ROLLUP: Eminem's Bored Ape | Why Crypto Prices Are Down | OpenSea Freezes Stolen NFTs

First Week of 2022 ------ 📣 ONJUNO | Crypto from your Checking Account! https://bankless.cc/OnJuno ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🍵 MATCHA | SMART ORDER ROUTING https://bankless.cc/Matcha 🚀 SLINGSHOT | LAYER 2 SOCIAL TRADING https://bankless.cc/Slingshot 🏦 GEMINI | TURN FIAT INTO CRYPTO https://bankless.cc/Gemini 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ Topics Covered: 0:00 Intro EF Research Team AMA https://www.reddit.com/r/ethereum/comments/rwojtk/ama_we_are_the_efs_research_team_pt_7_07_january/ 5:15 MARKETS 5:34 BTC Price 6:20 ETH Price 6:43 ETH BTC Ratio 7:26 Why Down? https://www.coindesk.com/markets/2022/01/05/bitcoin-falls-to-1-month-low-as-fed-minutes-reveal-talks-to-shrink-balance-sheet/ 10:50 MetaMask MAU https://twitter.com/ljin18/status/1478122393084305410?s=21 12:36 Electric Capital Dev Report https://twitter.com/avichal/status/1478776674648944641 18:07 NFT Markets https://decrypt.co/89653/ethereum-nft-market-soars-first-days-2022-opensea-3b https://metaversal.banklesshq.com/p/state-of-the-nfts https://twitter.com/masonnystrom/status/1472671834239766528?s=20 26:00 RELEASES 27:45 Zapper NFT Notifications https://twitter.com/sebaudet26/status/1477695744245219329?s=21 29:03 Aave Mobile Wallet https://twitter.com/stanikulechov/status/1477067176733335556?s=21 29:52 BitGo Index Coop https://twitter.com/bitgo/status/1478750888059715592?s=21 30:42 Multidimensional EIP 1559 https://twitter.com/VitalikButerin/status/1478798036667150346?s=20 33:47 OpenSea Raise https://www.coindesk.com/business/2022/01/05/nft-marketplace-opensea-valued-at-133b-in-300m-funding-round-report/ Dharma Rumor? https://www.axios.com/opensea-nft-dharma-acquire-f6df00d5-1cc0-463a-95fd-2f5039947ed8.html 36:30 Jobs https://pallet.xyz/list/bankless/jobs 37:30 NEWS 37:47 Vitalik Podcast https://cointelegraph.com/news/we-are-50-of-the-way-there-says-vitalik-on-ethereum-s-development 40:02 Aave Arc https://www.coindesk.com/business/2022/01/05/fireblocks-whitelists-30-trading-firms-for-aaves-institutional-defi-debut/ 44:03 Aave on StarkNet https://governance.aave.com/t/arc-deploying-aave-on-starknet/6726 45:05 Game Overwhelms Polygon https://thedefiant.io/sunflower-game-causes-polygon-fee-spike/ 46:45 Solana Performance https://polynya.medium.com/transaction-quality-trilemma-4af36704590b Dan’s Take: https://twitter.com/delitzer/status/1479140747353870337?s=20 52:20 Buying Stolen NFTs https://twitter.com/marcograssi_/status/1478872167328751618?s=21 57:29 Freezing Bored Apes https://cointelegraph.com/news/opensea-freezes-2-2m-of-stolen-bored-apes 59:35 Fake Bored Apes https://www.theverge.com/2021/12/30/22860010/bored-ape-yacht-club-payc-phayc-copycat-nft 1:02:12 Eminem https://twitter.com/Eminem 1:03:23 Samsung NFTVs https://messari.us17.list-manage.com/track/click?u=5b89525c77acdd986027c25d1&id=11853b4ecf&e=ba752c823c https://messari.us17.list-manage.com/track/click?u=5b89525c77acdd986027c25d1&id=11853b4ecf&e=ba752c823c Metaverse: https://www.theblockcrypto.com/post/129380/samsung-metaverse-flagship-837-store-decentraland 1:05:30 BTC Environmental Oversight https://www.theblockcrypto.com/linked/129336/congress-is-preparing-an-oversight-hearing-on-bitcoin-minings-environmental-impact-sources 1:09:20 Kazakhstan Internet https://www.theblockcrypto.com/post/129312/bitcoin-mining-pool-hashrates-fall-amid-kazakhstan-internet-shutdown 1:12:04 CFTC Fines Polymarket https://www.coindesk.com/policy/2022/01/04/polymarkets-cftc-fine-hints-at-defi-regulation-roadmap/?outputType=amp 1:15:52 Tether Freezes a Million https://www.theblockcrypto.com/post/129133/tether-freezes-over-1-million-usdt-single-address 1:16:32 China’s Digital Yuan Wallet https://www.theblockcrypto.com/linked/129081/chinas-digital-yuan-wallet-goes-live-on-app-stores-in-pilot-mode 1:19:00 TAKES 1:20:00 Protocol Mafias https://twitter.com/jai_bhavnani/status/1477515100940500992?s=20 1:22:20 Lawyer Fees https://twitter.com/balajis/status/1478425001900457985?s=20 1:25:16 Goldfish Market https://twitter.com/CatfishFishy/status/1478384991491047428?s=20 1:28:01 Degens & Boomers https://twitter.com/sassal0x/status/1478702153271169024?s=20 1:31:32 Greed Ruins Games https://www.reddit.com/r/CryptoCurrency/comments/rwlo57/nfts_wont_ruin_computer_games_greedy_game/ 1:32:09 Bull Supply Bear Demand https://twitter.com/AltcoinPsycho/status/1478643223027273730 1:32:57 What David’s Excited About 1:33:54 What Ryan’s Excited About 1:36:30 MEME of the Week https://twitter.com/TrustlessState/status/1478096910871191554?s=20 ----- Not financial or tax advice. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:00Ryan Sean Adams?

  Man, what would it be like if society like totally broke down?

• 0:03David Hoffman?

  Right.

• 0:03Ryan Sean Adams?

  And we lost electricity, lost internet? Like, how long could I last?

• 0:08David Hoffman?

  Right.

• 0:08Ryan Sean Adams?

  In that, in that sort of a situation? The truth is like, not very damn long.

• 0:15Ryan Sean Adams?

  Good morning, Bankless Nation. David, what time is it?

• 0:18David Hoffman?

  Oh, Ryan, it's the Friday weekly roll up time where we roll up the entire week in crypto, which is always an ambitious endeavor, yet we do it anyways nonetheless, because it's always the best show of the week, at least in my opinion.

• 0:30Ryan Sean Adams?

  Happy, uh, Happy New Year, man. This is our first show of 2022. How are you feeling about this year so far?

• 0:35David Hoffman?

  God, already a very bumpy, wild week for the first week of, of, of 2022. I'm kind of, uh, kind of thinking that 2022 is going to be way crazier. And I think we're, yeah, crazier all around and yeah, yeah.

• 0:53Ryan Sean Adams?

  It started, it started off that way, okay? Like market volatility. By the way, man, like my power was off for like two days. Okay, 48 hours.

• 1:02David Hoffman?

  You're right.

• 1:03Ryan Sean Adams?

  Just after New Year. Yeah, you see, I totally down, man. Everything about me was down. And, um, yeah, so there was that. And then yesterday, so I, um, my internet turned off again midday. I ran downstairs to go check my router. I slipped and fell on my staircase and like fell straight on my back, got the wind knocked out of me. And then I remember just like in between my breasts being like, oh my God, is this what 2022 is going to be like? Flat on my back, not able to breathe.

• 1:32David Hoffman?

  Yeah, gosh, yeah, it has felt like that in so many different respects.

• 1:36Ryan Sean Adams?

  Yeah, or maybe this is the worst week of 2022 and it's all up to me.

• 1:40David Hoffman?

  Up only, up only from here?

• 1:41Ryan Sean Adams?

  Up only, I don't know. We'll see, but guys, we are going to get into it. A few things on the agenda for today. We got to talk about the Fed meeting, okay? Jerome Powell strikes again. This time it's hitting crypto markets. We'll talk about that. That is the reason the markets are down in the dumps, uh, dumps. Also, open sea, lots of stuff to talk about in open sea. A 13 billion valuation. But like one token, right? Also, there's some drama about OpenSea maybe freezing NFTs. We're going to dig into that. And OpenSea also had a comeback month in December. We'll talk about that a little bit, too. So tons of stuff to discuss today on the roll up. David, before we get in, we got to talk a little bit about our friends at On Juno.

• 2:22Ryan Sean Adams?

  They wanted us to get the word out about these magical checking accounts, these checking accounts for crypto natives. You got to check this out. So David, I know you're like me, right? It's like you have your Coinbase accounts, you have your Ethereum address, we do all your bankless things, but you still got your old fashioned Wells Fargo account.

• 2:41David Hoffman?

  You got to pay rent.

• 2:42Ryan Sean Adams?

  And you have, we're not fully bankless, right? And so you have to maintain a traditional bank account if you want to do things in the, in the real world. But the problem with your traditional bank account is it sucks. It sucks in particular for crypto natives. Like there's no way in Wells Fargo for me to purchase Ethereum, or there's no way for me to receive a paycheck in Bitcoin or ETH.

• 3:05David Hoffman?

  Or get any yield at all.

• 3:07Ryan Sean Adams?

  Yeah, it's totally disconnected. So On Juno is this cool, I guess neo-bank that is very much connected to the crypto world. It's a bank account, a checking account for crypto natives, and there's lots of cool things you can do with it. The first is you could start to receive your paychecks in crypto, which that's a huge unlock. So you can earn paycheck with your paycheck in crypto. You can also save, get 4% yields using USDC. You can also invest. You can buy crypto at zero fees. This is my account. I recently created one. And look, I mean, it has a portfolio tab here that you can check out. You also get a card with this, too, like a virtual card with a debit card.

• 3:52Ryan Sean Adams?

  So it's like this crypto native bank account that straddles both worlds. And I think it's going to be a nice hybrid solution for me moving forward. There's some good news, too, for Bankless listeners. I think there's a $50 incentive to open up an On Juno account. You want to talk about that, David?

• 4:09David Hoffman?

  Yeah, $50 if you use the code BANKLESS to sign up with On Juno in your preferred crypto asset. And overall, like the UI on this, on this, on Juno is just exactly the UI I wish I had with my Wells Fargo account.

• 4:24Ryan Sean Adams?

  Yeah, so pretty awesome guys. Go create that account. You guys could get started. There's a link in the show notes to that. And remember to use the code bankless to get that $50 off. Also, David, another PSA. The Ethereum research team is doing an AMA on Reddit tomorrow. I love those AMAs, man. There's so much learning that's dropped. Where's that going to be? Is there a link in the show notes or something?

• 4:45David Hoffman?

  Yeah, that'll, uh, people will have to go to the rEthereum subreddit in order to get that done. There's not a link yet, I do not believe, but it is happening at 1pm UTC time, which I believe is, I think it's probably just gonna be going on all day, uh, today, the day of the listeners listening to this, if you are listening to this on Friday. But yeah, this will be in the rEthereum Reddit. I believe people are already asking questions. So in rEthereum, yeah, there is already a link. We will, we will have a link in the show notes. People already are asking questions there. So we'll probably also pick out some of these responses, questions and responses, and cover some of the best ones in the roll up next week, probably.

• 5:27David Hoffman?

  But if you want to get your question asked, or just read all of them, go ahead and go to the link in the show notes to check out the AMA.

• 5:33Ryan Sean Adams?

  All right, let's get to markets, David. Bitcoin, Bitcoin time, the tumble, the sad music is playing. Bitcoin falls below 43K, it's even lower at the time of recording, leads to 800 million in crypto liquidations. This is the headline. What's going on in Bitcoin world?

• 5:48David Hoffman?

  Yeah, we had one of those big oof candles where we fell from the high, high price of $46,000 down to $42,500, currently at $43,000. Overall, down 7.5% on the week. Uh, kind of, I'm not a trader, we're not traders here, but there was a trend line that Bitcoin broke through. You can see it here on the YouTube here as well. Uh, we were really hoping to not break below $46,000, yet we did it anyways. So here we are. Traders are fearful, uh, state of fear in the crypto markets right now.

• 6:20Ryan Sean Adams?

  Flat on your back in 2022. And how about ETH? What's going on with ETH prices? It looks like it's went the way of Bitcoin as well.

• 6:28David Hoffman?

  Yeah, same, same deal. Started the week at $3,800, fell down to the low price of $3,330. Has currently climbed and reclaimed $3,400, but overall down 7% on the week. So an oof week in the crypto markets.

• 6:43Ryan Sean Adams?

  Let's go through a few other metrics and let's just talk about what that, what this means after that. But let's take a look at the ratio. So the ETH, the Bitcoin ratio, what's that looking like right now?

• 6:51David Hoffman?

  Yeah, last week, it started the week at point zero eight. We are at point zero seven nine. So fell down below that point zero eight meme line. Um, nothing really much to report there. Overall, still looking, okay, still looking pretty good.

• 7:04Ryan Sean Adams?

  We'll have to monitor it. How about the Fed index? So that's a third DeFi, a third Bitcoin and a third ETH. What are we looking at on the week?

• 7:13David Hoffman?

  Started the week at $144, currently at $127, down 10%, 10.5% on the week. Which means that the DPI tokens took an even bigger hit than Bitcoin and Ether.

• 7:26Ryan Sean Adams?

  Okay, so what's going on, man? What's happening in 2022? Should we talk about some of the Fed minutes? Because I think this is, you know, you can't always attribute crypto market movements or even general market

• 7:39David Hoffman?

  You usually cannot.

• 7:41Ryan Sean Adams?

  Stories. You usually cannot. But in this case, I think you definitely can. So Jerome Powell and the Fed had a meeting. They talked about shrinking the balance sheet. They talked about getting a bit more hawkish, including reiterating that they intended to raise the rates this year. I think the shrinking the balance sheet statement was the one that caught the market most off guard. And stocks tumbled, crypto tumbled along with it. All the risk on assets really went down as a result of this. Do you think this was the primary catalyst for the wreckage that we saw over the last couple of days?

• 8:14David Hoffman?

  I think the timing is pretty hard to ignore. It happened right at the release of the minutes. It happened at the same time as traditional equities markets also took a tumble. So this happened across the board. This was correlated in all assets ever. And so just because of the nature of the money printer, all assets are kind of risk on assets at this moment. And so when the Fed says they're going to be raising interest rates, all assets take a tumble. So that's, that's, I think it's a pretty clear connection. There are other possible explanations. We're going to get into this later in the show. Kazakhstan had a massive power outage which caused Bitcoin to lose I think thirteen percent of its hash power, which is pretty significant.

• 8:56David Hoffman?

  Uh, and that can stoke some selling pressure from miners. Uh, if thirteen percent of hash power disappears. Uh, miners can go risk off themselves and that can also create uh downward pressures for the whole rest of the market if if Bitcoin gets sold off in in mass. Um. So it could could be other things as well, but I think this one is definitely the the hawkishness from the Fed. The the possibility of raising interest rates beyond what the market expected. It's gotta be gotta be in the lead for the biggest um uh reason why the market took the tumble that they did.

• 9:24Ryan Sean Adams?

  It's interesting. I think this is gonna be a story to track all year, David. So talk about a theme of twenty twenty two. It's going to be what is the Fed doing? Right? It's like last year, what were they doing? They were continuing to print money. It was kind of stasis. But this year, there's some uh inflation pressures. The type of inflation the Fed cares about is CPI. That's what everyone notices. That's what politicians notice, and it's been seven percent here recently uh in the US. It's like five percent in in uh the Euro, the ECB. Um, I I read recently, so it's like inflation fears are causing central bankers to take a more hawkish stance. But they can only, like, they they can only do that uh so much because

• 10:05Ryan Sean Adams?

  when the markets tumble like this in this way, that that's also bad for the optics and, you know, also kind of um against the the principles that the Fed has of making sure that the the economy continues to function. So it's kind of a rock and a hard place, and I think that'll be a major theme for twenty twenty two is like, how does the Fed navigate this? How do they you string that line through the eye of the needle?

• 10:30David Hoffman?

  Hundred percent, hundred percent. It's going to be, well, yeah, you're totally right. Watching them now and like thread that needle is going to be. It's probably, I I kind of think it's an impossible needle to thread, and so seeing how they do it is always going to be interesting no matter what, because it kind of maybe can't be done. Uh, so the fallout from that is going to be interesting.

• 10:49Ryan Sean Adams?

  Absolutely. All right, let's talk about this. Something that was up, now everything else was down, is MetaMask users, active users been up. So 21 million monthly active users since April. And what's interesting about this from Lee, oh, Lee Jin, so she's coming on the podcast as well, we're going to talk about a number of things, maybe we could bring this up. If you compare this to monthly active users of Facebook, it's close to 1%. It's 0.7% right now, MetaMask has versus Facebook. It's about 6% of Twitter's monthly active users, and it's about the rate of the number of internet users in 1996. Feels about right. What year is crypto in? Maybe it's 1996.

• 11:33David Hoffman?

  Well, hang on, we got to control for population inflation. And so it's actually got to be like 94, 93.

• 11:39Ryan Sean Adams?

  Okay, 94, 93. And this is like, monthly active users is only one measure, of course, of the usage of this thing. I think because this is an internet of value, also market cap and the value and, you know, the fact that we're at $2 trillion is another fantastic measure of this whole thing. But what do you make of this, monthly active users on MetaMask?

• 12:00David Hoffman?

  Monthly active, MetaMask is a, it's a great signal because everyone uses MetaMask, except for this Alana ecosystem, even if you're getting onboarded to Polygon, if you're getting onboarded to Avalanche, you're using MetaMask. Pick your L2, you're using MetaMask. And so it's a pretty high signal of just very general rate of adoption. Granted, like, I have two computers, and so I have MetaMask on there twice. I also have MetaMask on my phone. Do I count as three? Probably. But it's directionally always a pretty good signal.

• 12:29Ryan Sean Adams?

  It's kind of like the Netscape of the internet, if you will. That's, that's really what MetaMask is in a lot of ways. Let's talk about this too, David. There's this fantastic report from Electric Capital, and they do this every year. I feel like it gets better every year, more detailed in a lot of ways. And what they try to do is they go through the developer metrics from each of the ecosystems and track that over time. And so there are a few highlights from this that maybe we want to get into. I'll start with The first one that I saw, and that is this, web three developers are at all time highs right now.

• 13:07Ryan Sean Adams?

  Okay. 18,400 developers, that's up, it's almost double from the start of 2021. So we kind of doubled the amount of developers in the web three ecosystem in 2021, which is pretty crazy. David, why don't you talk about this one? Because this is super interesting. Why did the developers come in here? Is it like because they're excited? Why is it?

• 13:32David Hoffman?

  Well, I think the line of show me the incentives and I'll show you the outcome is really true here. When price goes up, when number goes up, it attracts everything. Everything always gets attracted to capital and that includes developers. And so when price goes up, developers also goes up. The interesting thing here is that, and this is why we always know in crypto, crypto is a one way street. People don't come into crypto and then they're like, nah, I'm going to leave now. When you come into crypto, you tend to stay. And so when prices go down, developers stay flat. And so like bad prices means that we just don't get any new developers. We don't lose any developers. We just don't get any new ones. And so when price goes up, we get new developers. When price goes down, we don't lose any developers.

• 14:17David Hoffman?

  And so this is kind of why crypto is always a waiting game. Like you can zoom in on the markets and be like, oh, it's up 5%. Oh, it's up down percent, down 5%. But like, it's just a waiting game. You can just wait out the markets until the developers build out crypto into the vision of the future that we have for it, and then prices will be up. Like, it's just how it works. You can just wait it out. The developers aren't going anywhere.

• 14:38Ryan Sean Adams?

  Yeah, totally agree. And it's really interesting how that floor gets painted. At like the peak of the last cycle becomes kind of the floor for the next cycle. You, Chris Dixon, in our podcast with him, he's like, ah, I don't pay attention to prices so much. I'm sure he does a little bit, but he's like, I pay attention to the talent inflows in the space. And that's what I track. And this is an interesting way to track that. It's interesting, too, if you chart it by ecosystem as well. So you can compare some of the layer one ecosystems, Ethereum, Polkadot, Cosmos, Solana, Bitcoin. Those are the five largest Ethereum, really far in a way in the lead in terms of its mindshare and developer count. And this is not just protocol development, but this is the entire ecosystem.

• 15:20David Hoffman?

  Application layer development.

• 15:22Ryan Sean Adams?

  Application layer too. These metrics aren't like foolproof. So they're tracking GitHub, they're tracking open source, open source projects primarily. You know, they're directionally correct, but the data doesn't always like reflect the entire truth here. But Ethereum definitely cemented in the number one slot. Number two is actually Polkadot, according to this, which I found surprising. Then you've got Bitcoin, Cosmos and Solana right behind it. Here's another graph of the same thing. This is if you compare the developer ecosystems from day zero. And you do sort of an apples to apples comparison of where they are and you kind of track the numbers here. What are some of your takeaways from this?

• 16:04David Hoffman?

  Yeah, actually, if you go up to the very first graph, I really want to pay attention to, especially on graphs like this, the very first graph, the area under the curve is really, really important. And so like we have this blue line here of all of the developers. And it just now, just recently hit new highs, right? But it's so recent, it's the area under the curve. This is extremely rough science. It's the area under the curve that is the rate of development. Because these, so many new Web three developers just came in, they haven't built anything yet. But now that this area under the curve is so large, that every single day means so much more in terms of development than it did in July of 2017, for example.

• 16:49David Hoffman?

  I mean, look at, look at how much area under the curve there is in July of 2017, versus how much area there is under the curve in July of 2021. We are making like, as an industry, we are developing like three to four times faster than we were in July of 2017. And that's just what happens when developers come into the ecosystem. And so while there's a lot of developers here right now, they just onboarded them. A lot of them are just, you know, experiencing their first apps, like building their first stuff. And so it's going to take six months for that, the area under the curve here to actually build out in order to the thing where we actually get a bunch of new, cool new stuff. But the point is we are accelerating development here, which is just super bullish.

• 17:29Ryan Sean Adams?

  Totally. It's all happening faster. It's interesting here. Again, this is a, this is chart Ethereum, of course, far in the lead with 4,000 monthly active developers. You see kind of Bitcoin down at the bottom and Bitcoin just hasn't really grown that much. And that sort of makes sense for the type in developer count. That sort of makes sense for the type of network that Bitcoin is. But some of these other networks are like growing just as fast, if not faster than Ethereum in its early days. And I think some of them benefit from the infrastructure that Ethereum has really built out already. So that's interesting to see as well. Yeah, let's talk about this too,

• 18:08Ryan Sean Adams?

  David. So NFT market. It feels like NFTs are back. All right. So after a lull, maybe for the last couple of months, kind of a minor bear market ish.

• 18:20David Hoffman?

  A correction, a retracement.

• 18:22Ryan Sean Adams?

  Yeah, they're showing some signs of life. And this doesn't necessarily mean they'll, they'll return to all time highs or not. But what do you think this means?

• 18:30David Hoffman?

  Yeah, well, we had OpenSea, just, you know, and NFT volume at large just grew so fast, so quickly. We would, it's totally expected to see a retracement. And that's what we saw. We saw about four months of decreasing volumes. But December and also the first week of 2022 saw a resurgence in volume away from the decreasing downtrend that we saw in the last four or five months. So Bored Ape yacht clubs have really performed well, both in terms of floor price and also volume, and also just like celebrity adoptions. So many celebrities have Bored Apes now. And then there were some other winners as well. Doodles are on the mind. X copies have gotten a ton of volume. So yeah, there's always a bull market somewhere. It's just a matter of finding out where it is.

• 19:13Ryan Sean Adams?

  This is some NFT stats for 2021, just a year in review. This is put out by Andrew Chang, I believe, in the One Confirmation team, Andrew Chang, that is. Some interesting stats of note. This is from Metaverseal Newsletter. Ethereum is still king. So 90% plus of all NFT volume was on Ethereum this year. And that includes also kind of Axie Infinity, its ecosystem, that as a sidechain. There are total market cap of NFTs past 31 billion in 2021. 31 billion, which is crazy, but it's still only 1%.

• 19:54Ryan Sean Adams?

  Just adding up all the NFTs, I guess. Yeah, some of them, maybe on OpenSea, I'm not sure. You could dig into the data here, but it's interesting. This is only 1.3% of crypto's total market cap, right? So remember all of the predictions that NFTs were eventually going to be larger than crypto? If that's the case, a long way to go. There's a lot of upside here if that's the case. Active NFT users on Ethereum hit 2 million. Pretty crazy. Trading volume on NFTs passed 20 billion in 2021. Some pretty big stats here.

• 20:33Ryan Sean Adams?

  And then it goes through different segments of the NFT market, like crypto art, gaming, marketplaces, collectibles, and then some highlights, other things. Yeah. What are your thoughts on the year of 2021? That NFTs had? Do you think we're going to repeat something like that this year?

• 20:50David Hoffman?

  Yeah, I'm reminded of a tweet thread that Kane Warwick put out forever ago about the difference between technologies that fundamentally change the world, but then are just not very loud technologies. And I think that's DeFi. Very, very just paradigm shift in what it means to do finance. NFT is also a paradigm shift, but when it's only a $32 billion market cap versus how much exposure and like social and cultural acknowledgement there are around NFTs.

• 21:19Ryan Sean Adams?

  It's punching above its weight class, isn't it?

• 21:21David Hoffman?

  It's making bigger cultural impact than DeFi is at like 1, 1,000th of the market cap. Like absolutely insane. And it kind of just shows like how small the NFT industry actually is. 31, $2 billion is, I mean, it's a lot of, it's more money than I have certainly, but like it's not a lot of money in the grand scheme of things.

• 21:43Ryan Sean Adams?

  Yeah, it's still small. So I guess one takeaway is NFTs are early. But what do you think, though? Do you think they're going to have a crazy year in 2022?

• 21:51David Hoffman?

  Oh, I think they have to. Yeah. I mean, crazy is such an open word. Do I think prices are going to go up in 2022? For some. And I think 2022 will be another crazy year in the world of NFTs. And it's going to be crazy in a way that we can't expect right now.

• 22:07Ryan Sean Adams?

  That's it. That's the key. It was crazy in 2021 in a way we couldn't expect. And it's going to be crazy in 2022 in a way we can't expect either. So I expect to be surprised. And that is cryptic for you. There's also another almost companion report. It's a separate report, but I call it companion report. Chainalysis put this NFT report together and it took a different lens on things. It was basically like, who's winning? Who won in 2021? So of that 30 billion or so in value, who made the money? A few takeaways, at least from my mind were, OpenSea data actually suggests it's really difficult to achieve outsized returns without being whitelisted on OpenSea.

• 22:49Ryan Sean Adams?

  So you kind of had to be on OpenSea in order to get these returns. Another takeaway was if you want to flip NFTs, don't buy the cheap stuff, buy the blue chips. This is interesting. The top 500 NFT collections account for 94% of all the flips. The top 100 accounts for 50% of the flips on OpenSea. So if you're kind of scouring the bottom tier of the market, just buying the cheap stuff, that's actually not the way, according to this report, that you're making real money on NFTs. And most people actually lose.

• 23:21David Hoffman?

  This next chart, I think, is really, really insightful. And this is everything, everyone should listen up about this. This tweet says, "You're probably not making money flipping NFTs. 20% of user addresses on OpenSea account for 80% of secondary NFT sales, while just 5% of all addresses account for 80% of profits made on secondary sales." And so, yeah, like this is, this reminds me of, Hozu made this comment, I think in a podcast a while ago, where there was this big, big boom in online poker for a while. And everyone, everyone and their mother started playing online poker. And then the really, really good poker players just milked. All of the noobs for all of their money and then the and then

• 24:04Ryan Sean Adams?

  They made a living on it.

• 24:05David Hoffman?

  They made a living on it. They got extremely wealthy and then all of the, you know, the retail poker players put their tail between their legs and went elsewhere and did something else with their lives because they got worked. And then the world of online poker just hit like a quote unquote bear market because there were any players left because all the good ones took all the money from the bad ones. Uh, I, I definitely kind of think that's what's going on with NFT flipping and that's definitely why the best advice you can ever get about NFTs is you only buy something that you like. Rather than trying to get rich on it. Uh, because like if you're trying to flip NFTs, I'd say like you gotta know what you're doing. Uh, and one of these, uh, one of these charts illustrates that, uh, in order to, uh, optimize for the best flipping, uh, potential.

• 24:47David Hoffman?

  It says, uh, the tweet, uh, a couple of tweets down says, uh, arguably the most important, uh, stat in the entire report for NFT flippers is that the top 5% of NFT flippers. On average is paying 2.2 ETH more for their NFTs. So they're not blank for floor NFTs. They are sifting through, trying to find the rare ones. Doing their homework, doing their due diligence, uh, and then flipping that. And so

• 25:09Ryan Sean Adams?

  They're paying premium.

• 25:10David Hoffman?

  They're paying the premium. They're targeting their, their selections. They're, they're doing their homework. Uh, and if you're just buying a floor hoping to flip it like. You might get, you might get worked. You might get worked.

• 25:20Ryan Sean Adams?

  You might get worked. I mean, I think the takeaway here, and by the way, this, in my opinion, this goes for all trading, not just NFT trading. 95% of you listening to this should not be trading.

• 25:29David Hoffman?

  Yes.

• 25:30Ryan Sean Adams?

  You're

• 25:31David Hoffman?

  Trading and flipping are the same things.

• 25:33Ryan Sean Adams?

  Exactly. 95% of you probably shouldn't be doing that. That, and that goes for NFTs too, according to the stats. Um, guys, we will be right back with some of the releases and raises and the rest of the rollups. But before we do, we want to thank the sponsors that made this episode possible.

• 25:49David Hoffman?

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• 26:31David Hoffman?

  and you can bridge your assets over to Arbitrum using bridge dot Arbitrum dot I O in order to experience DeFi and NFTs the way it was always meant to be. Fast, cheap, and friction free. When you shop for plane tickets, you probably use Kayak, Expedia, or Google to compare ticket prices. So why would you limit yourself to just one exchange when you trade crypto? When you make your trades, you want to make sure you're getting the best possible price on your trade. And that's why you should be using Matcha. Matcha has smart order routing that splits your trade across all the various liquidity sources in Ethereum and is also operational on Polygon, Avalanche, Binance Smart Chain, and other chains. Trading on Matcha is super easy because it pools the liquidity for me in a single, easy to use platform and allows me to make limit on-chain orders.

• 27:12David Hoffman?

  So you can set and forget your DeFi trades and they will go through automatically while you're away. So when you're making a trade, head over to matcha.xyz slash bankless and connect your wallet to start getting the best prices and most liquidity when you trade your crypto assets. Bankless is proud to be sponsored by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum that lets you trade any token at the current market price. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. The Uniswap Grants Program is accepting applications for grants.

• 27:55David Hoffman?

  Do you have something of value that you think you want to contribute to the Uniswap ecosystem? No matter how big or small your idea is, you can apply it for a unique grant at uniswapgrant.org and help steer Uniswap in the direction that you think it should go. Thank you, Uniswap, for sponsoring Bankless.

• 28:10Ryan Sean Adams?

  All right, guys, we are back with the releases of the week. The first is this, maybe some alpha here from Zapper. What are we looking at?

• 28:16David Hoffman?

  Yeah, Zapper is introducing what looks like notifications for NFTs. So if you do decide to flip NFTs, you might want to use Zapper because you can get notified about when your friends buy NFT stuff. You can actually see my profile picture will come up there. There I am. My notification is that I bought a Pudgey Penguin. There's a bunch of drama with the Penguins right now.

• 28:36Ryan Sean Adams?

  I see me in this. What did I do?

• 28:38David Hoffman?

  Yeah, what did we do? No, it's not real. It's just, it's just all the crypto Twitter.

• 28:42Ryan Sean Adams?

  What are they saying I did?

• 28:43David Hoffman?

  Yeah. What, what NFT did you buy?

• 28:44Ryan Sean Adams?

  Oh, I received a Poap.

• 28:46David Hoffman?

  Oh, you received a Bankless DAO Poap. Lovely. Yeah. So you can just follow, get push notifications for what you and your friends are up to with regards to NFTs through Zapper.

• 28:55Ryan Sean Adams?

  What did you do?

• 28:56David Hoffman?

  Kind of cool. I bought, I bought a Pudge Penguin, allegedly.

• 28:58Ryan Sean Adams?

  Oh, you bought a Pudge Penguin. That's your Pudge Penguin. All right, cool. Yeah, that's great. I love that functionality. It's more functionality from Ave, too. Looks like they're building a mobile wallet? That coming from Stani is the tweet. What do you think their mobile wallet might contain, David?

• 29:12David Hoffman?

  Well, it's got to contain borrowing and lending. It's also got to be on Layer 2. So hint more on this later in the show, because there's no way that people are going to be like, the only people that are willing to pay L1 gas prices are also going to be the desktop power users. So any mobile wallet, I think it's got to be an L2 wallet.

• 29:31Ryan Sean Adams?

  Well, so Argent just deployed on ZK Sync, right? Ave, you think they'll do ZK Sync? Do you think they'll do an optimistic roll up? Do you think they'll do Starkware or something like this?

• 29:42David Hoffman?

  Well, I think we have an announcement later in the show, Ryan, to talk about. So we'll talk about it then. Yeah.

• 29:46Ryan Sean Adams?

  I don't even remember. Okay. We'll get to that soon then, guys. To be continued in the back half of the show. Let's talk about this, too. This is big. Release Bitco. They're now supporting index co-op.

• 29:58David Hoffman?

  Cool.

• 29:59Ryan Sean Adams?

  Assets. So this is the MVI data, the bed index as well in Bitco. Bitco, of course, is a qualified custodian. So it's kind of like fire blocks. This is where the institutions store their money. So this is a gateway for institutions to buy index co-op products. And of course, these are all indices of other assets. Kind of think of them as DeFi's answer to ETFs. Really cool that Bitco is doing this now, and that was just announced. You can learn more with the link in the show notes. Any thoughts on that?

• 30:29David Hoffman?

  Big DeFi mullet. Yeah. Centralized custody provider in the front, a bunch of DeFi tokens from a DeFi DAO in the back. Pretty cool.

• 30:38Ryan Sean Adams?

  Big greasy DeFi mullet. That's what we got going on. Multi-dimensional EIP 1559. That's the title of this.

• 30:46Ryan Sean Adams?

  ETH research post. David, I haven't gone through this yet, but you have. What can you tell us about this?

• 30:51David Hoffman?

  Yeah, this is a research post out of Vitalik Buterin himself, talking about how we can use an EIP 1559 type mechanism to control for other network resources, mainly how we compute gas. So right now there are hardcoded values for all the different types of functions that go into gas computation. So like, is, are you multiplying a number? Are you dividing a number? Like, what are you doing to a number? And all these have arbitrary values and that's how we manage the resources of the ecosystem. It's when we were talking about like increasing the gas cost of call data that we're talking about this number.

• 31:30Ryan Sean Adams?

  And they change in hard forks, right? Like basically manually, rough consensus, we should change this thing and then they get updated and changed.

• 31:36David Hoffman?

  Developers are like, hey, this resource needs to get upregulated or downregulated. So let's increase or decrease the price because we think that some resource is, this is a risk or this resource is underpriced, etc. So it's manual changes. Vitalik Buterin is talking about taking every single thing that goes into the calculation for how gas is calculated and making, giving like a control theory type mechanism to manage it, right?

• 32:01Ryan Sean Adams?

  No way. That is awesome. So algo manage rather than people manage.

• 32:05David Hoffman?

  Yeah, exactly. So if resources are underutilized, they will become cheaper. If resources are overutilized, they will become more expensive. And this goes back to one of the first big statements that I heard out of any developer in Ethereum, came out of Amin Soleimani's mouth. When he talks about no magic numbers belong in blockchain design. And what's a magic number? A magic number is a number that's just arbitrarily determined by humans. Because human, we're trying to get away from human controlled governance. And so we need to have these control theory, these equilibrium, these numbers that converge on an equilibrium organically, naturally, in order to have a sustainable, long-term equilibrium. So

• 32:49Ryan Sean Adams?

  Because what you're trying to do is you're trying to remove the dials from human intervention. You're trying to like, so the whole, the start of this podcast The start of the year was a magic number that Jerome Powell is talking about. He's got maybe two magic numbers. One is the interest rate.

• 33:02David Hoffman?

  Yep.

• 33:02Ryan Sean Adams?

  And the other is how much is on the Fed balance sheet? How much are they? And they dial those up manually. There's like 12 people in a room who make these big decisions.

• 33:11David Hoffman?

  Right, totally. And so this is exactly in the crypto economic ethos, where we are trying to use crypto economics to manage our public goods resources. And so a pretty interesting in-depth blog post. There's a lot of, you know, vitalic language in here. But overall, the comments from the other developers are like, hey, this is really, really cool. Big, big engineering lift, kind of scary. Kind of scary engineering lift. And so we will see if how well this gets received by the rest of the Ethereum researchers over time.

• 33:43Ryan Sean Adams?

  It could be a long-term goal. It's really cool that that's being thought of right now. Let's talk about this from a raises perspective, moving on to raises. OpenSea is raising $300 million. They just announced that. And that's at a valuation of 13.3 billion.

• 33:59David Hoffman?

  Wow.

• 34:00Ryan Sean Adams?

  Okay, 13x unicorn now. They just became a unicorn last year and now they're like a unicorn with 13 horns. It's crazy, man. I guess it's not a unicorn then if it has 13 horns.

• 34:12David Hoffman?

  Something else, that's a mutant.

• 34:14Ryan Sean Adams?

  Okay, but so what's going on with OpenSea? Is this just the valuation? How's like, what, what do you think here?

• 34:21David Hoffman?

  Dude, you might as well just call, right now, you might as well just call OpenSea like the NFT store. Like it's the NFT store of crypto.

• 34:29Ryan Sean Adams?

  It's, it's the Apple, you know, store of crypto, I guess.

• 34:33David Hoffman?

  Right, it's, it's managed to strike a very interesting balance between a centralized web two company and a decentralized web three protocol that I think positions it pretty well. And it's, they've captured basically all the volume in 2021.

• 34:48Ryan Sean Adams?

  Is it, is it like an NFT bank? Is that what you'd say?

• 34:52David Hoffman?

  No, I would consider, I would say consider Coinbase's future NFT platform to be an NFT bank, because this is still self custody. OpenSea is still self custody, but you still need to ask permission to sell stuff on OpenSea. So it's definitely, we're going to get more into this in the show, but.

• 35:06Ryan Sean Adams?

  Do you know what this valuation is based on though? It's like OpenSea is literally printing money right now.

• 35:10David Hoffman?

  Yes, yeah, there's, yeah. For a 90 person team, the amount of revenue that they have, like they are so incredibly lightweight for just the amount of ether just flowing into their coffers.

• 35:21Ryan Sean Adams?

  Totally. There's some rumors floating around too. I don't know how substantiated this is. Neither David nor myself have any insider knowledge about this, but there's some talk that OpenSea maybe plans to buy a wallet, like a Dharma Labs wallet. That could be in the works. I'm not sure. We'll have to see how that develops, but like, what do you do with $300 million? You're not gonna hire that many people, are you? You have to make some acquisitions at least and execute on a growth strategy, I would think. You think we're gonna see Super Bowl ads for NFTs, David?

• 35:51David Hoffman?

  Oh, gosh. I mean, I kind of think all ads are gonna start to become crypto ads in the future.

• 35:57Ryan Sean Adams?

  Okay, so I went and I saw the new Spider-Man, right? And there was the first crypto ad played as a trailer. It was a crypto.com ad.

• 36:06David Hoffman?

  Yes.

• 36:06Ryan Sean Adams?

  And it was like Matt Damon. Did you see that?

• 36:08David Hoffman?

  I saw it on when I was watching Dune. Yep.

• 36:11Ryan Sean Adams?

  Yeah. Okay. So like, yeah, first time, it's starting to invade, it's starting to feel normal. And I, you know, I think we'll see more of this. I mean, they're gonna spend that $300 million on something.

• 36:23David Hoffman?

  OpenSea Super Bowl ad would be hot.

• 36:25Ryan Sean Adams?

  That would be pretty awesome. It's a lot of fodder there for graphics and such. But speaking of massive raises, of course, all of that money is going somewhere. It's going to jobs as well. These crypto companies, crypto protocols are looking for talented people. You can check out what jobs are available on the Bankless job boards in crypto. 2022 could be, should be, the year you get a job in crypto.

• 36:50David Hoffman?

  Make that your New Year's resolution. Resolve to get a job in crypto.

• 36:55Ryan Sean Adams?

  Yeah, at least by the end of the year. You got 12 months. Clock is ticking. Here are some jobs. Senior Full Stack Engineer, Syndica, a Senior Software Engineer from Gilded, a founding Full Stack Engineer from Utopia Labs, Senior iOS Engineer, Smart DeFi, Community Ecosystem Lead, DYDX, Crypto Research Analyst, NFT Specialist from Bitwise, Smart Contracts Research Analyst, Bitwise again, and a Governance Specialist from Bitwise. A Blockchain Developer, you gotta be specialized in Rust at Solidx, a Senior Blockchain Engineering Manager as well. There's a ton more on the Bankless job boards. Go check that out. Also subscribe so you get these sent directly to your inbox. And make 2022 the year you get a job in crypto.

• 37:40David Hoffman?

  Absolutely. It's the best industry to get a job in, certainly. Yeah, let's get into news.

• 37:45Ryan Sean Adams?

  Totally. Yeah, it's always exciting. News. Let's start here. So the podcast that we did with Vitalik, and we put that out on Monday, that made some news this week in Crypto Cycles, particularly this headline. Here's the article from CoinTelegraph. "We are 50% of the way there," says Vitalik on Ethereum development. He said that in a two-hour Bankless Podcast episode, and that was a fantastic episode, man. This is all about Ethereum's roadmap. 50% of the way there. What are your thoughts on this?

• 38:16David Hoffman?

  Yeah, Vitalik Buterin, once again reclaiming the number one most download episode in 24 hours.

• 38:22Ryan Sean Adams?

  Oh, really?

• 38:22David Hoffman?

  He's had that title before, but he lost it a number of times to others. Chris Dixon was the previous holder, but now it's Vitalik Buterin once again. Yeah, so Vitalik really did a great job illustrating the rest of the Ethereum roadmap. And we talked about this in the debrief, which was one of the few debriefs that we actually gave out for free subscribers. We do a 30-minute debrief. For those that don't know, we do a 30-minute debrief for every single podcast. It goes out to the premium subscribers RSS feed, but because this podcast was so good, and I thought the debrief was particularly helpful, we decided to release it for free. And we were talking about how the clarity behind the Ethereum roadmap is something that we've never had before that we have now.

• 39:05David Hoffman?

  We can actually clearly see through what we call the crypto fog of war, the unknown R&Ds of cryptography and consensus and all that stuff. For the first time, we actually have a very distant vision of the future, which is something we've not had before in Ethereum. So that's what I really enjoyed out of this podcast. We also talked about the rise of the alternative layer ones and what Vitalik's take is on that, because he thinks that all crypto systems will ultimately converge upon the same future. So regardless of what point on the blockchain scalability trilemma that your blockchain has decided to compromise on, it doesn't matter, because we're all hended to the same state anyways. And so we unpack what that means and why that's true. So just a really educational episode.

• 39:50Ryan Sean Adams?

  Yeah, I listened to it again this morning, actually, David. Well, actually, my first time this morning, and it just held up. It's exciting. I want to bring it back on the podcast.

• 40:01Ryan Sean Adams?

  More questions, sir. Let's talk about this, too. AVE. They have just released AVE Arc. We talked about that before. That's kind of their institutional product. They whitelisted it. It's been whitelisted now with Fireblocks, which is kind of like a BitGo, an institutional custodian. What's the story behind this product, David?

• 40:21David Hoffman?

  Yeah, we just now have a kind of a siloed quarantine version of AVE specifically for KYC-ed institutions. And so I think a lot of listeners, and Stani actually addresses this here in the article, people ask like, well, is that just antithetical to what DeFi is? And Stani just goes, well, yeah, it is totally antithetical, but it's what we can do now in order to get retail and institutions closer to the same place. So it's necessary evil, but I have a different take, and I think this is actually the better take. And my take is that in the current financial world,

• 40:59David Hoffman?

  we have all the retails that are retail individuals, the normal people that just have their banking accounts where they're getting 0.00001% APY. And those people are quarantined away from actual finance. But in DeFi, it's the inverse. Because DeFi has no limitations on the basic Ethereum address, it's the regulations of the nation state that are forcing or compelling people like AVE and Compound to create a siloed version of DeFi. And so where in the traditional finance world, the individual is cut out, in DeFi, it's the institution that's cut out. Because they have this gated, like neutered, siloed version of DeFi when the rest of us get to go and do anything that we want.

• 41:41David Hoffman?

  And so it's actually completely the inverse. And so this is actually retail taking the big W here. Because AVE and Compound and Fireblocks have to build out all this special stuff in order to allow for big institutions to become compliant. And so, yeah, like it's the institutions that are taking the L this time.

• 42:00Ryan Sean Adams?

  Yeah, I think that's a great take. And I do think Istani believes that too, right? So he says at the end, I think DeFi will forever be permissionless and accessible to everyone as long as these networks like Ethereum are decentralized, right? And so what he's basically saying is like the Aave Ark product was built on top of Aave. It doesn't take anything away from the permissionless protocol that exists already with Aave. So DeFi users who aren't institutions continue to use Aave the way they always have. But I think you're totally right in that in the traditional financial system, it's a two-class account. There's like first-class citizens and second-class citizens. And retail are definitely second-class citizens.

• 42:41Ryan Sean Adams?

  Okay, the first-class citizens are the bankers, the institutions, those in power. And you're totally right that DeFi completely inverts that. And institutions become the second-class citizens. We have better, more permissionless access if we're just using Aave with our MetaMask wallet and our Ethereum address than through this permissioned, you know, pool via fire blocks. But all that to say, this liquidity is going to be good for the ecosystem. One of my observations coming to this 2022, David, is I don't think crypto has yet seen what institutional FOMO actually looks like. Okay? The first decade of crypto was, I mean, institutions came toward the end of that, but it was primarily retail-driven, right?

• 43:25Ryan Sean Adams?

  The institutions were still stuck on, yeah, oh, crypto, that drug dealer money. Yeah, like terrorist money. Okay, we're not touching that stuff. We haven't yet seen institutions FOMO in to this asset class. And I think over the next decade, we will in all areas. I'm talking like web two companies coming to web three. I'm talking about institutional banks coming to DeFi. That is totally going to happen. And we're just starting, like, we haven't seen the FOMO yet. And I think it's going to be a big space to watch over the next decade. I'm not sure how much happens this year versus in future years, but it's definitely a massive trend that I see.

• 44:01David Hoffman?

  Hundred percent.

• 44:02Ryan Sean Adams?

  All right, let's talk about this. Oh, okay. Was this what you were referring to earlier? What's the headline here?

• 44:08David Hoffman?

  Yeah, so Aave is Trying to deploy on Starknet. And so this is a proposal in the AVE governance forums about deploying AVE on Starknet. So a proposal for progressive bootstrapping of the AVE ecosystem over Starknet, Starknet's permissionless and decentralized ZK rollup. And so with this would pair nicely with an AVE mobile app. Because Starknet, it's even cheaper than an optimistic rollup. It's super, super cheap, like less than a penny. And so a less than a penny type transactions that are also instantaneous are kind of what it takes to satisfy people that are used to web two. And so without sacrificing decentralization is an important point. And so that's really, that makes sense. I think these things have to come in tandem.

• 44:51David Hoffman?

  If AVE wants a mobile wallet, it's got to be on something like a ZK rollup.

• 44:55Ryan Sean Adams?

  So maybe we're putting some pieces together and we're seeing this take shape. An AVE mobile wallet on Starknet, question mark. Maybe that happens, we'll see. What's happening with Polygon though? So some issues, some hiccups along the way with Polygon. There's this game called Sunflower, throwing a wrench in Polygon's gears. That is the title here of the article. What's happening?

• 45:18David Hoffman?

  I think Polygon is having its CryptoKitties moment, where it had its first big, successful game. And because of the just transactional capacity of this game, this game just involves a lot of transactions. It really just like crippled the Polygon network. So Polygon gas prices spiked to 410 Gwei. That's not, that's not Gwei in Ether terms, that's Gwei in Matic terms. But still pretty high in terms of gas consumption. And but this is, this is what kind of what happens when you allow a network to have really, really cheap transactions, people fill them. And so this has actually already been a problem for Polygon previously. They've already started to tackle some of this stuff. They raised the Gwei limit from zero to 30 previously to start to mitigate some of the spam transactions.

• 46:05David Hoffman?

  And so that eliminated some of the transactions that were just trying to get a penny of MEV out. But now when there's a game, people are just like playing this game like, oh, they'll pay like five cents a transaction, 10 cents a transaction. And apparently that was still enough to completely congest the Polygon network. And so this is kind of what happens when you have a chain that has really cheap transactions. If you optimize for cheap transactions, guess what? You get a lot of transactions, like that's what happens. So this is, this is something that not just Polygon, but all chains that have cheap transactions have to deal with.

• 46:40Ryan Sean Adams?

  And I am less worried about it at the layer two than I would be at the layer one. And what's interesting here is the same sort of thing seems to be playing out and has played out multiple times with Solana. So this is just, I don't know if this is the second time this has happened this week, but the Solana network is also experiencing degraded performance due to high transaction throughput. And this is because, as I've understood in the past, there have been a lot of DDoS attacks, right? A lot of spam type transactions that have brought the Solana network to its knees and even more than that actually caused it to go offline for periods of time. Is this, I mean, are these two things related? Is this basically the same effect?

• 47:21Ryan Sean Adams?

  You've got cheap transactions, you get lots of spam, you get open security vectors for DDoS attacks?

• 47:27David Hoffman?

  Yeah, it's, there's a pretty like direct relationship. When you have fast chains, you compromise on stability. And so, slow chains are stable chains, fast chains are unstable chains. And so, this is why you were talking about the difference between an L1 that's fast versus an L2 that's fast. Because if your L2 is unstable, you can go back to the L1. But if your L1 is unstable, you don't got anywhere to go.

• 47:52Ryan Sean Adams?

  It's interesting that Paulinaia wrote an article about this recently, about the transaction quality trilemma. What is this trilemma that we're seeing? Because I think we're observing it both in Polygon and also Solana and every other network that has very low gas fees.

• 48:12David Hoffman?

  Yeah, so crypto loves its trilemmas. So Paulinaia's transaction quality trilemma puts the trilemma between spam, censorship resistance, and low fees. You can only have two. Because if you have low fees, but you don't have censorship resistance, well then people are just going to spam your network. In order to get rid of spam, you can censor the spam transactions and keep your low fees, but then you, then you, you know, lost censorship resistance. Like now, now you're a censor train, etc. And so, Paulinaia unpacked some of the trade-offs here. And some of the trade-offs aren't so bad. They talk about how Immutable X has used Censorship to keep spam off of the chain while still keeping low fees.

• 48:54David Hoffman?

  And so they just, they are, they have a centralized block producer. And they just, you know, filter out all the spam transactions in order to keep all of the real transactions. Good. And I, I, I think this is an okay trade off, right? Like, I know we like censorship resistance, but again, it's more, everything about these things are more important on the layer one. And when Immutable correctly censors the bad transactions, however, society deems bad to be bad. And enable and continues to allow the good transactions, however, society enables, considers good to be good. Well, then that is, in my mind, a successful L two, because the L two is serving the desires and the needs of the people. While also preserving low fees and fees on Immutable X are like, they're free.

• 49:39David Hoffman?

  Because they're so incredibly low that the block producers just, they, they just eat the costs. And, and he also talks about how the ability to exit out of the layer two is also really, really, really important. Because if you think that Immutable X is doing a bad job of censoring transactions. And perhaps they're censoring your transactions, but letting in other bad transactions. Well, then you don't like that. So you leave. And the ability to exit out of an L two, a permissionless exit out of L two is a check. On the centralization that enables the censoring of spam transactions. Really good article, really good education. We won't unpack it too much more here. But there's a link in the show notes if you want to learn more.

• 50:16Ryan Sean Adams?

  And you know, I think all this means is that it's such a false choice to, to, to say that a layer one long term. Will have cheap transaction fees because it can't.

• 50:27David Hoffman?

  Can't.

• 50:27Ryan Sean Adams?

  Not while being a settlement layer, right? And if it does have very cheap transactions, you know, fees in the, in the short run, those will just get spammed out of existence. What's interesting about spam is that spam actually accrues a cost to the entire network. Because people have to, nodes in the network have to maintain that state. You know, forever after, basically. So there is this, this cost imposed that's distributed over all of the nodes for the spam too. And that, that's not good. So layer one. Long term, they have to have expensive, relatively expensive block fees, right? It's like layer twos, they can be much, much cheaper when it comes to, to gas fees.

• 51:10Ryan Sean Adams?

  But layer ones, I don't see a way out of long-term, uh, layer one settlement transaction fees going up. I think that's a reality that, that too few are like accepting right now in this market.

• 51:21David Hoffman?

  A hundred percent. And also consider this, right? Like say like Solana, Avalanche, Polygon, all of these low transaction fees, high throughput chains. If they, if they continue to allow for spam, well, the spam just increases the fees to be, until they're expensive.

• 51:38Ryan Sean Adams?

  Exactly.

• 51:38David Hoffman?

  And so like, it just raises the watermark because the, because the spam is there. And so like it ultimately converges upon the same reality at the end of the day.

• 51:47Ryan Sean Adams?

  There you go. Here's the take maybe to finish this off from Dan Ellser. Why don't you read it out?

• 51:52David Hoffman?

  Dan Ellser says, "Perfect example of why monolithic L1s with low fees are not sustainable long-term. If you make global state and computation free, people will do stupid shit until it breaks or the price increases enough to make them stop. There is no TPS high enough for this." Cause like, again, if you only, if you just increase the, the TPS of your chain, then you, people are just going to use more of it.

• 52:17Ryan Sean Adams?

  Exactly. Well said, Dan. That about sums it up. Uh, let's talk NFT world. So you got a story for us, David? What's the story? This is again, related to OpenSea. I feel like this is our OpenSea roll-up episode, David.

• 52:29David Hoffman?

  All right. So this is a story of a guy that unfortunately bought an NFT that was previously stolen. So an NFT was stolen from some other guy's wallet. And then that, this dealer, the hacker who managed to exploit, I don't know, with a seed phrase attack, put the, uh, put the NFT up for sale on OpenSea. And then some individual bought that stolen NFT for 1.5 Ether. And then it was reported that that NFT was stolen. And then the NFT was frozen by OpenSea inside the new owner's wallet. So the new owner had no idea that it was stolen, just bought an NFT doing normal NFT buying stuff. Buys this new NFT, this illicit, you know,

• 53:09David Hoffman?

  Previously stolen NFT and then OpenSea freezes it because apparently it's OpenSea's policy to freeze all stolen NFTs no matter what.

• 53:17Ryan Sean Adams?

  Okay, let me just pause and recap here. So a guy buys, okay, so person steals an NFT. He steals it, then sells it, trying to sell it on OpenSea. Some, some person buys it, right? So this is like the, um, uh, the dude selling, opening his trench coat and selling like fake Rolexes, right? Or like stolen Rolexes, okay? And sells the NFT to this buyer and now the buyer has it. And then what, what happens to the buyer? Clarify that for me. So the buyer's got this new NFT, this Rolex, doesn't know it's like, it's hot, it's been stolen.

• 53:50David Hoffman?

  Right.

• 53:51Ryan Sean Adams?

  Uh, it gets frozen, did you say?

• 53:53David Hoffman?

  Yeah. So OpenSea froze the NFT because it was stolen. And apparently that is their policy that they freeze NFTs that are stolen. I think it's a legal restraint that they have. They have to freeze these things if they are stolen. Just to become, just to stay squeaky clean on compliance and legal. Uh, and so it's a kind of a-

• 54:10Ryan Sean Adams?

  And what do you mean frozen? I thought these things were on Ethereum, right? They cannot be frozen, right? If they're, it's in ERC 721.

• 54:17David Hoffman?

  Right. They, so they are frozen on OpenSea, not on Ethereum. Cause you can't, you're totally right. Can't freeze anything on Ethereum. But OpenSea can choose to not accept any Ethereum assets through their contracts. And so, uh, and so like, yeah, you know, you can still take your NFT out and sell it on any other platform. But then the counter argument is like, well, all the liquidity is on OpenSea. So like, if you don't let me sell on OpenSea, well, like I can't access any of the liquidity.

• 54:43Ryan Sean Adams?

  So they basically like blacklist it and they just freeze it like on the OpenSea platform. And that's kind of enough to make it worthless or close to worthless right now because OpenSea has so much volume?

• 54:53David Hoffman?

  At the very least, yeah.

• 54:54Ryan Sean Adams?

  Kneecapped, okay.

• 54:55David Hoffman?

  Yeah. Uh, and this is even, even though they know that the current owner of the current, of the NFT didn't do anything bad. They still have to freeze it because it's stolen. And so it's kind of just an unfortunate outcome where like the guy who had his NFT stolen takes the L, the guy that bought the NFT takes the L. Uh, OpenSea takes the L because they don't want to do this anyways. Like, and- The scammer, the hacker exploiter takes the W by getting the 1.5 free ether by selling this stolen NFT.

• 55:29Ryan Sean Adams?

  This seems like a bad incentive setup because rewarding thieves and thieves getting away with it. And basically, the third-party buyers who purchase these things, they're the ones taking the hit. It seems like a bad precedent to set in general because what you might do is entice more thieves and more stolen NFTs. But what are the lessons learned here? What are the takeaways from your perspective?

• 55:54David Hoffman?

  Because people think like, "Oh, Web 3, NFTs. I'll go to OpenSea, this Web 3 platform, and buy my NFTs." And then realize that OpenSea is not actually fully Web 3. It's also not fully Web 2. It's somewhere in the middle, right? Because it's non-custodial. You own your NFTs. You can upload your NFTs into OpenSea. But also, in order to sell your NFTs, it's permission. You have to ask OpenSea for permission. I mean, they give you permission by default, but then they can revoke it because they have that power. So OpenSea, kind of Web 2.5. So OpenSea is going to find themselves, I think, in an interesting spot in 2022. We definitely need alternatives to OpenSea. There's no reason why we have to have all of the NFT markets,

• 56:37David Hoffman?

  all the NFT volume consolidated onto just one exchange. And OpenSea is going to face a lot of competition, and I think in 2022, we have, on the more centralized end of the spectrum, a completely custodial Coinbase NFT marketplace coming online. And then there's just the massive fight for a completely decentralized Web 3, DAO-focused NFT platform. And so I think we're going to go the full gamut of the full centralized, full custodial, to the fully decentralized, fully non-custodial, and then have OpenSea in the middle. But people, I think, are just learning the limitations of a semi-centralized system like OpenSea and kind of being bummed about it.

• 57:19Ryan Sean Adams?

  Bring it on. Let a thousand flowers bloom, right? We're seeing some of the cracks in centralization and I'm sure either OpenSea or some competitor will will try to bridge those cracks. What's going on with board apes, though? They just crossed the 1 billion mark in total sales, totally crushing it, coming to the year pretty strong. That's one headline here, but there's also been some freezing of board apes as well. Again, is this a case of stolen board apes, similar to the story that you just told?

• 57:46David Hoffman?

  Stolen board apes, yeah. So if you've been on crypto Twitter, especially on NFT Twitter, you definitely have noticed the memes about how board ape owners tend to get their board apes stolen from them.

• 57:57Ryan Sean Adams?

  How does this hap- okay, so how does this happen, by the way? This is not like somebody, you know, physically meeting someone in person and like, you know, wrench attacking them and taking their NFTs, right? This is all happening in Discord channels and Twitter DMs and people just giving up their private keys.

• 58:15David Hoffman?

  Yeah, people are like, hey, like, oh, are you having trouble with your wallet? Like, submit your private key here and I can help you with it. And then they do that and then they get their board ape stolen. Or like they get to, they get somebody to like, hey.

• 58:27Ryan Sean Adams?

  They're just new to crypto.

• 58:28David Hoffman?

  They're new to crypto. They don't know, right? Like, they think people are helping them and then they don't like, and then they, there were these very ironic, kind of unfortunate tweets from very early board ape holders saying like, hey, I just had my board ape removed from my wallet. How do I contact Ethereum customer support to get it back? Like, like, like, stuff like that. They just don't know. They just don't know. And so like, it's become a meme that like board ape, like, there was a meme that I saw. It's like, name a better duo, board ape yacht club holders and like giving away their private keys towards scammers. It's happened like a number of times.

• 59:02Ryan Sean Adams?

  It's very sad. So what happened in this case?

• 59:04David Hoffman?

  Yeah, so $2.2 million worth of board apes had to get frozen by OpenSea. Based off of the same things that we're just talking about, like, you know, scammers managed to get their hands on board apes. OpenSea is like, okay, well, we're not going to let you sell your stolen apes on our platforms. And yeah, I mean, unfortunately, OpenSea doesn't have the power. Unfortunately, and also fortunately, depending on how you look at it, OpenSea doesn't have the power to give those board apes back. But they can at least just restrict these sellers from selling them on their platform.

• 59:35Ryan Sean Adams?

  What's this? This is maybe not a related headline?

• 59:39David Hoffman?

  Yeah, this is completely unrelated to OpenSea.

• 59:41Ryan Sean Adams?

  Okay, unrelated.

• 59:41David Hoffman?

  But it's still related to Bored Apes. I think this headline is absolutely hilarious.

• 59:46Ryan Sean Adams?

  Okay, let me read it then.

• 59:47David Hoffman?

  Yeah.

• 59:47Ryan Sean Adams?

  "Two NFT copycats are fighting over which one is the real fake Bored Ape Yacht Club?" What? The real fake?

• 59:54David Hoffman?

  Right, yeah. So there are these funks out there, which are just crypto punks, but mirror images of each other. And now somebody has made like the Bored Ape Yacht Club version of those. So mirror images of Bored Apes, except there's two of them. And so like these, both of them are Bored Ape clones. And they're like, "No, we're the real clone. Like, we're the real fake Bored Apes." Which is just hilarious.

• 1:00:17Ryan Sean Adams?

  Okay, but so don't they, when it's talking, I haven't read anything past the headline, of course, right? So, but, um, aren't they fighting for this in the, the public square? Aren't they fighting for social consensus of what the true fake Bored Ape really is? Like, or is this getting into like legal territory or something like this?

• 1:00:36David Hoffman?

  I think this is getting into legal territory, yeah. Because, because I think Bored Ape Yacht Club has like copyright rights over their Bored Apes. And so when someone like yoinks all of their JPGs and does a mirror image of them, and then makes a new NFT set, like that, that is a copyright infringement. And so, and, and I don't think that like really the Bored Apes team can really do anything. There's not much power they have. But the NFT marketplaces have to answer to copyright. And so like they have to tussle with this, which is even more insane.

• 1:01:10Ryan Sean Adams?

  So, okay, what's going on here then? There's a Rarible?

• 1:01:13David Hoffman?

  Rarible, yeah. So like this is the fake Bored Apes page on Rarible. And it's banned. It says, "This user or item has been temporarily blocked from public access."

• 1:01:22Ryan Sean Adams?

  This is Rarible doing it to you.

• 1:01:23David Hoffman?

  It's Rarible, yeah.

• 1:01:24Ryan Sean Adams?

  Rarible is also a hybrid web 2.5 type company.

• 1:01:28David Hoffman?

  Exactly.

• 1:01:28Ryan Sean Adams?

  Between web 2 and web 3. And so what's going on here with this Degen Spartan tweet?

• 1:01:34David Hoffman?

  Yeah, Degen Spartan, if you guys don't know who Degen Spartan is, he's just a kind of...

• 1:01:38Ryan Sean Adams?

  A Degen.

• 1:01:38David Hoffman?

  A Degen, who's also a Lone Ranger, kind of Chad-type crypto Twitter character.

• 1:01:45David Hoffman?

  He goes, I minted five fake apes. I sold three, booked back my entire capital plus a hundred percent profit. I kept two because I am my ape and my ape is me. He's kind of making, making fun of bored apes. And I give it an 80% chance that Rarible shuts down the fake apes yacht club. I don't know what P H A Y C stands for. Market buy tomorrow, 95% by the end of the week. And yes, indeed, Rarible did indeed shut down the fake, fake bored apes.

• 1:02:10Ryan Sean Adams?

  NFT craziness. Eminem sporting a

• 1:02:15David Hoffman?

  Again, meanwhile, unrelated but related, Eminem, Marshall Mathers has got a pretty sick

• 1:02:21Ryan Sean Adams?

  Slim shady. Yeah, that's awesome. Yeah, that's the, that's the Slim shady cap right there. That's the hat.

• 1:02:26David Hoffman?

  Shady cap. Yeah.

• 1:02:26Ryan Sean Adams?

  Is that custom or did the ape come with that?

• 1:02:28David Hoffman?

  Nope, that's, that's the normal, normal ape.

• 1:02:31Ryan Sean Adams?

  Wow, that's cool. That's a big move. Good for bored apes, getting celebrities in there. He also, on that, on that train. Again, we don't know whether it's Eminem or whether it's like one of the Eminem people, you know, the people behind Marshall Mathers. But Eminem dot ETH was just purchased. Are we assuming by Eminem this was purchased or do we, do we know about this?

• 1:02:55David Hoffman?

  I don't think we know for sure, but I mean, it's at the same time that he got buys his bored ape. So it would make sense.

• 1:03:01Ryan Sean Adams?

  56K?

• 1:03:01David Hoffman?

  Yeah.

• 1:03:02Ryan Sean Adams?

  Uh, 15 ETH for that, for that purchase. Dot ETH names, I feel like as the original NFTs or one of the original NFTs. Celebrity is starting to support those more and more, right? And, you know, I think that's, it's gonna be interesting for a lot of the people who've been sitting on nice dot ETH names. Uh, when, when that tidal wave hits. Uh, let's talk about this. Samsung is introducing an NFT platform with its new smart TVs. So what is this? You get to display NFTs on your Samsung TV? Does this only come with some TVs? Uh, what are they doing here?

• 1:03:36David Hoffman?

  Yeah, so there are certain Samsung products that are designed for art. I actually have, there's a Samsung Frame TV and these are the, that's the TV that I got to display my NFTs I got from Nate Moller, shout out. And so, yeah, Samsung's leaning into NFTs. What it actually means to actually have an NFT like platform integrated into a TV, I don't know, but

• 1:03:58Ryan Sean Adams?

  Is it kind of like, you know how smart TV, like Samsung has like smart TV type functionalities, other TVs have this where they'll embed apps like a Netflix or something inside of it? Are they embedding like an OpenSea and NFT marketplace, some sort of NFT displayer inside of it?

• 1:04:13David Hoffman?

  TBD. I don't, I don't think we know, but we do know that Samsung is leaning into NFTs and just crypto at large. So more to, more in the future.

• 1:04:22Ryan Sean Adams?

  Related, Samsung is entering the metaverse, entering its flagship store, 837 store in Decentraland. So, yeah, big consumer electronics companies coming to the metaverse too, coming to crypto by way of NFTs, not DeFi.

• 1:04:38David Hoffman?

  Yeah, it says the virtual Samsung 837 store will be open and decentralized in Decentraland for a limited time. What do you think you can do there? Like, do you go there to buy a TV? Because like, what? How does that work? I don't know.

• 1:04:52Ryan Sean Adams?

  I don't know. It feels like they're just experimenting with it, but what's interesting to hear is you remember there was a lot of talk about Samsung back a couple of years ago? Maybe creating a crypto wallet to roll out on all of the Samsung phones?

• 1:05:05David Hoffman?

  Oh, I do remember that.

• 1:05:06Ryan Sean Adams?

  Not much really happened with that, right? Like, I didn't hear much about that, but now they're coming back with NFTs, right? So it's, it's kind of, again, the, the conversation we've been having so much recently about NFTs creating additional surface area to onboard people into crypto and that includes companies into crypto as well. It's kind of a, you know, doing what DeFi could not. Let's talk a little bit about Bitcoin though, David. Some news from Congress that they are preparing an oversight hearing committee on Bitcoin mining's environmental impact.

• 1:05:41Ryan Sean Adams?

  I feel like David, Bitcoin is taking a full frontal assault from a proof of work perspective, right? Basically, every other Layer 1 crypto network is migrating or has started with proof of stake. And it's going to be basically Bitcoin versus the world in terms of justifying why proof of work mining is actually worth it. And, I mean, you and I might agree and might say, yes, it's worth it, right? But Bitcoiners don't have to convince us. They have to convince Congress and the rest of society that the money spent on what society sees as environmental waste is well-spent funds.

• 1:06:25Ryan Sean Adams?

  And this looks like it's kind of a committee in Congress that will shed some more light on this and probably amplify the topic. What are your thoughts here?

• 1:06:32David Hoffman?

  Yeah, this is going to be a big litmus test for so many different things. First off, the Bitcoiner narrative is that Bitcoin is good for the environment because it creates more energy and specifically leans in towards green energy. So the more energy that proof of work consumes for Bitcoin, the faster we can have a green society. A lot of people do not buy that argument. I kind of am compelled by it, but also at the same time, I think there's a very strong counterargument to say that, like, well, it's even more green just to consume less energy than to consume more of it. But that's a different story. What I'm interested in hearing about the fallout of this is, does, so Congress is supposed to do their research. So when they do do their research and they sift through the thud of just, you know, sometimes

• 1:07:17David Hoffman?

  just blatantly misinformation about the negative externalities of Bitcoin mining, they do exist, but sometimes they're just way overblown. What is Congress's opinion about Bitcoin mining after they actually do homework? Like, what is on the other side of that? Do they actually find that Bitcoin does incentivize green energy production? To what degree do they find that that's true?

• 1:07:40Ryan Sean Adams?

  Do you think they're actually gonna do their homework, though, David? Or do you think they're just using this as another committee for like

• 1:07:46David Hoffman?

  Right.

• 1:07:46Ryan Sean Adams?

  to score some political points, which is the entire purpose of this committee, is right?

• 1:07:50David Hoffman?

  Yeah, it's popular to hate on Bitcoin. And so I could totally see an outcome as like, oh, we did our homework. Bitcoin, energy mining, bad. It's bad. Uh, that's our, that's our reports. It's bad. Uh, and then, and then we actually progress nowhere. And we should do something about it. Yeah. And then Congress, everyone in Congress is like, oh, yeah, totally. It's bad. We should do something about it. I could totally see that happening.

• 1:08:10Ryan Sean Adams?

  Well, one thing I'm, I'm glad about right now is, and this wasn't the case going into 2021, but it is the case going into 2022, which is, um, I think mainstream and even in Congress, the world of crypto is now larger than Bitcoin. There was a time where crypto and Bitcoin was kind of synonymous for a lot of people. Like Bitcoin kind of eclipsed the rest of crypto. That's no longer the case. Like, I think even going into 2022, we used to say Bitcoin is the gateway drug. Teaching people digital scarcity is the gateway drug to crypto. I don't know if that's true anymore.

• 1:08:42David Hoffman?

  Yeah.

• 1:08:42Ryan Sean Adams?

  I think like, things like NFTs are becoming the gateway drug, right? So, and again, that's just teaching people digital scarcity as well. Digital scarcity of a JPEG, which is interesting. And that leads them down possibly a path to start to understand some of the other crypto money type topics. But that is a sea change and I'm glad that's the case, or else the rest of crypto would also be lumped into this argument. Not that I'm not sympathetic about, um, you know, the counter arguments that the, the crypto and the Bitcoin community would have to support proof of work. I am, I just am glad that's a, a fight that not all of crypto has to fight.

• 1:09:17David Hoffman?

  Yep. Yep. Having options is important.

• 1:09:21Ryan Sean Adams?

  Well, let's talk about this. You alluded to it earlier in the, in the show, Kazakhstan, internet shutdown. Okay. So there was like, I, I believe the, I haven't followed this very closely, but the government in Kazakhstan has, um, just walked, basically walked away. There's lots of protests, um, you know, concern about the prices, gas prices, the prices of everything. It's kind of a, a, you know, a revolt, a, a minor revolution, I guess, I would say, the protests in the street. And the government completely walked away. And this has caused downstream effects with, there's apparently a bunch of Bitcoin mining in Kazakhstan right now. They shut down the internet, so the internet's been shut down, and now hash rate, Bitcoin hash rate has fallen. What's, uh, what's the story here?

• 1:10:04David Hoffman?

  Eighteen percent Bitcoin hash rate fallen.

• 1:10:08Ryan Sean Adams?

  That's a lot.

• 1:10:09David Hoffman?

  That's a lot. I didn't know, I didn't know Kazakhstan had so much Bitcoin mining capacity inside of it. And, you know, it kind of just makes sense. Kazakhstan's like right next to China. Uh, and so when a lot of, uh, when China pushed out its Bitcoin miners, it went all over the world. But like a lot of them just went to Kazakhstan, just went right next door. Uh, and so this is, well, now, now they're probably going to be moving out of Kazakhstan if this continues. And this actually just might be kind of like another microcosm of China. It's just like, well, we're just pushing out Bitcoin mining hash power further and further, probably west, probably into Europe, probably into America, where Bitcoin mining is just more dependable, more stable, uh, and the inside of less volatile foundations.

• 1:10:51David Hoffman?

  Uh, and so it might be a long-term good just for the narrative of getting more and more hash power domiciled in countries that regulators with power like. Uh, and yeah, and, and this is also kind of some sort of speculation going on with this, uh, decreasing Bitcoin price. Because, you know, guess who has a lot of Bitcoins? Miners do. They, they are the kind of the source of Bitcoins. Uh, and so if, if they have elected the lot, the big, big drop in May, when Ether went from four thousand three hundred down to eighteen hundred, and I don't know what the Bitcoin price does, because I didn't, because I didn't pay attention to it as much. That was on the heels of China pushing out Bitcoin miners. Uh, and so we just saw another big oof candle, big oof candle.

• 1:11:34David Hoffman?

  I'm going to just keep on saying that until it becomes in the dictionary or something. Big oof candle, followed by the news of a bunch of hashing power that got, it got, um, axed. Uh, and so, uh, miners, they are very conservative with their risks. Miners are generally pretty risk averse. And so maybe they sold a bunch of Bitcoin to fund an actual migration of, of hash power, or just to cover their costs or whatever. Uh, I think that's a pretty reasonable thing to speculate on.

• 1:12:00Ryan Sean Adams?

  It could be. That could be what's going on for sure. It's definitely interesting news. Also, as we look west, let's talk about some of the regulation coming in the US markets. So the CFTC just fined Polymarket $1.4 million and asked it to wind down some of its prediction markets. The story is after a CFTC investigation found that Polymarket was offering illicit option contracts in the US. It's a very interesting story here because the question is, is this the beginning of other CFTC types of enforcement actions in US markets? What happened here and what's kind of your takeaway?

• 1:12:39David Hoffman?

  Yeah, my big takeaway is that this is the perils of a web 2.5 company, a company that didn't make it all the way towards fully decentralized. This is what they have to deal with. I think Polymarket has definitely been able to have a ton of success based off of the trade-offs that they've made on the centralization to decentralization spectrum. But like when you have any amount of centralization, like you get the ire of nation-state regulators. This $1.4 million fine, extremely reasonable. This whole thing in my mind is reasonable. This is the CFTC doing normal CFTC stuff. This isn't the SEC being just hard-handed and kind of just overall a dick to our industry.

• 1:13:19David Hoffman?

  And I think Polymarket more or less perhaps saw this coming. They already had pretty decent limitations on their markets. And now I think what's as a result of this is that they are just going to probably do something like DYDX, which is not allow US IP addresses, not allow US people to participate in Polymarket and just kind of move offshore and be serving customers that aren't inside the United States. So you know who loses? Us, people in the US, people, US users. We don't get to use Polymarket because of the CFTC, because of nation-state regulators. Is what it is.

• 1:14:00Ryan Sean Adams?

  Yeah, it's kind of painful. I think it also so like I do agree with you. This is not necessarily the CFTC being heavy handed in terms of their their touch. It doesn't appear like that is the case to me as the SEC has been in the past. But it's also like there's a problem with our regulations in the US from a commodities perspective. And Brian Quintenz, who is a former CFTC commissioner, actually came in the podcast and said this, like, if you ultimately want change, that has to happen in Congress. Like, the legislative body has to change in the rules about what consumers, retail consumers can have access to in the US. I

• 1:14:40Ryan Sean Adams?

  mean, at some level, the CFTC is unfortunately, kind of trying to enforce the rules on the books. But the question is, what happens if the rules on the books don't make sense anymore?

• 1:14:50David Hoffman?

  Right.

• 1:14:51Ryan Sean Adams?

  What if they're wrong? What if they're old? What if they no longer apply? And I think that's definitely the case for for polymarket. These are like prediction markets, right? So what are the chances that that, you know, Democrats lose the next election cycle, that Biden gets reelected, all of these sorts of things, things that like, consumers should have access to. And

• 1:15:12David Hoffman?

  Right. What harm can that really do?

• 1:15:14Ryan Sean Adams?

  I mean, like, we're trading NFTs in the same way. Like, I mean, we're trading all of these different things. It's just that the letter of the law says a certain thing, and this causes a stifling of the market in the US. And what's going to happen, polymarket's going to be just fine. I think they'll continue operating. They might have to geo fence, as you said. They'll probably move some of their operations outside of the US and move it internationally. And who loses? To your point, David, the US loses, right? So it's a shame that this is happening. But if we want change, that's why in the US, we have to be involved in our political system as well, or we'll see more of this in the future. David, speaking of things that we've we're seeing more of, Tether just froze $1 million worth of USDT.

• 1:15:58Ryan Sean Adams?

  I think that's just a PSA, like a reminder that Tether can freeze USDT.

• 1:16:02David Hoffman?

  That's the full story. We don't know why or who it is, but there's $1 million in an Ethereum address, I think it's on Ethereum, that got frozen. And so that's what happens. Don't do illegal things with Tether. Don't do illegal things. Don't do illegal things. But if you want to get away with illegal things, don't use Tether.

• 1:16:21Ryan Sean Adams?

  Well, but like, Yeah, and then like Tether is not a censorship resistant stablecoin, right? That's also the takeaway. Some people treat it as if it is. Neither is China's Digital One, and that wallet goes live in the App Store. It's going live in app stores in China in pilot mode now. And what's interesting to me is like, all of this development has gone on with the Digital One, and the US has like, basically done nothing.

• 1:16:48David Hoffman?

  They have no clue.

• 1:16:49Ryan Sean Adams?

  Yeah, we've watched it from the last like, you know, three or four years being like, "Oh, China's doing this. It's coming. They're investing in blockchain." And the Fed's like, "Yeah, we'll believe it when we see it. We don't have to do anything."

• 1:17:00David Hoffman?

  We'll have a meeting to discuss.

• 1:17:02Ryan Sean Adams?

  We'll have a meeting to discuss the implications. We'll create a paper, and we'll have a congressional hearing maybe in the future, right? And then China is just like, building it.

• 1:17:10David Hoffman?

  Right.

• 1:17:10Ryan Sean Adams?

  And now they're in pilot mode.

• 1:17:13David Hoffman?

  It's like the difference between peer review and actually doing it in live production.

• 1:17:18Ryan Sean Adams?

  Totally. Or like, the difference between a startup and a large corporation who just talks about doing things, right? And the startup's just hustling and building it out, right? And I do think that the US is gonna get caught very flat-footed on this China digital wallet thing and digital blockchain thing, and another thing that's gonna cost the US. Anyway, that's the take here. We've done a lot on China, by the way. We did that episode with Richard Turin called Cashless. If you want to hear about the China digital currency story, go tune into that episode as well. Guys, we will be back with the takes of the week, but before we do, we want to thank the sponsors that made this episode possible.

• 1:17:56David Hoffman?

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• 1:18:38David Hoffman?

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• 1:19:20David Hoffman?

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• 1:20:05David Hoffman?

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• 1:20:13Ryan Sean Adams?

  All right, guys, we're back with the Takes of the Week. Here's Jay with a really interesting take on protocol mafias. What's the prediction here, David?

• 1:20:20David Hoffman?

  Yeah, Jay of Rari Capital, which we just did a show State of the Nation with Rari Capital and Tribe, Fae/Tribe, Joey and Jay, about the merger between Fae and Rari Capital. There's a lot of synergies, these teams have been working together, and so they have decided to merge. So the two tokens, the RGT token for Rari and the Tribe token for Fae are merging into the same token, which is going to be Tribe. And so Jay continues this thought and extrapolates it to the rest of DeFi and talks about one of his predictions for 2022 is that protocol mafias are coming to life. And he thinks that there are already some like different DeFi apps that kind of have banded together.

• 1:21:02David Hoffman?

  So you have the Magic Internet Money, Spell, ICE is one mafia, one group of people. We also have the Epic, the Frack Stablecoin, Olympus and Sushi Tribe, excuse me, mafia. And then now we have the tribe, which is also already a part of a Rari. So three tribes, three mafias, if you will. And I think there's just, there's a lot of like redundant overlapping apps in DeFi. And so Jay is just predicting that these are going to consolidate and merge into the same organization. You know, we can be more powerful together. There's a bunch of competition out there. DeFi is kind of ruthless these days. And so Jay is just basically just predicting that this ruthlessness naturally collapses into mergers.

• 1:21:45David Hoffman?

  And we have seen this before. This is what happens in normal businesses. Businesses merge when it makes sense. And DAOs should be considered the same. And so this is a big prediction that I'm kind of on board with. If you want to hear more about this, we talked about this concept in our State of the Nation. That show came out on Tuesday or Wednesday, depending on YouTube or the podcast. So you can check that out as well.

• 1:22:05Ryan Sean Adams?

  That's a really good prediction. I, you know, I, I think he's right on with that. We'll have to see what happens in 2022. It might be the year of mergers, DeFi mergers. All right. Here's a take from Balaji. Lawyer fees are the equivalent of gas costs for traditional finance. Every contract update requires transaction fees from JDs. Lawyer fees being like gas costs. What do you think of this?

• 1:22:26David Hoffman?

  Yeah. And there was another tweet as well that talked about layer twos where layer twos are like the paralegals. Where so like, you know, layer twos prep everything and then they bundle it all up and they settle that transactions down to the L1, which are the actual lawyers that actually execute the transactions. And this has always been in my mind, the correct framing for what a blockchain is. A blockchain is just a system of courts, a courts and appeals. But instead of subjective judges, we have the EVM. And so the, if you have a contract that your lawyer drafted up and you want to change. Change it, you gotta pay the gas cost to make the transaction, the contract update. And so, and this is, this is why, like, I know, I know fees on Ethereum are high.

• 1:23:08David Hoffman?

  But in stark contrast, the $500 like transaction fee on Ethereum is orders of magnitude than the 500 bajillion dollars that you would have paid a lawyer to do the same. And then if that ends up going to court, you're paying 10 times even more than that, right? And so, yes, gas costs on Ethereum are high, gas costs on other chains are low. But the point is that we are disintermediating an entire industry of extremely expensive lawyers and litigation and court. We have to remember what we are actually improving upon. And it's not, it's not, it's about the court system, the court of appeals, which is extremely slow, extremely laborious.

• 1:23:52David Hoffman?

  And way slower than Ethereum, by the way.

• 1:23:55Ryan Sean Adams?

  I, I, so I, I totally vibe with this take. I have maybe like a subtle change. I feel like coders are the actual lawyers in this case, right? So like, you still have to pay coders to create the contracts, the smart contracts. And the, the transaction fees are actually like taxes, right? It's like that whole court apparatus that you're talking about. And that is maintained by federal and state taxes, for example, in the US, right? And like, that is the court system. So, yeah, I, and I totally agree with the takes of like, we're automating a ton of that away and it's becoming much more efficient. In fact, what are the costs to maintain the US legal system?

• 1:24:41Ryan Sean Adams?

  From like circuit courts all the way to like Supreme Courts on up, right? Well, it's like military budget, or the entire government infrastructure bureaucracy is required to maintain that system. And we're not only automating the lawyers out of the mix, we're also automating the entire like government system out of the mix. And how much more efficient is that? So I'd even take it a step further than Blaji's tweet, but yeah, he's, he's right on. That's essentially what we're doing. Smart contracts are the new, the new legal system. It's, you know, code is law in a way. Let's go to the next take here, David. So this is a take from Suzu. Maybe I'll read this originally and then you can read the reply, which is the meat of it.

• 1:25:25Ryan Sean Adams?

  So Suzu says, "I'm bullish on nearly all quality L1s. But if you think that Saluna of X, that's Saluna, Solana, Luna and Avalanche together are boomer coins. If you think they're boomer coins, you literally have the memory of the goldfish." And here's this reply, which is the real take here we want to get into. "That's all the current market is. Goldfish running from one side of the tank to the others. Crypto influencers furiously tapping the tank to attract them to the other side with their bags to dump." Well, that's a bleak outlook on the market as it stands today. Do you think that's right?

• 1:25:59David Hoffman?

  Yeah, I saw this reply get passed around in numerous different circles where everyone's like, "Oh yeah, this is a really good analogy." So like all the influencers are like, "Hey, pay attention to my bags. Hey, pay attention to my bags. Tap, tap, tap. Pay attention to my bags." And we saw this in Kobe's fantastic Substack about how like crypto is a fight for attention. If you can't get attention on your bags, your bags will not pump. And so, and like, and I'm just gonna self-shill us here. This is why some influencers that have not changed their tune for forever are perhaps worth listening to. When they are only saying the same things, year in, year out, about the same principles. Maybe those guys are people that, you know, they're saying, they're not tapping different spots in the tank.

• 1:26:44David Hoffman?

  They're saying, "Hey, this is worth listening to, and it was worth listening to last year, and it'll still be worth listening to next year." So just gonna, just gonna throw that out there.

• 1:26:52Ryan Sean Adams?

  I just think, look, man, I think fundamentals last, fundamentals are stronger than the market's short-term attention cycles as well. Like, that's why we talk about them so much on Bankless is because, like, if you're narrative investing, you care a lot about what Kobe was saying in his Substack about, you know, the attention and whether the attention's on this narrative or whether this narrative. But if you don't care about narratives, if you're not narrative chasing, if you're investing in fundamentals, then all that kind of becomes noise. Longer term plays and back to what we said at the very beginning, right? It's like 95% of you shouldn't be trading anyway. 95% of you shouldn't be following the influencers like a goldfish.

• 1:27:38Ryan Sean Adams?

  Because you're going to get wrecked on the other side of that. So that's why we emphasize fundamentals.

• 1:27:44David Hoffman?

  The game is to find the spot on the goldfish tank that you think all the taps will converge to over the very, very long term.

• 1:27:52Ryan Sean Adams?

  Yeah, that's right.

• 1:27:53David Hoffman?

  And just wait there until the all the taps start to show up and hopefully you place your bets accordingly.

• 1:27:58Ryan Sean Adams?

  Exactly, exactly. All right, let's go on. This is a related take actually from Anthony Sisano. Either die, you either die a degener or live long enough to see yourself become a crypto boomer is the take. I think he wrote a blog post about this and I, the, the take in the blog post is basically like, everyone starts as a degener, right? When you get into crypto, you're kind of just here to make money, right? I don't know if that's, that's true for everyone, but like generally a lot of people get into crypto for number go up. And then when the number does go up, you kind of lose touch with everything else. And you no longer care about the like early, you know, degener style games.

• 1:28:41Ryan Sean Adams?

  But in these degener games, that's where a lot of the innovation is actually happening. So you kind of grow out of touch and become like a crypto boomer, according to Anthony. Yeah, what's your, what's your thought on this take?

• 1:28:53David Hoffman?

  Yeah, there's just always generations about crypto. And when people are coming in, they're looking for, they're, they're coming in with their limited amounts of capital wherever they came from. And they are trying to get that 10x. That's what, that's what people know the crypto world to, to offer 10x is 100x is. And like, you're not going to find a 10x, 100x in, in the, the high caps. Like you're not going to get your 100x with Bitcoin or Ethereum anytime soon. It's going to take a real long time to get 100x on Ether. It'll happen, but it'll happen over decades. And so if you want that 100x, you got to go down the degener rabbit hole and start doing your, doing your investigations, doing a super insane amount of research, like following all the discords, doing all that stuff.

• 1:29:35David Hoffman?

  And that's what like that you are living on the periphery. You are living on the edges. Uh, and once you actually survive that part of your crypto cycle, then you kind of graduate into something a little bit more stable. You kind of have developed what you are familiar with. You've gotten your feet under you. Uh, and, and then the crypto world moves on and starts to innovate and in different directions than what you're used to. And either you can choose to follow that in innovation, which is what Sazil is saying. You either die a DGEN as in you stay a DGEN forever and you're just following the narrative trades over and over and over again. Or you just like kind of call it quits and settle and say, well, you know, I'm actually familiar with this part of crypto and I want to stay right here. Uh, and so that's what Anthony is calling a crypto boomer. Uh, and so the, this juxtaposition, I think is pretty compelling.

• 1:30:21Ryan Sean Adams?

  Yeah. I, do you think that's totally right though? Like, do you think you either have to be a DGEN? Or you, you, you, uh, become a crypto boomer and those are the only two choices? Like I, I feel like there's a, there's another choice here, which is like, um, I don't know. It's kind of the like buy what you use sort of Warren Buffett, like evaluate this based on its fundamentals. Wait for narratives to prove themselves with some raw fundamentals and then invest in them. Like, but be open to new narratives. I feel like a total crypto boomer would just be like, yep, I bought my thing. And like, this is how it is, and I'm never going to change my thesis or my opinion.

• 1:31:00Ryan Sean Adams?

  It's always this one particular way, but like, I think there's some space in between being a full DGEN and being a crypto boomer. What are your thoughts on that?

• 1:31:09David Hoffman?

  I think it's funny that you referenced, uh, Warren Buffett in your explanation as what's not a crypto boomer. It's like, oh yeah, Warren Buffett, long-term behavior. No, like it's, it's the juxtaposition between the DGENs and the non-DGENs. Like if you're not a DGEN, you're therefore a crypto boomer. Um, although like I do accept your nuance.

• 1:31:27Ryan Sean Adams?

  Yeah, yeah, I do think there's some nuance there, but I, I totally understand the point he's making.

• 1:31:32David Hoffman?

  So here's a take out of Reddit and this take is really just the headline. And this is coming off the heels of all of the gamers rejecting NFTs in their games. And the take here is that NFTs won't ruin computer games. Greedy game companies will ruin computer games using NFTs. I think that's a really good take. Technology is just neutral. It's really about the incentives of the game developers that can choose to actually have helpful or harmful NFTs in the games. Uh, and so that's kind of what I would ask, uh, the gamers that don't like NFTs to consider is that, well, maybe it's actually the studio that you don't like, not NFTs.

• 1:32:05Ryan Sean Adams?

  Yeah, I think that's totally the case. NFTs are neutral technology. Why don't you take this take?

• 1:32:11David Hoffman?

  Yeah, this comes from Altcoin Psycho Twitter account. He says, "So many poorly designed unlocks are all happening this year, 2022. A lot of popular alts will likely get hammered." Unlocks is referring to angel investors, seed investors, getting their tokens and then their vesting periods ending so that they can finally sell their tokens. He continues, "2022 will be the year that humbles everyone who said fully diluted value or tokenomics are a meme. TA, Technical Analysis, won't save you from a shitty emission curve crushing your project." So basically, he's saying that like, yo, beware of the tokenomics, like, or excuse me, beware of the vesting schedules. Because when VCs have their tokens unlocked, they need to cash in and lock in some profits. And they got in on those tokens cheaper than you did. So you gotta beware.

• 1:32:57Ryan Sean Adams?

  All right, David. So what are you excited about this week, Ben?

• 1:32:59David Hoffman?

  Tomorrow, we record with Kobe, with Crypto Kobe. And so I think that's gonna be pretty interesting. There's been some Twitter spats, friendly-ish Twitter spats between us and Kobe beforehand, before this. But he was amicable enough to come on the show. And so we're recording with him tomorrow, and that episode comes out on Monday. I've already shared the agenda with him, and he was like, oh, it's pretty good. And there are some hot questions in there. So it's gonna be a fun show.

• 1:33:27Ryan Sean Adams?

  You know, I actually think there's a lot of shared values between Bankless and Kobe. But Kobe definitely takes more of the, I'm a narrative investor, I'm a trader side of the spectrum, where we take the more fundamentals, long-term approach. So I don't think we disagree on as much.

• 1:33:42David Hoffman?

  I think our dispositions are definitely different. Yeah, our styles are very, very different. And maybe that's where and why we butt heads. But overall, I'm looking forward to the conversation.

• 1:33:51Ryan Sean Adams?

  Yeah, I do have a lot of respect for him, too. So that'll be fun.

• 1:33:55David Hoffman?

  Ryan, what are you excited about?

• 1:33:56Ryan Sean Adams?

  Uh, dude, I'm just excited to have my electricity back and my internet back. Uh, it was, it was a mess, like.

• 1:34:02David Hoffman?

  You mean you yourself be back online?

• 1:34:04Ryan Sean Adams?

  Yeah, totally. Yes, yes, that's what I mean. But like, also, just like, I realize this is a first world problem, right? It's like, um, being without the internet for 48 hours, okay, well, you'll survive, Ryan, like, and that's totally true. But like, it also always makes me think, uh, man, what would it be like if society like totally broke down?

• 1:34:22David Hoffman?

  Right.

• 1:34:22Ryan Sean Adams?

  And we lost electricity, lost internet? Like, how long could I last?

• 1:34:27David Hoffman?

  Right.

• 1:34:27Ryan Sean Adams?

  In that, in that sort of a situation. The truth is like, not very damn long. Uh, and, you know, I, I, I thought about other things too. It's like from a crypto perspective. You know, crypto really doesn't work when the electricity is off, of course. But the interesting thing about that is, um, neither, neither do gold ETFs, right? Neither does your bank account. Like, just like, nothing works. I know that's been an early critique over things like crypto. It's like, well, what happens if the internet powers down or electricity turns off, you don't have crypto? Well, the truth is, you really don't have anything.

• 1:34:59David Hoffman?

  Right.

• 1:34:59Ryan Sean Adams?

  When those two things happen.

• 1:35:01David Hoffman?

  And in fact, if the internet turns off, like, parts of the internet can turn off and completely cripple the banking system.

• 1:35:07Ryan Sean Adams?

  Uh, totally.

• 1:35:07David Hoffman?

  And if only parts of the internet turns off, Bitcoin and Ethereum still are online.

• 1:35:12Ryan Sean Adams?

  Exactly. Next time, there's some internet connectivity established, you can kind of do it. So I, I sort of asked myself, like, what would I do if this was sort of a, you know, persistent scenario? This was a real disaster and this spanned like weeks or months or something like this. What would I want to hold? And it's not going to be gold ETFs, right? Because what use are those?

• 1:35:31David Hoffman?

  Right.

• 1:35:32Ryan Sean Adams?

  It's like family, it's friends, and it's food.

• 1:35:35David Hoffman?

  Yeah.

• 1:35:35Ryan Sean Adams?

  That's what you're doing in a real crisis.

• 1:35:37David Hoffman?

  And a nice house.

• 1:35:38Ryan Sean Adams?

  Yeah, shelter, right? And a nice house, ideally. So I guess it just impressed upon me that society is built on. You know crypto is built on many different technologies, but like all of society is also built on top of these technologies. And I think crypto is much more resilient than it first appears. It's at least resilient as just about everything else in society, right?

• 1:36:00David Hoffman?

  Well, it's supposed to be the most resilient thing on the internet after like SMT, SMTIP or whatever.

• 1:36:07Ryan Sean Adams?

  Yeah, yeah. After, after like the TCP IP core internet protocols, you know, there's crypto and that will persist. So anyway, it's, I'm fine. Internet's back up. I'm connected. Electric is here.

• 1:36:21David Hoffman?

  AI back online.

• 1:36:22Ryan Sean Adams?

  Yeah, AI back online. But it's good, good to go through that experience, I think, once in a while, right? It's like, makes you think about things like this.

• 1:36:29David Hoffman?

  Absolutely.

• 1:36:30Ryan Sean Adams?

  Uh, you ready for meme of the week, man?

• 1:36:31David Hoffman?

  Meme of the week? Yeah, absolutely. This was a, this is my meme this week, which I'm very, very stoked that I had a successful meme.

• 1:36:38Ryan Sean Adams?

  First, though, this is a meme that we talked about in the last show. And this was a Jack Dorsey anti Web 3 meme. Maybe we should talk about that one first.

• 1:36:45David Hoffman?

  Yeah. So I wrote in Market Monday this week, what Jack doesn't get about Web 3, which I, I some tried to summarize all the arguments that I could about why Jack is just basically completely backwards about Web 3 incentives.

• 1:36:57Ryan Sean Adams?

  This is Jack Dorsey, the founder, co-founder of Twitter and also CEO of Square.

• 1:37:03David Hoffman?

  Yeah. Jack thinks that Web 3 is just this Silicon Valley VC marketing term because it's really, really hot and they can make a lot of money off of it. And so all these Web 3 companies are just pouring capital into Silicon Valley VCs because all these VCs are giving them all their money, leaving very, very little for retail. So we, Web 3 is a VC-led endeavor is what Jack's critique of. And in my opinion, it's the exact opposite. And I know it's not perfect, but like, A, let's think about Web 2. And here's where the meme comes in. So it's the same meme that, I need to explain the, the first meme for the listeners. So the meme is that there's this water pipe and it's being, coming out of Ethereum and the water pipe is labeled Web 3.

• 1:37:44David Hoffman?

  And this water pipe is just flowing water into the mouths of very fat and happy Silicon Valley VCs. While this extremely famished retail individual is just opening his mouth for these mere droplets. That are just accidentally leaking out of the pipe. And so that's that's Jack's claim on on web three is retail is just left in the sidelines. And so again, I think this is completely backwards from reality. So I made this alternative version of the meme. Where instead of small little droplets being dropped off and going into the mouths of retail. It's actually just hearts and likes coming out of the web two pipe. And so the web two pipe is flowing money into Silicon Valley VCs as Jack says it was for web three. But instead of retail getting droplets in web two world, you just get hearts and likes.

• 1:38:29David Hoffman?

  Like here's here's what you get out of web two. You get a like, I get to like your thing.

• 1:38:33Ryan Sean Adams?

  Dopamine hits.

• 1:38:34David Hoffman?

  Dopamine hits. Yeah. So so no money. And Jack completely ignores, and I write about this in the article, Jack completely ignores. How airdrops are a fundamental component of web three. And people have gotten over a million dollars worth of airdrops from web three endeavors. And how also I make the claim that like, uh, Jack says that like VCs, you you web three will never be able to escape VC incentives. I make the claim that web three platforms that put more and more capital into the hands of retail do better. Think about ENS and how beloved ENS is. All net zero VCs, all retail. Uh, and so I think that Jack just has this completely backwards. And so this is the new meme that I think is far more accurate of reality.

• 1:39:14Ryan Sean Adams?

  Yeah, it's a good take. Look, so, you know, Silicon Valley VCs got very fat and happy off of web two. But I I think the the true genius of this meme is like, what did retail get out of the whole web two movement, right? Like likes and hearts and their attention kind of stolen, right? And like dopamine addictions, that's kind of what where we are in the in the cycle. Certainly didn't get any equity, didn't get any token drops. Yeah. So that's the meme of the week.

• 1:39:41David Hoffman?

  That is the meme of the week.

• 1:39:42Ryan Sean Adams?

  All right, guys, this has been the first roll up of 2022. Welcome to 2022. We're glad that you're with us. As always, none of this has been financial advice. Eth is risky, DeFi is risky, so is Bitcoin. 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.

• 1:40:01David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where we summarize the week in crypto and other

• 1:40:46David Hoffman?

  fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless Nation.