ROLLUP: 4th Week of January ($GME, Robinhood RANT, WHY WE DEFI)

🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/ ✊ STARTING GUIDE BANKLESS: https://bit.ly/37Q17uI 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 👕 BUY BANKLESS TEE: https://merch.banklesshq.com/ ----- 💪BECOME A BANKLESS PREMIUM MEMBER: http://bankless.cc/membership ----- GO BANKLESS WITH THESE SPONSOR TOOLS: ⭐️ AAVE - BORROW OR LEND YOUR ASSETS https://bankless.cc/aave 🚀 GEMINI - MOST TRUSTED EXCHANGE AND ONRAMP https://bankless.cc/go-gemini 💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith 📱 DHARMA - MOBILE ONRAMP DIRECTLY INTO DEFI https://bankless.cc/dharma ------ MARKET BTC $32,500, hanging in the low 30,000’s ETH $1480 (New High) High-Highs, Lower Lows TVL in DeFi: 26.5B $DPI: $290 DPI/ETH 1-Day Chart! https://www.tradingview.com/symbols/DPIWETH/?exchange=UNISWAP Corrections - Avg correction in bull market is 35% - Every quarter has a correction - Expect them _______ RELEASES ETH 2.0 available on Bitfinex https://twitter.com/bitfinex/status/1352293087045947394?s=20 L2 is Coming https://twitter.com/StaniKulechov/status/1351952652612067328?s=20 Coinbase offers secondary shares https://www.theblockcrypto.com/linked/92251/coinbase-offer-secondary-market-private-shares-nasdaq Kyber v3 launched a bunch of thing...focused on LPs https://blog.kyber.network/kyber-3-0-architecture-revamp-dynamic-mm-and-knc-migration-proposal-acae41046513?gi=769375436a6f Alpha Homora v2 https://newsletter.banklesshq.com/p/how-to-boost-your-yield-farming-reward Vitalik’s Holy Grail for Rollups https://twitter.com/StarkWareLtd/status/1354061268731179010?s=20 Comparing Layer 2 Solutions https://indexed.wtf/ Uniswap WBTC-ETH and USDC-ETH LP Token Vaults are Live https://twitter.com/nomos_paradox/status/1354280885936250881?s=21 https://vote.makerdao.com/executive/collateral-onboarding-debt-ceiling-adjustments-other-changes?network=mainnet#proposal-detail https://daistats.com/#/ _______ NEWS Track Placeholder Ventures on Chain https://messari.io/screener/placeholder-ventures-portfolio-AD10BC17 Public Company buys BTC (Marathon Patent Group) https://www.theblockcrypto.com/post/92378/nasdaq-marathon-patent-group-buys-bitcoin-btc-treasury-reserves MicroStrategy bought even more BTC https://www.microstrategy.com/content/dam/website-assets/collateral/financial-documents/financial-document-archive/Form-8-K_jan-22-2021.pdf Yellen on Cryptocurrencies https://www.theblockcrypto.com/linked/92028/yellen-treasury-senate-cryptocurrencies?utm_source=cryptopanic&utm_medium=rss Miami Mayor is hot for BTC https://twitter.com/FrancisSuarez/status/1354488469091975168 ConsenSys partners with BSN (China) https://www.coindesk.com/ethereum-based-consensys-quorum-partners-with-chinas-bsn-blockchain Dot’s popularity in China https://decrypt.co/55163/polkadot-china-hottest-crypto DyDx raises $10mm Series B Funding https://t.co/uZ2wFoyv3e Genesis did $20B in Lending in 2020 https://info.genesistrading.com/hubfs/Genesis%20-%20Quarterly%20Reports/Genesis%20Q4%20Report.pdf DyDx did $18B in Lending in 2020 https://drive.google.com/file/d/1j2IIXIfGOnfiwfVDlK8RORa6jbsBjp52/view Mark Cuban & Soulja Boy minting NFT’s Cuban: https://twitter.com/mcuban/status/1354497954732761088?s=20 Soulja Boy: https://twitter.com/souljaboy/status/1354486572037492736?s=19 _______ TAKES Ethereum not blockchain https://twitter.com/JayeHarrill/status/1352027529331134464?s=20 PoS vs PoW on energy https://twitter.com/pythianism/status/1353782557884641281?s=20 Institutions adopt “ETH is Money” https://www.coindesk.com/institutional-investors-ether-rally DeFi paying users instead of advertisers (airdrops were sick) https://twitter.com/erikvoorhees/status/1353939463202893824?s=21 Banks charging negative interest https://twitter.com/q9fmz/status/1354048620253868032?s=21 _______ WSB / GAMESTOP https://markets.businessinsider.com/news/stocks/gamestop-stock-short-seller-squeeze-losses-reddit-traders-citron-gme-2021-1-1030000080 https://www.theblockcrypto.com/linked/92959/rep-tlaib-congress-robinhood-gamestop ------ Don't stop at the video! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit the official Bankless website http://banklesshq.com/ Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case

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

• 0:08Ryan Sean Adams?

  Hello everyone. Happy Friday morning. Welcome to the fourth week of January. David, how are you doing today?

• 0:14David Hoffman?

  I am fired up today. We have a lot of things to talk about. So much news. We are going to do something a little bit different this episode. I know a lot of people, including myself, want to talk and hear about GameStop and all of that, just that massive amounts of news. There's so much to talk about. There's so much to peel back. What we are doing in this particular weekly rollups, we are putting the very last section, the section that about what David and Ryan are excited about, that is going to be, we're only going to talk about GameStop. We're going to talk about GameStop for like 20 minutes. And the reason why we're doing that is so that we can go through the weekly rollups as we usually do it. We don't have to bother about touching GameStop because we're going to touch on all of the GameStop topics at the very end. It's going to be a

• 0:56David Hoffman?

  normal weekly rollup up until that point. And it's going to be our normal PG weekly rollup up until that point. But like I said, I am fired up. So if you've got kids in the car, if you listen with your kids around, maybe listen to the GameStop section of this episode at a different time because there might be some swear words.

• 1:14Ryan Sean Adams?

  There you go. Things are going to get kind of spicy, kind of weird, near the end of this weekly rollup. But David, let's get started with the typical. We always start with market. What is going on in the market? Should we talk about Bitcoin?

• 1:26David Hoffman?

  Yeah, Bitcoin is hanging around in the low 30,000s range, ranging between, it actually got below 30,000 a couple of times in the last week, but didn't stay there for very long, kind of staying within 30 to $34,000, consolidating at what is still a relatively high price, pretty still pretty far off of its all time high of $42,000, but doing a good job maintaining that $30,000 floor.

• 1:52Ryan Sean Adams?

  When there's a dip, people always question, they always ask, well, are we going back to all time high below all time high? Do you have any takes on that? Or are you just kind of a wait and see?

• 2:02David Hoffman?

  Yeah, I think Bitcoin at this point is growing a pretty strong allergy to anything in a $20,000 range. I think we could flirt with it a few more times. I don't think, I think Bitcoin is actually going to be relatively quiet for perhaps even all of Q1. I think we're going to find $30,000 Bitcoin to be an extremely comfortable number.

• 2:22Ryan Sean Adams?

  Okay, well, let's talk about some other numbers. ETH price. We hit a new all-time high.

• 2:27David Hoffman?

  New all-time high.

• 2:28Ryan Sean Adams?

  Did we just say that?

• 2:29David Hoffman?

  Yeah, last week too.

• 2:30Ryan Sean Adams?

  We just said that. Okay.

• 2:31David Hoffman?

  I think we're three weeks in a row of ETH all-time highs. First, it was 1440, then it was like 1460, and then it was 1490. Still having resistance around the 1400 level.

• 2:43Ryan Sean Adams?

  Yeah, well, let's see if we can continue that trend, David. I'm kind of liking it. This all-time high next week, too. What about DeFi? What's going on there? Is it DeFi season yet?

• 2:52David Hoffman?

  Oh, I think it could be. Things are really heating up with DeFi tokens. The DPI index, the token that tracks all of DeFi, well, most of DeFi, the top 10 DeFi assets, is at an all-time high of $291, as well as the value locked in DeFi is at an all-time high of $26.5 billion. DeFi doing really, really well.

• 3:16Ryan Sean Adams?

  Well, let's talk about DeFi versus Ether, because we always approach Bitcoin, but also Ether as kind of a reserve asset. Ether is the reserve asset for the Ethereum economy, which means if you're buying DeFi tokens, you better be making more value in Ether with your investments, or else you're better off just holding Ether, right? So that's why you're bringing this metric into the fray here. I've got a "Join for Free" button on TradingView. I'm not going to join today, David. Is that okay?

• 3:48David Hoffman?

  Not today.

• 3:49Ryan Sean Adams?

  Okay.

• 3:49David Hoffman?

  Just refresh that page and that'll go away.

• 3:52Ryan Sean Adams?

  All right. Refresh the page. But what is this ratio that we're looking at?

• 3:56David Hoffman?

  Yeah, so we are looking at the US or the ETH dollar, the ETH price of DPI. So DPI denominated in ETH terms, and that tells us a very different story than the DPI price in dollar terms. It was, you know, the dollar is the dollar, but Ether is really the reserve asset of Ethereum. And what we are seeing is that back in, we had DeFi somewhere where very, basically, all of the DeFi tokens were, you know, pretty inflated in price. And then we had the DeFi, like, quote-unquote, "three-month bear market" at the bottom. It bottomed out in November, and then it bottomed again really in January versus ETH. But, you know, Since like early November, early November 2020 to where we are now,

• 4:36David Hoffman?

  DeFi tokens have been in a channel versus ETH that is starting to poke up against the upper bounds of that channel. And I think the reason why it's important to pay attention to DeFi tokens versus ETH and DPI versus ETH is that it's DeFi season, quote-unquote alt season, which I totally think is coming, which we've been talking about on the weekly rollups for a while. I think that that happens when these DeFi tokens break out of this channel versus Ether, which they have been outperform, they've been outperforming Ether for basically all of 2021. And all we need to have happen is for that trend to continue for us to get into DeFi season. I think DeFi season is right around the corner and the DPI ETH chart has that story being told.

• 5:18Ryan Sean Adams?

  Oh, David, I don't know, though. ETH is, ETH is pretty strong these days, too. So what happens if ETH goes on a tear, bust through the, the 2K mark and leaves DeFi in the dust? Is that a possibility as well?

• 5:30David Hoffman?

  Yeah, I think that's totally a possibility. And like, like I said, I think in DeFi tokens and that, in that possibility will outperform the dollar very, very strongly because they track Ether. But you're totally right. Versus Ether, they could fall. There is room for, for Ether to just do something stupid after it breaks its all-time high, like we saw Bitcoin did. You know, Bitcoin broke its all-time high and then doubled it. You know, Ether has broke its all-time high twice now, but you know, has really been kind of scared to get into price discovery mode. I think the, the time where Ether breaks all-time high and goes into price discovery, price discovery mode, I think that's a possibility. I'm, I'm hoping that that happens. That, that would be awesome.

• 6:10David Hoffman?

  And that would definitely kick the can down the road for DeFi tokens versus Ether and DeFi season. If Ether comes to dominate the, the landscape, DeFi tokens will have to take a backseat. But I think DeFi season is, is coming inevitably one way or another.

• 6:26Ryan Sean Adams?

  This is why we talk about the crypto money portfolio, the bankless portfolio being a healthy dose of crypto monies at the bottom. So these are Ether, these are Bitcoin. This is sort of what you denominate your wealth in, in the crypto economy. And you purchase some things like DeFi tokens and those assets, if you think they're going to outperform ETH and Bitcoin, right? In order for them to be good investments, they must. But if you have that kind of a portfolio, you can't lose in this kind of a bull market. Of course, never know what could happen in the future, but things are going up at the moment. David, I just said things are going up at the moment. And at the same time, Bitcoin has had like, you know, two weeks, maybe three weeks or so of somewhat of a correction,

• 7:10Ryan Sean Adams?

  right? But these corrections are normal, aren't they? Like this is, so this is a chart of 2017. What's happening in 2017 here that is relevant for us in 2021?

• 7:21David Hoffman?

  Yeah, this chart shows the four quarters of 2017, and it shows multiple 20 to 40% retracements of the Bitcoin price as it climbed up that 2017 parabola. We've talked about this before on Weekly Rollups, we're talking about it again. 20 to 40% drawbacks are the norm in bull markets. You know, bull markets are fun times because everyone's making money, but that does not mean that pain is not felt in bull markets. There is always pain ahead of us. Even if you've just felt pain, there's pain ahead still. That's how bull markets work. It is not smooth sailing. So there's always a looming 20 to 40% correction on the horizon.

• 8:01Ryan Sean Adams?

  So that's the message here. The other message thing, the other message is of course that these corrections, these pullbacks, if you will, are normal in bull markets. We've seen this play out already. There's about one every quarter that happens with Bitcoin. This is what happened in 2017. And the average pullback is about 30%. David's right on. Between, you know, 20 and 40% would be somewhat normal. So keep that in mind during the bull run. If there's a correction, doesn't mean necessarily that it's over.

• 8:29David Hoffman?

  Aave is a borrowing and lending protocol on Ethereum, and just recently released Aave version 2, which has a ton of cool new features that makes using Aave even more powerful. With Aave, you can leverage the full power of DeFi, MoneyLegos, yield, and composability all in one application. On Aave, there are a ton of assets that you can deposit in order to gain yield, and all of those same assets can also be borrowed from the protocol if you have deposited collateral. Here, you can see me getting a 200 USDC loan against my portfolio of a number of different DeFi tokens and ETH. I'll choose a variable interest rate, because it's a lower rate than the stable interest rate option, but I could choose the stable interest rate option

• 9:12David Hoffman?

  if I wanted to lock that interest rate in permanently. One of Aave's V2 features is the ability to swap collateral without having to withdraw your assets, trade them on Uniswap, and then deposit them back into Aave. Aave does all of this for you, all in one seamless transaction, so you don't have to repay loans in order to change the collateral you have backing up. Check out the power of Aave at ave.com. That's A-A-V-E dot com. If you want to live a bankless life, you need to get a Monolith DeFi Visa Card. Monolith is a one-two punch of both an Ethereum smart contract wallet and an accompanying Visa Card that lets you spend the money that you have in your Ethereum wallet everywhere where Visa is accepted. When you swipe your Monolith Visa Card at the grocery store or at a restaurant,

• 9:57David Hoffman?

  it actually makes a transaction on the Ethereum blockchain that spends some of the money you hold in your Monolith wallet. It's insanely cool, and it's one of the best tools out there for living a bankless but still normal life. Monolith also offers on-ramp services for getting your fiat money into the world of DeFi, so it's trivial to top up your Monolith card if you ever need to, and your deposited money goes straight into your non-custodial wallet, so your money is never held by a centralized intermediary. Because Monolith is native Ethereum infrastructure, the money you hold in your Monolith wallet still has the power of DeFi behind it. Swapping assets on Uniswap or earning yield in DeFi is at your fingertips. Go to monolith.xyz

• 10:42David Hoffman?

  and sign up to get your Monolith Visa Card today.

• 10:45Ryan Sean Adams?

  David, that's market. Let's get to releases. So ETH2 is available on Bitfinex, and we're talking about the ETH2 asset, staked ETH really is what we're talking about here. What is, what does that mean?

• 10:59David Hoffman?

  Yeah, so Bitfinex is offering a staked ETH derivative token. And so what that means is that they are accepting ETH deposits from their users and then they are issuing a token, which is a claim on those deposits. This is actually how just banks work, right? Like you give them the money and then the banks will give you a receipt, like a receipt of deposit, a credit of deposit. And this is what Bitfinex is doing. They are receiving Ether deposits, issuing you a token that is a credit on your deposits. And then that token is, and then they are allowing for that token to be traded, it looks like on their platform. So I don't think it's something that you can withdraw. It's basically they are allowing a secondary market to happen inside of their exchange.

• 11:38Ryan Sean Adams?

  All the crypto banks are doing this, guys. So Kraken is, has amassed a pretty large amount of ETH, staked ETH. Coinbase is going to be doing it at some point soon. I'm looking to that release. David, this is not necessarily a bad thing, but it's also not necessarily a great thing. What we'd prefer is for people to stake at home on their own validators. And barring that, we'd prefer that they use a decentralized staking as a service provider. Can you talk about that, that second option?

• 12:08David Hoffman?

  Yeah, so for any centralized product that this world experiences, the theory behind Ethereum is that if there is a centralized product, we can make a decentralized correlate to that product using Ethereum's app layer. One of the centralized products that I think will come first to Ethereum's app layer and create a decentralized version of this is staking. It would be pretty terrible if things like Bitfinex and Coinbase and all these other centralized exchanges were the main staking entities behind the Ethereum network. And so let's, let's create an application that decentralizes the service where, you know, people can contribute the resources that they have. Maybe it's Ether, maybe it's a validating node. Depending on what you have, you can come to this

• 12:50David Hoffman?

  theoretical decentralized staking as a service application and then deposit the resources that you Have in order to create a self sovereign staking system. We just wrote about this in the Bankless newsletter. I put an article in there talking about the thesis and theory behind decentralized staking platforms. And I use Rocketpool as the example, the exemplar example of what a decentralized staking as a service application can do. In the same way that, you know, it's really great that we have USDC on Ethereum, even though it's a centralized stablecoin, it's a banked stablecoin. That's totally fine. There's more options for us. It's really important that we also have DAI. And in that same vein, it's in, we are going to see centralized versions of staked ether, ether derivative tokens come into Ethereum.

• 13:34David Hoffman?

  And it's going to be really important that we have a decentralized derivative staked ether token. And that coming out of Rocketpool is our ETH. I think there's going to be a very fun battle ahead of us. As you know, centralized protocols and decentralized protocols all compete for ether deposits to issue a staked ETH derivative token on Ethereum. And the one, this staked ether derivative token that's issued on Ethereum that is issued by a decentralized staking as a service provider will be the trustless, you know, assure, high assurances, high, uh, low risk token. That I think will come to be the status quo for a derivative token on Ethereum.

• 14:11Ryan Sean Adams?

  Well, at least that's what the Protocol Sync thesis would predict, which we are big advocates of and has a pretty good track record in this space. That the most credibly neutral protocols win. David, speaking of developments on Ethereum, L2 is coming. Let's talk a little bit about this big news. Ave A tokens. So this is their interest bearing tokens. We talk about so much. Thanks Ave for the, for sponsoring Bankless and making this, this possible. They have just ported some of their interest bearing tokens to the Matic network. What is the Matic network?

• 14:44David Hoffman?

  Yeah, Matic network is an L2 on Ethereum. It's, it's competitive advantage is, is a decently expressive L2. One of the big problems behind L2 designs is that we had trouble in Ethereum development, making them as Turing complete or as expressive or as smart as the actual Ethereum base layer. Matic has solved that problem. That is, so they have this L2 that has composability and they have smart contracts and that's, that's pretty unique. And Ave has put their interest-bearing deposits onto Matic network. And so for, for people that are managing these interest-bearing deposits, they can use them on the Matic network with much lower gas fees.

• 15:25David Hoffman?

  And I think this is part of just the story of Ethereum scaling. We saw Synthetix roll out their L2 with optimistic rollups. It looks like Ave is going on Matic and this is going to be just another one of Ethereum's big applications. Finding ways to save its users on gas with L2s.

• 15:44Ryan Sean Adams?

  Yeah, I'm super excited about this. I remember the, the 2017 bull run. It was always, well, here are some possible theoretical ways for Ethereum to scale in the future. And there was the, you know, state channels rating networks going to, to, to, to scale everything. And then there was plasma as sort of the holy grail. Different era. Now we actually have solutions that are here and being used. So it's exciting to see them being adopted. I think we'll cover that in future rollups as well. Coinbase, that's something else we're going to be covering in the future. What, what are they just, they're teasing us? They're offering a secondary market for their private shares. Ahead of their public stock listing as if this wasn't one of the biggest IPOs, anticipated IPOs in crypto.

• 16:28Ryan Sean Adams?

  They're, they're offering it to the secondary market ahead of time. What does this mean, David?

• 16:34David Hoffman?

  Yeah. So everyone wants to get in on the Coinbase IPO. Like I'm, I have zero legacy assets. I have zero equity assets. But I would, I would know I've got no stonks, but I would still buy the Coinbase IPO just because I think it would, it was probably a good bet.

• 16:48Ryan Sean Adams?

  Wait, wait, wait. Would you buy it over uni, uni tokens though?

• 16:51David Hoffman?

  Well, I already got my uni token.

• 16:52Ryan Sean Adams?

  Okay.

• 16:55Ryan Sean Adams?

  When are they going to give us retrospective airdrops, huh? I've been Coinbase user for a while.

• 17:00David Hoffman?

  Yeah, right. Like I've played Coinbase plenty of fees. Where's my airdrop? Where's my, you know, they, they should follow in their competition footsteps. What my question is, is this secondary listing of this, this private shares ahead of the public stock trading, who gets? To access that, do I get to access that? I'm not accredited investor. Who gets to access that? That I don't think, I don't think it's available for typical retail investors to be able to access.

• 17:25Ryan Sean Adams?

  Yeah, this would probably be an accredited investor thing for sure on the secondary market and mostly for like employee liquidity purposes. David, some other things, DeFi protocols are continuing to ship. So Kyber, it's been around for a long time. Fantastic liquidity provider in the DeFi space. They just launched a bunch of things, including their V3 release. And this V3 release focuses on liquidity, particularly providing incentives for their liquidity providers, which is something they've been quite good at. Any comments here?

• 17:59David Hoffman?

  Yeah, Kyber is kind of an unsung hero. I think when it comes to liquidity in Ethereum, before Uniswap was the shelling point of liquidity, Kyber was, and it actually still is. On a decent number of trading pairs, Kyber is actually one of the most liquid networks, liquidity networks in Ethereum. They are not an AMM like Uniswap is. They have a different way of providing liquidity to Ethereum. And that offers more options, more modularity with how liquidity providers want to be able to use their liquidity. With Uniswap, you kind of only have one option. You have to deposit equal amounts of two assets into a pool. Kyber gives you more optionality with how liquidity providers can offer liquidity. It's a little bit more capital efficient.

• 18:42David Hoffman?

  And some of the main updates in this Kyber 3.0 update are just furthering and bolstering the tools that liquidity providers have and how they provide liquidity to Kyber.

• 18:53Ryan Sean Adams?

  Speaking of which, Alpha Homora is an interesting DeFi protocol too. They just put out their second version. An interesting protocol for yield farmers. So folks that were already generating yield on governance tokens in the farms can now take leverage on ETH and other assets and actually generate more yield. So. Yield two and a half X your yield. This is really a degen type of tool. So I'm not sure how I comfortable I would be with it, but there is a way to actually lend ETH to this protocol. It's generating some pretty substantial returns. So like the seven, eight percent rate,

• 19:34Ryan Sean Adams?

  and it's locked up a massive amount of ETH, David. So like 500,000 ETH is locked up right now in alpha Homora. What do you make of that?

• 19:43David Hoffman?

  Absolutely crazy. What I make of that is that it's product market fit, man. Like leveraged yield farming with Ether deposits. Like, I'm not personally going to put my ETH in there because, you know, that's a little risky for my takes, but like DeFi degens who want to yield farm with leverage in an automated fashion that saves them on gas. Like, no shit, Alpha has, oh, I promised I wouldn't swear. No wonder like Alpha has gotten like almost 0.5% of all outstanding ETH supply in its contracts. Like, that's just product market fit. Like, that's just DeFi degeneracy at its best. And I mean that in the best way possible.

• 20:21Ryan Sean Adams?

  Yeah, Ibeth is the product for that. That's where you deposit your ETH inside. And you're right, that's getting closer to 5% of all ETH in circulation. Goes to show you how these money protocols can just be ETH monsters, ETH gobblers, sucking up all of that economic bandwidth that we talk about so much. David, back to layer twos for a minute. Starkware released their roadmap, and they were talking about a permissionless Stark-powered layer two built around ZK rollups with, and this is important, Turing complete functionality. So the ability to program on top of this layer two. If that felt a little bit jargony for you, then you have to check out

• 21:03Ryan Sean Adams?

  the Vitalik podcast and video that we just put out where he walks through rollups. But this technology, it's a little bit away. So it's a year or two, maybe three years away. But this is really the holy grail for Ethereum scalability. Any thoughts on this?

• 21:22David Hoffman?

  Yeah, that's exactly right. So this is the version of rollups that Vitalik is particularly hot about. He made the estimation that it's going to be optimistic rollups in the near term that really kind of get going with Ethereum and find a lot of product market fit. But Vitalik in the long term believes that ZK rollups are going to be the dominant form over the long term. And this is that one of the first steps to rolling that out into the Ethereum ecosystem. Definitely check out that video. This that video is coming out roughly around the same time that this one is. It's already out. And so, you know, just another video with Vitalik coming out on the Bankless YouTube and Bankless Podcast.

• 21:59Ryan Sean Adams?

  All right. And we're talking about all of the layer two. Somebody put together a fantastic, actually, I think Kevin Awaki did, put together this fantastic index of all the layer twos. We'll include this in the show notes, but you can check out all of the different layer twos that are in development, their various stats, transaction cost, how consensus works, and their transactions per second. Just a lot of work going on in that space. Very exciting. So this was really interesting, too, David, some liquidity pools from Uniswap. These are assets, of course, that are composed of Uniswap liquidity, like pairs of liquidity, one specifically for wrapped Bitcoin and ETH, and another for USDC ETH liquidity pools were just approved to be

• 22:42Ryan Sean Adams?

  collateral in the Maker DAO system. So that means they are backing the value of DAI. What's the significance of this?

• 22:49David Hoffman?

  Yeah, the significance is that Uniswap collateral, Uniswap liquidity tokens are being added as collateral into Maker DAO, which allows people to draw DAI against their liquidity positions in Uniswap. And not only USDC ETH pairs are being added to Maker DAO, but DAI and ETH, DAI ETH pair out of Uniswap. If you submit ETH and DAI to Uniswap, you get a token back. This is how Uniswap works. And you then you can now take that token to Maker DAO, put that into a vault in Maker DAO, and draw DAI against the DAI ETH pair that you've deposited into Uniswap. So if you can add, you can add liquidity to DAI, you can make DAI more liquid by adding liquidity to Uniswap, and then you can take that position.

• 23:32David Hoffman?

  And then draw more dye against it, making dye, it's a fantastic positive feedback loop of dye supply that I really expect this to be one of the main things that adds supply to dye, both supply and liquidity. It's a two for one punch. It's really awesome. And that's just a nice benefit to people that really want to contribute to the MakerDAO protocol. I think if MakerDAO came around in maybe 2019, 2020, this would be a yield farm. I bet you because MakerDAO, they already have their MKR token kind of locked into how they like it. But I foresee an alternative universe where the MakerDAO protocol or something similar to it came in

• 24:13David Hoffman?

  and started issuing MKR rewards to people that do this. If I had my fingers in the MKR token economics, I would issue MKR rewards to people that do this, just to incentivize liquidity. This is actually a normal playbook from DeFi protocols nowadays. But pretty cool innovation by MakerDAO, pretty cool new collateral, just more options for dye to become liquid. And of course, it's really important that dye is liquid in Ethereum.

• 24:38Ryan Sean Adams?

  Yeah, it's also an example of a super fluid collateral, the ability for these collateral, the collateral, tokenized collateral on Ethereum to be used across all of these various money protocols. I always think liquidity pools is kind of interesting because it's not only a bet on the assets and the ratios of those assets inside of a Uniswap liquidity pool, but it's also a bet on Uniswap trading volume, which makes it a unique asset that is not available anywhere outside of DeFi and a very decentralized asset at that. So very cool to see dye starting to adopt that.

• 25:14David Hoffman?

  Ryan, if you go to that dye stats page, you'll see that there is a $3 million dye limit on both US Bitcoin and Ether Uniswap tokens and a $3 million dye limit on USDC and Ether, and also a $3 million limit on dye Ether liquidity pairs. That's a relatively low ceiling for dye. There's only, you know, 3 million per Uniswap token. The reason why this is so low is that this is actually a new, there's a new oracle system. Providing the value of these Uniswap tokens going into MakerDAO. So MakerDAO previously uses other oracles to understand what the prices are of the assets inside the program, inside the protocol. This is because these are Uniswap tokens.

• 25:56David Hoffman?

  There's a different or there's a MakerDAO needed a different way to test and understand the value of these assets because now there's a weighting between it's one, one part ETH, one part DAI, or one part Bitcoin, one part ETH. And so there's a new oracle providing new information to the MakerDAO protocol. And that is why the debt ceiling is so low as people get more comfortable, as the MakerDAO MKR voters get more comfortable with this new type of asset. I expect the debt ceiling on these LP tokens to increase significantly.

• 26:28Ryan Sean Adams?

  And so that just means we can put more and more inside of MakerDAO and withdraw collateral based on it. Okay, cool. That is the, those are the releases for this week. Let's talk news. Of course, our main event, we're going to get to in a little bit, which is everything that's going on in game, the GameStop world, but we'll get to that soon. Let's talk about some of these other things. I thought it was really cool. It's an artifact of open finance that we can actually track the assets that individual funds, popular funds, hold and, and trade. This is from Masari, this is a watch list of all of the assets that placeholder ventures, our friend Chris Breninsky, holds inside of his fund.

• 27:11Ryan Sean Adams?

  Very cool that you can do that, I think, in open finance. And this is very much an unlock, I think, for, for all of us to be able to see what thought leaders, what individual funds are, are holding inside of their wallets.

• 27:25David Hoffman?

  Yeah, I think this actually does contrast very well with the GameStop conversation. Not to, I know I said we were going to tease that, but this is an inside out industry. People's bags are transparent, like there's no hidden information, right? And because there's no hidden information, people like Masari, the, the data website are publishing people's bags because that's already, that's information that's available. And so it's one part of privacy concern, like, you know, everyone should understand that your bags and your addresses are public. But that also means that everyone is on an equal informational playing field, which is not something that we can find in the legacy markets.

• 28:03Ryan Sean Adams?

  Yep. Okay. Next two things are about more firms buying Bitcoin. So this is a NASDAQ listed company Marathon Patent Group buying $150 million worth of Bitcoin. That seems to be a recurring trend in 2021. Firms buying publicly traded companies, buying more Bitcoin, adding it to the balance sheet. Speaking of which, MicroStrategy bought even more Bitcoin. How much did they buy this time, David?

• 28:28David Hoffman?

  They did it again. This is their smallest purchase ever, which I'm going to be really curious about this. $10 million, a modest $10 million on I think what is already like $700 or $800 million. I could be wrong about that. But I think this is, it's interesting just every time MicroStrategy buys Bitcoin, that's always interesting. But it's interesting as how small this is. Just like, it's a drop in the bucket of all the Bitcoins that they already own.

• 28:54Ryan Sean Adams?

  Just a casual $10 million, just dollar cost averaging in as one does into crypto.

• 28:59David Hoffman?

  Yeah. And so like this, people talk about like, is Michael Saylor trying to do like a Bitcoin pump and dump? Like, is he trying to really pump the price of Bitcoin? And maybe he is, but I don't really think so. I think he is actually a Bitcoin believer. And so I think any spare change that MicroStrategy has is going into Bitcoin. So I just pulled this up, bitcointreasuries.org. They have 70,700 Bitcoins, which is at today's value, $2.3 billion. So MicroStrategy adds on $10 million onto their $2.3 billion supply of Bitcoins.

• 29:34Ryan Sean Adams?

  It's crazy how well that has worked out for them. Let's talk about Janet Yellen again. We talked about her last week. She is, of course, the new Treasury Secretary. She's going to be overseeing important things like FinCEN. She came out with a more bullish quote on crypto this week. Last, last week, she said something bad that made headlines. This week, she's saying US government should consider the benefits of cryptocurrencies and digital assets, perhaps walking back some first statements from, from last week. You know, this really reminds me of the conversation that we will be publishing on Monday, but the conversation we had with

• 30:13Ryan Sean Adams?

  With Jeremy Allaire from Circle and we went through 2021 and whether there were going to be more headwinds or more tailwinds from regulators, it always seems to be there's this conflicting message. Sometimes it's good, sometimes it's bad, but it's never fully one or the other. Almost like they're lukewarm on crypto at the moment. What's your take here?

• 30:36David Hoffman?

  Yeah, the Yellen statements from last week was linked to the drop in Bitcoin price that happened last week. People saying that there's a bunch of regulatory FUD. I didn't really put much weight into that analysis. And now this week Janet Yellen is saying, you know, hey, there's actually is some value that could be leveraged by public blockchains. You know, I just don't think Janet Yellen is really all that informed. And I think both of these statements are relatively boilerplate and don't really mean all that much. We're going to have to wait for real action, real tangible action coming out of Janet Yellen and the rest of regulation. Like all these boilerplate comments are just not helpful to try and interpret his news.

• 31:14Ryan Sean Adams?

  We are wait and see mode. Meanwhile, some mayors are pretty hot on crypto. This is the mayor of Miami who is talking about turning Miami into an economic hub for crypto innovation. I think that this is going to be a popular narrative and this is why regulators and those in government cannot ignore crypto. There's just tremendous opportunity, economic opportunity, job opportunity that their constituents will want. And I think this will drive the adoption of crypto. What's your take there?

• 31:46David Hoffman?

  Yeah, Bitcoiners often call Bitcoin a mind virus. And instead of thinking of, you know, it's Bitcoin versus the state or like a public blockchains versus the nation state. I think it's actually much more suitable to think of like public blockchains as viruses that creep into people's brains and convince them that they are the best thing about the best thing about the world right now. And that's I've caught that bug. I know you've caught that bug, Ryan. It seems like the mayor of Miami has caught that bug. And the important takeaway is that there's totally a path where Bitcoin and Ethereum as mind viruses infect people in positions of power around the globe, including our own regulators, including our own governors, including our own mayors.

• 32:28David Hoffman?

  And we just have these protocols adopted because the people that use them are also in positions of power.

• 32:35Ryan Sean Adams?

  Absolutely. All right, let's talk about China for a minute. We do from time to time. So Ethereum-based Consensus, that is a big development studio that is developing tooling for Ethereum. They just partnered with the blockchain network of China. Is this good or bad? What does this mean?

• 32:54David Hoffman?

  Yeah, this is something to keep one's eye on. Quorum used to be a private consortium blockchain, and I think it still is based off of Consensus, owned by Consensus. And so, you know, very much aligned with the ethos of China to run a blockchain that is, you know, much more centralized, much more private, much more controlled. But still, blockchain is creeping into every single corner of the world. And it's interesting to watch Consensus help other entities lead that charge. Public permissionless blockchains are different than what's going on here. But, you know, blockchain technology, you know, I'm not a blockchain, not Bitcoiner, but I do think there is value in blockchain as a technology, and I'd like to see that proliferate, and that's what's going on.

• 33:35Ryan Sean Adams?

  Yeah, and particularly as it's linked into public blockchain. I think this lends some more credibility to the idea that their governments might have their own private ledgers and private chains even. But ultimately, they're going to have to settle on some credibly neutral infrastructure, a public network like Ethereum. And this just provides China's blockchain network with a conduit and a bridge to do that. So I think we'll have to see how that plays out. Speaking of China, David, I've been wondering a lot about Polkadot these days. The token price of dots has been just like off the charts, just crazy, right?

• 34:17Ryan Sean Adams?

  Yet, adoption hasn't... There are some projects building on Polkadot, but we don't see the transaction fee revenue on Polkadot that we see on Bitcoin. It's largely empty blocks. It's largely a ghost chain now. That could change in the future, absolutely, something to watch out for. But right now, that is what it is. But dots are super hot in China. I think this may be the reason price is pumping in the way it is, or at least one of the core reasons. Any takes on that?

• 34:45David Hoffman?

  Yeah.

• 34:47David Hoffman?

  Dot has a different consensus system than Ethereum does. And it's a little bit, the topological design, I should not be considered an expert in Polkadot at all. So take this with a grain of salt. The topological design of Polkadot allows for a little bit more governance and control over what goes on in the base chain than what Ethereum does. And so I find that interesting that China, of all places, which has a society, like in Asian countries tend to be a little bit in this disposition or demeanor. They're a little bit more controlled with top-down, stop top-down control. The Chinese population is used to top-down control. And Polkadot has sort of a top-down control mechanism in its consensus. So I find that that resonance between Polkadot and China a little bit interesting.

• 35:30Ryan Sean Adams?

  Yeah, it's going to be interesting to see whether Polkadot can build something of lasting value or whether it's taking the EOS approach, which of course did very well in China for a period of time. And now it's nowhere to be seen. I mean, no one's doing anything with EOS. Big blocks, you know, delegated proof of state did not work out over the long run. So we'll have to see what happens.

• 35:53David Hoffman?

  Don't cut corners on your blockchain, folks.

• 35:55Ryan Sean Adams?

  That's right. You can't do that. Have to preserve credible neutrality. D Y D X, they just raised 10 million and they put out this report, David. I don't know if you got a chance to see it, but I was blown away by the numbers. So first of all, two and a half billion in trade volume. D Y D X, of course, is a decentralized exchange and it provides margin in the same way a BitMax did. But it does so in a decentralized way and like, the trades are transparent. So you always know the house isn't betting against you. But this stat was astounding to me. 17.4 billion in loans originated in 2021. 17.4 billion. That's B, that's billion with a B.

• 36:38Ryan Sean Adams?

  Pretty incredible, David. This is just a great platform. And next month, they are actually moving to layer two. So they're rolling out their own layer two solution built on some Starkware tech. I'm pretty excited about it. What's your take here?

• 36:54David Hoffman?

  Yeah, D Y D X is one of the great big. Dysyncs, which is one of, and also USDC and also ETH. And so like, uh, D Y D X as an application is one of the great reasons why there's yield behind D Y, USDC and ETH. That's important to know. Uh, there's also speculation on a D Y D X token, question mark, not can, I, I don't know anything and I don't think that there's been statements from the team at all, but uh, I think there are rumors going around that there could be a, a retroactive airdrop as we all know and love, uh, coming out of D Y D X. Unconfirmed, yeah, I'm cautiously optimistic. Uh, if there was a D Y D X token, I would be a recipient of one. Absolutely.

• 37:32Ryan Sean Adams?

  That's because you use the protocol, uh, so much. And, and guys, if, you know, we, we put out a post recently about some future airdocks, just kind of speculating and predicting. There is value in using these protocols now. Um, not, not only value in leveling up, but also due to these retrospective airdrops. I mean, last year, if you collected all of the airdrops that were available, it was like $20,000 or something crazy. And guys, all this entails is actually using MetaMask, using a DeFi wallet, connecting to these applications and using them. Of course, that might not remain the case for D Y D X, no promises, but it's, uh, it's worth a shot, is it not?

• 38:12Ryan Sean Adams?

  Spend some, spend 10 minutes of your time to go figure this stuff out. Um, David, let's end with Mark Cuban. So Mark Cuban is getting in the N F T world, it seems. This is, this is deep into DeFi. This is just, I have Ether that I own on Coinbase or, um, you know, even I've used, uh, Ave. This is, he's actually minting an N F T using Rarible from his own pri, own, uh, public Ethereum address. This is pretty deep. I'm pretty impressed by this. What's your take?

• 38:45David Hoffman?

  Yeah. What was interesting is that when Mark Cuban made this N F T, which, uh, double check me on the numbers, but I think it listed for point two ETH and then it sold for $17,000 a few blocks later. So somebody really wanted that Mark Cuban N F T really badly. Um, but in, in process, like we were saying earlier, this is a public ecosystem. And when Mark Cuban mints an N F T and sells It people know where that NFC came from. And so people took a look at Mark Cuban's bags. Mark Cuban is a sushi token owner, by the way, for those that didn't want to know, he's got sushi in his bags. He's got a few other things you can you can find that tweet and investigate yourself if you really want to want to find out. But what that what really is interesting to me is like, you know, he's a sushi swap owner.

• 39:27David Hoffman?

  Sushi swap isn't even the leading AMM in DeFi Uniswap is so like Mark Cuban's deep in DeFi right now. He has got his fingers in the weeds. I think I I'm I got my fingers crossed. He's coming on bank list for a podcast in the future.

• 39:40Ryan Sean Adams?

  Yeah, well, you can see my my tweet right underneath like prompting him as such. So fingers crossed, David, that could be the case. We will see what happens. David, let's get into some takes. So that was news. This is the first take. Why'd you like this one? This is someone saying Ethereum, not blockchain. That's it. Three words Ethereum, not blockchain.

• 40:00David Hoffman?

  Yeah, this is a Jay, who's another podcast co-host, and she says Ethereum, not blockchain. And, you know, I've I find myself keeping on right when I do my writing, I talk about like the cryptocurrency industry, or I talk about public permissionless blockchains. But what the hell am I even talking about? I'm really just talking about if I'm talking about public permissionless blockchains, I'm just talking about Bitcoin and Ethereum. So I'll just say those things. Or if I'm talking about the cryptocurrency industry, most of the time I'm basically just talking about the Ethereum industry. And so like when people talk about like, yo, I'm I'm I work in crypto or I talk about cryptocurrencies. Like, no, it's actually just Ethereum. Like, maybe this is me, my ETH maxi hat getting getting put on, which I'm happy to wear.

• 40:41David Hoffman?

  But like the cryptocurrency industry is mostly noise, except for what is the Ethereum side of that cryptocurrency industry. So let's just start calling it Ethereum. It's the Ethereum industry Ethereum, not blockchain.

• 40:54Ryan Sean Adams?

  There you go. All right. That's David with his Ethereum maximalist hat on. Let's let's do another Ethereum take here. Proof of stake versus proof of work on energy. This has not been a narrative that has entered into the mainstream consciousness yet. It's something that has been talked about at various times. But of course, proof of work is a massive energy. Consumer, right? So all of all of the miners that like operate economically secure the Bitcoin network and the Ethereum network on proof of work today consume a tremendous amount of electricity and power. And that has an impact, of course, on the environment.

• 41:35Ryan Sean Adams?

  But proof of stake does not have that same impact, right? It has almost like no impact on the environment. Vance Spencer here is making the comment that more ESG funds, so these are environmentally savvy funds, will not allocate to proof of work systems like Bitcoin. So what he's saying is proof of work or cryptocurrency networks that employ proof of work will not be viewed favorably for a number of investors and perhaps government bodies and the world in the future. And proof of stake has an advantage there. What's your take on this?

• 42:11David Hoffman?

  Yeah, I'm on the fence about the proof of work sustainability arguments. I'm actually a believer that over the long term, the extra consumption by Bitcoin, energy consumption is actually a net positive. I think it could, there's a very strong argument that it actually in the long term can promote green energy consumption, incentivize green energy consumption. I'm compelled by that argument. In the near term, I think that it could be a massive part of the 2021 news cycle as people focus in on the on climate change, as climate change moves to the forefront, especially under a Biden presidency. I think Bitcoin could actually be plagued by its branding as a very energy consumptive network, which is

• 42:51David Hoffman?

  it is. It's like taking up one to 2% of the world's electricity. It's insane. I, and this is a frequent topic of conversation on my podcast with Christian Corolla's of Bitcoin Magazine. We talk about this and and we both generally agree that like over the long term, the merits of Bitcoin energy consumption could be positive. But like this article states, like, I think the short term FUD about Bitcoin's energy consumption will be a significant toxic plague that plagues its brand for many, many years to come.

• 43:22Ryan Sean Adams?

  Yeah, so you've got definitely a narrative issue despite what the the truth ends up being about Bitcoin's impact in in like the environment. I'm not actually sure what I think yet. I think I I need to take a look at some more data. There's certainly environmental externalities that need to be considered when you're consuming this massive amount of energy. But I guess the Bitcoiner argument is that essentially it's it's using energy that otherwise would would not be used and go to waste. So these energy sources are greener than other energy sources. I think that's really a like something that you you don't, over the long run, need to form an opinion on, like, the data will just bear it out and and show us. So it's kind of a thesis. I know that Bitcoiners want that to be true, though.

• 44:07Ryan Sean Adams?

  Like, and I understand they want it to be true. But I'm not sure that it is. At least, I I need to see some more data on that. So let's go to the next take. So institutions adopting ETH is money. David, it's happening. I read an article in Coinbase that basically said institutions are saying Ether is a store of value. Look at this. The case for owning Ethereum, Ether, we hear most frequently from our clients, is a combination of, first, its evolving potential as a store of value. It's evolving potential, not oil, Ether as a store of value, as a money. Second, as its status as a digital commodity. Oh, my God, they almost got all three. Just add staking, and they have the triple-point asset thesis here.

• 44:51Ryan Sean Adams?

  Pretty incredible, because back in 2017 and before, no one was saying this, least of all institutions, but basically, no one was saying it at the time. Do you think this is a narrative change that that's going to take hold in 2021?

• 45:06David Hoffman?

  Absolutely, and I think this is actually indications that this has already taken hold, and there's only going to be more talk of this. Like I was saying in the last rollups, people are coming in into this industry with a blank slate, like, they are not coming in with bias. They don't have a bias to bias them. Their opinions are largely unformed. And so the value proposition of Ether doesn't have this plaguing branding of just being gas for Ethereum, which is just, it was in that. That belief was antiquated back in 2017, but it takes time for data and facts and knowledge to proliferate. In the same way that Ryan, you were just talking about, like, people are just gonna have to wait for that, the Bitcoin energy consumption narrative to show up with

• 45:46David Hoffman?

  facts and figures. Ethereum, before we had like the evidence that we have today, back in 2017, Ether could have been argued as if it was gas, and it totally was argued to be that. Now we have the facts and figures, and we have the facts and figures, you know, they started to brew in 2018, they grew a lot in 2019, and now they are growing out of the surface into the mainstream media, into the mainstream knowledge, that Ether is a store of value, non-sovereign asset, just like Bitcoin, and it has its own unique, compelling value propositions. The world is waking up to this, and that makes me really bullish.

• 46:20Ryan Sean Adams?

  Well said, yes. How do we know it is money? It's because it's being used as money. That's exactly how we know. There's increasing evidence of that, and it's very plain to see, hard to argue otherwise. Eric Voorhees, one of our favorite folks in crypto, is talking about the value of airdrops last year. We talked about this a little bit earlier. This is where I got this stat, but the quote he tweets is, "Assuming you were an average DeFi investor, and a bankless listener, and a bankless reader, of course, this past year, and only used one address, so one Ethereum address only, you made nearly 20,000 in airdrops alone. This is because projects,

• 46:59Ryan Sean Adams?

  DeFi projects retrospectively rewarded their users with token drops." And Eric says, "This seems nuts, but consider what DeFi projects are doing. All they're doing is paying users to use them, rather than paying advertisers to use them." So essentially what he's saying is, "Guys, this is just marketing budget, and this is what marketing costs, and it's a genius move." Except that marketing isn't going to like Facebook ads, or Google ads, it's actually going to users who then propagate their love for the community through free advertising and marketing. It's pretty ingenious.

• 47:36David Hoffman?

  Yeah, I'd love to know of the tweet that Eric Voorhees is retweeting. I'd love to know the tallies that Nick, the tweeter, tallied together when he talked about the airdrops. Obviously, Uni is one, which was airdropped at roughly a value of $1,200 when Uniswap was $3 a token, which is now just under $15 a token. There's also 1-inch, there's also tornado cash, there's also dig, badger, there's a bunch of airdrops, yeah. And so it is valuable to just use these things, like, sorry, gas fees are really high, but like, fingers crossed, you'll just be compensated by airdrops.

• 48:13Ryan Sean Adams?

  It has certainly paid to be a DeFi user in 2020, and I think it will in 2021 as well. We are so early. It's still so early. Last, last take here, this is a take by Afri. Actually, I don't have it pulled up, David, but I will pull that up in a minute. And what he says is basically, he's, he's pretty flummoxed that banks are charging negative interest rates.

• 48:36David Hoffman?

  Yeah, I'll read it out here. Afri says, Afri is a core, used to be a core Ethereum developer. I think he stepped back, but definitely very much involved with the Ethereum community. Afri says, "My bank just informed me that they will now charge half a percent negative interest on my fiat holdings. It's really hard to understand the purpose of a bank in 2021 fiat whatsoever.

• 48:59David Hoffman?

  Just imagine the potential of anything not requiring a bank." Hmm, I, I agree, Afri. I agree with this idea.

• 49:06Ryan Sean Adams?

  Why just use banks? The thing about Afri is, like, he, he's very bullish Ethereum, but like, he's, he's been very, pretty bearish, I think, on DeFi in general, and anything involving, involving money. So to hear him say this, as he's looking at his traditional bank account and looking at a half a percent negative interest rate is pretty astounding. So we're convincing even the skeptics here.

• 49:30David Hoffman?

  Yeah, absolutely. And if that just doesn't scream "Bankless", then I don't know what does. Gemini is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got back into crypto back in 2017, and it has been my main exchange of choice to make my crypto buys and sells. Gemini is available in all 50 states and over 50 countries worldwide. And on Gemini, there are markets for over 30 various crypto assets, including many of the hot DeFi tokens like Wi-Fi, Aave, Uni. And also, they are one of the few exchanges that has liquid DAI markets. Having both the option of logging into the gemini.com website or instead opening the Gemini mobile app has allowed me to be able to access any and all exchange

• 50:14David Hoffman?

  and on-or-off-ramp services that I've needed to on a moment's notice. With instant deposits and fast withdrawals, I'm able to make my money do the things I want it to when I want it to. You can buy crypto safely and securely on Gemini with the peace of mind of knowing that your investments are insured and protected with industry-leading cybersecurity. You can open up a free account in under three minutes at gemini.com/go-bankless. And if you trade more than $100 within the first 30 days after signup, you'll be gifted a free $15 bonus. Check them out, gemini.com/go-bankless.

• 50:53David Hoffman?

  If you are looking for a product that connects your fiat bank account with DeFi tokens and products, you need to download the Dharma mobile app. Dharma is a non-custodial smart contract wallet and comes with a bridge that connects you right into your bank account. Dharma is the fastest and most efficient wallet between your fiat in your bank account and any token on Uniswap, or even any vault in Urn. With Dharma, you can get over $25,000 per week into the DeFi universe, and you can do it non-custodially. If you or anyone you know is hot on DeFi and you're trying to get your money into a DeFi investment, Dharma is the place to go. Signing up and going through KYC is an absolute breeze. It took me just under three minutes.

• 51:37David Hoffman?

  And after signing into my bank account via Plaid, I am now just one transaction away from any token that Uniswap has to offer. Go to www.dharma.io, that's D-H-A-R-M-A dot I-O. Download the Darma app and get yourself unbanked today.

• 51:56Ryan Sean Adams?

  All right, David, we are getting into the roll-up section for takes. This is the long-awaited moment where we talk about what is going on with GameStop. Why don't we start there, dude? What is going on with GameStop?

• 52:07David Hoffman?

  All right, so I'm going to explain the backstory here because it's important to understand the story going on here. For those that have watched the movie The Big Short, the Big Short movie depicted this guy who manages a hedge fund, who just did some math and saw that there was a ton of, there was a ton of, there's a problem in the housing market, right? So he basically called the housing market and so he wanted to, he opened up a short on the American economy, basically. And then The Big Short is about just all the people that saw the coming collapse of the housing market. And this guy particularly made his fund a bunch of money. The same guy in the movie, the character that the real, the real person, this is a true story,

• 52:51David Hoffman?

  that real person made a similar call. So now that he's a legend for calling the 08 crisis, people follow him, people pay attention to him. And he, what he did with this GameStop call is that he looked at the GameStop share price. He noticed that it was at, trading at a particular value. And then he went and he tallied up all of the assets that GameStop owns, like the real estate, the property, all the real assets, like no, never mind the business model.

• 53:18Ryan Sean Adams?

  This is like their book value, right?

• 53:19David Hoffman?

  The book value, yeah. The assets on the balance sheet. And he said that he thought that the share price was not inclusive of all the value that the company actually owned, like the straight physical assets. And so he said that he is going to make a long position on GameStop because the value of the asset, the value of the company is trading well below the actual value of the underlying assets that they own.

• 53:43Ryan Sean Adams?

  Okay, so, and where did he say this? Because I remember The Big Short in 2008, like no one would listen to him. He kept going to all these people and everyone was like, yeah, whatever, shut up, like we're not listening. Where did he start saying this?

• 53:54David Hoffman?

  I don't know, I don't know the answer to that question. I just do know that it was public. And it started, it started brewing in the Wall Street Bets subreddit server. So for those that aren't familiar with the subreddit, well, the subreddit. Reddit server Wall Street Bets. It's kind of, DeFi G gens will find themselves very fit very well in there. It's people that try and make like YOLO bets where they they put a ton of money on the line and they do it. They mainly do it for engagement and they either make a ton of money or they lose a ton of money. There are, there's memes. It's a little bit like 4chan culture. There's memes, degeneracy, just like, you know, all the memes that you see coming out of corners of the internet like this was present in Wall Street Bets.

• 54:34Ryan Sean Adams?

  Okay, so like, I want to understand the Wall Street Bets culture because I think this is important before we go on to the rest of the story, right? So like, my impression of Wall Street Bets culture is like, they're D gens, they're trying to, they're trying to make money, but they know this is all a game, right? Like, they very much know that the system is rigged and is is set against them. And that money printer is going brr and it's distorting the fundamental value of all of these assets, including stocks. And they're just like, what the hell? We might as well benefit from this too. Is that the culture? Is that the philosophy of Wall Street Bets?

• 55:08David Hoffman?

  You know, I don't think it was. It certainly is now. I think it wasn't necessarily that. I think maybe the money printer go brr was in there just as a casual meme. It was mainly just a meme of just like degenerate YOLOers who like people, and I think mainly very wealthy people would just like, you know, YOLO $100 into options. And options, for those that don't know, are a way to make or lose a bunch of money all at once. But I would say, in order to understand Wall Street Bets culture, you would need to understand, it's very similar to some of the green frog culture that we see in the crypto space. There's very much this headless movement. It's a cohort. It's a community, right? There are no leaders. It's just what the community thinks.

• 55:52David Hoffman?

  And so if you've ever participated in like a chain link community or 4chan community, these are very similar communities. No one is the leader, but these all, they're kind of arises a similar energy, a similar just community out of these people, right? And so, back to the story. And so, this guy that's famous for calling the O8 crisis says that GameStop is worth more than what the share price is. And so, he buys a position. And that information leaks out into the internet, public knowledge. And the Wall Street Bets subreddit grabs a hold of this. And they start kind of piling on. There are some extremely savvy, informed investors who do their own analysis in Wall Street Bets. And some of the Wall Street Bets community listens to these people.

• 56:35David Hoffman?

  And so, this trade became more or less public knowledge inside the Wall Street Bets subreddit. And so, that means that a bunch of these Wall Street Bets, they all put their capital into the same spot. And that's a very interesting phenomenon that we're seeing inside of Wall Street Bets. We're seeing inside of projects like Chainlink. We're seeing that in the projects that are run up by Green Frogs on 4chan. People are coordinating and injecting capital in specific places to collectively pump backs. That's what is going on here. But at the same time, there's also this fundamentally true and sound trade beneath all of these things. So, GameStop, or excuse me, for Wall Street Bets, they identify this trade in GameStop. And they all start buying spot.

• 57:17David Hoffman?

  They all start taking and putting GME stock into their portfolios. And what that does is that increases the price of the GameStop stock. And so, now we have to talk about hedge funds.

• 57:29Ryan Sean Adams?

  Yeah, so where do the hedge funds fit into this picture? And like shorts, we've heard that term as well.

• 57:36David Hoffman?

  Right, so we need to understand the concept of a short squeeze. And so, when you are going short an asset, that means you are hoping that the price goes down. And what that means is that when you short an asset, you borrow it from someone. And so, say I have a stock that's worth $100. And you want to short that stock, Ryan. And so, you borrow that stock from me, and it's at $100. And then, the stock goes down to $50. And then, when you borrowed that stock from me, you actually sold it on the market for $100. So, you put that $100 into your pocket, kept that there. And then, the stock went down $50. And then, you bought that stock back off the market and Gave that stock back to me and then you pocketed that fifty dollar difference, right? That's a short, that's ideal.

• 58:21David Hoffman?

  Uh, if you want to short as a, a, an asset, it goes down in price and you get to pocket the difference based off of the mail moment you shorted it. It goes, it can go really, really wrong in the opposite direction because say, say you borrow a stock from me at a hundred dollars and then you sell it and, and you're going to return that stock to me at a later date. But instead of that stock going down from a hundred dollars to fifty dollars, it goes up from a hundred dollars to two hundred dollars. Or maybe three hundred dollars or maybe five hundred dollars.

• 58:49Ryan Sean Adams?

  I have to pay that entire diff.

• 58:50David Hoffman?

  You have to pay any number. It could be, it's an infinite level of risk. It could go to a million dollars and you have to pay back a million dollars, even if you just shorted that stock at a hundred dollars. So there's a large amount of risk. And the thing what that funds were doing is many large hedge funds, very wealthy, which are just made up by wealthy investors, were shorting GameStop basically into the ground. And what the important point about this story is that there were, uh, there are alleged accusations of naked short selling, which is short selling the stock without actually borrowing the underlying stock in the first place, right? Which means that more than the total supply of GameStop shop, uh, GameStop shares were being shorted,

• 59:34David Hoffman?

  which means it's, it's like a fractional reserve system. It's kind of.

• 59:37Ryan Sean Adams?

  Wait, how do people get away with naked short selling?

• 59:40David Hoffman?

  Oh, because it's illegal and done behind the scenes. So I'm pretty sure, I'm pretty sure it's illegal. Is it illegal? YouTube comments, let, let us know if it's illegal or not.

• 59:48Ryan Sean Adams?

  It's, yeah, I would think that would be definitely illegal. Okay. So these, these funds are doing possibly naked shorts, which is like, doesn't get any risky, right? Like it's not only illegal, uh, quite possibly, um, it's, it's also they're, they're betting essentially that this stock does not go up in value at all. And. They don't even have the the stock backing that bet essentially.

• 1:00:14David Hoffman?

  Right.

• 1:00:15Ryan Sean Adams?

  So they're completely exposed here.

• 1:00:17David Hoffman?

  Completely exposed and they they think that they can just short the stock into the ground and make a bunch of money on these shorts. Right. And like honestly, may maybe it's it's bad. Maybe it's not right to like put sentiments into this, but like GameStop is a brick and mortar business and during times of COVID. Like, you know, I think if somebody said fuck you for shorting a stock, a brick and mortar company during COVID times, I would I would agree with that. You know, markets are supposed to be efficient, but you know, kind of, kind of fuck you. And anyways, so, okay, so like there we have a large and the the thing about shorts is that a short squeeze can happen. And so if you if you are exposed to a short, as in like you you owe shares back to someone and those shares double in price.

• 1:01:02David Hoffman?

  All of a sudden you have to buy back that the the shares that you borrowed at a higher price. But if you buy back those shares, say you're saying like, all right, I don't want this trade anymore. Like I've lost money. I'm just going to buy back the shares. I'll cut my losses and I'll pay back and I'll return the shares to their owner. If you do that, you buy back the shares and that increases the price because you bought them back, which means further shorts are then pressured even more. Because as shorts pay back, buy back their shares off the secondary market to cover, they push the price up and up and up, which causes more and more shorts to be influenced to buy back shares. And so it's called a short squeeze.

• 1:01:41David Hoffman?

  This thing is explosive. It can turn into a positive feedback loop of people buying back shares off the market. And remember, there was more outstanding short interest than if the floating supply of stock of GameStop the shares. And so this thing just rocketed from $20 a share up to like $350 a share in like three days. Right. And so all the companies that were cut short are down like 99.9% on their position. Right. And these are all hedge funds. And so this is where the drama starts.

• 1:02:11Ryan Sean Adams?

  Okay, so let me ask you here. So Wall Street Bets culture, obviously, they want to benefit from this trade, right?

• 1:02:18David Hoffman?

  Right.

• 1:02:18Ryan Sean Adams?

  We understand that rationale. Do they also want to screw the hedge funds? Do they want to screw the bankers? Was that part of the motivation behind this?

• 1:02:25David Hoffman?

  No, this is a, that is a secondary after effect. They just saw a position, they just saw a heavily shorted stock, and they, they all decided as a community, saying like, hey, if we all buy GameStop, so many of these hedge funds will have to cover their shorts that it could trigger a short squeeze. That's exactly what happened.

• 1:02:42Ryan Sean Adams?

  Okay, so what happened, what happened to these hedge funds, David? I'm looking at the, our first headline here.

• 1:02:47David Hoffman?

  They got fucking wrecked.

• 1:02:49Ryan Sean Adams?

  All right, GameStop short sellers lost 1.6 billion in a single day as Reddit traders rebelled against them? That's a, that's a fan, that's a 2021 headline. I feel like this is, this is a pretty, this is a pretty massive event. This is like, uh, ma- main street investors, retail investors, kind of sticking it to the funds in a way. That's been the, kind of the net effect, but the funds gotta be pissed about this. I mean,

• 1:03:15David Hoffman?

  Oh, I'm sure. I'd be pissed if I lost money too.

• 1:03:20Ryan Sean Adams?

  But like, this sort of thing is, um, let, let, let me say, outside of the rules of play. It's, it's a complete off-script move. No hedge fund trader, like, they're, they're all aware of, of the other traders and other hedge funds who might be coming after them, but none of them anticipated a, an online community would take this kind of an action. So they were completely caught off-guard, completely caught off-guard.

• 1:03:43David Hoffman?

  Yeah. Yeah, but the, they shouldn't be caught off-guard if they were paying attentions to the fundamentals of GameStop, because they should know that there was a massive amount of short interest out on GameStop, and everyone knows what a short squeeze is. This is not like esoteric information. A short squeeze is public knowledge, right? And the other interesting thing is, Wall Street Bets is a public Discord, or, well, it's also a Discord, it's also a subreddit. So all the, all the coordination in the subreddit was done in a public forum, where the hedge funds and all their naked short-selling is done behind, behind the curtain, you know, private, private knowledge. You don't get to know that information. And so like, this is absolutely, A story of just like the little guy versus the big elites who have

• 1:04:26David Hoffman?

  who have access to financial instruments and have access to financial resources and and capital that no one else has access to. Yet, the Wall Street Bets subreddit, they they saw the weakness in the armor and they all realize if they all just go buy the stock, they're going to be able to to short squeeze these funds who are trying to wreck this country, uh, this company into the ground. They're going to short squeeze them into oblivion, and that's exactly what happened.

• 1:04:50Ryan Sean Adams?

  Okay, so fair story so far, it sounds like, right?

• 1:04:53David Hoffman?

  Fair story.

• 1:04:54Ryan Sean Adams?

  This is all within the rules of play here. You know, hedge funds are taking massive amounts of of risk in in taking out these kinds of positions, you know, naked naked short selling aside. It's still a massive amount of risk when you're shorting something and this online community, Wall Street Bets, is just doing what it normally does. It's seeing an opportunity and it's pouncing on that opportunity as a community and the market response and the stock goes up and it's story, right? But like, it's not the end of story.

• 1:05:24David Hoffman?

  No, it's not the end of the story.

• 1:05:26Ryan Sean Adams?

  Because the hedge funds and the banking class has something that this this Wall Street Bets rabble, right? This crowd, this online community does not have, they have connections.

• 1:05:40David Hoffman?

  Political connections.

• 1:05:42Ryan Sean Adams?

  They have, they have, they have institutional prowess. They have people that they can call on the phone to get to take certain actions against the unwashed masses in in the subreddit. So what happened?

• 1:05:57David Hoffman?

  So this way, and so a lot, a large amount of these Wall Street Bets traders trade on Robinhood, right? This is the retail trader, the little guy, right? So they use the Robinhood application to make their trades. Robinhood shut down trading on uh, the GameStop uh, stock and also the AMC stock, AMC Theaters, right? Another asset that has heavy, heavy short interest that started to become a target of further you know, further Wall Street Bets short squeezes, saying like, hey, like, we just short squeezed the shit out of GameStop. We could probably do it for AMC and that that began. That happened and yet Robinhood canceled all trading activity on GameStop and AMC as of this morning. And not only that, but also TD Ameritrade.

• 1:06:40David Hoffman?

  And it gets even worse. We're going to show some tweets and some links in a second. They even took their clients' positions and sold them for them. While the trading activity was halted, Robinhood and TD Ameritrade and other brokerages made orders on behalf of their customers to sell the stock because of market volatility and market risks. So they did other things with other people's money because allegedly, from what we understand, what we think is true is that people who had connections at these funds that got wrecked, I can't remember the name of the fund, called up Robinhood and said, yo, shut this down.

• 1:07:22David Hoffman?

  And we think that's what happened. And we think that's what, exactly what Robinhood did. They shut down trading. First, they tried to pause the market when, two days ago, I think, when the GameStop share price went up too fast.

• 1:07:36Ryan Sean Adams?

  This was like Nasdaq was threatening to you.

• 1:07:39David Hoffman?

  Nasdaq halted trading because, and that was after funds started screaming that they needed to recalibrate their positions. And so they wanted to halt trading. What is that other than?

• 1:07:50Ryan Sean Adams?

  These funds were going bankrupt.

• 1:07:52David Hoffman?

  Going bankrupt.

• 1:07:53Ryan Sean Adams?

  Getting absolutely destroyed. So not only losing billions, but like it's costing them their entire business.

• 1:08:00David Hoffman?

  Entire fund, the entire fund, because there is no risk on short selling.

• 1:08:04Ryan Sean Adams?

  Right. And so they're making phone calls and then like, so they stopped trading for a while and they threatened to stop trading. So that happened. But this morning was the action that you're talking about, which is kind of like the, you know, unprecedented.

• 1:08:20David Hoffman?

  Unprecedented, yeah.

• 1:08:22Ryan Sean Adams?

  Where Robin Hood, like Robin Hood, this is what all the Wall Street Bets traders use. This is, this is kind of their live stream into you, into finance, basically. That was being shut down completely from these assets and their, their assets were being sold without their permission.

• 1:08:39David Hoffman?

  Exactly, exactly right. And so this is why we talk, when we talk about Uniswap and we talk about being able to control trading and, and you can't turn it off and you can't permit, you can't permission the assets and you can't permission the network. This is why this is important because a bunch of head funds made a bunch of calls to a bunch of their market running friends saying like, "Hey, I want this to stop because I'm losing money." And they did it and they listened. And not only that, but Discord, which is one of my favorite applications, canceled the Wall Street Bets Discord server. That's they, I mean, private company, sure, they get to cancel whoever they want because it's a private company. But like, fuck, where are all these people supposed to meet? Like this, the Wall Street Bet subreddit had to get locked because it was getting briganded by just a bunch of randos.

• 1:09:24David Hoffman?

  Discord is canceling their server, preventing them from being able to coordinate as people. Like, there's nothing more than oppression and silencing than just being able to cancel the place that these people meet and congregate. It's a violation of what makes America so great. And like, I, maybe it's not a constitutional violation because it's, because private companies get to silence speech as much as they want, but it's still fucking stupid.

• 1:09:50Ryan Sean Adams?

  Well, so, so everyone's like, people are angry about this and justifiably so. It's because basically the, the, the banker class and, and the elites and the people with connections and billions of dollars and, and in funds were able to do things that like you and, you and I or normal people, average Joe's, people that are on r slash Wall Street Bets cannot do. They don't have these connections. It's like a different set of rules applies for one group of people versus, versus another. Imagine the power just because you are getting wrecked on a trade to go de-list an asset. Like, that's an insane amount of power. And what's so crazy about this, David, is like, They just did it in broad daylight.

• 1:10:36David Hoffman?

  They did it in broad daylight.

• 1:10:37Ryan Sean Adams?

  So brazen. Like, what did they think that people weren't going to be pissed? That like, we weren't going to talk about this? That there wasn't going to be massive anger? They just delisted the assets. I mean, these are Robin Hood's own customers.

• 1:10:51David Hoffman?

  Right.

• 1:10:52Ryan Sean Adams?

  I can't imagine the amount of pressure that was on Robin Hood to get them to turn against their own customers. That affects their business model economically. There must be a massive amount of of power here to or leverage here to do something like that.

• 1:11:06David Hoffman?

  Yeah, people are making calls to say, delete, delete Robin Hood, delete, delete Robin Hood from your, delete it from your phone. That's a hashtag that's getting trending on Twitter. Ryan, let's go through some of the tweets and links that we have pulled up, ready to go.

• 1:11:21David Hoffman?

  Representative Talib, actually the same person behind the Stable Act, calls for congressional hearing on Robin Hood's GameStop actions. Nice drop. Like, yes, like, this is a, this is a securities market violation. If we believe in free markets in this country, in the United States, then this, people actually need to get summoned to Congress. They need to go to court. Somebody needs to go to jail or get fined.

• 1:11:44Ryan Sean Adams?

  So it's good to see representation talking about this issue. Okay, what's, what's the next tweet here?

• 1:11:50David Hoffman?

  Oh, yeah, this is from Russell. He's a football player. I'm not into sports, so I'm not going to try and mispronounce his last name. But like, this is, this is what's going on. This is a starting pistol for this entire industry, especially for DeFi. Russ is a big Bitcoiner. He is one of the few players in the NFL to get paid by Bitcoin. I don't think he knows about Ethereum or DeFi yet, but if he did, he'd be bullish on it. GameStop, get the dirty fiat and turn it into Bitcoin immediately. There's, there's values, virtues and ethos that are exuding out of this industry that the rest of the world needs, that we need to export to the rest of the world.

• 1:12:23Ryan Sean Adams?

  All right, let's go to the next one.

• 1:12:25David Hoffman?

  Oh, yeah. Ramp Capital, he's a fun meme account. Looks like Robin Hood woke up today and chose violence. Yeah, fuck you, Robin Hood.

• 1:12:34Ryan Sean Adams?

  All right.

• 1:12:35David Hoffman?

  Tyler Winklevoss, you want this one?

• 1:12:37Ryan Sean Adams?

  Uh, okay. So what does he say? What, what kind of a soulless human being do you have to be to short a brick and mortar business during a pandemic? These companies are not even allowed to legally operate. These suits have no solidarity. They care nothing about America. I'm glad Wall Street Bets is punching back, right? Like, he's basically saying, look, there's, there's, they're not good guys here, right? They're just trying to make money. And so when they lose money, they, they, uh, they, they take on this risk and they lose money. So what? Who cares? Be like, put on your big boy pants. Like, I mean, this is what the markets do. You got wrecked. You've wrecked a whole bunch of other people in the past, too. This time you got wrecked, you lost. That's how the game's played. Bye bye. See you later.

• 1:13:19David Hoffman?

  Yeah, no do-overs in public markets, bro.

• 1:13:22Ryan Sean Adams?

  No do-overs. You can't pull this kind of thing. I agree with Tyler there. Okay. How about this one? AOC is talking about.

• 1:13:29David Hoffman?

  This is Dave Portnoy. This is Dave Portnoy of Barstool Sports. He goes, when AOC and Donald Trump Jr. are on the same side, you know you fucked up. At Robinhood app. Yeah. AOC and Donald Trump Jr. Both are populist individuals. One's a populist for the right. One's a populist for the left. This is a populist issue. This is a few against the many, or, uh, yeah, a few against the many issue. And both AOC and Donald Trump Jr. are populist leaders for their respective camps. And they're, funnily enough, aligned.

• 1:14:00Ryan Sean Adams?

  This is the, uh, Wall Street Bets chairman here. Is this a meme account or is this an actual representative from Wall Street Bets?

• 1:14:05David Hoffman?

  Uh, definitely. Well, no one can truly represent Wall Street Bets, yet this guy is one of the, um, leaders of, of the community. Yeah.

• 1:14:14Ryan Sean Adams?

  Okay. So what's he saying here? They can only control us because we use their currency. So Wall Street Bets historically has not been a crypto-friendly, uh, community or subreddit, right? So like, if you post something about crypto on Wall Street Bets, it gets auto banned. I'm not sure if this was an outcropping of like 2017 or something where there were so many crypto spams, like Bitconnect, it's just simpler for Reddit moderators to just ignore the noise. But they still maintain that posture. And yet this is kind of making the Wall Street Bets community open up to crypto, open up to D5 as a solution. That seems to be what this, this tweet is saying.

• 1:14:52David Hoffman?

  We, I mean, we are certainly open to Wall Street bets. I hope members of the Wall Street bet community understands that this industry is young and nascent and it's not the industry that it was back in 2017. We have grown a lot and all of a sudden, a lot of our, the things that we find valuable, I think the Wall Street bet community would also find extremely valuable.

• 1:15:12Ryan Sean Adams?

  Absolutely. All right, let's go to the next one.

• 1:15:15David Hoffman?

  Uh, yeah. One hedge fund blows up a million retail investors. Efficient markets. Instead, a million retail investors blows up one hedge fund? Market manipulation. This is a diss towards people that are, for, for the same reasons that the Wall Street Bets Discord server got canceled, because they are, they, the powers that be are, are claiming that Wall Street Bets is manipulating the market. If buying spot is manipulating the market, I guess we're all market manipulators. Like, I guess when you buy something, the price goes up. Like, is that market manipulation? No. It's market manipulation to call up Robinhood and say, "Cancel trading." That's market manipulation. Buying spot is not market manipulation.

• 1:15:57Ryan Sean Adams?

  Yeah, totally agree. It's crazy that they would even propose that. What's this one?

• 1:16:02David Hoffman?

  Yeah, this is a screenshot of somebody who tried to set, place an order inside of Robinhood and Robinhood gives them an error message. They, they wanted to cancel the order that Robinhood placed on their behalf. Robinhood shows them an error message saying, "We're sorry, this order can't be canceled as we placed it to mitigate the risk to your account." Who the fuck are you to control other people's money? You don't know what risk is. The only reason why markets know what risk is, is because a diverse set of market participants all bear their own individual risks and they all place their own individual bets. You don't get to determine what other people's risk is.

• 1:16:40Ryan Sean Adams?

  We're screwing you over for your safety. You know, this kind of reminds me, we've talked about it so often, but like the SEC accredited investor laws, where you have to have a certain net worth in order to invest in $1 million or over, in order to invest at a startup. It's reminiscent of this sort of thing. It's like, "Sorry, retail investor, you're not smart enough. You're not sophisticated enough to, to do this. So, we're going, you're not elite enough to do this. So, we're gonna wall you off from this little corner of finance. We're gonna handle this for you. We're gonna sell your shares in the brokerage account because it's too dangerous." Absolutely insane that this is the error message that they would, they would put up to justify.

• 1:17:19David Hoffman?

  Dude, this one's even worse. Read this one out.

• 1:17:21Ryan Sean Adams?

  We don't let you buy, only sell, and even if you don't sell, we will sell it against your will. This is, is this, this is Robinhood Terms of Service? Is this an email that someone got? So that was a Twitter comment about an email. What's the email say?

• 1:17:36David Hoffman?

  Yeah, the email is from Robinhood to this user's inbox, I'm assuming, and says, "Important information about your Robinhood account. In light of recent volatility, we are restricting transactions for certain securities to position closing only, AKA, you can only sell. However, due to the unreasonable risk involved in brokering your position, we have closed your 14,500 shares of GME, that's GameStop, for an average price of $118 on January 18th, 2021." They just executed orders with their customers' money on their behalf. That's crazy. That's absolutely insane. That's absolutely insane.

• 1:18:17Ryan Sean Adams?

  All right, so what does this all mean, right? So like populism, people are pissed, banks are doing things with political connections, bankers and hedge fund managers and the wealthy elite are doing things that retail can't do. David, DeFi fixes this!

• 1:18:36David Hoffman?

  DeFi fixes this. This is what we have been chanting for so long.

• 1:18:40Ryan Sean Adams?

  So you can't, you can't delist an asset from Uniswap. In fact, anyone in the world can list an asset on Uniswap. This is not just, it, it's not just, it hasn't happened on Uniswap. It can't happen on Uniswap. This is the idea behind protocols rather than banks. This is the idea behind outsourcing this sort of, like creating institutions that are not based on corruptible human beings, right? This is what DeFi is all about, this openness, this transparency, this access to the world. This, everybody has a fair playing field.

• 1:19:25Ryan Sean Adams?

  It doesn't matter what country you're from, it doesn't matter what bankers you know, what politicians you can call, how much money you have. Everybody is treated equally, everybody is treated the same. This is an institution that makes way more sense to build on top of than the corrupted...

• 1:19:46Ryan Sean Adams?

  Banking institution right now. It's like, so is this a DeFi moment? Like maybe mainstream doesn't realize it yet, but is this a DeFi moment for us?

• 1:19:56David Hoffman?

  This is an absolute DeFi moment. And I think if if people were more savvy to what's going on, I think we would see, you know, markets are supposed to be efficient. If some news breaks, then assets tend to move. The reason why I think that, you know, people are, it's going to take a while for people to digest this information and then connect it to DeFi on Ethereum. Because if people did make those connections, we would see assets like you and I, it's absolutely mooning right now. Like if that's, I think that's the case. And the important thing I think to take away from this whole ordeal is that, you know, things that are deep in the protocol sync, the protocol sync thesis that we chant about all the time on the Bankless program.

• 1:20:38David Hoffman?

  The things that are deep in the protocols sync, the things that are neutral are inherently flat. They are flat landscapes for economic activity, right? And that flat landscape means a neutral playing field, a flat playing field where no one has advantages over any others. And that's what scares all the legacy institutions is because they have built systems that are not flat. They have built systems that privilege themselves over their users, over other people. And the elites are on the peaks when everyone else is in the troughs, right? And this is what Ethereum can bring to the world is a living playing field. One of, you know, Bitcoin is famously known as, you know, the separation of money and state. And Ethereum is the separation of economy and state.

• 1:21:22David Hoffman?

  There's no reason why the economy, the quote unquote, the market should be under control of Robin Hood or TD Ameritrade or anyone that can pick up a phone call, make a phone call and stop canceling. If somebody has the ability to stop trading of something, then the market is controlled. And the market inherently does better when it's not controlled. And unless, and the market, the free market is not free unless it actually manifests itself on Ethereum. There's no other place in the world to have a free market other than Ethereum.

• 1:21:53Ryan Sean Adams?

  Yeah, absolutely. Okay. So here's, here's the thing. I Listeners of Bankless will know that we are bullish Bitcoin, like we like Bitcoin. It's a good asset, but Bitcoin doesn't fix this. It doesn't have the answer to this problem, right? Coinbase, Binance, anywhere that you can purchase Bitcoin today can still delist those assets with a phone call. With a phone call. With government regulation, right? So like Bitcoin is one part of the DeFi story, but if you just stop with Bitcoin maximalist and maximalism, you don't get what we're talking about. A censorship resistant, permissionless, open financial system that solves the problem of GameStop and Robinhood. You need something like Uniswap.

• 1:22:38Ryan Sean Adams?

  You need money protocols in order to do this. I've seen many kind of maximalist like thought leaders say, yeah, Bitcoin's the solution. And it's like, no, it's not, dude. It's not like DeFi is the solution. I was glad one of the the Winklevoss twins said that it's Bitcoin, Ethereum and DeFi. Without all of these things, you can't actually solve what we're talking about today. You need a decent, we've been saying this since the beginning. You need a bankless money system if you're going to have a free money system. Or else you you get the same system that that we've already built. It's just built on a different store of value. New set of bosses, new set of bankers. That's not what we want. Ethereum really does solve this. David, maybe you've got a comment on that, but I also want to ask you about like,

• 1:23:21Ryan Sean Adams?

  what is it really going to take for the world to start seeing this? Is is the user experience just too hard on DeFi now? Is it just like for somebody who's used to Robinhood? And they switch over to to crypto and DeFi and they have to do MetaMask and they have to do like private key management and there's gas fees on Uniswap. Is that just all too much? What do you think the why don't? Why haven't we seen this influx of retail coming from the the disenfranchised Wall Street Bets crowd?

• 1:23:52David Hoffman?

  Well, I think a very simple answer is to say that like GameStop is not available on Ethereum. Like, that's not where the GameStop, the asset trades. And so first, we just need assets on Ethereum that people are interested in. And, you know, while many of these DeFi tokens that we are so hyped about, I think are truly revolutionary. They are unfamiliar to the legacy market participants who are looking to, because when Wall Street Bets chats, they're not chatting about DeFi tokens, they're chatting about things on Robinhood. Robinhood has actually done a terrible job adding new assets, crypto assets into their platform. They have, they actually have a category in crypto assets called the Ethereum family. You want to know what's in there, Ryan?

• 1:24:33Ryan Sean Adams?

  Yeah, what's the Ethereum family?

• 1:24:35David Hoffman?

  Ethereum and Ethereum Classic.

• 1:24:37Ryan Sean Adams?

  Oh, my God.

• 1:24:39David Hoffman?

  Terrible, terrible.

• 1:24:39Ryan Sean Adams?

  Correct, correct me if I'm wrong, but with Robinhood, David, you can't actually withdraw to an ETH address, basically.

• 1:24:47David Hoffman?

  You don't get access to the underlying.

• 1:24:48Ryan Sean Adams?

  What they're selling you is IOUs of something. They can pull the same shit they just pulled on GameStop, which is like, sell your ETH out from under you. Like, take it away, can't like, cancel it, delete it. Like, they can pull all of that because they are purely a bank selling IOUs. They're not selling actual Ether that you can withdraw from their exchange. Robinhood is not the place. If you're, look, if you're a millennial, if you're a Zoomer, go level up on DeFi. We're going to need this tech for the 2020s. I hope this week made it obvious. We need to be leveling up on these things. And I feel like sometimes, David, people are just like, oh, it's too, it's too hard, right? It's not that hard.

• 1:25:28David Hoffman?

  Yeah, and you got paid $20,000 if you lose DeFi in 2020. What do you mean it's not hard?

• 1:25:34Ryan Sean Adams?

  So, so your friends outside of crypto, right? What do you think their reaction is going to be as a, as a result of this? So, right, like, they're, they say something about this, I know they're going to talk about this. And you say, yeah, this is why DeFi exists. So what's their objection to coming on board at DeFi? What are they going to say?

• 1:25:52David Hoffman?

  Yeah, that's a good question. There is a group chat that I'm in of roughly 12 people who are DeFi, people that are people that are DeFi curious, but many of them come from the legacy markets. And, and there was just general consensus that like this pissed them off, like this just riled, riled them up. And, you know, I think that's the energy that we need for people to feel. That is that energy, that is motivation. That's pure motivation. They're angry at something. And DeFi allows that anger to be expressed in productive ways, right? They, we can take that, that riled up energy and we can put it into the DeFi ecosystem. I think the barrier to adoption and the barrier to understanding just got a lot lower. You know, it's a frequent phrase that we say on the Bankless program that the most bullish

• 1:26:36David Hoffman?

  thing about this industry is to become understood. And this is one of the most exposing pieces of, of, of news that has ever come across the news cycle at all, right? The cancelling of an asset on a, on a, on an exchange. That's insane. I don't think there's ever going to be this one magic moment where like all of a sudden, like all of Wall Street Bets is like, yo, let's go trade on Uniswap. It's just going to be a slow trickle. But, you know, the, like I said, the, the bear, the, the barrier is getting lower and lower and lower. And it's allowing more and more water to fall over it faster and faster.

• 1:27:09Ryan Sean Adams?

  Yeah. And at the same time, DeFi is getting more and more like, so the truth is if we had that influx now from Wall Street Bets, we probably like, we couldn't take it. I mean, too many transactions, gas fees would spike. But at the same time, Ethereum DeFi is developing layer two, right? To, to start to, you know, as other containers for this liquidity and for these users. So it's almost, we, we also don't want it to happen all at once. It's like better for it to kind of trickle in. And, but, but look, man, this is like, this is, this is populism. This is the 2020s. I feel like this is not going to go away. It's only if anything else, it's coming from the right, it's coming from

• 1:27:50Ryan Sean Adams?

  the left in politics. It's only going to get worse. And one of the reasons, David, I'm in this industry, and I think this is true for you, is because this allows us to channel populism and this anger into something productive.

• 1:28:04David Hoffman?

  Yeah.

• 1:28:04Ryan Sean Adams?

  We're not just focused on tearing it down, right? Like, because you could, you could look at this and get pissed. Like, I want to revolt. I want to go, I want to occupy Wall Street. I'm going to like storm the, the, the banks. I'm going to get the hedge funds who did this. Like, that's one approach.

• 1:28:21Ryan Sean Adams?

  The DeFi, the crypto approach is we're going to build a new system, right? That's credibly neutral and doesn't have the dependencies of the old system and all that anger that we feel, we're gonna, we're gonna channel that into something productive. We're gonna build an entirely new financial system from the ground up, right? Like, because populism can get really ugly for human beings. Like famously, the 1930s populism led to a world war, right? That could happen here, but the reason I'm in Ethereum, the reason I'm in DeFi and crypto is because it's a way to channel that populism into a movement that is all about building new structures and institutions for the world. So it's exciting from that perspective, too.

• 1:29:02David Hoffman?

  Yeah, that's exactly right. Something, another concept that we talk about on the Bankless program frequently is that before 2008, no, there was no place to exit to, right? But, and then Bitcoin came, right? And in 2021, in the financial crisis of 2020 and 2021 because of COVID, there is actually a place to exit to, right? There is actually a way for that populist angst and that populist energy to be expressed, invented, right? We actually have solutions for this. To me, this really echoes sentiments of the fourth turning concept where there is distrust in legacy institutions. No better of a more salient example of institutions cancelling their customers' orders against

• 1:29:44David Hoffman?

  their will to profit for, to make sure that the elites can keep their money. Distrust in institutions. And meanwhile, we are erecting new institutions for people to adopt instead. So we are changing the guard and it's not going to happen overnight. It's going to take a decade. But people are looking for new institutions these days because their old institutions are failing them. And there's no better, more salient of example than what happened recently.

• 1:30:08Ryan Sean Adams?

  Absolutely. Well, this is turning into an interesting year for sure with 2020. I think this is going to be a big year for crypto, a big year for the social movement that is crypto, the technology that is crypto, and probably the price in the bull market that is crypto right now. So very exciting. We're glad to have you on Bankless. David, you feel like you got that out of your system, man? This is, this is catharsis for you. I know you were angry this morning.

• 1:30:34David Hoffman?

  I was, I was pretty angry this morning. And the, and the thing is like, my, my one final comment on this is like, there's no reason to think that this was a one and done. The, the, the GameStop community, or the, the Wall Street Bets community just figured it out that they are a force. They are a fund, just like, just like actual funds. They are a collective community of people that have the ability to allocate capital.

• 1:30:56Ryan Sean Adams?

  They are a DAO.

• 1:30:57David Hoffman?

  They are a DAO. They are a DAO. They are literally a DAO. And they are, they are only going to grow massively. First off there, all of them just got really rich, even though some of them kind of got wrecked by, by, by Robinhood. People that were making the trade before the short squeeze, just made massive upsides. Like, if you were in options, you could have turned $1,000 into $20,000 to $50,000, depending on your position. So now they're well-funded. Now they realize that they are a force. They are more organized. They are more coordinated with each other. And I think that this is just going to be the first of many coordination attacks on legacy institutions like this, legacy markets. I think that this is going to be the, only the first of many episodes like this to come.

• 1:31:42Ryan Sean Adams?

  Well, I can't wait for that group to start to get their minds wrapped around DeFi. And I'm, you know, excited to help in any way. So David, this has been our roll-up. As always, guys, risks and disclaimers. DeFi is risky. ETH is risky. Apparently, so are the traditional financial markets.

• 1:32:01David Hoffman?

  Weird.

• 1:32:04Ryan Sean Adams?

  But you could lose what you put in, of course. But this is the frontier. We are headed west. Thanks for joining us. This has been the weekly roll-up from Bankless.