ROLLUP: ETH Merge Soon | Yuga Labs Acquisition | ApeCoin | Raises & NEW Releases Galore

3rd Week of March 2022 ------ 📣 ZERION | Trade Across 7 Networks and 500+ protocols https://bankless.cc/Zerion ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: 👀 POLYGON | LAYER 2 DEFI https://bankless.cc/Polygon ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🦊 METAMASK | THE CRYPTO WALLET https://bankless.cc/metamask 💳 LEDGER | THE CRYPTO LIFE CARD https://bankless.cc/Ledger 🧙‍♂️ ALCHEMIX | SELF REPAYING LOANS https://bankless.cc/Alchemix 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ Timestamps: 0:00 Intro 4:00 MARKETS 4:25 BTC Price 5:05 ETH Price 6:55 ETH/BTC Ratio 11:50 $BED https://www.indexcoop.com/bed 12:15 FED WATCH https://www.marketwatch.com/story/feds-powell-sees-the-light-and-turns-far-more-hawkish-than-expected-11647468210 24:05 ETH Gas https://dune.xyz/hildobby/Gas 26:05 VISA vs. ETH Volume https://twitter.com/blockworks_/status/1503343966057545729 27:15 Hold or Sell Airdrops? https://thedefiant.io/messari-airdrops-112-profit-selling/ 27:50 A Brief History https://twitter.com/justintrimble/status/1504262012255318018 29:50 Rotatooooooooorrrss - 3ArrowsCapital https://twitter.com/btcinchina/status/1504339901264777218 30:45 Terra Do Kwon 34:45 Terra Bet by Do Kwon https://twitter.com/stablekwon/status/1503264558160375810 40:40 RELEASES 41:05 Stripe Now Supports Crypto https://twitter.com/collision/status/1501961880289480704 45:00 Aave v3 is Here https://twitter.com/AaveAave/status/1504137636105043971 47:20 Alchemix v2 https://twitter.com/scupytrooples/status/1503751703019110410 49:55 Coinbase Tests Fee-Free Trading https://blockworks.co/coinbase-rolls-out-test-of-no-fee-trading/ 57:02 RAISES 57:05 ConsenSys $450M at $7B Valuation https://www.coindesk.com/business/2022/03/15/450m-raise-values-ethereum-builder-consensys-at-7b-as-metamask-tops-30m-users/ https://twitter.com/ConsenSys/status/1503748099885477897 58:28 Optimism x A16z https://medium.com/ethereum-optimism/money-long-team-strong-8526c6943fd7 59:55 StarkWare $6B Valuation https://twitter.com/Darrenlautf/status/1501863868502396928 1:00:15 Solana Marketplace, Magic Eden $27M https://www.coindesk.com/business/2022/03/14/solana-based-nft-marketplace-magic-eden-raises-27m-series-a/ 1:01:37 Aptos is Expanding https://medium.com/aptoslabs/expanding-the-aptos-community-38c5b18a84b7 1:05:14 JOBS https://pallet.xyz/list/bankless/jobs 1:06:04 Talent Collective https://bankless.pallet.com/talent/welcome 1:06:50 NEWS / ETH 1:06:55 Don’t Sleep on the Merge https://newsletter.banklesshq.com/p/dont-sleep-on-the-merge-lite 1:12:50 IT BROKE! https://hackmd.io/@prysmaticlabs/HyZqgTA-c 1:19:10 Rocketpool https://twitter.com/Rocket_Pool/status/1501796795365867524 1:21:28 L222 1:21:30 How Do Rollups Decentralize? https://medium.com/ethereum-optimism/our-pragmatic-path-to-decentralization-cb5805ca43c1 1:25:18 Optimism Cannon https://twitter.com/optimismPBC/status/1501624172581064704 1:27:20 NFTs 1:27:23 Yuga Labs 1:27:25 Biggest NFT M&A Deal? https://twitter.com/yugalabs/status/1502420714527334406 1:33:30 Great Summary From William Peaster https://metaversal.banklesshq.com/p/bored-apes-cryptopunks-the-big-ideas 1:35:00 $APE Coin https://twitter.com/apecoin/status/1504201556165644298 1:37:23 NFTX Milked: “FlashMint” https://twitter.com/wilburforce_/status/1504437189979119622 1:39:15 NFTs Coming to Instagram https://decrypt.co/95209/nfts-are-coming-to-instagram-says-meta-ceo 1:40:40 REGULATION / TRADEFI / MACRO 1:40:35 Congress Come Get Ya Boi… https://twitter.com/RepTomEmmer/status/1504117933395619846 1:42:46 EU Votes Down Anti-PoW Clause https://twitter.com/paddi_hansen/status/1503383993391194115 1:43:47 Saudi Arabia Considers Yuan? https://www.wsj.com/articles/saudi-arabia-considers-accepting-yuan-instead-of-dollars-for-chinese-oil-sales-1164735154 1:44:56 Future Regulation in South Korea? Win! https://www.theblockcrypto.com/linked/137172/yoon-suk-yeol-who-pledged-to-deregulate-south-koreas-crypto-sector-wins-presidential-election 1:49:10 TAKES 1:49:39 Some Ponzis Are Scams https://twitter.com/avifelman/status/1502400594245423105 1:51:14 Pay or Go Away https://twitter.com/iamdcinvestor/status/1503014777475502083 1:54:12 Diversification For the Weak https://twitter.com/ryansadams/status/1504081408968601600 1:56:36 What David’s Excited About 157:58 What Ryan’s Excited About 2:00:12 MEME of the Week https://twitter.com/ultrasoundmoney/status/1503684172438773765 2:00:40 Disclaimers ​ ----- Not financial or tax advice. Do your own research. 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?

  This is definitely the biggest event, the biggest crypto event of 2022.

• 0:04David Hoffman?

  I would say ever.

• 0:06Ryan Sean Adams?

  Right?

• 0:07David Hoffman?

  Other than the Genesis block of Ethereum itself, this is the most significant event since that.

• 0:12Ryan Sean Adams?

  And so this is now, now we've got bullish David back, I think, for the moment.

• 0:17David Hoffman?

  Plus one to the bullish side. We got three for the bear, we got one for the bull.

• 0:24Ryan Sean Adams?

  Hey, Bankless Nation, happy third week of March. David, what time is it?

• 0:28David Hoffman?

  It's a Friday, Bankless Weekly Roll-Up Time, Ryan, where we cover the entire news that happened in the last week in crypto, which is always an ambitious endeavor, and this week is no exception. And this one is a little bit different this week, I'd say, just because, you know, it feels like Merge Week, Ryan. I don't know why it feels like Merge Week, but it does.

• 0:46Ryan Sean Adams?

  Merge Week? Okay, that's the Ethereum merge you're talking about. It's funny, because that's still months away, but suddenly it was like everyone was talking about the merge again.

• 0:55David Hoffman?

  Mm-hmm, yeah.

• 0:56Ryan Sean Adams?

  Including us.

• 0:57David Hoffman?

  People, it was us, yeah.

• 0:58Ryan Sean Adams?

  Guilty, guilty.

• 1:00David Hoffman?

  People have decided that the next thing to focus on is the merge. Who knows? We have like three plus months until the merge actually comes. So, you know, maybe this is just one week and then the topic of next week will be a different topic. But this week, the topic of crypto Twitter was definitely the merge.

• 1:17Ryan Sean Adams?

  Yes, we're going to talk about that Ethereum Merge Week. Also, the biggest NFT M&A deal ever, Apes Buy Punks. I'm going to talk, I'm going to interview a punk holder and see how he feels about that one on today's episode.

• 1:31David Hoffman?

  Sure.

• 1:31Ryan Sean Adams?

  Talking about you, David.

• 1:32David Hoffman?

  Who are you going to interview? Oh, me? Alright.

• 1:34Ryan Sean Adams?

  And then they released a coin too, so I don't know what that means. We're going to talk about the ape coin as well. Zuckerberg, that's Mark Zuckerberg, also said NFTs are coming to Instagram. Big surprise, not really. We knew he was going to do it. How is he going to do it? We'll talk about that later. Also Stripe, the payment platform, fintech platform, jumping into crypto with both feet.

• 1:53David Hoffman?

  Huge.

• 1:54Ryan Sean Adams?

  I think this is hugely underrated and probably the biggest thing that happened this week. And we'll have to talk about that too. David, before we get in, we should talk about our friends at Zirion. Guys, I've loved Zirion so much. Since it launched, this is the way a bank user interface should be, except banks can't pull it off. Because banks are not connected to decentralized finance. You can bring your own assets to Zirion. You cannot bring them to your Wells Fargo bank account. And this is what it looks like. David, they've just added a whole bunch of multi-chain features, some bridging features. Tell them what's going on in Zirion these days.

• 2:37David Hoffman?

  Oh, yeah, especially as we get into this layer two world, which we have plenty to talk about this week in the weekly roll up. It's going to require infrastructure to help manage your assets, not not just the many, many more assets that you have in your Ethereum wallet versus what you have in your bank, but also in the many, many more chains that you engage with much more than just the Ethereum L1. So not only is the Ethereum L1 obviously available, but all of the Ethereum layer two is like Arbitrum and Optimism, and also the alternative EVM compatible layer ones like Avalanche and the other ones. And so depending on whatever chain that you are on, or whatever asset that you prefer, Zirion's the place for you to go and manage all of your crypto finance.

• 3:19David Hoffman?

  It's just, you know, things that your bank could never do, Zirion does for you.

• 3:24Ryan Sean Adams?

  Really cool too, as well, being able to bridge from one chain to another. If you want to go to ETH to Polygon in a hurry, you can do that in Zirion. You can also view all of your NFTs. Lots of cool stuff going on in Zirion. So guys, check that out. There is a link in the show notes where you can connect your wallet to Zirion and get started. All right, David.

• 3:42David Hoffman?

  This couldn't be your wallet, Ryan. That's way too sophisticated NFTs.

• 3:46Ryan Sean Adams?

  Oh, this is sophisticated, huh? These are really good. No, this is not my wallet, by the way. This is a demo wallet. But yeah, maybe we'll get to some of my NFTs a little bit later.

• 3:57David Hoffman?

  Yeah.

• 3:57Ryan Sean Adams?

  You noticed a little something behind me today?

• 3:59David Hoffman?

  Just a little bit. Yeah, yeah. I've noticed that it's a great looking cat. It's got a little bit more shine than my punk, and I'm a little bit upset by it.

• 4:07Ryan Sean Adams?

  It starts as a cat, and who knows what other animal it could turn into, maybe something with a shell? I don't know. We'll see a little bit later today.

• 4:14David Hoffman?

  Ryan started with turtles, graduated to MFers, and now is at cats. He's starting to get into the blue chips, folks.

• 4:21Ryan Sean Adams?

  Yeah, I'm working my way up here. I'm learning, okay? Let's talk about the market. What's the market teaching us? What is the market telling us? Let's start with Bitcoin. What's the price this week, David?

• 4:32David Hoffman?

  Yeah, we got a happy Bitcoin this week, Ryan. It started at $39,000, went down and touched the low of $38,000 very briefly, and then recovered right back up and started climbing out of that hole to where it is now at $40,700. Hit a high of over $41,000. So overall, up 5% on the week. So happy week. Could also just be a recovery off of a very bearish week the last week. So, you know, who knows?

• 4:59Ryan Sean Adams?

  I'm a little surprised about that. Are you surprised that we're actually going up this week?

• 5:03David Hoffman?

  I am conflicted that we are going up this week.

• 5:06Ryan Sean Adams?

  Okay, because it was all about bearish David last week. And I want to know whether bearish David has returned again this week, or whether it's a more neutral David, or maybe the bull David is back.

• 5:18David Hoffman?

  No, it's not. Bull David's not back. It's

• 5:21Ryan Sean Adams?

  Bull David's not fully back, okay.

• 5:23David Hoffman?

  Full conflicted David, where we're going to talk about this throughout the markets, where just macro has not changed at all, and in fact, has even, I would say, gotten worse. Meanwhile, like, the merge is so bullish. Like, how do I square these things? I just don't know.

• 5:40Ryan Sean Adams?

  You just buy more ETH, is what you do. But speaking of which, tell us what the ETH price is doing this week.

• 5:45David Hoffman?

  Yeah, ETH started the week at $2,600, hit a low of $2,500-ish dollars, and then climbed right back up out of that to where it is now at $2,800, especially in the last 24 hours of the time of recording. This is, we always record these as Thursday morning, by the way. So where it is now is up from $2,500, basically just 24 hours ago, or $2,600 to $2,800, kind of climbing out of that hole that it set. And then if you kind of zoom out, Ryan, there's another chart that we have available. I don't know if you pulled it up. Yeah, this is the creator of these charts who drew these lines would like us to inform you that these are just meme lines, and that's really all TA is, is meme lines. But if you know Bankless,

• 6:28David Hoffman?

  we know that memes are real. There's a triangle. There's a triangle here, and the $2,800 Level of ETH price is poking through that triangle. And that has been a descending, uh, line, a descending line from where it was at the start of the year. For like three to four months of ETH price just descending on this line. Uh, and it's poking through, it's poking through saying, hey, what's up on the, on the upside of this line? So who knows?

• 6:54Ryan Sean Adams?

  It's, it's, it's trying to figure out what merge week means for the price of ETH. I mean, that's what, what's going on. But how about the ETH to Bitcoin ratio? Cause this is our bull market, bear market indicator. When ratio goes up, we're generally more bullish when ratio goes down, more bearish. Uh, and it's up this week?

• 7:11David Hoffman?

  Yeah, it's up this week and you can see that line that I was talking about. Basically started towards the end of December where the merge hit the high of, oh, excuse me, the merge. The ETH BTC ratio hit the high of like, what looks like point 086 in December. And then it has had that linear line down setting lower highs and, uh, just basically for the last like four months. So started at point like 088 in like January is at point 082 in February is at point zero like 75 to where it bottomed at basically point 064. But since hitting that bottom of point 064, we have climbed back out to point 068. So, you know, like there, there's a, a shape being formed here. And we actually got some charty chart stuff to look at with that too.

• 7:55David Hoffman?

  Uh, so this is, uh, what was called a right, a channel. Uh, and so, uh, we touched the bottom of that channel in earlier last week. Uh, and we have bounced off of it. And so if you are perhaps a trader, you are looking at how Ether is in the bottom of this channel. Heading, heading back towards the top of this channel. So if it continues that, uh, you know, bullish, bullish.

• 8:16Ryan Sean Adams?

  What about this one?

• 8:17David Hoffman?

  Yeah, this is a triangle. We all, we, we love the shapes. We love the triangles. Uh, and so again, it's, it's another, the, the concept here is that as this triangle converges, something happens at the end of this triangle. Uh, like it's gotta go up or it's gotta go down. This is what traders look at when they look at these things. Uh, and this is a wedge, I believe. Uh, and, and if you'll notice Ryan, that the wedge comes to a close right around July, right around when the merge would happen. Uh, and so things are lining up. Like, uh, I don't pay attention to TA too much, but I do know that there are real reasons to look at it. Uh, and when you see an inflection point happening around the same time as something very, very fundamental, that is interesting. That's an interesting thing to look at.

• 9:02Ryan Sean Adams?

  Okay, so, so we're looking at TA, alright? We almost never do that on bankless. So I feel like we're looking at TA in this episode because you're feeling like conflicted as to what's going to happen next. This is, this is when you pull out the like the horoscopes, or I'm sorry, the TA, right? Is when you're like, what's the future going to hold? Let me look at the charts, let me look at TA, when you don't really know and it could fall one, one way or the other. So what is, what is it about this market that's so, you know, conflicting right now? Is it, is it the fundamentals of the ETH merge happening in 2022? Yet, in the backdrop, we have all of this macro bad news.

• 9:44Ryan Sean Adams?

  We've got, obviously, you know, war in Ukraine, commodities, price increases, shortages everywhere, still the tail end of COVID, economy, like inflation, the Fed just raised rates, which you're going to talk to us, all that macro stuff you're contending with, mixed with the bullish, otherwise bullish, specifically Ethereum news? Is that what's going on in your mind here?

• 10:05David Hoffman?

  Yeah, that's, that's a pretty good summary. I talked about this on last week where there's so many things about the current crypto markets, talking just about crypto right now, that are reminiscent of the end of the cycle last year, like last, last gasps of the mania for people to just grab their last amount of hype and attention so they can exit.

• 10:24Ryan Sean Adams?

  You said last year, do you, do you mean like last, like 2018?

• 10:27David Hoffman?

  2018, right, yeah, like, yeah, super cringey ICOs and people were just participating in them because that was just like the leftover energy. And like now we're seeing, well, we'll talk about this when we talk about the ape coin, but like, people, when people run out of ideas, what do they do? They issue tokens because that's the only idea that they have left. And ultimately, that just becomes dilution and that's bearish. And so like, like, we're seeing just the attention just leave out of the, the whole play to earn gaming side of crypto, we're seeing attention leave out of the NFT side of crypto, we're seeing people just hanging on, on these desperate attempts for, for attention. And so so much of the crypto industry just feels like it has lost the tailwinds. And on top of that, there's

• 11:12David Hoffman?

  There's just all of the macro bearishness. There's the commodity markets that just suck right now. We're gonna look at the like an index of equities charts and just kind of looks, looks bad. Meanwhile, like, like Putin is scared and in a corner and like that's volatile. And so like, you know, you know, that meme Ryan of like that, that the building that's toppling over and there are like three steel beams that are holding it up. Like, that feels like the, the world and the beams that are holding it up are, is the merge. And so like, there's an infinity number of like bearish things going on. But the merge is so bullish and I don't know what to do about it.

• 11:50Ryan Sean Adams?

  Well, uh, maybe we'll find it out by the end of this episode. Once we go through the, the merge, how you're feeling at the end of this data. But yeah, I, I understand the conflict here. Um, let's talk about the bed index because this is a nice blend. DeFi, Bitcoin and ETH. What are we looking at on the week?

• 12:05David Hoffman?

  Yeah. Started the week at a hundred one dollars, ending the week at a hundred and 3.78 dollars. So up like four or 5% on the week, three or 4% on the week. Um, modestly up, modestly up.

• 12:15Ryan Sean Adams?

  Let's, let's, let's switch to some of this macro stuff for a minute in our, in I guess our Fed watch, uh, segment. So Powell came out this week. Turns out he is more hawkish than the market expected. I don't know what I expected. I, I kind of expected him to be hawkish in the face of inflation. Hawkish means looking to raise rates, looking to, um, get a bit tighter on monetary policy these days. Uh, so the big news is they are increasing, the Fed is increasing its interest rate by 25 basis points. So quarter of a percent. I believe that's happening sometime in March. I'm not sure exactly. There's some other things we can get into, but what do you think this means high level?

• 12:57David Hoffman?

  I thought this was expected. I thought the Fed, the Fed raising by 0.25% was like viewable from a long way off. So I kind of been confused as to how the hawkishness interpretation came about.

• 13:09Ryan Sean Adams?

  Yeah, I guess maybe some people thought that given events in Ukraine that the Fed might sort of change their position worried about like the R word has been used recently with commodity prices increasing the recession word and of course they have to balance inflation with the threat and fear of recession. So this is also the first increase since 2018. I'd forgotten it's been that long. So that's a big deal.

• 13:36David Hoffman?

  Yeah, so we were just Fred was just getting into raising interest rates post, I believe, 2008 or something and started doing that in 18 and then boom, COVID and they just scrapped those plans. And then now they're start, they were about to start to raise interest rates and then boom, Russia invades Ukraine. But now this time it looks like they are not stopping the raising of interest rates because of the invasion. So maybe that's the hawkishness is like, oh, they didn't give us another free ride. I guess.

• 14:06Ryan Sean Adams?

  That's the take so far. Apparently his language is they outlined seven more hikes this year. So seven more hikes this year and then four hikes, interest rate hikes in 2023. So next year, they're also planning to run down their balance sheet a little bit. So that's kind of equivalent to another hike, discharging some assets from the balance sheet.

• 14:27David Hoffman?

  So discharging assets from the balance sheet was one of the reasons why the whole entire market turned over in December and January and we've been bearish ever since because people were like, oh, that's actually way more aggressive in terms of interest rates increases than we ever kind of accounted for. And the markets have been bearish ever since.

• 14:46Ryan Sean Adams?

  Exactly. And you know, people are, look, people are asking the Fed to do something about inflation. Like that's, that's coming from politicians now too. But Powell also hinted that if they did 11 hikes this year, that that would not cause a recession. He used the words no recession because he said aggregate demand is strong, tight labor market, there's a tight labor market and household balance sheets are strong. So he doesn't think that these rate hikes and this more like aggressive monetary policy contraction will actually lead to a recession. That's an interesting take. And of course, look, the Fed can change its mind at any time, like between this meeting and next meeting could be a totally different

• 15:29Ryan Sean Adams?

  story. But this is a new message coming out of the Fed. Do you remember six months ago or so, the, the big story on the rollups about the Fed's action was like, Completely ignoring inflation.

• 15:41David Hoffman?

  Right.

• 15:41Ryan Sean Adams?

  Like, it's, um, it's only temporary.

• 15:44David Hoffman?

  Transitory.

• 15:44Ryan Sean Adams?

  It, transitory inflation. And now this is a complete direction change, which is like, oh, inflation's here and we have to fight it. And not less than six, six months later, this is the new message coming out of the Fed. So that's interesting in and of itself.

• 15:58David Hoffman?

  Well, I mean, it sounds like they've done their research. They've certainly done more research than I have because I didn't measure like the average, like cash on hand for the average American household. But at the same time, like, the, the, the game of controlling inflation and interest rates is such a game of game theory. So like the Fed is like, oh yeah, we're going to raise interest rates like seven more times in 2022. But in the back office, they could be like, all right, guys, we're going to tell everyone that we're going to raise interest rates seven times in 2022. And maybe we're actually only going to do it four times. And so the market is actually also playing the game theory game is like, all right, so that's what they said. But what do you think they're really going to do? And like, it just throws everything into a ridiculous mess. And that is why people should not be in charge of the value of money. Anyways.

• 16:42Ryan Sean Adams?

  Yeah, well, another story there, but this is what equities are doing. I think this is an interesting chart from a, from a macro perspective, but what are you seeing in this chart? This is, I believe, this is a composite index from, from the NASDAQ, basically. Looks like, uh, you know, I don't know, 20 years, something? Long, long.

• 17:00David Hoffman?

  Very, very long time horizons. Yeah. So every single candle is one month. So very, very long time horizon. I think we actually accidentally cut out the bottom of the, the, the chart, but you can see when COVID happened, uh, and then you can kind of see when the 2008 crash happened. Uh, yeah, bad. Uh, and as you look very, very recently, you like, there are three, maybe four examples of like a bunch of red on this chart and one of them is in the last like four months. Uh, we've had like, I think I see four, three or four monthly red candles in the last four months. And when you look at how fast, this is a, this is a NASDAQ composite index. When you look how fast it's gone up in the last like two years, you could, I see that. I'm like pretty fearful about how much room there is to go down.

• 17:45David Hoffman?

  Uh, and when like, we've, we've noticed crypto be super correlated to traditional stock markets and the rest of the macro markets. And so if that does like turn over as it's looking like it's currently doing without any sort of recovery, like that's makes me scared. That makes me scared. Especially when there's a war in Europe.

• 18:03Ryan Sean Adams?

  Yeah, equities could have a ways to drop is what you're saying.

• 18:06David Hoffman?

  Yes, that's exactly what I'm saying.

• 18:09Ryan Sean Adams?

  Well, speaking of dropping, this is a chart we don't often look at.

• 18:12David Hoffman?

  We used to.

• 18:14Ryan Sean Adams?

  We used to look at this.

• 18:15David Hoffman?

  Here's why we don't look at this chart anymore. Absolute demolishing. So we are looking at, we are looking at the DPI ETH chart, the DeFi, the value of DeFi aggregate in ETH terms. We used to look at this chart a lot, but it kept on going down every single week. And so it stopped being alpha and started being depressing. I think the last time, the last time we reported it, it was something in like point 065 DPI per ETH, and now we are down to point 055.

• 18:43Ryan Sean Adams?

  This is really since like DeFi summer, basically. Let me see if I can max this out. Well, you know, I had some recovery, I suppose, earlier in the year, a little bit of recovery. And this is, this is kind of the fake out. Like, you know, we thought DeFi was, was back on the rise again, but it didn't happen, at least relative to ETH. And it's just bleeding. It's just completely bleeding out as compared to ETH right now. And ETH is retaining, sucking in more value. What do you think? Like, do you think this ever changes? I mean, now people go to the opposite end of the spectrum. Eighteen months ago, the narrative was, it's all about DeFi. All you need is Bitcoin and DeFi tokens and no ETH. Those are the things that are going to accrue value. Now it's kind of flipped a little bit, where people are saying ETH is forever going to gain value.

• 19:33Ryan Sean Adams?

  Well, and you don't need DeFi tokens, right? And like, there's this fear almost that ETH has become so deflationary that it could suck out all of the value from the greater Ethereum economy and all of the DeFi tokens. What do you think?

• 19:45David Hoffman?

  Yeah, I think that's right. I think having, justifying like having your Ethereum exposure in DeFi tokens never made any sense to me, because every time you add a token to Ethereum, you benefit Ether because of EIP 1559. Like, the economic activity that you create by having a new token flows back into EIP 1559 via transaction fees. That doesn't work the other way. Like, the value of Ether going up doesn't benefit. Your token. It's only it's only one way. Tokens benefit ETH, ETH doesn't benefit tokens. And so you get exposure to every single token on Ethereum by just holding ETH. And so like when you look at the DeFi bleed versus ETH, it's kind of what you would expect, especially when a lot of DeFi has high issuance from yield farming versus Ether,

• 20:30David Hoffman?

  which is quote unquote deflationary, not not in practice, but in theory, and later in practice. This is kind of what you would expect. This is what happens when when your base money is deflationary. Everything else kind of goes to zero in relation to it.

• 20:44Ryan Sean Adams?

  But do you think this will happen forever? Like surely DeFi tokens will have a resurgence, won't they?

• 20:49David Hoffman?

  Yeah, I think it can have a resurgence, but then it can continue to still happen forever, Ryan. Like, we could have a bullish year for DeFi tokens, and then once again, it can resume its towards zero trend versus Ether.

• 21:01Ryan Sean Adams?

  I think personally, I think that what's going to shake out is you somewhat in the middle, right? It's like, I think that now we're now we're on the other

• 21:09David Hoffman?

  That's not a spicy take at all.

• 21:11Ryan Sean Adams?

  I just think I just think that like, um, we're like, we go overboard on narratives, right? So in one direction, it was like ETH is going to have no value and is all DeFi tokens. Now we're probably on the other side of that pendulum swing where everyone's like, well, ETH is going to slurp out all of the value of DeFi. There won't ever be like DeFi tokens that are accruing value relative to ETH. And I kind of think that's the time you want to start looking at DeFi a bit more aggressively. Right? It's it's hard when you are denominating your returns in ETH to do that. But I do think there are going to be some real winners and some real champions on the DeFi side that that gain relative to ETH. But there's one, I think, compounding factor here that we have to figure out. And we haven't figured this out yet.

• 21:56Ryan Sean Adams?

  And I think it's going to be an important, I guess, part of the investment thesis to figure out in 2022, which is like, Will the the new DeFi token winners be the winners from the past?

• 22:08David Hoffman?

  Right.

• 22:08Ryan Sean Adams?

  Right? Like, there was this idea that we'd have a bunch of blue chip DeFi tokens that would continue to grow and expand. But what if, what if the turnover is a lot tighter?

• 22:19David Hoffman?

  Right.

• 22:19Ryan Sean Adams?

  Like, what if the winners on Ethereum are not going to be the same as like the winners in the L2 ecosystem? Or the winners on alternative chains? What if they're all of these new separate winners? And how do you like bake that into the calculation? Because even the DPI, it's just really the Ethereum blue chip tokens, the biggest tokens by by value there. So that's another piece of the puzzle, I think, to sort out. And I don't think the market has figured that out either, which is why the prices are so depressed too.

• 22:51David Hoffman?

  Yeah, yeah. And I have similar thoughts about the NFT ecosystem. Is that like, NFTs as a whole can be bullish, but that's just because people are rotating from one NFT to another, to another. And it's like, the NFT ecosystem is really just this shelling point game as to which is the next NFT that's going to be hot. All right. And we leave all the other previous ones behind. And like, the aggregate DeFi market cap could certainly grow. And perhaps it can even grow faster than the ETH market cap. But that doesn't actually mean that that's instantiated into a single asset that you can purchase. Because the growth happens in new tokens.

• 23:27Ryan Sean Adams?

  Even a single index is hard to capture at all.

• 23:30David Hoffman?

  Right.

• 23:30Ryan Sean Adams?

  And, you know, it's not capturing it all. That's what, you know, DPI is not capturing.

• 23:33David Hoffman?

  And that's why there's always alpha on the margins of DeFi. Because not even the the indices are going to be able to capture the upsides from these new tokens. Because for every good winner of a token, there's going to be 100 negative, like, bad tokens that the indices, like, you can't just accept all of them. And so like, that's always why there's going to be investment into DeFi is because there's alpha at the margins. And then by the time it gets into the indices, like, you probably, the alpha is probably already taken.

• 23:59Ryan Sean Adams?

  Yeah, absolutely. Well, there's more work to do here.

• 24:02David Hoffman?

  And that's why you buy ETH.

• 24:03Ryan Sean Adams?

  More research to do. Yeah, that is the simplest approach. I mean, you need to get an index of exposure to everything. Speaking of ETH prices, one price that like in Ethereum economy that is down is Ethereum gas prices. This is a fantastic dashboard on Dune Analytics created by Hildo... no.

• 24:23David Hoffman?

  Hildobby.

• 24:24Ryan Sean Adams?

  Hildobby. Hildobby. Yeah. And so this is showing us gas costs. We'll include this as a resource for you so you can kind of see gas costs over time. Recently, they've spiked. By recently, I mean like in the past few hours, I believe.

• 24:37David Hoffman?

  24 hours.

• 24:38Ryan Sean Adams?

  I was looking at this chart earlier. 24 hours. I was looking at this chart earlier and the prices to move like ETH were like, you know, a dollar or something like this. Now they're up to $5 on Ethereum. But what is this showing us overall, David, with the gas prices?

• 24:54David Hoffman?

  Well, it's definitely showing us over the last few months or so that gas prices have kind of hit new lows. I think over the last like three months or so, the median gas price was 22 Gwei, which we have not seen in a very long time. But you can also... this is just a very useful dashboard because it shows you time of day and where the spikes happen time of day and also on days of the week. And so it's just actually, it's just a really useful resource. I think we're going to be keeping this in the roll up all the time. But like here, here it is over the last day, week and month. Blue is in month. Over the past month, the average Gwei price, if you take the like the peak of that chart, I think is something like 30 Gwei. And over the last week, it was something like 22 Gwei for your average gas prices.

• 25:36Ryan Sean Adams?

  Super low.

• 25:37David Hoffman?

  Super low. Super low. But then like the, the market movements today, as long, along with the Bored Apes token, which we'll talk about later. We definitely saw a spike above 175 Gwei. So, you know, there's always life somewhere. But generally depressed, depressed gas prices, which is a plus one to the bear side of the argument, by the way. Let it be clear.

• 26:03Ryan Sean Adams?

  Depressed gas prices are now a bear, bear market indicator. And I guess they always have been, although people have been saying that high ETH gas prices are bearish for ETH as well.

• 26:14David Hoffman?

  Yeah, haters will say anything's bearish for ETH.

• 26:18Ryan Sean Adams?

  Visa versus Ethereum volume. Look at this. In 2021, Visa moved 10.4 trillion in payments volume. Ethereum moved 11.6 trillion dollars. I think we've talked about this before, but it just warrants repeating that last year Ethereum moved more in payments volume than the Visa network. That's aggregate of ETH and ETH tokens and stablecoins and everything else on Ethereum. That's a pretty big milestone to cross in my mind.

• 26:47David Hoffman?

  Yeah, and I think this is just taking into account stablecoins. I think that's what payments volume must mean is stablecoin transfers, which means it's apples to apples, folks. This isn't like ERC20 DeFi token transfers versus Visa's settlement in the networks for dollars. This is dollars to dollars. So, you know, apples to apples comparison and Ether Ethereum won. So, you know, nice job Ethereum.

• 27:16Ryan Sean Adams?

  Let's talk about this. Oh, airdrops. That's what the topic is right now. So, do you hold or sell airdrops? Let me ask you, what's your personal strategy? The airdrops you received last year, did you hold or did you sell?

• 27:30David Hoffman?

  Almost all of them I sold, except for ENS.

• 27:33Ryan Sean Adams?

  All of them? Almost all of them?

• 27:34David Hoffman?

  Yeah, almost all of them, except for ENS. ENS I still have.

• 27:37Ryan Sean Adams?

  Well,

• 27:41Ryan Sean Adams?

  if like, that is the profitable move. And maybe this is obvious to people who've been paying attention to airdrops over the past year or so, but like, look at these, look at these charts. Airdrops. What are we seeing here in these charts?

• 27:55David Hoffman?

  The uni swap going and spiking from where it got claimed at $3 up to $40 and then down to $10. But $10 was, oh, that's where it is now. So actually, you know, technically it's still a winner, depending on when you sold it. But what we're really looking at is like, it's claimed, it goes up, then it goes down. You know, and it usually goes up first and then down later. So, yeah, things. But this is just another articulation of what we were talking about earlier with the DeFi versus ETH. But I guess this is actually versus dollars now, isn't it? Which is even worse.

• 28:30Ryan Sean Adams?

  Yeah, yeah. So I guess the message here is when you get an airdrop, sell it immediately?

• 28:34David Hoffman?

  Hmm, no, I think, I think usually it's safe to wait like between like eight and 24 hours. Like usually it pumps and then you sell it.

• 28:45Ryan Sean Adams?

  I feel like that's fairly immediate though, right? So like sell in the first few days or the first week is has been the profitable move thus far.

• 28:52David Hoffman?

  Have your finger over the sell button. Yeah. For sell for sell for ETH.

• 28:57Ryan Sean Adams?

  I wonder if that ever reverses or ever changes if airdrops will become.

• 29:02David Hoffman?

  See, the thing is like.

• 29:03Ryan Sean Adams?

  Or maybe that's just the nature of an airdrop.

• 29:05David Hoffman?

  Airdrops are issuance and issuance is inflationary and inflationary is dilutive and that's all bearishness.

• 29:12Ryan Sean Adams?

  Airdrops are also a fantastic way to get your coin into every like crypto media publication, onto everyone's radar in like.

• 29:22David Hoffman?

  Attention.

• 29:22Ryan Sean Adams?

  Twitter, you know, Reddit. So it's yes.

• 29:24David Hoffman?

  You get one week of attention.

• 29:26Ryan Sean Adams?

  Right. So you see these like, they're almost like attention spikes, particularly for some of these really small market cap tokens. Like, I'm not sure what this is, but like, uh, I think that happened like SOS. Do you remember that one? That happened in December, just a quick spike and then it's gone. Whatever talks about it.

• 29:42David Hoffman?

  Attention spikes. Wow. I'm gonna, I think we should log that one because so many charts in crypto are not chart, just charts of the price, but actually are just proxies for people's attention.

• 29:53Ryan Sean Adams?

  But they really are, aren't they? Three Hours Capital is putting some attention on ETH.

• 29:58David Hoffman?

  Yeah.

• 29:58Ryan Sean Adams?

  Right now.

• 29:59David Hoffman?

  Right.

• 29:59Ryan Sean Adams?

  What's this transaction?

• 30:01David Hoffman?

  Yeah, because, because Three Hours Capital is so large, it's very easy to figure out which addresses are there. So they have, basically everyone has their addresses tagged and one of their addresses added 40,500 Ether, about $112 million, uh, about, uh, at 2 AM last night. Uh, so it'll be a little bit more than 24 hours ago from the, from the listener's perspective when they are listening to this on Friday. Uh, so Three Hours Capital, the rotators rotating into ETH ahead of the merge. Here we go.

• 30:31Ryan Sean Adams?

  Oh, man. How, how long ago was it the Ethereum is abandoning its users tweet?

• 30:36David Hoffman?

  Uh, like four months ago.

• 30:39Ryan Sean Adams?

  Four months ago?

• 30:39David Hoffman?

  Four or five months ago.

• 30:40Ryan Sean Adams?

  We're back in.

• 30:41David Hoffman?

  Yeah, we're back in. Unabandonoors.

• 30:46Ryan Sean Adams?

  Let's talk about this. So a few things on Terra Do Kwan, his list. Number one is he is buying, Terra is planning to buy $10 billion worth of Bitcoin for its reserves.

• 31:00David Hoffman?

  10 billion. What?

• 31:03Ryan Sean Adams?

  Pretty impressive.

• 31:05David Hoffman?

  How much does Michael Saylor have?

• 31:08Ryan Sean Adams?

  I don't think he has 10 billion.

• 31:10David Hoffman?

  No.

• 31:11Ryan Sean Adams?

  There's no way he has 10 billion. I mean, that's absolutely massive. And how are they, how are they doing this? Of course, it's the value of Luna.

• 31:17David Hoffman?

  Right.

• 31:18Ryan Sean Adams?

  So like on one side, it's like you're taking your Luna token proceeds and you're diversifying into Bitcoin and using that as a reserve. Do Kwan says this is going to open a new monetary era of the Bitcoin standard. And it's, you know what this kind of reminds me of a little bit is actually what EOS did. And people are gonna like hate that I just compared EOS to Luna and I'm not comparing them in all respects. But in this respect, EOS did, they raised a whole bunch of Bitcoin and ETH. They sold the vast majority of their ETH. They kept their Bitcoin. It's like billions of dollars worth of Bitcoin on reserve for EOS. And I'm not, I have no idea what they're actually doing with that right now.

• 32:04Ryan Sean Adams?

  But it's kind of like a way to get cheap Bitcoin. How? The issuance of EOS. And they sold it when EOS was much higher than it is today. I'm not saying that's exactly what's happening here, but it feels a little similar. What's your take on this, David?

• 32:22David Hoffman?

  So I'm not an expert in the dynamics between, behind the Terra ecosystem, but they have like the Terra USD, which they are saying that this 10 billion in Bitcoin is going to be like the backstop for it. Like, kind of like how the Federal Reserve has gold and other foreign reserve assets to shore up the value of the US dollar if the time ever comes to it, right? Like they can use their treasuries to protect the peg or protect the value of the currency. What, in my mind, this is just signaling a lack of confidence on the nature of your own asset. Like, why can't you use your own money to back, to back your Stablecoin. If you have confidence on the long-term sustainability of your own ecosystem, why do you need an alternative store of value to backstop the value of your stablecoin?

• 33:05David Hoffman?

  And plus, if the value of U S T, of Terra U S D, depends on something external to the Luna protocol, that's an external dependency. That is not cryptographic. That is trust. You have to have the security of your own network solved inside of your own network. You can't have an external money be the thing that props up the value of your stablecoin. So to me, this just shows a lack of confidence in the value of Luna, because they have to go elsewhere to have their store of value. And that's exactly...

• 33:37Ryan Sean Adams?

  You know what, I guess it seems like to me is, it feels a bit more like you sold stocks to buy some money, right? It's like, this is why I've always thought that Luna and the Terra ecosystem is a bit more on the fintech side of the spectrum than like an Ethereum or Bitcoin are on the hard, sound money end of the spectrum, right? And I guess from Terra's perspective, if you don't think the Luna coin is actually like money, a monetary asset, then what you're doing is you're taking some of your equity, almost like some of your stock, and you're exchanging that for a

• 34:19Ryan Sean Adams?

  real money, like a much harder money. And you're kind of doing the fintech play too, because you're sort of holding that to backstop your asset. So I guess maybe it makes sense from that perspective.

• 34:32David Hoffman?

  But that perspective itself doesn't make sense.

• 34:36Ryan Sean Adams?

  I mean, we're not here for like, new fintech.

• 34:39David Hoffman?

  We're here for the cryptographic futures, with no external dependencies.

• 34:44Ryan Sean Adams?

  That's the bankless take. This is also interesting, Do Kwan in the news. So there was a wager of some sort, a bet of some sort. What was this bet, David?

• 34:54David Hoffman?

  This was a bet created on Twitter. And so Do Kwan, the founder of Terra Luna, and this Sensi Algod, which is like a crypto trader Twitter account. Going or going at it about the future value of of Luna. And so Do Kwon proposes a $1 million US tether bets, UST bets, basically dollars, between Sensei All God and Do Kwon himself, saying that in one year's time, from March 14th, if the price of Luna is higher than $88, Do Kwon pockets the $1 million, or and if it's lower than Sensei God pockets a $1 million.

• 35:34David Hoffman?

  You know, it's just always a great popcorn season to see the founders of of Layer One's bet about the future price of their Layer One asset, like especially after it just flipped Solana, right? And so like some big, big like cockiness going on on Twitter right now. And then actually.

• 35:51Ryan Sean Adams?

  Actually, it got raised, right?

• 35:54David Hoffman?

  Not raised by that particular person, but a second person came in with another $10 million offer to take the same bet, which Do Kwon also accepted. So Do Kwon has $11 million in exposure in the bet against $88 Luna on March 14th, 2023. So, you know. Okay, going back to the whole fintech thing, this kind of feels like Elon Musk when he tweeted out, "Don't short Tesla." Like, "I'll wreck you."

• 36:20Ryan Sean Adams?

  Yes.

• 36:20David Hoffman?

  Yeah. And so like you would never ever see Vitalik making a statement like this.

• 36:26Ryan Sean Adams?

  Can you imagine?

• 36:27David Hoffman?

  Could you imagine? Jesus.

• 36:30Ryan Sean Adams?

  It's just a completely different.

• 36:32David Hoffman?

  Culture, yeah.

• 36:33Ryan Sean Adams?

  Like, like, culture and founder DNA there. And it does feel a bit more Elon Musk. And it feels a lot less Satoshi. It feels a lot less Vitalik.

• 36:42David Hoffman?

  Yes, very much so.

• 36:44Ryan Sean Adams?

  Is what it is.

• 36:44David Hoffman?

  I'm sorry, but when you see, when I see L1 founders making $11 million bets against the value of their assets in one year, I am.

• 36:53Ryan Sean Adams?

  Don't tell me it makes you bearish.

• 36:54David Hoffman?

  Of the whole industry. That is a bearish signal. We are plus two to the bear side of the equation today.

• 37:01Ryan Sean Adams?

  Well, we looked at that chart, too, the Luna chart in the in our conversation with Ledger earlier in the week. It's just an absolute massive chart.

• 37:08David Hoffman?

  Right.

• 37:08Ryan Sean Adams?

  It's like from 30 cents all the way up to what is Terra right now? Or what is Luna right now?

• 37:12David Hoffman?

  It is, I was looking at a second ago, it is at. Is at eighty seven dollars, is eighty seven dollars, thirty two billion dollar market cap versus Solana at twenty nine billion dollar market cap. How do you buy ten billion dollars of Bitcoin on a thirty two billion dollar market cap? How much are you gonna have to liquidate? You're gonna send that thing down to zero.

• 37:33Ryan Sean Adams?

  You do that, you do that very slowly, I think, is, uh, is how you do it.

• 37:37David Hoffman?

  I'm sorry, when, when Terra-

• 37:39Ryan Sean Adams?

  But maybe quickly as well.

• 37:40David Hoffman?

  When Terra was like thirty cents like a year ago, and now it's at eighty seven dollars, and now the founder is saying, oh, we're gonna market buy ten billion dollars worth of Bitcoin. How much bigger of a red flag do you need? Like, where do you think that money is coming from? He's gonna market dump Terra to buy Bitcoin. Like, fact check me on this, listeners. Like, maybe I'm wrong, maybe it's coming from elsewhere, but like, wow.

• 38:06Ryan Sean Adams?

  I'm, I'm, I'm sure we, we will get fact checked, but, uh, yes, some of these definitely send the, uh, the senses, the spidey senses tingling a little bit. Guys, we will be right back with the raises of the week, the releases of the week, and of course, merge week.

• 38:21David Hoffman?

  Merge week.

• 38:22Ryan Sean Adams?

  But before we do, we want to thank the sponsors that made this episode possible.

• 38:26David Hoffman?

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• 39:10David Hoffman?

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• 40:22David Hoffman?

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• 41:05Ryan Sean Adams?

  All right, guys, we are back with the releases of the week. We got to start here. Stripe now supports crypto. This is a really big deal. Stripe is a payment processing company, provide a whole bunch of APIs, basically the traditional banking system. We use Stripe on Bankless. It's a pretty fantastic product overall. I think these guys are doing $8 billion in revenue. They have 4,000 employees and they are launching support for crypto businesses of all kinds, all sorts of things they're doing here. A crypto-powered fiat payment API. I think what they're doing is basically connecting crypto rails to their existing set of payment APIs.

• 41:47Ryan Sean Adams?

  So it's like crypto-to-bank bridge, if you will, an on-ramp, if you will. Really cool stuff here.

• 41:55David Hoffman?

  Yeah, when Ryan said Stripe is supporting crypto, very like high-level nebulous statement, right? Like, what does that even mean? They are supporting crypto in like every single way KYC fiat onramps, exchange like stablecoin exchanges, like you know, credit card to stablecoin transfers, like native wallets. They're doing it all. They're doing it. And this is not just a little bit. This is a lot of it. This is the full thing.

• 42:21Ryan Sean Adams?

  I feel like it came out of nowhere too. It's just suddenly bam, Stripe's here and then they like all of these products they just released, even NFT marketplaces.

• 42:29David Hoffman?

  Right, yeah.

• 42:30Ryan Sean Adams?

  With an identity type of solution.

• 42:33David Hoffman?

  Yeah, so in payments and KYC baked in, like this is the type of release that gets a lot of like institutions and you know, businesses who are crypto scared to start being crypto enabled and start being crypto curious. Like, oh, we can like Stripe, I'm familiar with Stripe. I'm familiar with their brand. They're they are big on compliance. They're big, like heavily regulated and they're letting me do crypto things. So I expect this to get a ton of adoption from a lot of businesses that maybe were crypto curious but didn't know how to do it.

• 43:05Ryan Sean Adams?

  Well, totally. And I think even example is for us, David. So we use a platform for our newsletter called Substack. And it, you know, if you want to pay in fiat, you pay Stripe is basically the platform that powers all of Substack. We've been asking Substack forever to take crypto payments forever.

• 43:22David Hoffman?

  It's so simple.

• 43:22Ryan Sean Adams?

  Can you take ETH? Can you take ERC20s? Like, can you integrate that? And it's always just like, it's too much work. Nope. Like, we just use Stripe. Nope, nope, nope.

• 43:31David Hoffman?

  As somebody who's integrated crypto payments into a web app before, it's not that hard.

• 43:35Ryan Sean Adams?

  It's not. Yeah. Well, so they didn't want to for whatever reason. Maybe it was regulatory, maybe it was some additional. But now, if it's incorporated, if it's part of Stripe, you can guess that's going to be a feature that Substack is going to add. And under the covers of probably so many of the services used today, like the Shopify's where you like, you buy, you know, clothes, all the retail stuff, like e-commerce online, your software as a service subscriptions, Stripe is behind the scenes there. And so now what you're going to see over the next few weeks and months is another like pay via crypto type button. And so just as you check out with Stripe, you can just pay via crypto. Like, that's what's happening. So this is a, this is a massive move because it's happening at kind of the, like the base backend

• 44:20Ryan Sean Adams?

  layer of the internet and how payments work on the internet for all sorts of different websites. And this is just, we call it the DeFi mullet thesis, right? This is just crypto, like getting in the back there and having fintech, you know, the stripes of the world be the front end for them. So it's really cool to see.

• 44:38David Hoffman?

  Yeah, we are having the crypto lead at Stripe on the podcast later in the month after they said, we wanted to get them on for this coming Tuesday, State of the Nation. And they were like, no, we still have a number of announcements and releases to get out the door. So let's come in about, in one month's time after those get released. So there is more coming out of Stripe. There is your bankless alpha, more coming out of Stripe.

• 45:00Ryan Sean Adams?

  That's super impressive. Speaking of impressive, AVE V3, they just launched. What is included in AVE's? Yeah, that deserves applause, guys. AVE V3 is here. What's it include, David?

• 45:16David Hoffman?

  Oh, it's got so much stuff, Ryan. A bunch of just like quality of life features and upgrades, I would say. So it's not like anything, it's still a money market. That didn't change, but like basically everything under the hood has gotten an improvement. So you can do cross-chain transactions. So AVE is going to be on basically every single EVM chain, whether it's a rollup or another L1. And you can go from AVE to AVE to AVE directly through the web app, through this thing called Portal. They also have what they are calling high efficiency mode, which just unlocks more capital efficiency, more borrowing power. Isolation mode, which allows assets to get listed that doesn't have second or third order consequences to the rest of the AVE markets. So maybe some high risk token comes in, but they

• 46:01David Hoffman?

  don't want the collateral backing that thing to have contagion risk to the rest of the market. So they have kind of like, you know, compartmentalized markets. That's cool. More gas optimizations, which they say are reducing gas by 20 to 25%. And additional like risk management tools and various things like that. So you can read more in their blog and/or just go ahead and use AVE V3 on any of your preferred layer twos.

• 46:29Ryan Sean Adams?

  It's actually not on Ethereum mainnet yet, though. That's kind of the last they're getting to. So their deployment approach is super interesting. They hit all of the alternative Layer Ones that have EVM support. So the Phantoms and the Avalanches and the Harmonies of the world. And then also the Layer Twos, like Arbitrum and Optimism and Polygon. But they've not yet deployed on Ethereum mainnet. They're almost using these other sidechains and Layer Twos as kind of not quite a test environment, but their initial release environment before they deploy to Ethereum. But the cool thing about this, too, is right out of the gate, you can access AVE V3 on 1-inch, Paraswap, Zirion, which you talked about earlier, Zap or D-Bank,

• 47:12Ryan Sean Adams?

  any other interface you use and wallet you use. So it's like a quick rollout and deployment here, which is really awesome to see. But they weren't the only ones that just released a point upgrade. So Alchemix V2 is here. Yes, we like it.

• 47:31David Hoffman?

  If we go into Alchemix V2, V2 is cool.

• 47:34Ryan Sean Adams?

  Yeah, tell us.

• 47:34David Hoffman?

  Because there's just more vaults, I would say. I think it's the big upgrade. Like you have different possibilities with the collaterals that you want to put into Alchemix. So V2 allows for the arbitrary number of collateral tokens and also new yield strategies. So you get to pick your own collateral and you get to pick your own yield strategy. So you can kind of custom fit how the Alchemix protocol works from you. Token adapters are written and audited for V2 and they can add an ever-increasing selection of yield providers for your deposits on Alchemix. So Alchemix uses Urn to get yield, but now they are also opening up direct markets into AVE or into Compound. So you can source your yield from a specific part of DeFi with a specific stablecoin.

• 48:16David Hoffman?

  And so just a lot more composability and a lot more just user power. And that's what these applications are supposed to do, is bestow power upon the users. And that's what Alchemix V2 is all about.

• 48:27Ryan Sean Adams?

  What's the high level for what Alchemix does for people who aren't familiar with it?

• 48:30David Hoffman?

  Yeah, so it is a loan. It's like you can get your interest payments paid to you upfront. So you can advance. You put stablecoins. In and then you can borrow stable coins against your stable coins and the stable coins that you deposited earn yield. And they just like it's kind of like a proxy for yearn, right? So like right now, like you're like 3%. You put like $10,000 into into Alchemix and you get that 3% because it's yield farming your stable coins in yearn. But then Alchemix lets you borrow up to 50% of your deposited stable coins. And so you put it, just put like $10,000 in, you can borrow $5,000 and go do whatever with it. While that $10,000 is earning yield in DeFi.

• 49:14David Hoffman?

  What you can also do is you can take that $5,000 that you borrowed from Alchemix and you can put it back into Alchemix. So you can get off of $10,000 of deposits, you can get like $15,000 worth of stable coin yield. So it's a way to juice up your yield. You can also do this with ETH. But it's basically a way to get your, your, so that like $5,000 that you borrowed. Uh, I mean, you, you'd lock up, you lock up $10,000, but that's like technically $5,000 of interest payments that are paid to you upfront that you can go do stuff with.

• 49:44Ryan Sean Adams?

  It's something you can't do in the real world, right? Because like it's the ability to pull forward all of these interest payments and receive it in one lump sum and then go do ever you, what, whatever you want in that lump sum. It's pretty wild, pretty cool. Okay. So Coinbase, they are also testing fee free trading.

• 50:03David Hoffman?

  This is actually kind of a good deal. Yeah.

• 50:05Ryan Sean Adams?

  Yeah. So what's this, uh, this subtitle here? I think it's important. Trading fees have historically, historically made up the bulk of Coinbase's revenue, but they're trying to diversify their business lines. So no longer being dependent on fees for trading and switching out their, their business model a little bit. What do you think this means?

• 50:24David Hoffman?

  Yeah. The trading fees, transaction fees on, on exchanges has always been the dominant source of revenue for everything. FTX, Coinbase, Gemini, like, like basis points of fees on the trade. But I mean, this, the crypto industry is so hyper competitive that these fees have compressed, especially as more and more exchanges have come online and really competed with each other. And so like, what is the ultimate form of compression is going to zero, but then instead the way that you. To get revenue is by charging a subscription model. So this is a subscription model. You can now subscribe to Coinbase in order to get fee free trading. This has actually been in the works for a while and they finally released it. But I bet you this is not going to be the last time that we see a subscription model for exchanges. So you can get fee fee free trading. That's kind of a hard thing to say.

• 51:09Ryan Sean Adams?

  I hope I don't have to say that. It was hard to say, man. Fee free trading. This is something new as well. Crypto sleuthing firm Chainalysis. Heard us talk about them before. It's a good term for what they are is basically they they look at the blockchain, all of these transactions. They try to de-anonymize it. And yeah, they basically they sell it to government agencies or exchanges, whoever else needs to know. They are launching sanctioned screening tools for DeFi, for DAOs. Sanctions screening tools. This headline makes me very uncomfortable. I do not love this headline.

• 51:44David Hoffman?

  Okay, so there's two products that they've released. One is on-chain, one's off-chain. So the off-chain one is an API designed for web and mobile apps and web servicers. Users can receive an API key, which they can check if an address of interest is on the sanctions list or not. So basically you get to automate like, hey, this is Ethereum address, just signed up for my web app. Is it on the sanctions list? And Coinbase or Chainalysis can come back and say yes or no. You can also, they also are offering an on-chain oracle for smart contracts. So smart contracts can basically have the same checks. It's like smart contracts, like money just gets deposited into a smart contract. That smart contract pings the Chainalysis on-chain oracle and says, hey, is this is this address on the API?

• 52:27David Hoffman?

  The the sanctions list and the the smart contract oracle on Ethereum will ping you yes or no.

• 52:34David Hoffman?

  How do you feel about that, Ryan?

• 52:36Ryan Sean Adams?

  I feel terrible. I think it's terrible. I hate this. I hate that this exists. Now, of course, like protocols can, you know, protocols aren't necessarily integrating this, right? And there can be wallets that integrate it or choose not to. But I feel like this gives the surveillance state and like the sanction state another. way to basically mandate things in DeFi. So what if you can't really have a non custodial crypto wallet service like a MetaMask located in the US unless it is doing this sanction checking with Chainalysis unless it has that feature?

• 53:18Ryan Sean Adams?

  And then it's very easy for like third parties, government states to create a list of ETH addresses that are blacklisted for whatever reason, right? And maybe it's for a good reason, maybe it's not for a good reason. And once they do that, then that can like be pushed out into some of the DeFi tools that we have today. Of course, they can't get this at the base layer. They can't get this into the smart contract code of a Uniswap, for example. They can't get this into Ethereum. But it's not, it's not great. You know, and it's not surprising to me that Chainalysis would see this as a massive opportunity. But I guess AML DeFi is coming this year.

• 54:02Ryan Sean Adams?

  Like it's probably here.

• 54:04David Hoffman?

  Sick, I'm looking forward to it. I'm joking, obviously. Take for listeners who want a hypothetical scenario. Take for example, how people were asking crypto exchanges to deplatform Russian customers in compliance with sanctions. And then Coinbase and others actually ended up doing it. Like in theory, you could see that same thing where all Russian users coming from Russian IP address or have a Russian KYC get added to a sanctions list. And like it's parts of DeFi are like, oh, are you, are, do you have a Russian address? Because we know of that because of how you signed up for this centralized service. Well, now you're on the sanctions list.

• 54:46David Hoffman?

  So any sort of DeFi app that integrates with Chainalysis is now giving over powers towards nation, like nation state governance. And so like

• 54:55Ryan Sean Adams?

  The only way, the only way around this I see David is privacy, like on the base layer. It's like privacy services or L2 privacy. Like it's the only way around this because if Chainalysis can derive the identity of certain addresses, they will and then they will propagate that into the rest of DeFi infrastructure.

• 55:14David Hoffman?

  Yeah, and I've always been conflicted about chain analysis, just because like, well, it's basically like the teacher's pet of the government is like the the narc in the room that asks for the reminds the teacher that they forgot to collect the homework. Like, and but also at the same time, like, if not chain analysis, like, it would just be another different surveillance company. Like, the the value of who's going to be the snoop of the blockchain is going to be captured by someone. So this like inevitable. You have public blockchains, somebody's going to make a business around breaking everyone else's privacy about it. But that doesn't necessarily mean that we have to like it.

• 55:51Ryan Sean Adams?

  Yeah, and I I think that is the next battle that crypto will have to fight. It's privacy on the base layer and different different solutions for that. So.

• 56:00David Hoffman?

  Which we have plenty of, so I have no long term fears. Yeah.

• 56:04Ryan Sean Adams?

  Aztec for one, I think a lot of this will be built out on layer two. Maybe that's some more content we'll have to put together in the future, David. But enough of that for now. Let's talk about Volts. What are they doing with the Uniswap community?

• 56:15David Hoffman?

  Yeah, Volts is a is a DeFi primitive that is trying to bring interest rate swaps to DeFi. Kind of similar to Element Finance, but with a very different construction. But inside of the Volts architecture is the need for something like Uniswap V3 concentrated liquidity. But Uniswap V3 has a license, and so they have offered 1% of Volts tokens to access Uniswap V3 code inside of the Volts architecture, to which Uniswap governance gave an overwhelming support of yes. So Volts requested permission from Uniswap to use the Uniswap V3 license code for 1% of Volts tokens, and that got approved, which is kind of cool, kind of cool.

• 57:00Ryan Sean Adams?

  That's kind of an interesting collaboration, for sure. All right, David, let's switch gears. Let's talk about raises this week. The first one. Coinbase, they just raised $450 million on a $7 billion valuation. This is mostly on the back of MetaMask, which just topped 30 million users. Pretty big valuation. For consensus, though, what are your thoughts?

• 57:21David Hoffman?

  I thought it's like the third raise of the year for consensus. Like, they are just like pulling it in, like, coming out of the depths of the bear market, like, really turned it around, because for those that weren't around during the bear market, the consensus laid off a ton of people, because basically Joe Lubin was selling

• 57:35Ryan Sean Adams?

  Like 20% or something, right?

• 57:36David Hoffman?

  That's it? I thought it was more than that.

• 57:38Ryan Sean Adams?

  20, 30% something, yeah, a lot.

• 57:40David Hoffman?

  Yeah, I thought it was interesting that, like, in one of their tweets, they said, like, "In this raise, a lot of, some of this money is going to be saved to specifically buy ultrasound money," is what they called it. "All proceeds from this round will be converted to ETH to further build consensus's ultrasound money position as a rebalance to rebalance its ETH-to-fiat ratio in lines with consensus's treasury strategy." So they drained their ETH treasury in 2018, trying to fund the company, and now they're buying it back. So, like, they were kind of the reason why ETH went to $80, but now they're buying it back at whatever the price is now, $2,800.

• 58:19Ryan Sean Adams?

  Yeah, and they're doing some great work, too, with, obviously, with MetaMask and some of these things, so I'm glad they continue to be, to be well-funded. All right, speaking of well-funded raises, here's another one. Optimism, they just raised at a over $1 billion valuation. I'm not sure how much the valuation is here, David, but Optimism, of course, a EVM-compatible Layer 2, pretty awesome that they're getting funded as well.

• 58:44David Hoffman?

  Oh, not just EVM-compatible, Ryan, but EVM-equivalent. A $1.65 billion valuation, Paradigm and A16Z. And Optimism is, like I said, the EVM-equivalent version of an optimistic roll-up, which has a bunch of tailwind effects, because you get to strap into the network effects of Ethereum itself, because the difference between Optimism and Ethereum is trying to be reduced down to the bare minimum. And they're also having a very public goods ethos-aligned culture with Ethereum itself. So here's a quote from Jing, the CEO. "We are making revenue out of the sequencing for the Optimism Layer 2. We're giving all of that revenue back towards funding public goods on Ethereum. We don't want to say..."

• 59:28David Hoffman?

  That we want to want to be decentralized. We also want to show the community that we're setting up our own incentives to be compatible with that. So they are innovating on this thing called retroactive public goods funding. And if you want to learn more about that, we actually did a show, I did a show with with Austin Griffith, where we unpacked public goods funding. So there's more details all about that there. Everyone's really hyped about optimism. Really nice to see them getting good the funding to take their project for the rest of the way because it's super, super ambitious and they deserve it all.

• 59:56Ryan Sean Adams?

  Starkware next. At $6 billion valuation, they just raised a, let's see, $100 million after just receiving a $50 million valuation. That was just a few months ago at a $2 billion valuation, Series C. That was in November. So Layer 2 has continued to be well-funded. Solana, based NFT, an NFT marketplace on Solana called Eden, just raised a $27 million Series A. This feels kind of like the the OpenSea of Solana.

• 1:00:30David Hoffman?

  Filling that niche.

• 1:00:32Ryan Sean Adams?

  Yeah, filling that niche. They've got like 90% of market share of NFTs on Solana. What's interesting about this, I think, is the question of will every single independent chain and ecosystem, maybe Layer 2, will they have their own category winners and sets of apps? Will they have their own OpenSea's, their own, you know, Uniswap's, automated market makers, their own Aves that are separate and distinct from the ones that have won out on Ethereum? What do you think about that?

• 1:01:00David Hoffman?

  Well, I know for a fact that OpenSea shall be integrating Solana in the future. And so maybe there's like the the niche NFT marketplaces, like the the indie NFT marketplaces that are specific to the chain that like the chain loyalists like, and then there's going to be OpenSea.

• 1:01:15Ryan Sean Adams?

  So you're predicting some kind of a convergence there, then? It's like, basically, the category winners on Ethereum, the EVM ecosystems will go tackle all of these other chains one by one and go to war with these, you know, these these local winners in every single chain?

• 1:01:31David Hoffman?

  Yeah, yeah.

• 1:01:33Ryan Sean Adams?

  Interesting to see, probably some consolidation there too, as that all plays out. A new Layer 1 has just been funded as well. A $200 million strategic investment led by A16Z, Katie Hahn, MultiCoin of course, Three Arrows Capital, FTX Ventures, Coinbase Ventures, all in a new Layer 1 called Aptos. This Layer 1 is actually spun out of some of the initiatives, the early days of the Libra and DM project from Facebook, now called Meta, they were talking about releasing an entirely separate chain. And they actually developed a whole bunch, like, put together a whole bunch of work. There's a whole project, open source projects about this, a whole tech stack.

• 1:02:17Ryan Sean Adams?

  That project is now kind of end of life, but this team, this Aptos team, is sort of picking that up where Facebook left off, and they're trying to bring another Layer 1 to market. How many times do you think this play can work, David? Another Layer 1, like, are we just gonna have new Layer 1s pop up every couple of years or so? What's happening here?

• 1:02:42David Hoffman?

  This, once again, reminds me of when people were still issuing ICOs, like, three quarters into 2018, after it was so obvious that the ICO mania was over. So Ryan, this is three now, about three points towards the bear market thesis. It's too late in the cycle to be raising money for a new L1, especially one that came out of Libra slash DM, which never even got off the ground in the first place. And so I think they're just raising money off that branding, but that is just my anti new L1 take, I guess.

• 1:03:16Ryan Sean Adams?

  I read Kyle Simon's post on MultiCoin about this, and it just, well, look, man, it reminded me a lot of his, the pieces he's written about Solana and the virtues of Solana, which is interesting to me. And the one thing I will say is, I don't think any of these VCs or investors have a lot of chain loyalty. You know what I mean? I think that they are buying block space, buying L1 narratives, buying things that will pump. But all I would say is, like, retail, beware. And of course, retail can't get in on this coin right now, but in the future... I don't know, some of these supply like coin lockups and stuff, some of the,

• 1:03:59Ryan Sean Adams?

  I don't, I don't know how sustainable this is and we can't just have like layer one after layer one after layer one unless we get some real traction. Now, I don't, I don't know. So it seems to be just something we've, we've, we, we see like a new layer one launches, a bunch of VCs pile in, it's going to be the future. Although I will say in 2021, some of those, some of those chains did take off and some, you know, in big ways. So who knows?

• 1:04:27David Hoffman?

  Chain loyalty and VCs, can those go together?

• 1:04:31Ryan Sean Adams?

  I don't think so. I, I think the, like, they're not aligned. It's not compatible. Let's talk about this. Hex Trust, they just raised $88 million. What is Hex Trust?

• 1:04:41David Hoffman?

  Hex Trust, $88 million for a gaming ecosystem. $88 million for a brand new ecosystems, not, not a small number. Found, was co-led by Ano Mekah Brands and Liberty City Ventures and never heard of them before. Series B will use to scale to Europe and Middle East to obtain additional licenses in gaming. Hex Trust currently has over 100 employees across offices in Hong Kong, Singapore and Vietnam. And yeah, haven't heard of any of this.

• 1:05:13Ryan Sean Adams?

  Yeah, neither have I.

• 1:05:14David Hoffman?

  Moving on.

• 1:05:15Ryan Sean Adams?

  Jobs time.

• 1:05:16David Hoffman?

  Jobs.

• 1:05:17Ryan Sean Adams?

  It's our time to tell, to ask you whether you've gotten a job in crypto yet. And to remind you, if you haven't, there's a fantastic jobs board. I'm going to read out some jobs for you. The first is, wow, a bankless web developer.

• 1:05:27David Hoffman?

  Whoa.

• 1:05:28Ryan Sean Adams?

  We are looking for a web developer as well.

• 1:05:30David Hoffman?

  How crazy is it that we don't have a website, Ryan?

• 1:05:33Ryan Sean Adams?

  We have a website. I actually put it together and it's terrible. Aside from the newsletter, we have like a really ugly, terrible website. And we need a new one and we need a web developer to help. We also need an editor of the bankless newsletter, a senior product manager of Bankless Academy, a senior product manager for SuperRare. We've got a quantitative analyst of risk at MakerDAO, a risk analyst at MakerDAO as well, full stack engineer at Kazila, a product manager at Kazila as well, a whole bunch more at the bankless jobs website. Look, if you're not into any of those specific jobs, the other thing you can do is go check out the Bankless Talent Collective and submit your resume. So you just fill out a talent profile and you get connected with companies.

• 1:06:17Ryan Sean Adams?

  If you're a company looking for talent, there's already 200-plus resumes, Web3 resumes on the Bankless Talent Collective. You can tap into that as well if you are looking for talent and subscribe. This is a pretty cool new initiative that we've just spun up recently.

• 1:06:34David Hoffman?

  Yeah, Bankless got both sides of the job market. We've got the supply and the demand. Coming up next, out of the Bankless ecosystem, the Bankless Dating App.

• 1:06:42Ryan Sean Adams?

  No, never.

• 1:06:45Ryan Sean Adams?

  I don't know how much demand there will be. There might be a lot of supply, though.

• 1:06:50Ryan Sean Adams?

  Let's talk news, David.

• 1:06:51David Hoffman?

  Merge week!

• 1:06:53Ryan Sean Adams?

  It's merge week. It's the moment you've been waiting for. Don't sleep on the merge. This is a post you wrote. So people are predicting the merge in three months. We didn't necessarily fully double down on a June date, but we're pretty excited, we're pretty bullish that June could be the month that the merge comes. Part of this was a set of reasons given by SuperFiz, who's very plugged into the ETH staking community and that world. What are the reasons why a merge could happen? The Ethereum merge could happen in June? And maybe, David, should we back up and just explain what the merge is for people who haven't been listening to recent Bankless episodes?

• 1:07:31David Hoffman?

  Yeah, sure. Okay, Ethereum, currently proof of work, has also 100% always committed to eventually transition to proof of stake. We have the proof of stake chain, that's what the beacon chain is, that's been running since early 2021. And that thing has just been chugging along, making sure that's totally fine. And one day, we will swap out the proof of work and plug in the beacon chain, which is the proof of stake chain, to the current execution environment of Ethereum. And proof of work will go away, and proof of stake will replace it. That's the merge. We're merging the chains and stripping out proof of work. And so when this actually happens is completely unknown, because it's only going to happen when it's ready. It's ready when it's ready. But we get to also observe, because this is an open environment,

• 1:08:14David Hoffman?

  Get to observe the Ethereum developers and kind of hypothesize about when it might be ready. So that's what SuperFiz did. He's pulled in five different tidbits of information that indicate a strong likelihood of a June merge date. The first one being there's a planned difficulty bomb coming in mid-June. Difficulty bomb is something that's always been in Ethereum. Basically, we plan in the destruction of the chain because it forces us to make progress. Every now and then, we have to kick it back. Actually, that's been basically Ethereum culture since the beginning of time, is we just kick it back by having a hard fork. It gives us an opportunity to add in new EIPs and stuff like that and kick back the difficulty bomb. There's a difficulty bomb coming in June, which means we will be hard forking sometime by mid-June,

• 1:08:58David Hoffman?

  regardless of the merge or not, because we need to kick back the difficulty bomb. Danny Ryan, who's coordinating the ETH2, not ETH2, the transition from proof-of-state work Ethereum to proof-of-state Ethereum, has signaled that a delay in the bomb is not needed, which means that perhaps the merge can happen before the bomb happens, which happens in the mid-June. There's also the merge readiness checklist is getting more and more checkboxes in it. And also, there was a conversation in the Allcore Devs Call about potentially kicking back some development in the merge by 10 days. And a lot of devs got really picky about that. They didn't like the delay at all. And so devs are getting picky about the date. And last, but definitely not least, the Kiln testnet is actually testing the merge.

• 1:09:43David Hoffman?

  So we are having test environments for, we are practicing the merge. The merge is being practiced actively. And so barring any significant unforeseen issues with all of these little tidbits of data, June looks like the most likely candidate for the merge, which I'm really excited about.

• 1:10:01Ryan Sean Adams?

  Well, that's super cool.

• 1:10:04David Hoffman?

  Yeah. I'm gonna stop doing that.

• 1:10:07Ryan Sean Adams?

  What would the merge mean, David? So like, what does it mean? You talked about the disappearance of proof of work. But what does it mean for issuance as well? I think that's part of the story.

• 1:10:17David Hoffman?

  Yeah, so people who are staking their ETH on the beacon chain, they're earning a very respectable 4.8% in ETH-denominated yield, not even stablecoin yield, but ETH yield. And then, once this roughly 10.5 million ETH out of the roughly 118 million total supply of ETH, once that staked ETH merges with a proof-of-work chain, that yield goes from where it is now at 4.8% to somewhere between 10% to 15%, depending on gas fees. So that's a 2 to 3X in yield on Ether. And so that's a 2 to 3X, a stronger incentive to stake more ETH. And so there's going to be a demand to take your ETH, perhaps out of the secondary market, and to stake it to get that 10% to 15% ETH-denominated yield. And at the same time, the new issuance of Ether,

• 1:11:01David Hoffman?

  which is one of the best features about proof-of-stake, the new issuance of Ether is dropping by 90%. So currently, 12,000 Ether is minted per day to spend towards proof-of-work mining. Proof-of-work, very, very capital-intensive. It takes a lot of money to fund security in proof-of-work. But post-merge, that goes from 12,000 down to 1,280. So a 90% reduction in the Ether issuance, but not only a 90% reduction, Ryan, but also a 100% reduction in operational costs, because ETH staking and proof-of-stake costs nothing after you have an internet connection and a consumer hardware laptop computer, a normal computer. So we're basically, we're going from 12 Ether in daily issuance to 1,280,

• 1:11:46David Hoffman?

  and thousands and thousands of Ether in daily sell pressure to cover the operational cost of proof-of-work, down to zero. So the big questions that I ask the bankless nation: How much more Ether will be staked as a result of the increase in yield? The 2 to 3X in yield? Where will that Ether come from? Since a lot of the regular selling pressure is going to be eliminated, and what is the price going to do as a result? And all of these answers are likely coming in June, because we all get to experience it for ourselves. Yeah.

• 1:12:17Ryan Sean Adams?

  This is definitely the biggest event, the biggest crypto event of 2022. Maybe the biggest-

• 1:12:22David Hoffman?

  I would say ever.

• 1:12:24Ryan Sean Adams?

  Right?

• 1:12:25David Hoffman?

  I would say ever.

• 1:12:26Ryan Sean Adams?

  It's like, it's a triple happening.

• 1:12:29David Hoffman?

  Other than the genesis block of Ethereum itself, this is the most significant event since that.

• 1:12:34Ryan Sean Adams?

  Right, and so this is now, now we've got bullish David back, I think, for the moment.

• 1:12:40David Hoffman?

  Plus one to the bullish side. We got three for the bear, we got one for the bull.

• 1:12:45Ryan Sean Adams?

  Well, I mean, this is incredibly bullish, but there was something that that happened in the testnet as well. There was a block proposal failure, some bug in the kiln testnet. So that could set things back, possibly. That's a question to you. What happened with this bug? And, you know, what does that mean for the merge date?

• 1:13:05David Hoffman?

  Yeah, at the start of the article, I said barring any significant unforeseen issue, it's increasingly likely that we see the merge in June. And then three days later, there was a bug in the testnet. What happened was that the Prism client, the way that the merge works is that people have to run both an Ethereum proof of work chain client and an Ethereum beacon chain client. So Prism is the proof of stake beacon chain client, and then Prism plus Geth and Prism plus Nethermine, these combinations stopped producing blocks, which accounted for 15 to 20% of the total block supply. Because Ethereum has a multi-client architecture, this actually did not impact the testnet. But if it had been more than 33%, it would

• 1:13:48David Hoffman?

  have. So 15 to 20% kind of dangerously close. Also, Prism in its current implementation on the beacon chain has more than 66% of total, total supply of the new blocks. The client that's responsible for more than 66% of the blocks. So that is a concern. We need to get Prism dominance in the beacon chain down for that to be safe. The bug was relatively trivially identified and fixed, but it perhaps was indicative of more time and research needed to to understand that this thing is going to be stable. The significance is going to be unpacked and talked about during the Ethereum All Core Debs Call, which is happening tomorrow, which is today for the listener, Friday. And so if you want to tune into whether or not this actually does impact the merge, you can turn into the All Core Debs Call.

• 1:14:34Ryan Sean Adams?

  Another, I guess, reason why we need multiple clients, because this sort of saved the testnet in this case. But it's also a reason why we need client diversity on mainnet as well, and staking diversity across multiple clients.

• 1:14:47David Hoffman?

  Hey, Ryan, can you name me a different blockchain other than Ethereum that has multiple clients?

• 1:14:52Ryan Sean Adams?

  Well, David, I think there's probably none.

• 1:14:54David Hoffman?

  That's exactly right. That's exactly right. Ethereum is the only one with a multi-client architecture, which is ridiculous. We're supposed to be decentralized.

• 1:15:03Ryan Sean Adams?

  We've got some more trivia here, too. And this is maybe a question for you, even though you probably already know the answer to this. How much newly minted ETH will validators be able to sell after the merge, but before the withdrawals hard fork? So just to set up that question, newly minted ETH, okay? Not existing stake, because I'm fairly certain people know that once they stake their ETH, they can't withdraw it right now until there's a hard fork that adds some withdraw functionality. But we're talking about newly issued ETH. So that's after you stake your ETH, you get some return denominated ETH that newly issued ETH. When will you actually be able to sell that newly issued ETH, David?

• 1:15:48David Hoffman?

  No, no.

• 1:15:48Ryan Sean Adams?

  Do you have the answer to that?

• 1:15:49David Hoffman?

  Wait, no.

• 1:15:50Ryan Sean Adams?

  Actually, not when will you be able to sell it, but how much, excuse me, newly minted ETH will validators be able to sell post the merge? So let's say the merge happens in June. After that date in June and July and August, they're receiving new issuance of ETH. How much will they be able to sell of that ETH, David?

• 1:16:11David Hoffman?

  The answer is zero, Ryan.

• 1:16:13Ryan Sean Adams?

  Yes. You are correct.

• 1:16:15David Hoffman?

  Okay.

• 1:16:15Ryan Sean Adams?

  Ding!

• 1:16:16David Hoffman?

  So ding. So just to unpack that a little bit. Right now, you can go stake your Ether on the beacon chain. You send your Ether to the beacon chain contract. New that Ether on the current chain is burned. More in that Ether on the beacon chain is minted. You stake that Ether. You start earning that Ether yield on the beacon chain. Then the merge happens, and then that beacon chain is then securing the Ethereum chain. Proof of work is tripped out. But withdrawals are not yet enabled yet. There is a new, there's a new... Other hard fork that needs to happen to enable withdrawals and that's hypothesized to be roughly six months after. So after the merge, the ETH issuance into the validators won't be withdrawal, withdrawable for six months,

• 1:16:55David Hoffman?

  which means zero new ether will be introduced into the market for like six months after the merge.

• 1:17:02Ryan Sean Adams?

  What we're saying, what we're saying is to be clear, ETH issuance doesn't just drop by 90%, it drops to 100%.

• 1:17:09David Hoffman?

  Temporarily.

• 1:17:10Ryan Sean Adams?

  For some period of time.

• 1:17:11David Hoffman?

  For some period of time.

• 1:17:12Ryan Sean Adams?

  And that, that like additional 10% issuance is almost like it's, it's almost like vested. It's locked up.

• 1:17:19David Hoffman?

  Yeah.

• 1:17:19Ryan Sean Adams?

  It cannot be sold, cannot be spent. So we're actually going from like 4.25%, 4.5% issuance to 0% issuance. For at least six months plus.

• 1:17:31David Hoffman?

  Plus the burn.

• 1:17:33Ryan Sean Adams?

  Plus the burn.

• 1:17:35David Hoffman?

  Okay, but then, but then.

• 1:17:36Ryan Sean Adams?

  Why are more people talking about this?

• 1:17:38David Hoffman?

  Well, devil's advocate though, because like we were just, we're just locking, locking up the rewards for six months while we just make sure that everything's okay. Eventually it'll get unlocked and then, and then you might say like, well, then there's just pent up demand to sell. Cause they've just been earning all this ETH for six months and they're just going to sell it all at once. But the thing is ETH staking goes up to 10 to 15%. And so all of the people that are, have their ether on the main Ethereum chain that never decided to bridge over to the beacon chain. And they, because they never wanted to spin up an ETH one validator, that 10 to 15% is going to cause a huge influx of more stake for people to get that yield. And so not only is zero net new ether going to come into existence, the gravitational pull of 10 to 15% ETH denominated yield is going to pull in so much more ETH.

• 1:18:23David Hoffman?

  So even when the hard, the withdrawals hard fork is enabled, the incentive to still be staking is going to be so strong. I could totally see that that just becoming a non-event in terms of the ETH price and dumping on the secondary supply.

• 1:18:36Ryan Sean Adams?

  Look, uh, supply crunch is what this means. A massive supply crunch is happening this year and I'm, I'm really shocked that more people aren't talking about it.

• 1:18:47David Hoffman?

  You heard it, you heard it here.

• 1:18:48Ryan Sean Adams?

  You heard it here. Now that's going to happen potentially in the midst of this like crab sideways crypto bear market.

• 1:18:55David Hoffman?

  World War III.

• 1:18:57Ryan Sean Adams?

  Right? Like, who knows? So it's gonna happen in that context is not necessarily gonna happen during like hype season of, you know, early spring 2021. So we will see how that plays out. Rocketpool continuing to add more features and functionality here. They have a new staking interface with a bunch of improvements, including a wallet panel, transaction estimates, more intuitive exchange rates on the REth, and a lot more. So go check that out. There's all sorts of great staking services as well. If you don't want to run your own validator, Rocketpool being probably one of the most decentralized, Lido

• 1:19:36Ryan Sean Adams?

  being another one that's a little less decentralized, but is still doing better than staking in exchange. And you gave this tweet, you put out this tweet, David, "The drumroll for the merge has begun." Is that what you heard this week? Was it the drumroll?

• 1:19:52David Hoffman?

  Yeah, especially in the second half of the week. It's just like, people are just, the merge is getting a bunch of engagement on Twitter. That seems to be, in my mind, like, the thing that has captured the attention of people. As the attention from the NFTs and gaming and all that stuff has gone, people have refocused on the fundamentals of this industry, which are, is the merge. So, the drumroll is, I mean, we're three-plus months out, but like, the merge is here. The merge is, the drumroll's happening.

• 1:20:20Ryan Sean Adams?

  And when you say, when you say people, we're talking primarily about crypto people, like crypto Twitter people. None of this has broken outside into mainstream yet, right?

• 1:20:29David Hoffman?

  I mean, honestly, most of the crypto industry doesn't even understand this.

• 1:20:33Ryan Sean Adams?

  I totally agree with that. At least they're talking about it now.

• 1:20:36David Hoffman?

  The drumroll for the merge is definitely started, at least with the inner circle of Ethereum people who really, really pay attention to this stuff, and then also the people that pay attention to that. But, we got three months to go. There's gonna be a lot of conversations. There's gonna be a lot of content. We're, Bankless is gonna report on all of it. And it's, I think it's gonna be a very, very fun time, Ryan, because I think, I think it's E season. I think E season has started once again. And it's been, it's my favorite season. And we're gonna talk about every step of the way until the merge.

• 1:21:05Ryan Sean Adams?

  Yeah, well, we didn't tell you, it's not only merge week, but this week lasts many months, right? So, the next few months, we're gonna be talking about the merge. It's just a huge deal. In inevitability and most people in crypto do not appreciate this. I think this is a massive alpha for you. Whether it's a bear market or a bull market in crypto, this is a massive event to watch. Let's talk about L2s for a minute and the path to roll up decentralization. So, something that not everyone knows is that every major Layer 2 project, right now anyway, in its current state, has a trusted party which can execute protocol upgrades, right?

• 1:21:47Ryan Sean Adams?

  That is intentional. There is a backdoor to upgrade these Layer 2s in the event of a bug. And some Layer 2s have already used this to patch things before like, before there was a catastrophic issue. And so this is sort of a feature at this stage, not a bug. But if it persists into the future forever, then it becomes a bug. Because as long as there is a trusted third party that can execute protocol updates, the Layer 2 is not completely decentralized. So the optimism team wrote a fantastic post about how rollups move forward, how they decentralize over time, how they get rid of these access keys. They use the analogy of like throwing

• 1:22:29Ryan Sean Adams?

  the ring into Mountain Doom, throwing the keys into Mountain Doom so it would be burnt up and no one could access it before any longer, and the chain would be fully decentralized. What would you say is the path, not just for optimism here, but like optimism summary on what rollups need to do in order to get rid of this security hole in the future after they harden their chain? What's the path to making the rollups fully decentralized with no, you know, upgrade access for the core team?

• 1:23:03David Hoffman?

  Yeah, no trust, no centralization, right. Earlier, I talked about how optimism's strategy has always been EVM equivalence, not just EVM compatibility, but EVM equivalence. And there's also been like the narrative just like EVM is kind of the center of the universe, you know, Avalanche, all these EVM compatible chains, they're not Ethereum, but they are the EVM. And so EVM equivalence is really, really important. And so basically optimism, I think is going to take a leaf out of Ethereum's book, of which it is a fractal off of, and kind of follow the Ethereum roadmap for decentralization. And that involves, rather than having one canonical client for optimism, having many, many clients for optimism.

• 1:23:43David Hoffman?

  And then after enough sufficient multi-client architecture gets built out, then it's just a matter of handing over, like first off, calcifying in the same way that Ethereum is slowly, slowly having longer and longer hard force and longer and longer updates. The same kind of thing needs to happen with optimism L2s, where just like things need to change less and less and less over time and give more and more power back to the community. I think it's going to be interesting to see if like optimism or optimistic L2s retain some sort of upgradable path via the token, via on-chain governance in ways that Ethereum does not. But each, the nice thing is, is that you could spin up an optimism layer two and have one with on-chain governance and one without.

• 1:24:25David Hoffman?

  But the idea is that Ethereum itself has kind of laid out the roadmap to how you decentralize. And layer twos probably are going to just have to take a leaf out of Ethereum's book and follow in that path.

• 1:24:37Ryan Sean Adams?

  Yeah, there's no shortcuts to this, I think is the main message, but there is, there is a pattern, right? It's like you have to ossify the underlying protocol, you have to have multiple clients, make it decentralized. You have to create sort of a, you know, a specification that other teams can build towards. So that's one, not just one unified team. And once these things are in place, then you can toss those private keys into Mount Doom, into the, into the lava and burn them forever. But doing it before then is not a good idea, right? We need that flexibility, we need that upgrade path so that we can solve these problems. Like all of these layer twos are basically in a beta version until that time. Let's talk a bit more about optimism. So they are releasing Canon.

• 1:25:21David Hoffman?

  Canon.

• 1:25:22Ryan Sean Adams?

  Which is a next-gen fraud-proof architecture that's coming soon. What is, what does that mean? Next-gen fraud-proof architecture?

• 1:25:31David Hoffman?

  Yeah, the fault-proof architecture is, is one of the optimism's big missing components, which is No longer missing because they released Canon. And this particular fault proof implementation, the way that it's designed is a reflection of the optimism's design philosophy. And I talk about this design philosophy kind of summarized in a tweet where I say optimism's design philosophy has always been reduce, reduce, reduce. And what I really mean by that is reduce complexity, reduce the number of codes. And that optimizes optionality. When you reduce complexity, you can actually push complexity elsewhere. And so kind of like Ethereum itself, optimism is very modular. As in this Canon fault proof is a modular component of the greater optimism layer two.

• 1:26:16David Hoffman?

  And so this simplicity optimizes for modularity and efficiency, which ultimately creates security. And one of the hotlines in this article is, oh, it also enables the theoretical minimum of call data gas costs. Which is, you know, music to my ears when it comes to speed and, and gas efficiency on, on layer two. And so if you are, if you are technically minded and want to hear more about optimism's fault proof Canon architecture. You can go click the link in the show notes for more details.

• 1:26:47Ryan Sean Adams?

  Reduce, reduce, reduce. This is also a leaf out of Ethereum's book where there's, you know, so many efforts to reduce the, the beacon chain specification to the minimum amount of code necessary. It's definitely important on this journey as well. So is getting exchanges to on-ramp and off-ramp to your layer two. And Huobi Global, they just added optimism withdraw functionality and features. So this is a path that all rollups are going to take. And it's cool to see optimism like leading the way down that path too. All right, David, let's talk about the biggest acquisition in NFT history. The apes bought the punks, David. I don't know how you feel about that.

• 1:27:30Ryan Sean Adams?

  I'm looking at a punk in your background right now, but Yuga Labs purchased all of the intellectual property, I believe, from, from the CryptoPunks holders, Larva Labs. Yuga and Larva, they, they purchased all the intellectual property from Larva Labs. Tell us what this means. So what is this purchase? What's the significance of it? And what does it mean for the NFT ecosystem and for the, the punks and the Bored Apes community?

• 1:28:00David Hoffman?

  Yeah, Carly Riley over at overpricedjpg tweeted out a few months ago, "I wonder when NFT companies or NFT studios are gonna start buying the IP from other NFT companies or other NFT studios." And I'm pretty sure when she tweeted that, she meant like, you know, some of the B-list NFTs, not necessarily the Bored Ape Yacht Club founders buying CryptoPunks, the OG NFT. So the magnitude of this is absolutely crazy. And not just CryptoPunks, but also MiBits, which also came out of Larva Labs. And so for every NFT project, there is IP associated with it. There's licenses. And the CryptoPunks, again, the one I have in the back of my living room here, the IP for CryptoPunk was

• 1:28:44David Hoffman?

  actually not owned by the owners of the CryptoPunks. It was still owned by Larva Labs. So like, commercial licenses was not something that you could do with CryptoPunks. That was actually one of the reasons that's always been the case behind Bored Apes, is that the Bored Ape holders had the rights to use their own Bored Ape commercially if they so choose. This is Creative Commons Open, or CCO, I believe is what that's called. But double-check me on that. And so now, Yuga Labs, which are the founders behind Bored Apes and Mutant Apes and that whole ecosystem, struck a deal with Larva Labs to acquire the IP. And when they did, they gave the Punk holders the rights to their own commercial licenses for their Punk. So I can start going out and making merch and

• 1:29:27David Hoffman?

  branding out of my CryptoPunk if I so choose. Like, I already have a brand around me and my CryptoPunk, because I put my CryptoPunk as my profile picture on Twitter. But now I could go and start making like, I don't know, a movie where my CryptoPunk is featured if I so choose. And I would have my own commercial rights to that.

• 1:29:44Ryan Sean Adams?

  Why didn't Larva Labs do that?

• 1:29:46David Hoffman?

  Larva Labs...

• 1:29:46Ryan Sean Adams?

  Why they've been holding it?

• 1:29:47David Hoffman?

  That's a good question. I don't... Larva Labs has always been builders and not necessarily marketers. They like on-chain experiments. They like fooling around on the blockchain, doing cool, innovative, new things. Like I said, they weren't just the founders of CryptoPunks. They also did MiBits. They also did Autoglyphs. They are tinkerers and innovators at the chain level, where Yuga Labs are... are brand experts and and just like experts in growing the the value of an ecosystem. And that's just something that larva labs was never really interested in. So some punk holders are a little bit concerned because the climate and culture in bored apes is nothing like the culture around crypto punks.

• 1:30:31David Hoffman?

  Crypto punks kind of think the bored apes are kind of cringe, and I'm definitely one of those people.

• 1:30:36David Hoffman?

  But but and so like people are worried that you collapse is going to give crypto punks the same treatment that they gave the bored apes like, you know, yachts and things of that nature that are kind of against the crypto punk ethos. Like, it's really actually hard to tie down crypto punks. They're very, very decentralized.

• 1:30:53Ryan Sean Adams?

  Different cultures.

• 1:30:54David Hoffman?

  Different cultures, yeah. And so the some of the punk holders are concerned about that as in we don't need this company to promote the brand of the crypto punks. The crypto punks brand has always been about promoting itself. Uh, like, we don't need help. We're crypto punks, and we don't even want help.

• 1:31:10Ryan Sean Adams?

  But but can I but can I ask you this? This this part doesn't make sense to me. It's like, it feels, look, I'm a kind of outsider, not part of either of these communities. I'm just looking at it, but it feels a little bit like larva labs is just doing this as a cash grab. Like, why couldn't they have just given crypto punk owners creative common license? And like be done with it? Why did they have to sell to you collapse all of this IP and all of these punks? Like, I'm wondering if some members of the the crypto punk community feel a little bit, um, I don't know if betrayed is the the right word, but maybe rug pulled.

• 1:31:45David Hoffman?

  I will. So it wasn't the acquisition of the IP that I think was, that's only one part of the story. I think actually the bigger part of the acquisition is actually buying the treasury assets of larva labs, which was 423 crypto punks and, you know, with a 60 ETH floor, that's a lot of value and seven over 1700 me bits. Uh, and so I it was a package deal, right? Like, we'll buy your crypto punks, we'll buy your me bits and give us the IP and we'll we'll make a deal. I don't know how much like, I think I think the larva labs just wants to kind of sunset their responsibility over the crypto punks. Because they weren't really using that to do anything to begin with. And so I don't know, I don't, I don't think rug pulled is, is the right description.

• 1:32:27David Hoffman?

  I think it was just like a passing of the baton, a passing of the torch onto a new, a new steward of the brand. And that's kind of where the CryptoPunk side of the community kind of is like fearful, like they don't want a steward of the brand. The brand is its own steward. It does itself as a headless brand. And so putting a head on the brand is kind of anti CryptoPunk culture. I'm optimistic in the mirror post from Yuga Labs. They definitely addressed how they have no intention of just giving the CryptoPunks the, the Bored Apes treatment. And that they will listen to the community before they take any action. So I'm optimistic about the outcome of this. I kind of think that the CryptoPunks get the best of both worlds. They both get to have their headless brand that many, many CryptoPunks will just give the middle finger, finger to Yuga Labs.

• 1:33:12David Hoffman?

  And Yuga Labs will still have the incentive to promote the CryptoPunk brand. So long as they don't do it in any cringe way, like in my, like how they kind of did with Bored Apes, in my opinion. Then I think we're good here. I think we're good here.

• 1:33:25Ryan Sean Adams?

  Respect the culture, but as a punk holder, you feel you're cautiously optimistic about it.

• 1:33:30David Hoffman?

  Cautiously optimistic. I think that's a great way to put it. Yeah.

• 1:33:33Ryan Sean Adams?

  There's some takeaways from William Peaster. He goes over now, Yuga Labs now has five of the top 20 NFT projects. They are absolutely massive player and brand holder in the NFT space. Lava Labs is going to continue on with Web three projects. He said they're kind of a builder hacker house and it looks like they're going to spin up more Web three projects in the future.

• 1:33:57Ryan Sean Adams?

  It, it does beg the question of whether Yuga, what they do next. Will they launch an NFT marketplace, for instance, right? Then they have the brands, do they go like, start being vertically integrated and become sort of an OpenSea type of offering? Get into the exchange business. There's also some chatter about acquisitions, right? So like if, if Yuga Labs, Bored Apes can basically buy CryptoPunks, then that also means somebody can buy Bored Apes, right? Buy all of that IP. So who's next? Do the corporate behemoths enter the fray? Does like Disney go and buy an NFT project? Maybe they are the future owners of Yuga Labs.

• 1:34:38David Hoffman?

  I don't think the Bored Apes is the right culture for Disney.

• 1:34:42Ryan Sean Adams?

  So, but maybe it's someone else, right? It's like, like, the idea of these things being acquired and purchased has sort of entered the conversation as well. When token, that's what we'll get to in a second.

• 1:34:55David Hoffman?

  Yeah, right.

• 1:34:56Ryan Sean Adams?

  It feels like there's a token conversation. Play to earn games, some other things as well. But let's talk about the token really quick. So, there was talk, there's an ape token. Get me up to speed on that, David. I haven't honestly been paying attention too much to, to the Apecoin. What's going on there?

• 1:35:10David Hoffman?

  Yeah, so Yuga Labs minted and airdropped Apecoin, I believe as of this mo, as of this morning. And Apecoin is, according to them, "A token for culture, gaming, and commerce used to empower a decentralized community building at the forefront of Web3." Some people have, the negative take on this is like, "A token for culture, gaming, and commerce." Like, these things that are supposed to be unlocked by having the token. Wasn't that what, like, the apes themselves were supposed to be? But, you know, to each their own. This is putting a currency into an NFT world. So now we have the fungible money currency that's paired with the holders of the ape tokens that got all the money. So what they're going to be doing with the ERC20 token, I don't know, but you would imagine

• 1:35:55David Hoffman?

  some sort of, just like, economy is growing. This is now like, the nation of the apes. The world, the planet of the apes, if you will. They have their own identity and their own currency, and now they have to build out their world.

• 1:36:09Ryan Sean Adams?

  And this is just for ape holders? This isn't across all Yuga Labs properties, just for the apes themselves?

• 1:36:14David Hoffman?

  Board Apes, Mutant Apes, and Kennel, Kennel Dog, Doggy Dog Club, I don't know the name of that one. The dogs that go with the apes. So those three projects got the Apecoin airdropped in different proportions.

• 1:36:26Ryan Sean Adams?

  Got it.

• 1:36:27David Hoffman?

  Even more critiques came from the supply of, of the ape token that was given to Yuga Lab, Larb, Yuga Lab founders, because some amount of, was reserved for Yuga Lab founders, which is, which is typical, but then some amount was also reserved for Board Ape founders, which, they're the same thing. So, like, a little bit of a double dip right there. But, we'll see, we'll see. Still in early days.

• 1:36:53Ryan Sean Adams?

  There's some takes. Here's one from Alexis Ohanian, who's coming on the podcast on Monday, by the way. What's his take? "Despite how bored my ape looks, I'm excited to share that Apecoin DAO is adopting Apecoin and that I'm serving on special counsel that will oversee the decisions of the community." So Alexis, it looks like, is getting in the fray as a governor of some sorts. The exchanges are listing Apecoin as well. They've been very quick to list. FTX, I got an email from Gemini saying, "We are now listing Apecoin."

• 1:37:22David Hoffman?

  Good BD from UGA Labs.

• 1:37:25Ryan Sean Adams?

  Yeah, they can execute. These brands can execute. And what is this tweet that we're looking at here, David?

• 1:37:30David Hoffman?

  Yeah, so this was interesting. This has less to do with the actual airdrop out of UGA Labs and more with NFTX. And NFTX is like an index for various NFT projects. And so NFTX has a bunch of board apes in their vaults. And all of the board apes that NFTX has, they're able to claim the tokens. They're able to claim the airdropped, but no one actually owns them because it's owned by a pool. So what someone did is they took a flash loan to buy the entire vault of all board apes. And then, since they owned every single board ape, they claimed every single board apes from NFTX airdrop, and then resupplied and sold back to the NFTX vault all of the apes, and then paid back their flash loan

• 1:38:14David Hoffman?

  and was able to claim basically a million dollars of the ape token.

• 1:38:18Ryan Sean Adams?

  I don't even know if I'm mad about that one.

• 1:38:21David Hoffman?

  No, this is clever.

• 1:38:22Ryan Sean Adams?

  This is clever. Like, if NFTX didn't think about that, then that's on them. Yeah, that's pretty clever and some of the downstream effects of these things. So summarize this for us. Overall, what do you think about the acquisition of punks by the apes and UGA Labs moving forward?

• 1:38:39David Hoffman?

  Acquisition of punks by apes, I am neutral to slightly positive on that. There's a decent chance that it just becomes a nothing burger and CryptoPunks are CryptoPunks forever and nothing can really change that. So that's my opinion on that. With regards to the airdrop of the issuance of new tokens to generate excitement and to make money, goes back to my thesis of how we are in a 2018 part of the crypto cycle where people are just issuing tokens because it's the last gasp of opportunity to pocket some money before we go into the bear market.

• 1:39:13Ryan Sean Adams?

  There you go. That's the take. That's what happened this week, guys. Let's move on to something else that was in the headlines in the NFT world, which is Mark Zuckerberg, CEO of Meta, formerly Facebook, just confirmed rumors that Instagram will get into the NFT game in a matter of months, I believe. So, nothing specific to announce, other than Instagram is coming to NFTs. That's a big deal. It's like, we all suspected it. But I do see this as some Zuckerberg capitulation. Now, I don't know what NFT platform he's going to deploy it on, but how could he not do something on Ethereum? He can't, at this point in time, spin up his own Facebook chain and start issuing NFTs there, right? So, it's

• 1:39:57Ryan Sean Adams?

  gotta be with some of the existing platforms. And if that's the case, David, we're winning, man. We got the biggest social media conglomerate in the world, now using NFTs as digital property on its social media platform. I think that's fantastic. We'll see what Instagram does with it, but, look, we've seen TikTok, we've seen Twitter get in the NFT space. We knew Instagram was coming, and it looks like they're coming in the next few months. Zuckerberg has just confirmed it.

• 1:40:28David Hoffman?

  If only DM had worked out, they'd be able to do this natively versus their own blockchain. But, nope.

• 1:40:34Ryan Sean Adams?

  Yep, that's right. That's right.

• 1:40:37David Hoffman?

  Bend the knee, Zuckerberg.

• 1:40:38Ryan Sean Adams?

  Regulation talk. Let's talk about a few things. We'll be real quick, though. Okay, so, we've said for a while, Congress has gotta do something to rein in the SEC and Gary Gensler. In fact, we talked to Representative Tom Emmer on the Bankless Podcast about that. We're like, "Come get your boy."

• 1:40:56David Hoffman?

  Come get your boy.

• 1:40:57Ryan Sean Adams?

  Gensler is all over the place.

• 1:41:00David Hoffman?

  Rogue. Unhinged.

• 1:41:02Ryan Sean Adams?

  Gone a little bit rogue in crypto, and it's unclear how much of, like, how much actual authority, enforcement authority, he actually has in the SEC versus what he's actually doing. And this is a letter from Representative Tom Emmer, and to Gary Gensler, and a whole bunch of other representatives. It says this, "My office," that's Tom Emmer speaking, "has received numerous tips from crypto and blockchain firms that SEC Chair Gary Gensler's informational reporting 'requests,' in quotations, to the crypto community are overburdensome and don't feel particularly voluntary."

• 1:41:40Ryan Sean Adams?

  And they are stifling innovation. So Representative Tom Emmer and company querying the SEC, asking what authority they actually have over the crypto industry and maybe attempting to rein the SEC in somewhat. Good job. That's what Congress should be doing. That's what our legislative branch should be doing, the executive branch. The executive branch enforces laws, okay? They don't make laws. And when they get into the mode of making laws and crossing boundaries and

• 1:42:15David Hoffman?

  Being authoritarian?

• 1:42:16Ryan Sean Adams?

  Yeah, exercising authority where they don't have it. That's when Congress needs to pull them in. Generally, Congress hasn't done very much, but now here's Representative Tom Emmer, starting to do something. Great to see.

• 1:42:28David Hoffman?

  This is just like, I think the great summary for this is that this is like when the teacher sends a note home with the kid to the parent. Like, you had to get Tom Emmer to write a note about Gensler and the SEC to calm the F down and back off.

• 1:42:43Ryan Sean Adams?

  That's really, that's really the message and kind of what we want. Let's not stifle innovation, guys. Some more good news on the regulatory front. The EU just voted down the anti-proof-of-work clause. So this was the Econ Committee of the EU Parliament. There was some legislative action to actually ban proof-of-work. Ban proof-of-work.

• 1:43:05David Hoffman?

  Didn't even know that that was happening.

• 1:43:07Ryan Sean Adams?

  Right. So this was happening. I'm not sure how enforceable it is. I don't know all the details of how this worked, but that was kind of on the periphery. Well, it just got voted down. 32 against, 24 in favor. So this is Patrick Hansen on Twitter saying, "A big relief and political success for the Bitcoin and crypto community in the EU." Proof-of-work is not being

• 1:43:32David Hoffman?

  Allowed.

• 1:43:33Ryan Sean Adams?

  Is allowed. As it was before. It's not disallowed.

• 1:43:38David Hoffman?

  I mean, it does indicate the headwinds that proof of work as an industry has. I don't think you're going to see proof of state having to fight these battles.

• 1:43:47Ryan Sean Adams?

  Right, and you understand some of the concerns about your energy consumption, but proof of work has been sort of aligned and I don't think given a fair treatment either. This is a headline to Saudi Arabia considering considers accepting the yuan instead of dollars for Chinese oil sales.

• 1:44:05David Hoffman?

  Right, yeah. This is coming on the heels of sanctioning entire central bank. All of a sudden, a bunch of countries get scared about having the dollar allow allowing the dollar to have so much power. So this is kind of the after effects of the pushback from our sanctioning of Russia. All of a sudden, the rest of the world sees like, oh, look what accidental powers we gave the United States government and Federal Reserve. They can freeze all of our money. So now they are looking to the digital one or the one in general instead of dollars to process trade, which is bearish for the dollar.

• 1:44:39Ryan Sean Adams?

  Yeah, I do think this is the beginning of the end for the the dollar supremacy as the world reserve currency on the back of these sanctions. Whether you agree with the sanctions or not, you you've got to acknowledge that there are some some trade offs here and some downstream effects. Let's talk about South Korea for a second as we're spinning around the world today in the regulatory news.

• 1:45:00David Hoffman?

  Yeah, let me take this one, Ryan. Two two candidates were running for president of South Korea. Both candidates were pro crypto, therefore the pro crypto candidate won. And apparently both candidates were using crypto as a way to onboard votes from the younger generations. So crypto society growing in South Korea, you'll love to see it.

• 1:45:22Ryan Sean Adams?

  That's awesome. It's all good news on the regulatory front. A 16Z, they just appointed a Treasury official as their head of regulatory.

• 1:45:30David Hoffman?

  Fincenperson.

• 1:45:32Ryan Sean Adams?

  Yep, what's this coming out of Ukraine?

• 1:45:34David Hoffman?

  Yeah, yeah, Ukraine signed a new crypto regulation law. This new law points that agencies will regulate the markets and establish rules around virtual asset ownership rights, among other things. According to a statement out of Ukraine officials, Ukraine and foreign based cryptocurrency exchanges will be allowed to operate and banks will be able to open accounts for crypto companies. So crypto giving the big thumbs up out of Ukraine. You know, when a crypto comes and saves the day for your country, you generally tend to be favorable to it.

• 1:46:03Ryan Sean Adams?

  Absolutely. The last thing is

• 1:46:06David Hoffman?

  One bad thing.

• 1:46:07Ryan Sean Adams?

  We've got to mention, yeah, the DEX aggregator Masha, they just geo-blocked trades coming out of Russia. This is sanctions filtering down into crypto territory. This time on the DeFi side of things. DeFi aggregator Masha now geo-blocking trades from Russia. One Inch is also geo-blocking everyone in the US, for example. So this isn't new, but the aggregator layer seems to be a choke point for sanctions and censorship. And I bet we'll see more of that in the future.

• 1:46:38David Hoffman?

  That's ironic. I actually forgot that One Inch was geo-blocking in the United States because they're out of Russia and Masha's out of the US and they're blocking Russians.

• 1:46:47Ryan Sean Adams?

  Everyone's getting blocked.

• 1:46:48David Hoffman?

  Oh, God.

• 1:46:49Ryan Sean Adams?

  I think they're blocking the US due to SEC sorts of concerns.

• 1:46:55David Hoffman?

  That's right.

• 1:46:56Ryan Sean Adams?

  And this is not SEC, this is just kind of OFAC sanctions type of thing. But it's, you know, all kind of the same rhythm. Guys, we will be right back with the takes of the week. But before we do, we want to thank the sponsors that made this episode possible.

• 1:47:10David Hoffman?

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• 1:47:55David Hoffman?

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• 1:48:37David Hoffman?

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• 1:49:21David Hoffman?

  You can be a part of this story of Across by joining the Discord and becoming a co-founder and helping to design the fair, fair launch of Across. If you want to bridge your assets quickly and securely, go to across.to to bridge your assets between ETH, Optimism, Arbitrum, or Boba Networks.

• 1:49:38Ryan Sean Adams?

  All right, guys, we're back with the takes of the week. Here you go. First take: Some Ponzi's are scams. Others are the basis of human society. Well, that's quite a contrast. What do you think?

• 1:49:48David Hoffman?

  Yeah, I mean, we use the Ponzi word a lot at times here on Bankless, and that's because of how this tweet is right, in our opinion. I think I can speak for you, Ryan, when you agree with this tweet.

• 1:49:57Ryan Sean Adams?

  Totally agree. 100%.

• 1:49:58David Hoffman?

  Sometimes people are like, "You guys use the Ponzi word way too much." No, Ponzi games-

• 1:50:03Ryan Sean Adams?

  You don't use it enough.

• 1:50:04David Hoffman?

  You don't use it enough, yeah. Everything is based on the fact that other people value the same thing, which is the basis for human, shared, interest psyche value. So yeah, some Ponzi's are, somebody's gonna dump on you and then buy the more sustainable Ponzi. But it's Ponzi's all the way down. I just enjoyed this take.

• 1:50:24Ryan Sean Adams?

  You know Ponzi's are a coordination game and the book that taught me that really more than anything else was Yuval Harari's book Sapiens. Yeah, it's basically the thesis is all of humanity, all of our civilization, all of our coordination technology, the reason we can do things that the animal kingdom can't is because of shared myths, stories. Ponzi's are an outcome of these shared stories and shared myths. In fact, they're a result of it. And so Ponzi's are actually our coordination technology. That doesn't mean Ponzi scheme, doesn't mean Bernie Madoff, that's not what we're talking about. Anyway.

• 1:50:57David Hoffman?

  A Ponzi scheme is telling people a story that's not actually true.

• 1:51:00Ryan Sean Adams?

  I just, I feel like this is a fundamental education block in like in crypto. You have to, you almost have to understand this before you understand Bitcoin and like the rest of the monetary phenomenon and everything that's going on. So that's why we're emphasizing it.

• 1:51:14David Hoffman?

  Money is a gigantic Ponzi that doesn't pop. The good monies are Ponzi's that don't pop.

• 1:51:18Ryan Sean Adams?

  All right, next take, DC Investor take, what is he saying here, David?

• 1:51:22David Hoffman?

  I am done building identities and brands which corporations can buy and sell without paying me and for me to go, to be expected to go along with a ride because my identity is attached to them from now on will only feature art by independent artists and CCO PFPs on this account. So this is in reaction to Yuga Labs buying the CryptoPunks IP from Larva Labs and DC Investor is saying he only likes NFTs where he is the sole owner of the IP and because he doesn't want, you know, centralized companies buying the IP of an NFT profile picture that he, he rocks. So I will note, point out that DC Investor now has an MF'er as his profile picture because

• 1:52:04David Hoffman?

  Sartoshi and the MF'ers are CCO and they give complete ownership rights of the IP towards the owners of the NFT. So that's pretty cool.

• 1:52:12Ryan Sean Adams?

  So is DC an example of somebody who's maybe not so happy, a punk holder is not so happy about this Yuga Labs initiative?

• 1:52:20David Hoffman?

  He is cautiously pessimistic, I will say, where I'm cautiously optimistic.

• 1:52:25Ryan Sean Adams?

  Are there, are there some people in the CryptoPunk community who are just like ballistic, angry, I'm selling all my punks kind of thing?

• 1:52:30David Hoffman?

  Um, I saw one tweet about that, but no, I haven't seen more than that.

• 1:52:35Ryan Sean Adams?

  Interesting. I'm really, you know, enjoying seeing that that play out. You know, it's just interesting to see that play out. He says more on the CCO thing. Should we read that too?

• 1:52:45David Hoffman?

  Yeah, clarifying my thoughts on CCO. CCO doesn't mean it's a better NFT. There's lots of garbage CCO NFTs. It's also possible some corporate administered NFTs outperforms for many reasons. I simply prefer to participate in communities where they can't sell my participation to others. So, some takes.

• 1:53:03Ryan Sean Adams?

  DC.

• 1:53:03David Hoffman?

  Some takes.

• 1:53:04Ryan Sean Adams?

  Indy. He's an Indy NFT holder. Let's talk about this. Your take. The narrative around ETH has evolved beyond my wildest dreams. That's you. And you're saying that you're quote tweeting this consensus tweet that says all proceeds from the round, this is the massive round that consensus just raised, 450 million, is that how much it was? To further build consensus, the funds from the round will be converted to ETH to further build consensus ultrasound money position.

• 1:53:32David Hoffman?

  Ultrasound money position. You love to see it. You love to see it. In order to rebalance its ETH to fiat ratio in line with consensus's treasury strategy. So consensus picking a new unit of account to measure wealth in and they're naming that unit of account ultrasound money. This was infeasible in 2017. Yeah, where did they get that from?

• 1:53:55Ryan Sean Adams?

  Well, the podcast wasn't even out like at this time last year. It just came out. So it wasn't feasible.

• 1:54:00David Hoffman?

  Does this mean that $450 million of ETH buy pressure is coming?

• 1:54:05Ryan Sean Adams?

  I don't know. It should be.

• 1:54:06David Hoffman?

  It's what the tweet says.

• 1:54:07Ryan Sean Adams?

  You gotta buy it back consensus. Buy what you sold at 80.

• 1:54:13Ryan Sean Adams?

  This is my take. You want to read it?

• 1:54:14David Hoffman?

  The more you know, the less you diversify. Ryan Sean Adams.

• 1:54:19Ryan Sean Adams?

  Yeah, that's it. That's the take, man. I feel like this is true for my own investment strategy. Like the more I know about a particular asset, the more conviction I have about a particular asset, the less I care about diversifying. And I do think that conviction holds concentrated portfolio positions are the real way to build long-term wealth. I see so many people enter crypto. They don't really know what they're buying and they'll do like a shotgun scattershot approach. It's like get a little bit of this, a little bit of this and some YouTuber recommended this. Now I'm getting this and I think that's because they don't know enough. I don't think like it's and I find that in myself too.

• 1:55:02Ryan Sean Adams?

  Like I don't know very much, like I don't look at individual equities very often. So if I ever participate in equities, guess what I'm buying? S and P 500, right? But I don't participate in equities because I know about crypto. And the more I know about crypto, the less I want to diversify out of crypto as an asset class. So it also holds true from an asset class categories like crypto is going to be the future. It's like it's, it's so obvious to me. Why would I hold my wealth in anything other than crypto? Like I don't feel like I need to diversify. I mean, have some safety nets for sure, but like, like have a house, have, you know, some stable coins, have some dry powder, but like I'm, I'm not diversifying out of crypto, man. It's like all in crypto.

• 1:55:48David Hoffman?

  Rhymes with diversification.

• 1:55:50Ryan Sean Adams?

  What?

• 1:55:51David Hoffman?

  Capitulation.

• 1:55:53Ryan Sean Adams?

  Exactly, right? Well, I guess, I mean, some people, when I tweeted this out, some people made the point that, you know, a whole lot of people delude themselves on this too. You get burnt, right? And

• 1:56:04David Hoffman?

  I mean, you're rewarded if you're right and you're punished if you're wrong.

• 1:56:08Ryan Sean Adams?

  Why not? Why not live life like that? All right. So you have a take on my take though. What is it?

• 1:56:13David Hoffman?

  Yeah, I think this is a great way to illustrate the difference in our dispositions as individuals, where Brian Shaw Adams very politely says, the more you know, the less you diversify. And I just quote tweet him, I say, here's what he really means. He means diversification is for the weak. Have us fine, folks. Believe in yourself.

• 1:56:31Ryan Sean Adams?

  I, I guess that is what I mean, David. You put it very succinctly as well. All right, man. What are you excited about this week?

• 1:56:38David Hoffman?

  Oh, God, Ryan, I am just excited for ETH season. If we indeed are going into the bear market, then at least it will be ETH season along the way. It'll be the one entertaining, the one bright spot on the horizon of what is just like a crazy, crazy macro environment with, with, you know, the potential R-word coming, or none of that happens and it's still ETH season. Either way, it's ETH season, so I'm excited either way.

• 1:57:04Ryan Sean Adams?

  Do you mean you're happy to hold on to ETH if it's going down, as long as it's going down less relative to the rest of crypto?

• 1:57:12David Hoffman?

  Sure, yeah.

• 1:57:13Ryan Sean Adams?

  That would make you fine.

• 1:57:14David Hoffman?

  That's about right, yeah. But also, just like ETH season means more than just like price, price action.

• 1:57:19Ryan Sean Adams?

  Build season.

• 1:57:21David Hoffman?

  Yeah, it's build season. It's like, let's, let's come back to our fundamentals. Let's come back to what's real. Let's get rid of the noise. Let's talk about my favorite topic ever, which is ultrasound money. Like that, this is when the crypto Twitter discourse is talking about the thing that I care about other than some ridiculous NFT Ponzi scheme or play their own game or whatever.

• 1:57:40Ryan Sean Adams?

  Yeah, I hear you. That'll actually be refreshing, no matter what the price is doing at that point in time. It's like, we're shipping stuff for the future that matters a lot, right? Like, the merge is going to be absolutely massive, the biggest fundamental event. Prices aside, who cares about prices? I mean, this is history, so.

• 1:57:56David Hoffman?

  I care a little bit about prices.

• 1:57:57Ryan Sean Adams?

  Well, we do, we do.

• 1:57:59David Hoffman?

  All right, Ryan, we do care a lot.

• 1:58:01Ryan Sean Adams?

  I'm excited about the token frame I have behind me. So, the folks at Token Frame sent me one of these. It's pretty awesome. I, you know, look, I'm new to the NFT scene, okay? Like, I, you know, I don't know what I'm doing with it, but this is a digital frame, first one I've ever tried. And I really like how it works. So what's cool about this is you actually connect MetaMask and they're verified NFTs, right? So this is not just a JPEG or a screenshot, it's actually pulling my Coolcat from my portfolio. It's also cool is I can change it around, like, right? So like, I could.

• 1:58:37David Hoffman?

  About to get your turtle there or your MF'er?

• 1:58:38Ryan Sean Adams?

  If I want to, if I want to change, boom.

• 1:58:41David Hoffman?

  Wow, that actually is pretty cool.

• 1:58:42Ryan Sean Adams?

  From cat to turtle.

• 1:58:43David Hoffman?

  That's pretty cool.

• 1:58:44Ryan Sean Adams?

  Just like that. I'm still, you know, learning. I also would like to remove the cord. I think I have to like poke a hole in the wall, do some more work and like, put the cord behind it. But it's cool, man. Physical meets digital. It's been fun.

• 1:58:58David Hoffman?

  I think it'd be super. Can you go back to your cat? I think it'd be super funny if you dressed up as your cat one day. Kind of like how we did with Halloween. Yeah, but like, you know, like a red flannel, a white t-shirt, a bowl cap. And what else is there? That's it. That'd be a good look. It'd be a good look.

• 1:59:13Ryan Sean Adams?

  Yeah, well, I'm holding my cat. I'm holding my turtles, you know, I don't know. Do you ever sell NFTs, David? Do you flip NFTs or are you just always buying?

• 1:59:22David Hoffman?

  When I buy, sometimes I buy one and the hype just doesn't sustain itself. And then I just kind of see it on its trend to zero. So I'll sell some of those. But the ones that I shill on Twitter, I do not sell based off of principle. So that includes my CryptoPunk, my MFers. Are there any others?

• 1:59:40Ryan Sean Adams?

  This is the thing. I don't know how to make money on NFTs, David, because like whenever I buy an NFT, like I don't want to sell it anymore. I get attached to it. So I'm just like, well, am I the sucker here?

• 1:59:50David Hoffman?

  Right.

• 1:59:50Ryan Sean Adams?

  Like, am I actually buying an asset if I'm never gonna sell it for real money?

• 1:59:54David Hoffman?

  You're just buying a noun at that point.

• 1:59:56Ryan Sean Adams?

  Yeah. Well, like, you know, at some point, though, maybe NFTs get integrated into broader DeFi economy, right? You can lend against it. You can borrow against all sorts of things. So maybe I won't have to sell and can still be worth it. Anyway, that's what I'm excited about. Token frame. Thank you guys for that frame. It's awesome. Let's get to meme of the week, though.

• 2:00:14David Hoffman?

  Meme of the week.

• 2:00:15Ryan Sean Adams?

  This is on theme. You ready?

• 2:00:16David Hoffman?

  Yep.

• 2:00:17Ryan Sean Adams?

  There you go.

• 2:00:20David Hoffman?

  It's merge week. This is the Ultrasound Money Twitter account saying, issuance now, 15k ETH a day, issuance at merge, 1.5k ETH a day. And then the meme is, they don't know. They don't know.

• 2:00:31Ryan Sean Adams?

  It's that dude at the party, like, sitting in the corner, right?

• 2:00:34David Hoffman?

  Yeah, but, Bankless listener, you know, because Bankless told you. I know.

• 2:00:39Ryan Sean Adams?

  Guys, you also know, none of this has been financial advice. Bitcoin is risky, so is ETH, so is DeFi. You could definitely lose what you put in, 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.

• 2:00:54David 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.

• 2:01:30David Hoffman?

  Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, 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.