ROLLUP: Special Guest! | Airdrop Week | Base Szn | The DeFi Wars

Bankless Friday Weekly Rollup First Week of April, 2024 Major thanks to Anthony Sassano for filling in for Ryan as he takes some time off to update his firmware. https://x.com/sassal0x ------ 🌐 CRYPTEX | GET INVOLVED WITH GOVERNANCE FOR THE FUTURE OF DECENTRALIZED MARKETS https://bankless.cc/Cryptex_pod ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🏠 CASA | SECURE YOUR GENERATIONAL WEALTH https://bankless.cc/Casa 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku ------ TIMESTAMPS 00:00:00 Start 00:02:24 Markets https://pro.kraken.com/app/trade/btc-usd https://pro.kraken.com/app/trade/eth-usd https://pro.kraken.com/app/trade/eth-btc https://www.coingecko.com/en/global-charts 00:09:47 L2 Check-in https://l2beat.com/scaling/summary 00:17:19 ENA Airdrop https://twitter.com/ethena_labs/status/1775060005953421401?s=20 https://www.coingecko.com/en/coins/ethena 00:23:42 Wormhole Airdrop https://wormhole.com/w-launch-roadmap/ https://www.coingecko.com/en/coins/wormhole 00:28:14 Blobs Update https://warpcast.com/0xrob/0x0357eacb https://warpcast.com/sassal.eth/0xae93359e https://dune.com/hildobby/blobs https://twitter.com/rob_0x/status/1775130717774626839 https://x.com/TrustlessState/status/1775494227222315274?s=20 00:37:48 Base Ecosystem https://warpcast.com/jessepollak/0x078c9b74 https://x.com/ptrwtts/status/1774963873936011638?s=20 https://x.com/Uniswap/status/1774465349716435298?s=20 00:43:10 Degen Chain https://x.com/syndicateio/status/1773351144858750990?s=20 00:52:48 The Issuance Debate https://twitter.com/mikeneuder/status/1774072228839117307?t=C4VaAFdu-LRU1yDM31GCFQ&s=19 https://twitter.com/mikeneuder/status/1774072228839117307?t=C4VaAFdu-LRU1yDM31GCFQ&s=19 https://twitter.com/jon_charb/status/1774182126608380041 01:05:02 LST vs LRT Dynamics https://x.com/hildobby_/status/1775123732534603919?s=20 01:13:10 AAVE vs Maker https://x.com/lemiscate/status/1775116242019299404?s=20 https://governance.aave.com/t/arfc-risk-parameters-for-dai-update/17211/9 https://twitter.com/hasufl/status/1775157933501796465?s=20 01:17:48 Meme of The Week https://x.com/TrustlessState/status/1774791420504674325?s=20 01:22:34 Check Out The Daily GWEI! https://www.youtube.com/@TheDailyGwei ------ 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.

• 0:00David Hoffman?

  I think specifically going back to the whole Athena thing, people are like getting their reflexes triggered when they see a stablecoin offering 35% APY. And they're like, oh, the last time I saw that was Carolina, an anchor.

• 0:15David Hoffman?

  Bankless Nation, welcome to the Bankless Weekly Rollup where we cover the entire weekly news and crypto, which is always an ambitious endeavor, which is why we are tapping in. Substitute teacher, Anthony Cizano, while Ryan Sean Adams is stepping out for some downtime, some software updates, some repairs. Anthony, how you doing, my man?

• 0:32Speaker 01

  I'm doing good. Always happy to be back as the substitute teacher here. There's a lot to get through today and I'm pumped, basically.

• 0:39David Hoffman?

  There is a lot to get through. It's actually conveniently a pretty Ethereum focused week this week. A lot going on inside of the Ethereum ecosystem. There is a debate inside the Ethereum community. Should Ethereum, should ETH change its issuance curve? So we're talking about monetary policy of ETH, a very old subject that is now rearing its head once again. Convenient to have you here, Anthony. I know that you are following this debate and I think you can, you can kind of give us both sides of this. I have my opinions. I think you have your opinions. I think we're going to go back and forth on that. Also, what else is going on this week? Base season continues to heat up. The base chain is hotter than ever. It's getting its own layer threes. Are layer threes real? I think we're going to talk about that. And also some DeFi wars between AVE and Maker DAO. Things also getting spicy inside of the Ethereum app layer.

• 1:25David Hoffman?

  These are all the takes that we're going to get through, but before we get into it, a message from our friends and sponsors over at Cryptex Finance, which is a DeFi protocol to make crypto native markets tradable. It's on Arbitrum. Cryptex produces a synthetic asset using Chainlink and Pith data oracles to produce synthetic markets such as TCAP, their first ever market. TCAP is the total crypto market cap index. If you don't want to think, you can just buy TCAP. It'll give you exposure to, a synthetic exposure to the total crypto market cap. All indices are powered by CTX token governance, so holders of CTX can vote on upgrades in the management of the Cryptex markets and treasury. And they want you to become a part of the DAO to help build the future of decentralized markets.

• 2:09David Hoffman?

  There is a link in the show notes, bankless.cc/cryptex_pod. If you want to play in the world of synthetic market exposure. And other things that the CTX governance wants to bring to the world. First, we're going to start with the crypto prices. Thanks to Kraken for the Bitcoin charts. Bitcoin starting the week at $70,300, down 5.5% to $66,500. Ether doing something pretty similar on the week. Last week, we thought we were going to resume up only on the trend, but looks like there is still a pause in this bull market. Coming up on almost three weeks of a pause now since the first big, big 20% sell-off in Bitcoin and Ether and all the other blue chips.

• 2:51David Hoffman?

  Anthony, just overall sentiment on where we are in the market right now. This is the first big pullback and we're trying to get the engine started again. Haven't really been able to do it. What's your read on the state of the markets?

• 3:03Speaker 01

  Yeah, so my overall read is basically that we haven't really bought, brought in that much new money into crypto. I mean, besides the BTC ETFs, I think that generally there hasn't really been much fresh new money coming in from the retail investors, as we kind of like to call them there. And I think what's happened now is that obviously some of the flows have slowed down with the ETFs because the ETFs aren't going to be just like a huge flow, you know, kind of thing every day happening perpetually. It's a slow kind of moving beast. It's a passive thing. So people are kind of trading around that. But typically what you see when Bitcoin reaches, you know, its old all-time high is that it will kind of go sideways for a little bit. Like if you look at the previous kind of history of this, the last two cycles, it stayed there for like a month at least before kind of heading up again. So I think everyone is questioning, you know, is that what we're going to do?

• 3:48Speaker 01

  You know, the halving is coming up for Bitcoin in a couple of weeks. Like, are we going to continue up after that? Or are we going to dump? Like, there's, you know, this competing kind of, I guess, narratives going around right now. But generally, yeah, I mean, for the last few weeks, it's kind of been a little bit boring there. I know that meme coins have continued popping off and things like that. But as I said, or as I've mentioned on Twitter, for those who follow me there, I think that's just a lot of crypto native money sloshing around. I don't think that's new people coming in and being like, I'm going to go bid this meme coin on base. Like, they don't even know how to do that, right? So I really doubt that it's that right now.

• 4:19David Hoffman?

  So the, we hit Bitcoin all time highs around $73,000 on the 14th of March and the day of recording is the 4th of April. So we are approaching one month. So next week will be one month since the Bitcoin all time highs. And this is, I feel like generally pretty expected, especially when you zoom out and you look at the Bitcoin chart. The trend is 100% still intact, right? So like after hitting the Bitcoin all time highs of $73,000, we hit the 61,000 and a half lows on the 20th of March. So just a, yeah, just like a week later. And we haven't hit those lows since. All of the lows that we've hit have been slightly higher than

• 5:02David Hoffman?

  that. So trend looking good. Nothing is broken here. This is, I think, very, very expected. To say that like Bitcoin would be, would break all time highs and then just like rocket and like do its whole like 2X, 3X thing, I think is pretty, pretty greedy, I would say. We, we gotta, we gotta hang out for a little bit. And I would say the, the longer that we can stretch out this period, the better.

• 5:24Speaker 01

  Definitely. Yeah. I think that, you know, if you kind of look at, you know, not just the history, but look at kind of the vibe and the sentiment. I think people are looking at the history or like in, in large part, like I've seen this on, on crypto Twitter, a lot of people looking at the history being like, you know, we're just recharging. This is usually what happens, you know, and then we're going to go kind of up only from here. And then I, I kind of pause on that. And I'm like, yeah, okay, you know, that is based on history and there are kind of historical precedents here. But then people are like, oh, is it really going to repeat itself? Or have we kind of gone up too quickly? And now we're going to spend like six months down here. So that's always the tricky thing with, with market kind of commentary is that you're right that the trend is still intact, especially the trend on the higher timeframes. But, you know, we could go sideways for like six months and the trend would still be intact. That's,

• 6:07Speaker 01

  that's the thing with sideways movement is that doesn't necessarily break trends.

• 6:11David Hoffman?

  For sure, for sure. Honestly, I would enjoy six months of flat at, at high prices. I, I could, I could play that game. Ether doing something pretty similar. Start of the week, $3,570, down 6.5% down to where it is right now at $3,340. The ratio at point 050, which is relatively low on the long, on very long timeframes. Anthony, what's your, what's your take on the read on, on the ratio? It has a lot of just like pessimism priced into it right now.

• 6:42Speaker 01

  Yeah, I mean, I think this is a very obvious kind of thing to look at where essentially the market is pricing in that the ETH ETFs are going to get denied, right? Like, that is the general sentiment right now, based on everything that I've seen. And that's why ETH is generally relatively weak on USD pairs against like kind of other things as well, but also against Bitcoin. You know, if we were seeing ETH BTC go up, I think that would be a sign that people are confident that the ETFs are getting approved. But right now, you know, people are just like, well, why would I, you know, buy ETH when I'm not confident that these things are getting approved? No one else is, so I'm going to play the kind of trend of don't buy ETH until May 23rd, which is when we're expected to get a decision on a denial or approval, then I'll kind of play ETH. And the funny thing about that is that I think that if we get to May 23rd and people

• 7:25Speaker 01

  are still doing this, it kind of means that there's no one left to sell at that point and there's no one left to kind of, you know, short ETH. So ironically, even if it gets denied on May 23rd, we could see ETH go up. Like, that's the funny thing about markets.

• 7:37David Hoffman?

  Okay, so what you're saying is that it's likely, it's possible, that many of the people who have, who would sell ETH on the expectations of an ETH ETF denial have already done that because the market has priced in denial. One piece of news that we got this week, one glimmer of hope potentially, is that the SEC has asked for public comments from Grayscale, Bitwise, and Fidelity about the spot Ethereum ETFs. And so previously, over the last two weeks, people have been bearish about the Ethereum ETF getting approved, simply because the SEC has just not engaged, just like crickets, indifference, radio silence from the SEC. But this week, the SEC asked for comments from Grayscale, Bitwise, and Fidelity specifically about the spot Ethereum ETFs.

• 8:22David Hoffman?

  Anthony, does this change anything? Is this news? Like, how do you interpret this?

• 8:25Speaker 01

  Yeah, I mean, from what I've seen, it's not necessarily news, it's just kind of part of the process of what the SEC has to do. So I think that it's like illegal for them not to do this. So people were saying that, you know, this is just part of the process, basically. So I wouldn't say that it's anything to get too excited about, even though, you know, I really want there to be something to be excited about here, because, I mean, I personally still have hope. That these ETFs are getting approved on May 23rd. But I totally understand why. I would assume the vast majority of the market just does not have any kind of confidence in this. And we've seen, you know, the Bloomberg ETF experts that we all kind of have been following since the BTC ETFs. They've basically lowered their odds to what 20, 25% of approval by May 23rd. So I think that generally the market is in that kind of range there.

• 9:11Speaker 01

  But that can change quickly. If we actually do some, do see some proper actual back and forth between the SEC and the issuers, you would very quickly expect the market to kind of latch on to that. And basically say, well, look, this is what we waited for. It's what you wanted to see. You know, why would they be doing this if they were just going to deny the ETFs, right? So I think we have to wait a little bit, but I, I think that on the podcast that you guys did with Bitwise, they basically mentioned that we have till really the end of April. But then if we leave it later than that, essentially there's not enough time to do all the paperwork to get them approved anyway. So, yeah.

• 9:40David Hoffman?

  Right, right, right. Moving into Marcus, total crypto market cap, 2.7, 2.6 trillion dollars in total crypto market cap. But let's get into some layer two conversations. The scaling factor, which of course is how many Ethereum's worth of capacity all layer twos have. Hit 11, which is an all time high. This is a tweet from you on a warp cast. Crypto prices may be down, but layer two activity just hit another all time high. The numbers around layer twos are just great. I think they're great. We still are below that 39 or that $40 billion in TVL on layer twos. But to me, it's just like a matter of time. Scaling factor 11.33% linear coming in at 51 transactions per second over the last week or so. That's a 200% increase.

• 10:26David Hoffman?

  Base is just holding really, really steady. 30, 30 transactions per second over the last seven days. Anthony, I know, I know these numbers make you happy. Give us your take here. What's your sentiment?

• 10:35Speaker 01

  Yeah, I mean, I, I think since blobs went live on March 13th, we've had that kind of economic stimulus injected into the Ethereum economy. We're essentially brought fees down in such a massive way that it became like a narrative that, hey, okay, Ethereum can actually scale. Like people actually saw that we are scaling, we know how to scale. We're just doing it differently to other blockchains, right? Like there's been this perverse narrative, obviously for. A while now that Ethereum can't scale, but we all knew that blobs were coming. You know, anyone paying attention to the Ethereum roadmap. We just didn't really know how much it would actually scale because it's hard to measure these things on mainnet. But as soon as it went live, we all saw the fees just dramatically drop. And since then, we've seen Base increase their actual kind of capacity on their side as well by about 100%. So they've doubled their gas limit essentially on their side.

• 11:19Speaker 01

  So that's decreased fees further. We've seen Arbitrum do some specific upgrades there. And then the other layer twos are also working on their own upgrades. So we're really, I would say that we're just on the cusp of like such a big kind of scalability era for Ethereum now with the advent of blobs. But yeah, as you said, like these numbers make me really happy seeing kind of the scaling factor at all time high. And TPS numbers up, usage up across the board. And seeing people actually like talk about it as well. Like that's the main thing I like to look at is that, you know, I think I said this a while ago on my own show where I said that it's very hard to look at any metric in crypto or any metric in for any blockchains. And one, compare them to each other, but also take much signal from them because they're influenced by a lot of different things. But the one metric that I really like, and it's a subjective metric, but I really like is just vibes, right?

• 12:04Speaker 01

  Like the vibes of an ecosystem gives me kind of like, I guess, like a good insight into how strong an ecosystem is. And there are bad and good vibes, obviously, not all vibes are the same. But I think the vibes around layer twos have dramatically changed over the last, you know, three weeks since DenKun went live. Because of the fact that people saw that they actually work, the fees can be cheap. And they can still inherit the security of Ethereum and do what we've been saying that they can do for many years now.

• 12:29David Hoffman?

  I think definitely to add on to that, the vibes specifically around the Base ecosystem are definitely given some tailwinds. I think because of Farcaster, because the vibes on Farcaster, on Warp Cast are great. They're just great. Like there's no, there's no bots, there's no toxicity. There's like hearty, healthy debate, not like toxic, like poo throwing debate. And Base and Farcaster have this like unofficial official relationship where there's just like a lot of activity on Farcaster that points to some sort of NFT mint on Base. Or just like discussions on Base. And so like Base, and we're going to talk about DGEN here in a little bit.

• 13:09David Hoffman?

  Base just has this like its own native like locale for discussion where the vibes are like really, really good.

• 13:16Speaker 01

  Yeah, yeah, exactly. And I mean, definitely base has been the main benefactor of all this new kind of activity and all this new narrative energy over the last, I guess, like three weeks or so. And obviously, that's got to do with the fact that Coinbase has just been so strong for like a while now. And everyone knows that Coinbase is obviously going to try and push so much of their users to base as well as people are kind of playing that. So yeah, but I do want to stress, though, that even though like a lot of attention has been focused on base, the other layer two ecosystems are, you know, are strong and are growing stronger as well. Like Arbitrum one has been around for a long time now, and he's still as strong as ever across many different metrics. You know, they have a lot of upgrades coming to their to their chain as well. They have a lot of great ecosystems on there. So I think that narratives, you know,

• 13:59Speaker 01

  short term narratives kind of stuff, maybe take with a grain of salt when you see them too, and kind of look into other ecosystems as well. Because yes, base has been, you know, a main benefactor here. But yeah, the other ones are definitely doing a lot of great stuff as well.

• 14:12David Hoffman?

  Yeah, the whole DGEN layer three thing, which we're going to talk about, that's actually an Arbitrum Orbit chain, which is interesting because it settles to base, which is an OP stack. So we got we got some chains interwoven with other chains. And this is just a very, very interesting part of the story. We have an entire section to talk about the continuation of base summer and the DGEN layer three. There's plenty of blob market stuff to talk about. And then we're also going to talk about the three airdrops that injected $30 billion into the crypto ecosystem, Wormhole, Athena, and also DGEN, of course. So before we get into all those conversations, a moment to talk about some of these fantastic sponsors that make this show possible, especially Kraken, our preferred exchange for crypto in 2024. If you do not have an on-ramp to get into

• 14:56David Hoffman?

  these chains that we are talking about, choose Kraken. There is a link in the show notes to get started. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Kraken, one of the longest-standing and most secure crypto platforms in the world. Kraken is on a journey to build a more accessible, inclusive, and fair financial system, making it simple and secure for everyone, everywhere, to trade crypto. Kraken's intuitive trading tools are designed to grow with you, empowering you to make your first or your 100th trade in just a few clicks. And there's an award-winning client support ...team available 24/7 to help you along the way. Along with a whole range of educational guides, articles and videos. With products and features like Kraken Pro and Kraken NFT Marketplace and a seamless app to bring it all together. It's really the perfect place to get your complete crypto experience.

• 15:41David Hoffman?

  So check out the simple, secure and powerful way for everyone to trade crypto. Whether you're a complete beginner or a seasoned pro. Go to kraken.com/banklist to see what crypto can be. Not investment advice, crypto trading involves risk of loss. Taking self custody of your crypto is one of the most important things you can do on your bankless journey. It's also one of the hardest things to get right with huge consequences if you don't. If you want help going bankless, talk to Casa. Casa helps you take custody of your crypto assets. So you don't have to wonder whether you're doing it right. Casa is a one stop shop for doing self custody the right way. With Casa Vaults, you can hold Ether, Bitcoins, Stablecoins, all with one simple app and multiple keys for the ultimate peace of mind. With a support team to help you every step of the way. But it doesn't stop at self custody because even though crypto is forever, you are not.

• 16:25David Hoffman?

  We all plan on making life changing wealth in crypto. But with Casa's inheritance product, life changing wealth can elevate to generational wealth. For your kids and your loved ones who don't know anything about crypto. With Casa, you won't lose your private keys and you won't accidentally take them to the grave either. Click the link in the description to get started securing your generational wealth. Launching a token? Don't let complex legal and tax issues slow you down. Toku provides specialized support to optimize your launch and ensure that you as a founder and your team and your investors get the most tax efficient outcomes. The Toku team understands the crypto space inside and out and will ensure your token launch is fully compliant while maximizing tax efficiency. Toku can connect you with the best attorneys if you need them to make sure that you have the best advice. And Toku can help to optimize your taxes so you pay the least possible amount of taxes while still maintaining legal compliance.

• 17:10David Hoffman?

  With Toku's guidance, you can concentrate on building your company while Toku handles the logistics. Token launches don't have to be complicated. Talk to Toku today to get a free initial token valuation. Three huge airdrops this week. Athena releases their ENA token coming in at a $17 billion market cap. What is Athena? Athena is a synthetic dollar. Don't call it a stablecoin, but if you thought of it as a stablecoin, close enough. One of the more controversial products, I think, that has come out of the space mainly because of the dependency on centralized exchanges. This is the synthetic dollar that is produced by having staked ETH on one side and the yield from that going into the value of the USDE stablecoin.

• 17:54David Hoffman?

  And then also shorting perps on centralized exchanges and other exchanges on the other side. And so this, as a result of this basis neutral trade, collecting yield on both sides produces a stablecoin. That token is now live, like I said, coming in at $17 billion. Current market cap, $1.6 billion. If you bought the token right when it dropped, it dropped, I think, 60 cents-ish and then it is now at $1.15. So already some strong price appreciation, like we've seen with every single airdrop. Airdrops get dropped and then they tend to like triple in price over the next like, you know, days to weeks. It's just a trend that I'm seeing in the crypto space. And they have already kicked off their season two of their airdrop, so there is more tokens to come.

• 18:39David Hoffman?

  They are focusing on building integrations with Mantle, Eigenlayer Pendle, Maker, Morpho and Spark ecosystem. This is just 5% of the supply that was distributed, 750 million ENA tokens. Anthony, what's your, what's your take here? Give me, give me your thoughts and reflections.

• 18:55Speaker 01

  Yes, I mean, I've been aware of the Athena project for quite a while now. I should disclose that I am an investor in Athena from a while ago. I invested in them because I thought the idea was really interesting at the time, you know, and this kind of, I guess, like, as you mentioned, synthetic dollar that they called it, basically tokenizing this kind of perp trade that people already do on centralized exchanges. And, and you kind of mentioned it, you know, there are risks associated with this. And I think a lot of the debates recently around Athena have focused on these risks. You know, right now, funding is positive because there's a lot of demand for crypto, there's a lot of demand for, to buy these assets. But what happens when funding goes negative for prolonged periods of time? You know, do people start, because people start losing money, what happens? So they start unwinding their positions? And then what happens to the STE backing that?

• 19:39Speaker 01

  Like, does that de-peg? You know, as we've seen before, STE can trade at a discount to its fair value. We saw this during the Terra collapse and then what happens in that environment, does it lead to, I'm not, I struggle to use the term death spiral because I hate that term. I think it gets overused. But does it lead to a, you know, a mass deleveraging event where a lot of people get burnt and hurt and then eventually does that affect the Athena protocol? You know, stuff like that. But I think that those discussions are great to be having and I'm glad that people are being very kind of, I guess, like analytical about it rather than, I guess, ignoring it. Because we saw what happened with Terra. Not that Athena is like Terra, but I think when you're comparing projects in terms of ones that were, you know, scrutinized by only a few people. And then the majority of people were like, oh, this is going to work. You know, we got an infinite money printing machine, so on and so forth.

• 20:24Speaker 01

  But this time around with Athena, you have a lot of people scrutinizing it. A lot of people questioning it. A lot of people saying, you know, what, these are the risks, you know? This is how it can get crazy. So I'm very happy to see that. I'm very happy to see that that's actually a trend now within the ecosystem. But in terms of the project itself, I mean, as I mentioned, I'm an investor in it because I thought the interesting, the idea was interesting. Um, and it's just been crazy to see them drop the token at this valuation. Like, as you said, like, it seems to be a trend right now with these airdrops. You know, not all of them, you know, there are some out there that haven't really taken off. But yeah, there are these kind of things that get airdropped, you know, the market tries to find a price for them. And then they have these just huge fully diluted valuations, which may or may not make sense. It's up to the market to kind of choose this.

• 21:04Speaker 01

  But I think that, you know, a lot of them, obviously, they haven't distributed tokens to investors yet. Investors have vesting, team has vesting. So I think a lot of people are basically trading these things based on the short to medium term hype around it. Whereas they're not worrying about investor unlocks because they're not for a year plus. So they're like, you know, what can we, you know, trade this for the next six months, so to speak? So I think that's what you're seeing with a lot of the airdrops. Um, but I'm, I'm really glad to see people getting, you know, all this money from airdrops because it means that we're basically creating more kind of economic activity on, on chain. And we're getting more and more people to actually come on chain to claim these things, to actually use these things. And, you know, there's this whole points program stuff that's been going on over the last few weeks or a few months now, uh, which has kind of spurred a lot of activity too.

• 21:45Speaker 01

  So I think on net, they're a good thing. Like I'm, I, I, I don't think they're a bad thing, but it's going to be funny when the music stops. Because like, as you said, most of them are going up right now, but eventually when the market kind of exhausts itself, you're going to see the reversal of that. And I'm wondering what that kind of looks like.

• 22:00David Hoffman?

  Yeah, they're going up because there's no sellers. Everyone is like, why would I sell? There's no one to sell. Like, all the team is locked up. All the investors are locked up. And so it's like a safe purchase in the short term. I think hopefully market participants knowing full well that's not necessarily safe in the long term because Bitcoin will roll over because it went up too fast because of reflexivity. ETH will roll over because it went up too fast because of reflexivity. And then all of these investors and teams that are up some bajillion percentages will also be interested in selling. And this is what a bear market looks like. This is just how cycles go. I think specifically going back to the whole Athena thing, people are getting their reflexes triggered

• 22:42David Hoffman?

  when they see a stablecoin offering 35% APY. And they're like, oh, the last time I saw that was Terra Luna and Anchor. Even though this source of this yield is materially different, I would say this is a real sustainable yields that are generated by the market price, rather whereas Terra or the Anchor ecosystem on Terra was like, oh, we're just going to just mint USDT and then offer 20% for the depositors out of thin air. So materially different market structure here that's backing this thing. Not to say that there is no risks, but I would just say the risks are different. And you can't just like, kind of like, copy and paste the risks of Terra onto the Athena system. Athena currently coming in at $2 billion in TVL, $2 billion of ETH that's deposited into the system. So pretty strong launch.

• 23:27David Hoffman?

  So far, the product is working. Also, playing a role in this debate that we're going to talk about later between Morpho, Ave and Maker, there seems to be some borders going up between the world of the disabled coins, but we'll talk about that later. Also, that came in this week is Wormhole and the W token. So just one single letter for the token, kind of cool. Wormhole is a cross-chain, cross-layer-one bridge protocol. It's been very, very hyped. They just dropped their token this week coming in at a $14 billion fully diluted valuation. Current market cap, $2.5 billion. So of the 10 billion total Wormhole tokens, 1.8 are currently circulating.

• 24:12David Hoffman?

  Price dropped at $1.3 and now went up to $1.45 since the recent sell-off in the last like 24 hours, who are down to $1.16. Wormhole, what do you know about Wormhole? Have you ever used Wormhole, Anthony?

• 24:25Speaker 01

  No, I mean, I don't think so. Whenever I bridge, I usually use Jumper, which is like a bridge aggregator. And I don't think I've ever used Wormhole via that. I mean, I don't do that much bridging, especially to other layer ones. I don't really do much bridging there.

• 24:38David Hoffman?

  Which is what Wormhole is specified for.

• 24:40Speaker 01

  Yeah, yeah. And obviously Wormhole is a big player in the Solana ecosystem. So they're all about, you know, bridge between Ethereum and Solana, you know, so on and so forth. But it's funny looking at the token and looking at what it's valued at versus other bridging protocols. Like if you go and look at like Connect or HOP protocol, or, you know, ACROSS, I think, and a bunch of these others, they're not valued anywhere near what Wormhole is valued at. So it's like, when I look at this valuation, I'm like, okay, well, you know, either the market is wrong on, you know, the Wormhole side, or it's wrong on the kind of Connect side, and the HOP side, and so on and so forth. But I don't even know if the market is valuing this thing based on what it is. I think it's valuing it based on the hype behind it, not on the fact that it's a bridging protocol. And that seems to be the trend as well with

• 25:22Speaker 01

  other protocols like Athena, for example. I would struggle to think a lot of the people actually even know what they're buying, to be honest, because Athena is inherently like maybe more complex to understand than other projects, because it's something that a lot of people don't really kind of get exposure to. So yeah, it's just, it's just kind of wild to see these massive valuations on these things. And as you said, like, in the bull market, it can kind of happen because of the fact that there's not really, you know, there's no sellers, there's all these demands, and there's all these kind of narratives. But in a bear market, like, that goes the opposite way. So I'm very curious to see, in like, a couple of years, if we're in the bear market, what these valuations kind of look like. Because yeah, there are going to be investors and team that have vested out by then, not just for, I'm not trying to pick on Wormhole here, but like, for every

• 26:05Speaker 01

  one of these, that, you know, who knows what's gonna happen? Like, are they gonna be selling? Is that gonna be down only? Is the demand gonna be gone, so on and so forth? But yeah, I mean, you just brought up Connect and ACROSS. They're both worth, what, 2, 250 billion fully diluted valuation compared to Wormhole?

• 26:17David Hoffman?

  No, not even. Connect is 230 million, ACROSS is 290 million, and then Wormhole is 12.

• 26:24Speaker 01

  Oh, yeah, million. Yes. Yes, yeah, correct. Yeah. Yeah, not billion, million. Yeah, yeah, yeah. Yeah, so that's like a huge difference. Like, a massive difference, like 100x difference, basically, in valuations here. And even if you just look at market cap, not just fully diluted value, Wormhole's market cap is still like 10 times bigger than these other protocols. So, yeah. It's just crazy.

• 26:48David Hoffman?

  Maybe this is a take from the hip, but because Wormhole is like a cross-layer-one bridge, it holds state in ways that a cross does not, and I think also connects does not. And so maybe to like advocate for Wormhole here, just like holding state is bullish, just because like it is, there's additional like value capture surface area with holding state, whereas like a cross is like more of like a port for market makers and our bots to fulfill intents. So a cross actually doesn't hold any state. And so maybe, maybe there's like a market valuation going on there. But I will also say it's a shiny new token with zero sellers. And so perhaps also why it's commanding such a strong valuation.

• 27:32Speaker 01

  I very much doubt that people are doing that kind of thinking on this, to be honest, like that you just kind of outlined, like from all the people. Well, that's the thing, like for all the people that I've seen speculating on these things in my community on Twitter and everything, they don't mention any of this, right? It's always like the narrative stuff. It's always the hype stuff, which is fair enough. Like, I actually think that that's probably the proper way to trade these things when they first launch at least, because as you said, like you're probably mid-curving it by kind of analyzing the fundamentals.

• 28:01David Hoffman?

  Trying to say it's because of state.

• 28:04Speaker 01

  Yeah, yeah, yeah. But I mean, long term, maybe, but yeah, I don't think like short term is focused on that at all, really.

• 28:12David Hoffman?

  Let's get into some blobs, because we lost the first blobs. But this is, of course, by design. As 14 days approach, blobs, 14-day-old blobs expire. It's a pretty cool graphic that we saw circulating both on Twitter and on Warp Cast. This is blob storage. And you can see some of the blobs are starting to get pruned. So data is expiring here. This is this like deep red color right in the middle of the screen here. Since we are 14 days beyond the introduction of Dankun and 4844, blobs are being pruned. Just to really set the stage here, why do we prune blobs, Anthony? Why does this mechanism even happen?

• 28:52Speaker 01

  Yeah, so by default, all the clients will prune these blobs after, I believe it's 18 days. Yeah, I think it says that, yeah, 18 days, just to keep the kind of node requirements basically steady. So if we didn't do this, it would be an extra such and such gigabytes every 18 days added to the chain, which all the full nodes would have to store, and then it would put more of a burden on the network from that perspective. So that's why by default, all of the clients will prune this. Now, of course, that means that you can actually keep them if you want them as well. So for example, I'm keeping all the blobs, I'm storing them on some hard drives that I have in my NAS kind of storage devices there.

• 29:30David Hoffman?

  You're a blob holder, hoarder?

• 29:32Speaker 01

  Yeah, I'm a blob hoarder, definitely, yeah, yeah.

• 29:36David Hoffman?

  You're storing all of people's JPGs for them?

• 29:38Speaker 01

  Yeah, yeah, just as a hobbyist, but the thing is, is like, there's, there's plenty of services doing this as well, where like, they're gonna be offering this and, you know, maybe charging for it, basically, if you want to access this historical data here. But yeah, we expire it, we prune it because of the fact that we want to keep node requirements low. I mean, that's at the heart of, I guess, Ethereum's design is right, keeping node requirements low. And this was the magic of blobs, really, and that's why we were able to add them, because we knew that it wouldn't be a permanent thing that people would need to store.

• 30:06David Hoffman?

  Yeah, to really drive this point home, this is another chart of the increased capacity of the Ethereum Layer 1 with the introduction of blobs, but also the decreased capacity of the consensus layer and the execution layer. So we got three different colors here on the screen. On a graph, we got blobs in green, which is like the dominant part of this graph, and then we have the consensus layer payload and the execution layer payload. Just the sides of Ethereum, consider this the size of Ethereum, like how much like overhead or just like state that it has. And it's gone up bigly with blobs. And so like, compared to where it was before Dankun, like, just like, this is like really rough napkin math, but like, three to four times larger as state,

• 30:49David Hoffman?

  as just like overhead capacity of the Ethereum blockchain. The thing is, We prune the big stuff. All of the green gets eventually pruned. And so only the permanent parts are the consensus layer and the execution layer, which are the blue and green parts of your screen here, which are now, as a result, you can see those parts are actually much smaller since the introduction of blobs. And so this is just what I consider a good optimization. So Ethereum both grew in capacity, which is the green part, but also shrunk in long-term state growth. So Ethereum is both larger and faster and quicker in the first 18 days until we prune the blobs. But then post 18 days, it is slimmer, it's leaner, it is faster as well in terms of just like total state growth.

• 31:35David Hoffman?

  I just call this a good optimization.

• 31:38Speaker 01

  Definitely, yeah. And I mean, I think like what this chart is illustrating, if I'm understanding it correctly here, I think I saw this the other day, but I didn't dive deeper into it, is the fact that instead of using kind of like call data as well, or it might be a different chart, like because the layer twos or rollups using blobs now instead of call data, essentially what happens is that we take load off the network from that side of things, take state growth off from that side of things. And yeah, as you said, it's gone to blobs which do expire. So we've, yeah, we've kind of like increased that capacity there.

• 32:06David Hoffman?

  Here's a tweet from you that I saw on WorldCaster. Blobs are now ranked fourth on the ETH fee burn leaderboard over the last seven days. So we got Uniswap, of course, coming in at number one, just always a gargantuan, burning 3,500 ETH in the last week. ETH, regular old ETH transfers, 1,700 ETH moving tether around on main chain, 1,100 ETH. And then blobs coming in as 672 ETH burned over the last seven days. And I kind of expect that to continue to go up only, especially as more and more and more layer twos come onto the scenes. Inscriptions also burning, a lot of ETH people are really paying because they want their JPGs on the layer one, even though they're going to be pruned 18 days later. Where do you think this is going? Are we approaching an equilibrium? Is this going up? Where do you think this is going?

• 32:50Speaker 01

  So I think that a lot of this was due to the inscription stuff because of the fact that inscriptions were just pushing up the base fee of blobs, which just pushed up the price of blobs for everyone. But I think that what it gives us an insight into is that once we add, as you said, more layer twos, more rollups, once there is kind of more people using blobs, like the price naturally goes up like it does on the non kind of blob transactions and that translates to more fees being paid and more fees being burned, obviously. So I think this is going to go down again because like if not for inscriptions, it would go, it's just going to go down and kind of like reach a kind of plateau there because the rollups are very like, I guess, efficient in how they use the blobs in that like they don't want to overpay if they don't have to, obviously. And they have different ways

• 33:35Speaker 01

  of kind of measuring this and and and kind of seeing when the best time to post blobs is and things like that. But as the, you know, as more rollups come online, as the the crawlups have more activity, they're going to need to use more and more blobs, which means that while blobs are at what they're at today, you know, target of three max of six, then essentially what happens is that even without inscriptions, the rollups will be taking up a lot of capacity and then we'll see the fees go up there. But it is worth noting that we're not going to be stuck at three blobs as a target and a max of six. We're going to keep increasing both the count and the actual size of blobs as well over time, which is really the magic of blobs is that we get to do that. But yeah, I mean, over the longer term, though, I mean, I expect the kind of fees to go up just based

• 34:17Speaker 01

  on on demand because yeah, like the demand will go up on the L2s, which will trickle down into the into the data, which is the blobs, and then we'll see the kind of prices of blobs go up.

• 34:26David Hoffman?

  Yeah, even in the last like one or two days, we've actually seen some inscription fatigue, I'll call it. The supply of inscriptions going into blob space has gone down. And so we've actually seen a reduction in blob fees and the reduction in the number of blobs going below the target of three blobs a block. So we're down to like 2.2, 2.3, yeah, blobs per block. And so this is kind of like when gas fees are under the target that EIP 1559 sets. As a result, then the gas fees go down. So actually, in the last like, you know, 12, 18 Hours blobs have actually been free because people are just like not posting inscriptions. Getting inscription fatigue, people are bored putting their JPEGs onto the chain.

• 35:09David Hoffman?

  And so as a result, like layer twos have more, are basically free once again. I think people are overall surprised about like how much total space there are for layer twos to leverage blobs. I kind of consider like inscriptions as like backfilling, whatever layer twos don't use. Because layer twos will outbid inscriptions like any day of the week. Like a layer two is going to outbid your interest in purchasing blob space to put your JPEG on the chain. But like when there isn't that much demand from layer twos, then like people will go ahead and put JPEGs in. But we've seen just a reduction in overall usage of inscriptions and layer twos aren't totally using all the blob space. Do you have any like comments about those like what, how, how much slack there is in this system and where this is going?

• 35:54Speaker 01

  Yeah, I mean, it's hard to tell because obviously there aren't, there isn't just one layer two, right? There are many of them and they're all going to have different kind of usage profiles over time. And some of them will be used more than others and some of them will be more scalable than others. Like as I mentioned before, base increased its capacity by like 100% because they were hitting their capacity on the execution side. So I mean, there's really two parts to, to, I guess like two high level parts to a roll up here. That you have the execution side and the data side. The data side is obviously on Ethereum L1 with blobs, but the execution side is squarely on the L2. So they need to increase their capacity. And then essentially, once you reach capacity on, on the, on the, on the data side again, because of the execution side, we, data gets more expensive, execution is cheap. And then it's like a balancing act between those kind of two sides there.

• 36:40Speaker 01

  But as I said, like, there's not just one L2, there's going to be more of them coming online, more of them using blobs. And that's going to affect everything as well, not just these layer twos getting more scalable, but also the number of layer twos using blobs here.

• 36:52David Hoffman?

  Yeah, we're only like two weeks into this whole thing, but when we get the reduction in cost to layer twos, which is what this tweet that I'm showing on my screen is showing is a total spend on blob fees over the last like 24 hours. I think this is a daily chart was 1.9 million, so 1.9 million dollars was spent purchasing blobs. What it would have cost had blobs not existed to purchase the same amount of call data is 50 million dollars. And so like, you know, going down from 50 to 2 million dollars, what does that do? That opens up more viability for more layer twos. And now we're only 14 days into blobs. So like, people haven't like decided to make more layer twos in the last 14 days. But this is kind of the idea is as soon as you like do what is a 25x reduction in the

• 37:36David Hoffman?

  cost to, you know, maintain a layer two is like you're going to get more layer twos. I think that's kind of like the overall prediction. And that is what the whole like roll up centric roadmap is, is like, let's reduce the cost to be a layer two so that we can get more layer twos. Let's dive in specifically to, to the base ecosystem. Because as you said, like the big constraint now is not necessarily the size of blobs, but it is the execution side of layer twos. Last week, we talked about base increasing their gas target, basically their block size, their throughput by 50%, which they did. And then they did it again this week. And so I think we were at 3.75 milli gas per second last week. We are now up to five milli gas. So that's five million gas a second,

• 38:21David Hoffman?

  which is an interesting way to measure scalability. This is Jesse Pellock saying fees are declining quickly and expected them to expecting them to stabilize lower, though this of course may increase demand with a long-term goal of one gig of gas, which is 400 times more. So Jesse and the base team are targeting a 400x increase in capacity on the base layer two. And they said they will be sharing how they are getting there in the weeks ahead. Maybe that happens on a bankless podcast when we schedule that one with Jesse. So yeah, this is exactly what you're saying here. Like base is trying to get real big, real fast.

• 38:58Speaker 01

  Yeah, yeah, they definitely are. And I think that as they get bigger here, you're gonna see them hit the data constraints again, or at least like they're gonna be bidding like really big for these blobs because they're gonna be posting so much data to to kind of like L one here. But also at the same time on this chart that Dijese has posted, the reason why I really like this chart is because it shows you the concept of like basically induced demand. If you look at the the longer term one, so this chart in particular is on the the short term one, but it still shows you kind of what the effect is. So before this spike in the blue line, earlier in this chart, there's another spike in that blue line. And the yellow line is the fees. So the yellow line will go down every time this spikes, but the thing is it went down last time and then started going up again.

• 39:40Speaker 01

  Because there was that demand that was latent and then it came in once fees dropped again. And essentially what it becomes is basically a cat and mouse game of, okay, we increased the capacity. And then all these new people come in, all these new users come in because they're like, oh, my God, there's more capacity for us now.

• 39:54David Hoffman?

  Use cases come in too, yeah.

• 39:56Speaker 01

  Exactly, exactly. And then once you see that, you'll see the kind of fee spiking up again. And then you're like, okay, we have to increase the gas again because of this. So and and essentially like it it for the foreseeable future, while we grow out the whole crypto ecosystem, this is not going to be a thing where it's like you know, a spike and that's it, like based on an event, it's going to be a constant thing. It's like a constant demand for block space. Because of the fact that we're not even anywhere close to the, you know, I guess like the the adoption that we want to be at when it comes to crypto. But yeah, that's why I like that chart is it basically shows you that there is a lot of demand already waiting. And as soon as you as soon as you scale up a little bit, that comes flooding in and then you're back to square ones. You have to keep scaling up and I think the base team definitely understands that. That's why they've set such an ambitious goal.

• 40:39Speaker 01

  But with that goal, there is a lot of work involved in getting there. It's not just as simple as what they've done over the last week of increasing the gas limit. They have to do a lot of optimizations to make sure that they can actually run the software that allows for that to happen.

• 40:52David Hoffman?

  So what I'm showing on the screen is a Dune graph of the median layer two fees in orange, the median layer one fees in blue. And so of course, that gap between these two charts, these two colors on the chart is the profitability of a layer two. And then the gray line piercing through the middle is the total transactions over the course of time, which I think is 24 hours. Base cleared 7,000 transactions inside of one minute. So over 100 transactions a second. Apparently Arbitrum is also doing the same. 100 transactions per second. Is that, is that high? Is that low? Like other chains, Anthony, are boasting like 20,000 transactions per second. Like, how do we make sense of these numbers?

• 41:31Speaker 01

  Yeah, so the TPS metric is not one that can really be translated across chains. There are different ways that different chains will kind of meter TPS and there'll be different ways that the chains handle transactions. So I don't think that we should be kind of maybe comparing these chains to each other in terms of kind of TPS, just because they're different, especially chains that are not EVM. Like, if you're comparing an EVM chain to like the SVM on Solana, for example, like it's not going to be a one-to-one comparison. They have a different architecture. So I don't think it's apples to apples. I think that when people are comparing these things, they shouldn't compare that. But at the same time, you know, when it comes to TPS, there's also a concept of like the weight of a transaction, right? Like, what are the actual transactions happening here? Because if all you've got

• 42:15Speaker 01

  is like spammy transactions that are basically doing nothing, and it's just people spamming because the fees is so cheap, then to me, that's not really kind of like weighty transactions, right? It doesn't really add much value to the ecosystem. Whereas if you have like, you know, transactions that aren't just doing that, that are actually kind of real activity on the network, then that adds more value in my mind. So I think that people can disagree with that view, but I don't know. Like, the way I kind of view it is that I want to see like high-quality, valuable transactions happening on these networks, even though it's a permissionless network and people can do whatever they want on them. I have no issue with that. But at the same time, I would rather these networks be useful to people rather than just being a playground for spam, essentially.

• 42:55David Hoffman?

  Other things that are going on on the base chain, Uniswap passed a billion dollars in 24-hour volume on base. I think that's the first time that a billion dollars has been crossed on a layer two. I wonder, Anthony, if we're going to see a flipping of Uniswap layer two volumes versus Uniswap layer one volumes this cycle. The trajectory is definitely pointing us there. But really, the biggest thing that's been going on on the biggest base ecosystem, at least from a tension standpoint, is this whole DGEN chain. So this is coming out of the Syndicate Twitter account. Today, we're excited to announce the launch of DGEN chain, a layer three for the DGEN token community built with Arbitrum, with an Arbitrum orbit on base, using base for settlement and then Arbitrum AnyTrust for DA. So really, just like a super

• 43:37David Hoffman?

  juiced chain. So like Arbitrum technology, of course, absolutely fantastic, settling on base, which is super cheap, using off-chain data availability, which is, of course, super cheap. And then the native token for this layer three is DGEN. And so I don't think a lot of people know this, which I think actually kind of explains the crazy, crazy DGEN price action. But when you put your Ether on base and you bridge it over to the DGEN bridge, it sells your Ether for DGEN and then gives you DGEN on the DGEN layer three, of which is like, kind of more or less a casino, like almost by design. So there's a bunch of meme coins on there. People are speculating, being DGENs is literally

• 44:17David Hoffman?

  called DGENs. And so this has kind of like created a question inside of the Ethereum community and just the broader crypto community. Are layer threes real? This is actually not the only layer three that's going on. There's, I think there's like three or four of them. I think most of them are settling on base because everyone realizes that like, imagine having Coinbase as your top of funnel for your chain. Well, that's what base is. And so, you know, really, DGEN is actually just a layer two, but your layer one is base. And like the Ethereum layer one is actually kind of just like irrelevant from the perspective of the DGEN chain. At least that's kind of like the way I think about it. Anthony, what's your take of like all of these layer three DGEN shenanigans?

• 44:58Speaker 01

  Yeah, I mean, I think a lot of the debate, like as you mentioned, is centered around what's the point of a layer three, basically? Because there are very strong opinions from the top L two teams on these things. So I think it's obvious that Arbitrum is in favor of them, considering that they built the Arbitrum Orbit infrastructure in order to allow this to happen. But then you have, you know, I've seen some of the Polygon guys saying, you know, we don't really see the value in layer threes. Like, we kind of, you know, see layer threes as this thing that doesn't even, it shouldn't even exist, you know? We can just do it at layer two. And then there are other people with similar opinions, but look, I haven't got like a strong opinion either way at this point. I think for me, this just represents more experimentation happening within the Ethereum ecosystem. And it really represents like the, I guess, like the modular thesis, right?

• 45:40Speaker 01

  Because as you mentioned, this chain is built using Arbitrum Orbit, but it's settling down to base, which is built on OP stack. But it's using AnyTrust DA, which is Arbitrum's DA solution here for data availability instead of settling that down. So there is a lot of experimentation happening here with modularity in mind. And I actually think it makes perfect sense for something like DGEN to be doing a layer three, to be utilizing this. Because they get their own chain, which basically becomes their own casino, essentially. They get to have users on there that really are just wanting to do DGEN stuff, essentially. Like, so it's not a shared environment, it's more of like a specific environment. And yes, it may be like super centralized, but I think when it comes to layer threes and it comes to these kind of specific things.

• 46:21David Hoffman?

  Kind of the point, right?

• 46:22Speaker 01

  It's kind of, it's kind of the point, they don't really need to be, you know, too decentralized or anything like that. So I think that if that's your kind of environment that you want to create and people are happy with that and people want to kind of bridge into that, then, you know, who are we to say otherwise, essentially? But I think some of the arguments definitely kind of double clicked on the fact that we could just do this with an L two instead of an L three. You know, just do L two with DA off-chain if you want to keep the cost low. And then we, you know, and then instead of an L three. But that's more of maybe a deep architecture question and more of something of like, how easy is it to do that? Because I think it was very easy for DGEN to spin this up. Like, it happened within like a few days from what I saw. And then they were able to get people bridging in straight away. And apparently there's better bridging kind of infrastructure coming as well. So, yeah, I mean, my general take is that I'm all for the experimentation.

• 47:07Speaker 01

  Like, I love that it's happening because whether people find it valuable or not, we're not going to know until we actually kind of do this experimentation in a live environment.

• 47:15David Hoffman?

  Kind of the crazy thing about this whole DGEN thing is some of the stats that have been painted over since the launch of BaseChain, 2 million transactions, over $57 million bridged, 24,000 active addresses, 0.1 second average block times. These numbers are actually starting to rival some of the Layer Ones out there that are commanding like multi-billion dollar like chain valuations. And now this is happening as a Layer 3. I did an episode with Will Papper and Yasek from the DGEN, who created the DGEN token, just to kind of like peek into their heads about what's going on here. A lot of why, the answer to like, why they say, why did we do a Layer 3? Instead of a Layer 2 is just like, well, of course, Base has all the users.

• 48:00David Hoffman?

  Like I said, Coinbase is your top of funnel, so just like tapping into that. But also, they get to have a lot of opinions about how to build an ecosystem. So they get to be much more opinionated than optimism or Arbitrum or Base could, because they're kind of building something closer to an app. Like, they have a very narrow, specific direction for what they want BaseChain to be. And so they get to become much more opinionated about how to build that thing. And really, especially as a Layer 3, when like, rather than having the Ethereum Layer 1 as your settlement layer and therefore like settlement costs, like imagine settling onto the cheapness of Base, which we just saw, like has increased their capacity by 50% twice over the last 2 weeks. You have no constraints in scalability, like transactions are like billionths of a penny.

• 48:45David Hoffman?

  And so like, that's a free transaction. And they, without any sort of like constraint on like block size or anything like, and so this is a hyper-specialized chain to do a hyper-specialized thing, which is to be a DGEN casino by design.

• 49:00Speaker 01

  Exactly. And it's kind of funny, because it reminds me a lot of like, I guess, the Cosmos thesis, right? Where they were like, you know, out of specific chains. And I think that I've been, you know, I've been talking about this for a while, but basically like the Ethereum L2, L3 kind of module ecosystem seems to be realizing that, but it's realizing it in, I think, a more scalable and better way than I think Cosmos was originally architected, where essentially they wanted to have everyone be their own kind of, you know, super sovereign chain, bootstrap their own security and nodes and things like that. Whereas with a Layer 2 and a Layer 3, you don't need to do that. You can just reuse Ethereum's essentially, and kind of inherit that there.

• 49:37David Hoffman?

  So a lot of the monolithic people out there are seeing like the Ethereum people like tweet and like dance around about their layer threes and they're just like, uh, layer threes. Like, yeah, you guys haven't even fixed layer twos. Your layer twos aren't even decentralized yet. Meanwhile, Vitalik Buterin comes in with a tweet on WarpCaster saying, re-upping my post from 1.5 years ago on layer threes. And so he wrote an article on his website saying, what kind of layer threes make sense? And so if you didn't know that this article existed, he wrote this in late 2022. He says he's now updated it, especially with the modern context that we have today. And so definitely go read that. There is a link in the show notes to get to get access to that article. There's some drama, Anthony, that I want you to help me unpack as we progress further in this episode.

• 50:22David Hoffman?

  There is a big debate about the ETH issuance curve. So we are now talking about the issuance curve of Ether. There are some decisions to be made and some controversy that has been had around changes to the ETH issuance curve. There's also LRTs flipping LSTs and there's just a new equilibrium between the liquid restaking tokens and normal liquid staking tokens. There's also drama between Maker and AVE in the DeFi lending app layer. Lots of drama this week. So we're going to get to all of these subjects and more, but first a moment to talk about some of these fantastic sponsors that make this show possible. Mantle, formerly known as BitDow, is the first DAO-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle network.

• 51:03David Hoffman?

  A brand new, high-performance Ethereum layer two built using the OP stack, but uses Eigenlayer's data availability solution instead of the expensive Ethereum layer one. Not only does this reduce Mantle Network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest DAO-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 on-boarded, like Game7 for Web3 gaming and Bybit for TVL and liquidity and on-ramps. So if you want to build on the Mantle network, Mantle is offering a grants program that provides milestone-based funding to promising projects that help expand, secure, and decentralize Mantle.

• 51:44David Hoffman?

  If you want to get started working with the first DAO-led layer-two ecosystem, check out Mantle at mantle.xyz and follow them on Twitter at ZeroXMantle. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world, driving real-world use cases like mobile payments and mobile DeFi. And with Opera MiniPay as one of the fastest-growing Web3 wallets, Cello is seeing a meteoric rise with over 300 million transactions and 1.5 million monthly active addresses. And now, Cello is looking to come home to Ethereum as a Layer 2. Optimism, Polygon, Matter Labs, and Arbitrum have all thrown their hats in the ring for the Cello Layer 2 to build upon their stacks. Why the competition? The Cello Layer 2 will bring huge advantages like a decentralized sequencer, off-chain data availability secured by Ethereum validators, and one-block finality.

• 52:29David Hoffman?

  What does that all mean for you? With Cello Layer 2, gas fees will stay low, and you can even pay for gas natively using ERC20 tokens, sending crypto to phone numbers across wallets using social connect. But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello forums. Follow Cello on Twitter and visit cello.org to shape the future of Ethereum. All right, let's go into one of the bigger debates that I've seen in the Ethereum ecosystem, and this is a debate over the Ethereum protocol, which we have these every now and then. This is a particularly lively one, and I would call a very, very important one. There was a recent proposal from Casper and Onsgar to Ethereum EF Core devs about proposing

• 53:12David Hoffman?

  the need to change the issuance curve of ETH. So we are now talking about the monetary policy of ETH, which is always a very delicate subject. Mike Neuter, he releases blog posts, very comprehensive blog post, decently technical, at least just trying to really get very concrete and detail-oriented about some of the debates here. It's just titled "Issuance Issues," and then he has a TLDR. "Issuance on Ethereum defines how Ethereum pays for security. Entering mid-2024, the realities of staking have changed seismically since the inception of the beacon chain at the end of 2020. The future remains uncertain, but we can explore the impact of issuance on solo staking, ETH asset, and protocols building in and around Ethereum consensus."

• 53:54David Hoffman?

  Overall, changing, like I said, changing the ETH issuance curve is a touchy subject because we are talking about the monetary policy. The last thing... That I think anyone in the Ethereum ecosystem wants, wants any sort of resemblance to the Federal Reserve. But this is kind of the pattern that is being invoked here. Meanwhile, there are some very good arguments about like, hey, we still have a pretty blunt issuance curve. We never really put all that much rigor into how and why the issuance curve is what it is. And so let's revisit that conversation and generate a more precise issuance curve. Anthony, like, what are your reflections on this debate? How would you characterize the two sides?

• 54:34Speaker 01

  Yeah, I would say this debate really stirred up the hive. But as you said, like, it is the nature of any debate around Ethereum's monetary policy. It's always going to be a subject of intense scrutiny. And as it should be, the bar for changing Ethereum's monetary policy should be one of the highest bars, if not the highest bar in changing anything about Ethereum in kind of like my mind here. But I think that the reason that I wouldn't say like the conversation got too toxic or anything like that. But the reason why it got so heated, I would say, is because I think there was a bit of a misunderstanding about a few things here. So firstly, I'll say that the proposals put forward were just that. They were proposals. There were no EIPs or anything attached to them. They were essentially research posts from the kind of researchers, a few of them, as you mentioned, some of their names there.

• 55:18Speaker 01

  And they wanted to get feedback on what they wrote. They wanted to start a discussion on this. There was no.

• 55:23David Hoffman?

  They certainly started one.

• 55:24Speaker 01

  Yes, they certainly achieved that goal, but there were no EIPs attached to this. Now, I think the reason why people got ahead of themselves on this is because in the research post, they said that they wanted to target this to go into the next Ethereum network upgrade, which is called Pectra or Electra, which is slated for, could be, could happen at the end of this year, but probably early next year. And everyone was like, no, it's way too soon. We can't be changing the Ethereum monetary policy that that soon. Now, I agree, like, it was probably a mistake to put that wording in there, because that's what people focused on, which means that they didn't actually focus on the actual proposal itself. Because the actual proposal itself is, in my mind, pretty sound with its analysis of the risks and concerns. But I think that the implementation details are probably the thing that I would disagree with most.

• 56:08Speaker 01

  So I think the two top concerns are that one, you know, we're concerned. Turned with too much stake going into, you know, coming online just generally and too much of that going into like these liquid staking protocols. Or this could restaking protocols and not going to solo stakers, which essentially would squeeze solo stakers out of the network and essentially, you know, get rid of solo stakers. That's like the main kind of risk here. But the second risk is that in, I guess, like a downstream of the first risk is that ETH as an asset gets replaced as money by an LST, like ST ETH could replace ETH or some other LST could replace ETH as a money. And the researchers are worried about the implications of this. So in terms of like analyzing the risks and, and, and kind of like seeing the, the risks and, and identifying them, they did a really great job in doing that.

• 56:51Speaker 01

  But I think where it kind of broke down was trying to get this, or at least it's suggesting that they could get this into the next Ethereum network upgrade, which is obviously not going to happen, I don't think. But also probably not making their case well enough, not doing a good enough sales pitch, I think. And I think they've tried to rectify that. They've gone on, you know, they went on the Uncommon Core podcast to try and rectify that. You know, Mike put out this post that that came later than the original proposal. But, but yeah, and, and I think that a lot of the, I guess, risks have assumptions tied to them as well that people kind of disagreed with, where they were like, you know, we disagree with the assumption that 80% of ETH is going to be staked, for example, or 90% of ETH is going to be staked for such and such reason. And that is a fair thing to disagree with. But then the researchers will say, well, if, if our assumptions are correct and we get to 80% ETH staked on the network,

• 57:36Speaker 01

  then putting this fix in, if you want to call it a fix, is too late at that point. It doesn't actually fix anything and we can't, can't rectify this. So. It's a bigger disturbance, the more ETH is staked. Exactly, exactly. For, for the reasons outlined in the post. And I mean, this is a very broad topic, but I think that kind of summarizes it. I mean, as much as I can summarize such a, an in-depth topic there. But yeah, as I said at the top, like it, like no matter what the proposal is, no matter the details of it, anything that ever touches the Ethereum monetary policy needs to undergo, you know, the, the highest scrutiny and needs to go through the most intense process to make it into the network because, you know, I mean, for so many different reasons, but it really should be the toughest thing to change, I believe.

• 58:17David Hoffman?

  Yeah, I think that was a great summary. Really, I'll segregate the issues here into two camps. There's like the EIP process, which people are throwing a flag and saying, "Hey, you guys are being too aggressive. You guys are, you're violating the process. We need to, we need, as a community, need to process these proposals." And so there's that side of the debate, which I think is where most of the contention is about just like, "Hey, let's respect the process. Let's slow this thing down." And then there's the proposal itself, which is like, "Hey, let's change the ETH issuance curve", which I think is less contentious, but still needs like to be processed. I would say like personally, I'm on the pro, "Let's change the issuance curve" side of things.

• 58:59David Hoffman?

  Really, this debate falls on the side of like, "Are we okay with 100% of ETH being staked?" Because I think there are pretty strong arguments to say if we approach 50% of ETH being staked, of which we're at like 26, 27, 28% right now. If we approach 50%, the difference between 50% and 100% is actually not that much. I think once we pass 50%, we will more or less zoom pretty steadily up to 100%. Like not super fast, but like we'll get there. It's almost inevitable. And so like this is one of the reasons why Onsgar and Casper have presented some urgency about making informed choices about this, is they are saying, "Hey, if we do get to that point, imposing a change will be harder and have more stronger consequences.

• 59:44David Hoffman?

  And so let's consider this with haste", which is where like some of the process concerns came about. So like totally understanding the process concerns. We want to respect, respect the process. Can't force anything in. I would say like there are, there are being, there are two curves being proposed here. If you're looking on the screen, it's the same curve that we have, but with less total issuance. And so if we have less total issuance with a 100% ETH staked. And then the second curve is kind of like an S curve. And so this is what is called stake targeting. And so we can actually target a specific number. And no matter the external incentives around ETH staking, the LST, LRT incentives, the Eigenlayer incentives, it will rubber band around a particular

• 1:00:27David Hoffman?

  Point, call it 25 million ETH, or we could do 30, 35, 20, some sort of point. And if you go too far away from that point, issuance will actually drop to zero. If there is so much external demand from Eigenlayer. And this, what this would do if we targeted 25 million ETH staked, or some 25%. What this would do, this would actually preserve the value of vanilla ETH, which I actually think is pretty important. And so this is a difference of like, do we want only LSTs? Only Rocketpool ETH, only Lido staked ETH, only EtherFi ETH? That's the only versions of ETH that you'll see inside of the Ethereum ecosystem? Or do we want to preserve vanilla Ether as a first-class citizen? And that's actually kind of where my position is.

• 1:01:12David Hoffman?

  I don't know if you have landed on a position or a side of this debate, Anthony, about like where, what we should do with the issuance curve? But if you have, I'd love to hear it.

• 1:01:21Speaker 01

  No, I would say that I'm neutral still right now. I haven't made my mind up yet for a number of different reasons. But I think that I do want to go back to what you originally said about the fact that what we have right now is a rather kind of simple. I struggle to call it dumb, but like simple issuance curve, right? Like, as you said, like, there wasn't that much kind of effort put into it because of the fact that like it was part of the wider proof of stake upgrade, and it wasn't something that we were looking at too closely. And obviously, with the advent of all these LSTs and restaking, you know, things have changed substantially here. But I will say that even back then, when the previous stake was being designed, there was still chatter around potentially capping the amount of ETH staked on the network. And the original form of this was basically capping the active validator set.

• 1:02:03Speaker 01

  So how this would work is that there would only be X number of active validators on the network at a time. So you would still have, like, say you had 60 million ETH staked, but the only 30 million of that ETH stake would be active at any given time. So during the year, maybe only for six months of the year, 30 million ETH would be active, and the other 30 million ETH wouldn't be active, right? But the rewards would still kind of be. Be the same for everyone, but that's, I guess, like a similar concept to what's being proposed now. We're essentially just lowering the kind of reward curve, uh, you know, to a point where essentially it it kind of preserves, as you mentioned, like ETH the asset, so it doesn't get supplanted by the LSTs. And essentially makes it so that not too much ETH gets staked, uh, because we actually don't need that much.

• 1:02:44Speaker 01

  Like, I think people I don't understand that there is a big diminishing return to ETH being staked. Because the node operators, as they exist today, right? They are basically going to be the same for, you know, a while, basically. They don't change that often. There are a lot of node operators on the network. But essentially, uh, if you if you're adding more ETH stake to these node operators, you could argue that it doesn't really add much more security, right? Like, we already have so much economic security staked here. We already have tens of billions of dollars worth of ETH stake here. So like, how much more are we getting by staking more ETH? And then the argument can be made, well, if we're not really getting much from it, then what are we doing? Just overpaying for security, essentially. And this was the original argument around Ethereum's monetary policy, which is actually minimum viable issuance.

• 1:03:29Speaker 01

  So it's essentially this notion that we should only be issuing enough ETH to that is viable to secure the network. Anything more than that is overpaying for security. And that is, I I think, at the heart of what these researchers are arguing is that, like, uh, you know, outside of all the other risks that they've identified, we are pretty much overpaying for security in a world where, you know, fifty percent ETH is staked, let alone a hundred percent of ETH is staked. So I get the arguments on that side, but I also get the arguments on the other side of, we shouldn't be messing with the monetary policy at this stage. Like, that's that's the that's really the against side, I think, is that they feel like that touching the issuance curve or touching the monetary policy at this point in Ethereum's life is not great for a number of different reasons. One of the major ones being the fact that ETH is undergoing institutional adoption right now.

• 1:04:13Speaker 01

  And it it, you know, poses a risk to that. Uh, but there are other arguments as well. So there are good arguments on both sides, and that's why I'm I'm rather neutral here, because I want to see this play out. Um, but I definitely think that this is not going to go into the next Ethereum upgrade. Uh, I believe there's a zero percent chance of that happening. But I'm excited to see more discussions happen over the next, you know, maybe twelve months or so.

• 1:04:33David Hoffman?

  Yeah, of all types of conversations about the Ethereum protocol, I think Ether monetary policy is like one of the more interesting ones. And it's also one of the most broad ones where I think a lot more people can get involved. I had no like contributions to add to the conversations around 4844. I was just like a net receiver of information. I actually feel like somewhat equipped to actually like help move this conversation forward here. And I think a large part of the Ethereum community also feels that way, which is why we're seeing so much contention come from so many different corners of Ethereum with this conversation.

• 1:05:05Speaker 01

  Exactly.

• 1:05:06David Hoffman?

  Some LRT and LST dynamics. Lido has now the highest ETH staking outflows out of any protocol, while EtherFi and Renzo, two of the leading LRT projects, Liquid restaking token, have the highest inflows. Also, something I noticed because of you, Anthony, was that EtherFi, the number one LRT by ETH deposits, actually flipped Rocket Pool. So we have an LRT that is now bigger than an LST. So really some changing dynamics as a result of the Eigenlayer ecosystem. Actually, kind of one of the points that Casper and Ansgar were saying is like there are new influences around the staking and monetary dynamics of ETH. And we're actually seeing it play out relatively early in the Eigenlayer process.

• 1:05:50David Hoffman?

  Like reminder, Eigenlayer is not even live yet. And we have LRTs actually like trumping LSTs. Give me your thoughts and reflections here.

• 1:05:59Speaker 01

  I mean, if you've been paying any attention over the last few months, this should be obvious to you that people are definitely aping into restaking. I think it's just become such a huge thing, especially given that there is this kind of, I guess, like yield burger you can have or points burger essentially where you, you know, by putting your ETH into, yeah, yeah, I'll explain what I mean by this. By putting your ETH into EtherFi, you could farm EtherFi points, you know, before they did the token. I think they're doing another airdrop as well. And then they put that ETH into Eigenlayer and you're farming Eigenlayer points. So you're basically like getting a points burger like of all these kind of ingredients in there.

• 1:06:34David Hoffman?

  Well, you're also getting all of the future AVS tokens. And so like, call it, you're getting the meat and the patties and the buns. But like, all the AVSs are like the lettuce, the tomato, the condiments, if you will.

• 1:06:47Speaker 01

  Yep, yep. So you're just basically following the kind of incentives here. And Lido right now is not an LRT by kind of like a natively an LRT, which means that it's not equivalent to something like an Ethify, but you can take your STH and put it into Eigenlayer, but there are caps on that. Whereas you know, Ethify and others got around the caps by essentially solo staking that ETH as part of Eigenlayer and spinning up Eigenpods, which got around the caps that Eigenlayer put in. Um, so there was a lot of inflow going there, but it is very interesting to see the fact that uh people are not only going into Ethify, but other protocols as well instead of Lido. You can see this, there's uh, I mean, not on this screenshot, but if you go to Hilldobby's dashboard, where he tracks all of this, you can see the actual kind of inflows over the past week,

• 1:07:31Speaker 01

  past month, past six months, and you can see where they're flowing into. It's not just um the LRT protocols, like Mantle, for example, is doing the thing where you bridge your ETH into Mantle, the L2, and then they actually stake that ETH. And you can see there over the past six months, they're number three in terms of inflows. Lido is not number two, but the thing is, is that they're number two and by a very small But they're losing. Kind of a margin. Sorry? But they're losing. They're losing ETH. Yeah, well, exactly. It's going away from Lido. Yes, because you can see Ethify is number one, and then you count all the other ones and put them all together. Lido is a very small percentage of the total flow going into staking right now. So yeah, it's not just, you know, the LRT protocols, but it's also more and more competition has come online now within the staking space.

• 1:08:13Speaker 01

  And it's really, I think, like chipped away at Lido because of the fact that Lido has such a large market share that really, like if, if there's all these other protocols offering incentives, no one's going into Lido. And then all the STH holders are like, why am I holding this when I could be getting all these kind of incentives over here? Yes, it may be more risky, but people are taking on that risk there. So that's why I think you've seen this play out. And I remember I said this ages ago uh on, on Twitter and on my podcast. The best way to kind of take Lido's market share down was for there to be more competition. And I think with the advent of restaking, that competition has just blown up completely.

• 1:08:47David Hoffman?

  Yeah, that's totally right. And you're actually seeing Lido drop below 30% of total market share, which it has not been that low in a very long time. I remember for a while during like the air, the cycle of Ethereum in which everyone was like screaming about like Lido being 32.9%, like really approaching that 33.3%. And everyone's like ripping their hair off. Like Lido's gonna cross the 33% barrier. We are now down to 29.7%. And that trend is seemingly going, going to continue.

• 1:09:18Speaker 01

  Yeah. And I think as well, just to remind people that Puffa, one of the other LRT protocols, has over a billion dollars worth of ST8 that they're about to vampire from Lido, which is gonna knock another, I think, like at least percentage point off of Lido's market share just from that, which is crazy because they're actually going to be withdrawing the ETH from Lido using the ST8 that they have, and then staking it again as part of Puffa's system, which is the very definition of a vampire attack here. So I, I, I, I know that Lido is probably gonna do their own native restaking thing eventually, but I'm gonna be curious to see if that actually stops the bleeding, or if they keep bleeding market share to these other protocols.

• 1:09:57David Hoffman?

  Yeah, and this is kind of the story of, I think, this new bull market is a lot of very hungry new players are arriving to build somewhat similar, but also novel products to entrenched incumbents. We're about to get into Morpho versus Ave. And they, A, are able to move faster. They don't have like, they don't have baggage. They are able to play in the arena that is more modern. And so like all of these, what we're looking at here is this chart of LRT, the total supply of LRTs, which are approaching 2.4 million in ETH. This bright green, excuse me, cyan color is Puff ETH. That's all of the Lido staked ETH. So this, this cyan bar here is all Lido staked ETH, which is going to be

• 1:10:40David Hoffman?

  pulled out of the beacon chain, and the staked ETH will go away and it will turn into Puff ETH. And so these are all the result of like modern day Eigenlayer-based meta that are nipping away. Like we're just seeing Rocketpool fall behind the leading LRT. And now we're seeing like Lido start to get really tripped away here. And this is before the Puffy vampire attack, as you said. So this is kind of like the, a big theme of this bull market is that newer, hungrier disruptors are coming for incumbents.

• 1:11:11Speaker 01

  Exactly, exactly. And I think that it's kind of funny to see the incentives play out because Lido already has a token that's been trading for a long time. They can't really do another airdrop, whereas these other protocols have new tokens, right, that have just come out or haven't done their token yet and have these points programs. So as I was mentioning before, that's just the incentives, right? That's just the incentive of people coming along and being like, I'm going to farm these protocols. I'm going to get these points, which are going to turn into tokens eventually. And then obviously, at the heart of all of that, it's the mother of all tokens, which is Eigenlayout, which is the thing that everyone is farming through all of these protocols that, you know, people think is going to be like the biggest airdrop ever or whatever. But that's, that's the incentive, basically.

• 1:11:53David Hoffman?

  Yeah, it's pretty crazy to see the EtherFi token price at a fully diluted valuation of 5.2 billion, which in comparison to Lido, Lido's at 2.6 billion, which like if you're just comparing the amount of ETH in Lido versus the amount of ETH in EtherFi, Lido's like super dominant, but they're commanding half of a market cap, a fully diluted market cap versus EtherFi, and which probably just goes back to the same thing that we were talking about earlier with the, with the Athena and the Wormhole tokens. Shiny new token, zero sellers, everyone's locked up. And so like, true price discovery hasn't been seen, but like, we've got, we've got at least one full cycle before true price discovery actually kind of like happens in these things. So right now, they have a lot of collateral, a lot of leverage to work with that like Lido

• 1:12:37David Hoffman?

  shot at shot last cycle, because it's just like a last cycle kind of project.

• 1:12:41Speaker 01

  Yep, yep. And this is, I guess, a trend with crypto generally is that, like, the newer protocols, yes, they're newer, but they have the fact that they haven't done a token yet as like a huge thing that they can lean on, where the older protocols can't. And that's how market share is kind of distributed. But if you were to take like a very long-term look here, I do still believe that the protocols that are the best products are the ones that are going to win out over the long term, because token incentives can only get you so far. But at the same time, like you said, during a cycle, those token incentives can get you far, that's for sure.

• 1:13:12David Hoffman?

  Right, right, for sure, for sure. All right, coming up with one of the last subjects of the day, there has been a bunch of drama in the DeFi app layer of Ethereum. There has been a brewing war, a brewing division between Aave and Maker. And it's especially with the introduction of both Morpho and Athena. And so here's Mark Zeller, who's one of the leading, like, operators of Aave, the Aave DAO, writing a proposal to remove the collateral status of DAI in Aave, citing risk concerns due to what Maker DAO is doing, integrating the new ETH, USD E from Athena, a brand-new synthetic dollar,

• 1:13:54David Hoffman?

  using that as what Aave thinks is too much collateral to back a DAI, presenting a systemic risk in DAI, the stablecoin. So as a result, Aave is reducing its exposure to DAI inside of Aave by just removing it as collateral. Stani from Aave, he comes into the Aave Governance Forum, saying, "Personally, I am in full favor of offboarding DAI from all Aave markets completely. At this point, I see little value for the Aave DAO with this new risk direction Maker DAO is adopting. Would suggest a temp check for full offboarding. The offboarding process should start immediately in case of a favorable outcome." Maybe in the background of this is the incentive of like, well, Aave has the GHO, the Go stablecoin, and so Aave would like to enshrine its stablecoin above competitor's stablecoins.

• 1:14:39David Hoffman?

  But then also, at the same time, there is this like brand-new introduction of ETH, USD E from Athena, into a collateral of Maker DAO with a pretty healthy credit line. I think $600 million with a proposal to increase it to $1 billion on this brand-new synthetic dollar, which is like, you know, still getting tested. Still, the risks are still being stress-tested. So Maker DAO giving a very healthy credit line to this brand-new stablecoin, to which Aave is saying, like, "That's risky. Don't do that." So this is the drama of the week, in the last week in the DeFi layer. Anthony, what's your take here?

• 1:15:15Speaker 01

  I mean, I would say that I totally get Ave's point, or the AveDAO's point here about the risks associated with this and kind of MakerDAO's new direction of taking on more risk. You know, I think for a long time, people assumed that Maker was this kind of slow-moving beast. It was the least risky kind of protocol within DeFi. It would basically do, you know, a proper analysis before integrating anything. But then recently, as you just explained, they had this proposal, or maybe not even a proposal, they just wanted to do this thing, but they essentially put like 600 million to a billion dollars into Athena, which I mean is like objectively a very new protocol and an untested protocol. And there's a lot of like real risks associated with it. And people, and then the AveDAO is like, oh, this is just crazy. Like, that just increases the risk too much for Dai,

• 1:15:59Speaker 01

  which basically means that we shouldn't have it as a collateral asset on Ave, because that could hurt the Ave ecosystem. So I totally get where they're coming from there. And, you know, I don't know kind of like what side I sit on here. I don't think it's something that I've paid that much attention to, to enough to have a side. But I think that I get the logic surrounding it here. But, I mean, you've got a Hazu tweet here about Athena's risks being over-exaggerated. Maybe you want to get into that one as well.

• 1:16:24David Hoffman?

  Yeah, this is Hazu saying, kind of like what we were saying, is like the risks of Athena are over-exaggerated, at least to like what people understand when they make comparisons to Terra Luna. That's what I'm saying. Hazu says, "It's not a Widowmaker trade like GPTC and BTC, let alone Terra Luna. It's very common and relatively low-risk trade many firms employ, even more so if you can use a prime broker like Copper Fireblocks pretending otherwise is either uninformed or disingenuous. Current rates will obviously come down as the funding rates shift, then USDE will become less attractive. It's already starting to happen. Finally, this Ave Maker war is destructive for both parties. The involved parties seem to go to prioritize ego over value creation."

• 1:17:04David Hoffman?

  I actually am doing a podcast with Sam McPherson from Sparks, which is like the Ave fork for the MakerDAO ecosystem. So basically MakerDAO, and Mark Zeller from Ave. And so we're going to have both of them on a podcast tomorrow morning. That'll come out sometime, sometime next week.

• 1:17:21Speaker 01

  Yeah, and that should be like a good podcast, I think, to get the different perspectives there. But I mean, I agree with Hazu, there probably is a little bit of like subjectivity in this and a little bit of ego in this, like there always is when it comes to these sorts of things. But as I said, like I understand Aver's position here. I understand Makers' position of wanting to increase their revenue, their net revenue of the maker ecosystem, wanting to increase the supply of dye as well generally. And I mean, I'm looking forward to listening to that podcast that you do there. It should be an interesting one.

• 1:17:53David Hoffman?

  All right, coming up as the last bit of the week, this is a little bit late since it's April 4th and not April 1st. This is going to be our meme of the week. I think it's kind of cringe to do a meme on April 1st on the April 4th, but we're doing it anyways because I thought it was pretty funny at the time. Sad, this is me tweeting out, sad to announce my time at Bankless HQ has come to a close, but the Bankless mission still burns in my heart. In pursuit of that mission, I'm stepping into a VP of decentralization at the Solana Foundation. Stoked to work with Anatoly and Austin Fadera on Solana. This was our April Fools joke, Bankless does what I think is a very funny April Fools joke every single year. And then as a result of this, my DMs are just flooded with people saying, "David, congratulations on the new move. Like, always knew you were a Solana maxi."

• 1:18:39David Hoffman?

  Really stoked to see what's going on here. And then there's like the satisfaction I get of saying like, "Guys, come on, April Fools joke, April Fools joke."

• 1:18:48Speaker 01

  I think this is why everyone hates April Fools, like at least kind of for me, it's become so like annoying, especially because I'm in Australia, so I get to experience it twice a year, which is super annoying since I'm like in the future, so to speak. But yeah, it's kind of funny, like when I went on Twitter on April 1st, I was scrolling through and I got like caught in so many of them where I was like, "Oh my God, like this can't be true." And then I'm like, "Oh, fuck, it's April 1st." Well, technically it was April 2nd for me, so that's why it didn't immediately kind of ring to me. But it's funny that you got so many DMs about this because I'm sorry, but you take one, you take one, look at this, and you actually read what you posted and you can see that it's a joke.

• 1:19:25Speaker 01

  I mean, look at the quote from me at the bottom, like the quote that you put in there, like saying that, you know, I always knew David pissed, like pissing off ETH maxis. It's like, what? So I don't know, people just read the headline, I guess, and wanted to be nice about it. But it's always funny seeing those responses.

• 1:19:42David Hoffman?

  I think it's just one good day a year to just inoculate people against just headline spinal reflexes of just like, yo, like, like, let's double check the headline here.

• 1:19:54Speaker 01

  Yeah, but people don't seem to learn.

• 1:19:57David Hoffman?

  Yeah, they don't seem to learn. Granted, we did have our designer Photoshop on a pretty well, like a Solana logo onto the T-shirt that I was wearing. I've never worn a Solana T-shirt, but like now in this graphic that I had. So it's like, kind of not fair when you employ your graphic, your very Chad graphic designer to like, make something look very, very legit. This was actually Ryan's line. "I really just want to help Solana decentralize," said Hoffman in a tweet announcing his new role. "This goes beyond the Nakamoto coefficients for me. This is about actually making a difference. Anyone with a data center should be run, should be able to run a Solana validator."

• 1:20:31Speaker 01

  Yeah, see, like, if you actually read that stuff, you would know that it was a joke. But yeah, as you said, people seem to just read the headline and, and go off of that. But, uh, I mean, yeah, I will say this was one of the better, I think, April Fools kind of jokes, because the whole point of it is to trick as many people as possible, right? Like, and I think you tricked a lot of people.

• 1:20:47David Hoffman?

  Oh, for sure. Yeah, okay, so there is also just a discussion that I think some people have had about like, hey, April Fools shouldn't be good. We should not accept April Fools in the crypto industry because it's, I don't know, do they do April Fools in Australia, Anthony?

• 1:21:01Speaker 01

  Not, not really. I mean, there's some of it, but that's just like us trying to employ, import, uh, American culture, but no, it's not really a big thing here.

• 1:21:08David Hoffman?

  April 1st is kind of like a US centric phenomenon.

• 1:21:12Speaker 01

  Yes.

• 1:21:12David Hoffman?

  And so, so I got messages that Asian media saw this report and started broadcasting it in Asia on Asian news channels as truth, because of course they would. It's not, April Fools isn't a thing in Asia. And so apparently, like, there's a bunch of people in Asia who actually think I'm the VP of decentralization at Solana. And so like, I think there, there are also other April Fools jokes that like accidentally moved token prices, because I kind of thought that their, uh, April Fools joke was irresponsible. And so granted, I take the point that like, we do need to be careful as a crypto industry where we have like markets and cross-cultural differences where like, actually, April 1st is kind of just like a US-only phenomenon. But nonetheless, like, we can't, we can't not do it.

• 1:21:57David Hoffman?

  We are a media platform, we kind of have a lot of opportunity here.

• 1:22:00Speaker 01

  Yeah, yeah, I think I remember I did it last year, just like as a, as a thing for my viewers on my podcast, where I introduced myself as Charles Hoskinson instead of myself. And that was like as far as I went. If you get, if you get fooled by that, that one's on you. Yeah, exactly, exactly. So I did, that's, that's all I really did. But yeah, no, it's definitely like a very US centric thing. And that's why I think people on, you know, in crypto have an issue with it because of the fact that crypto is global, right? Like, as you said, like, there's these Asian media outlets that reported on this and, and that Europe is a huge player in crypto as well. So all those people weren't maybe seeing this to me and like, well, it's, you know, not, we're not going to double check the day with, this isn't a thing that we do, sort of thing. So yeah, that's how I kind of view it as well.

• 1:22:39David Hoffman?

  Yeah. So just as a takeaway, if you do an April Fool's joke, don't move markets in the crypto space. Anthony, thank you so much for stepping in as substitute teacher. We always appreciate you and either me, I need to climb a mountain, or Ryan needs to go hang out with his fam. We always appreciate you coming in. If people don't know anything about you who are living under a rock and they just appreciate your takes, I think you have a place to send them. Where should they go?

• 1:23:03Speaker 01

  Yeah, I mean, you can just find all of my content at the Daily Guey, or if you've got my Twitter, it's on there. If you want to just search me up on Twitter, all the relevant links are there. I mean, I do a daily, like every weekday, kind of news recap of what's happening in the Ethereum ecosystem, pretty technical, pretty deep dive. Like, it's not going to be kind of for total noobs to the ecosystem, but if you want to learn more about Ethereum, yeah, you can go check that out.

• 1:23:24David Hoffman?

  Yeah, very consistent 30 minute videos about what's going on in the Ethereum ecosystem. Anthony does the whole thing in a single breath, so it's very, very efficient. And you can, you can get that. I listen to it on podcast, you can also get it on YouTube. Bankless Nation, thanks again for running through the week of news with us, with me and Anthony. Risks and disclaimers, of course, crypto is risky, you can lose what you put in, but we are headed west. This is Frontier, it's not for everyone, but we are glad you are with us on the Bankless of Journey. Thanks a lot.