ROLLUP: Base Kicks-Off Onchain Summer

Bankless Weekly Rollup Second Week of August, 2023 ------ 🚀Join Ryan & David at Permissionless II in September. https://bankless.cc/GoToPermissionless ------ 📣 STADER LABS | ETHX LIQUID STAKING https://bankless.cc/Stader ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦊METAMASK PORTFOLIO | MANAGE YOUR WEB3 EVERYTHING https://bankless.cc/MetaMask ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum ⁠ 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⁠ 👾POLYGON | VALUE LAYER OF THE INTERNET https://polygon.technology/roadmap 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/Toku ------ TIMESTAMPS 0:00 Intro 2:37 MARKETS 4:07 Layer 2 TVL https://l2beat.com/scaling/summary 15:42 DAI Savings Rate https://twitter.com/RuneKek/status/1688235137178509312?s=20 19:26 Coinbase Q2 Earnings https://twitter.com/ramahluwalia/status/1687268549797019648?s=20 24:28 Paypal Launches Stablecoin https://etherscan.io/token/0x6c3ea9036406852006290770bedfcaba0e23a0e8 https://twitter.com/0xCygaar/status/1688592430315036672?s=20 https://twitter.com/sassal0x/status/1688716600294383616?s=20 https://twitter.com/RyanSAdams/status/1688586469370216450?s=20 34:32 Base Kicks off Onchain Summer! https://twitter.com/BuildOnBase/status/1689321221715017728 https://www.geckoterminal.com/dex-rankings https://l2beat.com/scaling/projects/base https://dune.com/tk-research/base 40:31 Vitalik and Jesse At Permissionless https://twitter.com/Permissionless/status/1687130264089042945?s=20 42:25 Arbitrum Releases BOLD https://twitter.com/offchainlabs/status/1687137574052143116?s=46 https://twitter.com/terencechain/status/1689025407499345920?s=20 https://www.youtube.com/live/4yzPYr5HRfU?feature=share 47:31 Polygon Vs zKSync https://mirror.xyz/0x70DF15b0208eFCeFaA541Da9A0ED6C4A884554Fc/gNi8coqXjd1ybFsQBAG7QARUkPHZECu7ihIRkpiVx2Y https://twitter.com/gluk64/status/1687263207860166656?s=20 49:31 Is Curve Gonna Make it? https://etherscan.io/address/0x9e2b6378ee8ad2a4a95fe481d63caba8fb0ebbf9 https://etherscan.io/tx/0x23c4799784c91023204bd68a94ec7a963486f2485dc43c13d8b804d5301b8041 https://twitter.com/CurveFinance/status/1688221472815284224?s=20 https://twitter.com/lookonchain/status/1687294816890347520 54:28 Fantom Becoming a Layer 2? https://www.theblock.co/post/243220/fantom-optimistic-rollups-ethereum 56:11 Hacker Hotline https://twitter.com/samczsun/status/1688613385565528064 58:03 NFT Stuff https://twitter.com/sandeepnailwal/status/1689187495190069250?s=20 1:00:49 Is Biden a Bitcoin Maxi? https://twitter.com/joebiden/status/1687120734793986048?s=46 1:01:46 Huobi Insolvency https://twitter.com/WuBlockchain/status/1687764670340591618 1:02:45 Gary Pivots to AI https://www.bloomberg.com/news/articles/2023-08-03/sec-chairman-gary-gensler-discusses-the-risks-to-finance-in-ai 1:03:59 This is Just Weird... https://www.cnbc.com/2023/07/21/ftx-lobbyist-tried-to-buy-island-nauru-create-superspecies-lawsuit.html 1:05:06 Wallets 2.0 https://twitter.com/goldfinch_fi/status/1688961804515647488 1:08:05 Turnkey https://twitter.com/turnkeyhq/status/1688910588246933509 1:08:35 RAISES https://medium.com/@puffer.fi/a-push-for-decentralization-puffer-finance-raises-5-5m-to-redefine-liquid-eth-staking-936a61b750f7 1:12:57 Questions From The Nation https://discord.com/channels/615592155481767941/1058053004705669211/1138316265962876988 1:15:50 Takes Of The Week https://twitter.com/davidfbailey/status/1689051629146767360?s=46 https://twitter.com/dankrad/status/1689634128101310464?s=20 https://twitter.com/TrustlessState/status/1687448061860003840?s=20 https://twitter.com/TrustlessState/status/1687609256269230080?s=20 1:21:43 What Are We Bullish On? 1:25:53 Meme Of The Week https://twitter.com/divine_economy/status/1689650898975481856?s=20 1:26:39 Disclosures ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

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

• 0:00David Hoffman?

  I think that we will look back and see the reason for why we had a bull market in 2024 and 2025.

• 0:05Ryan Sean Adams?

  What's that reason? Layer 2s?

• 0:07David Hoffman?

  Base, Coinbase, specifically putting all of its marketing and weight behind a base layer 2, because they are, like I said, printing money on it. But they are going to take Ethereum layer 2s, specifically base, because they now have the incentive. They are going to take it mainstream.

• 0:27Ryan Sean Adams?

  Bankless Nation, it is the second Friday of August. David, what time is it?

• 0:31David Hoffman?

  Ryan, it's the Bankless Friday Weekly Roll-Up, where we cover the entire weekly news in crypto, which is always an ambitious endeavor, yet we persevere nonetheless into the frontier. How are you doing this week, my man?

• 0:41Ryan Sean Adams?

  I'm doing great, man. I've got my, I've got my coffee. We've got our stablecoins going. Some big news this week. PayPal launched a stablecoin on Ethereum. I think that's a big freaking deal, and we gotta talk about that.

• 0:54David Hoffman?

  Yeah.

• 0:54Ryan Sean Adams?

  Yeah. What else are we talking about?

• 0:56David Hoffman?

  Base gets dropped with already $105 million in total value locked. Kicking off on-chain summer, Coinbase just putting all of their weight behind the base launch. And so we're going to talk about all those details and more. And then something out of Arbitrum. Tell us about Arbitrum.

• 1:11Ryan Sean Adams?

  Yeah, they got a little bit more decentralized, at least they're preparing to. So we're going to cover that with their bold new proposal. David, do you like that one? Bold?

• 1:19David Hoffman?

  You did it in the show. You can't keep on doing it.

• 1:21Ryan Sean Adams?

  I can keep doing it. This is a different show. I get one per show. Also.

• 1:25David Hoffman?

  You had three last time.

• 1:27Ryan Sean Adams?

  Whatever. Let's move on. Polygon and ZK Sync, they are throwing some punches back and forth, at least on Twitter. We gotta talk about that. There's been some wallet UX breakthroughs, I feel like, recently. This is making me pretty bullish, so we'll talk about that. The SEC isn't done yet. They are striking back. And lastly, David, is Joe Biden a Bitcoiner? What?

• 1:49David Hoffman?

  Words I never thought I'd see.

• 1:52Ryan Sean Adams?

  We'll talk about that, too. Before we get in, we've got a message from our friends and sponsors over at Stater. What's Stater, David?

• 1:59David Hoffman?

  Stater is a LSD protocol that helps you stake your Ether and also run in staking node if you so choose. So Stater, one of the cool things about Stater is that the bond, the Ether that you need to deposit into the Stater staking protocol can be as low as 4 Ether, which is the lowest capital requirement I think that is in the industry. And you get to charge other people a fee for staking their Ether when they stake on your node. And so if you want to both stake your Ether and then get a little bit more juicy Ether yield, you can do it with Stater. There is a link in the show notes to get started.

• 2:31Ryan Sean Adams?

  It is stake season. I feel that very strongly.

• 2:34David Hoffman?

  It is ETH season, for sure.

• 2:37Ryan Sean Adams?

  Oh, yeah. Well, let's talk about the other seasons, too, when we get to the market. And I got to ask you, what's cracking, my friend? Open up the cracking charts. Yeah, it's become a thing. I'm doing it. Let's see what's cracking with Bitcoin USD on the price charts.

• 2:50David Hoffman?

  Well, nothing is cracking, Ryan, because we're only up half a percent. 29,300, ending at 29,400, $100 in Bitcoin. It's not much.

• 3:00Ryan Sean Adams?

  Are you bored?

• 3:02David Hoffman?

  You know, the thing is, like, I would be bored, except for how incredibly good the news cycle is. Like, the innovations, like, it is, there is a huge decoupling disconnect between what is going on with announcements and innovation and the foundations, the fundamentals, if you will, and the actual prices. And so people are getting frustrated about, like, PayPal, they just dropped a stablecoin on Ethereum, and it didn't even move the price. Why?

• 3:28Ryan Sean Adams?

  Well, let's look at it.

• 3:29David Hoffman?

  Don't be frustrated by that. That is alpha.

• 3:33Ryan Sean Adams?

  Let's look at it. No price movement here. This is the ETH price on the week. What are we, are we flat?

• 3:38David Hoffman?

  $1,843 to $1,850. We went up $7 this week.

• 3:43Ryan Sean Adams?

  It's flatter than a pancake. I used that, like, a sheet of paper. That's how flat we are on the week.

• 3:49David Hoffman?

  Don't even ask me about the ratio. It's flat.

• 3:53Ryan Sean Adams?

  Uh, next you're gonna tell me the global cryptocurrency market cap is also flat.

• 3:58David Hoffman?

  Is 1.2 trillion dollars.

• 3:59Ryan Sean Adams?

  I'll just play it back.

• 4:00David Hoffman?

  You know what's not flat, though? Two things.

• 4:02Ryan Sean Adams?

  Yes.

• 4:03David Hoffman?

  Layer two TVL and layer two scaling factor is up.

• 4:07Ryan Sean Adams?

  So we get to cover these in our market section every week from now on?

• 4:11David Hoffman?

  We have added this to the template layer, like total value locked on layer twos coming in at 10.57 billion dollars. Break, working through that 10 billion amount.

• 4:18Ryan Sean Adams?

  So because we are adding something to the template, David, I feel like we have to explain these metrics. First time, Bankless Nation, you only get this one time explanation and then every single time.

• 4:28David Hoffman?

  You're expected to know it.

• 4:30Ryan Sean Adams?

  You're expected to know it. Okay? So what is total value locked in layer two? Why are we looking at this chart on a weekly basis forever and more?

• 4:38David Hoffman?

  Yeah, TVL, kind of the same thing as AUM, assets under management. It's just like, how, what is the total market cap of assets that are deposited onto layer twos? And if you aggregate all of that together on all layer twos on Ethereum, you come up to 10.57 billion dollars. Uh, well, actually technically it is flat. It's up half a percent over the last seven days, but it's been incrementally growing for all of this entire bear market. The other thing that we're going to look at is scaling factor. Uh, so if you hit the activity tab on the right, you can see a scaling factor of 4.8X, 4.83X. That is how many more Ethereum's all aggregate layer two economic activity is adding.

• 5:19David Hoffman?

  So on layer twos, there are 4.8 Ethereum's worth of economic activity happening that are settling to the Ethereum layer one, which, you know, is one Ethereum. Pop quiz, Ryan, um, how many, how many times larger is the Ethereum layer one in 2023 versus 2015? How many more Ethereum's is 2023 Ethereum versus 2015 Ethereum?

• 5:43Ryan Sean Adams?

  Are you just talking about kind of like ignore the L2s?

• 5:46David Hoffman?

  Ignoring the layer twos, just, just the scalability of the layer one. Cause the reason why I'm asking this is I don't actually think people appreciate that the Ethereum layer one also scales. And so that is a shifting number. So when we say there's a scaling factor of point 4.8. X layer twos to the layer one. Well, the layer one is also growing as well.

• 6:05Ryan Sean Adams?

  I bet the layer one on its own and these are through primarily client optimization. So, you know, the team over at Geth, for example, doing a lot of work to kind of optimize how fast Geth can run. And, you know, there's some juice to squeeze there versus 2015. I'm going to say three to four X from 2015.

• 6:27David Hoffman?

  Pretty good. The answer is six X. So Ethereum.

• 6:31Ryan Sean Adams?

  That's better than I thought.

• 6:33David Hoffman?

  Ethereum throughput from 2015 to 2023 is six times larger than it once was. And like you said, this is layer one client improvements, networking improvements, just bandwidth, just hardware. As hardware gets better, the Ethereum layer one is actually allowed to increase in scale conservatively, because that's our philosophy. But over time, the block size, the data throughput of Ethereum has gone about six X from 2015 to 2023. And layer twos are 4.5 X times on top of that. And they are not even at max capacity now.

• 7:07Ryan Sean Adams?

  So we are at like between 24 and 30 X if you multiply that all together.

• 7:11David Hoffman?

  Yeah, if you compare to 2015, but like 2015 was like primitive, primitive era, Stone Age, Stone Age in crypto.

• 7:17Ryan Sean Adams?

  Yeah, we didn't have much to do on change. It's like some.

• 7:20David Hoffman?

  Remember, remember peepeth?

• 7:23Ryan Sean Adams?

  I do remember peepeth. All right. But those are the stats we're going to go over on a weekly basis. So scaling factor 4.83 X, remember that number and assets in locked inside of layer twos, $10.5 billion. Well, let's peepeth outside of the crypto markets here, David. And go into the traditional markets. Inflation rose 3.2% in July. That's the year over year. And of course, I'm talking about inflation of the dollar. I'm not talking about inflation of ETH because that's deflationary, of course. This is a small uptick from 3% in June. So it's 3% in June, 3.2%. This commentator is saying this is good news that inflation rose a modest 0.2%

• 8:08Ryan Sean Adams?

  for the month of July alone. That's encouraging. Sign that inflation is moderating. So inflation moderating is one of the takes here. This is the stat kind of over time and this is annualized. So you can kind of see this. Let me look at a different view. See this. This is all the way back from five years ago where we used to be under 2%, around 2%. That's where the Fed likes it. And then of course, COVID cranked us all the way up over to 9% or so. And now we are back down, but there's a little, look at this little bump. It's like we're going up.

• 8:38David Hoffman?

  Hey, things go up, things go down. If you, if you teleported me back to the peak of that inflation, back when we were at 9% and then you showed me what the future curve would look like, I'd be like, wow.

• 8:48Ryan Sean Adams?

  This is good.

• 8:49David Hoffman?

  That's best case scenario.

• 8:50Ryan Sean Adams?

  Soft landing is what you, is that what you see here?

• 8:52David Hoffman?

  That sounds like successful manipulation of our economy.

• 8:56Ryan Sean Adams?

  Manipulation of our economy. Yeah, it's going to be interesting to see. Of course, this is not exactly what the Fed wants, but it's pretty close. We'll see what the August numbers look like. I also think, David, this number is going to get increasingly political. Why? Because the US gets increasingly political during the election season, right? Every four years. So we're creeping up to 2024 in a presidential election. So some people are going to say this is a, this number is too high. Others are going to say it's, it's, it's too low. What the Fed says is a good question. I, I think there's also this debate of, you know, does money printing actually cause inflation? Because what we're seeing right now is, I don't know if you saw the headlines this week.

• 9:37Ryan Sean Adams?

  You know, the US is at a $1.8 trillion budget deficit as fiscal government spending this year, right? So that's a lot of spend going into the economy. All the while, the Fed is, is tightening. And some of that spend goes to like interest payments, that kind of thing. So, you know, to be, to be determined on what inflation, where that goes next. One, one thing I will say is it does seem like asset inflation is continuing to rise. As always, so there you go. Another thing I wanted to mention this part of the market, David, this is your quarterly reminder that Home Depot, you know, the stock price of Home Depot is actually higher than the total market cap of Ethereum right now. I saw this, apparently I said

• 10:22Ryan Sean Adams?

  this back in May because it blew my mind when I was looking at the largest assets by market cap and Ethereum was trailing Home Depot. I think Home Depot

• 10:33David Hoffman?

  It's trailing a few others that make it even worse.

• 10:35Ryan Sean Adams?

  I hate Home Depot. Nestle as well. It's below Nestle. It's below Merck.

• 10:40David Hoffman?

  They have a monopoly on water. So that's Adobe.

• 10:44Ryan Sean Adams?

  Yeah.

• 10:44David Hoffman?

  Bank of America.

• 10:46Ryan Sean Adams?

  All of these things are worth more than Ether right now than Ethereum.

• 10:49David Hoffman?

  Platinum is higher than Ether.

• 10:52Ryan Sean Adams?

  I know.

• 10:52David Hoffman?

  Palladium is higher than Ether.

• 10:55Ryan Sean Adams?

  Yep.

• 10:55David Hoffman?

  Home Depot, at least you need to like, you know, build houses. People need houses. People don't need Palladium. Maybe they do.

• 11:02Ryan Sean Adams?

  Well, I don't know. Palladium, I'm sure has tons of use cases, David, but there's Ethereum number 50 in terms of the world's largest asset. So we got our weights to go. You know, how are you feeling though in this market? You were talking about it a little bit when we were getting into sort of the, you know, the market section in the intro and I think for me, I'll answer for me before, you know, I ask you maybe.

• 11:25David Hoffman?

  Yeah. If you hand it off to me, it's gonna be dangerous.

• 11:26Ryan Sean Adams?

  I think for me, we might be entering my favorite part of the market cycle.

• 11:33David Hoffman?

  Say more.

• 11:33Ryan Sean Adams?

  Yeah. Yeah. It's so, um, things aren't annoying yet and a lot of the, a lot of the stupidity has been burnt off.

• 11:42David Hoffman?

  Right.

• 11:42Ryan Sean Adams?

  Kind of the frauders and the scammers were sort of found out and the market isn't completely irrational. It's still kind of a builder's market and it's quiet. So we're not getting all the hype and kind of the, you know, the silliness. This is sort of the quiet moment where you look at everything that's going on. And you were talking about it earlier in terms of the fundamentals and the news and the building that's going on. And you realize that doesn't match with the price because the price is still under 2,000. And you're just like, oh, this is a very obvious trade. This is a very obvious purchase. I feel very comfortable right now. The last time I felt this way was 2020, before COVID, by the way.

• 12:26David Hoffman?

  Oh, before COVID?

• 12:27Ryan Sean Adams?

  And then after COVID.

• 12:29David Hoffman?

  Yeah.

• 12:30Ryan Sean Adams?

  Then after COVID, when we realized the world wasn't ending, you know, kind of toward the end of 2020. And that has been consistently my favorite part of the of the market cycle, just before things get stupid. And you're in this kind of like, oh, we're building, we're doing the right thing. The, you know, like we've, we've, we got hit by US regulators, right? That's not going to get any worse at this point. Like we bottomed on fading the US and US regulation. Coming out of the hole, we're coming out of the hole on all kind of the scams and the frauds and the centralized exchanges and all that crap from 2022. And now it feels like this, this recovery phase, but it hasn't been a quick recovery. So it's not yet stupid and I love that part of the market.

• 13:12Ryan Sean Adams?

  So I, I think we'll get some months here and I'm actually excited about that.

• 13:17David Hoffman?

  I think what you're saying is we're in this like Goldilocks zone in the, in the crypto era where like, if you were a tourist, if you weren't going to make it through the bear market, you're gone, you've, you're, you're gone by now. Anyone who's still left is here for the right reasons and here for the long haul. And we get to see all like, all the announcements and progression and like I said, fundamental growth of this industry that the rest of the world is not accounting for. And so all of a sudden, like in the bull market, alpha is hard because everyone is chomping at it. But in the bear market, alpha is easy because there's just not that many people left. This reminds me of a, a take that I had this week that I tweeted out, so we'll, we'll pull it up here.

• 13:56David Hoffman?

  Uh, I tweeted out, once upon a time, there was a six month period between the 2018 to 2020 bear market and then the 2021 bull market, where ETH broke $300 and hit 450 for the first time in three years. And multiple times a week, you would see people on crypto Twitter tweet out something like, personal news. I'm leaving my job and I'm starting a thing. The entire set of crypto Twitter, we just all knew that it was on it being the bull market and that we had made it. And it was just the best time. It was great because you would see all of your friends who were like, you know, had to commit to their nine to five job to, in order to make it through the bear market. Then all of a sudden have the foundation to go out and build their own venture. I tweeted out one of these tweets right before going from my last job to Bankless.

• 14:42David Hoffman?

  And it was this great Goldilocks moment where like Ether price was appreciating, but there were, it was all us. Everyone was just, it was all us buying rather than like necessarily like new money because everyone was positioned for it. And so all of the gains were us. And then, and then you realize, cause like, oh yes, that's because people are about to come in. And then I followed this, this tweet with like, little did I know the incoming bull market was coming for life.

• 15:10Ryan Sean Adams?

  Yeah, totally. I mean, so are you ready for another round of this? Like

• 15:15David Hoffman?

  I could use a few more months, but that's what we get. We're at the beginning of that phase.

• 15:19Ryan Sean Adams?

  Yeah, we're gonna get some time in the Goldilocks period. Yeah, that's cool. I'm glad that resonates with you too. It's just, it just sort of hit me this week. This is how Murk puts it though. If you aren't happy single, you won't be happy in a relationship. True happiness comes from Ethereum breaking 2K, not from anyone else.

• 15:36David Hoffman?

  Hey, 2K is pretty achievable. We have happiness on the menu.

• 15:39Ryan Sean Adams?

  Yeah, I'm okay. Under 2K though, to be honest, like just keeping the Goldilocks period of time. You know what else is going up though? Dye savings rate is now live paying out 8% at no additional risk. Hey, that's above T bills. What's the dye savings rate, David?

• 15:54David Hoffman?

  The dye savings rate is the yield that dye out of MakerDAO naturally produces. It's one of the core primitives that is part of the MakerDAO building blocks. It's, we kind of call Ether staking the stake, the risk free rate of Ethereum. The dye savings rate is just the risk free rate of holding dye. So if you're holding dye, you can get 8% at no additional risk compared to actually holding dye. You're not lending it out. It's just part of the protocol. Kind of like in the same way that holding a United States Treasury is, you know, not really any different from holding dollars. And if you're holding dollars, you might as well turn it into a treasury.

• 16:25Ryan Sean Adams?

  Yeah, you just park it in T bills and it can, it can stay in the, in the DSR. Can it be fungible as well?

• 16:32David Hoffman?

  Yeah, yeah. So chai, chai money. I don't know why they called it chai, but chai is, it's like how there's our ETH or staked ETH for Ethereum. Chai is the DAI savings rate version of DAI. Why? And where is that 8% coming from? It's part of the MakerDAO protocol. Gosh, back in my MakerDAO days, I would be able to very fluently explain this, but that was like four years ago.

• 16:55David Hoffman?

  There's just a demand for DAI and it's creating yield.

• 16:57Ryan Sean Adams?

  Yeah, and not everyone is in the DAI savings rate as well. So that's why the yield is higher than normal. That's what Rune reminds us the rate is so high because there are currently not that many people using DAI savings rate. Only 8% of DAI holders use DSR currently. So the more holders, the more that goes down. Of course, a reminder that you can access this at Spart Protocol. But not if you're American or use a VPN because we live in a financial prison.

• 17:21David Hoffman?

  Yeah, VPN users, hands off.

• 17:26David Hoffman?

  Don't touch it. VPN, the specific mention of not available for VPN users. I'm pretty sure that's a wink. I'm pretty sure that's a wink right there.

• 17:34Ryan Sean Adams?

  I don't know. We can't interpret that, right? But of course, the smart contract is uncenterable. It's just people have to screen out on the UI side or else the big bad American government gets mad with all of your financial access. David, another interesting stat I dug up this week. Did you know that WorldCoin is spending money on Ethereum block space?

• 17:54David Hoffman?

  Well, certainly.

• 17:54Ryan Sean Adams?

  Not just a little bit, a lot. 500K in the last 40 days. So if you were to annualize that, which we can't exactly do, but if you were to annualize that, that would be $4.5 million in gas fees. And so my take on that is this, of course, the bull take comes out. Companies will need to hoard ETH the same way they hoard other essential commodities. Ethereum block space is the new oil. What's really cool to me is something that we predicted for a long time about Ethereum is companies actually purchasing Ether as a, you know, a right as access for block space in the future.

• 18:34Ryan Sean Adams?

  In the same way that maybe an airline might procure barrels of oil or like futures on oil or something to hedge against future. Gas price costs. It's very cool to see third parties actually spending on block space. And that being a driver of demand rather than just users. And if you're curious about what they're actually spending on DC Builder, of course, he is a dev over at WorldCoin. He gives some context here. For context, this is the World ID Identity Manager Contract. The biggest costs here are insertions and not zk proof verifications, which are mostly happening on Optimism. So this is the part, the insertions part is happening on Ethereum main chain. Most of the other activity for WorldCoin is happening on Optimism.

• 19:19Ryan Sean Adams?

  Anyway, it's interesting to start quantifying that and you know, companies actually purchasing block space in this way.

• 19:26David Hoffman?

  Speaking of companies, Coinbase just released its Q2 earnings. This is from Ram Alawaya, former Bankless podcast guest, who says, "This is the first quarter where reoccurring revenue, for example, USCC income, staking and subscriptions exceeded transaction revenue, as in like trading revenue. 51% to 49%." So Coinbase has cut its reoccurring expenses by a whopping 50% as well as all the layoffs and all that stuff. And they also still rolled out new products like Coinbase Wallet and also Base. And so inside of the product innovation section, they say, "We are expanding our focus towards crypto use cases beyond trading." Of course they are. That's been their, ever since going public, that has been basically their number one focus as a company is to

• 20:08David Hoffman?

  get away from being dominated by trading fee revenue. And so they've opened up new lines of revenue and it's been working. And so as an example, of course, Base is an investment in blockchain infrastructure where we expect to drive down transaction costs and increase transaction speed, of course, the point of a layer two, but also a way for Base to make Coinbase money. Also stated in their regulation section, "We're beginning to see a pathway for bipartisan legislation that could enshrine consumer protections in an equitable market structure framework, AKA soon the regulatory trials will be over."

• 20:42Ryan Sean Adams?

  So it's still pretty early. We are 24 hours into Base, but Base yesterday generated $213,000 in fees. That is $78 million in annual run rate. 15% of that goes to the Optimism Collective. Coinbase buckets the rest.

• 21:00David Hoffman?

  Yeah, so like brand new business model, poof, out of nowhere, you're like $70 million in annual run rate for Coinbase because of base. And that is again, before the layer two bull market kicks in.

• 21:12Ryan Sean Adams?

  I kind of like that Coinbase is a publicly traded company because then they get to explain how layer twos work to Wall Street.

• 21:19David Hoffman?

  All they got to explain is $70 million.

• 21:22Ryan Sean Adams?

  Yeah, and they're like,

• 21:23David Hoffman?

  That's all they have to say.

• 21:24Ryan Sean Adams?

  Wall Street analysts are like, wait, you could see that on chain? I don't have to wait for the annual report? Like, oh, wow. Okay, that's really cool. I think it'll totally educate them on how to start evaluating crypto protocols and crypto networks. So.

• 21:36David Hoffman?

  Remember that that old website, current, current website still running, Mariano Conti put it together, diestats.com. It's just like a live audit of MakerDAO. It's like every, every Ethereum block, it gets updated. Somebody should make that for base. Coinbase should make that for base. Base economics, and they can just have this in their investment reports, but they can just link out to it like, hey, are you curious? How much money we are printing in this very current moment on base? You should just go to basestats.org to look at that. And one of the themes I think is happening is that like Fortune 500 companies are being shown the way to mint their own layer two using the OP stack. And that website would go very, very far in helping that narrative.

• 22:17Ryan Sean Adams?

  Yeah, I think so. We can, we can pill Wall Street if that's what we want to do. I don't know. I'm still comfortable in the Goldilocks zone of just like waiting.

• 22:24David Hoffman?

  With that, that website can be under development for a while.

• 22:28Ryan Sean Adams?

  It'll take them a while to catch on.

• 22:29David Hoffman?

  Bankless Station coming up next. PayPal is dropping a stable coin. Coinbase is dropping the base. There's a layer two summer party and you're all invited. And Bankless is also dropping something big to help you navigate all of it. Coming up next is all of those details. But first, a moment to talk about some of these fantastic sponsors that make this show possible, especially Kraken, our preferred exchange in crypto for 2023, to help you drop some US dollars into some crypto assets.

• 22:53Ryan Sean Adams?

  Let's go hear from them right now.

• 22:54David Hoffman?

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• 23:36David Hoffman?

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• 24:20David Hoffman?

  and start building your first app with Arbitrum. Experience Web3 development the way it was always meant to be: secure, fast, cheap, and friction-free.

• 24:28Ryan Sean Adams?

  PayPal is launching a stablecoin on Ethereum. Guys, this is a really big deal. It's called PYUSD. It's a fully-backed US dollar stablecoin. It's backed by short-term US treasuries and similar cash equivalents. For all intents and purposes, David, this looks to me a lot like USDC. Here's the contract address. It's very cool to see this on Ethereum Live. This is PayPal US dollars right here, and you can see some of the activity on EtherScan right now. David, do you think this is as big a deal as I think it is?

• 25:01David Hoffman?

  Yeah, I mean, I can't imagine why it wouldn't be. It's just like, well, it's just another USDC clone. But it it just indicates that, hey, perhaps the market doesn't think that the stablecoin market is saturated. Like, we can enter the game with further stablecoins. PayPal USD, $27 million market cap at the current time of recording. 12 holders, 12 total holders. I don't think it's actually like live in the app yet, but hey, we have a contract address and we're watching 182 transfers going around in this very moment. I mean PayPal has weight, PayPal has size in terms of users and demand. Like, we don't know the TVL of PayPal, but there is a number of PayPal somewhere.

• 25:44Ryan Sean Adams?

  Well, there is. I mean, when we had Jose on and the, you know, the public stats are 450 million active user accounts on PayPal. And and think about the significance of this, too. PayPal really pioneered payments on the internet in the web, you know, 1.0 days before web 2.0, right? And so now here they are in crypto, innovating on this front and doing this first. This is issued by Paxos, it's kind of the, you know, the bank machine behind it.

• 26:11David Hoffman?

  Paxos, who are, they had to give up BUSD, Binance stablecoin. And I'll pull in a Harry Potter quote for all the Harry Potter fans, trading a nut for a galleon, giving up Binance and all of its regulatory gray areas and gaining PayPal as a, as a client, as a customer. That's, that's definitely a win. That's what you call a dub.

• 26:29Ryan Sean Adams?

  So just like USDC, you're going to be able to transfer PayPal US dollars between PayPal and external wallets. So that would be bankless wallets, of course. You could send it person to person, so peer to peer. You could fund purchases with PayPal US dollars by, by selecting it at checkout, right? All right. So like you're different, you know, checkout using PayPal, you can use this as an option. And you can convert any of PayPal-supported cryptocurrencies, of which there are, there are many now, to and from PayPal US dollars. This definitely feels like a big win to me. There's some comments on it, of course, in the crypto community. This is one from Cygar who says, "So the PayPal stablecoin contract, number one, is written in an extremely old version of solidity.

• 27:12Ryan Sean Adams?

  Number two, allows the owner to pause all transfers. Number three, allows the owner to freeze addresses to prevent actions. Number four, allows admins to increase the total supply at will, centralized, but transparent at least." You could see all of those controls in the code. What do you think here, David? Do you think that these? These centralization vectors are an issue for PayPal US dollars?

• 27:36David Hoffman?

  All the properties that he just listed allows owners to pause transfers, allow owners to freeze addresses, allow admins to increase total supply at will. These are like table stakes for centralized stablecoin service providers. You have to have all of those functions. You need to increase the supply because if you get more dollars in the bank, you need to issue more stablecoins. Of course, you have to increase the supply. And then in order to be compliant at all, you have to also be able to pause and freeze addresses. Like, imagine if somebody starts, you know, sending this money to North Korea. Like PayPal's gonna need to do something. So I don't, I don't think that there's any pearl clutching about this. This is totally expected. USDC has all of these things.

• 28:13Ryan Sean Adams?

  This is why we call it a centralized stablecoin. It's not a decentralized stablecoin. It's not a crypto native asset in any way. And some people are saying, well, as a result of that, why are you crypto people celebrating? David, Ryan, why are you so excited about this? Why are you even excited about this? What's your response to that?

• 28:30David Hoffman?

  How many million accounts did you say was in PayPal?

• 28:34Ryan Sean Adams?

  450.

• 28:35David Hoffman?

  Now they have a much more direct bridge to Ethereum and going bankless. That pipe is easier and more direct because of this. So they can go from PayPal to Ethereum to a decentralized stablecoin in like five fewer steps now. And while we would like to all have the world go bankless, that is a spectrum and people will choose to go as far down the bankless journey as they would elect. And some people will elect to stay in centralized stablecoins. And that is just fine, in my opinion.

• 29:09Ryan Sean Adams?

  Yeah, I agree with this. This is a step, right? This is slightly more, just slightly more bankless than the existing status quo of dollars inside of the PayPal platform. And why is it good? As just what you said, increases adoption. So we get more private keys in the hands of more individuals. There's now an off-ramp. We load this into your MetaMask wallet. Also, this is a big normalization event, I think, for crypto. It used to be like the, you know, the crypto exchanges, the coinbases of the world, the Krakens of the world who were into kind of the stablecoin business. And now this is PayPal. It doesn't get any more fintech mainstream than this. The last point I would make is this is another example of a third party, a publicly

• 29:51Ryan Sean Adams?

  traded company, actually paying gas fees on Ethereum. Every time you pay gas fees on Ethereum, you make Ethereum more secure. And that cannot be understated, I think. Economic bandwidth, the value and the price of Ether corresponds to security on top of Ethereum. We don't get any of those attributes and any of those wins with just a bank coin inside of the PayPal app, which is what we had today. So this is not like a panacea. This is not pure decentralization we're celebrating. We're celebrating one step forward and that's why it's exciting.

• 30:25David Hoffman?

  So stablecoin transfers, Ryan, are the number two most gas intensive activity on Ethereum as in it burns the most gas after swapping. And we just saw like the stablecoin contract for PayPal. They're going to start burning plenty of Ether too.

• 30:39Ryan Sean Adams?

  Yeah.

• 30:40David Hoffman?

  And but also that's going to be a cost to the business. You know how PayPal can turn that cost into revenue?

• 30:48Ryan Sean Adams?

  I got an idea, but why don't you tell me yours?

• 30:50David Hoffman?

  Why don't they just do the thing that Coinbase is showing the world that's possible? And make their own layer two and all PayPal stablecoin transfers, they can collect their own sequencer fees for. Huh? Huh?

• 31:06Ryan Sean Adams?

  That's a good idea.

• 31:08David Hoffman?

  A PayPal payments network in addition to the PayPal stablecoin. One of the strategies that's hypothesized about the partnership between Circle and Coinbase and the base layer two is to make Circle USD transfers on base free and turn base into a payments network for Circle. So and also they're going to generate revenue from that because of the layer two. Why doesn't PayPal just make its own layer two for its own payments network?

• 31:35Ryan Sean Adams?

  That's really smart. That feels like the next logical step. I mean, yes, you should get a job at PayPal.

• 31:40David Hoffman?

  They should. I should be a consultant for PayPal.

• 31:43Ryan Sean Adams?

  PayPal execs, if you're hearing this, David is excited about this opportunity, bringing you guys a layer two. I also think there's another like point to all of this is with the addition of PayPal US dollars, we didn't lose any of the decentralized options. We didn't lose Ether as an option or DAI as a stablecoin. Like those are all still options and you can still use those if you want to use something a bit more decentralized. So this is only adding to the. That's why I'm personally excited. This is Anthony Sisano summing up his take. Yes, PayPal's stablecoin is centralized. No, that doesn't make it any less cool that PayPal has a stablecoin. Ethereum being a settlement layer for all types of value means that different types of assets will exist on the network and you get to choose which ones you want.

• 32:27Ryan Sean Adams?

  Another subpoint that I think is interesting here, I don't think that PayPal would do this without regulatory confidence. I said regulatory cover, but I mean regulatory confidence here. The US government, I think, wants stablecoins to work. At least some portion of the US government does. Subconsciously it does. And so I think that, you know, this happens at an interesting time where I'd say 2023 was one of the most bearish years for US crypto from a regulatory front. But I still think that people are massively underestimating the chances that the US government might flip bullish, particularly on this stablecoin issue. They might look at

• 33:07Ryan Sean Adams?

  it and say, hey, we need a payment rails to export the supremacy of the US dollar. And this is one more step towards that, the stablecoin step with PayPal. Of course, not everyone on Capitol Hill feels this way. This is Maxine Waters, who says she is deeply concerned that PayPal chose this path versus the federal path. And Matt Walsh makes the comment, "The federal path for issuing a stablecoin literally doesn't exist. What planet are we on?" So some politicians are still complaining about this, even though they haven't provided a path to actually register a stablecoin with them.

• 33:42David Hoffman?

  Maxine Waters being deeply concerned that PayPal is creating a stablecoin while also being the person who blew a kiss to SBF is just like, what lizard people are controlling this planet, dude. Oh, no, I forgot about that. Yeah, of course, she's deeply concerned.

• 33:59Ryan Sean Adams?

  That does look awkward. This is Mike Selig, crypto lawyer. "Banking regulators have essentially said banks can only issue stablecoins on private blockchains. PayPal will issue its stablecoin on Ethereum. This regulatory arbitrage has put a lot of pressure on Congress to pass a stablecoin bill ASAP." The free market always wins.

• 34:18Ryan Sean Adams?

  Yep.

• 34:18David Hoffman?

  One of my takes in my last article was that crypto is an unstoppable force, but the nation state is not an immovable object. And that is what we are saying here.

• 34:26Ryan Sean Adams?

  That's a good take. Yeah, they could definitely be influenced. They'll just stamp approval and legitimize it before long. David, Base ship this week.

• 34:33David Hoffman?

  Drop in the base.

• 34:35Ryan Sean Adams?

  Okay, what is happening? What do we need to know?

• 34:37David Hoffman?

  The base layer two is now live and open to everyone with a two-way bridge. So if you ever make some meme coin gains, you can finally get out.

• 34:47David Hoffman?

  Over a hundred applications and service providers are already ready to go inside of the base ecosystem. And there is an NFT to mint. So if you want to get on base and mint an NFT, mint Base Day One to join the story of bringing the world on chain. That NFT is available to you. Already over 12,000 transactions and $3.6 million has happened, not on Base, but on Uniswap V3 on Base.

• 35:14Ryan Sean Adams?

  Wow, Uniswap V3 is there.

• 35:16David Hoffman?

  Yeah.

• 35:16Ryan Sean Adams?

  Uh huh. Okay.

• 35:17David Hoffman?

  Yeah. So $155 million, part of the TVL of the $10.5 billion TVL on Layer 2s. Base owns 155 million of that, all in the last 24 hours, up to 159, 159. Six transactions per second, you know, not at capacity, still pretty good. And so Base, we are going to watch the Base story with great interest. I think that this, we will look back on and see the reason for why we had a bull market in 2024 and 2025.

• 35:47Ryan Sean Adams?

  What's that reason? Layer 2s?

• 35:49David Hoffman?

  Base, Coinbase, specifically putting all of its marketing and weight behind a base layer two, because they are, like I said, printing money on it. But they are going to take Ethereum Layer 2s, specifically Base, because they now have the incentive. They are going to take it mainstream. There was a conference, not a conference, a festival, Friends with Benefits Festival over in California. And Coinbase and Base had a very significant presence there. And it actually didn't really go around crypto Twitter circles because it's all like culture and music and not nerds and normal people. Coinbase is taking like base marketing to mainstream culture.

• 36:30David Hoffman?

  And so they're just broadcasting and advertising the Ethereum roll up centric roadmap on our behalf, which golf clap, golf clap.

• 36:37Ryan Sean Adams?

  This, you know, this is very cool. This is going to be very good, I think, for our, uh, our metric that we're talking about earlier, layer two total locked value. So you, you said there's already, look, a hundred, it's gone up as we've, we started this episode, uh, almost 160 million total value locked by base right now. It's cool to see them on layer two B. And if you were asking the question, which you very well should. Okay. So how decentralized, it's already number five? Damn. Okay. And if you're asking the question, how decentralized is this thing? Well, layer two B has the answer for you, right? Uh, it's getting there. It's, there's five slices of the decentralization pie that you need to turn green from red to green for base. Base has two of those on layer two B. Uh, it needs three more.

• 37:22Ryan Sean Adams?

  So, um, some upgrades to state validation, upgrade ability itself and proposer failure. We need to, um, get those to a state where they're more decentralized. Um, but you know, the first step is launching a roll up and, uh, that's what base is doing here.

• 37:37David Hoffman?

  So the security pie that you're looking at on layer two B, that the base security pie and the optimism mainnet security pie are actually the same. Uh, because base actually is governed by the optimism collective. Because it is an OP stack chain that is a part. And so this is like the first chain, uh, in addition to the mainnet, the base chain is the first chain to be formally a part of the super chain, which is this thing that meme that people are talking about, which we're going to actually cover in a future bankless episode with Jesse and Ben from optimism. But they are the first major chain to join the collective. And so the base chain is governed by, oh, the OP token.

• 38:16David Hoffman?

  And so when optimism mainnet upgrades to fill in whenever they get in their, um, validity proofs, then all of a sudden base will also gain validity proofs because that's how the collective works.

• 38:28Ryan Sean Adams?

  Santiago Santos has a take on this. Let's take a moment to appreciate the novelty of a centralized public company launching decentralized public infrastructure. Coinbase is a mission-driven company and will likely go down as the most impactful company who pushed crypto to mainstream.

• 38:43David Hoffman?

  Hundred percent.

• 38:44Ryan Sean Adams?

  Coinbase is to Web 3 as the iPhone was to the smartphone industry.

• 38:48David Hoffman?

  Big statement. Wow. Jesse and Brian on the Coinbase podcast, they have their own show now called Onchain Summer Stories because they are just pushing the phrase on-chain. On-chain, on-chain, online, on-chain, online, on-chain. Get it in my head? So let's hear about Jesse and Brian, talk about their collaboration with the OP Collective.

• 39:06Speaker 02

  You know, the collaboration we've had with Optimism, by the way, is really incredible and we're, huge shout out to them. The collaboration's been good and it allows, it's allowing us to move very quickly with this particular L2 solution and we hope it gets broad adoption across every kind of product out there in the space.

• 39:22Speaker 03

  Yep, yep. And a huge plus one to that on Optimism. You know, when we were just trying to kind of get started building an L2, we obviously thought about kind of how do we want to approach this? And I think the thing that was a north star for us was decentralization. It's like, how do we get this decentralized network incubated inside of a public company and then like fully decentralized over the next few years? And as we were trying to figure out how to do that, I think what we identified was having a partner, having like a collaborator in doing, who could kind of help lead the way on decentralization, help kind of push those boundaries for us and help us figure out our path was going to be really valuable. And I think that's where Optimism has really kind of been a great collaborator.

• 40:05David Hoffman?

  And really, I think the main thing that I want to get across in this section is that Fortune 500 companies, Coinbase is showing them the way to becoming on-chain, to being on-chain. This is going to be the first of many, just like how I said, we're saying, hey PayPal could have its own payments network. They are showing the way for Fortune 500 companies to spin up decentralized Layer 2s because we have the technology in the year 2023 to get that done.

• 40:31Ryan Sean Adams?

  Yeah, that is very cool. And by the way, we're going to have another opportunity to sit down with Jesse at Permissionless, which is coming right up. David, you're doing a panel, I believe, with Ben Jones and Jesse of Base and Coinbase at Permissionless. So what are you going to talk about there?

• 40:49David Hoffman?

  Yeah, so probably we're going to unpack the relationship between Coinbase, the centralized company, and the OP Collective, a decentralized DAO that governs over the OP stack. There is just a ton of nuance to unpack there. And I think as Permissionless is coming up, we're a month away? Yeah, one month away. And so there's going to be a lot of conversations about like, okay, but what is the super chain? How do these things form together? How does a decentralized organization like converse with a centralized organization? Lots of questions all about that. And that's happening. A panel that I'm moderating between Jesse Pollock and Ben Jones from Optimism. But that is not the only conversation I'm moderating at Permissionless. New this week that we just got finalized, Vitalik is coming to speak

• 41:30David Hoffman?

  at Permissionless remotely. Me and Vitalik are going to talk about Ethereum for the future. And this is a little teaser for all the people that, you know, for some reason are not going to permissionless, just don't know why you wouldn't. Ethereum, there's plenty of use cases that we talk about. Let's put Wall Street on chain. Let's take, you know, NFTs and make them for brands. But what about all the future use cases that we can't imagine because we don't know the future? What about the future things that Ethereum, the future technologies that Ethereum will be a platform for? So that's a conversation that Vitalik and I are going to kick off Permissionless with right after Eric Voorhees and right before we have Dankrat and a few other Ethereum people talk about the Ethereum roadmap. Just the future use cases that we can't imagine because it's not here yet. So we're going to do our best to navigate Ethereum for the future. And that is going

• 42:15David Hoffman?

  to be talk number two at Permissionless.

• 42:18Ryan Sean Adams?

  Grab a ticket, guys. The September 11th, it's coming right up, so get your ticket. And there's a link in the show notes, as always. David, we were talking earlier about Base and its kind of security pie on L2 beat. Actually Arbitrum took a big step forward in getting one of the slices of its pie from yellow to green and becoming a bit more decentralized. This is not in production yet, but the plan is in place. The DAO just has to vote, the code needs to get pushed to production, and then we're good to go. They are calling it Arbitrum Bold. Bold stands for bounded liquidity delay. Can you give us the TLDR of the Arbitrum release this week?

• 42:56David Hoffman?

  Yeah, Bold basically allows the protocol to enable permissionless validation for all Arbitrum chains. It removes the permission validation set, improves decentralization, like you said. Validation via fraud proofs is currently permissioned in Arbitrum because the protocol is vulnerable to denial of service attacks. But Bold is a protocol that anyone who is running Arbitrum software, the Arbitrum infrastructure, helps solve that problem. So, a single honest validator is now, has the means to win disputes against any number of evil validators. We call this an N over 1 security model, as in you just need one honest person to be participating in the network in order for the network to be honest. It is the gold standard of network security.

• 43:38David Hoffman?

  If you only need one honest person to maintain the network, then you can basically have as many, as the strongest assurance as possible that that network is going to, going to work. So that is Bold in a nutshell. And as soon as Bold gets voted by the Arbitrum DAO into mainnet, gets merged, then all of a sudden, one little yellow slice on Layer 2 beat is going to turn green, and Arbitrum will have the most green slices out of all Layer 2s. I think it already does, but it's going to have even more. Terrence.ETH from Arbitrum, he tweets out a great way to explain this. Before Bold, in order to submit a fraud proof, it would be Terminator style, and you would, in order to win, you have to defeat all your malicious opponents one by one by one. And now with Bold, there's one gigantic fight where you have the superpower to knock out all malicious opponents at once.

• 44:23Ryan Sean Adams?

  The Royal Rumble, and then you have God Mode, huh?

• 44:25David Hoffman?

  Yeah, exactly right. You are given God Mode inside of a Battle Royale, yeah.

• 44:29Ryan Sean Adams?

  That's very cool. This is an entire episode that we did earlier this week on Bold and Arbitrum, so if you want to catch that, there's a link in the show notes and also on your RSS feed.

• 44:39David Hoffman?

  And also at Permissionless, because all the Layer 2s are going to be at Permissionless. Steven Goldtiger from Arbitrum will be there as well.

• 44:45Ryan Sean Adams?

  David, what do we got coming up next?

• 44:47David Hoffman?

  Coming up next, what's going on with Hobi? Should you be concerned? Curve hacker returns some of the funds with a cheeky message and Michael sold some more CRV to pay back his on-chain loan. Is Michael, the founder of Curve, gonna make it? And then a judge rejects Ripple's ruling precedent in the Terraform Labs case. We're gonna unpack all of that and more. But first, a moment to talk about some of these fantastic sponsors that make this show possible, especially Metamask Portfolio. I know you use Metamask, Bankless listeners, so therefore you have Metamask Portfolio. Perhaps you just haven't opened it up yet. There's a link to open up your Metamask Portfolio in the show notes. Let's go hear from them right now. Are you a Metamask user? Well, you're listening to Bankless, so of course you are. The wallet you know and love just got a whole lot better. Metamask Portfolio is the ultimate one-stop shop for all of your crypto needs.

• 45:32David Hoffman?

  It gives you a holistic view of your crypto portfolio across multiple chains and multiple addresses all at once. You can easily view and manage all your coins, tokens, and NFTs in one convenient place just by connecting your wallet. Metamask Portfolio goes beyond just viewing your portfolio, though. Inside the portfolio, you can do all the incredible money verbs that make DeFi so powerful. You can buy, swap, bridge, and stake your crypto assets with ease. It's like having a powerful battle station for all your DeFi moves right at your fingertips. So if you're looking to do more in Web3 your way, Metamask Portfolio is the answer. I already know that you have Metamask Wallet, so go check out your Metamask Portfolio. Learn more at metamask.io/portfolio. Enter Mantle, an entire ecosystem dedicated to the adoption of decentralized token-governed

• 46:17David Hoffman?

  technologies. Mantle, formerly known as BitDow, is the first DAO-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle Network, a brand-new, high-performance Ethereum Layer 2, built differently from the other Layer 2s that you may be familiar with. Mantle asks the question, how would you build a Layer 2 if you had the technology of 2023? Mantle Network is a modular Layer 2, built using the OP stack, but uses Eigenlayer's data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle Network's gas fees by 80% compared to other Layer 2s, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the The biggest DAO-owned treasuries in DeFi, which is seeding an ecosystem of projects from all around the Web3 space for Mantle.

• 47:02David Hoffman?

  Mantle already has sub-communities from around Web3 on-boarded to help the growth of Mantle, like Game7 for Web3 Gaming, or EduDAO for the world of DSI, and Bybit for TBL, Liquidity, and Onres. So if you want to build on the Mantle network, Mantle is offering a grants program that provides milestone-based funding to promising projects that help expand, secure, and decentralize Mantle. If you want to get started working with the first DAO-led Layer 2 ecosystem, check out Mantle at mantle.xyz, and follow them on Twitter at @zeroxmantle.

• 47:31Ryan Sean Adams?

  Polygon and ZKSync had a bit of a scuffle this week over crypto Twitter primarily, but it spilled out into other channels. David, give us the scoop. What happened?

• 47:40David Hoffman?

  Yeah, so Polygon and ZKSync, two creators of the ZK-EVM, probably the two most frontier creators of ZK-EVMs, had a scuffle over attribution about whose code was who. So Polygon wrote this blog post called "Protecting the Open Source Ethos", which is TLDR: "Copy and pasting source code without attribution and making misleading claims about the original work is against the open source ethos and hurts the ecosystem." In the world of open source, there are like these rules of engagement for citing open source work. And Polygon is saying that ZKSync did not follow those rules of engagement and did not provide proper attributions

• 48:21David Hoffman?

  when ZKSync borrowed some of Polygon's code that they created. And so that is the claim from Polygon about ZKSync. And then ZKSync, of course, has a response from Alex Lukowski on Twitter, saying, "We actually did all of these attributions. Polygon just didn't feel like they were satisfactory", and then started making citations about when they were using their own code versus Plonky2's code, which is... Polygons, it was, it was a fight of who owes who credit and it elevated and got into the world of front-facing crypto Twitter. Most of this stuff, most of these fights happen, you know, just between these two organizations behind closed doors, but it surfaced and got

• 49:06David Hoffman?

  into quote unquote, "the real world." That's the, that's the TLDR.

• 49:10Ryan Sean Adams?

  A bit of drama, huh? You know, the kids are gonna fight, I think. That's, that's what this looks like.

• 49:15David Hoffman?

  This is a little spicier in the Layer 2 war space than I would have enjoyed. All the other Layer 2 wars has been pretty fun. This one was a little bit, it's too spicy.

• 49:23Ryan Sean Adams?

  Yeah, a little bit of a downer. I don't think mainstream is paying attention to this at all. This is very much an internal.

• 49:28David Hoffman?

  It is a question of like legitimacy, right? That is the big question here.

• 49:31Ryan Sean Adams?

  Well, I'm happy to leave that one in the rearview mirror. So, moving on, speaking of rearview mirror, actually, last week, Curve was a big subject on the rollup and particularly, is Curve going to make it? Was CRV and some of Michaels, the founder of Curve, were some of his positions on lending and borrowing protocols going to be liquidated? Would that cause a cascade that would be bad for those protocols and bad for DeFi in general? David, this week, it's looking like Michael is gonna make it.

• 50:02David Hoffman?

  He's gonna make it, yeah.

• 50:03Ryan Sean Adams?

  Maybe? What happened this week?

• 50:05David Hoffman?

  Barring any sort of further black swan events, which I would consider as why Michael was underdressed in the first place, it was a black swan event of the day's, day one bug in Viper. So, first, an exploiter returned some of the stolen funds from Alchemics. So, 4,820 Alchemics Ether was returned, as well as 2,258 actual Ether, which is about 15% of the total losses in the Curve exploit. And then Michael as well, also sold 75, 72 million CRV to 15 entities to generate $42 million to pay back some of his loans. And so, some good news. Michael's positions are becoming more secure. The Curve exploiter

• 50:45David Hoffman?

  is returning some of the stolen funds. I think one of the funny things is that in the transaction, in the call, in the data for the transaction, the exploiter wrote this message saying, "I saw some ridiculous views, so I want to clarify that I'm refunding you, not because I think you can find me, it's because I don't want to ruin your project. Maybe it's a lot of money for a lot of people, but not for me. I'm smarter than all of you." Is what the exploiter said.

• 51:11Ryan Sean Adams?

  Yeah. What a dick.

• 51:13David Hoffman?

  Yeah, wow. So Curve Finance has extended a bug bounty to offer anyone who is able to identify the exploiter 1.85 million dollars. And so if you know who the exploiter is, you can get paid 1.85 million dollars. But the Curve exploiter is saying, "You can't find me. Niner, Niner, Boo Boo."

• 51:35Ryan Sean Adams?

  It seems like the Curve trauma is sort of over, though. Is Curve price recovering? Michael's not going to get liquidated?

• 51:43David Hoffman?

  Michael's probably not going to get liquidated. He's probably fine. Whether the, I mean, the Curve price is definitely hurt, but it's not, it's definitely, it's definitely still alive. It's doing just fine.

• 51:54Ryan Sean Adams?

  There's a comment, a summary from Michael Bentley from Euler who says this, "If there's one thing that's clear from recent events, DAO governance of lending protocols is not a great idea. Most people are simply not qualified in possession of sufficient information to determine appropriate risk parameters in complex protocols whose risks evolve in time." I should say, Michael from Euler, of course, has a lending and borrowing protocol that does not require governance of this type. But I think he's making a commentary on some of the governance decisions in protocols like AVE that allowed so much Curve to actually be deposited into their protocol. There was votes about this. We talked about this last week, and the votes passed, even though the CRV deposited was kind of very clearly owned,

• 52:40Ryan Sean Adams?

  the vast bulk of it owned by one individual. There's some, you know, risk issues that fell out of that. Do you think that's a fair take from this entire episode?

• 52:50David Hoffman?

  Yeah, I'm glad you asked, because I actually think that governance-free protocols are a very core component of the bankless thesis, of the Protocol Sync thesis. If we can do all of our decentralized financial activities without governance, then we ought to. Governance, I've always thought, is like a stopgap means to an end, and it's exactly what happened with AVE, where Gauntlet submitted a governance proposal saying, "Hey, there's risk here. You guys should take care of this." And AVE was like, "No. Vote no. 100%." To zero and then exactly what Gauntlet feared would happen would happen. And like I talk, we talk shit about the Federal Reserve and their human control over the economy all the time.

• 53:30David Hoffman?

  And then we juxtapose that with Ethereum and its algorithmic balancing dynamic monetary policy. And we applaud Ether. And I think we should do the same for all of our governance applications. Should be looking to minimize governance as much as possible. That's my articulation of the bankless thesis. I don't know if you agree.

• 53:48Ryan Sean Adams?

  Yeah, no, I totally agree that like governance is sort of a hack, but sometimes it's necessary. Like sometimes you really need it and sometimes you need it for kind of scalability. I mean, how could you do real world assets without that sort of governance? And so I also think that governance will level up over time. So now in AVE and other lending and borrowing protocols, they'll see where this went awry. Maybe they won't make the same mistake in the future. So long as they have skin in the game, that, that, that I think is the, the main point. And um,

• 54:14David Hoffman?

  Right.

• 54:15Ryan Sean Adams?

  So it's kind of different than, than the Fed who actually, I mean, what do they, what do they care about the decisions they make?

• 54:21David Hoffman?

  That's a good point. AVE holders are being stuck with the bag and the Fed can do whatever it wants. That is a good point.

• 54:29Ryan Sean Adams?

  This is interesting, David. Phantom is exploring adding optimistic rollups to connect to Ethereum. All right. You're laughing. Why are you laughing?

• 54:37David Hoffman?

  Oh, it's because the L2 thesis, man. Dude, there are just like, I was sitting and reflecting upon this agenda and just over the last few weeks. There are some bankless theses that we have put forth that are coming true in the best of fashions. Like it was one thing when the Cello organization voted to move to a layer two, but now Phantom also looking at this and like, oh, we could become a layer two. And now if there's a meme that, that when you see memes about this stuff, you start, you know, that it is becoming deeply solidified in people's mind share. What we are looking at is somebody has made a bingo card of all of the, of the layer ones that could potentially become layer twos. Like some things you probably haven't thought about in a long time. Stellar, iota, EOS, V chain, flow, flux, Kanto.

• 55:23David Hoffman?

  ETH Classic would be hilarious. Tezos, Apdos, Wave.

• 55:27Ryan Sean Adams?

  Never do it.

• 55:27David Hoffman?

  You think so? Yeah, probably not. Near might. Tron, probably not. Anyways, we have Cello and Phantom. So we have 1, 2, 3, 4, 5, 5, 5, 5, 25.

• 55:35Ryan Sean Adams?

  I actually think Tron might, David.

• 55:38David Hoffman?

  You think so?

• 55:38Ryan Sean Adams?

  I could totally see Justin Sun doing that.

• 55:40David Hoffman?

  Maybe. Yeah, actually, that's a good point. Okay, so we've got 25 squares with 25 Layer 1s. Two of them are turned green because of Cello and Phantom. I guess, well, Phantom actually has to do it. So maybe we're at 1 and 1/2. But this has been a bankless thesis for so long. And I'm just, I just sit back and be like, sometimes theses just play out exactly how you expect them to.

• 55:59Ryan Sean Adams?

  There's David Hoffman victory lap.

• 56:01David Hoffman?

  I am victory lapping so hard.

• 56:04Ryan Sean Adams?

  Well, I think, I do think this is a narrative to watch, right? Is which sidechain, EVM sidechain, is going to become a rollup next? And that's what this is kind of articulating. This is a tweet from Sam CZ Sun, who's kind of the savior of crypto. A white hat.

• 56:18David Hoffman?

  A white hat of white hats, yeah.

• 56:19Ryan Sean Adams?

  Yeah, white hat of white hat that finds our issues before they happen in most cases. "Over the past few days, I've been working with a group of white hats, auditors, and other security leaders to try and solve the hardest part of responsible disclosure: finding the right person to talk to." And he's got an image of the bat signal here. What's the take for this? Why are we including this in the agenda?

• 56:41David Hoffman?

  So this is a Telegram bot is basically what's going on. So there's a Telegram bot that anyone can use during emergencies to get in touch with trusted members of the security white hat community, so trusted white hat hackers, and their extensive network of contacts. It's basically 911 for DeFi protocols. It's, I actually think, I'm so proud of Sam. Obviously, he doesn't need to be any more proud.

• 57:05Ryan Sean Adams?

  Just like 911 is.

• 57:06David Hoffman?

  Yes. Except it shows, it is an example of self-regulation and self-management of this own industry. Not only is it a public good, but it is also a sign of maturity for what needs to happen if we are also going to have permissionless finance.

• 57:21Ryan Sean Adams?

  I don't think we can make that point enough, honestly. It's like, the regulators look in and say, crypto's completely unregulated and the crypto markets aren't doing anything about it. And then I look at things like this. It's like, no, we are doing exactly what you should be supporting us to do. You know what? I also look at, you know what's another example of this? Is L2 freaking beat, okay? This is better than anything the SEC is or CFTC has ever put forward for disclosures in crypto. It's creating a staging process for how decentralized our layer twos are.

• 57:53David Hoffman?

  Right.

• 57:53Ryan Sean Adams?

  And creating a scoring map. That is the industry regulating itself. And I think that should be commended. So, very cool to see Sam CZ doing that. David, this is also cool. Nearly $3 million in sales in the last 24 hours for DraftKings NFTs. I guess the theme this week is companies buying block space and using crypto, right? So this is DraftKings. You know, DraftKings is a, it's a fantasy sports betting.

• 58:22David Hoffman?

  Sports industry, sports.

• 58:24Ryan Sean Adams?

  They're in the, yeah, sports fantasy betting. Do you know this is a, let me show you a stock. Have you ever looked at a stock before?

• 58:29David Hoffman?

  Wow.

• 58:30Ryan Sean Adams?

  It's a public company. DraftKings is worth about $2 billion, something like this.

• 58:36David Hoffman?

  12, 13 billion dollars, 13.

• 58:38Ryan Sean Adams?

  Oh, $13 billion, 2 million in revenue. Still 2 billion in revenue last year, 13 billion dollars. Sorry, I'm a little rusty on looking at stocks here. Yeah, and they were, according to Sandeep here, they were the number one collection by sales volume on Polygon. So they beat Board Apes, they beat a lot of other things, so.

• 58:59David Hoffman?

  They beat Board Apes on the Ethereum Layer 1. $3 million in sales on Polygon, which is the number one of sales across the NFT industry in the last week.

• 59:08Ryan Sean Adams?

  Wow, that's crazy.

• 59:10David Hoffman?

  Yeah.

• 59:11Ryan Sean Adams?

  Right?

• 59:11David Hoffman?

  Yeah.

• 59:11Ryan Sean Adams?

  And I don't even know about this, because I don't pay no attention.

• 59:15David Hoffman?

  Yeah, I don't watch boards.

• 59:17Ryan Sean Adams?

  It's very cool to see that that's bleeding outside of crypto culture, though. But going back to crypto culture, what's this from Frank D. Gods?

• 59:25David Hoffman?

  Yeah, so Polygon gets a dub, but then also Polygon takes an L. Utes gets heated from Polygon to Ethereum. So Utes is to D Gods, like mutant apes are to Board Apes, basically a derivative project. Same team. Utes is like the expansion collection. D Gods, Utes, they were a big NFT hit on Solana before migrating to Polygon. We actually had. Frank from D-Gods on the show to talk about this after moving from Polygon, from moving from Solana to Polygon. As the bear market wore on, economies shriveled up, including the Solana ecosystem. So Polygon gave a $3 million grant to Utes to migrate to Polygon specifically. So fast forward to today, D-Gods has done well on Ether,

• 1:00:09David Hoffman?

  Layer 1, and it actually has given the D-Gods, Utes, Y00TS team.

• 1:00:17Ryan Sean Adams?

  Utes.

• 1:00:18David Hoffman?

  Utes, it's given them confidence that they actually can be a blue chip NFT on the Ethereum Layer 1. They actually don't need Polygon. So they are migrating from Polygon to the Ethereum Layer 1. They are also returning the $3 million grant to Polygon as well. And so that's the news. So from Solana to Polygon to Ethereum.

• 1:00:36Ryan Sean Adams?

  That sounds like just a pure business decision to me. What do you think?

• 1:00:39David Hoffman?

  Yeah, that's right. Well, it also shows the gravity well that is the Ethereum Layer 1. So like, if the, the, the goal of all high value assets is to be on the Ethereum Layer 1.

• 1:00:49Ryan Sean Adams?

  David, uh, did you see this, this clip? This is a Joe Biden clip. You ready for this?

• 1:00:56David Hoffman?

  He's drinking coffee.

• 1:00:57Ryan Sean Adams?

  Look at his mug. Yeah. Look at his mug. I like my coffee dark. What is that? What's on his mug, David?

• 1:01:06David Hoffman?

  For the podcast listeners, he is drinking a mug of Joe Biden's bust 2024 with some glowing, deep red, laser eyes.

• 1:01:15Ryan Sean Adams?

  Laser eyes.

• 1:01:16David Hoffman?

  Laser eyes.

• 1:01:17Ryan Sean Adams?

  Bitcoin maximus laser eyes. Wow.

• 1:01:20David Hoffman?

  Where did that come from?

• 1:01:22Ryan Sean Adams?

  Yeah, I, I don't think it's related to Bitcoin, unfortunately, David, even though there was some, some hope or speculation. I think this is a different meme from a different corner of the internet that crossed into, into crypto for a brief moment here. It's like a Dark Brandon meme, I think, that his campaign is using.

• 1:01:39David Hoffman?

  Let's not unpack that.

• 1:01:40Ryan Sean Adams?

  It's nothing to do with Bitcoin.

• 1:01:43Ryan Sean Adams?

  All right, well, let's try to unpack this a little bit, even though we don't know too many details. Is Huobi insolvent? That is a centralized exchange. I believe they are based in China. And a fairly large one, at least like, you know, at some point in time is top 5. I'm not sure where they stood right now, but there's some questions around its solvency. What do we know so far?

• 1:02:03David Hoffman?

  Yeah, so some financial media organizations in Hong Kong have reported that several executives at Huobi have been taken away by police in China. A spokesperson for Huobi denied this. Huobi's stablecoin exchange balances dipped by 33%, so they lost a third of stablecoins. So almost $50 million has been withdrawn from Huobi. I'm pretty sure I remember this story happening like 2 years ago, exactly as written as-

• 1:02:28Ryan Sean Adams?

  With Huobi?

• 1:02:29David Hoffman?

  With Huobi, yeah. Rumors of Huobi's solvency, executives taken away by Chinese government, and then nothing happened.

• 1:02:36Ryan Sean Adams?

  So what do you think? Is this another repeat?

• 1:02:40David Hoffman?

  I don't know.

• 1:02:40Ryan Sean Adams?

  All right, well, don't keep your funds on centralized exchanges, kids, as another reminder. David, you'll never guess this headline. "With AI booming, Gary Gensler wants to keep finance safe for humans." "The head of the SEC is focused on the risk to markets and investors when AI is making trades and recommendations." David, this is Gary Gensler. He is pivoting from crypto to AI.

• 1:03:03David Hoffman?

  Great, great.

• 1:03:05Ryan Sean Adams?

  Yeah.

• 1:03:06David Hoffman?

  Focusing on AI, keep on focusing on AI. I think this is just like, this is the emperor is wearing no clothes, and it proves it. It's just like Gary Gensler is just trend-following as the influencer that he is, and now he's focused on AI. Because AI is totally going to disrupt securities markets. Like crypto, he actually has some like, some foundation to stand on because these are financial assets. What is going on in the AI market that needs Gary Gensler's attention?

• 1:03:36Ryan Sean Adams?

  So you think he's just fear chasing, just narrative chasing?

• 1:03:39David Hoffman?

  Yeah, he's being an influencer, yeah.

• 1:03:42Ryan Sean Adams?

  So Gary is going to say, like, I can't-

• 1:03:44David Hoffman?

  Next year, he's gonna, or next week, he's gonna rotate to semiconductors. It's gonna be great.

• 1:03:48Ryan Sean Adams?

  I can't think of anybody who actually wants him to do this. Like, what is he? How is he going to keep finance safe for humans in the world of AI?

• 1:03:55David Hoffman?

  Rogue human.

• 1:03:57Ryan Sean Adams?

  Like, what practically does that even mean? Speaking of weird headlines, an FTX lobbyist tried to buy a Pacific island called Nauru in order to create a new superspecies. What?

• 1:04:07David Hoffman?

  A superspecies, yeah.

• 1:04:09Ryan Sean Adams?

  This was the younger brother of Sam Bankman-Fried. His name is Gabe Bankman-Fried, and he tried to buy an island to create a new superspecies of human beings, genetically modified human beings. Is this even real? Like, what is going on here?

• 1:04:22David Hoffman?

  Okay, so this is called the transhumanist movement. It's not actually all that cringe, except when you pair it with SBF and all the effective altruism groups and also all the wealth that they have, then it starts to get really weird. So, yeah, he wanted to buy an island to create a fortified apocalypse bunker state in the event where 50 to 99.9% of people die for some sort of reason to protect his philanthropic allies and create a genetically enhanced human species. This is the headline that we are reading to you.

• 1:04:57Ryan Sean Adams?

  Wow. Uh, yeah, I don't know what to say. I'm speechless.

• 1:05:00David Hoffman?

  You don't have to say anything. We can just let the headline stand on its own and move on, please.

• 1:05:06Ryan Sean Adams?

  David, this was a really cool demo this week. I feel like this is a major unlock for wallets. Goldfinch Wallet. This is their Unipig moment. Do you know what I'm talking about when I say Unipig moment?

• 1:05:17David Hoffman?

  I do. I bet you about 80% of Bankless listeners does not.

• 1:05:21Ryan Sean Adams?

  Okay, what was Unipig?

• 1:05:23David Hoffman?

  Unipig was the demo between Optimism and Uniswap. And it was the first iteration of an optimistic rollup deployed to Ethereum that was just meant to be a Uniswap application. So back before we knew about Layer 2s and the way that we know them now, it was the first implementation of Layer 2s. And it was like, everyone was having this like breakthrough aha moment when, after being used to Uniswap on the Ethereum Layer 1, they used UniPig, which was a Uniswap fork, on an optimistic rollup, very early version of Optimism, as a Layer 2, and everyone realized that, oh, it's Rollups, rollups are where it's at.

• 1:05:59Ryan Sean Adams?

  It was a breakthrough, it was a breakthrough demo and we're still years from getting rollups to mainnet. But every

• 1:06:05David Hoffman?

  Yeah, this was 2019, 2020.

• 1:06:06Ryan Sean Adams?

  Everyone who saw this, yeah, we were like, oh, okay, this is how Ethereum is going to scale.

• 1:06:10David Hoffman?

  Yeah.

• 1:06:10Ryan Sean Adams?

  So I saw something similar when I saw this demo. This is a wallet demo. You can access it at DeFi for the world. And basically in about like 15 seconds, you can open up a wallet with no seed phrase, biometric signing as well. So it works on your phone, kind of, you know, face scan. It's self custody. Okay. So private key accessible. There are some compromises on it, but like it just felt so easy to use and set up. Oh, I should mention full account abstraction. So gasless transactions and deployed on base, deployed on a layer two as well. Right? So this is the diagram of how it works.

• 1:06:53Ryan Sean Adams?

  There's a, you know, a web standard that's commonly used is called passcode that can, you know, use the secure enclave of your phone. Every phone has a secure enclave that is authenticated via, you know, PIN number or biometric access, you know, ID, face ID. And then the private keys are actually stored inside of a third party called Turnkey. That's probably the point of weakness for me, but Turnkey has a really interesting component. Anyway, this, this, another third party called Zero Dev bundles this up and makes account abstraction work. And the whole experience is you get a wallet in about like five seconds and it feels very fintech.

• 1:07:30David Hoffman?

  The most bankless wallet possible inside of, inside of five seconds.

• 1:07:35Ryan Sean Adams?

  I would say so, right? There's a few weak points maybe, but I would say so. And what's exciting to me and why this is comparable to the Unipig moment for me is like, okay, now I see the future. The big next step for crypto is we have to make wallet UX easy. If we're going to get to a billion users and they're not going to use some centralized exchange or service, we have to make this whole process of setting up a wallet and holding your own private keys very easy. And this was a big step towards accomplishing that. So really cool, exciting demo.

• 1:08:05David Hoffman?

  Another paired announcement, Turnkey, which is what We were talking about that powers this whole thing is out of private beta and is now available for people to play with. No widgets, no pre-built generic UXs, no limits on what you can create. There's a link in the show notes to get started with turnkey if you so choose. Perhaps this is the Cambrian explosion of wallets going into web two. Moving on to Zora, Zora has introduced protocol rewards on chain rewards for creators and devs. Possible by Zora's mint fee, which now automatically splits across creators and developers. All right, getting into raises of the week and we've made a decision in the templates for the bankless weekly roll up. And so we're going to articulate what we are going to do with the raises section.

• 1:08:46David Hoffman?

  We've had trouble in times deciding which raises to talk about and which raises to not talk about because we didn't really have a standard for making this concrete. So here's what we're going to do going forward. Any big raises that like reverberate throughout the crypto ecosystem that is like news, we will talk about. And then we are also going to include anything that bankless ventures is investing in. So as a inception of the moment of a conflict of interest, whenever bankless ventures, our VC company, our VC firm, invests in something, we will also include it in the raises. So big raises that become large enough to be news and then also the moment of inception of a conflict of interest about when bankless ventures invested in something.

• 1:09:25Ryan Sean Adams?

  Yeah. So this week there were really no big raises that were on our radar. So normally we would skip this section. But there was a bankless ventures investment this week, Puffer Finance. They just raised a $5.5 million seed. Bankless ventures was part of that. David, why did we invest in Puffer?

• 1:09:41David Hoffman?

  Yeah. So Puffer is a LSD protocol and joining the ranks of like Lido, Rocket Pool, Stater, Diva, Swell. And so it is going to have an LSD. It is different from all of these. It's got this one unique differentiator that I think really sealed the deal for me personally, which is inclusion of trusted execution environments inside of the LSD ecosystem. And so trusted execution environments, it's this primitive that are a part of just chips and hardware that Puffer is incorporating into their LSD. And so Things like Scroll and Eigenlayer that need trusted execution services can have those services specifically enabled by Puffer and allows for the Puffer LSD to get extra

• 1:10:23David Hoffman?

  yield by providing TEE to the Ethereum ecosystem. Sriram from Eigenlayer is an angel investor, as well as a member of Obel, which is also perhaps a user of TEE. And so that competitive advantage of TEE as a service is what attracted me to and Bankless Ventures to this deal.

• 1:10:42Ryan Sean Adams?

  Yeah, congrats to Puffer on that raise. We got a lot more coming up next, including some questions from the nation. ETH versus Layer 2, token value capture. We're talking about that again, and some hot takes from crypto Twitter, including why the Bitcoin ETF is a bigger deal than you might think. As always, make sure you like and subscribe if you appreciate the content. We'll be right back.

• 1:11:02David Hoffman?

  Introducing Polygon 2.0, the value layer for the internet. For too long, the limitations of blockchains have held back app development and stifled user adoption. The internet allows anyone to create and exchange information. What's missing is a value layer that lets anyone exchange, store, and program value. That's where Polygon 2.0 comes in. Polygon Labs has unveiled a series of innovations that will radically alter the Polygon ecosystem and Web 3 as a whole. By leveraging groundbreaking ZK innovations such as Polygon ZK EVM, the next iteration of the best-in-class Plonky 2 proving system, and a first-of-its-kind ZK-powered interoperability layer, Polygon 2.0 will give users and devs unlimited scalability and unified liquidity. Right now, there is a Polygon improvement proposal regarding

• 1:11:45David Hoffman?

  a potential ZK-powered upgrade of Polygon proof-of-stake. If approved, Polygon proof-of-stake would become a Layer 2 ZK EVM, Vilidium. So make your voice heard on this proposal by joining the Polygon Discord today. You have a chance to help the Polygon community give the internet the value layer it deserves. Are you planning to launch a token? Is your token already live? And are you granting your employees and contractors vesting token awards? And are you trying to figure out how to take care of taxable events for your team? Toku makes implementing a global token incentive award simple. With Toku, you will get unmatched legal and tax support to grant and administer your global team's tokens. Toku will help you navigate across the lifecycle of your token. From easy to use pre-launch token grant award templates to managing post-cliff taxable

• 1:12:27David Hoffman?

  events with payroll. For legal, finance, and HR teams, it's a huge, complex task to have to comply with labor laws, payroll, and tax obligations, tax reporting, and crypto regulations in every country that you employ someone. It's difficult, time-consuming, manual, and costly, and it's drawing more attention from global regulators and governments. Toku makes it simple for leading companies in the space: Protocol Labs, Hedera, Gitcoin, and many more. So if you want some help navigating the complex world of token compliance, go to toku.com/banklist or click the link in the description below.

• 1:12:56Ryan Sean Adams?

  Questions from the nation this week, this one from cyogi.eth. Is there a reason to think that implementation of massively lower-cost L2s won't tank the demand for the use of Ether, which is one of its pricing factors? And what do you think about that? We get all this cheap block space on Layer 2. Does that tank the price of Ether?

• 1:13:13David Hoffman?

  Yeah, so this is the conversation of our Layer 2s. Our Ethereum Layer 2 is parasitic to Ether. And the answer is yes and no, but I would definitely say mostly no. And I think we saw this in the episode when we talk about Utes migrating from Solana to Polygon to the Ethereum Layer 1. While Polygon does pull TVL from the Ethereum Layer 1 to Polygon, or any Layer 2 does this, also Ethereum itself is its own gravitational pull for liquidity. So it's a yes and conversation. Ethereum Layer 1 is going to have the most central liquidity in all of its own landscape. And so the massively lower cost of Layer 2s are going to actually induce new

• 1:13:54David Hoffman?

  transaction types, new types of economies, that require low transaction fees, whereas the Ethereum Layer 1 is going to be the epicenter of liquidity and high-value transactions. And so I always have said that Layer 2s will actually induce net new economic activity rather than being more parasitic to the Ethereum Layer 1. But then also, ETH will become money inside of all of these networks. And so the way that Layer 2 economics works is that Ether... It sacrifices the value of the transaction economy, the value of transactions, you know, gas fees, to the Layer 2 tokens inside of each respective Layer 2. But it wins a pluralist network economy that all these networks use Ether as its reserve currency.

• 1:14:38David Hoffman?

  So in order to give room for these Layer 2s to exist, it gives up the transaction economy, the gas fee economy, to the Layer 2 tokens. But it wins another network that uses Ether as money. And to follow through on this thread, I put out a tweet this week. Last bull market, Ether was money only for Ethereum. This bull market, Ether will be the money for the majority of chains, for Polygon, for Arbitrum, for Optimism, for Base. And then I finished with saying, this cycle, ETH becomes money for the internet, is my bull take of the week.

• 1:15:08Ryan Sean Adams?

  Yeah, I think that's right. I would add this take from Sudo. L2 business models are actually really simple. Layer 2 fees minus Layer 1 settlement cost plus verification equals profit. Layer 2s are really value-added resellers of Layer 1 block space. I don't think they're any more competitive than states are competitive with the federal government in this world. Of course, there's always that one state who could get really, really, really, really big and then threaten to secede from the federal government. But I don't think we're there yet. And as always, the US dollar in the kind of the United States becomes the currency of all of its respective states in the Union. So that's how I expect that'll play out. Hey, we got some takes of the week. This is the first one from David Bailey.

• 1:15:53Ryan Sean Adams?

  It's not just the insane flows. The ETF is truly the definitive integration into our financial system. You can own ETF shares tax-free in your IRA. Your bank will recognize ETF shares when you apply for a mortgage. You can borrow against ETF shares. You can margin ETF shares. You can lend out your shares and gain yield. If 100 billion flows into the ETF next cycle and the price of Bitcoin is 10x, 1 trillion dollars of ETF wealth will cause trillions of new credit within the financial system. Tens of millions of Americans will see their assets balloon in value. This is really the bull case, I think, for the ETF, which is the Bitcoin ETF, which I still am holding. I think it happens this year or shortly after, but I'll say this year as a shortcut. We will get a Bitcoin spot ETF.

• 1:16:38Ryan Sean Adams?

  That represents after, how long has Bitcoin been in existence? 12 years, 13 years? Okay, that represents.

• 1:16:45David Hoffman?

  13, 14, 14, 13.

• 1:16:47Ryan Sean Adams?

  Okay, so close to that. That represents financial integration into the traditional system, which is absolutely crazy that we've come here. Like gotten this far in just over a decade. The ETF will be an absolutely massive win, and I think we're on the cusp of it.

• 1:17:04David Hoffman?

  I think to put this into language that I think Bankless listeners will be familiar with. The ETF is a money Lego that is very important for getting Bitcoin into TradFi so that it can go in margin accounts and it can go in yield accounts and it can just be expressed in TradFi. And so it creates, induces a ton of reservation demand for Bitcoin. It is the building block that we need for Bitcoin to be incorporated in TradFi.

• 1:17:29Ryan Sean Adams?

  Yeah. This is a take from Dankrad. PSA, if it doesn't use Ethereum for data availability, it's not Ethereum rollup and therefore it's not Ethereum layer two.

• 1:17:39David Hoffman?

  Wow, Dankrad, the hardliner, alright.

• 1:17:42Ryan Sean Adams?

  There was some back and forth, a lot of commentary sort of debating that, right? And this goes to what's the definition of a layer two and what's the definition of a rollup? And I think we're playing kind of like games of words and games of definition, which by the way is not a bad game to play. I think we need to be precise in our language and in our definition. So I think Dankrad is making the case that it can only be called a layer two and/or an Ethereum rollup if it does two things. One consensus on Ethereum, which is of course based, but also data availability layer on Ethereum. Okay, so that would cut out a class of what some people would call rollups called Validium, which they, you know, park their consensus data on Ethereum, but data availability, it could be somewhere else.

• 1:18:26Ryan Sean Adams?

  You know, Arbitrum Nova is the example of this. Immutable has lots of versions of this. There's all sorts of, you know, the Polygon proof of stake system is moving more towards a Validium type of architecture. So it's really a question of what gets it to call itself a Layer 2 or an Ethereum roadmap? And Dankrat here is saying unless the data availability is on Ethereum, it's not a rollup, at least according to him. What's your take on this?

• 1:18:53David Hoffman?

  I think that's right. Yeah. So we have Ethereum rollups and then we have rollups. And both can hook into the Ethereum Layer 1. But Dankrat is saying in order to be a rollup that is an Ethereum rollup, you must use Ethereum data availability. And so he's like presenting the hardliner argument for how you legitimately call yourself an Ethereum rollup. But then it's leaving room for non-Ethereum rollups to still settle to the Ethereum Layer 1. You just use a different data availability solution like Eigenlayer data availability.

• 1:19:23Ryan Sean Adams?

  Does it even matter?

• 1:19:25David Hoffman?

  It does. Yeah, because EIP 4844 is allowing Ethereum block space, which is the most pristine World War III resistant block space in existence, to be allowed for Layer 2s. And so if they want to use, it's supposed to say like, hey, you can use this and have the best insurances. It's still going to be the most expensive version of data availability, even if it's 100 times cheaper than it already is today. Because you can also just use like a self-run database and that'll be even cheaper for you. So there's always, there's going to be a different ways to use data. And Dankrat is saying, well, if you want to be the gold standard, which is Ethereum, you need to use EIP 4844. You need to use Ethereum.

• 1:20:07David Hoffman?

  And if you don't use the gold standard, then you don't get to use the Ethereum brand as your rollup name.

• 1:20:13Ryan Sean Adams?

  Which is not out yet, by the way. EIP 4844 is not available yet, but will be soon.

• 1:20:19Ryan Sean Adams?

  Yeah, I could see that. I think for myself, until this is sort of the dust settles with what the, you know, the community decides is, you know, kind of how we're going to name these things. I'm going to start being a bit more deliberate in talking about Ethereum rollup versus a Validium.

• 1:20:34David Hoffman?

  Yes.

• 1:20:34Ryan Sean Adams?

  Uh, David, you got a take here? I'll read it out. "The chapter of 2021 to 2022 scammers is coming to a close, but our 2024 to 2025 chapter of scammers is about to begin." Oh, that doesn't sound good, David. "Those who would harm this industry walk among us today. Let's not repeat 2022. Let's stay vigilant. The SEC and mainstream media aren't going to help us. It's up to us." Uncle Sam picture pointing at us. David, are you, um, charging us with some responsibility during the next bull market?

• 1:21:03David Hoffman?

  Almost always am I charging people with responsibility. So this is just a continuation of my take from last week about Doquan, Alex Wachinski, SBF, Three Ours Capital, Richard Har, all going to jail or being fined in some prospective way. So we get to celebrate about that, but also reminder, bull markets attract grifters. And so if we are going to enjoy a bull market, we need to also be aware that it is going to attract grifters and is going to bring us a new cohort of scammers. And so we should be cognizant about how that is also going to happen and take our lessons of 2021 and 2022 forward so that we can be better in the future.

• 1:21:40Ryan Sean Adams?

  That's a good take. Uh, what do you bullish on this week, man?

• 1:21:44David Hoffman?

  Bullish on the OP stack, man. I've been bullish on the OP stack for a while. The, I made the OP stack video about like what the OP stack is and why I think it's exciting in November of 2022. And this was after I wrote my EVM equivalence article. This is my second victory lap of the week of this, of the episode.

• 1:22:01Ryan Sean Adams?

  You only get two per week, okay?

• 1:22:04David Hoffman?

  I, I, first, I just like, am so proud of the optimism team for having the conviction and the vision that they had from day, day one. One of the original things that they wanted to do is connect transaction ordering to public goods, sequencer fees to funding public goods, raw degeneracy and Moloch turning into Ethereum's Phoenix and funding sustainable open source projects that can scale out to the world. And this, they've had this same convicted thesis from the get-go. And now... Coinbase, a public company in crypto, launching a layer two using the OP stack, which is meant to be forked and meant to be iterated on and meant to be spawning 10,000

• 1:22:45David Hoffman?

  chains. All of a sudden, they're creating the OP collective, which is going to have weight and bargaining power for public goods, and it's going to be financed by the OP's people forking the OP stack and wanting to join that collective. It took such strong vision and execution back in 2018, 2019, when the optimism team came together out of the Plasma Group, and they just followed through on it in, I think, fantastic sense. And I just, it's beautiful when you see a plan come together and also a plan that I think just goes so deep to the values of Ethereum and scaling Ethereum values. It's just nice to see, it's just nice to see what I consider to be the good guys take a huge dub. And so just big clap to the optimism team.

• 1:23:30Ryan Sean Adams?

  It all started with Unipig, didn't it?

• 1:23:34Ryan Sean Adams?

  Yeah, very cool. I think the thing I'm bullish on is similar, but also broader, which is this, I'm bullish on all layer twos, in particular, this really crafty approach, I feel like Ethereum, the Ethereum community and the Ethereum Foundation had with respect to layer twos. This is an episode that's not out yet, but I got pre-listened access from our Pod Squad team, and thank you for recording it, David.

• 1:24:00David Hoffman?

  What episode are you talking about?

• 1:24:01Ryan Sean Adams?

  The Sci-Fi Roadmap for Ethereum with Justin Drake and Tim Bako. By the way, I haven't finished it yet, but I can't wait to go back to it. It's not an RSS feed. I'm gonna do this weird, you know, Google Drive. Anyway, so I'm listening to it. And then Justin Drake is describing basically layer twos. And what's incredible to me is when he talks about how layer twos are basically funded, massively funded by investor dollars, by VC dollars, and this is the private market taking the execution layer for Ethereum and launching like 50 different incredible experiences, experiments on it, and then accelerating those experiments so fast.

• 1:24:45Ryan Sean Adams?

  Because they have all of these disparate teams and all of this, this, this capital going and attacking the problem at once. And it just struck me as he was talking about how genius a strategy this was for this particular layer of the stack. You focus on consensus for Ethereum and then you launch like, you know, a hundred private company type of experiments on top. And some of these might be able to turn into, into public goods as well. And then what Ethereum plans to do is take the best designs and the best experiments and enshrine them in an enshrined roll up inside of Ethereum. And so make the best projects, like private company projects, kind of public infrastructure again.

• 1:25:31Ryan Sean Adams?

  Anyway, it's, it didn't have to be the case. This was not the original strategy for Ethereum. Ethereum originally was going to develop everything. And this strategy, this play worked out very well. And yeah, I'm, I'm very bullish on everything that's going on in, in kind of the layer two ecosystem as a result.

• 1:25:50David Hoffman?

  Yeah, that episode comes out next week.

• 1:25:53Ryan Sean Adams?

  There we go. David, we've got a meme of the week. What are we looking at right here?

• 1:25:57David Hoffman?

  Meme of the week, this is coming on from David Phelps. He goes, every crypto company's pitch deck right now, and he's got a two by two grid here. And one has been, one, one spectrum is has not been hacked and has been hacked. And also is in jail or is not in jail. And all of our companies, competitors have either been hacked or are in jail. But this company, the one you're getting pitched, Bankless, our company is both not in jail and has not been hacked.

• 1:26:30Ryan Sean Adams?

  That's all you need. Where do I send my money? You're still standing.

• 1:26:34David Hoffman?

  Oh God, our standards are on the floor.

• 1:26:36Ryan Sean Adams?

  Yeah, that is the game though. You just gotta survive for sure. Going to end with our standard risks and disclaimers in a minute, but first we disclose on the show today. We mentioned a few projects that David and I are advisors for, including some of the layer twos like optimism and Polygon and ZK Sync. I am also an investor in Zora. A small angel check and both David and I, as always, we hold a whole bunch of ETH. We are long-term investors, not journalists. We don't do paid content and there's a link to bankless disclosures in the show notes. And of course, got to let you know, none of this has been financial advice. Crypto is risky. You could 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.