ROLLUP: What Grayscale's Win vs The SEC Means For The Next Bull Market

WRU 1st Week Of September ----- 🏹 Airdrop Hunter is HERE, join your first HUNT today https://bankless.cc/JoinYourFirstHUNT ------ 📣 AAVE V3 is Here! http://app.aave.com/ ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦊METAMASK PORTFOLIO | MANAGE YOUR WEB3 EVERYTHING https://bankless.cc/MetaMask ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum ⁠ 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⁠ 🦄UNISWAP | ON-CHAIN MARKETPLACE ⁠https://bankless.cc/uniswap 👾STADER LABS | ETHX LIQUID STAKING https://bankless.cc/Stader ----- TIMESTAMPS & RESOURCES 0:00 Intro 5:24 MARKETS https://pro.kraken.com/app/trade/btc-usd 9:36 Layer 2 Check https://l2beat.com/scaling/summary 13:45 Anthony's Bullish Predictions https://twitter.com/sassal0x/status/1696162071715422442?s=20 32:41 Grayscale Beats the SEC https://www.bankless.com/grayscale-beats-the-sec https://www.docdroid.net/vrehbKf/dc-cir-22-1142-01208547571-0-pdf 36:53 Takes on the Case https://twitter.com/jchervinsky/status/1696544309699363201?s=20 43:27 Are NFTs Securities? https://www.sec.gov/news/press-release/2023-163 45:59 IRS Proposal for Digital Brokers https://home.treasury.gov/news/press-releases/jy1705 49:37 US HOSTILITY TO CRYPTO https://twitter.com/zkmattwyatt/status/1695190244516319564?s=46&t=2ZINVXJQKx6xO_6Wiiu_2g https://twitter.com/zkmattwyatt/status/1695190244516319564?s=46&t=2ZINVXJQKx6xO_6Wiiu_2g https://twitter.com/AntonioMJuliano/status/1695160970111300053 54:29 Roman Storm Released on Bail https://twitter.com/brianeklein/status/1694779420731658700?s=20 55:26 Farcaster V3 https://twitter.com/dwr/status/1695187576003645873 57:41 Lido Almost 33% https://twitter.com/RyanSAdams/status/1696220879976284511 1:09:10 AMEX Gives out POAPS https://twitter.com/mamb0san/status/1695458362237034957 1:09:46 X Gets Currency Transmitter License https://twitter.com/BitcoinMagazine/status/1696587745089540494 1:11:47 DCG to Deliver Recoveries https://twitter.com/DCGco/status/1696506972781138275?s=20 1:14:28 Bitboy Crypto Boots Bitboy https://twitter.com/Bitboy_Crypto/status/1696184571279159401?t=R1qQjJ06kpariGkBKzbjrw&s=19 https://twitter.com/Bitboy_Crypto/status/1696184571279159401?t=R1qQjJ06kpariGkBKzbjrw&s=19 1:17:01 Instadapp Multisig https://twitter.com/Instadapp/status/1696537797916799035?s=20 1:20:56 Questions From the Nation https://discord.com/channels/615592155481767941/1058053004705669211/1145795932575760565 https://discord.com/channels/615592155481767941/1058053004705669211/1146193895345111162 1:31:13 Takes of The Week https://twitter.com/neerajka/status/1346836020927619077?s=46 https://twitter.com/cburniske/status/1695583389167075822?s=20 https://twitter.com/RyanSAdams/status/1696618835518857610?s=20 1:35:29 What Are We Bullish On? 1:39:08 Meme of The Week https://twitter.com/CryptoCred/status/1696041243061420108 1:40:17 Check out The Daily Gwei! 1:42:00 Moment of Zen ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

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

• 0:00Speaker 00

  What reinforces the halving narrative is the ETF narrative. Because if they do get approved, it's going to be relatively close to the halving. So let's say they get approved in Q1, right? They all just get approved in Q1. It may be later than some people expect, but they all have to get approved together. Because if they don't, then the SEC opens themselves up to more lawsuits. So that is Q1 and then April 2024 is the halving. So you have ETF narrative into halving narrative, which is going to, in my opinion, you know, be very bullish for the market generally. And then the flywheel starts from there.

• 0:36Ryan Sean Adams?

  Bankless Station, it is the last week of August and it is time for the Bankless Weekly Rollup. I have with me, not David Hoffman today, but maybe the David Hoffman of the Southern Hemisphere. Anthony Sisano from the Daily Gwae. Hey Anthony, how you doing?

• 0:50Speaker 00

  Hey Ryan, I'm going good. I've never been called the David Hoffman of the Southern Hemisphere.

• 0:54Ryan Sean Adams?

  Are you insulted? Are you complimented or is there something in between?

• 0:58Speaker 00

  I think that was meant as a compliment, so I'll take it as a compliment.

• 1:02Ryan Sean Adams?

  Hopefully Bankless listeners will, uh, will take it as a, as a compliment as well. And of course, Anthony, you've filled in so many times, uh, this summer for us as we've been on holidays. David's out at Burning Man, so he's not climbing a mountain this week. He's out enjoying himself at Burning Man and I have no idea what shenanigans they get up to, uh, there. Have you ever had a desire to go to Burning Man, Anthony?

• 1:22Speaker 00

  No, if, if there's anything that is the complete opposite of a desire that I have to do something, that would be Burning Man. It's, it's not my scene at all. I, I am not about that, but I think it's David's scene, uh, definitely.

• 1:35Ryan Sean Adams?

  Yeah, I totally see David, uh, fitting in there, but yeah, I'm, I'm like you. It's not my scene, uh, but Anthony, thank you so much for, for joining us today. We always learn something, knew about crypto, knew about Ethereum and, and maybe if we're lucky, knew about Australia. So, uh, I told you I was going to be late to this episode and you said, no wookas. I think that's how you pronounce it, no wookas. And you said, that means no worries. Am I getting this right?

• 1:59Speaker 00

  So yeah, it's funny that you didn't pronounce it right.

• 2:02Ryan Sean Adams?

  I didn't pronounce it right?

• 2:04Speaker 00

  No, so it said, no wookas, no wookas instead of wookas. Um, yeah, it's just weird Aussie slang that some people use. I don't know how widespread it is, but I say it to my friends sometimes like, yeah, no wookas. And I feel like I had to explain that to you.

• 2:19Ryan Sean Adams?

  Thank you, thank you. All right, well, we got a lot to discuss this week, including something bullish, which I'm glad you are here for something bullish, Anthony. Grayscale wins their court case. This is a US federal court that rules that the SEC has no legal authority to block the Bitcoin spot ETF proposal. That is, of course, very bullish. We're going to talk about that. Also, X, formerly known as Twitter, obtained a license to store, transfer, and trade Bitcoin and crypto. Should we be excited by this? We'll talk about that. Lido is almost at 33% of total staking market share. Anthony, I want to ask you about that, if we should be concerned. And we've got some news about

• 2:59Ryan Sean Adams?

  Digital Currency Group. This is DCG. Apparently, they agreed to deliver 90% of the value back to Genesis creditors. I'm kind of wondering if we finally cleaned up the mess from 2023. So we'll talk about all of those items and more as we get in. Just want to set the tone here, Anthony. This ETF news, we'll spend a lot of time getting into it, but does this make you bullish on the week? And how bullish?

• 3:25Speaker 00

  So I think generally, I've always, at least for the last few months, kind of acted with the assumption that these ETFs are inevitable over probably the next kind of six to 12 months. So the Grayscale win just further solidifies that for me. And I think what it also does for the wider kind of audience is solidify that for them as well. It basically says, yes, okay, the ETFs, you know, they've been teased for so long now, many, many years, there's been, there's been kind of like teasing of a Bitcoin ETF in the US. And now it finally feels like that's actually really going to happen this time. And I think that this, this recent win from Grayscale just kind of like solidifies that for a lot of people. So definitely bullish. Short term, you know, the markets are going to do what the markets do, but I think that anyone doubting that an ETF is going to get approved at this point, you know, I wouldn't

• 4:10Speaker 00

  be taking that bet, to be honest.

• 4:11Ryan Sean Adams?

  Yeah, I totally agree with you and we'll talk about that in a minute. And we'll also talk about how the markets reacted to that news, which was quite favorably. But before we get in, a message from our friends and sponsors over at AVE. I know Anthony, I'm sure you've used AVE many times, like everyone in DeFi. AVE V3 is here, they want you to know. And if that feels like old news for you, because that happened back in January. Now AVE really wants to accelerate getting the word out because there is apparently $2.2 billion in AVE V3. But there's also a couple billions still in AVE V2. And their message is to go migrate your assets to V3. It is now time.

• 4:52Ryan Sean Adams?

  You can go to the app.ave.com site in order to migrate your assets from V2 to V3. There's some big benefits there, better capital efficiency. They've got some supply and borrow caps that limit the amount in pools for a particular token. This is called asset isolation mode. And of course, cheaper gas prices, so you can stack your ETH rather than spending it. If you're a builder as well, they are subsidizing AVE grants towards their new stablecoin go. So you can check that out at the avegrants.org website. There's a link in the show notes as well. All right, Anthony, let's get to the markets. These are the charts that Kraken is showing us on the week. This is Bitcoin and we are up on the week, my friend. Look at this glorious green candle right here.

• 5:37Ryan Sean Adams?

  I think that happened around the time of the ETF court decision that we were just talking about. So let me read out some numbers. We started the week at about 26,000. We are ending the week, at least at the time of recording, at 27,300. So we are up 5% in Bitcoin price. This green candle, is this all directly related to the court and the ETF ruling?

• 6:04Speaker 00

  Oh, it's 100% correlated and related to that. And I think that it's pretty much mostly traders driving this as well, because if you look at what the traders have been looking at over the last few weeks, or pretty much all of them have been talking about the grayscale decision, because it'd been teased that every Tuesday and Friday, people were checking the, I think it was the SEC's website, or maybe not the SEC's website, but a website that would show you the result of the lawsuit. And it wouldn't, it didn't come for like, you know, last Tuesday, last Friday, and a few before that. And then it finally came today. And yeah, every trader that I looked at was looking at the same thing. They're like, we're gonna go down. Maybe if nothing happens, you know, if grayscale loses their case, we go down. If grayscale wins their case, we go up. But whether that actually

• 6:46Speaker 00

  results in any kind of long term sustained kind of upward price movement, at least for the short term, it's hard to tell, because I think I've been on here before and said to you, last time we had a pump like this, which was the SEC case against Ripple, where Ripple won that case, and we had that massive kind of pump on not just BTC and ETH, but everything else. And I said to you, if there's no follow through, we're just gonna sell back down. And the follow through has to come from new money. Because if we don't have new money, it's just traders. And all the traders are gonna do is they're just gonna short it back down. Because all they're looking for is that short term profit. They're not looking to invest, right? They're not investors. They're literally playing a different game to investors.

• 7:22Ryan Sean Adams?

  It's funny, that was the SEC Ripple court case happened another week while David was out. Every time he leaves, something bad happens to Gary Gensler. And I don't know what he's off doing. Maybe he's like hunting down horror cruxes or something. But yeah, we need him to stay away for another week, and then maybe Gary gets fired. But so you're just saying this pump is basically trader action. And what were going into this court case? What were people thinking? Like, do you think people were over or under grayscale beating the SEC? What were kind of the odds in the sentiment going into this?

• 7:59Speaker 00

  I really do think it was a coin toss for a lot of people. And I think a lot of people in crypto definitely don't have a very good read of the legal world. I think they basically learn about it because of these crypto cases and myself included, to be honest. I mean, especially in the US. I mean, I don't live in the US, so I'd never really had a reason to pay attention to it. So it's all new to me. So I kind of looked at it like that. I was like, you know, it's a coin toss. It's 50 50. I've got no idea. But then the judgment came out and as we're going to talk about and it really kind of was less than it was. It was, sorry, it was much better than 50 50 in odds of grayscale. It should have been like 90 10, you know, 90% that were going to win 10% that were going to lose just based on the kind of result there. But for traders, I feel like, you know, you can see over the last kind of like week or two, it was just completely flat and just pretty boring.

• 8:44Speaker 00

  And that was because all the traders, I think, were waiting for this signal in particular, which is kind of wild when you think about it. But at the same time, there's also not much else going on as, as you know, we know there's not new money coming in right now in terms of market activity. I'm the innovation side and the technical side of things is different, but market activity, yeah, it's really just a kind of trader game right now.

• 9:05Ryan Sean Adams?

  Well, let's look at a few trader numbers too. ETH is up on the week. I believe we're at 1715 at the time of recording. That's up 2, 2 and a half percent. So up less than Bitcoin, as you'd expect Bitcoin kind of reading, leading this because this is about a spot Bitcoin ETF, but still up nonetheless. And total crypto market cap 1.14 trillion on the week. By the way, this is about a, if we're looking at the one year view, a 12% increase on the year in total crypto market cap. But here are the charts that you were referring to that maybe are even more exciting and not just for traders, but for long time crypto settlers. This is L2 total locked value and the scaling factor for Ethereum.

• 9:50Ryan Sean Adams?

  This looks at all of the, the interesting metrics around our L2s. And you tweeted this out earlier in the week, Anthony. Ethereum layer two activity continues being up only what bear market? And here you're looking at a chart from L2 Beat, which shows the scaling factor that is activity on Ethereum at a multiple of Ethereum main net of 5.24X, which is absolutely massive. And you can see, I don't know what the time, is this just the last? No, this is the entirety of the last year and we've just had a 5X in transactions over the last year. Is that right?

• 10:25Speaker 00

  Yeah, exactly. Well, yeah, I mean, we're basically, you can see there's that blue kind of section there, the blue squiggly line, that's Ethereum L1 TPS, which isn't going to go up because Ethereum L1 is already at capacity. And then you've got the red above it, which is showing all the L2s that L2B is tracking, and their TPS just going up over time and basically being up only over the last year at least.

• 10:47Ryan Sean Adams?

  Anthony, that is an interesting question. It's like, so what is the capacity right now for this red line? So of course, may net, the blue line has just 16 transactions per second, is kind of the full capacity of Ethereum, and then gas fees start getting wonky and, you know, we can't go over that. But how about layer 2s right now? Tell us about the pre-Proto Danksharding EIP 4844 world and then the post one.

• 11:17Speaker 00

  Yeah, so it's always a difficult thing when measuring TPS because not all networks are created equal, of course. And I think what L2B tries to do here is normalize the TPS as well, because there are different kinds of ways to measure it depending on the layer 2 that you're looking at. So that's what they've done in this chart here. I can't give you like an upper bound number of kind of total TPS across these L2s as it exists today, but I can say it's a lot higher than here. We're pretty much nowhere near capacity from what I can tell and what I've been able to research. And then after EIP 4844 goes live, that goes up by at least 10x from kind of what I've seen here. And I also want to note about Ethereum L1, it's kind of funny when measuring TPS,

• 12:00Speaker 00

  because the way Ethereum works is that, or at least Ethereum L1 works, is that it has what's called a gas limit, which is the block size of Ethereum L1 blocks. Now, this gas limit is taken up by various transactions, and each of these transactions has a different amount of gas that it uses. So for example, if all of the transfers on the Ethereum, oh, sorry, all of the transactions on the Ethereum network were only ETH transfers, so transfers of ETH, the asset, to and from addresses and things like that, not smart contracts, just to and from addresses, the Ethereum network could do, I think, upwards of 40 transactions per second, just doing that. Ethereum L1 does a lot more than just simple ETH transfers. Obviously, we have smart contracts.

• 12:39Speaker 00

  We have DeFi NFTs. We kind of level out an average of, you know, 15, 16 TPS or something like that. Because those other things take up more gas, which means that the gas limit fills up quicker per block. Or by those transactions, and that's how the TPS is measured. The same is true for a lot of L2s as well, especially the ones that are EVM compatible or equivalent. But as I said, because there are certain L2s that aren't, like Starknet, for example, they're pushing like hundreds of TPS right now, but their TPS is measured in a different way that you would measure it on an EVM chain. And that's why I said that L2B in this chart tries to normalize it so that it actually is as close to equivalent as like an L1 Ethereum TPS measure as possible.

• 13:21Ryan Sean Adams?

  That's a great point. Yeah, thanks. Thanks for getting into that, too. It's something we often forget. This is also another screenshot from a new website that we just kind of uncovered. It's called growthepie.xyz. And this is another measurement of the Layer 2 metrics. This is actually built by someone in the Bankless community, so it's really cool to see this. But another resource for you in addition to L2B. Anthony, let's talk a little bit about some of your predictions, actually, because this was a tweet thread that I came across and wanted to include in the market section. And now that we have you as a co-host this week, it makes even more sense to talk about it. You said earlier in this week, it was Monday, GM Bulls and happy Monday.

• 14:05Ryan Sean Adams?

  I know that it may seem dark and gloomy in the markets right now, but there are always bright spots over longer time periods. And I'm here today to share some of them with you. And so then you go over some of those bright spots over the next 12 to 18 months. Here are the outsider bullish narratives. You mentioned the Bitcoin halving in April 2024, the potential ETF bonanza, which maybe that it's interesting because that prediction is already coming true. You said this on Monday. Now by Wednesday, we have this fantastic ETF news. ETH staking becomes very attractive to TradFi because of the passive income yield. There's some positive US regulatory stuff. Maybe a stablecoin bill, which is kind of interesting because we've had a lot of

• 14:50Ryan Sean Adams?

  bad regulatory news up to this point, I would say, and maybe you're you're saying that's going to start to shift. TradFi companies keep playing with and adopting crypto, Visa and PayPal. Those are recent examples. Those are all of the outsider bullish narratives. Then we could get into the insider bullish narratives. But let me just just pause. You're feeling bullish, it seems like, Anthony. Tell us about the big picture and then any of these outsider bullish narratives that you think are most relevant right now.

• 15:19Speaker 00

  Yeah, I'm definitely feeling very bullish for the next kind of 12 to 18 months, especially. I have kind of operated under the assumption for this year, 2023, that we're basically just replaying 2019 in terms of kind of market action, general sentiments, all the stuff that happened in 2019 that laid the groundwork and kind of like the bedrock for the bull market of 2020 and 2021. And I'm feeling the exact same thing play out right now. So if you were to take that to its kind of logical conclusion, you would say that 2024 is like 2020, and then 2025 would be like 2021, hopefully with a lot less fraud, because unfortunately, there was a lot of fraud that ended up happening in in the last bull market led by, of course, SBF and some other kind of actors in the

• 16:02Speaker 00

  space. So I looked at the kind of the big picture here and kind of tried to articulate why I'm bullish and bucketed it into two categories that you mentioned, the outsider bullish narratives, which are things that the outside crypto people can get excited about, the things that are easily digestible, the things that we don't have to spend, you know, a whole hour explaining to people for them to actually understand what's happening. And then the insider narratives. Now, the cool thing about the outsider narratives is that the crypto natives can also get excited about the outsider narratives, just as much as they can get excited about the insider ones. So we get like a double whammy by being crypto natives. But on the outsider ones, you know, I looked at the obvious things. The Bitcoin halving, it's kind of a meme or a pretty strong narrative that after every

• 16:44Speaker 00

  halving, the market pumps, right, BTC pumps, and then we get a bull market within Basically six to 12 months of that happening. And that has happened every time so far. Twenty twelve into twenty thirteen, twenty sixteen into twenty seventeen, twenty twenty into twenty twenty one. So it feels like we're on track for that to happen again. But what reinforces the halving narrative is the ETF narrative. Because if they do get approved, it's going to be relatively close to the halving. So let's say they get approved in Q one, right? They all just get approved in Q one. It may be later than some people expect, but they all have to get approved together. Because if they don't, then the SEC opens themselves up to more lawsuits. So that is Q one. And then April twenty twenty four is the halving.

• 17:26Speaker 00

  So you have ETF narrative into halving narrative, which is going to, in my opinion, you know, be very bullish for the market generally. And then the flywheel starts from there.

• 17:35Ryan Sean Adams?

  Could you imagine? Could you imagine, Anthony? So like BlackRock gets their ETF approved, then into the halving. And then they're starting to pump the halving meme. Is like, I mean, that's something that could happen, right? In order to attract capital to the new BlackRock ETF.

• 17:50Speaker 00

  The thing about the ETFs is that there's not just one of them. And I think this is important for people to kind of keep in mind. There are multiple ETFs and they're all competing with each other. And the start of the product is the most important because they want to show that they get the most inflows, right? Like you want to show that you're the market leader. So what are you going to do to do that? Well, you're going to start now. You're not going to start when it's approved. You're going to start now reaching out to your clients, reaching out to your high net worth clients as well. And you're going to be telling them, hey, you know, there's this thing happening. There's this thing happening, the halving, blah, blah. And you're going to give them the bullish pitch because you want them to put their money with you as soon as that ETF gets approved. Because you want to be the market leader so that you can just start that flywheel of getting more money in.

• 18:32Ryan Sean Adams?

  That's a great point. I had not put that together, this kind of this stacking of timelines here, but you're exactly right. It almost seems like it's orchestrated.

• 18:42Speaker 00

  Some people said that to me. They're like, it almost seems like the whole thing's just manipulated and orchestrated. I'm like, it does to an extent, but then you also need to consider that the four year cycle is also the political cycle in the US, right? Next year's election year. I actually think Satoshi did this on purpose, to be honest.

• 18:59Ryan Sean Adams?

  Really?

• 18:59Speaker 00

  So, yeah, I have a thesis that's never going to be proven or disproven, obviously, because we don't.

• 19:04Ryan Sean Adams?

  Timing it with election years.

• 19:06Speaker 00

  I feel like the the timing is on purpose because election years are always kind of, I guess, like a a pretty fun year. Let's just put it that way. I'm not going to get into politics here. And and and it just it all lines up too perfectly to me.

• 19:18Ryan Sean Adams?

  Fun is one word for it, Anthony. You could say that when you're not living in the US.

• 19:23Speaker 00

  Yeah, exactly, exactly. And I and I think that these other things around it just act as more positive narrative catalysts because the narrative is what matters for for the market, at least over kind of like the the bull market period. The fundamentals don't kick in until like the longer term. And I think the narrative is is going to be very, very strong next year, at least, you know, the outsider narrative, but also the insider one. But that's my general view on the outsider stuff.

• 19:48Ryan Sean Adams?

  Okay, that's outsider stuff. Bitcoin ETF in the happening, a big thing here. We also talked about some some positive US regulatory headwinds, the stablecoin bill, I could totally see that. And we've talked so much on the rollups about Visa and PayPal now has a stablecoin. But but this point on the outsider bullish narratives, I want to dig into for for one more second here. ETH staking becomes very attractive to TradFi because of the passive income yield. So you everything you were just saying about kind of like the Black Rocks of the world and Wall Street getting on board here, that was all Bitcoin related. You also think simultaneously, they will start to understand TradFi will start to understand ETH staking.

• 20:26Ryan Sean Adams?

  I mean, I think I believe that too, but I'm wondering if you have any like evidence for that or any thoughts on why that happens.

• 20:35Speaker 00

  So I think that there are already kind of TradFi players getting involved with ETH staking, to be honest. They're definitely doing it through the providers that KYCing them and things like that because they have to due to regulations. So you're not going to really see it. You know, they're not going to go with with Rocketpool, for example, at least not right now, because they probably just legally can't. They may not even be able to legally go with Lido, for example. So they're probably going with these other providers, maybe Coinbase. There's Alluvial that recently got announced, they're targeting more of the kind of like enterprise kind of stuff there. But just generally, TradFi loves yield because they can sell that product to their customers very easily. Because customers love yield. You know, there's this obsession that people have with yield. And I get it because it's it sounds nice. Um, but I have my own opinions on yield generally,

• 21:19Speaker 00

  but I'll leave those on the table. Uh, but but generally, I think when it comes to ETH staking, what people forget is that in a bull market, the yield is going to go up because we're going to get more activity on the chain, which is going to result in more fees, which is going to result in more yield for all the stakers, which is going to result in a flywheel of people being like, holy crap, the yield's so high, I need to stake, right? And we're going to get such an inflow of ETH stake. And um, I do believe we're going to get an ETH ETF as well. I don't know how long after BTC gets approved, we'll get an ETH one. I can't imagine it's going to be very, very long after that. And that number one selling point that these kind of ETF issuers are going to say about ETH is staking. They're gonna, they're gonna pump the hell out of staking. I, I, I'm very confident in that.

• 21:59Ryan Sean Adams?

  Yeah, it would be, it would be wild if we Bitcoin ETF approved, uh, Gensler out of office, you know, something happens with kind of the elections and then 12 months later, you have a, uh, an Ethereum ETF approved. Okay, let's talk about some of these insider bullish narratives. These are the ones for us that the outside world doesn't really know about. Um, the overall four year cycle timing is still playing out nicely and only maybe gets invalidated if 2024 is another crab year, in my opinion. That's your opinion. So what's interesting is, uh, you, you just think the four year cycle, we're on repeat yet again. And some people, always the criticism against that is like, it can't be that easy, Anthony. Like, come on, man. Like, that's just, we, we like to overcomplicate our investment thesis in crypto a lot and think we're very

• 22:43Ryan Sean Adams?

  smart. And so they can't see history repeating what for the fourth time is this? Um, you also, also say Bitcoin actually pumps again after the happening, layer twos continue taking off, we get a proper layer two summer. So we haven't seen a layer two summer is what you're implying? Decentralized social platforms, uh, Ethereum's drastically improved supply dynamics finally kind of like kick in in the way like we, we.

• 23:10Ryan Sean Adams?

  I feel like they should have kicked in more and they haven't fully kicked in. And I think that's what you're implying here.

• 23:14Speaker 00

  Well.

• 23:14Ryan Sean Adams?

  Dex volumes, ETH burn goes nuts. Yeah, give us the highlights from the insider narratives here.

• 23:20Speaker 00

  Yeah, I want to hit on that kind of like supply dynamic thing. I think that they have played out in the bear market, but they've played out in a different way than what people expected. So they played out with ETH going down only a little bit against BTC. This bear market, whereas last bear market ETH went down 90% against BTC from its top, 90%. So if you put 10 BTC into ETH at the top, you were left with one BTC at the bottom, right? That is a substantial loss. The difference here now is that ETH is only down 25% against BTC this bear market, which is substantially different. Now, I chalked that up completely to ETH's drastically improved supply dynamics

• 24:03Speaker 00

  and its monetary policy with the merge issuance reduction and the burn, which has further and staking, of course, which has further strengthened ETH's store of value properties, which is all that matters for value accrual at that size. Store of value and money is what BTC and ETH have going for them. And ETH has proven this bear market that it has achieved a very strong store of value property. And it has not outperformed BTC, but only underperformed it by a little bit.

• 24:30Ryan Sean Adams?

  I think that's a great point. So you're saying basically last cycle, and people don't remember this. Last cycle, 2018, last bear market, ETH got absolutely freaking slaughtered. It got destroyed along with all of the alt Bitcoins, you know, the alt coins, right? Of that cycle. This time it was alongside Bitcoin, a flight to safety asset for crypto.

• 24:55Speaker 00

  Exactly.

• 24:55Ryan Sean Adams?

  And it slurped in all of that liquidity and that is so different from the last bear market. I don't think I properly took time to reflect on that, but you're absolutely right.

• 25:04Speaker 00

  And then similarly, in the bull market, when demand comes back, I really do think that's going to play out in a really positive way for ETH, because there's just not going to be that much ETH to buy. And the narratives for ETH are really, really strong. Obviously, BTC has a strong narrative with the ETF happening right now. But I think, I like to bucket these into two different kinds of things. I think the ETF narrative goes into my bucket of impulse narratives, where impulse happens, the news happens, the price impulses up, but then it kind of fades away over time, and it doesn't, doesn't keep doing the impulses, because people get over the news, right? It's kind of like, whatever, the news is the news. We bought the news, now we have to wait for new, new kind of news and narratives. And the narrative kind of loses steam. But there's another bucket, which is the fundamentals bucket, right? Which is exactly what ETH has with its changed

• 25:49Speaker 00

  supply dynamics, which play out over the longer term. And you can actually see this on ETH BTC, especially recently, you know, especially over the last 24 hours. I know this is short term, but this illustrates my point. ETH BTC went down because BTC impulsed up on the grayscale news, right? But then ETH BTC has just started kind of like cruising a little bit back up again since then, the last kind of like 12 hours, because the impulse is kind of over. And now we're just going back to the fundamentals. So if ETH is going up against BTC based on fundamentals, and the demand is just there, when the demand comes back in, you can imagine a world where ETH BTC just continues going up only over time. And even potentially next bear market, maybe ETH is the one that outperforms BTC, and BTC goes down against ETH, and ETH becomes that kind of like top

• 26:34Speaker 00

  flight to safety asset.

• 26:36Ryan Sean Adams?

  The real flipping finally happens. Anthony, kind of the last point here on the markets that we want to touch is this idea of layer two summer. Okay. And so you're, you're analoging this to the, to the previous bear to bull cycle, right? You're saying this is 2019, right? And let's, let's go with that narrative for a while. So we had our DeFi summer in 2020, and that was kind of the year after, right? And you're analoging this, and you're, and you're saying, you're analogizing this, and you're saying, now, now we might get a layer two summer in 2024. I think that's what you're saying. So DeFi being kind of the new layer twos. It's also interesting here where you, you talk about Decentralized social platforms. Well, maybe that becomes the new kind of NFT of the of the

• 27:20Ryan Sean Adams?

  previous cycle here. I want to provide some maybe thoughts around this or other numbers that we see on the week. Base is the fastest layer two to 100,000 users. This is Delphi Digital tweet. This milestone was reached just 56 days after launch. So a lot of users flocking. This, of course, is measured by daily active unique addresses, of course. This is Ha Su saying, "Rule number one, you always underestimate the importance of distribution, even when you know rule number one and try to keep it in mind." Actually, not totally sure what he's saying there, but Fiscanti says, "This is wild, given there was no expectation of an airdrop or base token." That's what's very interesting about this rapid uptake is that there was no token to

• 28:05Ryan Sean Adams?

  provide juice, and yet it got to 100,000 users in record time. Do you think this sets us up for an L2 summer that is similar in some respects to DeFi summer? And, you know, tell me a bit about that, too.

• 28:20Speaker 00

  Yeah, so my whole kind of thesis on an L2 summer revolves around, I guess, maybe two main things. The first thing is that L2s are finally here and usable, and we have big institutions like crypto institutions like Coinbase, building their own and making it really easy to bridge into these things. There's liquidity on them. There are apps on them. It really feels like the, you know, a lot of these top L2s are just like L1 in terms of liquidity, the apps that are on there. Obviously, there's more liquidity on L1 still, but for the smaller players, definitely probably enough at this point on these platforms. And the second thing is just fresh money coming in. Now, fresh money can come from various different sources. It doesn't just have to come from the outside kind of new money that's not in crypto right now. Maybe it's sitting in a bank account,

• 29:02Speaker 00

  earning some yield, and then they come back into crypto. Fresh money can come from other ecosystems and also from people who haven't actually come on chain yet. And that's my real bull thesis for L2. And this is the same thing that happened in DeFi summer. It brought people who had never come on chain, that were in crypto, maybe they held some ETH on an exchange, they held BTC on exchange, and they saw what was happening. In DeFi summer and they said, I want some of that, right? So they brought their ETH on chain. They learnt how to use MetaMask and other wallets. They learnt how to put liquidity into uni swap pools. They learnt how to yield farm. They learnt how to do all of these things. And we got the birth of DeFi. And DeFi has just kept innovating and growing since then. And I think similarly with with L2s, you're going to get the same thing where people are going to be like,

• 29:46Speaker 00

  what we saw recently with Friend Tech, they're like, I want a piece of that, right? I really want to get on chain and I want to get amongst this excitement that's happening right now. And I think that just by the sheer number of L2s that we have going live and that are live right now, the apps just scrambling to get on to these things because I know that's where the users are going to be. The ports of entry becoming a lot easier because obviously Coinbase supports direct bridging into base. It's really cheap. It costs like 10 cents or something. That's going to get cheaper over time. All of that is going to bring more money on chain. And also the the outside money is also going to come in and they're probably going to skip L1 and just go to L2. So I think that that's all setting us up for when the market heats up and that new outsider money comes in,

• 30:27Speaker 00

  we could potentially see a proper layer two summer where things just go go nuts. And we could potentially see new layer twos launching and within one day getting 100,000 users, not 56 days.

• 30:38Ryan Sean Adams?

  There you go. A lot of reasons to be bullish maybe right now. The setup is here. If you are both an outsider, you've got you've got some narratives. And if you're an insider, you've got some as well. But Anthony, we've got a lot more to talk about. Coming up, that big L for Gary Gensler and the SEC. The US court said the SEC was wrong to deny the grayscale ETF. We'll talk about that. There's also an SEC enforcement action against an NFT company. We'll talk about that. We'll talk about all that and more when we get back. But first, we want to take a moment to thank our sponsors for making this possible, including our number one recommended crypto exchange, Kraken. Go check them out.

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• 32:38David Hoffman?

  Download the Uniswap Wallet today on iOS. There's a link in the show notes.

• 32:41Ryan Sean Adams?

  Grayscale just won a monumental legal victory against the SEC and the entire crypto industry, including you and I, Anthony. We've got a lot of cause to celebrate. This was the fight for a Bitcoin spot ETF in the US, and this is not, we can't declare mission accomplished, final victory, but this was a major step forward for Grayscale and crypto to get a spot Bitcoin ETF approved in the US. Maybe just before we get into this, some context. What's your take, Anthony, on why doesn't the US already have a spot Bitcoin ETF? I mean, Europe has one, Canada has one, I don't know if Australia has one. Lots of jurisdictions have one, the US doesn't. Why?

• 33:20Speaker 00

  So I think in recent times, it's because the SEC has just waged this war on crypto. And I think this, and by recent, I mean over the last kind of like few years, it seems. They typically have kind of cited concerns around market manipulation and things like that, which I don't think that holds much water. And then they would, they would kind of cite concerns around custody, but we have Coinbase as a custodian who has been operating like that for over 10 years now, and has never been hacked, right? And they have the best-in-class custody you're probably ever going to get from a crypto custodian. So really, I don't think there's any reason for them to be denying these things outside of personal bias and just not wanting to see, see this happen.

• 34:03Speaker 00

  And that is pretty much, I think, what the judge has actually said here as well.

• 34:07Ryan Sean Adams?

  Yeah, the judge used these words arbitrary and capricious to define what the SEC was doing and SEC leadership is doing. If you just need a definition of what capricious means, given to sudden and unaccountable changes of mood or behavior. I love that. Unaccountable changes of mood and behavior. And that's what the SEC has felt very much to, I think, the crypto community and a lot of retail investors is they're just not account. Like, everyone wants a Bitcoin ETF. I can't think of anyone who is a retail investor who doesn't want this. If you, just because the product exists, doesn't mean you have to buy it, right? And so why, why are they restricting this choice? I think I go back to, and I agree

• 34:50Ryan Sean Adams?

  with you, Anthony, that it's largely, why don't we have a spot Bitcoin ETF? It's because Gary Gensler doesn't actually want it. So this was a decisive ruling that happened. The judge of a DC Circuit Court of Appeals ordered the SEC to vacate its own order denying Grayscale's application. And what they were trying to do here, this was Grayscale applying to convert their GBTC trust into an ETF, which would also solve a whole number of other problems, right? Because there are a lot of retail investors who actually own GBTC, and that is trading down and lower than spot Bitcoin. So it's a very inefficient market. So And the SEC approved that product, by the way.

• 35:36Ryan Sean Adams?

  It doesn't make any sense. So anyway, this is a big setback, a big L for Gary Gensler in the SEC, and a big win for Grayscale in the crypto industry. This was actually interesting as well. Not only was it a pushback of the SEC, they actually, the court actually said the SEC violated the APA Act, which is the Administrative Procedure Act. If you look this up, Anthony, the APA is actually a set of laws that all federal agencies, so you know, if you're like the EPA or the FTC, or the CFTC, or the SEC, not just financial, but all US government agencies, they're required to abide by a set of laws in terms of their

• 36:16Ryan Sean Adams?

  process for rulemaking, right? They cannot be arbitrary and capricious, right? They have to actually abide by a set of standards when doing this rulemaking. And the court said they didn't. It's very rare for a court system to actually side with a lawsuit and find a regulator in violation of the APA. So not only is this a big loss in this specific issue, I feel like it's a major drain on SEC credibility, right? And I've got to think, Anthony, that's going to come back to bite Gary Gensler. You have to start to wonder how long he's going to keep his job. This is Jake Chervinsky saying, "Great skills. Victory over the SEC

• 36:57Ryan Sean Adams?

  is massive." He also echoes, "It's very rare for a federal circuit court to find that an agency has violated the APA by acting arbitrarily and capriciously. The DC court just delivered a huge embarrassment for the SEC." And then he goes on and says, "But the ETF isn't approved yet." Yeah, so what's your take on all of this so far?

• 37:18Speaker 00

  Yeah, I mean, the point about the SEC's credibility is a good one, because I would say that right now, the SEC's credibility is pretty much almost zero, right? It's like Terra Luna after it crashed. It's just gone to zero, because they haven't really protected anyone. All of the settlements that they do just seem like protection money that they're taking in, right? They'll sue someone for doing something, and then they won't go to court, because that someone or entity will be like, "Well, it's better for us to pay this fine," which is normally less than the money that they actually raised from the alleged unregistered securities sale, right, than go to court. But it seems like every time that the SEC goes to court, they lose. You know, they lost the Ripple case, they lost this case. Are they going to lose the Coinbase case?

• 38:03Ryan Sean Adams?

  I don't know. Maybe they like losing. I don't know.

• 38:06Speaker 00

  Yeah, yeah, exactly, exactly. So the SEC's credibility, I think, is very low right now. As you said, like, it begs the question, like, how long is Gensler going to keep his job? I think that it's a lot of politics going on, obviously, because Gensler is a Democrat appointee. The Democrats don't want to be removing one of their appointees. You know, like that, or at least firing one of their appointees like that during, especially during an election year, obviously, as I was saying before, uh, next year, it doesn't make them look very good. But it could be kind of like a graceful exit thing where they kind of promote him to another position and basically say that, oh, you know, he's been promoted and we're replacing him with someone, you know, better or something, right? So, yeah, just, just generally, um, uh, no one in crypto definitely thinks the SEC is a credible agency at this point with, with Gary Gensler at the helm.

• 38:50Speaker 00

  And I think outside of crypto, even the TradFi people that I follow also think that, uh, Gary Gensler's war on crypto is based on nothing, uh, and is really against the law.

• 39:00Ryan Sean Adams?

  Yeah. So I, as happy as it would make me for Gary Gensler to exit his position, that, that might not be what actually happens. But this whole thing could, could cause him to, to pause and take a step back. Or he could completely go to war and double down. Maybe he has the, the political backing in order to do that. This is Jake Chervinsky again. One theory on where the SEC will go from here. One theory is that the SEC will just pick a different reason to deny Grayscale's proposal and force more long and costly litigation. They could do that, Anthony. That's possible, he says. It's hard to understate the extreme hostility of the SEC leadership towards crypto. Will Chair Gensler really accept this loss? Maybe he'll feel like backed in a corner and want to double down on his position.

• 39:42Ryan Sean Adams?

  But another theory, Jake says, is that the SEC will take the DC Circuit Court's decision, uh, and do a semi graceful exit from their anti ETF position. Jake says, I'm in this camp. It's the right move. We disagree, they could say, but we're following the law. It's, that's a convenient excuse to back out of a losing battle. So hopefully they choose to, they're, they're in this place on the check and chessboard where, where they're in check right now. And hopefully rather than kind of like doubling down and, and, and losing the game, they actually just, just back off. Jake says there's also political pressure on the SEC to prove the spot Bitcoin ETFs, not just about grayscale.

• 40:22Ryan Sean Adams?

  All of TradFi is ready for a Bitcoin ETF, including BlackRock and Larry Fink, who also, you mentioned the Democrats earlier. He throws some pretty heavy punches in, uh, Democrat circles and, um, political DC. Jake. Concludes this thread, I have no doubt that we'll get a spot Bitcoin ETF sooner or later. The only question is how painful the SEC wants to make it on themselves. I strongly recommend that SEC picks sooner rather than later. We'll see. This is what we're seeing in mainstream coverage. This is ABC News. Bitcoin ETF appears to be on the way after court hands the SEC a stinging loss. That's what the normies are saying, Anthony.

• 41:04Ryan Sean Adams?

  They're saying this is a stinging loss and that the ETF is on the way. So they're seeing it too, I guess. All good news from here. And also to the point you made earlier, there are a lot of ETFs that have applied that are due for rulings in the coming weeks and months. So many, I can't even keep track of them, honestly. But there's Bitwise, there's BlackRock, there's VanEck, there's Wisdom Tree. I think there's Kathy Woods, Ark Invest. There's just a whole line of them. And, you know, these will come out over the weeks to come. We had an expert on Bankless recently, James Seffert. He is a research analyst at Bloomberg. He tracks all of these things. And his prediction was possibly by the end of the year, we get this,

• 41:46Ryan Sean Adams?

  but more likely in Q1 of 2024. That's when some of all of the dates kind of converge and the bill really comes due. And the SEC is essentially forced to either approve or, you know, finally disprove all of these applications.

• 42:04Speaker 00

  Yeah, and I think the thing that throws a little bit of a, I guess, like, what's the term I'm looking for? A little bit of a kind of a spanner in the works there is that the ARC ETF that you mentioned actually has a due date before Q1, like a final due date. I don't know exactly when that is, but it's sooner. So as I mentioned before, the SEC actually has to approve all of these things at once. They can't approve one and not the others because they're, from my understanding, they're not allowed to be seen to be picking favorites. And if they do pick one, like if they approve ARC and not the others, what ends up happening is that they open themselves up to massive lawsuits, which they're probably guaranteed to lose. And that's just even worse than the situation they're in right now. So two outcomes, the ARC ETF gets denied.

• 42:48Speaker 00

  That ARC has to refile so that um the SEC can approve all of the ETFs next year in Q1, as we just mentioned, or they all get approved by the ARC date. I'm leaning towards the former more, um, just because, I don't know, it makes for, I, I think it's nicer to just approve them in Q1. Fresh new year, right? Everyone's feeling bullish because it's a new year. Let's, let's do that. But it could happen at the ARC date. Um, but I think the funny outcome will be that the ARC one gets denied. And then everyone's like, oh my God, all the ETFs are going to get denied. But in reality, it's just because they want to approve them all in Q1. So that's another kind of little bit of a short term narrative to pay attention to.

• 43:24Ryan Sean Adams?

  That's a great point. Um, more on the SEC too. They just charged an LA based media and entertainment company called Impact Theory, which I've never heard of, for unregistered offering of NFTs. I don't know if you, you took a look at this story and what was your take here?

• 43:39Speaker 00

  I want to just quickly uh uh note, note the headline here. An unregistered offering of NFTs, as far as I know, is not a thing. There is no way to register an offering of NFTs, right? So if what they're doing here is that they're trying to frame that all NFTs are securities by saying this, right? The, the headline should have read an unregistered offering of securities, not of NFTs. Because there, the SEC has not been able to, to kind of like state or prove in, in law that NFTs are all securities. So they're trying to basically just do their regulation by enforcement um thing here, uh, which is just crap. And I really hate the fact that they did this headline because it just speaks to the fact that they're still stuck in their ways.

• 44:22Speaker 00

  Um, and I, I really want that to change, but we'll have to, we'll have to see.

• 44:26Ryan Sean Adams?

  Yeah, the framing was wrong. Uh, certainly Hermione Wong agrees with you. This looks like a naked.

• 44:31Speaker 00

  Yeah, I got it from her. I got it from her, actually. I didn't know if you had this, this thread here up, but yeah, she says the same thing.

• 44:36Ryan Sean Adams?

  Yeah, I um, I, I think that's true. Now, I will say that um this actual security offering disguised as an NFT or kind of tokenized as an NFT actually does appear to be clearly a security, right? I mean, they raise funds, promising profits.

• 44:53Speaker 00

  Yeah, yeah. Zach XBT did a thread on this project in 2021. I'm not defending the project here at all. It was definitely very dodgy and definitely looks like a security to me based on the assertions that the SEC made here. But like, again, the headline is just ridiculous. And second, they paid $6.1 million in fines, they burned the NFTs that they owned, and they raised $30 million. So did they actually come out ahead in the end?

• 45:20Ryan Sean Adams?

  That's another great question. Well, Hester Purse makes the, Commissioner Hester Purse and her colleague, another commissioner from the SEC, make the same point that you're making is just, let's make sure that this doesn't apply. I don't know if this is a dissent or just a thought piece from Commissioner Purse. This matter raises larger questions with which the commission should grapple before bringing additional NFT cases. So, okay, Hester saying that this is a flagrant securities issue, but like, hold on, timeout, before we carry this to all of the NFT cases, let's pause and actually consider this for a moment. I don't know if she'll be listened to. There was some other interesting regulatory news in the US. The IRS released a draft of

• 46:03Ryan Sean Adams?

  proposed reporting rules for digital asset brokers. The bad news here, Anthony, is they seem to want to treat everyone as if they're a broker and everything like it's a broker. And this could include the front end of Uniswap, or EtherScan, or any other DeFi app interface that you use today. And what they're saying is similar broker level reporting requirements would come from them. So if you make a trade on Uniswap, let's say, then Uniswap has to cut a file to the individual who makes that trade with kind of all of the tax liabilities and the

• 46:42Ryan Sean Adams?

  price-related data. And of course, this is not how any of this works. The IRS is presuming that there's some form of intermediary, like we're dealing with an exchange. Anyway, this caused some concern, of course, in crypto and DeFi as well. And we'll have to see how that plays out. They just put together a proposal. Ruling for comments. So the industry is kind of commenting back and we'll see where this where this all shakes out. But I think the the big question to me is, what what do you think about US hostility to crypto? You actually implied earlier when we were talking about the the bull cases for crypto,

• 47:20Ryan Sean Adams?

  that the US might pivot its stance a little bit. And I'm increasingly feeling and seeing a lot of doomerism in the space. So this is a tweet, all caps, proposed tax regs threaten US blockchain access. Okay, and I think that's true. The proposed tax regs are our regulations are pretty bad. This is Gabe Shapiro saying, in the end, our entire industry will just be run by Coinbase and a small number of others. They will all have government licenses and run some compliant KYC web app style, sort of like an app store and all the DeFi devs. They'll have to pay their vig to them and simp to get listed. All right, there's a lot of doomerism, I think, going on from especially those that live in the US.

• 48:04Ryan Sean Adams?

  This is Antonio from DYDX saying crypto builders should just give up serving US customers for now and try to reenter in five to 10 years. It's really not worth the hassle or compromises. And then he goes on in this thread to talk about how ironic it is. He's an American. He's writing this from his office in New York City. And nobody in his company can actually use the product that he is developing. And he says it's effing ridiculous. And that is ridiculous. What's your take on this, you know, kind of doomerism type feeling about the the US regulatory approach to crypto right now?

• 48:41Speaker 00

  So I think the doomers are gonna always be kind of like very on the on the side of doomerism for various different reasons. And I genuinely take a much more kind of like, I guess, hopeful approach to these things. I would say that Gabe's tweet is just being very kind of like out there with his assertion here that they'll just be government licenses and compliant KYC to everything. It's just what it's doing is it's taking like the worst case as if it's the base case and then applying that and saying this is this is what we're gonna Get right. This is the end state of the ecosystem, which I honestly think is a ridiculous take the proposed. The the proposed things that you were just talking about the the tax regulations.

• 49:22Speaker 00

  Yes, they are crappy. They're bad. They're unworkable, but they're not law. They're not the regulations yet. They can be amended and changed over time. And I I I bet that they will be to the point where they actually get sanitized and look a lot better than what they do today. Based on feedback and things like that. And I also think that inherently, a lot of this stuff is actually hard to understand. For even people in crypto, let alone people outside of crypto. So how much, uh, you know, knowledge do the people writing these things have about crypto? If they've got nothing, then they're going to write it as if they un- as they understand it. Then they're going to solicit feedback and get comments in whether they listen to that is another thing. But that's that's kind of what happens from there. And then the final point with Antonio's tweet here.

• 50:05Speaker 00

  By saying that the crypto builders should just give up and leave the US is the worst thing that they could possibly do. Because if you give up and leave the US, that means you're not fighting anymore, right? And if you try to come back in five to 10 years, we're probably living in Gabe's world where he said that everything's just K Y C. Because no one was around to fight it. It's like it's like saying that while my house is on fire, I'll just go down to the McDonald's for for lunch. And then I'll come back and everything will be okay. That's not how it works, right? So that take to me is just kind of ridiculous, but it is also ridiculous that his own employees in the company, the the software that they're building. In the U. They can't actually use it like that is crazy, right? Um, and obviously D Y Dex is not the only app that is gonna um, the only project that's going to suffer from this.

• 50:49Speaker 00

  So that needs to be fixed, but it's not going to be fixed by leaving the US and coming back in five years. That's going to make it worse.

• 50:55Ryan Sean Adams?

  Yeah, I I agree. And some of this honestly, Anthony is like cathartic for me to read because it's so frustrating, right? So a certain amount of, I I wouldn't say maybe doomerism, but kind of alarmism, uh, rally the troops ism is actually necessary. For us to kind of like take a stand and and talk about how stupid it is that the US doesn't have a Bitcoin ETF. Why? Because some regulators on a power trip. How stupid it is that Bill. DeFi builders like Antonio are building a fantastic application that like benefits the rest of the world and his own company, he himself can't actually use it. Like, how dumb is that? And I do think part of this is letting our voices be heard while not succumbing to kind

• 51:40Ryan Sean Adams?

  of that doomerism that maybe Gabe's tweet suffers from. This is Mike Selig, a crypto lawyer we've had on the show. He says, "The SEC, CFTC, FinCEN, OFAC, New York Department of Financial Services, and now the IRS have all tried to regulate crypto out of existence. The US is going to run out of regulators to throw at crypto pretty soon." The US has too many regulators. Holy crap. It's just too many. I think that is a great point. We had to have been at some point of like seeing the worst at this point in time. Like, all of the regulators have something against crypto and we are making some progress. We got a lot more to talk about. DCG agreed to deliver 90% back to Genesis creditors? That's big news. Also, Anthony, I want to ask you about Lido. They're almost at 33% of ETH

• 52:25Ryan Sean Adams?

  staked. Is that a big deal? Should we be concerned? Oh, did you hear this too? BitBoy Crypto fired BitBoy. I didn't even think that was possible. We'll talk about all that and more. Before we do, we want to thank the sponsors that made this episode possible, including MetaMask. Go check out their portfolio app. Get your bull market battle station ready.

• 52:43David Hoffman?

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• 53:26David Hoffman?

  I already know that you have MetaMask wallet, so go check out your MetaMask portfolio. Learn more at metaMask.io/pot portfolio.

• 53:34David Hoffman?

  Introducing ETHX from Stater. ETHX is a liquid staking token designed to maximize rewards all while securing Ethereum. With Stater, you can run an Ethereum node with just four ETH, which is 85% lower capital and 35% higher returns versus just solo staking. Stater has a multi-pool architecture with both permissionless and permission node operators to enable decentralization and scalability. Stater has extensive experience in building liquid staking solutions on six proof-of-stake blockchains and is trusted by over 70,000 stakers. Stater has partnered with over 40 leading protocols on these chains to bring DeFi utility to their liquid staking tokens. Stater is actively building integrations and partnerships across Ethereum to bring the same great DeFi utility to the ETHX token.

• 54:16David Hoffman?

  While smart contract bugs are always a risk in DeFi, the ETHX smart contract has received three independent audits and has a million-dollar bug bounty with ImmuneFi. Go to staterlabs.com/eth/stake to access the Stater staking protocol today.

• 54:29Ryan Sean Adams?

  Some good news this week. We were mentioning Roman Storm, the developer of Tornado Cash, how he was arrested by US prosecutors. He is already out on bail, according to his lawyer, Brian Klein. So that is good news. Brian says, "Although I remain very disappointed that the prosecutors charged him because he helped develop software, their novel legal theory has dangerous implications for all software developers." He notes that Roman Storm is already out on bail, so that is some good news. Just a follow-up from last week. There is a link we will include in the show notes where you can actually give Roman and other Tornado Cash developers their legal defense. You can donate to their legal defense if you want to do that.

• 55:14Ryan Sean Adams?

  This is from the FreeAlex Percef website. According to this, has been vetted by several folks I trust in crypto, and it looks like the funds are going to flow to Tornado Cash legal defense. That's another way we push back. Anthony, this was interesting to me. We've been talking about Farcaster a little bit on Bankless recently. Certainly, Web3 Social has kind of picked up steam. And Farcaster V3, their rollup starts on Tuesday. Well, actually, it already started. So that was yesterday at the time of recording. What's interesting about this is new users actually have to pay money to use this network. Five dollars per year to use the network and that lets you store 5,000 casts,

• 55:57Ryan Sean Adams?

  2,500 reactions and 2,500 follows. I was just curious, like, what do you think of this model? The, the idea that we are actually paying rather than through our eyeballs, I guess, an ad model, we're paying to use our Web three software. Do you think this will be scalable? Do you think we'll see this elsewhere?

• 56:14Speaker 00

  Yeah, so I, I think Farcaster is probably the best attempt we've seen at something like this in, in and outside of crypto, basically making a social media platform that people will just pay for, right? Instead of, as you said, having our eyeballs kind of hijacked by ads and we become the product. We actually pay for the product and we get a certain usage out of it. So it's basically just API kind of like reads and, and, and storage and things like that. But I think, you know, five dollars a year. I, I think the, the price was cho- was definitely chosen by the Farcaster team purposefully. And the limits they've put in place for that was also chosen purposefully. But I think that's going to cover most users. And I think that being able to, to get access to a decentralized social media network that you can kind of interact with and be on for five dollars a year is an absolute bargain. Right?

• 56:58Speaker 00

  Especially when you can pay in crypto, which I'm, I'm going to assume is going to be available from, from day one here. I've been on Farcaster for a little while now. I've tried to engage. I mean, it's very hard to break my Twitter habit. That, that's for sure. And I, and I, I don't want to kind of just be copying over everything I put on Twitter on Farcaster. But I've been on Farcaster for a while in the closed beta, kind of, um, in closed beta period. And it's been really fun to kind of interact with it and, and, and use it. And it's, it's really smooth. I use the Warp Cast client because you can use different clients on it. But yeah, I, I do think that this model has the potential to, to scale definitely. But at the end of the day, also people need to understand that if you're not paying for the thing that you're using, then there are going to be ads because that's the only way that you can actually finance it.

• 57:39Ryan Sean Adams?

  Yeah, you are the product. Well, here, here's another question unrelated to Farcaster, but one I've wanted to ask you all week. So Lido is almost at 33% as one-third of all ETH staked. They are at 32.17% the time of recording. And of course, having one-third of all ETH in your protocol is, is certainly a milestone when it comes to kind of consensus. How worried should we actually be about this? What's your take?

• 58:13Speaker 00

  So there is a lot to unpack here, so I'll try to keep it concise, so I don't ramble on for people. I think when people see numbers like this, they automatically go towards, oh my god, you know, Lido 33%, that's a huge, as you said, like that's one third of the steak teeth, that's a huge part of the network. You know, what if they kind of turn bad and wanted to do something bad on the network, right? So that's the kind of thing that people automatically go to. But what I want to unpack here, and I don't want to pick on kind of Lido, because this could have been anyone. It could have been Coinbase, it could have been Binance, it could have been Kraken, and maybe it will be in the future, you know, who knows? But with Lido, people need to understand that it's not like when you stake with Lido,

• 58:53Speaker 00

  all of that E stake is going to one node operator, as we call them, one kind of entity that's operating all of the validator infrastructure. There are currently 30, I believe, node operators under the Lido umbrella. So there are 30 different entities that are operating underneath the Lido umbrella, of course, but they're operating their own infrastructure. And most of these entities, as far as I know, are outside of the US as well, whatever that counts for here. So that fact, I think, should be talked about more, even though some people will argue that, well, yes, they're separate entities, but they still exist under the Lido umbrella, and Lido governance can still affect what they do. And yes, that's true, Lido governance, I don't know about right now, but they might be able to do this right now,

• 59:37Speaker 00

  but in the future, they could vote to remove a node operator, or remove a bunch of node operators for no other reason than the Lido token holders wanted it to be the case, right? Or they could vote to remove an operator because they were doing something like allowing transactions through that the rest of the Lido node operators didn't want to happen, or something like that. So there are obviously centralization concerns here, because Lido has that governance token, the LDO token, which governs the kind of whole Lido ecosystem. So I totally understand that. But the entities themselves are definitely kind of like separate, and it's not like if one of these entities was to go offline or get slashed, it wouldn't affect the other ones, because they are distinctly separate. But, and then the question falls to, okay, yeah, okay, they're distinctly separate,

• 1:00:22Speaker 00

  but let's assume that they're all going to work together, and they're all going to collude together as part of the Lido kind of entity. What's the worst they can do here? Well, really, at 33% You can't necessarily do anything catastrophically bad. And I don't really see any incentive for them to do this to begin with. But what I think, and this is why I want to be concise here. I'm gonna, I'm gonna miss a bunch of context here. But what I want people to understand is that the Ethereum blockchain is not defined by one entity. It's not defined by Lido. It's not defined by Kraken or Binance or Coinbase. It's not defined by you or me. The Ethereum blockchain, what Ethereum actually is as a network, is defined by its users, by its community, by its stakeholders. And these range from core developers to people that run validators,

• 1:01:07Speaker 00

  to people building apps on top of the network. We all have a say in what the Ethereum network is. And we have lots of precedent over this. Bitcoin in 2017 had a hash war with Bitcoin Cash, where Bitcoin Cash forked off and said, where the real Bitcoin? And they had like a minor hash war going on. But the thing is that the majority didn't believe that Bitcoin Cash was the real Bitcoin. So the real Bitcoin remained the Bitcoin that we know today, right? And the same was true for Ethereum during the DAO hack back in 2016, where people were saying, well, no, Ethereum Classic is the real Ethereum. But no one, the majority didn't believe that. The majority believed that Ethereum was the real Ethereum. So if we're talking about attack vectors here, if Lido was to become malicious in any such way, right?

• 1:01:50Speaker 00

  What ends up happening is that the rest of the community and ecosystem would say, well, Lido is acting maliciously, then Lido is trying to basically make the network something that it isn't. So we're going to decide that Lido is basically a bad actor, and we're going to essentially socially fork them out. Now, that's a messy proposition, of course, and that's not something that we necessarily want, a point that we want to get to. But I just want to illustrate the point that a blockchain ecosystem is not defined by these sorts of things. And while Lido or any entity having a big percent of the market share is definitely a risk. Yelling about it and and kind of like uh uh being kind of, I guess, like um uh uh infighting it and kind of being maybe doomer about it is not going to move the needle.

• 1:02:32Speaker 00

  And this is an unpopular opinion amongst a lot of my Ethereum friends and they don't like it when I say this, but um there was a proposal to to uh to different staking providers. Uh I think it was last year or it's been going on for a while to for them to self-limit the amount of stake that they would take into their their kind of like protocol. And the limit, I think, was 22% or something like that. Lido is already over that limit. So what you're basically asking Lido to do is to reduce its market share, a for-profit business, mind you, with a token, to reduce its market share to 22% uh just to satisfy what what you know, whatever you you you the criteria you've come up with here. And and look, I understand why people wanted to do that, but that's not how you compete with these big ecosystems.

• 1:03:16Speaker 00

  That's not how you reduce their market share. How you reduce Lido's market share is by building a better product, right? And that's exactly what other staking providers have have tried to do, like Rocketpool, for example, and other ones out there. Um they have tried to build better products to compete with Lido and compete in the free market because Lido doesn't have any special privileges over the the Ethereum network. They it's not like the Ethereum network says to Lido, hey, you know, you're going to get more yield because you're Lido. No, the Ethereum network does not favor anyone. What happens is that the Ethereum network says, anyone can build an LST on top of me, that's fine, and then you go compete in the free market. So when you look at it from from that perspective, at least from the perspective I look at it, you reduce dominance of any one player by by by increasing competition in the market.

• 1:03:59Speaker 00

  And also, the dominance of any one player needs to be looked at under a microscope, under a lens of, you know, Lido is different to Coinbase, Coinbase is different to Rocketpool, uh you know, Coinbase is different to Binance. You can't look at them as if they're the same thing. So as much as I understand the risks and understand the concerns around Lido specifically, I also am a realist and I also believe that the we can keep talking about it as much as you want to keep talking about it, but what's really going to move the needle is competition.

• 1:04:26Ryan Sean Adams?

  Yeah, I think I find myself largely agreeing with all of those points, even though this is a very contentious issue. And we did an entire episode this on Hasu, who we sort of put on the hot plate to kind of like answer for Lido. But, you know, he takes a very pragmatic approach to all of this. And I think my conclusion at the end of that episode was like, how concerned should we be about Lido having 33%? It's not ideal. Let me be first to say it's like, it's like not ideal to have this sort of situation, but it's better than Coinbase having it, right? One single centralized entity. And Coinbase having it would be better than like CZ and Binance having it, from my perspective.

• 1:05:09Ryan Sean Adams?

  So there's this scale of like, you know, not bad or good, but like, good, better and best, right? And this is better than some other outcomes, though it's still not ideal. I think the one thing that really concerns me, though, about all of this, Anthony, is actually more smart contract risk. So I'm less worried about collusion of those, you know, 29 to 30 entities inside of Lido and governance doing something bad. I think those are all concerns. And by the way, Lido's working in some ways to kind of mitigate some of those and decentralized elements of it, like giving ST ETH holders the ability to vote, that kind of thing, right? But I'm less concerned about that. I'm more concerned, what if there was like a bug in like,

• 1:05:53Ryan Sean Adams?

  the underlying Lido smart contracts, right? That caused like a DAO style of like event, let's say? What happens then? But that also comes into play if we have a lot of ETH accrued in sort of like Maker or in sort of any default or Eigenlayer or any kind of large smart contract set of code that that manages, you know, a lot of ETH. And then there-

• 1:06:18Speaker 00

  Yeah, that's table stakes, right?

• 1:06:19Ryan Sean Adams?

  Yeah, it's table stakes. And there, back to your point, we have to revert back to the social layer anyway. So I'm not really sure what we do there. But let me ask you this, because so here's a little bit of pushback. Some people say in the community that, no, actually, Anthony, Ryan, you guys are wrong. People like you, call them Ethereum community members and leaders, you have the responsibility to actually stop talking about Lido. Like, put Lido down in your education episodes, right? Tell people to go stake elsewhere. And by the way, you know, we do tell people to go stake on Rocketpool, run your own node, those sorts of things if it's within your... But like, they think that the social leadership around Ethereum should be doing more.

• 1:07:04Ryan Sean Adams?

  What's your take on that?

• 1:07:06Speaker 00

  I'm not sure how much more I could personally be doing. I mean, and also, also, also with Bankless. I mean, we're both Rocketpool ODL members, right? We're both part of the ODL. We're both really big bulls on Rocketpool. I'm the same as you. I don't, I honestly don't tell people to stake with Lido, but not because it's Lido. I'll, I tell them, don't stake with the top provider, right? Don't, don't stake with the biggest entity. Stake with a, with a small entity, help the decentralization of the network, because it's good for the overall health of the network. But as I was kind of alluding to before, I don't think it actually helps us to, to put down Lido because they've gotten to the market share that they have. It's obviously the market basically saying that Lido is a good product and people want to use it.

• 1:07:48Speaker 00

  And as I said before, the Ethereum network does not favor Lido. It does not favor any staking entity. So if Lido is winning, it's winning based on merit, in my mind. And people may agree with that. People may say, oh, well, you know, Lido does underhanded tactics or whatever. But at the end of the day, like, any protocol can do that. It's not like, as I said, Ethereum is favoring Lido specifically. So I just revert back to my, look, you know, you and I are doing a lot to try and kind of push the needle forward here. I'm, as I said, I'm always trying to push people to others taking protocols. And that goes back to my point about just increased competition in the market. And that is a huge market share that, you know, the LST market share, I think is like, what, 80% plus for Lido? That's a huge market share that can, that competitors can come in and get for themselves.

• 1:08:33Speaker 00

  And they will naturally do that. And we've seen a lot of these competitors come online recently. And even like Rocketpool is continuing to grow. They have a lot of really awesome plans coming along. And I've been a big proponent of them. So I think that... Rather than than shooting people and putting and and kind of like going after the people and saying, you know, you should be doing more, you should be doing blah, blah, blah. I just kind of need to understand and maybe acknowledge that people are doing what they can. At the end of the day, shouting can only get us so much. Talking about it can only get us so far. There needs to be decisive action to to match that as well.

• 1:09:03Ryan Sean Adams?

  All right, there you go. Yeah, I think that's a good message. Moralizing can only get us so far. And at some point in time, we have to like just build a better solution. Speaking of building great solutions, and this goes back to one of your your bullish points about fintech getting involved in in crypto. Apparently, American Express has partnered with PoApp to give PoApps for attending certain Amex events. This is super cool. This is a tweet from Mambosian dot ETH, and they say, "Super cool. I I hope this is just the beginning of Amex getting into blockchain tech." So not only Visa, but it looks like Amex with an integration here. I've not tested this out myself, but yeah, with all the Amex terms and conditions here. It's kind of cool to see that that level of traction.

• 1:09:47Ryan Sean Adams?

  This was also interesting, Anthony, from on the Bitcoin side of things. This is a tweet from Bitcoin Magazine, which doesn't often make it inside of a rollup, but here it is. Elon Musk's X, that is, aka Twitter, obtains license to store, transfer and trade Bitcoin and crypto. I'm glad they said "and crypto," by the way. I think, you know, thanks for that. Did you take a look at this?

• 1:10:08Speaker 00

  It got community notes, though, like if you look before. It's not it's not totally accurate. It's just, as it says, "X obtained to currency transmitter license in the state of Rhode Island. This license is required if X were to provide virtual asset-related services." There's absolutely no mention of Bitcoin in the licensing filing.

• 1:10:26Ryan Sean Adams?

  Is this a big nothing burger?

• 1:10:29Speaker 00

  Not necessarily. I think that, you know, when it comes to payments, I don't know why. So so, okay, maybe step back a little bit here and give some context. Elon did payments in Bitcoin for Tesla, right, quite a while ago. That went nowhere. No one wants to use their Bitcoin as money. Okay.

• 1:10:46Ryan Sean Adams?

  This was to be clear, you could buy a Tesla with some Bitcoin if you wanted to. And also Dogecoin.

• 1:10:52Speaker 00

  Yeah, yeah, yeah, yeah. So, so, okay, well, then, what has Elon learned from that? I, maybe he, he has. And what, what are they going to integrate into this payments kind of platform?

• 1:11:02Ryan Sean Adams?

  Stablecoins.

• 1:11:03Speaker 00

  Crypto. Exactly. Stablecoins. Stablecoins. That's where it's at. And PayPal just announced their own stablecoin. You know, you gotta, you gotta think there's some movement going on there. So I, I, I definitely think that stablecoins are the more likely candidate. Yeah, maybe you will be able to do Bitcoin as well, but I highly doubt people are going to be using their Bitcoin for payments on Twitter.

• 1:11:21Ryan Sean Adams?

  It's so funny to me. Your Bitcoin community is so funny. Like simultaneously, they've, they've told us how valuable Bitcoin is. Never sell your Bitcoin. And then they also want like Bitcoin to be used to buy a Tesla. I was like, I don't encourage anybody to spend their ETH on anything. It is, it is a store of value asset. All right? We'll, we'll create a unit of exchange through some other mechanism, but, but don't sell your Bitcoin. Don't sell your ETH. Um, I, you know, I don't know. That's a, it's funny to me when that sort of stuff comes up. Um, this is interesting though, Anthony. DCG, Digital Currency Group. Man, they've been at the center point of a lot of things. Most notably, I think in retail investors' mind, there is an $800 million loan

• 1:12:00Ryan Sean Adams?

  from Gemini, the Gemini Earn Program, that, that, um, Digital Currency Group and Genesis basically owns Gemini Earned customers. They have not paid back. And here is a statement this week. I've not gotten in depth on this from Digital Currency Group. They're pleased to reach an agreement in principle with Genesis and the Unsecured Creditors Committee, which provides a framework for comprehensive resolution. Man, I'm not going to read all of this, Anthony. It's kind of legal speak. I think the TLDR is, um, DCG has agreed with Genesis creditors to deliver recoveries of up to 90%. Maybe that's the key word, up to 90%. So there's a lot of gray area, uh, from the numbers of zero to, to 90%.

• 1:12:44Ryan Sean Adams?

  But, um, some details are DCG plans to take up new debt facilities and a repayment agreement. This will include 328. 0.8 million loan facility, two-year maturity, $830 million loan facility with a seven-year maturity. There's a lot of details here. And 70% to 90% recoveries for unsecured creditors in US dollars equivalent, 65% to 90% recovery of in-kind basis, depending on the denomination of the digital assets. I haven't heard from the Gemini side whether they feel like this meets their needs or not. So the story is kind of not full yet. But I'm wondering,

• 1:13:28Ryan Sean Adams?

  from your perspective, if you think this is kind of the last cleanup that we have to make from all of our sins in 2022, and maybe the sins of Barry Silbert and Suzu and some of the centralized lending borrowing providers.

• 1:13:45Speaker 00

  Yeah, I think this is one of the last ones, to be honest. I mean, there's still, obviously, the FTX bankruptcy process, which is just going to take forever and seems to be just draining money out of FTX creditors. Unfortunately, the lawyers seem to be cleaning up there. And there's a 3AC case as well, which I believe the Gemini, sorry, Genesis was involved with, and that's why they kind of got kind of stung with some bad debt here. But yeah, hopefully, this ends in a positive outcome for Gemini creditors there and Gemini earned customers. But you were reading all the legal speak and all the up-twos and everything. It doesn't inspire that much confidence, right? It really seems like this is going to take a lot longer than people would hope to kind of like get repaid here.

• 1:14:29Ryan Sean Adams?

  What is going on here? BitBoy Crypto is no longer employed, employing BitBoy. I don't even know how that works.

• 1:14:38Speaker 00

  Yeah, I didn't know that BitBoy Crypto was more than BitBoy, but apparently there are other people that like were on some videos and stuff. I mean, obviously, I don't watch the BitBoy show, but I saw this and I'm just like, that's really ridiculous.

• 1:14:51Ryan Sean Adams?

  He's been fired, right? That's what happened?

• 1:14:53Speaker 00

  Yeah, yeah, like, yeah, yeah. And I feel like the company's gonna die because, I mean, the only reason anyone followed it was because of BitBoy.

• 1:15:01Ryan Sean Adams?

  Why did they even, can you explain this to me? Why did they even follow it? Even, even like while, but why is the appeal of BitBoy? I, I've never understood this.

• 1:15:10Speaker 00

  I don't, I don't, I don't know personally. Um, I think really the, the appeal is, is that it appeals to the Dgen gambling side of crypto, the people who want to kind of like buy into these low caps and be told that it's going to go like a hundred X and they're going to make life-changing money. But yeah, I, I've never, these kind of people have never appealed to me because that's not something that I'm about. Um, but yeah, it's got a lot, he's got a lot of subscribers, right? 1.5 million or something like that. It's just crazy.

• 1:15:34Ryan Sean Adams?

  It's absolutely insane. Uh, even when you compare that to like bankless or, or daily way viewership, it's just like he dwarfs us. Uh, like in a massive way and it's a part of this. Uh, do you remember this clip? This is from October of last year. I'm just going to play this. So for people who have no idea who we're talking about, this is, this is a flavor of how Bitcoin talks and how he speaks. This was him from October 2022 of last year.

• 1:15:58Speaker 03

  But I want this guy right here, Ryan Sean Adams. I don't know who the F you are because you're not important. But here he says, please, dear Lord, and any lawmakers or adults reading this tweet, just know BitBoy doesn't represent us either. Talk to Jay Shervinsky, talk to Miller C W L, talk to Coin Center. You know what? We are tired of people that look like this guy trying to run stuff.

• 1:16:24Speaker 03

  I don't represent the people, the fuck I don't.

• 1:16:27Speaker 00

  Yeah.

• 1:16:28Speaker 03

  I'm the one who does. It's me.

• 1:16:30Speaker 00

  He's going.

• 1:16:31Speaker 03

  I'm the one out here putting the work in.

• 1:16:33Ryan Sean Adams?

  Oh my God, it goes on, but it's, it's just.

• 1:16:35Speaker 00

  It's just an unhinged rant and I think he actually got fired. At least they'd said that he got fired because of substance abuse and maybe he can see that in this video. But I don't know how true, how true that is, but, um, yeah, it certainly seems like he's, he's unhinged.

• 1:16:51Ryan Sean Adams?

  Yeah, and there's this weird populist rhetoric that I've never kind of identified with and just sends tingles up my spine. Anyway, good luck Bitcoin, BitBoy in the future. Did you see this, Anthony? So Instadap is rolling out a multi-sig, and I'm wondering if this is going to be a safe competitor. Yeah, did you take a look?

• 1:17:11Speaker 00

  Definitely a safe competitor, yeah, yeah. It's got like very similar features to Safe, you know, the apps, the bridging, the stuff like that, obviously the multi-sig thing. And I think we need competitors in the multi-sig space. I know it's a kind of scary thing, I think, for people to build, because obviously multi-sigs can be like huge honeypots for assets and stuff like that, but we can't just rely on one. I don't want Safe having a monopoly over multi-sigs.

• 1:17:35Ryan Sean Adams?

  I agree. Are you at the point where you like trust Safe? Like you trust as well as a ledger? Or an EOA?

• 1:17:42Speaker 00

  Yeah, I mean, I'm definitely at a point where I kind of like trust Safe. I mean, it's been around for a very long time now, and I think that, I mean, I don't want to say anything definitive, but you know, it's got such a large honeypot there that I feel like if there was a bug, it probably would have been found by now, but if there's always, and I know, I don't want to jinx it, there's always the kind of, there's always the kind of risk with these things, but the multi-sig stuff is actually more secure than a vanilla hardware wallet, because you can have hardware wallets as your multi-sig signers, right? So you can do like a three of five and then just have, you have one of the wallets, you know, two other trusted people have them, and then it needs all three signatures in order to do any transactions, rather than they just being one. But yeah, it does come with the trade-off, as we were talking before, about smart contract

• 1:18:27Speaker 00

  risks generally being prevalent in these things, or being, or existing in these things.

• 1:18:33Ryan Sean Adams?

  Yeah, 100% though. And by the way, the UX of these multi-sigs, like Safe, has gotten so good these days. It's just, it's really a pleasure to use. Guys, we got more coming up, some questions from the nation. A question to Anthony and myself, why on earth would there be thousands of chains instead of a winner-take-most type of market? We'll talk about that idea. And also, is staking ETH really risk-free? We call it the risk-free rate. Can we justify that? Stay tuned, we'll be right back. Talk to you soon.

• 1:19:01David Hoffman?

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

• 1:20:56Ryan Sean Adams?

  Question this week from the Bankless Nation. This is LimeZ. What's the counterargument to L2s being a winner take most? What actually meaningfully differentiates individual chains in the OP superchain vision? Why would users and developers not flock to the market leader? I think the question here is like, there's this idea that we might have hundreds or thousands of chains. Like, why? Why is that even an attractive notion? Why doesn't everyone just flock to like their favorite optimism or Arbitrum EVM chain? And it becomes kind of a winner take most or winner take all kind of network effect? Do you have a take on this?

• 1:21:34Speaker 00

  Yeah, I mean, I think the obvious take is probably that we get more scalability by modularizing everything, even though they may connect to something like a superchain where they share liquidity and stuff like that. Still, by modularizing it, we get just like more scalability than we otherwise would have. But I think generally, this is actually an open question. And I actually don't think anyone has a definitive answer to this. If you want to take the kind of history here, we only have history when it comes to L1s. And really, L1s have been a winner take most market, where Ethereum has taken the lion's share of L1 activity. And that has been true for quite a while now. But we don't know what, how it's going to play out in the L2 world. You could make the argument that it's going to play out the same way. But the L2 world is a bit different in that we're going to have like, you know, the OP superchain.

• 1:22:17Speaker 00

  But we're also going to have Polygon's version of the superchain and potentially ZK Sing's version of it. And then those things may just connect together and share liquidity and interoperate. So the way I maybe like to think about it, if you want to use real world analogies, is that blockchains and L2s, they're just like nations, right? They're just like countries where you have big nations like the US and you have small nations like Australia. I mean, economically, we're pretty big, but population wise, we're small. But they all trade with each other, right? They all interoperate with each other. We have global supply chains, all those sorts of things. And that way, we have more scalable things like culture, which I think is very important and often overlooked. But more scalable kind of manufacturing, more scalable. Economies generally. So that's how I like to view it. And in terms of flocking to the kind

• 1:23:02Speaker 00

  of like, in terms of being a winner take most, I think in the long term, it probably won't be because there's just so much opportunity out there and there's so much kind of money and activity to be had that the competition is going to be very fierce. And I know that liquidity begets liquidity, but the same could be said for really anything. And I don't think we see the real world play out as a winner take most kind of thing. We do have dominant players, but there are also smaller players that can bat above their average. As I said, Australia has a relatively small population. We have a rather large economy because we have a lot of minerals that we dig out of the ground and sell to other countries. Same is true for L2s. Maybe they have something that they sell to people, not just block space. Maybe they have unique block space where they let you program your smart contract in a language that isn't solidity or something like that, right? So there are these differentiations that can

• 1:23:45Speaker 00

  happen. And that's how I generally think about these kind of like L2s.

• 1:23:49Ryan Sean Adams?

  Yeah, I think that's a pretty good analogy. And by the way, it kind of fits because all of these chains and networks are kind of, they're almost like emerging economies. So you can think of kind of emerging nations. And yes, we do have hundreds of countries across the world, but there is a G7. And then there's also a G20. And that is kind of disproportionately weighted towards the larger companies with larger economies as well. And so I think we'll start to see that. One interesting question, though, is whether that kind of breaks on the, you know, kind of the superchain level, or the individual chain level, or kind of like the main chain level. What I mean is, you know, will it be

• 1:24:29Ryan Sean Adams?

  winner take most, or winners take most at the superchain level? Or like, you know, optimism and maybe a couple of other chains, like they start to accrue all of their value, optimism, Polygon, Arbitrum? Or will it be at the chain level? And that's something I also don't know. I don't know if you have a take on that.

• 1:24:51Speaker 00

  I mean, there's an argument that if everything becomes interoperable, it's actually the bridges that accrue a lot of the value.

• 1:24:56Ryan Sean Adams?

  Right, right.

• 1:24:57Speaker 00

  You know what I mean? So there's that argument as well. And I, as I said, I don't think we actually have a definitive answer that could be given at this point in time. It's still too early. I, I've just gave, given a slice of my kind of views on these sorts of things. But this is exactly why I'm personally investing in as many of the L2 kind of things as I can, because I don't know which one's going to win. I don't know who's going to be the market leader. You know, and to use an analogy, up until recently, people thought that Arbitrum was the, was the, the market leader, right? Of the L2s, they thought that Arbitrum had just, had just squashed Optimism, had crushed it. But then Optimism came back with this OP stack thing. They landed base and they're getting all these people building OP stack change now. And now suddenly everyone's changed their narrative and changed their tune.

• 1:25:41Speaker 00

  And they're like, you know, Optimism's the market leader now. So this is what I mean by it's very hard to kind of pick a winner because the winners can look, look like they're winning at one point, but then be like a loser at another point. Not to say that Arbitrum's a loser or anything like that, but I'm saying that the rankings can change pretty, pretty quickly in this ecosystem.

• 1:25:58Ryan Sean Adams?

  Except Ethereum, right, Anthony? Can we pick Ethereum as a winner?

• 1:26:02Speaker 00

  I mean, yeah, I, I think at this point we definitely can for, for, I mean, too many reasons that I don't have time for on the show, obviously. But, but still, there's always that kind of like, you know, less than 1% in my mind, risk that Ethereum loses its, its kind of like market leadership.

• 1:26:18Ryan Sean Adams?

  Totally. Well, here's a question about ETH, in particular to this idea of the risk-free rate. So here's the question from merkleroot.eth. I love the notion of staking as the risk-free rate internet bond, but when I seriously consider staking a meaningful amount of ETH, I get stuck. Is it truly risk-free? And does the 4.2% justify the risk? The poster goes on talking about how they tried Geth and Prism. It was kind of challenging, took 32 ETH, LSDs, there's smart contract risk, worried about staking with Lido, all of these things. So the, the overarching question, this idea of risk-free rate, is it truly risk-free?

• 1:27:00Ryan Sean Adams?

  And 4.2%, does that justify the, the risk? What's, what would be your answer to this question?

• 1:27:08Speaker 00

  I mean, I probably wouldn't consider it risk free under any kind of capacity here. I would say if you want to get as close to risk free as possible, you would be a solo staker, running it all on your own, running all your own infrastructure, running your validator keys yourself and the validators yourself and everything like that. That's as close as you're going to get. But even with that comes the risk. But the risk free, the term risk free is probably being used in a different context here. Because what it means when it comes to kind of like treasuries, for example, is that it's as close as you're going to get to a security guarantee because the US government is guaranteeing that kind of like that bond or that kind of like treasury note, right? Whereas with Ethereum, if you're solo staking, the Ethereum network is going to guarantee

• 1:27:52Speaker 00

  that as long as you follow the rules, it's going to pay out the yield that it's supposed to pay out to you based on the network rules and based on obviously other things like fear of you and things like that. But it's not going to guarantee to you that you're not going to get slashed or that you're not going to go offline, right? And it's obviously not going to guarantee to you there's not going to be smart contract bugs if you're staking with Lido or Rockpool or whatever. So I think that the term itself probably doesn't map one to one. But if you wanted to try and map it one to one, I would say that solo staking on your own, completely on your own, is the closest you're going to get. Otherwise, yeah, there's risks with every kind of staking setup.

• 1:28:25Ryan Sean Adams?

  Do you think it justifies it, running a solo staking to get 4.2% ETH?

• 1:28:29Speaker 00

  If you feel comfortable doing it, sure. I know that people don't feel comfortable doing it for a variety of different reasons. I would say that the risks of slashing are vastly overstated. You're most likely not going to get slashed unless you're trying to actually do something malicious on the network. And going offline is not very punishing at all. It actually is very forgiving if you go offline. So yeah, I would say that generally it's definitely worth it in my mind. And I have most of my ETH staked. And the reason why it's not all staked is because I don't have enough at times to spin up another solo validator, obviously you have to get to 32 ETH. And also I want to have ETH for gas fees, obviously, as well as to keep some ETH for gas fees.

• 1:29:10Ryan Sean Adams?

  Right. Yeah. You know what? For me too. And by the way, this is every investor, every ETH holder will have to make their own decision and what your risk profile kind of looks like. For me, it also recently crossed that threshold where I was not staking very much of my ETH. And now I'm staking the majority of my ETH. And it recently kind of crossed that threshold to me because we're like, you know, a year plus into kind of the merge and all of these things. And so I'm feeling a little bit better about it. But yeah, I will plus one what you just said, Anthony. And this term risk-free rate is actually like a TradFi term. Okay? So in the context of ETH, it doesn't mean that there's no risk to staking. There is

• 1:29:53Ryan Sean Adams?

  slashing risk. There are other risks you have to consider. What it means in TradFi is it's generally applied to like T-bills or treasuries, the US treasuries. And so like if treasuries are yielding a 5% interest rate, that's like considered in TradFi, the risk-free rate. And the reason it's the risk-free rate is because if you're going to invest in anything else, if you're going to buy a property, if you're going to invest in a stock, if you're going to buy any kind of asset deal to return, it better damn well be above 5%. Or else, or else what? Or else you should just park your money inside of a T-bill and get that 5% yield. So that represents the risk-free rate. And then you evaluate all of your other investments and the other ways you'd spend your capital.

• 1:30:38Ryan Sean Adams?

  And they would have to exceed the risk-free rate, right? And that's, I think that is actually a helpful framing of how you should think about crypto and ETH. So if you're going to take your precious ETH, right? And you're considering diversifying, investing in anything else, well, that investment better exceed 4.2%, the risk-free rate of Ether, if you're going to make that investment as denominated in Ether, or else what? Or else you're better off staking. And so I do think it's actually a useful paradigm, but not kind of apples to apples. You really have to understand. It's a TradFi term. All right. Takes of the week. Narashe here from Coinsetter. This was an old tweet, but I feel like it was pretty applicable on the back of the tornado cash. He says this,

• 1:31:22Ryan Sean Adams?

  "I'm sorry that your warrantless surveillance regime was built on the assumption that people would always need intermediaries to transact." Well said. I think our entire regime, AML, KYC, FinCEN is all built on this stupid assumption that really falls apart.

• 1:31:37Speaker 00

  And this is why, and this is why they're fighting it so hard as well. And pretty much like all the regulations are built on the assumption that these intermediaries would be custodians of the assets, right, in one way or another. And that doesn't apply to DeFi, obviously, because the, there are custodians that can interact with DeFi, but if you're a user and you're just custoding your own assets and playing around with these things, then every regulation or almost all of them doesn't apply to you.

• 1:32:02Ryan Sean Adams?

  It's pure to pure.

• 1:32:03Speaker 00

  And I don't think that they like that.

• 1:32:04Ryan Sean Adams?

  It's pure to contract.

• 1:32:05Speaker 00

  Exactly.

• 1:32:05Ryan Sean Adams?

  Okay, so do you think, let me ask you that, because this goes back to something we were saying earlier, do you think it's malevolence or do you think it's ignorance?

• 1:32:12Speaker 00

  I think it's a bit of both. I think, I think it can't, you can't, so malevolence is, is a lot harder to kind of see because obviously all this stuff is done like, not behind closed doors, but it's not like they're on live streams talking about this and, and you know, telling us what they're thinking. But I also think that there's a, there's a huge chunk of ignorance as well because I mean, in the US, if you look at the average age of, of a politician, right, in Congress, it's, it's not great, right? These people didn't grow up with, yeah, these people didn't grow up with technology and they certainly do not understand how crypto works. So I think that plays a big part in it as well.

• 1:32:44Ryan Sean Adams?

  Take from Chris Broninski, often newcomers to crypto investing want to put 1K to work, hoping to find the next Bitcoin and turn that 1K into $1 million in search of the quick 1,000X. They don't realize they're wanting to gamble, not invest, and learning to invest through cycles makes all the difference. Keep it simple. Many quality, obvious names still have 10X upside. Tranche in, tranche out, fixate on perfection and you'll miss. Don't, don't get discouraged if you're down. Dig deeper, find joy in what's being built and how attractively it's priced. Don't get drunk at the highs. Some timeless advice, I think there from, from Chris. What are your takeaways from that? Is this how you've approached investing?

• 1:33:27Speaker 00

  Yeah, I mean, it definitely is timeless advice. I think that's the perfect way to put it because it applies to not only crypto investing, but just investing generally. And it will probably always apply to all types of investing for as long as we have financial markets, right? And I understand the people who want to find the next Bitcoin, who want to turn a little bit of money into a lot of money. Because that's what the media reports on when it comes to crypto. They say, oh, this guy put in like 1K and he became a millionaire or this guy put in this and that. And that's what the people think that they can do. But the thing is, is that one guy does it and then a million people don't do it. And that people focus on the one guy who did do it and won and the million people who didn't win and lost. And you're, you know, almost certainly going to be part of those million people who lost.

• 1:34:09Speaker 00

  So my, I mean, my investing strategy for a long time now, not always, because I was definitely one of these people in 2013. But for a long time now, probably since 2017, was to just invest for the long term and basically keep it simple. But also do a little bit degening on the side, not with my whole portfolio, obviously, but with a decent chunk of it. And then slowly kind of, I guess, like reduce that chunk over time as I accumulated more wealth. You know, go from wealth generation to wealth preservation mode.

• 1:34:37Ryan Sean Adams?

  Get rich slowly, I think, is the key for crypto. Let me ask you though, do you think there's another 10X left in Ether, price of ETH?

• 1:34:45Speaker 00

  Oh, definitely, definitely. Yeah. I mean, but the thing is, is that like, it's not going to happen for a while, right? And these people, they don't want to wait years for a 10X. They want a 10X in like a week, which you can still get, mind you, but that's gambling, as Chris said here. That's not investing. You're throwing money at a meme coin, hoping for a 10X. That's like throwing money on, you know, at the casino, hoping for kind of like black or something, right? It's the same thing.

• 1:35:08Ryan Sean Adams?

  Yeah, I know. And I think people don't realize how much risk has actually been boiled out of assets like Ether at this point in time, right? Where it's like, 10X is great. Who cares if that takes like three to five to 10 years, right? I mean, it's 10Xing your money. Where else can you get that at this kind of, you know, risk minimized sort of state that we're in? Anthony, gotta ask you near the end. So what do you bullish on these days, my friend?

• 1:35:35Speaker 00

  Well, I mean, always eighth, of course. I think that's just like the table stakes answer to give. Um, but generally, I I'm bullish on watching the cycle play out the same way it's played out every cycle in crypto. And I know we talked about this earlier, but the reason I'm bullish on that is because I think that there's always gonna need to be a shelling point for the market to kind of rally around or any market to to kind of rally around. And I think in crypto for the foreseeable future, while we're still not very deeply integrated with TradFi, our shelling point has always been that four-year cycle, right? And that that halving narrative that that applies to all of crypto. And I'm excited to to see maybe it it had one last hurrah. Maybe by the time the next cycle rolls around, we're too deeply ingrained with TradFi and it no longer becomes a a four-year

• 1:36:19Speaker 00

  cycle. But um, that generally is something that I I'm just pretty excited about because I'm basing, obviously, a lot of my investing assumptions on this four-year cycle uh playing out. Um, but I also think that it'll be good for the ecosystem for next year to be a good year so that we can actually get some fresh capital in and use all these new pretty toys that we've created over the last couple of years.

• 1:36:39Ryan Sean Adams?

  Yeah, you know, I'm I'm bullish on something we were talking about earlier in this episode. I want to make maybe a link near the end. So um, I think the Bitcoin ETF would be a big win. And we've talked about all of the reasons why, but I think one maybe under-reared reason, which some bankless listeners might be uncomfortable with, and I'm somewhat uncomfortable with as well. But let me kind of run through the calculus here. This gets Wall Street on a crypto side in a big way. Um, if you are a cynic about the US political system, you might say something like, yeah, the banks run politics, right? And like, I mean, maybe there's some elements of truth in that. Maybe there's 100% truth in that. Um, to date, Wall Street, like the big asset managers of the

• 1:37:23Ryan Sean Adams?

  world, like the Black Rocks of the world, they haven't seen any big wins from crypto. Well, that changes when they get an ETF, okay? Then they have an actual product to sell. And when they have a product to sell, they'll sell that product into our legislators, into Congress, and all the lobbying required to get it pushed through. Um, I somewhat see this as an unholy By the way, because let me be first to say I do not trust the banks will you protect our peer-to-peer DeFi, you know, privacy, like all of the decentralization, kind of the reason we're here, but they are a useful adversary at this stage in the game because one of our main opponents so far have been rogue regulators that don't want retail to

• 1:38:08Ryan Sean Adams?

  buy crypto at all. And so this is like checkmate to Gary Gensler. And I think once you get kind of Wall Street and some of the banks on crypto side, then you you get some wins. So the ETFs will fall next to stable coins. They will get on board with stable coins. That's another product that they can sell. They'll be very excited about that. We'll have to fight them later, I think, for some of our DeFi rights. But by that time, again, the market cap of crypto will be much larger. And I think we'll be in a better negotiating and bargaining position. So that's sort of a hidden benefit of this whole Bitcoin ETF thing that I think people fail to appreciate. Once we get the Bitcoin ETF, I think the politicians will start singing a different tune because of this effect.

• 1:38:53Speaker 00

  Definitely. Yep. Yep. I agree with all of that. And I think you hit nail on the head by calling it an unholy alliance, because yeah, I feel the same way. It's definitely not something that we ideally would want, but it is necessary, I think, at this point in time.

• 1:39:06Ryan Sean Adams?

  We are playing the game, the game of Thrones here. Let's end with the meme of the week. Anthony, this is something I picked up from one of our chat rooms, I think. GM, fellow multi-cycle digital currency enthusiast. We are looking at a sad Wojak in the center of a circle here. What are we looking at? Can you describe this meme for us, Anthony?

• 1:39:25Speaker 00

  Yeah, I mean, this is basically the meme of investors always kind of missing the bottom to buy and then always missing, missing the kind of like top as well. So this happens a lot, I think, especially first cyclers and maybe even second cyclers, where essentially they're like, oh, I'm not going to buy yet because the bottom is not in. And then the bottom actually is in and then they wait for the bottom to be kind of like retested. It never comes, right? And then they're like, okay, well, we're going up, but I'll just wait for the market to pull back in order for me to buy now. But then the market tops out and you end up buying on the downtrend in the bear market. So this is a harsh lesson for people to learn, but I think people need to learn it.

• 1:40:05Ryan Sean Adams?

  Yeah, totally. And I can identify with this too. Even I get sucked up into this sad Wojak chap here. Guys, we've got a moment of zen for you coming up. It is Song and Dayman talking about the Gary Gensler court case. I think you'll enjoy that. Also, I want to give another shout out to Anthony Sisana for coming on the show today. He just uploaded mid-episode The Refuel, which is absolutely like on the daily must-listen to content for Ethereum and crypto. Anthony, what have you been talking about recently on The Refuel?

• 1:40:37Speaker 00

  I mean, a lot of the same stuff, I guess, we've talked about on the roll-up today, of course. I think that I've been trying to follow more closely along with the individual L2s themselves and seeing what they're doing, because I feel like a lot of them are coming into their own right now, where they're actually defining their vision, what they actually want to build out for their own kind of platforms and ecosystems. So I've been trying to kind of relay that to my community there. But yeah, I mean, and core development too. I mean, EIP484 is around the corner. I think it's going to go live in November of this year. That's kind of my estimate that I've been talking about for quite a while now, and it seems to be on track. So that's, those are the kind of main things I've been trying to focus on mostly for the show, but of course, covering the day-to-day news as well.

• 1:41:16Ryan Sean Adams?

  Guys, there's a link to that in the show notes, and I recently saw that The Refuel is now on Apple Podcasts. You can go catch that there in your podcast player. I'm going to end with risk in a minute, but first we disclose, I think the only thing to disclose today is I'm an angel investor in the Insta app. We talked about an application for Insta app today. Of course, you got to know, both Anthony and I, we are long-term bullish holders of Ether, but of course, you already know that. We are long-term investors here at Bankless. We're not journalists. We don't do paid content. There's always a link to all Bankless disclosures in the show notes. You can access that at bankless.com/disclosures. Got to let you know too, on the risk front, crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:42:04Speaker 04

  To avoid arbitraryness and caprice, administrative adjudication must be consistent and predictable. Following the basic principle, similar cases should be treated similarly. And why is it an unprecedented substantial evidence at great scale is similar? Across the relevant regulatory factors too.

• 1:42:46Speaker 04

  Bitcoin futures, ETPs, the commission failed to adequately claim why it approved the listing of two Bitcoin futures, ETPs, but not at great scale. Frodo Bitcoin ETP. In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.

• 1:43:44Speaker 04

  In the absence of coherent explanation, this unlike regulatory treatment of like products is unlawful.