ROLLUP: Axie Infinity, Binance Squeeze, JPMorgan ETH Staking, EIP 1559 (1st Week of July)

1st Week of July, 2021. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/unigrants ------ 📣 KYBER | Liquidity mine with Rainmaker https://bankless.cc/kyber ------ Topics Covered 0:00 Intro 2:10 MARKETS 2:20 BTC Price 4:56 ETH Price Exchanges https://twitter.com/cryptoquant_com/status/1411973786941804547 Deposit Contract http://www.theblockcrypto.com/data/decentralized-finance/asset-management/eth-in-eth2-deposit-contract 8:03 ETH/BTC 10:10 DeFi Action 13:15 NFT Volume https://duneanalytics.com/rchen8/opensea 16:30 RELEASES 17:45 EIP-1559 https://twitter.com/TimBeiko/status/1412762432079007748?s=20 Fee Burn https://goerli.etherscan.io/blocks?p=1 Fee Savings https://twitter.com/TimBeiko/status/1412995748665298944?s=20 22:35 Beacon Book https://twitter.com/StatefulWorks/status/1412408929267630093 24:30 Balancer & Polygon https://medium.com/balancer-protocol/balancer-joins-polygons-summer-of-defi-with-10-million-in-joint-token-incentives-c09d4db5ae9b Zapper https://twitter.com/zapper_fi/status/1412889987155173382 Dune https://twitter.com/0xPolygon/status/1409556178443505667?s=20 27:30 Göerli Sidechain https://twitter.com/bantg/status/1412388910429347841?s=20 31:05 Aave Pro in July https://twitter.com/TraderNoah/status/1411719489947906048 34:16 Raises Index Coop https://www.coindesk.com/dao-behind-defi-pulse-index-raises-7-7m-from-galaxy-digital-1kx Zerion https://www.theblockcrypto.com/post/110675/defi-investing-platform-zerion-series-a-funding 36:20 NEWS 36:30 JPMorgan ETH Staking Report https://decrypt.co/75108/ethereum-staking-crypto-jp-morgan 39:57 Andre on a Tear https://twitter.com/andrecronjetech/status/1411244286146977792?s=21 41:43 Axie Infinity Growth https://twitter.com/amytongwu/status/1412875602030301190?s=20 43:05 China & Stablecoins https://www.coindesk.com/china-central-bank-pboc-worried-stablecoins 44:53 $70m Ransom Attack https://www.forbes.com/sites/roberthart/2021/07/05/ransomware-hackers-demand-70-million-in-bitcoin-claim-massive-us-attack-as-biden-investigates-possible-russian-involvement/ 46:35 Circle Spac Merger https://www.theblockcrypto.com/post/110806/confirmed-stablecoin-firm-circle-public-spac-merger 47:45 Wyoming DAOs https://decrypt.co/75222/americas-first-dao-approved-in-wyoming 50:50 News Drive-By Crypto Cards top $1B https://www.cnbc.com/2021/07/07/visa-says-crypto-linked-card-usage-tops-1-billion-in-first-half-of-2021.html Binance Squeeze https://www.theblockcrypto.com/post/110510/barclays-customers-in-the-u-k-can-no-longer-transfer-funds-to-binance Elizabeth Warren Flex https://www.coindesk.com/elizabeth-warren-sec-deadline-crypto-regulation 54:30 TAKES 55:00 Computer without Internet https://twitter.com/chainlinkgod/status/1410359761971736577?s=21 56:25 Spooky Chainlink https://twitter.com/edgararout/status/1412401125463035914?s=21 1:00:20 Creator Economy https://twitter.com/balajis/status/1410585347092729857?s=21 1:03:05 Influencer to Creator https://twitter.com/balajis/status/1412890086635544578?s=20 1:04:53 CeDeFi https://twitter.com/dcfgod/status/1410985736715767817?s=20 1:06:50 Speed & Depth https://twitter.com/balajis/status/1411046562063523841?s=21 1:09:15 Broken Pegs https://twitter.com/stefan__ionescu/status/1412190540700004357?s=21 1:11:50 MEV Negative Externalities https://twitter.com/bertcmiller/status/1412579402345586696?s=20 1:18:35 Transparent Systems https://twitter.com/panekkkk/status/1411347712168153090 1:24:05 What David’s Excited About 1:25:05 What Ryan’s Excited About https://twitter.com/RyanSAdams/status/1412799192603533313?s=20 1:29:00 Meme of the Week https://i.redd.it/8b1khwy3uu971.jpg ----- 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 I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:08Ryan Sean Adams?

  Happy Friday morning, everyone. It is the first week of July and it's roll up time. David, you ready to dig in?

• 0:13David Hoffman?

  I am ready to dig in to the Friday weekly rollups, the best episode in all of crypto. At least I think this is where we go through what's happened in the last week of crypto. We go through the markets, what's happened in the markets, we go through the releases, what's got, what got released, and then we go through what's happened in the news cycle, and then we finish off with who had some interesting takes in the crypto ecosystem, and then we finish things off with what David and Ryan are excited about, and then we finish that off with the meme of the week.

• 0:40Ryan Sean Adams?

  Still not finished until the meme of the week comes, then you know it's over. David, we gotta talk about this though, man. You doing okay? How's your face doing?

• 0:47David Hoffman?

  Yeah, so the viewers of the YouTube will notice I got some blemishes on my face. I took a little tumble off of an electric scooter here in San Diego the other night and protected my brain with my face, and a little bit worse for wear, but the bankless ecosystem does not stop producing content, and that is no excuse. So, the march goes on.

• 1:07Ryan Sean Adams?

  Look at this guy, injured in everything, still doing the rollups. That is dedication, my friend. I think the meme of the week might be about that.

• 1:13David Hoffman?

  Oh god, no.

• 1:16Ryan Sean Adams?

  Alright, man, you ready to dig in?

• 1:17David Hoffman?

  Yeah, let's do it, Ryan.

• 1:18Ryan Sean Adams?

  Alright, before we do, we gotta talk about Kyber's Rainmaker program going on. They are making it rain, making it rain KNC tokens. This is their long awaited liquidity mining program that they've just launched, 25 million over the next three months. They are dishing out to liquidity providers. We've got ETH, USDC pairs, wrapped Bitcoin pairs, DAI pairs, everything, and across two chains, not one chain, two chains, Ethereum and Polygon. That's, that's pretty cool. Love that Kyber's doing this. They are an OG DeFi protocol. So, click on the link in the show notes if you want to learn more about how you can supply liquidity and start earning some of that rain yourself.

• 2:00David Hoffman?

  Kyber is one of the oldest projects in DeFi and they are in the capital efficiency game with their dynamic market maker, which changes fees according to market conditions to make sure that you are optimized in your LP position. So check that out.

• 2:13Ryan Sean Adams?

  David wanted to fit the words capital efficiency in. I know, I know you did, David. You wrote a fantastic article on that. David, let's start market time, man. Let's start with Bitcoin price. What is Bitcoin price doing for us? I'm going to scroll out to the, uh, the five day and see where we started. I think that was like the third or something.

• 2:31David Hoffman?

  Yeah, we started at $35,000, fell down to $32.7,000. Then we jumped to $36,000. Then we dumped to $32,000 and now we're at $32.8,000. So flat on the week, basically where we started. But, but also did jump up a little bit. It is nice to have a pretty high in the middle of the week, even though we didn't end there. It's nice to claim some of that high territory, which I say-

• 2:56Ryan Sean Adams?

  Yeah, good Wednesday. We had a good hump day.

• 2:58David Hoffman?

  We had a good Wednesday. Yeah.

• 2:59Ryan Sean Adams?

  Yeah, good Wednesday.

• 3:00David Hoffman?

  There was a hump on the hump day. Nice.

• 3:01Ryan Sean Adams?

  Do you know what though? Um, I feel like Bitcoin's in maybe a bit of a rut. I don't know if you feel this way. It's like the, uh, coming off of Bitcoin Miami, we had the El Salvador news that kind of spiked things a little bit, but that's sort of died down, right? People aren't really excited and I'm talking narratives, of course. You're not fundamentals, um, but the happening is behind us too. Uh, Michael Saylor putting Bitcoin on your corporate, uh, balance sheet. That hasn't quite spread like wildfire where the, the Bitcoin bulls were saying it would maybe in January of, of this year. Any takes there? Do you feel like Bitcoin's in a rut too? And how does it get out of this rut?

• 3:36David Hoffman?

  Yeah, I'm sure Michael Saylor would like a few more allies than he thought that he would have gotten by now. Um, but at the same time, I think Bitcoiners will say that the happening event doesn't manifest in the price until like two years later, right? That is like what the happening is apparently. Uh, and so they always will say-

• 3:55Ryan Sean Adams?

  Stock to flow, right?

• 3:56David Hoffman?

  Yeah, stock to flow, right? Um, if you believe in that, uh, and so there, the, when I, when I talked to my Bitcoiner, co-host over at POV Crypto, CK, he talked about how like, you know, it's going to take the world, the world a while to integrate the El Salvador news into their- Understanding of Bitcoin and so like the price appreciation happens later, right? There's always a lag, which sounds both true if we look at the historical evidence of Bitcoin. The catalysts always appear in the charts later, but there's also like, you can also say that that's just an excuse, you know, if the markets integrate everything in the moment of, and so, you know, who knows? But yeah, like unlike Ethereum, which has like a bunch of positive tailwinds coming its

• 4:40David Hoffman?

  way, Ethereum Bitcoin just kind of feels like floating out at sea, like where's it gonna go next? We don't really know.

• 4:46Ryan Sean Adams?

  Yeah, there's not another happening for a while, right? So what is the next, what is the next catalyst? That remains to be seen, but let's.

• 4:53David Hoffman?

  It ain't cap route, let me tell you that.

• 4:54Ryan Sean Adams?

  It's not? Okay. All right. Let's talk about Ether for a second. So price of Ether, where are we now? Where do we start?

• 5:02David Hoffman?

  Yeah, we started the week at 2170, 22,170 dollars dipped down to $2,000. Then we jumped to $2,400, which it got everyone really excited. And now we are back down to literally exactly where we started at $2,170.

• 5:19Ryan Sean Adams?

  There's some good news about this, David, and that is ETH is at an all time low on exchanges, like a two and a half year low. So people are pulling their Ether from exchanges. This is awesome. This is great for banklessness because it means they're either holding it, you know, privately, self sovereignly, which is awesome, or they're using it in some sort of a DeFi protocol. Maybe they're trading it on Uniswap or providing liquidity on something like Kyber rather than, rather than hold it inside a crypto bank. So I feel like this is pretty bullish. It also probably means, David, they're not, not exiting or not planning to exit to Fiat, which is another good sign. Any takes here?

• 5:57David Hoffman?

  Yeah, the ETH on exchange metric is always interesting. When there's low ETH on exchanges, that always means that like price can be volatile and people generally think it's volatile to the upside, just because like if there's no ETH to sell, because the ETH isn't on the exchange, so there's only people who can buy ETH who want to buy it. And if there are people that want to buy it, because there's not a lot of ETH on exchanges, it moves the price faster to the upside. Granted, DeFi is also a place to buy and sell ETH, right? So a lot of ETH could be moving off of the exchanges and going into DeFi to be sold on Uniswap. So it's not necessarily that there isn't ETH available to sell. It's just not, like you said, it's not available to sell to go back to people's bank accounts.

• 6:41David Hoffman?

  So this is a bearish metric for people who are thinking that people are trading their ETH, like you said, to go to fiat. However, you could still trade your ETH and go to crypto dollars, but that stays in the Ethereum ecosystem.

• 6:52Ryan Sean Adams?

  You can go to crypto dollars and crypto dollars to me feels also somewhat temporary, or at least it is net positive for Ether, right? You're still using those transaction fees on Ethereum, you're still using DeFi. Let's take a look at some of this ETH. It's definitely going into taking beacon chain deposit contract. Dude, happy 6 million, man.

• 7:12David Hoffman?

  6 million in the deposit contract, that's great.

• 7:14Ryan Sean Adams?

  There's over 6 million Ether in the deposit contract right now. So I guess like the quick math on that is what? It's just over 6% of all ETH supply.

• 7:23David Hoffman?

  A little bit less.

• 7:24Ryan Sean Adams?

  The deposit contract, yes, a little bit less.

• 7:27David Hoffman?

  Yeah, because there's roughly 117 million Ether and there's 6 million Ether in the deposit contract.

• 7:32Ryan Sean Adams?

  Right, so a little bit less. So, I mean, super impressive though. I mean, I remember, do you remember the discussions we were having in like winter or late fall of 2020? It's like, oh, is anyone going to put their deposit?

• 7:49David Hoffman?

  Are we gonna make it?

• 7:50Ryan Sean Adams?

  It's a one-way bridge, fam.

• 7:51David Hoffman?

  What was the threshold we needed? Half a million?

• 7:53Ryan Sean Adams?

  Yeah, half a million.

• 7:55David Hoffman?

  Are we gonna be able to make it? Are we gonna be able to get half a million Ether? These were the questions we were asking.

• 8:01Ryan Sean Adams?

  I think we made it. I think it's okay, it's gonna be okay. Let's talk about that ETH Bitcoin ratio. What's that doing? So I'm seeing some ups, I'm seeing some downs, but more ups than downs.

• 8:12David Hoffman?

  In the last week, you're seeing up, man. And that's really the story. I think the ETH BTC ratio tells a bigger story than the ETH dollar or Bitcoin dollar.

• 8:21Ryan Sean Adams?

  The biggest story, maybe in the rollups.

• 8:22David Hoffman?

  Yeah, and the same story is also being told, we're gonna get to this, on the ETH DPI ratio, which is also looking just like the ETH BTC ratio. We are establishing this floor at point 055 ETH per BTC and we could definitely range between where we are now at point 065 and point 55. Like there's definitely room to bounce back and forth here. But what the story that I am seeing is that when it does hit that point 055 level, it rockets back up. Maybe not rocket, but it's got a very solid foundation floor at point 055, which again is historically a high ETH BTC valuation. And so when I see ether hitting point 055 and just rejecting it and going back up.

• 9:07David Hoffman?

  That's indicating to me that people are still risk on. This is a, in my opinion, a great proxy for overall the bull market. If you are asked, if you want to ask the question, is the bull market over? I think you should look to the ETH BTC ratio because that tells the story.

• 9:21Ryan Sean Adams?

  You know, David, I think you're spitting a lot of wisdom here, man, because especially we're just talking about the, you know, Bitcoin price in a rut. The doldrums, no tailwinds ahead in terms of narrative for Bitcoin that we can see in the future. But there are a ton of tailwinds ahead for ether. We're going to talk about some of those when we get to kind of the news and, and some of our takes on that. But like EIP 1559, the merge, all of these things are going to be tailwinds for ETH. So if we're going to have a continuance of the bull run, we need ETH to run.

• 9:54David Hoffman?

  Yep, yep.

• 9:54Ryan Sean Adams?

  And we need this ratio to continue going in the direction.

• 9:57David Hoffman?

  And Evan Van Ness will happily say that ether and Ethereum always leads bull markets. And so when we see the ETH BTC ratio rising, that's, that's where we get to say is like, oh, this bull market is still, still looking good.

• 10:10Ryan Sean Adams?

  Yeah, absolutely. All right. Well, let's talk about other bull market indicators, value locked in DeFi. So that's been hanging.

• 10:17David Hoffman?

  Slightly up, slightly up.

• 10:19Ryan Sean Adams?

  Slightly up a little bit. So $55 billion of value locked in, in DeFi, hanging in the 50s or so. Not too bad. Um, let's talk, let's talk about DeFi, DeFi tokens as measured by the DPI, the DeFi pulse index we talk about every week. So a little bit up on that.

• 10:36David Hoffman?

  Up on the week, up on the week. Yeah.

• 10:38Ryan Sean Adams?

  DeFi tokens were catching a bid this week.

• 10:41David Hoffman?

  We started, started at two. $260 to start the week, ended at $300, but also hit a midweek high again on Wednesday, hump day of $350. And so I think we should go ahead and go right into the ETH DPI conversation, Ryan.

• 10:55Ryan Sean Adams?

  You've been waiting for this.

• 10:56David Hoffman?

  Oh, yeah. Look at that number. Look at that 0.13. Okay, so I called the bottom at 0.13. It broke down below 0.13 for a solid like eight, nine, 10 days. But I think-

• 11:07Ryan Sean Adams?

  And you said, to be fair, you said, give it two weeks. If it doesn't break for two weeks, that's what you said two, two weekly rollups ago, then you're still in the clear. So you're still feeling okay.

• 11:18David Hoffman?

  It's not, I will admit that I did not call the absolute bottom. So like, I guess if you want to be really strict about this and say the number fell below 0.13, yes, the number fell below 0.13. So I did not-

• 11:27Ryan Sean Adams?

  Part of me wants to be strict on this, David, but I'll give you some grace too here.

• 11:30David Hoffman?

  Yeah. Well, okay. So like, let's, let's think about things in six months, in 2022, 2022. Say, for example, that DeFi tokens finally get the bids that they deserve and DPI resurges back to previous levels and maybe even goes on the bull market that we've all been wanting the DeFi tokens to go on the bull market for, and they break previous cycles. Then, then what are you going to say? Like, oh, David didn't call the bottom of 0.13 because it was 0.12, even though DPI is at 0.3 or something. Like, it's going to be a great bottom call.

• 12:02Ryan Sean Adams?

  I'd also say, so if this bull run turns into like ash and sadness, right? And we're ranging in this, you know, 2,000 or so range for ETH, I'd also give Eric Connor some credit for calling like 2,500 ETH.

• 12:17David Hoffman?

  That's a fair point.

• 12:17Ryan Sean Adams?

  Because he kind of deserves that, because it shot up above, but not for too long.

• 12:22David Hoffman?

  Right.

• 12:23Ryan Sean Adams?

  So like, the spirit of the prediction is intact. So David, the spirit of your prediction is intact.

• 12:29David Hoffman?

  And that's what's important, man.

• 12:29Ryan Sean Adams?

  But we'll see. For now, we'll see what happens. Every week, we're going to be checking up on you.

• 12:35David Hoffman?

  That is a really good point, I think, about Eric's top call. And for those that aren't following, Eric Connor had made the top call of $2,500 for ETH price. And we rocketed above that to $4,300, making Eric wrong. But we have spent a lot of time below $2,500.

• 12:53David Hoffman?

  Even in contrast to how much time you've spent above it, right? And so like while the call was technically wrong, the more and more time we spend below that number, the more and more Eric is in the spirit of things correct, which makes me really angry. So I really would like ETH price to get it back above 2,500 so I can start gloating against Eric Connor again.

• 13:14Ryan Sean Adams?

  There you go. We could do that anyway. All right, let's talk about this. You know, this is a metric I wanted to include in metrics, David, because NFT bear market is what people are saying. Ain't no bear market.

• 13:25David Hoffman?

  Apparently, that's just a meme. That's just a thing that people say.

• 13:28Ryan Sean Adams?

  It is. It's a thing that people said, say, because look at this. Open C volume. So this is like kind of a, an eBay, let's say for NFTs where all of the NFTs are being sold on kind of secondary markets. Best volume ever in June. Best volume ever. 150 million in volume.

• 13:47David Hoffman?

  Higher than the peak of the mania.

• 13:48Ryan Sean Adams?

  Higher than the peak of the mania. So.

• 13:51David Hoffman?

  Quote unquote mania, yeah.

• 13:52Ryan Sean Adams?

  Like, there are some categories of NFTs that are down, like, you know, top shots, maybe a few other categories, but there are others that are up. And in aggregate, ain't no bear market here. NFTs are still plowing ahead, full steam.

• 14:08David Hoffman?

  And like, I think that just makes sense. I think when people are saying, oh, there's an NFT bear market, what they are really saying is like, oh.

• 14:15Ryan Sean Adams?

  My NFTs are down.

• 14:16David Hoffman?

  My NFTs are down. I'm no longer getting really rich really quickly on NFTs, like this random NFT project that I just ape into, didn't make me any money. Like, yes, that side of NFTs is in a bear market. There are some NFT projects that are going to zero just because the market didn't want them. NFTs as a whole, NFTs as an industry, doing just fine. And so there's definitely a consolidation to quality going on in the NFT market and we are seeing that play out.

• 14:45Ryan Sean Adams?

  But this makes sense too, right? If you think about like collectibles, which collectibles are in style, you know, 90K for 90s kids, it was like POGs, right? And then it's like at one point in time, it was like Beanie Babies and all of these things.

• 14:56David Hoffman?

  I do not remember POGs. I never figured out what POGs are.

• 14:58Ryan Sean Adams?

  You didn't know what POGs are? Okay. So like, some of you guys listening remember POGs. And like, anyway, collectibles as a whole has not gone down, but individual collectibles and categories of collector, collectibles have had their, their, their cycles. Maybe NFTs are starting to reflect some of that. Anyway, David, we are going to get to releases, but before we do. We want to thank the sponsors that made this episode possible.

• 15:24David Hoffman?

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• 16:07David Hoffman?

  which can help you launch and distribute your token with day one liquidity. At Bankless, we use a liquidity bootstrapping pool to sell our BAP t-shirts to much success. Balancer V2 brings powerful new features that makes your money work even harder for you. In V2, idle tokens are capable of generating yield in DeFi without sacrificing liquidity in the pool using Balancer's asset managers. Balancer's vault architecture lets you trade between Balancer pools at a fraction of the cost versus trading on other platforms. Balancer's mission is to become the primary source of liquidity in DeFi by providing the most flexible and powerful platform for asset management and decentralized exchange. Dive into the Balancer pools at app-balancer.fi.

• 16:52David Hoffman?

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• 17:30David Hoffman?

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• 18:08Ryan Sean Adams?

  all right guys we are back with releases David this is an almost release but it still counts because

• 18:13David Hoffman?

  release of a release

• 18:14Ryan Sean Adams?

  it's a release of a release it's a release date which is super exciting for EIP 1559 we're talking about

• 18:21David Hoffman?

  I haven't heard of that one

• 18:22Ryan Sean Adams?

  oh oh you're about to hear about it then sir August 4th is the date August 4th so that is going to be maybe an Ethereum holiday in the future I don't know it's a really it's a really exciting milestone for Ethereum and Tim Baker who is kind of the I guess coordinating lead for this EIP has been

• 18:43David Hoffman?

  Ethereum 1 actually as well yeah

• 18:45Ryan Sean Adams?

  yes he has confirmed this so it's merged it's in GitHub the date is merged the go live date is is set so unless something big happens between now and August 4th looks like August 4th is going to be the day for EIP 1559 which includes the the the new gas transaction auction mechanism and also the ether burn super exciting man to have a date finally

• 19:12David Hoffman?

  yeah and granted asterisk if something goes wrong on the test nets then it will get kicked out but if nothing goes wrong then it's going to be the 4th that's basically the the two paths that we have forward with us it's really awesome to have a date August 4th like holy shit that's so cool it's so close uh bankless and ETH hub are going to do a live stream we are talking with Anthony and Eric to get that going so there will be

• 19:38Ryan Sean Adams?

  no matter what time of day

• 19:39David Hoffman?

  no matter what time of day

• 19:40Ryan Sean Adams?

  Whatever.

• 19:41David Hoffman?

  We woke up at four in the morning to do the ETH 2.0 Beacon Chain launch livestream and there's no other time that we couldn't do if we wouldn't do four in the morning. So whenever that's happening, there's going to be a livestream. So stay tuned for that.

• 19:55Ryan Sean Adams?

  Yeah, we'll be there. This is cool. This makes it real too, is when you start to see EtherScan showing the fee burn. Look at this at the top here.

• 20:02David Hoffman?

  This is on the Gorley testnet, by the way. Yeah.

• 20:05Ryan Sean Adams?

  Gorley testnet. But in Gorley testnet, and by the way, everything's going well in Gorley testnet. It seems like there is a fee burn of over 80 ETH so far. Of course, results will be totally different in mainnet, but it's so cool to see that on EtherScan. You can also see, get this, David, on EtherScan, you can see on the transaction, like an overview of the transaction, you can actually see the transaction fee savings, which I think what this calculates is what you maybe would have paid before versus what you're paying now. Is that what it's calculating or what is this?

• 20:39David Hoffman?

  I think what's going on here is that with EIP 1559, you can set how much you are willing to pay, and then you will pay the base fee. And that's kind of like saying, just like how you are, when you go into MetaMask, when you want to do a custom gas transaction, if you want to really tinker with your gas and make it specific, say you want to prioritize your transaction. So gas is at 50, and you want your transaction to go in ASAP, so you put in 70. And then you overpay by roughly 20 Gue if your transactions would have otherwise gotten included for 50. With EIP 1559, you can put in 70, but if base fee is 50, or the right payment is 50, then you are not paying that extra 20. You are paying 50. And so this is reporting to you as like, hey, you bid up to

• 21:24David Hoffman?

  this amount, but you actually paid this amount. So this is how much you saved. And this is actually where a lot of the confusion about EIP 1559 reducing gas costs came from. If EIP 1559 does reduce gas costs, it's from reducing the cognitive load of users who have to think about the right price to put in their transaction, and also perhaps getting that number wrong. But that's where if there's any fee savings, it's coming at the human brain level, not at the protocol level.

• 21:50Ryan Sean Adams?

  Rain level shouldn't be underestimated, right? Because like if you're if you're bidding like 70 on that transaction and I get the inkling that you're bidding 70, I'm gonna bid 71, 72 and it just kind of escalates in a very rapid fashion. That's how the mechanism kind of incents people to just keep outbidding one another. In this model, it doesn't matter, right? Like, because you'll get the savings back anyway. Super cool.

• 22:14David Hoffman?

  So just to be clear, EIP 155959 does not save gas fees at the protocol level. It makes gas fees easier to reason about and that allows you to make more precise choices about how you spend your gas, which can cause you to spend less gas.

• 22:31Ryan Sean Adams?

  It also burns that sweet E.

• 22:33David Hoffman?

  It also burns it.

• 22:33Ryan Sean Adams?

  I didn't talk about that. All right, let's talk about this. This is the Beacon Book, David, super cool. This is kind of an NFT, an actual physical book. This almost looks, sorry, to me like an almanac of some sorts. You know, after a team like wins a sports championship, like the World Series, they'll publish a book, it'll be quotes from the MVPs, all of the players on the team. That's kind of what this reminds me of, only it's for the developers of Ethereum 2 and the beacon chain, all of these researchers that have been hard at work bringing this thing to market. This kind of commemorates them. Super cool.

• 23:09David Hoffman?

  Yeah, this is led by Trent Van Eps and other contributors to the Stateful Works Project, which is producing the Beacon Book. This is an actual book. You can go and read it, it's online. It's really, so it's a wall of text, but you can actually produce a physical book and purchase a physical book if you want to compete for one of those. They're going to be in high demand. This is a, I think, how would I want to describe this? This is like a timestamp of Ethereum progress and development, right? This is going to the Ethereum developers, the actual protocol of Ethereum, people who work at client teams, people who work at the EF, and they talk about their, their experience of building out Ethereum, right? This is going to be a one of a kind piece of this art, because or book or illustration.

• 23:53David Hoffman?

  It's free for you to read, but purchasing a physical copy is an NFT, so that there's going to be competition for that. But this is really just instantiating a lot of just. Just blood, sweat and tears of the Ethereum developers, the Ethereum builders to get Ethereum to where it is today. So Trent and the Stateful Works team have done a fantastic job just honoring all of the labor of the Ethereum developers that they have put into Ethereum over the last six years into the Beacon book. And so go ahead and check it out. Go give it a read. Get your learn on. This will be a great learning moment. And then if you want to compete for some of the NFTs and some of the actual physical books, go right ahead.

• 24:29Ryan Sean Adams?

  Absolutely. Collect a piece of Ethereum history. David, let's talk a little bit about Polygon. This is part of kind of the Layer 2 Summer. I know Polygon is a sidechain, but Layer 2 Summer nonetheless, kind of a test ramp for all of the Layer 2s that are coming out. Balancer joins Polygon with a $10 million joint token incentive program. This is kind of what we're talking about with Layer 2 Summer, where you have protocol plus the Layer 2 itself rewarding users and incenting them to deposit liquidity into their protocol on Layer 2.

• 25:03David Hoffman?

  Dual yield farming is hot. So if you are bullish on Bal and you are bullish on Matic, you can go and get liquidity incentives using Balancer on Polygon. So congratulations to Balancer for launching on Polygon. I'm sure that they are also probably going to be building on Arbitrum and Optimism 2. And so maybe we also see some Bal rewards over there as well.

• 25:23Ryan Sean Adams?

  You know, it's cool. This is starting to get all of the infrastructure. I remember probably just a couple of years ago when it hit me that, oh my God, all of DeFi is going to have to re-architect itself on Layer 2. And like, what a lift that would take. But you know what, David? It's happening. And it's happening much more incrementally than I thought it would. Here is Zapper now supporting Balancer Labs on ZeroX on Polygon. So you could just zap into a position the same way you would on mainnet now on Polygon, which is super cool. This is doing analytics, integrating with Polygon. And the same recipe, the same playbook that they're pulling off on Polygon, that's going to take place in the other notable Layer 2s like.

• 26:07Ryan Sean Adams?

  Optimism and Arbitrum, and it's going to happen really fast from this point on. So it's great to see that infrastructure support pouring in as well.

• 26:15David Hoffman?

  And we have to see that infrastructure report, uh, infrastructure being built out on these, on these, uh, L2s. Because like, it's one thing if the apps are there, but like, the infrastructure is crucial. Like, I think people underestimate how important infrastructure is. Using Matic before there was Polygon Scan, the fork of EtherScan was, was kind of like using a black box. Like, if your transaction did something weird, it was impossible to go and check out what happened to it without Polygon Scan. And so getting all of these like classic infrastructure tools up and running for all these L2s is really going to be what makes and breaks an L2. You need the infrastructure to go along with you. That's also, that's also why Arbitrum optimism has been more slow to, to launch versus Arbitrum.

• 27:00David Hoffman?

  Just because they are just really dotting their i's and crossing their t's to make sure that they have the infrastructure to go along with all the apps at the same time. So when Arbitrum optimism rolls out, it should come with a suite of infrastructure. So it really emulates the experience of using Ethereum at the base layer on optimism on day one.

• 27:17Ryan Sean Adams?

  That infrastructure, man, really provides such a moat for the EVM as well, right? So if you're, if you're launching a, a layer two, or even a layer one, EVM support just gets you some of that infrastructure right out of the box. David, let's, let's talk a bit more about this, like the distinction between sidechain and layer two we've made before. But what about the distinction between a sidechain and a testnet? We're just talking about Gorley testnet, of course, that this is a test, testnet for Ethereum mainnet. This is where EIP 1559 is running and the London Hard Fork is running. But this from Andre, my friend Andre, formerly YFI, you know, a DeFi builder extraordinaire.

• 27:58Ryan Sean Adams?

  When some of the newest stuff that he's built, he actually added support for Gorley testnet. Okay. So like the DeFi products he's building. Like in addition to you other layer twos and sidechains and Ethereum mainnet, he's also adding Gorley testnet as an option. But what that does, David, is that makes Gorley not a testnet anymore because it makes the Gorley ETH, go ETH it's called, makes it valuable potentially. What's that distribution like? Man, people you see like, I have some somewhere, I think, unless it kind of expired or disappeared, I'm not sure. But like a ton of developers have this go ETH. And it kind of clouds the difference between a testnet and a sidechain.

• 28:43Ryan Sean Adams?

  If there's actual economic value attached to some of these go ETH tokens and he takes on this.

• 28:48David Hoffman?

  My gut take is this is weird and I don't understand why they're doing this. But Andre and then also Bantag from Urn, they're both like bullish on this. They're both excited about it. They both think that Gorley could be an L2 scaling solution to Ethereum. It sounds like they know more than me. And so let me ask her what I'm about to say with saying that they might just straight up be more informed about what this could be. But Gorley is an Ethereum fork, right? It's a clone of Ethereum that's meant to be an Ethereum testnet. It's not any more scaled than Ethereum itself, to my knowledge. And if it is, it's scaled in the same way Binance Smart Chain is scaled, which is just tinkering with some numbers that really shouldn't be tinkered with. And the reason why you can tinker it with that on Gorley is because it's a testnet. There's nothing at stake.

• 29:32David Hoffman?

  It's if it explodes, it doesn't matter because it's a testnet. In my opinion, testnets should be testnets. And there is a, there's terrible Gorley ETH distribution. I'm pretty sure there's like two people that have like more than 50 or two addresses that have like more than 50% Gorley ETH. Or there's some like terrible distribution of that. If you're starting to use Gorley ETH as money or as some valuable asset, the distribution of Gorley ETH becomes really important. And it was never meant to be money. It was never meant to be distributed, so that it's become very concentrated. I'm skeptical of using testnets as L2s. Testnets or testnets? L2s or L2s?

• 30:07Ryan Sean Adams?

  Yeah, look, it just, it just makes it a different thing, right? And I think this is why some of the people, like developers of Ethereum, particularly who have testnet deployments are kind of pissed. off about this because it kind of ruins the test net. I mean, like, are you going to you? How incentive are you going to be now to give your go eat to somebody who's just testing something out? Right? If it has economic that.

• 30:29David Hoffman?

  We're gonna start doing like go eat improvement proposals now?

• 30:32Ryan Sean Adams?

  Yeah, exactly. So so what it what it kind of does is it it makes it a different thing than what it was. So if you if you make? If you make um go really test net and incentivize side chain system, then you just need a different a new test net.

• 30:47David Hoffman?

  Right?

• 30:47Ryan Sean Adams?

  We have to go create another test net, and I think people are angry about this.

• 30:51David Hoffman?

  I I would like some further analysis on this from people who are more privy to these conversations.

• 30:56Ryan Sean Adams?

  But also, you can't stop it, right?

• 30:58David Hoffman?

  Can't stop it.

• 30:59Ryan Sean Adams?

  Like, once it starts, you can't stop it. So we'll we'll have to talk about this as it emerges a bit more. AAVE Pro coming in July, David, we did an episode State of the Nation with Robert Lesher on this, all about institutions coming to DeFi. This is the DeFi mullet.

• 31:14David Hoffman?

  No, no, no, no.

• 31:15Ryan Sean Adams?

  Take on this.

• 31:15David Hoffman?

  DeFi coming to institutions.

• 31:18Ryan Sean Adams?

  Ah, yes.

• 31:19David Hoffman?

  Important distinction, important distinction.

• 31:21Ryan Sean Adams?

  Yeah. So so what is this? AAVE Pro seems like kind of like Compound Treasury.

• 31:25David Hoffman?

  Yep. Yeah. So it's it's a the same Ave that we know and love, same thing with Compound Treasury, same compound that we know and love. There is just a new interface or a new wrapper around the whole protocol that is, you know, institution friendly, right? And so with Compound Treasury and with AAVE Pro, they solve a lot of just like the issues of using DeFi that we all know exists. Like, private keys are scary. Like, once you get used to them, they're not, but initially they are, right? And also, you need to have certain compliance and reporting requirements. Well, if you just make a wrapper around Ave and make a clone of Ave, a fork of Ave that uses Ave as the protocol,

• 32:06David Hoffman?

  but only allows certain whitelisted players or certain entities in there who who need that sort of control, and allow them to use that wrapped version of Ave, you know, protected Ave, if you will. That is and then and then again, it hooks into Ave underneath the actual Ave protocol that we are all using.

• 32:24Ryan Sean Adams?

  And so it's DeFi with training wheels.

• 32:26David Hoffman?

  DeFi with training wheels. A little bit of a bubble boy DeFi, which is fine. That's what the institutions are familiar with. And so the, and the fact that we're seeing this in AVE and Compound at the same time is actually really interesting. Kind of tells you the rate of progress in this industry. Like if, and we also saw this with, with L2s. Like it just so happens that Optimism and Arbitrum are releasing both in July, like funny coincidence. AVE Pro and Compound Treasury are also releasing around the same time. The rate of change, the rate of progress is like breakneck speeds because these, these teams keep on releasing the same products around the same time. Anyways, the story is that DeFi is becoming institution ready. And we are not waiting, we're not waiting on our hands for institutions to learn how to manage their private keys.

• 33:11David Hoffman?

  We're just figuring out how to solve that problem for them and making it easier for them to come to us. So DeFi is building the bridge to institutions rather than institutions having to build the bridge to DeFi. And that's just how Ethereum works. Ethereum just solves its own problems. It's really cool, really optimistic story.

• 33:29Ryan Sean Adams?

  This is, this is also going to bring a ton of liquidity, right? A ton of like value from institutions. And you know what I love about this too, David, is like, it's the, in this banking system, it's the institutions who need the training wheels, not the retail investors. We can use the power tools at will if we want. I feel like the traditional banking system is the complete opposite. The institutions get the better banking system and they give all of us retail consumers the training wheel version of the thing.

• 33:58David Hoffman?

  That's an, that's an interesting take. Like Robin Hood is just financed with, with training wheels on it. And then here, here, here retail have Robin Hood. Here's what you get.

• 34:06Ryan Sean Adams?

  The way they front run you alone, right? Like Robin Hood, that's their business model. No fees retail, but we're going to front run every trade and you don't actually see that cost there. Anyway, let's talk about some raises this week. The first is this index co-op. The Dow just raised 7.7 million from Galaxy Ventures, One KX, a few other VC companies. Super cool. I think that like a native Dow is now raising from VCs, right? It started off with any outside, without any outside VC investors, but now outside investors want to jump aboard this. I think that's kind of cool.

• 34:43David Hoffman?

  It is cool. And the other, the other thing that's cool is that the, there is a one year lockup on these, on these index tokens with six months linear vesting. And the price that they got them at was pretty competitive. Usually when like organizations like, like with, you know, not too much liquidity on their tokens, try and sell their token, they give them a pretty good discount. There was not much of a discount on the index tokens being sold to these, into these investors. And so I believe if I'm regurgitating this from, from Anthony Cisano, which I happen to do a lot, they were sold for roughly $24.5 apiece where index token is currently trading at $27. So, and I don't know when, when these tokens were purchased.

• 35:25Ryan Sean Adams?

  Do you know what's cool about this too, David? Is that like retail had an opportunity to buy index co-op tokens before all of the VCs for months?

• 35:32David Hoffman?

  I did.

• 35:32Ryan Sean Adams?

  I love it. Right? And like, and then here the VCs have to get kind of our, our table scraps.

• 35:38David Hoffman?

  Yep.

• 35:38Ryan Sean Adams?

  It's kind of nice. Again, training wheels.

• 35:40David Hoffman?

  Yeah. If you've been paying attention to Bankless, if you've been paying attention to DeFi, like you, you cannot have missed index co-op. Index co-op is one of those tokens that I never feel like, not financial advice, blah, blah, blah. But like, I'm, I'm just super bullish on index. It's like the Dow is super greased, like it works. It's had a fantastic product. It's got tons of revenue. Now it's finally getting the attention it deserves from, from, you know, larger firms. I'm bullish on index, man.

• 36:04Ryan Sean Adams?

  Bullish on index, bullish on DAOs in general, bullish on this kind of capital coordination. Super cool. All right. Also, Zerion raised 8.2 million in a series A fund, just a great DeFi dashboard. Zerion is, is fantastic. It's kind of a user interface. It's like a banking interface on top of all these DeFi protocols. I love what those guys are doing too. Are you ready for news, David?

• 36:26David Hoffman?

  Let's do it.

• 36:27Ryan Sean Adams?

  All right, let's get to the news. Hey, we got to start with a bank, JP Morgan. They say Ethereum upgrades could jumpstart 40 billion, a $40 billion staking industry. So they're saying Ethereum ETH2, Beacon Chain, that's going to jumpstart a $40 billion staking industry. It's like, yeah, guys, we've been telling you this, but like, cool.

• 36:52David Hoffman?

  Hey, you guys figured it out.

• 36:54Ryan Sean Adams?

  Better start learning solidity.

• 36:56David Hoffman?

  Oh, man. Well.

• 36:58Ryan Sean Adams?

  I mean, the banks are saying it, though, now, right?

• 37:00David Hoffman?

  Better late than ever. Yeah. Yeah. If the banks are saying it, you know, it's like, oh, yeah, this is starting to really breach into the mainstream.

• 37:05Ryan Sean Adams?

  Do you know why they're saying it, too? Look, uh, so the first bank, this is a Swiss bank called, Sinjum?

• 37:12David Hoffman?

  Signum?

• 37:13Ryan Sean Adams?

  Signum, thank you. Wow, I've ventured that. Signum, Signum Bank is offering E2 staking services, right? So this is super cool because it is the first time a bank, a registered financial bank institution in the jurisdiction of Switzerland is offering a staking service. And this is recognition that Ether is, as we've been saying, an internet bond. This is going to deliver yields to people. This is not my favorite way to stake, of course, right? Because this requires that you give this bank custody of your, your private keys. Although you can, uh, you can dictate a separate withdrawal contract.

• 37:55Ryan Sean Adams?

  So there might be some intricacies where you don't like, you just give them kind of validating rights. I'm not sure how this is configured, how this is set up. What's cool, I think, is that the banks are coming aboard. And if Ether is going to be a global reserve asset, which we think it will, if Ether is going to be an internet bond for the world, a non-sovereign bond, competing with sovereign debt-type, uh, instruments and bonds, this kind of thing needs to happen. So it's, it's starting, man. This is domino one, and the rest are gonna fall. JP Morgan report, this bank is now coming to staking? How soon until JP Morgan wants to start offering staking? Of course, important that we can still stake at home, and we don't have to, to, to use that non-sovereign, um, or that, um,

• 38:38Ryan Sean Adams?

  we don't have to give up our sovereignty and our private keys to a bank. But still, they're coming along for the ride. It's kind of cool.

• 38:44David Hoffman?

  And this is the beauty of staking, is that like, any entity, because you can stake at home, any entity can therefore stake, right? It's, this isn't mining. You don't need to have, like, privileged access to supply chains or just be interested in a multimillion-dollar investment to a, a mining. Operation, all you need is a one computer to stake and then banks can stake, you know, funds can stake. Anyone can stake, anyone can make a staking product.

• 39:10Ryan Sean Adams?

  Governments could stake.

• 39:11David Hoffman?

  Governments can stake and that makes staking really, really competitive and it from an Ethereum security protocol, from Ethereum protocol security perspective, that's really, really good. Because you want there to be an extreme amount of competition in the staking world. And so I invite all banks to open up, you know, staking products, staking services. Because I want more stake to happen because that makes Ethereum more secure and it's also bullish for Ether. And so this is one of the many little, tiny little flags blowing in the wind that say, hey,

• 39:45David Hoffman?

  Ether is going to become the world's internet bond and it starts with just competitive staking. And many, it starts with many, many different things with many, many different ways. But one of the ways that it starts is competitive staking across the globe.

• 39:56Ryan Sean Adams?

  Yep, absolutely. David, let's talk about this. Andre, the creator of Wi-Fi and the wire earn ecosystem, he's on a tear again. I feel like it's back. I feel like this is why this is in the news section. It's because Andre is back and he is building. So these are a few things he's built. Lev X is one, protection markets, some sort of on-chain insurance. AVE delegate, like he's just like pushing stuff out. There's about five or six things here that he's pushed out and into GitHub. And, you know, one of DeFi's biggest builders is back, maybe from a brief break or hiatus? Or what's your take on this?

• 40:34David Hoffman?

  Yeah, and this actually isn't all of the entire list of what he's built. He also released another project on his own medium that he announced as well. People are stoked that Andre is building again. There's some mixed opinions on this because whenever Andre was building something right after a year and it attracted all the attention, it actually kind of pissed Andre off. And then Andre kind of like. Went dormant, went quiet, just because he didn't enjoy being the person that's like, oh, Andre's building. What's he building next? What am I going to ape into next? What's the next YFI? Uh, and so he looks like he's just releasing a bunch of, of prototypes, a bunch of code. It looks like it also is just infrastructure for other prototypes. These aren't going to be tokenized projects.

• 41:16Ryan Sean Adams?

  None of these have tokens.

• 41:17David Hoffman?

  None of these have tokens. Yeah. Uh, and so maybe that's kind of what Andre does nowadays is help us just build in little attachments or little add-ons to already existing projects. I don't really know. Um, the day that Andre does build a project with a token is going to be an interesting one. If he even decides to do that or not, I don't mean, maybe he's lost the taste for it.

• 41:36Ryan Sean Adams?

  We should have him on again, David. That's what we should do. Now that he's back, we should have him on Bankless again. It's been about a year.

• 41:41David Hoffman?

  It has been about a year. Yeah, you're right.

• 41:43Ryan Sean Adams?

  David, let's talk NFT world. So Axie is on an absolute tear. Look at this, uh, revenue.

• 41:48David Hoffman?

  Yep.

• 41:50Ryan Sean Adams?

  Pretty crazy.

• 41:50David Hoffman?

  Up and to the right.

• 41:51Ryan Sean Adams?

  Axie Infinity. What are, what are people doing with Axie?

• 41:54David Hoffman?

  Uh, Axie Infinity is kind of like a Pokemon game, but with on-chain scarcity mechanisms built in. Uh, so you raise and breed little Axie creatures and then you make them fight.

• 42:06Ryan Sean Adams?

  To the death?

• 42:07David Hoffman?

  I, I, I mean, to the metaphorical death. I think you, I'm pretty sure you get yours back. Uh, you level them up. Uh, each one has different properties. Um, and people are really, they, they have been one of those, I wouldn't say dormant, but you know, kind of heads down building projects with a very committed community fan-based following that would play this game. But it has absolutely taken off in the last, uh, in the last like maybe two, three weeks or so. Broke into the absolute like mainstream news cycle of crypto. We are actually bringing G Ho on the State of the Nation next week on Tuesday to talk all about Axie Infinity and the explosion of growth that they've seen in the last two weeks. So if you are interested in this story, we will be reporting on it on the State of the Nation on Tuesday.

• 42:48Ryan Sean Adams?

  Here's the meme term to remember. Uh, you ready?

• 42:50David Hoffman?

  Ready for it?

• 42:51Ryan Sean Adams?

  Play to earn.

• 42:52David Hoffman?

  Ah.

• 42:53Ryan Sean Adams?

  Play to earn. That's what's happening in Axie and I think this is a model that is just beginning. That crypto game studios are really pioneering. I expect to see a lot more. I expect to see more from like even Gods Unchained in the future. Around that. All right, David, Bitcoin world, there's really not too much to talk about this week. All is quiet in Bitcoin land. So let's, uh, let's hop over to regulation. China's central bank worried that stable coins pose risk to the financial system. Do you think this is also because it's kind of a USDC? It's, it's sorry, it's the dollar seeping into Chinese markets and they want to

• 43:34Ryan Sean Adams?

  protect the sovereignty of their currency and the, and the reserve currency status of the Chinese, you know, yuan.

• 43:41David Hoffman?

  It's, it's absolutely that. There's nothing that China wants more than to dethrone the dollar and place the yuan there. Uh, and so of course they don't want, you know, stable coins to exist because stable coins are dollars. They're not yuan or yen or whatever. And so yuan, thank you. Important note. And so this is completely antithetical to what China wants. China doesn't like free markets. China doesn't want, you know, permissionless finance. They want you to use their currency on, on their rails. And while the US isn't 100% aligned with crypto dollars and they also kind of want their own CBDC, they are much more cool with stable coins out of the private market than, than China is.

• 44:23Ryan Sean Adams?

  Yeah. You know, it's, you know, it's funny is the game theory of this is if China hates it, I bet the US will start liking it more. It's like, oh, stable coins, private stable coins. They're great. Now we don't need a central bank digital currency.

• 44:35David Hoffman?

  Right.

• 44:36Ryan Sean Adams?

  Privatize it all and export that way.

• 44:38David Hoffman?

  The private markets built our CBDC for us? Oh, thanks, guys.

• 44:42Ryan Sean Adams?

  Kind of could be, it could go in that direction. So, uh, remains to be seen. It's, but there's so much game theory going on about the world reserve currency status, particularly with, with fiat. Let's talk about this. Ransomware hackers demand 70 million in Bitcoin and they claim a massive US attack as Biden investigates possible Russian involvement. David, I didn't even catch this story. What is this story talking about?

• 45:06David Hoffman?

  Yeah, this has been a reoccurring theme over the last few months. There's just been more and more ransomware attacks that have been using Bitcoin as a currency. And so it's an unfortunate PR issue for our industry. I'm not even going to say just Bitcoin, just for crypto at large, even though all these attacks have been happening with Bitcoin, people kind of associate it with crypto at large because it is. Um, and, and so this is going to be a fight that our, our industry is going to have to tackle head on. And also there's no reason why this can't happen with crypto dollars or stable coins as well. Uh, and so NLW had a really good take on this is what, what, who do you think is going to get blamed? Do you think Bitcoin is going to get blamed? Or do you think Russia is going to get blamed? Probably going to be both, to be honest. Um, but overall, this is

• 45:50David Hoffman?

  an unfortunate reality of the world that we live in. It's a bad PR for our industry and permissionless finance allows you to do permissionless finance things.

• 45:58Ryan Sean Adams?

  Look, you know, one thing I've learned about politicians, it's they'll blame whoever it's most politically expedient to blame, right? And so one day it might be Russia, the next it might be Bitcoin, depends on what the political aims are going to be. But yeah, it's not great PR, that's for sure.

• 46:13David Hoffman?

  Especially when Bitcoin doesn't have a single representative to defend itself. It's easy to defend or to attack something that can't defend itself. Yeah, the Bitcoin cyber hornets can, can yell on Twitter saying, no, this is FUD. But like, there's no actual, like Satoshi isn't coming to say like, hey, this is, this is bullshit. Don't attack Bitcoin on this one. Um, like there's

• 46:31Ryan Sean Adams?

  Also a strength.

• 46:32David Hoffman?

  Also a strength, also a strength, right?

• 46:34Ryan Sean Adams?

  Double edged sword there. All right, let's talk about this. Stablecoin firm Circle is going public via a SPAC merger. This is pretty cool.

• 46:44David Hoffman?

  This is brand new, this is brand new as of this morning, this is a couple hours old, yeah.

• 46:48Ryan Sean Adams?

  The numbers are crazy. Look at this, the deal value Circle at 4.5 billion.

• 46:54David Hoffman?

  Whoa!

• 46:55Ryan Sean Adams?

  I know, we were just talking about stablecoins, right? And USDC is one of the most popular stablecoins, definitely the most legitimate stablecoins out there. Tether is the only other competitor, but doesn't have the legitimacy that USDC does. And Circle is a primary issuer of that 4.5 billion. That's a big bet on stablecoins.

• 47:15David Hoffman?

  Big bet, yeah.

• 47:17Ryan Sean Adams?

  Going public.

• 47:18David Hoffman?

  Congrats to Jeremy Alair and everyone at Circle and probably also Coinbase is involved with this one as well. USDC just really planting a flag as the de facto crypto dollar, fiat backed crypto dollar in the ecosystem. Congrats. This is a really, this is a really, I feel like a monumental moment for the industry. Like, there are many monumental moments, but like...

• 47:40Ryan Sean Adams?

  It's a mini Coinbase.

• 47:41David Hoffman?

  It's a mini Coinbase, yeah. Very, adds to the legitimacy of the industry.

• 47:46Ryan Sean Adams?

  All right, David, speaking of legitimacy and the industry, America's first legal DAO was approved in Wyoming. Wyoming has been a state that's been very friendly to crypto regulation. And overall, I'm really enthusiastic and like excited about the approach that they've taken. Even recognizing DAOs as a thing is just amazing. So, very bullish on that, although not perfect. I read an analysis from a legal substack, crypto legal substack that I follow. And there's some weirdness about this, right? So, DAOs in this structure cannot be managed or managed, so people can't actually be behind it. It has to be algorithmically managed. So, that adds some weirdness to it.

• 48:27Ryan Sean Adams?

  Yeah, there's some description here, but it just means it's more, like, it's more difficult to have, you know, a centralized institution kind of give up control. It has to be completely decentralized at the start, so there's some issues there. Also, if you're going to do this in Wyoming, you have to put DAO in the name, right?

• 48:48David Hoffman?

  All right.

• 48:48Ryan Sean Adams?

  Like, it has to be called something DAO, right? It can't just be Bankless, has to be Bankless DAO, which is convenient for Bankless DAO, I guess.

• 48:58Ryan Sean Adams?

  Not so convenient if you're AVE or Uniswap and you don't want to be called Uniswap DAO necessarily.

• 49:02David Hoffman?

  It's also really kills my interest and effort in trying to promote digital organizations or

• 49:08Ryan Sean Adams?

  Oh, yeah.

• 49:09David Hoffman?

  Not DAOs. DAO, it's not a DAO, it's a DOO. But no, apparently, apparently I'm giving up on that fight.

• 49:15Ryan Sean Adams?

  Yeah, well, we'll see. Maybe you'll win it in the next round. The bill also requires the DAOs to maintain a person, a registered agent in Wyoming. So there's still, so again, it's kind of a first draft, right? It's good that Wyoming is doing this, but it's a little ham-fisted on the implementation. Still, no discouragement, like kudos, guys. You're actually pushing in the right direction with some revisions. This could be something really cool, so we'll look forward to the future.

• 49:39David Hoffman?

  They're trying, they're trying their best.

• 49:42Ryan Sean Adams?

  They're trying their best.

• 49:43David Hoffman?

  What I don't like about this is that this is the nation state telling DAOs what they need to do. And the whole point about Ethereum is to not have to do that. DAOs.

• 49:53Ryan Sean Adams?

  I know.

• 49:54David Hoffman?

  DAOs belong to Ethereum. They owe no homage to any nation state. I guess if they want the perks of being instantiated in the nation state, this is like the coupler.

• 50:04Ryan Sean Adams?

  There should be like a legal coupler, yes.

• 50:06David Hoffman?

  This is a coupler.

• 50:07Ryan Sean Adams?

  There should be a bridge to the nation state. And this is kind of a ham-fisted bridge, but at least it's a bridge.

• 50:14David Hoffman?

  It's a bridge, yeah.

• 50:16Ryan Sean Adams?

  So it's something.

• 50:17David Hoffman?

  I'm, I am most bullish on pure DAOs, as in DAOs that exist on Ethereum and Ethereum alone. And the only rules that they abide by are the rules enforced by the EVM. That, that's the most bankless maxi, the most bankless future. There is absolutely a time and place to be coupled to the real world. And I don't want to discourage anyone to, from doing that. But like, the grand vision of DAOs belongs to Ethereum.

• 50:44Ryan Sean Adams?

  And right now, it's going to be a little bit ham-fisted if you try to couple into the real world, right? It's hard. Okay, a few things we're gonna just breeze by, David. The first is this Visa is crushing it with crypto-linked card usages that top $1 billion. So this is all the Visa cards that crypto banks are issuing, which are cool. Some of these are coming to market, one from Gemini, one from BlockFi. Coinbase is doing something. Crypto.com is already has something going. Visa's like, hey, we love it. Top in a billion. This is working.

• 51:14David Hoffman?

  Keep it coming.

• 51:15Ryan Sean Adams?

  Bullish. Yeah. David, why don't you do the next one?

• 51:18David Hoffman?

  Yeah, the Binance squeeze Barclays customers in the US Barclays is a bank in the, or excuse me, in the UK can no longer transfer funds to Binance. Binance, the undomiciled crypto bank, getting the squeeze from nation states. That's all I have to say there.

• 51:33Ryan Sean Adams?

  It's like that Vice Grip, slow squeeze rather than a, than a quick hit. Why don't you do this one too?

• 51:39David Hoffman?

  Elizabeth Warren gives the SEC July 28 deadline to, quote, "figure out," quote, "crypto regulation." Elizabeth Warren has started, really started to stamp her feet about crypto as an industry. The, the thoughts behind this is crypto, or Elizabeth Warren is really bullish on a central bank digital currency, and so she wants to diminish their role and of the crypto industry and wants to regulate it in order to, you know, implement, implement her CBDC. Overall, she is really just drumming up a lot of noise about how our industry needs to get regulated. And from what I can tell, she's extremely uninformed about it. I think Elizabeth Warren is a great politician. I think that she does a great job. I, I overall support her.

• 52:25David Hoffman?

  I have not heard a single good noise out of her as it relates to crypto and the industry that I pay attention to. And so all of a sudden, I feel very resonant with the, like, the libertarian cohort who just get pissed off at politicians who come in. And start regulating other people's industries and other people's businesses while they have no like informed position about it. That's what I see happening here.

• 52:47Ryan Sean Adams?

  There's definitely some intent at play here. And yeah, there's, there's a broader plan here. All right. David, before we get into the takes, and we got a lot for the week, a lot of hot takes.

• 52:56David Hoffman?

  Big takes episode this week.

• 52:58Ryan Sean Adams?

  You're gonna love these takes, guys. But before we get to them, we want to thank the sponsors that made this episode possible.

• 53:03David Hoffman?

  Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and will say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap. Just

• 53:47David Hoffman?

  look at the size of the Uniswap Treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a UniGrant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless, and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless. The Aave Protocol is a decentralized liquidity protocol on Ethereum, which allows users to supply and borrow certain crypto assets. Aave version 2 has a ton of cool features that makes using the Aave Protocol even more powerful. With Aave, you can leverage the

• 54:32David Hoffman?

  full power of DeFi money Legos, yield, and composability all in one application. On Aave, there are a ton of assets that you can supply to the protocol in order to gain yield, and all of those same assets can also be borrowed from the protocol if you have supplied collateral. Here, you can see me borrowing 200 USDC against my portfolio of a number of different DeFi tokens in 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 if I wanted to lock in that interest rate in permanently. V2 also features the ability for users to swap collateral without having to withdraw their assets, trade them on Uniswap, and then deposit them back into Aave.

• 55:14David Hoffman?

  With Aave, users can do this in one seamless transaction, saving you time and gas costs. Check out the power of Aave at ave.com. That's A-A-V-E dot com.

• 55:27Ryan Sean Adams?

  Alright guys, we are back with the takes for the week. Let's start with this one from ChainlinkGod, who says, "A blockchain without oracles is like a computer without the internet." He got the meme correct this time, his words. "A blockchain without oracles is like a computer without the internet." What's your thought?

• 55:43David Hoffman?

  I thought that was a pretty cool way to illustrate the role of oracles when it comes to blockchains. Blockchains only know what is true according to their internal state. Ethereum only knows about Ethereum, so it needs oracles to know things about the rest of the world. And so ChainlinkGod, who is literally the instantiation of bullishness on Chainlink itself, he kind of compares and contrasts this to like, well, if you just have a computer but no internet, the computer only knows things that are on the computer. But if you connect it to the internet, you can Google, "What is the weather in Argentina?" or whatever. And so I think that's a pretty cool way to illustrate the role of oracles in blockchains.

• 56:22Ryan Sean Adams?

  Okay, oracles, super important. Agree with you, ChainlinkGod, on that. What about this take? This is kind of a contrasting take?

• 56:29David Hoffman?

  Here's the yin and the yang. That was the bullish Chainlink, here's the bearish Chainlink.

• 56:33Ryan Sean Adams?

  Give us the yang. What's going on here?

• 56:35David Hoffman?

  Yeah, this Twitter account, which I've never seen before, Edgar Arut says, "Wake up. Chainlink controlling all information inflow on chain is the worst possible coming dystopia." And then goes through a thread about all the risks of what happens when Ethereum only receives inbound information from Chainlink oracles and Chainlink oracles alone. It's a centralization risk. Like, Chainlink is the only thing providing external data to Ethereum. And he goes, "Indisputable history blockchain plus a gaslit army of zombies calling it fair private mem..." I think that's referring to the Chainlink army. And then he also says, "A private mempool with unverifiable node software." That's the Chainlink infrastructure.

• 57:17David Hoffman?

  And then Edgar says, "Think more widely than just token prices," which is largely what Chainlink is currently used for. "Real estate deeds, oil prices, passage of law, marriage deeds, all funneled and controlled by a tiny cabal with insane power." Again, referring to Chainlink here. And then, and then he kind of goes into the nuances and critiques of Chainlink in a kind of a nuanced way, which I won't go into on the, on the Bankless Weekly roll up here. But he is saying that there is just too much centralization and consolidation on oracle power to the Chainlink network, and we need to diversify some of that power outside to other oracles.

• 57:52Ryan Sean Adams?

  Well, I, I think we should always have some skepticism about oracles, particularly off-chain oracles. This is why I like Ether so much as an asset. Like Ether's price isn't based on anything external, right? We've called it the, the most trustless form of economic bandwidth for Ethereum, right? Other assets are not like this. Even something like Maker, DAO, requires an oracle to function. Uniswap is pretty beautiful in that it doesn't require an oracle. I love the sorts of DeFi primitives that like come without and don't require an oracle, so oracleless design. But with that said, oracles, my God, they're super

• 58:33Ryan Sean Adams?

  useful for getting all sorts of different, you know, synthetics and DeFi products and, you know, as this person's saying, real estate deeds, oil prices, commodity prices, all of these things on-chain. And so they're useful in the here and now, but they could become a centralization vector, and they are dependent on the degree to which Chainlink is actually decentralized, right? I don't know if I'd prefer to live in a world with many different oracles. I probably would. I'm not sure all of the details of Chainlink's level of centralization versus decentralization. But also, David, there's an element that, look,

• 59:14Ryan Sean Adams?

  anything coming off-chain into the blockchain is going to be centralized at some level. So can you really get around all of these things? What are your thoughts?

• 59:24David Hoffman?

  Yeah. Chainlink is supposed to be a decentralized oracle network, as in like, even though there's, there's only one Chainlink network, the participants of the Chainlink network are sufficiently decentralized. Whether that's true in practice is up for debate, and that is the subject of a lot of debate in the oracle World. I am I am bullish on all kinds of oracles. Maker Dao just solved their own problem and made their own oracles. And now other people can use those oracles. Compound has hooks into its own network of oracles using both centralized and decentralized options. Coinbase offers oracle services. A lot of exchanges offer oracle services. CoinGecko offers oracle services.

• 1:00:05David Hoffman?

  The pattern of robustness is that you have redundant and redundant and redundant oracles. And dependence on chain link is not redundancy. I want to see competition amongst oracles and I'm not seeing that. I'm just seeing people just hook into chain link over and over and over again.

• 1:00:21Ryan Sean Adams?

  All right, David, let's take a look at this next take. This is from Balaji. The creator economy is becoming part of the crypto economy, he says, because legacy social media platforms have no real concept of digital property rights. This is a hot take and he goes on, he talks about Substack, Twitter, Facebook. They're all great, but they are intermediate steps. Ghost goes further. You can run it at a domain that you control. Decentralized media platforms go further still. You hold the private keys. He goes on to make the point that

• 1:00:54David Hoffman?

  Oh, no, that that third tweet I think is really, really important. He finishes up with, under communism, there was no such thing as personal property. Everything that transpired in the PRC and USSR was downstream of that economic illogic, the root cause. The restoration of private property was one of the keys to unlocking the Chinese economy. And Nick Carter wrote an article a while ago, kind of a kind of a niche article that didn't really make through the mainstream.

• 1:01:18Ryan Sean Adams?

  I read it. I love that one.

• 1:01:20David Hoffman?

  Which one are you? Which one are you talking about?

• 1:01:21Ryan Sean Adams?

  Where he talks about like property rights.

• 1:01:23David Hoffman?

  Right.

• 1:01:23Ryan Sean Adams?

  He talks about like, yeah.

• 1:01:24David Hoffman?

  The success of developing nations and the economies of nations as it relates to how strong their property rights are. And he made the made the association, made the claim that the stronger the property rights, the more innovation and development is allowed to happen because people have assurances as to the assets that they own. So Ryan, you and I are big on Twitter, big degenerate tweeters. We don't own our Twitter handles, even though we made all the work to produce the value of the content of the people that follow us on Twitter. If we actually own Our own Twitter handles, which we don't, we would have longer, better assurances as to what we could do with our Twitter accounts. And that could blossom into something new. And so this is what Balaji is talking about. He's saying the crypto economy or the creator economy is coming.

• 1:02:09David Hoffman?

  Uh, and in with the web three world, the world where we own our own social media platforms. There's going to be a blossoming of just like content and innovation and creatorship. Because people own the land that they are settling on.

• 1:02:23Ryan Sean Adams?

  I think that's a really good take. Yeah, we are basically renting our Twitter accounts. Twitter could deactivate us at any time. We can't take the communities with us. They can punish us via algorithm. You too, any social media property that you have.

• 1:02:37David Hoffman?

  President.

• 1:02:38Ryan Sean Adams?

  Right? Any social media property you have is rented property, not owned. So it's like, it's like, um, like building your house on someone else's land. Right? And in particular, a faceless corporation's land that has no notion of individual rights. I guess there's a user agreement, but that is not like a charter of freedoms or a bill of rights.

• 1:02:58David Hoffman?

  You must sign in order to have that anyways.

• 1:03:01Ryan Sean Adams?

  Who reads it? Oh, my God, how can you read it? Anyway, that's a great take by Balaji. He follows it up with this take. Why don't you read this?

• 1:03:08David Hoffman?

  Yeah, from internet influencer to crypto creator. The internet influencer was forced to rely on legacy media and social media platforms. The crypto creator uses decentralized media to become completely independent from them. This reminds me of just how like there was once three channels. And now there are like a million YouTubers, right? Like there used to be this one approved form of information and media. And now there's going to be like a bajillion of them, Bankless being one of them. Uh, and, and that is a take here.

• 1:03:38Ryan Sean Adams?

  Totally. Everybody can like, social media allowed everyone to become Oprah Winfrey if they wanted to, right? It wasn't just like one place to go for that level of influence. But what this also means, David, is all those influencers that the internet has built up over the last 10, 15 years. They're going to find a conduit into crypto and they're going to come into crypto. They're going to bring their communities into crypto with them. I've already seen this with with Gary Vee. His NFT sales platform is doing pretty well. I read recently that he's already booked a million dollars in terms of, you know, it was like volume or something. There was some metric that was important. Anyway, he's bringing his entire

• 1:04:18David Hoffman?

  Clearly wasn't that important.

• 1:04:20Ryan Sean Adams?

  It was something. It was. I can't remember. Too many numbers going on in my head, but thanks for that. Oh, my God. We have a soundboard now on on weekly rollups. It's gonna be my bane.

• 1:04:32David Hoffman?

  Sorry.

• 1:04:32Ryan Sean Adams?

  And only David can control it. Talk about centralization.

• 1:04:38David Hoffman?

  I can keep going.

• 1:04:39Ryan Sean Adams?

  What I mean? What I deal with? Anyway, all of these influencers, if there's anyone listening still, all of these influencers will be coming to crypto and bring their communities with them. I think that's what this this means. And that's what Blaji is saying.

• 1:04:54David Hoffman?

  Here's another take from DCF God. He goes, this is a take on Binance and C DeFi, or really just crypto banks. He goes, Binance, literally at the point where I need to upload a selfie video of myself doing random shit to get my funds. And so he is trying to withdraw his assets from Binance, and he has a withdrawal appeal page ups. He has to appeal to withdraw. And here is the upload statement video instructions. You need to appear in the video and hold the information page of your ID document. Please clearly state the following. Today on month, day, year, I'm applying to withdraw X amount of X cryptocurrency for my account. I confirm that it is my activity and I am contacting Binance customer service to enable the withdraw

• 1:05:37David Hoffman?

  function of my Binance account. Here's my email address and phone number. And you have to actually do this a second time for a whole different. You have to do two of these things. And that sounds annoying and troublesome, especially when I compare it to just borrowing or trading or whatever on Uniswap, and all my ledger asks me is to approve a transaction or not, and it's one single button. Stark contrast. Stark contrast. Crypto banks not looking so hot.

• 1:06:04Ryan Sean Adams?

  Yeah, look, this is not self sovereign finance.

• 1:06:08David Hoffman?

  The Binance squeeze, Binance is getting squeezed.

• 1:06:10Ryan Sean Adams?

  For it. Look at this. I mean, this is, this is terrible. You have to like, record yourself saying these things like, um, wow. And that this is not just for the initial signup process for AML KYC. This is just to withdraw. Every time you need to withdraw, can you imagine saying this?

• 1:06:26David Hoffman?

  Yeah, right. I mean, I don't think that's what's going on. I think if you want to withdraw, most customers can just withdraw like normally, input your Ethereum address, which is already cumbersome to begin with, because you got to check your email, like approve it, blah, blah, blah. But I think this might have happened if like, I don't know. I don't know, like his account got compromised. Either way, it's like a part of the Binance ecosystem and they're making people do it.

• 1:06:48Ryan Sean Adams?

  Uploading a video. It's hilarious. All right. Balaji again.

• 1:06:53David Hoffman?

  Again.

• 1:06:54Ryan Sean Adams?

  He keeps dropping the takes this week.

• 1:06:55David Hoffman?

  This one's, this one's completely new, though. I'll read this one. Balaji goes, "I'm not the first to observe this, but the speed and depth of innovation happening simultaneously in several fields is just not something that current societal institutions can handle." What Balaji is saying is there is so much innovation happening in this world, not just in crypto, but also definitely in crypto, that people just can't even come to terms with it. Like, there is massive advancements in AI. There's massive advancements in bioengineering. There's massive advancements in, in crypto. And Ryan, I think if you click on that text or click on that tweet, he might list, maybe it was a retweet that he retweeted himself. He just listed a bunch of things that like,

• 1:07:36David Hoffman?

  societal institutions can't handle right now because they're really complex. They're really hard to understand. And they're advancing at an accelerated rate. And so I'm just reminded of our podcast with Josh Rosenthal about the crypto renaissance. You need to be on the, on the fringes of at least one of these fields that's about to change the world. Because if you don't, then you're behind. And so be a part of the revolution, undergo the revolution rather than it happening to you. And so if you are, it would be unfortunate to be part of this legacy, legacy world and have all this massive rate of change happening that you're just ignoring because it's too complex and you can't keep up with it. Change is coming to the world. Again, this is almost a completely a conversation outside of crypto.

• 1:08:20David Hoffman?

  Change is coming to the world and you need to be on the ball in the 2020 decade.

• 1:08:25Ryan Sean Adams?

  Absolutely. Yeah, you can't just trust your financial advisor, right? You can't just trust your college admissions like officer. You can't just trust, you know, whoever's saying, yeah, if you just sock away your funds in a 401k and work at a steady job for 20 years, there's going to be like retirement.

• 1:08:42David Hoffman?

  There is no steady job for the next 20 years. Not one job will last for 20 years. It's gonna be completely different.

• 1:08:47Ryan Sean Adams?

  Yeah, so you gotta get ahead of this. This is not, you know, not the era our parents screw up in. You know, it's really cool too, as he said, current social institutions can't handle this. Crypto is a new institution. Remember when we had Balaji on, he talked about like the crypto nation state, actually creating a little literal sort of nation state that is built on crypto institutions? That's the sort of thing he was talking about. If we're gonna handle this rate of change, we need new institutions. Let's do this one. Why don't you read it out, David?

• 1:09:19David Hoffman?

  Yeah, okay. So this is a retweet of a Stani tweet. So it starts with the Stani saying that, "A kind reminder that 60% of DAI is backed by USDC," which is a little bit of a knock on DAI. Like, what good is a trustless stablecoin if 60% of it is backed by trusted collateral, trusted assets, which is just a dollar? So DAI is-

• 1:09:38Ryan Sean Adams?

  It's a good take. I-

• 1:09:39David Hoffman?

  It's a good take, yeah. DAI is basically 60% USDC. Is that really what we want when it comes to a trustless stablecoin? Maybe not. And then Stefan from the Ry slash Reflexor Project goes, "Another reminder that if you simply backed your pegged coin with ETH, you still have a broken peg." And so that is harking back to the days where DAI, a single collateral DAI, or back when multi-collateral DAI was largely just ETH, DAI had a lot of trouble maintaining the peg. It fluctuated between 95 cents to a dollar and 5 cents until they really opened up US dollar backing of DAI. And so Stefan is saying-

• 1:10:16Ryan Sean Adams?

  There's a trade-off.

• 1:10:17David Hoffman?

  There's a trade-off here, and perhaps it's actually not possible to have a pegged, trustless stablecoin without compromising the composition of the collateral that is behind it. And so what the through line is, and Stefan, he's the CEO of Reflexor, so he's very incentivized to promote RAI as a product, so there's his bias there, but I still agree with him, is he's saying that perhaps the pegging is the problem. Perhaps we want a stablecoin that's unpegged, because then we can have Ether as collateral, Ether being the only collateral behind RAI, and then we have our trustless stablecoin. Maybe we just lose the peg and we keep the stability, and that's what RAI is. But whatever he's saying, he's saying that like, well, if you back DAI with centralized

• 1:11:01David Hoffman?

  stablecoins, that's a problem, because you're backing it with centralized stablecoins. If you back it with Just ETH, well, then you lose the peg anyways, because DAI-

• 1:11:08Ryan Sean Adams?

  That's what RAI is doing.

• 1:11:09David Hoffman?

  That's what RAI is doing, yeah, yeah.

• 1:11:10Ryan Sean Adams?

  Backed by ETH, we're okay with losing the peg to the dollar, we can create our own unit of account here.

• 1:11:15David Hoffman?

  Yeah, and so the through line is, trustless stablecoins are hard, DAI has its problems and its, you know, solutions. It is still a great product, but if we really want to have the self-sovereign, trustless stablecoin that we've all wanted, maybe we gotta lose the peg to the dollar.

• 1:11:31Ryan Sean Adams?

  Well, it's funny too, because all the algorithmic stablecoins without collateral, without any collateral back, have failed.

• 1:11:38David Hoffman?

  Failed, blown up violently.

• 1:11:39Ryan Sean Adams?

  Like, all of them so far. They've all blown up, and they've blown up relatively quickly.

• 1:11:43David Hoffman?

  Yeah.

• 1:11:44Ryan Sean Adams?

  So, maybe there's no way to solve that problem too. There's so much experimentation that goes on in the stablecoin space, I'm really excited to see all of it. How about this one? MEV Negative Externalities Alert. This is from Robert Miller. This Polygon bot has been active since June 29th and has sent 2 million transactions failing almost all the time. These failures cost close to nothing, but they bloat the state, while the few successes pay for the failures many times over. This is MEV at work, but on Polygon, the transactions cost almost nothing.

• 1:12:21David Hoffman?

  Right.

• 1:12:22Ryan Sean Adams?

  So it's just MEV with no cost and a lot of upside, but there is cost to the public system. The public good that is Polygon in the form of state bloat. What's your take here?

• 1:12:33David Hoffman?

  Yeah, so there is a spectrum of scale and trade offs, right? And so Polygon has really optimized for a very, very scaled side of this, of the scaling spectrum. And that's why Polygon, transactions on Polygon are actually going to be like a lot cheaper than transactions on Arbitrum or Optimistic rollups. Transactions on Arbitrum and Optimistic rollups are going to cost like a number of pennies, up to 50 cents, maybe even up to a dollar. They will be an order of magnitude better than the Ethereum mainchain, but they're not going to be free and instant. They still will be instant. They will not be free like how they are on Polygon. Polygon has scaled differently. It's made some trade offs. It has even more scale than optimism in Arbitrum.

• 1:13:16David Hoffman?

  And then you can get even cheaper fees, but when you go that far down the, down the spectrum of scale, then you have externalities. And so because they have made transactions so incredibly cheap, it has been economically rational for this MEV bot to spam the Polygon blockchain with random transactions, hoping one of them hits. And in the certain scenarios, there's probably some sort of strategy that this MEV bot is trying to, trying to do, make trades on QuickSwap or something. I don't really know. It's not the point. The point is, is that it's economically rational for this bots to spam transactions over and over and over again, trying to like catch a fish. And the, every time it catches a fish, it just makes it all of this spam worth it.

• 1:13:58David Hoffman?

  And this ends up just adding more and more state into the Polygon blockchain, which means that all the Polygon validators are downloading every single transaction that this bot is doing, downloading that into the state that they are downloading. And then the whole network has to absorb all of these spam transactions because the transactions are so cheap. And so this is, the MEV is causing negative externalities, which is what Robert started this tweet off, is adding bloat because of how cheap transactions are. And remember, you pay transaction fees because we need to meter resources when we use these public systems. And so the, while our Polygon is so awesome because it is so incredibly scaled, it has its own network costs to this, which we are starting to see.

• 1:14:43Ryan Sean Adams?

  Yeah, yeah, state is definitely a negative externality. It's a public good that no one pays for in these chains right now. And that is the issue because it because it can lead to that centralization. Now, Binance chain just like removes all the all the guards on this and like their their state has swollen. You know, so much.

• 1:15:03David Hoffman?

  Above a terabyte now.

• 1:15:04Ryan Sean Adams?

  Yeah, it's very difficult to to run Binance validates, but that's of course, okay, is because there's only like 10 or 11 of them and they're all appointed by Binance. Polygon has the same issues. They have some more guardrails in place for state. And so they're trying, they're limiting it in other ways. But the interesting point, I think, is that whether you're a side chain, whether you're the main chain Ethereum, or whether you're a layer two like optimism or Arbitrum, you're all going to have this state blow problem and it's going to be a centralizing factor. Now, I'm waiting to see the first kind of iterations and changes to this. Vitalik, I don't know if you caught the post recently that Vitalik wrote, it might have been Ethereum Research,

• 1:15:46Ryan Sean Adams?

  where he proposes a few solutions to Ethereum mainnet state blow, right? One of them is this idea of like, it's not quite state rent, but it's state expiry, where like state expires after a certain point in time. Archive nodes like distant archive nodes can still keep it, but if you want to reactivate that state, you have to send a special transaction to reactivate that state. So that's like one idea that's floating out there. You know, there there are some other ideas as well that that some of these chains have. I know when we had Optima, when we had Arbitrum on, they talked about, you know, some of their concepts that they were pursuing in the future.

• 1:16:27Ryan Sean Adams?

  But the key thing is state can't be free in these chains. And if it is free, it'll just blow and become centralized. So somebody has to pay for this in the future. Anyway, all these chains will have to work through it. I think Polygon will work through it as well. I think it'll be okay, but it's just a hidden cost. Somebody tweeted at me the other day, David, there's like, yeah, I'd be bullish on DeFi and crypto as soon as gas fees go away. It's like. Okay, I wouldn't.

• 1:16:59David Hoffman?

  Gas fees will go away on L2s, but like you said, I wouldn't wait until, until becoming bullish at that point.

• 1:17:05Ryan Sean Adams?

  Yeah, no, but I also mean like you have, there has to be a cost to this stuff. It can't, these transactions can't be free.

• 1:17:13David Hoffman?

  We're just used to the whole like Facebook, you know, freemium model where we're like, oh yeah, we don't pay for our products. We just get, we just pay for them in other ways. Like you pay for them with your soul. Yeah. I just said, just for the people who are newer into this ecosystem and want to understand why this is so important. Think of state blow as literally, it's just, it's the size of the chain in like gigabyte terms. And these, and just think about a crypto economic system that is like 20 gigabytes versus 20 terabytes. If you are only 20 gigabytes, your literal footprint on the internet is smaller and you are more anti-fragile, more, more, you know, spreadable, more viral.

• 1:17:53Ryan Sean Adams?

  Anybody can run it.

• 1:17:54David Hoffman?

  And more decentralized, right? And so a smaller, more lightweight system, which, which is what Bitcoin, when small blocks and the small block wars and the block wars for Bitcoin, that was this fight. This was this fight is can we make our blockchain crypto economic system lightweight and easy to manage? And one of the big critiques of Ethereum is that we allowed our state blow to grow really, really quickly in the early days of Ethereum. Now we are trying to, to corral that. It's a big problem of crypto, but overall we like our systems to be smaller, lighter, easier to download, easier to sync. And that's, and the more state you have, the more state bloat you have, the harder it is to achieve those goals. So there's trade-offs, balances. There's your little learning lesson.

• 1:18:35Ryan Sean Adams?

  There we go. Let's talk about this last one. So this is Jacob. Whether it's MEV performance of Uniswap V3 or economic exploits, let's take a minute to recognize that a transparent financial system means that people all around the world with nothing more than an internet connection can openly examine flaws and collectively work to resolve. Transparency is the most under recognized property of decentralization. It is a basic requirement of decentralization. A non-transparent system can never Be decentralized and then he goes on every critic, every troll, every diehard anti-coiner makes the system stronger. Critics can criticize precisely because the base system is transparent.

• 1:19:18Ryan Sean Adams?

  Regulators can call crypto systemic risk because they can actually see how many stable coins exist on chain. Think about how incredible it is that less than 24 hours after an exploit, there are dozens of Twitter threads, postmortems and blog articles flush with data revealing the precise flaw. What does this look like in TradFi? A back page Bloomberg article two years after the event? Open public systems allow society to scale. They increase the speed and efficiency of information, coordination, collective learning and collective resolution. I'm just going to finish this, David. This idea of open decentralized finance is bigger than Bitcoin, Ethereum or Satoshi.

• 1:20:01Ryan Sean Adams?

  And if preserved, if we choose to value it above all else, we'll live far beyond any implementation of it. That's a great tweet thread.

• 1:20:10David Hoffman?

  That's a great tweet thread. Yeah, I don't even have too much to add. Jacob did just a great job summarizing this. Basically, systems that are inside out have all of their flaws exposed. And so sure, there are plenty of critiques about our industry. People critique our industry all the time. It's because it's transparent and they actually can find things to critique about. And that actually makes the system better because our flaws stick out like a sore thumb, forcing us to have to address them rather than sweep them under the rug. This is, this is the metaphor of, Andreas Antonopoulos made this metaphor of Bubble Boy versus like the sewer rat, where like crypto is the sewer rat, right? Like it just eats diseases for breakfast

• 1:20:52David Hoffman?

  because it's become immune to them. Whereas legacy finance is the bubble boy. Like any one little ounce of bacteria that like gets inside the bubble causes the whole system to just like die. Right? And so because we are an inside out industry, we wear all of our flaws on our surface. Everyone knows what our flaws are and we know how to answer to them and correct them and route around them. And this is why our industry is anti-fragile and why our. Industry is going to eat all the the legacy industries. Nice.

• 1:21:19Ryan Sean Adams?

  Yep, I agree. Even like so I've been part of some conversations about MEV and like criticisms of minor extractable minimum extractable value on

• 1:21:28David Hoffman?

  Maximum extractable.

• 1:21:29Ryan Sean Adams?

  Maximum, excuse me, extractable value on Ethereum lately. And what what the critics fail to recognize is that in traditional systems, right? They're extracting the value, but you just can't see it.

• 1:21:41David Hoffman?

  Right.

• 1:21:42Ryan Sean Adams?

  So there's nothing to criticize. There's no data points here. Like, how do we know whether, you know, GameStop had a conversation with Citadel to halt trading or treat one group different than another? Same with Bitcoin, by the way. Like so much activity, MEV activity in Bitcoin doesn't happen on Bitcoin. Because you can't trade on Bitcoin. You can't take out a loan on Bitcoin. What can you do on Bitcoin? You can move it from one address to another.

• 1:22:07David Hoffman?

  Yep.

• 1:22:08Ryan Sean Adams?

  All of this activity happens inside of crypto banks. Can they be front running you? Like, how about BitMEX, right? I mean, like, the black box derivatives model. It's so much better when all of this is upfront, in the open, completely transparent. Even when we have to deal with MEV problems, at least we see what we're dealing with. That is something the critics don't take into account.

• 1:22:31David Hoffman?

  Well, that transparency with MEV really creates a completely different like context for what this industry is trying to do with MEV. Like you, like you said, the the concept or the same patterns of MEV exist in the legacy financial world. There are people with like fiber optics cables that are measured to exactly the same as others because people want to get their trades in faster. There's order routing, routing, like deal flow. MEV in the in the legacy world is is massive. And it's just got captured because no one really tried to collaboratively solve the problem. In the crypto world, we all see MEV and the problem that it creates. And now we are trying to collaboratively collaboratively solve the problem rather than just like raising the the white flag and saying, you know what?

• 1:23:16David Hoffman?

  Like, we're just going to let some company win and capture all the value here and we'll just give up. That's what happened. We are actually, because it's transparent, we are actually trying to solve this problem and make a more equitable financial system because you can view it.

• 1:23:28Ryan Sean Adams?

  Your only choice in the legacy world, even the crypto bank world, is depend on regulators. That's it. That's how the existing system solves it. If we catch you doing something that's against the law, if we catch you, then you have the threat of the long arm of the law.

• 1:23:45David Hoffman?

  Yeah. Oh, you extracted $100 million from your clients and you did it in a way that's against regulations? Here's a $5 million fine.

• 1:23:53Ryan Sean Adams?

  God, how often do bankers go to jail? Remember 2008? One guy went to jail.

• 1:23:59David Hoffman?

  One? Oh, wow. Good, good. I'm glad we got him. I'm glad we got him.

• 1:24:02Ryan Sean Adams?

  Yeah, there was a scapegoat.

• 1:24:06Ryan Sean Adams?

  All right, that's it. David, let me ask you, what are you excited about this week, man?

• 1:24:10David Hoffman?

  I'm gonna invoke my Anthony Sazano here, where he tweeted out how the stars are aligning for Ethereum. And so I'm gonna play off of what Anthony was saying this week. We got EIP 10559 on August 4th. We got the merge coming in Q4, Q1 2022. Got Layer 2 is coming in July. It's July now, by the way. We got Arbitrum and Optimism rolling out probably this month. The rebirth or renaissance of NFTs. We got institutional DeFi now. We got banks staking Ether. Like, I don't know what more bullish fundamentals I can ask for, but I feel like I'm getting all of them.

• 1:24:52David Hoffman?

  I feel like I'm getting every single bullish fundamental I've ever asked for in my time in Ethereum. And it's all seems to be on the horizon. That's what I'm excited about. It seems to be finally here.

• 1:25:02Ryan Sean Adams?

  Yeah, dude, we definitely have a lot. And what I'm excited about is I'm just gonna riff on the EIP 1559, because that's something we've been... I remember when you wrote an article on Bankless 2019 called "The Missing Puzzle Piece."

• 1:25:17David Hoffman?

  "The Missing Puzzle Piece to Ethereum's Monetary Policy."

• 1:25:20Ryan Sean Adams?

  And it talks about EIP 1559. This is proof of work issuance. I'm gonna display this, because like...

• 1:25:26David Hoffman?

  Ether's proof of work.

• 1:25:27Ryan Sean Adams?

  I spent some time... Yeah, sorry. This is Ether's proof of work issuance. I spent some time creating this. And this is annual percentage on the left axis. Started at 20% annual issuance percentage. So block time increases, issuance reduction 1, issuance reduction 2, and now here we are here, which is... August 2021, EIP 1559 goes down. Ether is going to start to be burnt. Don't know how much. That depends on block space demand at any given time, but it's going to go down. It's going to be burnt until the merge. And then guess what? Falls off a cliff. All proof of work issuance ends.

• 1:26:07Ryan Sean Adams?

  We're at about 4.1, 4.2% or so annual issuance in proof of work. There's also proof of stake issuance on top of that. But all of that comes to an end. And then we get into this new era, David, this new issuance policy, monetary policy era, post EIP 1559, post the merge, which is kind of the ultrasound money era, basically, where we're going to be like less than 1% issuance, likely negative issuance for Ether for the rest of the platform's lifecycle, right? That's the plan right now. So I'm excited about that because EIP 1559 is the first step to ultrasound money.

• 1:26:49Ryan Sean Adams?

  It's the merge later, probably early 2022. But this first step is absolutely a monumental event in Ethereum's issuance policy, monetary policy history. It's great for ETH asset.

• 1:27:03David Hoffman?

  Totally. This, this chart of Ether's issuance or Ether's monetary policy is a favorite chart of Bitcoiners to like FUD Ether as money or Ethereum's monetary policy because they'll show you. They, they show you this chart and be like, look, look at how irregular this chart is. It's jagged. It's not stable. Who knows where it's going to go next? But if you, if you look at that chart, it tells you a very, very solid trend of just A, down and to the right and also stabilizing over time. It was chaotic in the first, in the first two years of Ethereum. I will give you that. In 2019 onwards, it has been very stable and it's now going into the final phases of Ethereum's monetary policy where we just don't have to touch it forever.

• 1:27:48David Hoffman?

  Or maybe, maybe have like.

• 1:27:50Ryan Sean Adams?

  This is not, it's just not even that hard to understand this, this issuance policy. There's been like two issuance reductions, right? The, the. The places where it's gone down and risen back up have been because of a difficulty bomb that's been embedded in the in the code to force Ethereum to upgrade to get to proof of stake. Hard fork. When that difficulty bomb is taken away, then issuance goes back up temporarily for a period of time, but it's always down.

• 1:28:15David Hoffman?

  It's always down. And it's also stabilizing over time, which is the really the important thing. It is becoming exactly what Bitcoin you're saying, or Bitcoin Maxies, sorry, excuse me. Bitcoin Maxies say that Ether's monetary policy.

• 1:28:27Ryan Sean Adams?

  They said it. They said it's like the Fed.

• 1:28:29David Hoffman?

  Right. It's like, which is fucking ridiculous. Excuse me.

• 1:28:33David Hoffman?

  But it's becoming more dependable, more stable over time, and importantly, extremely low. And so like this, this chart is again, historically a favorite chart by Bitcoin Maxies to fund Ethereum. And I think it's about to flip into Ether peoples, Ether Maxies, whatever, our favorite chart to illustrate the power of Ethereum's monetary policy. Look how low it is and look how stable it is. It's about to become a bullish ETH monetary policy chart, not a bearish one.

• 1:29:01Ryan Sean Adams?

  Minimum necessary issuance. All right, man. We promised everyone the meme of the week. Let's get to the meme of the week. What is it? Oh, my gosh. This is guy's name.

• 1:29:09David Hoffman?

  Harold, Harold, good old Harold. Yeah, a meme favorite. And Harold's drinking a cup of coffee, looking at his laptop, and he says, I don't want a nine to five job. No one in the crypto world wants a nine to five job. We want to work in crypto. So Ryan, take us to the next panel.

• 1:29:24Ryan Sean Adams?

  Oh, there's the next panel. There you go.

• 1:29:26David Hoffman?

  Now, now I'm in crypto. Now I work 24/7.

• 1:29:31David Hoffman?

  And Ryan, you and I were talking before the show about like how we like resonate with this meme a little bit too much.

• 1:29:37Ryan Sean Adams?

  Never worked so much in my life.

• 1:29:38David Hoffman?

  I could never imagine myself going back to like a nine to five, like show up, show up at nine, close the clock out at five type job anymore. I don't know how I would do it. But then also I realized like, oh yeah, now I just like. I'm not really ever turned off when it comes to working.

• 1:29:54Ryan Sean Adams?

  That is a downside, right? Not ever turned off, but like I also, when I am working, don't feel like I'm working.

• 1:29:59David Hoffman?

  Exactly.

• 1:30:00Ryan Sean Adams?

  As much. I mean, there's some things which just feel like work, but like, so it's a double edged sword here too, but oh my God, I can relate. Like too much time on crypto.

• 1:30:09David Hoffman?

  Markets don't turn off. Crypto Twitter doesn't turn off. Crypto is a, is a global phenomenon. So announcements go out at two in the morning, whether, whether you were awake for them or not. And so like the overall working in the crypto industry, the, the lines are definitely blurred between like, what is

• 1:30:24Ryan Sean Adams?

  Work and play.

• 1:30:24David Hoffman?

  Work and play. Yeah. Which is pros and cons. Like sometimes you just don't want to have to be working, but also it's not that bad. Also, it's just not that bad.

• 1:30:34Ryan Sean Adams?

  Yeah, that's right. You could, you could definitely set your own schedule. I consume as much or as little as you want. All right, guys. This has been the weekly roll up. As always, none of this was financial advice. Bitcoin and ETH are risky. So is DeFi. You can lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

• 1:30:58David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast and community as a bankless premium subscriber to get the most out of your bankless experience. You'll get access to our market analysis, our alpha leaks and exclusive content, and even the bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the bankless community is where you want to be. Click the link in the description to become a bankless premium subscriber today.

• 1:31:34David Hoffman?

  Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, ask me anythings and weekly rollups where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the bankless nation.