ROLLUP: Crypto Bill | OP Wintermute | Illuvium Land Sale | PayPal Crypto | ApeCoin Ethereum

1st Full Week of June, 2022 ------ 📣 METAMASK | The Easiest Buy in Crypto https://bankless.cc/buy ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🏦 ROCKET POOL | DECENTRALIZED ETH STAKING https://bankless.cc/RocketPool 👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave ⚡️ MAKER DAO | THE DAI STABLECOIN https://bankless.cc/MakerDAO 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave ------ Topics Covered: 0:00 Intro 3:40 MARKETS 4:05 BTC Price 5:25 ETH Price & Ratio 8:15 Total Crypto Market Cap 8:35 Fed Watch https://www.youtube.com/watch?v=nzGMSKbqjco 12:55 S&P Trading Range https://twitter.com/NorthmanTrader/status/1534895680417841156?s=20&t=ph6CaCM3VmI-aktXIK1YuQ https://twitter.com/NorthmanTrader/status/1534895680417841156?s=20&t=ph6CaCM3VmI-aktXIK1YuQ 14:10 Historic Downtrends https://twitter.com/NorthmanTrader/status/1534895680417841156?s=20&t=ph6CaCM3VmI-aktXIK1YuQ https://twitter.com/NorthmanTrader/status/1534895680417841156?s=20&t=ph6CaCM3VmI-aktXIK1YuQ 17:09 Is the Bottom In? https://twitter.com/RyanSAdams/status/1534214035775930369?s=20&t=PgOB_giLsY0ruzmCjNf2Xg https://twitter.com/RyanSAdams/status/1534214035775930369?s=20&t=PgOB_giLsY0ruzmCjNf2Xg 18:52 Arthur Hayes https://entrepreneurshandbook.co/shut-it-down-15d230b28089 22:24 Bottom Checklist https://www.youtube.com/watch?v=cIyxIYd8AzY 26:25 State of the Bear https://twitter.com/mrjasonchoi/status/1533157547204833280?s=20&t=MouipAFckt5tBzWVlAsX_Q https://twitter.com/mrjasonchoi/status/1533157547204833280?s=20&t=MouipAFckt5tBzWVlAsX_Q 31:00 Market Meme https://twitter.com/JadedCapital/status/1534159961260892163?s=20&t=cHUeFE6WQj53jmQUiwSajg https://twitter.com/JadedCapital/status/1534159961260892163?s=20&t=cHUeFE6WQj53jmQUiwSajg 32:40 Burning ETH https://twitter.com/sassal0x/status/1533758315267665920?s=20&t=Zov7f0A-pR8auAhF3liUlw https://twitter.com/sassal0x/status/1533758315267665920?s=20&t=Zov7f0A-pR8auAhF3liUlw 37:00 The Ropsten Merge! https://twitter.com/lightclients/status/1534568543198527491?s=20&t=JSYI9AFcKSfwqgwAk-xJSg https://twitter.com/lightclients/status/1534568543198527491?s=20&t=JSYI9AFcKSfwqgwAk-xJSg 39:40 Dress Rehearsal https://twitter.com/BanklessHQ/status/1534701665772773376?s=20&t=BW4kTDm3LEofxUeCqiVM3Q https://twitter.com/BanklessHQ/status/1534701665772773376?s=20&t=BW4kTDm3LEofxUeCqiVM3Q 40:35 Great Success! https://twitter.com/dannyryan/status/1534928763057631232 42:25 Merge Odds https://twitter.com/PolymarketHQ/status/1534573695741612032?s=20&t=UDosiK6ra7MFZTLGYH05MQ https://twitter.com/PolymarketHQ/status/1534573695741612032?s=20&t=UDosiK6ra7MFZTLGYH05MQ 43:26 Timelines https://shows.banklesshq.com/p/ethereum-merge-updates-tim-beiko 46:07 Electricity https://twitter.com/drakefjustin/status/1534857446203834368?s=21&t=NUEmAxr8h0x_3KPC-wgIKQ https://twitter.com/drakefjustin/status/1534857446203834368?s=21&t=NUEmAxr8h0x_3KPC-wgIKQ 48:42 20m OP Wintermute Fumble https://plaid-cement-e44.notion.site/A-Message-to-the-Community-from-the-Optimism-Foundation-f49b913bb0974d8a854a8bdd409a9dd6 51:50 Kain’s Takes https://twitter.com/kaiynne/status/1534653450692497408?s=20&t=eYPpC7L9k3u4VrJ4tQQ8hQ https://twitter.com/kaiynne/status/1534653450692497408?s=20&t=eYPpC7L9k3u4VrJ4tQQ8hQ 53:15 The Crypto Bill https://www.gillibrand.senate.gov/news/press/release/-lummis-gillibrand-introduce-landmark-legislation-to-create-regulatory-framework-for-digital-assets 1:00:00 NEWS 1:02:30 PayPal External Transfers https://twitter.com/Blockworks_/status/1534198854077251585 1:04:40 Bored Ape Ethereum https://forum.apecoin.com/t/aip-41-keep-apecoin-within-the-ethereum-ecosystem-process/5664 1:05:50 Illuvium Land Sale https://twitter.com/illuviumio/status/1533458697514536960?s=21&t=6m-JweSHFrwIbq6ryn6FmA https://twitter.com/illuviumio/status/1533458697514536960?s=21&t=6m-JweSHFrwIbq6ryn6FmA 1:06:52 Diablo Immortal https://twitter.com/RyanSAdams/status/1533488085585076226? https://twitter.com/RyanSAdams/status/1533488085585076226 s=20&t=Q133IOgqCIng0FNECL_y8g 1:10:35 Budweiser and Digital Horses https://twitter.com/budweiserusa/status/1533826563287957506 1:11:56 Nickelodeon NFTs https://twitter.com/nickelodeon_nft/status/1534890874747994112?s=20&t=uDZxZLg7PPW40z_MyN-y5A https://twitter.com/nickelodeon_nft/status/1534890874747994112?s=20&t=uDZxZLg7PPW40z_MyN-y5A 1:13:00 New York Mining Ban https://www.cnbc.com/2022/06/03/heres-whats-in-new-yorks-new-bitcoin-mining-ban-.html 1:15:28 Raises BlockFi: https://www.theblockcrypto.com/post/150377/blockfi-is-raising-a-down-round-at-1-billion-valuation-sources Euler: https://twitter.com/eulerfinance/status/1534163279349592064?s=21&t=iGfmuGsBnlCD3sGh_o5vrA https://twitter.com/eulerfinance/status/1534163279349592064?s=21&t=iGfmuGsBnlCD3sGh_o5vrA 1:16:35 Bankless Jobs https://pallet.xyz/list/bankless/jobs 1:17:36 Greyscale https://twitter.com/jchervinsky/status/1534279351402958849?s=20&t=DQ1mOHKUeLpHXcNyNCelNQ https://twitter.com/jchervinsky/status/1534279351402958849?s=20&t=DQ1mOHKUeLpHXcNyNCelNQ 1:20:15 Jay-Z and Jack Dorsey https://www.rollingstone.com/music/music-news/jay-z-jack-dorsey-launch-financial-literacy-school-at-brooklyn-project-1364919/ 1:21:26 Chipotle https://www.coindesk.com/business/2022/06/02/chipotle-now-accepting-cryptocurrency-payments-at-us-locations 1:24:00 Questions from the Nation https://twitter.com/BanklessHQ/status/1534626663354482690?s=20&t=uJAnalv_CuWnvqfMyAxHlg https://twitter.com/BanklessHQ/status/1534626663354482690?s=20&t=uJAnalv_CuWnvqfMyAxHlg 1:25:18 Tech Skills https://twitter.com/willitsmckinley/status/1534628582206672902?s=20&t=a_fuu65MkZe07cR2MJby5g https://twitter.com/willitsmckinley/status/1534628582206672902?s=20&t=a_fuu65MkZe07cR2MJby5g 1:27:08 OP Token Value https://twitter.com/RickLatona/status/1534676772587024384?s=20&t=a_fuu65MkZe07cR2MJby5g https://twitter.com/RickLatona/status/1534676772587024384?s=20&t=a_fuu65MkZe07cR2MJby5g 1:31:08 ETH Bullishness https://twitter.com/n1x_it/status/1534627825281601536?s=20&t=a_fuu65MkZe07cR2MJby5g https://twitter.com/n1x_it/status/1534627825281601536?s=20&t=a_fuu65MkZe07cR2MJby5g 1:35:00 TAKES 1:35:15 The Citizen House https://twitter.com/VitalikButerin/status/1532533086352576512?s=20&t=iVP94Kh6xj5s_hQw4R_aWw https://twitter.com/VitalikButerin/status/1532533086352576512?s=20&t=iVP94Kh6xj5s_hQw4R_aWw 1:37:00 Analogy Resistant https://twitter.com/jbrukh/status/1534140205334245376?s=20&t=NCZuooaqIpJCQaIrCoxJ5w https://twitter.com/jbrukh/status/1534140205334245376?s=20&t=NCZuooaqIpJCQaIrCoxJ5w 1:38:00 Medium not the Message https://twitter.com/ourzora/status/1534582905674076161?s=21&t=UAEzTgQHSrmu_xBnmAdNQg https://twitter.com/ourzora/status/1534582905674076161?s=21&t=UAEzTgQHSrmu_xBnmAdNQg 1:39:03 Crypto Equality https://twitter.com/RyanSAdams/status/1534251962362998785?s=20&t=uJAnalv_CuWnvqfMyAxHlg https://twitter.com/RyanSAdams/status/1534251962362998785?s=20&t=uJAnalv_CuWnvqfMyAxHlg 1:43:25 What David’s Bullish On https://newsletter.banklesshq.com/ 1:46:30 What Ryan’s Bullish On 1:49:00 MEME of the Week https://twitter.com/0xfoobar/status/1533533574397304832?s=21&t=PXZ4pEod6NJXY6-wuiRJbA https://twitter.com/0xfoobar/status/1533533574397304832?s=21&t=PXZ4pEod6NJXY6-wuiRJbA 1:50:00 Moment of ZEN https://twitter.com/BanklessHQ/status/1534268751394197504?s=20&t=uJAnalv_CuWnvqfMyAxHlg https://twitter.com/BanklessHQ/status/1534268751394197504?s=20&t=uJAnalv_CuWnvqfMyAxHlg ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:00David Hoffman?

  I'll call it right now if that's what you want, Ryan.

• 0:03Ryan Sean Adams?

  I want it. The people want you to call it bottom.

• 0:05David Hoffman?

  It's not going down anymore. It's not going down anymore.

• 0:10Ryan Sean Adams?

  Hey, Bankless Nation. Happy first full week of June. David, what time is it?

• 0:15David Hoffman?

  Oh, Ryan, it's the Friday Bankless Weekly Rollup Time, where we cover the entire weekly news in crypto, which is always an ambitious endeavor, yet we persevere nonetheless. What's going on this week?

• 0:26Ryan Sean Adams?

  Oh, man, there's so much going on. You and I just had a debate as to whether this is the the first week of June or the second week of June. No idea. But we compromise and call it the first full week of June, which I guess it is. That is one of the central debates on Bankless today. But we'd also have some... Is it settled, David?

• 0:46David Hoffman?

  Every single weekly rollup, we always end up starting the week like, shit, is it the second week of this month? Or is it the first week of this month? Like, how do we square that? Sometimes there's five weeks in one month. So this whole like first, second, third week of the month thing. You think that it actually works well, but it doesn't work well at all.

• 1:01Ryan Sean Adams?

  Yeah. I mean, David and I understand crypto very well. It's just calendars. Calendars are giving us the problem.

• 1:06David Hoffman?

  Calendars are hard.

• 1:08Ryan Sean Adams?

  Anyway, topics of the week, guys. Number one question, I think, in everyone's mind is, is the bottom in? We're going to talk about that, David. First thing, we're going to talk about the takes, the data, the arguments suggesting it, a hot take from Arthur Hayes as well, and try to answer the question, is the bottom in or not? At least as far as crypto. What else we talking about, David?

• 1:28David Hoffman?

  Oh, of course, got to talk about the Robson testnet, which is merged. The merge happened to Robson, the testnet. We got two more testnets to go, and then the final, final, actual merge happening to Ethereum. We'll probably talk about the timelines, because as we get closer and closer with one testnet behind us, you could actually start to see the merge on the horizon. We have all remaining steps left. So we're going to talk about the recap, the Robson merge, and also talk about the timeline for the actual merge coming in the future.

• 1:59Ryan Sean Adams?

  We're also going to talk about the 20 million optimism token fumble. Some of these tokens were apparently hacked, taken, and there's a whole story around that. And also, David, you know PayPal is allowing users to go bankless for the first time. PayPal, recall, they have 400 million users. This was like one of those bear market headlines that just kind of dropped. I didn't see, talked about a lot, but this is a pretty big deal. So we're going to talk about that too. Of course, Friday morning, make sure you like and subscribe to this podcast. You're listening to it on YouTube. Do those two things. If you're listening to the podcast side of things, make sure you rate and review. As David says, that is how we get out of the bear market is getting bankless to the top of the charts.

• 2:43Ryan Sean Adams?

  So make sure you do that while you're listening right now. David, also got to talk about our friends at Metamask. There's a handy little button in the Metamask app, either on mobile or the desktop version, that some people probably haven't clicked yet. What is this button and why should they click it?

• 2:58David Hoffman?

  It's called the buy button, Ryan. And I frequently forget that Metamask actually has this buy button. And yeah, the other cool thing I learned while doing this is the buy button works for a lot of different chains. And so regardless of what chain you're on, Polygon, Avalanche, BNB, Phantom, Cello, you can buy crypto across all of the chains with Metamask. It's the easiest way to get Ether into your wallet or whatever gas token into your wallet. So you can start doing some things. And I think, Ryan, we've been talking about the build market lately. It's not a bear market, it's also a build market, but it's also, Ryan, a buy market. At least that's what I'm doing.

• 3:33Ryan Sean Adams?

  This is not financial advice coming from David, but you know, you want to be thinking about dollar cost averaging in, of course, as you always do. And another buy button inside of your wallet is an easy way to do that. So if you want to check that out, of course, you got to have Metamask downloaded. So go to the link in the show notes, get Metamask if you don't already have it. If you do have it, go take a look at that buy button and how quickly you can get crypto directly into your wallet without having to go through the five step process of transferring from bank account to exchange, blah, blah, blah. David, let's get to the market, man. What's the market telling us? We got to start with our friend Bitcoin.

• 4:09David Hoffman?

  It's a choppy, choppy week this week. Bitcoin is down 0.8%. Started the week at 30,400, ended the week at 30,100. I guess it went up a couple hundred dollars since we last talked, but 30,300 is where it is right now. Choppy week. Barted up, barted down, barted back up, barted back down again, and overall, just kind of flat. Kind of flat.

• 4:31Ryan Sean Adams?

  When you say Bart's, for people don't know what you mean when you say Bart's, it's kind of like a technical trader type talk. What is a Bart, David? Because I see it here.

• 4:40David Hoffman?

  I think it's very un-technical, but yeah, so Bart, imagine Bart's head, right? Bart's head is like this like column shaped thing, and then it's got a bunch of jagged lines at the top.

• 4:49Ryan Sean Adams?

  Bart Simpson.

• 4:50David Hoffman?

  Bart Simpson, yeah, right. And so like you can see, you can see the wall it makes on the, on the upside. It chops around and then it goes down. And then, of course, you also have the inverse Bart, which is the same thing where like it like breaks down really fast. And then it chops for a little bit and then it goes back up. If you, if you type in like Bart chart pattern into Google, you'll get like actual charts with Bart's face like superimposed on it. Yeah.

• 5:12Ryan Sean Adams?

  And this works when you're zoomed in on the seven day, but also when you're zoomed out, right? You see Bart's at all different timelines and all different levels, right?

• 5:19David Hoffman?

  Bart fractals are everywhere. Yeah.

• 5:21Ryan Sean Adams?

  Now you're gonna see them everywhere.

• 5:22David Hoffman?

  Barty week. Yeah.

• 5:24Ryan Sean Adams?

  Apologies for that, guys. It's Bart, Bart is now going to become part of your vocabulary. Are we seeing any Bart's on the ETH chart? Tell us the price right now, David.

• 5:31David Hoffman?

  Yeah, Ether took a little bit more of a hit. It seems to be the theme of the last few weeks. Started the week at 1830 and we are currently at 1805, so down about 2% on the week.

• 5:41Ryan Sean Adams?

  So we talked about Bitcoin, we talked about ETH. Now let's put them all together. Let's talk about the ETH Bitcoin ratio, up or down on the week?

• 5:47David Hoffman?

  Down on the week. 1.3% went from 0.0602 to 0.0594. I mean, 1% in crypto, I'd call that flat, technically down, but yeah, flat, flat plus some chop this week.

• 6:00Ryan Sean Adams?

  David, are you ready to call a bottom on the ratio? At what, where is the bottom, do you think? Look at the bottom.

• 6:05David Hoffman?

  Look, it's either right now or a lot lower. One of those two things.

• 6:10Ryan Sean Adams?

  Thank you. It's either right now or a lot lower. Is there a third option even available to us?

• 6:15David Hoffman?

  No, I think that that makes the, I mean, we are testing the lowest that the Ether BTC ratio has been since it really broke up out of the bear market trend, the 2018 bear market trend. And so like if it starts to go lower than this, like it's, that's to me a signaling a long, brutal bear market, which I do not think is coming.

• 6:35Ryan Sean Adams?

  You think if it goes a little bit lower? Okay, so remember, recall it broke out of this back when we were full steam ahead in the, the bull run in April of 2021. That's where we broke above the, the ratio that we're in right now. But it's gotten as low in like 2020. It got as low as 0.018, 0.017 even. Has it gotten lower?

• 7:00David Hoffman?

  No, that's, that is the lowest. Well, I mean, it started lower than that, but that was the lowest that it got in between the 2017 to 2020.

• 7:07Ryan Sean Adams?

  So I mean, could we fall back there, do you think?

• 7:10David Hoffman?

  Absolutely not. Get that out of here.

• 7:12Ryan Sean Adams?

  Where's your bottom then?

• 7:14David Hoffman?

  No way.

• 7:15Ryan Sean Adams?

  You're gonna call a bottom?

• 7:16David Hoffman?

  I always, I always think the ETH BTC ratio is up and to the right.

• 7:20Ryan Sean Adams?

  Over the long time range, maybe so, but if we're in a bear market, it, it could be hard to tell. Okay, I won't make you call a bottom on this, in this roll up, but at some point, David, because you know, I love when you call bottoms and then we can just mean, mean that.

• 7:35David Hoffman?

  I'll call it right now if that's what you want, Ryan.

• 7:37Ryan Sean Adams?

  I want it. The people want you to call a bottom, David.

• 7:40David Hoffman?

  It's not going down anymore. It's not going down anymore.

• 7:42Ryan Sean Adams?

  Come on, you got it. Okay, give me a number.

• 7:45David Hoffman?

  What's the number? 0.0963 is the number.

• 7:49Ryan Sean Adams?

  Point, 0.0963?

• 7:52David Hoffman?

  Oh, excuse me. 0.05963 is the bottom.

• 7:55Ryan Sean Adams?

  That's the number right here? You're not even going to be conservative and be like .05 or something like this?

• 8:02David Hoffman?

  No, I'm also not a trader, so no one should be listening to me for trading advice ever.

• 8:06Ryan Sean Adams?

  All right, well, now, now you know for sure it's going below .0596, guys. So there's your alpha for today. But let's talk about the total crypto market cap.

• 8:16David Hoffman?

  What's the inverse of alpha? Crypto, total crypto market cap, lost a little bit, lost $12 billion in the last week. 1.312 trillion down to 1.298 trillion, but mostly flat, flat on the week.

• 8:28Ryan Sean Adams?

  A few billion among friends. Who cares? Pretty much flat, eh? Okay. State of the markets, let's talk about the Fed because, you know, people are wondering what the Fed is going to do next. And there is actually a new set of inflation numbers that are coming out today. So we don't have them because it's prior to when we recorded this. And those are going to be some numbers to watch. I think what's going to happen here is there's going to be a lot of scrutiny with the newest CPI inflation numbers, right? And so is it going to be down or is it going to be up? The median forecast apparently is a year-over-year CPI increase of about 8.2%.

• 9:07Ryan Sean Adams?

  So if so, that would be slightly below the April 2020, which was 8.3%. So we're hoping for, and I think the Fed is hoping for, and certainly the, the American public is hoping for a lower inflation. But even if it was 8.2, man, that's not a lot lower, just like a tiny fraction lower. And we'll have to see if CPI is higher than expected, though, David. I think you got to assume the Fed is going to continue to be hawkish on this market. And that means increasing yields, like in their forward guidance. It means continuing the quantitative tightening that they're doing, all of its policy actions. And what that, of course, leads to is, pretty predictable, bond yields go up, stocks and crypto.

• 9:50Ryan Sean Adams?

  Maybe they go down, maybe they're on a downward trajectory. So be looking for that, those inflation numbers tomorrow because they are kind of the North Star, I think, guiding the Fed. Any thoughts on this?

• 10:02David Hoffman?

  Oh, I got a ton of thoughts. Yeah, so inflation is a lagging indicator. So we are about to see the report for May in the early June. But May, like ultimately inflation is still always lagging behind the markets. Like inflation is a reaction to the rest of the markets and not leading the rest of the markets. But right now, the inflation report is kind of how the markets are interpreting the Fed's response. And so. Now, Raul talked about this when we had our podcast with him, where he kind of thinks inflation's already dead. We're just waiting for it to show up in the reports. And so like, if you are asset heavy, if you are waiting for the risk, for the bull markets to resume, if you are still into risk assets like crypto, you are just waiting for the CPI reports to come in

• 10:44David Hoffman?

  and finally indicate that inflation has actually shown up, or the death of inflation has finally shown up in the metrics.

• 10:51Ryan Sean Adams?

  I mean, you kind of wonder how much of a lagging indicator that is. We're probably looking at like-

• 10:56David Hoffman?

  Yeah, so it's a question of, are we lagging it by like one month, two months, four months? Like, how long do we have to wait for the death of inflation to actually show up in the metrics? Because we already know that tech stocks got wrecked, right? Like, ARK, which had billions and billions of dollars on it, is like at a six-year low, right? And so all of the inflation, which came from asset price inflation, it's reasonable to assume that it's already dead because everyone's broke now. And so like, that is really the fight that's going on, is the Fed is making all of the big gains that happened in 2020 to 2021. It's trying to eliminate those because the people that had all those gains are spending a bunch of money. And so now that the markets are dead, people have stopped spending a bunch of money, but we're waiting for the effect of people not spending a bunch of money to show up in inflation.

• 11:41David Hoffman?

  And like, all the people that are just gotten like whiplash by the market and like worked by the market, they're like, "We know inflation's like done because we stopped spending money. So like, just like, lower the interest rates so we can start spending money again." And the Fed's like, "No, we gotta wait for it to show up in the metrics."

• 11:56Ryan Sean Adams?

  Yeah, and I do think we're living with the Fed's decisions, you know, not just the Fed, but fiscal policy too, of like 18 months ago, probably. Like, realistically, maybe it stretched as far as 24 months ago. That's what's showing up now.

• 12:07David Hoffman?

  Even the Fed was like, "Yo, we waited way too long to raise interest rates." And like, that's why, and so like, the markets got way out of control, which makes it way worse on the downside.

• 12:17Ryan Sean Adams?

  Dude, it was just last summer, we're on Bankless, on these weekly rollups, we were talking about the Fed, and Powell kept saying it's transitory. And we were sort of laughing at that, like, "Transitory? Like, what are you even doing?"

• 12:30David Hoffman?

  Right. If we were smarter, we would have realized that that would be a top signal. If we're laughing about how it's not transitory and we're just waiting, we're waiting for the Fed to figure it out, like, we kind of could have connected the dots that like, "All right, as soon as the Fed does realize that they're behind the curve by three months, they're gonna come in hot and destroy the markets." So if we were smarter, we would have figured that out.

• 12:50Ryan Sean Adams?

  Yeah, well, I guess we should be central bankers, David, maybe in another life.

• 12:55Ryan Sean Adams?

  Let's talk about this, the S and P trading range. This looks pretty bardy too. This looks pretty choppy. What chart are we looking at here?

• 13:02David Hoffman?

  Yeah, so this is the S and P since May 27th to where we are now, June 9th. How many days is that? Like two weeks? And so you can just see, this is a 2.5% band from the top of the yellow box to the bottom of the yellow box. That's 2.5% band. And you can see it touches the bottom once, top once, bottom twice, top once more, goes back to the middle, touches the top again, touches the bottom again, touches the top again to where we are now. So like it's touched the band of this 2.5% range a bunch of times without going anywhere. And so like a very tight band of of activity with a lot of chop. And to me, what this is, is just like the market is just confused and waiting for information. It's waiting for data. Generally, when you see like these tight trading bands, people kind of meme in meme this as like, oh, it's a coiled spring, it's going to explode.

• 13:47David Hoffman?

  Don't really know which direction it's going to explode in. But like when we know that May CPI reports are coming in in a couple of days, like maybe that's the information that the market's waiting for and it will make its decision as to be bullish or bearish on those numbers.

• 14:00Ryan Sean Adams?

  Guys, this is chop season. We're seeing it in equities. We're seeing it in in crypto as well. We're just chopping Bitcoin and ETH, you saw it too. That's what those barts are. It's kind of the choppy action. But David, let's just zoom out for a minute and and take a look at this this bear market. And this is relative to historic bear markets, at least from an equities perspective. The S and P 500 bear markets in their current downturn declines and duration, that's what we're looking at. And we're looking at all of the major bear markets from, I guess, you know, the turn of the 20th century up till now. And if you look at what we're doing here is we've been currently in a downtrend for about 96 trading days. Okay.

• 14:41Ryan Sean Adams?

  And we're verging on negative 20% in the S and P. All right, that's not quite historically, that's not quite bear market territory yet. I mean, historically, at least according to this chart, the the line is drawn at below 20%. So if we are trending downwards into the bear market, like we probably have more to to go, but. What's interesting about this chart, David, is the slope of the line looks a lot like the 2007, 2008 crash. Looks a lot less, the slope of the line looks a lot less like COVID, which like hit us. And it was a very rapid descent down, but it was relatively fast and the recovery was

• 15:22Ryan Sean Adams?

  fast, like some might say V shape, at least in the assets and equities market. This looks a little bit more like 2007, 2008. So you wonder if it's going to be as prolonged. You know, 2007, 2008 was close to 300 days of downtrend before it started to turn around. What are some of your thoughts when you see this market, when you see this chart?

• 15:44David Hoffman?

  Yeah, when we talk about financial markets, timing is always tricky. It says current downtrend 96 trading days. Well, the S and P actually hit its peak really at the end of the year. Like the peak of the S and P was like January 2nd, December 31st. And then it went down like a lot. It went from 4,800 points down to 4,200 points in March. And then in March, middle of March, it went from 4,200 up, like rallied up from 42 to 46. But then it went from 4,600 points to where it is now, down to like 4,160. It got even a little bit lower. But like the peak of 4,800 points of the S and P actually happens over six months ago. So this is, it depends on where you actually mark the top.

• 16:26David Hoffman?

  And I think this, this current chart is marking the top in March, but we were actually way higher in December and January. And so you could actually, in theory, double that current downtrend of 96 trading days to be something like, I don't know, 365 divided by two. But yeah, that's my take there. It's actually been down for a long amount of time. That wouldn't change the current downtrend. Actually, no, it would actually. And so it would go from 4,800 points down to 4,200 points. And so that would be more than, more than 20%. So again, it depends on where you count it.

• 16:58Ryan Sean Adams?

  Yeah, this is all true. And I think we're going to this level of depth because we want to get here to this question. The question on everyone's mind is for crypto. Anyway, if you're a crypto investor, is the bottom in yet? That's the big question. Is it in yet, guys? I asked that question on Twitter. It put it the same way. Is the bottom already in? Here was the sentiment, at least among people that follow me on Twitter, who are probably slightly in the bullish camp, like over optimistic camp. And 27% said, yes, the bottom is already in. And the remaining 73% said, no, the bottom is not already in.

• 17:39Ryan Sean Adams?

  I do think that is the consensus take in general. Most people do not believe the bottom is in, believe we still have a ways to drop from here. I'm probably more in that camp, but I'm not ready to like, trade on that at all. Like, it could go the other way as well.

• 17:56David Hoffman?

  I would definitely say that Twitter polls about markets are inaccurate by their very definition. Like, there's been a ton of Twitter polls I've seen, like, hey, like, guess the top, guess the bottom. Like, Twitter polls don't get market predictions right, like, very, very infrequently.

• 18:12Ryan Sean Adams?

  I don't think they get market predictions right, but I think they get market sentiment generally directionally correct.

• 18:17David Hoffman?

  Yeah, so the information here is like, this is sentiment, not accuracy.

• 18:22Ryan Sean Adams?

  Of course.

• 18:22David Hoffman?

  This is engagement of sentiment, not like, I don't think there's a 70, I don't think this means that there's a 73% chance that the bottom is in or not.

• 18:29Ryan Sean Adams?

  If I asked the same question, is the top in yet? And I asked that question in like, December of last year, I bet I would have gotten, yeah, people would have said, no, the top's not in. We got, it's, you're always, consensus is always biased towards whatever the momentum is at a given period of time. So when consensus is saying one thing, I think you have to look at what the contrarians are saying. And Arthur Hayes is certainly a contrarian. Sometimes he's wrong. A lot of times he gets it right and this is his take in an article he published. His take is in summary that the bottom for crypto is already in. But let's lay out the case that he makes a little bit and he starts this off. I'm going to read a quote to you from the article, but the TLDR of this portion of the article is

• 19:14Ryan Sean Adams?

  everyone is broke right now. Okay, everyone is feeling broke, whether you don't have a lot of assets or you do have a lot of assets. People are kind of feeling broke and he says this. "The median yearly income for Americans is approximately $50,000. You know you've printed too much money when the median house appreciated more than the median income. That means you made more money sitting in your Lulu jammies than going to work. Assuming you own a home, woe to the pleb that rents." Not going to make it. Now, that's kind of the tone of his take and inside of that, he shows this graph from Bianco Research. What are we looking at here, David?

• 19:50David Hoffman?

  Yeah, this is US real average weekly earnings year over year. So real average weekly earnings, not nominal average weekly earnings. So this is growth, there has been wage growth in nominal terms as in like people's number of dollars that they are making is going up, but the value of dollars is going down bigly. And so this is a chart going all the way back to 2007. So it even has the 2008 financial crisis worked into it where weekly where weekly earnings wage growth was down like 2.6% over time. So people were making negative 2.6% in the bottom of the 08 crisis. We are down 3.4%.

• 20:30David Hoffman?

  So real, in real terms, people's wages have gone down 3.4% as of recently because of the loss of value of the US dollar and how wages have, maybe they've gone up in dollar terms, but not in real terms. So like lending itself that like people are Are losing money, like the state of the economy is people are losing money. People's savings are being depleted. People are making less money. They're having to spend more money. And so like people are broke. People are broke is the state of the market.

• 20:59Ryan Sean Adams?

  You know, it's crazy is in every graph I see of this sort of thing, you see this whiplash, right? So like prior to people losing money, like, you know, actual real wages decreasing like three to 4%. They were actually increasing from 2020 to 2021 at rates of like 4 to 7%. So the whole story here about, you know, like the Fed intervention and monetary policy is whiplash, right? Everyone's feeling rich, you know, 18 months ago. Now everyone's feeling poor and that happened historically fast was historically volatile. It feels like a, a really sick ride.

• 21:33David Hoffman?

  We would never be able to get this data, but it'd be nice to like the counterfactual universe that we would love to see is like, what if the Fed did nothing for COVID? Like, and we, it didn't jump to 7% wage growth in April of 2020, and then it didn't fall down to negative 3.4% wage growth in April 2022. Like if the Fed didn't do anything, what would that whiplash look like? And also like, would we have been able to fight COVID just as well? Like having that counterfactual universe to compare against would be awesome, but we don't. But like the whole like Austrian take on econo- on economies is that human manipulation over the monetary supply is just bad for markets. And like, you can kind of see that here, like went up and then it went down and there's whiplash and whiplash is bad.

• 22:16Ryan Sean Adams?

  Yeah, absolutely. We're definitely suffering from whiplash. But what does this mean for crypto? Back to the question is have we bottomed yet? Arthur Hayes actually says we have, and he gives a three-point checklist as to what he looks for at the bottom. Number one, and he says all of these things have been hit, by the way. Number one, Bitcoin and Ether move increasingly in a less correlated fashion versus the NASDAQ 100. That is starting to happen, David. Crypto assets being less correlated. Number two, the current price levels are very close to the previous cycle's all-time highs. What's the all-time high for ETH from the previous cycle, David?

• 22:52David Hoffman?

  1400.

• 22:54Ryan Sean Adams?

  Yeah. And what about Bitcoin?

• 22:55David Hoffman?

  20,000.

• 22:57Ryan Sean Adams?

  We're about that, right? I mean, we're close. We're not quite that, but we're getting closer to that. And so that's close to being hit.

• 23:03David Hoffman?

  Like 20 to 30% higher than previous all time highs.

• 23:07Ryan Sean Adams?

  Exactly.

• 23:09Ryan Sean Adams?

  Number three, he says, "The mainstream financial media gloats about how stupid and greedy plebs are who attain short-lived wealth investing in crypto." So the kind of articles like, "Yeah, haha, JPEGs, they were always a meme. We told you stable coins would never work. Aren't you crypto investors really stupid?" We're starting to see some of that sentiment in mainstream media. I don't pay much attention to it because it's just kind of noise to me, but like, I think that is happening. So he says, "Three strikes. All three of those criteria have been hit. You're out." And so he says that this is his bottom checklist, but he also says, "It doesn't mean prices will automatically resume a quick ascent back to like 70K Bitcoin and 5K ETH."

• 23:55Ryan Sean Adams?

  The one thing he's looking for is some of the political and macroeconomic picture to coalesce, to come together. And he thinks US elections will be a big catalyst for that. So the question in my mind is, if we're in this Bart season, if we're in this chop season, maybe the bottom's in, or we've gotten really close. So is this actually an accumulation season? That's the question. Should people be accumulating here? Or should they get ready and wait for the next leg down? What are your thoughts here?

• 24:27David Hoffman?

  Yeah. Interestingly, this end of this article, it really is reminiscent of our conversation with Vance Spencer that we had, where Vance is like, "Yo, there's got to be like a big massive liquidation event in order for me to like really be confident on the bottom, right? Like, the market trends toward peak drama, and we haven't seen drama yet."

• 24:44Ryan Sean Adams?

  It has to puke, he said.

• 24:45David Hoffman?

  Right. And you responded to Vance like, "Well, wait a second. Like, there has been sectors of the crypto industry, maybe not the crypto industry holistically, that has puked, A lot of NFTs are down bad, like Terra literally went to zero. All Layer 1s are down like 98%. We're about to see a thread that talks about how down bad parts of the crypto industry are. And the only things that really haven't puked are the blue chips, right? Like Bitcoin and Ether are like down like 60 and 65% respectively, which is would be a historically not bad crypto bear market, but kind of what you would expect from a more crypto immature crypto industry. And so this this conversation has this like, do we need the big liquidation candle that we are used to for crypto markets is still like kind of up in the air?

• 25:30David Hoffman?

  And Arthur is saying, no, no, we don't need that big liquidation candle in the big blue chips. Because, you know, other the drama has happened elsewhere.

• 25:40Ryan Sean Adams?

  He's also saying, if you want to be sure, he's predicting that that central banks and monetary policy will loosen. Because again, everyone feels broke, everyone's in pain. And so the Treasury and and the Fed essentially become a one during times of huge economic stress. And so he thinks that there will be a massive quantitative easing and that Powell and, you know, the central banks of the world will start to project that signal that probably close to kind of election time or shortly thereafter. And so if you want to be certain, his advice is look for that signal because it'll be loud and clear. I think it's a pretty good take and I really enjoyed this article. So we'll include a link in it in the show notes.

• 26:25Ryan Sean Adams?

  But David, could you also give us a state of the bear market, the snapshot in crypto? This is a thread from Jason Choi that I think is pretty useful for us.

• 26:34David Hoffman?

  Yeah, so he put six tweets together that covers different sectors of the crypto industry, starting with DeFi. And so he says, DeFi has been the most painful trade in the past year. Looking at the DEX vertical alone, we had the we've had the most prolonged bear market out of all the verticals, 400 days since all time highs for a lot of the DEX tokens, which includes Uniswap, Sushi Swap, Balancer, BNT, Average Joe, Cake Swap, CRV. Average average time since all time highs, 400. 100 days. That's been, that's been since DeFi summer and like uni down 88.6% sushi swap down 93%. Balancer down 91% cake swap down 90% curve down 92%.

• 27:20David Hoffman?

  You know, these look like 2017 ICO numbers, Ryan, like where things like

• 27:24Ryan Sean Adams?

  They do, like pretty high.

• 27:25David Hoffman?

  90% is a big number. That is one tenth of the previous market cap. Previously was so that, that was a DeFi Dex trading and then he continues with DeFi 2.0. He says, DeFi 2.0 was hit the hardest relative to all time high across virtually any category with a median drawdown of 98%. Ryan, don't let the numbers fool you. The difference between being down 90% and being down 98% is an 80% difference. Wait, no, it's a 90% difference. It's a 90% difference. And so if you are down 98%. Down 98%, you are down 90% more than if you had would been if you had just been down 90%.

• 28:03David Hoffman?

  So like DeFi 2.0 is down 90% worse than DeFi 1.0. That includes Alchemics, Ohm, Butterfly, Time. Time is literally one to zero curve and, and toke curve survived it like 85%. So that's pretty good. Toke down 95% Alchemics down 98.5%. Again, these things are exponential. That is painful. I own three of these tokens, Ryan.

• 28:27Ryan Sean Adams?

  Oh, cool. How much pain are you in?

• 28:29David Hoffman?

  Oh, I'm fine. Again, most, most are ETH bags. So, you know, I'm used, I'm used to going down big, big numbers in bear markets. That feels like home. Jason Finnis continues going, interestingly, long centralized exchange, short Dex might have been a good trade. Sex tokens, sex as in C centralized exchange tokens were amongst most

• 28:49Ryan Sean Adams?

  As a hard C, David, you don't need to do this soft C on the, on the EX.

• 28:53David Hoffman?

  Uh, moving on.

• 28:56David Hoffman?

  These sex tokens were, were down not so bad. So FTT down 69% nice. BNB down 56%, Huobi down 74%, median down 71%. So not so bad if you are a sex token.

• 29:10David Hoffman?

  I'm gonna keep on doing it.

• 29:11Ryan Sean Adams?

  Continue to say CDX. I'm just gonna spell that one out.

• 29:14David Hoffman?

  Onto Layer Ones. FAT protocols seem to be a hold. The most weight still has L1s continue to be among the most liquid and defensive assets. No major Layer One drew down more than 90% except Mina. The average for the Layer One trade is down 85%. Ether's down 63% from all time high. Avalanche down 84%. FTM down 90%. Solana down 85%. Algorand down 89%. Nier only down 74%. And I think winning this whole entire trade is, other than Ether, of course, because it's got that an extra cycle under spell.

• 29:47Ryan Sean Adams?

  Tron?

• 29:47David Hoffman?

  Is sadly Tron, but I don't count that. It's not legitimate. Nier and Adam seem to be the outperformers here.

• 29:55Ryan Sean Adams?

  Outperformers among underperformers.

• 29:58David Hoffman?

  Not losing a lot.

• 29:59Ryan Sean Adams?

  Yeah. Wow. Yeah, you know, but I don't see max pain. That's what's interesting is I don't, I still don't see max pain among the Layer Ones. I wonder if we get there first.

• 30:08David Hoffman?

  Yeah, I mean, 90, down 90%, I would definitely call max pain.

• 30:12Ryan Sean Adams?

  Yeah, but you just said the difference between 90 and, you know, 98% is a whole hell of a lot, right?

• 30:18David Hoffman?

  I'm ready to, as soon as I see like an median drawdown of 85%, I'm like, you can start calling bottoms there, in my opinion.

• 30:28Ryan Sean Adams?

  You think so?

• 30:29David Hoffman?

  Yeah.

• 30:30Ryan Sean Adams?

  I wonder how far ETH goes down. That is the big question. How about the Solana ecosystem?

• 30:35David Hoffman?

  Yeah, his last tweet just highlights the down badness of a lot of the tokens in the Solana ecosystem. The tokens of the Solana were a median drawdown of 94% from the top. This is likely because of just the illiquidity of many tokens in the Solana ecosystem.

• 30:51Ryan Sean Adams?

  This looks like the ICO market. This looks like 2017 ICO.

• 30:53David Hoffman?

  Yeah, indeed.

• 30:55Ryan Sean Adams?

  Crazy. So a lot of pain. That's the sum up here, definitely. I think this meme sums it up fairly well, David. It's a contrast of 2020 versus 2022. What are we looking at here?

• 31:07David Hoffman?

  Right. So this isn't just a meme, even though it is a great meme. The top panel is a guy closing his eyes, throwing a dart at a dartboard, and he goes, "Me trading in 2020 and quadrupling my money," and then "Me trading in 2022 and declaring bankruptcy" is the bottom panel. But like, again, this lends itself to the fact that the source of inflation was asset prices, and this is instantiated in this meme. This isn't just a meme, this is evidence, because so many people liked this meme. If you could just throw a dart at the dartboard and quadruple your money in 2020, guess where inflation came from? It's from the people who quadrupled their money by doing no work. And now, people trading in 2022 and declaring bankruptcy, which is the second half of this meme, is like, well, there's nothing you

• 31:50David Hoffman?

  can do in the markets without you losing money. And so, you know, this is a symptom of the money printer, and then this is a symptom of raising interest rates to correct for the overzealous money printer. So all those like, money printer go brr memes, if you are somebody who's experiencing pain, you can blame the money printer go brr era of monetary policy, because that's why.

• 32:11Ryan Sean Adams?

  Well, this is the thing. So in the first panel, the guy's just throwing a dart at a dartboard, right? And it's easy, easy money, right? The second panel is, he's got like six computer screens open. He's like freaking like typing on it. He's like, in the zone, trying to actually get some, get some alpha and generate some upside, and instead, he's declaring bankruptcy. To me, this is just a difference between the easy money era and kind of the tightening era's all monetary policy effect. That's what's crazy about it. Meanwhile, though, David, we are continuing to burn ETH. It's looking pretty bullish on that side of things, even though the market don't care about it. Read out this Anthony Sisano tweet here.

• 32:51David Hoffman?

  Yeah, Layer 2s on Ethereum have burned over 20,000 ETH since EIP 1559 went live. Repeat after me, Layer 2s are not parasitic to the Ethereum or ETH. And then here we have a snapshot from ultrasound.money website. NFTs have almost burned 900,000 ETH, DeFi a quarter, 750,000 ETH, Layer 2s coming in fourth after MEV at 22,000 ETH. A very long shot away from the amount of ETH that DeFi or NFTs have burnt, but the idea is that NFTs and DeFi move on to the Layer 2s. And so, Layer 2s, I think, can definitely become number one. OpenSea has burned over a billion dollars because of ETH transactions, because

• 33:32David Hoffman?

  of how computationally intensive NFTs are. Eric Connor gave out this interesting tweet that kind of really puts this into perspective. Ethereum is currently burning 2.9 million Ether per year. After the proof of stake merge hits mainnet, ETH will become deflationary as the supply shrinks massively. At this current pace of 2.9 million ETH burned per year, we will hit one ether in all of existence, as in we will have burned every single ether in existence in 40 years. We are not getting to that point, that's not how it works. That's never gonna happen. But it's illustrative of the crazy rate of ETH burning that we are currently doing. And so like, it's much more accurate to say like ether is burning at 2% per year, because then that establishes some sort of equilibrium over time. But like, illustrating

• 34:14David Hoffman?

  this as if at this current pace, we will burn literally all ether in existence at 40 years is illustrative of how much ether we are burning in this current state of Ethereum. And also, just like, how quickly the supply is going to go down in the next five years versus the next like 50 years, right? And so, you at this, and a person going through what is a bear market while ether is being burnt massively, is this is the early opportunity of Ethereum itself, where the Ethereum supply is going to get cut in half over the like next 50 to 80 years, and you get to buy it in a bear market, right? And so, when there's this exorbitant burning right now going on, to have where the trajectory is so high of

• 34:56David Hoffman?

  the burn rate that we delete all ether in existence, that is a buy signal in my mind.

• 35:01Ryan Sean Adams?

  Yeah, deleting all, there, someone once said, "There is no supply floor," that became a meme, and that's definitely true of ETH. And what's crazy here is, I actually, like in 2018 crash, basically, we saw block space demand completely dry up, like it kind of evaporated and went away. And we're not seeing that with Ethereum this time around. Like, block space demand has definitely gone down, but it hasn't dropped to zero. In fact, block space demand, like gas fees are still pretty high on Ethereum right now. And, you know, so block space demand is still high. Where it's evaporated, it's very much in kind of the alternative layer one. Ecosystem and to lesser extent, I guess, like, you know, Layer 2s and such, and, you know,

• 35:45Ryan Sean Adams?

  the polygons of the world. So that, to me, is a bullish indicator. Guys, we have so much more to cover as usual. Coming up next, we're going to talk about the successful dress rehearsal for the merge, the Robson merge. We'll give you some merge updates, including maybe our greatest, our latest thoughts on a timeline for this thing. What else are we covering next, David?

• 36:05David Hoffman?

  We got the 20 million tokens for the optimism fumble between the optimism team towards winter meal. We will cover all of those drama in details because like this story unfolded in like three different phases, went three different directions. It's kind of crazy. And then, of course, the crypto bill. There's a big crypto bill that got put out. We got the details. We're going to run through and TLDR all of the details from Senator Gillibrand and Lummis's long awaited crypto bill. So all of that and more is coming right after we talk to some of these fantastic sponsors that make this show possible. Rocketpool is your friendly decentralized Ethereum staking protocol. You can stake your ETH with Rocketpool and get our ETH in return, allowing you to stake your ETH and use it in DeFi at the same time. You can get 4% on your ETH by staking it with Rocketpool, but you can get even more by running a node. Rocketpool is the only staking provider that

• 36:50David Hoffman?

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• 37:34David Hoffman?

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• 38:11David Hoffman?

  And we're merged. Ryan, we're merged. At least the Robson testnet has merged into proof of stake format. So there's a number of testnets in the ACROSS Ethereum ecosystem. There's three big ones, and Robson's pretty damn big, and it successfully merged. So this is the first dry run, the first dress rehearsal for the proof of stake activation merge on the Robson testnet. Robson used to be proof of work, and now it is proof of stake, Ryan. So here is a picture of just a bunch of the Ethereum developers taking screenshots of the Robson merge and all of the statuses around this. Here's the Nimbit Twitter account putting some cool art into the actual blockchain with the famous panda. The panda is now the meme for the Ethereum merge because there's this meme about like one polar bear and one

• 38:54David Hoffman?

  black bear touching fingertips and they'd merge into a panda bear. It's like the consensus layer and the execution layer. And so here is another meme kind of illustrating the trajectory of this. This is coming out of Preston Van Loon where we have private testnet miners, the miners, those private testnet miners are dead, even though it's a testnet, it's never really alive in the first place. Robson miners, the proof of work behind Robson, those are now dead. And then we have the Grim Reaper going for what's next, which is the Sepolia miners, that is the testnets coming up next. Sepolia is also proof of work and will soon be proof of stake once Sepolia gets merged. And so we have all of these testnets and they're getting merged one by one by one. And Ryan, when we run out of testnets to merge with proof of stake, guess what happens next?

• 39:35Ryan Sean Adams?

  Oh, I think it's the main event.

• 39:37David Hoffman?

  I think it's the real deal.

• 39:38Ryan Sean Adams?

  The real deal. Mainnet. This was from an article from CNBC. They said Ethereum just completed a successful dress rehearsal, they called it, for the most important upgrade ever. Dress rehearsal, David?

• 39:52David Hoffman?

  Very specific language.

• 39:53Ryan Sean Adams?

  Very specific language.

• 39:54David Hoffman?

  Where'd they get that? Well, I think that's the metaphor that you used with Tim Bako when we livestreamed with him on Tuesday. That episode is already out in your RSS feeds if you want more details on the merge. But there's no way that they also came up with the phrase "dress rehearsal" and published an article like 12 hours later. I think CNBC tunes into Bankless.

• 40:13Ryan Sean Adams?

  It's gotta be, right? So, hey CNBC, it's great to have you listening to Bankless. We'd love to be on CNBC to update you on the crypto roadmap sometime. But that's really, I think, a good metaphor for this. We've got three dress rehearsals and then we're gonna have the actual performance that we're staging. And like, there's two more left, two more dress rehearsals left. But how did this go? How did Robson go? Was it a success? Was it a failure? Was it somewhere in between?

• 40:38David Hoffman?

  Yeah, so when we were talking to Tim Bako, we were like, okay, the reason why we don't have a merge date is because it's not a date. It's not a binary yes or no. It's more of a vibe. And so like, as if the developers feel good, the client teams feel good, the community feels good, the surrounding infrastructure around the merge feels good, everyone's vibing, then we can come up with a date. And so Danny Ryan, who coordinates these things, says the Robson merge was a "major" in all caps "success". "If this were mainnet, I would be jumping for joy." I don't see Danny Ryan using emojis often, and he uses the celebration emoji saying "congratulations to everyone involved." And then he highlights some of the actual issues that did show up, so we can speedrun through these.

• 41:19David Hoffman?

  14% of validators had a downtime at the time of transition. 9% is a Nimbus team config issue fixed with a CLI change and redeploy. Basically, as soon as you start and stop your miner, your node, it works again. 1.8% is a known con currency bug in Nethermind required a reboot for some nodes. And then 2.5 to 3% Nimbus base web socket problems swapped to use HTTP. These are all developer talks, but of the percentage of nodes that did not successfully merge, it was all very trivial and they were able to restart themselves and get up. To merge. So the issues that were discovered in this dress rehearsal were all trivial, which is exactly what we want. There's no way that zero issues happen. We're trying

• 42:03David Hoffman?

  to figure out what issues are going to happen. And the more trivial they are, the better they are. And what Danny's saying is like, all the issues that were discovered were super trivial and would not prevent an actual live merge happening. If this were a real merge, it would have been a success. So

• 42:19Ryan Sean Adams?

  Guys, the dress rehearsal went well. That's fantastic.

• 42:22David Hoffman?

  Well, good performance.

• 42:23Ryan Sean Adams?

  Yep. And so we'll talk, let's talk about the merge odds, though. This is a poly market, which is a prediction market in crypto and DeFi. And they're estimating the odds. So people are actually betting on this. By September 1st, the odds of a success, ETH merger 28%. By October 1st, 65%. By end of year, 90%. To me, David, this feels about right, although I am a bit more bullish than I would say these numbers.

• 42:53David Hoffman?

  This feels like it's leaning bearish. I think these numbers are

• 42:56Ryan Sean Adams?

  Leaning bearish.

• 42:56David Hoffman?

  I think they are taking in, these are, we found a bug numbers in my mind.

• 43:03Ryan Sean Adams?

  Well, give me your take, then. What do you think the actual number is going to be?

• 43:07David Hoffman?

  I think you, it says by end of year 90%, by October 1st 65%. I think by October 1st 90%, and then by September 1st 65%.

• 43:19Ryan Sean Adams?

  Interesting.

• 43:20David Hoffman?

  And you bump those numbers up.

• 43:22Ryan Sean Adams?

  For you guys, on a, you know, a weekly basis as things happen. But this is the overall schedule for the merge. I think this is important for people to understand. What would you, what would you highlight from this? Of course, we have an entire episode on this that came out on Tuesday of this week. So if you're looking to get all of the details, listen to that episode. But what, what's the highlight on the next steps to happen to get the merge to completion, David?

• 43:43David Hoffman?

  Yeah. So this is a fantastic infographic illustrating what comes next. First, we have the client releases on the very far left, the blue, with the blues like the off-chain layer. Robson, Sepolia, and Gorley. We're already down on one of those. And so each one of those things gets merged. And then, then we, the, once all those things gets merged, and we're all happy about it, on the All Core Devs Call, a TTD will be selected, a total, terminal total difficulty. It's like a block height, it's like a block number, but it's something else. But basically, for all intensive purposes, it's the same. Once a TTD is selected by the all-core devs, that is basically picking a date for the merge. So when the TTD is selected, it's like picking a date. So we will actually have a date where we say, hey, the merge is going to happen at this particular date.

• 44:27David Hoffman?

  And then some client, a software gets releases for the consensus layer and execution layer clients called Bellatrix and Paris. And then eventually those get activated on the beacon chain, on the proof of stake chain. And once those get activated, then when the TTD number gets hit, these new activated execution layer and consensus layer clients start listening to this. And then once the TTD gets hit, that is when we merge. And 12.8 minutes after that point, we will have successfully finalized the first merge blocks and made us a proof of stake network.

• 45:00Ryan Sean Adams?

  My favorite part about this is like, once you deploy the, you know, the Bellatrix and Paris client releases for both the consensus layer and the execution layer, so to basically the proof of stake and proof of work networks, then it's just a shot clock, like then there's just a timer, it's a countdown. And everything is automatic after that. So like, you push it out there and then within like a week, maybe two weeks, we're just counting down the time for the merge to actually happen. It's crazy. It's gonna be a lot of fun, though, guys. We're gonna have a lot of fun this summer, this early fall, sometime soon.

• 45:34David Hoffman?

  Halloween, Halloween, I'm gonna, every, oh my god, I'm calling it. Everyone, for everyone in the Ethereum community during Halloween is gonna dress up like a panda. And I had, I just had that idea right now, and I bet you that's coming. So I'm calling that. If you guys want to get all of the details from the merge and the remaining steps between now and the merge, we did a live stream with Tim Baker, who is privy to all these information and all these details. And so that, again, that podcast is already out on the RSS feed, it's also up on the YouTube. And that, I believe, will conclude the merge section.

• 46:07Ryan Sean Adams?

  Last thing on that is one of the downstream effects after the merge effects is going to be an absolute monster decrease in electricity used by Ethereum. So like it's basically all of it is going to go away, going to evaporate. And that is crazy to think about because right now Ethereum consumes somewhere between 0.1% to 0.3% of all of the world's electricity right now. Let me repeat that. This is less than Bitcoin, you know, not a lot less than Bitcoin, but a little bit less than Bitcoin. Right now Ethereum proof of work consumes 0.1% to 0.3% of all of the world's electricity

• 46:52Ryan Sean Adams?

  output. That's a lot. And that is going to go away after proof of work, almost like a light switch. It's no longer going to be needed because you'll no longer make any money consuming that electricity in the form of Ethereum block rewards. So you kind of wonder what effect that's going to have maybe to the power grid or maybe to kind of like, you know, mainstream news. Will anyone notice that decrease? But it sort of means that Bitcoin will now have to sort of stand alone as the sole proof of work chain, the sole juggernaut proof of work chain. And I do think a lot of scrutiny will come Bitcoin's way as a result of that. Whether you agree with that scrutiny or not, certainly the narrative is coming.

• 47:34Ryan Sean Adams?

  And in fact, we're going to be talking about some New York legislation that dampens what New York can do with with proof of work a little bit later. But any thoughts on this, David?

• 47:45David Hoffman?

  Yeah, I mean, if it does indeed start to make news that like Ethereum turned off all of its miners and like redirected all of that electricity consumption back to the grid. And for then there were some fallout as a result of that for better or for worse. Like maybe there's like a grid surge and that happens or like electricity prices get really, really cheap in some corners of the world where Ethereum miners are hooked in. Like it just highlights the fact that Bitcoin is the last chain standing that is consuming energy. And I do not envy the Bitcoin ecosystem to having to fight that fight as like justifying their like, I mean, you if you 1.1 to 0.3% of electricity consumption by Ethereum is like high. If your Bitcoin is like 0.5% and higher like TBD, like the how to calculate these numbers

• 48:30David Hoffman?

  is a little bit up in the air. So fighting that fight, the political fight, the fight for hearts and minds while your blockchain is consuming a ton of electricity, not exactly the best place to be.

• 48:40Ryan Sean Adams?

  Yeah, I'd rather not be doing that's for sure. But let's talk about this. So

• 48:44David Hoffman?

  Big news item number two.

• 48:46Ryan Sean Adams?

  Yeah, 20 million in OP tokens hacked, stolen. What happened here, David? What's the story?

• 48:53David Hoffman?

  Yeah, so Optimism and the Wintermute team were made a deal where the Wintermute team would liquidity provide for Optimism tokens. And so to carry out this engagement, Optimism gave a temporary grant of 20 million OP tokens to send to Wintermute as part of the foundation's partner fund. Wintermute provided an address to receive these tokens, and this was their multi-sig address on the Ethereum Layer 1. However, the accident, the whoopsies that happened here was that Wintermute's multi-sig address, the Nosis multi-sig, they used one of the very, very old versions of the Nosis multi-sig that has since been updated. And as a result of that quirk, the address on the Ethereum Layer 1 is not the same as the

• 49:34David Hoffman?

  address on the Ethereum Layer 2. So if you use a, if you make a Nosis multi-sig now, it would be, it will, would be the same address, but Wintermute was using a very old multi-sig contract. And so they made an assumption that it would be the same address and it wasn't. And that resulted in the OP tokens going to a multi-sig address that had not yet been initialized. And so there was an attacker that I think basically just like spammed the initialization of a multi-sig address until they got the right one, giving them control over the 20 million OP tokens. As soon as the attacker got their hands on the 20 million OP tokens, they sold 1 million of them and have also delegated another million

• 50:17David Hoffman?

  of the tokens to a delegate and then also sent Vitalik another 1 million tokens. And so this person, yove.eth, said, "The plot thickens. As I'm writing this, explain it to me. The attacker delegated the 1 million OP voting power to me. Thank you for delegating." Hint, no, I'm not the attacker and I don't know who it is. And then Bantag from Urn says, "The attacker just sent 1 million OP tokens to vitalik.eth." Interesting, like, why 1 million? Why not all of them? Like, I can't, I don't actually know how many tokens the attacker has left. Presumably 19 or 18 million now.

• 50:53Ryan Sean Adams?

  One quick note, I think, David, you kept saying Winter Mule. It's Winter Mute, I believe.

• 50:58David Hoffman?

  Oh, excuse me.

• 50:59Ryan Sean Adams?

  What is Winter Mule? That sounds familiar to me, though, but it's not these guys. And what is, who are Winter Mute? And like, what's gonna happen as the outcome of this? Like, who's actually gonna pay for the 20 million OP tokens? Who's gonna suffer that loss?

• 51:13David Hoffman?

  Yeah, apologies, Winter Mute.

• 51:17Ryan Sean Adams?

  Not Mule's Mutes.

• 51:18David Hoffman?

  Yeah, Winter Mute is going to be buying tokens off of the secondary market to replace the losses. Right now, just 1 million tokens have been sold. And so, since the OP token is still so young, there's not much issued. That actually didn't impact the price. But Winter Mute, as a result of their trading profits, is committed to buying back the tokens that they admit that they lost. Kane, there's a lot of people like pointing at Winter Mute, saying, "Oh, my God, this is amateur hour, like, you gotta check your addresses."

• 51:46Ryan Sean Adams?

  How could you do this?

• 51:47David Hoffman?

  "How could you do this?" Kane put a thread together that I thought put things into perspective, which makes a lot of sense to me. Kane says, "Loving the reply, guys, in this thread, saying, 'Oh, my God, how could you do this? Well, I'll tell you exactly how. You do several thousands of things with correct assumptions, and then one of them is an incorrect assumption. Seeing the funds in your address is not sufficient as a test." And then he continues, "I can think of at least 50 different times something like this has happened within the synthetic community. The correct way to test a transaction is to ensure that you can move the received tokens, but like, 0% of people do this. Almost anyone who's been in crypto long enough has a story of incorrect assumptions leading to the loss of funds. I have made this mistake. Just recently, I called a function named burn on one contract when it was supposed to be another contract.

• 52:30David Hoffman?

  I had 20 tabs open, and the sequence of transactions was 20 transactions long, resulted in 10 million die burned."

• 52:36Ryan Sean Adams?

  What?

• 52:36David Hoffman?

  I didn't know that. Sorry, Kane, that sucks.

• 52:38Ryan Sean Adams?

  Sorry, Kane.

• 52:39David Hoffman?

  My conclusion, after years of watching this stuff, this stuff happen, is that it's not possible to avoid every mistake, but communicating them transparently and quickly is the optimal approach. And that is what I will give a ton of like credit for, towards the Winter Mute team. They didn't hide it, they immediately owned up to it, and they have also committed to rectifying their losses. And they committed to all of this stuff before like crypto Twitter got like all up in arms about the drama about it. So, I think this is gonna be just a very small hiccup in the very long story of both Winter Mute and optimism.

• 53:11Ryan Sean Adams?

  Well, speaking of long stories, David, we've got our news, a big news item number three, which is the bill, a long awaited crypto bill led by Senator Gilderbrand and Senator Lummis is being put in front of Congress. And I think we've gotten our hands on it, at least a draft version of this, where they're calling it landmark legislation to create a regulatory framework for digital assets. And Lummis has been a long-term advocate for crypto. Of course, she's a Republican. Gilderbrand, I believe, is also a crypto advocate as well. And so this is a bipartisan bill. I don't know what the chances of this going

• 53:53Ryan Sean Adams?

  through are. In fact, I think we're going to have Senator Gilderbrand on Bankless tomorrow to actually ask her about this. But let's talk about the meat of what actually is inside of this bill, because this is maybe, I think, the crypto industry is hoping for some clarity. That's what we've been begging Congress to do. So even regulators like Hester Purce and, you know, the former CFTC chairs have been begging Congress to do is just give us clarity. Just tell us like, what you expect out of this space. Come up with some sensible regulation. What does this bill include? What are some of the main provisions, David?

• 54:27David Hoffman?

  Yeah, I've pulled out some of the most relevant parts of this very long bill. So I'm going to speed run through all of them. I'll also type the section numbers if you guys want to check them out yourself. Section 204, Decentralized Autonomous Organizations, specifies that certain decentralized autonomous organizations, DAOs, are business entities for the purposes of the tax code. This requires that a DAO be properly incorporated or organized under the laws of a jurisdiction as a decentralized autonomous organization, which may include an LLC, corporation, partnership, foundation, cooperative, or other similar organization. Basically telling DAOs that they need to register somewhere. Kind of taking the D out of DAOs. So kind of don't really like that.

• 55:04Ryan Sean Adams?

  Yeah, it's not awesome. I'm not a fan of that. It's very cumbersome.

• 55:08David Hoffman?

  It does also give them optionality and clarity in some respects, although it's not the most ideal form. Section 206, Internal Revenue Service IRS Guidance. This requires the IRS to adopt guidance or clarification on longstanding issues in the digital asset industry, including disposition of forks and airdrops, merchants, acceptance of digital assets, mining and staking charitable contributions, legal characterizations of payments, stable coin as indebtedness. So there is that. Section 2208 Digital Asset Mining and Staking declares that digital assets obtained from mining or staking activities do not form part of a taxpayer's gross income until the disposition of these assets.

• 55:49Ryan Sean Adams?

  Wait, what?

• 55:50David Hoffman?

  Staking yields not taxed until you sell them. That is awesome.

• 55:55Ryan Sean Adams?

  Oh, my God.

• 55:56David Hoffman?

  We love that.

• 55:57Ryan Sean Adams?

  All right. So both of those are very good things.

• 55:59David Hoffman?

  Those are very good things.

• 56:01Ryan Sean Adams?

  So IRS giving us guidance, they haven't given us jack around guidance. Like, you have no idea how crypto assets are treated. Everyone's just kind of guessing. So that's good. It's something we needed. But this is crazy. So you're saying staking income is not ordinary income under this bill?

• 56:17David Hoffman?

  You pay zero taxes on staking income until you sell it.

• 56:20Ryan Sean Adams?

  Wow. I mean, this would be a congruent with other jurisdictions around the world. I believe Germany treats things this way, but that would be shocking to me if the IRS took this sort of position. But it's not them. I guess it's Congress making them do it. Incredibly bullish. What else we got, David?

• 56:38David Hoffman?

  Section 403 CFTC jurisdiction. The previous ones are all big deals, but this is also a very, very big deal. The CFTC shall have exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of a digital asset that is offered, solicited, traded, executed, or otherwise dealt in interstate commerce. The LUMIS JILIBRAN grants the CFTC exclusive spot market jurisdiction over all fungible digital assets which are not securities. Section 404, also very related, digital asset exchanges, creates a pathway for digital asset exchanges to register with the CFTC to conduct trading activities similar to the Digital Commodities Exchange Act. Awesome. So the CFTC is crypto. Crypto and CFTC, big handshake unless they are securities.

• 57:23David Hoffman?

  So if a cryptocurrency is not a security, it becomes under the jurisdiction of the CFTC, giving the CFTC prime control over regulation over the crypto industry. We like that clarity. We like being able to pick one entity and say, you're responsible for regulating crypto, which definitely tells the SEC to back off regulating crypto and Gary Gensler to just cool your jets, bro.

• 57:46Ryan Sean Adams?

  Yeah, I think that's so it's very clear to me that under this bill and everything I've said that that even Bitcoin will be treated as commodities under these provisions. The still outstanding question is what else is a commodity and how does something that's a security become a commodity is is there a path to that? I'm not sure that that's clarified, but seeing the CFTC take a more active role in this is a is a big win in my mind.

• 58:08David Hoffman?

  Right. And then the last one I want to highlight, section 601 issuance of payment stable coins. The Loomis Giller brand requires a bill requires all issuers of payment of payment stable coins to one, maintain high quality liquid assets value at 100% of the face value of all outstanding payment stable coins. Two, provide public disclosures on assets backing the stable coin and their value. And three, have the ability to redeem all outstanding payment stable coins at par in legal tender. If you have been paying attention to what Circle has been doing, they have been doing all of this stuff for the last six months, front running what is they expected to be these requirements. The last part of this section is really, really cool, Ryan. Establishes a detailed optional process for depository institutions, banks and credit unions to issue a payment stable coin.

• 58:53David Hoffman?

  Banks can issue stable coins, credit unions, small banks, big banks have been given by this bill, the green light to issue a stable coin. That is really cool. That's really cool.

• 59:03Ryan Sean Adams?

  Yeah, that is really cool. Now, so I if I take all of this in its totality, the last thing I'm worried about in the stable coins thing, I think it's really good for, you know, centralized stable coins like Tether or USDC or something new to follow these guidelines. I hope this does not preclude the dies of the world or even the experiments like like Frax. That would be dangerous territory. So for me, that depends on the fine print. But if I'm zooming out, like the Dow thing is not great, but the tax implications are incredibly good. And the CFTC taking a more active role and rather than the SEC is also bullish.

• 59:44Ryan Sean Adams?

  So I like this is more bullish than bearish to me to the crypto industry. The big question in my mind, though, is can they actually pass it with this Congress at this point in time when nothing actually gets passed? So we're seeing some movement, but I wonder, do we have to wait until 2024 to actually see this get passed? We actually had Kevin O'Leary, you may know him as Mr. Wonderful, the shark from Shark Tank. He is going to be coming out, the podcast is coming out on Monday. He was actually in Washington, talking to legislators, talking to people in DC about this very bill. His emphasis, David, was like, hey, if we're going to concentrate on one thing, get one thing right, let's get the stablecoin piece right. This section 601, I believe, would be his emphasis or focus.

• 1:00:28Ryan Sean Adams?

  So it could be the case that maybe this entire bill doesn't get approved. You know, this entire bill doesn't go through, but a section of it does in a smaller version of this bill. And maybe that's the stablecoin section. Maybe that's something we can all, you know, start with and actually get some clarity there before we get into the other areas. So overall, I think this is a good step. It's bullish, it's certainly not perfect, but I'm excited about it.

• 1:00:54David Hoffman?

  Coming up next in the next part of the show, there's a ban on Bitcoin mining in New York. We got to talk about that as well as the fight over the apes. There was a fight over the apes as to where the board ape ecosystem is going to go. So we got that answer now, as well as PayPal allowing 400 million users to go bankrupt. So all those details and more coming up right after some of these fantastic sponsors that make the show possible. Arbitrum is an Ethereum layer two scaling solution that's going to completely change how we use DeFi and NFTs. Over 300 projects have already deployed to Arbitrum and the DeFi and NFT ecosystems are growing rapidly. Some of the coolest and newest NFT collections have chosen Arbitrum as their home. All the while, DeFi protocols continue to see increased usage and liquidity. Using Arbitrum has never been easier, especially with the ability to deposit directly into Arbitrum through all the exchanges,

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• 1:02:57Ryan Sean Adams?

  Hey guys, we are back. Some bullish news, this is the kind of bullish news that happens in the bear market and the market does not react. But get this, PayPal is now allowing external transfers to non-custodial wallets, or custodial wallets, outside of the PayPal ecosystem. That is huge. Realize how massive PayPal is today, 400 million users, they have 30 million merchants, and this puts all of those users, all of those merchants, on the path to going bankless. Why? Because now you can withdraw your Bitcoin, Ethereum, Bitcoin Cash, and Litecoin to other wallets and exchanges. Previously, you couldn't do this. A couple of weeks ago, we talked about the way Robinhood was allowing this for their users.

• 1:03:40Ryan Sean Adams?

  Now PayPal is allowing withdrawals for their users as well, and I gotta imagine deposits. So this is super cool, David, and I think, you know, opens the door for many more millions to go bankless when they are ready to take custody of their private keys or move it outside of the PayPal network. It's also cool to see a network like PayPal wouldn't do this unless they had to, and crypto is kind of forcing, you know, networks like PayPal to do this sort of thing. Because people want the ability to access their own private keys. We want to take custody of our assets, we want the ability to go bankless. So I think this is super bullish.

• 1:04:17David Hoffman?

  The table stakes for fintech companies just always gets higher and higher and higher for getting involved in crypto. First, first you have to provide access to crypto assets. Then it has to be, well, now you have to withdraw crypto assets for you to even be considered. And then soon it's going to be like, well, you have to be able to let me get yield, DeFi yield inside of your app. And then soon it's going to be like, well, I need to be able to stake ETH inside of your app. And all of a sudden, all of these fintech front ends are just going to become front ends for DeFi and growing out the DeFi mullet. So that is the story here. All right, moving on to the battle of the apes. Apecoin DAO officially favors remaining within the Ethereum ecosystem. Yay, decentralization. The final votes reveal that 53.6, not that much, over, over a majority.

• 1:04:57Ryan Sean Adams?

  That's barely.

• 1:04:58David Hoffman?

  53.6% of Apecoin voting participants have agreed to stay within the Ethereum ecosystem. The immutable ZK rollup layer two actually made a proposal for them to go on to that ZK rollup two. This is not that. All that the apes have done is they have voted with a snapshot vote using the Apecoin that they decided they want to stay within the Ethereum ecosystem. And so they don't know where to go. I think they, I still, I believe, want to migrate off of the Ethereum layer one. But as a, just a temperature check, the apes are staying inside the Ethereum ecosystem. And so I much agree with this choice. Nice choice, Apecoin. You got to put yourself next to where the epicenter of economic activity is, and that is of course on Ethereum.

• 1:05:42Ryan Sean Adams?

  Look how tight this vote was though.

• 1:05:44David Hoffman?

  It's a tight vote. It's a tight vote.

• 1:05:46Ryan Sean Adams?

  Yeah. I wouldn't be surprised if they changed their minds in a, you know, a few months. We'll see what happens.

• 1:05:52David Hoffman?

  That is not the only Metaverse story of the week. Illuvium, the, the big game from Kieran Warwick, Kieran Warwick, Kane Warwick's brother. The Illuvium land sale got concluded all last week. All land plots apparently sold out. They sold 20% of the future Ethereum land. An absolute insane amount of money was collected from in a bear market sale. $72 million for 20% of the Illuvium land. That is nuts. That is an insane market cap on the total supply of all Illuvium land, which the game isn't even out yet. This was done on immutable, on immutable X. And so that got around all the gas wars. And so big, big success out of the Illuvium ecosystem. $72 million. Who is buying Metaverse land

• 1:06:37David Hoffman?

  in this bear market, Ryan? In this, in this economy? In this economy?

• 1:06:40Ryan Sean Adams?

  In this economy, you're buying your virtual land? What are you doing, guys? What, de-gens are still de-gening, I guess? Or maybe, look, maybe this is going to be incredibly valuable. I've heard great things about alluvium in the ecosystem. People may be bullish alluvium land, but they are not bullish Diablo Immortal, which is some sort of Diablo, I guess, game. You've told me, David, this is mobile-first, so I know, like, both of us are former Diablo players. I think you got into Diablo III a bit more than I have. Oh, there's the game right now, you're sharing on mobile. I was a Diablo II aficionado, spent a lot of my youth inside of that game, buying, selling, leveling up.

• 1:07:18David Hoffman?

  Yield farming before it was yield farming?

• 1:07:19Ryan Sean Adams?

  Yeah, exactly. But never made a cent on it. So, a little bit different than the yield farming we do today. But I've just been seeing all of the spillover from the gaming community of hatred for this game.

• 1:07:31David Hoffman?

  Right.

• 1:07:32Ryan Sean Adams?

  Like, one of the lowest-reviewed games in history. People are calling it predatory. What are some of the issues that have surfaced? And can NFTs fix this, David?

• 1:07:41David Hoffman?

  Yeah, so in the Diablo subreddit, there is a post that is upvoted, 20,000 upvotes saying, "Ban Diablo Immortal from this subreddit for predatory gaming monetization." So, like, Diablo, the only, the Diablo community is banning a Diablo product, saying that this is ridiculous.

• 1:07:59Ryan Sean Adams?

  They hate it that much.

• 1:08:00David Hoffman?

  They hate it that much, for like, you know, microtransactions and freemium. And this guy, Ryan Todd Adams, tweets, "It costs $110,000 to fully gear up in Diablo Immortal, as in, it's a freemium game, so if you want to buy all the goods, you gotta spend allegedly $110,000 is how much it takes to, like, max out your stats. And you don't even own your stuff. We've turned video games into rich kid country clubs." Wow, that is a great metaphor. Do NFTs fix this, or do they make it worse?

• 1:08:27Ryan Sean Adams?

  Now, NFTs- What do you think about that?

• 1:08:28David Hoffman?

  And there's a take later on in the take section that this is gonna be relevant to, but like, NFTs could make it worse, or they can make it better. It's up to the technology, but at least it provides an option, right? And so, this is like, what's been going around in the NFT crypto Twitter world, is like, NFTs have the ability to fix this, where you can allow people to buy and have the same sort of monetization, but at least they get to own their own assets. And maybe we, like, tamp down on the egregiousness of $110,000 to max out your character. Yeah, so-

• 1:08:56Ryan Sean Adams?

  There's a huge difference. $110,000, like, that is just revenue to...

• 1:09:00David Hoffman?

  Right.

• 1:09:01Ryan Sean Adams?

  Does Blizzard still own Diablo?

• 1:09:02David Hoffman?

  That leaves your hands.

• 1:09:03Ryan Sean Adams?

  Who owns Blizzard?

• 1:09:03David Hoffman?

  Yeah.

• 1:09:04Ryan Sean Adams?

  Yeah, it's just like, it's all revenue on Blizzard's side, right? It's very different than somebody paying like $110,000 in a game, for example. I'm saying that that's an egregious amount of money, but they're buying it from another player.

• 1:09:18David Hoffman?

  Right.

• 1:09:18Ryan Sean Adams?

  Right? So Blizzard doesn't generate that upside. It's some other player that got in earlier or did more within the game. It's the players that are actually receiving this economic return. That's a completely different model than what we're seeing in Diablo.

• 1:09:33David Hoffman?

  Right. And like, you can just imagine how much more adoption there will be where, using the $110,000 number, one player pays another player $110,000 for their items, and then Blizzard just takes like a 1%, 2%, 3% cut on that.

• 1:09:45Ryan Sean Adams?

  Yep.

• 1:09:46David Hoffman?

  And because players are not feeling just like extracted from, and they're actually able to make money because some player made $110,000, it onboards a ton of more players. And that's like one of the very basic ways to integrate NFTs into games. Vance Spencer talked about this on our podcast with him. But it's like, you know, you can give out NFTs for free and have them be like valuable in secondary markets. So NFTs do fix this once we figure out the form factor for NFTs.

• 1:10:11Ryan Sean Adams?

  It's such a cool, it's such a cool model that no one's tried. Like Axie was silly, like you had to pay to mint, that sort of thing. But like, you know, Vance's concept is, no, all the minting should be free. And then the game publisher just makes money on the transaction fees. Why don't we try that? I think we will see those experiments in the future. So we got a fix for you guys. Diablo Immortal, you know, people who are enthusiastic about that game but found it predatory. I think NFTs are coming to fix some of that. What is Budweiser fixing here? I'm seeing some horses on screen, David.

• 1:10:39David Hoffman?

  Dude, Budweiser is just killing it in like the NFT world, the branding world. Budweiser is now the official beer of Zed Run. And Zed Run is a, is a, like a metaverse horse racing ecosystem, right? So they, the horses are NFTs and you can bet which horse is going to win, which like,

• 1:10:58Ryan Sean Adams?

  Wow.

• 1:10:58David Hoffman?

  You know, people love to gamble, right? And I'm a big fan of like, you know, those horses are like brutalized in real life, right? And so for those like animal rights, let's just... Make NFT horses in like the metaverse and like we'll race those things rather than like making actual horses race anyways Budweiser is like sponsoring the whole this whole virtual horse racing ecosystem. And so there's a bunch of a bunch of horses that you can like purchase or bet on. And yeah, so Budweiser like sponsoring.

• 1:11:26Ryan Sean Adams?

  I have never felt the the need or the interest in betting on horses until now. This is pretty cool.

• 1:11:32David Hoffman?

  Yeah, I mean, if we wanted to, Ryan, bankless, we could buy a horse if we wanted to, we could have the bank.

• 1:11:36Ryan Sean Adams?

  Buy a horse, a bankless horse?

• 1:11:38David Hoffman?

  Yeah.

• 1:11:39Ryan Sean Adams?

  Isn't there isn't there some like Vitalik?

• 1:11:42David Hoffman?

  Yeah, there's there's.

• 1:11:45David Hoffman?

  Yeah, I don't know how to find it. I have not.

• 1:11:48Ryan Sean Adams?

  Anyways, I think this forged from fire horses is Vitalik.

• 1:11:52David Hoffman?

  Oh, my God. Well, I guess that's Rob Budweiser. Coming up next, I think you guys remember when I talked about how the SpongeBob SquarePants NFTs were coming to Ethereum versus with this IP.

• 1:12:06Ryan Sean Adams?

  I remember this.

• 1:12:07David Hoffman?

  Yeah.

• 1:12:07Ryan Sean Adams?

  Very excited.

• 1:12:08David Hoffman?

  Yeah, so we're getting closer, Ryan. Nickelodeon NFTs. Nickelodeon underscore NFT Twitter account. So the 90s called. They want your attention back. If you're reading this, you're early hashtag Nickelodeon NFTs. And so like, all the 90s kids who like have crypto money now, they're gonna have some NFTs that they can purchase. And like, like I said, like.

• 1:12:30Ryan Sean Adams?

  You're talking about yourself, aren't you?

• 1:12:32David Hoffman?

  I might be buying the SpongeBob NFT. Like, I might do that. Everyone hands off. I will outbid you.

• 1:12:40Ryan Sean Adams?

  There's gonna be a fork show. It's just good bankless SpongeBob edition where David just shows his SpongeBob NFT takes.

• 1:12:47David Hoffman?

  Yeah, that's exactly right. Anyways, so call to action for anyone that enjoys Nickelodeon and NFTs. Plan on which NFTs that you want to buy, so long as it's not SpongeBob.

• 1:12:57Ryan Sean Adams?

  Save your money. Save your ETH, guys. It's gonna be a big one. On the regulatory front, the New York mining ban, this has happened. This is the headline. "New York Just Passed A Bill Cracking Down On Bitcoin Mining." Here's everything that's in it. We won't go through all of the details, but David, this is the first state to actually start to institute a ban on carbon-based power sources, Bitcoin mining being the primary one targeted. What do you make of this?

• 1:13:27David Hoffman?

  Yeah, so the author of this is Mackenzie Sigalos. I actually met her at ETH Denver, so shout out to her. She's a fantastic, well-researched, good-intent reporter, so I can actually trust her as good signal here. In the article, it says, "Following an early vote in Albany on Friday, lawmakers in New York passed a bill to ban certain Bitcoin mining operations that run on carbon-based power sources. The measure now heads to the desk of Governor Kathy Hochul, who could sign it into law or veto it. If Hochul signs the bill, it would make New York the first state in the country to ban blockchain technology infrastructure, according to Periann Boring, founder and president of the Chamber of Digital Commerce. Industry insiders also tell CNBC it could have a domino effect across the US, which

• 1:14:09David Hoffman?

  is currently at the forefront of the global Bitcoin mining industry, accounting for 38% of the world's total miners. If it passes, it would make New York the first state in the country to ban blockchain technology infrastructure." I said that twice.

• 1:14:21Ryan Sean Adams?

  Do you know what, though, David? Texas ain't doing this, man. It'll just move over. It'll move down south, right?

• 1:14:26David Hoffman?

  I don't know. There actually is a ton of energy in Pennsylvania. There's a bunch of data centers in Pennsylvania, so it actually makes sense for Bitcoin miners to be there. But like Texas is like-

• 1:14:35Ryan Sean Adams?

  Is it clean energy, though? It's not actually-

• 1:14:37David Hoffman?

  I don't know. I don't know.

• 1:14:39Ryan Sean Adams?

  Probably a lot of coal energy and that sort of thing. But yeah, other states will be happy to pick up this slack. I don't think that this is a thing unless you get this instituted federally. And do you think that, like, Congress or, you know, through executive order, there's an appetite to do that?

• 1:14:53David Hoffman?

  No, no, definitely not. There's so much, there's a decent amount of lobbying power. Like, no one really heads it out for Bitcoin mining all that much, just New York. New York has always proven itself to be like a very hard state for crypto companies to operate in. Anyways, I live in New York now.

• 1:15:11Ryan Sean Adams?

  Alright, so maybe you can change a few things around there, or maybe not. I don't think you're gonna come down on one side of the proof of work debate. But that is increasingly a debate that Bitcoiners will have to stand alone on, as we made that point earlier in the show. David, some raises this week. The first one, BlockFi gets a $1 billion valuation, and that sounds like a lot, but it's actually down from their previous range. So, we're starting from their previous raise. So, we're starting to see the bubble, I guess, deflate a little bit from private markets. We've certainly seen that in public markets, prices going down. And what's this? Euler Finance, they just raised as well, $32 million, I believe. What is Euler Finance?

• 1:15:55David Hoffman?

  Euler Finance is a money market like Compound and Aave, but also like Rari, and it kinda combines the best of both worlds, between Compound and Aave/Rari. Rari, where you have fuse pools, where you can make up any market on any parameters. But then Compound and Aave have the benefit of like a shared central liquidity source. Euler tries to do the best of both worlds, and they have raised $32 million. There is an article that I'm releasing, I'll talk about this more in the roll-up for what I'm bullish about, there's an article coming out on Bankless on Wednesday that features eight projects that I'm excited about, eight projects that I'm bullish on. Euler is one of them. And so, if you want to dive down the Euler rabbit hole, that article might be for you.

• 1:16:35Ryan Sean Adams?

  Awesome. Also, some jobs that might be for you. Of course, we have the Bankless Jobs Board. I'm gonna read out a few of the jobs from this week. This is David's first time dancing in New York City, maybe? Maybe we'll be about to see that?

• 1:16:49David Hoffman?

  I got to talk about the Twitter specialist. Coming up first on the Bankless Jobs is the Bankless Twitter Specialist. If you understand and know how to work and manipulate the Twitter algorithm, we want you. And so, if you're a good threador, if you're a good tweeter, and you know how to get 1,000 likes, apply for that job.

• 1:17:06Ryan Sean Adams?

  Now he's gonna get to dancing. Also, a research engineer at Blockchain Capital, a tech lead at Swell Network, a solidity developer at Unlocked, a senior product designer at Streams, a business development lead at Goldfinch, associate business operations chain link, developer evangelist at Argent. As you can see, guys, crypto industry is still hiring. If you want to check out those jobs, go to the Bankless Jobs Board, bankless.pallet.com/jobs, or submit your resume to the Talent Collective. Go check that out. We want you to get a job in crypto. David, we're gonna have to burn through these things because we gotta be quick. But did you know that Grayscale might be getting ready to sue the SEC? Alright, so

• 1:17:44Ryan Sean Adams?

  Grayscale has this product that we've talked about before. It's called GBTTC, which is basically a trust that holds Bitcoin. It's kind of like a pseudo ETF, but it's way more expensive, like higher management fees, kind of trades off the actual price of Bitcoins. Kind of a crappy product compared to what an ETF should be. To no fault of their own. They want to make, to no fault of their own. They want to roll that, they want to convert that to a fully fledged ETF. But guess who won't let them? The SEC won't let them. So, Grayscale, this time, is tweeting out, "As we enter the final month before responses due..." So they just submitted another application to get the SEC to approve their ETF. They've

• 1:18:26Ryan Sean Adams?

  retained Donald B. Valeri? Is that how he says? Anyway, he's a former Solicitor General of the United States, and apparently, according to people who are inside, he's a lawyer. A badass lawyer, okay? This is Jake Trivinsky. "Strong move. Grayscale means business. The SEC's deadline to approve or deny the application to convert GDBC to ETF is July 6. No doubt it should be approved. I don't see how the SEC survives a legal challenge, if not, especially one led by Dan Verrilli." Ooh, spicy. Mark your calendar. Gearin' up, gearin' up. And so crypto is taking it to the courts. This was another tweet that I saw. "SEC lawyers are starting to quit because Gensler wants

• 1:19:11Ryan Sean Adams?

  to litigate cases, not settle." Here is a former SEC lawyer who actually quit. He says this. "I like to try cases, but I also like to win. I was looking down the pipeline at the types of cases the SEC is going to bring and not seeing a path towards victory on the SEC side of things." Said a former SEC official. Yes.

• 1:19:31David Hoffman?

  Wow.

• 1:19:32Ryan Sean Adams?

  It could be that some in the SEC, maybe Gary Gensler, are overstepping their bounds and this is going to be settled in court. So crypto is lawyering up and I'm here for this fight. I think it's a good thing. I think we need to do this.

• 1:19:45David Hoffman?

  I love it. I don't usually like to feel schadenfreude, even though it's in the name that you do enjoy it. But like, I feel an insane amount of schadenfreude over the demise of the SEC.

• 1:19:55Ryan Sean Adams?

  Well, it's not, look, man, SEC should be doing things, but like-

• 1:19:58David Hoffman?

  The demise of the bad parts of, yes, yes, exactly.

• 1:20:02Ryan Sean Adams?

  Yeah, I mean, to, obviously to clarify, and look, the truth is, we should have had an ETF product for Bitcoin like a long time ago. And it's hurting every week that goes by, every month that goes by, it's costing retail millions of dollars, the fact that we don't have this. David, Jay-Z and Jack Dorsey teaming up? What are they up to?

• 1:20:21David Hoffman?

  Yeah, Jay-Z and former Twitter CEO Jack Dorsey are teaming up to launch a financial literacy program titled The Bitcoin Academy for residents of the Marcy Houses project in Brooklyn, New York, where the rapper grew up. They're offering classes, Ryan, from June 22nd to September 7th, including classes titled such as What is Money?, What is Cryptocurrency?, What is Blockchain? And How to Keep Yourself Safe from Scammers? Jay-Z says, "Everyone should be empowered to make informed financial decisions in order to take care of themselves and their families." Ryan, if I had a class that I was a part of in middle school, or elementary school, or high school titled What is Money?, I'd be a lot smarter by now. And so, like, the conversation, the less,

• 1:21:02David Hoffman?

  the class of What is Money? Sounds like the most fun class of all time. And so, some underprivileged kids in the, are going to be able to hear about What is Money? And skip over Boomer Finance and go straight into Crypto Finance. Nice job, Jay-Z.

• 1:21:16Ryan Sean Adams?

  If you want to bring equality to the world, you got to start with financial literacy. And this is, this is how you start education. It's why we do what we do. And I'm glad, you know, Jay-Z and Jack Dorsey are teaming up on this one. David, did you know Chipotle, you can now pay for a Chipotle burrito and get the guac if you want with ETH, all right? With Bitcoin, with Dogecoin, with 98 different digital currencies. It's pretty crazy.

• 1:21:41David Hoffman?

  You know what, Ryan?

• 1:21:42Ryan Sean Adams?

  Ultra Chipotles.

• 1:21:43David Hoffman?

  I just consider that adoption. So let's just like wrap this up. Like, I think we're done here. This is what we came for.

• 1:21:48Ryan Sean Adams?

  We made it. We made it to Chipotle. So like, here's the thing, it was never about buying the Starbucks coffee with Bitcoin. It was the burrito.

• 1:21:57David Hoffman?

  Burritos. Burritos.

• 1:21:59Ryan Sean Adams?

  Now we made it. It's burritos. Every Chipotle. I actually want to try to do this and maybe I'll tweet it out when I do. Just for fun.

• 1:22:08David Hoffman?

  You're not gonna spend your ETH on a burrito, bro.

• 1:22:10Ryan Sean Adams?

  Dude, it's guac. Burritos are my thing. I don't know what your food is of choices, but like, if there was one food item that I had to eat every day, it would definitely be kind of that Tex-Mex combo of like rice, beans, maybe some protein, maybe not.

• 1:22:28David Hoffman?

  That's not what I expected. I'm learning something about you today, Ryan.

• 1:22:31Ryan Sean Adams?

  Yeah, well, what's yours?

• 1:22:33David Hoffman?

  Probably a skirt steak.

• 1:22:36Ryan Sean Adams?

  Skirt steak, okay. Where can you get that at like fast casual, though? Like, I'm talking like the fast casual, fast food level of food. You're not gonna eat steak.

• 1:22:47David Hoffman?

  Yeah, I will not get fast food steak. That would be egregious. I'll have to think about that. Maybe we'll talk about that later in the show. Anyways, coming up next, sorry to disappoint you, Ryan. I'll have to think about that answer. Coming up next, questions from the nation, such as advice for job seekers. Somebody asked us some job advice, so we're gonna answer that. Also, OP token value beyond governance, and if we have time to get to it, how to convince friends and family to be bullish on ETH. Explain like I'm Normie, the bull case for ETH is a question there. And also followed up by hot takes from crypto Twitter. So that is what's coming up next. Don't go anywhere, but we have to get to some of these fantastic sponsors that make this show possible. The Brave browser is the user-first browser for the Web3 internet with over 50 million monthly active users. Control your digital footprint with built-in privacy and ad blocking.

• 1:23:31David Hoffman?

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• 1:24:16David Hoffman?

  And now Aave V3 is here. Aave V3 has powerful new features to enable you to get the most out of DeFi, including isolation mode, which allows for many more markets to be launched with more exotic collateral types. And also efficiency mode, which allows for higher loan to value ratios. And of course, portals, allowing users to port their Aave position across all of the networks that Aave operates on, like Polygon, Phantom, Avalanche, Arbitrum, Optimism, and Harmony. The beautiful thing about Aave is that it's completely open source, decentralized, and governed by its community, enabling a truly bankless future for us all. To get your first crypto collateralized loan, get started at ave.com. That's A-A-V-E dot com. And also check out the Aave Protocol Governance Forum

• 1:24:57David Hoffman?

  to see what more than 100,000 DAO members are all robbing about at governance.aave.com.

• 1:25:03Ryan Sean Adams?

  Hey guys, we are back. Going to start with our new segment, Questions From The Nation. And just a reminder, if you want to get in the weekly roll up, get your question in. Make sure you respond to the tweet we have. We put that out on the Banklist HQ Twitter every Wednesday. Here's the first question, David, I'm going to throw this at you. This is from willybillyboo.eith. Nice .eth handle as well, willybilly. What advice would you give to someone trying to get into the industry with minimal tech skills? For example, I'm an educational psychologist, but I'm trying to find a path forward in crypto. Not sure where to start. So from one psychologist to another psychologist, I guess you're not a psychologist, but you minored in psychology, David. What advice do you have for willybillyboo?

• 1:25:45David Hoffman?

  Yeah, willybillyboo. And so, yeah, it's like, the way that I answer almost everything, if you don't have a tech background, can you write well? Because if you can write well, you can do so much in crypto. So many people need good writers who can communicate well. Communicating crypto is hard.

• 1:26:05David Hoffman?

  That's why Bankless is what it is because Ryan and I have figured out how to communicate crypto with metaphors, with connections, with getting people to understand complex topics quickly. If you have those skills, write more. And so that's how I got my foot in the door as somebody who's like tried to figure out how to get a job in psychology and was like, well, crypto is way more interesting. I don't know what to do. I'm not a developer. Maybe I'll have to learn how to code. I just started writing and that snowballed from there. So whether you can like tweet very well, or you can write a blog post very well, or if you can be a technical writer, if you can communicate or just like be a good communicator of a project, that project will hire you. So learning to communicate in crypto native mediums like on Twitter and articles, short form articles.

• 1:26:47David Hoffman?

  How can you, how can you collapse as an insane amount of information into a short as a short of a paragraph or a sentence as possible and still retain all of the alpha? It's an insane skill that almost everywhere in this industry needs. So not sure where to start? Start making content.

• 1:27:04Ryan Sean Adams?

  Communication is a skill that crypto needs desperately for sure. David, here's another question. This is from ricklatona.lens. That lens, nice handle, Rick. I, I hear from time to time that the OP token, that's the optimism token, will have value beyond governance when they start to decentralize sequencers, but I'd be lying if I said I understood that fully. Can you explain it? Explain why the OP token has value aside from like responsibility token or governance token? Why do you think it might have value in the future, David?

• 1:27:37David Hoffman?

  Yeah. So this system of OP token gaining value actually is also related to eventually the Ethereum layer ones because the, the layer two for optimism plus the Ethereum layer one are going to exhibit the same pattern. So this is a lesson that works beyond optimism. And is generally part of optimism's vibe of how layer twos can provide a business model to open source. So all layer twos, they have block space sales. People pay transaction fees to get into the block and that transaction fee is eventually going to go towards the OP stakers because optimism will be a proof of stake network where you are staking OP tokens to be a block validator, just like you are staking. Ether to be a block validator on the Ethereum Layer One.

• 1:28:18David Hoffman?

  What happens is that there is a system, like a kind of like a pyramid of transaction funneling that begins in these things called sequencers. And the job here is done by what are called searchers. Searchers go and they search through the mempool and they sequence a bundle of transactions. And so these are like, kind of like MEV bots. People, the searchers will look at all the different DEXs on a particular blockchain and they will order transactions in a way that benefits them some MEV and they will put a bundle together. And these bundles are generally going to be optimized for like DEXs or some other specialists will specialize for borrowing and lending protocols and MEV about borrowing and lending protocols. There's going to be all these specialists that bundle up transactions in ways that they are very, very tuned to extract MEV from.

• 1:29:02David Hoffman?

  And these specialists are going to bundle up transactions and they're going to send them to the builders. And the builders are going to basically bundle up all the bundles. So builders bundle the bundles and then the builders accept the bids from the searchers to accept their bundle. And then the builders put a whole entire block together. And then the builders send a bid over to the OP token staker saying, "Hey, here is this block that I've constructed for you using all of the bundles from these searchers." And then once this block is, this block comes with a bribe towards the OP token. It comes with like a payment, like a tip to bribe the OP token stakers to accept their particular block because they want their block to be accepted because they get MEV out of it. And so they pay a bribe to the OP token to accept their block.

• 1:29:47David Hoffman?

  So what this does, and this also, again, is the part of the future roadmap for the Ethereum Layer One is this basically takes the entire value of the economic activity on a Layer Two or the Layer One and it puts it into the proof of stake asset being the OP token. And so that is the path forward for not just the OP token, but for basically any like Layer Two that wants to follow this path and also for Ether on the Layer One. So Rick, that is how the OP token will have value beyond governance if the community gets it there to that point in time. That is, I don't think it's actually codified anywhere, but that's kind of the vibe of optimism.

• 1:30:21Ryan Sean Adams?

  Yeah, so the short answer to that is whether it's the optimism token or any other layer two token, the answer to the question is, what's the value? It's a maximal, maximally extractable value. It's that thing David was saying called MEV. And that, the thesis is, assuming like, high market competition at the searcher level and at the builder level, all of the value is going to flow up to the stakers of that asset, in this case, the OP token stakers. And of course, governance handles this. There's some public goods funding associated with the optimism ecosystem, but that basic principle follows to all layer twos and also follows to, to stakers on Ethereum. So if you're selling blocks, this is, and you're staking, this is essentially the way

• 1:31:06Ryan Sean Adams?

  you're going to make money in the future. David, this last question here, how can I convince my wife to let us move more of our savings into ETH? Smiley face. This is from N1X. But seriously, how would you explain the potential upsides of a larger ETH allocation, especially pre-merge to someone with a very limited knowledge of crypto? I'm gonna take a, you know, a counter take to this. I want to hear what you say, but here's my counter take. You can't. I don't actually think you can explain it. All right? So I think that, and what it can boil down to, someone who hasn't had, spent the time to actually understand, um, why money exists, why it's valuable, why ETH is valuable, all of the things you're learning on bankless, it often collapses to like, hey, this thing's

• 1:31:49Ryan Sean Adams?

  gonna be really valuable because I said so and because I, like, I think, it's very difficult to distill your thesis into anything more than like, trust me, it's going to be valuable in, you know, a year's time, two years' time, five years' time. That's my take on it. I actually don't think you can tell someone why it's valuable. They actually have to do the hard work and find the conviction themselves. But why don't you take a stab at this answer, David?

• 1:32:14David Hoffman?

  Yeah, explaining crypto to people that don't get it is certainly an art. And so it really depends on where this person is in their crypto perception. Like if they think crypto is a scam, you have to start the conversation at a different place. But let's go ahead and assume that this person doesn't think crypto is a scam. They do think it's real, they just don't know how or why, or like the details around that. The way that I explain Ether is that like in the traditional stock market and traditional equities market, a lot of people just like ignore all of like the trading of which stock to buy and they just buy an index, right? They buy the S and P. What you have to do is you have to explain how Ether is basically an index for the entire Ethereum economy that is based on top of it, which is true.

• 1:32:56David Hoffman?

  So transaction fees from NFTs, transaction fees from DeFi. When somebody mints a token, that puts transaction fees on Ethereum. When they do anything on Ethereum, if you use Ethereum at all, you pay transaction fees in Ether. And then that ultimately becomes part of the Ether value proposition. And like you actually don't even have to explain like, oh, transaction fees leads to upside in Ether this way. You can kind of just like explain that at the very high level. When people use Ethereum more, they need Ether, the currency more. And Ether as a currency, the more that Ethereum becomes useful, a lot of that gets imbued into Ether, the asset. People accept that on face value. So I think all you have to do is say like Ether represents an index for the entire Ethereum economy. So you don't have to buy this token on Ethereum, you don't have to buy that token on Ethereum.

• 1:33:41David Hoffman?

  You don't need to like diversify across like the whole entire ecosystem because Ether itself is an index of the entire Ethereum economy. And the Ethereum DeFi economy is like 85, 90% of all of DeFi. And so you can tell them, you can get exposure to so much by just buying Ether because Ether is an index of the Ethereum economy and the Ethereum economy is massive.

• 1:34:03Ryan Sean Adams?

  Yeah, I think that makes sense. And then you also have to explain why you think the Ethereum economy is the one that's going to win kind of the power law above other alternative layer ones. Because then my next question would be like, oh, cool, so I should buy Ether, but then I should also buy like Tron and Cardano and like Solana and Polkadot and Bitcoin too? Is that what you're saying? You also have to, you know, talk about that too.

• 1:34:28David Hoffman?

  Right.

• 1:34:28Ryan Sean Adams?

  Yeah, I think that's actually a good way to explain it.

• 1:34:31David Hoffman?

  You can just say, you can just end it there.

• 1:34:33Ryan Sean Adams?

  Trust me, just trust me.

• 1:34:34David Hoffman?

  The answer would be like Ethereum is the longest standing smart contract platform that's gone through multiple cycles. So it has stronger, it's been around for longer, so you can have better assurances that it's going to be around longer than all the alt layer ones. And so you can feel better about that position.

• 1:34:50Ryan Sean Adams?

  I just think people are going to hear that and just like, maybe, I don't know. You have to develop the conviction yourself is also my takeaway. So like, oh, I agree with you. That's the best way to explain it. It's, it's, it's hard to get there just from hearing it once from one individual. So I don't know if this will work in your marriage, my friend.

• 1:35:09David Hoffman?

  Good luck with your wife and one X.

• 1:35:11Ryan Sean Adams?

  Good luck with that. Anyway. David, let's get to some takes of the week. This is a take from Vitalik. He says, this is a great example of why I'm so proud of optimism for adding non-token governance to Citizen House. Optimism explicitly has goals other than just to make OP price token go up. And the only way to do this long term is with explicit representation of non-token holder interest. He's talking about the ability or that the Citizen House, which is not based on the amount of tokens you have, but based on you as an individual identity in inside of optimism. So can you explain what his take is here, David?

• 1:35:53David Hoffman?

  Yeah, there was a proposal inside of optimism to use the OP token as the gas payment token on the optimism network. And like all the token holders were like, yes, this is good. We like this. This increases the OP value. And then the Citizen's House was like, guys, this doesn't really make any sense. Like optimism, the token's not a currency. Like maybe it provides a short-term price increase, but it doesn't do anything in the long term. And so these long-term thinkers that aren't thinking in price token number go up short-term that the, that the token house is, are able to balance the incentives. And this has always been the idea of the dual house model. The short-term incentives of the token price of the token holders, because they want the token price to go up. But the long-term people that understand the five, 10, 20-year vision of optimism and making sure that the choices that we make.

• 1:36:35David Hoffman?

  Even we can definitely like lean into like making the token price go up so long as it doesn't get in the way of the long-term vision of optimism. And so the citizens house balances off like the short-term degens of the OP house. So it's like, it's like the short-term house versus the long-term house. And Vitalik is just giving props to optimism for having this long-term house balance off the short-term benefits of like the degens token holders.

• 1:36:59Ryan Sean Adams?

  That's really cool. I didn't realize that that's what was going on here. Here's a take. Do you want to read it out and explain it?

• 1:37:04David Hoffman?

  Yeah, so somebody tweets Bitcoin is digital gold, Ethereum is blank. And Jake Bruckman, we've had him on the podcast, he answers Ethereum is analogy resistant. And I love that tweet. Ethereum and Ether breaks all previous models. What is Ethereum? Is it gas? Is it a store of value? Is it a money? Like, it's all of those things. And so in order to understand Ether and Ethereum, like, it doesn't work as an analogy. You just have to under, it's like, it's a brand-new thing. It's like, it's never been seen before, doesn't fit into any pre-existing models. People that try and place and bucket Ethereum into a model are really just like doing the whole blind men feeling an elephant thing, where they're just trying to measure one aspect of it. And so Ethereum is analogy resistant, I think is a great take.

• 1:37:45Ryan Sean Adams?

  There you go. And N1X, explain that one to your wife. Just, just tell her it's analogy resistant. That's why we're going all in. How about this tweet from Zora? NFT is the medium, not the message. Interesting. NFT is the medium, not the message. I have to think about this, but what do you think it means?

• 1:38:04David Hoffman?

  Yeah, I think this, we can continue this conversation off of the Diablo NFT conversation. NFTs, that, NFT is a standard, it's a token standard. ERC 721 is a token standard. And so it is the medium of a message, not the message itself. So NFTs can be good or bad. They could be stupid, silly little JPEGs of like weird Goblin things, or they could be actually like revolutionary and actually innovative. And so when the gaming world comes and says, get your NFTs out of our games, they're not hating NFTs, they're hating on the container that the NFTs are, they're hating on the message that they're containing in this particular moment in 2021 crypto. The message that is being contained

• 1:38:46David Hoffman?

  by NFTs, how these NFTs express themselves and what they are, will develop over time. So NFTs, the container will stay the same, but the message that it contains will develop and evolve and iterate and eventually win the hearts and minds of all of the world.

• 1:39:00Ryan Sean Adams?

  That's cool. That's cool. Very cool.

• 1:39:04David Hoffman?

  Ryan, this is yours. You want to read it out for us?

• 1:39:06Ryan Sean Adams?

  Yeah, this comes from a book. You know, the Marc Andreessen podcast, he recommended a whole bunch of books and I've been making my way through them. The first book that I started with was A Conflict of Vision by Thomas Sowell. And he really talks about these two kinds of visions that have classically been at play in all political philosophy, right? Since like the 1700s onwards. And it was crazy to me, David, how I see these two conflicts of vision play out in crypto and also between like crypto advocates and crypto skeptics. And it really hinges on the question of what freedom means and what equality means. And the question of like, does crypto bring equality? Some people will say, yes, it does, like us, for example, and some people will say, no, it doesn't.

• 1:39:51Ryan Sean Adams?

  And the reason why these disagreements occur is because we actually have a different vision in terms of what freedom and equality actually means. So I tweeted this out. One person will say crypto gives us a fair and egalitarian system. Another person will disagree. They'll say that there's wealth inequality. Of course, it's not free and egalitarian, but that's just because we mean different things when we say free and equality. So crypto people, we generally emphasize equality of process, right? So do I have the freedom to fork, to run a node, to get my transaction in at the market price? That is freedom. If I'm treated equally as all other participants, if there's no bias, if there's no special interests.

• 1:40:34Ryan Sean Adams?

  It's why we emphasize algorithms rather than humans. We want ungovernable systems. We want equality of process. All right? So that's what we mean often on Bankless when we say words like freedom or equality. But others are like, oh, hold on, that's not actually equality. That's not actually freedom. That's kind of like some crypto speak garbage because equality of outcome is what actually matters.

• 1:41:00Ryan Sean Adams?

  And they'll point to things, they'll say, "Look at the distribution, all right? Go look at the Gini coefficient of Bitcoin, who owns it? A whole bunch of whales, same with Ethereum, other networks are even worse." And who actually cares, David and Ryan, if anyone can transact on the network? Because it costs like $50 to transact on Ethereum at rush hour times, and no one can afford that, the 99% can't afford that. So you know what's actually a better solution? Maybe something like China, what China has going on, which is a CDBC that's actually banking the unbanked, providing some value to them. Remember our podcast with Richard Turin, David, where we talked about all of the people in poverty in China that were getting access to banking services through a centralized CBDC?

• 1:41:42Ryan Sean Adams?

  And they'll say, "That's way better than your Ponzi games and your fake moralism around decentralization." But the reason that this debate happens is because there's a difference. We're talking about equality of process, and some of the detractors and skeptics are talking about equality of outcome. And this is a debate that I'm learning now, and digging into this, that's gone on for centuries. People have had this debate between like, you know, people like Adam Smith and Hobbes on one side of the debate, equality of process, and people like Godwin and Rousseau on equality of outcome opportunity. And I think it all hinges upon this debate.

• 1:42:22Ryan Sean Adams?

  So, really good, I think, mental model for me to understand in this book, A Conflict of Visions. I'm curious your take over some of those things. You don't have to read the book to get those takes, I kind of summed it up, but what do you think about this?

• 1:42:37David Hoffman?

  Yeah, it just reminds me that something like 90% of debates ultimately settle down to becoming a semantics debate, where like, most people agree, even though they're debating, because they actually haven't agreed on the terms. And so like, people that debate about certain things, they're actually debating just like difference in emphasis, or there's like difference in what some words mean. And so it sounds like a lot of these things is like, we can actually, could agree if we were actually in agreement as to actually what our vision is for a particular thing. That's a thought that came to mind.

• 1:43:09Ryan Sean Adams?

  Yeah, I totally agree, and I also believe that like, the blended systems actually provide the most resilience, because both of these visions do have some merits. And what you're really trying to do with like, a system like Ethereum is try to find the right mix, right? So you can't go extreme on one side or the other. Anyway, it's something to think about. What are you bullish on this week, David?

• 1:43:29David Hoffman?

  Okay, Ryan, I'm stupid excited about this. Okay, so I've been writing this article. I know I've been teasing it to you. It's like, I don't know what the title is. I'm trying to think of a hotter title, but it's basically eight projects that I'm bullish on in the build market. And so there's like a bunch of different projects that are behind the scenes. Some of them have already gone to main net. Some of them are about to go to main net. But it's like projects that most people I don't think have really heard of. And so I've written this article that is like a complete like concentrated download of all the things that I know about that I don't think the rest of the crypto industry has really like caught up to yet. It's all of my alpha. It's all of my alpha. It's all the alpha I got. It's eight projects summarized and distilled and the bull case is explained. And so like, there's a bunch of different ways to get value out of this article that's coming out on Wednesday.

• 1:44:12David Hoffman?

  So like, if you're a big spiffy hedge fund investor, you'll be able to get a pulse for the directions of the general crypto startups. The startups that I'm talking about are like, some are in the DeFi space, some are in the layer two space, some are not even on-chain at all, some are in the NFT space. And so like, another way to get value out of this article is if you're on the hunt for airdrops, probably almost every single one of these, except for maybe an exception here or there, is going to have a token. I've gone and for every single project, I've gone and found all the open job listings. So if you are looking for a job, there is a job in every single startup that they have available. And overall, if you're just like trying to look for new sectors of crypto to explore and just like get downloaded on information and get a better view of what crypto is.

• 1:44:58David Hoffman?

  All these things are in this Wednesday piece. Every single piece, every single project has additional resources that I've labeled beginner, intermediate, or expert for diving deeper and going down the rabbit hole. So like I've said, this is just like the most concentrated amount of alpha that I can like get into one single article. So Ryan, that's coming out on Wednesday, and that is what I'm excited about.

• 1:45:20Ryan Sean Adams?

  That's awesome, man. I think this is also a template for what people should be doing during the build market, right? The bear market. It's an opportunity to breathe, but it's an opportunity to go research some incredible projects that are still building. And there's opportunities, whether it's your resource, your time capital, working there, or whether it's like your actual capital to kind of get in and invest, or whether it's just messing around in the ecosystem. This is what everyone should be doing. So you can look at David's eight projects, but you can also like come up with your own list of projects as well. Maybe some of these are on your list, but maybe some of these are new directions that you're able to explore. So it's a cool template there, too. But David, where can people find this? Because people are listening on the podcast and they're probably like, okay, where's this

• 1:46:05Ryan Sean Adams?

  gonna be? Is this gonna be a podcast? Or where can I find this?

• 1:46:07David Hoffman?

  This is not gonna be a podcast. You are going to have to put on your reading glasses. This is coming out on the newsletter. It's a newsletter with links and stuff. And so that's coming out on the Bankless newsletter. So there is, of course, a link to like and subscribe. Definitely like and subscribe, but also subscribe to the weekly newsletter that comes out at a bankless. And then this one's coming out on Wednesday.

• 1:46:29Ryan Sean Adams?

  Awesome. Cool, man.

• 1:46:30David Hoffman?

  Ryan, what are you bullish on? I have eight things I'm bullish on. What are you bullish on?

• 1:46:34Ryan Sean Adams?

  Yeah, I'm just, I'm bullish on these dress rehearsals, man. I'm bullish on the merge, okay? So we just saw the dress rehearsal. It went well. Like, we just, we went from proof of work to proof of stake. Like, we did that. The entire ecosystem did that. And it went well. And that, to me, feels like we are right on the cusp of this thing. It's feeling more real than other. We've got a second and third dress rehearsal for the merge coming up. But what I'm seeing out of the core Ethereum community is, I've never seen it so galvanized. Like, there aren't any detractors about the merge. You know, remember with things like EIP 1559? Some people are like, no, this is terrible. Let's not, never do that. Let's not do this. There were some detractors in the past. We've had other contentious

• 1:47:16Ryan Sean Adams?

  issues inside of Ethereum. This is not contentious at all. And it's because it's part of the core social contract that we all signed up for when we first learned about Ethereum, which is this migration from proof of work to Proof of stake and all of the benefits that it accrues, including monetary system benefits, efficiency benefits, removal of electricity usage, all of these, all of these different benefits, and they're all coming to a head. So what's crazy to me is I think we're actually going to be like, this is, we talked to Tim Baker about it and we're like, Tim, are we really going to be changing engines mid-flight here? Is that the analogy you should use? He's like, that's exactly the analogy that you should use. So I can't believe we are about to change engines mid-flight, right?

• 1:48:01Ryan Sean Adams?

  Picture 747, we're going into the engine, we're swapping that out, we're putting another one, and we're in midair. We're not on the tarmac, we're not on the ground doing this, we're in freaking midair. And so that's crazy to me. But the crazier thing is like, David, I think it's actually gonna work. Like, I think it's

• 1:48:17David Hoffman?

  I was about to say like, damn, you're putting a really dangerous image in my brain right now.

• 1:48:20Ryan Sean Adams?

  No, I think it's gonna work. That's what's crazy about it. And that's what I'm so excited about. So we are simulating doing that in midair right now. And yeah, the, after seeing the first dress rehearsal go live and work, it's made it all feel more real.

• 1:48:34David Hoffman?

  Yeah, Tim Baker, an interesting perspective that we had out of that show is that like, he said 50% of the complexity of the merge is because we don't want to turn Ethereum off to install the, install the engine and then turn it back on again. Like, we don't want to land the plane, add the new engine, and then take off again. We want to do it in the air so nothing gets disrupted. And like, that level of commitment to Ethereum uptime is why the merge has been so complex. And I kind of forgot like, that that is a perspective to have.

• 1:49:03Ryan Sean Adams?

  Yeah, absolutely. All right, David, you ready? Let's get to the meme of the week, man.

• 1:49:06David Hoffman?

  Meme of the week, yeah.

• 1:49:08Speaker 02

  Mr. Depp, you're down 95%. Have you ever considered selling?

• 1:49:15Speaker 03

  No, I can't. That's a... No.

• 1:49:21Ryan Sean Adams?

  Oh, I love it.

• 1:49:22David Hoffman?

  Oh, my God, that's great.

• 1:49:24Ryan Sean Adams?

  Johnny Depp from The Trial. I love like, the moody music, and that's exactly how I feel. No, I can't sell. Sell your heat, David.

• 1:49:31David Hoffman?

  Also, the, for the podcast listeners just missed, they missed like, this like, smile that he says, like, when he's asked, like, why don't you sell? He's like, I don't know. But he's like, smiling about it. Like, I can't sell.

• 1:49:43Ryan Sean Adams?

  Yeah, that is exactly the vibe, exactly the mood during the bear market I'm feeling. All right, guys, that's it. That's a wrap. Been the weekly roll up for the first full week of June. We hope you enjoyed it. As always, none of this has been financial advice, of course. ETH is risky, Bitcoin is risky, so is DeFi. 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.