey, before we get in, we gotta talk about Hash Flow, though, David. So Hash Flow is a DeFi OTC desk. People know what DeFi is, but what's an OTC desk?

• 2:02David Hoffman?

  Yeah, an OTC desk, OTC stands for over the counter. If you are a big trader, trading a lot of volume and you just want your price to be optimized, then you go to an OTC desk. But as we all know, if you can do it in C-Fi, you can do it even better in DeFi. And so that's what Hashflow is. Hashflow is your DeFi OTC desk for big trades with zero slippage, MEV protection, and a bunch of other cool features as well, a ton of liquidity. And so you can check them out at app.hashflow.com. If you are a high-volume trader or just making a big purchase, Hashflow might be the place for you.

• 2:39Ryan Sean Adams?

  Tight spread, zero slippage, liquidity, MEV protection. Also, soon, they'll provide a way to grant yield on top of this liquidity. So you can actually be a liquidity provider on Hashflow, and there is a Google form if you want early access to that. You can check that out. We'll post that link in the show notes as well. All right, so David, I usually ask you, what's the state of the nation this week? But today's different because this is the last State of the Nation episode of the year. It's the last podcast you and I are recording for the year. We're gonna go on holidays. So tell us, you gotta tell us, what's the state of the entire year in crypto, not just the week? Sum up the year for us in one word.

• 3:16David Hoffman?

  It's a tall order, Ryan, but I think the state of 2021 is proven. We are proven. Crypto has proven itself in so many different ways. Inflation, we got a solution for that. Terrible culture, we got a solution for that.

• 3:32Ryan Sean Adams?

  Terrible culture.

• 3:35David Hoffman?

  Web 2 gargantuan's that are consuming all of our data, we got a solution for that. All of the use cases that we've always dreamed of in crypto are finally proven out in 2021. So, Ryan, the state of the year in crypto is proven.

• 3:48Ryan Sean Adams?

  I think it's true, man. We definitely had a lot to prove coming into 2021, and we proved it to mainstream. So I'll plus one that. And I think one of the things that we've proven most is that crypto can be a home for new forms of institutions, right? And, you know, the old institutions better get on board or get out of the way. So we are about to get to the 20 biggest events. That happened in 2021. But before we do that, we want to thank the sponsors that made this episode possible.

• 4:18David Hoffman?

  Arbitrum is an Ethereum scaling solution that's going to completely change how we use DeFi. And now it's live with over 100 projects deployed. Gas fees on the Ethereum L1 sucks. Too many people want to use Ethereum and it doesn't have enough capacity for all of us. And that's why teams like Arbitrum have been hard at work developing Layer 2 solutions that makes transactions on Ethereum cheap and instant. Arbitrum increases Ethereum's throughput by orders of magnitude at a fraction of the cost of what we are used to paying. When interacting with Arbitrum, you can get the performance of a centralized exchange while tapping into Ethereum's level of security and decentralization. That's why people are calling this Ethereum's broadband moment, where we get to add performance onto decentralization and security. If you're a developer and you want to save on gas costs

• 5:03David Hoffman?

  and overall make a better experience for your users, go to developer offchainlabs.com to get started building on Arbitrum. If you're a user, keep an eye out for your favorite DeFi apps building on Arbitrum. Many DeFi applications that are on the Ethereum Layer 1 are migrating over to Layer 2s like Arbitrum. And some are even skipping over Layer 1s and deploying directly on Layer 2s. There are so many apps coming online to Arbitrum. So go to bridge.abitrum.io and start bridging over your Ether or any of the tokens listed and start having a DeFi experience that you've always wanted. Living a bankless life requires taking control over your own private keys. Not your keys, not your crypto. That's why so many in the bankless nation already have their Ledger hardware wallet, which makes proper private key management a breeze.

• 5:46David Hoffman?

  But the Ledger ecosystem is much more than just a secure hardware wallet. Ledger is the combination of the Ledger hardware wallet and the Ledger Live app. And if you're used to seeing all of your crypto services and favorite DeFi apps all in one spot, Ledger Live is where you want to be. Not only does Ledger let you buy your crypto assets straight from the app, but it also hooks into all of the DeFi apps and services that you're used to. Using Ledger Live, you can stake your Ether and Lido, swap on DEXs like Paraswap, or display your NFTs with Rainbow. You can also use Wallet Connect inside of Ledger Live to connect to all the other DeFi apps that keep coming online. DeFi never stops growing and the Ledger Live app grows alongside with it. So click the link in the show notes to see all of the DeFi apps that Ledger Live has.

• 6:31David Hoffman?

  And stay tuned as more apps come online. And if you don't have a Ledger hardware wallet, what are you even waiting for? Go to ledger.com, grab a ledger, download Ledger Live and get all of your DeFi apps all in one space.

• 6:44Ryan Sean Adams?

  All right, Bankless Nation, here we are now. We are counting down the top 20 biggest events, the marquee events, news items from 2021. And what a year it's been, just an incredible year for crypto. Hard to summarize all of these things, but we are going to attempt to do that. So what are we doing, David? We're doing a countdown from 20 all the way to one. And what's the rank ordering here?

• 7:06David Hoffman?

  It's a little bit chronological, a little bit by significance. So as things progress down the list, they happen later and later in the year, but they are also more and more significant as well. Ryan, are you ready to get started?

• 7:18Ryan Sean Adams?

  Yeah, let's get started, man. What's number, uh, let's start with number 20. What is number 20 on our list of top 20 biggest events?

• 7:26David Hoffman?

  Yeah, number 20 is Ether and Bitcoin break all time highs. And this happened at the very beginning of the year. In fact, Bitcoin actually broke its all time highs in 2020. So technically that did not happen in 2021. Bitcoin broke its all time high on the 14th of December, 2020. And then Ether broke its all time high on the 18th of January, 2021. After three years of depressed bearishness throughout a very long and drawn out bear market. After DeFi summer happened, which brought in a ton of new energy, Bitcoin finally broke its all time highs on December 14th, 2020 at $21,000. And then Ether followed suit a little over a month later,

• 8:08David Hoffman?

  breaking through that $1,400 mark on the, in the first few weeks of January. So that's really how we started off this year is breaking new all time highs.

• 8:16Ryan Sean Adams?

  So we started this year bullish. I feel like we ended it bullish, but also we're in kind of this weird crap territory, David. And we'll see what's in store for 2022. I think both you and I are still bullish going into the new year, but that remains to be seen what's going to happen. But let's get to number 19 on our list. So number 19, GME and the rise of meme stocks. So GME, of course, is the famous GameStop stock. They had a little debacle with hedge funds. That happened earlier in the year, and we covered it significantly on Banglais. I think it proved out the use case for DeFi in a big way. But what was this story? What happened here?

• 8:57David Hoffman?

  There's so much packed into this story. It's the story of stimulus checks, the downstream effects of stimulus checks, which definitely were a big theme of 2020, going into the hands of retail traders and the retail traders showing the power of all of, you know, apes aping together, ape strong together, or apes together strong, that one. And then also going up against institutions. It was the apes versus Citadel, the hedge fund, and then also showing the power structures of the world where when a bunch of retail traders band together to short squeeze a big hedge fund, the big hedge fund calls up Robinhood and says, yo, stop trading. And so this had so many

• 9:39David Hoffman?

  different stories like wrapped in it inside of it. The stimmy checks, retail traders banding together, the inflation and pushing out on the risk curve that people have as a result of increasing printing of dollars, the power structures of the world, the hedge funds connected with the infrastructure to make sure that the hedge funds can't lose. Oh, man, so much wrapped into this. And this really kicked off the meme stonk revolution. AMC happened right after this. Dogecoin mooned from below a penny up to 25 cents right after this. And so it really just kicked off so many things in 2021.

• 10:15Ryan Sean Adams?

  What do you think about this energy? Do you think it's a healthy energy? Or do you think it's a little bit unhealthy? I know, definitely know traditional mainstream media's view on this, which is pretty negative. But what's your take on this?

• 10:26David Hoffman?

  Oh, I think it's definitely an indication of something that crypto very much stands for, which is power going back into the hands of the individual. And the individuals having and realizing they have more power than what they previously discovered. And so, no, I'm very, very optimistic about this. Also, just like, again, individuals taking more control over their own personal finances. Granted, meme stocks is kind of, okay, like, whatever. I'm not going to fight that fight. But yeah, I think it's just emblematic of the year at large.

• 10:57Ryan Sean Adams?

  Yeah, another story wrapped up in that is, of course, like how Reddit analysts are better than the best analysts in Wall Street. And how if we band together and like research these stocks and these various assets, these opportunities, we can uncover things that Wall Street doesn't. That's a really cool example there. That's number 19. Let's get to number 18. So this is Michael Saylor buying Bitcoin. He did it all year. We'll also wrap up Tesla buying Bitcoin in the mix here. Both of those things happened in Q1. Of course, for Michael Saylor, it's happened the entire year. Why is this number 18 on our list?

• 11:35David Hoffman?

  Yeah, this also, Michael Saylor also bought a bunch of Bitcoin in 2020. But it was really Michael Saylor, MicroStrategy, buying Bitcoin in 2020. And then also continuing to do it all throughout 2021. And then actually convincing other companies like Tesla to follow suit. So yeah, 2021 was the year that Tesla, the biggest, one of the biggest public companies out there, puts Bitcoin on the balance sheet. And also really when Elon Musk as an individual starts just participating in crypto discourse. And we'll talk about that in the honorable mentions category later. But yeah, Michael Saylor, Tesla, and a few other public companies, putting Bitcoin on the balance sheet was a big theme in 2021.

• 12:15Ryan Sean Adams?

  Still kind of contrarian, though, because even though like Microstrata is doing it, a handful of other firms are doing it, it didn't maybe get as widespread as people thought it was at the beginning of 2021. There was this idea that all Fortune 500 companies or many of them, their CFOs were going to like, I guess, ape into Bitcoin and start adding it on the ballot sheets. And that didn't happen.

• 12:37David Hoffman?

  Yeah, no, that's, people thought that this was going to be a snowball that just rolls. And it kind of stopped with Tesla. After Tesla, like, no big significant company put it on the balance sheet. And I, perhaps people just looked at like, the volatility of both Elon Musk and Michael Saylor as individuals and be like, oh, well, that's, that's a volatile set of individuals.

• 12:56Ryan Sean Adams?

  Not so sure about this one. Yeah, exactly. Well, let's get to number 17. So that was 18. But number 17 is the rise of Layer 2s. David, you and I called for Layer 2 Summer to happen. It kind of happened ish at the end of summer, which is the launch of all of these new Layer 2s. But there were definitely some massive successes on the Layer 2 front this year, particularly in these application-specific Layer 2s like DYDX. Right here, we're looking at Layer 2 B. Why was the rise of Layer 2s a big story this year, number 17 on our list?

• 13:28David Hoffman?

  Well, because the conversation about Layer 2s in Ethereum has been happening since, you know, 2017. We've talked about Layer 2s. And so

• 13:35Ryan Sean Adams?

  Plasma?

• 13:36David Hoffman?

  Yeah, Plasma, state channels, yeah, payment channels, yeah, all like Raiden, all these like Layer 2s, technical and technically count as Layer 2s, but they weren't the Layer 2s that we really, really, you know, hoped or dreamed for. And so after 2017, 2018, 2019, 2020, Layer 2s are coming, Layer 2s are coming, Layer 2s are coming. Ryan, we started this podcast saying Layer 2s are coming. In 2021, Layer 2s actually came, fully-fledged Layer 2s, EVM-compatible, smart contract-enabled, trustless Layer 2s arrived on Ethereum. After years and years of research and development and experimentation, main nets are actually deployed onto the Ethereum Layer 1. And that's, that's huge.

• 14:18David Hoffman?

  It's been many, many years coming. Didn't really have the blowout, you know, if, you know, here, the Blowout like adoption that we hoped that they would have. Turns out it was a little bit of a slow roll. Turns out these things do not go are not when you deploy them onto main main net. They are not in their final form. They are still like relatively constrained and limited. But they are in their last phases of just research development and the last phases of just actually being tested by the real world market. Which is of course, the last thing. So 2021, actual L2s with actual smart contract capabilities with actual trustlessness came to Ethereum.

• 14:54Ryan Sean Adams?

  This kind of bleeds into our next item on the list, number 16, clocking in number 16, DeFi bigger than C-Fi. And this is a story, I think in two parts. The first is this, we're looking at a tweet from Hayden Adams. From February 15th, 2021, earlier in this year. Uniswap just became the first decentralized trading platform to process over 100 billion in volume. An exciting milestone for DeFi. That on some days was larger than the volume on Coinbase. Also, there were some days in 2021 that stablecoin liquidity and volumes on Uniswap V3 dwarfed that of Coinbase as well.

• 15:38Ryan Sean Adams?

  So kind of a flippanting in progress there. The second part of this story is Antonio from DYDX. And this dovetails into what you were saying about scalable layer twos with with number 17. He said, "Five years ago, I left Coinbase and I eventually funded founded DYDX. Today, for the first time, DYDX is doing more volume than Coinbase." Oh my God, this DeFi protocol deployed on layer two now doing more volume than the Coinbase exchange. DeFi grew bigger than C-Fi in a few cases in 2021, and that's a big deal. What are your thoughts?

• 16:17David Hoffman?

  I think just having days and weeks where DeFi is doing more volume is just of course, the first step to doing months and years. So I think it's it's days and weeks in 2021 and 2022 and beyond, it starts to be like, oh, we're like, DeFi exchanges are doing more volume than Coinbase on a monthly basis. And then it's not many months after that until it's a yearly basis. And then after that is just forever. And now DeFi is completely just eaten C-Fi's lunch. And that is why. So just bullish on that. And we got the first taste of that in 2021.

• 16:49Ryan Sean Adams?

  Bullish the the bankless thesis, which of course says that DeFi protocols will be at the very bottom layer for the entire financial ecosystem. Okay, we just breezed through five of these. We're getting to number 15 now. Number 15 is clocking in. China actually banned Bitcoin this crypto this time, not just Bitcoin, but all of crypto. Alright, so this has been like common FUD in crypto circles for many years. Oh my God, every couple of months or so, China's banning Bitcoin, China's banning crypto, something like that is happening. Well, this year it felt like they actually did it. How do we know that? There was a mass exodus of proof of work mining machines and

• 17:29Ryan Sean Adams?

  companies out of China into other regions of the world. We'd never seen that before. Why is that number 15 on our list, David?

• 17:38David Hoffman?

  Because it's going to be very indicative of global shifts of power. If you believe the crypto thesis that open permissionless public networks are going to be the dominant form of just financial activities, and then you see China pushing out not just Bitcoin mining, but all crypto infrastructure, like websites, exchanges, out are out of China. And not only do we know that from the hash flow migration, hash rate migration, but we also just know this from the data of holdings of crypto assets inside of Chinese exchanges have also gone to zero. So we know that China is actually pushing out basically everything about crypto. And so this might be the thing that finally ends China's like significant dominance. This might be the

• 18:20David Hoffman?

  the thing that costs them significantly in growth and just, you know, integration into the real world economy in the future. It's also really truly helped the Bitcoin narrative as hash flow goes from the east into the west, where US regulators are feel much more comfortable about it. It's helped Bitcoin mining, proof of work mining, go from coal heavy to green energy friendly. And so that's also helped with its narrative tailwinds. And so there's a lot, a very significant number of positive second and third order consequences as a result of China actually banning crypto this time, except sad for the actual Chinese citizens, because they are now only have the option of the Chinese central bank digital currency,

• 19:02David Hoffman?

  which while it is doing fantastic things to unbank the or bank the unbanked, it's also putting them even further under control of the Chinese authoritarian government.

• 19:12Ryan Sean Adams?

  That last point, I think merits some repetition as well. We did a fantastic podcast on the Chinese central bank digital currency and their plans around blockchain earlier this year with a book called Cashless. Somebody wrote about what's going on in China. And so if you want to dig in deeper into the story, which I encourage you to do, go check out that podcast. We'll include a link to it in the show notes. But that's exactly what China is teeing up. So step one, get crypto out. Step two, replace crypto with this centralized pseudo crypto type of system that is completely controlled by the Chinese government. And

• 19:53Ryan Sean Adams?

  you have to wonder what other nation states will do in reaction to this, right? There's kind of a fork in the road. Will they follow China and pursue that path? Or will they follow the open permissionless crypto path and continue to develop on top of those rails? That's something we'll be monitoring into the next year. All right, that's 15. Number 14, this was big, man. A central bank finally adopted Bitcoin. Bitcoin became legal tender in El Salvador. They started purchasing it on El Salvador, a nation state balance sheet. Why is this number 14, David?

• 20:28David Hoffman?

  This has been part of the Bitcoin unofficial roadmap for forever. Like, you know, first individuals, then companies, then countries. And after countries, there's not much more beyond that. There's only bigger and bigger countries. And so El Salvador, you know, small country, small GDP, but the first. And so Bitcoin is now officially a cryptocurrency, the first ever cryptocurrency is now legal tender in an entire country. This did not, this also drew a bunch of criticism. You know, the dictator nature of the president of El Salvador, Nayib Bukele, and also the kind of the forcing of Bitcoin upon individuals and

• 21:09David Hoffman?

  businesses in El Salvador didn't always, wasn't always received with positive feedback from both the citizens of El Salvador and from others as well. This has also drawn the attention of institutions like IMF. Feel very, very threatened by this, by the independence of El Salvador from the global financial system. And overall, it has been just a huge narrative tailwinds towards alternative currencies that aren't just fiat currencies printed out of thin air by central banks. So just a very powerful story and you know, hopefully the first of many to come of countries that are choosing alternative assets as legal tender in their countries.

• 21:47Ryan Sean Adams?

  Yeah, I think it's an extraordinary story and I like that you called it part of Bitcoin's unofficial roadmap because that's exactly what it is. It's now Bitcoin is on an adoption roadmap. There are not too many, you know, technical plans and improvements in the works, but definitely a lot of adoption things to take. And the IMF's response on this has been like, let's quarantine the contagion. Let's make sure this doesn't spread to other places in Central America, other places in the world. It was definitely a shot across the bow of the nation states and existing institutions of the world. So that in itself is fascinating and I think worthy of being on our list here this year. Let's get to number 13 though. Unlucky number 13, I guess. It's a meme number in itself.

• 22:32Ryan Sean Adams?

  And $69 million is also a meme number. That was the price at which this Beeple artwork sold, $69 million. The highest crypto art sale in history, making Beeple, the creator of this art, one of the top three most valuable living artists. Absolutely incredible. This happened in March of this year. We're still in Q1 of NFT mania, which we'll cover, I think, on this list in some more detail. But what are your thoughts on this one?

• 23:06David Hoffman?

  Yeah, this, this I think is really emblematic of many of the things that make NFTs so cool. Beeple was famous for making digital art, one digital art per day for years, like didn't miss a day. And digital art is not easy to create in a short amount of time. And so the, and as a result of just the nature of digital art before crypto, he never really had any way to monetize his artwork, monetize his, you know, creations. NFTs gave Beeple the ability to actually monetize his digital art. And so just from going from a guy who, kind of an indie guy with a cult following of just like making weird digital art things every single day and a decent sized Instagram.

• 23:47David Hoffman?

  And then going to actually being able to sell those things because of the power of it slapping a token onto a JPEG. That made Beeple the number one, or one of the top three most valuable living artists. So this is the story of NFTs at large. A lot of digital art, new forms of art, don't have a way to be monetized and NFTs offer that for so many people. People was just like a signal of things to come. And you know, a lot of digital artists will be funded by NFTs in ways that they weren't previously able to monetize their art. So this was just the first of what turned into a whole entire movement. And now we have photography NFTs, other digital, like music NFTs. You know, Audius has a whole entire platform, for example.

• 24:30David Hoffman?

  And so this is just a great example of the power of NFTs, putting money into the hands of artists that previously did not have such an opportunity.

• 24:38Ryan Sean Adams?

  I think if you're measuring the timeline of the creator economy, right? This $69 million Beeple sale is going to be a key milestone in that, right? It's like this is an artist's connection directly to fans and a way to monetize his art pieces without any third parties. And the creator economy is definitely a big theme that they carried forward through the rest of the year. But so were NFTs. And that brings us to number 12 on our list. Only a dozen more to go. Number 12, CryptoPunks, Bored Apes and Profile NFTs, PFP NFTs. What a crazy year for this asset class. Let's talk a little bit about, you know, Bored Apes, CryptoPunks, Breaking Sotheby's estimates.

• 25:23Ryan Sean Adams?

  Where do you want to start with this one, David?

• 25:25David Hoffman?

  Yeah, the Profile Picture NFT movement really just proved, it really helped the whole broader NFT movement. Because you could see Profile Picture NFTs in your Twitter handles. And now I have them also in my Instagram and Facebook handles. And when I uploaded it to my LinkedIn. Account. I was like, ha, ha, ha. Now everyone on LinkedIn has to look at my CryptoPunk.

• 25:44Ryan Sean Adams?

  You put a CryptoPunk on your LinkedIn profile?

• 25:46David Hoffman?

  Oh, 100%, 100%.

• 25:48Ryan Sean Adams?

  Awesome, man.

• 25:48David Hoffman?

  And so.

• 25:49Ryan Sean Adams?

  I could add my turtle.

• 25:51David Hoffman?

  I think this is really just a breakout use case of the metaverse, like actually putting a digital representation of yourself as your digital avatar on your, all your social media accounts. As it turns out, as the definition of the metaverse has expanded, it's expanded into platforms like Instagram and into platforms like TikTok. Like, turns out that's what the metaverse is. So having digital representations, unique digital representations, just was an extreme use case. And also the dollar value of things like CryptoPunks and Bored Apes, the sticker shock of these things allows people to flex and people love flexing, especially with art. And, and also just the combination of just like a, a coherent community, like there's all the CryptoPunks,

• 26:31David Hoffman?

  there's all the Bored Apes, but also have unique people inside of those, in those communities. So like, you have, you know, 10,000 CryptoPunks, 10,000 individuals, but you know, only one of them is the albino smile with the hat, right? So I'm a, I'm a CryptoPunk, but I'm only this CryptoPunk. It allows for communities to form with individuality also inside of those communities. And so not only was it a way to flex in the metaverse, flex your NFTs, but also a way to, you know, signal that you're a part of a tribe, you're a part of a community, but you're a unique part of a community as well. So just a really big movement this year with the whole profile picture NFT phenomenon.

• 27:10Ryan Sean Adams?

  This is new wave flex, new wave Rolex for sure. And I think you're right about something about the, the profile. It was like, it's a perfect fit for all of our existing social media platforms that we know and love. Like you could just glue it directly into your avatar image and it sort of became a representation of you in the metaverse. Also, from a price perspective, David, what, what are some of the prices that we're talking about with CryptoPunks and Bored Apes? Like what are the floor prices or some of the big sales over the course of the year?

• 27:41David Hoffman?

  Well, CryptoPunks recently had that over $10 million sale for a single CryptoPunk, making it the highest profile picture NFT sale ever. The floor price of CryptoPunks, I believe, is low at 60 right now. The highest I think it got to was like 160 ETH. Yeah, the highest it got to was 144. I believe Board Apes are clocking in at 45 ETH for the floor. There's a big conversation about Board Apes flipping CryptoPunks in terms of the floor price. But overall, just a generalized adoption. The Board Apes have been like the story of an NFT profile picture adoption, hands down. I think it's specifically because they got launched in 2020 or early 2021, so they had some of that early momentum.

• 28:25David Hoffman?

  Jimmy Fallon's got a Board Ape, the Chain Smokers has a Board Ape. Really, Board Apes have kind of won the pop culture meme, but we've just really seen...

• 28:34Ryan Sean Adams?

  Is it true that Board Apes launched? I think I've got something in my notes, like April 20th, 2021.

• 28:40David Hoffman?

  Yeah, 4/20/21.

• 28:42Ryan Sean Adams?

  Such a new project.

• 28:43David Hoffman?

  Right, right, yeah. So huge, just huge victory by Board Apes for how much mainstream adoption they've gotten in such a short amount of time. And so, yeah, we've got the headline up. Collection of Board Ape NFTs breaks Sotheby's estimates with three days ago. Also, CryptoPunks also sold on Sotheby's. And so really just making their way into traditional art sale auction houses. And so they aren't the only ones as well. Other art blocks made their way here. Also, shout out to Cool Cats, definitely deserves to be up here as well. Cool Cats NFTs, of which I gave mine away. So slight regret on that one, but okay, it's fine.

• 29:20Ryan Sean Adams?

  Well, you got someone else into crypto, right?

• 29:24David Hoffman?

  I did, yes I did.

• 29:25Ryan Sean Adams?

  That's what this whole movement's about. That's number 12. All right, guys, number 11, getting closer to the top 10. Not quite there yet, but getting closer. Number 11. Axie Infinity.

• 29:35David Hoffman?

  Of course.

• 29:36Ryan Sean Adams?

  Just two words breakout game, absolutely crushing it. Some stats. This is a tweet from, let's see, August 6th. The first NFT project Axie Infinity to hit $1 billion in all time NFT trading volume. History in the making. 2.5 million monthly active players in October. The AXS token was about $30 million in market cap this time last year. It got to highs of like eight, maybe nine billion dollars in the course of a 12 month time span. Absolutely the breakout token, the breakout price appreciation, maybe the breakout app of the year.

• 30:18Ryan Sean Adams?

  Combining NFTs and crypto games. What's, why does this make number 11 on our list? Besides everything I just said.

• 30:26David Hoffman?

  Yeah, just to help listeners frame the context of 1 billion in all time NFT volume. That happened in August, so not even counting the rest of the year. OpenSea hit $10 billion in NFT trading volume in November. And OpenSea is a platform for trading NFTs. Axie Infinity is a specific NFT project and that one NFT project did $1 billion in August. So that is absolutely insane. The SLP token, the strange love potion that is the medium of exchange token in Axie Infinity, has also become a medium of exchange token in the Philippines. Insert contrast to Bitcoin as legal tender in El Salvador.

• 31:08David Hoffman?

  We now have strange love potions as the unofficial medium of exchange token in the Philippines, which is just crazy. The absolute just insane amount of reach that this application got. Entire like investment and funds and funds have been spun up as a result of Axie Infinity. Right? Like, oh, Axie Infinity did that thing where they went from, you know, 30 million to 8 billion. Like funds have started as a result of that to invest in crypto gaming. And so just blow out success and just absolutely just move the needle with what it means to be a crypto game. And it has really just redirected a ton of capital into crypto gaming to people trying to emulate that sort of success.

• 31:50Ryan Sean Adams?

  Absolutely, and also, the rise of all of these gaming guilds as well has been another story. And these gaming guilds themselves receiving investments as well to sort of marshal the gaming workforce in gaming communities. So, super exciting stuff. Guys, we are going to be back with the top 10 biggest items from 2021. But before we do, we want to thank the sponsors that made this episode possible.

• 32:16David Hoffman?

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• 33:01David Hoffman?

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• 33:44David Hoffman?

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• 34:24Ryan Sean Adams?

  All right, guys, we are back with the top 20 biggest crypto items of 2021. This is a roll up of roll ups. All right. So we're, we're hitting them quick. We're going through them. We went through 10 already. Now here we are with the top 10. We're going to come back and start with number 10 here. The story is OpenSea. OpenSea, the platform, the eBay of NFTs, crossing 10 billion in all time sales volume. David, you just mentioned that earlier. From a benchmark perspective, they had months that were bigger than entire quarters through Etsy. Okay. Etsy, which has been in existence for, for years in the physical space, getting up there with eBay type volumes, not quite passing it, but getting up there this year.

• 35:09Ryan Sean Adams?

  What an incredible breakout application for crypto, uh, OpenSea. What else do you want to talk about?

• 35:16David Hoffman?

  Definitely. One of the things that surprised you and me, Ryan, in 2021 is the just insane amount of adoption that NFTs got. Turns out people like to trade pictures. Uh, and so all, all that OpenSea does is facilitate that sort of behavior. Oh, would you like to trade pictures? Well, you must go to OpenSea. And it seems, it makes a ton of sense that OpenSea had the, just the insane amount of success that it did in the same year that meme stonks became a really big thing. And the retail trader just buying into memes became a really big thing. Retail traders buying into memes. That is exactly what OpenSea enables. It's like, here, David, go for it.

• 35:56Ryan Sean Adams?

  Do you know that Domino's meme, right? Where like the first Domino's starts and then like it collapses and then it's like, I feel like some of the first Domino's are, you know, back to like central bank stuff, right?

• 36:06David Hoffman?

  Stimmy checks, inflation.

• 36:07Ryan Sean Adams?

  Easy monetary policy, stimulation, stimulus checks, right? Which cause meme stocks, which causes retail FOMO phenomenon, which causes like the entire bull case of NFTs and kind of it meets where you get OpenSea volume crossing 10 billion this year, right? It's like, all of these things are connected.

• 36:24David Hoffman?

  100%. No, that's exactly right. Yeah. You get your $1,400 stimmy check and then at the end of that Domino's is OpenSea crossing $10 billion in all time sales volume and you're stuck with a bunch of liquid JPEGs.

• 36:37Ryan Sean Adams?

  I'm stuck with a bunch of turtles. That's at the end of the Domino's.

• 36:40David Hoffman?

  Is that where you got your turtle, Ryan, on OpenSea?

• 36:44Ryan Sean Adams?

  Yeah, of course, right? All turtles come from the OpenSea. Thanks for that tee up, David.

• 36:48David Hoffman?

  Wow.

• 36:51Ryan Sean Adams?

  Number nine, the Coinbase IPO. That was a long expected IPO. We thought it was gonna happen. We hoped it was gonna happen and it happened in 2021. That's a big event, though. Direct listing on NASDAQ, April 14th was the plan. Why is this significant? Why is it number nine on our list?

• 37:13David Hoffman?

  Coinbase is crypto's biggest company, most employees, biggest revenue. It's our flagship. It's kind of a signal for the rest of the industry. Now having our biggest company as a public company on the NASDAQ, on the New York Stock Exchange is just very, very legitimizing. And it actually allows people to invest in the world of crypto in ways that they are used to through selling shovels and also doing it through inside of their brokerages with centralized exchanges. Again, the pre-crypto world is just used to exposure like this. And so it's good for the rest of crypto because it is legitimizing to our industry. It also allows Coinbase to get the funding from the legacy world that they need and

• 37:58David Hoffman?

  allows people to have exposure in ways that they're more comfortable with. One interesting fact about the Coinbase direct listing.

• 38:07David Hoffman?

  Which I think people forget, even though it made a big deal at the time, is that Coinbase gifted 100 shares to every single one of its employees ahead of the direct listing. And I think that directly came as a result of the whole airdrop culture, airdrop phenomenon, specifically Uniswap, the retroactive airdrops, like, hey, employees, we are retroactively rewarding you for your contributions to Coinbase with 100 shares. And I remember, Ryan, when Uniswap did their airdrop, we talked about how Uniswap has shifted the overton window of capital, what it means to have a relationship between capital and labor, and allowing labor to earn capital, not just currency, as a way to solve wealth inequality and wealth distribution. And I think Coinbase is taking a leaf out of the ethos of crypto by gifting out 100 Coinbase

• 38:52David Hoffman?

  shares to all of its employees. And so not only was it one of the biggest direct listings, biggest public events of all time, or, excuse me, in 2021, but it also did it in a very crypto ethos way. So congratulations to Coinbase and tip of the hat.

• 39:07Ryan Sean Adams?

  Yeah, so I guess one thought on that too is, right, so overall, I think it was a great move, and I think it's like net, very legitimizing to the space to have a crypto bank, a crypto company listed on the NASDAQ. I think there's a lot of value there where you have Wall Street analysts now pouring through Coinbase documentation, and as a byproduct, learning about Ethereum and Bitcoin and like DeFi, right? That's super cool, and I think that's fantastic. But also, part of me, even though they did things like the employee gift of shares, part of me feels like this is also a missed opportunity, right? So part of me is a little bummed out that we didn't, there wasn't a token at the end of this for actual users, because that would have been the completion of your thought, right?

• 39:51Ryan Sean Adams?

  So like, there's some value in airdropping equity or tokens, stocks in this case, to employees, but the next step would have been some sort of token, some sort of appreciation, some sort of value dropped to the actual liquidity providers and users of Coinbase, and we weren't able to make that happen. And I think part of that is like, goes to number eight on our list. List, actually. So it's a brilliant segue from number nine to number eight. And that is the story of Gary Gensler. Okay, Gary Gensler. And the article's down. Bad gateway for Gary Gensler. Let me try to reload this.

• 40:32Ryan Sean Adams?

  Gary Gensler was confirmed by the US Senate as the chairman of the SEC. He had previously served in other administrations. He was previously, people forget this, the CFTC chair as well. Did a stint at MIT, actually taught courses on blockchain, taught courses on crypto, good courses as well. I saw some of these lectures, very knowledgeable about the space. And I think some people in crypto thought, hey, this is a good thing. Somebody knowledgeable about crypto is coming in, in one of, you know, one of the US's primary regulatory bodies. They actually know what they're doing, actually talking about. But wow, what a disappointment.

• 41:17Ryan Sean Adams?

  Like saying, Gary, you were the chosen one and you failed us. Blocking the Coinbase earned product, no clarity in the difference between utility tokens and securities. And when a network becomes decentralized enough to, you know, become a commodity. Harsh crackdowns on many areas that seem like heavy handed. Rather than collaborating with the industry, it's a very antagonistic approach. And some of that has leaked into, you know, Senate meetings where Gary gives testimony, Gary Gensler gives testimony. And, you know, senators press him on various things. And he just seems very anti crypto in posture and in agenda.

• 42:01Ryan Sean Adams?

  And a tremendous disappointment. I almost wonder if that is part of the reason we didn't get a Coinbase token, right? If the US had have leaned into that, pressed into clarifying rules and regulations with respect to what's a security and what's not. Maybe we would have gotten that. But David, why is Gary Gensler number eight on our list?

• 42:23David Hoffman?

  Yeah, he, just exactly what you said, has really influenced the rest of the industry. Really spooked a lot of people. It's moved a lot of projects and teams and capital outside of the US because the threat or restrictions of operating in the US has just become, when people do their cost benefit analysis, they say the US, not a good spot just because of the posturing and the messaging and the lack of clarity coming out of the SEC. We were all told to be cautious. I think the sentiment going into Gary Gensler was cautious optimism. About it's like, oh, somebody that finally knows about crypto, that's not going to be just a dunce about how this industry works. Finally, any clarity, any sort of good clarity

• 43:05David Hoffman?

  is exactly what this industry needs. And turns out, the need to be cautious was the thing that was the right thing to be, rather than optimistic. Because not only did we get, even though Gary Gensler knows exactly how crypto works, the clarity that we've gotten is absent, right? So even though he knows everything, like, we know nothing. And so the signaling out of SEC has been basically empty and has really shifted how the whole entire market works right now. Because everyone is really cautious to be inside the US. We got airdrops that did not go to US investors. We have Coinbase products that are not going to US citizens. And overall, like, the US is starting to fall behind in terms of market

• 43:47David Hoffman?

  adoption. A lot of people going to things like just Europe, almost anywhere in Europe, or Canada and Mexico as well.

• 43:57Ryan Sean Adams?

  Yeah, absolutely. Definitely proven to be kind of an institutionalist. And we should qualify this by saying it's not everyone in the SEC. This is Gary's take, but it's certainly not other chair members as well. Hester Purst, for example, has pushed back against this agenda. And, you know, she is a member of the SEC as well. But we'll have to see what happens in 2022. Gary Gensler was number eight on our list. Getting into number seven now, David, the story of Constitution DAO, this DAO that formed, what, like?

• 44:32Ryan Sean Adams?

  10 days or something, maybe, maybe a shorter time period in order to buy something, in order to form capital, to bid against a billionaire or many billionaires to purchase a copy, an original copy of the US Constitution. A lot of symbolism in this movement. Also, a living, breathing use case of the power of DAO capital formations, the sorts of things you can do in a crypto, crypto economy that you couldn't do in a traditional meat space. What is, what is the story? Why is this significant? Why is this number seven?

• 45:06David Hoffman?

  Yeah, the story is that over 17,000 people contributed a collective $47, $48 million into Constitution DAO to collectively buy the Constitution. 17,000 people with the average contribution size of $206 per person. So this was a fantastic grassroots event. I think like half of the people that signed up to be part of the Constitution DAO and send in, again, an average of $206. This was their first time using MetaMask. This is the first time using Ethereum. They were just, they just saw some headline, group, internet group of people wants to buy the Constitution and also you can be a part of this. And apparently that was enough for people to learn how to use Ethereum,

• 45:48David Hoffman?

  how to use MetaMask, how to get Ether into MetaMask and then also join a DAO. And so an insane example of just like adoption for a specific use case. And this was just one DAO. And so hopefully Constitution DAO is a harbinger of things to come in 2022 with the power of DAOs and the power of capital coordination. And the same theme of, you know, apes strong together. This is the same energy, like join a DAO, get something done, just buy, buy something that you want. I think we're going to see a lot of this in 2022.

• 46:19Ryan Sean Adams?

  Definitely a theme, like it definitely goes back to, you know, the, the GME you conversation with meme stock conversation that we're having earlier. And all that said, with all of the success, Constitution DAO didn't actually, wasn't able to actually purchase the Constitution. It was ironic is a hedge fund manager bought it out from under them.

• 46:38David Hoffman?

  The Citadel one, the one, the one that called up Robinhood to tell them to stop trading.

• 46:43Ryan Sean Adams?

  Exactly. Like what a full story, what a way to bookend the year and kind of the way it started. And that, that was interesting. The other story that was interesting that I think we'll get to a little bit later was, you know, some people were pretty upset, disappointed by Ethereum gas fees when they were trying to withdraw some of their funds. When they're trying to deposit, for a lot of people, it wasn't even worth the gas fee in order to withdraw some of their funds. So that caused some growing pains and consternation as well. But Constitution Dow definitely deserves to be in our top 10. And that's why it was number seven. But let's get to number six, moving closer to this top

• 47:21Ryan Sean Adams?

  five. Can't wait. EIP 1559. Okay, I say 1559. 1559 is what many of you say. This is the improvement proposal for Ethereum that started Burning Eth, improved the fee mechanism for the way everyone pays gas fees on the Ethereum network. It went into play August 4th, I believe, in the Ethereum London Hard Fork. This was a long awaited EIP and a very important one from an economic perspective and also from a user experience perspective. Why is this worthy of number six, David?

• 47:58David Hoffman?

  Well, this was the, this is the biggest upgrade to any public blockchain ever, let alone a blockchain that is settling billions and billions of dollars of value like every single week. So this is, this is an example of so many different things. The Ethereum core developers, the client developers, actually being able to coordinate around a spec on EIP 1559, implement that into their, into their client software. After going through a rigorous research phase, which brought in, you know, Tim Ruffgarden, who is a game theory and economist, professor at some very prestigious school, which brought in a bunch of debate from the ecosystem. This was one of the most, probably the EIP that had the most eyeballs on it ever.

• 48:43David Hoffman?

  And like you said, like long awaited, two years of communities just drumming, saying, hey, we want EIP 1559, we want EIP 1559. And then it actually arriving on mainnet without a hitch, by the way, completely just seamlessly integrating into Ethereum. And starting to make Ether, the asset, ultrasound money. And so to me, when I saw EIP1559 get integrated, this is already after the Beacon Chain launched. But the Beacon Chain actually was a new blockchain, separate from the current Ethereum L1 that everyone touches all the time. And so EIP1559 was the biggest change to the actual live Ethereum blockchain. And so to me, this was the biggest signal that the rest of the Ethereum roadmap was absolutely going to get executed upon

• 49:28David Hoffman?

  because of how big of a lift that it was, how complicated it was, and how well it went off without a hitch. And it has so many important points to bring up with regards to Ethereum, network security, the hardness of money, the relationship between money and its economy, and the ability for a community to rally around something that it wants, and the developers that support that community to actually listen and implement it. And so I think everybody was surprised with how much Ether, EIP1559, would actually burn. Inside of the same year when this got launched in August, we would burn over 100,000 Ether. No, excuse me. Yes, 100,000 Ether. And it's just a lot more than what people thought it would burn when we were daydreaming about it years ago.

• 50:13David Hoffman?

  And so EIP1559, formerly in the rearview mirror for Ethereum.

• 50:19Ryan Sean Adams?

  Absolutely, and you know we couldn't leave it with just one slot on the top 20 list. We have to touch it again because number five, clocking in at number five, is the ultrasound money narrative. And that dovetails nicely with EIP1559, but isn't the only aspect of EIP1559, right? So when we talk about ultrasound money, David, and this narrative taking hold, as I think exemplified by this fantastic website the community came up with, ultrasound.money, what are we talking about here? Why is this worthy of number five? Why is this a major narrative and proof point that came out of 2021?

• 50:57David Hoffman?

  Also a correction run, if you go down and hit all, it is 1.2 million Ether that has been burnt since the implementation of EIP 1559. So yeah, 10x larger than how I thought it was. Ultrasound money is the first significant meme for Ether, the asset, which Ethereum and Ether, the asset, really struggled to actually get a grasp on like, hey, like, why is Ether valuable? Once upon a time, people just thought it was gas. It was going to have a very high velocity. It wouldn't really store any value. But slowly, over time, DeFi got built out and Ether as a collateral became a very viable use case. Then EIP 1559 happened and the scarcity of Ether turned into a function of

• 51:39David Hoffman?

  the demand for the Ethereum block space, AKA the Ethereum economy. Meanwhile, in the background, we have proof of stake happening, which will be eventually merged. And overall, when you tie all these things together, we finally came up with a meme, ultrasound money. And so there's a lot baked into what ultrasound money actually means. And turns out that that is actually a good enough meme to get into mainstream adoption. So you can now read about ultrasound money in like bank's finance reports about Ethereum and, you know, just investigative deep dives into the economics of the Ethereum network. And so now people understand, when, once upon a time where Ether, people thought Ether was just this

• 52:20David Hoffman?

  velocity utility token, now people understand it to be what it really is, which is ultrasound money.

• 52:26Ryan Sean Adams?

  Yeah, I remember talking with people back in, you know, 2018, 2019, saying things like, and even 2020, the one thing Ethereum is missing is a monetary policy, right? It's like, it's just like a cohesive, understandable monetary policy of what supply looks like in the future. And that monetary policy is ultrasound money, right? And you can kind of see this on the, on the website. If we look at, you know, projecting the supply into the future, we've got two parts of three components in place already that make Ether ultrasound money. That is the beacon chain launch, the ability to stake ETH that happened December of 2020, and then EIP 1559, which happened in August, and then next year.

• 53:07Ryan Sean Adams?

  Going to 2021, we have the proof of work chain going offline and being replaced fully by proof of stake, which will decrease issuance by another 4.1%. So that's going to be, next year is going to be the true ultrasound money era for Ethereum issuance. And the cool thing about this is, I feel like, David, we no longer have to talk about it or meme it very much, because now people can just see it in the data and in the numbers. And, you know, these numbers are continuously reported, block by block. Ethereum becomes more scarce, Ether becomes more scarce. And, you know, the meme propagates, so it's kind of taken a life on its own. And that's why it's number five on our list, a big year for Ethereum's monetary policy.

• 53:51Ryan Sean Adams?

  Now we get to number four, which is kind of the downside of this as well, some bumps along the road that Ethereum hit. And that is gas fees, Ethereum gas fees being too damn high, okay? So there's a good side of that, of course, because high gas fees means high block space demand, which is product market fit for Ethereum. That's the thing it's trying to drive towards, it's like more demand for its block space. But the flip side of this is it prices a lot of user activity off of main net, off-chain. And users get upset about this, right? Why should a Uniswap trade cost $50? I mint an NFT and it costs $250.

• 54:36Ryan Sean Adams?

  I can't even afford to move it from one account to another. It's not even worth that much. So there's kind of a, almost like a populist uprising from a user perspective, saying ETH fees are too damn high. I'm going to sidechains, I'm going to alternative layer twos. Ethereum is broken, this cannot, this cannot persist. And of course, I'm not gonna, I'm not gonna tease number three, we'll get to number three in a minute. But that leads to number three on our list too. But let's talk about for a minute Ethereum fees being too high, and what are the ramifications and implications of this that played out over 2021?

• 55:10David Hoffman?

  Yeah, there's a friction with Ether as ultrasound money and Ethereum as a utility network to do DeFi smart contract stuff. And Bitcoiners have actually had this criticism of Ethereum for forever now. It's like, either you can have a smart contract platform, or you can have sound money, but you can't have both, implying that the more, the higher the value of the asset is, the less utility the actual smart contract chain can offer. And that's true in a world where there's only one single Ethereum Layer 1. I think in 2022, we're going to discover that Ethereum L1 is not a place for users. That's not where people should find the utility. The utility is discovered in execution environments,

• 55:54David Hoffman?

  in where transactions actually get executed. And while that does happen on the L1, it also happens on Layer 2s. And so while we're watching this graph of ETH price, ETH gas fees go up and up and up and up and up, I think we are also simultaneously seeing users pushed out into the Layer 2s more and more and more and more. The incentive to go to Layer 2s goes up as gas fees go up. That's what L2s are for. And so we are in this limbo period, this weird awkward phase of Ethereum where everyone's still on the Layer 1, gas fees are really, really high, people haven't migrated to Layer 2, but eventually, everyone will be on Layer 2s and they will reconstruct in their heads what it means to pay a gas fee. And so this is how Ethereum gets best of both worlds. It has cheap execution on

• 56:36David Hoffman?

  the Layer 2, and then strong settlement assurances on the Layer 1. And that's hopefully how we can balance these things.

• 56:43Ryan Sean Adams?

  I think while we're in this awkward phase, this idea and this concept of Ethereum mainchain not being for users, but now it's for chain settlement, for the settlement of rollups, which is an aggregation of all sorts of user activities. While Ethereum is in this awkward phase, I think competitors have really taken advantage of it. And that gets us to number three on our list. We're in the top three now, the biggest things that happened in 2021. And that is the rise of alternative Layer 1s and their assets. We're talking Solana, we're talking Avalanche, we're talking Terra, we're talking Binance Smart Chain earlier in the year and a slew of other competitors that have locked in a tremendous amount of total locked value.

• 57:28Ryan Sean Adams?

  They have NFT ecosystems, they have a DeFi economies and DeFi projects that are not the typical Ethereum projects. Some of these are copies, things that have occurred on Ethereum. Some of them are sort of net new. And they're all taking advantage of low gas fees and Ethereum's high gas fees in order to execute their their strategies. Of course, we also have more Ethereum line side chains like Polygon, which are moving to to layer two technology as well in the mix. But let's talk a little bit about the rise of alternative layer ones. How did this happen and why?

• 58:05David Hoffman?

  As it turns out, what you wanted to sell or be selling at the start of 2021 was block space. When it comes time for just mainstream adoption of crypto, where everyone's coming to become and start doing crypto things. Turns out, we need a ton of block space for those people to do crypto things with. And expensive block space isn't going to onboard the world. Ethereum as a resource constrained network, which constrained means is how it allows itself to maintain decentralization. Having that constrained block space just doesn't create enough block space for the whole rest of the world. And so layer ones, other alternative layer ones have taken advantage of this fact that Ethereum has constrained block space.

• 58:46David Hoffman?

  And so things Binance Smart Chain, Avalanche, Solana and a few others as well have all cropped up in order to answer for the growing demand for block space. And they actually, those were the chains that actually met the demand of users. And that's why since January of 2021, when Ethereum had over 95% dominance in TVL, Ethereum is now down to 62 and a half percent of total TVL supplies is of Ethereum. The rest, the rest of the one third of that total TVL is split between chains like Terra, Binance Smart Chain, Avalanche and Solana.

• 59:21Ryan Sean Adams?

  It's interesting. Many people are calling this a new multi-chain world. This is kind of the new normal and expecting Ethereum's market share of total locked value to erode over time. Others will counter and say, look, we haven't yet seen layer twos in their, the fully manifested form and wait until Ethereum gets out of puberty, you know, and, and comes out on the other side of this with, you know, big muscles and a new job. And, you know, it's like, it's got its entire roll-up ecosystem that is launched on top of it. And that might be a different story going into 2022. So we'll have to see. But David, we are now to our top two, uh, top two items.

• 1:00:01David Hoffman?

  I want listeners to pause and reflect on what they think it is before we get in there. What do you think it is?

• 1:00:06Ryan Sean Adams?

  What, what do you think it is? Top two things. What else happened in this crazy year that was 2021?

• 1:00:12David Hoffman?

  Coming in at number two, David buys a CryptoPunk. Right?

• 1:00:17David Hoffman?

  That's what, that's what's number two, right?

• 1:00:18Ryan Sean Adams?

  Chilling our bags. That's number two. Yeah. Not number two. The real number two is this. The infrastructure bill.

• 1:00:25David Hoffman?

  Oh, yeah.

• 1:00:26Ryan Sean Adams?

  Et tu brute, okay? Politicians betraying us, Treasury betraying us. This infrastructure bill is all too important in the American legislative process, a very important bill to get passed. Treasury snuck in a provision that made a whole bunch of our crypto transactions, the regular things where I send you some ETH, David, or you purchase a CryptoPunk. We're called brokers in these transactions. KYC, AML, tax requirements, everything that comes with it, really clamping down on the space. This language was snuck into the infrastructure bill, a must-pass bill sometime over the summer. And we got to see a lot of things

• 1:01:08Ryan Sean Adams?

  play out as a result of this. We got to see some conversations in Congress about proof of work versus proof of stake and maybe some broader understanding of what DeFi actually is, some pushback as well. I also feel like the crypto community woke up and discovered some of its latent strength, its ability to actually push policy decisions, its ability to flex some muscle from a lobby perspective and to start educating members of Congress. A lot wrapped up in this one. That's why it's number two. What from your perspective makes it so high on our list?

• 1:01:46David Hoffman?

  Yeah, this is, this is the, the event where crypto learned that if it's not at the table in these negotiations, then it's on the menu. And that's exactly what happened here. It's like no one, people, no one, we didn't really have any crypto representation during when some of this infrastructure deal making was being written. Therefore, they were like, oh, the crypto people will just tax them a lot so we can get a bunch of their money. And turns out, we weren't there to defend ourselves. And that's probably the last time that that's ever going to be true, because now we are definitely there. And so what used to be a very amount, a very significant deficiency in our representation in Capitol Hill has turned into just a great amount of just energy put behind the people that are now teaming up.

• 1:02:29David Hoffman?

  And there's a lot of different lobbying groups, things like Coin Center and Blockchain Association that are now becoming far, far better coordinated between each other. There's a lot more energy and a lot more funding here. New lobby groups are coming to the table. We saw Andrew Yang saying that he wants to make the Humanity Forward Party the crypto party. Politicians are, have realized that there is money and energy inside of this movement. And they saw that from the reaction of the crypto industry towards the infrastructure bill. And so while it was a big L, in a way, it definitely was a big L. Like, there's definitely, and this wording is still in this infrastructure bill, by the way. So like, we're actually all still going to become brokers at the end of the day.

• 1:03:13David Hoffman?

  But while, while it was an L, I think it's really a long-term W, because we're going to be able to redirect some of the, some of that, that failure into what crypto people are good at. And what crypto people are good at is winning. And so we always find our way to make lemonade out of lemons. And I think that's exactly what's going on here.

• 1:03:32Ryan Sean Adams?

  And this, this doesn't go into effect until the year 2024, so we've got some time. Also, you know, there's a lot of work going on to pass an amendment, to push an amendment through that would kind of nullify these problematic clauses in the infrastructure bill. So that's ongoing work. And I think exactly to your point, right? So the crypto industry and politicians realize that crypto has the two things that they really like, and that's money. And votes. We are passionate, single-issue voters when it comes to crypto freedoms. And I think politicians are starting to wake up to that. Toward the end of the year, David, there was a, I believe, I forget where in Congress this was, what committee,

• 1:04:13Ryan Sean Adams?

  what organization in Congress this was. Do you recall? Somewhere in Congress, and there was a, one of the most successful meetings we had to date about crypto, crypto items and crypto on the agenda. There were actually some politicians, congress members who stuck up for crypto, talking about the merits of even things like Web 3 in a way that we hadn't previously seen. So that is this muscle in action. And that, I hope, is the future conversation around crypto in the legislative bodies of the US. That gets us to number one, David. Number one, coming in at number one.

• 1:04:54Ryan Sean Adams?

  Inflation. 7% inflation this year. The number one item, a macro item, something crypto people have been predicting for years. We've seen asset price inflation. Now here's inflation in CPI, in consumer prices, in energy, in housing, in groceries, all the things you care about, you spend your money on as an individual consumer, showing up there. They said it was transient at first, earlier this year. Did not show itself to be very transient. They're getting rid of the word, recycling the word transient. But let's talk about this. Why is this number one, David? Of all the things we could have put

• 1:05:37Ryan Sean Adams?

  as number one for 2021, we chose inflation. Why?

• 1:05:43David Hoffman?

  I think this story just indicates why monetary policy, global monetary policy, is so, so important. Because if we go and recap the list that we just ran through, so many of these things are triggered by inflation, by the money printer. Bitcoin and Ether, starting at number 20, Bitcoin and Ether, new all-time highs. That definitely has to do with the money printer. GME and the rise And the pushing out of individuals with their STEMI checks into risk on trades and just YOLOing their money into Robinhood. Maybe that's because of the mini printer. Michael Saylor and Tesla buying Bitcoin, definitely because of inflation. DeFi, bigger than C-Fi, definitely has tailwinds because of all the money going into crypto because of the inflation. Bitcoin, legal tender in El

• 1:06:26David Hoffman?

  Salvador. Well, the other currency that El Salvador has is the dollar, which is inflating. So now they also have Bitcoin, which isn't. Beeple's $69 million sale, definitely because of people being pushed out on the risk curve because of inflation. Board Ape's profile picture NFTs, probably the same thing. Axie Infinity, maybe, probably. OpenSea, $10 billion in NFT volume. People are trading JPGs because of the devaluing of the dollar. In the same way that, did you know, fun fact, Ryan, that Rolexes are completely sold out across all Rolex stores? Well, so like, OpenSea is also doing $10 billion in NFT volume. These are the same energies.

• 1:07:05David Hoffman?

  Coinbase IPO, maybe not. Gary Gensler IPO, maybe not. Constitution Dow, maybe not. EIP1559, ETH is ultrasound money. Ethereum fees are all too high. Not necessarily due to inflation, but definitely telling the other side of the story of disinflation. And also the rise of alternative Layer 1 demand for block space, perhaps just a demand to do crypto things, crypto being an anti-inflation hedge. And so I think the reason why we're talking about inflation here is because it impacts everything. Everything is impacted by the monetary policy of the global macro reserve asset, which is currently the dollar. It impacts all forms of life. It impacts everything we do. And now the fact that it's at 7% annualized in the last month, it's only seen,

• 1:07:49David Hoffman?

  it could only get hotter from here. So inflation is the most influential, impactful thing that happened in 2021, in my opinion.

• 1:07:58Ryan Sean Adams?

  David, did you just do a rollup of the rollup of rollups?

• 1:08:02David Hoffman?

  You know, did you know, Ryan, that you can settle a rollup that settles on another rollup?

• 1:08:07Ryan Sean Adams?

  That settles on a roll up.

• 1:08:08David Hoffman?

  Yeah, that settles on a roll up.

• 1:08:09Ryan Sean Adams?

  The real reason we put inflation as number one is because it was an opportunity to roll up this entire roll up, which was an aggregation of roll ups anyway. That's the real reason. But yeah, also, look, it affects everything. It is that first domino in that domino meme to go over. And it leads to all of these things downstream. I think a question going into 2022 is, why is the Fed going to do about it? Here's a Jim Bianco tweet that says they don't have a lot of choices. Maybe they have two choices and both of them are bad. You respond to inflation and hike the yield, uh, interest yields aggressively. Okay.

• 1:08:46Ryan Sean Adams?

  Or you don't respond to inflation and you destroy your influence, reputation as a governor of the, of the system, as the Democratic Party in this instance. And so you can't also do nothing and wait too long because, you know, people, people are upset. The price of the pump, people are upset with asset prices, uh, rising. So what do you do? They're kind of in between a rock and a hard place. And, uh, you know, they'll, they'll have to make some difficult decisions, but it's not even clear that the Fed is even in control at this point. They're kind of a, they're just going with the system and responding as needed, uh, to, you know, to, to what they, they think they should do. They're sort of a product of the system at this point.

• 1:09:29Ryan Sean Adams?

  That's something that we will be tracking in 2022. And that's our wrap up. The top 20 things, biggest things that happened in crypto for 2021. David, there are some honorable mentions we should also get to that almost made our list. What are those honorable mentions?

• 1:09:46David Hoffman?

  Yeah, the first one that we have, again, in no particular order. The first one is loot, the whole loot phenomenon, right? Remember when we were buying black images with white text on them on, on OpenSea?

• 1:09:56Ryan Sean Adams?

  That was fun.

• 1:09:56David Hoffman?

  Yeah, that was, that was a crazy week. Yeah, it turns out that like this whole loot phenomenon, which was, uh, an inverse of the typical, uh, NFT JPEG, uh, phenomenon where rather than having the actual JPEG tell people what the token means, you have the token tell developers what it looks like and what that means. Is that there's actual embedded data in this token that actually has items inside of it that allows the world around loot to come and be built around it rather than having a token just resemble a specific JPEG. So it's an inverse between the data and the token. And that allows people's imaginations to go wild. Game developers can just go wild.

• 1:10:38David Hoffman?

  And that really, really, it was actually really at the start of this whole kind of metaverse word. The metaverse word was definitely being used, but it really got kicked off with this loot phenomenon, at least inside of the crypto industry. And with this design of a token that is inside out, that allows the imaginations of the people and its owners and the developers around it to actually bestow what the thing actually looks like. So that was a huge conversation starter and still actually has a bunch of just like building and investment and trading going on to this day.

• 1:11:07Ryan Sean Adams?

  Another honorable mention is in real life crypto events, they came back a little bit this year. I think there'll be more in 2022, but they came back this year and that was important for the industry. What are your thoughts?

• 1:11:18David Hoffman?

  Yeah, I would say they came back, but also it was a first because the crypto, in real life crypto events of 2017 and 2018 were of a very different time. And there weren't very many in real life crypto events from 2018 to 2019 because it was a bear market. The crypto events that are here today are making headlines in magazines and pop culture magazines. And as it turns out, dope parties are a way to onboard a lot of people into crypto. And so crypto is not only getting its foundations, strengthening on a fundamental basis, where like Bitcoin is being bought by central banks, but also in real life crypto people are now, it's now a cultural movement. And it's a global cultural movement.

• 1:12:01David Hoffman?

  And so this is, I think, really shifting what it means to be part of the crypto industry. Because now being part of the crypto industry also implies that there's, you go to something in real life. Ryan, Ryan.

• 1:12:13Ryan Sean Adams?

  It's happening. I'll be going to things in real life next year, I promise.

• 1:12:17David Hoffman?

  Okay.

• 1:12:18Ryan Sean Adams?

  Not a 2021 thing, it's a 2022 thing. But let's group these next honorable mentions together. Elon Musk pumping Doge as well. That was a theme for the year. Pumping all sorts of things. Elon Musk, the meme lord, was an honorable mention, something that happened a lot in 2021. Also, Shib, the price of dog coins going wild. So, somebody reportedly on Shib turned $8,000 into $1 billion. I'm not sure how much liquidity was on that $1 billion, but quite a trade on Shib tokens and meme coins. So, dog tokens went wild this year. Also, NFTs made SNL as well. Do you remember that SNL skit, David? What's the significance of that?

• 1:13:04David Hoffman?

  Again, NFTs just making their way into mainstream adoption. SNL, it's a cultural icon, and now they made a skit about NFTs. And so, NFTs are just now at the family dinner table. People are going to talk about them here at Christmas. They talked about them at Thanksgiving.

• 1:13:21David Hoffman?

  If it's in SNL, it's in public awareness.

• 1:13:24Ryan Sean Adams?

  The last two honorable mentions, the ETH Bitcoin ratio. ETH maybe gearing up for a flippening? We talked a little bit about that at the outset, but that looks like it's getting closer. Maybe a potential going into 2022. And maybe the last item on the list is Facebook becoming meta. Facebook maybe co-opting the metaverse idea? Or maybe building an alternative to it? Depends on your perspective here. What are your thoughts on that last one, meta?

• 1:13:52David Hoffman?

  Yeah, it's definitely a sign of how much the metaverse is in vogue. And also a sign of Facebook trying to run away from its previously tainted branding. But I don't think it's going to be able to get too far away from that. Web 2 is still web 2. But maybe 2022 is the year of the metaverse? Maybe that's too soon, I don't know. But the metaverse is on people's minds, be it big Silicon Valley companies or individuals like us. The metaverse is in.

• 1:14:19Ryan Sean Adams?

  Guys, that's it. Top 20 items for the year, plus some honorable mentions, bonus items for you. We hope you have a happy holiday. It's been a lot of fun doing Bankless this year. David, I don't know how many recordings we did this year, how many articles we wrote. There's a whole bunch, and we hope you leveled up just as much as we did this year. I see a meme of the year on the agenda too, David. I don't know if you snuck this into the list.

• 1:14:45David Hoffman?

  Oh yeah, I don't have too much conviction on that one, but I think it's fine.

• 1:14:49Ryan Sean Adams?

  All right. Meme of the year. DeFi mullet thesis. There it is. DeFi in the front, DeFi in the back. Man, I gotta say, dude, you look great in mullet. I think you should try this for real.

• 1:15:00David Hoffman?

  Dude, that looks like a real photo of you, man. Like, that looks like a college Ryan.

• 1:15:05Ryan Sean Adams?

  That's what it looks like under here. Crypto wife is fantastic. Best memer on Twitter, in my opinion. Guys, this has been state of the nation. Hope you enjoyed it. Let's get to the financial disclaimers. Disclaimer is the end of the episode. ETH is risky, Bitcoin is risky, crypto is risky. You could definitely lose what you put in. Take it from the guy in the Santa hat. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:15:35David Hoffman?

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

• 1:16:16David Hoffman?

  Ask Me Anythings, and weekly rollups where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless nation.