ROLLUP: Bitcoin Top? Ethereum's Existential Risk | Restaking Summer Updates | Tornado Cash Trial

Bankless Weekly Rollup Final Week of January, 2024 ----- 🏹 USE PODCAST24 FOR 10% OFF https://bankless.cc/Citizen2024 ------ 🎧 Listen On Your Favorite Podcast Player: https://bankless.cc/Podcast ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo https://bankless.com/Celo 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ------ TIMESTAMPS & RESOURCES 00:00 Start 03:45 Markets https://x.com/lookonchain/status/1749801176621846958?s=20 https://twitter.com/deitaone/status/1749453448913805514? https://twitter.com/matt_hougan/status/1749834562547614000?s=46 https://x.com/pythianism/status/1750546708000608684?s=20 https://x.com/CoinDesk/status/1748717790737953239?s=20 11:06 Silk Road Selling 11:55 L2 Update https://l2beat.com/scaling/summary 14:32 Stock ATHs https://www.tradingview.com/chart/6pvEnBKK/?symbol=BLACKBULL%3ASPX500 21:24 Restaking Summer https://x.com/eigenlayer/status/1750208139365114087?s=20 https://app.eigenlayer.xyz/ 26:33 How To Restake https://x.com/litocoen/status/1750019968639639918?s=20 https://dune.com/swell-network/swell-network https://x.com/pendle_fi/status/1745067042867433718?s=20 30:51 Why is Restaking Important? 32:54 Altlayer Airdrop https://x.com/alt_layer/status/1750397156039499969?s=20 33:47 ETH Client Bug https://x.com/NethermindEth/status/1749508268676764118?s=20 https://twitter.com/0xcygaar/status/1749486074483654859 https://twitter.com/Labrys_io/status/1749746305738703217 https://x.com/brian_armstrong/status/1749552489509392696?s=20 https://twitter.com/matthewbarby/status/1749826741302866165 https://twitter.com/LidoFinance/status/1749860092885819577?s=20 https://app.hex.tech/8dedcd99-17f4-49d8-944e-4857a355b90a/app/3f7d6967-3ef6-4e69-8f7b-d02d903f045b/latest?tab=client-diversity https://clientdiversity.org/#distribution 40:25 Tornado Cash Trials https://twitter.com/rstormsf/status/1749490246000238942?s=20 https://x.com/ameensol/status/1749493173444075535?s=20 https://wewantjusticedao.org/donate 45:16 ETH ETF Delayed https://x.com/WatcherGuru/status/1750246931656237518?s=20 46:54 L2 Updates https://x.com/arbitrum/status/1748073865132052689?s=20 https://x.com/0xPolygonLabs/status/1750245942261891364?s=20 50:41 AEVO is Migrating https://twitter.com/aevoxyz/status/1750013642278633510 Meme of the Week: https://twitter.com/JimmyRagosa/status/1749456437250535575?s=20 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠ https://www.bankless.com/disclosures%E2%81%A0

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

• 0:00Ryan Sean Adams?

  Bitcoin's down like over 20%, like 25%, something like that.

• 0:04David Hoffman?

  Yeah.

• 0:04Ryan Sean Adams?

  Like people saying it's over. I mean, like, look, I am no trader and you don't get trading advice on Bankless, at least not good advice.

• 0:11David Hoffman?

  That's for sure.

• 0:12Ryan Sean Adams?

  That's not why you're tuning in every week, but like, this one is so easy to freaking call, David.

• 0:17David Hoffman?

  This is so easy.

• 0:18Ryan Sean Adams?

  The answer to the question is, is it over yet? Have we topped? The answer to that question, we'll give it to you.

• 0:28Ryan Sean Adams?

  Bankless Nation, it is the last Friday of January and it is weekly roll up time. We're going to talk about a few things. First though, not to sugarcoat this, Bitcoin is down on the week.

• 0:39David Hoffman?

  Big, down big.

• 0:40Ryan Sean Adams?

  We'll give you the numbers, but the question is, is the bull market over? And I think to answer that, we got to answer the question, when will Grayscale's BTC ETF, the new Bitcoin ETF, when will it stop selling? Seems to be a source of the trouble here. What else we got, David?

• 0:53David Hoffman?

  The curse of Barry Silbert's still among us. After that, we're going to talk about some more exciting things. We're going to talk about restaking summer. What it is, what's going on? What are people doing and why it's a big deal? And then we're also going to talk about how 10% of Ethereum went down. 10% of the Ethereum network stopped producing blocks, but the network as a whole doing just fine. That's why we have multiple clients. But Ryan, have you ever thought about what if 80% of the network went down? Because a lot of people have been thinking about that lately.

• 1:20Ryan Sean Adams?

  Only in my waking nightmares, David. That's the only time I ever think about that. But I think we as a community have to think about it. So we'll talk about that. And also, the tornado cash developers, David, Roman and Alexi, they're getting ready for their trials. I think this is going to be an absolutely massive court case. So we'll give you an update on that. But David, before we get in, a little self-shilth that we don't often do, and that is talking about Bankless Citizenship. So that is the paid membership to the Bankless Nation, and that is available to anyone who is listening. We actually have a discount code that we'll give you in just a minute, but we have added over 1,000 new citizens, that is new members in the last two weeks. Tell people a bit about the benefits. I feel

• 2:02Ryan Sean Adams?

  like a big reason people are flocking to this, to this opportunity is because of what we have here, the airdrop hunter. I think we're looking At this on screen, testimonial from the Bankless community. That was such an unexpected massive airdrop. I think for the first time this year, I'm actually gonna buy myself something. Christmas is a comment. Another comment, yeah, my airdrop is now worth $35,000. At times like this, this is really, yeah, this is really an opportunity to kind of like, do things on chain and get rewarded for those things. And the airdrop hunter with Bankless allows folks to do it.

• 2:36David Hoffman?

  Anytime that an airdrop goes out, one of them went out this week, we're gonna talk about it, and you didn't get it. It was probably in the Bankless Airdrop Hunter. It's definitely been the hottest product that people are looking for. It's why we've had 1,000 new citizens sign up in the last week. But if you're a podcast listener, there's of course exclusive episodes and ad-free episodes, like the one you're listening to right now, but without ads on the Bankless Premium Feed. There's a bunch of other things. You can come hang out with us in the Discord, and you can go into in-real-life Bankless events, like the one we're doing at ETH Denver. So this is a call to action for all Bankless citizens, if you are listening to this on the ad-free Premium Feed. Wednesday, February 28th, mark your calendars. There is a link in the Citizens Discord, where we're all chatting, hanging out, for you to come to our meetup at ETH Denver.

• 3:21David Hoffman?

  This is only available to Bankless citizens and previous podcast guests that I'm slipping the link to. And so if you want to go hang out, free beer, said brewery, same brewery as last year. Free beer, free beer, free beer, free beer.

• 3:35Ryan Sean Adams?

  We almost missed this as well. The code to get a 10% discount is podcast24. So you can go use that at bankless.com/join. That's podcast24. All right, David, let's get to the bad news, man. Markets, Bitcoin is down, and I think it's down in the double digits. Is that what you're about to tell me?

• 3:54David Hoffman?

  No, that would be Ether. Bitcoin only down 6.5% this week.

• 3:58Ryan Sean Adams?

  Thank you.

• 3:59David Hoffman?

  Started the week at $42,500, ending the week at $39,800. The big question, why is it so down? I think the very simple answer was it was a sell-the-news event, but that answer actually can get more and more sophisticated. Grayscale, everyone's looking at grayscale and Barry Silbert, so grayscale- Sent over $1 billion of Bitcoin to Coinbase to dump. That's what you do when you send Bitcoin to Coinbase. Since the launch of the ETFs at large, since the GPTC trust was converted to an ETF, it's sent over, over $3 billion of Bitcoin.

• 4:37David Hoffman?

  The other Bitcoin ETFs, the BlackRock ones, Fidelity ones, the Bitwise ones have absorbed a pretty good amount of Bitcoin. So there's been buying pressure from those. But it's hard to ignore the absolute gargantuan sell pressure that Grayscale has presented to the market. Grayscale currently holds over half a million Bitcoins. That's $20 billion. People are just waking up to the 20%, the 1.5% fees that the GPTC is charging. But there's been speculation that it's actually not very much conversion from GPTC to other Bitcoin ETFs.

• 5:16David Hoffman?

  Nick Carter, I think, put out just like kind of a ad hoc number of like 20 to 30% conversions where other people are just selling. Selling, they're just trying to get out. They're finally recapitalized after the Bitcoin discount has been in the GPTC trust for so long that people are just hitting that sell button and they're getting out.

• 5:34Ryan Sean Adams?

  Yeah. You know how sometimes it's sell the news and it's just like, that's the narrative? Well, this is actual like outflows. This is actual selling of Bitcoin. That I think explains a lot of the, what, down 6.5% this week and like last week? I think we were in the double digits down for Bitcoin, right? About 1 billion.

• 5:52David Hoffman?

  Bitcoin peaked out at $49,000 and we are currently at $39,000, which is a pretty big, pretty big falloff.

• 5:58Ryan Sean Adams?

  It's a, it's a big explainer. This is Matt Hogan here that says, "This is not strictly speaking ETF-led sell-off. The ETFs are net buyers of Bitcoin. That includes Grayscale. This is an ETF expectations-led sell-off. The market front ran the ETF approval by piling to both spot Bitcoin and Bitcoin derivatives. It is now expected larger net flows into ETFs than we've gotten so far. It is now unwinding that bet." Oh, that's, that's what he's saying. This is a bit of an unwind.

• 6:25David Hoffman?

  There's a diversity of opinions about like what's going on here. Matt, Matt is just saying the industry. Really placed bets on this being a massive buy the news event. And it was actually sell the news event. Here's Van Spencer, who says, my two cent guess on GPT flows is that very little of the outflows have been recycled into new ETFs. This was Vance prediction, maybe 20 to 30%. I would think grayscale and FTX are probably sellers in the neighborhood of $1 billion each, not recycling. That is 50% of flows. So FTX, the FTX treasury, that is trying to source all the capital that they can. They didn't sell any of their GPTC up until now. Now that GPTC is an ETF, not a trust. Now they are selling, which will eventually go into the pockets of FTX creditors.

• 7:10Ryan Sean Adams?

  You want, you want to hear a silver lining here, David? If, if that news got you down, bankless listeners. Okay. The silver lining is this, you know how they used to say that Litecoin is silver to Bitcoin's gold? Well, it turns out Bitcoin.

• 7:23David Hoffman?

  That never made any sense, for sure.

• 7:25Ryan Sean Adams?

  Yeah, Bitcoin is silver to gold's gold. All right, here's what I mean. Bitcoin is now the second largest ETF commodity in the US. Just took that place. There used to be gold number one, right? And this former monetary unit, it still has, you know, consumption value as, as like a, you know, consumable type of asset, commodity asset. Silver is number two. Now Bitcoin is actually number two. So I'm sorry, silver, got to get out of the way.

• 7:49David Hoffman?

  Buy a lot too. Bitcoin, the Bitcoin ETFs are coming in at 27 and a half billion dollars across the 11 ETFs that they have.

• 7:55Ryan Sean Adams?

  Wait, 27 and a half billion?

• 7:57David Hoffman?

  Yeah, yeah, yeah. Well, I mean, you, you take the grayscale trust, which is 20 billion right now.

• 8:02Ryan Sean Adams?

  Well, it's no longer a trust. It's no longer a trust.

• 8:05David Hoffman?

  Correct, correct. Now it's an ETF. Yeah, with outflows.

• 8:08Ryan Sean Adams?

  But they had, but they had years of doing that is what you're saying.

• 8:10David Hoffman?

  Correct, exactly. Yeah, they, they started, it started from square one at 20 plus billion dollars. Silver, so 27 and a half billion dollars in BTC trusts, number two. Silver, 11 and a half. So we're already almost like two and a half X-ing silver across five ETFs.

• 8:27Ryan Sean Adams?

  Just out of curiosity, what's gold, David?

• 8:29David Hoffman?

  Gold, $95 billion. So Bitcoin is a second, very far distant second to gold, but we are so young in the Bitcoin ETF lifespan.

• 8:40Ryan Sean Adams?

  That is totally within striking distance.

• 8:42David Hoffman?

  Yeah, that's within striking distance, for sure.

• 8:44Ryan Sean Adams?

  Gold had since in ETFs since 2004.

• 8:47David Hoffman?

  Yeah, it's got a 20-year head start.

• 8:49Ryan Sean Adams?

  Yeah, yeah. Plus, not just that, it's got thousands of years in history.

• 8:53David Hoffman?

  As an asset, yeah.

• 8:55Ryan Sean Adams?

  As an asset. I mean, how long has gold been in like, we're already at 27, like, we're in striking distance? That's pretty impressive. All right.

• 9:01David Hoffman?

  Well, striking distance, 2796, these are different numbers, but I think, yeah, as soon as we can get rid of just this toxic selling of grayscale GBTC.

• 9:10Ryan Sean Adams?

  A 3X for crypto? What's that? That's easy for us.

• 9:14David Hoffman?

  Yeah, that's a good point, actually. Actually, we don't even need necessarily any more Bitcoins to flow into the ETFs. You actually just need Bitcoin to triple. And so like, if we have half of each, you know, it's easy. Yeah, gold is done for.

• 9:27Ryan Sean Adams?

  Sell your gold, everyone.

• 9:29David Hoffman?

  Sell your gold.

• 9:30Ryan Sean Adams?

  Baby boomers, sell your gold, switch to Bitcoin. All right, let's talk about the ETH price, though. You said that was down in the double-digit territory, and thanks to Kraken for these glorious charts, by the way.

• 9:41David Hoffman?

  So we can really see how bad ETH is down in high-fidelity modular charts. Look at those red candles.

• 9:49Ryan Sean Adams?

  It's kind of ugly, but it's beautiful when we do it like this as well. So what are we, what are we at right now?

• 9:56David Hoffman?

  Yeah, so ETH are down 13% on the week. Started the week at 2,500, ending the week at 2,200, which of course means the ratio down 6%. Ratio touched 0.06, now it's at 0.055.

• 10:08David Hoffman?

  Sad.

• 10:10Ryan Sean Adams?

  Did you know this, though, David? On January 24th, actually, you did know this because you mentioned this. On January 24th, we hit 2,000, over 2,700 ETH in the Kraken charts.

• 10:21Ryan Sean Adams?

  Can you read that?

• 10:22David Hoffman?

  Yeah, 2,700, that was really high.

• 10:25Ryan Sean Adams?

  What were you doing on the 24th? Because I don't remember that. Usually I like...

• 10:28David Hoffman?

  Oh, yeah, I was climbing mountains. As soon as I got back from the mountains, we started dumping.

• 10:33Ryan Sean Adams?

  Wait, what day is that? Oh, shoot.

• 10:35David Hoffman?

  The 12th?

• 10:35Ryan Sean Adams?

  That's 2024. I said January 24th, that's why. It was the 12th, that happened the 12th. So you're climbing mountains. So I should have been paying attention.

• 10:43David Hoffman?

  I was climbing mountains when it was going up, and then when I came back, it started going down.

• 10:46Ryan Sean Adams?

  All right, well, I have a solution for that, David.

• 10:49David Hoffman?

  I have a...

• 10:50Ryan Sean Adams?

  You go climb some mountains. Yeah, we want an Ethereum ETF, okay? And we want all-time highs back again. So go climb some mountains. ETH Bitcoin on the ratio, what are you looking at?

• 11:01David Hoffman?

  0.055, and then the total crypto market cap, 1.62.

• 11:07Ryan Sean Adams?

  As far as L2 updates, these updates are always brought to you by Mantle.

• 11:10David Hoffman?

  Ryan, before we get to the layer 2s, I just got a tweet notification on my phone from the DB, it announces like big news in the crypto space. US files notice to sell 130 million dollars of Bitcoin seized from Silk Road agent.

• 11:24Ryan Sean Adams?

  Oh.

• 11:25David Hoffman?

  We just got, like, the United States government telling us they're going to dump 130 million dollars.

• 11:30Ryan Sean Adams?

  130 million?

• 11:32David Hoffman?

  Yeah.

• 11:32Ryan Sean Adams?

  I guess we can absorb that.

• 11:34David Hoffman?

  Yeah, it's not that much. It's just hilarious. It's like, here's a brand-new reason no one saw coming for 130 million more dollars of Bitcoin sell pressure.

• 11:42Ryan Sean Adams?

  They know they need to not broadcast their sells. Because then they get a lower price. There's some trading advice to...

• 11:50David Hoffman?

  To the US government.

• 11:51Ryan Sean Adams?

  To justice over there.

• 11:52David Hoffman?

  Yeah.

• 11:53Ryan Sean Adams?

  Maybe that's not what they're optimizing for, I don't know. Anyway, okay, back to the layer 2 update. This is brought to you by Mantle, which is a new and up-and-coming layer 2 that David and I enjoy. It's also growing real fast. Speaking of growing real fast, look at our scaling factor on the week. So remind us what scaling factor is, because it says 6X. So what are we talking about with scaling factor of L2s?

• 12:15David Hoffman?

  We're talking about 6 Ethereum's. So we have the Ethereum layer 1, and then we have the aggregate transaction volume of all the layer 2s on Ethereum. And the aggregate transaction volumes of all layer 2s are 6 Ethereum's. So 6X Ethereum's. We saw that one big, big spike where we got to like 8 or 9 or 10 Ethereum's. But that's the one where Ordinals took down Arbitrum, and then they updated their client, and then everything's fine. So 6, 6. When 10? When sustained 10? Once we hit 10, whatever. Like, this chart doesn't go down. This isn't a price chart where it goes up and it goes down. It's an up-only chart.

• 12:47Ryan Sean Adams?

  Because scaling is up only, transactions per second is up only?

• 12:50David Hoffman?

  It's up only. And it's like, we're going up like one Ethereum at a time, like one month is six, the next month is seven, the next month is eight. But sometimes we're gonna, we're gonna start going by two a month, and then we're gonna go by like five a month, and then we're gonna go by 10 a month. And that's just how it's gonna look.

• 13:04Ryan Sean Adams?

  Speaking of going up, David, uh, let's talk about some coins that were going up. There's a bunch here. Uh, Bit, Bitensor, Manta Network, but you want to focus on one, which is, uh, I believe the UMA, uh, token?

• 13:15David Hoffman?

  UMA Protocol, yeah. So UMA just completely repriced itself. It went from $2 to above $6, coming back down to where it is, uh, just below $5 right now. UMA, that is, uh, universal market access, pretty old protocol, I'd say, like really old protocol, uh, like 2018, 2019. Uh, these are also the same people behind the across bridge. So this new Oval Protocol, uh, they just, just announced it this week. That's why the price pump happened. They announced this thing called OEV, maybe it was already a thing, Oracle Extractable Value. So, so when Chainlink has stale data and then they update their price feeds, because that's what they do. Uh, whoever can capture the change in liquidations or the change in USP pools or like whatever.

• 13:56David Hoffman?

  Uh, somebody gets to have the first, uh, opportunity of, uh, arbitrage as a result of updating Oracles across DeFi. And Uma just announced this Oracle, uh, value extraction layer, aggregation layer. Uh, where instead of, uh, just allowing MEV to happen as a result of Oracles, you can bid for that. Uh, pretty, uh, like common design pattern, uh, and it just created like a 2.5X increase in the UMA price. So that is why Uma is, uh, the mover of the week this week.

• 14:24Ryan Sean Adams?

  Yeah, I mean, that kind of makes sense, right? Because it's a new value accrual mechanism for an old token, which is kind of-

• 14:28David Hoffman?

  Kind of a forgotten token, yeah. Uh, no offense, Hart.

• 14:33Ryan Sean Adams?

  All right, David, let's talk about, uh, the other thing that's, uh, flying high this week, which is the S and P 500, my friend. Did you know that stocks are at all time highs?

• 14:42David Hoffman?

  Buy a lot, too.

• 14:44Ryan Sean Adams?

  Yeah, let's look at this chart. Look at this chart. Um, this is S and P price. It's just barely off its all time high, I guess, in the last like couple of days, but, I mean, look at this, man.

• 14:55David Hoffman?

  It's at all time highs. It's at all time highs. And so this, this is like, there's a big decoupling going on between the crypto markets where like, we, we ran up from, you know, below a trillion to like almost 1.8 trillion. Now we're down to 1.6 trillion, and everyone's super bearish, and they're like, oh, is the bull market over? Meanwhile, like-

• 15:12Ryan Sean Adams?

  So Jim Cramer says, David, he said it's over. He said Bitcoin is topped.

• 15:17David Hoffman?

  Meanwhile, the trad markets are up only and Bitcoin and crypto at large has been more coupled to trad than not as it's grown bigger. And so I think this is just a perfect signal of just like, yeah, we had this like run up in price. We're recovering from the Bitcoin ETF party. We're a little bit like hung over at the present moment, but like overall markets are definitely healthy as a whole. Like risk on assets are definitely a thing. We still got the Fed pivot.

• 15:42Ryan Sean Adams?

  Bitcoin's down like over 20%, like 25%, something like that. Like people saying it's over. I mean, like, look, I am no trader and you don't get trading advice on bankless, at least not good advice. That's not why you're tuning in every week, but like this one is so easy to freaking call, David. The answer to the question is, is it over yet? Have we topped? The answer to that question? Let me give it to you. No. This is so easy. Like this is just like, this is what you see. Bull markets will give you opportunities. They will give you shakeouts. They will give you times where, you know, it's going to go down 20%, 30%, 40%, right? You could even see 50% and it definitely

• 16:25Ryan Sean Adams?

  depends on the asset, right? But like what this is, is sort of a shakeout. If you're still a buyer and a buyer, it's a buying opportunity. That's all I see. I don't know. Look, could be wrong, but like 98% certainty, we ain't seen the top. That would be, this would be the dumbest bull market ever and it would just be contrary to all of the like ways everything has ever played out in crypto. Now, the only thing I'll say is, black swan, event aside, something crazy could happen. You never know, but like you can't, you can't press that in. Am I wrong?

• 16:59David Hoffman?

  No, totally. It's just, it's gonna take some time for the GPTC outflows to cease. So that is like an open wound that is currently bleeding. It'll take two weeks, four weeks, six weeks. I don't know, two months, and then eventually it'll stop. And then there will continue to be flows into the Bitcoin ETFs, like the Black Rocks of Fidelities, the BitWises. And also there's like, the whole concept of a Bitcoin ETF, it ages like wine. There's like a, there's like a six month period where people are just like looking at it and be like, you know, we're gonna, we're gonna revisit this in six months. We'll just buy in six months. There's like a age like wine kind of thing going on in trad. And so like it flows into the Bitcoin ETF or non-stop.

• 17:39Ryan Sean Adams?

  If you're here, the nice thing about this is it gives you some time because now I think mainstream is just like, they're not interested in the Bitcoin ETF as much right now because why? Because it's not pumping, like price isn't pumping, right? So now they have a product they can buy, but you know, when they'll want to hit the buy button is when this thing shoots up, right? That's when you get the texts, that's when everyone kind of piles in. These markets are so reflexive.

• 18:01David Hoffman?

  Can I give you a prediction, Ryan?

• 18:03Ryan Sean Adams?

  Yeah.

• 18:04David Hoffman?

  So markets have memory. We all just watched the Bitcoin ETF happen. Now the ETF approval is like going to be known, a known sell the news event. And we have the ETH ETF later this year. There's an update for that later in the show, May or August or something later this year. It'll get approved probably this year, like most likely, more likely than not. And then the market is going to be like, oh, it's going to be a sell the news event because of how the Bitcoin was a sell the news event. Except we also have the ETH E trust. It's just meaningfully smaller than the GPTC trust. And so I think my prediction is more like the market is just going to be kind of confused going into the ETH trust because the ETH ETF approval. Because they're not going to know, it's not going to know if it's a bullish or bearish event.

• 18:47David Hoffman?

  It'll be more muted going into it, but then post it will be more bullish is what I'm saying is my prediction.

• 18:52Ryan Sean Adams?

  David, you're getting dangerously close to trading talk, my friend.

• 18:57David Hoffman?

  These are words, not actions.

• 18:59Ryan Sean Adams?

  Oh, you're just going to hold all the way through that.

• 19:01David Hoffman?

  Yeah, I'm not going to do anything about it.

• 19:03Ryan Sean Adams?

  It's the way to do it, man. All right, what do we got coming up next?

• 19:05David Hoffman?

  Coming up next, we're going to talk about restaking. We got some updates from the Eigenlayer LST caps for deposits. We also got some LRT protocols to talk about and the emergence of LRT phi with something called Pendle. It gets more and more risky. We further, we progress into the conversation, so we're on the frontier of restaking. And also a bug in Nethermine takes down 10% of Ethereum. Not that big of a deal, but what if it happened to Geth? And then also tornado cash developers preparing for trial and they need your help. So we're going to talk about all of this and more, but first a moment to talk about some of these fantastic sponsors that make this show possible, especially Kraken. If you do not have an account with Kraken, consider clicking the links in the show notes to getting started with Kraken today. Kraken knows crypto. Kraken's been in the crypto game for over a decade. And as one of the largest and most trusted exchanges in the industry,

• 19:50David Hoffman?

  Kraken is on the journey with all of us to see what crypto can be. Human history is a story of progress. It's part of us, hardwired. We're designed to seek change everywhere, to improve, to strive. And if anything can be improved, why not finance? Crypto is a financial system designed with the modern world in mind. Instant, permissionless, and 24/7. It's not perfect, and nothing ever will be perfect. But crypto is a world-changing technology at a time when the world needs it the most. That's the Kraken mission, to accelerate the global adoption of cryptocurrency, so that you and the rest of the world can achieve financial freedom and inclusion. Head on over to kraken.com/bankless to see what crypto can be. Not investment advice. Crypto trading involves risk of loss. Cryptocurrency services are provided to US and US territory customers by Payward Ventures. PVI, doing business as Kraken. Are you launching a token?

• 20:35David Hoffman?

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• 21:20David Hoffman?

  Visit toku at toku.com/bankless or click the link in the description below.

• 21:24Ryan Sean Adams?

  David, restaking summer is here. I think this is going to be an absolutely major thing in 2024. We got to talk about the liquid restaking token wars, the LRT wars. But in order to do that, I'm looking for a base-level explanation of what restaking is and why we're so excited about restaking summer. David, we've got a screen pulled up, which is the total amount restaked inside of Eigenlayer. That amount is 815,000 Ether. So that's like $1.5 billion. Can you explain what is going on here?

• 21:57David Hoffman?

  Yeah, I'll explain what is going on, and it'll end up leading into why the liquid staking wars are so, so hot right now. 815,000 Ether deposited into Eigenlayer.

• 22:07David Hoffman?

  330,000 of that is natively restaked. And this just means that people running Ethereum validators have set their withdrawal credentials, as in when they withdraw their deposit from Ether staking, it goes to Eigenlayer first, and then it goes to their wallet. And that is what restaking is. If Eigenlayer restaking is you stake your ETH, you stake it again, and Eigenlayer has control over additional slashing conditions for Eigenlayer networks that will come online when Eigenlayer mainnet hits in Q1, Q2. 330,000 Ether are just normal Ethereum solo validators that have staked to Eigenlayer. Then there's this thing called liquid restaking, where people are taking staked ETH from Lido, our ETH from Rocketpool, Stater ETH, you know, all the LSTs,

• 22:51David Hoffman?

  and they're also depositing into Eigenlayer. So instead of running your own node, you just take your liquid stake token and you deposit it into Eigenlayer. And that's the remainder of the ETH and how we get up to 815,000. So these are the two concentric circles. You have native restaking, just normal vanilla Ethereum staking, but you set your withdrawal credentials to Eigenlayer, making that restaking. And then next concentric circle out, you have liquid restaking, where you just deposit LSTs into Eigenlayer. Are you with me so far? Because we're about to go one more concentric circle out. Oh, there's another circle? There, oh, there's a few more. There's always another circle. There's always another circle. I'm with you so far. Then we get into liquid restaking tokens, which is the brand new war that's going on. I'm super stoked on it. I think it's a super cool thing.

• 23:36David Hoffman?

  It is a brand new playing field for dominance over liquid restaking tokens, which are just like liquid staking tokens, just like staked ETH from Lido, just like our ETH from Rocketpool, but liquid restaked tokens from these new liquid restaking protocols that are coming out. So it's more yield when all these Eigenlayer networks that are going to come online, which are called AVSs, actively validated services, like EigenDA or Crossbridge Protocols or Fast Finality Layers, additional Eigenlayer networks. These are all going to be spitting out yield, and that yield will be incorporated into the yield of a liquid restaking token, which will also have the yield of a liquid staking token. So Ether. Then staked Ether, then restaked Ether,

• 24:21David Hoffman?

  all of that yield being packaged up into a liquid restaking token, which is the subject of the most recent wars in Ethereum space, because people are jostling for dominance, just like how Lido was jostling with Rocketpool and all the other ones. But it's all over again. And so now, applications, liquid restaking protocols are jostling for dominance over the liquid restaking market. You with me so far?

• 24:45Ryan Sean Adams?

  Yes. So let's talk about some details of the liquid restaking wars. But before we do, okay, so I think we need to take a step backwards, because people are hearing restaking, they're hearing yield. Why are people restaking their ETH? So again, what is restaking? You take your ETH and then you stake it again. And so what that means is you are lending out the economic security of your Ether to somebody in exchange for what? You're getting some type of yield? Or there's some expectation of yield in the future? And there's some additional risks that you sign up for too. Is that what's going on? Are people staking their ETH with the expectation, restaking their ETH with the expectation of future stacking yield? Is that why they're doing it?

• 25:25David Hoffman?

  That's like the fundamental reason. That is like why Eigenlayer exists. Yes, you will have more yield as a function of all the fees that are going to be collected from AVSs. Are any AVSs online? No. Is Eigenlayer at mainnet? No. So what are people doing? They're farming the Eigenlayer airdrop, because Eigenlayer points are a thing. And so that's what people are doing now. In the future, we will be able to talk about the yields produced from AVSs. But right now, that is a future conversation. Right now, people are just playing the Eigenlayer airdrop farming game.

• 25:55Ryan Sean Adams?

  Okay, so there's some speculation going on. And why are we focusing so much on Eigenlayer? That's because it seems like that's where the center of all of this restaking activity on Ethereum is. Like, that is kind of the ground zero for this. And the Eigenlayer network is what? It's like channeling this Ether, this economic security, in order to secure other applications. So it's like a platform that you can build applications on top of. And you called these things AVSs. Am I right so far?

• 26:22David Hoffman?

  That's right. Like, think of Eigenlayer as Ethereum security as a service. And for networks that are not blockchains, any type of other network, like an oracle, for example, or anything, really.

• 26:32Ryan Sean Adams?

  Yep. So that's a refresher. And now, help me with this last piece, David. So how does somebody restake? Okay, you mentioned all of these things. But like, how do I, as someone who's interested in exploring restaking, how do I actually do it? Are there multiple ways to do it? What are they?

• 26:48David Hoffman?

  There are multiple ways to do it. You could go and do native vanilla native restaking, but that requires running your own node. And so that's why people have opted for liquid restaking, which is just depositing staked ether from Lido or re-ether from Rocketpool into Eigenlayer. The problem with that, Ryan, is that there are LSC caps in Eigenlayer. They have constrained the amount of deposits into Eigenlayer because they want to start slowly. They don't want this thing to blow up too fast, so they are responsibly slow-starting the Eigenlayer protocol by constraining the amount of LST deposits into Eigenlayer. But native restaking has always been uncapped. That's actually the news that went out this week, is that they are postponing the raising of the cap by one week. So the new dates are somewhere between February 5th and 9th. And between those dates, actually, all caps

• 27:33David Hoffman?

  will be lifted because they are preparing for mainnet. And so sometime in the first or second week of February, LST caps will be completely lifted, and then we will be able to resume Eigenlayer farming with LSTs.

• 27:45Ryan Sean Adams?

  Okay.

• 27:46David Hoffman?

  But the existence of these caps have created incentives for people to find ways to farm the Eigenlayer airdrop using protocols that can natively restake. And this accounts for the explosion of TVL in EtherFi, and also Renzo Protocol is one of the other new ones. But EtherFi has this absolute like hockey stick growth, where they were from like $50 million of TVL, like just a couple of months ago, to over like $350 million of TVL as of now. And the race between them and Swell as number two and number one of TVL and Eigenlayer is like on, like things are like neck and neck right now.

• 28:21Ryan Sean Adams?

  Okay, so let me try to summarize that for you. So the way you restake, I think I heard three different ways that somebody could restake right now. They could restake natively, so that's vanilla. But in order to do that, you have to have the capability to run an ETH node and some additional Eigenlayer validator-like functionality, okay? That's one way. There's no cap, so anybody can go do that now if you have those skills and expertise. The second is, if you have, you're staked with Lido, you're staked with re-ether, you're staked with Swell, something like that.

• 28:49David Hoffman?

  You're just holding staked ether, for example.

• 28:51Ryan Sean Adams?

  Yeah, you could take those tokens and just kind of like restake them, deposit them. The problem is, it's capped, so you can't do- Do that now, maybe sometime later in February, those caps will, and you can like slip in before it fills up again because it's going to fill up again. And then there's the third way, and that is the kind of the new group, like the new category that crypto is creating. And that is restaking with like a service provider, right? So it's like restaking natively, except you're not running the validators, you're using a service provider. And that category, that's called LRT. So it's liquid restaking tokens, right? They do the managed service and you get a liquid token on the other side of that. And folks like EtherFi are kind of, and that's where the, that's where the war exists right now. Is that, is that all correct?

• 29:37David Hoffman?

  That's, that's exactly correct. I think we need to do a whole entire episode. We'll do this, I think, next week, Ryan. Where we need to go through like all of the different ways, the ways to build an application, an LRT application. Because there's EtherFi who's spinning up their own nodes for vanilla native restaking. And that's accounted for a lot of the deposits that are going into EtherFi. There's Swell, which is both an LST and an LRT, who are the number one TVL depositors of the LRTs into Eigenlayer. Followed by EtherFi. And then there's Renzo, and then there's Puffer, and then there's like other ones that haven't come online yet, like Rio. There's a bunch of others that I'm not naming because there's so many right now. And then after that, Ryan, we go one more concentric circle out and we talk about LRT Fi.

• 30:23David Hoffman?

  With things like Pendle and people foregoing their airdrops for more yield, 30% yield. Or people are going for zero yield and like leveraging up on Eigenlayer airdrops. There's like this whole blossoming like LRT financialization layer. It gets very, very degenerate, but like this has accounted for a ton of activity in the Ethereum financial space lately.

• 30:44Ryan Sean Adams?

  Okay. Bankless promise, we will do an entire episode on restaking and what the opportunities are and how the landscape is. Now, I'll just kind of zoom out for, for a minute and talk about why this is important. This seems very much like DeFi summer 2020, 2020. And that's why like we're calling this, others are calling this restaking summer. And I will note that during DeFi summer, a lot of these yields were kind of speculative yields. And remember the point earlier that you made that none of these applications on Eigenlayer, these things called AVSs, none of them are live. None of them are producing yield. So why are people doing this? They're, they're piling in. Because there's anticipated value being created and anticipated airdrops and tokens

• 31:26Ryan Sean Adams?

  that can be received. It's kind of like yield farming, yield hunting. It's DeFi summer 2020. If you weren't there for that, this is what that is. And so what's going to happen is what happened that time. There's going to be a lot of people that pile in, risk too much, because look, smart, like, these things haven't been, like, some of them haven't been audited, some of them will go fast and loose, and they won't take security seriously. Like, there's real risk if you're playing this restaking game. And you don't have to go there if you don't want to. You can sit by, hold your ETH, maybe just stake your ETH, like, simple stake. You don't have to restake and observe what's going on. However, if you want to be an active player in this, I would just remember that there's a lot of risk associated with these things, and like, maybe only a portion of your portfolio, you know, assigned

• 32:11Ryan Sean Adams?

  to kind of explore this ecosystem, because there's going to be, like, fortunes made and fortunes lost. There's going to be lots of shenanigans playing out. What's really exciting, though, is this is the birth of an entire new sector of crypto. Like, that's what's happening now. Of the same order of magnitude, in my opinion, of DeFi in 2020. And yeah, there's a lot of chaos, but it's like, you know, a star being born in a nebula cloud, right? It's like, all of this chaos, these gamma radiation, all of this stuff. But at the other side of that, something beautiful is going to form something life-giving, and it's going to propel our industry forward. So, don't get caught up too much in the speculation, unless you want to play those speculation games, and then, you know, enjoy the frontier.

• 32:52David Hoffman?

  Yeah, as restaking summer continues, there's definitely going to be some blood sacrifices along the way, for sure. Don't let that be you. Do be the people that collect the restaking airdrops for restaking your ether, which one of these is Alt Layer that was announced this week. Alt Layer Airdrop Season 1 was just announced by this brand-new rollup as a service provider with Eigenlayer restaking networks to as like, extra little modules on rollups. So like, think of them like, superpowered rollups. And so if you want an easy way to deploy your rollups with the perks of Eigenlayer restaking networks, AVSs, when they come online, this is what Alt Layer does, they just launched their token, it's coming in at like, a 3 billion $1 valuation. If you are a Celestia staker, or you are an Eigenlayer restaker,

• 33:35David Hoffman?

  or a few other criteria or conditions, you have an airdrop to claim. This was in the Airdrop Hunter, so go check that out.

• 33:43Ryan Sean Adams?

  Yeah, you'd know all this if you're a bankless citizen, guys. It's in the Airdrop Hunter, mentioned at the beginning of the show. David, let's talk about the ETH client bug that shook up the Ethereum network, both from a technical and a social level. So what happened this week with the client bug?

• 33:59David Hoffman?

  So Nethermind, which is the number two largest client, execution layer client on Ethereum, had a bug that took down all Nethermind running nodes, which was about 10% of the network.

• 34:11Ryan Sean Adams?

  Including some of ours, by the way, David. You know, you and I are running some Nethermind clients.

• 34:16David Hoffman?

  I do know that, yeah.

• 34:18Ryan Sean Adams?

  Those went down.

• 34:20David Hoffman?

  And then they went back up. It was a relatively simple fix. And so what were the consequences of this? Nothing, really, because 10% of the network is, you know, it's a big deal if we hit 33%, 10%, we're very, very safe. But this really sparked a conversation about what if it was the larger execution client, Geth, which has 80% of the network? So, you know, there are two levels of risk with Ethereum. There's the 33% level, and then there's the 66% level. And then there's Geth, which has 80% of the network. Coinbase uses this, Binance uses this, Kraken uses this, most of Lido uses this. And so our client diversity around the execution client, around the Ethereum layer one, not great.

• 35:02David Hoffman?

  Geth is a very hardened execution client. It's easy to run, it's very stable. That's why people run it. It has just, it's just very stable. And so everyone's running it. The problem is, we have this tragedy of the commons where everyone's running the same execution client. And if this was a bug in Geth, while Geth is less likely to have a bug, a bug in Geth could be massively catastrophic. And so this has kicked off a conversation in the Ethereum community about, yo, it doesn't matter how stable Geth is, we can't have it at above 66%, and really, we need it below 33%. So switch away from Geth. This has created pressure from the Ethereum community into people like Coinbase and Kraken and Lido, who all, props to all of them.

• 35:47David Hoffman?

  Brian Armstrong comes into DC Investors tweet saying, "Hey, dear Coinbase, I'm unstaking my ETH with you guys because you guys use Geth." Brian Armstrong responds, "Taking a look." Kraken comes in and also says, "Hey, the team is currently exploring this. Internal discussions are happening and we will share updates as we get some decisions in place." Lido has also had some of their validators switch away from Geth. And as a result, the Geth dominance in Ethereum has gone from 82% to 78%, I think is where it is now. So we're down 5%, which is great, but we still have got a long way to go. We need to get down below 66% bigly.

• 36:24Ryan Sean Adams?

  Great summary, David. The only thing I would, I would ask you is when you say massively catastrophic, if that was Geth, or that was a kind of like a, you know, super majority client. What do you mean by massively catastrophic? So the network goes down, right? Like there's a, there's a liveness issue.

• 36:41David Hoffman?

  It depends upon the nature of the bug. It could go, it could be anywhere from trivial to catastrophic. The thing is, because Geth is at 80%, whatever bug that is becomes Ethereum. Where like you could have a catastrophic bug in Nethermind, but Nethermind is only 14%. And so that doesn't become Ethereum. Since Geth is 80%, a catastrophic bug in Geth becomes a catastrophic bug in Ethereum. And so the worst of this would be like an inflation bug mint in Ether, where Ether goes from like 120 million supply to infinite supply. That breaks the network. We would have to do a socially coordinated rollback. Then there's like other more trivial bugs where like the network just stops finalizing, but it's just totally fine. That would be best case scenario.

• 37:25David Hoffman?

  But the problem is, any bug in Geth becomes a bug in Ethereum because it has such a dominance in, in the network.

• 37:33Ryan Sean Adams?

  Got it. A few, a few things to note, I guess I would say is most other networks, not Ethereum networks, including Bitcoin, don't have multiple clients, right? So they have, they're basically all on their version of Geth.

• 37:42David Hoffman?

  It's only Ethereum.

• 37:43Ryan Sean Adams?

  Right. But the other thing I would add is Ethereum's not really getting the benefit of its multiple clients if it's not actually running those multiple clients, right? And so that is kind of the, the call and the social push for client distribution. So maybe the network is, is self-healing due to this close call. Humans have to learn the hard way, don't we? All of us. David, what do we have coming up next?

• 38:05David Hoffman?

  Coming up next, we've got some updates on the ETH ETF timelines and some Layer 2 updates as well. Why we're about to see a lot more arbitrage from orbit chains coming into the fold. All of this and more. But first, I want to talk about some of these fantastic sponsors that make this show possible, especially Mantle, one of the fastest-growing Layer 2s that's out there, who also has their own liquid-staked ETH protocol, which might become a restaked ETH protocol. Hint, hint. Let's go hear from Mantle right now. 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 using the OP stack, but uses EigenLayer's data availability solution instead of the expensive Ethereum Layer 1.

• 38:47David Hoffman?

  Not only does this reduce Mantle Network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest DAO-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 onboarding, like Game7 for Web3 Gaming and Bybit for TVL and liquidity and on-ramps. 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. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the

• 39:32David Hoffman?

  real world. And now, something big is happening. Introducing the Cello Layer 2. It's a game-changing proposal that's going to bring Cello's rapidly-growing ecosystem home to Ethereum. Vitalik has shared his excitement for the Cello Layer 2 on the Cello forum, so has Ben Jones from Optimism. But why? The Cello Layer 2 will bring huge advantages, like a decentralized sequencer, off-chain data availability, and one-block finality. What does all that mean? Rock-solid security, a trustless bridge to Ethereum, and more real-world use cases for Ethereum without compromise. And real-world adoption is happening. Active addresses on Cello have grown over 500% in the last six months. With the Cello Layer 2, gas fees will stay low, and you can even pay for gas using ERC20 tokens. But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard.

• 40:17David Hoffman?

  Join the conversation in the Cello forum. Follow @celloorg on Twitter and visit cello.org to shape the future of Ethereum.

• 40:25Ryan Sean Adams?

  Before we get into the ETH ETF stuff, I got to talk about the Tornado Cash trials. So the two developers, two of the developers behind Tornado Cash, which was a privacy protocol, smart set of smart contracts deployed on Ethereum. Roman Storm and Alexey Pertsev are bracing for their trials at this moment. This, David, was an impassioned plea from Roman that he put out on Twitter. Let's go hear it.

• 40:48Speaker 02

  Hi, my name is Roman Storm. I'm a passionate software developer. And four years ago, I helped develop Tornado Cash, an open source, non-custodial privacy protocol. A few months ago, despite my ongoing cooperation with US authorities, heavily armed FBI agents raided my home at 6:00 AM and arrested me in front of my three-year-old daughter. My legal team and I are going to put forth a strong defense at trial, not just for my family's sake, but for the future software developers and financial privacy. Folks, I need your help. Whether you're a passionate developer like me involved with Web3 or just care about software and privacy,

• 41:31Speaker 02

  this legal battle will affect you. So please help contribute to my legal defense, because this case will set major precedent for years to come. Justice Dow has put together a number of options to delay. Will you support this cause? Every contribution counts. Thank you.

• 41:52Ryan Sean Adams?

  Arrested in front of his children, David. I know many people in the Ethereum community who know Roman. And everything I have heard and everything it seems like at this point in time, he's just a typical open source, smart contract developer, right? Of course, like, there could be some other things revealed in the court cases, so we don't know for sure. But that indeed is what it looks like. And he was arrested for developing and deploying open source cryptography code on-chain. So from my perspective, this is kind of like the US government, this is, I believe, FinCEN kind of leading the charge here, and of course, carried out by the US Justice Department. It's kind of like them saying HTTPS is now Illegal. You know, you're trying to encrypt communications.

• 42:37Ryan Sean Adams?

  Okay. Well, like you can't do that. Encryption is illegal. It's back to the cryptography wars of the early 90s. And Roman, it appears, is an early casualty. So here he is, asking for some help from the crypto community for that case. And I think this case is going to be a landmark case in the US because it's going to, it's not just about Roman. And it's not just about tornado cash. It's actually going to set some precedent for how the US court system applies like the privacy and juxtaposes that with free speech and the right to develop code. And the right of everyday, ordinary Americans who are using tornado cash just to shield their like transactions.

• 43:18Ryan Sean Adams?

  Okay, the same, the same freedom that we have with cash dollars in physical form. Will they have the right to do that moving forward in any form? So that's what this case, why this, why this case is so important.

• 43:29David Hoffman?

  I think the precedent can become even larger than that. It's not just about achieving financial privacy using crypto. The precedent that this is setting is that smart contracts can be illegal. That, that is the precedent that the DOJ and Treasury are trying to prove with this court case. And so like, it's about privacy, but really ultimately like if, if we lose this court case, it is, the precedent is set that smart contracts on Ethereum, incredibly neutral protocols are illegal to touch.

• 43:57Ryan Sean Adams?

  Well, they currently are, David. They currently are. So it's like, uh, this hasn't been contested in court. But if you're a US citizen, reminder, you cannot use tornado cash smart contracts. Like if you do, like, uh, I just wouldn't, just don't do it. All right.

• 44:10David Hoffman?

  Just don't do that. Don't do that.

• 44:12Ryan Sean Adams?

  Yeah. FinCEN has already, uh, talked about what the repercussions of that might be. So Roman's trial is going to be in September 2024. Alexi, his trial is getting started in the next two months. If you wanted to get involved, if you want to help, uh, there's a place where you can donate for the legal expenses for Roman and Alexi as well. We'll include a link in the show notes. It's a justice DAO. There's multiple ways to donate, including if you want to use Fiat, uh, GoFundMe. Uh, hopefully, uh, they, they don't shut that down, David.

• 44:41David Hoffman?

  I'll call this a pooly moment, round two. Remember when, uh, there was frivolous? Lawsuits going after the pool together Dow and all of crypto banded together to help support that legal case. This is one of those moments. I think the stakes are much higher. That's why we at Bankless have donated $10,000. Many other people have signaled their support on Twitter about their donations to help fund this case. This is going to be a matter of just like, can we get enough money into the hands of these lawyers who are defending our rights to be able to touch neutral credible smart contracts on Ethereum? And so there's a link in the show notes if you would like to donate to this court case.

• 45:16Ryan Sean Adams?

  All right, let's talk about the ETFs one more time this episode, David. But this is not the Bitcoin ETF, the Ethereum ETF, the Ether ETF. It was, there's something was delayed this week, which is the BlackRock Spot Ethereum ETF. I don't know how to parse this. Was this expected? Give me an update on this.

• 45:34David Hoffman?

  This was super expected. So the SEC has postponed its decision on the BlackRock proposed Spot ETF citing the need for additional time to review the proposed rule changes. This just, the final deadline was tomorrow. And so they're just delaying it the last possible moment. This is exactly what they did with the Bitcoin Spot ETF. The new final decision on the BlackRock Spot ETF is now expected for August 7th of this year, which to me represents a very strong backstop for when the ETH ETF could be approved. There are some other key dates as well. And so VanEck and Arc 21 shares Ether ETFs have final decisions on May 23rd and May 24th. So those are two dates to keep in mind. Grayscale, Invesco, Fidelity, and Galaxy all have deadlines of June 18th,

• 46:19David Hoffman?

  July 5th, and August 3rd. And then after that, we have the BlackRock on August 7th. So sometime between May and August, ETH ETF probably getting approved. Probably, maybe not, probably.

• 46:31Ryan Sean Adams?

  It feels likely. If you want Hester Purse, Commissioner Hester Purse's take, someone asked her about the ETH ETF and the SEC's likelihood, she said this, "We shouldn't need a court to tell us that our approach is arbitrary and capricious in order for us to get it right. So I certainly hope that wouldn't be the case." A delay was, was the question, she says. She certainly hopes a delay wouldn't be the case. Yeah, so I'm with you, David. I think, I think we get the Ethereum ETF Let's get into some L2 updates, David.

• 46:57David Hoffman?

  Finally, yeah.

• 46:58Ryan Sean Adams?

  Arbitrum Orbit is expanding. Today, we introduce an Arbitrum Orbit Expansion Program, allowing you to have a self-service path to launch custom Orbit chains, L2s or L3s that settle to Ethereum. What does this mean?

• 47:09David Hoffman?

  This means that Arbitrum is going to be easier to deploy Arbitrum Orbit chains, not just on top of the Arbitrum Layer 2, but just anywhere across Ethereum. And so I think this was pretty hotly needed by the Arbitrum ecosystem, just more Orbit chains. You know, we have all these OP stack chains. Now Arbitrum wants all these Orbit chains. Two criteria. First, people that deploy an Arbitrum Orbit are expected to contribute a portion of their profits back to the Arbitrum ecosystem. So that is 10%. If you want to use Arbitrum Orbit technology, you have to give 10% back to the Arbitrum DAO. Second, the deployment of the rollup must be exclusive to Ethereum or any chain that derives its security from Ethereum.

• 47:46Ryan Sean Adams?

  Dang.

• 47:47David Hoffman?

  So Arbitrum is like, yo, free to use our chain.

• 47:52Ryan Sean Adams?

  ETH maxes.

• 47:53David Hoffman?

  But on Ethereum, like not anywhere else, which I think is hilarious. And yeah, and so I think this is going to help bootstrap a lot of Arbitrum Orbit networks across the Ethereum space and nowhere else.

• 48:05Ryan Sean Adams?

  It's kind of like they're basically going after like the optimism play that's been successful, right? Which is like, this is the key here, the self-service path. Anybody can launch an Orbit chain.

• 48:15David Hoffman?

  Self-service, yes. There is a difference here. Whereas the OP stack, forking the OP stack and deploying your own OP stack chain, you don't have to give any fees back to the OP collective.

• 48:25Ryan Sean Adams?

  Opted.

• 48:25David Hoffman?

  If you want to join the optimism super chain, the collective, then you have to give 15%. So it's either 0 or 15%. And Arbitrum is like 10% for everything.

• 48:36Ryan Sean Adams?

  I mean, L2s are moving and they're moving fast. Not to be outdone, this week Polygon's got some news as well. This is an upcoming feature that they're going to launch as early as February. I guess maybe calling it a feature is kind of underselling it.

• 48:50David Hoffman?

  Polygon is introducing its own middleware layer across all of its Polygon supernets. So these are all the Polygon chains. And since Polygon is a ZK rollup, every single ZK rollup produces a ZK proof. What this is, is an aggregate. Aggregation layer across ZK proofs. So every single ZK roll from Polygon produces one. And then the aggregation layer takes all these ZK proofs and aggregates them into another ZK proof. And this has a bunch of just composability and liquidity and atomic inclusion benefits as well. So it is a big plus one to the world of the recombination of Ethereum layer twos using a ZK proof aggregation layer.

• 49:27Ryan Sean Adams?

  Yeah, we actually did record an episode with Justin Drake about this. It's entitled, it's coming out in a week or two. It's called fixing fragmentation. And he talks about like the promised land that Ethereum can get to, which is something he calls universal synchronous composability. Basically, right now, the experience of Ethereum is very fractured across all the L2s. Like you got a bridge from one L2 to the other, you got a switch change in your wallet, all of that. Drake says all of that will be solved and it will be solved relatively soon. And Polygon is actually

• 49:57David Hoffman?

  Oh, relatively.

• 49:58Ryan Sean Adams?

  I mean, in the next one to three years. But this is actually accelerating, David, because this is a part of that solution. With this solution, it sounds like from Polygon, there will be universal synchronous composability. Not quite to the same degree of it as a decentralized sequencer, but with some feature limitations across Polygon chains. And that's a start. And other ZK chains can also opt into this as well, which is kind of interesting.

• 50:25David Hoffman?

  Yeah, so this is some internal composability for the internal Polygon ecosystem. And then there's the larger battle, which is global composability across different standards, like between Polygon and Arbitrum and Optimism. That's a harder thing, but we have the tools to get there, according to Justin Drake.

• 50:41Ryan Sean Adams?

  AVO, they are migrating to Celestia DA. What is this?

• 50:45David Hoffman?

  AVO, which is a derivatives-focused layer two built on an OP stack that previously was using Ethereum for data availability, which is very expensive, has now migrated to using Celestia as for a data availability layer. So Ethereum for asset settlement, but Celestia for DA now becoming modular. This is the second that we've seen of this. Lyra did this like two weeks ago. I think we're about to see many, many, many more of these because that's just what the incentives played out. We saw Lyra paying 40 Ether a month. And feast to Ethereum Layer 1. And then as soon as they pivoted to Celeste DA, half an ETH. AVO I'm sure is doing the same thing. And then you're gonna see, you're gonna see more of these for sure.

• 51:23Ryan Sean Adams?

  So that was the roll up this week. We got to end with this. The meme of the week, David, what are we looking at here?

• 51:30David Hoffman?

  This is the breaking up with my best friend. I found a new best friend meme format. This is net worth is not in the hands of Vitalik anymore. Peter from Geth now controls my net worth. And this is when you learn that a bug in Geth could wipe out 90% of your network, of the net worth of Ethereum. If we let that happen, which is why you should switch to a minority client.

• 51:53Ryan Sean Adams?

  Peter, of course, is the core developer behind Geth. And, you know, I just want to shout out Peter. Like, he doesn't get enough credit. Like, seriously, thank you for everything you're doing. I mean,

• 52:04David Hoffman?

  Please don't rug us.

• 52:05Ryan Sean Adams?

  80% of the Ethereum network, thanks to this man and others on his team at Geth's hard work. And we appreciate you. Thank you for keeping our net worth safe.

• 52:15David Hoffman?

  I remember, okay, so there's a, I did an interview with Peter at last DevCon, I think it's one of the few interviews that Peter's ever done. And I asked him a question of just like,

• 52:25David Hoffman?

  Imagine if like you, I think, I can't remember who the other developer was. I think it was like Preston Van Loon from Prismatic. I was like, if you and Preston like teamed up, because Preston has, is Prismatic and Peter's Geth. So we have two like client team chats being able to like, you know, support the Ethereum network. It's like, if you and Preston teamed up to take down the Ethereum network, how hard would that be? And you know what his response was?

• 52:46Ryan Sean Adams?

  What?

• 52:47David Hoffman?

  Why do I need Preston?

• 52:51Ryan Sean Adams?

  Oh, man. Nervous laughter.

• 52:53David Hoffman?

  Does that make you feel good or no?

• 52:55Ryan Sean Adams?

  Peter, Peter. Wow, it wasn't Vitalik. It's always been in Peter's hands, huh?

• 52:59David Hoffman?

  It's always been Peter.

• 53:00Ryan Sean Adams?

  Keep that man safe. And like, let's, let's thank him again, David, as we end this show. Thank you, Peter.

• 53:06David Hoffman?

  Please no rug.

• 53:08Ryan Sean Adams?

  Well, that's a perfect time to end with risks and disclaimers in a minute. But first, we disclose both David and I are advisors for Eigenlayer. Also, we're investors in some of the L2s mentioned. And Bankless Ventures is an investor in some of the restaking protocols we talked about. As always, you can see a link to all of our disclosures at bankless.com/disclosures. Crypto is risky, so is staking, so is restaking, so is whatever we think of next. 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.