ROLLUP: CZ to Jail? | Consensys sues SEC | IRS vs. Crypto | USDT in Telegram

Bankless Friday Weekly Rollup Last Week Of April ------ 🔐 SAFE | USE SAFE, GET REWARDED. CHECK OUT SAFE PASS https://bankless.cc/SafePass_pod ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🔐 SAFE | USE SAFE, GET REWARDED https://bankless.cc/SafePass_NL 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku 🏙️ CONSENSUS | SAVE 20% WITH CODE BANKLESS https://bankless.cc/4aykesD ------ TIMESTAMPS & RESOURCES 0:00 Intro 4:19 Markets - Thanks Kraken 5:39 Total Crypto Market Cap 5:46 L2 Update - Brought to you by Mantle https://l2beat.com/scaling/costs 7:42 10M active wallets are using Ethereum ecosystem every week! https://twitter.com/RyanSAdams/status/1782756457915506876 8:19 Base is the #2 chain for USDC Supply - Coinbase trying make a payment chain https://vxtwitter.com/jessepollak/status/1783503518156136498 9:48 ENTER RUNES Runes changed the game for a day https://twitter.com/mikealfred/status/1781684678782791830 https://www.okx.com/web3/marketplace/runes?channelid=ACEAP6502255 https://twitter.com/ercwl/status/1782029205770744125?s=46 https://twitter.com/hlopez_/status/1781501372200059336 https://ycharts.com/indicators/bitcoin_average_transaction_fee 22:56 ETF INFLOWS: The inflows into BTC spot ETFs are not back yet https://twitter.com/carpenoctom/status/1783327357652042187 https://x.com/EricBalchunas/status/1782740051929006496 https://www.coindesk.com/business/2024/04/20/grayscale- reveals-015-fees-for-its-bitcoin-mini-tr https://www.coindesk.com/business/2024/04/20/grayscale-reveals-015-fees-for-its-bitcoin-mini-tr https://twitter.com/thomas_fahrer/status/1781809562070442047 28:03 Q1 ‘24 income statements for Ethereum and MakerDAO https://twitter.com/tokenterminal/status/1782858613943321016 33:01 CZ might spend 3 years in prison https://twitter.com/johnreedstark/status/1783107482325225947 https://twitter.com/rizzn/status/1783199755541066103 https://storage.courtlistener.com/recap/gov.uscourts.wawd.328570/gov.uscourts.wawd.328570.8 https://twitter.com/RyanSAdams/status/1783195468840697896 40:21 Samourai wallet founders arrested https://twitter.com/RyanSAdams/status/1783222828361281847 https://www.justice.gov/usao-sdny/pr/founders-and-ceo-cryptocurrency-mixing-service-arrested-and-charged-money-laundering https://x.com/RyanSAdams/status/1783254322894999978 46:39 Consensys sues SEC https://twitter.com/fintechfrank 52:56 Renzo announced its token launch! https://x.com/RenzoProtocol/status/1783277589525594231 https://www.bankless.com/renzo-madness https://twitter.com/DefiIgnas/status/1783083767449432189 https://twitter.com/dcfgod/status/1782978862772814000?ref=bankless.ghost.io https://twitter.com/Ian_Unsworth/status/1783163546857099730 58:57 Telegram allows USDT payments https://twitter.com/ton_blockchain/status/1781294475219812665 https://twitter.com/cstanley/status/1782459974313988281 https://twitter.com/dannypostmaa/status/1783541623839740030 1:00:17 OP is releasing its multichain upgrade! https://twitter.com/OPLabsPBC/status/1780987940526534943 1:01:09 Liam Shiba Inu raised $12M for its new chain https://x.com/treatsforShib/status/1782490407655592242 https://shibarium.shib.io/ 1:02:32 Lido is starting with DVT - Stake with friends - making lido more decentralized? https://twitter.com/LidoFinance/status/1780317961854636384 1:04:13 IRS keeps labeling self-custody wallets as brokers https://twitter.com/valkenburgh/status/1781380879476043940 https://www.irs.gov/pub/irs-dft/f1099da--dft.pdf https://twitter.com/TheCryptoCPA/status/1781403340045197813 https://twitter.com/jchervinsky/status/1782061785119367284 https://x.com/lex_node/status/1782050294429319545 1:08:09 Raises and BVC Investments Movement Series A https://x.com/movementlabsxyz/status/1783511681928175791 Othentic raised $4M in their seed round - RaaS for Eigen Apps https://twitter.com/0xOthentic/status/1782378684369739781 1:11:23 MEME of the Week https://polymarket.com/event/nic-carter-vs-david-hoffman-Fight?tid=1714065541205 https://x.com/nic__carter/status/1781676895291015477 1:15:00 Closing & Disclaimers ------ 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?

  Speaking of meme coins, we're going to talk about Bitcoin and its happening. Bitcoin is not the meme coin, but what happened on the happening, basically Bitcoin's meme coin event. So the happening, of course, happened last week and we've seen happenings before. It's pretty, pretty much a non-event, except for the fact that it just happened. This one's different, though.

• 0:20Ryan Sean Adams?

  Bankless Nation, it is the last week of April. It is time for your Bankless Weekly Rollup. David, we got so much to talk about. Where are we starting?

• 0:29David Hoffman?

  The Bitcoin happening, one week later. How are the runes doing? Well, they're probably doing better than CZ, who might be sentenced to jail. For how long? What was the reaction to all of that? What else we got, Ryan?

• 0:40Ryan Sean Adams?

  David, why are we smiling at CZ going to jail, man? That's like serious.

• 0:43David Hoffman?

  It was the transition between runes and CZ that was funny.

• 0:46Ryan Sean Adams?

  Is it one of those awkward smiles that, you know, you hear tragic news and you smile? Like, it's just one of those things?

• 0:52David Hoffman?

  It's just how you, how you react to it, yeah.

• 0:54Ryan Sean Adams?

  We'll talk about that. We'll talk about how the crypto community is reacting. I think it's a little bit different than SBF. Also, this is very sad. Two more crypto privacy developers were arrested in the US. What is going on? We got to talk about that. And the IRS also wants everybody to register their unhosted crypto wallets. So your MetaMask, your Ledger, David, all that's got to be on a tax form. We'll talk about that, too.

• 1:18David Hoffman?

  And then an LRT announced their token release, which then triggered liquidations. How did that happen? And then Telegram, also expanding into the world of payments using Tether. 900 million users in Telegram. Now all like proximate to a wallet and to stablecoins. I'm sure that that's just the start. Is this the beginning of a new super app? Before we get into all of those details and everything else that happened this week, a moment to talk about our friends and sponsors over at Safe. Safe, of course, you know Safe. It's a multi-sig. That's where banklist.eth is. It's a multi-sig. It's where I have my own multi-sig. A lot of people have their own multi-sigs. And they frequently use Safe because it's the largest account abstraction leader with $100 billion in TVL that just announced their Safe Activity Rewards Program.

• 2:03David Hoffman?

  So you get rewarded for using your Safe, making transactions through Safe, holding assets in Safe, doing things with your Safe. There is a link in the show notes to getting started with your safe pass that they want you to get. So you can get your rewards from the safe ecosystem.

• 2:17Ryan Sean Adams?

  You know, it's not only they want you to get it, I want you to get it, we want you to get it. Because it is a key to amplifying the points that you receive in your safe. So we just claimed ours yesterday. I don't know if you know this, David, in one of our multi sigs. Because if you have safe tokens.

• 2:32David Hoffman?

  I did it.

• 2:33Ryan Sean Adams?

  Do you not know that?

• 2:34David Hoffman?

  Oh, you didn't do that. I didn't.

• 2:36Ryan Sean Adams?

  I was told it was done. I didn't know you did it. Cause I guess it takes two people to do, huh?

• 2:41David Hoffman?

  Yeah, it's a multi sig, yeah. It was me and somebody else who's not you.

• 2:47Ryan Sean Adams?

  Okay, well, thanks for doing it. Seeing this opportunity for me to thank you. And now that we have the the safe pass, we get extra points when we use safe. So if you do more transactions, if you have more assets in there, if you like do more stuff in your safe, you get more points. Now, I don't know what these points are going to be redeemed for entirely, but I'm sure they will be redeemed for some sort of incentive in the safe ecosystem in the weeks to come. So if you got a safe, that's just a PSA. Go get your safe pass.

• 3:15David Hoffman?

  Yeah. Speaking of safe, okay, so like safe, I mentioned my multi sig via NOSA Safe like in 2019. I think we did ours in banquets in like 2020. NOSA Safe has, it's like one of the earliest projects, products that's been in crypto. It's like the first, like when you spawn a smart contract ecosystem, like what's the first thing that you build? Oh, you you build a multi sig. You build, you build a vault. And so like this is how like safe has secured like so many billions of dollars over the years. They airdropped their token last cycle, but it was non-transferable. So you could claim it.

• 3:45Ryan Sean Adams?

  It's like locked in your wallet.

• 3:47David Hoffman?

  It was locked and it's been locked. It's been locked for a very, very long time. It actually just unlocked this last week, like a couple of days ago. So you actually now know what the token value of the safe product is.

• 3:57Ryan Sean Adams?

  I, I, yeah, I almost forgot we had safe tokens, right? Because you can't do anything with them.

• 4:02David Hoffman?

  Which you would claim inside of your safe, which is how you got the safe tokens.

• 4:06Ryan Sean Adams?

  All right.

• 4:06David Hoffman?

  1.9 billion dollars.

• 4:08Ryan Sean Adams?

  1.9 billion?

• 4:10David Hoffman?

  Yeah, for the market cap of safe.

• 4:11Ryan Sean Adams?

  Oh, that's pretty impressive. And that just happened this week, too, right? Governing's unlocked it. So safe tokens are now transferable. So that's another PSA for you. David, let's get to the markets on the week. Thanks to Kraken for these glorious charts. Flat, but glorious nonetheless. What are we looking at in the week?

• 4:28David Hoffman?

  Better than down. Yeah. Flat is not down, which is good news in the last like four weeks or so. Bitcoin started the week at 62,800, up one and a half percent to 64,400, actually 700, just kidding. And then ETH price also up, but still kind of flat. Started the week at 3,060, up about 3% to $3,160.

• 4:49Ryan Sean Adams?

  David, do you have any snipe orders in for like any prices? What did you call it last week?

• 4:54David Hoffman?

  Stink bids.

• 4:55Ryan Sean Adams?

  Stink bids. Stink bids. You got any stink bids?

• 4:58David Hoffman?

  No, because if I have dollars, I don't hold on to them. I don't. Because like stink bids require you to be patient. And I just bid.

• 5:08Ryan Sean Adams?

  You're a spur of the moment type of person?

• 5:10David Hoffman?

  Oh, I have dollars? Oh, now I have ETH.

• 5:12Ryan Sean Adams?

  Looks cheap.

• 5:14David Hoffman?

  It looks cheap. I saw 10K ETH, I'll buy.

• 5:17Ryan Sean Adams?

  Hey, look, anything under 10K ETH is super cheap right now. How about the ETH Bitcoin ratio?

• 5:22David Hoffman?

  It's not great, Ryan. 0.048. Yeah, it got all the way down to 0.0478. It's the lowest it's been in a long ass time.

• 5:30Ryan Sean Adams?

  Well, I'm sorry for your loss, David, but Bitcoin's having its moment in the sun. And hopefully ETH gets that this cycle. We'll have to see though. It hasn't happened yet.

• 5:37David Hoffman?

  As soon as we get a goddamn ETH ETF, let me tell you.

• 5:40Ryan Sean Adams?

  How about the global crypto market cap today?

• 5:43David Hoffman?

  2.5 trillion dollars. 2.5.

• 5:47Ryan Sean Adams?

  Layer 2 updates this week brought to you by Mantle, as they always are, which is a... I gotta stop saying new and upcoming Layer 2, because they have really cemented themselves as one of the top Layer 2s.

• 5:58David Hoffman?

  Pretty mature, yeah.

• 5:59Ryan Sean Adams?

  Yeah, super impressive. 1.25 billion in total locked value. Okay, there's lots we could talk about on Layer 2s this week. I want to highlight maybe three things, all right? So one is COS. Layer 2 Beat, by the way, just put together a new kind of like chart, new set of dashboards called COS. And I want you to see this, David. I don't know if you've looked at this. If I go to the seven day cost of layer twos. Actually, no, no, I'll go to the one day cost of layer twos. Okay. So one day costs of layer twos, what they're paying in a post blob spaces cheap world. Blob spaces available and blob spaces is cheap. Look at this Arbitrum one, they are spending $3,000 a day.

• 6:41David Hoffman?

  $3,300 a day.

• 6:43Ryan Sean Adams?

  This is their cost, the cost that they pay to settle all of their transactions, everything.

• 6:47David Hoffman?

  1.7 million transactions.

• 6:50Ryan Sean Adams?

  That's crazy. Crazy cheap.

• 6:54David Hoffman?

  Okay, this is a total cost for all of the transactions. Since Arbitrum has 1.7 million transactions on a daily basis, let's, let's filter it. Click that little button and let's filter it by per transaction. So total cost per transaction of the, of the 1.8 million transaction, 0.0074 cents to settle to Ethereum.

• 7:12Ryan Sean Adams?

  Or like per, per transaction.

• 7:15David Hoffman?

  Per transaction.

• 7:16Ryan Sean Adams?

  That's, it's, it's pretty impressive. And I think the TLDR of this is like, as we said before, when this gets cheap, when like layer two fees to Ethereum gets cheap. You know, everyone talking about Ethereum is so expensive. Well, from a chain perspective, it's really not. From a user perspective on those chains, it's really not. But like cheap fees are just going to spawn more layer twos. We're going to get more and more layer twos. So already 50.

• 7:38David Hoffman?

  When it's more profitable to build a layer two, you will get more layer twos.

• 7:42Ryan Sean Adams?

  Yep. Another thing I wanted to show you in the layer two ecosystem, David, is the number of active wallets. So look at this chart. This is active wallets per week in the Ethereum ecosystem. You span, it's not all of the chains in the Ethereum ecosystem, but some of the major ones. We are now at 10 million active on-chain wallets in Ethereum.

• 8:03David Hoffman?

  Pretty cool. Yeah, that's a doubling in a year.

• 8:07Ryan Sean Adams?

  Yeah, this is, yeah. I guess what like 10 million, it's kind of the size of New York City, right? Like that's, that's, you know, it's a sprawling metropolis of users or something like that. Eight million, 10 million in that zone. Other thing that's cool this week is Base just became the number two chain after Ethereum in terms of number of USDC, amount of USDC supply inside of it. Not surprising, considering Coinbase has started to settle on the base chain itself. Do you have any takes on this?

• 8:37David Hoffman?

  Well, yeah, so Coinbase owns, I think, 25% of Circle. There's totally a competitive with competition with Visa angle going on here. They're using Base Chain to like store their own USCC and user account USCC. So they're just using Base, their own chain, as their own settlement network for the Coinbase exchange. I expect this. I honestly could see like USCC on Base surpassing Ethereum or Ethereum.

• 9:01Ryan Sean Adams?

  Oh, for sure. I think it's up only. I think.

• 9:04David Hoffman?

  It could become the number one USCC chain.

• 9:06Ryan Sean Adams?

  I think.

• 9:07David Hoffman?

  You might as well call Base USCC chain.

• 9:08Ryan Sean Adams?

  They're trying to make it. They're trying to make it a payment chain, I think, over time. Like maybe a competitor to Visa or something like that.

• 9:14David Hoffman?

  Yeah, for sure.

• 9:15Ryan Sean Adams?

  David, let's talk about the movers. It wasn't stable coins, of course, in the week. It wasn't Bitcoin. It wasn't Ether.

• 9:20David Hoffman?

  Wasn't stable coins, that's for sure.

• 9:22Ryan Sean Adams?

  It was your favorite, my favorite, meme coins.

• 9:25David Hoffman?

  Meme coins.

• 9:25Ryan Sean Adams?

  Were up on the week. All right, like between 50 to almost 100%. Bonk was up 97% on the week. Pepe was up 54%. Floki, I don't even know what Floki is, 40% on the week. Dog with Hat, it's got a 20%, 28% on the week.

• 9:42David Hoffman?

  That's our favorite. That's what we love.

• 9:44Ryan Sean Adams?

  Yeah.

• 9:44David Hoffman?

  On Bankless.

• 9:45Ryan Sean Adams?

  I know your bullish meme coins.

• 9:48David Hoffman?

  Speaking of meme coins, we're going to talk about Bitcoin and its halving. Bitcoin is not the meme coin, but what happened on the halving, basically Bitcoin's meme coin event. So the halving happened last week and we've seen halvings before. It's pretty, pretty much a non-event, except for the fact that it just happened. This one's different, though, because now the chart that you are seeing on the screen, you are seeing the fees paid to Bitcoin miners. The blue, the very flat blue bars are the block subsidy. That was the 6.25 BTC that was minted per block paid to miners, which is now 3.125. And then the orange is the block fees. Since the halving, you have seen, call it like a pre-halving. It was like a 5 to 1 ratio of block subsidies to block fees.

• 10:30Ryan Sean Adams?

  That's how it's been like almost for, like for a very long time. For most of Bitcoin's history, like there hasn't been much.

• 10:36David Hoffman?

  Well, no, actually, the fact that those fees are actually in existence, those are all ordinals fees. For most of Bitcoin's history, there, there was no orange bar.

• 10:43Ryan Sean Adams?

  Even slimmer.

• 10:43David Hoffman?

  It's like, yeah, it's even, even smaller. Yeah. So like a 6 to 1. Ratio of fees to block subsidies, block subsidies being the six. Now, post-haveting is pretty volatile, but with runes, the introduction of runes, block fees are just totally surpassing all historical total incentives. So like for the podcast listeners, we're seeing bar charts that are like five times higher than the pre-haveting security budget, and that's all coming from rune fees. Transaction competition to become a transaction in the Bitcoin blockchain to mint runes.

• 11:18Ryan Sean Adams?

  We should explain what runes are, but before we do, I just have a comment on this. So I used to be of the camp and I still sort of am. I used to sort of think the having was like a bit weird to celebrate. And by the way, sometimes we say having, sometimes we say having, and I just can't help it.

• 11:37David Hoffman?

  There's not consensus.

• 11:38Ryan Sean Adams?

  Yeah, well, I mean,

• 11:39David Hoffman?

  I've asked so many people what it is and they all give me different answers.

• 11:42Ryan Sean Adams?

  So both are acceptable, so you can say having, you can say having?

• 11:44David Hoffman?

  Both are acceptable.

• 11:45Ryan Sean Adams?

  Okay, so we'll use them interchangeably then to, you know, be the,

• 11:49David Hoffman?

  Really throw off the listeners.

• 11:50Ryan Sean Adams?

  Yeah, exactly. Anyway, I used to be of the camp that like, it's kind of weird to celebrate. Like, I get that word celebrating algorithmic kind of issuance.

• 11:59David Hoffman?

  Monetary strength of BTC.

• 12:00Ryan Sean Adams?

  Monetary strength, but like, there's a, there was, at least it used to be, especially like last havinging. No one would acknowledge that this is actually reducing, cutting your security budget, Bitcoin's security budget in half as well. So it's kind of like you're celebrating this algorithmic issuance policy, but like you're also celebrating, well, the economic security of our blocks is now like half, right? And I was very worried about this and didn't think that the Bitcoin community was giving this enough attention or time, because if you cut your block subsidy, you have to make up for it in block fees in order to have the same security budget. And it's interesting, David, that that is what's happening, only more so.

• 12:42Ryan Sean Adams?

  Like, because there is now building on Bitcoin, I'm actually, if this is sustained, of course, I'm much less worried about the block subsidy like dropping down. I think a big question, though, is how sustainable is this runes, Bitcoin layer twos? Will that be a sustainable source for L2 fees going forward?

• 13:01David Hoffman?

  Yeah, that's totally right. The main difference between the Ethereum security budget design with EIP 1559 is that Ethereum tries to ensure its sustainability internally with its own internal mechanisms like fee capture via 1559, whereas what we're seeing here with ordinals and runes, starting to become a very dominant part of the Bitcoin security budget. Those are things that are actually external to the protocol.

• 13:23Ryan Sean Adams?

  Well, but also Ethereum is going to issue block subsidies potentially as long as it needs to.

• 13:29David Hoffman?

  Yeah, like because it knows that it can't demand on external influences to protect itself. Ethereum wants to always ensure at the very end that it will have the assurances that it will be secure.

• 13:42Ryan Sean Adams?

  Which always seemed to me a more like conservative approach to this. But anyway, we should probably explain just a recap of what runes are, David. What are they and why are they causing the spike in Bitcoin block fees?

• 13:53David Hoffman?

  Runes are a new introduction to Bitcoin, the Bitcoin app layer, the Bitcoin layer one. They are fungible tokens on Bitcoin. So we probably all know what ordinals are. They use Bitcoin block space to etch or inscribe JPGs into Bitcoin block space, and that is an ordinal. Runes do a similar thing, but it produces fungible tokens inside of the Bitcoin layer one. So they are native to the Bitcoin layer one fungible tokens that you can trade and send à la like ERC 20 tokens on Ethereum, but with like a lot less functionality. Like no, there's no smart contract inside of Bitcoin for any of these tokens. They're just tokens, which is why when I did the transition into the segment, I called them meme coins because they're kind of constrained to becoming meme coins. If you want to invoke some sort of like

• 14:36David Hoffman?

  meaning into them, it has to come from outside the protocol because you can't put logic into runes.

• 14:42Ryan Sean Adams?

  But as the creator said, meme coins, that's perfect product market fit, right? So like let a thousand meme coins bloom. And that's really what we're seeing. This is a dashboard. By the way, this is on a centralized exchange, OKX, a dashboard of runes.

• 14:55David Hoffman?

  It is pretty cool to see Bitcoin tokens actually trading on centralized exchanges.

• 15:00Ryan Sean Adams?

  Yeah.

• 15:01David Hoffman?

  That's a new thing.

• 15:02Ryan Sean Adams?

  There were some of the ordinals tokens maybe doing that? I wasn't paying attention to that, but now like runes.

• 15:06David Hoffman?

  Yeah, so Magic Eden has been like.

• 15:09Ryan Sean Adams?

  Really not just that. There were. BRC 20, BRC 20s, right?

• 15:12David Hoffman?

  Yeah, but those are ordinals. Those are ordinals.

• 15:15Ryan Sean Adams?

  Okay.

• 15:15David Hoffman?

  BRC 20s are ordinals. So the BRC 20s were like trying to layer on fungible tokens on top of an ordinal.

• 15:20Ryan Sean Adams?

  And they didn't kind of worked? Didn't work as kluge?

• 15:23David Hoffman?

  They worked enough to have speculative memery mania around them.

• 15:27Ryan Sean Adams?

  But not like this.

• 15:28David Hoffman?

  Basically like an ERC 111, 1155. But Casey was like, somebody just like brute forced fungible tokens. Casey, the creative runes and ordinals. So he said, somebody just, somebody just brute forced fungibility onto an ordinal. Let's just actually make a brand new protocol. We'll call it runes.

• 15:44Ryan Sean Adams?

  That's what runes was. Oh, and how this relates to the happening is he just co-released it. He just co-released it happening just because why not? You get the maximum attention on Bitcoin. Anyway, these on the OKX, these are the leading coins in the runes ecosystem. One is called ZZZZZZ. I think it's called Satoshi.

• 16:00David Hoffman?

  In the naming of runes, there is no space.

• 16:03Ryan Sean Adams?

  Yeah.

• 16:03David Hoffman?

  So instead of a space, they have a little dot. It's like a bullet.

• 16:07Ryan Sean Adams?

  Oh, yeah, yeah.

• 16:07David Hoffman?

  That counts as the space. That's why, that's why there are bullets here.

• 16:10Ryan Sean Adams?

  Doggo to the moon. Of course, all separated by these spaces, as you said.

• 16:14David Hoffman?

  Yeah, dot, dot, dot.

• 16:15Ryan Sean Adams?

  Satoshi Nakamoto.

• 16:17David Hoffman?

  Z space, V space, F E H U space, dot.

• 16:21Ryan Sean Adams?

  Look at, look at this, this, you know, like straight five Z's in a row or doggo to the moon. I mean, look at these market caps, man. Like this is 50, oh no, sorry, 45,000 Bitcoin.

• 16:34David Hoffman?

  Market cap, which is, which is $3 billion.

• 16:37Ryan Sean Adams?

  It's about $3 billion.

• 16:38David Hoffman?

  $3 billion market cap for a Bitcoin rune. Called ZZZZZ F H U ZZZZZZ.

• 16:45Ryan Sean Adams?

  Wow.

• 16:46David Hoffman?

  And then the number two market cap is, yeah, doggo to moon. I love, I love Satoshi Nakamoto Inu, number five. Solid name. $80 million.

• 16:59Ryan Sean Adams?

  Wanko, rune, nacro, meme, gob is gob is gob.

• 17:03David Hoffman?

  Bitcoin runes X.

• 17:04Ryan Sean Adams?

  Honey badger coin.

• 17:06David Hoffman?

  All right. So like, there's no way to like actually do any fundamental analysis on these things, right? It's just like, oh, I like that name.

• 17:11Ryan Sean Adams?

  Oh, this is Eric Wall pissing off ETH maxies and Bitcoin maxies alike. And he is tweeting a picture of one day block space fees. And look at this. Bitcoin takes the lead with 70.

• 17:24David Hoffman?

  78 million dollars.

• 17:26Ryan Sean Adams?

  78 million dollars and absolutely dwarfs Ethereum on the one day. Ethereum is, comes in second place. Nothing else is close with $3.2 million in one day fees. Look at that. The block space is valuable again.

• 17:40David Hoffman?

  Funny enough, like I put out a tweet that I was retweeting this saying I don't really feel aggrieved at all by this. I think it's cool that Bitcoin is generating fees like this means like, hey, at least something is being productive here.

• 17:51Ryan Sean Adams?

  That's because you're not an ETH maxi, David.

• 17:52David Hoffman?

  That's because I'm not an ETH maxi. I will say it did make me feel a very immense appreciation for EIP 1559. Because these $78 million of BTC that that people are paying to mint and trade and purchase runes.

• 18:05Ryan Sean Adams?

  Minor revenue, baby.

• 18:06David Hoffman?

  Are going straight to miners who have expenses and overhead and eventually they all sell Bitcoins. Miners are bullish Bitcoin. They would love to hold Bitcoins. But in the fullness of time, they are forced sellers of Bitcoin because of the overhead of their operations. They have to pay for electricity or they have to pay for new chips.

• 18:23Ryan Sean Adams?

  What a payday for miners, though.

• 18:24David Hoffman?

  Gets sold. Huge payday for miners. Whereas if this was on Ethereum, which it frequently is when there's NFT drops, 1559 burns that. And so it actually gets recycled back into the value of ETH rather than gets sold by miners and turns into like a line item in their P and L.

• 18:39Ryan Sean Adams?

  Yeah, well, that just makes you a greedy plutocrat, David. That's what I say.

• 18:46David Hoffman?

  This is. Many such cases.

• 18:47Ryan Sean Adams?

  Okay, so Bitcoin is now treading this territory of its block space fees are really high. This is a tweet from Hector Lopez. 82% of wallets that hold Bitcoin cannot move right now due to high fees. So if you have trace amounts of Bitcoin inside of a Bitcoin wallet, it's not worth it for you to move your Bitcoin. Like outside of your like self custody because it's too expensive. That's what happens when you have high block space fees. It's the same thing that Ethereum has been through and will continue to go through, like moving forward.

• 19:16David Hoffman?

  Even worse for Bitcoin because I think this just shows how much, how much more small a Bitcoin block is than an Ethereum block. Like in a data throughput per time, Ethereum just has so much more data per Bitcoin block in comparison to Bitcoin block. And so like it's just a really, when there's any marginal amount of demand for Bitcoin block space, fees just go through the roof.

• 19:36Ryan Sean Adams?

  I was gonna ask you this, though. So here's a tweet. How sustainable is this? This is from Dan Smith. Bitcoin runes are playing out exactly like the short-lived inscriptions craze we saw on Avalanche and Arbitrum. I don't know, pretty bearish. On the longevity of this, in the meantime, miners stay winning. And you like put some stats about some of the largest collections. The question is, is this a flash in the pan or is this sustainable? If you have any takes on that, very hard to guess. It's certainly part of the meme coin mania this time on Bitcoin. And first time tokens have been in a like reasonable way on Bitcoin. But the question is, do you think all of this is sustainable?

• 20:17David Hoffman?

  There's, there's definitely some like Bitcoin exceptionalism that tokens and ordinals, like runes and ordinals will receive just because they're on Bitcoin. Part of the pitch of a Bitcoin ordinal is that like, well, the Bitcoin blockchain is going to be around forever. And so you can be assured that the data of your ordinal will also be around forever. And it's on like, you know, the one, the one blockchain with all of the Lindy. And so there, yeah, so there's Bitcoin does have like some exceptionalism in it. You can see that in the monetary premium. And so therefore I think runes and ordinals get some overflow from that. But also at the same time, Bitcoin, the blockchain is entering in the dangerous world of utility. And if you are trying to invoke utility into your chain, you have to, you have to keep on moving. Like you have to add more and more utility. You have to keep on evolving.

• 21:02David Hoffman?

  And so like, what is the evolution path for further utility, further expressiveness for ordinals and runes? The one that I see that's very clear and obvious are Bitcoin layer twos. Because of what ordinals and runes are, which are like native to the Bitcoin layer one, all of the data for a rune or an ordinal is on the Bitcoin layer one. They are fully interoperable with Bitcoin layer twos, which are far more expressive than Bitcoin, the Bitcoin layer one. And so maybe that is the path where the Bitcoin blockchain does grow and evolve in its utility. And so maybe that is the future path. But at the same time, like ordinals and runes are like strictly an inferior technology to a smart contracting system.

• 21:43Ryan Sean Adams?

  Yeah, I think Casey called it Stone Age, right? In terms of what you're dealing with. Casey, the creator of this. It's also difficult to imagine. I mean, $78 million worth of fees. That's what like people are paying for. Like, how do you sustain that?

• 21:58David Hoffman?

  In day number one, which is quite literally a flash in the pan.

• 22:01Ryan Sean Adams?

  For sure, for sure. This is a take here. Honestly, I can't help but be disgusted by some of the behavior I see in the Ordinals and Runes ecosystem. There's influencers, Ord influencers. They're grifting and stealing from you as blatantly as I've ever seen. And it'll be egregious with runes. And he goes on to explain Bitcoin block times are 10 minutes long. And he goes on, basically, I think there are many.

• 22:24David Hoffman?

  He basically is saying the MEV opportunities, the arbitrage and sniping opportunities in Bitcoin runes and Ordinals ecosystem is massive. And people are taking advantage of that. And so this is what happens when you see like $78 million of daily fees. Like, where is that coming from? It's actually coming from MEV.

• 22:41Ryan Sean Adams?

  Yeah. Casey said that there wouldn't be as much. He didn't anticipate as much MEV in runes. I mean, yeah, how can there not be, right?

• 22:52David Hoffman?

  Yeah, if there are fees on your blockchain, there is MEV.

• 22:56Ryan Sean Adams?

  Okay, so Bitcoin block space has a new set of buyers, meme coin buyers. And Bitcoin asset, of course, this has been something we've talked about since early in the year. It has a new set of buyers, which is the institutions. Let's go check in on the Bitcoin ETF this week. Inflows versus outflows. Things are starting to slow down in Bitcoin ETF world. What are we looking at?

• 23:17David Hoffman?

  Yeah, we're just seeing a tapering of both the inflows and the outflows. So outflows are lessening, inflows are lessening. And so we are staying at an equilibrium, which again, like I said last week, and I think the week before it, and I think the week before that, which is why prices haven't moved. We're probably going to stay flat for a while until we probably see some BTC inflows. Cause that is ultimately the thing that's wagging the entire market right now. Two investment advisors, however, have allocated over 5% of their portfolio into a Bitcoin ETF. There is some Kansas advisor who put $20 million into fidelity. That's 6%. Of a investment advisor's portfolio and then also some investment advisor in Minnesota put 17%, that's 5% of their portfolio. So you can see, starting to see some like

• 24:01David Hoffman?

  further marginal buyers of extremely boomer investment advisors, starting to put BTC into their portfolio. I know I say the word boomer a lot and I'm sorry if that offends any actual boomer listeners, but these are actually Eric Balachunas's words. He calls them, he says like, here's the homepage of the Kansas advisor that just plowed $20 million into the Fidelity BTC ETF. Literally, this is as boomer as it gets. And if you look at the picture, like, yeah, come on. They're all, they're all suit and tie.

• 24:33Ryan Sean Adams?

  Yeah, it's, it's, it's definitely what I think crypto adoption looks like with RIAs, right? Which is like these registered investment advisors in the US, kind of like just starting to buy a portion of funds and exposing their clientele to it. That

• 24:47David Hoffman?

  You are no longer early if you are buying Bitcoin. These people are buying Bitcoin now.

• 24:53Ryan Sean Adams?

  I think early is kind of a spectrum. It depends. I mean, they're still early for registered investment advisors. And so there's still some alpha there. It's just like, you're not early like, right? You know, many listeners were many years ago on Bitcoin, but it's still super early for registered investment advisors. David, let's check in on the grayscale ETF as well. So that, if I recall, was like bleeding to the other ETFs, you know, Fidelity was taking share from them. So it was

• 25:21David Hoffman?

  It was all of the outflows.

• 25:22Ryan Sean Adams?

  It's because they had the most expensive ETF out there. It was like

• 25:26David Hoffman?

  Well, they had the most expensive ETF, but they also had all the buyers. So there's, it was the most crowded like asset in history in crypto.

• 25:33Ryan Sean Adams?

  Are you saying because it used to be a trust and then it's transferred to the ETF? So it was already really big?

• 25:38David Hoffman?

  All the new ETFs were all net new buyers, whereas the GPTC has like had buyers from like eons ago.

• 25:43Ryan Sean Adams?

  Well, and their fee doesn't help. 150 basis points, 1.5% fee on this ETF. That's, that's a lot of money. But they've rolled out something to help mitigate that. What do they got?

• 25:53David Hoffman?

  And they're rolling out a mini Bitcoin ETF, which is exactly the same thing. I think it's just like another second ETF out of grayscale. So this one, instead of having the 1.5% fee, has a 0.15% fee. I believe that's 15 bips. And this is the lowest, either the lowest or tied for the lowest of all the fees out of the Bitcoin ETFs. And what's important to note here is like, you can actually, if you are a GPTC holder, and one of the reasons why you might not want to sell your GPTC and go into a different ETF, is that that triggers a taxable event. And you might have been buying GPTC when it was like, you know, 80% lower, like a significant taxable event for you.

• 26:35David Hoffman?

  Like you might be up very, very significantly and you don't want that taxable event. And so you're just taking the fees to the face because you don't want to pay the taxes. So you can actually roll over your GPTC into this brand new grayscale mini Bitcoin ETF. And that is not a taxable event. Some sort of fancy shenanigans going on there to make that true. And so you can get instead of, you can hold your BTC with grayscale, continue that, and not pay the 1.5% fee, pay the 1.5% fee. And so I think the growth of this mini BTC ETF that they call it, you'll actually start to see the bifurcation of people who are selling GPTC to get out of the very high fees versus people that are actually just selling just to get out of BTC as a whole,

• 27:17David Hoffman?

  because they made that speculative bet of, I'll buy GPTC at that significant discount and sell during the, once the ETF is approved. You're going to see those two populations emerge.

• 27:26Ryan Sean Adams?

  This is just a way for grayscale to kind of salvage its business. It's sort of a lifeboat, right? Because, you know, the 1.5% fees are just not sustainable. And, you know, this 15 bips, I know you're a big fan of bips. This 15 bips mini ETF alternative is just, it's actually cheaper in terms of fees than, than almost all of the other ETFs.

• 27:45David Hoffman?

  Oh, yeah.

• 27:46Ryan Sean Adams?

  So it's a way for them to salvage this, which totally makes sense. I think it'll be, it'll, it should be neutral, though. I mean, it's not like, I don't think it's going to do anything.

• 27:55David Hoffman?

  It's not going to attract any more marginal buyer.

• 27:56Ryan Sean Adams?

  Yeah, exactly. So it's just a, you know, good for grayscale type thing.

• 28:00David Hoffman?

  But it could prevent marginal sellers is, so that is bullish.

• 28:03Ryan Sean Adams?

  You know, I was thinking about the RIA investor class who is now sort of like getting up to speed on Bitcoin. I was thinking about that. I think about them a lot, David. Yeah, they're in my thoughts often, thoughts and prayers.

• 28:16Ryan Sean Adams?

  Muslim prayers. But here's one unsung story. So they're starting to understand Bitcoin. Oh, there's this digital asset. It's like gold, right? Here's a story that they're going to understand. Give them like five years, maybe. Hopefully sooner, but five years. Hold your breath, Bankless Nation. That is crypto now has this cycle. We have productive capital assets. Okay. If that doesn't mean anything to you. I've heard this before. It does to the RIAs, all right? Because they like, they like productive assets. They buy things like stocks with dividends. And we have those now. This is interesting from Token Terminal, who, by the way, I think they're doing fantastic work over there at like showing you what a crypto native P and L looks like, right?

• 28:58Ryan Sean Adams?

  And so if Ethereum, these are two protocols, if Ethereum and Maker were to issue their earnings report, right? Like imagine they did this. Of course, this is completely on chain. There's no centralized like in a group that kind of issues this. So you can find all this data on chain. If they were to do that, then Ethereum earnings would be $370 million on the Q1 quarter. That's big. That's over like, like well north of a billion in terms of like annual profit, profits, which is exceptional. This is Maker, which is of course a longstanding DeFi protocol, blue chip, 30 million on the quarter.

• 29:38Ryan Sean Adams?

  Like really impressive if you look at these assets from just a productivity element as well. Anyway, this is a story that I think for crypto natives, there's still time to front run. I will tell you though, I'm not, I don't get optimistic. Yeah. Keep on front running the crypto's industry. It's like deciding that like fundamentals and revenue is actually bullish. I've been waiting for that for like five years. This is what I think of when I think of fundamentals in crypto. And yeah, I get, so maybe. Now fundamentals in crypto is which crypto Twitter influencer is talking about your meme coin. Maybe I'm just praying the RIAs get it. RIAs, please come and push out the meme coins in this industry. God damn it. Make fundamentals matter again. Make fundamentals matter again.

• 30:23David Hoffman?

  All right, what do we got coming up? Coming up next, CZ might spend three whole years in prison. Is this fair? What are people's reactions to this and why? And then also, more crypto privacy devs arrested. Who's next? Is it you? Is it me? Is it your local podcast? I hope not. But first, before we get there, there are a moment to talk about some of these fantastic sponsors that make this show possible, especially Kraken, our preferred crypto exchange in 2024. If you do not have an account with Kraken, consider clicking the links in the show notes to getting started with Kraken today. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Kraken, one of the longest-standing and most-secure crypto platforms in the world. Kraken is on a journey to build a more accessible, inclusive, and fair financial system, making

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• 33:02Ryan Sean Adams?

  All right, here it is. CZ is looking at three years in jail, David. Here's a tweet. "The US recommends a 36-month prison sentence for billionaire Binance CEO CZ, and the scheduling is sentenced for the end of this month, so a few days from now, April 30th." A few of the highlights from the prosecution, what they're saying. "A custodial sentence of 36 months, which is twice the high end of the guidelines range, would reflect the seriousness of the offense." This is the prosecution speaking. "Promote reasonable respect for the law, afford adequate deterrence, and be sufficient, but not greater than necessary, to achieve the goals of this sentencing." That's what they're saying. Of course, the major misconduct that CZ has already pled guilty for is that he failed to implement an effective AML program,

• 33:47Ryan Sean Adams?

  that's anti-money laundering program at Binance, and he allowed illicit actors to use the Binance exchange, like, to do illicit things. That's the summary here, and the prosecution is asking for three years in jail. I gotta tell you, David, jail time actually surprised me. I don't know why I was surprised, but the fact that CZ could go to jail for this for, like, years was actually surprising to me.

• 34:12David Hoffman?

  I kind of even thought that all of this was gonna be negotiated ahead of time by CZ and his team. That's definitely what Arthur Hayes did when he had to settle with the DOJ. Was it the DOJ? When, over the Bitmex case, is like, he said like, hey, I'm not coming in to negotiate, I'm not coming in to talk to you guys until, like, we agree on some certain terms. And those terms were, like, ended up being, like, house arrest. CZ's defense team says that no defendant in a remotely similar Bank Secrecy Act case has ever been sentenced to incarceration. And it quote, "Although probation references a conversation in which Binance's chief compliance officer warned Mr. CZ that there were users from sanctioned countries on Binance.com, the reality is that Binance, a non-US company,

• 34:53David Hoffman?

  was not prohibited from having users from US sanctioned countries on its platform." So, some back and forth between CZ's defense team, saying, hey, this is... 36 months in jail is too much. I'm guessing, like I said, I kind of always thought that this was already negotiated ahead of time. We'll see. I bet you it's something closer to Arthur Hayes than actual jail.

• 35:14Ryan Sean Adams?

  You think so?

• 35:15David Hoffman?

  I think so.

• 35:16Ryan Sean Adams?

  I mean, who knows? This is up to the judge, right? This is up to the court system. And Arthur Hayes, as you said, he got six months on house arrest.

• 35:23David Hoffman?

  Yeah, in his mansion.

• 35:26Ryan Sean Adams?

  Didn't spend any time actually in jail. I think there's an interesting contrast with, there's been a lot of banks over the past decade, David, that have been charged massive fines, billions of dollars in fines for breaking AML laws as well. And I've never heard of bankers going to jail. So there's the case where like, yeah, like maybe you can kind of like pre-negotiated this. Or it could be that the US prosecutors and maybe the judge and the courts are really trying to make an example of CZ. That's kind of what they were saying in their statement, like, would reflect the seriousness of the offense, promote respect for the law, and afford adequate deterrence. That to me just says like, we want to make an example of CZ.

• 36:09Ryan Sean Adams?

  So I don't know, maybe the political climate has changed, or there's something about this where they're really going to like go for the jugular here.

• 36:18David Hoffman?

  CZ actually wrote a letter to the court where he said, he apologized for his poor decisions and accepted full responsibility for his actions in a letter to the judge. There is no excuse for my failure to establish the necessary compliance controls at Binance. I originally became interested in cryptocurrency because of the inclusiveness and equal opportunity it provides everyone to the world. Looking forward, I see many opportunities in biotech as well. Specifically, I feel too much of the current medical research is too profit driven. Words cannot explain how deeply I regret my choices that result in me being before the court. Rest assured that it would never happen again, is what CZ says to the court. So kind of saying, hey, I had a bad guy pass, but I'm going to be a good guy in the future, I promise.

• 36:58Ryan Sean Adams?

  Yeah, this is a pleading to the judge, basically. He said, "I also apologize to everyone I've let down, my family, my friends, Binance employees, and the larger crypto community," right? This is a very contrite letter, basically saying, "I don't want to go to jail. You know, like, I'm sorry. I've learned my lesson." And he talks at the end about another area I will continue to spend my time is helping youth, which was a priority for me. So he's trying to paint the picture to the judge.

• 37:26David Hoffman?

  Good guy arc.

• 37:27Ryan Sean Adams?

  Yeah, that he's going in full good guy arc. It's interesting, he has a sister, I believe that works at JP Morgan, who spoke on his behalf as well and is kind of like writing letters to the judge. His kids are in the US. They go to like US colleges and they have also spoken out. And so like CZ is really trying to gather a lot of support. There's letters of support from a US ambassador to China, professors at university, Columbia University, Morgan Stanley managing directors. It's really a whole campaign to kind of like show that CZ is on a good guy arc and has learned his lesson. He just doesn't want to go to jail, man. I get it.

• 38:05David Hoffman?

  Not just those of all the people you mentioned, 161 total letters of support. So there was a very like a coordinated effort to like, "Hey, can you please write a letter to the court saying, 'Don't put CZ in jail.'"

• 38:16Ryan Sean Adams?

  What do you think about this? What do you think about this? So 36 months in prison, should he get prison time? I asked the crypto community this question, but before they speak, I want to hear what you say.

• 38:28David Hoffman?

  I do, I mean, I've said this before many times on the weekly rollup. I do think that CZ has some like pretty crazy skeletons in the closet. I don't think they're related to anything about this. Like the bank secrecy stuff and financial surveillance things, which is what he's being charged for and what he's going to jail for, I care less about. The things that like I know that CZ has done that are wrong are more, probably more in the familiar camp for what people are known in the crypto Twitter space, which is like backdoor dealings about pumping tokens and, you know, unsavory relationships with Justin Sun and things like this that are kind of actually back in the rearview mirror of 2017 to 2020. I think CZ realized that he was becoming at the head of a very large empire and he

• 39:12David Hoffman?

  knew that he would have to eventually like kind of button up and manage risk, which is slowly the arc that CZ has been on this entire time.

• 39:21David Hoffman?

  36 months in jail for like, you know, very much like, you know, very illegal things, kind of seems like a good deal. Like, the guy's gonna come out after three years, at most, if that's what the sentence is, like, a b- jigger billionaire, and he's gonna be just fine.

• 39:38Ryan Sean Adams?

  Three years, man, that, that, that sucks, though. So, the question of the crypto community, should he get prison time? No prison time, 82%. Yes prison time, 17%.

• 39:47David Hoffman?

  Yeah, that's because it's like CZ in Cornish crypto Twitter is like a god, so.

• 39:52Ryan Sean Adams?

  Well, SBF stole people in crypto's money. CZ did not do that.

• 39:57David Hoffman?

  Right, CZ didn't lose anyone's money.

• 39:58Ryan Sean Adams?

  I think there's just a, a number of crypto people, myself included, who think that AML KYC laws are like, broken anyway. And so, probably treat that with less severity than maybe some will. But it's all up to the court system now, so we'll have to see. David, speaking of AML KYC, alright, this was huge this week. The Samurai Wallet founders were arrested on Wednesday morning. So that happened just a couple of days ago. One of them is extradited from Portugal. They could face up to 25 years in prison.

• 40:30David Hoffman?

  So the Samurai Wallet, this is a Bitcoin wallet, and it has a CoinJoin feature. CoinJoin is like, pretty old technology in the Bitcoin world. It's basically a mixing service. So all of the Bitcoin UTXOs, which is what a Bitcoin is, all goes into this CoinJoin thing, they get mixed up, and then you get sent back a new UTXO, which is your new Bitcoin, same amount, but now you have some amount of privacy with where that UTXO came from. And so, like, like I said, this technology has been around. This is not the only time this CoinJoin technology's been used. The problem with CoinJoin is that it requires a centralized server to do some coordination about which UTXO is selected for input into a CoinJoin-like cycle.

• 41:12David Hoffman?

  And so this is what the Samurai founders were actually like, operating and maintaining. You can actually go to the samuraiwallet.com website, and you will notice that it is seized by the FBI.

• 41:22Ryan Sean Adams?

  This is what it looks like right now. This website has been seized, it's a big FBI notice. There's like the Silk Road-type notices that they made previously.

• 41:30David Hoffman?

  Yeah, so the Samurai Wallet coin join functionality is actually dead. It is actually a downed service, unlike Tornado Cash, for example, which, I mean, the devs are also having their court case, but Tornado Cash as autonomous code on Ethereum is still operating, unlike this one. And so there's also some other differences here. The accusation of these two developers is that they actually kind of targeted gray and black market activities intentionally. They were, they made more than $100 million in profits from fees from money laundering from legal dark web markets. They facilitated around $2 billion in unlawful transactions between 2015 and now. And then there's also some like pretty bad facts is what a lawyer would call them, which

• 42:13David Hoffman?

  is like Samurai founders messages to their investors talking about their intent to solicit activity from gray and dark markets and kind of boasted and invited illegal activity. So, yeah, as a lawyer, probably some bad facts. We'll have to see, you know, everyone gets their day in court, but materially different from the Tornado Cash case, which there is no such evidence that either the developers facilitated or aided in any sort of nefarious activity. Obviously nefarious activity did use Tornado Cash, but that wasn't any sort of result of the actions of the founders of Tornado Cash. And also Tornado Cash was like a totally autonomous.

• 42:51David Hoffman?

  And so like while we don't enjoy privacy devs or devs who write code to be arrested, the precedent for this, I don't think is as meaningful as it would, as it is with a Tornado Cash case.

• 43:05Ryan Sean Adams?

  Yeah, I guess like, you know, that subtlety is definitely a difference. And I think it makes the Tornado Cash case, which is like two devs got arrested, charged with like anti-money laundering stuff.

• 43:16David Hoffman?

  Publishing code, yeah.

• 43:17Ryan Sean Adams?

  Yeah, makes it more defensible. But like, I think there goes to the basic question of like, should US citizens have the right to private transactions of their cryptocurrency? And like all of those subtleties, that'll get worked out in kind of like courts in terms of what's permissible and what's not. But I think the Samurai Wallet devs were basically, they took kind of like the Silk Road vantage point. Basically, like, everybody should have access to privacy. And if we have to run centralized servers for that, then so be it. Right? Like, I don't know that the DOJ right now is making the distinction that you're making of like, these guys were writing private code. These guys are, you know, like, writing immutable smart contracts on Ethereum. Because they're both arrested right now, like, both groups are arrested right now.

• 44:03David Hoffman?

  Go straight to jail.

• 44:03Ryan Sean Adams?

  Go straight to jail. And I think that's like, the biggest concern about this. Like, it really feels like the US is putting its foot down and saying, we don't want the world, US citizens or anybody, to have the ability to transact privately. And they've enjoyed these benefits in the banking system to date, right? They have like, the Eye of Sauron. They can see all the transactions that are going on at any one time. And I think that the concern here for crypto is whether it's a tornado cash, whether it's Samurai, is where does this stop? Right? Like, we're talking about 25 years for writing code that helps people keep their transactions private. Yes, bad guys can use tornado cash code.

• 44:47Ryan Sean Adams?

  But like, it's, you know, it's required if you want private transactions. There's no other way to do it in crypto right now. So here's another thing, David. They treat the banking system with kid gloves, right? Over the last 10 years, there have been, like, dozens of cases of AML breaches of some of the largest banks in the world, HSBC, just like others. And the UN estimates there's 2 trillion in money laundering by big banks each year. And I never see any of the bankers go to jail. They're never just like, arrested from their homes and like, they have facing 25 years of prison time, which makes me feel very much like crypto's being targeted in this case.

• 45:27Ryan Sean Adams?

  And so tornado cash developers, privacy developers, we have Samurai wallet developers. Like, what about Aztec? That is a layer two. There's a private layer two. What about Zcash? This is an entire blockchain that keeps all transactions shielded and private. Are they going to come after them next? We don't really know, because this is not like, laws on the books through. Through a congressional act of any sort, this is like regulators and the DOJ coming after these people. And so like, where does it end is kind of the question. And I think what their objective is, is to push out a lot of fear in the industry, to get people to stop using these tools and to get people to stop developing them.

• 46:11Ryan Sean Adams?

  And actually, here's the concerning thing, I think it's working, right? Like, if you're a dev working on something related to privacy and crypto, like, you're gonna stop working on that thing unless you want to face the possibility of prison.

• 46:25David Hoffman?

  Yep. Yeah. Just the incentive of the state is always to capture the next most marginal illegal person doing the next most marginal legal activity. So at some point, the court has to stop them. Hopefully, that's the tornado cash case. Speaking of the courts deciding things, this is actually some breaking news that we had to pause the recording right now just to actually inject into this weekly rollup. Consensus, the Ethereum software studio, is actually suing the SEC. So this is coming out right now.

• 46:52Ryan Sean Adams?

  Wow.

• 46:53David Hoffman?

  So apparently, the SEC gave Consensus a Wells notice, and then the Consensus was like, okay, great, we're gonna sue you guys. And so they are preemptively suing the SEC over a number of different things. I think the main SEC lawsuit against Consensus is that its popular MetaMask wallet, everyone knows MetaMask, is a broker dealer because it probably has that swap feature in it. And so Consensus is-

• 47:19Ryan Sean Adams?

  Oh my god, it's the same thing as Uniswap, right?

• 47:21David Hoffman?

  Same thing as Uniswap.

• 47:22Ryan Sean Adams?

  Uniswap's a broker dealer, so MetaMask must be a broker dealer too.

• 47:25David Hoffman?

  Every wallet.

• 47:26Ryan Sean Adams?

  Yeah.

• 47:26David Hoffman?

  Same thing. Yep. Yeah. And like, MetaMask is just like, it has that like transaction swap feature, and it uses on-chain DEXs and DEX aggregators to fill those orders. So this is the precedent that's gonna be decided around that. But Consensus is saying, hey, we're not gonna wait for you guys to sue us. We're just gonna sue you preemptively to get clarity ahead of time. And also, Ryan, they're also going for ETH as a security. This is the new thing.

• 47:52Ryan Sean Adams?

  Wait, what?

• 47:52David Hoffman?

  They are, they are trying to get a court to get the SEC to state-

• 47:56Ryan Sean Adams?

  Oh, Consensus is-

• 47:57David Hoffman?

  Consensus is-

• 47:58Ryan Sean Adams?

  I thought you meant the SEC was trying-

• 48:00David Hoffman?

  Like suing consensus.

• 48:01Ryan Sean Adams?

  Okay.

• 48:01David Hoffman?

  Yeah, consensus is going after the SEC, leveraging the court, saying, hey, court, get the SEC to say that ETH isn't a security. So this is in the consensus complaint against the SEC, as well as an injunction to the SEC to leave ETH devs alone. I don't know if that makes sense, but apparently that's in there as well.

• 48:21Ryan Sean Adams?

  Leave them alone. That's great. All right, so we're being a bit more aggressive and proactive, right? Not waiting the lawsuits to come to us, taking them to court.

• 48:29David Hoffman?

  No one scared of the SEC. Everyone's scared of the DOJ. No one's scared of the SEC. SEC is a joke.

• 48:34Ryan Sean Adams?

  Yeah, FinCEN is kind of scary these days, for sure, and the financial surveillance stuff. All right, what do we got coming up?

• 48:40David Hoffman?

  Coming up next, an LRT token de-pegues and causes liquidations. Rutt row, the superchain gets a little bit more real, and the IRS wants you to pretend that your ledger wallet is a broker-dealer. So joining forces with the SEC. Well, let's go hear about all this stuff and more. But first, I want to talk about some of these fantastic sponsors that make this show possible, especially Mantle. The chain with all of the yield, your ME field and all the other types of yield in the DeFi ecosystem that's on Mantle. If you don't, if you have not checked out Mantle, check it out today. There's a link in the show notes. Get started with Mantle. Let's go hear from them right now. 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

• 49:24David Hoffman?

  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 on-boarded, 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 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 mantel.xyz and follow them on Twitter at @zeroxmantle. Cello is the mobile-first, EVM-compatible

• 50:09David Hoffman?

  carbon Negative blockchain built for the real world, driving real world use cases like mobile payments and mobile DeFi. And with Opera Mini Pay as one of the fastest growing Web3 wallets, Cello is seeing a meteoric rise with over 300 million transactions and 1.5 million monthly active addresses. And now Cello is looking to come home to Ethereum as a Layer 2. Optimism, Polygon, Matter Labs, and Arbitrum have all thrown their hats in the ring for the Cello Layer 2 to build upon their stacks. Why the competition? The Cello Layer 2 will bring huge advantages, like a decentralized sequencer, off-chain data availability secured by Ethereum validators, and one-block finality. What does that all mean for you? With Cello Layer 2, gas fees will stay low and you can even pay for gas natively using ERC 20 tokens, sending crypto to phone numbers across wallets using social connect.

• 50:54David Hoffman?

  But Cello is a community governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello forums. Follow Cello on Twitter and visit cello.org to shape the future of Ethereum. Have you heard about Safe? They're not just pioneers in crypto custody, they're also leading the transition to the world of smart accounts. With Safe, managing your crypto has never been smarter or safer. They've recently passed $100 billion in total value secured and are now deployed everywhere with over 15 supported networks. But that's not all. Safe is revolutionizing the game with their full compatibility with ERC 4337, making embedding wallets super easy to integrate into your daily crypto activities. And for the crypto enthusiasts out there, Safe has something special. The Safe Pass Activity Rewards Program.

• 51:39David Hoffman?

  It's a fantastic way to engage and earn rewards, launching just after Safe DAO voted in favor of Safe token transferability. So what are you waiting for? Head over to safe.Global, sign up for the Safe Pass Activity Rewards Program, and don't forget to check out SafeCon during Berlin Blockchain Week, where the future of smart accounts is unfolding in real life. Click the link in the show notes to secure your spot today and be a part of the transition that's setting a new standard in the world of custody. Welcome to Consensus 2024. Consensus is one of the biggest hubs for all things crypto, blockchain, and Web3. This May, Consensus is celebrating 10 years of decentralizing the future. Going to Consensus means being in good company with over 15,000 attendees from over 100 countries. You have the opportunity to learn directly from the architects and Advocates representing Bitcoin, Ethereum, Solana,

• 52:22David Hoffman?

  along with the teams from popular Layer 2s like Mantle, Arbitrum, Optimism, Base, and others. Well, Consensus is more than just discussions and presentations. Badge holders get access to witness 10 professional karate combat fights, and one unprofessional one between myself and Nick Carter. For the visionaries, Pitch Fest is your spotlight, presenting a stage for the most promising early-stage Web3 companies. And for the devs, the Hackathon offers a unique chance to build your next project or take your existing project to the next level. Immerse yourself in hundreds of side events and hacker houses scattered around Austin. Register for Consensus 2024 today and save 20% with code BANKLIST. A new LRT airdrop this week. Renzo announced its token launch. That will actually launch on May 30th is when that token will be live.

• 53:03David Hoffman?

  Second-largest LRT after EtherFi with 33.5% market share, $3.5 billion in deposits. So Season 1 campaign ended on April 26. Season 2 incentives will start soonly thereafter. This is kind of the new meta. Season 1 is like people's retroactive airdrop, and Season 2 is like, but wait, there's more, don't leave. So airdrop details again claiming on the 30th. The total airdrop allocation for both Season 1 and Season 2 is 12%. 7% for Season 1. And then there was some airdrop eligibility as well. Minimum number of 360 easy points per wallet. As the Renzo org announced their airdrop. That was the good news side, right? That was the good news. There was a little bit of a hiccup post.

• 53:49David Hoffman?

  So Renzo did not have withdrawals enabled yet. So if you had easy ETH, which is the Renzo LRT, you could not, you can't just unwrap it and get your ETH back. If you wanted your ETH back, you'd have to go to Uniswap and sell it. They will eventually, eventually open up withdrawals, but withdrawals was not enabled. Once they announced their token and that the snapshot was happened, had happened, all the airdrop farmers were like, oh, well, we're done here. I'm going to leave the protocol. Except since there was no withdrawals, the only way to leave is to sell your easy ETH for ETH on Uniswap, which causes the disequilibrium in price. Like this, what we're looking at on the screen? Just like, yeah. And so for bank listeners, we are looking at what is called a big WIC. Big depeg. A depeg, yeah.

• 54:32David Hoffman?

  So the price of easy ETH, depegged all the way down to like $680 for what is worth one Ether. And so some numskull. That's like, that's like a 70% deep, that's a big depeg. Yeah, yeah, cuz some idiot just like market sold all their easy ETH into Uniswap, not accounting for how much liquidity was there, which was not enough to actually account for the like the outflow demands. There's something like $30 million of liquidity inside of the Uniswap pair, so it de-pegged.

• 54:57Ryan Sean Adams?

  Someone learned a harsh lesson that day.

• 54:59David Hoffman?

  Someone, someone immediately took a 70% haircut, yikes, trying to become an airdrop farmer. That's why, just like, hands off, guys.

• 55:07Ryan Sean Adams?

  Calm down, calm, take a breath, know what you're doing.

• 55:09David Hoffman?

  Anyways, there is also leveraged airdrop farmers in the DeFi ecosystem who have easy ETH as collateral or other types of collateral that is related to easy ETH, specifically inside of Morpho. And so where if Morpho and the Morpho Vault that uses easy ETH as collateral, it uses the Uniswap exchange to get liquidity for any sort of liquidation.

• 55:34Ryan Sean Adams?

  Yeah.

• 55:34David Hoffman?

  And so it uses Uniswap, it's like, hey, what's going on over there? Is there enough, what's the price of easy ETH on Uniswap? And when the price of you, when it gets cut in half by like 70%.

• 55:44Ryan Sean Adams?

  Liquidated.

• 55:45David Hoffman?

  Then all of a sudden Morpho's like, well, we're gonna have to liquidate you guys. And so there's a big liquidation in Morpho because some trader, some airdrop farmer, just hit market sell into Uniswap into like no liquidity. And so, yeah, so this is, we have discovered that we are on some sort of efficient frontier of risk inside of the leveraged airdrop farming ecosystem. People that were depositing easy ETH into Morpho to borrow more ETH to go like leverage up on point farming. Yikes. And then we also learned that you don't dump into Uniswap. We also learned that LRTs should enable withdrawals before they announce their airdrop. That's the correct order of operations.

• 56:23Ryan Sean Adams?

  Lots of learnings, lots of learnings for everybody.

• 56:25David Hoffman?

  Lots of learnings, lots of learnings.

• 56:26Ryan Sean Adams?

  I mean, who would have known that when if you stake your ETH, then re-stake it and then lever long on it, you could get liquidated, right?

• 56:33David Hoffman?

  And wind that bird up, baby.

• 56:35Ryan Sean Adams?

  I mean, but people should be aware, LRTs can de-peg sometimes quite significantly.

• 56:39David Hoffman?

  LRTs can de-peg.

• 56:40Ryan Sean Adams?

  And I mean, as a result, you probably just shouldn't lever up. By the way, this is a chart that's kind of worrying to me a little bit. I don't know if this is a chart for the future. This is the, you know, the Karak protocol, the new re-staking protocol?

• 56:52David Hoffman?

  Yeah, Karak is like the Eigen competitor. That's like, oh, Eigen is just ETH and LSTs? Well, you can re-stake with Karak with anything.

• 56:59Ryan Sean Adams?

  Okay, but here's the problem, if you look at this pie chart, the, the stake that's in Karak right now, about 75% of it is Eigen-layer LRTs. Okay, so this is ETH that's been staked, re-staked, and then re-staked again.

• 57:13David Hoffman?

  It's not just 70% LRTs, it's 34% LRTs and then 41% derivatives of those LRTs in Pendle.

• 57:21Ryan Sean Adams?

  It's levered? It's levered LRTs?

• 57:23David Hoffman?

  Oh yeah, uh huh, yeah. Okay, so like, so here's the structure going on. So let's start from, I'm gonna start the very bottom.

• 57:29Ryan Sean Adams?

  You really wanna get into this?

• 57:31David Hoffman?

  Yes, here's the structure that's being built right now. We have the beacon chain. Proof of stake beacon chain with these stakers.

• 57:37Ryan Sean Adams?

  We're good.

• 57:37David Hoffman?

  Solid, super strong. We have Eigenlayer as the, and the withdrawal contract for Eigenlayer. That's where the slashing events happen for AVSs.

• 57:45Ryan Sean Adams?

  Risky, it's new, but okay.

• 57:47David Hoffman?

  Well, it's designed to be, it's new, it's designed to be like, no one is supposed to be slashed. Unless they are really meaningfully like, F up. Like, you can be an AVS and never have a slashing event unless somebody like materially fucked up.

• 58:01Ryan Sean Adams?

  Go on.

• 58:02David Hoffman?

  Okay, so that's Eigenlayer. Then LRTs, deposit Ether or LSTs into Eigenlayer. On top of that, and that's, that's, that's the Eigenlayer LRT ecosystem. Then we can enter the Ethereum DeFi layer where some people are doing Pendle trades. Some people are leveraging up on Morpho, some people are like providing liquidity in Uniswap. That's some of the LRT ecosystem.

• 58:23Ryan Sean Adams?

  Got it.

• 58:24David Hoffman?

  And that's, that's the conversation that we just had with Renzo and Morpho and all that.

• 58:29Ryan Sean Adams?

  Super risky.

• 58:30David Hoffman?

  Now we enter, this is where Karak is built on, this is where Karak starts.

• 58:34Ryan Sean Adams?

  No, no, not all of Karak, 75%.

• 58:37David Hoffman?

  So 75% of Karak starts here and those assets are deposited into Karak. For the Karak points.

• 58:45Ryan Sean Adams?

  You know what, people get liquidated in these things like, I mean, come on, come on, do not complain. Do not complain, you know what you're doing. You're hunting for some, some points here.

• 58:56David Hoffman?

  Oh my god.

• 58:57Ryan Sean Adams?

  All right, David, let's move on to something a bit more stable. Telegram is allowing USDT payments, so 900 million Telegram users out there, do you know that? I know, we are one of them. And it's just going to work like sending a direct message. Except with a stablecoin, except with Tether. So free, cross-border, instant. Pretty impressive, Telegram is really like doubling, tripling down on crypto these days.

• 59:21David Hoffman?

  Yeah, finally getting their crypto ecosystem that they promised in 2018. But come back to me when we can do some liquidations on Telegram. Because tether payments not exciting.

• 59:32Ryan Sean Adams?

  Stablecoins are so boring to you right now.

• 59:33David Hoffman?

  Let's get some Telegram restaking, stablecoin leverage going on.

• 59:38Ryan Sean Adams?

  Well, I mean, this does pull the question of where the next super app is going to live, right? Telegram, kind of building on top of crypto to become a payment super app. X, of course, is building a wallet. They're not talking about any crypto plans right now. So far, it seems to be built on the Trad banking system so far. And they're trying to turn X into a Venmo-type experience. And we also have, this is a rumor just coming to this episode, David, so not completely substantiated. Looks like Stripe is adding crypto payments finally this summer. Look at this, this is a good old fashioned crypto wallet. And of course, everybody uses Stripe. So, I don't know.

• 1:00:11David Hoffman?

  It feels like 2022.

• 1:00:13Ryan Sean Adams?

  I know, we're actually getting some of that adoption that we were hoping for.

• 1:00:17David Hoffman?

  Pivoting into the world of this superchain, Optimism is releasing a multi-chain upgrade system. So this is a way for all of the chains in the Optimism superchain to upgrade their chain at once via a single shared upgrade contract. So when this one single contract upgrades and we're upgrading the OP stack, all of the chains in this superchain all upgrade all at once. And so this is just part of the growing scope of the superchain. And then this is, of course, Liam saying, "Native interop between base world chain, Cellozora, OP, mainnet, and all the other future superchains." Fractal is also one of those. These will all upgrade in unison and then will all become universally composable.

• 1:00:59Ryan Sean Adams?

  That's great. If we can just solve fragmentation across at least the superchain ecosystems, right? That would be like, you know, 80% of the challenge today.

• 1:01:09David Hoffman?

  To get more chains, this is a little curveball this week, right? Shiba Inu has raised $12 million for its new chain by selling an unreleased token, "Treat Token," because you give treats to your dog.

• 1:01:24Ryan Sean Adams?

  Yeah, yeah.

• 1:01:26David Hoffman?

  So that it can have a privacy-focused Layer 3.

• 1:01:30Ryan Sean Adams?

  Wait, what?

• 1:01:31David Hoffman?

  On top of the shib layer 2. So this is a FHE, fully homomorphic encryption rollup, that settles down to the shibarium layer 2, which is actually a sidechain, which is its own native validator network. And so they spit out this new token called treats, which is the native token of the shib layer 3, that's going to be a privacy-focused layer 3, that settles down to the shib layer 2, which is actually a sidechain.

• 1:01:58Ryan Sean Adams?

  Wow, wow. Okay, I think I get it. It's actually a sidechain, so it's not a layer 2, so it can't be a layer 3. But did you say privacy-focused? Privacy-focused?

• 1:02:07David Hoffman?

  It's an FHE, fully homomorphic encryption rollup.

• 1:02:10Ryan Sean Adams?

  That is a privacy layer 3. That's some deep tech. I did not expect this.

• 1:02:16David Hoffman?

  Let's just introduce privacy into crypto via the meme coins. The DOJ will never see it coming.

• 1:02:20Ryan Sean Adams?

  Well, actually, this is a meme coin that's building, maybe, presumably. I have to see what they build, but wow, that's how we're going to revolutionize the world, huh?

• 1:02:27David Hoffman?

  Revoking their meme coin status, injecting utility. Wow, bold strategy.

• 1:02:32Ryan Sean Adams?

  Tell me about this, David. So Lido is starting with DVT. I think like DVT is, I understood it as you get to stake with friends, right? So you can kind of like do group staking, can be less than 32 ETH. But remind me about that. And it seems like this is maybe a step towards making Lido more decentralized. What's going on here?

• 1:02:51David Hoffman?

  That's exactly right. So DVT, distributed validator technology. Basically, you and your buddies can create a virtual validator in the cloud of sorts. And so if none of y'all have 32 ETH, but you need a 32 ETH, you guys can band together and have like 2, 3, 4, 5, N number of nodes that all put in ETH into a pot. Once you get over 32 ETH, you can become an Ethereum validator. And only one of you has to sign a message on everyone else's behalf. And the cool thing is, if one of you fails to sign a message, somebody else can take over that role. And so it's not only a decentralization mechanism, but it's also an uptime mechanism as well. Actually, Lido originally gave, I think, Obol Network a grant

• 1:03:31David Hoffman?

  way back in the day to research a DVT before it was actually a piece of software. And so this is actually coming full circle from an initial Lido given grant to research and develop DVT. Now, Lido is...

• 1:03:44Ryan Sean Adams?

  Bearing the fruits of that grant so that they can actually use DVT to include 72 net new node operators into the Lido ecosystem.

• 1:03:54David Hoffman?

  That's big. That's like, that's very big.

• 1:03:55Ryan Sean Adams?

  That's tripling.

• 1:03:56David Hoffman?

  Yep.

• 1:03:57Ryan Sean Adams?

  I guess because they have 30 right now, right?

• 1:03:58David Hoffman?

  32, yeah. So they're adding 72 onto the previous 32 that already existed.

• 1:04:03Ryan Sean Adams?

  That's great. All right. So if you have 32 ETH, all you need is one ETH and then a very rich friend or a group of friends, right? All that ETH.

• 1:04:10David Hoffman?

  Or maybe, hopefully, you're all equally rich.

• 1:04:14Ryan Sean Adams?

  David, this was annoying, super annoying this week. This is the IRS news. So here's, when's the last time you looked at a 1099 tax form? You ever look at these?

• 1:04:24David Hoffman?

  No, I pay someone to look at them for me.

• 1:04:27Ryan Sean Adams?

  All right. Well, so if you have an exchange account with our favorite exchange or Kraken, Kraken's going to send you a 1099 every year, like detailing your trades and transactions you did. This is a new proposed form from the IRS for digital assets. So it's a 1099 for digital asset proceeds from broker transactions.

• 1:04:46David Hoffman?

  Are you making me look at an IRS form when I don't have to?

• 1:04:48Ryan Sean Adams?

  Yeah. Okay. Well, let me zoom in. Let's enhance, enhance. I'm going to zoom this in, right? So, okay, so Coinbase or a Kraken or something like exchange has to send you one of these. There's a checkbox, broker type involved in the transaction, kiosk operator, digital asset payment processor, hosted wallet provider, or what's this? Unhosted wallet providers.

• 1:05:08David Hoffman?

  Broker type.

• 1:05:09Ryan Sean Adams?

  Broker type.

• 1:05:10David Hoffman?

  Unhosted wallet provider.

• 1:05:11Ryan Sean Adams?

  What is a broker that is an unhosted wallet provider? Okay?

• 1:05:16David Hoffman?

  I have a wallet on this computer right now. Is my computer a broker?

• 1:05:19Ryan Sean Adams?

  The IRS thinks your ledger is a broker, basically. That's the huge concern with this type of a tax form because what it could mean, David, is that if you are a Uniswap user interface, or if you're a MetaMask or something, you have to go find the identities of anyone who has used an unhosted crypto wallet inside of your application, go track down their social security number, their like where they live, all of that to send them this 1099. That is the nightmare scenario if the IRS considers unhosted crypto wallets essentially a broker.

• 1:05:54Ryan Sean Adams?

  Sheehan.

• 1:05:55David Hoffman?

  Isn't this what consensus is suing the SEC over? Because like MetaMask, the last thing that MetaMask wants to do is have to send all of his...

• 1:06:03Ryan Sean Adams?

  You know, we're fighting the Hydra here, so we like, that's the SEC head of the government. This is the IRS head of the government.

• 1:06:08David Hoffman?

  We're gonna chop off the SEC head and then the IRS is like, haha.

• 1:06:11Ryan Sean Adams?

  Yeah, the IRS comes in, like, you know, bites our head, and that's what's happening. So this is Sheehan, he is a like crypto tax expert.

• 1:06:18David Hoffman?

  Can we take the IRS to court?

• 1:06:20Ryan Sean Adams?

  I mean, I think we're gonna have to take them all to court, David. He says, "I don't think crypto will be sued anonymous or privacy preserving anymore."

• 1:06:27David Hoffman?

  Get your shit figured out.

• 1:06:28Ryan Sean Adams?

  At least in the US. Yesterday, the IRS issued this, the form they were just talking about, and brokers will be required to generate this form for the sale of transactions. Okay, we're not sure exactly whether the IRS like did this accidentally, whether they don't know what they're doing or what, but like, we'd already given comments on this. This is months ago. The problem is, the form captures data points, is data acquired, date sold, date proceeds. It's also, it would also create a massive IRS database of every single person's crypto wallet, and like, who owns it? I mean, like, what a honeypot. This is...

• 1:07:01David Hoffman?

  Sick.

• 1:07:02Ryan Sean Adams?

  Anyway, I, we've talked too much about the different heads of the Hydra in this episode. I'm just kind of exhausted by it, but that's another thing for you to think about. I know you've spent a lot of time thinking about your 1099 forms, so.

• 1:07:15David Hoffman?

  Totally, yeah. What's that line, like, you don't account, don't attribute something to like, malice, which could be contributed or attributed to, um, what's it like, being a mistake or something?

• 1:07:27Ryan Sean Adams?

  Incompetence, stupidity, something like this, yeah.

• 1:07:29David Hoffman?

  In this case, I think for the government, when it's about the government in relation to crypto, it's gotta be inverted. It's not incompetence, it's actually malice.

• 1:07:36Ryan Sean Adams?

  I think it could be both, a little bit of both. The good news, says Jake Trivinsky, is these rules make literally no sense at all, and the great news is...

• 1:07:45David Hoffman?

  Is that good news?

• 1:07:46Ryan Sean Adams?

  Yeah. Well, he says the great news is, we really like filing lawsuits. So if you're a crypto lawyer, you're about to be real busy. I mean, you already have been.

• 1:07:55David Hoffman?

  Yeah.

• 1:07:56Ryan Sean Adams?

  Yeah.

• 1:07:56David Hoffman?

  You're about to get more busy.

• 1:07:57Ryan Sean Adams?

  Yeah. This can only be explained by wanting to discredit and destroy crypto. It's another crypto take.

• 1:08:01David Hoffman?

  Right. Right. Thanks, Gabe.

• 1:08:03Ryan Sean Adams?

  It's like all the Hydra heads are kind of working together at this point. It feels very coordinated.

• 1:08:08David Hoffman?

  Yeah, it's all happening at once.

• 1:08:09Ryan Sean Adams?

  David, some raises to mention on the week. There's two that Bankless Ventures is involved in. The first one is movement. What is this?

• 1:08:17David Hoffman?

  Yeah, movement is so simple. A move EVM layer two on Ethereum. So move the language. This is the thing, the coding language developed actually by Facebook. And that was the focus of the Libra DM project. Developers speak very highly of move for some reason. I don't know why, because I'm not a dev, but everyone loves move. It's object oriented, which I think is like, what are tokens and NFTs other than objects? So I think there's a connection there.

• 1:08:43Ryan Sean Adams?

  Yeah.

• 1:08:44David Hoffman?

  But the point is different virtual machines that are extremely performant as layer twos on Ethereum. And so a move based layer two that is bytecode equivalent with the EVM. So you get both the benefits of move and the ecosystem of the EVM. They say, Ryan, 30,000 transactions per second with bytecode compatibility.

• 1:09:04Ryan Sean Adams?

  Oh, wow. 30,000.

• 1:09:07David Hoffman?

  How many do you think of those are votes? How many of those are vote transactions?

• 1:09:11Ryan Sean Adams?

  Oh, wow, David, you couldn't resist, huh?

• 1:09:13David Hoffman?

  The answer to that is zero, Bankless Ventures, because move and movement is not.

• 1:09:18Ryan Sean Adams?

  Deep cut.

• 1:09:18David Hoffman?

  It's not on layer one, so it doesn't need consensus. And it's not Solana delegated proof of stake, so it doesn't need votes.

• 1:09:23Ryan Sean Adams?

  Wow, you had to go there.

• 1:09:24David Hoffman?

  I just had to explain the joke.

• 1:09:26Ryan Sean Adams?

  Authentic as well. They raised 4 million in their seed round. This, to me, this Bankless Ventures was involved. This is almost like a RAS, like an infrastructure layer, rollup business service. You've heard that for the rollup ecosystem. This is that for Eigen apps, this kind of infrastructure. What this means is more Eigen apps, I think faster, because we have the infrastructure. You just like kind of print it out. More yield, hopefully, if you're a restaker, although like, don't go and releverage your restake. We just talked about that. And something as well called stateless rollups. What is a stateless rollup, David, that's possible on Authentic?

• 1:10:00David Hoffman?

  Yeah, so a stateless rollup. So a rollup is a blockchain, right? And so blockchain has trustless state. That's my Twitter name.

• 1:10:08David Hoffman?

  A stateless rollup is basically just like, take this state out of a rollup and then what are you left with? You're left with compute. So you get stateless compute. So like, these are compute networks, which can compute certain things, literally anything. And that can be kind of a module inside of the rollup ecosystem, or any sort of like, anything in the valence of Ethereum can leverage the stateless compute of these specific AVSs. This is like a perfect bankless ventures deal, because we like scaling things. We love restaking, and we need more AVSs. And so this, I think there's actually going to be more AVSs than there are rollups. I think it's,

• 1:10:43Ryan Sean Adams?

  Wait, what?

• 1:10:43David Hoffman?

  There's more need for, yeah, more AVSs than rollups in the long tail.

• 1:10:47Ryan Sean Adams?

  Well, some, rollups can be AVSs, yes? You just economically.

• 1:10:52David Hoffman?

  I think, yeah, I think AVS is actually encompass a larger Venn diagram. The rollup Venn diagram fits inside of the AVS Venn diagram. And the Eigenlayer ecosystem is like, really hitting the gas right now. And so, but like, what is needed the most is more AVSs.

• 1:11:10Ryan Sean Adams?

  Yeah, apps, actual apps that people use.

• 1:11:13David Hoffman?

  Actual Eigen apps. Yeah, I think we're the only ones that call them Eigen apps, but more people should. So Authentic just helps Eigenlayer AVSs spawn and structure themselves and build themselves.

• 1:11:23Ryan Sean Adams?

  Well, guys, that has been the rollup. The last thing I want to talk to you about, David, is your big fight that's coming up, okay? I just want an update, because I was looking at this on the week. This is the Polymarkets. People are gambling. People, you know, crypto likes to speculate.

• 1:11:36David Hoffman?

  Nick's coming, he's getting, he's biting at my heels.

• 1:11:39Ryan Sean Adams?

  If you haven't heard.

• 1:11:40David Hoffman?

  The margins have compressed.

• 1:11:42Ryan Sean Adams?

  Is it May 30th? Is that the date? You're fighting Nick Carter, okay?

• 1:11:46David Hoffman?

  Me and Nick Carter are fighting karate combat.

• 1:11:49Ryan Sean Adams?

  These podcast titans.

• 1:11:50David Hoffman?

  It's basically, basically kickboxing.

• 1:11:52Ryan Sean Adams?

  All right, you are winning so far in terms of the betting markets, okay?

• 1:11:55David Hoffman?

  Always happen.

• 1:11:56Ryan Sean Adams?

  50% on David Hoffman. That's gone down, though. I don't know if you're happy about that.

• 1:12:00David Hoffman?

  Started 60%.

• 1:12:01Ryan Sean Adams?

  Yeah, and then Nick has 43%. There's like, a lot of money on the line. It's growing over here.

• 1:12:07David Hoffman?

  There's like, $63,500 of beable betting between me and Nick Carter.

• 1:12:12Ryan Sean Adams?

  And I'm just enjoying seeing Nick taunting you and like, you clapping back on all the social media that I follow. This is Nick thinking about David Hoffman.

• 1:12:23David Hoffman?

  Did you see my most recent tweet about this?

• 1:12:25Ryan Sean Adams?

  I don't think so. I don't know. What'd you say?

• 1:12:28David Hoffman?

  There's this Telegram group of all the fighters in the card. So there's six fights going on. We're actually the headliners, because...

• 1:12:34Ryan Sean Adams?

  Really?

• 1:12:35David Hoffman?

  No.

• 1:12:35Ryan Sean Adams?

  Of course. Who else is fighting? Anyone I would know?

• 1:12:38David Hoffman?

  Billy McFarlane from the Fire Festival guy?

• 1:12:41Ryan Sean Adams?

  No way.

• 1:12:42David Hoffman?

  I shit you not.

• 1:12:44Ryan Sean Adams?

  Who's he fighting?

• 1:12:45David Hoffman?

  Uh huh. I don't know.

• 1:12:46Ryan Sean Adams?

  Ja Rule?

• 1:12:48David Hoffman?

  I don't know, dude. Yeah, so he's in the card. But yeah, we're the headliners. So, and there's this like group of us, and they're like, hey, you guys have to go get like a medical exam, blah, blah, all this kind of stuff, like logistics. And Nick just drops a question in there. It's like, um, will there be drug testing? Because I don't see anything about drug testing in this. I'm like, dude, bro, you can't just have that.

• 1:13:11Ryan Sean Adams?

  Is he writing up to come beat you? Is that what he's doing? Do you think he's got something?

• 1:13:15David Hoffman?

  So I tweeted a screenshot of him asking that, that being the implication. I don't think Nick would take that.

• 1:13:21Ryan Sean Adams?

  No, he would never.

• 1:13:22David Hoffman?

  It seems not characteristic of him.

• 1:13:24Ryan Sean Adams?

  That would be so fiat of him.

• 1:13:24David Hoffman?

  It's very fiat of him. Yeah, it would be very fiat of him. Anyway, if anyone knows any roid stealer, hit me up.

• 1:13:30Ryan Sean Adams?

  Oh my god. Are you, um, so how's training going for this? Like, are you gonna be ready? How you feeling?

• 1:13:37David Hoffman?

  Oh, I'm not feeling...

• 1:13:37Ryan Sean Adams?

  How you feeling, champ?

• 1:13:38David Hoffman?

  I'm pulling an Ansem.

• 1:13:39Ryan Sean Adams?

  No, what? By the way, I, um, so you're not the only crypto... Can I call you crypto influencer, David? That's what other people say.

• 1:13:48David Hoffman?

  Okay, but if you do, I get to go on a quick soapbox about that.

• 1:13:52Ryan Sean Adams?

  All right, then I won't say it. We gotta end this episode. I did watch the Ansem fight, though. Okay, so this is Ansem versus I don't know who. Ansem.

• 1:14:02David Hoffman?

  Barney.

• 1:14:02Ryan Sean Adams?

  Barney.

• 1:14:03David Hoffman?

  Barney, he's the guy, yeah.

• 1:14:04Ryan Sean Adams?

  Ansem, unlike you, is definitely a crypto influencer. I'm not sure about David, but is definitely one. And, uh, yeah, I watched, um, three rounds of this. I'm not a big boxing guy, so...

• 1:14:15David Hoffman?

  You watched three and a half rounds.

• 1:14:16Ryan Sean Adams?

  I can't really assess what I watched. Uh, Ansem did lose, I will say that. And, uh, yeah, I don't know if you have any, any thoughts on this fight? Anything that you've learned, anything that you're gonna do differently? Any different kind of energy you're gonna bring to the Nick Carter fight? Uh, but yeah, it's...

• 1:14:33David Hoffman?

  No, I'm gonna, this is actually a message to Nick. I'm gonna perfectly bring the Ansem energy into the fight. I'm just, I'm just not gonna train. I'm just gonna, I'm gonna wing it.

• 1:14:43Ryan Sean Adams?

  Oh, wow.

• 1:14:44David Hoffman?

  I believe in myself. Yeah, I believe in myself. I'm gonna, I'm just gonna eat myself into this without training. Yeah.

• 1:14:50Ryan Sean Adams?

  Wow, I was not giving a lot of faith to one side of that prediction market here, David, but I'm rooting for you and we'll be following your training with great interest and certainly updates on the roll-up from time to time. Let's end with this: crypto is risky, so is karate boxing and whatever you, Nick, are getting up to. You could lose what you put in, but we are headed west. This is a frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.