ROLLUP: ETH Staking Withdrawals | Shapella Upgrade | Arbitrum Governance Controversy

Bankless Weekly Rollup 2nd Week of April 2023 ------ 🚀 TOKEN HUB 🚀 https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken 🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap 👻 PHANTOM | FRIENDLY MULTICHAIN WALLET https://bankless.cc/phantom-waitlist 🦊METAMASK LEARN | HELPFUL WEB3 RESOURCE https://bankless.cc/MetaMask ------ Topics Covered 0:00 Intro 2:45 CryptoTaxCalculator https://bit.ly/3me8nfF 4:45 MARKETS 13:20 Layer 2 Adoption https://l2beat.com/scaling/tvl 16:00 a16z Report https://a16zcrypto.com/content/article/state-of-crypto-report-2023/ 18:40 Trusting Crypto https://www.pewresearch.org/fact-tank/2023/04/10/majority-of-americans-arent-confident-in-the-safety-and-reliability-of-cryptocurrency/ 24:00 Shapella Withdrawals https://twitter.com/etherscan/status/1646281789735047168 28:40 Danny Ryan https://twitter.com/dannyryan/status/1641679529188925442 29:50 Nail-Biter 35:25 ETH Withdrawal Stats https://app.metrika.co/ethereum/dashboard/withdrawals-overview 41:25 Arbitrum Foundation https://twitter.com/arbitrum/status/1642653013062868992 48:30 Eric Wall Take https://twitter.com/ercwl/status/1644819508798865408 52:00 Euler Redemptions https://forum.euler.finance/t/plan-for-redemption-of-euler-funds-v2/947 53:55 Bitcoin Lightspark https://twitter.com/davidmarcus/status/1645849537691676672 56:10 FTX Recovery https://twitter.com/WatcherGuru/status/1646207148244844560 59:45 Japan Crypto https://www.coindesk.com/policy/2023/04/06/japan-releases-web3-white-paper-to-promote-industry-growth-in-the-country/ 1:03:20 Winklevoss Gemini https://archive.ph/iCDGW 1:03:15 🚀 TOKEN HUB 🚀 https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 1:06:00 MetaMask Buy https://twitter.com/MetaMask/status/1645446587131346946 1:06:30 Etherscan Token Approval https://twitter.com/tayvano_/status/1644977491612930048 1:10:50 Questions from the Nation https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 1:18:05 Regulation https://twitter.com/financenewsguy/status/1646116774880989184 1:23:30 What David’s Bullish On https://twitter.com/sassal0x/status/1644543263670685698 1:25:25 What Ryan’s Bullish On MEME of the Week https://cdn.discordapp.com/attachments/519280913289445376/1096072369128345650/unnamed_81.png ---- 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://www.bankless.com/disclosures

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

• 0:00David Hoffman?

  The Shapella hard fork went live last night. People are withdrawing their ether. Stakers are withdrawing their ether.

• 0:09Ryan Sean Adams?

  Bankless Nation, it is the second week of April. I'm back and we're ready for what, David?

• 0:14David Hoffman?

  The Bankless Friday Weekly Roll-Up, where we cover the entire weekly news and crypto, which is always an ambitious endeavor, yet we persevere nonetheless into the frontier on the Friday Bankless Roll-Up with coffee. It's always going to be a little bit late for me while I'm here in Montenegro for coffee. Yeah, Ryan, you got coffee?

• 0:31Ryan Sean Adams?

  I got coffee. Look at it. Right here. Right here. I got my coffee. Beautiful. Do you know, did people, since I was out last week on vacation and drinking myself, did people think that the April 1st, April Fools thing was like legit?

• 0:45David Hoffman?

  Yeah, I had to.

• 0:46Ryan Sean Adams?

  We had, we were not going to do this podcast any longer. That there was some kind of breakup going on?

• 0:52David Hoffman?

  Saturday, April 1st, we released on the Bankless Newsletter that we broke up. Tuesday, the State of the Nation.

• 0:58Ryan Sean Adams?

  Notice the date, guys. April 1st.

• 1:00David Hoffman?

  April 1st, real important date. Tuesday on the State of the Nation, I was solo. Friday, with the Weekly Roll-Up with Anthony. Also, you weren't there. But in the, in the start of the Friday Weekly Roll-Up, the first thing that we, the first link I pulled up was this post about how we broke up.

• 1:18David Hoffman?

  Just to real, make it real obvious that no, Ryan is actually on vacation. Because Ryan actually takes vacations at times. Go figure.

• 1:25Ryan Sean Adams?

  No breakup here. And, you know, but has David been replaced by an AI? Have I been an AI the entire time? We may never know. Who knows? All right. Topics of the week. David, we just did a hard fork.

• 1:38David Hoffman?

  We just had for, it's been hard fork week.

• 1:40Ryan Sean Adams?

  It's hard fork week. Shapella, that's what the upgrade is called. And ETH is over 2K? For the first time since when? We're going to talk about that. What else we got?

• 1:49David Hoffman?

  The Arbitrum DAO drama continues, which Ryan completely missed all of this.

• 1:55Ryan Sean Adams?

  Yeah, I'm glad, actually.

• 1:56David Hoffman?

  The Bankless Nation is going to hear Ryan get downloaded about the Arbitrum drama in real time. Also, the MEV drama as well. A new meta in MEV happened last week, and that drama has continued. The Exploiter, which again semantics, don't know if it called it Exploiter or not, had their stables frozen by Tether. So we're going to talk about that. And then there's a new product launch. Ryan, you want to take this one?

• 2:21Ryan Sean Adams?

  Dude, I'm so excited about this. It's called the Token Hub. So you know, we're looking at tokens. And we've got some token analysts that are telling us what's bullish, what's bearish, and what's neutral. It's a new product for the Bankless Nation, for Bankless citizens. We're releasing that today, I believe. It's released right now. So we'll talk about that.

• 2:39David Hoffman?

  Yes, I do for the listener. It's already out.

• 2:41Ryan Sean Adams?

  It's already out. David, we also, you know, it's the time of the year around April. I gotta remind you. How are you doing on your taxes, man? How's that going for you?

• 2:51David Hoffman?

  Real good because of their crypto tax calculator, Ryan.

• 2:54Ryan Sean Adams?

  You use the crypto tax calculator, don't you?

• 2:57David Hoffman?

  In some of my wallets, but I pass all the information over to the human accountant.

• 3:02Ryan Sean Adams?

  Do you know who the human accountant uses?

• 3:04David Hoffman?

  All the new wallets, because it's actually a nice way to like practice doing taxes with, because like doing it yourself when you have a little robot buddy. So that's what I'm using it for.

• 3:13Ryan Sean Adams?

  I'm just saying, I know your accountant and I know what she uses. And I know she uses crypto tax calculator as well. Because it's a badass tool. Yeah, it's totally, that's totally what she uses.

• 3:23David Hoffman?

  No way.

• 3:24Ryan Sean Adams?

  Yeah. And it's a fantastic tool, guys.

• 3:26David Hoffman?

  I'm just paying my accountant to use a crypto tax calculator?

• 3:28Ryan Sean Adams?

  No, there's more than that. Come on. But it's a time saver for everyone. Like whether you're a trader, whether you're a DeFi gen, whether you're an accountant, and you're like looking at your, all of your wallets and all of your NFTs that you purchased and all of this activity, and you're getting the hot sweats because you don't know like how to make, make sense of any of this. You just plug those addresses into cryptotaxcalculator.io and it sorts it out. They say they're built by D gens for D gens. And I really believe that because they picked up some transactions that most other tax calculator crypto applications don't and have not. So I made the switch to them this year and it's been fantastic.

• 4:11Ryan Sean Adams?

  Also, David, there's a little bit of a bonus here. If you type in bank30, what are you getting? You getting some kind of a discount?

• 4:18David Hoffman?

  Yeah. And that magic number is 30% if you don't figure that one out. Bank 30 for 30%. If you are a Bankless Nation citizen, you're a premium subscriber to Bankless, there is a different code for 40% off in the Bankless Nation Discord. So make sure if you're a premium subscriber to go in the Discord to go get that extra 10%.

• 4:38Ryan Sean Adams?

  Yeah, because you're never going to guess what the code is without going to the

• 4:41David Hoffman?

  It's not bank 40.

• 4:43Ryan Sean Adams?

  It's not.

• 4:43David Hoffman?

  It's not bank 40.

• 4:45Ryan Sean Adams?

  All right, David, let's get to the markets today, man. This is a good day for markets. I'm feeling pretty good. This is my, the happiest markets report we've had all of this year, I think, at least for me it is.

• 4:55David Hoffman?

  It's a good week.

• 4:56Ryan Sean Adams?

  Okay, it's a good week. So what are we looking at for Bitcoin?

• 4:59David Hoffman?

  Bitcoin has crossed $30,000. We are at $30,500. Bitcoin is up 8% on the week. Congrats Bitcoin crossing the $30,000 mark. I love to see it. Well done.

• 5:11Ryan Sean Adams?

  That's huge.

• 5:12David Hoffman?

  So, okay, this, not only is this $30,000, which is a nice round number, and so therefore it's significant. We are also, what is, what's not a meme, is this $30,000 has now fully erased the three arrows capital liquidation. So when we broke above 24-ish thousand dollars, we erased the FTX liquidation. Now that we are at above $30,000, we have completely erased the three arrows capital liquidation. And so that means there's only one big step left.

• 5:43Ryan Sean Adams?

  And by that you mean, because I'm looking on, I'm a charter now, I'm looking on the Kraken charts. Kraken Pro, by the way, thanks for, thanks for sponsoring this and thanks for putting the charts out that you've, you've put in. It's fantastic interface. You're, you're talking about the last time Bitcoin actually hit the 30,000, actually dipped below 30,000 was when?

• 6:03David Hoffman?

  May? Yes, if you want to zoom into that, so we can blow that up in the, oh, look at that. Look at, oh, that just happened so fast. Yeah, so last May was the last time Bitcoin was at $30,000. And then we had the three hours capital liquidation that broke down below $30,000.

• 6:20Ryan Sean Adams?

  That's what you mean. That's what this, this huge red candle down was in like June, toward the end of June and that destroyed Bitcoin. We haven't, now you're saying we've recovered from that.

• 6:31David Hoffman?

  Yes.

• 6:31Ryan Sean Adams?

  We're back to 30,000.

• 6:32David Hoffman?

  Back to 30,000, yes. So

• 6:34Ryan Sean Adams?

  But there's still some work to do.

• 6:36David Hoffman?

  We're above FTX, we're above three hours capital. The next step is to get above $40,000, which would get us above Terra Luna. And that would be the last of the big contagion events that really spawned this whole bull market. I'm going to say it's going to be really hard to get to $40,000. That is

• 6:53Ryan Sean Adams?

  Yes.

• 6:53David Hoffman?

  That's pretty hard. But that is the next milestone to recover from.

• 6:58Ryan Sean Adams?

  Don't you think it requires new buyers? It requires something a little bit different than what this market has built out so far? Are ordinals gonna make it to 40,000, you think?

• 7:08David Hoffman?

  Uh, ordinals are not gonna do it.

• 7:10Ryan Sean Adams?

  How about the Bitcoin signal?

• 7:12David Hoffman?

  Could we step into $40,000 without a mass influx of new buyers? It gets, I mean, the higher, the higher we go, the harder that that gets. $40,000 is a big ask.

• 7:23Ryan Sean Adams?

  Bology's Bit Signal, is that gonna get us there?

• 7:25David Hoffman?

  Bology's Bit Signal is not gonna get us there. I feel pretty confident about that one. Sorry, Bology.

• 7:29Ryan Sean Adams?

  David's calling it. How about ETH? What is that looking like on the week?

• 7:32David Hoffman?

  Ether, $2,000, $2,000 US American dollars. So it started the week at the low, low price of $1,850. We are currently just above $2,000. I keep on checking it. Sometimes we're above it, sometimes we're below it. I think we hit $2,008 today. I've seen it dip down below back to 1,997 or something, but yeah, above, above $2,002 right now.

• 7:58Ryan Sean Adams?

  Do you know what? I'm ready, I'm ready to say something here is, you remember, I was thinking that there was not a huge probability, but I'm gonna call it 60% probability that we would dip back into triple-digit ETH. And that has not happened.

• 8:14David Hoffman?

  No, it hasn't.

• 8:15Ryan Sean Adams?

  And I had some buyers set up for that.

• 8:17David Hoffman?

  The entire time that you've said that.

• 8:18Ryan Sean Adams?

  And I've been a patient little investor. I've been waiting for the triple digits again. I thought that we would hit some sort of, you know, like, like post-merge, just like the bear market hitting us FTX. We'd have some rallies, then we'd go back into this chop, and the chop would take us back to, to triple digits. It hasn't yet. And at 2K, I'm almost, I'm feeling pretty ready to capitulate on that. I don't know if we're gonna see triple digits again.

• 8:46David Hoffman?

  Hang on, let me, let me put on my bear cap.

• 8:49Ryan Sean Adams?

  Okay.

• 8:49David Hoffman?

  Because, okay.

• 8:50Ryan Sean Adams?

  Wait, we switching spots now?

• 8:51David Hoffman?

  Yeah, we're switching spots. Can you put, can you pinch out a little bit? Yeah, okay. So, uh, too far. Go back a little bit. So go back to the three O's capital liquidation. Okay, so Ether was at two, Bitcoin, it's just crazy how these round numbers happen. Bitcoin was at $30,000, then three O's capital liquidated Ether. Ether was at $2,000, then three O's capital liquidated it all the way down to like the 18, the 18, excuse me, $870 mark, which was the low for Ether. That, and so interestingly, Ether hit its low for the cycle at 870-ish dollars the last May, the three O's capital liquidation. It did not hit a new low with FTX, even though Bitcoin did.

• 9:29Ryan Sean Adams?

  Well, that was actually, it was a little later than May. Uh, it was in June.

• 9:33David Hoffman?

  It was in June, yes.

• 9:33Ryan Sean Adams?

  June 17th.

• 9:34David Hoffman?

  Right. Uh, and so the three O's capital, before three O's capital got liquidated, we were at where we are now, at $2,000. Uh, we resurged after three O's capital. Ether went from 2,000 down to 870, back up to 2,000 again, pretty quickly in like August, I'd say. And then it, and then that, and so it hit that it was started there, fell down to 870, back up to 2,000, then it retouched something like the high 900s in the FTX liquidation.

• 10:04Ryan Sean Adams?

  Yeah, we didn't get, I, oh, no, we didn't break that 1,000. Triple digits again, yeah.

• 10:08David Hoffman?

  And then, and so they hit 1,000-ish, and then we're back up to 2,000. We are not above the three O's capital liquidation point. We are at the three O's capital liquidation point. This is my bear cap. We have not broken through. We are hanging there. And so while you are perhaps ready to capitulate, there's plenty of people, and then I think plenty of reasonable takes that this is, we're just going to touch this, and this was a local top, and then we have another flat year between 2,000 and $1,000 for 2024, or the rest of 2023. Uh, that is the bear case. That is a bear take.

• 10:44Ryan Sean Adams?

  Oh, I, no, I still think that that's the, a likely case for sure. I'm just getting ready to capitulate on us. I know, I'm just, well, yes, but also I'm ready to capitulate on us going back below 1,000.

• 10:59David Hoffman?

  Okay.

• 10:59Ryan Sean Adams?

  That's like, cause that's a 50% haircut from here.

• 11:02David Hoffman?

  Yeah, yeah, yeah.

• 11:02Ryan Sean Adams?

  And do, how do you think that happens?

• 11:05David Hoffman?

  Yeah, I think that that happens. Uh, the case for that is the case that E-Tie gave us on the weekly rollup, which I don't know if you've caught up on.

• 11:13Ryan Sean Adams?

  Recession?

• 11:14David Hoffman?

  Recession, yes.

• 11:15Ryan Sean Adams?

  Stagflation recession.

• 11:16David Hoffman?

  His take is that this depreciation from $4,800 down to $1,000 for Ether and Bitcoin from like $67,000 down to $20,000, he didn't call that a bear market, he called that a rerating. He's saying the bear market is actually ahead of us and this is an economic stock market, bear market. Everything is getting rerated and that was 2022 and E-Tie is saying there's still a case to be made for an actual economic equities, S and P, NASDAQ, bear market and that is potentially ahead of us. And so the case to why Ether and Bitcoin would have a 50% haircut over the next year plus

• 11:55David Hoffman?

  is that this is just traders and this is a bounce, but we still have an actual bear market ahead of us and that crypto assets are not going to be fun to hold inside of an actual bear market.

• 12:08Ryan Sean Adams?

  I could see that. I mean, I think the real question there is you have two opposing forces of like people who think crypto is a risk asset and risk on assets will get, you know, destroyed in that type of environment and then crypto, people who think crypto is a monetary hedge. And I think monetary hedge assets could actually do fairly well in that environment, right? If the government, I mean, how are we going to tame inflation? How are we going to combat recession? Interest rates have to go up, like more money printing has to happen. And so these are some opposing forces. We'll have to see which one wins out. Well, maybe there's a chance for my triple digit ETH then. How about this ETH Bitcoin ratio? What's the ratio doing this week?

• 12:45David Hoffman?

  Down on the week, down 1%. We are at point 0.65. Ether since the Shapella upgrade has rebounded significantly, but overall has just, it's been down week and then basically bounced back up to zero for the, flat on the week.

• 13:01Ryan Sean Adams?

  There you go. And total crypto market cap looking pretty, pretty nice today.

• 13:05David Hoffman?

  Yeah, $1.3 trillion. Nice to see that three number there. It's been, I don't think we've seen that three number yet since breaking down below a trillion dollars. So 1.3 trillion, not, not bad.

• 13:16Ryan Sean Adams?

  Yeah. All right. Let's talk about some of the signals from the market. So one is looking at layer twos. We've had some new layer two entrance, ZK Sync Era and Polygon's ZK EVM enter. Where are they placed on the board? Well, here they are. ZK Sync Era, number four on l2beat.com board. This is ranked by total value locked inside of the layer two. And ZK Sync coming in at number four with $232 million locked inside of the first, I think they call themselves the first, ZK EVM to market, which is pretty good. Of course, still dwarfed by Arbitrum, which has a significantly-

• 13:57David Hoffman?

  Arbitrum is an absolute gargantuan, dude.

• 13:59Ryan Sean Adams?

  $6.4 billion versus 232. But ZK Sync Era has just been out for a few weeks. Is also looking for Polygon, mentioned them. They are down here at number 17, 3.72 million in total locked value.

• 14:15David Hoffman?

  Interesting discrepancy.

• 14:16Ryan Sean Adams?

  Yeah. Yeah, slower start there in terms of total assets locked. But, you know, with Polygon's biz dev team and all of the activity and everything that's going on and that just the absolute massive size of their proof of stake chain, like that's going to go up over time. But still cool to see these new layer twos on the, on the charts here.

• 14:36David Hoffman?

  I mean, I think the real big story here is Arbitrum won at $6.4 billion. The total locked value of all layer twos is close to crossing $10 billion. We're at $9.7 billion. Close to crossing $10 billion in layer twos. Arbitrum won, clocking in at $6.4 billion of that.

• 14:55Ryan Sean Adams?

  David, do you remember when we, this is the beginnings of the Bankless Podcast, when we were so excited about DeFi Pulse? That was kind of the board. And we hit 10 billion locked in DeFi?

• 15:06David Hoffman?

  The big day, the biggest moment of celebration was 1 billion locked in DeFi.

• 15:11Ryan Sean Adams?

  Right. Oh, my God. There's 1 billion locked in DeFi. I remember that.

• 15:15David Hoffman?

  Yeah, it's when the million turned, it's when the M turned into a B and all the ETH people just had an absolute blast on Twitter that day.

• 15:23Ryan Sean Adams?

  Well, this was, was this back in like 2020?

• 15:26David Hoffman?

  This was late 2019, early 2020.

• 15:30Ryan Sean Adams?

  Late 2019, early 2020.

• 15:31David Hoffman?

  This was before DeFi summer.

• 15:32Ryan Sean Adams?

  This was before anyone thought DeFi was a thing.

• 15:35David Hoffman?

  Right.

• 15:36Ryan Sean Adams?

  Like we barely had the term. It was such a niche and we hit a billion for the first time. Wow. Incredible. Now we've got like almost 10 times that. On layer twos. Dude, we're old, man. We are old. Crypto, we're gonna have to rebrand this to crypto grandpas. Like, that's what we're becoming here. Do you remember that day on Twitter? Yeah, I can barely remember. Was it 10 billion or one? A16Z also put out their annual report, which I always enjoy. It's a 2023 state of crypto report. David, what are some of the takeaways from you in this report?

• 16:10David Hoffman?

  I remember seeing this report and reports like it back in the 2018 to 2020 era. And it was one of like, one of these things that these, what these reports did for me was like, help me stay convicted during the bear market. I think the biggest takeaway is developers are so sticky. Developers don't leave. They go up in bull markets and then they stay flat in bear markets. Actually, I do see a little bit downwards trend, but we'll ignore that.

• 16:40Ryan Sean Adams?

  I mean, it's pretty much flat, though. Like, I think the point is some leave, but like, look, you're still at the, you know, late 2021 mark in terms of active developers building on crypto. So it's just gone down a smidge, but like, it's hit sort of a, you know, a stable point. It's probably gonna go up in the, in the coming months.

• 17:00David Hoffman?

  Yeah, so since October, September of 2021, we have the same amount of developers. And this is really just how you grow utility, how you grow fundamentals. So I always like seeing the developer numbers. NFT volume, still good. Of course, it hit an absolute crazy high during the NFT mania. But NFT volume is like, not anywhere close to zero and starting to see like, much more organic signs of life. That one was very big. Let's see, layer twos, there was a section here on layer twos. And then also, there's a decent amount of focus on just the crypto perception in the outside world, which of course, isn't totally great.

• 17:44David Hoffman?

  But, and also talked about the different countries. US is losing its lead in Web 3. It should come as no shock to anyone here. We are scheduling right now with somebody from A16Z Crypto to come and walk us through this detailed report, so we will have more on that next week.

• 17:58Ryan Sean Adams?

  Yeah, that's really good. I mean, just to put some numbers around the active developers, 30K developers contributed to or built on crypto. That's 30,000, and that's a steady increase of 60% over the last three years. So, pretty impressive. And yeah, that point about the US leading, losing its lead on Web3, that was actually, like, that's killer to me. Between 2018 and 2022, the proportion of crypto developers based in the US versus the rest of the world fell 26%. And I think that is because US regulators are driving talent to other locations.

• 18:35David Hoffman?

  Literally anywhere else.

• 18:36Ryan Sean Adams?

  Yeah, I mean, I think, not good there. And you were just mentioning surveys, David. So, this is from the Pew Research Center. "Majority of Americans aren't confident in the safety and reliability of cryptocurrency." The quote here is, "Among the vast majority of Americans who say they have heard at least about cryptocurrency," that's 88%, so 88% of Americans have heard of cryptocurrency, "three-quarters say they are not confident in cryptocurrency." Yet, despite this poor standing, crypto still polled better than the US government. So, we got that going for us.

• 19:14David Hoffman?

  Oh, my God. That's a great way to follow that up. Okay. "Majority of Americans aren't confident in the safety and reliability of cryptocurrency. I am as much of a crypto bull as anyone in this industry. Can you really blame them?"

• 19:28Ryan Sean Adams?

  No.

• 19:28David Hoffman?

  Because when you are an outsider, and you don't know the difference between FTX and Coinbase, and neither did the insiders of this industry prior to FTX's blow up, by the way, you don't know the difference between Ethereum and Terra Luna. And again, neither did some of the crypto insiders of this industry either. And so, can you really blame them?

• 19:50Ryan Sean Adams?

  Yeah, I can't blame them, but that's why I think there's such a, you know, an opportunity here, just an arbitrage opportunity. Like, I was telling you on a couple of rollups ago, just, I own ETH and Bitcoin and I sleep very well at night, like in all market conditions. And, you know, I think people have invested in all sorts of other things. They don't understand what they've purchased. They bought at the tops due to FOMO, all sorts of other reasons why they don't have conviction in this asset class. And, no, I can't blame them. But I do think the antidote is us bringing more utility to the things that we are building and for us to educate so that people understand what they're actually buying and why.

• 20:29David Hoffman?

  It was a frequent conversation during the bull market where I would talk about, "Oh, I'm in crypto." And then people would ask me, like, "All right, so like, how much of your net worth in crypto?" And I'm like, "Oh, 100%." And they're like, "What?" How are you worried it's gonna... And then the inevitable question is like, "But what if it just goes to zero?" And I just, I feel like a dagger going through my heart, because I'm not invested in Terra Luna, I'm invested in Ether. Ether's not going to zero. And they think that it could go to zero. And that is that information asymmetry that just...

• 21:01Ryan Sean Adams?

  It sounds the same, because they've heard somebody who's shilling Hax or shilling Luna or something, and they say the exact same words that you say. You know, "Luna's not going to zero. Hax ain't going to zero."

• 21:11David Hoffman?

  It's going to the moon.

• 21:12Ryan Sean Adams?

  And they can't tell the difference. They don't know why. They don't have that conviction. Yeah, the conviction, it takes time. So, we have to just be patient. David, what do we have coming up next?

• 21:21David Hoffman?

  Coming up next, we got to talk about Ethereum withdrawals. The Shapella hard fork went live last night. People are withdrawing their Ether. Stakers are withdrawing their Ether. Kraken is withdrawing a ton of Ether. So is Coinbase as well. So we're going to talk about all about the Shapella upgrade. And then after that, I fill Ryan in with all of the drama around Arbitrum DAO. And then what else? FTX recovers $7.3 billion in assets and has started discussions about potentially restarting the exchange.

• 21:50Ryan Sean Adams?

  No.

• 21:51David Hoffman?

  Yep. All of that and more, as soon as we talk about some of these fantastic sponsors that make this show possible, especially Kraken, our preferred exchange for 2023. So if you are feeling unsure about your crypto exchange, perhaps... Go sign up with Kraken, who's been here for 12 years, and I can only assume will be here for as many years as you are, Bankless listener. Here we go. Kraken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Kraken puts an emphasis on security, transparency, and client support, which is why over 9 million clients have come to love Kraken's products. Whether you're a beginner or a pro, the Kraken UX is simple, intuitive, and frictionless, making the Kraken app a great place for all to get involved and learn about crypto. For those with experience,

• 22:35David Hoffman?

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• 23:20David Hoffman?

  If you haven't used Phantom before, you've been missing out. Phantom was one of the first wallets to pioneer Solana staking inside the wallet and will be offering similar staking features for Ethereum and Polygon. But that's just staking. Phantom is also the best home for your NFTs. Phantom has a complete set of features to optimize your NFT experience: pin your favorites, hide your uglies, burn the spam, and also manage your NFT sale listings from inside the wallet. Phantom is, of course, a multi-chain wallet, but it makes chain management easy, displaying your transactions in a human-readable format with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked. So get on the Phantom waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes,

• 24:03David Hoffman?

  or you can go to phantom.app waitlist to get access in late February.

• 24:08Ryan Sean Adams?

  The big Ethereum upgrade we've been waiting for. We can now withdraw ETH, any ETH that we have staked, for the first time. That just happened late Wednesday evening, at least on Eastern time. It's called Shapella. Withdrawals have been enabled. David, what are we looking at on screen? What just happened?

• 24:25David Hoffman?

  We are looking at one of the Ethereum clients doing their classic ASIC-y art. How do you pronounce it? ASIC-y art?

• 24:31Ryan Sean Adams?

  ASIC, yeah.

• 24:32David Hoffman?

  I don't know. Anyways, so when the merge happened and was successful, there was this cute little, actually, I think it's like a snail. What is this animal? No, it's an owl. It's an owl. Excuse me. Withdrawals are on, basically. And so withdrawals have been enabled. Why this is so significant, obviously, is that if you are an Ether staker, it's always been a one-way street, which is fundamentally unsustainable for blockchain security. The only reason why people have been going this way and staking their Ether in this one-way fashion is because they've been trusting that eventually, at some point in time, they will be able to withdraw, because that's what they are hoping would happen. It happened. So now the full loop is now available to do for anyone. And what do I mean by that?

• 25:17David Hoffman?

  Is that you can take your Ether that's in DeFi, or wherever, or on Coinbase, or in your self-custody wallet. You can go and stake it, and then you can withdraw it the same day. You could do that if you wanted to.

• 25:29Ryan Sean Adams?

  It sounds like a simple thing when you put it like that, though.

• 25:31David Hoffman?

  Right? We've never had this. It's always been like a one-way flow. And now it can go both ways. And you could deposit.

• 25:38Ryan Sean Adams?

  Why did they divide it up like this? Why did they divide it up like this?

• 25:42David Hoffman?

  Ah, right. Why did we not do, enable withdrawals on like the moment of the merge?

• 25:47Ryan Sean Adams?

  Yeah.

• 25:47David Hoffman?

  Because the merge was just optimized for the maximum amount of simplicity. Merge was a pretty big deal. We didn't want to overdo anything. And so because withdrawals was just one more step. Then they took it out so that they could just keep it maximally simple. And so the the proof of stake Ethereum, the beacon chain, plus the execution layer has been operating. When did when did we merge last September?

• 26:12Ryan Sean Adams?

  September, yeah.

• 26:13David Hoffman?

  Yeah. And so it's been humming along just fine. And so they now did the withdrawal hard fork. So now you can withdraw your ether.

• 26:21Ryan Sean Adams?

  So there were a lot of questions coming into this, like one question, which is very interesting, David, and we had the whole discussion with Justin Drake and Dan Baker and Anthony Sisano. We never once posed the question of like, so is this going to work, guys? I think the assumption was the hard fork would be successful just because the last whole bunch have been successful because the merge went so flawlessly. And this was lower complexity than that. And so we didn't even ask that question. Needless to say, it was successful, but there were some other questions going into this event, such as what would happen to ETH price? Would there be a run on all of the staked ETH? And everyone who had their ETH locked up and staking 18 million supply worth, which is how much, David?

• 27:06Ryan Sean Adams?

  18 million times the price of ETH. What does that equal?

• 27:08David Hoffman?

  That is a whopping $36 billion. So $36 billion is now able to be withdrawn and market sold and Ether's totally going to zero.

• 27:19David Hoffman?

  Except that's not what happened because we actually instead pumped to $100 post withdrawals. The Ether Bitcoin ratio, which I know I focus on a lot, went from like 0.063 to 0.066. And so the people that have claimed that this is bearish for Ether are slowly receding. Some are still holding fast that saying like the withdrawals happens over the selling pressure happens over the next five to seven days, which is actually technically true.

• 27:46Ryan Sean Adams?

  Because there's a queue, right?

• 27:48David Hoffman?

  There's a queue, yes. So a maximum amount of 1,800 ish validators per day can either deposit or withdraw. And so 1,800 times 32 times 2,000 is $115 million at current Ether prices.

• 28:04David Hoffman?

  Can be deposited or withdrawn inside of a 24 hour period because there is a restriction. There is a bottleneck for ether going between being staked or being unstaked. Why is that the case? Because we don't want to have Ethereum security being volatile. So this bottleneck constrains the supply of security to the Ethereum network. Just make sure that like these dumb apes that are like operating on top of it. Don't do anything too stupid.

• 28:32Ryan Sean Adams?

  A little circuit breaker ish.

• 28:34David Hoffman?

  And so it's a, it's a, yeah, like it's, it's a conductor.

• 28:38Ryan Sean Adams?

  Yes.

• 28:38David Hoffman?

  It's a transistor. It's a transistor. That's what it is.

• 28:40Ryan Sean Adams?

  I don't know what it is. Danny Ryan is really excited about this. What's his tweet saying?

• 28:44David Hoffman?

  Proof of stake took a bit of time, but the loop is finally complete. Happy Shapella, happy withdrawals. Congrats. Well done, Danny. If you want to scroll down and just get this awesome, awesome gif of Danny Ryan just saying, thank you. Thank you, Danny. We appreciate your service.

• 29:00David Hoffman?

  And so here's a take also from Danny. Danny says withdrawals is a great time to catalyze a redistribution of stake amongst pools for a more secure Ethereum.

• 29:09Ryan Sean Adams?

  Yes.

• 29:09David Hoffman?

  Just like stakers succeeded in making Ethereum more resilient by switching consensus clients from majority consensus clients to minority consensus clients. We can do so at Shapella for pools. And so what Danny's saying is staking as a service providers like Lido. He's saying like, hey, if you are staking with a very majority pool, perhaps it's time to withdraw your ether from the majority pool and distribute it to a minority pool to help Ethereum be decentralized. That is Danny Ryan's collection. Or be a solo staker, which is now something that you can do. And if you decide to rage quit, you can rage quit. Because that's what we just enabled.

• 29:44Ryan Sean Adams?

  Yeah, you're not locked up. It does seem like a better environment for solo stakers. There was a little bit of suspense, I think.

• 29:52David Hoffman?

  Yeah.

• 29:52Ryan Sean Adams?

  At least you experienced this firsthand in the hard fork. I was laughing earlier about how we just expected the hard fork would work, of course. And those are probably the moments where you least have to, when everyone's expecting a hard fork to work, that's when you should be the most worried.

• 30:05David Hoffman?

  Right.

• 30:06Ryan Sean Adams?

  So what happened here? What are we looking at?

• 30:08David Hoffman?

  So I went to, watching the Shapella hard fork upgrade, I went to my first in real life Ethereum. People meet up to all watch the hard fork together to celebrate the hard fork. That was totally going to be a complete success and no one thought anything otherwise. No one was worried. So we had this website pulled up on the screen and the website would show you the blocks inside of an epoch. And so every six seconds, a block would turn green. Uh, and then we would see the block number of the Chappelle hard fork come. And so we're like, we're one hour away, 30 minutes away, 15 minutes away. There's a live stream and so this is a picture that was taken of Vitalik's answering some questions on the live stream. And so we were watching the blocks come and then you see the block for the, the Chappelle hard fork come.

• 30:50David Hoffman?

  And so the blocks likes, uh, the way that it works is that there's, uh, I think 64 blocks. You just take six seconds and you watch it go across and turns green and turns green and turns green. And then once a row of 64 all turns green, the most recent row of blocks gets justified. And sometimes not a Is that called an epoch? Yes. And so, um, sometimes you miss a block and that's totally fine because Ethereum is anti fragile. It's just the block is red and whoever is the validator just doesn't get the reward for that block like boo hoo. Time goes on. It's a problem when 66% of blocks are only green and 33% of blocks are red or missed or whatever. That's a problem. Um, and so, uh, because the Ethereum blockchain is good, uh, every single block turns green.

• 31:35David Hoffman?

  Uh, and then, and so then when one row of blocks hit 66 or above, it gets justified. And then it gets finalized the next time another row of 64 blocks gets justified. So like, you know, it's a blockchain. This is how blockchain works. Uh, and so we're watching the Chappelle, uh, uh, blocks come in. Then we hit the Chappelle block. You see the, uh, withdrawals activated. Everyone starts cheering, but then you see the first four or five blocks turn red. And then you get one green one and then you get like another red one. And then you get a few more green ones and I'm like, no, that You're running the math. The merge had less green blocks than that. I know the difference between red and green and those are red. Those are not green.

• 32:18David Hoffman?

  And you see, I see, and I'm sitting next to Vitalik and I see Vitalik like, Looking at it and I see Tim Baker like looking at it and we're watching the ghosts. And it's like, okay, we get a few more green blocks. Like the first bundle of blocks were like uncharacteristically red. And then Tim Baker said something along the lines of like, yeah, there was a bunch of messaging that was actually kind of expected. We didn't really know about that, but like, okay. But then like, there were still more red blocks, dude. Like, I didn't like, yeah, it's like more red blocks happening. I'm like, guys. But I'm like, meanwhile, the live stream is like withdrawals were enabled. We did it. And then Vitalik's like, hmm, let's make sure that the block finalizes, right, guys?

• 33:01David Hoffman?

  And then I see Tim Baker pull open his laptop and starts typing to people. I'm like, guys, I don't like what's going on here. Oh, God. Like Vitalik's and but as as time went on, like it got more and more green. And then so then the row filled up, pretty heavy red on the left, mostly green on the right, the epoch. And then the the epoch comes to get justified and it goes down and then we start filling out the next next row. And then so that row gets filled out, more green blocks are happening. I think only two or three red blocks. So like, we're good. And but then that one comes in and that one also justifies. But the hard fork block is not finalized. It's just justified. Ooh, just hanging there.

• 33:46David Hoffman?

  We have two justified blocks, not finalized. To justified epochs, you mean? Epochs, yes, exactly. Epochs, which is and one epoch is a bundle of 64 blocks. And like, I'm listening to Vitalik start to make concern noises and he's like looking at his phone and I'm like, uh, so Vitalik, like, I know he doesn't know what's going on. He's just waiting for more data. And it's like, I go, Vitalik, so what's going on? Meanwhile, while the live stream is happening and everyone's chatting and he goes, oh, the beacon chain's just being weird. And I'm like, what does that mean, dude?

• 34:19David Hoffman?

  And then we, okay, and then we get to the next epoch. It's all green, everything finalizes and we're good to go.

• 34:25Ryan Sean Adams?

  Well, I'm glad your first viewing event was that fun because that's the way they should be, right? You don't really know, they should be suspenseful, they shouldn't go without a hitch. But everything's fine, right?

• 34:38David Hoffman?

  Guys, like, this is the simple one, what's going on?

• 34:43Ryan Sean Adams?

  What, what did, what was the reason for all of those red blocks? Did you find that out later?

• 34:47David Hoffman?

  Uh, I think, uh, two problems. One, quick bug with Lighthouse that got fixed pretty quickly. One quick bug with Prism, Prism, uh, clients that got fixed pretty quickly and, and nothing was the issue. The thing is like, this is why we have multi-client architecture because that was Solana. That would have gone down.

• 35:05Ryan Sean Adams?

  You had to bring Solana into this, didn't you, David?

• 35:08David Hoffman?

  This is why you have five clients because it protects against stuff like this.

• 35:12Ryan Sean Adams?

  Any, any blockchain with only one client.

• 35:16David Hoffman?

  Yeah.

• 35:16Ryan Sean Adams?

  Including Bitcoin.

• 35:17David Hoffman?

  Including Bitcoin.

• 35:18Ryan Sean Adams?

  You don't, like, hard forks are very nerve wracking, uh, very nerve wracking. Okay, well, we made it. We made it, okay. Withdrawals over you, what's this? What are we looking at? We've got some dashboards up here, Dave.

• 35:28David Hoffman?

  Okay, so there are a bunch of dashboards. If you are curious to see stats of, uh, the beacon chain post Chappelle, there's a bunch of dashboards. So these, uh, I don't know how to pronounce this, so I'm just gonna...

• 35:39Ryan Sean Adams?

  Look, are we up in terms of the amount of, is this locked? Okay, this is total amount of ETH on the beacon chain. Is this staked ETH? Has that gone up?

• 35:45David Hoffman?

  19 million? That's higher than I thought that it would be. Wow, okay. Where'd that come from? I don't know. But 161,000, uh, round up to 162,000 Ether has been withdrawn. So, okay, 162 Ether has been withdrawn. That's a pretty good amount. And so you can scroll down and see that circulating supply, just that green line of Ether coming out of the beacon chain. So thi- this is like the bear case, right? This is like all of the ETH that's like locked is being, uh, put, uh, put into the market. Except no one's just, no, not necessarily selling it because the price is going up. But yeah, like Ether is net flowing from the beacon chain to the main chain. The, the DeFi ecosystem, anywhere, like not staked, basically.

• 36:26David Hoffman?

  Uh, and so the, the circulating supply of Ether is going up because it's being unstaked.

• 36:32Ryan Sean Adams?

  So are we seeing a big exodus of staked ETH like some of the bears thought we would? Obviously ETH price has gone up and I think that's because we have another

• 36:41David Hoffman?

  De-risking event?

• 36:43Ryan Sean Adams?

  De-risking event, hard fork behind us, which is fantastic. So markets responding to that. But what about this idea of a run on the protocol with ETH stakers fleeing and exiting? Are we seeing any early numbers around that?

• 36:57David Hoffman?

  Yeah, so some of these dashboards are going to be able to put a nice visual behind the withdrawals versus further deposits. So I think it's either this one or the next one if you keep on scrolling down. There is absolutely a net outflow of Ether as you would expect. This is not the hard fork that enables deposits. This is the hard fork that enables withdrawals. So now that withdrawals are happening, people are withdrawing their Ether. Kraken, which had to shut down its staking platform because of the SEC, they're not going to keep it there. They're going to withdraw it. So they are withdrawing a bunch of Ether. People are withdrawing CB ETH from Coinbase. And so Coinbase has a bunch of staked Ether being withdrawn.

• 37:38David Hoffman?

  And so people are starting to squeeze through that 1,800 validators per day, 1,800 times 32 to get to the amount of Ether per day. So there's a line. So you got to get in line. That line will clear pretty fast, I think in the next like four, three, four or five days. And then all of the Ether that is queuing up to be withdrawn will be withdrawn. And that's the status of things now.

• 38:04Ryan Sean Adams?

  How about this, David? This is ETH waiting for withdrawal.

• 38:06David Hoffman?

  Yeah.

• 38:07Ryan Sean Adams?

  This chart. So what are we looking at here?

• 38:09David Hoffman?

  Yeah, so Kraken is the set of the line of people looking to withdraw their Ether. Kraken is 70% of that, withdrawing 551,000 Ether, which implies something like 750,000 total Ether.

• 38:23Ryan Sean Adams?

  That's all in queue right now, right?

• 38:25David Hoffman?

  It's all in queue. Yeah. Yeah. Currently being processed, right? And so Coinbase is like coming in at a solid 6.5%. So and then after that will be all the centralized service providers, which big fan of, big fan of.

• 38:39Ryan Sean Adams?

  Well, but Kraken, part of the reason why Kraken is withdrawing so much is because the Gensler ban hammer has

• 38:46David Hoffman?

  Exactly.

• 38:47Ryan Sean Adams?

  Like, they have to basically discontinue staking services in the United States. And so you have to imagine a large portion of the Kraken is as a result of this. But overall, we're not seeing this mass exodus of staked ETH, are we? It's just kind of

• 39:01David Hoffman?

  Well, so we're hitting the upper limit. Like, we are seeing the fastest withdrawal pace that you could see. It's just that, is it being sold? Is it being deposited again in a different service provider? Is it being sent to DeFi? We don't really know. What we can actually assume is it's not being sold because Ether price is up.

• 39:24Ryan Sean Adams?

  Yeah, these are some metrics we're going to be looking at in the, I think, the weeks to come is because I also think in addition to all of the withdrawals that we see, we're going to look at a week from now and see how many deposits, new inflows as a result of this de-risking event we'll see. And I wonder if the number's going to be like over when we started or above. Like, Justin Drake's prediction is basically maybe a small dip, but pretty much flat through this entire event. And then we'll resume the climb upward on a linear path to more and more ETH staked. So from 18 million to 20 million to beyond, he thinks. And we might get as high as like 30 million or a little bit above that is kind of his take on the final resting place. So we'll see in the weeks to come what bears out.

• 40:07David Hoffman?

  As you can see on that last dashboard, the staking APY has increased by 6%, 0.6%.

• 40:14Ryan Sean Adams?

  And that's because fewer validators staking API goes up?

• 40:18David Hoffman?

  Must so, yeah. It's also worth noting, there are two ways to withdraw. You can do a skim withdraw, which just withdraws everything above 32 Ether. And a large supply of the withdrawn Ether in the queue is people just withdrawing their rewards, not withdrawing their principal.

• 40:36Ryan Sean Adams?

  That's a skim withdraw. People call that a partial withdraw as well. You're just withdrawing the rewards, you're not disbanding the validator itself.

• 40:44David Hoffman?

  Yeah, and so a full exit, which is when you withdraw 32 Ether, is what Kraken is doing and partially Coinbase as well. But most people are just claiming their rewards.

• 40:55Ryan Sean Adams?

  Very cool.

• 40:56David Hoffman?

  As you would expect.

• 40:57Ryan Sean Adams?

  I think I'm going to be staking more in the weeks and months to come. I've been sort of waiting for this moment. Some of the core devs celebrating as well. David, this is Peter from the get.

• 41:07David Hoffman?

  From the get. Yeah. And if you want to learn everything there is to know about Shapella and what happens next, you know who put out a report. That's us, Bankless is you know who. And so bankless.com, how Shapella pushes Ethereum forward. If you just want to go further, deeper into the subject.

• 41:24Ryan Sean Adams?

  All right, David, you got to get me up to speed real quick on this Arbitrum thing. So I think there was a lot of anger last week from members of the Arbitrum community and other communities who wanted to pile on to this about Arbitrum's foundation. I was following this at high level. I know you and Anthony covered it on the, on the last roll up a little bit. Why don't you get me up to speed on what happened? And then let's talk about what happened this week, which was there was a new proposal that was basically saying in this Arbitrum proposal 1.05, that the foundation should return all of those funds, 700 million arb tokens back to the DAO. That's a new foundation that came into play and I believe it's being voted on right now.

• 42:08Ryan Sean Adams?

  But just tell me what happened while I was out.

• 42:11David Hoffman?

  Yeah, so the first ever snapshot vote for Arbitrum was a ratification of AIP, Arbitrum Improvement Proposal 1. It turns out the community decided to vote no against it because the foundation was to receive 700 million, 750 million arb tokens, about a little bit over a billion dollars. And the community voted no. But then Arbitrum was like, um, this was just a, this was not, this is just a ratification. This is not a vote. This vote doesn't matter because the way that AIP is, is the way that AIP 1 is going to go because that's how, that's how it's going to be. And so the DAO was like, well, what does our vote even matter?

• 42:56David Hoffman?

  We vote, you guys put this thing up for a snapshot vote. We voted no, but it's going through anyways. W, what the hell? So like the conclusion that I have is that this was a major just comms miscommunication, a major comms F up by Arbitrum. They kind of just assumed that people would vote for this because why wouldn't you want to give a bunch of money to the DAO, to the foundation, when the foundation has the best interests of Arbitrum at their heart, which is an assumption. And I will totally agree that that's an assumption. Maybe the DAO is like, F the foundation, give us the tokens, we'll decide what to do with them. But because of legal constraints that are very significant for the Arbitrum team and the way that these things get set up, and also just because of the foundation can be a more centralized,

• 43:40David Hoffman?

  perhaps more effective entity than a distributed decentralized DAO, people like, the Arbitrum team was like, yeah, just give the tokens to the foundation.

• 43:49Ryan Sean Adams?

  Well, to me, doesn't this all hinge upon whether like Arbitrum had already made this decision beforehand and was like, had already kind of communicated that to the community and had put this proposal out as a snapshot vote and saying, you could vote for this, but it doesn't really matter because we've actually already made the decision as part of initial distribution. That would be like, like one, one, one way this actually happened. The other way that it could have happened is if they put it out to vote and they, like, they had meant for the community to vote it, but they didn't like the outcome of that vote. And so they were like, no, just kidding, wasn't an actual vote this time. I mean, the difference between the two is, is pretty, a pretty big deal in my

• 44:32Ryan Sean Adams?

  mind and kind of like would inform me on, on who, who is kind of the, the, the good actor in this case.

• 44:40David Hoffman?

  Yeah. That's actually a really good point that I actually haven't considered. The fact that like, but I'm, I'm, just because my memory doesn't work to that level of granular detail, I'm pretty sure in the AIP and in, in blog posts, they said like, this is what's going to happen. Also vote on it. So I guess there was confusion to begin with. They just should never have put the vote out.

• 45:04Ryan Sean Adams?

  If that's the case, they shouldn't have put the vote out and that that's kind of caused this whole confusion. Okay, so what what happened this week? There's a new AIP proposal that is.

• 45:13David Hoffman?

  There was a new proposal that says, give the money back to the DAO and then resubmit AIP1 and the DAO will execute the transfer of the funds, not you guys. And so that proposal was placed forward to say like, show us, the DAO was as a voice, as the collective, the DAO was like, show us that we have the power, like, do, like, show us that we can do this.

• 45:35Ryan Sean Adams?

  So how is that vote going?

• 45:37David Hoffman?

  Well, that vote just was voted against it. So 108 million arb tokens, 83% to 15% voted against, like, none of this, just don't, like, not even bother. It is what it is. Let's move on, is the way that the DAO has collectively voted. I bet you there's probably some conversations that's like, large whales voted against it and maybe retail voted for it. But overall, as an airdrop receiver, I voted against this because I think this thing is mostly just drama. And I got flack for that take, by the way, saying that this is just drama.

• 46:12Ryan Sean Adams?

  Why'd you get flack? What do people like, so one thing that's interesting about a DAO vote is we've we've made this point before. We've had Hsu on, we talked about kind of the faults in DAOs and all of these things, is there's no like legal obligation here. There's no like settlement layer to ratify a DAO vote and for kind of Arbitrum, the company, or any of the other Arbitrum stakeholders to actually like carry that vote forward. It's almost like a gigantic social signal, if you will, but there's not like anything close to shareholder rights, which is sort of settled in a in a US court system. So as part of that is, like, what does a DAO vote actually entitle you to?

• 46:54Ryan Sean Adams?

  And as a as a arb token holder, like, is this all window dressing? Is governance kind of window dressing or do you actually have rights? And I do think that is a valid concern, but it's not just a concern for Arbitrum. It's a concern for all, any sort of squishy governance that can't be settled on chain, of which, like, most DAOs have this, don't they?

• 47:17David Hoffman?

  Yeah, I do think this is a bunch of window dressing. What my frustration is that.

• 47:24David Hoffman?

  The inception, the initialization, the bootloading of a foundation and a DAO, how that exists, how that comes to be, is an exceptional moment and warrants exceptional circumstances because of Gary Gensler and jail time and fines and stuff because of that reason.

• 47:46Ryan Sean Adams?

  And so you think there should be a grace window, particularly at the very beginning?

• 47:49David Hoffman?

  The first initialization, the first creation of the whole system should actually be outside of DAO governance. It should, because of efficiency, capital efficiency, cost efficiency.

• 48:01Ryan Sean Adams?

  But it has to be, it just has to be though.

• 48:02David Hoffman?

  It also has to be that way. And so then every other proposal after that should have the full faith and might of the DAO behind it. But the initialization is a special circumstance that we need to have some sort of grace period just for conditions.

• 48:18Ryan Sean Adams?

  You want to give them a mulligan for just this one time, but if they do it again, then you'd have a bigger problem with it.

• 48:24David Hoffman?

  If you do it live in production, then let's get the pitchforks.

• 48:27Ryan Sean Adams?

  I see. Look, I don't have a real strong take on it now that I've heard like all of these sides. I just, we probably didn't have too much to talk about last week. And so we were really focused on this this week. But here's a take from Eric Wall. It's a lot, but could you summarize what his take is on this whole ordeal?

• 48:43David Hoffman?

  Yeah, it's basically a summary of what we've said just so far. It's basically, there's this interesting proposal that's out there that says, hey, give it back to the DAO. And it's basically a summary of what we've just talked about. Eric Wall says, as a delegate, I control basically half a million arb tokens and I will probably vote, not vote against it, even though it worries me a great deal to see the Arbitrum Foundation in such a risky seat. And despite knowing how important their work is to make sure that Arbitrum prospers and stays competitive with other Layer 2s, with functional foundations. And so Eric Wall is like balancing, is like, well, he's a big delegate. He understands the value of a foundation, but he's not going to vote against it because he wants to see the trial of governance play out. But the thing didn't pass anyways.

• 49:27Ryan Sean Adams?

  All right, David, so we've covered Chappelle, we've covered Arbitrum. What's coming up next?

• 49:33David Hoffman?

  Coming up next, the last and final update on Euler. I actually did say that last week, but this is because there's one last step, which is people get their money back and then there's no more conversation about it. So there's that. FTX recover 7.3 billion in assets and has started discussions about how to restart the exchange. We will discuss whether we even want that or not. And Bankless has its brand new product update, the Token Hub, your brand new hub for tokens. If those title wasn't descriptive enough, just in case you want to lose extra money this cycle, a brand new token hub for citizens. So all this and more as soon as we get to some of these fantastic sponsors that make this show possible. Learning about crypto is hard, until now.

• 50:14David Hoffman?

  Introducing MetaMask Learn, an open educational platform about crypto, Web3, self custody, wallet management, and all the other topics needed to onboard people into this crazy world of crypto. MetaMask Learn is an interactive platform with each lesson offering a simulation for the task at hand, giving you actual practical experience for navigating Web3. The purpose of MetaMask Learn is to teach people the basics of self custody and wallet security in a safe environment. And while MetaMask Learn always takes the time to define Web3 specific vocabulary, it is still a jargon-free experience for the crypto curious user. Friendly, not scary. MetaMask Learn is available in 10 languages with more to be added soon, and it's meant to cater to a global Web3 audience. So are you tired of having to explain crypto concepts to your friends?

• 50:59David Hoffman?

  Go to learn.meta mask.io and add MetaMask Learn to your guides to get onboarded into the world of Web3. You know Uniswap as the world's largest DEX with over 1.4 trillion dollars in trading volume, but it's so much more. Uniswap Labs builds products that lets you buy, sell, and use your self custody digital assets in a safe, simple, and secure way. Uniswap can never take control or misuse your funds the Bankless way. With Uniswap, you can go directly to DeFi and buy crypto with your card or bank account on the Ethereum Layer 1 or Layer 2s. You can also swap tokens at the best possible prices on uniswap.org. And you can also find the lowest floor price and trade NFTs across more than seven

• 51:42David Hoffman?

  different marketplaces with Uniswap's NFT aggregator. And coming soon, you'll be able to self custody your assets with Uniswap's new mobile wallet. So go bankless with one of the most trusted names in DeFi by going to uniswap.org today to buy, sell, or swap tokens and NFTs.

• 51:59Ryan Sean Adams?

  All right, we're back with Euler. So it sounds like Euler got all of its funds from the hacker back, which seems like a miracle, and that's amazing. But now there's a process for which people who had deposited funds in Euler have to redeem, and just an extra process? Is that what we're talking about right now?

• 52:18David Hoffman?

  Yeah, so because Euler is a money market, when people deposit money into Euler, they have a position. That position was rugged from them by the attacker. I guess that's not the appropriate way to use rugged. But the exploiter stole the money, but people had it in positions. And so who gets how much money back had to do these calculations to make sure who gets. You can't, you can't just put the money back into the vaults.

• 52:43Ryan Sean Adams?

  Got it.

• 52:43David Hoffman?

  And so Euler has run the computations, done the math, and created a claims page.

• 52:49Ryan Sean Adams?

  So if you are- Great news, though.

• 52:50David Hoffman?

  Right. If you are an Euler victim, there's now a button that you can go press, and you can press that button, and you can get your money back. So go press the button.

• 52:59Ryan Sean Adams?

  Do we know anything about this, this attacker?

• 53:02David Hoffman?

  His name's Jacob.

• 53:04Ryan Sean Adams?

  Says his name's Jacob, right?

• 53:05David Hoffman?

  Says his name's Jacob, yeah.

• 53:06Ryan Sean Adams?

  He just, but basically, we don't know motives, we don't know who this individual is. They stole the money, and then they said they were sorry, and then returned the money. Is basically the full circuit here.

• 53:17David Hoffman?

  Yeah.

• 53:17Ryan Sean Adams?

  Well, isn't that great?

• 53:19David Hoffman?

  I'm going to assume that law enforcement put some heavy pressure on this person.

• 53:24Ryan Sean Adams?

  There was probably some pressure to do that. And I wonder, I wonder what this person is doing right now. Can you just be like, oops, accident, it was just a prank, bro? And like, and then you're fine? You are no longer in trouble with law enforcement? Is that how this works?

• 53:38David Hoffman?

  I don't know how this works.

• 53:39Ryan Sean Adams?

  Jacob would have to tell us.

• 53:41David Hoffman?

  I'm just, for some reason, I'm just picturing like, some high schooler in his, like, mom's house. And he's like, oh shit, what should I do?

• 53:50Ryan Sean Adams?

  I didn't think this would work.

• 53:52David Hoffman?

  The police showed up at my house.

• 53:54Ryan Sean Adams?

  Wow, that's crazy. All right, Bitcoin stuff. Lightspark is a competition for the Lightning Network. This is David Marcus, who formerly ran the Diam program, which is called Libra Diam at Facebook. One of the original Facebook, not a founder, but early to Facebook, certainly. David Marcus, very excited about the Lightning Network and Bitcoin. He says he's thrilled to unveil the Lightspark platform today. We believe the internet badly needs an open payment protocol, one that works 24/7, settles in a near real time. This is basically a startup, an application built to expand the Lightning to the masses. What's your take on this?

• 54:35David Hoffman?

  It is probably the biggest effort to build out Lightning infrastructure from somebody who's already done something very big in this world that I've seen. Is this the one that is different?

• 54:48Ryan Sean Adams?

  Well, I forgot to mention David Marcus was also the former PayPal president. So he knows a thing or two about transactions. And his comment was, "Much of Lightning's potential is being held back by the clunky and time-consuming process of node management engaging with the Lightning Network." He's like, "The UX is bad, so I'm going to fix that." One thing that's interesting, at least my take on this is, I agree with him. The UX is bad. I don't think that will solve the problem because I think the UX still remains bad as long as you have Bitcoin as the unit of account. Because people don't want to spend their Bitcoin. I don't want to spend my ETH either. I just don't. I want to spend stable coins.

• 55:28Ryan Sean Adams?

  I spend my DAI, I spend my USDC, and I hold my ETH. And it's...

• 55:35David Hoffman?

  I make people pay me in Ether, but I pay them in USDC.

• 55:38Ryan Sean Adams?

  Exactly. I don't, and that's the thing that Bitcoin advocates have been preaching for a very long time. And so I don't know if you can get over that from a UX perspective, you know, particularly to the masses. Maybe, maybe if you had hyper Bitcoinization, large nation-states will do settlement between each other in Bitcoin, like Bitcoin transactions? But I don't know. Hold your Bitcoin, sell your Fiat. That's the UX problem, in my opinion. But it's great to see more development on... On Lightning and certainly on Bitcoin. David, more news on FTX bankrupt. FTX has recovered 7.3 billion in assets. And here's the kicker and is considering relaunching the exchange in Q2.

• 56:23Ryan Sean Adams?

  Okay, what's your take on this?

• 56:26David Hoffman?

  Just to make it really clear, Q2 is now. It's this quarter.

• 56:32Ryan Sean Adams?

  Why?

• 56:33David Hoffman?

  So 7.3, part of that number has come from the rise of crypto asset prices. Since FTX, right? And so that number is going up because Bitcoin and Ether and Solana and these other tokens are going up in price.

• 56:48Ryan Sean Adams?

  If you wait long enough, everyone will be made whole.

• 56:51David Hoffman?

  But, but not actually because a lot of the people lost Bitcoins. And so Bitcoin denomination has not gone up.

• 56:59Ryan Sean Adams?

  No.

• 56:59David Hoffman?

  Anyways, okay, so a total recovery of these assets would have been $6.2 billion from crypto prices in November of 2022. So we've gained $1.1 billion, thanks to crypto asset appreciation. In legal proceedings, it was discussed the potential to start, restart the crypto exchange. They, in these legal proceedings, however, it said that FTX would need significant capital to restart its crypto exchange because the existing customer interface had little connection to the movement of money behind the scenes, the lawyer said. Remember, Ryan, a very big topic of conversation was how good of a product FTX was.

• 57:39Ryan Sean Adams?

  How fast it was.

• 57:40David Hoffman?

  It was so good and fast.

• 57:42Ryan Sean Adams?

  The UX was amazing.

• 57:43David Hoffman?

  It really makes a ton of sense that this thing that was a fraud behind the scenes had this very polished and sleek front end. Because it didn't matter. You didn't have to connect those things.

• 57:54Ryan Sean Adams?

  The numbers weren't real.

• 57:55David Hoffman?

  They weren't real.

• 57:56Ryan Sean Adams?

  Just generated numbers. It wasn't even connected to like the backend, what was actually happening. Well, that is amazing.

• 58:02David Hoffman?

  Which really makes Sam Bankman-Fried's Excel docs of accounting just hit a little bit differently.

• 58:07Ryan Sean Adams?

  Wow. Let me ask you this though, David. FTX, say it relaunches. Would you ever use the new FTX exchange?

• 58:16David Hoffman?

  I never even used the old one, dude.

• 58:19Ryan Sean Adams?

  Okay, but like, you probably thought about it.

• 58:22David Hoffman?

  Yeah, I probably thought about it.

• 58:25Ryan Sean Adams?

  I'm just saying.

• 58:26David Hoffman?

  I don't need any more centralized exchanges.

• 58:28Ryan Sean Adams?

  But like, who is going to use, maybe not you, who is going to use the FTX exchange? Are people just gonna be like, oh, it's rebranded, it's under new management, FTX 2.0, sounds great, let me put all of my money in this thing.

• 58:43Ryan Sean Adams?

  Why don't you just let it die, guys? This is a bankruptcy proceeding. I don't understand a need to, or an interest. I guess shareholders are probably like, relaunch, relaunch, let's mint a token and see if we can get some of our money back. That's probably what it is, but like, I don't know that this is a consumer product that will ever work again.

• 59:02David Hoffman?

  Okay, so all of the exchanges out there that have been proven to be good, I know the names of these leaders. Brian Armstrong, Jesse Powell, and CZ. Who is going to lead FTX and have somebody rise to the shoulders of these other giants? And can actually like, command trust? Who's gonna do that? Who's gonna step up to the plate? No one.

• 59:28Ryan Sean Adams?

  Jamie Dimon. Jamie Dimon purchases FTX, relaunches the exchange, there you go, we're done, we're done here.

• 59:34David Hoffman?

  I know the 2022 simulation was pretty crazy.

• 59:40Ryan Sean Adams?

  Well, I'm just surprised they're actually reconsidering launching this, so that's, that was not on my list. Also not on my list, Japan, doing big things in crypto, appearing more crypto-friendly, it seems. We've got an article written in Japanese, so I cannot read this, David, but what does this say?

• 59:57David Hoffman?

  The next link is what you want, Ryan. Japan's Liberal Democratic Party and its Web3 project team release a white paper to push crypto-friendly initiatives in the country. This is part of Prime Minister Fumio Kishiata's, god, I'm such a naive white person. Strategy of Promoting Technology, a project they've called Cool Japan.

• 1:00:21David Hoffman?

  They have a project called Cool Japan that includes Web 3 initiatives.

• 1:00:25Ryan Sean Adams?

  When do we get Cool America?

• 1:00:27David Hoffman?

  Yeah, we do not get Cool America.

• 1:00:29Ryan Sean Adams?

  We got 90 pages of FUD in a Biden, Biden administration economic report on crypto. And Japan gets Cool Japan.

• 1:00:36David Hoffman?

  Yeah, that's not, not very cool of us. A quote from this white paper, "After crypto winter, Japan may be the first to welcome spring. In order to promote blockchain-related businesses in Japan, it is necessary to develop an environment that facilitates investment in tokens." So here are some, some high-level details. They want to see tokens as fundraising tools for Web 3 startups instead of speculative assets. They are looking at tax reforms that favor cryptocurrencies, which should be considered alongside existing accounting tools. And also DAOs that can be established in the same way that LLCs can be established.

• 1:01:11Ryan Sean Adams?

  Wow.

• 1:01:12David Hoffman?

  Cool Japan.

• 1:01:13Ryan Sean Adams?

  That is Cool Japan. I'm just, I'm just jealous, but I'm very excited that Japan is doing this. This is, this is very good. And it's clearly there's some land grab of like, okay, America's not going to take lead of this, then we'll jump in because we're also seeing this in Hong Kong. Hong Kong's finance chief pushes for Web 3 adoption. This is Hong Kong's top financial boss saying that now is the time for the economy to push Web 3 adoption. They want to be basically the fiat banking center for crypto and doing that in Japan. So again, this is more indication that America's got to catch up. So does Europe, it seems like for, for that matter.

• 1:01:51David Hoffman?

  Ryan, can you scroll down just a little bit and then see the Permissionless 2023? You wanted to just go ahead and click the "Join Us in Austin, Texas" link right there? Because Permissionless in 2023, September 11th through 13th, Dave Dow has officially challenged Ben Dow to a dodgeball tournament.

• 1:02:10Ryan Sean Adams?

  This has nothing to do with Japan or Hong Kong.

• 1:02:12David Hoffman?

  Nothing to do with Japan.

• 1:02:13Ryan Sean Adams?

  This is a hard pivot here.

• 1:02:14David Hoffman?

  I have moved on. I have completely moved on. I am doing my best to convince Mike and Jason at Blockworks to carve out a part of Permissionless in the event center to host a dodgeball tournament. And I want all of the rivalries to, to come forth. I want optimism versus Arbitrum. I want ZK Sync versus Polygon. I want Ben Dow versus Dave Dow. I want A16Z Crypto versus Paradigm. I want people to assemble their, their squads.

• 1:02:42Ryan Sean Adams?

  Can we do Crypto natives versus regulators, please?

• 1:02:45David Hoffman?

  Well, the regulators aren't coming. They're not invited.

• 1:02:47Ryan Sean Adams?

  Well, easy win then.

• 1:02:51David Hoffman?

  Anyways, so if you are interested in your dodgeball tournament and want to help me meme this into existence so that Jason and Mike are compelled to host a dodgeball a part of Permissionless, then go get your Permissionless ticket. If you're a bankless citizen, you get 30% off, which is like hundreds of dollars, because the tickets go up in price every two weeks. So, link in the show notes to get your Permissionless 2023 ticket.

• 1:03:13Ryan Sean Adams?

  Crypto is tribal enough, David. I think we can get our tribal rage out on the dodgeball courts here. From Dodgeball to Token Hub, this is it. This is the Bankless Token Hub. It is now available for bankless citizens. If you are not a citizen, you should definitely upgrade. You get so much in your citizen package, including a premium RSS feed. And also, now, the Token Hub. David, have you checked this out, man? This is neutral, bearish, bullish positions on 28 different tokens from the Bankless Analyst Team. It gives our rating. We're putting it out there. Not financial advice, entertainment only.

• 1:03:50David Hoffman?

  Entertainment only.

• 1:03:51Ryan Sean Adams?

  But this is what some of the best analysts that David and I have found are actually rating these tokens and evaluate them, evaluating them based on some catalysts. So, if you're like, oh, you know, Boomer, David, and Ryan only talk about ETH and some of the core assets and all the blue chips, and it's not exciting enough for me, let me tell you, we go down the stack in the Token Hub. And it's not our opinions, it's our analyst's opinions. But did you also know you can mark some of these as your favorites?

• 1:04:17David Hoffman?

  Yeah, right.

• 1:04:18Ryan Sean Adams?

  Some of these tokens, mark them as your favorites. And also, let me ask you, like, Uniswap, are you, what do you think about Uniswap, uni-token? Bullish, neutral, or bearish? Give me a rating.

• 1:04:26David Hoffman?

  I am just, the answer is obviously bullish. Why am I bullish? Because it has a monopoly on volume. It is wherever it goes. Because Uniswap, it's on ZK Sync, it's on Polygon, Optimism, Arbitrum, it's on every layer too. It's always the dominant exchange. So, even though there's no fee switch that's turned on... You just gotta turn it on. So I'm bullish.

• 1:04:50Ryan Sean Adams?

  You can see what the other citizens think. So 41% are also bullish on Uniswap, but 47% are neutral and 12% are bearish. Lots to unpack here. You guys can find it at bankless.com/tools/token-hub or just go to bankless.com, become a citizen and you'll get connected right into that.

• 1:05:09David Hoffman?

  Oh, by the way, explicitly, our ratings, these neutral bullish bearish ratings are versus Ether, not dollars. That's a very important point.

• 1:05:19Ryan Sean Adams?

  That is important because ETH is money and that's how we denominate our portfolios. It really makes the game a little harder when you're dishing out token ratings and you're bullish because it's not bullish relative to fiat. That's easy mode. We're going hard mode here. Bullish relative to ETH. Oof, gonna be tough. Yeah, now we can lose money together in new ways.

• 1:05:39David Hoffman?

  If you want a token to be rated by the token ratings on the token hub, you can say so inside of the Bankless Nation Discord, which you can only get to if you're a Bankless citizen.

• 1:05:48Ryan Sean Adams?

  You could just say whatever token you want and Ben and team will go do it.

• 1:05:52David Hoffman?

  You can just yell it.

• 1:05:54Ryan Sean Adams?

  Don't curse that. Did you know MetaMask, by the way, our friends and sponsors, they have just launched a really cool feature on their portfolio app. This is the part of MetaMask that adds new features even faster than the main wallet. And you can find that in MetaMask at portfolio.meta mask.io. They have this buy tab now where you can really easily buy directly from fiat, buy crypto assets, all sorts of different ACH transfers, bank transfers, all sorts of different like buying mechanisms. So you can fiat onboard directly through your wallet, which is really cool. It's great to see new ways to onboard and they've added that there. So there'll be a link in the show notes for you with that feature. And David, did you know this? Okay, I think you did know this, but.

• 1:06:39Ryan Sean Adams?

  You know, one thing that can happen over time is if you're doing a lot with your ETH wallet, you approve all of these various smart contracts. And some of the security around these smart contracts, the things that you do in Web2, all the crazy DGEN activities you do, sometimes smart contracts go bad. And so you may have opened the door, but not shut the door. You may have approved access to your keys to do some specific function in a wallet, and forgotten to revoke. EtherScan actually has a tool where you can look at your address and you can revoke access.

• 1:07:15David Hoffman?

  It will tell you what you've given access to specifically, rather than just like not understanding. It'll tell you like you've given access to all of these contracts. Do you trust these contracts? Do you know who these people are?

• 1:07:29Ryan Sean Adams?

  I didn't know EtherScan was doing this.

• 1:07:31David Hoffman?

  Yeah, they've had this for a while.

• 1:07:32Ryan Sean Adams?

  I didn't know. I was using another tool for this, but seeing EtherScan, a tool I trust and already use like every day, do this is pretty awesome. So that's probably a security tip. Like go through some of your addresses that you use for DGEN activity, and make sure you are revoking access to the things that you don't trust. Why leave access open? There was actually an event earlier this week that happened in Sushi, I believe, where some people got their wallets drained because they did not revoke access.

• 1:08:01David Hoffman?

  Well, they gave access to a router that was exploited. And then people had to go revoke access because that router was proven to be bad. Like other contracts, like the wrapped Ether contract, you're never going to have to worry about that one. That thing is rock solid. The Dye contracts, like generally rock solid. Some things without names that you can't remember why you gave it permissions in the first place, maybe you want to revoke that one. Yeah, you want to revoke that one.

• 1:08:29Ryan Sean Adams?

  All right, David, what do we got coming up next?

• 1:08:31David Hoffman?

  Coming up next, we got some questions from the Bankless Nation, as well as some takes of the week, followed up by, of course, what Ryan and I are bullish on. And lastly, but not least, the meme of the week, because that's how we end the show. But first, a moment to talk about some of these fantastic sponsors that make the show possible. Arbitrum 1 is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web3 landscape. Hundreds of projects have already deployed on Arbitrum 1, producing flourishing DeFi and NFT ecosystems. With the recent addition of Arbitrum Nova, gaming and social dApps like Reddit are also now calling Arbitrum home. Both Arbitrum 1 and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM-compatible.

• 1:09:14David Hoffman?

  On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitrum Nitro, it's also now 10 times faster than before. Visit arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be: secure, fast, cheap, and friction-free. Bankless is launching the Bankless Token Hub. At Bankless, we've been studying the crypto markets ever since 2017, and all of our research has led us to this: The Token Hub. You're a one-stop shop for alpha to help you navigate through the crypto markets. Have you ever wished for a trusted resource that would share their thoughts, ratings, and their opinions about tokens? Boy, do we have the product for you.

• 1:09:59David Hoffman?

  The Bankless Token Hub is where we provide Bankless citizens with the alpha on the hottest tokens in crypto. We do the research, so you don't have to. The Bankless Token Hub includes the token ratings, where our team shares their research and outlook on the hottest tokens in crypto. Also, the Token Hub includes Bankless Bags, our own internal investment club. Bankless Bags is where we put our money where our mouth is. And for the Bankless power user out there, you can access the analyst team 24/7 inside the Bankless Nation Discord. You can ask them questions and learn from a group of people deep in the weeds of crypto investing. The last feature of the Token Hub is the ability to upvote or downvote token ratings. The Bankless Token Hub lets you learn from your fellow citizens to rate these tokens yourselves. The Bankless Token Hub is launching right now

• 1:10:42David Hoffman?

  and has already been beta-tested by your fellow Bankless citizens. So stay tuned in the Bankless Discord for updates. And if you're not a Bankless citizen, well, you'd better sign up if you want access, because this corner of Bankless is available for citizens only. I'll see you in the Discord.

• 1:10:56Ryan Sean Adams?

  Back with questions from the week. This one from Orin. I'm gonna read the whole question, David, because there's a story associated with this. "After 14 months, I finally feel like I'm in crypto for real. I lost 1.1 ETH to a scam. It was my own fault. I clicked a link from a trustworthy source without reading the accompanying text in an opaquely worded confirmation letter, and I'm down 1.6 K pounds. Why didn't I read the text properly? I was mentally juggling soothing a grizzling baby, work emails, and the myriad other daily life tasks that take up brain space, all the while trying to stay up to date with opportunities in crypto. It made me wonder when and how we're going to get crypto to a stage where it can be trusted by people who can't always focus their whole attention on it, the casual retail users. Surely, without them,

• 1:11:41Ryan Sean Adams?

  the room for growth as an industry is limited. I know crypto is risky, and I can lose what I put in, but having some arse outright steal your funds hits so differently from taking a punt on a DGEN token that goes to zero. What are your thoughts on what we can do to combat the constant scams that reinforce the negative view of the industry, limit growth, and give more ammunition to Elizabeth Orin's and those like her? I love the roll-up. It's been a godsend in keeping us up to date with the industry in the limited time I do get." This is a very sincere question from Orin, and I gotta say, I really resonate with this. Like, how does a normal person possibly have time to determine and figure out what's a scam and what's not? This is certainly the wild west, David.

• 1:12:26Ryan Sean Adams?

  Are we ever going to graduate to something that feels a little more safe? Like, one thing, when the DGEN tokens go to zero. Another thing, when something unexpected happens, as it happened to Orin here, clicking a link from what he thought was a trustworthy source, and then getting 1.1 ETH stolen.

• 1:12:47David Hoffman?

  Yeah, and I'm sad to say I don't really have a silver bullet here. I think this more or less comes with the territory of self custody crypto assets. We have the power and the responsibility of being able to control our own money. Wells Fargo will never let you send your money to a scam because of how cumbersome it is that scammers don't even bother to try. So, thank you Wells Fargo, I guess. They can also totally confiscate your money, capital controls, all of those bad things. And so this is just the double edged sword, I would say, that is crypto. How do we prevent this? Well, one part is of course just education.

• 1:13:30David Hoffman?

  We're never going to be able to get away, get rid of scammers in the way that the traditional finance world just doesn't have to deal with scammers because scammers just can't operate in traditional finance. Simultaneously, there's like ways to win in this space because of those same properties, right? Like you get airdrops, you get to invest in things that you otherwise wouldn't have gotten to invest in. And so like there's, there's upsides and there's downsides. And now we're talking about one of the downsides. I think sadly, another unsatisfactory answer is that like the kids that are raised with this financial system are going to become extremely fluent in this natively. Whereas people that are older that have to learn this thing just from top down, just

• 1:14:11David Hoffman?

  because we're faced, confronted with this while trying to learn it manually, we are the, the more vulnerable people because once upon a time, we learned how to do Venmo and ACH transfers and all that kind of stuff. And we never had to worry about this kind of thing, which is why it's easy to fall victim to a, to a trap when you have a trusted source sends you a link. And so the one part is just like, it's just going to take time. There's also innovation to talk about. This is a problem and problems inspire problem solvers and problem solvers that create useful solutions get investment to scale those solutions out to the world. And so sadly, I don't really have a silver bullet here, but that's because there's 10,000

• 1:14:53David Hoffman?

  different answers that are all kind of good and kind of bad. But when you put them all together, we have a solution and sadly it just takes time.

• 1:15:01Ryan Sean Adams?

  I want to echo, I think you said many of the points I would have made, David, with kind of competition and time and innovation and also upside. We are on the frontier. This really is the bleeding edge frontier. And like, I think some things that used to be more bleeding edge frontier are less frontier. So we can look at the past. It's much safer to hold ETH in 2023 than it was in 2016. And to use a multi-sig in 2023 than it was in like 2017. Or like to use Uniswap. We've come a long way. And the way we've, like, the only way that's happened is through time and sort of like Lindy

• 1:15:44Ryan Sean Adams?

  playing over time, which means like, large amount of value and smart contracts, they don't get hacked over time and sort of risk boils out. So I do believe we're just in the Wild West right now. This is definitely the frontier. And that is bad because there's risks. I think it will get better over time, but there's no silver bullet, there's no immediate fix. But it also, on the flip side of that, once all of the risk is boiled out of the system, it means there's going to be not very much upside left. Right? So you, Orin, you're here in the early stages. You just had a, like, an event happen to you. It's happened to many in this space. Sorry, right? Like deeply, like that, these types of things hurt.

• 1:16:29Ryan Sean Adams?

  And yet, I think this is a short-term setback because the most fundamental thing is you are here, you are on the frontier. You're going to use this as a learning opportunity and you're exposed to so many more opportunities than the people with their money in Wells Fargo and the banking system are going to be. They're not going to receive the airdrops, they're not going to have the opportunity to buy ETH at 2K. They're not going to have the opportunities that you have right now because you know about this stuff. So, once it becomes less risky, it's also like, the upside is not going to be there anymore. And that's just the trade-off that we're dealing with at this point. There we go. David, we got a take this week, and I think this is going to... Be the only take that we talk about because it's a big one. A tale of two agendas. What is the first agenda here?

• 1:17:14Ryan Sean Adams?

  And then what is the second?

• 1:17:16David Hoffman?

  Yeah, so these two takes juxtapose with each other. So here we have Chamath Palapatiya, Palapatiya from the All In Podcast. And he tweets out, if you invent a novel drug, you need the government to vet and approve it, the FDA, before you can commercialize it. If you invent a new mode of air travel, you need the government to vet and approve it, the FAA, before you can commercialize it. If you create a new security, you need the government to vet and approve it, the SEC, before you can commercialize it. More generally, when you create things with broad societal impact, positive and negative, the government creates a layer of review and approval. AI will need such an oversight body. The FDA approval process seems to be the most credible and adaptable into a framework to understand how a model behaves and is counter and it's counterfactual.

• 1:18:01David Hoffman?

  Our political leaders need to get in front of this sooner rather than later and create some sort of oversight before the eventual big avoidable mistakes happen and the genies are out of the bottle. That was the first take. Let's go ahead and go to the second take. Here is Naval.

• 1:18:18David Hoffman?

  Much of the innovation in the last few decades was in search, social, crypto and AI, because pure math is the last unregulated frontier. Invite the regulators in and they'll freeze innovation here, just as they did in healthcare and energy. That's the other side of the take. Ryan, which of these two takes do you like?

• 1:18:40Ryan Sean Adams?

  You know, I'm going to say the second.

• 1:18:42David Hoffman?

  I was, I thought Chamath's take, he was like, if you want to go back to the other one, it's like the government, they've got, they've got securities. You've got to get approved, you've got to ask permission. Aviation, you've got to ask permission. Drugs, you've got to ask permission. I thought he was setting, setting up for like, we live in a permissioned society. It all sucks. But then he goes full statist and he's like, let's do it for AI. And I'm like, what? I thought you were going the opposite direction, dude.

• 1:19:12Ryan Sean Adams?

  I think, I think that there is a mistake here in that like, so what I think the mistake is, there is some, a little bit of truth in the middle, but it's like, I'd still more veer, veer towards Naval. Because I think the assumption that Chamath is making this tweet is that.

• 1:19:29Ryan Sean Adams?

  It's not like the full libertarian, like a super hyper libertarian assumption of like, we don't need any institutions, the free market will solve everything, right? It's like, I don't agree with that. But I don't think that the only regulatory institution has to come from the nation state, from a bureaucracy, right? I think we can develop other regulatory institutions outside of the FAA and the SEC and the FDA. And indeed, we are doing that in crypto in various ways, right? It's like, so I think that there is a lack of imagination when like, there do need to be standards in harmony and sort of like institutions in place, but they don't all, and coordination

• 1:20:12Ryan Sean Adams?

  apparatus, but they don't all have to come from big government nation state. And I think Naval is right on when he says that sort of get quelches innovation and like puts us further behind. But if Naval was to go as far as to say like, and therefore we don't need coordination, we don't need any sort of institutions.

• 1:20:35David Hoffman?

  Yeah, right.

• 1:20:36Ryan Sean Adams?

  Or like regulate, and it's sort of just every, every person for themselves, then that is sort of a bridge to fall from, far from me. So I think what we are doing in crypto is really creating new institutions here. And they're in their proto phase and they're very early, but like DeFi, open source code, Ethereum as an institution, that's more of the innovation I'd like to see. And I think that doesn't come with the trade offs where, you know, you get big G to come in and they just totally swelched the thing and kill all innovation. What do you think about that?

• 1:21:05David Hoffman?

  Yeah, I think that, I think that's right. I think if Chamath's take, instead of saying, and we're going to need that for AI too, was instead, you can bet that that is coming for AI, I would have been like, yeah, that makes more sense.

• 1:21:19Ryan Sean Adams?

  Well, but would you go as far as to say, okay, so let me ask you this, though. David, are you saying that we don't need any regulators? We don't need any like coordinating bodies or institutions? Are you just living in sort of a, you know, a libertarian, anti-establishment, like utopia, wonderland that doesn't actually exist?

• 1:21:42David Hoffman?

  I would say that all of our examples of regulators are in these pendulum of incumbent protecting corruption institutions on one side of things versus effective regulators. They're too far along, all of them are too far along on the incumbent protection corruption machines.

• 1:22:03Ryan Sean Adams?

  Even like the FAA?

• 1:22:04David Hoffman?

  FAA, probably not that one. That one's more of a niche. FDA, so I've been talking to a ton of synthetic biology and longevity researchers, and all of them say that the FDA has held back their industries by decades. And they just can't do what they aspire to do because of the FDA.

• 1:22:23Ryan Sean Adams?

  It's like, I don't know.

• 1:22:24David Hoffman?

  The FDA.

• 1:22:25Ryan Sean Adams?

  I, you know, you said that, yeah, you said it correctly. But like, yeah, I, I don't, I think every regulatory institution has gone through the kind of this path. Some are on the other side of corruption, right? It's like, I have a personally generally neutral to maybe positive feelings about the FAA, for instance.

• 1:22:43David Hoffman?

  Yeah, FAA, we like you guys.

• 1:22:44Ryan Sean Adams?

  I mean, like, it is safe, right? But, but maybe that's just because, maybe that's because I don't know enough about the airline industry. To be like, oh, they're blocking all of this innovation. I just don't know enough about it. But I do know.

• 1:22:56David Hoffman?

  Industry, it's just like flight in general.

• 1:22:58Ryan Sean Adams?

  Like, the SEC, man, they are screwing up.

• 1:23:01David Hoffman?

  I know a few things about the SEC.

• 1:23:03Ryan Sean Adams?

  They have abandoned their mission, right? And the FDA, I'm like, learning a little bit more about it, but it sounds like those in various life sciences spaces will say they're just totally shitting the bed as well.

• 1:23:13David Hoffman?

  Yeah. Well, they delayed the COVID vaccine by like, months.

• 1:23:17Ryan Sean Adams?

  And so are like, I mean, Chamath says, we need this for the, for AI. Like, you want a Gary Gunslar of AI? Like, that's what that sounds to me.

• 1:23:27David Hoffman?

  We need it yet.

• 1:23:28Ryan Sean Adams?

  What would he do? Like, exert power, exert control? I mean, it sounds terrible.

• 1:23:32David Hoffman?

  I bet you even Eleazar would be like, they're not gonna do any of them.

• 1:23:37Ryan Sean Adams?

  All right. Takes of the week. What are you bullish on, David?

• 1:23:40David Hoffman?

  I am bullish on the future of ETH staking, this ETH staking industry. Okay, so with the Shapella upgrade, we have the loop, correct? And so this is like staking 1.0. The staking project is not done, but the foundations are set. So like you have ETH staking, you have withdrawals, you can stake at home. It's only 32 Ether. There is so many more new layers of innovation that come along in this stack to take ETH staking from its existing but still primitive state to what we and I have always seen, which is the global internet bond market. And so we got Eigenlayer restaking, we got distributed validator technology, we got more competition in the

• 1:24:22David Hoffman?

  long tail of liquid staking derivative tokens. We have interest rate swaps. We have all of this other stuff. We have MEV capture and proposer builder separation. The the maturation and growth of the ETH staking industry is going to be so cool to watch. And that is what I'm bullish on.

• 1:24:41Ryan Sean Adams?

  I agree. There's another point. This is an Anthony Sisana tweet, DVT on test nets and main net. And in our episode earlier this week, I think you actually coined this phrase, and I hope it catches on, squad staking. So you don't have 32 ETH, but you want to solo stake? Grab some friends.

• 1:24:56David Hoffman?

  Well, it's not solo at that point. It's squad staking.

• 1:24:58Ryan Sean Adams?

  It's squad staking. Grab some friends and you make a squad staking unit. This is actually possible with some new technology that is here, but also early called DVT, Distributed Validator Technology. This kind of allows that. So I think we've just scratched the surface. We had to get through withdrawals in order to unleash kind of the next phase of innovation. And I also am very excited about the future of staking, the future of ETH staking in particular.

• 1:25:25David Hoffman?

  But what else am I bullish on?

• 1:25:26Ryan Sean Adams?

  But what else am I bullish on? Look, just Ethereum shipping, David. So we went just six, just over six months, I think close to seven, close to seven months from the September hard fork. We got another hard fork. We have withdrawals. And I think the next hard fork. Is probably, I don't want to put dates on anybody, but it's probably like another six to eight months away. Maybe that's a little optimistic, but that's EIP 4844. And so at that time, we'll have proof of stake, we'll have cheap layer two block space, and we'll have, like, we already have ZK EVMs, and layer twos are like blowing up. So we have cheap block space, we have proof of stake, and we have layer twos firing.

• 1:26:09Ryan Sean Adams?

  That is like what Ethereum has promised, I think. And that will be the fulfillment of the first set of promises that Ethereum really made.

• 1:26:19David Hoffman?

  The big core revolutionary promises, yeah, that you and I signed up for in like 2018.

• 1:26:25Ryan Sean Adams?

  Yes, it will feel like finally promises kept, promises fulfilled. And I'm just excited how fast Ethereum is shipping. I think morale has never been, never been higher. So, very cool. What do we got for meme of the week?

• 1:26:38David Hoffman?

  Meme of the week, meme of the week. This is a meme that you gave us. Her, this is one of those her me memes. It's her. Are you religious? Me. And there's this like child religious looking kid in a white button down shirt and a tie, holding the Bitcoin Standard book. Have you ever read the Bitcoin Standard, Ryan?

• 1:26:55Ryan Sean Adams?

  Of course I have.

• 1:26:57David Hoffman?

  I love the Bitcoin Standard book.

• 1:26:59Ryan Sean Adams?

  Why do you love it?

• 1:27:00David Hoffman?

  The writing style? The, just like, the absolute, like, Saifedean is a toxic character, the author, is a toxic character who has me blocked on Twitter, which is a big shame, because like, a lot of his ideas, I'm a huge, a huge fan of, yeah.

• 1:27:15Ryan Sean Adams?

  He would turn you away at a book signing because you're a very Ethereum.

• 1:27:19David Hoffman?

  Okay, so I actually have a signed copy of the Bitcoin Standard from Saifedean Mouse, I shit you not. CK from Bitcoin Media got it for me. And it has something in, written in it, I can't remember what it was, but CK gave the book to Saifedean and said, hey, can you sign this for my, like, my ETH head friend? And then Saifedean wrote something along the lines of like Bitcoin, Bitcoin will be ready for you when you, when you come to it, or something like this.

• 1:27:42Ryan Sean Adams?

  That's hilarious.

• 1:27:44David Hoffman?

  There's a lot of, there's like a lot of cool, like the whole topic of like fiat culture, I'm just a huge, huge fan of.

• 1:27:51Ryan Sean Adams?

  I, I get it, but he, he, he, so I get it. And I also enjoyed that book, to be honest. Like I, I read it like all the way through. I didn't hate it, but I, it, when you turn it into a holy text, right? And like, I think-

• 1:28:04David Hoffman?

  It is absolutely a holy text of Bitcoin.

• 1:28:07Ryan Sean Adams?

  Well, that's the thing. That's where it's just, it gets weird for me because I see the point of like fiat culture means kind of like, you know, uh, like the concept of like fiat art, things don't, um, we don't spend as much time on things anymore. It's all sort of this product of, uh, he's got some great underlying points, but that's almost turned into sort of a, like a religion where anything fiat is unholy.

• 1:28:30David Hoffman?

  Religion. Like I kind of consider all blockchains as like these sort of religions, but Bitcoiners have taken, parts of the Bitcoin community have taken this way too far.

• 1:28:42Ryan Sean Adams?

  Anyway, that's a, yeah, I laughed out loud when I saw this. So we're sharing that. That's the meme of the week, guys. Um, none of this, of course, has been financial advice, including the token hub. We really have no idea what tokens are going to go up or down. Crypto is risky.

• 1:28:54David Hoffman?

  But our analysts might, but it's still for, it's still for entertainment of value, though, first and foremost, and primarily and always.

• 1:29:00Ryan Sean Adams?

  So was this episode, as always, and we are headed west. This is Frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.