ROLLUP: Curve Exploit | BASE Memecoins | Richard Heart vs SEC

Bankless Weekly Rollup First Week of August, 2023 ------ 🚀Join Ryan & David at Permissionless II in September. https://bankless.cc/GoToPermissionless ------ 📣 STADER LABS | ETHX LIQUID STAKING https://bankless.cc/Stader ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE ⁠https://k.xyz/bankless-pod-q2 🦊METAMASK PORTFOLIO | MANAGE YOUR WEB3 EVERYTHING ⁠https://bankless.cc/MetaMask ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 👾POLYGON | VALUE LAYER OF THE INTERNET https://polygon.technology/roadmap 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/Toku ------ TIMESTAMPS 0:00 Intro 3:40 MARKETS 5:45 25m ETH Staked https://twitter.com/ultrasoundmoney/status/1686670146427813888 6:40 US Debt Crisis https://twitter.com/stackhodler/status/1686276924773982208 https://www.cnbc.com/2023/08/01/fitch-downgrades-us-long-term-ratings-to-aa-from-aaa.html https://twitter.com/LukeGromen/status/1686516760680214528 https://www.linkedin.com/pulse/whats-happening-economy-great-wealth-transfer-ray-dalio/ 16:10 Tether T-Bills https://twitter.com/paoloardoino/status/1685993811774738432 https://twitter.com/collins_belton/status/1686084175697211392?s=20 20:00 Curve Exploit https://twitter.com/CurveFinance/status/1685693202722848768 https://twitter.com/BanklessHQ/status/1685829565158162432 https://twitter.com/BanklessHQ/status/1685829579334938624?s=20 https://twitter.com/autismcapital/status/1686251750632853504 https://twitter.com/DefiIgnas/status/1686323974563909632?s=20 https://twitter.com/MilkRoadDaily/status/1686422244594012179?s=20 Learn More: https://twitter.com/BanklessHQ/status/1686190496019017730?s=20 https://www.youtube.com/live/I1bVLQdUkMw 24:20 BASE Mainnet Launch https://twitter.com/coinbase/status/1687087044579966976 https://twitter.com/MacnBTC/status/1685589663963078656?s=20 https://pbs.twimg.com/media/F2XvGTsXwAAm9SW https://twitter.com/notEezzy/status/1685994199819190272?s=20 29:00 SBF Conspiracy Theory https://twitter.com/hype_eth/status/1686126115947941890 https://twitter.com/ryansadams/status/1686148330139639808 https://twitter.com/FrankResearcher/status/1686184372485976065?s=20 32:00 Passing Arbitrum https://twitter.com/TheDeFinvestor/status/1685962819051675648 https://twitter.com/westiecapital/status/1686417439372812288 https://twitter.com/sassal0x/status/1686194472689000448 34:55 SEC Sues Richard Heart https://twitter.com/SECGov/status/1686042971190272000?s=20 https://www.sec.gov/news/press-release/2023-143 https://imgur.com/saLUKNd https://twitter.com/TrustlessState/status/1686687165575520256?s=20 https://twitter.com/ercwl/status/1686491323908452353?s=20 37:20 Uniswap Delisting HEX? https://coinmarketcap.com/headlines/news/uniswap-delists-hex-token/ 45:00 3AC No Longer US Citizens https://www.theblock.co/post/242675/3ac-co-founder-says-us-court-can-no-longer-tell-him-what-to-do 46:30 Justice…? https://twitter.com/TrustlessState/status/1687086457075236864?s=20 48:20 Richard Heart Documentary https://twitter.com/ercwl/status/1686491323908452353?s=20 51:15 Binance vs DOJ https://www.semafor.com/article/08/02/2023/us-prosecutors-worry-binance-charges-could-cause-run-on-exchange https://twitter.com/cz_binance/status/1686757050464813056?s=20 https://twitter.com/NoelleInMadrid/status/1686808699904344082 54:24 Ethereum’s Birthday and Futures https://twitter.com/LefterisJP/status/1685577856502382592?s=20 https://twitter.com/RyanSAdams/status/1685672504616968192?s=20 https://twitter.com/EricBalchunas/status/1686510111123030016 https://twitter.com/DegenSpartan/status/1686563092061462528 57:30 EIP1559 https://twitter.com/ultrasoundmoney/status/1686419775868620820 https://dune.com/arixon/mev-burn 59:10 MetaMask Staking MATIC https://twitter.com/metamask/status/1684263257450610697 1:00:55 EIP 6968 https://twitter.com/owocki/status/1683916090831937538 1:03:22 Celo Temp Check https://twitter.com/marek_/status/1685982906655662081?s=20 1:03:50 Worldcoin Contd https://twitter.com/ercwl/status/1684939802083282944?s=46 https://twitter.com/koeppelmann/status/1686318014034026496?s=46 1:06:50 Microstrategy BTC https://twitter.com/stackhodler/status/1686633880051200000 1:07:50 DCG Bankruptcy Agreement https://www.theblock.co/post/242350/dcg-says-its-close-to-reaching-agreement-on-genesis-chapter-11-appoints-new-cfo 1:10:00 Questions from the Nation 1:16:45 Important to Internalize https://twitter.com/pythianism/status/1684981202275667968 1:19:45 Bull Market Starting https://twitter.com/TrustlessState/status/1686671529768079360?s=20 1:20:00 What David’s Bullish On 1:25:00 What Ryan’s Bullish On https://twitter.com/ryansadams/status/1686428210991419402 1:27:15 Vitalik’s Take 1:28:45 MEME of the Week https://twitter.com/pseudotheos/status/1685743250127433728 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

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

• 0:00David Hoffman?

  Binance could face fraud charges from the Department of Justice, but what is the Department of Justice waiting for?

• 0:08Ryan Sean Adams?

  Bankless Nation, happy first Friday of August. David, what time is it?

• 0:12David Hoffman?

  Oh, Ryan, it's the Bankless Friday Weekly Roll-Up, where we cover the entire weekly news in crypto, which is always an ambitious endeavor, yet we persevere into this bullish frontier. I'm claiming it's bullish this week. It's a very bullish week to me. I think it's a bullish.

• 0:26Ryan Sean Adams?

  David came down from the mountains bullish. Okay, so what was the elevation of Matterhorn? And how did that go?

• 0:33David Hoffman?

  The elevation of Matterhorn was 14,690 feet.

• 0:38Ryan Sean Adams?

  Okay, mark that number, Bankless listeners.

• 0:39David Hoffman?

  You can't necessarily judge a mountain by its elevation. Matterhorn is very steep. Yeah.

• 0:46Ryan Sean Adams?

  I mean, but that elevation is high, though, right?

• 0:50Ryan Sean Adams?

  That elevation is high as far as mountains go.

• 0:52David Hoffman?

  I mean, high is relative. I wouldn't call it super high. Like Everest is 26,000 feet or something like that.

• 0:58Ryan Sean Adams?

  Okay.

• 0:59David Hoffman?

  Yeah. Yeah. I mean, I was definitely like feeling the altitude, that's for sure.

• 1:04Ryan Sean Adams?

  Did you see my comment? That's going to be the elevation of Matterhorn is going to be the top price of Ether during the next bull cycle. So give us that number again. 14,000 what?

• 1:14David Hoffman?

  14,690.

• 1:16Ryan Sean Adams?

  There it is. It has been prophesied.

• 1:18David Hoffman?

  I'm looking forward to like as Ether pumps through this next bull market. It's like, oh, it passed my summit at Baker. Oh, it passed my summit at Pollock's. Oh, it passed my summit at Rainier.

• 1:29Ryan Sean Adams?

  You need to tweet that every single time it does, man. That's great. Well, it's great to have you back, Dankless.

• 1:33David Hoffman?

  It's really good to be back. I'm...

• 1:35Ryan Sean Adams?

  I'm just calling you Dankless. David in Bankless is Bankless. It's great to have you back, David.

• 1:40David Hoffman?

  It's not the first time the word Dankless has been uttered. I'm very excited to be back. It's a very good time to be back. It's a very good week to be in crypto. I was a very entertaining week. Good things happened, some bad things happened. More good things than bad things, I would say. And like I said, I'm feeling pretty bullish. I don't know about you.

• 1:54Ryan Sean Adams?

  All right. No, I'm feeling bullish too, although there were some bad things that happened this week, starting with the Curve Exploit, which we got to talk about. That led to a cascade of events across all of DeFi. Everyone's talking about the CRV token right now. We did an entire episode on that. I think we gotta get the recap in today's rollup. David, what else we covering?

• 2:12David Hoffman?

  What else? We got the base launch date is announced. We're about to drop the base and a meme coin frenzy has already happened on base. So it's already had its meme coin frenzy cycle, or at least the first of perhaps future cycles. Richard Hart is sued by the SEC for fraud in issuing unregistered securities. Man, like, I never thought I'd see the day, but here we are. So we're gonna talk about all of that and why. Some people are thinking that the Department of Justice is not far behind. And then also Binance is in the hot seat. And speaking of the Department of Justice, investigation for fraud. Are they too big to fail? Does that matter for Binance? What else we got, Ryan? We got some birthdays, don't we?

• 2:50Ryan Sean Adams?

  We got a birthday to celebrate in the episode. I'm not gonna tell you what birthday we're about to celebrate, but it's a big one. It's an important one. So stay tuned in the show, guys, for that. David, while we're here, we gotta shout out our friends and sponsors over at Stater, a new staking protocol that is also decentralized, which is very exciting. David, what's going on with Stater? What do they want the Bankless Nation to know?

• 3:12David Hoffman?

  Brand new staking as a service protocol on the scene with as low as four Ether for your bond. So if you want to run a node with Stater, not just stake with Stater, but run your node with Stater, because it's a permissionless protocol, you can do this. You only have to stake four Eth. It's one of the lowest capital requirements that I've seen. They also are issuing SD token, the native token of the protocol, to people who stake. So if this piques you, there is a link in the show notes to get started. Staking with Stater. Staking with Stater, kind of rolls off the tongue.

• 3:39Ryan Sean Adams?

  All right, let's go see what's cracking. Oh, thanks Kraken for these fantastic charts.

• 3:46Ryan Sean Adams?

  What's Bitcoin price on the week?

• 3:47David Hoffman?

  When did you think of that one?

• 3:50Ryan Sean Adams?

  Not gonna lie, it was a while ago. You know, I've been waiting for that. Been waiting for you to come down the mountains.

• 3:54David Hoffman?

  Oh my God, I'm glad you did. Bitcoin started the week at 29,400, down 0.3% to 29,330. Bitcoin lost a whopping $70. So that is flatter than flat, I would say.

• 4:07Ryan Sean Adams?

  That's pancake flat right there on the week. How about ETH price?

• 4:11David Hoffman?

  ETH price, a little bit, a little bit actually down.

• 4:13Ryan Sean Adams?

  A little bump?

• 4:14David Hoffman?

  Yeah, down. 18,075, down 1.5% to 1840. I didn't say 18,000, we're not there yet. That's later. 1875 down to 1840.

• 4:26Ryan Sean Adams?

  18,000 would be past your Matterhorn peak there. You gotta climb a higher mountain for that to happen.

• 4:30David Hoffman?

  That's exactly right. That's a great excuse to go climb another mountain.

• 4:33Ryan Sean Adams?

  Don't, don't. Man, I was, I'm not gonna lie, a little bit worried for you on this one. You know, you're posting about like snow conditions and you know, whether you should do it or not. And yeah, so I think we're good for now.

• 4:47Ryan Sean Adams?

  How about the ratio, ETH Bitcoin ratio?

• 4:49David Hoffman?

  Yeah, down about one and a half percent. So 0.062. It's stayed in the low 0.06s for a while now.

• 4:55Ryan Sean Adams?

  Can I zoom out here for a second? It's been kind of flat summer, hasn't it?

• 4:58David Hoffman?

  Yeah, it's been flat since the start of the last bull market. It's been flat for a very long time. It's been like two years now.

• 5:07Ryan Sean Adams?

  I'm looking back in June.

• 5:08David Hoffman?

  And this is what Ether does. It is a stablecoin and then it goes vertical.

• 5:14Ryan Sean Adams?

  All right. Well, that's great. We found our stablecoin finally, the decentralized stablecoin we've been waiting for. How about the crypto market cap, David?

• 5:21David Hoffman?

  1.2 trillion, over 1.2 trillion.

• 5:25Ryan Sean Adams?

  All right. Hey.

• 5:25David Hoffman?

  Man, we've been up the total crypto market cap. I mean, it goes up, it goes down, but it's been on an upward trend for seven months in a row now.

• 5:32Ryan Sean Adams?

  Yeah.

• 5:33David Hoffman?

  Ever since FTX.

• 5:35Ryan Sean Adams?

  Yeah. I mean, not too bad to be above a trillion, as we always say. David, let's talk about all of that ETH, what it's doing, what is it doing? It's getting staked. This is crazy to me. Look at these numbers. Can you read them out?

• 5:47David Hoffman?

  I mean, this isn't new news. It's just the news is that there's more of it happening. 25 million Ether staked is the threshold that we have recently passed. 22 and a half million is actively staking with 2.5 million, over 10% is actively queued up to stake.

• 6:05Ryan Sean Adams?

  Waiting to get in.

• 6:06David Hoffman?

  Waiting to get in.

• 6:08Ryan Sean Adams?

  Wow. Yeah. And I think there's like a 30 to 40 day wait time now. Like if you're in the queue, you gotta, in order to get in the staking club, you gotta wait 40 days. Which is pretty incredible. Man, a lot of interest there. But what happens when more ETH is staked? That means yield goes down.

• 6:23David Hoffman?

  You'll go down. Yeah.

• 6:24Ryan Sean Adams?

  Okay. Is that okay? Are we happy with that?

• 6:27David Hoffman?

  I don't care.

• 6:28Ryan Sean Adams?

  It goes down.

• 6:29David Hoffman?

  Yeah.

• 6:30Ryan Sean Adams?

  It's part of the game. Part of the game.

• 6:32David Hoffman?

  I mean, y'all can all please unstake and I will gladly take your issuance.

• 6:37Ryan Sean Adams?

  They'll take the issuance, Steve will take all the MEV. Let's talk about another type of yield and that is interest payments. Interest payments are the fastest growing US federal expense. Did you know? What is this chart that we're looking on? They're about to pass $1 trillion. I'm, of course, talking about how much the US government has to pay in interest on its debt. Because yep, the US government is in a lot of debt. Look at this chart right now. What are we looking at?

• 7:06David Hoffman?

  We are looking at the chart of government debt. It, it looks like a shitcoin parabola. That's how I would describe this. So in 1991, we're looking at maybe $4 trillion of government debt. It had already started to increase pretty fast at that point for the decades prior. Moving up to like 2005, we're at a doubling of 8 trillion in debt. Moving into 2012, we're at 16 trillion, so another doubling. 2019, 22 trillion of debt to where we are now at $32 trillion in debt. And that makes, according to this tweet, about $1 trillion in interest payments that the government has to make this year. That's a lot of money.

• 7:47Ryan Sean Adams?

  This is more than the US spends on defense.

• 7:50David Hoffman?

  Yes.

• 7:50Ryan Sean Adams?

  And you know, the US spends a lot on its military.

• 7:53David Hoffman?

  That sounds like spiraling debt. That sounds like spiraling debt.

• 7:57Ryan Sean Adams?

  Well, related to this, Fitch. Fitch is a ratings agency, so they, they rate various debts of different kind. Fitch downgraded the US debt rating, basically their credit worthiness to AA+ from AAA. And that apparently in these circles is a big move.

• 8:13David Hoffman?

  One rating lower than AAA is AA+. These ratings, I think, could do with a redo, but whatever.

• 8:23Ryan Sean Adams?

  Crypto can't fix that yet, David. Their statement was why? So why did they downgrade the US? A few reasons. Three, primarily fiscal deterioration over the next three years. That means they expect the legislators and Congress and the president to continue spending. Number two, a growing general debt burden. Oh, we just saw it. $32 trillion. Number three, erosion of governance related to its peers. So the US having an inability to actually govern itself?

• 8:56David Hoffman?

  Some of the comments that they gave are pretty funny. The US government lacks a medium term fiscal framework. I think that's related to the governance issue. Like they just, you know, we can't govern our own spending. The budgeting process is extremely complicated, they cited. US politicians don't really know what's going on with their own budgets. Quote, "You're too confusing to even be a proper government."

• 9:22Ryan Sean Adams?

  Wait, who said that?

• 9:23David Hoffman?

  Okay, I'm quoting Kyla Scanlon, who's quoting. So we're hearing this through the grapevine a little bit. But then also they cited the rising cost of social security and Medicare. We got an old population and just like shout out to Kyla and her humor. Boomers are booming.

• 9:36Ryan Sean Adams?

  Very true. Luke Raman has a take here. The US cannot mathematically sustain their debt and deficits without sustained negative real rates. That's a problem when you raise rates. So don't tell me the downgrade doesn't make sense. Tell me which suckers at the card table collectively have a big enough balance sheet to hold 32 trillion in debt at negative real rates. Yeah, that's the question. I don't know who's buying bonds, David. Do you? Who's buying bonds? You buying any bonds?

• 10:04David Hoffman?

  Not me.

• 10:04Ryan Sean Adams?

  I'm buying ether, the internet bond.

• 10:06David Hoffman?

  Yeah, the bonds that are both giving you real yields and also capital appreciation. Yeah, I remember talking last week, we were talking about like the Fed, because the Fed raised interest rates last week, a quarter, quarter 25 bips, if you will.

• 10:21Ryan Sean Adams?

  Ooh, bips. I like, I like, I like the cut of your jib, David. You're learning these finance terms.

• 10:29David Hoffman?

  But the comment I made is like, man, I haven't thought about macro or interest rates. We haven't talked about the Fed pivoting in forever now. It's like the markets, A, kind of have like written off how big of a deal these interest rates are anymore. Cause they're also slowing down and getting smaller, but also inflation's coming down. But also like all of the points that people have originally made is like, sure, we can jack up interest rates to combat inflation. But the Fed has a date with destiny and that destiny is to print money at some point in time. And so I think there's a decent possibility that the markets have written off the pivot. We've forgotten about it, but at some point in time, the money printer must resume. And whether that's one year, three years, five years, 10 years, I don't know.

• 11:14David Hoffman?

  But like, I think the market has written that off.

• 11:17Ryan Sean Adams?

  David, you're starting to sound a little bit like Ray Dalio to me.

• 11:20David Hoffman?

  Bullish, yeah.

• 11:20Ryan Sean Adams?

  Yeah. Oh, I guess you're bullish crypto, you're bearish government debt. Do you remember, I think it was a couple of rollups ago where I asked this question about, you know, all this Fed tightening? I mean, interest rates raised from basically close to 0% all the way to, you know, five, above 5%, right? And I remember being told at that time, and a lot of the prognosticators were saying, that will absolutely devastate everything. Like that will be a catastrophe, widespread job loss, like stock market will go down, like all of these bad things would happen. And so, I mean, I was told the Fed tightening would nuke everything. And the question is, why didn't it? Guess what? I think Ray Dalio is a listener to the Bankless Podcast because he heard that question, maybe,

• 12:05Ryan Sean Adams?

  and wrote his entire post about that this week.

• 12:08David Hoffman?

  Thanks, Ray.

• 12:09Ryan Sean Adams?

  And he answered the question and I think he did a good job answering it. Here's the, here's the take from Ray Dalio on why. There was a big government engineering shift in wealth from, one, the public sector, the central government and central bank. And number two, the holders of government bonds to the private sector, which are households and businesses. This made the private sector relatively insensitive to the Fed's very rapid tightening to a more normal monetary policy. And as a result of this coordinated government maneuver, the household sector's balance sheets and income statements are in good shape, while the governments are in bad shape. So that's why unemployment is low, feels like the private sector is doing okay.

• 12:52Ryan Sean Adams?

  The stock market is almost all time high, because you know who took all the bullets for us? The government, the US balance sheet, that $32 trillion that we are looking at over there, and bondholders, that was the take. He simplifies it a little bit. More simply, central banks took on a lot more debt, so their balance sheets deteriorated, and the central banks printed a lot more money, which caused inflation to rise, and bought a lot of the debt to get money into the hands of the private sector, which now, as a result, is in relatively good shape financially. So yeah, bondholders took a haircut, the government's balance sheet took all the bullets, the private sector's doing okay, wealth inequality increased even more, and that begs the question of what's the next phase

• 13:37Ryan Sean Adams?

  of all of this? And I think the answer, according to Ray Dalio, is more money printing, as you're saying, but a different type of money printing. We already did the QE thing, we already did, you know, the buying bonds thing. The next step, according to Ray Dalio's, you know, long-term cycles and his planning, is basically like helicopter money directly to the people to decrease wealth inequality, all sorts of government programs, fiscal and central bank programs kind of become the same, and we're just printing money and giving it to the people. That's kind of the next step.

• 14:13David Hoffman?

  Why do the people get the money? What's the motivation there?

• 14:16Ryan Sean Adams?

  Well, because look at things like the stock market's at an all-time high, right? But also, wealth inequality has increased in the US.

• 14:24David Hoffman?

  But don't the people need to like, you know, grab their pitchforks in order to induce the motivation in order to get the helicopter money?

• 14:31Ryan Sean Adams?

  Ah, yes, David.

• 14:32David Hoffman?

  Right, then we're not gonna be like, hey, we've decided to give a distribution to the people, like, no.

• 14:36Ryan Sean Adams?

  I mean, look out there. Are you seeing pitchforks? Because I see pitchforks. They might be a little bit in the distance.

• 14:42David Hoffman?

  I'm not seeing pitchforks.

• 14:43Ryan Sean Adams?

  There's so much anger, like, politically. I mean, look at our political climate. I think so much of-

• 14:48David Hoffman?

  Yeah, I see there's a number of step, a gap in that happening, and then also helicopter money. I don't see those things, like, having a smooth direction.

• 14:57Ryan Sean Adams?

  I don't think it'll be smooth, but I think that there is increasing anger, you know, we- I blame social media for some of these things, blame the internet for some of these things. I think a lot of the anger, just in general, like the question, answer the question of why is everyone angry all of the time is due to wealth inequality, due to like shrinking pie, due to lack of economic opportunities. There's, again, the, you know, the top 10%, the top 1% are doing fairly well in this type of environment, but a lot of people are left behind. The whole rural versus urban thing, you know, that's, that's another lens on this. I mean, we're, we're, not to get into politics, but 2024 in the

• 15:38Ryan Sean Adams?

  US political scene is going to be real rocky for many reasons, for lots of reasons, but one of them, I think, is a part of the wealth inequality story.

• 15:47David Hoffman?

  Yeah, yeah. And I think one of the big things that people were looking for is depreciation of house prices, housing prices, and that has not happened. Like, if you, if you bought at the, uh, real estate at the top of the market in 2021, you're doing just fine. Like, you're doing great.

• 16:03Ryan Sean Adams?

  Student debt is another example, that, you know, whole large conversation. I mean, there's, there's many thing, areas where this is spilling over into political. But let's move on. Let's talk about, uh, Tether for a second. Did you know, David, that Tether now holds more US T-bills than Australia? It's pretty crazy.

• 16:21David Hoffman?

  Alrighty then. Okay. I mean, I don't know how many T-bells Australia holds.

• 16:26Ryan Sean Adams?

  Less than Tether.

• 16:27David Hoffman?

  Yeah.

• 16:29Ryan Sean Adams?

  So Tether, David, has 72 billion dollars worth of T-bills, and apparently this is a larger than the nation state of Australia. So, um, there's a comment from Collins Belton about this. Wow, if true, Tether is apparently holding more T-bills than Australia, and also the UAE and many other countries. At this point, regardless of whether you believe on their history, I think it's hard to see the US government railroading these guys easily anymore.

• 16:55David Hoffman?

  What does that mean?

• 16:55Ryan Sean Adams?

  What do you think about that?

• 16:56David Hoffman?

  Who's the USG and what's railroading?

• 16:59Ryan Sean Adams?

  Uh, USG's government. He's saying the US government is USG.

• 17:02David Hoffman?

  What's railroading?

• 17:03Ryan Sean Adams?

  I think what he's saying is basically like, um, the US government is not going to shut Tether down, is not going to completely like.

• 17:10David Hoffman?

  Oh, is it too big to fail?

• 17:13Ryan Sean Adams?

  Yeah, I think that's what he's saying. Basically, when something like this gets too big, the government doesn't kill it because that would be too painful for everyone involved. Instead of killing it, they just legitimize it in some way. And so Collins is making the point that this seems to be what could be happening with Tether. I mean, they got a lot more T-bills than most countries.

• 17:34David Hoffman?

  I'm not sure how I feel about that. That's probably bullish for crypto assets because it reduces the systemic risk of tether. But then crypto just made another bank that's too big to fail. I'm not sure how to feel about this.

• 17:49Ryan Sean Adams?

  I don't know. I don't know how to feel either.

• 17:51David Hoffman?

  I'm gonna take the bullish side. I'm bullish because of it.

• 17:53Ryan Sean Adams?

  All right, it's bull week. So when in doubt, you choose bullish. David, what do we have coming up next?

• 17:59David Hoffman?

  Coming up next, Curve Exploit and its founders Megalone sends DeFi into a hot seat. Base surpasses Arbitrum in daily transactions and it's not even live yet. And a protocol has celebrated its eighth birthday, starting to throw a little bit of breadcrumbs your way. We'll figure out who or what it is. But first, a moment to talk about some of these fantastic sponsors that make this show possible. We're gonna hear what's cracking from Kraken. Let's go hear from them right now. Kraken Pro has easily become the best crypto trading platform in the industry. The place I use to check the charts and the crypto prices, even when I'm not looking to place a trade. On Kraken Pro, you'll have access to advanced charting tools, real-time market data, and lightning-fast trade execution, all inside their spiffy new modular interface. Kraken's new customizable modular layout

• 18:44David Hoffman?

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• 19:26David Hoffman?

  By leveraging groundbreaking ZK innovations such as Polygon ZK EVM, the next iteration of the best-in-class Plonki2 proving system, and a first-of-its-kind ZK-powered interoperability layer, Polygon 2.0 will give users and devs unlimited scalability and unified liquidity. Right now, there is a Polygon improvement proposal regarding a potential ZK-powered upgrade of Polygon proof-of-stake. If approved, Polygon proof-of-stake would become a Layer 2 ZK EVM, Vilidium. So make your voice heard on this proposal by joining the Polygon Discord today. You have a chance to help the Polygon community give the internet the value layer it deserves.

• 20:00Ryan Sean Adams?

  Curve Finance was hacked this week, and it sent shockwaves across all of DeFi and crypto. David, what happened here?

• 20:07David Hoffman?

  Yeah, so there was a vulnerability in the coding language, Viper, that Curve used for some of its pools. So this is actually pretty damn deep in the tech stack. And so I don't think it was anything in the way that Curve pools were built, but because they use Viper and because Viper forgot to have these re-entrancy checks in their codebase, as a result, it allowed for a re-entrancy attack, which is a pretty known attack. It's actually how the DAO hack got drained back in 2016. And so Curve had a re-entrancy attack thanks to, I guess, thanks to the coding language Viper that forgot to have re-entrancy checks in it. $70 million was drained from four Curve pools:

• 20:52David Hoffman?

  the Pindal ETH pool, the Metronome ETH pool, Alchemix ETH pool, and then the Curve/ETH liquidity pool. About $20 million was actually recovered by white hat hackers and MEV bots, interestingly enough, which is an interesting little side quest of this story. But the big story is that because of the Curve ETH pool, $5.1 million of Curve tokens, 7.2 million Curve tokens, was drained and then taken into the exploiter's wallet. Now, that's one thing, that's bad, because this exploiter gets $7.2 million. The reason why this goes from a bad story about Curve to a bad story about DeFi is because the Curve founder, Michael Igorov,

• 21:36David Hoffman?

  had taken out about $110 million of stablecoin loans against his 460 million Curve tokens, which was almost $300 million at the pre-exploit price.

• 21:48David Hoffman?

  Then, once you put $7 million of Curve tokens into the hands of an exploiter, people start to react to that because that is, you know, we are just one button press away from dumping $5.1 million of Curve tokens into the market. So people start to withdraw liquidity. People who are providing liquidity to Curve across DeFi, either in stablecoin pairs with Curve or ETH pairs with Curve, they start to yoink their liquidity because they don't want to get dumped on. So liquidity starts to dry up around Curve. And so that makes the liquidity profile around Curve very precarious. And especially when Michael has $110 million of collateral, of borrowed stablecoins against his Curve collateral, he is under duress. His positions

• 22:29David Hoffman?

  are under duress. And if that Curve exploiter decided to liquidate his Curve, that would cause a cascading liquidations if Michael was not able to bolster up his positions. He has since sold about $16 million of Curve to pay back some of his loans, but he still has 90-something million dollars in loans to pay back across DeFi protocols. Now, here's all of the DeFi protocols that Michael has put Curve tokens into and borrowed stablecoins from. Ave V2 is the biggest one, coming in at 300 million Curve tokens, which is 34% of the circulating supply of CRV. Abracadabra has 51 million, Fraxlens had 41 million,

• 23:14David Hoffman?

  Inverse Finance had 25 million, StakeDAO had 3 million, Silo had 2 million. This guy put Curve across DeFi and then borrowed stablecoins, like I said, 110 million stablecoins. And so all of these are in precarious positions. If Curve goes down to the price of, I think, 34 cents, it's currently at 38 cents, last I checked, but if it ever went to 34 cents, he would be liquidated and that would cause- Wait, 38 cents? What, did it get that low? It did flash crash that low, but not to the point of it actually being liquidated in DeFi protocols. So we're still, we're still good here for now. Curve price is currently at 58 cents, which is where it was 24 hours ago as well. So he's looking good for now,

• 23:56David Hoffman?

  but it's still not a good place to be. Why? What did this man do with the $110 million that he borrowed from all these DeFi protocols? Well, just a few months ago, he happened to have bought a $40 million mansion and also a second one.

• 24:14David Hoffman?

  So he's got two million, like multimillion dollar mansions in Melbourne, Australia that he bought. One of them he bought just a few months ago. I don't know about the other one.

• 24:23Ryan Sean Adams?

  Seems like it could be related to the the stablecoin borrowing, but we don't know for sure. We don't know for sure. Let's say, let's. So that's, you know, a question, I suppose.

• 24:36David Hoffman?

  Yeah. So there's actually a ton more in the story. And we did a 45 minute, an hour long episode yesterday that got released. So we are just kind of giving the highest level of recaps. So if, so if you want to catch up on this and go dive down into this, there's a, there's a fantastic article that Bankless, the Bankless newsletter team put together, shout out Jack. And then also, we use that article to inform a podcast that we put out yesterday. And so that you, we have just given you the high level of recap. The story goes very deep. But that's it right there.

• 25:06Ryan Sean Adams?

  I mean, the TLDR is, we're gonna be okay. This is not systemic beyond right now the CRV token.

• 25:13David Hoffman?

  Yes. And also, and also, if you are a DeFi protocol governor, then you who has CRV as collateral, you need to pay attention. But other than that, you're fine.

• 25:22Ryan Sean Adams?

  Some cool things going on in the layer two world. This is after all, layer two summer. It's been layer two summer for about two years now. But it's definitely layer two summer now. The base mainnet has just been announced that the launch date for that. That date is, you ready for it, David?

• 25:39Ryan Sean Adams?

  August 9. Okay, this is next week. The next roll up you hear, base mainnet will be launched. There's already been some activity on base mainnet as well. Should we talk about that?

• 25:50David Hoffman?

  Yeah, sure. So base has been open for developers to go build stuff. And some developers have definitely built stuff. And some people have just went on and minted tokens and meme coins and started trading them. And so this has been like the news of base in this last week or so. This bald token was launched on July 30. So just like four days ago.

• 26:10Ryan Sean Adams?

  It's literally called bald, right?

• 26:11David Hoffman?

  It's called bald. It's called bald. Why is it called bald? Because there's a meme that bald founders are bullish. I'm pretty sure that was DJ and Spartan that started that. And so, you know, this is Brian Armstrong's chain. It's not actually, but you know, associated with Coinbase, therefore associated with Brian Armstrong, who is a bald man, who is a bullish bald man. So the ball token was made. And so that launched on July 30th, when all tokens are minted, they all start at a valuation of zero. And that went to $50 million in market cap in just under a day with over $100 million of trading volume. Now, this is a pre-mainnet base. One of the reasons why this just rocketed to $50 million in market cap is because you can't actually leave base.

• 26:53David Hoffman?

  You can only go on base. You can't go out of base. There's no off-ramp. There is now since an off-ramp, but while this thing was pumping, there was no way to get off of base. And so Bald token, which has created $50 million out of thin air. And you know what happened next, Ryan?

• 27:10Ryan Sean Adams?

  Tell me.

• 27:11David Hoffman?

  It was a rug. And so as soon as it hit $50 million, the Bald deployer yoinked over 1,000 ether of liquidity and others removed 6,800 ether of liquidity and another person released 1,800 ether of liquidity. So over about 10,000 ether was yoinked of liquidity. And this thing goes from $50 million down to below $10 million. We are, the valuation of Bald, not that it matters, or you should care, but if you are curious, the valuation of Bald is about 11 to 12 million dollars.

• 27:40Ryan Sean Adams?

  As of now?

• 27:41David Hoffman?

  As of now, after falling about 90%. And so a short little token meme coin mania in base, but the founders removed about $32 million.

• 27:52Ryan Sean Adams?

  Now, we've seen meme coins before. I mean, that, you know, we've seen a lot of meme coins of course. This is the first on base and it was certainly the largest last week.

• 28:00David Hoffman?

  Congrats, space. You got your first meme coin.

• 28:04Ryan Sean Adams?

  And you were just talking about the liquidity being drained. There's more to that because the person, the individual who removed the liquidity seems to be the founder of Bald, the instantiator of the meme coin. And this individual, the founder, was actually the lead rug puller here and withdrew $32 million of ETH liquidity. So it was basically a founder rug meme coin that happened on the base blockchain.

• 28:34David Hoffman?

  Do you get to call yourself a founder if you just founded a meme coin?

• 28:37Ryan Sean Adams?

  Yeah, I shouldn't have said founder. What is that? Scammer? Like scammer in chief?

• 28:43David Hoffman?

  I mean, is it a scam? Because like? You're

• 28:47Ryan Sean Adams?

  What is this scam anymore?

• 28:49David Hoffman?

  It's you're rugging liquidity, but you never, I'm assuming they never brought like advertised, here's what I'm gonna do with this base token.

• 28:56Ryan Sean Adams?

  It's gross. I don't know what

• 28:57David Hoffman?

  It is gross.

• 28:58Ryan Sean Adams?

  term we use for it, but like we'll call it gross. That's for sure. Uh, but there's some conspiracy theories going on about this on who is the, uh, the mentor, the, the scammer in chief behind Bulp. Um, so there's a lot of this conversation going on in crypto. Twitter. This is one account's hype saying to summarize thousands of ETH between FTX and Bald. The ball deployer was the first voter on all sushi proposals. Listen to these clues. The ball deployer tweets the same sentence structure as who? SBF?

• 29:28David Hoffman?

  What?

• 29:30Ryan Sean Adams?

  First time we've used, uh, those initials in a while. The ball deployer was the biggest DYDX farmer. The ball deployers DYDX post sounds a lot like SBF in terms of sentence structure. The on-chain activity lines up with court dates and bail of who? SBF? We know SBF was doing stuff through VPN recently. Okay. A lot of the sleuthers are doing sleuth stuff. Okay. And there is, there was a possibility.

• 29:55David Hoffman?

  Of all the people, of all the lines going across all the, the different like clues.

• 29:59Ryan Sean Adams?

  This is total crypto Twitter conspiracy theory, but there is the possibility, at least crypto. Twitter was considering the possibility that the rugger in chief was actually our friend SBF. And can you imagine David, that one of the biggest frauds in history, just like hypothetically, imagine, okay, Charlie conspiracy theory gets out on bail from his parents basement, launches a $30 million rug on one of his biggest competitors chains called Bald. And he thought no one would notice. Like, if that's the case, that's what happened. Now, I personally don't think that's the case after the sleuths on crypto Twitter have kind of batted

• 30:43Ryan Sean Adams?

  this around, but I will say it does seem like the individual who deployed this has some ties to Alameda research, which is of course.

• 30:52David Hoffman?

  That is a fact. That is a known fact.

• 30:53Ryan Sean Adams?

  That is a fact and is absolutely crazy here. Um, this is another take. Somebody who's been doing some sleuth sleuthing. What does this say?

• 31:03David Hoffman?

  Yeah, they say Igor says, "All right, I've been sitting on this news all day, but let's look at the bald base, bald Twitter account, which is the account that issued the base token deployer address. This is definitely someone from Alameda, but I don't think we can safely say that is FBS. This is definitely someone from Alameda, but we cannot safely say that is SBF, even though he's a psycho," is what this person says. And so, yeah, so if you just sleuth around and you go back to the originating address, there is a, it's associated with Alameda Research. So, you know, scammers can scam, but they do.

• 31:34Ryan Sean Adams?

  Wow. And they say that Sam has no access to a laptop or a limited access. So,

• 31:40David Hoffman?

  Yeah, it's like, it's like, I don't know the details of it, but it's like, he can access like the New York Times and, you know, government-approved websites. I bet you he cannot be issuing contract addresses on Ethereum. I bet that is not allowed.

• 31:56Ryan Sean Adams?

  So they say, but the conspiracy theory lives on on crypto Twitter.

• 32:00David Hoffman?

  Anyways, as a result of all this, Bald has made Base surpass Arbitrum again, before Base is launched, Bald transactions surpassed Arbitrum transactions in daily transaction volume. 5.3 million transactions settled in one day, which interestingly enough, Ryan, has made Base profitable. So the Layer 2 Base Sequencer has accrued $700,000 profit in just three days, which is about $85 million on an annual basis. Now, this is straight alpha for coin price, in my opinion. Do you think Wall Street analysts understand how to value that thing? It's like, it's not even, it's not even on mainnet and Base, Coinbase,

• 32:42David Hoffman?

  whoever, whoever is validating Base, I think 15% of these profits goes to the optimism collective, actually. But on an $85 million annual basis, pre-mainnet launch,

• 32:54David Hoffman?

  That's what Coinbase would get.

• 32:56Ryan Sean Adams?

  I doubt Wall Street's considering this, although Coinbase does have an earnings report that's coming out shortly, so maybe we'll see something in that. Go out, take a look at that. I don't think Wall Street's considering it, although, and so you're saying this could be a bull case, although you could also make this a bear case, because the driver of all of this profit was a scammy meme coin. And it's possible that US regulators point to Coinbase and say, ah, so this is your crypto chain that you say is going to revolutionize finance in the world. And the very first big hit on it, and a driver of your profit, is a scammy meme coin rug pull,

• 33:36Ryan Sean Adams?

  right? So I don't know bearish or bullish on this initial use case here.

• 33:42David Hoffman?

  I choose to interpret the bullish scenario.

• 33:45Ryan Sean Adams?

  It's that kind of week, huh?

• 33:46David Hoffman?

  Although, yeah, it is that kind of week. But, you know, Base is a permissionless chain. And just in case anyone was confused, you do not need to go through KYC to get on Base. You can go to the Base Layer 2 through the Ethereum Layer 1 without doing any sort of KYC. Anthony Cisano had a really good take this week about this. Funniest thing about this launch of Base is that it's only meant to be for developers. The official public launch is scheduled for early August. That's August 9. But D gens are so starved for volatility that they ape anyways. Amazing. See, bullish appetite, trading appetite is on the table. People want to buy tokens right now.

• 34:21Ryan Sean Adams?

  For this crap, though, it's like casino stuff. I hate it. I hate it.

• 34:26David Hoffman?

  Hey, you know?

• 34:29Ryan Sean Adams?

  We're gonna get there.

• 34:30David Hoffman?

  Token's gonna token.

• 34:31Ryan Sean Adams?

  David, at some point, the like, high utility, good-for-the-world use cases will crowd out and buy the block space from the crappy ones.

• 34:40David Hoffman?

  The dumb use cases come first. The better use cases are harder, and therefore come second.

• 34:45Ryan Sean Adams?

  Say that again, so I believe it.

• 34:47David Hoffman?

  The dumb, stupid, easy use cases come first. The harder public goods...

• 34:53David Hoffman?

  Good for humanity bullish use cases are harder to do, but they come second. Oh, well, speaking of that, I've got another story for you. Richard Hart, do you remember that? A dumb, stupid meme coin token called HEX. What happened with that this week? Not just HEX. Yeah, so the SEC has sued Richard Hart over HEX, Pulse Chain and Pulse X alleging that he raised over a billion dollars across three different unregistered securities since beginning in 2019. He also defrauded investors by using investor funds for personal goods. I think there's plenty of evidence for that on crypto Twitter and it just, he just flashes that around. The lawsuit says that Hart continually touted these investments as a pathway to grandiose wealth for investors,

• 35:34David Hoffman?

  claiming that HEX, for example, was built to be the highest appreciating asset that has ever existed in the history of man. Although Hart claimed these investments were for the vague purpose of supporting free speech, he did not disclose that he used millions of dollars of Pulse Chain investor funds to buy luxury goods for himself. As a result of this suit, HEX, Pulse Chain and Pulse X have all dropped a lot. I put a, I got a chart tab if you want to open up that one. HEX went from one penny to half a penny, down 50%, which is pretty bad. Pulse Chain went from .001 dollars, so one tenth of one penny, down to six hundredths of one pennies. This is really annoying because the denomination on these are so low. Okay, that's part of the strategy here.

• 36:17David Hoffman?

  And then Pulse X goes from, I'm sorry about this, .00003 down to .000018. We should do these in market caps. It's also hard to see the market cap on these things just because of the way that these, yeah. But anyways, HEX is down 50%, Pulse Chain is down 40%, Pulse X is down 40%, which is pretty bad. I put these two charts together. I've layered on the HEX chart on top of the Terra Luna chart and also scaled it up to market cap. Did you know that at its very peak, HEX was double the market cap of Terra Luna? Wait, what? Yeah. It was worth 80 billion dollars? The peak, at the peak of HEX. It was a top 10 token, bro. No, it wasn't. It was, yes.

• 37:02David Hoffman?

  What is wrong with this industry? Dude, this is what we've been doing, man. What? It's not great. Hex was $80 billion, 2X the valuation of Luna before Luna went to zero.

• 37:17Ryan Sean Adams?

  Ah, oh man, okay. This is another part of the story, David. Uniswap, at least on the user interface side, delisted the hex tokens. The official Uniswap user interface basically delisted it. Now, does that mean that Uniswap, the protocol, has also delisted hex?

• 37:36David Hoffman?

  No, it does not. It does not mean that.

• 37:38Ryan Sean Adams?

  Why, David?

• 37:39David Hoffman?

  Specifically the front end. So, uniswap.com does not let you, the front end website that you find in your browser, does not let you buy or sell hex anymore. Uniswap Protocol does not know about the uniswap.com front end. Those are different pieces of technology. There's many different ways to access the Uniswap Protocol. So, hex is still trading on Uniswap. No token can be, has ever be, or will ever be delisted from Uniswap, the protocol. But the Uniswap Labs company, who operates the uniswap.com front end, has not, has disabled the ability to buy or sell or interacts with hex in any particular way, which I think is just completely fine.

• 38:20Ryan Sean Adams?

  Can I ask you something?

• 38:20David Hoffman?

  Sure.

• 38:21Ryan Sean Adams?

  Right, so, as I was thinking about hex, right? So, there's no question in my mind, this was sort of a self-promotional meme coin for this individual, Richard Hart. His real name is Richard Schuyler, by the way.

• 38:34David Hoffman?

  Scholar, scholar.

• 38:35Ryan Sean Adams?

  Richard Schuyler, I think.

• 38:37David Hoffman?

  Sure, it's not as cool as Richard Hart.

• 38:40Ryan Sean Adams?

  I mean, he used this to personally get wealthy. I remember, David, you know, as part of that kind of ledger leak, all sorts of addresses were leaked, these sorts of things. I actually received a physical mailing from Hex and Pulse Chain promoting their token, right? I don't know that this came from Richard Schuyler, or who this came from, but like, on Twitter, everything. It was very clearly a pump and dump memetic scam coin promoted by an individual, right? So, it's incredibly distasteful, not what this industry should represent. We could go on about it. I think the question in my mind is, what is the actual difference between hex and XRP, though? All right?

• 39:25Ryan Sean Adams?

  Here's the problem. I worry with the SEC. I cannot defend this individual, this project, cannot defend it at all. But if you give the SEC an inch, they'll take a mile. And I expect they will make similar arguments that they made in the XRP case, in the HEX case. And who is willing to defend?

• 39:45David Hoffman?

  HEX, yeah.

• 39:46Ryan Sean Adams?

  Richard, who is willing to defend HEX? Who's willing to defend Pulse Chain? I'm certainly not, right? But is it a security? Is the asset itself a security? Is Boltcoin a security? Are all of the dog coins a security? I don't think they are. So I'm not entirely excited that the SEC is coming for a token. I'm sort of excited about the outcome, that, you know, hey, we get another kind of scammer off the streets, right? That's great. That's great. But what about the precedent?

• 40:17Ryan Sean Adams?

  What's your reaction to that? What do you think about this?

• 40:19David Hoffman?

  Yeah, I think the point that you are making is that XRP and HEX, it can be claimed that they serve very similar purposes, which is to enrich the issuing entity. The one, the major difference between Ripple is that they actually had some intent of doing inter-bank settlement transfers, as scammy as one might think Ripple is. They actually had some intent of building something. And one might say that, Richard, well, he did build a chain. He raised a billion dollars and maybe he spent $1 million actually building the thing that he promised to. But the intent is just so different.

• 41:01David Hoffman?

  Also, I don't think ever Ripple directly touted financial gain about XRP. And if you, the lawsuit says, "Hartz continually touted these investments as a pathway to grandiose wealth for investors, claiming that HEX was built to be the highest appreciating asset that has ever existed in the history of man." That I don't think Ripple ever did that.

• 41:20Ryan Sean Adams?

  I guess what I'm saying is, I don't know that this passes the Howey test any more than XRP does.

• 41:27David Hoffman?

  Yeah, if we went through the litigation process, I think what you're saying is like, yeah, you would find similar, the reasons why XRP is not a security might be similar to the reason why Hex is not a security.

• 41:37Ryan Sean Adams?

  Yeah, the intent of the founders is so subjective, or like, the intent of the issuers is so subjective.

• 41:43David Hoffman?

  And then you're saying is like, okay, while we can't support Richard Hart and I would like to see him punished, is this the method that we want to see that happening? And I think you're calling into question that. And I'm happy just to take, this isn't the appropriate way of using Occam's razor, but just taking the simple approach of saying like, I don't give a fuck, I want the man in jail.

• 42:05Ryan Sean Adams?

  I just worry about the precedent, the sets in general. It's like Gary Gensler stacks it up as a win, what an easy target. It's kind of the same thing they did with SBF, basically, which is like, of course, SBF was a scammer and no one could defend him. And like, then they go and they present and they see Exhibit A, this is what crypto is. Here's your god, here's your hero. His name is Sam Bankman-Fried and he perpetrated one of the largest scams in history. That's all crypto is. And they win their cases that way and they chip away at us. So that's what I'm worried about, the kind of the credible neutrality is. But like, what's weird is now it sounds like I'm defending Richard Skyler and Hex and Pulse Chain and I'm not doing that.

• 42:44David Hoffman?

  Hands off, Richard, SEC.

• 42:47Ryan Sean Adams?

  I am not doing that at all, to be clear. I just, I worry about the precedent, the sets. But it might not just be the SEC bringing a case against him. What's this piece of the story?

• 42:56David Hoffman?

  Okay, so this is now speculation. But Martin Shkreli was engaging with Eric Wall. And Eric Wall is, he's been interestingly a part of like the whole Hex ecosystem, not as a promoter, as like one of the guys trying to take it down and like help, help prove the fraud to the Hexicans, even though they don't want to see it. Anyways, Martin Shkreli is replying to Eric Wall. And Martin Shkreli is the guy who went to jail for jacking up, I think like EpiPen costs, remember him? And now he's in crypto. And so he goes, if you look at page 90 of the sentencing guidelines, he is already at 40 points, which if you look up the sentencing chart in the same PDF is recommended life sentence with all the victims. It's a rough situation if he gets cuffed. So this is, I

• 43:40David Hoffman?

  think some, this is talking about the Department of Justice. And so Martin Shkreli is saying that he might rack up enough, whatever these points are, rack up enough points. And Martin Shkreli would be very familiar with this as, as somebody who he racked up, he said 39 points. And if you get to 40 points, the sentencing chart can put you in jail for life.

• 43:59Ryan Sean Adams?

  What are these points? Is this like, like fraud?

• 44:01David Hoffman?

  I think, yeah, I'm not, I'm not sure. I'm not sure. I've never, I've never racked up any points. I've never been charged by the Department of Justice.

• 44:10Ryan Sean Adams?

  Misappropriation?

• 44:11David Hoffman?

  Yes.

• 44:11Ryan Sean Adams?

  Right. It's a different set of causes and these, these things seem more relevant to the individual in question, at least in my opinion, rather than the SEC making a determination as to whether some particular meme coin is a security or not. I just don't want them to do that, but I do want our justice system to catch scammers.

• 44:29David Hoffman?

  Right.

• 44:29Ryan Sean Adams?

  That would be nice.

• 44:30David Hoffman?

  So I asked Martin Shkreli, what do you think the odds are that the Department of Justice picks this up? And he goes 99% if they have the goods on misappropriation, which I've seen that they likely do. And he goes, it's likely that he copsed, he like settles to 10 to 15 years in jail. If he goes to trial, 25 to 30 years is easily on the table. So I don't, trusting Martin Shkreli is not something that I would do, but he has, he's got experience in this matter, having gone through this. And so he's saying that it's, it's likely that eventually we will find Department of Justice charges upon Richard Hart.

• 45:08Ryan Sean Adams?

  Meanwhile, David, in another court, do you remember Kyle Davies, the Three Hours Capital co-founder?

• 45:13David Hoffman?

  How could I forget?

• 45:15Ryan Sean Adams?

  Well, he said he apparently renounced his US citizenship. And so as a result of doing that, I'm no longer an American citizen. The US courts have no jurisdiction over him. Is that how that works, David? Can you do that?

• 45:28David Hoffman?

  Can, can I just say I'm not a citizen?

• 45:31Ryan Sean Adams?

  If you break, if you break a law and you just, you know, I was never a citizen.

• 45:35David Hoffman?

  I actually listened to it. There's an old Planet Money episode about this. I used to love Planet Money. It's kind, it hasn't been so great lately, but they did, they did an episode on people who just like declared independence from citizenship so they wouldn't have to pay taxes.

• 45:48Ryan Sean Adams?

  Really?

• 45:48David Hoffman?

  Yeah, there's been like a handful of court cases about this who people just say, I'm not a citizen anymore. And they're also living inside of the United States when they do this. Uh, and there's been a whole series of like legal efforts about this. It's, you can't do it.

• 46:00Ryan Sean Adams?

  It doesn't work that way?

• 46:02David Hoffman?

  It doesn't work like that. No, not at all. Um, so that, I mean, he's just trying to abscond from participating in bankruptcy and, and all these things that he has to do. He is currently in Dubai, I believe, uh, which is a non extradition, uh, country. But, uh, yeah, basically Kyle Davies is saying that the United States courts can no longer tell him what to do because he declares to no longer be a citizen of the United States. Which again, the United States says, you can't do that.

• 46:29Ryan Sean Adams?

  Well, certainly racking them up this year, David, you have a tweet here. Do Kwan jailed in Montenegro, awaiting extradition. Alex Mosenski charged by the Department of Justice. Check. SBF house arrest, awaiting trial. Check. Three hours capital permanently exiled from the US and all extradition countries. We'll see. Check. Richard Hart sued by the SEC, speculation of DOG indictment. What, why are you putting this checklist together, David?

• 46:54David Hoffman?

  This goes back to our permission to be bullish weekly roll up. Was that last week's? Permission to be bullish? Man, like, we're cleaning up the industry. Like Richard Hart sued by the SEC. I will say fingers crossed that the Department of Justice is not far behind. Three hours capital, like, they're not in jail, but they are quarantined as far away from the United States as possible. And all United States allied countries, you know, the West. They could go to jail. I, I will give like a two thirds, a majority checkbox, but there's still left to be, do things to be done there. Same thing with SBF. He's under house arrest. He's awaiting trial. I'm assuming he's going to go to jail if I want to have, place faith in society. Alex Mosenski charged by the Department of Justice. Do Kwan is in Montenegro, waiting extradition to the United States.

• 47:38David Hoffman?

  It's what? Who else is there? We got him. We got them all.

• 47:43Ryan Sean Adams?

  You know, another question here is, does this act as a deterrent for the next cycle? When a new scammer thinks there's easy prey out there in crypto? And I'm going to launch my token, I'm going to do my fraud, I'm going to do it this way. When they look back and they see, well, the previous cycle, look what happened to the scammers in chief. Last time, justice was served. Does it act as a deterrent? Because if so, that is also bullish moving forward. It means, hopefully, we have less scammers entering the space. Because it works like the real world, right? If you commit fraud and it's egregious, then justice will be served. And, you know, I think that is bullish as well.

• 48:23David Hoffman?

  Yeah. Richard Hart got away for all of his trinagons for way too long. You know, there's a documentary being made by him.

• 48:28Ryan Sean Adams?

  About Richard Hart?

• 48:29David Hoffman?

  About Richard Hart, about hacks, yeah. August 4th and 5th, wow, that's in two days. Oh, my God, the timing of this is great.

• 48:37Ryan Sean Adams?

  The documentary industry has to love this. Like Hollywood's got to love what happened in crypto in, you know, the last few years. So much material.

• 48:44David Hoffman?

  There are so many stories that are some of the craziest sitcommy stories. Ones that crypto Twitter does know about, ones that they don't. That I wish all of them could come to light, but there's too many of them.

• 48:58Ryan Sean Adams?

  We'll get a few, though. I think we'll get a few. David, speaking of great content, what's coming up next?

• 49:03David Hoffman?

  Coming up next. ETH is getting an ETF, at least a futures ETF, perhaps. Binance could face fraud charges from the Department of Justice. But what is the Department of Justice waiting for? We'll talk about that. Two protocol birthdays this week. These ants, these birthdays keep on changing. Something turns eight, something else turns two. The world coin debate continues. Some angles that we might have missed that we're going to cover. And also, $750 million magically appears in Bitcoin buy pressure. Where'd it come from? I don't know. But we're going to get to all these stories and more. But first, a moment to talk about our fantastic sponsors that make this show possible. Especially Metamask Portfolio, the portfolio you need to help navigate the incoming bull market. Because we're feeling bullish, we're going to go here for them. Right now. Are you a MetaMask user? Well, you're listening to Bankless, so of course you are. The wallet you know and love just got a whole lot better.

• 49:48David Hoffman?

  MetaMask Portfolio is the ultimate one-stop shop for all of your crypto needs. It gives you a holistic view of your crypto portfolio across multiple chains and multiple addresses all at once. You can easily view and manage all your coins, tokens, and NFTs in one convenient place just by connecting your wallet. MetaMask Portfolio goes beyond just viewing your portfolio, though. Inside the portfolio, you can do all the incredible money verbs that make DeFi so powerful. You can buy, swap, bridge, and stake your crypto assets with ease. It's like having a powerful battle station for all your DeFi moves right at your fingertips. So if you're looking to do more in Web3 your way, MetaMask Portfolio is the answer. I already know that you have MetaMask wallet, so go check out your MetaMask portfolio. Learn more at metaMask.io/portfolio.

• 50:32David Hoffman?

  Arbitrum is accelerating the Web3 landscape with a suite of secure Ethereum scaling solutions. Hundreds of projects have already deployed onto Arbitrum One. With a flourishing DeFi and NFT ecosystem, Arbitrum Nova is quickly becoming a Web3 gaming hub, and social dApps like Reddit are also calling Arbitrum home. And now, Arbitrum Orbit allows you to use Arbitrum's secure scaling technology to build your own Layer 3, giving you access to interoperable, customizable permissions with dedicated throughput. All of these technologies leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM-compatible. Faster transaction speeds and significantly lower gas fees. Arbitrum empowers you to explore and build without compromise. Visit arbitrum.io, where you can join the community, dive into the developer docs,

• 51:16David Hoffman?

  bridge your assets, and start building your first app on Arbitrum. Binance could face fraud charges from the Department of Justice. The US DOJ officials are considering fraud charges against Binance, but they're concerned about the cost to consumers. According to people familiar with the matter, reported by Semaphore.com, federal prosecutors worry that if they indict Binance, it could cause a run on the exchange similar to the one that befell the now bankrupt platform FTX, causing customers to lose money and potentially spurring a panic in the crypto market. Binance and its co-founder CZ are already facing charges, of course, from the SEC in addition to the Commodities Futures Trading Commission. So... The Department of Justice wants to charge Binance with fraud,

• 51:56David Hoffman?

  but they're not going to out of fear that it will cause an FTX-style run on the bank, which is interesting.

• 52:05Ryan Sean Adams?

  Do you want to interpret that as bullish this week, David?

• 52:09David Hoffman?

  Okay, so either CZ and Binance are completely solvent. There's probably fraud, but they're could be completely solvent and they're not getting charged by the DOJ because the DOJ doesn't understand how to tell the difference between FTX and Binance. Or Binance does have a hole in its balance sheet and the Department of Justice does know something and so this is a real concern. I'm going to cautiously go with the former. Cause I kind of am grouping Binance and Tether FUD as the same things. Like I've heard 10,000 Tethers FUDs, I've heard about 5,000 Binance FUDs. But that is the news.

• 52:46Ryan Sean Adams?

  Yeah, my, who knows? It's always been our take. Like it's really hard to speculate.

• 52:51David Hoffman?

  You just don't know.

• 52:52Ryan Sean Adams?

  I guess my speculation though is there's no way this is as bad as SBF if there's something

• 52:58David Hoffman?

  No, no way. There's no way.

• 53:00Ryan Sean Adams?

  But there might be something here. We don't know yet. But CZ's response as usual is what?

• 53:04David Hoffman?

  Four.

• 53:05Ryan Sean Adams?

  Four. What does that mean? He tweeted this out for the morning of.

• 53:10David Hoffman?

  Four is his shorthand for ignore FUD, fake news and attacks.

• 53:15Ryan Sean Adams?

  So nothing going on here, just four. What would you expect me to say, right?

• 53:19David Hoffman?

  Yeah, yeah, no matter what, four. Yeah.

• 53:23Ryan Sean Adams?

  David, did you know this though? China is actually Binance's largest market by far. 20% of their trading happens in China. And I thought crypto was illegal in China, but apparently it's the largest market for Binance.

• 53:35David Hoffman?

  You know what I don't know is how does China feel about Binance? How does the Chinese government? What is their stance towards Binance? Do they care about it? Do they not care about it? Do they think it's good? Think it's bad? I don't know the answer to that question.

• 53:48Ryan Sean Adams?

  I don't know the answer either, although didn't Binance originate?

• 53:53David Hoffman?

  In China?

• 53:53Ryan Sean Adams?

  Yeah. And then had to move?

• 53:55David Hoffman?

  Yes.

• 53:56Ryan Sean Adams?

  There's crypto bans, not friendly jurisdiction, so it can't be super friendly. And they're not on great terms. But this is crazy. Do you know, even if Binance totally pulled out of the US and Europe as a result of this, they'd still be the largest crypto platform in the world?

• 54:11David Hoffman?

  Yeah.

• 54:11Ryan Sean Adams?

  In terms of trading volume.

• 54:12David Hoffman?

  It's pretty hard.

• 54:13Ryan Sean Adams?

  That's how big Asia is.

• 54:14David Hoffman?

  It's pretty hard to state how big Binance is. Binance is like,

• 54:16Ryan Sean Adams?

  Ow.

• 54:17David Hoffman?

  Like 70, 80% of all crypto trading volume and Coinbase is not 15? Maybe it is 15-ish?

• 54:24Ryan Sean Adams?

  Yeah, we'll, we'll watch that. We'll have to see how that evolves. David, it's birthday time. We've been teasing it the entire episode. Whose birthday was it this week?

• 54:32David Hoffman?

  It's Ethereum's birthday! Ethereum turned eight. Ethereum turned eight on July 30th. It's when the first proof of work block got minted by Ethereum in 2015. It's been a crazy, crazy journey. Here's Left Terrace on the day of the, and I'm pretty sure that's Vitalik, on the day of the first block of Ethereum. Yeah. Wow, eight years. You know what's crazy? I came in, I remember coming into crypto, and this is something I tell all newcomers into crypto. I came into crypto in 2017, two years, two and a half, two years after Ethereum got started, and I felt so late, so incredibly late. And now we're eight years into Ethereum and people are gonna, people coming in probably in 2021 probably feel the same.

• 55:16David Hoffman?

  Crypto has a way of making you feel late.

• 55:18Ryan Sean Adams?

  Eight years, man.

• 55:19David Hoffman?

  Eight years.

• 55:19Ryan Sean Adams?

  Look, that's what, like, second grade? That's, that's still pretty young, like, just an eight-year-old.

• 55:24David Hoffman?

  Very year, yeah, it's very young, yeah.

• 55:26Ryan Sean Adams?

  $400 billion in secured value, you add up all of the tokens, 3.6 billion in annualized profits, thanks ultrasound money for that, and a total of 17.8 million blocks of uncensorable digital property. That's not too bad for an eight-year-old, huh?

• 55:43David Hoffman?

  Not bad. Yeah, it's not, it'd be better than I, than me at eight years old, that's for sure.

• 55:47Ryan Sean Adams?

  Happy birthday Ethereum. And maybe to celebrate, some things going on in the Ether Futures ETF race. What's this?

• 55:53David Hoffman?

  Yeah, so here's what Ether gets for turning eight. It gets an ETF futures. And so a handful of companies, Bitwise, VanEck, ProShares, Grayscale, VolatilityShares have all submitted an ETF futures for Ether. Six of them. All at once, interestingly enough.

• 56:14Ryan Sean Adams?

  That's actually, when you think about it, you know, eight years' time to get here, that's not too bad.

• 56:18David Hoffman?

  Not too bad.

• 56:19Ryan Sean Adams?

  Like, all the way from like, just a project and a white paper in somebody's head, all the way to like, the CME-regulated futures for a new type of digital commodity. That's pretty amazing. How much is Ether market cap right now? 150 billion?

• 56:34David Hoffman?

  No, I think it's like 200 something.

• 56:37Ryan Sean Adams?

  It's like, top 50 assets worldwide.

• 56:40David Hoffman?

  Yeah. 220 billion-dollar market cap.

• 56:44Ryan Sean Adams?

  There you go.

• 56:44David Hoffman?

  Doing great.

• 56:45Ryan Sean Adams?

  That ETF might happen before the Bitcoin ETF, which might be interesting. Now, this is not a spot ETF. This is a futures ETF. And Bitcoin already has one of those, but this would be the first time. So that's kind of cool news. And David, as usual, the Canadians are ahead. While Americans are fumbling around with the futures ETF for ETH, powerful Canadians will start staking ETH in their spot ETH ETF later this month. This is DJed Spartan. Canadians already have a spot ETH ETF. So what is America waiting for? Wow. I think that's the question.

• 57:16David Hoffman?

  I love how it's staked. That's so good. Yeah. So the ETF isn't Ether. It's staked Ether, because of course it would be. It's way better.

• 57:24Ryan Sean Adams?

  That makes sense. Yeah. Buy your internet bond. That's in the bond.

• 57:27David Hoffman?

  There's gonna be so much ETH staked. They're gonna nuke our yields, bro.

• 57:31Ryan Sean Adams?

  We're totally gonna nuke their yields.

• 57:32David Hoffman?

  God, we have Canadians.

• 57:34Ryan Sean Adams?

  David, you know, that wasn't the only birthday, though. We also have to celebrate another, like, baby birthday, a two-year-old.

• 57:40David Hoffman?

  Coming up, coming up, up this week is not yet. So we are on the cusp of EIP 1559 turning 2. This was August, early, the first week of August 2021 is when Ether started being burned for the very first time. As of now, as of two years, $10 billion of Ether has been burned, which is just nuts. $9.6 thousand of Ether burned every single minute for two years in a row.

• 58:09Ryan Sean Adams?

  You know, David, somebody brought this to our attention. So that is EIP 1559. So that's a different type of burn on kind of transaction fees. What would happen if we started burning MEV?

• 58:22David Hoffman?

  Oh, you mean as in what is going to happen in the future when we put MEV burn into the protocol?

• 58:27Ryan Sean Adams?

  I mean, that's, that's a likely future trajectory. What are we looking at here?

• 58:31David Hoffman?

  We're looking at a chart of Ether burn with and without MEV burn.

• 58:36Ryan Sean Adams?

  With MEV burn, we would be what? Very deflationary, this looks like.

• 58:42David Hoffman?

  So without MEV burn, we have been at net deflationary by negative 0.285%. With MEV burn, we would have been negative half a percent. So we would be twice as deflationary with MEV burn than we currently are. Almost twice, almost twice.

• 59:03Ryan Sean Adams?

  The furnace just keeps getting bigger.

• 59:05David Hoffman?

  Love it. And it's, and Ryan, it's still a bear market. The bull market's ahead of us. Imagine the burn, imagine the burn then.

• 59:15Ryan Sean Adams?

  This is a release from MetaMask. Attention stakers, you can now stake your Matic with MetaMask portfolio. Check it out. We talk a lot about MetaMask portfolio. MetaMask is actually a bankless sponsor, but this is really cool to see. Their user interface and the, in the portfolio app, and you can actually stake your Matic tokens. You can stake Ether as well. But adding another verb to the MetaMask portfolio, stake, to stake.

• 59:41David Hoffman?

  Yeah, so, okay, so this, I think, is, A, this is cool because MetaMask portfolio, we're going to talk about with what I'm bullish on, and it has to do with setting up my battle station, my bull market battle station, which you should do, teaser. But MetaMask is now making it easy to stake for a Layer 2 network. Do you think it stops at Polygon? No, it doesn't just stop at Polygon. All Layer 2 networks, once they decentralize, once they become permissionlessly validated, you're going to be able to see that stake button. Oh, am I allowed to do this?

• 1:00:12David Hoffman?

  Yes. Tomorrow, I don't think the announcement is out, but today, Offchain Labs is announcing shared sequencing, permissionless validation of Arbitrum. So you're going to be able to stake your arb token and validate the Arbitrum chain. So Arbitrum, stake. Optimism, stake. ZK Sync, stake. Any Layer 2 that gets to the point of decentralizing the sequencer and allows for permissionless validation, there's going to be a stake button. I mean, probably. So.

• 1:00:39Ryan Sean Adams?

  There definitely should be, and why stake? For yield, right?

• 1:00:43David Hoffman?

  For the yield, bruh. Yeah. Stake your Ether for the Layer 1, stake your Layer 2 tokens for the Layer 2. Everyone pick your Layer 2 that you think is going to get the most yield, and press the stake button that's probably coming to MetaMask portfolio eventually.

• 1:00:57Ryan Sean Adams?

  So much cool stuff going on. This is another cool thing going on. This was an EIP that almost escaped my attention. EIP 6968. This is Kevin Awaki writing this. 68, 69. Oh, sorry.

• 1:01:13David Hoffman?

  I was waiting for you to get that one.

• 1:01:17Ryan Sean Adams?

  Cut me not getting that joke.

• 1:01:19David Hoffman?

  No, don't do that. Keep it in.

• 1:01:23Ryan Sean Adams?

  Enables ecosystem chains. What is an ecosystem chain? It's a chain with contract-secured revenue, CSR. That means the contract deployers can earn sequencer fees when their contracts consume gas. Okay, break this down for the layman. What is this EIP proposing?

• 1:01:42David Hoffman?

  Yeah, so this is, remember Canto? Remember the Canto chain that had a brief moment of, yeah, but went no longer.

• 1:01:49Ryan Sean Adams?

  Don't slam. Don't slam, David.

• 1:01:52David Hoffman?

  So Kanto was all about a chain because of CSR, Contract Secured Revenue. So if you built a chain, a contract on Kanto, you would get fees at any time as a developer, you would get fees anytime that you, somebody use your contract is like a sustainability mechanism. So this has, like all things, anything that's been put into a chain is now an EIP for Ethereum. This is the way that it goes. This is, never mind. EIP 6968 is contract secured revenue for Layer 2. So this is meant to be for Layer 2 specifically. And so any Layer 2 can accept this EIP to create a contract secured revenue primitive on top of their Layer 2. And so it's an incentive to get devs, like it pays devs. Like if you are a dev and you make a contract on a Layer 2 and people use your contract, you get money. So it's a financing mechanism.

• 1:02:37Ryan Sean Adams?

  It's so huge. I think this is massive. I think it's incredibly bullish. So what this means is basically like if you create a kind of like a public good, you don't have a monetization mechanism. Like, let's say you create a very cool stablecoin on a Layer 2 that starts to accrue a lot of value, a lot of, you know, transactions around it, you actually get paid sequencer fees in order to do that. It's a whole new business model, I think, on top of Layer 2s. And that's what's exciting here.

• 1:03:04David Hoffman?

  Yeah, there's been a lot of debate about contract secured revenues and the economic models behind it and whether they're good or sustainable or not. We haven't seen them actually meaningfully get adoption. And perhaps there's good reasons for that. Maybe we haven't seen enough experimentation. But now we are seeing this experimentation move to the Layer 2s. Speaking of moving to Layer 2s, the layered, the temperature check for Cello, this is the temp check of the Cello Layer 1, the governance checks, like, hey, do we want to move to a Layer 2? Passed 100% to 0. Okay, not completely 0, 56 million to 632. Call that 100 to 0. So Cello is officially going to be a Layer 2. Yeah.

• 1:03:50Ryan Sean Adams?

  We spent a lot of time last week talking about WorldCoin. I think there's just a couple of things to tie off. The first is this tweet thread from Eric Wall. It's actually almost like a Twitter post these days. It's pretty long, so we probably can't read all of it, David. But what's the TLDR here?

• 1:04:06David Hoffman?

  Eric Wall does a fantastic job just unpacking technical subjects for laymen. And so it's simply too long. There's maybe, it's almost 1,000 words, I'd say. So I can't read it. It would take five to 10 minutes. But there's a link in the show notes to go read this tweet thread. I think if you want to understand the strengths and weaknesses of WorldCoin, and specifically where those weaknesses are and why this thing might not work, this tweet thread is for you. He just unpacks all the nuances very, very well. And so if you just want, if I feel actually like complete on the WorldCoin conversation because of this tweet thread. This is just such a weird awkward photo of Sam Altman.

• 1:04:42Ryan Sean Adams?

  This is a mid-journey photo, David. There's no way this is real. There's just no way this is real.

• 1:04:46David Hoffman?

  It's gotta be. It's gotta be. Yeah, you're right. I don't, that you, a human would not know not to post like that.

• 1:04:53David Hoffman?

  Okay, so that's the call to action. If you want to read this tweet thread, I highly recommend it. Also this week, I saw a tweet here that Ryan's got pulled up from Martin Koppelman, who's also a creator of a different decentralized identity protocol. And so he was retweeting this tweet that did some address analysis from WorldCoin addresses. So they've detected, like in this tweet and in this image, three different clusters of WorldCoin addresses that all appear to converge down to one address. And so it looks like 130 individual addresses actually are just three people.

• 1:05:32Ryan Sean Adams?

  Stockpuckets, basically.

• 1:05:33David Hoffman?

  Exactly. So it has been Sybil attacked. And so if you read the Eric Wall tweet thread, Twitter, Twitter, Twitter thread, X thread, he, basically the TLDR is like, yeah, every single WorldCoin account is 100% verifiable, a unique pair of eyeballs. That doesn't mean that it is in the hands of a unique person. And this is what we are seeing here today. So this The whole premise of WorldCoin and even anyone giving legitimacy to WorldCoin, which included me, base is based on the fact that they can actually produce civil resistance. And if they can't do it, then this thing is worth zero. And so where it's not-

• 1:06:14Ryan Sean Adams?

  Yeah, that's the base requirement for decentralized identity is you have to be civil resistant. If you're not, then the solution just doesn't work. So-

• 1:06:20David Hoffman?

  Yeah. Just because you can prove unique eyeballs does not mean you can prove unique humans. And so that this is the weakness that is seems to be appearing with the WorldCoin, with the WorldCoin thing. Binance received a deposit address of a bunch of WorldCoin tokens from 100 different, 150 different wallets within 48 hours after launch, profiting about $10,000. So this is, you know, hey, that UBI WorldCoin distribution, somebody is farming that. Many people are farming that and they're profiting from it, which breaks the whole system.

• 1:06:50Ryan Sean Adams?

  You gotta fix that if you're gonna do this. Well, MicroStrategy, David, they're continuing to buy Bitcoin. MicroStrategy is about to pump another, what, $750 million into Bitcoin?

• 1:07:03David Hoffman?

  Dude, thin air, man. They deserve, they're minting MicroStrategy shares out of thin air just to buy Bitcoin and it's working.

• 1:07:11Ryan Sean Adams?

  I totally knew this would work. Sailor is channeling demand for Bitcoin ETF to demand for MicroStrategy shares. He's printing infinite MicroStrategy shares and buying finite-

• 1:07:21David Hoffman?

  Finite-

• 1:07:21Ryan Sean Adams?

  Buying finite Bitcoin. Central banks and governments should take note. Maybe they're the next ones to do this is kind of the point. You know, I was looking at like an old E-Trade account I have and there's a-

• 1:07:33David Hoffman?

  Boomer.

• 1:07:33Ryan Sean Adams?

  There's a crypto section in E-Trade and you know what they recommend? Because you can't actually buy, you know, a spot ETF. Of course, the grayscale products, that kind of thing. Also, MicroStrategy. If you want crypto exposure in your E-Trade account, then buy MicroStrategy stock. And they're not wrong, but it's so messed up.

• 1:07:54David Hoffman?

  I'm just gonna chalk that up to TradFi failings. Last bit of news here from DCG says it's close to reaching an agreement on its Genesis Chapter 11 bankruptcy. So in a letter to investors, DCG says, "After a month of tireless negotiations led by DCG leadership, we are close to reaching an agreement in principle to resolve the claims in the grayscale Chapter 11 cases. So we expect to bring these cases to a close soon." So maybe the grayscale, excuse me, the DCG story is coming to a close here, which is just around the mark, the time for the bull market to start. So that makes sense.

• 1:08:30Ryan Sean Adams?

  Yeah, and getting that story closed would be bullish. David, we got some, we got some bullish questions coming at us. And number one, will OP tokens accrue value? How does base fit in? That's a question from a Bankless listener. Also, are L2s as safe as Ethereum? We'll get into that. And there's also a pretty hot Vitalik take this week on the state of crypto right now. And it's bullish, of course, the theme of this episode.

• 1:08:54David Hoffman?

  Would Vitalik say that it's bullish?

• 1:08:55Ryan Sean Adams?

  I don't know. I'm putting words in his mouth, but guys, we'll be right back. We will be right back with all of that just after we thank the sponsors that made this episode possible.

• 1:09:04David Hoffman?

  Mantle, formerly known as BitDow, is the first DAO-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle Network, a brand-new, high-performance Ethereum Layer 2 built using the OP stack, but uses Eigenlayer's data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle Network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest DAO-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 onboarded, like Game7 for Web3 Gaming and Bybit for TVL and liquidity and on-ramps. So if you want to build on the Mantle Network, Mantle is offering a grants program that

• 1:09:48David Hoffman?

  provides milestone-based funding to promising projects that help expand, secure, and decentralize Mantle. If you want to get started working with the first DAO-led Layer 2 ecosystem, check out Mantle at mantle.xyz and follow them on Twitter at ZeroXMantle. People worldwide, paying them in crypto, providing them access to benefits. It all so complex, but it doesn't have to be complying with labor laws, payroll rules, tax obligations and crypto regulations in every country that you employ someone is difficult, time consuming, manual and costly, and it's drawing more and more attention from regulators and governments. But there is good news. Toku is here. Toku is the first employment and compensation platform for the crypto industry that makes this easy.

• 1:10:29David Hoffman?

  Toku helps you hire employees or contractors and pay them in fiat or crypto legally, compliantly, and with all the taxes handled in over 100 different jurisdictions. So whether you're an early stage company with just a team of two, or you're an enterprise with 200, Toku has a solution that meets your needs. Toku is already working with the leading companies in the space, Protocol Labs, Hedera, Gitcoin, and many more. So transform your employment and token payroll operations with Toku. You can reach out to Toku at toku.com/bankless or click the link in the show notes.

• 1:11:00Ryan Sean Adams?

  Question from Kefu, I think I've heard of value accrual to OP from the main OP chain via fees and MEV, but will there be any value accrual from other OP chains like Base to the OP token itself? How is a layer two token like OP going to accrue value, David?

• 1:11:16David Hoffman?

  Yeah, so this is a really, really good question. I think from the early days of Base mainnet launch, they said that they committed that they, A, want to be a part of the OP collective because they used the OP stack chain to create Base. And being a part of the OP collective means that you need to contribute some of your sequencer fees of your layer two towards the OP collective to help finance the retroactive public goods funding effort, basically put the money in the OP collective.

• 1:11:43Ryan Sean Adams?

  It's like a tax on revenue kind of thing.

• 1:11:44David Hoffman?

  I think the number is 15%, 10 to 15% I think is right. We are, like I said earlier in the episode, we are doing an episode with Ben Jones and Jesse from Base about the law of chains, which is how this standard is going to be set. And if you are an OP stack chain and you want to be a part of the super chain, You must abide by the law of chains, which assures some level of block space quality and assurances while also and also like, what does it mean to be a part of the OP Collective? And that's probably where a certain number, I think, again, I think the number is 15%, but it's probably up to governance anyways.

• 1:12:17Ryan Sean Adams?

  That's kind of cool. It's like a confederation of chains.

• 1:12:20David Hoffman?

  It's a union. Yeah, it's a union of chains.

• 1:12:22Ryan Sean Adams?

  You can choose to be a part of it or not, but if you do choose to be a part of it, you have to pay your taxes.

• 1:12:27David Hoffman?

  Yeah, exactly. Right. So 15% of that base revenue that we were talking about earlier goes to the optimism collective. The Zora chain, 15%. Worldcoin, if that is a thing that lasts, 15%. I think, again, do your own research. If the 15% is the correct number, I will ask Ben and Jesse what that number is when we do the episode with them. But I think that episode, that number is public somewhere that was announced way back when with the with the base chain. Anyways, we will get those details. So that's how this works. So that this is why this is the model for OP, the OP stack chains. If you want to be a part of the superchain, if you want the composability, if you want the network effects of optimism, you got to pay the tax to the optimism collective.

• 1:13:08Ryan Sean Adams?

  Here's a question from KiwiDog4. "Once we have ZK rollups with permissionless sequencers and trustless bridges, will L2s have basically the same security guarantees as L1?" This has also been a Twitter debate recently that I've heard. So the question of will Layer 2s have the same security guarantees as their Layer 1? What's your take on that?

• 1:13:29David Hoffman?

  I think the operative word is will Layer 2s have basically the same security guarantees as Layer 1? And yes, basically, they will. There will always be some nuances. There will always be some smart contract risks because Layer 2s are smart contracts. But with permissionless sequencers, trustless bridges, all of the things that decentralize Layer 2 chains, also with some time, some Lindy, Layer 2s will give you basically the same security guarantees as Layer 1s. And that is why we are doing the Layer 2 roadmap. That's why Ethereum is a rollup-centric roadmap, because we have found ways to make scalable chains have the same security guarantees as the Layer 1s. It's always been part of the vision. And so I don't even necessarily think ZK rollups are the only, will have

• 1:14:13David Hoffman?

  a monopoly on this. It's just they have a little bit faster path there. Optimistic rollups will have the also have the same security guarantees. But that is the Layer 2 vision. The Layer 1 and the Layer 2s, those lines blur once we get to permissionless sequencers, trustless bridges, et cetera, et cetera. Yeah.

• 1:14:30Ryan Sean Adams?

  So a couple thoughts on that or follow-ups, add ending what you just said. It's important to realize none of the chains are there today. All right. So you can see this on layer two B. It's what I have in front of us. A lot of them are at stage zero, doesn't offer that full decentralization or stage one, which is kind of training wheels. They need to get to stage two. And that's where everything is permissionless. All the sequencers are completely whitelisted. Upgrades are handled correctly. But there's the caveats and we're certainly not there yet with layer twos. The other thing I'll say is there is this dependency on the trustless bridge from Ethereum to a layer two on that working.

• 1:15:11Ryan Sean Adams?

  There's some smart contract code there, of course, and smart contract code can have bugs. So there's that dependency as well. But for all intents and purposes, it's almost the same security guarantees as the layer two, once we get to this stage two level for across, across these rollups.

• 1:15:32David Hoffman?

  Remember when layer two only had, uh, layer two B only had like four or five layer twos on them?

• 1:15:37Ryan Sean Adams?

  Ah, those were the days.

• 1:15:38David Hoffman?

  Scroll down, how far is it? Oh my God, it keeps on going. 29, 29, 29, 29 layer twos.

• 1:15:44Ryan Sean Adams?

  We just got started, David.

• 1:15:45David Hoffman?

  After, once this, once we, once Ether hits all time highs, how many layer twos are going to be on layer two B? Question for you. Make a prediction.

• 1:15:55Ryan Sean Adams?

  Ether all time highs, you mean the, um, the summit amount? What's all time highs? You're talking about this cycle?

• 1:16:00David Hoffman?

  $4,300, uh, $4,900 for Ether. Once Ether, once Ether breaks all time highs.

• 1:16:06Ryan Sean Adams?

  And is heading towards your? Matterhorn elevation?

• 1:16:10David Hoffman?

  Hitting the matterhorn, yeah. How many layer twos will be on layer two B?

• 1:16:13Ryan Sean Adams?

  Ooh, uh, I'm gonna guess, I'm gonna guess 900.

• 1:16:21Ryan Sean Adams?

  That's sorry, that's my Matterhorn number.

• 1:16:25David Hoffman?

  Oh, that's my Matterhorn.

• 1:16:25Ryan Sean Adams?

  Okay. Maybe all time high, I'll say 300.

• 1:16:29David Hoffman?

  Okay. Back. I was gonna go with, I was gonna go with 100, but that seems a little low. I'm gonna go, can I, can I give a range?

• 1:16:40Ryan Sean Adams?

  I'm more bullish than you.

• 1:16:41David Hoffman?

  100 to 150, layer twos on layer two B when Ether breaks all time high.

• 1:16:45Ryan Sean Adams?

  All right. It's on, the bet's on, David. Some takes this week, this one from Vance Spencer, what's he saying?

• 1:16:52David Hoffman?

  Vance Spencer says, "It's important to internalize. Blue chip DeFi or anything was a meme last cycle. Nobody was generating sustainable cash flows and to be honest, the industry was a shit show." Yeah, kinda was. "Launching a successful protocol and 15 VCs funded forks would come in with tokens and vampire attack you. This cycle is different. Real, sustainable cash flows with paths to scale. Large markets, all competitors now dead or thoroughly discouraged. No VC money to fund second, third, fourth, fifth place. Consolidation, blue chippery." I think what Vance is saying is we're off of the shitcoin roller coaster and we are focusing on quality and fees. That was one of my big takeaways from ECC is like the maturation and verticalization of so many DeFi protocols.

• 1:17:36David Hoffman?

  And this is the take that Kane Warwick gave me ECC 2022 a year ago. We are in now a bull market for fees. I mean, it turns out we were going through a bear market, actually, but you know, Ethereum people, we're always just like a couple of years ahead of the curve and and our takes are just a couple of years too early. But you know, we're in, we're witnessing layer two summer.

• 1:17:58Ryan Sean Adams?

  Protocols that capture cash flows, basically.

• 1:18:01David Hoffman?

  Fees.

• 1:18:02Ryan Sean Adams?

  Yeah. Now, they don't flow to the governance token yet, though, right? Like Uniswap doesn't have its fee switch.

• 1:18:08David Hoffman?

  Well, it has a fee switch, this is not on.

• 1:18:10Ryan Sean Adams?

  It's not on, yeah. Turn that, turn it on.

• 1:18:13David Hoffman?

  He, he continues and Vance says, "We figured out where aggregation points are and who the long-term incumbents incumbents in DeFi will be. We figured out some protocols are features and likely to be rolled into larger incumbents." Exactly what I was saying. "If you squint a little bit, you can see the fang of DeFi is assembling." The fang of DeFi, which Vance is saying is smell, S-M-E-L-L. I don't actually know if he's actually articulated which ones they are. S is probably synthetics.

• 1:18:41Ryan Sean Adams?

  They start with so.

• 1:18:42David Hoffman?

  S is synthetics, M is maker. I don't know what E is.

• 1:18:46Ryan Sean Adams?

  For people.

• 1:18:46David Hoffman?

  L is Lido and the other one, the second L is. I don't know.

• 1:18:51Ryan Sean Adams?

  Well, for people who aren't familiar with FAANG, though, that, that, that, these are the tech companies, right? Like, we got Facebook, Amazon.

• 1:18:57David Hoffman?

  Netflix, Google.

• 1:18:59Ryan Sean Adams?

  Yeah.

• 1:19:00David Hoffman?

  Does Netflix still belong to be there? I don't know if Netflix belongs to be there anymore.

• 1:19:03Ryan Sean Adams?

  What, is the other A alphabet? Or is that, um, Apple? That's a good question. Anyway, it's up for debate. It's maybe it's, uh.

• 1:19:10David Hoffman?

  Well, who else with the GB? It's Apple. It's Apple and Amazon.

• 1:19:14Ryan Sean Adams?

  Ah, yeah.

• 1:19:14David Hoffman?

  Apple, Amazon, Netflix, Google.

• 1:19:16Ryan Sean Adams?

  We figured it out live. Look at that. Look at us, David. Um, this is a tweet from my co-host here, a take for the week, maybe. Can you feel it? The bull market has started. I feel it, David. I'm hitting like. I'm hitting retweet.

• 1:19:29David Hoffman?

  The, uh, the comments, not all, not everyone feels it in the comments.

• 1:19:33Ryan Sean Adams?

  Oh, really?

• 1:19:33David Hoffman?

  Yeah, not everyone feels it. I feel it.

• 1:19:35Ryan Sean Adams?

  Anthony Sisana feels it. Um, no, he says the bull market never left.

• 1:19:40David Hoffman?

  Anthony's, Anthony's like a, uh, he doesn't, it doesn't count when you say you're bullish every single day.

• 1:19:45Ryan Sean Adams?

  Can you feel it? The crab market keeps crabbing. That's a reply. Maybe it's just a crab market, David.

• 1:19:50David Hoffman?

  We, we have doubled the market cap over the last seven months.

• 1:19:54Ryan Sean Adams?

  All right.

• 1:19:54David Hoffman?

  The bull, I, I, I am, I'm claiming the bull market has started, is what I'm saying.

• 1:19:59Ryan Sean Adams?

  Going to Matterhorn.

• 1:19:59David Hoffman?

  You can, I think you can feel it. Yeah.

• 1:20:01Ryan Sean Adams?

  What, what are you bullish on this week, David?

• 1:20:03David Hoffman?

  Uh, so, well, what I was bullish on last week was that, hey, I'm just bullish, which is also what I'm bullish on this week. I'm just bullish, but I will tell you, I'm doing something about it now. Uh, I'm setting up my, my battle station, my bull market battle station. And so what does that mean?

• 1:20:15Ryan Sean Adams?

  What is, yeah, what does that mean? That sounds awesome.

• 1:20:18David Hoffman?

  Yeah. Uh, well, I'm, uh, I bought a cheap little computer to do all my signing, which is not my work computer. So I'm taking my signing and having a cheap little computer that is my crypto signing, uh, computer. I recommend this for anyone who downloads files or works on their computers like me. Uh, and so I'm getting a dedicated signing computer. Um, and also just setting up all of the websites and infrastructure that I, that once was a scale, which got rusty in the bear market because, you know, appetites for tokens are gone in the bear market. So this is like, you know, dexscreener.com for, for people that want to stay ahead of the game on Dexes. Uh, and just making sure that you have your situation prepped

• 1:20:58David Hoffman?

  to make moves and make moves quickly during the bull market. Because if you want to make money in the bull market, you need to be pressing buttons. You need to be pressing send transaction. You need to be approving transactions. You need to be doing things. And so I think it would behoove everyone to get their wallets in order, make sure that they're, I've had problems with my web browser attachments, my extensions, getting those fixed, making sure that you are moments away from making a move if you need to make a move. And just setting up your setup so you can know the state of your things, perhaps meta mass portfolios for you, sponsor. But just like, setting up your battle station, making sure that you're ready to go, collecting data and being able to preview the DeFi landscape.

• 1:21:42David Hoffman?

  Because I'm saying, we are in the first out of a nine inning game. And here we are.

• 1:21:49Ryan Sean Adams?

  That's cool, David. I'm, you know, the DeFi, the crypto battle station is a great idea. Bull market battle station is a great idea. I will also say, and just to take that, you know, the traditional Ryan boring type approach here is, you also don't have to do that.

• 1:22:05David Hoffman?

  Oh, yes. This is a game that you choose to enter. You do not have to play.

• 1:22:08Ryan Sean Adams?

  Yes. The game that you can just choose to play, if you're kind of like, just tired right now, is dollar cost average in. And I'll just counter this with the point of like, the game that David's playing, I know, because I know David, he's not playing with his entire stack. So he's got a portion kind of set aside, right? He's playing this game, right, David?

• 1:22:31David Hoffman?

  The staking stash. That is a different game. One could play the staking game, which is a different game to play.

• 1:22:38Ryan Sean Adams?

  Yes. And I just want to, so that you don't hear from what David just said, all right, I got my bull market battle station. I'm going all in with all of my assets on whatever's kind of pumping, whatever I'm feeling good about in this bull cycle. I'm going to make it all back this bull cycle. I will just say, I think that boredom has stolen more money from crypto investors than Sam Bankman Fried. All right. The worst mistakes I've made in crypto have been because I was bored and I wanted to click buttons when I shouldn't have. Sometimes you have to click those buttons. Sometimes you have to be cautious and can just dollar cost average it. So the way to manage this in your mind is just partition things.

• 1:23:15David Hoffman?

  Yes.

• 1:23:17Ryan Sean Adams?

  Have your staking game that you're playing, your accumulation game, your kind of like your, maybe your ETH game, and then have another game on the side that you play and separate those interests, separate those accounts and separate them in your mind, too.

• 1:23:29David Hoffman?

  I think it is worth noting that there are different games to play. The game that I'm talking about, what I'm setting up my bull market battle station is the game that like, there was two main, two, yeah, two big victories that I had in terms of financial gain during last bull market. One was YFI at like $2,000 and Loot at 2 Ether. Yeah.

• 1:23:50Ryan Sean Adams?

  Oh, you sold Loot. That was a good idea.

• 1:23:52David Hoffman?

  I did sell Loot, not at the perfect top, but I definitely made money. I mean, I definitely made money on Loot. And YFI wasn't so fast, but it was still pretty fast. And you needed to be ready and understand things and make your move. Loot was extremely fast. And that's the game that I'm talking about. It's the phenomenon comes and you buy, you press buy early and you just ride it and it's a kind of a gamble. Loot was absolutely a gamble. Like it was a fucking text on a JPEG. But this is, that's the game that I'm referencing.

• 1:24:16Ryan Sean Adams?

  And it did not work out long term.

• 1:24:18David Hoffman?

  It did not work out long term. It worked out for the short term for people who sold. There's others, there's other games to play. There is the self-staking at home optimization game where, you know, Ethereum yield is not homogeneous. You like, you, if you play the game well, can increase your yields just by staking. And so you're not like perusing Twitter, you're not like making gambles, you're not, you are just refining your system. I can't play that game nearly as well because I leave and go away from home. And so I can't play that game nearly as well, but that is a very valid game to play as well. So figure out what game you want to play and then set up your battle station for that.

• 1:24:56Ryan Sean Adams?

  Another way to say that, and this is kind of classic Bankless, is as you enter crypto, choose your character class.

• 1:25:00David Hoffman?

  Yes.

• 1:25:01Ryan Sean Adams?

  You start like your Diablo account and some RPG you're going to play. What are you going to be a necromancer, barbarian, like what are you going to be, right? Amazon, alright. Well, so David is doing this hybrid character class of like settler slash trader. But he has like a separation of those things and like, you have to choose your character class. You can't like jump from character class to character class or you'll get beat up in this market.

• 1:25:23David Hoffman?

  Right.

• 1:25:24Ryan Sean Adams?

  There you go.

• 1:25:24David Hoffman?

  Yeah. Alright, so I've got my battle station set up, Ryan. What are you bullish on? What's your battle station look like?

• 1:25:28Ryan Sean Adams?

  You know what? Well, it's not exactly a battle station, David, but I will tell you what I'm bullish on this week. I am bullish on founders that stayed. The founders, the protocol, the DeFi founders in particular, did not orphan their projects early. I feel like that happened with a lot of DeFi projects, right? As they got orphaned, kind of the founders left, the parents left before they could grow into functional adults. But there are a number of founders who stayed, and I'm very bullish on those founders. And as a result, I'm bullish on those projects too. Synthetix Kane is one, he kind of left, but now he's back a little bit.

• 1:26:04David Hoffman?

  He left with good reason to decentralize the protocol, and then he came back also with good reason.

• 1:26:08Ryan Sean Adams?

  Yes, Ave is another, Stani, Uniswap Hayden Adams is still there. There's a whole list that this Twitter thread pumped out. DeFi Dad talks about the founder of Curve, the founder of Frax, the founder of InstaDapp, the founders of Balancer, Liquidity, Nexus, all of these founders stayed. And I just want to give a big shout out to the founders who stayed. They are settlers, not tourists. And yeah, I think we have the potential to build the fangs of DeFi, as Vance was saying. And it's going to be done not over one cycle, but over multiple cycles. And so a big shout out to you, all of the founders who have just dug deep and had the grit to actually stay through these cycles. I think the results will show for themselves.

• 1:26:49David Hoffman?

  Yeah, 100%. And also I will also say that MakerDAO, not just Rune, not just Rune Christensen, but there's a number of very early MakerDAO OGs who are still working on MakerDAO and then also have gone off to found other projects. And so not to say that like, hey, you must stick with your first project and your first baby until the end of time. But just staying in crypto, like Bankless was not my first job. So sticking around generally is always the way to wealth and success.

• 1:27:20Ryan Sean Adams?

  I totally agree. You know what, David? We just, we missed the Vitalik take.

• 1:27:23David Hoffman?

  We did miss it.

• 1:27:23Ryan Sean Adams?

  We promised that, we teased it. Okay.

• 1:27:25David Hoffman?

  This isn't a tweet. This is just what we were talking to Vitalik about privately, where he says, "I feel like crypto culture might actually be the best that it's ever been in 2023. People's biggest complaints amazingly seems to be that, quote, 'there's too much focus on infrastructure,'" which, from the point of view of almost any other socio-political system in the world today, sounds like not a complaint, but a success story. It's honestly really heartening to hear Vitalik say that crypto culture is in the best place that it's been because crypto culture has not always been so great.

• 1:27:59Ryan Sean Adams?

  We just spent some of this episode talking about the bald token and Richard Skyler. So, you know, yeah, it feels good when Vitalik says it. What do you think about this point? That it's actually, I all use the words bullish. Vitalik wouldn't use these words. The focus on infrastructure is actually bullish, though.

• 1:28:17David Hoffman?

  Yeah, well, I think he's saying that he's comparing this from socioculturally. He's saying like, yeah, this is compared to like governments and like cities and, you know, city like organization planners, like crypto, we're complaining that like everyone's building infrastructure where the rest of the world generally has failing infrastructure, at least the United States does.

• 1:28:36Ryan Sean Adams?

  Yeah, can we get more infrastructure?

• 1:28:38David Hoffman?

  Right. And so I think if even if we're like over indexing on infrastructure, good, because crypto is supposed to last for generations upon generations. Like, that's a good thing that we're over indexing on infrastructure. So bullish.

• 1:28:51Ryan Sean Adams?

  You ready for meme of the week, David?

• 1:28:52David Hoffman?

  I am ready for meme of the week, yeah.

• 1:28:54Ryan Sean Adams?

  There it is. I think this is you when you came back down from the mountain.

• 1:28:57David Hoffman?

  This is exactly me, bro. Okay, so this is pseudo Theos from the scroll team. So this is the meme of the guy coming back into the room with pizza boxes. And the quote is, "Me taking a day off of crypto. This is how I felt because I left to climb the Matterhorn Sunday morning and then I came back and all of this was happening. Viper zero debug, curve exploit, Ave stables de-pegging, base one-way bridges into bald tokens." This all happened into like, not even in 24 hours, dude. This is 12 hours all of that happened. That was insane.

• 1:29:26Ryan Sean Adams?

  He comes back in the apartment with pizza boxes and it's just absolute chaos. There's fires and fighting.

• 1:29:34Ryan Sean Adams?

  That's what it feels like to be in crypto for sure. That's why you can't take a day off. We hope you don't take a week off the weekly roll up because our job is to absorb all of this chaos and then relay the signal to you.

• 1:29:45David Hoffman?

  Our mental health is great.

• 1:29:48Ryan Sean Adams?

  Listen, disclaimers, gotta end with this. Of course, none of this has been financial advice. Crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.