SotN#23: Crescendoing! w/ Eric Conner (Community Culture, & Staking, War Effort, Propaganda)

🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/ ✊ STARTING GUIDE BANKLESS: https://bit.ly/37Q17uI ❤️ JOIN PRIVATE DISCORD: https://bit.ly/2UVI10O 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 👕 BUY BANKLESS TEE: https://merch.banklesshq.com/ ----- 📢 DEFI BUILDER? APPLY TO FILECOIN ACCELERATOR FOR $20K GRANT http://bankless.cc/filecoinapply ----- GO BANKLESS WITH THESE SPONSOR TOOLS: ⭐️LEDGER - BEST HARDWARE WALLET TO SECURE YOUR CRYPTO https://bankless.cc/ledger-20 🚀 ZERION - INVEST IN DEFI FROM ONE PLACE (download it now!) https://bankless.cc/zerion 💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith 🤖YEARN - YIELD-SEEKING MONEY ROBOT THAT FARMS DEFI FOR YOU http://bankless.cc/yearn ------ Eric Conner, co-Host of the EthHub Podcast, Formerly Product at Gnosis, and Ethereum’s Unofficial Community Manager We ask Eric, does he accept the title of 'Unofficial Community Manager'? Eric has called the the 2018-19 Bear Market period as ‘the time that User, Investors, and Builders of Ethereum all came together’ - Why is this important? - What was the Ethereum community like in 2015-17? - How has the Ethereum community developed, changed, matured over time? Did Eric ever have doubts that we would ever get to this point? Then, Eric and David discuss the merits of a 'patriotic duty to Stake ETH' - Is it someone's patriotic duty to stake? - Or is ETH staking just another yield-farm? - How does the role of feeling politically aligned play in Staking ETH? Finally, we turn to the Bull Case for Ethereum - What is Eric's perceived 'win-condition' for Ethereum? Tune into the video! https://youtu.be/BtPOpRzx6NQ ------ Don't stop at the video! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit the official Bankless website for resources http://banklesshq.com/ Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState Follow DeFi Dad on Twitter https://twitter.com/DeFi_Dad ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

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

• 0:00David Hoffman?

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• 2:10David Hoffman?

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• 4:20David Hoffman?

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• 6:30David Hoffman?

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• 8:40David Hoffman?

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• 11:46David Hoffman?

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• 12:28David Hoffman?

  Zerion also makes it super easy to access interest in DeFi using applications like Compound and Aave in the background. And you can also exchange your assets using the Zerion app, using an exchange aggregator in the background to make sure that you always get the best rates. You can even use the Zerion mobile wallet to add your MetaMask or Argent or another Ethereum address right into your mobile wallet, so you can see your portfolio and engage in DeFi on the go. Here I just loaded up my Argent wallet and now I'm going to load up my MetaMask as well. And Zerion will do the same. Thing. It will add all of my assets and wallets together all in one space and give me a portfolio summary of what's going on.

• 13:06David Hoffman?

  Adding wallets is trivially easy. If you already have a MetaMask, you can get it right into the Xerion app and it can sync with your desktop app as well. And the best part is you can also buy Ether right into the app itself. Use the Invest tab to look at all the things that you have invested in as well as other opportunities. And coming soon to the Xerion app is the ability to buy and sell your assets straight from your mobile device as well. So download the app. It works on iOS and Android. Go to xerion.io, plug in your wallets and get a historical report of your portfolio over time, as well as a comprehensive breakdown of all the assets that you own and how much yield they're generating for you.

• 13:46David Hoffman?

  We're also brought to you by Monolith. Monolith is your cool new DeFi account, your DeFi savings account, your DeFi checking account. Except the cool thing about the Monolith DeFi account is that it gets software updates, right? You actually get to increase the usefulness of this over time. So here are some of the features. Monolith is a smart contract wallet with a lot of the features that you would expect if you've come to know DeFi and what it is. You can, you can add money to it. You can put that money to work in Compound and accessing yield. But you can, and you can also swap through Uniswap. What was cool with Monolith is that they will send you a very sexy Monolith Visa card that connects to your Monolith smart contract wallet on Ethereum.

• 14:28David Hoffman?

  So it's a really awesome tool to live a bankless life with a savings account that gets software updates. So this is something that you're never going to find out in the real world, but you can still do real world things with, you know, real money and like buy your groceries. So that's just fantastic. Coming soon to Monolith, actually already here to Monolith is now you can buy, die and get it sent to your wallet directly, right? So it's also being an on-ramp. So you don't have to go through your centralized exchange like Coinbase or Gemini or wherever. You can just go straight from your bank account, right into your Monolith checking account, smart contract wallet. So check them out at monolith.xyz.

• 15:09Ryan Sean Adams?

  Bankless Nation, welcome to another episode of State of the Nation. This is where we go through what's happening for the week. We try to summarize it for you and talk about the most important things. We have a special guest today who is recently back from his Twitter hiatus. That's Eric Conner. Super excited to talk to him today, David. It is war effort week, my friend. So what does that mean? Why are we bringing Eric Conner on? What are we going to talk about?

• 15:34David Hoffman?

  Yeah, we are bringing Eric Conner on because Eric Conner has been in the Ethereum community since day one. I kind of have given him this label, which I don't know if he accepts or not. So we're going to ask him. The Ethereum's unofficial community manager. He's the guy, to me, he's the guy that like kept the campfire lit during the darkest of nights during the 2018 and 2019 bear market. He was the guy that kept us focused, that kept on beating the same drum about like, what were we here to do? Like, what is Ethereum here to do? And regardless of the price action, the same message came out of Eric Conner's Twitter the whole way through. And so I think that's a really valuable add to the ecosystem. And I kind of want to get Eric's take on how the community has progressed and developed.

• 16:17David Hoffman?

  And now that staking is here, what that means for Ethereum and its community? Because you, me and you, Ryan, we definitely have our takes as to what staking means when it comes to the relationship between people and code. And I want to get Eric's take on that as well.

• 16:32Ryan Sean Adams?

  All right. So what happens when you get three Ether megabulls together for a conversation? We are about to have, we're about to find out. So if you're new to State of the Nation, this comes live to you on YouTube every Tuesday at about 2:00 PM Eastern, a little bit after sometimes. We try to do 2:00 PM. And then it's also released on the podcast. You can catch it in audio form as well. As David mentioned, today, we're talking about staking, the war effort, Ether's community and culture. And also, before we get into this, Dave, we should talk about some things that are happening in the Bankless Nation itself. So we had Michael Sonnenschein on from Grayscale, which is not a 100% bankless product, but

• 17:13Ryan Sean Adams?

  it is bringing billions of dollars right now into crypto, into both Ether, the asset, and into Bitcoin. That was a pretty hot interview that dropped on Monday. What were some of your takeaways?

• 17:26David Hoffman?

  Yeah, absolutely. The grayscale, the whole institution of grayscale is what we call like the bridge to crypto, right? It is how value gets onboarded into the crypto world.

• 17:39David Hoffman?

  And so the grayscale is just acting as the the bridge onto the arc, right? We are building the system to get everyone onboarded. And so that was pretty valuable. And in getting grayscale, like the take of what grayscale is for retail, and how it is serving the needs of the industry was really valuable to me.

• 17:57Ryan Sean Adams?

  We are also having Bilaji on. I think we're recording tomorrow, David. I am locked and loaded for that conversation. Lots of cool things, including, I think, some announcements, maybe from Bilaji. The theme is going to be, of course, crypto, DeFi, but also this idea that we've been playing with so long is digital nations and how crypto empowers that. So do not miss that episode coming out next Monday. I can't tell you what's going to be in it because we don't know yet. We haven't recorded it. But I know it's going to be hot. I know it's going to be a good one. Also, David, we've got our mega meme post coming out tomorrow. We issued a call to action around ETH staking to join the war effort on Monday, and Wednesday is going to be a continuation of that. We're

• 18:41Ryan Sean Adams?

  dropping some propaganda. We're dropping some memes. David, while you're talking about this post, should I give a quick tease?

• 18:46David Hoffman?

  Yeah, you got it ready? Do it. Absolutely.

• 18:50Ryan Sean Adams?

  I'm gonna do some tease. You set us up the what is this conversation? What is the post going to be about?

• 18:54David Hoffman?

  Yeah, so this is a concept I've been chewing on a lot. And it's another topic that I want to get into it with Eric here in a second. But it's the relationship between the values of the blockchain and the community that it garners around it, right? And so each, there are values baked into each and every blockchain protocol that we know of. Like for the, there are values in a 21 million proof of work hard cap currency that attracts a certain cohort of people, right? There are also values in maximally lowering the barrier to entry for blockchain validation. And that is what Ethereum strives for. And so I want to, I, I use a thought, I use this article to peel back the layers on that and trying to understand. How these values of Ethereum impact the

• 19:38David Hoffman?

  community that it generates around it, right? And it all comes back to the ability to stake your Ether. And that's the call to action that we're going with in this, in the article. There's a bunch of these graphics and gifs that we're going to just dump all at once to be spread and shared amongst the community, kind of as like a community rallying cry, like a community totem to share and just, you know, have a shared narrative that we all believe in. And, you know, pictures are worth a thousand words. So we made a bunch of these graphics. So we're going to dump them all out on the Bankless newsletter tomorrow.

• 20:07Ryan Sean Adams?

  This is one that's coming out tomorrow as well. I think there's going to be like half a dozen of these. I want you, Captain America, to buy ETH bonds now. It fits with that whole Ether as an Internet bond theme that we've been talking about for so long and the Digital Nation theme. So on Monday, we ask you to stake your ETH. And I think tomorrow, we're going to ask you to meme your stake, right? We want to spread these memes far and wide as well to get the community fired up for staking. David, I think that's, that's what's going on right now. Should we, should we get to the question I ask you always?

• 20:40David Hoffman?

  I'm ready for it.

• 20:41Ryan Sean Adams?

  I'm just going to do that. All right. What is the state of the nation right now, my friend?

• 20:45David Hoffman?

  The state of the nation is crescendoing. We are crescendoing and you can see that, like all states of the nations that we come up with, there's so many different ways to see it, it playing out. You can see it in the crypto price actions in the crypto markets. The price charts are just painting a big fat crescendo. Nick Carter recently tweeted out about when Bitcoin was like 14K or 15K, that this was the quietest bull market ever. Now Bitcoin is at like 18K ish and we see it on CNBC. And so we're starting to see the trend, like Maisy Williams, Aria Stark tweeted out about Bitcoin the other day. We're starting to see like the bubbling in.

• 21:22Ryan Sean Adams?

  She's cool again now, after that disaster of a season. She's cool. Okay.

• 21:25David Hoffman?

  Meanwhile, we're watching the green bar of the ETH deposited into this deposit contract, moving faster and faster towards the finish line. There's a lot of things that just feel like crescendoing and I can't wait for that, that gong to hit at the very end when there's the big bang. And so that's something that I'm looking forward to. And that is what the state of the nation is.

• 21:43Ryan Sean Adams?

  Cruxenewing up and you mentioned Nick Carter. David, is Nick Carter your favorite Bitcoiner? Be honest.

• 21:49David Hoffman?

  Yeah, he's my favorite Bitcoiner because if you ask him, "Am I a Bitcoiner?" He makes you define your terms first and rather than just puts on like the Bitcoiner caps and says, "Yeah, I'm a Bitcoiner."

• 21:57Ryan Sean Adams?

  You know how I know too is because we've invited him on the show so many times and we're actually going to have him on the show on Tuesday next to the nation to talk about Bitcoin and price and all the cool things going on from an adoption perspective there. But today's show is not about Bitcoin. It is about Ether. It is about rallying the troops. So we have Eric Conner, who I'm sure you guys know if you've been in the bankless community long enough, if you've been in the Ethereum community. He is the co-host of the ETH Hub podcast. He was formerly product at Gnosis. He is, as David said, I don't know if he'll accept this title, but we think of as Ethereum's unofficial

• 22:36Ryan Sean Adams?

  community manager. Eric, thank you for joining us back from your Twitter hiatus just in time for the launch of the ETH2 network. How's it going, man?

• 22:47Speaker 02

  Hey, hey, hey.

• 22:51Speaker 02

  It's going good, guys. How's it going? I think this is my, I know this is my first bankless appearance, which seems strange given how many episodes have been put out between, you know, the two of, all three of us, but I'm very excited to be here.

• 23:04Ryan Sean Adams?

  Yeah, absolutely. I think we were afraid to put too many ETH bulls on one show because like, I mean, who knows?

• 23:10Speaker 02

  It is, yeah.

• 23:10Ryan Sean Adams?

  Yeah, it is dangerous.

• 23:11David Hoffman?

  We were saving it for now.

• 23:13Ryan Sean Adams?

  We're saving it for such a moment as this. All right. So, you know, first question, Eric, what do you think of that David's title he's given you, Ethereum's unofficial community manager? I feel like you, like much like David and myself, kind of like don't really have a traditional job, like you don't work for a company, but like you almost work for the protocol or like a set of protocols. What do you, what do you think of that, that, that title? Do you accept?

• 23:39Speaker 02

  Yeah, I guess, yeah, I'll accept it. I think it's a title I couldn't give myself, right? It has to come from other people. And I think there's multiple unofficial community managers, right? But yeah, I definitely agree. What's funny about that is it's also a niche I never thought or expected I would fall into, right? It just kind of like happened. Like, my background's in finance, and I found Ethereum. I was interested in building DEXs. That's how I got initially interested in Ethereum. And then, like, all of a sudden, I saw this, you know, I've been in it kind of since the beginning, and I saw this wave of euphoria through the first bull market. And Ethereum didn't have a bear market, right, until 2018. So, we went like years without having

• 24:21Speaker 02

  a real bear market. We had the DAO hack and like the DDoS attacks, and it went from like 20 to 6 or whatever. But we never had like a prolonged bear market. And you saw this like euphoria fade, and the community like kind of go into shambles, and people disappear. Just like price went down 90%. It felt like the community shrunk 90%. And then there was just this like relentless fud from other communities and whatnot about ETH and Ethereum. And then, yeah, just kind of like fell into this odd niche I never thought I would around like education and rallying the community and stuff. So, yeah, I'll accept it. But I will say, I think there's, there's multiple of us out there. I think you guys are included in that as well. And yeah, no one's like paying us per se to do this, but I think we all share a similar passion.

• 25:05Ryan Sean Adams?

  You know what? I never expected to be doing Bankless and like what I'm doing today. I think probably David feels kind of the same. But like your story, your and Anthony's story around ETHub is, I think, similar to the story of Bankless. It's just like, started Bankless because I was pissed off, to be honest. Like, I was mad that all of this amazing stuff was going on in Ethereum, in this whole side of crypto. And I saw that Ethereum was not going away. It was actually getting stronger. And like, no one was talking about it. But I felt like the roots of this movement and the value system of this movement, I most resonated.

• 25:48Ryan Sean Adams?

  With was alive and well in the Ethereum community. And, you know, I just wanted to like, start that down that path, right? And I think that's why, you know, David's doing this too. But, but is that why you kind of fell into it? It's basically like, no one was, no one was doing it. You just, you just found a gap that you could fill and you stepped up and you made things happen.

• 26:10Speaker 02

  Yeah, you know, it's interesting, right? Like, if you've thought of Ethereum as like a company, there would be PR teams, there would be marketing teams. That doesn't exist for Ethereum, right? And Ethereum started very dev and tech heavy. And honestly, like, the first few years were a little weird. Like, I don't have a dev background. It was not hostile, but weird to be like a financial background that didn't know how to code in this space.

• 26:33Ryan Sean Adams?

  Yeah.

• 26:34Speaker 02

  So it took a while for people that weren't, didn't have a dev background to kind of find their spot in the community, right? Beyond just being an investor or, you know, using the network or whatever. So normally, if Ethereum was a company, they would have people kind of backing them up, fighting off misinformation, marketing. And that just didn't exist. And it felt like a pretty easy hole to fill, right? And it definitely comes out of these wars between different chains. Like, at the time, it was Bitcoin and ETH. Now I kind of see ETH as fighting off, quote unquote, Ethereum killers or what, attempted murderers, as I call them. But at the time, it was a lot of misinformation between Bitcoin and Ethereum community, which has slowed down a little bit now. But yeah, there was just no one doing it.

• 27:15Speaker 02

  And if you're passionate about something and you see it being attacked, especially with a lot of misinformation, right? Your natural instinct is to kind of want to defend that. And at the same time, no one was really doing like education, right? And I consider like ETHub and the documentation and all the podcasts we do and what you guys are doing, Bankless, that's education. But at the end of the day, it's really like fighting misinformation, right? Which could also be grouped into marketing and all this stuff. And I'm glad this side of the community's been built out. And one of the Coolest things I've seen over the last few years in Ethereum community is the shift from just a dev-heavy focus to appreciating people with a bunch of different backgrounds. Investors, educators, you know, people with marketing expertise, operations expertise,

• 28:00Speaker 02

  product management, project management, whatever it is, right? I think that's helped us mature as, you know, a protocol in a space.

• 28:06Ryan Sean Adams?

  I feel like, like Eric, that one thing is that, I mean, Ethereum used to be primarily dev-focused, right? In terms of like attention, like technology. And you were one of the first people that I saw in the space, talking about monetary policy and issuance policy. And I found like that so refreshing because I couldn't get my head wrapped around just the pure tech focus in Ethereum's culture. Like tech is important, but at the end of the day, what we're building is a social movement. What we're building is not just a computer or a database, but an economic computer, an economic database. And there was like this complete lack of discussion around the economics of the thing.

• 28:49Ryan Sean Adams?

  Like I remember you were one of the first people to actually like map out Ether's issuance policy long-term, like taking into account things like ETH too. So, you know, that, that is so important. And the Bitcoin community's had this down for like years. In fact, like their technology is stagnated, but I would argue their, their social movement and like their writing, talking about Bitcoin is that, the narrative layer. Yeah, exactly, David. That's really been thriving over the past five years while technology's been dormant. So I'm glad you stepped up to the plate, man. It's super useful. Now, we've never had that going into a bull run, right?

• 29:34Ryan Sean Adams?

  Like Ethereum has not had a strong narrative layer, and now I feel like we do. And I wonder where that's going to take us.

• 29:41Speaker 02

  Yeah, absolutely. It's interesting looking back, right? Like, early 2014, 2015 Ethereum community was, hey, it was basically, we know and we want to do more than what Bitcoin is willing to do. And Bitcoin had cemented into their narrative, but they weren't going to like really expand beyond that, right? So there was this group of people that said, hey, we want to do more. And it took a while to decide, A, what that is, right? We started like World Computer, which I still hate that. I know some people still like it, but it's too broad, right? For me, it was always DeFi that attracted me. And I'll fight to the end of the day, like, when I first read the white paper for Ethereum, I saw and thought of DeFi, right? And so we went into this like weird World Computer narrative.

• 30:24David Hoffman?

  We're going to decentralize Facebook, kind of thing?

• 30:26Speaker 02

  Yeah, exactly. Which I just don't personally see happening. Maybe someday, once we get scaling and all that. But, you know, the community was just kind of messy and no one was talking about the monetary policy. And I just got to thinking, like, okay, everyone wants to work on this, be funded to work on it. We need to make sure there's a monetary premium so that the underlying asset goes up, right? And or at least tries to go up or has a good narrative for going up. Because we all want to kind of work on this and, you know, developers want to get paid to work on it. And we can't just have a willy nilly monetary policy. And really, the only thing was like, there's a blog post from Joe Lubin in like 2014, that there's just like a graph of ETH issuance,

• 31:08Speaker 02

  where if it's five ETH per block, what does it look like? And no one was talking about, okay, how much do miners really have to be paid? Let's look at the fee side of things as well, which, you know, 1559 is a part of now. But yeah, it was interesting that no one really thought about that for the first two or three years. But I think it also proves just how early we are in this stuff.

• 31:27David Hoffman?

  The monetary policy is a fascinating conversation. And like Ryan said, it's because of what you've done at ETH Hub that it got pushed into the forefront. And I want to return there. But first, I kind of want to talk about what the Ethereum community was kind of like at Genesis, right? At 2015, 2016, before we kind of really figured it out, right? And I remember a tweet from you, Eric, that came out a while ago.

• 31:51David Hoffman?

  Or some messaging in some capacity that was along the lines of like the 2018, 2019 bear market was the time where the Ethereum community, the users and the investors and the builders all kind of came together, right? These used to be separate groups and now they are kind of having one, they're moving as one unit. Can you kind of talk about what was, what was it like before that transition? What was it like after that transition? And why is that, why is getting everyone on the same page important at all?

• 32:18Speaker 02

  Yeah, so I think early on it was all these grand ideas with no idea how to really execute them, right? So I'll take, like, I was thinking about building EtherX, which was a first stab at like a decentralized exchange. And we had this great idea, but like the tech was nowhere close. We didn't know how we were going to do the incentive side of things. Were we going to do a token? Were we going to take fees? And so you kind of saw these like huge ideas, but you already saw this fracture in the community. So first of all, it was all on Reddit, right? Like, there was no Ethereum Twitter at all. So it was all on Reddit. At the time, it was ETH Trader and our Ethereum. So you already had this split of investors and the tech side, right? And the devs. And I remember, and it still is kind of like this, but all price talk is banned on our Ethereum, right?

• 33:01Speaker 02

  And I'm thinking like, all these people on our Ethereum are talking about building these great ideas. They want users, they want to make a lifestyle of this, but they're not even considering price or investors, right? You need people to invest in this thing for it to be sustainable long term.

• 33:15David Hoffman?

  And in fact, like, it's core to the economic security, the security model of the entire system. Like, the price of ETH matters for security reasons, to prevent double spends, to prevent attacks.

• 33:28Speaker 02

  And it's still almost to this day, I think as a community, we're getting better. I still kind of see a neglect to this today, but it was totally separated in the back. Kind of like, why do we care about price? Let's put this to the side. So I think what we, so also it was very just dev focused where there wasn't really, you know, developers did build this protocol. They helped more than anybody kind of get us to where we are today. But I think what the community realized after the ICOs in 17 are, hey, we also need like product people. We need operations people, marketing. People to actually build products that people want like we can just think of these products and build them for ourselves.

• 34:08Speaker 02

  But do people actually want to use them? Right? And so I think what we've learned through the bear is, hey, this is a community effort. Like, we need expertise. Like, it's not like abnormal that the rest of the world works in groups of expertise. We should probably follow a similar suit.

• 34:24Ryan Sean Adams?

  Yeah, totally.

• 34:25David Hoffman?

  And how would you characterize the community now? Like, what problems have we really solved that we kind of figured out?

• 34:32Speaker 02

  Yeah, no, I mean, I think Ryan just kind of hit it on the head is I think we've come to realize the importance of the monetary policy and securing the network. I think that's been the biggest breakthrough we've had. We've gone from five ETH per block to two and the network's still secure. I mean, obviously, when ETH price went from $1 to 1400, we should be thinking about changing issuance, right? We don't need to be paying miners, you know, 50 times more than they deserve to make. And so I think we've realized that investors are important, developers are important, all these different groups are important. And I don't think I don't see that split anymore. I think most debates we see, every side is considered anymore.

• 35:13Speaker 02

  And I think we even see that on the E2 launch, there's been a lot of, you know, it's very tech heavy, but we've also seen a lot of discussion about what the issuance should look like. What does the rewards curve look like? How much ETH do we need stake to get there? You know, how is the merge going to look? So we're considering all these different aspects and, you know, it doesn't surprise me. It's taking years and it's going to take more because it's just a more complex system than a Bitcoin, right? Bitcoin kind of just has to focus on the monetary policy and the simplicity. And when you start adding all these other variables, it takes time, especially in a decentralized community, right? It takes time to figure this stuff out.

• 35:50David Hoffman?

  And then how about the community's relationship with staking? Because staking has been in the ethos or the commitments of Ethereum since day one. But what the community has perceived staking to be has changed. Like, once upon a time, you used to need 1500 Ether to stake, right? That used to be the number and before it got lower down to 32 and there were different attitudes.

• 36:11Ryan Sean Adams?

  My God, I almost forgot about that, by the way, dude.

• 36:13David Hoffman?

  Really high number, right?

• 36:14Ryan Sean Adams?

  Do you remember that?

• 36:15David Hoffman?

  Yeah, it's like, oh, I guess I'm only ever using staking pools. Like, damn.

• 36:21David Hoffman?

  So Eric, like, how has like the the community changed or understood staking to be whatever it is? Like, has that changed over time?

• 36:29Speaker 02

  You know, I think the social contract has always been there. It's funny to me still when I see people like concerned about miners POW at this point on Ethereum, because like it's not even, it's never been part of the social contract. We've always known that we're going to proof of stake. I, you know, I get some heat for this. I don't know why we even consider the feelings of miners at this point. It's just not in my interest. They're being kind of weighted out and that's been part of the social contract. So, you know, I think that's always been there. Um, but yeah, you know, it shifted a lot. One of the more painful moments was, I think, like early 2018, when like the proof of stake roadmap as was, was completely scrapped and kind of rebuilt into what we're getting now, which is the beacon chain and the different phases we're seeing.

• 37:11Speaker 02

  You know, that was definitely a painful moment as an E's investor, because we've been waiting, you know, four, five, six years now for this to happen. At the end of the day, it paid off, right? And I talked to you guys all the time offline about this, but this is a long game and it always fascinates me how short-term people think, even though they know it's a long game. This is a multi-decade game, right? And I, I, I feel like I have hands of diamonds at this point, holding onto my bags, because I feel like some people flip-flop back and forth every week. So, you know, we're getting there. I think we're weeks away from Genesis block launch and huge props to everybody that's been building that. But yeah, seeing the shifts is interesting. And you know, you mentioned the 1500 to 32 each change. Like, it's amazing what changes with price, right?

• 37:54Speaker 02

  Like, price goes from one to 1400, you start rethinking your issuance policy. You start rethinking how much you need to stake. You know, and it changes rewards too. Like, staking rewards are way different at a ETH price of 100 versus 10K, right? So, all of these things need to be considered and all, all change. Even Bitcoin, in a way, I know they're not going to, but price determines everything as far as security of the chain, how much you need to stake and all of that.

• 38:22David Hoffman?

  Was there ever a moment in Ethereum's history where you were like, "Fuck, what if we never get to ETH 2?"

• 38:29Speaker 02

  Um, I don't know if I ever thought we might not get to ETH two. There were definitely some, I would say the hardest as like a long-term investor at this point was like after the Dow, just in general sentiment about ETH. Because you had like, you had just gone through this huge rally from three bucks to 24. Everyone was hyped, but like on the other side, you know, Bitcoiners and people and other coins were saying, hey, smart contracts will never be secure. This stuff's impossible. You guys are crazy. Next day, the Dow gets hacked and you're kind of like, okay, you know, you have that doubt in the back of your mind. Like this was our first experiment. It got hacked.

• 39:09Speaker 02

  So I don't think I've ever had a moment where I didn't think E2 was going to happen, but there's been a couple of days, especially like after the Dow where you're, you're questioning your sanity on the overall vision, right? But I, I think DeFi is totally stomped out any of those, you know, we can't trust any smart contract fears at this point.

• 39:28Ryan Sean Adams?

  Yeah, I, uh, we, Dave and I commented recently that just like the success of Uniswap alone. Okay. So like 24 months from zero to over four billion in weekly volume, right? And you're telling me smart contracts don't work and DeFi is not going to, I, here, here, here's a system made by one guy with a less than a hundred thousand dollar grant, his first development project, and within two years, he's doing more volume than Coinbase, right? Like, sorry, guys, like DeFi works, smart contracts work and like we have data. We had a belief back in 2017 about DeFi, but now we have actual data and use cases and like we see the success.

• 40:10Ryan Sean Adams?

  And I'm almost surprised, Eric, that, um, this doesn't have mainstream attention. Like, so it's funny to me because, um, I see even at the start of the cycle and we are in a bull market. By the way, I love the seasons of crypto. Right? That's maybe why like I love Southern California, perfect weather all year round, right? But I live on the East Coast and it's nice to have the seasons and we get these seasons in crypto where we get the bull season, we get the bear season. And I enjoy the bear season, to be honest, because there's builders, there's narratives.

• 40:38Speaker 02

  Like it's friends.

• 40:39Ryan Sean Adams?

  The tourists are all gone. There's friends. You forged like the real community in the bear market. But now we're shifting to summertime again, right? It feels good. I like that transition too. I'm excited for, for, for the bull market. But like, uh, what, what's it going to take? Because I feel like at the start of this bull market, Bitcoin is going to have the narrative for a little bit, right? But like, what's happening with DeFi is so incredible right now. You did the Uniswap story alone and no one's really telling it. What, what is this going to take to go to get into the mainstream narrative where we start seeing this thing on CNBC? And is that going to happen in this bull cycle?

• 41:19Speaker 02

  Yeah, it's amazing how fast people just like shift, right? Like a year ago, it was, hey, Ethereum has no users. Now it's like, okay, well, we're doing billions in volume a day on DeFi. There's billions locked to DeFi. Now everyone just like shifts the goalposts constantly, right? And I think, you know, how I see this playing out is Bitcoin probably going for all time high and breaking it. But you know, the Bitcoin narrative to me is boring. You look at Twitter right now and it's literally just, hey, number went up. Number went up more than two years ago. Hey, look, how many days has number been this high? And it's like, okay, that's great.

• 41:54Ryan Sean Adams?

  Are you stark, are you stark talking about Bitcoin is not like?

• 41:57Speaker 02

  Exactly. It's not really development. Yeah, exactly. So I think, you know, that attracts mainstream media potential. The big difference this time for ETH is going to be that we have something tangible to use. There was a lot of promises last time, you know, CryptoKitties was kind of the thing people caught on to. I think people investing now after, you know, say Bitcoin breaks all time high and, and kind of gets this mainstream media attention. Retail investors start looking for alternatives. Now they hop into Ethereum, they say, oh, wow. Okay. They're, they've built stuff, you know, I, I would argue the UX of DeFi is better than traditional finance now. So hopefully gas fees aren't too crazy as people are kind of running into this stuff.

• 42:38Speaker 02

  And they're going to be kind of blown away, I think, you know, of course, it's still going to be a small subset. Like I said, I still think this is a multi-decade play, not like a multi-month play. But people are going to Realize the power of an alternative financial system and start to play with it and tinker with it. And you're going to capture some people. And I think a Uniswap and AMM is very unique to DeFi. I think it's one of the products that traditional finance is going to be a bit blown away by. Hey, you can just have this like pool liquidity and all this stuff. And that's a unique product offering when it comes to, you know, DeFi versus traditional finance.

• 43:13Ryan Sean Adams?

  Dude, just real, like real quick, like, yeah, your point about UX. Right after this, I actually have to go to my local bank and I have to appear in person to like send a wire transfer. Right. And I have to present my card and I have to fill out like actual physical paperwork and be there and say, hi, my name is Ryan. And I just want to transfer the money that supposedly I own to somewhere else, but I have to ask your permission. Pretty please do it. And by the way, you're going to charge me like 30 bucks for doing that. It sucks.

• 43:42David Hoffman?

  And also you're going to be wearing a Bankler shirt while you do it too.

• 43:45Ryan Sean Adams?

  Yes.

• 43:47Speaker 02

  I, I got an email from my, I, I've gone all DeFi basically, and I got it. So my savings account is pretty much moved on to DeFi just because of the yields over there. And I got an email from my bank two weeks ago and said, hey, your balance is too low now in your bank account. We're going to start charging you.

• 44:04Ryan Sean Adams?

  Please come back, Eric. We'll charge you money until you come back.

• 44:08David Hoffman?

  I think one of the things that makes me so incredibly bullish and, and Uniswap is involved in this conversation. And Maker is involved in this conversation is back in 2017, 2018, we had nothing sticky on Ethereum. Like ICOs were fleeting, right? Like you come in, you put your token, you put your money into the ICO, you get your token. You hope the token pumps. If it doesn't, like you're out. But then we had Maker come in, in the December 2017 and Maker was a place for value and capital, capital to be sticky. Right? Like you could put your capital in Maker and leave it there. You could leave it there and it would do stuff. And same thing with Uniswap. And, and one thing that makes me particularly bullish about this cycle is how many more sticky things we have this, this cycle than, than we did last time.

• 44:52David Hoffman?

  Like you, we have reasons and incentives for you to come and also stay. And we've never had that before. So I'm really excited to see what happens in this bull cycle. When people find that there's actually, you know, a, a land out here that people have settled on. And there's actually like a sustainable way to live a life out here.

• 45:13Speaker 02

  Yeah, no, absolutely. I mean, and the, you know, the amount of liquidity out there now and kind of the composability between all these apps. I, I think to me, what's going to capture mainstream the most is the ease of moving these funds around, right? Okay, you say you open a high-yield savings account, the next week, the bank cuts it from 1% to 0.75%. You want to transfer that out, probably requires an in-person thing, it requires multiple days. That, that doesn't exist, right? I, I hop my yield farms around in 15 seconds and I, there's no monopoly. No one has like a say on what I can do as far as hopping my, or moving my money around. And I think that's going to resonate with people and just the ease of how easily you can trade in and out of things.

• 45:55Speaker 02

  And I think that's going to be what captures people the most, just that, you know, it, it seems like a 10x improvement to the traditional finance system.

• 46:04David Hoffman?

  Absolutely. Okay. So Eric, now that staking is quote unquote here, like knock on wood, it's like seven days away. Um, and like we've made it, right? Like with the staking, we can basically see staking, which is like right there. Um, how does that make you feel as somebody who's been here around since day one, where we committed to staking? And we kind of thought that was going to be here a lot sooner, but now it is actually here. Like, how, how does that make you feel, um, now that it's actually arrived?

• 46:27Speaker 02

  Yeah, it's great. I mean, I think what I'm most impressed by, and I think people underestimate this, is how hard it is to coordinate this effort. It's not necessarily like the tech that was built and like what, what's out there smart contract wise and how the beacon chain works. It's coordinating people across the globe to build this and getting, you know, agreement from the users of the network of, hey, this is what we should build. I think we're even seeing this in like smaller DeFi projects, how hard, how hard governance is, how hard decentralized governance is. And we're getting buy-in from the community of, hey, this is the path. And I think E2 struck this perfect line that I liked early on in Ethereum, ETH1 of

• 47:09Speaker 02

  A bit centralized, you've got a couple like central players that really know what they're doing, but also like there's a couple of other teams out there and you're getting buy-in from the community. It's just like pseudo decentralized governance that I think protocols need early on. I don't think, I'm scared of just going 100% hands-off decentralized start. So I'm impressed that the E2 team, teams that are building this were able to pull it off first and foremost, because it's not easy, right? And you know, a lot of people have made the analogy of what if like Apple was building the iPhone in public, right? On like GitHub and they were asking for input of across the nation and stuff like, it would be a disaster. It would take years. And so stuff like this is just going to take time. You know, it's cool. I'm still cautiously optimistic

• 47:53Speaker 02

  myself about staking. I put out a tweet a few, couple of days ago, hey, just for now, treat this as another yield farm, in my opinion. Don't like ape in 100% of your ETH, because there's a, there's a lot of opportunity costs there. Your liquidity is locked up. It's new code. Who knows how long it's going to take until, you know, phase one comes in, you can move stuff around. But, you know, I'm excited. It's a, the day that Genesis block goes live, I mean, it's a, it's one of the biggest steps for Ethereum since the original ETH1 Genesis block.

• 48:23David Hoffman?

  Yeah. So even though there's three ETH Maxies on this live stream, there's definitely some diversity.

• 48:27Speaker 02

  I'm not an ETH Maxie, David.

• 48:29David Hoffman?

  Okay. That's what, that's what you say.

• 48:31Speaker 02

  David, I thought you were a Bitcoin Maxie.

• 48:33David Hoffman?

  Yeah, closeted, apparently, allegedly. But there is some diversity of opinion. I guess there is a diversity of opinion here, but Eric, what you just said is that, you know, treat staking as another yield farm, right? But me and Ryan are hammering this drum as like, it's your patriotic duty to stake. Like, this is a political statement. And so I kind of want to get into that topic. But before we get there, we have to take a quick break to talk about some of these fantastic sponsors that make this show possible.

• 49:00David Hoffman?

  If you want to live a bankless life, you need to get a hardware wallet. There is no alternative for storing your crypto in a self-sovereign fashion. That's why I have four ledgers that I use to manage my different crypto assets using the Ledger Live account as well. Ledger Live is like your home base for managing. Managing your Ethereum, DeFi, and crypto accounts. It does a really good job of aggregating all of your different Ethereum wallets if you are the type of person that uses more than one. But you can also add other cryptocurrencies like Bitcoin, or Cosmos, or whatever your preferred blockchain is. And then it will display an aggregate portfolio of all your accounts at the main page.

• 49:39David Hoffman?

  One thing that Ledger is doing a really good job of is enabling all the money verbs that me and Ryan talk about with the Bankless Skill Cube enabled in the Ledger Live app. So right now in the Ledger Live app, you can buy, sell, lend, swap, and stake your crypto assets, which is doing a really good job of fulfilling all of the money verbs in the Bankless Skill Cube. Something that's new to Ledger Live is Ledger Swap, where you can swap assets one for another directly inside the Ledger Live application, ensuring trustlessness in your financial activity on Ethereum and on Bitcoin. If you want to learn more about what you can do with a Ledger, go to the blog post "The Power of Ledger Live" on the Ledger website, where they share some of the more advanced things that you can do with your Ledger that you might not have known about.

• 50:23David Hoffman?

  There's a link in the show notes that will take you to the Ledger shop where you can get your preferred Ledger hardware wallets. I personally like the Ledger Nano X, but I also have both. They're both great options. When you own a Ledger, you own your own assets in the way that they have been designed to be held by the user and the user alone. So go get your Ledger today to make sure that you are as self-sovereign as possible. The Bankless State of the Nations are brought to you by Wyarn. Wyarn is DeFi's first self-building, community-run project, which I just get really, really excited about. Wyarn is a system that seeks out yield in DeFi, and it does that in a number of different ways. A very aggressive way is with the vaults, where you can deposit your preferred asset of choice,

• 51:08David Hoffman?

  and different DeFi experts will come in and generate a strategy for what to do with your deposited token, right? And so it'll go find ways to get yield in that deposited token in DeFi. For those who want to just earn yield on their stablecoins, the Earn system is for you, where you can deposit your preferred stablecoin, and Wyarn will go and figure out. out which money market on DeFi and DeFi is producing the best interest rate, whether it's DY, DX, it's Compound or AVE. It looks around DeFi to see where the yield is coming from and it directs stablecoins automatically. So you don't have to check them out at whyearn.finance to get started. And also check out the stats page to see what other people are doing as well.

• 51:50David Hoffman?

  All right, guys, we are back with Eric Conner and we left the conversation off with the difference of opinion as to whether it is your patriotic duty to stake or whether you should just treat staking as another yield farm. And so the Bankless community probably already understands what Ryan and my opinions are with staking. But Eric is offering an alternative view where you kind of just treat it as like a profit maximalist. You just try to treat it as a yield farm. Eric, you want to elaborate on that, on that take?

• 52:18Speaker 02

  Yeah, so I don't think altruism really exists when it comes to this stuff, or I don't think it should, right? And I think I would be a bit of a hypocrite. I've been calling out Bitcoin for their monetary policy not being sustainable. Once the cap's hit and the argument I hear back a lot is not a lot, but like one of the arguments back is miners will be a bit altruistic. And I don't agree with that. I think incentives run this world, this crypto world that we're in. And I think if we're not seeing enough stakes, it's because we got the incentives wrong. And I will say, I don't think the incentive curve has been revisited since the DeFi craze. And the reality is people are earning, maybe not on straight ETH staking,

• 53:01Speaker 02

  but you can put your ETH in Compound, draw stablecoins with a very safe liquidation price and net 10 to 15% on your, on your capital at that point. So I don't think the incentive curve was really thought about post DeFi yield farming era. And I think that's something as a community, we need to think about. You know, what is the ideal target for staking? I'm not really sure. It seems like the devs and researchers think it's around like 10 million long term, but you know, it's, it's kind of hard to say. I actually recently submitted an issue on the ETH2 GitHub today, the spec GitHub, that I think we should put a max date in and just kind of bypass this minimum threshold because it seems a bit arbitrary to me. But you know, I'm personally,

• 53:45Speaker 02

  Thinking about this is just another yield farm. I want to experiment a little. You know, it's complicated. Like, running this stuff isn't easy. You need to generate your own keys. You need to know what you're doing. You need to have uptime. So I want to give it a little bit of time and see. I'll run a validator too early just because I want to be a part of the Genesis block. But that's kind of where my head's at.

• 54:03Ryan Sean Adams?

  So Eric, in summary, you don't want to miss Genesis block. You're going to be there for sure. But you don't think that ETH to staking in general should rely on any form of altruism or any sort of like patriotic duty to the theory of nation? David, maybe I'll play the role of moderator a little bit here. So like, David, do you agree with Eric's take there? Or like, what's maybe a counter take to that?

• 54:30David Hoffman?

  Yeah, I 100% agree that you have to start with incentives. Like, this is a cryptoeconomic system. And so if you don't get the economics right, then you don't have the system. And so first and foremost, you don't, there's no such thing as a meme-secured blockchain, right? You are secured by just facts, by science, to whatever degree that you can be secured by that. And that means incentives, right? So, you know, show me the incentives and I'll show you the outcome. If you have incentives that secure blockchain, then we have a secure blockchain. However, once the incentives are placed, that is actually the substrate in which a political statement can emerge out of, right? That is where the meme comes from. Like, a lot of people will comment on like how Bitcoin is just a meme coin. But Bitcoin is a meme coin because they have everything else right.

• 55:15David Hoffman?

  Like, the meme is allowed to emerge out of that, out of that success. And if that success starts to falter, if the incentives start to become misaligned, then the meme pops. But the idea, the purpose is to grow like the social layer around staking. And so once we do have the staking correct, we get to rally the flag and say like, yo, we got staking nailed, like we got the incentives down. Now we get to generate like a social hype layer, the narrative layer around staking, saying like, it is your duty to stake. Because the ETH devs and ETH researchers figured out the right balance of incentives, we get to carry that banner. It's like, they figured it out. We have this perfect. Strictly secure blockchain, everyone should stake because it is because we figured it out.

• 56:00David Hoffman?

  And now that now that we figured it out, you know, you can access that upside, right? Like part of the ethos of Ethereum is to spread out decentralization to everyone and allow blockchain validation by everyone.

• 56:11Ryan Sean Adams?

  Would you say, would you say, David, that the part of the ethos in the Bitcoiner community is like, it is your duty as a Bitcoiner to hold?

• 56:18David Hoffman?

  Yes.

• 56:18Ryan Sean Adams?

  You hold.

• 56:19David Hoffman?

  That's why the 300 meme is so strong with Bitcoiners, right? They're always about like, you know, hold the line, don't sell, stack the sats, right? And I feel like an equivalent, uh, social layer for Ethereum could be about staking, right? Like you should stake.

• 56:33Ryan Sean Adams?

  But you did, you did say something that might get back to Eric's point about like, once, once it's right, once they get it right.

• 56:40David Hoffman?

  Yes.

• 56:40Ryan Sean Adams?

  And maybe that's a distinction, Eric, that that you're trying to make, or how would you respond to what David's saying there?

• 56:46Speaker 02

  Yeah, so I'll go back a little bit to like the social contract comment I made of, we've always expected this, right? But one of the aspects of the social, social contract, I don't think many of us thought about or expected was this unknown lockup period, right? So this throws a huge wrench into the incentives. So I, I agree with you, David, totally. Once, you know, the lockup's gone and we're kind of like ETH1's merged into ETH2 and staking is a little more vetted. At that point, I plan to stake all my ETH. This, this lockup, this unknown lockup is a wrench in the system, right? And I personally think that the incentives should probably be a little bit higher early on to incentivize people to take this potential opportunity cost loss. I mean, you're talking, put it this way, right?

• 57:28Speaker 02

  What if, this is not financial advice, ETH pumps from 480 to 5K while your ETH is locked up, right? Now, everyone knows when this ETH is gonna unlock someday. What if the market just goes through a full cycle and dumps back before you can unlock your ETH on staking? You lost out on a ton of money, right? Yeah, maybe you got your 15 to 20% yield, but the opportunity cost is just amazingly high. And I think that's why we've only seen 100K ETH staked there. That, you know, I'm not going to say that the financial incentives behind ETH2 were more neglected than they were on the initial ETH1. Cause I don't think they were, they were thought about, but I still don't think they were thought about enough. And I think as a community, we should start having this conversation and I think they should change every phase.

• 58:13Ryan Sean Adams?

  So before David replies to that, another, I guess, nuance, I want to get your take on, right? So you gave the example, Eric, of the opportunity cost of ETH going to, say, $500 or something per ETH. But I've also, 5,000, excuse me. Yeah, we'll be at 500 at the end of this episode, right?

• 58:30Speaker 02

  It's happening right now.

• 58:31Ryan Sean Adams?

  End of the stream. All right. So 5,000. So, but, but there are other opportunity costs I think I've heard you argue about, which is like on ETH1 right now, this wasn't the case in 2017, but on ETH1, you can do a hell of a lot with your ETH, right? Like there are yield farms, there are DeFi opportunities, there are ways to generate. Now, you have to take like risk into account here, but I guess my question is, do you think that DeFi opportunities on Ethereum are almost a little competitive with ETH staking, at least at this point?

• 59:07Speaker 02

  Yeah, I would say absolutely yes. And this is not something that was even considered, I would say, a year and a half, two years ago. So it needs to be taken into consideration. I mean, I'm, I'm currently yield farming, I have almost all of my ETH deployed in yield farms, earning on average about 15 to 18% even any given week on my capital. Why would I take that ETH and put it into ETH2, lock it up for a year and earn the same amount, right? So I think we need to just be like real about these conversations and understand what the competitive landscape looks like. And yeah, sure, DeFi yields have come down from 100% to 15, but I see them staying in the 10 to 15, 20% range for a while. And

• 59:51Speaker 02

  the real question is, what are, what is the sweet spot on ETH2 staking? I haven't really seen this answer, you know, is it 3 million? Is it 5 million? Is it 10 million? You know, what is that sweet spot? And then kind of like tune it around that point. And I think that that was attempted, but I don't think it was attempted considering DeFi. So, you know, are you going to lock up your ETH for 15% on DeFi? Are you going to lock it up for 15% in ETH2? People are going to answer that different ways, right? If you have more technical expertise, you're probably going to take the staking side, more financial back. Background, you're going to take the DeFi side. But this wasn't even in consideration, you know, when we were first talking about staking.

• 1:00:29Ryan Sean Adams?

  So David, what's your response to that? That Eric is describing a very like, like methodical investor type take on opportunity cost here. He almost sounds a little bit like more like a Raul Paul, right? When you had that conversation with Raul, it was like, yeah, but like, where's, what's my ROI? What's my yield for taking these sorts of risks? What's your response?

• 1:00:48David Hoffman?

  Yeah, and again, we always have to take that perspective first, right? Because if you don't have the incentives, then you don't have anything, right? Everything is layered upon correct incentives. And so I think like, if, if you are voicing these concerns, then like the, the rest of the Ethereum ecosystem should be paying attention that these concerns are being voiced. I do want to take a little bit of a side quest and talk about like DeFi's competing for ETH versus staking, competing for ETH. Because like the, if you focus in and on this very narrow viewpoint, you're like, oh, that's bad. Because like DeFi is stealing security from Ethereum and Ethereum is stealing Ether collateral from, from DeFi. This has actually been in the Ether triple point asset thesis since day one. Everything competes for ETH.

• 1:01:30David Hoffman?

  Like this, it's a massive tug of war in all, in all and every direction, right? And so I think what Eric is a fan of that I think would really offend Bitcoiners would be tinkering with incentives, like tinkering with the right numbers, the right metrics. And that's kind of been the, the division between Ethereum and Bitcoin. That, that's kind of where we draw the lines. Like Ethereum is okay with tinkering to get the, the most optimal outcome. And Bitcoin is like, no tinkering ever. And what it is, is what it is. And so there, there's obviously values into both sides. And I think what Eric said is that at, once we get to phase 1.5, where Ether staking on the phase zero beacon chain can merge with the rest of Ethereum, that's when we actually start to get,

• 1:02:12David Hoffman?

  hit that drum a little bit harder with, which, which is like, you know, staking is for you. Like you can stake at home. Like it's, it's, you protect Ethereum by doing that at home. And, and I kind of see this one and a half, two year period where. We are, it's an experiment. We are learning how to stake. Like, people are learning how to run a node. People are learning how to stake at home. Clients are learning how to make their clients easier to use. Staking becomes more, you know, more accessible. Because right now, staking is not easy, like, and almost intentionally so. Because it acts as like a filter to make sure that only the technically competent can get to that point. But that filter and that barrier comes down. And I think that's what I'm going to do over this next, like, year, a year and a half is while it gets easier and easier to stake and the barriers become lower and lower and lower.

• 1:02:57David Hoffman?

  I'm going to try and build up the memes to get better and better and better. So more people can get convinced that staking is, is for them at the point where it becomes right.

• 1:03:06Speaker 02

  Yeah, and here's something interesting too, right? Let's go on the total other side. We're, we're at phase one and a half. You know, maybe phase two, it's one-click staking on Coinbase, on your local computer, whatever. We also don't want to overpay, right? So again, let's, what is that number? We need to find what are we okay with from a security perspective of e-staked? The curve should get us steeply to that and then drop off. Because if there's no value to 50 million e-staking, why are we incentivizing it, right? There should be zero incentivization up there and we should push that back down to a lower number. So, you know, I don't want to also, it might seem hard to get there now because the barriers are high. The opportunity cost is high. But once it becomes easier, we don't want to go on the other end of the spectrum where we're overpaying for security.

• 1:03:51Speaker 02

  And we're just repeating, you know, the block reward drop from five to three and three to two. And we're, we're back at square one. So I, I think getting it right on both ends is very important.

• 1:04:00David Hoffman?

  Now Bitcoiners will say that you actually don't know how much security is the adequate amount of security. And therefore you should try and strive for as much security as possible at all times. How would you respond to that?

• 1:04:13Speaker 02

  I mean, I agree. I actually agree on proof of work. It's very hard to do, like, you know, when I wrote the EIP one, two, three, four to reduce the rewards from three to two. It was very hard, like, to come up with an analysis of what is proper security. I, I compared it to Bitcoin in my, like, EIP in my analysis. I think that changes on proof of stake, though. Like, it's easier. To know like how many validators you need, you know, I'm not going to get it. I can't get into the details about technical enough. But for a malicious attack to take over and you can, you can better understand the economic impacts of an attack and slashing people and stuff like that. So it feels to me like it would be easier to come up with this number. And again, I've seen floated around like 10 mil or so.

• 1:04:58Speaker 02

  But I agree with you on proof of work, but I do think it starts to change when you get to proof of stake. I think it's a little easier to quantify.

• 1:05:04Ryan Sean Adams?

  It's funny. It's funny to me that you'd say that that's the Bitcoiner position too, a little bit, David, because like that may be what they, they talk about and I hear that. But like, if you look at their issuance policy and their security budget, like it doesn't match, right? If you just said that Bitcoiners are trying to optimize for security, right? And they're cutting security in half every four years. In the thing that Bitcoin is strongest in, which is not the market for its own block space. Ethereum even surpasses Bitcoin there, but in the market for its asset and they're choosing to cut that in half. That to me doesn't jibe, but.

• 1:05:43Speaker 02

  That's why we're here in Ethereum.

• 1:05:45Ryan Sean Adams?

  Right? Maybe we'll, we'll talk to Dick Carter a little bit about that. I think we have before next week. All right. Well, so that, that to me makes sense. So I think you guys are both playing as both Ethereum patriots. Playing at kind of different sides of, of the risk spectrum here. And Eric, even though you're not going to kind of go all in day one, which is like prudent investing. And by the way, guys, like we've said it before, but there are a lot of risks to staking ETH at this stage. This is the frontier. It's not for everyone, but there are some whales out there, right? Who have tons of ETH and they could be doing something, right? Like they don't have to put it all in, but they could be doing something, try to fire up a node, try to go down this path.

• 1:06:27Ryan Sean Adams?

  And I think you guys are agreeing there, but over time, Eric, I bet you, you, you will be just as patriotic as David is over here on the, on the ETH staking memes. As a kind of phase one draws to it, draws to a close. We get into like these future phases.

• 1:06:44Ryan Sean Adams?

  Let's, let's talk about the ETH bull case, right? Cause. Let's see what happens when you get three bulls in here. If Ethereum's bull case played out to say the nth degree, if it was maximally successful, let's talk about that scenario. What would that look like, Eric, to you? Like a maximally successful Ethereum and Ether over the next, say, bull cycle to the next three to five years?

• 1:07:13Speaker 02

  Yeah, I mean, for me, it's that DeFi starts to truly threaten the traditional financial market, right? So you, basically, how I've always envisioned it is, I don't really see DeFi as, you know, directly usurping the traditional finance system. I see them running in parallel and then people seeing the benefits of it over the traditional financial system. So to me, the mega bull case for ETH, you know, next five years or whatever, is this realization of, hey, maybe I don't need my bank. Maybe DeFi is fine. I can manage, you know, it's not hard to use a ledger, use MetaMask, like it's easier than logging into Chase or whatever bank you use. And a large amount of money is starting to come over and that starts waking up the traditional finance market, right?

• 1:07:58Speaker 02

  And then they start saying, okay, well, what's going on here? And they start looking into it. And it's kind of this like positive feedback loop at that point.

• 1:08:05Ryan Sean Adams?

  Okay, what's funny is I think that's kind of like your personal story too, right, Eric? Right? Like, you're just, I think, projecting your personal story and saying, hey, I'm going down this path, I've been down this path, and I think there's going to be a lot more like me. We talk about in Bankless, like, two points of flippanting, right? There's, there's one sort of flippanting where suddenly you look at your net worth and you're like, oh my God, I have more crypto net worth than I have like fiat existing traditional finance system network, right? That's flippanting one. And then flippanting two comes later when you're like, oh my God, I don't even use my bank account anymore. Like, I, I don't need it. I just have a few bills that I pay from it, but my banking services have largely shifted over to crypto.

• 1:08:49Ryan Sean Adams?

  Have you passed both of those hurdles?

• 1:08:52Speaker 02

  I have, yeah. It actually took me, it was very first hurdle one. Hurdle two took me a while. So I

• 1:08:59Ryan Sean Adams?

  Just the last couple of years, right? As DeFi has developed the last year.

• 1:09:02Speaker 02

  Yeah. Hurdle two was actually just the last six, six, nine months, 12 months, something like that. So recent within the last year. And the difference was the yields, right? Like, why do I have my cash sitting in a savings account earning point four percent or whatever? When I can put it in DeFi. And now I will caveat this with, there are still risks, obviously. Like, we still see DeFi protocols getting hacked. I personally diversify across like eight different DeFi protocols. So yeah, if one goes down hacked, you know, it's not the end of the world. There's also Nexus Mutual Insurance you can buy and cover and all this stuff. But yeah, I've, I've taken the plunge on both. And I just, yeah, I mean, I use my traditional bank account just to pay bills. I, I keep all my

• 1:09:43Speaker 02

  stable coins now in different vaults across DeFi and, you know, the interest earned, maybe I'll put back in traditional banking to pay some bills. But other than that, it's, to me, I feel comfortable that like, why, why keep it in?

• 1:09:55Ryan Sean Adams?

  Eric, you've been around crypto for a long time, like before Ethereum, like, wasn't this the whole freaking vision for the whole thing from the very start? Do you remember like back in 2013, we'd see like Olaf Karlsson, we, and he was like, I'm going to live on Bitcoin for a year, right? And like, he stopped doing that because it sucked so bad because of volatility. But now you are actually living banklessly without a bank on crypto. And like, no one's talking about it. That's crazy to me. Like mainstream hasn't caught on to this yet. But this is the crypto, hasn't this been the crypto dream from, from inception?

• 1:10:30Speaker 02

  Oh, absolutely. I mean, this is what initially attracted me to Ethereum. So like, I was day trading Bitcoins in 2013. Mt. Gox happened. Everyone lost their money. I was in IRC chats where a bunch of people lost their money. And we said, okay, wait, why are we trading centralized assets on decentralized exchanges? And that led me into the wormhole. So yeah, that's what I've always been here for. It amazes me, the reliance on centralized servers, services that come from the Bitcoin. You can't, you cannot live in a bankless community on Bitcoin. You just can't. So, you know, Ethereum is offering that and it's powerful. And yeah, yields aren't always going to stay up where they are now.

• 1:11:10Speaker 02

  But for the medium future, I think we're going to see much higher competitive yields because a lot of it's driven by speculation, right? And that, at the end of the day, is one of crypto's strongest use cases right now is speculation.

• 1:11:23David Hoffman?

  Yeah, especially as the, the greater macro world falls into zero and negative interest rates. Like just the juxtaposition there is insane. Eric, you, you started this conversation talking about how when you said, when you read the Ethereum white paper, you saw DeFi. And so I want, I want, and part of this take is that this is a little bit of semantics. It's like, what is DeFi? What is Ethereum? But to me, the entire point of Ethereum and crypto at large is to produce DeFi, right? Like Ethereum is DeFi. And if we get any value out of this whole entire, whatever this whole entire crypto thing is, it's DeFi. And the reason why Bitcoin itself is valuable is because it is an instantiation of DeFi, right? It's all DeFi. It's DeFi, DeFi, DeFi, whatever, whatever that is. That's the whole point. Does it, do you agree with that?

• 1:12:07Speaker 02

  Yeah, no, I totally do. I even think that, you know, we're seeing like an NFT craze on Ethereum. I kind of say that's an extension of DeFi. I mean, the composability of DeFi and using ETH and using DAI in the NFT markets is DeFi. But yeah, that's how I've always seen it. I, I personally don't really see long-term other use cases. I know a lot of people disagree with me on that. There's a lot of people that still believe in Ethereum. I'm, I'm just not there. I think when I heard about the ability to program your money, it just clicked. And I, I don't think, so Ryan, you, you've mentioned a lot, like, why hasn't the mainstream picked up on this? You know, I think this idea of programmable money really only just, you, it has to click with you.

• 1:12:52Speaker 02

  I don't, I've, I've struggled explaining it to people. But then, once I've shown it to people recently, it slowly started to click with them. And I don't think until people really see the benefits. It's almost something like you can't force on people, right? So until you kind of have that aha moment, you start using it and say, wow, that, you know, the benefits are truly here of this system. You know, we might not actually see that mainstream media until then, which might take some time.

• 1:13:17Ryan Sean Adams?

  Yeah, that's a good take. All right, Eric, we're going to conclude with a couple of like just quick hit questions. Right now I'm looking at the Ether Launchpad. And when David and I put out that post yesterday, it was kind of a call to action, right? So we are at about 100,000 each stake in the contract. We need about 424,000 more if we're going to hit the December 1st date. And we need that within the next seven days because a week out, the date will start to be pushed out further and further potentially. Do you think we hit it? Do you think we get to that mark and we launch December 1st or not?

• 1:13:57Speaker 02

  I don't think so. I think it's going to come a week after because people are going to realize what the yields will actually be and start to flow in. So I, I don't think we're going to hit it on that day, but it's going to be shortly after.

• 1:14:08David Hoffman?

  Okay, so it doesn't, yeah, so whatever, it's always going to be afterwards. It's not going to be before because there's no incentive to go in early, right? You also kind of want the, the information. You're going to kind of want to be fashionably late, right? You're not too late.

• 1:14:20Speaker 02

  Exactly.

• 1:14:21David Hoffman?

  But you're definitely not early. Yeah.

• 1:14:22Speaker 02

  Yeah.

• 1:14:23David Hoffman?

  That makes sense to me.

• 1:14:23Ryan Sean Adams?

  You think there's a chance, Eric, that it could come down to, do you remember the, the great Yam migration? Where suddenly it was like this rush, the last like three to, you know, four hours. Uh, and then everyone kind of piled in at the end. Do you think, think something like that could happen as well?

• 1:14:39Speaker 02

  It could. I mean, I definitely think because there is no incentive to go early, people are waiting till the last minute. But in like the Yam situation, it was a, hey, let's save the protocol. It's not quite like that on, you know, for this, it's, it's more optics than anything. So I think we're going to see, you know, what happens if we don't hit it, right? Okay, now we know how much we need and people will start quoting APYs. Hey, you could earn 30% because there's only X amount in here. And that's going to start, I think, attracting people and kind of right now it's like a game of chicken. I would say who's going to go first, who wants to go first? But we'll get there. I think it'll just be slightly after.

• 1:15:18Ryan Sean Adams?

  What is the best way that you've found to stake so far, Eric? Is it just, you know, you go through the guides that are available? You watch maybe Hudson Jameson's video and you stake at home? Or are there other avenues?

• 1:15:30Speaker 02

  Yeah, Hudson's live stream was pretty good. I've just, so I've been running multiple test nets to this point. So I've pretty familiar with Prism. Their Discord's very helpful, so I've just become comfortable with that. I am very excited that Ledger today just announced that they're going to have support for E2 staking keys on Ledger. So one of the things I've felt uncomfortable with personally is generating keys in terminal. I just, I'm not a command line terminal guy. And the fact that I'm like generating these keys and just like copy pasting code in and like I'm trusting this process with a lot of my money.

• 1:16:06David Hoffman?

  It feels very foreign.

• 1:16:07Speaker 02

  Exactly. And like, if I can do that through a ledger, I'll personally feel more comfortable. So I'm excited for that.

• 1:16:14Ryan Sean Adams?

  And just a quick note on Ledger, David, before you go is, uh, thanks to Ledger for sponsoring the show, of course, as always. I think they're going to be running some Black Friday deals. And what Eric is talking about is not their Nano product, right? But their newer product that they offer stake on. The Ledger, the Ledger S.

• 1:16:36David Hoffman?

  Or is it the X, the big one?

• 1:16:37Ryan Sean Adams?

  The big one, X. And that is going to be available possibly for some Black Friday deals next week. So if you're looking to pick some of those up next week, it might be the time.

• 1:16:48David Hoffman?

  So Eric, when the Genesis of a Phase Zero actually kicks off, how much ETH will be in it at Genesis?

• 1:16:57Speaker 02

  I mean, 528 or whatever, right? Well, so here's the weird caveat is if my issue I submitted goes through.

• 1:17:05David Hoffman?

  Okay, let's talk about that.

• 1:17:06Speaker 02

  Yeah, yeah. So basically, what if we don't care about the minimum deposit amount and we want to put a hard date in? So I put December 15th. It seems to be getting very rough consensus. Like, who knows how we actually do this stuff, right? But if that goes in and we just say, hey, this date, no matter what, I would say like 300,000. But if that doesn't, I think Genesis is going to be at the very minimum of 520. And but then I think, though, we're going to see a larger N-Fuck. So if you think about this from like game theory, right? You kind of want to know. Who's going in, how much is in there? And once like the genesis happens, if you're like a profit maximalist, right? Then you're like, okay, well, if I go in now, I know exactly what my yield is going to be.

• 1:17:50Speaker 02

  Um, as opposed to now, you're not quite sure. You could be like, what if 10 million come in at the last second? You could be anywhere between 25 and 5% return.

• 1:17:57Ryan Sean Adams?

  And, and to clarify, your, uh, the EIP you submitted, it's basically removing the 528K threshold, basically, right? So that would lower that down, which means that there would be, uh, higher rewards. Essentially a higher interest paid out if it was lower than that. Why did they put a, um, why, why, why was a threshold put in place to begin with?

• 1:18:20Speaker 02

  Yeah, so there's a couple of attack factors, one being like a gatekeeper attack. So like if the stake is too high on the E2 side, there can be some censorship. Like if it's too centralized, there could be some censorship that can happen. Um, but it seems like the stake going over so far is pretty decentralized. And like, that's an economic analysis that happened with ETH was, I think, 80 bucks. So not as relevant anymore as well. Um, so yeah, this would basically say, hey, if we didn't hit it and we hit this date instead, just go with it. So, you know, if you, if you're at 200K, you're talking, I think, like 30, 35% return, which would be nice for those that are doing it.

• 1:18:58David Hoffman?

  We're doing it live. Fuck it, doing it live.

• 1:19:01Speaker 02

  Exactly.

• 1:19:02David Hoffman?

  All right, Eric, so you've been through the cycles before, and so we couldn't let you go without asking you the classic question of when are all times high, when are all time highs for ETH price and at what price will it be?

• 1:19:15Speaker 02

  December 2021, 2,500 bucks.

• 1:19:18David Hoffman?

  Ah, so you, you, you know this.

• 1:19:22David Hoffman?

  It is known. How, how did you come to those numbers, if you don't mind me asking?

• 1:19:27Speaker 02

  Um, I think one thing people underestimate is every cycle you go through, it gets harder to pump higher market caps, right? So everyone expects the same, you know, crazy 10,000%. And yeah, Bitcoin's done that. I just think it becomes harder to push this market as shorting options are online. There's more liquidity, there's more access to all this stuff. Um, I don't, I personally don't see an insane target for the next run like a lot of people do. I know a lot of people are calling for 10K. You know, I, I'm gonna, I've learned my lessons. I'm going to exit a little bit earlier than people are anticipating this time.

• 1:20:04David Hoffman?

  Fair enough, fair enough. And I've also recently heard a take where I compared Ethereum's current cycle to Bitcoin's last cycle, drawing the metaphor that Ethereum is just one cycle behind Bitcoin. Does that resonate with you? Or is that kind of just that stale data?

• 1:20:19Speaker 02

  I think it's more about like the maturity of the market as a whole, to be honest. I mean, I think we just saw this with DeFi. Like even in 2017, when ETH was pumping, there were really no options to short it. The liquidity was pretty low and institutions weren't involved. If we look at what DeFi just went through, we went through an entire market cycle in like three weeks because there was more liquidity, there was access to shorting. I think, you know, larger players were involved. So I think, I don't think you can really compare ETH's current cycle to Bitcoin three years ago, because all of this exists for ETH now that didn't exist three years ago. You know, there's futures, all this stuff. So I don't think the market is

• 1:21:00Speaker 02

  that simple. I think it always throws a, you know, kind of throws something different at you. Who knows? It could go to 80 tomorrow, it could go to 50K tomorrow. I'm going to stick somewhere in between at my 2,500 number.

• 1:21:15Ryan Sean Adams?

  Fair enough. Bold prediction, though. That is 2,500 in a year, which would be a 2X, I guess, ish all-time high. What's interesting to me about the 2016 last bull market comparisons is I remember entering 2016, entering 2017, rather, and Bitcoin price was around 400. Different market cap to ETH, but like ETH prices floating in that 400 range, and it did run up to 20K. Totally different numbers because obviously the market caps are wildly different, but it is interesting. We could have a lot of play here for Ether. Eric, it has been a pleasure having you on. Thanks for guiding us through the culture, through staking, through our patriotic duties discussion, and through the

• 1:21:58Ryan Sean Adams?

  investor mindset as well. Really appreciate everything you are doing. And welcome back to Twitter, sir. How long are you gonna hang out with us?

• 1:22:06Speaker 02

  Thank you. Yeah, we'll see how crazy the bull market gets, right? But yeah, I'm planning to stick around this time, but I appreciate you guys having me. This was a lot of fun.

• 1:22:13Ryan Sean Adams?

  All right. It's been great to have you. All right, guys. Risks and disclaimers as always. ETH is risky, so is crypto. DeFi is too. If you choose to stick with ETH, keep in mind that it is especially risky in this first phase zero. But we are headed west. This is the frontier. It's not for everyone, but thanks for joining us on another episode of State of the Nation.