SotN#8 - PUMPED, Introducing: $BAPs! (ETHSCAPE SHIRTS, ETH2 COMING, BULL MARKET MENTALITY)

STATE OF THE NATION #8 - Tuesday, August 4, 2020 Watch on the Bankless YouTube Channel https://www.youtube.com/c/bankless The State of the Bankless Nation is.... PUMPED! The bankless boys discuss why. Plus a special announcement...introducing $BAPS ----- GO BANKLESS WITH THESE SPONSOR TOOLS: ⚔️ GODS UNCHAINED - TRADING CARD GAME https://bankless.cc/godsunchained - you own the cards - start a free account, play and trade https://godsunchained.com/! 🧙‍♀️ POLYMARKET - BET ON CRYPTO https://bankless.cc/polymarket - bet your beliefs! - use it to bet on DeFi outcomes https://bankless.substack.com/p/how-to-bet-on-defi-with-polymarket! 🌈 AAVE - LEND & BORROW YOUR CRYPTO W/O A BANK https://bankless.cc/aave - earn some interest! 💸 AMPLFORTH - MONETARY EXPERIMENT FOR BASE MONEY https://bankless.cc/AMPL-MINE - learn about this experiment! ----- Covered: ETHSCAPE SHIRTS TOPIC ETH2 COMING TOPIC BULL MARKET MENTALITY We show: The democratization of value https://bankless.substack.com/p/the-democratization-of-value (article on scarce product tokens) RAC launch of $TAPE https://defipulse.com/yearn.finance Introducing Bankless Apparel https://bankless.substack.com/p/introducing-bankless-apparel Bankless Apparel Season 0 - Ethscape Shirt https://bankless.substack.com/p/bankless-apparel-season-0launch- Bankless Apparel website https://banklesshq.com/apparel/ Delphi Digital Ethereum report https://www.delphidigital.io/reports/ethereum/ --- Episode Actions: Grab one for the first 50 BAPs https://bankless.substack.com/p/bankless-apparel-season-0launch-! Also...subscribe to Bankless YouTube https://www.youtube.com/c/bankless to watch State of the Nation every Tuesday! ----- Don't stop at the show! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit the official Bankless website for resources http://banklesshq.com/ Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState Follow DeFi Dad on Twitter https://twitter.com/DeFi_Dad ----- 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 is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

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

• 0:00Ryan Sean Adams?

  Hello everyone, welcome to episode 8 of State of the Nation. David, nice shirt you got on today, my friend.

• 0:08David Hoffman?

  Hey likewise, lots of colors in there.

• 0:10Ryan Sean Adams?

  Yeah, you know what, we're gonna talk about these shirts in just a minute. We're gonna talk about the announcements in just a minute, as David gives you a tour of what's going on. Let me give you, if this is your first State of the Nation, here's what we do. We talk about what's going on in the Bankless Nation. We relate it to the big picture stuff, and we always like to drop some insights and action items. These episodes release every Tuesday on YouTube, so make sure you subscribe to YouTube to catch them, and they release on Wednesday on the Bankless Podcast. So you can check it out there too, if audio is more your thing. We're gonna get into announcements in a little bit,

• 0:50Ryan Sean Adams?

  but David, we should talk about our sponsors first. We've got a new one. Why don't you start with our new sponsor we're super excited about?

• 0:59David Hoffman?

  Yeah, this sponsor is absolutely fantastic. Gods Unchained, for those that are into like,

• 1:07David Hoffman?

  instead of like investing in tokens and all this crazy DeFi stuff, there's also this other world going on, where like digital scarcity and digital tokens can be leveraged for like a really awesome purpose. And so for those people that have played like Hearthstone or Magic the Gathering, this is that same concept, that same type of game, but layered on to like Ethereum, and using the Ethereum backend to manage your cards. And so the cards in Gods Unchained are tokens, like all the other tokens on Ethereum, except they represent cards in the Gods Unchained game. And so it's absolutely fantastic. I've put in like 50, 100 hours into Gods Unchained, and they keep on iterating and making the thing like even sexier, even smoother.

• 1:46David Hoffman?

  The graphics of that game are absolutely fantastic, but what I love about it is that like with my cards in my Ethereum wallet, my little tokens, I'm playing against somebody else's tokens on Ethereum through the Gods Unchained game. And so what's pretty cool about Gods Unchained is that you have provable scarcity of your cards, right? So when you open up a legendary card, you have assurances on the block. That there's not only going to be like any more than like 200 of these cards, right? And like, that's not true for Blizzard's Hearthstone. That's not true for Magic the Gathering. They can print them endlessly. But with Gods Unchained, you have assurances to how scarce your cards are. So if you are into a trading card game

• 2:26David Hoffman?

  and you want to have that experience on Ethereum, check out Gods Unchained, download the game. You can, you don't have to buy cards to get started. You start, you get started off with like the basic starter pack and then you win games and then you get more cards and it's fantastic. So check them out at Gods Unchained.

• 2:41Ryan Sean Adams?

  Yep, GodsUnchained.com. We will include a link in the show notes. Also, longtime sponsor, friend of Bankless, Aave. I want to tell you about Aave a little bit. They are climbing up the leaderboard. I looked the other day and they were at something like number three in terms of total value locked in DeFi. So they are a really interesting lending and borrowing protocol. So you can deposit DAI into the protocol. You can deposit other tokens into the product protocol and start receiving interest on those tokens. You can also take out loans. They have, they have fixed loans, fixed rate loans in addition to variable loans. Fixed rate loans are pretty unique in DeFi.

• 3:21Ryan Sean Adams?

  They're also like fast movers. So they're rolling out a ton of cool things. They're rolling out a credit type system pretty soon. And they've just released Avenomics, which is just wild. So this is their liquidity and token incentive model. And one of the things they're adding with Avenomics is this, this safety feature. So a portion of funds and ETH is actually going to secure the contracts and provide sort of an insurance for holders in the event of catastrophe. So check out Avenomics, check out Aave, start using it. Try it out at ave.com. That's A-A-V-E dot com. David, let's get to announcements real quick. So we had Eric Voorhees on the podcast. Episode came out.

• 4:04Ryan Sean Adams?

  Yeah, it was so good, guys. Just go check out that episode. Fantastic. And then tomorrow, we actually have a first. I think this is not just a first for Bankless, but this is like a first for crypto, maybe for podcasts. In general, what's happening tomorrow, David?

• 4:22David Hoffman?

  Yeah, tomorrow, we're getting Andre, creator of the Urn and Yiffy Protocol on the Bankless Podcast. And why this is so crazy and so unique is not only exactly why Urn and Yiffy are so unique in the sense that they launched in like the most fair and equitable way possible, but that Andre, the creator of this project, who didn't premine any of the Yiffy tokens, which have has done the first like, you know, 10,000 X out of any token ever. He didn't premine any for himself and he's letting the tokens, the token owners govern whether he goes on to a podcast or not. And so as he made this announcement, he like, he tweeted out, like, I've gotten a lot of requests

• 5:04David Hoffman?

  for people for it to come on people's podcasts and I'm only going to do it if the token holders say so. And so when I heard, when I saw that tweet, I immediately rushed to the Urn Finance Governance page and submitted a proposal for for Andre to come on the Bankless Podcast, which passed in like flying colors, like 95% voted yes. And then Andre messages me and says, so I'm told I'm enslaved to you. So let me know when and where to show up for the interview. And so that time was tomorrow is tomorrow in the morning. And so we're recording with Andre, creator of the Urn Protocol tomorrow morning, which

• 5:38Ryan Sean Adams?

  Well, I wonder, I wonder if he even wants to like, it's like he doesn't have a choice.

• 5:42David Hoffman?

  This doesn't matter.

• 5:43Ryan Sean Adams?

  It doesn't matter. He buy coin vote, he has to show up for the interview tomorrow, right? It's pretty, it's pretty funny how that works. And I do think this is the first like interview podcast episode by coin vote. So we'll see how that goes. We've got a lot of interesting questions for him. Also releasing tactics on Bankless. So there's a DYDX tactic that you'll find that was released this morning. Check that out. It's about an ETH perpetuity. That's going to be pretty fun, I think, in this upcoming bull market that we've been talking about so much. Last thing I'll say is, do you know what August 27th is, David?

• 6:21David Hoffman?

  I don't know, tell me, Ryan.

• 6:22Ryan Sean Adams?

  All right, so August 27th is when Bankless first started. So Bankless turns one year old as a, as kind of a newsletter and kind of the genesis. And, you know, I'm hopeful we can share some stats that day. But one of the things, you know, when I started the newsletter with Bankless is I wanted to, by the first birthday, get to 10,000 subscribers, 10,000 people on the Bankless journey as part of the extended Bankless Nation. So we're getting close, but, um, you know, maybe we'll reveal some stats on that pretty soon. So tell your friends about Bankless. Let's see if you can hit those numbers and celebrate Bankless's birthday. David, gotta ask you the question I ask every single episode. You've been right on for the past, for the past seven episodes.

• 7:07Ryan Sean Adams?

  It's been, it's been scary accurate, actually. So what is the state of the nation today, David Hoffmann?

• 7:15David Hoffman?

  The state of the nation is pumped. We are pumped in so many different ways. Ether price has pumped. It has just blown past expectations. People are pumped for that. The Ethereum Phase Zero, right before that we're recording this, the testnet just went live, so people are absolutely pumped for that. I'm pumped about these shirts, which we're about to talk about after this. There's just a lot of pumping going on. People are stoked, prices are pumping, pumping's all around us. It's a fantastic time.

• 7:45Ryan Sean Adams?

  Wait, wait, wait, pumping is a bad thing, though, sometimes. Like, are you saying, like, pump as in a good thing in this context?

• 7:51David Hoffman?

  Yeah, pumped as in, like, prices are going up and we're all stoked about it. Yeah, so sometimes pumping could be viewed badly, but not this time.

• 8:00Ryan Sean Adams?

  Yeah, so it feels like, to me, it's like, we've been talking about this for a long time. Honestly, we've been talking about this not just for months, we've been talking about this for years, that at some point, the market would actually catch up with what's going on in Ethereum and what's going on with DeFi. And a huge portion of this just feels like the market catching up. Like, it's 2016, we haven't even seen 2017 yet. Still, the people coming into Bankless, the people watching this today, are mostly people that already know about crypto. We've got a whole new, fresh crop of immigrants into the Bankless Nation to start onboarding, and they haven't even shown up yet. So I do feel like this is just a lot of catch-up to all of the things we've been talking about over the past months and years.

• 8:43David Hoffman?

  Yeah, totally. So I've been getting text messages from friends like who are getting back into DeFi, back into Ethereum, but they were there with me back in like 2017, 2018. These are the friends that I made back in that cycle who like kind of went on and did their own thing. But it's easy for them to come back, right? And they know who to talk to. Like, we're still waiting for that wave of like people that have never touched anything before. That hasn't, that hasn't happened yet. But like, as you were saying, there is no ever any fair value for Ether, for Bitcoin. No one knows what these things should be. And over time, I think it's fair to claim that like the price of these things on the secondary market oscillate around what they should be. Like 2017 Bitcoin and Ether were priced way too much. 2018 and 2019, they were priced way too low.

• 9:27David Hoffman?

  And now it seems like we're kind of coming back to that mean, to that average. And like the theory is like all previous bull markets, like you pass that average where you think it's about fair value, but then you just keep on going. And that's what like a bull market mania is.

• 9:42Ryan Sean Adams?

  Guys, we said this before, these are fractals. We're like, people are like, oh, there'll be nothing like 2017 again, like that was a one time. No, it's not a one time. I mean, it happened in multiple cycles with Bitcoin. It'll happen again. Things will get overextended too. But right now, we're not there. We're just approaching probably more lines along the lines of what the value should be. It's just a bit of catch up over the last two years of everything that's happened. David, first topic, man. I know you are burning to talk about this. The shirts, what's going on? What are these things? What are we wearing today?

• 10:14David Hoffman?

  These shirts have been an idea of mine that I've always wanted to pull off in a while. So I made this graphic forever ago. Not this exact one, I kind of tweaked the size of the Ethereum logo, but it's debuted, this graphic debuted in my article Ether, the Money Game, Ethereum, the Money Game Landscape, where I talked about like all these applications on Ethereum are little games. Like Uniswap is a game, Compound is a game. And largely, it's a game about stacking Ether, right? Like, at the end of the day, Ethereum is a landscape for humans to compete with other humans, as well as computers to compete with other computers, as well as humans and computers to compete amongst themselves for Ether, right? And so Ethereum is like this money game landscape where Ethereum, Ether, the asset are the points.

• 10:56David Hoffman?

  And so this is that, that we have like a little outrun style like graphic with like, it's a landscape, right? It's like a grid and there are mountain ranges, peaks and valleys. And then there's the Ether logo in the background. And so it's all about Ethereum as a physical landscape of competition for Ether, the points. And that's what is resembled in this fantastic shirt.

• 11:14Ryan Sean Adams?

  Dude, I, I just wanna, I, I wanna take a minute just to admire the shirt, the craftsmanship of the shirt. Like, these things are like, like, the fit is awesome. So I got mine on Thursday, David, and I opened up the package, right? And, uh, you know, you'd, you'd hyped it up. You said, look, this is a good shirt, but like, you didn't tell me too much. I opened it, I put it on, it just felt like, it felt perfect. Like, the fit is exceptional. What, like, what material is this?

• 11:37David Hoffman?

  It's, uh, I have no idea. I have no idea.

• 11:39Ryan Sean Adams?

  It's just like, it's not, it, obviously, it's not cotton, right? Like, this is a, this is a super high-quality shirt. Where did you first see these types of shirts?

• 11:48David Hoffman?

  Yeah, so the, the first time I saw these types of shirts where I got this idea, it came out of the ETH Denver Conference, where they have very similarly graphicked, uh, graphicked up shirts, right? And so I found out who the manufacturer was, I reached out to them, got the details. Uh, then I, they handed over them the graphic and then that was, it, you know, it all fell out of that. And so we, we got, um, 50 of these shirts produced, so there's only 50 of them. And two of them are already taken, because me and Ryan got ours.

• 12:16Ryan Sean Adams?

  We pre-mined.

• 12:17David Hoffman?

  We pre-mined two shirts, uh, so now there's only 48 left. And, and this is where we get into the concept of bankless seasons, bankless apparel seasons.

• 12:25Ryan Sean Adams?

  Ooh, okay.

• 12:26David Hoffman?

  Yeah, and so this is, and this is season zero. This shirt is season zero. And so bankless apparel seasons is a, like, a regular, occurring, uh, release of some really cool piece of clothing, right? This, this shirt being the first one. And so this is gonna be a reoccurring campaign, because what, uh, what frustrates me is that in the crypto world, there's, there's not really cool swag. Like, we don't, we, we have these fantastic futuristic sci-fi crypto-economic, like, protocols, and we don't have any good way to, like, wear them. Like, like, people want to have, like, wear a totem, they want to show their colors, they want to express themselves, and they're And like I just went on like a five minute tangent about like the metaphor behind this shirt.

• 13:07David Hoffman?

  And I think that the bankless apparel seasons is like a vehicle for expressing these really complex things like in a shirt that you can wear. And people can ask you about it and say, hey, what's that shirt? And like, oh, let me tell you about it. You shouldn't have asked that question because now I have 20 minutes of things to talk about. And so

• 13:24Ryan Sean Adams?

  Oh, they're gonna, they're definitely gonna ask you about this shirt.

• 13:26David Hoffman?

  They're gonna ask.

• 13:27Ryan Sean Adams?

  Like, yeah, you can't go outside without being asked about this shirt specifically. It's a statement. It's super unique. Like, the design is awesome. It's definitely like, but and you can basically wear your colors, what you're talking about, wear your culture, everything we talk about in Ethereum and bankless. You're going to like, take that outside of your house if we ever get outside of our houses again.

• 13:50David Hoffman?

  Okay, so the way that this is going to work is this is a sale. And so we're posting this video up on YouTube later today. We also have a release going out on the bankless newsletter. And once all those things are going to go out at once. And then one hour after that, after all these things get released at once, we are supplying all remaining 48 BAP tokens. BAP, bankless apparel, so BAP zero for season zero. We are going to supply all remaining 48 BAP tokens to the Uniswap exchange. The links will be in the show notes for this video, also for the newsletter. And then you can go to Uniswap and purchase a token.

• 14:26Ryan Sean Adams?

  All right, so we should get into this a little bit. I'm going to share my screen as you're talking, but keep talking.

• 14:30David Hoffman?

  Yeah, so you purchase a token off Uniswap and then you burn it. You can burn it by sending it to the Genesis address of Ethereum, that's 0X00000. Or you can also, some wallets don't let you do that, so you can just change the last zero for a one and that counts. But once you burn a token, that is you redeeming a token for a shirt, right? These are redeemable tokens. This is how you get one of the shirts. And again, there's only 48 left because Ryan and I already have two. And so you purchase a token, burn it, you email that transaction hash to [email protected]. And then we will coordinate with you about how to deliver your shirt wherever you are in the world. And so this is how we're distributing the BAP tokens.

• 15:13David Hoffman?

  So there, again, they're on Uniswap and this is, this is like the redeemable token scarcity mindset. We're really into this idea of scarce apparel. And we're using the tools of Ethereum to enable like this scarce apparel project.

• 15:26Ryan Sean Adams?

  So back to scarce apparel really quick. We ran a couple bankless posts on this. Jacob from Zora wrote a post about redemption tokens, redeemable tokens. We'll include in the show notes to give you some context. And there've been these sort of scarce product releases a few times within Ethereum that have caught some headlines, most notably our friend RAC, right? So he did a, he's a friend of the nation. He's actually in the nation. So he's a bankless member now. Here he is repping the bankless swag, repping the bankless shirt. And he released

• 16:04Ryan Sean Adams?

  a token called Tape, right? And this was a token specific to a new album that he dropped. And it did really well. I think it was really successful. But basically, he dropped the token, issued it on Uniswap. And you could read this post for kind of what happened next and the details. But it's really similar to that idea, right? So you release a scarce token that represents some sort of real world item. And then people can purchase it on Uniswap. They can purchase it with ETH. And then, once they have the token, they have the ability to redeem that for the item itself.

• 16:47David Hoffman?

  Yeah, I really think that these scarcity tools on Ethereum, like ERC20, and then also the infrastructure like Uniswap, Balancer, etc., that go also into the ecosystem are really going to enable artists to do cooler things, right? And so RAC was able to kind of produce value for, produce value for his fanbase, his clientele, using Ethereum and using non-fungible tokens. And I think that like, and the future of bankless apparel seasons includes like, the ability for future artists to contribute designs, and they will be awarded with percentage of the tokens. So like, I'm not a designer. I have basic Photoshop skills. This is actually a relatively easy graphic to make. Some designer who knows

• 17:31David Hoffman?

  Photoshop better than me, or however you make these graphics, can produce even cooler, even better designs. And then we are going to let the Bankless Nation decide on which design will be in the next season. And then the winning artist who has their designs chosen will receive a percentage of the token. So it's a way for artists to monetize, to receive value from their value that they produce. And they don't have to, like in the case of RIC, they don't have to get ripped off by a record label. Or in the case of Bankless Seasons, like all of this stuff is managed for you. I think it's a really interesting way to return value back to artists with scarcity tools on Ethereum.

• 18:06Ryan Sean Adams?

  Yeah, absolutely. And spread the culture, right? That's what this is all about. I mean, we've talked so much about Bankless and crypto being a cultural movement. A lot of people have seen it as a technology in the past. I mean, it's a social technology. This is a cultural movement. This is about representing what you're doing and the journey that you're on. And if nothing else comes out of this whole experiment that we're doing, David, we've got this picture, which is just, let me say, it's amazing, sir. Is that you in front of the Seattle skyline there?

• 18:38David Hoffman?

  Yeah, it's a Seattle skyline. It's a couple of blocks away from my house. I was thinking about perhaps a different word for the state of the nation was proud, because we're proud of all how far we've come. And I think that picture represents that. So when you wear your Bankless Season apparel, when you wear your BAP Zero, you should be proud because we're all here together. We've built something incredible and we're taking it to the market.

• 18:59Ryan Sean Adams?

  All right, we're here to stack BAPs. It's kind of what you're saying, right, David?

• 19:02David Hoffman?

  We're here to stack BAPs.

• 19:03Ryan Sean Adams?

  All right, so this is the post. I'm actually scrolling through the post that's going to be sent out. This is the, you'll receive this post by the time we publish the video. And this includes some more details about the BAP Zero sale. So again, all of these things are redeemable tokens, so they represent these shirts. And here's some details about the supply. Maybe, David, you should say just something about how we're doing the liquidity. Because, so we're putting 48 of these things in, right? But with those kinds of low numbers...

• 19:36Ryan Sean Adams?

  Uniswap has a pretty steep curve where like it, by the way, these shirts start out like expensive, right? This is scarce apparel. This is not regular bankless merch.

• 19:47David Hoffman?

  They cost money to produce in the first place.

• 19:50Ryan Sean Adams?

  Yes, they cost money to produce. This is not regular bankless merch. We'll have a separate merch store for non scarce apparel with bankless stuff. I know a bunch of people have asked about our bankless tees that we typically wear in these. We'll have a separate store for that. But what happens when you deposit things into Uniswap in small quantities is the curve gets pretty steep. So it gets more and more expensive as more of these BAP zero tokens are taken out of the market. So what are we doing to kind of dampen that liquidity? Can you talk about the phases?

• 20:22David Hoffman?

  Yeah. So the first thing that we're doing is we're supplying all tokens to the Uniswap market. So we're giving the entire supply to the market. So with some like some DeFi tokens or ICO tokens, like they only give out 10% to the market. And then they have the remaining 90% like non circulating. No, they're 100% circulating, 100% in the market, which is one way to like soften that curve, that incline of price go up when somebody buys a token. But then we're also committing to selling all of our available BAPs at a certain level, right? So when 50% of the BAPs are purchased, roughly 50%, 23 out of the 48, leaving 25. When 23 are sold, they will be roughly selling for five ETH a BAP.

• 21:05David Hoffman?

  And what we're doing at that point is we are going to withdraw liquidity from Uniswap in order to sell BAP tokens back into Uniswap to keep that price suppressed until we have no more. Like so, so David and Ryan are going to do our best to like keep that price at five ETH per BAP or lower until we have no more in our hands. Anyway, we have no more to sell. And then at that point, Bankless won't be making any more money. And all the tokens will be in the ecosystem and we will have exited and all tokens will be available for either redemption or selling back into Uniswap. So we're getting, we're getting out of BAPs early, as early as possible at what we think is a fair rate. So that the remaining BAPs on the market can price themselves.

• 21:50Ryan Sean Adams?

  Yep, and we're not trading these things.

• 21:52David Hoffman?

  Yeah.

• 21:53Ryan Sean Adams?

  And the tokens, so the tokens that we have, the two shirts that we have, we actually, we went through the process, right? So we took those two tokens. What, here's the, here's the address. May, may, like you can see all this stuff, obviously, on chain.

• 22:11Ryan Sean Adams?

  Here's the, the BAP token that I have in a, in a bankless test address here that I received. And this is me sending it to that ETH address to burn it. So it's burnt.

• 22:22David Hoffman?

  It's gone.

• 22:23Ryan Sean Adams?

  With fire. It's gone.

• 22:25David Hoffman?

  Forty-eight left.

• 22:26Ryan Sean Adams?

  Forty-eight, just forty-eight left.

• 22:27David Hoffman?

  Forty-eight left.

• 22:27Ryan Sean Adams?

  So, and yours is gone too. So there's just forty-eight and, you know, we're just supplying the liquidity. We're not going to be trading these things. We have redeemed them. Now, what's super interesting is like, people don't have to redeem these things, right?

• 22:41David Hoffman?

  Yeah.

• 22:41Ryan Sean Adams?

  So they can buy them on Uniswap. And like at that point, it's kind of theirs to do with what they will. They, they have an option to redeem it. In which case, we, we talked about how they do that, but they don't necessarily have to redeem it, which is interesting. I have no idea how that's going to play out.

• 23:00David Hoffman?

  Neither do I. Neither do I.

• 23:02Ryan Sean Adams?

  That's why markets are fun, right?

• 23:04David Hoffman?

  That's why, this is, yeah, this is a fun experiment. It's why we're calling it Season Zero, not Season One.

• 23:08Ryan Sean Adams?

  Yeah, exactly. So, you know, another thing though is, when Jacob wrote that redeemable tokens post, he talked about the utility of these tokens potentially in virtual worlds, right? So, for instance, I, I don't know, how, how much time have you spent in like crypto voxels?

• 23:28David Hoffman?

  Very little.

• 23:29Ryan Sean Adams?

  Decentraland, yeah.

• 23:30David Hoffman?

  Very little.

• 23:30Ryan Sean Adams?

  So I haven't spent a ton of time either, but like, like, we're both gamers, right? So like, we know the potential of those types of virtual worlds. And what I think is really interesting is with NFTs, you have the ability essentially to represent a digitally scarce good. Of course, you can redeem it for a physically scarce good, the Ethscape T itself. But you can also like rep the shirt in crypto voxels or in Decentraland. And I feel very much like these virtual worlds are just a shadow of what they will become. It's very possible in the future that Like the most value that comes from these sorts of scarce tokens, not not these, but like

• 24:13Ryan Sean Adams?

  maybe these, but other sorts of scarce tokens will actually come in virtual worlds in game experiences where you're doing it for the same reason you're you're doing it in the physical world, right? You're it's a it's kind of repping your colors. It's, you know, you've mentioned the word, you know, proud, right? It's something that you've earned and that you've you've purchased and that you want to showcase to the world. It's kind of a a human, it's in human nature to like, put on these sorts of displays and and these sorts of social signals. So I think it could be really interesting in virtual worlds as well as that expands.

• 24:47David Hoffman?

  Yeah, totally. The the virtual world side of Ethereum is very much kind of like the L2 world where there's a lot of them and there needs to be some sort of like settling or some sort of convergence upon like which virtual world is going to be the thing that everyone onboards into. Maybe it's not even the ones that we currently have available to us. I wouldn't even say that the virtual worlds on Ethereum are even closely to the point that like L2s are.

• 25:11Ryan Sean Adams?

  Yeah.

• 25:11David Hoffman?

  But that doesn't actually, for what what this means, it doesn't actually matter because if you redeem a BAP token, the the vision of these the system is to create a virtual version of these shirts in the virtual world that emerges, right? And so we're gonna have to do this after the fact, but that's kind of where our heads are at. Like, if you redeem a token, you get the actual shirt in real life, and then you get the virtual shirt for whatever virtual world comes to Ethereum. And so if that world does ever indeed come, we will be issuing virtual versions of these shirts in the virtual world that comes.

• 25:42Ryan Sean Adams?

  Absolutely. So you sort of get the best of both. Now, maybe the last thing to say is when we think about additional seasons, David, and again, this is just season one, so we're seeing how it goes, and we'll use information to iterate on whatever season two is. But we're also thinking about tiers of scarcity.

• 26:00David Hoffman?

  Right.

• 26:00Ryan Sean Adams?

  For some of these items, right? So this first, the Ethscape shirt, is a legendary shirt, right? Because there's only 50 of them.

• 26:09David Hoffman?

  There's only 50.

• 26:10Ryan Sean Adams?

  So what are the other classes?

• 26:12David Hoffman?

  Yeah, so for those those who are gamers will find themselves very, very familiar with this system. So it's just like finding loot on the ground or loot in like a chess box or some some random loot loot box or whatever. There's legendary, epic. Rare and commons, right? And so legendary's got 50 items, epic's got 150 items, rare has 250 items, and then common has 500 items. And so as we go through these different seasons, each season will have like a different rarity, right? Like one will be a common item and it'll be like a hoodie that's mostly black or something relatively simple. And then, you know, in the future, there will be future rare items as well that look as dope as this one, right? And so there's different tiers of scarcity because there's different like kind qualities

• 26:55David Hoffman?

  of goods that you can produce with different like values in how the graphic looks. And I think that's pretty cool.

• 27:03Ryan Sean Adams?

  Absolutely. Yeah, so we will, we will see how this experiment goes. Dave and I are super excited about it. You know, maybe only a couple sell on Uniswap, in which case, look dude, I'm still excited about this. You know, we'll see what happens. I know when we, when we originally talked about, you know, the curve, having one ETH like equal one shirt, that was at a time when ETH was a little less expensive than it is today.

• 27:28David Hoffman?

  That was at least $200.

• 27:30Ryan Sean Adams?

  Right, right, right, right. So, so guys, one thing, the last thing I'll say about this is this is kind of one of those things that's not for everybody, you know, in the bankless nation. This is sort of, you know, scarce merch. It's expensive, right? These shirts are super high quality, so it gets you out of kind of the, the fast fashion motif of buying cheap shirts from like a Gap or like an H and M or whatever. So there's that, but they're still expensive, right? So there's going to be a certain group of people who are really excited about that and drawn into that. And there's others for which will, will launch like a merch store, a bankless merch store, and you'll have a way to buy other bankless swag and represent the nation that way. But we hope you enjoy this fun experiment, guys. Like just like have fun with it.

• 28:14Ryan Sean Adams?

  That's what I, I think my favorite thing about crypto is, is there's something new every single day like to do. It feels like one giant video game anyway, right? Like, or you're like Mario and you're like here and you're leveling up and you're collecting the coins. And my parents have no idea what I do, like how I spend my time.

• 28:36Ryan Sean Adams?

  But you guys do, because you're in this space too. David, anything else you want to say about the BAP and about the Ethscape shirt?

• 28:47David Hoffman?

  Yeah, so you talked a little bit about fast fashion. I don't really want to go into that here, but there is two posts going out. There is the introductory Bankless Seasons post, which talks about fast fashion, what it is, and how scarce apparel can fix that. And so I kind of walked through the narrative there. And at the end of it, it forwards you off to Season Zero launch, which is the second post, which is also going out. So there's two separate things to read. One's kind of like the explainer of the whole Bankless Apparel Seasons campaign. And then the other one is specifically Season Zero and all the details to go in with that. So that's in your inboxes and in the show notes. So check them out.

• 29:26Ryan Sean Adams?

  All right, well, here we go. That was topic one. David, before we get into the other things we want to talk about in State of the Nation, we should talk about our sponsors first. Do you want to start with Polymath or Polymarket?

• 29:40David Hoffman?

  Polymarket, yeah. So Polymarket, another new sponsor of the State of the Nation. Polymarket is a prediction market platform on Ethereum. And for those that don't know, prediction markets are markets where you can go to to express an opinion about what you think is the most likely outcome of the future. Right? And so sports games, presidential elections, future crypto prices, these are all viable contenders for being able to express an opinion for what you think will happen. So like, the market gives you odds based on like, will Donald Trump or Joe Biden win the presidency? And if you think that the odds that the market is offering you from Polymarket are off from what should be correct, you can go and express an opinion and take a bet.

• 30:24David Hoffman?

  And then in the future, as more and more people do this, you can just go to poly.market and look at the bets just for your own information. Like, okay, the Polymarket is gauging that coronavirus will be over in four months. And so I can plan my life based on that because the people that are betting have skin in the game. They are going to win or lose money based off of whether they're incorrect. Correct or not. So they have a really elegant UX UI. It's pretty simple, pretty easy to understand. If anyone's gone to predictit.org, it's very much like that. So if you are into betting on the future events of the world, check out, check them out at poly dot market.

• 31:02Ryan Sean Adams?

  Yeah.

• 31:02David Hoffman?

  And send an email with bankless in the subject line after you make a bet and they will cover all of your gas costs. And so go to poly dot market and you know, check out the very, the available markets there. Tweet out if you make a trade and then again, email them at hello at poly dot market. With the subject line bankless to get your gas costs reimbursed.

• 31:23Ryan Sean Adams?

  They've also got some pretty cool DeFi markets in there if I remember correctly, but David, dude, you're on a roll and why don't you just take the second sponsor too?

• 31:30David Hoffman?

  Take this home?

• 31:31Ryan Sean Adams?

  Maybe it's your shirt. You're on a roll.

• 31:34David Hoffman?

  All right. So our, our, our last sponsor of the state of the nation is Ampleforth. Ampleforth is a base money experiment on Ethereum. It's a pretty unique token where instead of the price going up and down, the supply goes up and down. And so it's a variable supply asset on Ethereum. And it's, they're marketing themselves as a base money currency, right? An M zero. And so I think the, the most interesting thing about ample force is that you can denominate debts in this thing. And be comfortable paying it back because the price never goes too far away from a dollar. It's not a stablecoin, but it is a trustless M zero to denominate debts in. So you can check them out at ampleforth.org. They have a cool dashboard where you can learn more about the economics.

• 32:20David Hoffman?

  Do, do your own research. I think it's a fantastic experiment, but be careful.

• 32:25Ryan Sean Adams?

  All right, man. All right. Topic two, we want to talk about ETH two, I think. So, all right. So we're, we're in the bold market now. ETH is, ETH is, you know, charged, it charged past that, you know, 353 price. So I got unlocked from jail. I charged, it charged past some, you know, pretty.

• 32:46David Hoffman?

  Previously very strong resistances.

• 32:48Ryan Sean Adams?

  Exactly, exactly. And it just charged through it. It hit almost 400. And

• 32:54David Hoffman?

  It didn't hit 400. It got up to 415 for a hot second for that.

• 32:58Ryan Sean Adams?

  Wait, it did?

• 32:59David Hoffman?

  Yeah, 415.

• 33:00Ryan Sean Adams?

  Oh, I was supposed to tweet something out at 403. Oops.

• 33:03David Hoffman?

  You missed that one.

• 33:04Ryan Sean Adams?

  I missed that one. But you know, it should sustain past 403 for a while before. Yeah, it didn't do that. Okay. So, but we haven't even seen ETH2 yet. But it's coming. Let's talk testnets, man. What's going on there?

• 33:17David Hoffman?

  Yeah, the morning of this recording, the Medasha testnet just went live. It sounds like it had a small little hiccup out the door where not very many validators found the testnet, but turns out that solved itself over time.

• 33:28Ryan Sean Adams?

  Wait, so it's Medasha? It's not Medalla?

• 33:31David Hoffman?

  It's not Medalla. It's spelled Medalla. It's pronounced Medasha.

• 33:35Ryan Sean Adams?

  Wow, what language is that?

• 33:36David Hoffman?

  I think it's Spanish.

• 33:38Ryan Sean Adams?

  Okay.

• 33:39David Hoffman?

  And I think there was some game of telephone where we lost the original spelling or original pronunciation. I don't know. But Mariano Conti pronounced it Medasha and so.

• 33:49Ryan Sean Adams?

  Oh, he's the pro. Yeah, I trust Mariano.

• 33:50David Hoffman?

  He knows, he knows. And so, and so that is live right now. And so what this means is, is that if no hiccups happen, if no bugs happen between now and three months from now, and what is it? It's August 4th. So August, September, October, November. Did I do that right? November.

• 34:07Ryan Sean Adams?

  Yep.

• 34:07David Hoffman?

  So in November, if after three months of this testnet running, if it's still running without any bugs, then Phase Zero goes live. And so you can also check out on our sponsor, poly.market, that people are giving odds, two to one odds, that no bugs happen currently in.

• 34:24Ryan Sean Adams?

  Wait, so they're betting two to one odds that ETH will ship this year?

• 34:27David Hoffman?

  ETH Phase Zero will ship in November. Yeah, in 2020. Yeah, in 2020, right?

• 34:33Ryan Sean Adams?

  Interesting.

• 34:34David Hoffman?

  Right? And so people, people are starting to price in the success of Phase Zero, right? And we have the final testnet up and running. And again, if everything goes according to plan, which the market is giving two to one odds that it will, Phase Zero launches this year, by the end of this year.

• 34:49Ryan Sean Adams?

  That's weird. I was told ETH2 would never ship.

• 34:51David Hoffman?

  Yeah, I sold that too. I sold that every single day for the last five years.

• 34:55Ryan Sean Adams?

  All right, well, you know, maybe, maybe some, some people are like, let's believe it. I'll believe it when I see it. So what about folks who've been kind of sleeping on this for a little bit? They're just now kind of waking up to DeFi theory and probably price got their attention. Look, everyone's lives are busy, right? So before I was doing crypto full time, right? Like, I mean, I had other stuff going on. I wasn't constantly monitoring the status of test nets, crypto test nets, right? We should just go a quick recap of the various phases that we're talking about in ETH2 and explain what it is really quick. So I'm going to show a roadmap, David, and maybe you could kind of start by explaining what this initial phase is.

• 35:37David Hoffman?

  Yeah, absolutely.

• 35:40Ryan Sean Adams?

  All right, so we're, we're, what we're really talking about is not the full ETH2 in its final form. What we're talking about is phase zero. First, first I'll show this one. This is a more simple roadmap, I think. And we'll get to the other.

• 35:52David Hoffman?

  Okay, so yeah, we are currently at Ethereum 1.x. That's the Ethereum 1.x. X stands for the fact that we constantly update it. We add new things because both Ethereum 2.0 is progressing, but also Ethereum 1 is also progressing separately. They both have progress. However, for ETH2, the first is phase zero, the beacon chain. That's like the heartbeat of the whole entire system. I kind of like to imagine this thing as like an organism that is growing and it grows from the center out. And the heartbeat is at the very center, right? Once the heartbeat is stabilized and predictable and, and, and able to be depended on, then the heartbeat turns into more complex things like, you know, extremities, arms, legs, whatever, more organs. But first off, phase zero is the heartbeat. That's where the beacon chain gets the entropy,

• 36:36David Hoffman?

  which is really important in the rest of the, in the rest of the phases, because you need entropy to make things ungamable. And, and then this is also where the deposit contract lives, right? So at some point, when, if this test net succeeds without bugs for three months, this deposit contract opens up. So people on the ETH1 chain send their ether to this deposit contract and it gets redeemed on phase zero beacon chain, which makes it ETH2 ETH, right? Then that's up and running for a while. Then we introduce shard chains. And this is where we start to get scale, right? And so not just do we have the main beacon chain, but we also have the shard chains that are, there's going to be 64 of them, and they all connect back to the beacon chain. And then they also cross link.

• 37:19David Hoffman?

  And so that's where we go from just having one Ethereum blockchain to having 64 of them. So like increasing throughput by like a theoretical 64x. And I think it's actually even more than that. But there's 64 shards of Ethereum running. And then the beacon chain coalesces them into one. And that's, that's great because that's kind of the issue of gas today. That's where we solve the gas problems on the L1. But we don't yet have contract execution. So we can't actually do DeFi things on phase one yet because there needs to be a virtual machine. And that's where phase two comes in. Phase two brings in the eWasm virtual machine. We currently have the EVM, the Ethereum virtual machine running 1.x. And EVM runs, the EVM runs on Solidity, which is great,

• 38:04David Hoffman?

  but it's also limiting. And that's where eWasm comes in. So we have a secondary virtual machine which runs on contracting language that is more common. There's more people, more developers out there, like your Google devs, your Amazon devs. eWasm is probably going to be the virtual machine that brings them in. It makes it very easy to build on Ethereum, which is great because Ethereum needs development and Ethereum needs developers. And we all of a sudden have way more developers available to Ethereum. And so in that phase, that's like the final phase. There's more innovation that goes on, but phase two is, is basically all of Ethereum 2.0. And once that's here, we're done.

• 38:43Ryan Sean Adams?

  Yeah, absolutely. Get over the, you know, so the Delphi digital, the Delphi folks, they're kind of an analyst group. And they, they talk primarily to sort of Wall Street institution types. And they put out a fantastic report on Ethereum's birthday last week that we'll include in the show notes. You should absolutely check out. But there's this, there's this image in the report that shows exactly what you're saying with those phases, David, and then also kind of timelines too, right? So what we've been talking about. The test nets, the the Medasha test net that we were just talking about, that's kind of a Q4 ETA. And that's that phase zero, right?

• 39:22Ryan Sean Adams?

  And then we're looking at a, you know, a shard chain in, in, you know, the phase one, which is probably 2021 ish. And then this is really exciting. So this wasn't in Preston's slide that you just showed, but this is a phase 1.5. That's kind of in between phase one and phase two. And the reason this is exciting is because what it provides is essentially a migration of the original ETH 1.0 chain that David was just talking about into ETH 2.0. So it moves ETH 1.0 into a shard on Ethereum 2. And what happens there is super important from the perspective of Ether, the asset.

• 40:04Ryan Sean Adams?

  Because at that point in time, we can get rid of proof of work, right? So proof of work Ethereum, Ether issuance is about 4% per year right now, right? And that's going to continue, that's even going to continue into phase one, where we institute and start doing proof of proof of stake. There'll be some inflation there, probably around the 1% range. So Ether issuance will increase briefly from 4% to about 5%, you know, potentially somewhere around that that timeline. But when we get to phase 1.5, the entire Ethereum ecosystem, the entire Ethereum nation becomes secure just by proof of stake.

• 40:47Ryan Sean Adams?

  And issuance drops like off a cliff. So it drops to about 1%. It's variable based on the amount of people staking and also based on what what we've talked about a lot, which is EIP 1559, which could actually burn a portion of the Ether based on usage. But so all of this leads to is at the end of this, when you get to one, phase 1.5, which could be 2022 or so, you've got a very low issuance Ethereum that

• 41:17Ryan Sean Adams?

  Offers higher security than the original ETH mainchain. And I think that will enshrine Ether, the asset, into a store of value, right? The monetary policy will become much more widely known. There's no doubt, right? This has always been the plan and it's finally being executed.

• 41:35David Hoffman?

  Yeah.

• 41:35Ryan Sean Adams?

  Um, you know, in fact, I think there's somewhere in this report where they talk about, where they talk about that. Uh, let me find that in just a minute, but what were you gonna say, David?

• 41:44David Hoffman?

  Yeah, so ETH 1.5, the phase 1.5 is where um, the ETH Ethereum L1 chain, the current chain, starts to be secured by Ethereum 2.0. So it's where these chains start to get melded. And so that's when we, we are able to strip away miners. And uh, may- maybe there's some small miners left on the chain. But the point is, is that very quickly does the ETH 1 chain become verified by the ETH 2 chain? By the proof of stake consensus on ETH 2, which means we don't know, we no longer need miners. Which means we no longer need that extra issuance to pay the miners because security under proof of stake is much more inexpensive. And so both chains will simultaneously be verified and validated by the ETH 2 stakers.

• 42:27Ryan Sean Adams?

  Yeah, absolutely. And the other thing we get in phase 1.5, of course, is a migration of all of DeFi, all of the apps. Uh, and then we also get some pretty large scalability benefits. Not the full scalability of ETH 2, but in layer 2, we can actually start stor- storing some additional data. So um, if, if, if folks listening are familiar with all of the, the layer 2 tech that's being built out for Ethereum today. You know, specifically, there's been a slew of new um, layer 2 options. As Reddit kind of put out a request and said, hey, ETH community, can you help us out? We're trying to scale on Ethereum. We want to do tokens for all of our subreddits, but we need it to be super fast. How could you do that?

• 43:09Ryan Sean Adams?

  And Ethereum community came back with a ton, like, like 30 different answers to that. All of them have high potential, good answers.

• 43:17David Hoffman?

  Yeah.

• 43:18Ryan Sean Adams?

  Yes, and those become ultra powerful when we get to phase 1.5 because we can start storing some of that data in the. Secure ETH2chain itself. So, super exciting. And you know what's exciting to me when I saw this report? I've honestly never seen a report like this, like a report from an analyst who's talking to institutions. Get it right. They didn't, they've never gotten it right. Like, they've never understood what Ethereum is. This is the first report I've, I've read, which is like, cool, you got it right. And you're actually explaining this in a way that institutions can, can understand, right? So, they, they talked here about ETH2. Proof of stake, what does it bring?

• 43:58Ryan Sean Adams?

  Proof of stake is more economically feasible, enhanced monetary policy, minimum necessary issuance is something we talk about often to describe Ethereum's monetary policy. It turns Ether into a staking asset. Well, that's triple point asset. That's what we've been talking about here.

• 44:15David Hoffman?

  Been hitting that hammer for a long time.

• 44:16Ryan Sean Adams?

  It burns transaction fees. I mean, the analyst probably reads bankless, I'm gonna say, right? And anyway, these sorts of things that we've been talking about in the Bankless Nation are starting to get translated into language that quite honestly, like, I don't like, I'm never gonna write a 30-page analyst paper like this, right? It's just, it's boring to me.

• 44:40David Hoffman?

  But you helped.

• 44:42Ryan Sean Adams?

  Sure, like, right? So, some of the ideas that we've talked about in the Bankless community form the bottom layer of these sorts of analyst papers. And these analyst papers are now getting translated into a language that institutions can start understanding. And now, they can understand Ether as an asset. And they, now they can understand what the hell's going on with Ethereum 2.0. So, I'm also excited because of that.

• 45:03David Hoffman?

  It took three years of bear market memes to generate those, those memes. And now, they're, they're finally being leveraged, right? Like, partly when I see the Ether price run to $400, I'm like, oh, great. Like, the world's finally pricing in the memes we've generated over the last two years.

• 45:16Ryan Sean Adams?

  Kind of, right? And, you know, people, I think, people, like, I, when we talk about memes, we take a very high view of what a meme actually is.

• 45:25David Hoffman?

  Yeah, right.

• 45:26Ryan Sean Adams?

  It's, it's not just a, you know, a gift somebody puts out on, on Twitter that sort of goes viral. It's a, it's a, exactly. It's a, it's a shared story that... Social groups start to believe and it becomes the forming narrative for what the, you know, what, in this case, what the particular asset class is.

• 45:44David Hoffman?

  Right.

• 45:44Ryan Sean Adams?

  So these memes really are the base layer.

• 45:47David Hoffman?

  Right.

• 45:47Ryan Sean Adams?

  And this is how those memes get translated into into regular language.

• 45:50David Hoffman?

  Yeah, like Bitcoin's meme is a non-sovereign uncapped store of value asset. And it becomes that if everyone believes that that's what it is.

• 46:01Ryan Sean Adams?

  Yep.

• 46:01David Hoffman?

  And it's it's going to do a great job at doing that if everyone believes that it will do a great job of doing that. And that's how it becomes reality, right? And so with with like burning ether in EIP 1559 or as a capital asset or as a store of value, it will become that because we all think that it will become that.

• 46:20Ryan Sean Adams?

  Right, absolutely. And it gets tested through the fires, like good memes get tested, right? So, you know, it's not enough for a meme to be out there and for a bunch of people to believe it. It has to pass through the fires, right? So an example of Bitcoin passing through the fires, well, it held up relative to other crypto assets in the bear market as sort of a reserve asset. So it's sort of like we pass through the fire. But there was a time where people thought that Bitcoin was going to be peer-to-peer cash.

• 46:48David Hoffman?

  Right.

• 46:49Ryan Sean Adams?

  Like a money system, a payment type layer system, and that was the meme, right? I can send you Bitcoin, no one can stop me, David, peer-to-peer basis.

• 46:57David Hoffman?

  Coffee, yeah.

• 46:58Ryan Sean Adams?

  Yeah, it decentralized PayPal. That was a meme back in 2013, right? Pay for my coffee in Starbucks. It didn't pass through the fires.

• 47:07David Hoffman?

  Right.

• 47:07Ryan Sean Adams?

  And so the meme actually died. So these memes actually get verified.

• 47:12David Hoffman?

  They're based on fundamentals, right?

• 47:14Ryan Sean Adams?

  They're based on fundamentals because they have to pass through those fires.

• 47:17David Hoffman?

  And in the same way that like speculation on something is speculation on its fundamentals. You don't get speculation for speculation's sake. Speculation is built on something and memes are built on something in the same way.

• 47:30Ryan Sean Adams?

  Absolutely. All right, David, last topic. This is this is kind of a fun one. So we've switched into full bull mode, right? So I wrote a post about this on Monday.

• 47:41David Hoffman?

  Ecosystem has, yeah.

• 47:42Ryan Sean Adams?

  The entire ecosystem, the the the switch has been flipped. We're in bull mode, bull mode now, bull market now for crypto. Eric Voorhees called it even in our, you know, podcast Monday. Joey Krueg called it the week before. Chris Brindinsky hinted at it.

• 47:56David Hoffman?

  All before that, before they, he was the first one in my, in my.

• 47:59Ryan Sean Adams?

  Absolutely. So like, it's not just us saying this, we're we're kind of reaching consensus and prices kind of showing you breaking through these these walls, showing you bull market. So.

• 48:08David Hoffman?

  Bull market meme is on.

• 48:10Ryan Sean Adams?

  Bull market meme is on. So how do we get into a bull market mentality? And like, what is that? Because there's a bear market mentality that you need to have, right? And understand and adjust for, but there's also like a bull market mentality. And I've seen people lose more in the bull market, a lot more in a bull market than in a bear market. Like, bull markets can be way more dangerous than bear markets. Can you talk about what the bull market mentality is and how how we should be thinking about this?

• 48:40David Hoffman?

  Yeah, and markets are a reflection of the participants participating in them, right? And so when we say it's a bull market, what we're really saying is that everyone who's participating in price discovery around ether, price discovery around Bitcoin, has a bull market mentality, because it's the mentality that creates the bull market, not the other way around, right? So it's the mentality that comes first. And like, one of the core characteristics that differentiates a bear market from a bull market is that like, in a bull market, good news moves the price. In a bear market, good news doesn't move anything. Depressed, like, people are depressed. That's literally the word depression means that like, good news doesn't mean anything to you.

• 49:20David Hoffman?

  In a bull market, good news doesn't only mean something, but it probably means more than what it actually means, right? In in bull markets, good news really moves the price. And that's because it's reflected in our mentality. And so everyone who's participating in price discovery, which means you are buying or selling or trading anything, the your mentality is shifted. You are no longer a bear market mentality. You are now a bull market mentality. And you need to account for this, because who you are changes in a bull market. Your personality changes based on the mentality that you have. And so there's a couple of things that's like, it's really important to remember. As we go through this bull market, because like the biggest thing that is going to cost you is you got too greedy, right? The biggest thing that is going to cost you is your hubris, right?

• 50:04David Hoffman?

  You need to be modest, you need to be humble, and you need to accept that you're not going to win all the gains. But in order to, if you, and if you were to chase all of the gains and try to get the maximum amount of gains possible, that's how you lose everything, right? That's how you lose everything. And I'm speaking in general terms, but like there's, there's a couple of lessons that I learned that I want to share. And, and starting from last cycle, right? And I feel like I'm coming full circle to like where I started in crypto, where I came in, in after the first major run up in 2017. So Ether went from like $50 to $400, back to $170, and then it floated up to $300. That's what brought me in. And that was like relatively late into the hype cycle, right? Like ICO, the ICO boom was already in full mania.

• 50:48David Hoffman?

  And so, you know, and so I buy Ether, I start investing in tokens, all that happens. And then my, my block portfolio number goes up and up and up. And I think like I'm a fucking genius.

• 50:57Ryan Sean Adams?

  David, when you bought those tokens, like, how much did you know at that point in time?

• 51:04David Hoffman?

  I'm so little, so little, so little. Like, I couldn't have told you anything about the qualities of Ether as an asset that I know today. Zero things. And, but also the ecosystem didn't know them, but like I

• 51:15Ryan Sean Adams?

  For sure.

• 51:16David Hoffman?

  I, I had, I, I was, I was months old when it comes to the crypto world.

• 51:20Ryan Sean Adams?

  So you're like, price is going up, this thing is hot, I don't fully know what it is, but like

• 51:25David Hoffman?

  I'm playing the game.

• 51:26Ryan Sean Adams?

  I'm playing the game, I'm in the game, I know there's something here and I'm, I'm putting my chips on this and I'm risking it, right? Like I'm, I'm headed west, these are my chips, I don't exactly know what I'm doing, but I'll figure it out Right. Once I start investing.

• 51:39David Hoffman?

  Yeah, it didn't take me a few months to figure it out, it took me like three years and counting. Like, I'm still figuring it out, I'm still figuring it out.

• 51:44Ryan Sean Adams?

  All right, so then what happened?

• 51:46David Hoffman?

  Yeah, so I'm watching my block portfolio go up and up and up. And like for a kid that was previously a broke student trying to get into physical therapy school, like I made more money than I ever thought that I would at that age, right? And like in hindsight, it wasn't, it wasn't all that much. But at the time, like each person has their own number as to what means to them. And my mistake was that I started spending more without paying off my credit card. Right. That was my big mistake.

• 52:10Ryan Sean Adams?

  You saw those numbers going up in Blockfolio and you're like, net worth going up. That means I am richer, so I can spend more each month.

• 52:17David Hoffman?

  Which is a true statement if you sell. You don't get to spend more without selling your profits. If you're making profits and then you are going to Amazon and buying a boat, like you need to sell because that's where you're getting the money to fund your endeavors, right? And so you don't get to have both. You don't get to have number go up and also I buy more things. Like you need to choose one.

• 52:41Ryan Sean Adams?

  Okay, so are you saying like basically you can't treat those Blockfolio numbers as real numbers? Like they're not real.

• 52:47David Hoffman?

  They're not.

• 52:47Ryan Sean Adams?

  It's just not like ignore your feelings, ignore the euphoria. You're going to be checking price like 20 times a day, maybe, but you have to ignore that. You're not any wealthier until you sell. Is that what you're selling?

• 52:59David Hoffman?

  Yeah.

• 53:00Ryan Sean Adams?

  Is that what you're saying?

• 53:00David Hoffman?

  You don't get to spend more until that dollar shows, that dollar sign shows up in your bank account. Like that, until that moment, you didn't have any more money than you did previously. It doesn't matter what your Blockfolio says.

• 53:10Ryan Sean Adams?

  Okay, so here's another mistake I feel like people make in the, in the bull market. That's a huge one. I'm so glad you said that. So another mistake is sometimes they sell too early.

• 53:19David Hoffman?

  Yeah.

• 53:20Ryan Sean Adams?

  To be honest.

• 53:21David Hoffman?

  Yeah.

• 53:21Ryan Sean Adams?

  Right? So, so people are like, oh my God, ETH just went from 200 to 400. Like DeFi is in a bubble. This is like, I'm calling the top and they call the top. And then, and then, you know, a week or two later, they're right because ETH drops down to, you know, 300. And they're like, see, I told you. And it's on the, it's on the upside in the bull market that so many people miss out on.

• 53:43David Hoffman?

  Right.

• 53:43Ryan Sean Adams?

  Like all of the gains, all of the opportunity costs that could have been there is because they, they also sold too early. So how do you prevent that? So you're saying, you know, step one is don't live like it's real money. Just keep your, keep your standard of living the same as if it doesn't even exist until, until you sell. But, but also like, how do you prevent not selling before? Like this whole thing has been realized, the full cycle plays out.

• 54:08David Hoffman?

  Right. And this is, this is really, really hard, right? Because this partly involves timing the market. There are signals, if you are really looking, paying attention to them and you're doing your research as to how like market cycles work. There are signals that you can tap into, but again, it's all subjectivity at the end of the day. And what also makes this really hard is that every time a token pumps, it looks exactly like the last time it just pumped. Right? And so ether goes from 50 to 300, then it goes from 100 to 450, then it goes from like 300 up to 700. Then it goes from like 500, where it dropped up to like 900, then it goes from 900 to 1400. Turns out 1400 was the last time that it pumped, but it could have been any of you.

• 54:51Ryan Sean Adams?

  If you were there, it didn't feel like that, right?

• 54:52David Hoffman?

  Didn't feel like it. It could, you, like, when I saw $1400 ether, I was thinking $2000 ether like the next week, right?

• 54:58Ryan Sean Adams?

  That's how psychology works. That's how your brain always works.

• 55:00David Hoffman?

  That's how it works. And so like, you don't know, the all pumps look exactly the same and you don't know which one's the last one. Because this is a game, at the end of the day, a mania, a bull market, a bubble is a game of musical chairs. Right? And so at some point, the music stops and it looks like all the other times at a pump, but you just don't know. Right? And so this is fun because you get to play musical chairs. Like you get to, and it's a game of chicken. It's like a game of how long can you go before you sell? And if you sell too late, you lose. And so at some point in time, you have to, you don't really want to play the market. Like, don't, like ether goes from like 200 to 400, and then you short it and it goes from 400 down to 320.

• 55:42David Hoffman?

  And then you're like, I'm a genius. And then it runs up to $600 and you're out. And then you're bitter and then you never get back in, you lost all your money while there's this bear market or bull market. Like, you don't want to be that guy. However, you also don't want to be the guy that like sells too late, right? And so you have to answer to yourself, like, does the money that I've just made in this bull market meaningfully impact my life? If I sell right now, how much better is my life? Do I, do I pay off my credit card, pay off my mortgage, pay off my car, whatever? Like, I leave the, the weight of debt. If you have the option to like, remove all debt from your life at the middle of this cycle, that might be a good time for you to, like, and I'm sorry if that cuts off, you know, 2X, 3X, 4X gains after that. But at the same time, you locked in a meaningful life change and you're never going to forget it.

• 56:27David Hoffman?

  And you're always going to thank yourself that you did that.

• 56:31Ryan Sean Adams?

  Yeah, that's it. Yeah, it's a great point. So I, you know, I think there are a couple of strategies that, that, you know, people can use. So we, we've talked about dollar cost averaging into crypto, right? We just take, you got a paycheck, you take a slice of that paycheck and like this is allocated to crypto class. You can also dollar cost average out. So you do the same thing, except in reverse. You could do that in two ways. You could do that one on a time horizon. You say, okay, bull market mode, every month I'm gonna sell a little bit, right? Percentage out, I'm gonna take money off the table. You can also, some, some people have seen even very sophisticated investors do the same thing. It's not a, you know, it's not a play just for, you know, retail and, you know, simpletons. Sophisticated investors do this where, you know, every time Eve doubles, I sell a portion. Every time Eve doubles, I sell 10%.

• 57:15Ryan Sean Adams?

  Make that your rule. Another rule you can have for yourself going in, okay, so going into this, you need to have your rules. You need to have your game plan established like now. Because as David was saying, in the moment, you're not gonna, like, the euphoria is gonna take over. And when you see a thousand, you're gonna be like 10,000's on the table, right? And like, you're gonna know that in your heart.

• 57:36David Hoffman?

  Right. And if you make, if you make rules while ether is like going from 5,000 to 10,000 dollars, they're going to be different rules than if you had made them at the very genesis, when you were fucking sober.

• 57:47Ryan Sean Adams?

  Yes. Yes. Bull drunk, I guess, is maybe the term. Yeah. So, so that's what you have to do is establish those rules, getting in. Another, another rule you can establish is, once it hits this amount, right, I'm gonna sell, I'm gonna sell some portion. But I also want to frame this, okay? So we started Bankless, the entire principle of what this is, in, in the Bankless movement, in the Bankless nation, is at some point, if we're right, here's the thing, you don't have to sell, okay? I, I want you to park that, right? So everything that David just said about, look, if you got credit card debt, if you got student loans, make a meaningful amount, like, and things are going crazy, you know, don't lean in. Everything that David said is true, right?

• 58:31Ryan Sean Adams?

  But the thesis is also true, that

• 58:35Ryan Sean Adams?

  Like we think the bankless thesis, the megalith's belief is over time, you you want to start thinking about your denomination for what wealth is, right? Right now, everyone's denomination for wealth, basically, is US dollar denominated. You know, a million dollars, right? US dollar denominated, because we pay for things in US dollars. But when you start to get into the bankless world, your your bottom like denominator starts to change. And you're like, well, is it? What if US dollars actually isn't the reserve currency in this bankless country? But what if what if US dollars weakens as a reserve currency for the world? And then what you need to find is what are the reserve currencies

• 59:18Ryan Sean Adams?

  in this parallel universe that we call crypto, right? And that's really been the thesis of the bankless program from from day one is you want to find what the crypto monies are, and you want to build into what the crypto monies are. And the crypto monies in, you know, in crypto are very clearly ether and bitcoin. At least it's clear to me. Some people don't believe the first.

• 59:38David Hoffman?

  Makes sense.

• 59:39Ryan Sean Adams?

  A lot of people believe the second. They don't believe the first. And look, it's possible some other contender could rise up the ranks and be a crypto money. We're not, we're, I don't think we're close to that yet. So the way I think about these bull markets is not just in appreciation of US dollars. Right? That's just one denominator, but that's not the bankless nation denominator. The bankless nation denominators ether and bitcoin, right? Is that increasing? Because that might be long term wealth over time. And when you start thinking about these things in cycles, like once we've done a couple of cycles, like Eric Voorhees, 2011, that's how he thinks.

• 1:00:12David Hoffman?

  All the cycles.

• 1:00:13Ryan Sean Adams?

  Oh, I'm going to tell you, he thinks like he thinks in decades now.

• 1:00:16David Hoffman?

  Right.

• 1:00:16Ryan Sean Adams?

  And he's like, what do I care about US dollars? I'm only taking US dollars out that I need to spend immediately. Like, I'm not speaking for Eric here, but I'm pretty sure this is how he thinks. Like, or majority of my wealth. Yeah, I'm going to keep in crypto native reserve currency assets that are going to continue to appreciate. Yeah, over over these cycles. So think about your denominators. Your denominator should be crypto money. Even if you're doing things with like DeFi tokens, these other things, and doing narrative plays and that sort of thing. And come back to what's your denominator? Is it US dollars? There's also these reserve currencies. That's how you start to to make long term bets in this space and last through these cycles.

• 1:00:55David Hoffman?

  Yeah, sorry, that's a helicopter. So yeah, DeFi tokens are not going to trade against dollars like SNX, the Synthetix Network token, Yiffy, like the Yiffy token, their main trading pair is Ether, right? And so they are going to appreciate or depreciate versus Ether, not versus US dollar. Ether and all these things are going to appreciate first or depreciate versus the US dollar, but they trade against Ether. Trade like Ether is the base currency. And so, you know, I don't have too much evidence to support this, but like when especially Yiffy, which 98% of all trading volume is between Yiffy and Ether, or excuse me, it's Wify, Wify and Ether. When Ether goes up, Wify will also go up.

• 1:01:39David Hoffman?

  When we, why, when Ether goes down, Wify will also go down because it's denominated in Ether. And more and more of these things, I think, are just going to choose, like we saw this in 2017, like say what like Bitcoin is, maybe this is contentious, say what you will, but the 2017 ICO, ICO mania, the 2017 bull market was because of Ethereum, because of the ICO mania. And Ether, the asset went through the roof because everyone had to buy Ether because the ICOs were denominated in ETH. DeFi tokens are the same thing, you know, it's a safer link, which I think gets the majority of its volume from US dollar, like DeFi tokens, the mania that we've seen already, mania, quote unquote, this coming out of depression is denominated in Ether, right?

• 1:02:23David Hoffman?

  And so if you are trading your DeFi tokens, denominating in dollars might be a mistake. Like you might need to be denominating in the bankless monies, which is our Ether and Bitcoin.

• 1:02:32Ryan Sean Adams?

  Yeah, I've seen a lot of the people who are saying things like the DeFi could moon without Ether have been strangely silent over the past week and a half.

• 1:02:42David Hoffman?

  Weird.

• 1:02:43Ryan Sean Adams?

  So some of these things, look, guys, some of these things, you know, you're just making bets, right? You're thinking through the fundamentals and you're making bets. And I, anyone could point to any time horizon or data point and say, yo, David, what you said is a lie because here's Wify going up and Ether's going down, right? So what you said is not true, right? And they're looking at a two week time horizon or something. Zoom out, guys. That I think is the last maybe piece of advice we have for the bull market mentality is you have to zoom out and look at the long run and. You know, a couple of weeks, a couple of months, even sometimes, depending on the cycle you're in, a couple of years of data doesn't tell you much. You've got to zoom

• 1:03:26Ryan Sean Adams?

  out. This is a decades-long journey and process.

• 1:03:30David Hoffman?

  Lifetime.

• 1:03:30Ryan Sean Adams?

  Lifetime long. And think about it in those terms of time horizons, and I think you'll do pretty well in this space. Everybody who has had that long-term outlook has done really well, has done really well, right? And it's just, it's about, David was saying it earlier, it's about staying in the game, right? Marathon, not a sprint. The thing you don't want to do is do stupid stuff like, you know, go in debt, take margin, that sort of thing, and face the prospect of like, getting totally destroyed if there's a sudden crash. Because that eliminates you from the sale.

• 1:04:04David Hoffman?

  Staying in the game.

• 1:04:05Ryan Sean Adams?

  Stay in the game. You know, stack the reserve currency assets, stay in the game. Maybe stack some BAPs while you're at it, right?

• 1:04:12David Hoffman?

  Stack some BAPs.

• 1:04:15Ryan Sean Adams?

  All right, David, I think that's, that's probably it for the show. That's it from us. Yeah?

• 1:04:19David Hoffman?

  Yeah, that's it for me, sir.

• 1:04:21Ryan Sean Adams?

  All right. So, action items. We will put a link in here to the Uniswap Exchange, and there'll also be a link to the post that explains what we're doing with these etherscape shirts. You can pick one up and be wearing it like David and I are today. This has been State of the Nation, episode eight. Thank you so much for hanging with us.