SotN#10 - GAMING (MONEY GAMES - YAMS NOT DED, CRV LAUNCH FAIR, MAXIMALISM GETTING DUMBER?)

STATE OF THE NATION #10 - Tuesday, August 18, 2020 Watch on the Bankless YouTube Channel https://www.youtube.com/c/bankless The State of the Bankless Nation is.... GAMING! The bankless boys discuss why. ----- GO BANKLESS WITH THESE SPONSOR TOOLS: ⚔️ GODS UNCHAINED - TRADING CARD GAME https://bankless.cc/godsunchained - you own the cards - start a free account, play and trade https://godsunchained.com/! 🧙‍♀️ POLYMARKET - BET ON CRYPTO https://bankless.cc/polymarket - bet your beliefs! - use it to bet on DeFi outcomes https://bankless.substack.com/p/how-to-bet-on-defi-with-polymarket! 🌈 AAVE - LEND & BORROW YOUR CRYPTO W/O A BANK https://bankless.cc/aave - earn some interest! 💸 AMPLFORTH - MONETARY EXPERIMENT FOR BASE MONEY https://bankless.cc/AMPL-MINE - learn about this experiment! ----- TOPICS: 1) MONEY GAMES - YAMS NOT DED 2) CRV LAUNCH FAIR? 3) MAXIMALISM GETTING DUMBER? We show: Ready Player One https://bankless.substack.com/p/ready-player-one-market-monday-0817 (article by David) Ethereum: The Money-Game Landscape https://bankless.substack.com/p/ethereum-the-money-game-landscape Conway's game of life article https://bankless.substack.com/p/ether-is-equity YAM Farms https://yam.finance/farms YAM analytics https://yam.zippo.io/ Where you mine CRV https://dao.curve.fi/ CRV price https://www.coingecko.com/en/coins/curve-dao-token --- Episode Actions: Catch SOTN LIVE on YouTube every Tuesday https://www.youtube.com/c/bankless at 10am EST (2pm UTC) Also...subscribe to Bankless YouTube https://www.youtube.com/c/bankless to watch State of the Nation every Tuesday! ----- Don't stop at the show! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit the official Bankless website for resources http://banklesshq.com/ Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

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

• 0:14Ryan Sean Adams?

  All right. Hey, everyone. Welcome to State of the Nation. This is episode 10. David, this is the first time we are live streaming this. Pretty exciting. How are you doing, sir?

• 0:23David Hoffman?

  Pretty good, pretty good. Breaking out my live streaming skills. Turns out it's not so hard. So yeah, we are now going to livestream the State of the Nation. So we're going to get a little bit more consistent with the time. So I think we're doing 7:00 AM Pacific, 10:00 AM Eastern Time every Tuesday. So make sure that you tune in to the Bankless livestream to get that done. You can find it on Twitter, but honestly, we prefer you to go to YouTube because the YouTube comments are just better there. And so you can subscribe to it.

• 0:53Ryan Sean Adams?

  Wait, did you say YouTube comments are better?

• 0:55David Hoffman?

  Than Periscope comments? Yeah.

• 0:57Ryan Sean Adams?

  Oh, okay.

• 0:57David Hoffman?

  Yeah. Yeah, we just want everyone to be in the same room. So if you're watching this, go to the YouTube. Also, while you're there, subscribe to the YouTube so you get these alerts that we are live streaming.

• 1:07Ryan Sean Adams?

  Awesome. Very cool. Yep. Super exciting. This is starting about 10 minutes late just because we were going over some technical issues. But we will work to start this promptly at 10:00 AM East Coast time. I think that's 2:00 PM UTC. If you're international and tuning in that way as well. All right. What do we do in State of the Nation? We talk about what's happening. So in particular, what happened the previous week? We try to relate it to some of the big picture themes that we talk about in Bankless every week. And we always like to show you some visuals, to drop some insights, and to drop some action items. A couple of quick announcements. We had Kane Warwick on Live AMA last week. You've got to check that out.

• 1:52Ryan Sean Adams?

  That's now published in the podcast feed. So take a look at that. We're also publishing a podcast today with Charlie Noyes. So make sure you grab the Bankless podcast feed and subscribe there. The Charlie episode is just fantastic. We talk a lot about ETH as a monetary asset. Why? Needs to be a monetary asset. Charlie works at Paradigm, which is one of the, I think, the most interesting crypto funds in the space. We're also dropping Tactics, so Tactic on Y earn today, and then some killer articles later this week that you're really gonna like, so get on the program. David, before we begin, we should talk about our sponsors. You wanna tell folks about Gods Unchained?

• 2:33David Hoffman?

  Yeah, yeah. Gods Unchained is gonna be really perfect for this particular state of the nation, but Gods Unchained is a game. And it's a game very much like Magic the Gathering, or Hearthstone, or Pokemon. It's a, it's a trading card game. And everyone loves Magic the Gathering because it's like a very social game and you play right across from another person. And you play with like physical cards, like you own the cards physically, kinda like owning cash physically. And then Hearthstone is that same game, but in a computer form. But Blizzard, the company, owns your cards. Like you purchase the cards from them, and then they give them to you and you can play with them, but you don't own them. They can take them back from you. You can't trade them. There's no marketplace. Gods Unchained is the perfect marriage between a physical card trading game and a digital card trading game.

• 3:17David Hoffman?

  Because you own the cards as tokens on Ethereum, which is really, really cool. And other than that, it's just a fantastic game to play. Like the, the game graphics are just super sexy. I have a fun time playing it. I've put like 50, 60 hours into it. So you can check them out at godsunchained.com. And the greatest part is when you win games, you get packs and then tokens show up in your wallet, and it's fantastic. Somebody has actually made, by playing Gods Unchained, has made the minimum wage more than the minimum wage in their home country of Brazil, I think, which is a pretty fascinating story.

• 3:50Ryan Sean Adams?

  Oh yeah, we, we did an article on crypto gamers and how, how much money they're making. There's some really interesting analysis on that. I think, anyway, we'll include in the show notes, but you can make money this way. Also, I wanna tell you about our second sponsor. This is Ave. So Ave is a friend of the show, has been doing incredible work in the lending and interest space. So it's a money protocol that allows you to deposit crypto asset in, so an ERC20 or ETH, for example. Die, for example, you know, link or USDT or USDC, any asset on Ethereum and you receive interest back on the amount that you deposit. You can also borrow from it. And this team, the

• 4:35Ryan Sean Adams?

  AVE team is just like iterating on their protocol so fast. Last week, they just announced a V2 of AVE, which I think is going to be absolutely fantastic, like amazing. I feel like bit by bit, we're taking pieces out of the existing banking system and we're moving it from like a bank and a building and, you know, thousands of employees to actual code. That's what AVE is doing. They're also like blowing up the DeFi leaderboard charts. So two comma club, congrats, AVE, well done. They are at a billion in locked value in the AVE protocol. So are they the second?

• 5:16David Hoffman?

  Right, isn't that three comma club?

• 5:19Ryan Sean Adams?

  Ah, three comma, three comma club.

• 5:22David Hoffman?

  You gotta get Pierre to come and audit your comments, bro.

• 5:24Ryan Sean Adams?

  Yeah. So now there's actually, I'm looking at DeFi Pulse right now. We've got Maker, who reached over a billion. They're, they're leading right now, AVE, number two, and Curve, number three. So anyway, check out AVE, super easy user interface. That's at ave.com, A-A-V-E.com. We'll include it in the show notes. David, want to ask you the question I always ask at the beginning of State of the Nation. What is the state of the nation today, sir?

• 5:54David Hoffman?

  The state of the nation is gaming. We are all gaming. I am literally gaming last, or I was literally gaming last weekend when I was playing Hearth, uh, playing Gods Unchained. But also even earlier than that, I was gaming by farming some yams and playing these money games on Ethereum, which we all seem to start to kind of get a little bit more, uh, there's just a lot more exposure around these things and people are starting to realize that they are much more like these massive multiplayer online money games. Like it's a new genre of games and it's all about wealth maximizing. And that's basically what

• 6:30David Hoffman?

  has happened over the last month of the DeFi world. And so we're again, like, kind of how we're stretching the definition of a nation when we call it the bankless nation. We're also stretching the definition of a game by calling it like a money game. It's a different type of game, different rules, different players, different win conditions. But I think it's a fascinating concept and we're gonna, we're gonna go into that into this, in this episode.

• 6:51Ryan Sean Adams?

  Yeah, I saw a tweet from Hasib, who we actually are releasing an episode with. He's from Dragonfly, he's an investor at Dragonfly, and he said something to the effect of, I knew crypto gaming would come.

• 7:05Ryan Sean Adams?

  But I didn't know it would take the form of yams.

• 7:09Ryan Sean Adams?

  It's like for, it's, it's always, it's, for a long time, it's been a meme that like, one of the biggest use cases is going to be gaming in crypto. And I believe that's true, God's Unchained is an example of that. But also so are these money games. So as all of the kind of the yield farming that that's going on, the stakes are maybe a different, like, a little higher and a little different. But these are absolutely games that we're playing. So maybe we should start there with topic one, David, because you wrote a fantastic, like, kind of, you've written a few things on money games. Like, and you wrote a post yesterday that sort of summarized what's going on a little in, in some of these things.

• 7:51Ryan Sean Adams?

  Maybe, maybe you could get into that. So the post is called Ready Player One, and I'm going to bring it up on screen. And yeah, talk about that for us.

• 8:00David Hoffman?

  Yeah, so this came out of a very early article, I think I wrote in last November, called Ethereum, the money game landscape. Again, I always use Ethereum as a, referred to it as a landscape, like it's a physical plane of existence. And there's different options, peaks, valleys, different tools, different parts of the landscape that do different things. And so as a money game, landscape, there's different constructions to be playing different games, right? And so I think MakerDAO, when the thing that kind of brought the DeFi world into existence is the first example of a move that you can make.

• 8:40David Hoffman?

  Right, the when single collateral die was issued, there was a move enabled like there's a new valid move on the board. And that that move was to deposit ether and mint die. And you had specific rules and parameters for making that move, but that move is now available. And over the course of the bear market, what we've seen the growth of DeFi, what we've really seen is the explosion of the growth of possible moves, right? There are more things for us to do. And each move offers you some sort of strategy to create, right? And so all these people that have been like, especially the people that have made a ton of money now. They've been practicing their games, their gaming, they've been gaming for the past like two years in DeFi.

• 9:25David Hoffman?

  Practicing their moves, learning how to make moves, learning what moves work and what moves don't. And as the DeFi ecosystem gets larger and more complex, because there's more like different boards. There are more total moves and now some people are really good gamers. And the other people are not so good gamers. But the cool thing about Ethereum is that you can pick your level of difficulty. It's it's largely, you largely play against yourself. Like there are other people that you have to compete with. But it's really mostly a single player game inside of this like MMO universe.

• 9:59Ryan Sean Adams?

  Yeah, I think that so.

• 10:02Ryan Sean Adams?

  If you if you want to play on easy mode, right? We've talked a lot about sort of this is not financial advice, but we've talked about portfolio construction. A little bit, right? Easy mode in crypto is you buy the reserve money assets. You buy ETH and you buy Bitcoin, right? And if you do that, it's pretty passive, basically, because you can benefit from all of the the upside. But harder mode, right, is when you start playing these money games with each of these particular protocols. And you you talked about four valid moves, right? And it's funny because all of these, well, I guess Synthetix is has been around for for over a year. But the other three are relatively new moves that just came on the board.

• 10:47Ryan Sean Adams?

  And almost like they were inspired by synthetic. But um comp and compound, for instance, I mean, that just came out in in May.

• 10:55David Hoffman?

  Right.

• 10:55Ryan Sean Adams?

  Can you talk about each of these um new valid moves, David?

• 10:59David Hoffman?

  Yeah, and so each each game, speaking of these protocols as games, each game kind of makes moves. Um and they're similar, but also different, right? And as you said, Synthetix uh kind of did the the yield farming before it was called the yield farming, right? That's why Kane in his bio on Twitter has the father of modern agriculture, because.

• 11:19Ryan Sean Adams?

  I mean, that's.

• 11:21David Hoffman?

  Which is true, this is true. He created he created the concept of like issuing rewards from the protocols in order to uh sponsor certain moves. Because Synthetics as a protocol wants you to do certain things, right?

• 11:35Ryan Sean Adams?

  Wait, wait, wait, wait. Don't you think Satoshi should be able to claim that title, though?

• 11:40David Hoffman?

  Yeah, you're right. Yep, you're right.

• 11:42Ryan Sean Adams?

  But no, no, good.

• 11:43David Hoffman?

  Until he does, though, until he does.

• 11:47Ryan Sean Adams?

  Or she, or they.

• 11:48David Hoffman?

  Or she or they, right, or it, or whatever. Um and and so so Kane and the Synthetix team like made this very prescriptive statement saying like, okay, we are going to uh encourage this type of move by issuing these rewards, right?

• 12:01Ryan Sean Adams?

  Right.

• 12:02David Hoffman?

  Compound and Comp with yield farming kind of expanded that and said, okay, you can get rewards by supplying any asset or borrowing any asset. So they kind of expanded the horizon of how you receive protocol issued rewards. And then it also included the governance module. And the governance module over compound from their native comp token is important in the game because that is the thing that is really incentivizing uh cash flows at its very essence, right? Because it governs over the cash flows. Then Ampleforth brought this rebasing mechanism, very simple. And with it came this massive game that was just made played around this one move. And basically, Ampleforth is a one-move type of game. It's like you buy and then you sell.

• 12:44David Hoffman?

  And you do that and because it's speculative, because it's a non-dilutive asset, it's a game of accumulation, but it has this like reflexive repricing thing that makes people play it differently, right? And then and then Urin and Yiffy came around and it made this scavenger. Hunt where there's a bunch of different moves, but they're elsewhere, not in, not like comp where it's in the protocol, but it's elsewhere. And then, and then I think what was really cool was that Yam and Yams and, and, and all of the activity around Yams. It's really a collection of all of these moves. And so Yam created this brand new game that was a collection of all these things.

• 13:23Ryan Sean Adams?

  These games inspire each other. Someone in the comments called it the money Farmville. And that's basically what they are because they're, they're also games that you play socially. There's this, this whole social dynamic around things like Yam or Ampleforth or SNX or Comp. And I, I want, I want to get back to the comment I just made about Satoshi, right? Because some people I, I think don't recognize that Bitcoin is a scarcity game in itself, right?

• 13:59David Hoffman?

  The most simple.

• 14:00Ryan Sean Adams?

  It the most simple, like it's almost, um, yeah, people don't like the term Ponzi game, right? But you know, to me, that's different from a Ponzi scheme. So other, you know, a Ponzi scheme is something that's non-transparent. You know, the, the centralized planners of the scheme are, you know, taking siphoning money. They're, they're giving false numbers out in order to trick investors, basically. A Ponzi game is, is simply a, it's simply a scarcity game where those that get in early are rewarded disproportionately relative to those that get in late. And that's what Bitcoin is, right?

• 14:38Ryan Sean Adams?

  The entire, the entire, um, I guess motif, the entire, you know, operating line of thought and social layer is like, I'm going to buy my, my portion of the 21 million Bitcoin and I'm going to hold. Nothing's going to shake me from, from holding. Like that is the original money game. And if you think about it, that's what backs, like those types of money games are the things that back the entire like value proposition of the bankless decentralized money space.

• 15:12David Hoffman?

  The fact that people are playing the game makes the game real.

• 15:15Ryan Sean Adams?

  Right, right. And, and it's harder to see with Bitcoin because, oh, now, you know, Goldman Sachs is saying you should have a little Bitcoin in your portfolio, right? And, uh, big investors, it's become institutionalized. So it's become like socially accepted. But it wasn't when it, when it started. It was a game that, that most people in the mainstream completely dismissed as a scam, as a scheme, as, you know, nothing that would, would become the movement that it has. So at, at some level, like all of crypto is backed by these types of games with one, like, degree of, of credibility, uh, or, or another, wouldn't you say?

• 15:57David Hoffman?

  Yeah, absolutely. And it's, it's all bakes down to a wealth maximizing game. And that's what Bitcoin is in its essence, right? It's, it's a wealth maximizing game that is also a game of chicken, right? And we, we see Bitcoiners playing this game when like Bitcoin takes a dip and then they all go to Cash App and they buy some Bitcoin and then they take a screenshot and then they post it to Twitter.

• 16:20Ryan Sean Adams?

  They socially signal.

• 16:22David Hoffman?

  They socially signal and then they say, I'm never selling. And basically what that's saying is like, the, in the, the game of chicken, if they're both, if two Bitcoiners are driving straight at each other, 200 miles an hour each car, then they, they're signaling that both they're going to run right into each other because they're not ever going to leave the game of Bitcoin because they're never going to sell. And that reinforces the game because the price floor of Bitcoin is determined by how many Bitcoiners are committed to buying Bitcoin and never selling it, right? And so that makes the game valid for other people. Because if you are as an investment firm, see like this army of Bitcoiners that are all buying like point 01 Bitcoins on Cash App and then signaling

• 17:07David Hoffman?

  that they're never going to sell, you see the available supply of Bitcoin becoming less and less available to you. And so that as an investment thesis, it turns, it goes from a game to an investment thesis. And the investment thesis of Bitcoin is that everyone's going to be playing the Bitcoin game.

• 17:22Ryan Sean Adams?

  Well, some people are like, uh, but David and Ryan, like you, you just made the entire space seem super scammy just now by talking about it in those terms. Um, and I just go back to you. That's exactly what gold is, right? Like gold is just a, a Ponzi game with much more history. 3,000 years of history, right? So that somewhat, lots of players, that somewhat legitimizes it, but it's the same sort of game that we're playing. There's a scarce amount of gold and we're betting that other human beings are going to use it as a store of value. But there's like, there's very little of the value of gold. There's very little of that. That's actually like utility value,

• 18:04Ryan Sean Adams?

  commercial value, that sort of thing. And, um, in, in, in another sense, uh, fiat is the same sort of money scarcity type game. It's very much based on a belief that a particular nation state will uphold the scarcity of the asset, not inflate it away. So like money as a social construct is, is a scarcity game. At least that's what I've come to believe, right?

• 18:34David Hoffman?

  I think, I mean, maybe this is like a new thought for the world and the, the rest of the world thinks we're crazy, but I think that this perspective and understanding this perspective is a very useful thing to guide your decision-making in Ethereum. And so maybe this is a new thought for the world, uh, and that's fine. But you know, this is a new industry for the world and to whatever degree that this perspective helps you in your understanding of how these systems work, that is a useful thing to know.

• 19:00Ryan Sean Adams?

  Well, let's talk about the rules. There are a few rules, right? But let's talk about rule number one. Maybe that's all we're ready to talk about today. What is rule number one, David?

• 19:09David Hoffman?

  Yeah. Rule number one, I think we could chalk that up as the only real rule because all the cool thing about Ethereum is that it's infinite and all rules are possible. But rule number one is the rule and that is the rule of keeping yourself in the game, right? So you, you can play the game really safely by buying Ether and then keeping it in cold storage and never touching it. And that's really safe. Or you can do more crazier stuff, riskier stuff. By going like leverage like 5x leverage long on DYDX with all of your supply and that's really risky. That's breaking rule number one because going 5x long on Ether is putting you in a position for you to lose all of your resources.

• 19:47David Hoffman?

  Right? So like imagine you're playing Zelda or like Diablo or like World of Warcraft and like you take all of your armor and your swords and all of your like consumables. And then you you gamble it, right? Like you try and you try and 5x all of those things. Well, if you lose all those things, then you have no weapon, you have no shield, you have no armor, you have no no health potions. Like if you lose all of your stuff, you're out of the game, right?

• 20:10Ryan Sean Adams?

  Yeah, you see a screen that looks like this.

• 20:12David Hoffman?

  Right.

• 20:13Ryan Sean Adams?

  If you're trying to avoid.

• 20:14David Hoffman?

  So you can do risky stuff like going 5x long on Ether, but you shouldn't do it with your whole entire stack because you need to stay in the game. Right? You should do it with a responsible amount of money that keeps you in the game.

• 20:26Ryan Sean Adams?

  Yeah, absolutely. David, we should talk a little bit about these games in general, right? Because you've you've compared these to Conway's Game of Life because all of these games on the Ethereum. If Ethereum is sort of a canvas for these types of of money games, you have all of these protocols, all of these money games going on simultaneously. And they're kind of competing, right? They are also like obeying the algorithms of their code and their and their construction. And it almost starts to resemble like living organisms. Can you talk about Conway's Game of Life and you know how that relates here?

• 21:08David Hoffman?

  Yeah, so Conway's Game of Life is a pretty interesting computer science experiment. And what you see on the screen right now is, and again, if you're watching this on the podcast, go to YouTube because that's where you get to watch us look at things while we talk about them. But Conway's Game of Life, it's a grid, right? It's like a it's like a it's like your graph paper in, you know, elementary school. And there are certain certain cells are colored white and certain cells are colored black. And then there's a set of rules for like if you have exactly three white neighbors and like two black neighbors, then you're.

• 21:42David Hoffman?

  If you are a white cell, then you will switch to a black cell. And then there are certain rules for if you are in one state and your neighbors are in that state as well, or a different state, then you will switch states. And so over time, you can create these patterns of cells that will change based on their surroundings, based on the parameters around them. And so as people created this game of life, they found out that using a specific construction of types of, of patterns of cells, either a one or a zero, black or white, will create something that lives, that, that does things, repeats and recycles and, and creates something that doesn't die. Like, there are these things called gliders that can, that just move forward.

• 22:27David Hoffman?

  There are these like things that interact with each other and make gliders, like a, like a factory contract on Uniswap is, is how I illustrate that. But the point is, is that it's very much like a chessboard, a checkers board. And then there are updates to the checkers board. And that's very much like the state machine of Ethereum, because Ethereum moves in this very serial manner, like one block, two block, three block. And each of these blocks is a time for people to make moves or not. And when we coalesce, coalesce all the applications on Ethereum in DeFi, we create this like ecosystem of combining patterns of cells that all interact with each other. And what you see on the screen is some guy who had a lot of time,

• 23:13David Hoffman?

  who, who made out this, who made this massive diverse ecosystem of just organisms using Conway's game of life. And it coalesces into an economy, right? And so each of these individual little like patterns are part of a larger whole that is itself, if you take this metaphor to the end, is itself Ethereum, right? All of the activity in these like different patterns of organisms becomes Ethereum.

• 23:42Ryan Sean Adams?

  So these are all money games, basically, that we're watching. This is like

• 23:45David Hoffman?

  Money, money.

• 23:46Ryan Sean Adams?

  An organic economy is kind of what we see. That's why I love, we brought it up in the last State of the Nation, but that, that picture of like, all of the different money protocols, you know, like where, where Uniswap was like Pac-Man eating the others. Now, at certain times, some, some of these organisms will become more dominant and start eating liquidity from others. But this is very much how it looks. It's sort of this organic, you know, set of money games. This is, this gets pretty complex, too. Wow.

• 24:17David Hoffman?

  It's, yeah, and I think I thought, maybe, I don't really know the guy that made this video, how much hours he put into it. I'm assuming it's a lot, but a lot of that complexity must be emergent, right? Like, he, he's like, he's like the central planner of the initial state, but the state grows in its own way from beyond that. So some of these things happen automatically.

• 24:37Ryan Sean Adams?

  Absolutely. Well, very interesting. All right. So let's relate that to, as we promised, to something that, that has been going on currently, or something that happened last week, and that is YAMs. So we talked about this in the last State of the Nation. But like, and that was really the day YAMs launched. So I guess just to get folks up to speed, if you've been on vacation the last week, right? Like, you have, it's just, I, I tweeted this out the other day, like, you know, you take a day off and you, you, you miss eight yield mining opportunities, right? It's just like, this stuff is happening so quickly. But anyways, if you, if you missed it, YAM was a, kind of a derivative off of the, the idea of ample fourth, basically,

• 25:23Ryan Sean Adams?

  where you have some sort of an asset that rebases, in YAM's case, is rebasing every 12 hours to a, to, to kind of meet its, its market cap. So if it was above a dollar, the supply would inflate. If it was below a dollar, supply would deflate. Anyway, the details, the intro, we can, you know, check out the last State of the Nation, episode nine. Anyway, what happened was, YAMs got absolutely bonkers crazy, right? So this is a, a contract that was written in 10 days, basically. It was a fork of a synthetics contract, but unaudited, right? Completely unaudited. But the, the DeFi gamers, some would call them degenerates.

• 26:07Ryan Sean Adams?

  Deposited an incredible amount of funds inside of the YAM contract in order to earn that that gaming reward of more YAMs. So the way it works is basically you have all of these farms that are set up. I'm not going to unlock my wallet. You have all these farms set up and you can you can basically deposit in different assets. So you can deposit in Wi-Fi or ETH or all of these different assets and based on the amount that you deposit and some other parameters, you get a return. You harvest YAMs basically. So we got to a

• 26:44Ryan Sean Adams?

  point where there was over 600 million in value, 600 million in value deposited into these YAMs farm, the YAMs farm and the market cap of YAMs as well. You know, I wasn't tracking, it's difficult. The tracking places don't have exact metrics on on YAM, but I believe it got to like 750 million, like close to a billion dollars in market cap before the whole thing, the whole thing started to collapse. David, maybe you want to take it from there? Like, so what's what happened with the collapse? Because everything I talked about happened within about, you know, 48 hours.

• 27:29David Hoffman?

  Right.

• 27:29Ryan Sean Adams?

  And then something started to go wrong. You want to take it from here?

• 27:32David Hoffman?

  Yeah, yeah, it was it was a 48 hour game. And before I finish off the the story of YAMs, I do want to talk about how like, YAMs presented different difficulty levels. And I think one of the reasons why YAMs was so popular is because it had a very accessible easy mode, because the easiest thing you could do was like submit Ether into the system, then you get YAMs, right? And it's also important when we talk about the safety and security of these systems, because as the listeners probably know, YAMs blew up. But the whole thing didn't blew up. A specific contract of the YAM system blew up. And so the people that deposited their 600 million dollars of value into YAMs, that part was extra secure, super secure, because all the

• 28:16David Hoffman?

  Place that you submitted your value was just a bucket for submitting value like it didn't do anything with it. It was very, very inert and so vetting the risk of these systems takes nuance and understanding. Because the part of the yams that blew up was unrelated to the place that people submitted their capital. So the submitted capital was never at risk, right? Not, not from the way that yams blew up.

• 28:40Ryan Sean Adams?

  So the way it blew up, my understanding is, you know, all of that 600 million that was deposited. It's completely safe, but where it blew up was its governance module. So what yams was trying to do was take, you know, 10% of its rebases on the upside and put that into a stablecoin reserve of sorts. And it was that stablecoin reserve portion that blew up. And the idea was, you know, yam holders would be able to govern like, you know, the protocol to some degree and be able to determine what happens with that, that reserve. So it was that stablecoin reserve that effectively like it, it, it blew up in such a way

• 29:23Ryan Sean Adams?

  that yams could no longer be governed. Is that about right?

• 29:27David Hoffman?

  Yeah, the, the treasury could, yeah, the, the governance module broke. And so there was an interaction between the treasury and the governance module and the rebasing system. So those three things created a result that was like a, it was like a mutation that didn't go well. Like it was, it was a bad combination and that's, that's, that's as a result of probably the hastily generated game that had like a faulty game board, like instead of, instead of the path of the game, like going to finish line, it like veered off the edge.

• 29:59Ryan Sean Adams?

  Yep.

• 30:00David Hoffman?

  And so what happened was that, you know, governance needs to have a quorum of yams, but yams rebased. And so the supply of yams changed. And so all of a sudden the quorum got really, really difficult and finding quorum and was needed to have, needed to happen in a certain amount of time. And then it did happen, which actually really cool story is like enough yams did reach quorum to fix the issue, but turns out there was another bug behind the bug, right? The governance module rebasing and treasury link between those three things didn't link up. And so as a result, YAMs turned into something much closer to just a much more inert thing like Ampleforth, but it also had a 10% tax because that's how the treasury was filled.

• 30:44David Hoffman?

  But the treasury was being filled without anybody to actually make a claim on it, right? And so that broke. Now here's where things get interesting because this was a game and the game ended. Except I think my claim is that the game is still being played, but it's being played off-chain. And we saw this happen by by people still flooding the YAM Discord, but there being a ton of energy and discussion about YAMs in the YAM Discord. And most importantly, in the course of I think like 70 hours, $100,000 got donated to fund an audit of the YAM V2 system that is supposedly coming out, right?

• 31:24David Hoffman?

  And so YAM, the YAM community, and also all games on Ethereum require community because you need players. There's a lot of players who are playing the YAM game that want the YAM game to continue, right? They want to remake the board in a way that the path of the board doesn't veer off the edge, but it finishes, right? It does what it's supposed to do. And so it's a court, it's now a coordination game. It used to be a money game, which was also to some degree a coordination game, but now it's completely a coordination game where all the YAM players are trying to figure out how to get the game restarted, right? And so there's a generally assumed path where the YAM version 1 token is going to be redeemed for a YAM version 2 token, and the YAM version 2 token is inert.

• 32:05David Hoffman?

  It's just a normal ERC 20 token, which is this placeholder for the YAM version 3 token. And that token is supposed to, in theory, comes out after the audits, after we have successful audits and with patience. And the game currently is now speculating that that is going to happen, right? Yeah. And so this is not, the game is not over and it's still a highly risky game, perhaps the most risky game on Ethereum. But if you want to play the YAM game, you are now speculating that the YAM game will continue. Or not is though it's now a different game in a different part of Ethereum now it's off chain. And it's a speculation, will the game make it back on to the board like will we make it back on to Ethereum?

• 32:47Ryan Sean Adams?

  And let's be perfectly clear what the game is right like I can't use any clearer language than this. This is a Ponzi game, right? It's a game of basically buying low before everyone else and selling high.

• 33:00David Hoffman?

  Right.

• 33:00Ryan Sean Adams?

  Right? Or holding if you want until Yan becomes the global reserve asset of the world. But it's a similar game. Right? So it's a similar game as the Bitcoin game, only with far less legitimacy. But a very interesting distribution mechanism in that it's not going to VCs or like being I quote unquote pre mind. Anyone has access to a Yam farm who has some capital. Now it's still a whale game, to be honest. Because the the people with larger amounts of DeFi capital are going to disproportionately get more Yams, of course, right?

• 33:44Ryan Sean Adams?

  However, it's different than the the whale games of of venture capitalists and Sand Hell Road and Silicon Valley in that it's accessible to anyone. And I do think that is an interesting distinction in this type of the game, but it is. That's what you're playing. If you're you're making a bet, as David said, that Yams will be resurrected in some sort of second level, second version. And you're also making a bet on the Ponzi game, but I thought Yams may have been dead as well, right? Because it was quite a quite an epic ascent and then descent. And even the developer was like, one of the developers was like, I'm sorry, guys, like this was a bad idea.

• 34:26Ryan Sean Adams?

  But now I like, if you look here, it's not only social coordination going on off chain, but it's also there's $370 million still locked in this thing. That's $370 million worth of farming that activity is still happening. So. Someone's betting on something here. And then if you look at, okay, so yeah, market cap right now, I said earlier, it got to like 750 million, something like that. I'm not sure that EtherScan is updating this correctly, right? So this says market cap of yams right now is 25 million, but I'm not sure that that this total supply is correct because supply continuously rebates. Is that right, David?

• 35:06David Hoffman?

  EtherScan is not equipped for rebasing. It was not equipped for rebasing with Ample4th and definitely not, it's still not equipped for rebasing. Like rebasing is this very creative mechanism that infrastructure like EtherScan is not yet equipped to present.

• 35:20Ryan Sean Adams?

  Yeah, so what you have to do is you have to sort of calculate the scaling factor of yams.

• 35:30Ryan Sean Adams?

  I actually was able to figure this out from, from somebody before we came here, up here. So we see this would be the correct calculation of what yams are right now, the market cap at a price of 55 cents, be about instead of 25 million, fully diluted, 31 million. So again, quite a descent from, from its highs, but it seems like people are still playing the money game. David, we put out a thread on Friday, which I knew would be controversial, but it was basically like, hey, DeFi, hey, Ethereum, hey, bankless community, do you love or do you hate yams? And I'm talking specifically about these types of Ponzi-esque money games, speculative

• 36:14Ryan Sean Adams?

  money games. And again, Ponzi, not the Ponzi scam, but the Ponzi, the game you have to buy early and speculate. And I feel like the community is somewhat divided. So here's a comment saying, Yam is the symbol of everything wrong in DeFi. It doesn't do anything, right? Like this is not like peak insanity. This will end very badly, like the ICO craze. Others?

• 36:41Ryan Sean Adams?

  Like had a divided opinion, right? Excited that this kind of game is possible in a way that has never previously been possible. But also like it was hastily launched and you know, maybe the game is is sort of not correctly informing noobs as to as to the risks and speculative nature of it. What's your take on YAMs? Good or bad? These types of money games, good or bad?

• 37:07David Hoffman?

  Yeah, money games, absolutely good. And specific iterations of money games also very good. Like Yearn and Yiffy, good money game. I would also bucket YAM into the good money game category, largely because it was a fair launch with good intentions. I know two of the five people on the YAM team. One's Dan Elitzer, the other's Will Price. I've met Dan in real life and I've met Will online. And so me, maybe because I know more people in the space than the average person. I have like privileged information just from knowing these guys, but I trust them. Like Dan's a nice guy. I trust his morals. And so from that perspective, for me, YAMs was a good game. And very much in the same way that in 2015 and 2016 ICOs were good.

• 37:52David Hoffman?

  The best, the early ICOs were like Augur and Golem and Genosis. Excuse me, Gnosis. And the ICO mechanism was a great way to receive funding and distribute your tokens. And then it became bad, right? And then it got milked and milked and milked at the cost of retail. So I understand when people are seeing like, oh, this is the worst of the worst of DeFi. Is because like, maybe, maybe there is something here. And maybe the people that are hating on these games aren't seeing like, are there, are there kind of not seeing the good parts because they are seeing the future bad parts coming? And that's totally fair. And if we do think that we are on the cusp of this bull market with a bunch of new entrances,

• 38:35David Hoffman?

  I think what we're going to see is we're going to see a lot of money games that are very bad money games that are really set up to benefit the people that designed them because they know how they work and in order to milk retail, right? And that's kind of what we, that's what we saw with the ICO where the ICO was initially good. And then people found out that they could milk retail with it. And so that's what I'm worried about.

• 38:58Ryan Sean Adams?

  Also, what about the charge that like these games aren't really doing much for the for the world, right? So a bunch of early whales like get rich. Who cares, right? Aren't we here to go bankless? What about that charge?

• 39:13David Hoffman?

  Yeah, so going going bankless and leaving your nation state, taking your capital and leaving your nation state, putting on Ethereum is is a subject that I think is relatively separate from money games, because you can like take your money and put it inside a compound and earn an interest rate. And like technically, the way that we are describing things, we therefore state that you are playing games. And the user may not think of him like that, think of it like that. Like, they just may think that I'm trying to receive an interest rate on my money. Like, I'm not playing a game. And that's totally fair. That's totally fair. Like, the the bankless nation is a much bigger thing than just these money games. The only idea, the the reason why we call these money games money games is because we are thinking that it's an appropriate way to view these things and understand these things. Right? Go ahead.

• 39:59Ryan Sean Adams?

  Yeah, yeah, no, I I agree. I guess my take is so Ethereum is an open permissionless platform. These things are going to come. And some of the games, as you said, David, are going to be scams and and toxic. And some of them are going to be a bit more transparent speculative Ponzi games. And I feel like our job as the bankless nation is to educate folks on the game that they're playing. So they know, right? Like, if you were playing the ICO game back in 2017, it was not a game based on any sort of fundamental cash flow, right? So the game you were playing,

• 40:42Ryan Sean Adams?

  whether you knew it or not, was a game of selling to the next guy, right? Who who buys it at a higher price? It was completely speculative. There was nothing really backing. That's similar to honestly, what the Yams game is. It's a it's a speculative game that you're just trying to sell it for higher than you bought it for, essentially. And I feel like if people are clear on what they're actually buying, I think a lot of people Bought ICOs in an uninformed way. They thought that success of the project might be correlated with value of the token. They thought that the like the token itself was like the project itself was real when in reality it hadn't shipped.

• 41:25Ryan Sean Adams?

  All sorts of things. So I feel like the best place to be is to stay educated on these topics. And we hope to play a role in like informing you about these various money games. So if you choose to play them, you know, the game you're playing, you know, that like there's someone, there's not someone behind it who can bend the rules in their favor.

• 41:48David Hoffman?

  Right.

• 41:49Ryan Sean Adams?

  Yeah.

• 41:49David Hoffman?

  I think it's important to think about where this could go, right? And so we always discuss like if you, if you take a day off in DeFi, like you're behind. I think we are just at the beginning of that. And we saw this evidenced by the creation of YAMs, which was the integration of like three or four other mechanisms from other protocols that we just, the creators of the YAM system found out like, hey, what if we took this puzzle piece and this puzzle piece and this puzzle piece and put them together and that's YAMs, right? I think that compounding possibility of possible valid moves is about to explode. Like we are on the cusp of that. And as more valid moves are created, more and more possible experiments will result.

• 42:31David Hoffman?

  And so we are just seeing the basic primitives, like the rebasing invented by Ampleforth is a primitive, right? That is going to be recycled and reused over and over and over again. And maybe it's one small component of a massively more complex thing that we create as the developers of these systems get better at developing them. And so going back to that video that you showed on your screen, Ryan, of Conway's Game of Life, we are in the very small, very, very might like the smallest version of Conway's Game of Life. We are in the very primitive state, but as that game grows, it becomes more and more and more complex, right?

• 43:11David Hoffman?

  We, in two to five to 10 years, we are going to see some of the most insanely complex and fun games on Ethereum. And they're going to come out of experimentation that we are seeing in DeFi today.

• 43:23Ryan Sean Adams?

  I totally agree, 100% agree. These experiments are net good for everything to come in the future. We're building up primitives here. David, speaking of money games, we should talk about our next set of sponsors. Do you want to kick it off with Ampleforth?

• 43:38David Hoffman?

  Yeah, Ampleforth, father of modern rebasing. Ampleforth created the rebasing mechanism and is responsible for a lot of the creativity that we see on Ethereum today. So Ampleforth is a base money experiment. You could call it a base money game. Very much similar to Bitcoin in that if you own 1% of Ample tokens, you will always own 1% of Ample tokens. But instead of having a fixed supply and variable price like Bitcoin, Ampleforth has a fixed price variable supply, right? So it's inverse, right? It's not a stablecoin, even though the unit of Ampleforth tracks $20.19 over time. The volatility comes from the volatility in the supply, right?

• 44:22David Hoffman?

  So you purchase 100 Ampleforce and then you will see that 100 Ampleforce go to like 200 Ampleforce or 50 Amplefords, while the unit will always be a dollar. And we're seeing how successful of a mechanism this is in the way that people are copycatting it and using it in their own protocol. So check them out at ampleforth.org. They have their own liquidity incentivization mechanism called the Geyser. If you supply Ampleforth and Ether to the Uniswap pool, you can get a little extra bonus of Ampleforth tokens. And so, yeah, that's Ampleforth.

• 44:55Ryan Sean Adams?

  All right. I also want to tell you about a poly market. So the quest for prediction markets on Ethereum and using DeFi protocols continues. And poly.market has a really interesting take. So if you go to poly.market, you can bet on your beliefs. This is like an information market. So you can see some of the market categories they have, coronavirus, crypto. You can even create your own markets. This is an interesting category we've talked about on Bankless. One of my favorites is make a bet on will Ethereum V2 Phase 0 launch before 2021? 64% think yes.

• 45:36Ryan Sean Adams?

  36% think no. What do you think, David? Just curious.

• 45:42David Hoffman?

  I think that's fair odds.

• 45:45Ryan Sean Adams?

  Fair odds. Alright, so David might enter this market equally on both sides, I guess. Well, that would make him net zero. I'm not sure what David would do with this market. But if you want to bet on things like that, you can. They even update it with interesting things like amount of YAM being delegated. So you can go to poly markedly and start betting on DeFi protocols. And if you do this and you email hello@poly Markit with bankless in the subject line, they will cover your gas costs and give you early access to unreleased features. Gas cost coverage is a net benefit in these times of 200, 300 GUE gas fees.

• 46:29Ryan Sean Adams?

  So check them out at poly Markit. We'll include them in the show notes as well. David, let's talk about our next topic here. And then what we'll do in like, at the end is kind of turn it over to the bankless community in the YouTube to ask some questions and finish this off. But let's talk about Curve really quick. So Curve released their token. They started releasing their yield farming mechanism for their CRV token last week.

• 47:01Ryan Sean Adams?

  I was shocked at the market cap, at the price of this baby when it launched. Like, so here it is.

• 47:11David Hoffman?

  It got up to like $80 billion, didn't it?

• 47:14Ryan Sean Adams?

  Yes. So here it is on CoinGecko at 70 billion. They must take like, you know, like some kind of a one day average or something.

• 47:21David Hoffman?

  Yeah, that's showing 70 million, but they're missing three zeros there. It was definitely 70 or 80 billion.

• 47:26Ryan Sean Adams?

  Yes, it was. And when I looked on.

• 47:30Ryan Sean Adams?

  Yeah, in fact, I don't think these numbers are accurate. Well, this this is accurate as of now. It's a it's worth $11 billion right now. When I looked at this on Saturday, we were like 130 billion, 120, 130 billion. So it briefly exceeded the market cap of certainly of Ethereum. I don't know. Did it succeed the market cap of exceed the market cap of Bitcoin?

• 47:54David Hoffman?

  No, not a Bitcoin. Bitcoin is like 250 billion.

• 47:56Ryan Sean Adams?

  Okay, all right.

• 47:57David Hoffman?

  That would be crazy.

• 47:57Ryan Sean Adams?

  Getting close though, right? Getting close. Um, so an absolutely insane valuation, at least at first. And the way it launched was somewhat odd, right? So, um, the the way it launched was basically the the Curve team had put out some code, sort of an unreleased version. And this guy, this person on Twitter or organization on Twitter, a simple farmer, DeFi Chad. He was the one who activated the Curve governance contracts, the Curve yield farming mechanism. So individual group paid $800 in gas fees

• 48:39Ryan Sean Adams?

  to activate this this contract prior to the Curve team formally releasing it. So a little weird, a little interesting. Um, and there's lots of speculation around that. So anyway, like back to the fact, so it was activated and then Curve came out and said, since it was activated, without our permission, our knowledge, we're just going to go with it because we have no other choice. In the meanwhile, people had started to yield farm Curve early, right? And if you're in early with yield farming, you you you kind of.

• 49:13David Hoffman?

  You get outsized returns.

• 49:14Ryan Sean Adams?

  You get outsized returns, right?

• 49:16David Hoffman?

  Because because no one else is yield farming. So you have a disproportionately large part of the pool.

• 49:22Ryan Sean Adams?

  Exactly. So there's controversy over the the launch. The the the value of the token has fallen steeply, of course, which it had to. I mean, that's just gravity, but still. It's appropriate. It's still $11 billion, which seems awfully, awfully rich.

• 49:39David Hoffman?

  Yep.

• 49:39Ryan Sean Adams?

  For a capital asset. But yeah, that's basically what happened. And there's some controversy around it that we could get into. But David, do you have any quick takes here?

• 49:48David Hoffman?

  Yeah, so the controversy around the launch was that, you know, we are now kind of used to the status quo of fair launches, right? Like, no VC premine, no founders rewards. But that's, the money's still enticing. And so the nefarious malicious opinion of what happened was that this DeFi Chad guy, who's an anonymous Twitter account, was, this was a plan, right? And the plan was to deploy the contracts under this anonymous account. And then from Curve, they say like, oh, somebody deployed our contracts. But somebody got to like, basically premine. It was basically a premine because it was released before anyone knew it, right? So the criticism is that this was really done by the Curve team and they just wanted to

• 50:33David Hoffman?

  to have the outsized returns. I don't know. That is a thought. There's nothing to back that up. I don't know if that's true or not. But that is what is the worst, the least generous interpretation of those events.

• 50:47Ryan Sean Adams?

  Yeah, that's what, I think a good summary of that interpretation or that possibility. And criticism of the way it was launched is found in this Twitter thread by Adam Cochran. So we'll include that in the show notes. But it does seem that whatever happened with respect to like the, you know, the fairness, sort of people getting in early, it seems like this was maybe done to avoid some regulatory scrutiny.

• 51:12David Hoffman?

  Also totally fair.

• 51:13Ryan Sean Adams?

  Right, it's just kind of like hands off. We didn't, we didn't deploy this thing. Somebody else did. We don't know who.

• 51:19David Hoffman?

  Yep.

• 51:20Ryan Sean Adams?

  Which is, which is quite interesting as well. I don't know if you've got, you've seen any crypto lawyer feedback on that? Like a Jake or somebody like that?

• 51:29David Hoffman?

  No, Jake would never say anything on public Twitter, no.

• 51:33Ryan Sean Adams?

  He wouldn't touch that.

• 51:35David Hoffman?

  But that is a good point. There are unknown regulatory risks with launching these things because there's no, there's absolutely zero sort of information about the state of whether these things are. Dubious, compliantly dubious regulatory issues, it's unknown. And so it's fair to assume that like these people that are kicking off these yield farming events are trying to disconnect from that. That's, that's fair.

• 52:01Ryan Sean Adams?

  Yep. And we will include a link to where that yield farming can be done, just in case you're interesting, interested. Again, like the earlier in these protocols, you start yield farming, the more risky it is.

• 52:13David Hoffman?

  Yes.

• 52:13Ryan Sean Adams?

  So this again is maybe not quite YAM on the spectrum of risk.

• 52:17David Hoffman?

  Right.

• 52:18Ryan Sean Adams?

  But it's pretty close.

• 52:19David Hoffman?

  Going through the door first is risky, right? And I would also say even the design of Curve is, this is not an easy mode game. This is a hard mode game. And largely it's because of the gas fees, right? And so I actually started to farm Curve at the very beginning, because the returns were ridiculous. At an $88 billion valuation, you could make just a ridiculous amount of returns. It was something like 550,000 APR for like on an hourly basis, right?

• 52:51Ryan Sean Adams?

  Right.

• 52:51David Hoffman?

  So I'm like, okay, like I'll go into yield.

• 52:54Ryan Sean Adams?

  It's worth the risk at that point.

• 52:55David Hoffman?

  Yeah. Now, I'm not like the biggest DeFi whale. And so I got burned on gas fees going in and out of the pool. So it cost me 0.5 gas to get into the pool and 0.5 ether to get into the pool and 0.5 ether to get out of the pool. And I farmed 0.35 ether worth of Curve. So I got, I got burned.

• 53:15Ryan Sean Adams?

  Yeah.

• 53:16David Hoffman?

  And so this is not a game for everyone. And this is kind of why it's advantageous to be a whale in the space, because you can pay for those gas fees, because it's more efficient, right? And so when you are making the calculus as to what moves you want to make or not, like I messed up and I lost that game because I have less money than I do now. And so therefore I lost, right?

• 53:36Ryan Sean Adams?

  And you messed up because of gas fees.

• 53:38David Hoffman?

  I messed up because of gas fees, right?

• 53:40Ryan Sean Adams?

  And by the way, what do you deposit in Curve? It's like some sort of a, you're like a stablecoin, right? Like you deposit a DAI or you can deposit a USDC or something?

• 53:50David Hoffman?

  This is also why this is not an easy game, because it's a two-step game where you deposit stablecoins, your preferred stablecoin, USDC. tether die and then you get the Y die Y Y USDC Y tether version of that which is the interest bearing version and then you submit that to the Y curve Dow governance portal which is then where you get your curve tokens that's where you start farming right and so it's it's a two step process whereas Yams with a one step process and getting in and out of the Y the Y curve stablecoin pool is really expensive really expensive

• 54:26Ryan Sean Adams?

  yeah and just like converting what you said point five ETH into dollar terms right so like I don't know a hundred and fifty dollars

• 54:33David Hoffman?

  twice so I spent a whole ether in gas to receive a third of an ether and farmed

• 54:38Ryan Sean Adams?

  okay so four hundred dollars you spent two hundred dollars to receive how much ether

• 54:42David Hoffman?

  point three four

• 54:44Ryan Sean Adams?

  yeah so net loss right

• 54:46David Hoffman?

  net loss of two thirds of an ETH yeah

• 54:48Ryan Sean Adams?

  and that is why I think there you know I think some within DeFi are starting to get upset and a bit jaded at these gas fees because the argument is

• 55:01Ryan Sean Adams?

  hey like if gas fees are three hundred Gua then the only people that can afford gas fees high gas fees are folks that are dealing in large capital pools right so like to make that trade worth it basically what you said is like I'd have to have at least a thousand dollars or so right or actually I'm not sure how much

• 55:21David Hoffman?

  for a curve way more yeah

• 55:22Ryan Sean Adams?

  okay so I'd have to have and that was when curve was sky high right so if I was depositing in curve now then like you know different story I'd probably need like I don't know thirty fifty thousand dollars something like that before it's even worth it so that is the criticism what do you think of that criticism David

• 55:40David Hoffman?

  I think it's totally fair and that's why this the current gas market is not good I mean it's good for Ethereum because fees are good but it's really crowding out a lot of you know smaller players that that want to play games but the it's it turns out like the the current games on Ethereum are like you know five thousand dollar minimum poker tables right

• 56:01Ryan Sean Adams?

  yeah

• 56:01David Hoffman?

  like like that it's just not suitable for everyone and so a lot of people are on the sidelines like watching all these like rich whales have a lot of fun it's it's not the the best environment I'm not going to say that I'm happy about it

• 56:13Ryan Sean Adams?

  And yeah, not only have a lot of fun, but also make a lot of money.

• 56:16David Hoffman?

  Right.

• 56:17Ryan Sean Adams?

  And then sometimes dump that.

• 56:18David Hoffman?

  Right.

• 56:19Ryan Sean Adams?

  On less savvy.

• 56:21David Hoffman?

  Right.

• 56:21Ryan Sean Adams?

  Players of the game, basically.

• 56:23David Hoffman?

  Yeah, so like somebody who might not understand how to vet games very well, might look at like, okay, yield farming, I don't really know how to do it, it sounds risky, gas is really expensive. You know what I'm just gonna do? I'm gonna buy the the curve token. And if you did that on the first day, you bought a curve token that was valued at $88 billion, when Ether was valued at like $40 billion. So that also wasn't a good move either. So really, you were kind of just forced to sit out, right? And if you didn't know how to evaluate the game, you might have made the mistake of buying Curve at an $88 billion valuation.

• 56:56Ryan Sean Adams?

  Yeah, yeah. You know, it's interesting in our podcast with Haseeb, which is coming out next Monday, we talk a little bit about that, like DeFi in Layer 2, DeFi in ETH 2, right? And how the main chain basically is shaping up to become a settlement chain, right? The original Ethereum 1.0 main chain is kind of like a Manhattan, basically, where things are gonna get really expensive and not all transactions can be done in Manhattan. It will become like a town, an area, a district for the wealthy. And that is the economic reality that I think ETH 1 becomes a settlement layer. But that's why we need Layer 2 solutions.

• 57:37Ryan Sean Adams?

  That's why we need ETH 2.0 to to create some more space, some more geography, some other, like Haseeb calls it, yes, the other suburbs, other other farmland, that where where gas fees aren't completely prohibitive, we get some more room to breathe. I'm pretty, I'm pretty bullish about that in the long term, but I think in the short run, it's gonna be tough. But we are seeing things like optimistic rollups, Layer 2. I'm, I think that will start showing up in in fall. And that uses the security of the Ethereum main chain for things. We're also seeing things like X-Di, for instance, this is just a sidechain. It's not even, it's not like, it doesn't use the security of Ethereum. But you can run D.I., for instance, in X-Di.

• 58:23Ryan Sean Adams?

  And it's reasonably secure, right? Like it's it's almost like a crypto bank level of security. So there's lots of different things that I think are gonna scale this out, but I don't expect an immediate fix here. I think, um, yeah, I think it's gonna be some, you know, 200 to 300 way prices for quite some time.

• 58:42David Hoffman?

  Yeah.

• 58:42Ryan Sean Adams?

  It's not going down.

• 58:43David Hoffman?

  Yeah, the the important thing about all the development in scaling solutions is that there are many different paths to go down. And it's really all about optionality, right? Like sharding creates options. L two systems create options, like rollups create options, Xty creates options. And these options compound upon each other, right? And so we we don't get linear scale in many different directions. The optionality of being able to scale multiple things in multiple different ways is really how, uh, you know, small fries gotten people with like less than a hundred ETH, less than $10,000 can play some of the similar games as the big guys, right? Uh, and it because of that optionality. Also, I do want to bring up, um, how, um, Urn and Yiffy.

• 59:27David Hoffman?

  What Andre built with Urn is a gas optimization mechanism. Because anyone that is yield farming with their capital is making a bunch of transactions on Ethereum. And they're all doing that. But instead, if they just deposit their capital into Urn, into this automated thing with if, you know, 500 people were all making 500 transaction transactions each trying to maximize yield. And instead, they put it into Urn. That's one transaction for 500 people that does the same thing. And so that is also this internal scaling solution, which just makes things more efficient. And this is how Bitcoiners actually think Bitcoin is going to scale. If you played an Xbox 360 game in year one, and then you bought an Xbox 360 game that came out like a decade later,

• 1:00:12David Hoffman?

  the graphics were like orders of magnitude better. It looks like a different system. And that's because the developers just learned to be more efficient with like the graphics of that game. And I think that's going to also become true about developers that, you know, you know, not too long ago, gas prices were one way. Right? Like two, two, two or three or four months ago, but gas prices were one way. So developers weren't really incentivized to figure out how to be efficient. Now developers are really incentivized how to be efficient. And so we're experimenting in efficiency in all different directions. And that efficiency compounds and having optionality in how you scale is really important for having that compounding scale.

• 1:00:50Ryan Sean Adams?

  Yeah, I mean, I mean, look at a city like Manhattan, right? I mean, there was a time where it was relatively like flat. We're talking 150 years ago. And what did they do to scale partially? Well, they built up, they built skyscrapers. Right? That's kind of how it could emerge.

• 1:01:04David Hoffman?

  And they also built down with the subway.

• 1:01:07Ryan Sean Adams?

  Yep, more efficiency through each unit of geography, more efficiency through each unit of block space. And you're right, the economic pressures will sort of force them into that. I was listening, last thing, and then we'll turn it over to the folks in the Bankless community for questions. I was listening to the Peter McCormick Vitalik interview with Sampson. Did you catch that, David?

• 1:01:31David Hoffman?

  Yeah, it pissed me off, man. I had to turn it off last night. And this is one thing I'm concerned about with Vitalik, because I wanted Vitalik to take the offensive, because he wouldn't. Vitalik is very, very peaceful, he's very pacifist, and Sampson was being a fucking asshole.

• 1:01:49Ryan Sean Adams?

  He was being a bully.

• 1:01:50David Hoffman?

  He was being a bully, and, and he was just being a wrong bully, and Vitalik wouldn't call him out on it because of how nice Vitalik is. And like, it was the most disingenuous.

• 1:01:59Ryan Sean Adams?

  But don't you think, David, like, that came through to anyone who was listening?

• 1:02:04David Hoffman?

  I'm not so sure, man. I'm not so sure, because Peter McCormick's audience are a bunch of Bitcoiners that hear things like what Sampson Mao says as like gospel. I'm not so sure.

• 1:02:16Ryan Sean Adams?

  Yeah, I mean, one of the things that kills me with criticism is like, things like, and this is back to relate, back to our question, our earlier conversation is, you know, kept pressing Vitalik on gas fees, that sort of thing. Bitcoin has the same freaking problem. When Bitcoin is in high demand, Bitcoin block space is in high demand, transactions become too expensive to use. Only you know what they do to scale Bitcoin, is it scales essentially on crypto bank infrastructure, on sidechains like Coinbase and Binance and that sort of thing, right? Whereas Ethereum has a slew of other options. I just find a lot of the criticisms aren't equally applied to both, to both networks.

• 1:02:59David Hoffman?

  Absolutely.

• 1:03:00Ryan Sean Adams?

  One thing in the interview, I don't know if you noticed, but Vitalik gave a couple of shoutouts to Bankless.

• 1:03:06David Hoffman?

  Oh, I must have turned it off before that.

• 1:03:07Ryan Sean Adams?

  Oh dude, yeah, get there. So he talked twice about conversation, Bankless podcast that we did with him. And then he also used the term economic bandwidth.

• 1:03:16David Hoffman?

  He did, I did, I did hear that. I did hear that. That was pretty cool.

• 1:03:20Ryan Sean Adams?

  Yeah, you know, some progress.

• 1:03:22David Hoffman?

  The part that pissed me off the most was, and to continue your conversation of how Bitcoin scales. Bitcoin is going to scale on Ethereum, and that's going to be how it scales without having to succumb to crypto banks. If you want to use Bitcoin expressively, it's going to come to Ethereum. Bitcoiners got really excited about the MicroStrategy purchase of like 21,000 Bitcoins. Well, there's 43,000 Bitcoins on Ethereum. Like, that's twice as big.

• 1:03:49Ryan Sean Adams?

  Yeah, so converting that into monetary terms, it's 250 million versus like something like 500 million, right? So MicroStrategy purchased 250 million Bitcoin, and there's already 500 million tokenized Bitcoin on Ethereum.

• 1:04:01David Hoffman?

  Right. And so Ethereum is going to scale. We are currently scaling. And Bitcoin is going to scale by coming over to Ethereum. And what, you know what, what really pissed me off the most was that Samson Mao said to Vitalik, to his face on the podcast, lying through his teeth, that people in DeFi are preferring to use wrapped versions of Bitcoin instead of Ethereum.

• 1:04:23Ryan Sean Adams?

  Oh dude, I caught that.

• 1:04:25David Hoffman?

  Because it offered a stronger foundation.

• 1:04:27Ryan Sean Adams?

  Is that where you turned it off at that point?

• 1:04:29David Hoffman?

  I was like, this is absolutely ridiculous.

• 1:04:32Ryan Sean Adams?

  It's a lie.

• 1:04:33David Hoffman?

  The belief is that Bitcoin itself is a very sturdy foundation, and that you build big structures on sturdy foundations, and Ethereum isn't that sturdy of a foundation. That's a fair criticism, and that's the criticism that was baked into that argument. But what Samson Mao forgot about is that in order to get Bitcoin onto Ethereum, you have to have trust in something like renBTC, that you have to make sure that protocol works, or wrapped Bitcoin, you have to make that Bitco is going to do that correctly, or TBTC, like they haven't gotten out the gate, but he just glossed over...

• 1:05:05Ryan Sean Adams?

  TBDC, you actually have to have ETH to make the trustless Bitcoin work.

• 1:05:09David Hoffman?

  And so he just glossed over this massive trust assumption that this is just going to work, because he wanted to spin the narrative of just like, yeah, you know, people in DeFi want to use WBTC, which is just abjectly false. Oh god, it riled, it just fucking riled me up.

• 1:05:25Ryan Sean Adams?

  It, me too, because I think that is the deception that's going on, right? Like, to be honest, the Bitcoin story is, is simple to understand. But like, when they lie about the Ethereum story, it frustrates me. Here's the thing is, the other thing Samson was doing that pissed me off is, I consider myself a Bitcoiner.

• 1:05:44David Hoffman?

  Right.

• 1:05:44Ryan Sean Adams?

  All right.

• 1:05:45David Hoffman?

  Same.

• 1:05:45Ryan Sean Adams?

  Like, if you ask me, but I'm not Samson Bitcoiner.

• 1:05:48David Hoffman?

  Right.

• 1:05:48Ryan Sean Adams?

  Right, like, that, like, Bitcoiners are right, maximalists are wrong.

• 1:05:52David Hoffman?

  Right.

• 1:05:53Ryan Sean Adams?

  You know, like, I can be a Bitcoiner and also be an Ethereum.

• 1:05:56David Hoffman?

  Right.

• 1:05:56Ryan Sean Adams?

  Right, that, I mean, that's what the bankless nation is. It's optimizing for the most bankless money system.

• 1:06:01David Hoffman?

  Absolutely.

• 1:06:02Ryan Sean Adams?

  Wherever it exists. And so his, I think, his painting of Bitcoiners as pure maximalists is, um, it's just not going to age well. I don't think that's why people are entering this space for.

• 1:06:15David Hoffman?

  You know what I think he's doing?

• 1:06:17Ryan Sean Adams?

  What?

• 1:06:18David Hoffman?

  I think he's playing the Bitcoin game. And the Bitcoin game is to get everyone to buy Bitcoin. And so he's playing a game where he is trying to brainwash people by lying in order to get them to play the game. Because when more people play the Bitcoin game, Bitcoiners, the people that have, have already been playing the Bitcoin game win. Right? And so I think it is a, and also, but Samson Mao comes from Blockstream, which is an attempt to build a expressive sidechain for Bitcoin on Ethereum. Or BTC on Bitcoin. And there's no bigger, stronger competitor than Ethereum to Blockstream. It's not, it's not Bitcoin versus Ethereum, it's Blockstream versus Ethereum. Like, no shit Samson Mao doesn't like Vitalik and what he's built.

• 1:07:01David Hoffman?

  Because Ethereum is going to make Blockstream completely redundant and unnecessary. And also, by the way, James Presswitz, who is a very great developer on both Bitcoin and Ethereum, discovered a bug in the Blockstream Liquid network that is where this Bitcoin gets its expressivity, that would allow someone to steal all the Bitcoins. And like, he's talking about how Ethereum is like this shaky foundation, while his own Liquid had this bug for months that no one discovered because no one fucking uses it. Excuse me for using the F-word.

• 1:07:34Ryan Sean Adams?

  Look, man, I, I think you're right. I mean, full circle here, right? Samson is playing the game. However, I have a massive problem.

• 1:07:43Ryan Sean Adams?

  When you're playing the game unethically, when you're lying about it, right? And by the way, that's not the game I'm playing, right? Like, I, I want, I want a money system to actually be good for the world, right? I don't, I don't fucking care if like Bitcoin gets to trillions of dollars, but all we're left with is a banked money system that doesn't restore self-sovereignty to individuals. Like, that's why I'm here. And I do think the tide is shifting a little bit, David. Like, I think people who listen to Bankless and then tune into the McCormick interview are like, "Oh, wow. Is this really the kind of the intellectual Mecca of maximalist?

• 1:08:28Ryan Sean Adams?

  Because it's empty. It's like a dry closet of skeletons. There's like nothing there. There's no organic material. There's no substance there." So, I'm, that's what, that's why I continued to listen to the episode, because I was just like, "Wow, this is the best you've got."

• 1:08:43David Hoffman?

  Yeah.

• 1:08:44Ryan Sean Adams?

  It's, man, I, what I want to see a debate of is honestly is, is like an Ethereum debating on like Ether. You know, I feel like we could make the argument a little bit better.

• 1:08:57David Hoffman?

  Right.

• 1:08:57Ryan Sean Adams?

  As to why Ethereum might fail.

• 1:09:00David Hoffman?

  Yeah, absolutely.

• 1:09:01Ryan Sean Adams?

  That was not it. That was not it.

• 1:09:03David Hoffman?

  No, that, that was a bag-inspired conversation from, from Samson Mao. And that's kind of why, like Vitalik's such a nice guy, like he means the best. He doesn't really want to get offensive, but I would love to see a world where Vitalik like brought out the teeth. Because he could, Vitalik's very witty, very, Vitalik is really clever. And I think if he wanted to, if you, if he practiced at it, he could destroy Samson Mao.

• 1:09:28Ryan Sean Adams?

  Yeah, I know. He's just, um...

• 1:09:31David Hoffman?

  He's too nice. He's too nice.

• 1:09:33Ryan Sean Adams?

  He's a, he's a better human, to be honest.

• 1:09:35David Hoffman?

  He's better than all of us, that's for sure.

• 1:09:36Ryan Sean Adams?

  Yeah, so, anyway, all right, we went on a rant there at the end. But hopefully you guys enjoyed it. Let's turn it really quick to any questions, so...

• 1:09:44David Hoffman?

  I've got one. What's your guys' take on staking on a validator node versus yield farming? I have my answer for this one, Ryan. What's your answer?

• 1:09:53Ryan Sean Adams?

  Okay, so it's a risk return answer, right? So I commented earlier on Twitter that all of this yield farming in DeFi is preparing us for the greatest yield farm in the world, which is staking our ETH, bonding our ETH, the initial bond offering of Ethereum. Now, it's different. People replied and said, "Oh yeah, show me where the like the 1,000% APY per day is on Ethereum. It's not there." So staking Ethereum in a validator, taking your ETH and doing it there, is going to be a much lower risk, not in the early days, right? Because ETH2 is new, but eventually it's going to be a much lower risk place to put your money.

• 1:10:36Ryan Sean Adams?

  So you know how in the like regular traditional world, people call the risk-free rate? It's basically like the Fed rate for returns on T-bills, essentially? That's what staking ETH is going to be. It's going to be the risk-free rate of the Ethereum, the DeFi economy, essentially. So much lower risk, right? Because in order for ETH staking to fail, the entire protocol has to fail, just like with T-bills, right? In order for the US government not to give you your money, US government has to go away.

• 1:11:08David Hoffman?

  Right.

• 1:11:09Ryan Sean Adams?

  Like foundationally, it's gone. So it's a much lower risk way to get a steady return. It's not the wild cowboy stuff of like 1,000% per day. But honestly, a portion of my funds personally, I want to be in the crypto equivalent of the T-bill asset class, right?

• 1:11:28David Hoffman?

  Absolutely. And it's important to like, so the question like framed it as like returns on ETH staking versus returns on yield farming. And actually, I think you can categorize as ETH staking inside of yield farming, right? You are farming yield. And the best thing about staking is that it is designed to be as easy as possible, right? It is supposed to be like the tutorial for people coming into the Ethereum game, right? Like the basic, most simple and most Trustless thing you can do is you can stake your ETH, right? And again, like you said, ETH staking when Phase Zero goes live is going to be hard. It's going to be expert mode and it's going to be high risk. And but the idea is that the UI and UX around the clients for staking your ETH

• 1:12:10David Hoffman?

  and and also other systems for for doing it for you will make this easy, right? The goal is to make this like the 101 game, right? Like you enter the game, you go through the tutorial and that tutorial is staking Ether. Because the reason why we want that easy is because staking is supposed to be supposed to enable maximum decentralization. So it has to be easy. If it was extremely difficult, then Ethereum wouldn't be decentralized.

• 1:12:32Ryan Sean Adams?

  Yeah, exactly. And I guess maybe one other thing, of course, is because of the super fluidity, as Dan Elitzer would say of these protocols, who's to say you won't have a way to essentially take your tokenized staked ETH and then also add some risk, add some return to it and start yield farming with it? There will definitely be ways to do that in the future. So maybe you can have your cake and eat it too.

• 1:12:57David Hoffman?

  So here's a question from a YouTuber. What do you think about chains like Polkadot Fusion or other interoperability chains for scaling? And I'm going to use this opportunity to shill our coming episode with Haseeb, which is coming out next Monday. Haseeb gave a pretty interesting classification of Polkadot, where Ethereum is supposed to be like Manhattan and its suburbs and its farms. Polkadot, the way Haseeb classified it is as like a one city per application, right? And so that application has its own domain. It has its own realm and that allows that application to scale up. And so, you know, I'm not an expert and so I can't really comment on like the more nuanced designs of Polkadot. But that categorization was interesting to me.

• 1:13:41Ryan Sean Adams?

  Yeah, yeah, I think my take is similar. Like so, my take is probably in that Haseeb episode a little bit. So I think that probably, this is a thesis, that probably in order to have a main chain, a settlement chain, the reserve asset behind that settlement chain has to be money. Because any reserve asset that Comes a money has trillions of dollars in economic security. There's there's no better way to get security than to be memed into a money to to be used as a money, right? Um, that's why gold is worth, you know, trillion, seven trillion, silver's like not even a trillion,

• 1:14:23Ryan Sean Adams?

  right? Because it has a money meme attached to it. Um, so I think there are probably some power laws to that where not everything can have that. Um, and Ether certainly has a a head start as a main chain with economic security. Polkadot, I feel like a Polkadot is kind of discluded from the race there a little bit, right? So part of the reason why is because, uh, first, uh, there's governance, almost a plutocratic governance. So if a like a majority of of, uh, dot whales, um, decide to change issuance or make some decision to the protocol, they can vote and make it happen, right? That kind of governance on chain governance can't happen in Ethereum.

• 1:15:06Ryan Sean Adams?

  And, um, that sort of on-chain governance, I think, is not probably conducive to a, you know, a monetary system underlying like, so how shitty would it be if, uh, Facebook and all the Facebook stockholders essentially had the ability to like owned the the the governance of the, uh, global reserve currency of the world? It would be, it would be very bad because then Zuck could do whatever he wants with it at any time, right? So like, we're here for a more neutral monetary system. Anyway, for reasons like that, I think that Polkadot and other things like it,

• 1:15:44Ryan Sean Adams?

  um, become a a side chain to stronger, more credibly neutral settlement layers like Ethereum, but they all work together at the end of the day. And by the way, could be wrong about some of these things. It's possible that dots or, uh, atoms through some roundabout way starts to accrue monetary premium, but that's my take right now, anyway.

• 1:16:05David Hoffman?

  Yeah, yeah. And I think that's the correct take for the information that we have today. And I think we'll win Polkadot goes live and inevitably interoperates with Ethereum because what else are you going to do? Um, we will have to update that take if anything changes, right? Because then we'll have more data. Um, but I think for now, until we have more data, that that's the right approach to evaluating these things that are not quite live yet.

• 1:16:30Ryan Sean Adams?

  Very good. David, should we do one last question?

• 1:16:33David Hoffman?

  Yeah, do you have one? I cannot find another one.

• 1:16:35Ryan Sean Adams?

  Well, I've got one that's super easy. When, when bankless merch? When, I think the people want these T-shirts, man.

• 1:16:42David Hoffman?

  I think they do want the T-shirts. I think that's true.

• 1:16:45Ryan Sean Adams?

  So we, uh, we're working on it, guys. So I have a box sitting over there, actually, with some bankless swag, with some bankless T-shirts. Um, we did our scarce swag launch, season one first, so that's out there. But that's a more kind of scarce premium. Uh, the, the Ethescape shirt is more, you know, premium product. We're gonna get some normal, uh, uh, merch like this. Um, hopefully, I'm gonna say within the next month. Um, cause I feel like, you know, I've got some economic bin. To do that. Um, but we're working on it, guys. We're definitely gonna get you guys some swag.

• 1:17:23David Hoffman?

  I really want to walk into my Wells Fargo wearing a bankless hoodie.

• 1:17:28Ryan Sean Adams?

  I told you, I did it. I, I did a wire from a bank in my Etherscape shirt. It's awesome.

• 1:17:33David Hoffman?

  Yeah.

• 1:17:35David Hoffman?

  So that'll be fun. That'll be fun.

• 1:17:37Ryan Sean Adams?

  Alright, alright, man.

• 1:17:38David Hoffman?

  In, in three weeks, there will be some cool news. And I'll leave it at that.

• 1:17:43Ryan Sean Adams?

  Ah, very good. Hopefully, maybe we can announce on State of the Nation what that cool news is.

• 1:17:47David Hoffman?

  I, I think we shall.

• 1:17:49Ryan Sean Adams?

  Alright, these are going live every day, guys, at, uh, 10 a.m. Eastern. That's 2 p.m. UTC. That's 7 a.m. Super early for you, David. Look at your bankless dedication, man. This guy wakes up at 6:30 to get ready for these. I just wanna...

• 1:18:03David Hoffman?

  Puffy-eyed livestream.

• 1:18:04Ryan Sean Adams?

  Yeah. And, um, you know, so thanks for, thanks for joining us. We'll livestream these. The recording will be on Bankless as well. As always, guys, this is not financial advice. Crypto is risky. DeFi is risky. It's not for everyone. We are going bankless, though, and we are glad you are with us on the Bankless journey. Thanks a lot.

• 1:18:40Ryan Sean Adams?

  The.

• 1:20:50Ryan Sean Adams?

  The.

• 1:23:00Ryan Sean Adams?

  The.

• 1:25:10Ryan Sean Adams?

  The.

• 1:27:20Ryan Sean Adams?

  The.

• 1:29:30Ryan Sean Adams?

  The.

• 1:31:40Ryan Sean Adams?

  The.

• 1:33:50Ryan Sean Adams?

  The.

• 1:36:00Ryan Sean Adams?

  The.