79 - The Crypto Coalition | Ryan Selkis

Ryan Selkis is the Founder and CEO the crypto data analytics platform Messari. Last time Ryan was on the podcast, we debated Ether’s properties as a money and the triple point asset thesis. We revisit many of these topics and explore what has changed in the landscape over the past year. However, we also discuss a perhaps more pressing issue: the state of regulation for the industry. Ryan is poised to take a strong leadership role in the political side of crypto, and he’s developing offensive strategies for the crypto vs. nation-state conflict. Listen in to learn why he’s now a single-issue voter. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🍵 MATCHA | DECENTRALIZED EXCHANGE AGGREGATOR https://bankless.cc/Matcha 🔐 LEDGER | SECURE YOUR ASSETS https://bankless.cc/Ledger 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ 📣 TracerDAO | Building DeFi Infrastructure. Join the Discord! https://bankless.cc/TracerDAO ------ Topics Covered: 0:00 Intro 4:00 Ryan Selkis of Messari 6:44 Ryan’s Broad Approach 12:41 Why Do They Hate Us? 18:13 “Protecting Us” 27:30 Single Issue Voters 35:49 It’s a Team Sport 45:00 Aligning with Regulators 54:00 Institutional Reactions 57:23 What the Markets Say 1:01:01 Ether as an Asset 1:08:40 The Flippening 1:10:44 Ethereum’s Narrative 1:13:53 Market Cap vs Money 1:17:37 Institutional Demand 1:19:55 Hot Sectors for Analysis 1:23:24 The Network State 1:26:41 Closing & Disclaimers ------ Resources: Ryan on Twitter: https://twitter.com/twobitidiot?s=20 Ryan’s Tweet Thread: https://twitter.com/twobitidiot/status/1426020410370449410?s=20 Mainnet Event: https://mainnet.events/ Messari: https://messari.io/ ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:07Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, Ryan Selkis on the podcast, we cover two things. First, everything that's going on in the government, regulation, nation state versus crypto. And second, we got to ask him once again, what is thoughts on Ether? Has that changed since the last time we spoke? Last time we debated it, last time we argued it, really interesting discussion here.

• 0:43David Hoffman?

  I really think Ryan could be positioned to become one of our industry's leaders. He already is at Missouri, but now that this political conversation has really blossomed, Ryan really seems to be positioned to take a even more leadership position, kind of helping the crypto industry navigate a part of the world that everyone really gets frustrated about, and no one really wants to have to partake in, yet you're kind of damned if you don't. And Ryan seems to be having just a fireball of energy behind him with regards to how to approach crypto regulation to get what we want. And rather than acting defensively,

• 1:24David Hoffman?

  which is anytime some sort of bad regulation comes up, crypto rises to the challenge to defend us. Ryan is thinking offensively, which is how do we attack these issues and instantiate crypto in the parts of the world that we want to instantiate them in before bad regulation even comes about. I think that's a fantastic strategy, and I really enjoyed that part of the conversation. And then, like you said, Ryan, in the second half of the show, we turned to a rehashing of a debate that we had last time Ryan came on the show. About Ether as an asset, whether institutions are going to be interested in it and where it fits in his personal opinion and his portfolio. And there was definitely some concessions from versus

• 2:05David Hoffman?

  last time that he came on to the show. Not as many as I would have hoped, but I think if we just keep on revisiting this conversation with Ryan over and over is simply going to be a death by a thousand concessions.

• 2:16Ryan Sean Adams?

  Yeah, there's definitely room for for growth there. You know, at the same time, like the last conversation we had, it was literally a debate on whether ETH is money or not. And what we meant by that was, is it a reserve asset worthy of monetary premium? Is it going to like do well in the future? And well, listeners will have to tune into that section to hear what Ryan has to say. We'll leave it there. Before we get into the conversation, we want to thank the sponsors that made this episode possible.

• 2:41David Hoffman?

  Living a bankless life requires taking control of your own private keys. Not your keys, not your crypto. That's why so many in the bankless nation already have their Ledger hardware wallets, which makes proper private key management a breeze. But the Ledger ecosystem is more than just a secure hardware wallet. Ledger is the combination of the Ledger hardware wallet and the Ledger Live app. And if you're used to seeing all of your crypto services and favorite D apps all in one place, Ledger is where you want to be. Not only does Ledger let you buy crypto assets straight from the app, but it also hooks into decentralized exchange aggregators like Paraswap, which makes sure that you are getting the best prices on your trades without your assets ever leaving your control. DeFi never stops growing and the Ledger Live app grows alongside with it.

• 3:24David Hoffman?

  So click the link in the show notes to see all the DeFi apps that Ledger Live has and stay tuned as more and more apps come online. And if you don't have a Ledger hardware wallet, what are you even waiting for? Go to ledger.com, grab your Ledger, download Ledger Live and get all of your D apps all in one place. Arbitrum is an Ethereum scaling solution that is going to completely change how we use DeFi. If you've been using Ethereum for the past 12 months, you've probably noticed the high gas fees and the slow confirmation times that have been plaguing DeFi. Too many people want to use Ethereum and it doesn't have enough capacity for all of us. That's where Arbitrum comes in. Arbitrum is a layer two to Ethereum, which means Arbitrum Arbitrum can increase Ethereum's throughput by orders of magnitude at a fraction of the

• 4:07David Hoffman?

  cost of what we are used to paying. When interacting with Arbitrum, you can get the performance of a centralized exchange while tapping into Ethereum's level of security and decentralization. This is why people are calling this Ethereum's broadband moment, where we get to add performance onto decentralization and security. If you're a developer and you want to save on gas costs and make an overall better experience for your users, go to developer. offchainlabs.com to get started building on Arbitrum. If you're a user, keep an eye out for your favorite DeFi apps building on Arbitrum. Arbitrum has been working with over 300 teams, including Ethereum's top infrastructure projects, and will be opening up to all users shortly. There are so many apps coming online to Arbitrum, so you may want to pack your bags in preparation

• 4:51David Hoffman?

  for the great migration to the Arbitrum Layer 2. To keep up to speed with Arbitrum, follow them on Twitter @Arbitrum and join their Discord.

• 5:00Ryan Sean Adams?

  Bankless Nation, we are super excited about our next guest. He's been on the show before. This is Ryan Selkis. He's the founder of crypto analytics firm Masari Crypto. He's a longtime crypto advocate. He's been a content producer in crypto for quite a long time. And more recently, he's become a single-issue voter. We're going to talk about what that means, too. Ryan, great to have you back. Welcome to Bankless.

• 5:21Speaker 02

  Thank you for having me. I'm surprised that you wanted me to come back and slap your own a little bit more.

• 5:28Ryan Sean Adams?

  Oh, man. Well, you are alluding to the second topic we're going to cover, which is ETH, and whether your thoughts on ETH have changed. We had a debate the last time you were on, on whether ETH is money or not. Want to get to that. But first, man, I got to tell you, it feels like you've been on a streak lately or something. Masari just raised 21 million from some massive names, Point72, that's billionaire Steve Cohen, that's his firm. You've been spitting fire about unelected bureaucrats in government. I feel like rallying the crypto industry about what's going on in the infrastructure bill and in getting the industry involved in politics. How's it feel, man? How's it feel to be Ryan Selkis these days?

• 6:09Speaker 02

  Uh, feels pretty similar to how it did two weeks ago. Uh, you know, I've lived through a lot of chaos last eight years in crypto. Uh, you know, that's, that's a lot of dog years. So, um, I think, uh, generally pretty, pretty steady. You know, social media, um, can, um, can be read a bunch of different ways. Uh, and I know when to dial down and, and up intensity, I think, uh, depending on, on what's going on. But it doesn't really change my day to day. Um, so I think the, the, the first thing that is really important about the last couple of weeks is what happened and the way that it happened with the infrastructure bill

• 6:53Speaker 02

  and this last minute provision, uh, that was inserted and then the bipartisan efforts to amend this particular provision of the bill and then the last minute stonewalling. Everything about the process, cover to cover, was essentially a hundred percent of what everybody hates about the US government and government and today's decaying institutions in general. So this was not a very like risky position to go out on a limb, but it, it was an opportunity, I think, to, uh, help shake people awake and, and kind of catalyze people and, and, and get them riled up in the Ari

• 7:32Speaker 02

  Emanuel, never let a crisis go to waste camp, right? So, um, I, I do think that this is a crisis, um, for crypto. I don't think that it's going to shut the industry down. I don't think that it's something that's going to necessarily cripple us, but it's definitely a move in a very negative direction that we're going to need to work hard to, to overcome. So it is a crisis. And I think to the extent that people are finally starting to take political effort seriously and ongoing engagement down to DC seriously, that's important. Now, when I say engagement, that's a loaded word and a lot of my frustration, and I think the, the unique voice that, that I have in this particular issue is, um, I'm sick of the bullshit as is everybody else, but most people can't actually say that

• 8:14Speaker 02

  quiet part out loud because they're running regulated businesses within crypto. They're either running an exchange, a custodian, they, um, they have

• 8:23Speaker 02

  A token, they're investing other people's money, right? So there's a lot of things that I think are pretty unique about me just from where I sit in the industry. A, running an information business and B, not necessarily touching other people's money or processing crypto transactions. So you can be a little bit more vocal about some of this. The other thing that's important is this is a very bipartisan response right now. If you look back to the early crypto days, it's a lot of libertarians. It's a lot of like crypto anarchists and small government maximalists more than anything else.

• 9:03Speaker 02

  But more recently, crypto, Ethereum, all the new application builders, there are a lot of progressives or classical liberals, I guess, that have entered the frame more recently. And it's not that they don't care about progressive issues. They do, they just also happen to be very passionate about tech's ability to kind of advance humanity and be a part of the solution. Particularly when juxtaposed with government and some of these like legacy, like monolithic institutions. So I think both from like right and left, the thing that has changed in the last couple of weeks is people are really fired up.

• 9:45Speaker 02

  There's an opportunity to get engaged down in DC and force the issue.

• 9:52Speaker 02

  Because this is going to be very politically expensive for representatives on both sides if they end up on the wrong side. And I think the big, unique tone or niche that I think I tapped into is the fact that engagement no longer needs to just mean education, advocacy, kissing ass, essentially. There is, I think, an opening to play a little bit of offense now. And I think everybody right now is scrambling to figure out, how do we do this productively? Because yes, most of this is still. A, uh, an education problem. And the, the episode that you guys just did with Jake was

• 10:33Speaker 02

  perfect, right? Like, I, I agree with him. Like, anything that can be ascribed to incompetence versus, you know, malice, you know, generally, it's, it's incompetence. And it's historically just been that they're not paying attention and they don't understand how this tech works. But I don't think that's, um, I don't think that's really an option any longer, um, for elected representatives to not pay attention because crypto is the fastest growing sector of American tech. It gets important for us from the geo, geopolitical perspective, particularly when we compare ourselves to China and our future competitiveness. And it's basically the only technology that is doing anything to preserve civil liberties in, in this country and, and defend against the overreach of the ubiquitous surveillance

• 11:13Speaker 02

  state. You look at Apple's announcement, um, from last week that was buried, or a couple of weeks ago, that was buried on a Friday, that they're, they're essentially going to incorporate backdoors into their products. Um, you think about basically what Treasury's trying to do with this bill and making sure that all of DeFi is surveilled. And, you know, at, at some point, we need to push back against the legalization of, of all private transactions and play a little bit of offense. Um, and I think riling up the base, um, organizing it more of a grassroots level. And, uh, and yes, ultimately primaring and unseating, um, elected representatives that are openly hostile versus just ignoring about crypto is, is going to be a good strategy. The difference between this year and years

• 11:56Speaker 02

  past is we have a lot of money to actually put this into action. Um, and I think it has to be done now because, um, the market has been going up. And if you're going to play offense, play offense in a bull market, um, when there's as much distress as there currently is in, in institutions, um, don't do it after a 50, 60, 70% drawdown, when they can just slap us around on consumer protection, on fraud, on everything under the sun, um, that you know is coming the next time the market takes a dip.

• 12:26Ryan Sean Adams?

  I love your voice in this space. And for the listeners, I think we're going to divide this conversation like two parts. The first is we got to talk about regulatory nation-state versus crypto. And the second part is I want to hear an update on your opinions on ETH as an asset, Ryan. But like, let's stay with this theme of playing offense crypto versus nation-state. This is for Bankless listeners, this is kind of a taste of the fire that Ryan's been spinning lately on crypto. And I think this really resonated. There's a lot of likes on this tweet. But it's basically the message, "I'm sick of feeling like we have to apologize for all our early-stage and walk on eggshells around politicians and regulators." This is Ryan tweeting this out. "We built a $2 trillion financial market

• 13:07Ryan Sean Adams?

  from scratch in less than a decade with absolutely no institutional help and active encumbrances from government. Meanwhile, the banks give you 0.025% interest on your deposits and front-run your trades legally, and DC grifters overspend and debase your tax dollars while they insider-trade stocks with impunity." And this really captured, I think, a lot of the ZEEK guys in crypto, and that's kind of that playing offense. As you said, it feels very much, Ryan, like the politicians are kind of like newly experiencing this force and not sure on what side they're going to fall on, right? So like, it's a bipartisan thing. It's not left versus right, like almost everything else in our political

• 13:50Ryan Sean Adams?

  discourse these days. And the politicians haven't yet decided, are they going to be crypto-friendly? Like, what's the cohort? What's the coalition around crypto that's going to support this? Or are they going to be anti-crypto? And what's the coalition that's going to support that? It feels to me like it's all squishy, and they haven't figured it out. But can we talk a bit about like, I'm curious, it seems in DC that there is a certain contingent, we asked Jake this question as well, but like, that is against crypto. And I want to know why. Like, why do they hate us?

• 14:25Speaker 02

  Well, because they can't control it. Or they can't control it in a way that they would like to, which is fully, I guess, for lack of a better term. And, you know, for, for many decades now, we've had a two-party system that is really just one big government party with different policy goals. Libertarians lose elections because they always say, "Vote for me, I'll do less work." And it's probably what we need, but it's not a very good message because people want to know, "I'm going to vote for someone powerful, they're going to advance my agenda, they're going to advance my interests, "I'm going to get this, this, and this from, from this political leader." And really what we need is, is just, you know, a greater degree of decentralization.

• 15:07Speaker 02

  And I think that's where crypto has been pretty powerful. If you think about crypto basically being like an opt-out political movement in many respects. It's a way to play that thesis proactively. And what I've compared it to, you know, you think about like gold bugs versus people who are building in crypto. Gold bugs are waiting for the end of the world, living in a cabin in the woods and digging holes in the ground and putting shiny metal like back in from whence it came. Folks in crypto might have the exact same thesis as those gold bugs, but instead of being in a cabin in woods, digging a hole in the ground and putting a shiny rock, waiting to ride out the apocalypse, they're actually in the front lines building things.

• 15:51Speaker 02

  Every day, and every single day, a new problem is created in crypto because of the unintended consequences of what has been built so far. And, and almost always, someone immediately recognizes the problem and starts a business to solve that problem. We've seen this for a decade now. Every single major problem that crypto has unleashed onto the worlds, the horror, has ultimately yielded like a billion-dollar business. You look at Chainalysis, it's a $5 billion business right now. They, they have, have done data forensics to help regulators and law enforcement worldwide actually track money launderers. You look at Taxbit, just a few-year-old business. The narrative is that...

• 16:37Speaker 02

  Crypto is full of tax evaders and people that don't want to pay their taxes. And this is just a way to kind of cheat the government and your fellow citizens. Tax bid is a $1.3 billion business. Did they get there because people are evading their taxes? Or they're trying desperately to pay them in a manner that doesn't take a week and a half to understand how to comply with impossible tax policy in the US or abroad? I'm sorry. We were created to basically be a first principles Edgar repository for disclosures and other project information, solve the investment fraud issue. I can tell you right now, some of my investors have relationships with Ripple. One of the first things that I did when we started the company was write a multi-month screed

• 17:18Speaker 02

  against Ripple and how horrible their investment practices, their took and selling practices were for their investors and how shady the marketing was around it. So there are folks in this ecosystem that want to see it survive, advance and ultimately become more anti-fragile and get built out in a way that is going to be a force for good in the world versus just sitting on the sideline saying, everything is going to ship, everything is broken, there's no way to fix it. I'm going to buy gold, wait for the dollar to get debased and then come out of my cocoon or my hiding after a decade when the dust has settled.

• 17:58Speaker 02

  And I think that's pretty powerful because it's techno progressives and it's classical liberals and it's like all the libertarians molded into one, but playing offense instead of just defense and basically saying, you know what, we're all screwed.

• 18:13Ryan Sean Adams?

  I feel like that's particularly true in DeFi, this whole idea of like, we're building a new, better financial system. That's the goal, more transparent, more open, right? It's like, I'm curious what you think about this. It seems like everybody in Washington all the time is trying to protect us from crypto. It's like this protection atmosphere.

• 18:30Speaker 02

  Well, you know what it is? It's just a massive projection, right?

• 18:34Ryan Sean Adams?

  Yeah.

• 18:34Speaker 02

  This is what they, this is what they do. They're corrupt.

• 18:36Ryan Sean Adams?

  Is it code?

• 18:37Speaker 02

  They're corrupted.

• 18:38Ryan Sean Adams?

  For like control? They want to control us? Is that what protection means?

• 18:42Speaker 02

  All of their concerns just project their own corruption. Right, they're worried about grift, whereas the revolving door in DC is just from a seat in influence in DC to a lobbying seat or in-house at a big corporation and then back again. You know, Janet Yellen made $7.2 million last year during COVID when she was giving speeches to financial services companies via Zoom. $7.2 million, her time's not that valuable, I refuse to believe that, unless she was ultimately going to become the new Treasury Secretary, which of course happened. So that's money well spent, but that's just part of the grift.

• 19:26Speaker 02

  And this happens at all levels of DC. People know that it happens. It's just assumed that this is kind of the way that business is done in DC and there's no real way to stop it. So if you think about the ethos of DC and the people that are working there and what the revolving door looks like and how people actually make their money, then of course they're projecting all the worst things onto tech, onto crypto finance and all the entrepreneurs that are working, because this is how they would be operating if they're in the private sector. It's just in their DNA. So let's call that out.

• 20:03Ryan Sean Adams?

  Okay, so it's in their DNA, but let me ask you this question, because this is actually further in the agenda we wanted to get to, but let's get to it now. You also tweeted out recently about crypto, that we need to spend money, lots of it, like crypto should also be playing this game, is what you're saying. And we should also, I don't know, maybe pay for Janet Yellen to come speak to us? I don't know. Are you basically advocating that crypto play the same game that everybody else plays in DC and have a stake at the table? Is that something that's important to crypto? And is there a moral issue with that?

• 20:39Speaker 02

  I hate it, but I think you have to fight fire with fire. And I think people are slowly starting to wake up to that. And here's the issue. Crypto can be shut down. China just proved that it can be.

• 20:56Speaker 02

  Do I think the US moves that quickly? Do I think it's as dire, the political situation and kind of surveillance state in the US as China? No. But it's certainly not where it was 10 years ago, 20 years ago, 30 years ago, certainly a couple hundred years ago when the country was formed. So we are moving in that direction. And I think the reality is, there's a lot of damage that regulators and policymakers can do to crypto via tax policy and by overextending the Patriot Act and all the associated provisions related to national security that they'll kind of throw at us.

• 21:40Speaker 02

  And we saw a sample of this with the Treasury's report on privacy tokens late last year. And if you remember, December, January, when Steve Mnuchin, on his way out of office, was essentially trying to sneak in some of these last-minute provisions that would make it very difficult to support any privacy tokens. This was a big part of what they had in mind. So anything that they can't control, I think, is scary to them. And so if you ultimately want to get elective representatives in office that understand why this is important, not just from a constitutional theory standpoint, but from an electoral standpoint

• 22:24Speaker 02

  and from the perspective of their constituents, then that's going to take active engagement beyond just yelling at people on Twitter. You're going to have to host fundraisers for politicians that are going to be on the right side of the issue, that have this as part of their platform, that are going to be going up in primaries against their 70, 80-year-old counterparts that have been in office since before the internet was created. So I think...

• 22:51Speaker 02

  There's no way around that because the alternative is pretty bleak. Everybody likes to talk a big game that we can just like route around the governments and this is permissionless and so even if it is shut down, we're still going to be able to operate these systems. That's all true, but it's just gonna, it will cover to cover be a black market and there's a sizable contingent of the world that is not going to play ball. Like Americans and Europeans are not going to transact in systems that are deemed illegal by their authorities because those are still relatively functioning, well-functioning societies that have otherwise robust financial services. And so you're not talking about

• 23:36Speaker 02

  situations like Argentina and Venezuela and Sub-Saharan Africa and high inflation countries in Southeast Asia. People will generally fall and there'll be some contingent that will not and they'll opt out, but it doesn't change the fact that it will be illegal or it will be extremely expensive or cumbersome from the user perspective to actually participate in these systems. So, you know, the folks that, you know, that are the loudest and have this battle cry on Twitter that like, we need to play a different game or we need to opt out. The problem with that is there's no new land in the world. There's no place that you can escape to. There's no free world to settle like we had when America was settled

• 24:21Speaker 02

  and the country was founded. You can't even escape to the metaverse, right? Like they will literally tax, this is what we're talking about. They'll tax and surveil everything that you're doing in the metaverse even. And I know that you were being completely facetious, David. This is more proof that I listen to you guys versus just kind of come on every once in a while to harass you. But like, one of you made the comment in the Jake episode about like, the IRS literally wants to know when your axes are mating. And it's not that far from the truth. Like any activity that you have in the metaverse, they're still going to be, they're still going to look at like, where was your phone locked in?

• 24:58Speaker 02

  To to establish a tax nexus, which is insane. And and so if there's no place to escape to physically, and you're not allowed to do virtual commerce even even if it's completely unplugged and and kind of disassociated from the rest of the economy, then you have no other choice but the kind of fight on their home turf. And I think you can do so intelligently. So, you know, I'm not I'm not advocating for like January sixth insurrection. Like, that's that's the the worst type of, you know, undisciplined, theatrical, dangerous type of of revolt. And ultimately, it's completely counterproductive. And it's it's extreme. Everybody knows that.

• 25:41Speaker 02

  I'm I'm not even advocating for like online harassment or, you know, vitriol, it's, you know, directed or, you know, female, you know, senators or congressmen getting misogynistic tweets and threats and and, you know, all the garbage that you see.

• 25:58Speaker 02

  What what I'm suggesting and advocating for, and then I think a lot of people agree with, even if there's not as forceful about it, because it can't be, is, you know, we have to start grading these folks on a one to five system. And the fives that are allies get a tremendous amount of support, an eye opening amount of support through social channels, through grassroots campaign efforts, through political donations, through super PAC contributions. The ones have the exact opposite in terms of how well funded their enemies are and their political rivals. And then the two through fours is where you can continue to focus on the education and advocacy. But the the education and advocacy work for the two through fours will be infinitely easier if they see what's happening to the ones and fives.

• 26:44Speaker 02

  Because on the fives, you've got a big carrot. And on the ones, you've got a big stick. And if we can unseat some folks like Brad Sherman that are in the one camp as established as he is and threaten folks like that, or even make their lives very difficult during the midterms, it's going to pay, I think, extremely lucrative long-term dividends. That's to say, nothing of the broader impact that we can have just through social channels, because crypto is very, very vocal. And I think the challenger is slightly different, but it's, how do you contain some of that enthusiasm or kind of channel it proactively so we don't look like a bunch of nut jobs, which may never be solved.

• 27:29David Hoffman?

  Ryan, I would think we definitely need to unpack this, because I think this is a fascinating point of the conversation that we should really spearhead here. I was going to ask you, now that we have this regulatory drama of the last two weeks in our rearview mirror, what have we unlocked? But I think you've already answered that question in bits and pieces in the last 10 minutes or so. I think where this is going and what you're talking about when we're talking about reviewing our regulators on the merits of whether they support our industry or not, I think really what has happened in the last two weeks for this industry is everyone has taken a moment to reflect on what crypto

• 28:11David Hoffman?

  really means to them, and asked themselves the question, am I a single-issue voter when it comes to politics and crypto? And I think we all know that crypto has so much tribalism and a desire to defend our home turf, and so much energy, and as we all know, so much capital behind it, that perhaps the measure of a single-issue voter body of the crypto world might actually be one of the most significant cohorts of a voting body that we've seen arise out of any part of the political sphere that we've seen in America in the last, I don't know, since the NRA.

• 28:56David Hoffman?

  How do you think that the, let's go into details on to how you think the crypto voting body can galvanize itself and direct itself to get what it wants in Washington DC? What are the next steps now that we have identified that we are here in this moment of time? How do we actually adequately capture this energy and direct it to get what we want done in DC?

• 29:22Speaker 02

  Well, I'll answer that question in terms of like, what are the methods and how can we actually make some forward progress there? But first, you know, it's important note, I intentionally use the NRA as like a call to action, just because it's a good X for Y comparison and it's provocative. So it kind of hits all the Twitter checkboxes. But there couldn't be anything that's further from the truth in terms of the fundamental issue that I think crypto, single issue voters have with the government right now. You know, the NRA, you know, guns are used in school shootings and mass shootings and gun violence

• 30:01Speaker 02

  is a real problem in the country. You know, other, I won't kind of name drop other organizations, but but most of the other organizations where you have single issue voters, the issues that they're talking about are extremely contentious. There's often like an element of violence or like national security implications that kind of rile people up. And in crypto, the issue is there's no opposition. Like there are very few intelligent opposition leaders to crypto. It's basically proponents and then people that don't understand it. That's an extremely powerful position to be in because like I said, it's not just

• 30:41Speaker 02

  about like right wing libertarian or progressive voters that are working in the industry right now and that actually care about building this tech and preserving its ability to get developed.

• 30:56Speaker 02

  In a way where you can still regulate the centralized organizations that are, you know, building broker services. And so I think that is just a major difference between some of the other lightning rod, individual member-led organizations, the card-carrying member organizations for other lobbying groups. Now, how do you actually win that? I think there's probably about a dozen people collectively, working in DC right now at the major think tanks and trade associations that everybody knows about crypto. Twenty tops. Working on defending

• 31:37Speaker 02

  this entire ecosystem. And that, I think, has worked in the past because we haven't really been on the radar. This is one of the first times that crypto has been a major part of the conversation, any legislation that's been passed. Most of the conversations to date have been regulatory in nature, right? How's the IRS going to treat this for tax purposes? What's the SEC say about, you know, whether this is a, whether these tokens are securities, or what's going to happen to Bitcoin ETF? What does Treasury, you know, think about the AML KYC requirements for crypto brokers, things like that? How is FinCEN

• 32:18Speaker 02

  thinking about this from a kind of monitoring standpoint? The only bills that have been, I think, even tangentially tied to crypto haven't really gone anywhere. And so this, you know, last-minute provision, it was only included because the politicians thought there was some type of money that they could extract from the industry, right? Again, follow the money and you'll see where their real interests lie. And so I think now that it's on the radar. The, the big thing that's changed is, is they've, we've, we've kind of had Pandora's box opened on us where they looked at the $28 billion score from the CBO and their

• 33:01Speaker 02

  estimate as to what tax receipts could be with tighter enforcements and tighter surveillance of, of DeFi in particular. And now it's, that's something that can't be undone, nor can the kind of battle that ensued over this because now they know that actually this is a much bigger deal to our constituents and, and this is a pretty, you know, fiery community that we didn't really know existed before. But the actual people in DC that are funded, do this on a full-time basis, that, you know, there, there's, there's probably about 20. So the first thing that, that needs to happen is, um, we need to make sure that, that coins and blockchain association, some of the other, um, groups that are, are popping up have the funding that they need. Um, and we have the right lobbyist infrastructure

• 33:44Speaker 02

  in place, um, to do the combination of like education advocacy work. Um, and then, you know, just generally, uh, have a better coordinated PR campaign. That could be, you know, funding, endowing chairs at, uh, at, at think tanks so that the, you know, the research from the independent heritage foundation or, um, Hutchins or, you know, Brookings, wherever, um, that all of these folks in DC actually rely on to support their, their policy, um, positions. Um, there's a lot that we can kind of do there and, and coordinate from a, a policy support standpoint. And then most importantly, which is what I've been talking about is just, um, getting more involved in electoral politics and, and having this

• 34:25Speaker 02

  grassroots effort where you have, um, hundreds of thousands of, of dues paying members to a, an individual member, uh, dominant organization, um, where you can actually mobilize people in local elections, local campaigns, you know, going to town hall meetings, all the blocking and tackling that I think people don't really appreciate until, um, until you see how much politicians care about not having pains in their ass.

• 34:55Speaker 02

  Just harassing them at all times and it's one of those situations where the squeaky wheel gets the oil and so a combination of money, boots on the ground and just potential bad publicity, I think is probably enough to get our ultimate policy goal, which is not, "Don't tax us, give us favorable treatment, do this, that, the other thing." It's, "Don't regulate things that you don't understand." And don't penalize crypto unnecessarily, particularly versus traditional financial services companies that we're talking about or other tech giants that would be subject to the same regulation.

• 35:34Ryan Sean Adams?

  I can definitely say I would be a card-carrying member of the self-sovereign crypto lobby group. And maybe they could issue that as an NFC, that would be a bit more conducive to the way I carry things these days. But one thing that gave me hope, you kind of started this episode, and I completely agree. You use this term "state surveillance," right? It feels like there is an all-out assault on our digital privacy and freedoms. It's not just crypto, it spans beyond crypto, right? So like, the newest thing with Apple, releasing a software update to give them the ability to basically scan all of your local photos on any Apple device, right? How dystopian is that? And what's weird about

• 36:17Ryan Sean Adams?

  this, Ryan, is like, there is nobody in our government who is pushing back against these things, right? Maybe they're not incented to push back, maybe they don't care. But what's given me some hope, actually, recently, is crypto has the, and I think we've seen this over the last two weeks, has the coordination ability and the capital and just the raw community fervor to push for self-sovereignty. And maybe we launch this thing, and it's primarily about crypto, cryptocurrency, but then maybe it expands and we capitalize other areas we care about. Because like, look, if I have the right to own cryptocurrency, but Apple has the ability to like-

• 36:58Ryan Sean Adams?

  Scan my device or whatever it wants. Like, I don't want to live in that world either. And this is why I've kind of come, I don't know, I used to be less enthusiastic about engaging, you know, on the lobby level and in DC and like, you know, as, as the traditional organizations have. But I think we need to for those, for these issues because nobody, if, if crypto doesn't, if the crypto industry doesn't, who's going to, right? Like, big tech isn't going to come to the defense of, of privacy and self sovereignty. They don't care, right? So like, it's gotta be us at some level. And maybe we start with crypto and expand from there. That is a hopeful future. What are your thoughts on that?

• 37:38Speaker 02

  Um, yeah, I think that there's multiple ways to do this. Um, but, you know, generally speaking, I think we have the resources right now. Let's win the battle that's right in front of us. And then, um, we can start talking about how we play with other organizations because I, I ultimately think this is a team sport. And ideally, you know, we've already seen allies at the, you know, EFF, at Fight for the Future, at, um, a number of other organizations. And I think, generally,

• 38:19Speaker 02

  there, there's often a lot of overlap that can be done in terms of research, in terms of active work and, and, you know, I think across the board.

• 38:28Speaker 02

  It's a, it, it's a starting point to just kind of focus on cleaning our own house and then, uh, ultimately being in a position where we can, uh, cross pollinate for many other important issues across the board. So I, I, I, I see what you're saying. And I think that there's, this is like a wedge. And that's why I think about it as like a political movement in and of itself, because, um, there's so much that I think is embedded in, in, in crypto values more broadly, that, um, we haven't really defined as a community because we're, we've generally been so focused on like all the differences between the communities versus, you know, our, um, uh, the, the kind of

• 39:12Speaker 02

  common interests that have been shared historically. And, and that's by design, right? Like it's a decentralized community. It's not a company that can just kind of lay out its, all its core values. I'll tell you, like, just for me personally, it's, um, it's, it's almost been like a little bit liberating because we went, we went through this period with Trump in office where you could not talk about politics at all. Like, in, in, like, any, uh, in any context, because the, the tenor, uh, was just so, um, over the top charged. And I think, um, you know, before that, it, it wasn't entirely different, but, you know, before that, in, in like the twenty,

• 39:53Speaker 02

  two thousand nine to, you know, twenty fifteen environments, um, there was, there was a lot of political discussion within crypto because this, this movement had political roots and it was, it was, you know, kind of anti-government, I guess, anti-big government, and certainly, um, to start. And then, you know, Trump took office and it's like, you, you, you can't actually talk about anything political because you're like three steps away from, from either being referred to as a communist or a Nazi. And then, so like, nothing good comes of it. Um, and then, you know, again, two weeks ago, when we saw the bipartisan effort,

• 40:32Speaker 02

  and you, you see everyone from like Ted Cruz on the one hand, to a twenty-one-year-old brown progressive writing an open letter to Elizabeth Warren, like, on literally the same side of the issue. I, I have trouble thinking of like a starker contrast than those two people.

• 40:51Speaker 02

  Articulating the same argument for like why it's important to support crypto long-term. You know, um, and it, it's kind of like smashed the Overton window to a certain extent for, I think, a lot of people that have maybe fallen into the camp of, uh, what I would think of as like radical centrism, um, or like, you know, just like blinders on, let's focus on building and, and not focus on every single debate that has, that is basically just like dominated today by the two, like, five percent extremes of the bell curve, with everybody in the middle just getting shut out because, you know, they don't want to talk about it or, or they don't want to incur the wrath of, of being on the wrong side of an issue.

• 41:32Speaker 02

  And I think this, the conversations that I've seen and like the general agreement, importantly with, with, yeah, I think many of the people in, in crypto on certain kind of core values has been, it's been illuminating and I think it's also been empowering for people to, that kind of feel strongly about the why, like we're in this industry aside for just the memes and the money, which, you know, is, is a nice byproduct. I think that's been a good rally point and, and, you know, people have been comfortable getting a little bit more politically engaged.

• 42:05David Hoffman?

  Hey guys, coming up next on the show, I ask Ryan about his opinion about whether or not we can convince regulators to actually align with DeFi, align with Ethereum, align with crypto as an attempt to, you know, increase the brand, the strength, the value of the US dollar. As we all know, United States nation wants a strong dollar and as we all know, dollars are a very important part of the DeFi economy and therefore perhaps the global economy of the future. How can we convince regulators to see this truth and to leverage this fact in the face of the Chinese CBDC? That's what I ask Ryan next. And then after that, we actually turn the conversation towards Ether as an asset

• 42:45David Hoffman?

  and his opinions about the institutionalization of Ether and putting Ether on the balance sheets for larger and larger financial institutions and also his own opinions and his own perspective as to where Ether fits in his own personal portfolio. And teaser, Ryan has actually become overweight Ether in relation to the last time we had him on the show roughly nine months ago. So we go into all those details and more. But first, before we get there, we have to take a moment to talk about some of these fantastic sponsors that make this show possible. When you shop for plane tickets, you probably use Kayak, Expedia or Google to compare ticket prices. So why would you limit yourself to just one exchange when you trade crypto? When you make your trades, you want to make sure that you're getting the best possible

• 43:29David Hoffman?

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• 44:09David Hoffman?

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• 44:52David Hoffman?

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• 45:38David Hoffman?

  Ryan, one possible future I see ahead of us is that we actually have an opportunity to convince regulators that aligning with the crypto industry is in their best interest. Using the stablecoin side of DeFi is a way to export the US dollar and the value of the US dollar and dollar demand globally. And it also, if we can get regulator support behind this, it can be a huge offensive weapon against the Chinese CBDC, which I think if you're paying attention to it, is a, we all, people who do pay attention to it generally agree that it's a massive threat to dollar dominance.

• 46:20David Hoffman?

  Meanwhile, we have US regulators having these banking panels or seminars asking what is crypto even useful for? Just really broadcasting their complete naivety about what is so cool about this industry. So there's a future world where we can actually convince US regulators that instead of being overbearing and over regulating this industry, that we can actually get them to use this industry as a weapon against the Chinese CBDC. Are you optimistic that we can actually make this happen? And if we can make this happen, do you have any thoughts about the right path to get there?

• 47:01Speaker 02

  Well, I think that argument, it works because it's truthful, right? If you just look at how quickly the US can move at a kind of centralized government level on certain issues, it's just, it's not very fast by any stretch of the imagination. And that's actually the one thing that's been like very positive for folks within crypto in the American and European scenes. If our governments were as functional as China is, I'm not saying that we want to live there, but if we were as functional as the CCP is and just making unilateral moves, then we could have a real problem if there was political opposition to what we're doing.

• 47:42Speaker 02

  But generally speaking, because we move slowly, things get funded slowly, innovation happens slowly. And so I, I think there's a credible argument to be made that the installed like tech base that we have is really.

• 48:02Speaker 02

  Going to have to be built by private companies and that are facilitating transactions in these open protocols because a like Fedcoin is just not like can you just imagine how inferior like Fedcoin as a product would be if it was rolled out by the big banks. It's just like

• 48:25David Hoffman?

  It would definitely suck.

• 48:26Speaker 02

  It's laughable, right? Like you're just not going to have anything near what what we see in crypto. And maybe the government would argue that's for the good of and for the protection of consumers. But I think, you know, by and large, it's the I buy that argument. I think we should make that argument that the government should be working proactively with crypto companies and supporting them. And yes, regulating the centralized businesses that are working on this infrastructure because it is arguably the best way to preserve the dollar's strength over time.

• 49:07David Hoffman?

  So say we do go down this path in an attempt to get regulators who really, really don't like crypto to be more okay with crypto in an attempt to use crypto to be offensive against the Chinese CBDC or other just like or just the dollar, protecting the brand of the dollar. I'm going to go ahead and guess that if we if this reality plays out, the crypto industry is going to have to give some concessions. We're going to have to make some compromises with the way that this industry works. The first thing my mind goes to is perhaps something like Tether. But even USDC has a very non KYC element to it that is probably concerning to a lot of US regulators. Those are the first two concessions that I come to my mind is probably more regulation around

• 49:51David Hoffman?

  stable coins. But what olive branches can we give to regulators that doesn't just hamstring what makes DeFi and crypto so cool? Do you have any thoughts on that?

• 50:04Speaker 02

  Well, I, I think most of the-

• 50:07David Hoffman?

  Or what are they really going to ask for, probably no matter what?

• 50:11Speaker 02

  Uh, I, I think the, the hard line in the sand needs to be that developers and, and code needs to be protected. Um, and, uh, the ability for someone to, uh, actually receive customer information needs to be taken into consideration as to whether, um, certain regulations should be, um, put on, uh, any, any contributor to an open network, right? So this is basically like the staking and kind of validator issue on the one hand, and then, um, just the contributors

• 50:45Speaker 02

  of code on the other. So, you know, I, um, I think that we, um, we have to be realistic, and I think the industry is realistic about centralized companies, centralized exchanges in particular, uh, being very proactive about working with regulators. I think we should expect that there's going to be, you know, continued oversight and tax reporting requirements and, um, in general, like customer, um, information sharing requirements with the coinbases of the world, the Gemini's. And to be honest, I don't even know that any of those organizations are like pushing back on that. Um, I think the, uh, the big, um,

• 51:28Speaker 02

  sticking point, um, might be around private transactions. Um, and, and we already kind of saw hints of that six, you know, six, nine months ago. Um, and, uh, aside from the private transactions is going to be DeFi, which is, you know, just, there's a lot of capital gains that are arguably being generated in decentralized exchanges that there's, there's no oversight, um, over and there's no kind of clear tax reporting policy. Having said that- The data forensics companies exist to get that information. So, you know, again, you're coming into this situation where if you are the IRS, you can make very clear guidance

• 52:13Speaker 02

  that transactions of such and such a nature on decentralized exchanges are taxable events, and you need to, you know, if you are attempting to launder money or evade taxes by parking your money in DeFi, that's a really bad way to operate. And ultimately, you know, you're going to get caught because there's a digital paper trail and it's a terrible way to actually execute a scheme like that. So I think, I don't think that our expectations or what we're arguing for is unreasonable by any stretch of the imagination. And that's what

• 52:55Speaker 02

  makes me so confident that a grassroots effort like this could actually work out very effectively because we're on the right side of this. And I think the arguments that we have at our side makes sense. And no one is really pushed back against them, other than the very ill-informed takes of, well, if the software can exist, then it's probably not good for society and we should shut it down or try to move it offshore. We've only heard a few people really say that.

• 53:26Ryan Sean Adams?

  Yeah, I agree with this. Like, so like, I think there are enough wins for regulators and legislators in the US government here in crypto for them to get actually excited about it. It's like, if they're not going to compete with China's central bank digital currency by rolling their own, which they can't, we just talked about that. There's like, I don't think there's an appetite to do that. What is their strategy? Well, like, it's got to be crypto. Export US dollars on crypto rails, right? Like Ethereum. What I do worry about there, Ryan, is that Maybe just in Congress, and maybe this is a symptom of like where the US government is

• 54:06Ryan Sean Adams?

  right now, it's just they're too like old and set in their ways to actually do it. You know, like they're just too content with the status quo. So we just roll around like roll on like the US is doing on a number of issues. Don't make any progress forward. We just settled the status quo and doing that is not a sustainable strategy for the US. So that, that, that is my worry, not that there's not enough wins here. It's just that they don't care. Maybe they don't care. But let's talk about something else that's sort of related because I know you're very plugged into the institutions and I'm curious what the reaction is from sort of the, the big money institutional world to all of this.

• 54:48Ryan Sean Adams?

  Did they freak out that crypto was like, it didn't reflect it in the, in the market price, which is interesting, but were they freaking out that crypto is like a, a potentially contentious issue in front of Congress and that this, you know, treasury is, is possibly against it? Is that a bad signal to them?

• 55:10Speaker 02

  You know, I, I think it's a wake up call. Again, I think the, um, the existing regulated businesses and brokers are going to continue to be regulated and, and they're going to continue to have big compliance teams and legal budgets and, and I, I think they'll be just fine. Right?

• 55:29Speaker 02

  So I, I don't think that there's, um, I wouldn't say that they're alarmed. I, I, I think it's, it's less about, it's less about being alarmed by like openly hostile actors within the government and more alarmed that this happened on such short notice. It was, um, you know, it, it was extremely fast. How it happened was very dysfunctional. And so now we're more or less at the mercy of those that are going to be writing the rules at the unelected regulatory body level. Right? So how much authority is treasury going to have to write rules? How much authority is the SEC going to have? How much, that is where authority is ultimately getting delegated.

• 56:16Speaker 02

  And that's definitely not a net positive. So I think a lot of what's being done right now with respect to, you know, kind of arguments in the House and trying to meter some of the native impacts of what we already saw pass in Senate, it's really just kind of laying the groundwork and setting the precedent for future court challenges. And, you know, maybe we can get lucky and there's improved language that comes out of the House and is ultimately incorporated into any final legislation that passes. But I think right now it's more of a long-term game. And I can

• 56:57Speaker 02

  tell you, if they're not alarmed, everybody is certainly very mobile right now at the institutional level. And that's, you know, DeFi, major investors, and then obviously the regulated groups themselves. Obviously, I won't name individual names, but I'd say it's pretty universal that people are fired up and taking this very seriously.

• 57:23David Hoffman?

  So as we all know, this is probably crypto's biggest regulatory event. It was that we couldn't stop talking about it for two weeks. We're still talking about it now. And as a community, generally, everyone kind of feels pretty emboldened after the fact, even though technically we kind of lost. And during the actual debates and the drama around different amendments, and everyone was getting scared about crypto being regulated to death, crypto asset prices like had a stellar performance, a weekly performance. Like Ether went from $2,300 up to $3,000. Bitcoin was below

• 58:03David Hoffman?

  40,000 and then zoomed up to 47,000. So in the face of crypto's biggest regulatory hurdle, asset prices like had a stellar week. What does this tell you? Does this tell you anything? What signal is this?

• 58:17Speaker 02

  People are distracted by Penguus.

• 58:21David Hoffman?

  Really? Do you generally think that the asset price movements were just uncorrelated to what the drama that was going on in DC?

• 58:29Speaker 02

  Honestly, I have no idea. I've a long time ago given up on trying to understand what moves crypto markets. But I guess the point is, this isn't like China. Like, when China actually like pushed the miners out, that was a major event. And it had some like fundamental impact on both Ethereum and Bitcoin. I would say long term, it was a massive net positive because it made proof of work cleaner and you kind of de-riff some of that geopolitical element.

• 59:03Speaker 02

  I think with what happened last week, for folks that are on the outside looking in, it doesn't necessarily look like the end of the world per se. Because it's like, oh, well, you know, the folks that passed the bill ultimately went on the floor and said, here's what we meant. And so here was our intention in the rule. Obviously, we didn't mean that developers would be captured. Obviously, we didn't mean that stakers would be captured. So there was already like a little bit of hedging and people, you know, kind of hear that and they're like, oh, okay. Well, this is probably just like lawyers dotting the i's and crossing the t's, right? And I just, I think that's

• 59:43Speaker 02

  I, this is going to play out over the course of years, right? Like even in the, in the worst, worst case scenarios, some of the rules that we're talking about and some of the policy that's going to be implemented. We're talking about like 2023, right? Like, you know, certainly into like 2022, deep into 2022. So we're still quite a ways away from that. And so I think there's plenty of time to prepare. There's going to be plenty of like, you know, court challenges and, you know, a lot of procedural issues. And this is really just kind of like the first inning in terms of how this ultimately plays out. But

• 1:00:23Speaker 02

  It's not something that would necessarily move the markets one way or the other on a day-to-day basis.

• 1:00:30Ryan Sean Adams?

  It's funny, sometimes I wonder in crypto whether we just like create explanations based on price. Or like, just like if the market had have fallen out during those two weeks for other reasons unrelated, it definitely, we definitely would have pinned it, the crypto industry, on, you know, regulation. It's always hard. I sort of agree with you that like the short-term noise in the market, it's so difficult to discern whether it's like signal or noise, or whether it's based on current events or not. Definitely have to think about this over the long run. This kind of brings us to the, to the second topic here, Ryan, that we wanted to get you on for. And this is the topic of Ether, Ether as an asset.

• 1:01:10Ryan Sean Adams?

  So, Bankless listeners, longtime Bankless listeners, may know, we had a debate last year, David was kind enough to host, about ETH as a store of value compared to Bitcoin, right? I'm not going to use the term money, let's not get hung up on the term money. But it was basically a debate as to whether Ether would accrue monetary premium, perhaps surpassing the monetary premium of Bitcoin. And your take was like, hey, no, ETH is not a good monetary reserve asset. My take was, yes, it was. And then we had this conversation with like a number of different, different trails on it. But I'm curious, so it's been, I don't know, close to nine months or so since we last talked about this in December.

• 1:01:54Ryan Sean Adams?

  Has your opinion on ETH changed since we last spoke? And if so, in what ways?

• 1:02:04Speaker 02

  I think the world has changed. So, I ultimately think

• 1:02:11Speaker 02

  your thesis was right for maybe reasons I disagree with. I don't want to say for the wrong reasons, but, but, but I think that the thesis, like there's been new information over the course of the last six months that I think is pretty important.

• 1:02:27Speaker 02

  The, the first kind of major item for me is we've actually de-risked the move to ETH two pretty, pretty significantly, right? When we last talked, it was, it was, it was kind of very earliest phases of it. Everybody was celebrating, oh, look at all the ETH that was locked in the staking contracts for the beacon chain.

• 1:02:48Speaker 02

  1559, I think was a big milestone.

• 1:02:53Speaker 02

  I also just think the continued evolution and like health of DeFi and all the other markets that continue to predominantly, you know, ride the Ethereum rails, the just explosive continued growth in stablecoin adoption and usage and lending markets and basically every conceivable metric for decentralized finance. And then importantly, the fact that we still haven't seen a ton of value leakage from Ethereum to other smart contracts, platforms and chains, right? We're starting to see like interoperability with layer ones, we're starting to see layer one versus layer two, you know, value flows, and that'll play out over time.

• 1:03:34Speaker 02

  But for the, for the most part, you know, Ethereum is like the base layer is, is, you know, continue to show that it's resilient and, and primarily responsible for lion's share of crypto transactions writ large. So, you know, one, one thing that you, I would, I would like to see more of, and we'll likely have some product coming out here, is, um, I think we've gotten so used to like market cap dominance, um, we just need to have like all of the other like dominance metrics top of mind, and, and whether it's like transaction volume, you know, lending capacity, AUM for, for whatever applications Ethereum has continued to move up and to the right, you know, aggressively.

• 1:04:16Speaker 02

  So where I, where I disagree with you, uh, in like the whole like Bitcoin to Ethereum debate, is, you know, I actually had the epiphany from Arthur Hayes at BitMEX. I think the way that he articulated it, um, kind of clicked everything into place for me, because it was something that I kind of felt, but didn't really have a, a good kind of verbalization of. And he made the point that if you look at like M0 versus the market cap of like big tech. They're about $6 trillion each. Is Ethereum going to be money? Or is it going to be the equity in the decentralized financial system? And this is not at all at odds with what I've been saying for years.

• 1:05:01Speaker 02

  In fact, I don't know if you guys were there, but like Ethereal, two years ago, 2019, I was on stage and everyone was talking about, you know, I don't know, whatever like the hot topic of the moment was in like Web 3 or decentralization, the internet, whatever. And I was on stage and basically said to a room full of Ethereum world computer maximalists that like if Ethereum was just the settlement layer for DeFi, that's literally all that it needs to be. And that's kind of where we are now. It's not to say that that's the only thing that's happening on Ethereum, of course. But the fact that Ethereum is a platform is generating real fees for like financial

• 1:05:45Speaker 02

  internet. That is a massive multi-trillion dollar opportunity itself. That does not necessarily make it a better money or a better shelling point for people that are thinking about just the value settlement use case that Bitcoin has kind of built a narrative around. I also just think that the most entertaining outcome would be a 50/50 split between like the money winner and the financial internet winner. So that Ethereum maximalists like yourselves and then Bitcoin maximalists, on the other hand, can just argue in perpetuity over the flippanting and like the re-flippanting and

• 1:06:26Speaker 02

  the un-flippanting and like, and we basically just kind of run in circles forever because everybody's talking past each other about like, okay, how are people actually valuing these two very different but important things? I will say from a fundamental standpoint, the other thing that has definitely worked in Ethereum's favor that I underappreciated late last year was how rapidly like the ESG narrative was shift. And you know, from my perspective, we, like the Black Rocks of the world.

• 1:07:04Speaker 02

  Starting to get more active on on climate policy and and and the potential risks that that could create for Bitcoin as a holding of, you know, not only individual investors, but potentially a treasury holding for other companies is a pretty meaningful development that we saw in Q2. And I think that had a real impact. And I think they're staying power to that negative narrative for Bitcoin, potentially. Having said that, that's not something that Ethereum solved yet either. It's on its way to, but until it's solved, it's not actually solved. So I think, you know, there's certainly a bunch of things

• 1:07:41Speaker 02

  that have changed. But my my core thesis for a long time has been, both are valuable. Bitcoin is more valuable. I'm probably slightly overweight Ethereum at this point because of that new information. I still don't think it's money. I still don't think it's money. But I think the risk reward for for both, if you put a gun to my head, I'd probably pick Ethereum right now.

• 1:08:07Ryan Sean Adams?

  Wow. Overweight Ether. That is a change, definitely.

• 1:08:12David Hoffman?

  When you say overweight Ether, Ryan, is that overweight versus Bitcoin? As in, you have more Ether than Bitcoin?

• 1:08:21Speaker 02

  No, I'm not stupid.

• 1:08:25David Hoffman?

  Wow. There the slaps are coming in.

• 1:08:29Ryan Sean Adams?

  Well, let me ask.

• 1:08:30Speaker 02

  I am from from a, yeah, I am overweight from like a portfolio standpoint.

• 1:08:36Ryan Sean Adams?

  Okay, got it.

• 1:08:36Speaker 02

  Versus versus where they said from a market valuation standpoint.

• 1:08:40Ryan Sean Adams?

  So I'm curious, like, so I know the term money can be distracting for people. So let's not use this, whether it's money, whether it's a reserve asset, whether it's kind of equity in this GDP that is Ethereum, whatever it is, right? Ultimately, like, asset price go up if it's successful, if this thesis is successful, is kind of what I think. The last time we talked, asked you about the flipping, or you brought it up maybe, and you said, the answer is definitely no, ETH would not flip in Bitcoin. Do you still believe it's a definite no?

• 1:09:13Speaker 02

  I don't think it's a definite no anymore. So I think that's why I've moved overweight. But I'm, you know, I'm also not going too aggressively in the other direction. Like there are tax reasons also not to, you know, to go aggressively in the other direction because I think both are going to succeed long term. And, um, and I definitely think that Ethereum is potentially relatively undervalued right now. So I'm putting more there progressively, but it, my position has not flippant. That's not to say I, I am not convinced that we will see a flipping of market cap in the next couple of years, but the probability is not negligible.

• 1:09:56Ryan Sean Adams?

  But by the way, one thing that's interesting, I know you use the term Ethereum maximalist for David and myself. It's like, I don't think of myself as an Ethereum maximalist at all. Like in fact, you know, Dave and I helped propose the index co-op. This thing we call the bed index, which is a third Bitcoin, a third ETH and a third DeFi. Right. I think that is juxtaposed with possibly Bitcoin maximalists who would take up that mantle and claim Bitcoin, that all they buy is Bitcoin. Right?

• 1:10:21Ryan Sean Adams?

  So, so yeah, like the term maximalist is a bit different, but I have always thought that for a long time, ever since we started Bankless, that the ETH, I guess, fundamentals and the narrative was not appreciated. And I want to ask you a question about narrative because I think that was one of the things you mentioned in your, your end of, you know, 2020 thesis paper where you kind of sort of wrote predictions for 2021. One of the challenges with Ether is the narrative is too complex, is what you said. Do you think the narrative complexity, has that been simplified a bit better? Is Ether maybe better understood in not quite mainstream, but in sort of the circles that are buying it?

• 1:11:02Speaker 02

  Yeah, I think narratively it's. I still don't agree with like the triple point asset like that particular memetic. A lot of people have, right? Like, I think it's resonated with with a lot of folks. But I'm a little bit more simple than that. You need ETH for working capital for gas and to stake. So you you you need Ethereum for working capital, and it is a capital asset now. It's more like equity in the decentralized internet than anything else. It just so happens you also use that for transactions for now, but you don't necessarily have to, right? Like, you can use USDC, many, many applications on DeFi denominated in USDC or USDT or another stablecoin.

• 1:11:47Speaker 02

  So you're already starting to see that. And, and, you know, at the end of the day, you know, any time that you run a transaction, you probably want it to be dollar-denominated. Most people in the world will want it to be dollar-denominated. So even if it's like an auto conversion to ETH,

• 1:12:03Speaker 02

  at the time that you're paying a transaction fee for a specific DeFi application, that's something that can be solved, and you don't necessarily need to hoard ETH to pay for ETH at the time that you need it for a transaction. So the the reserve demand is not necessarily the same as it would be for money. The reserve demand, the reason you would want to hold it, is for a combination of convenience today and then staking and collateral. So I, and and that, I think, it makes a lot of intuitive sense for investors. And and like I said, it's just, it's such a massive market that that both narratives can win. And look, maybe you will still prove to be right and that, you know, people will use this for money too.

• 1:12:46Speaker 02

  But I think, generally speaking, people align around the single best use case for a single technology. And in this case, the capital asset for a financial internet. I think is the stronger memetic that is getting institutions excited about because they look at this like, okay, JP Morgan is a $400 billion company, Ethereum is a $400 billion tech, you know, technological network that, you know, we can understand because these fees are getting burnt. There's like, you know, real money that's getting earned by those that are securing the network, kind of like Bitcoin, but, you know, in more of like a shareholder-based perspective. I think that's, it's really easy to rock. And I think

• 1:13:27Speaker 02

  DeFi reinforces that because some of the other DeFi applications are very similar, right? You're providing liquidity, you're providing, you know, lending, you know, capital for underwriting loans. So like the whole like stake-earn-deposit kind of ethos and the flywheel that creates in terms of network security, I think is like an important facet here.

• 1:13:52David Hoffman?

  Last time, Ryan, that we had you on the show to talk about this same debate, we had to take some time to actually define money because there was a question of is ETH money? And we landed on, you know, monetary premium is how you determine if something is money or not. But I want to ask you this because Ryan, Ryan said for a moment, setting money aside, we're all kind of primarily focused on number go up, right? Market cap, what's the size of these market cap things? And so say for a world, in a world where ETH does flip in BTC and Ethereum has a larger market cap than Bitcoin, in your opinion, does that make ETH money? Or how does the relationship of the market cap and whether a thing is money or not, how do those things relate? Can Bitcoin still be money, yet still

• 1:14:37David Hoffman?

  be under the market cap of Ethereum?

• 1:14:42Speaker 02

  Well, can, do you think that the value of tech stocks will eclipse that of M0?

• 1:14:49Speaker 02

  Right. Going back to the co-opted example from Arthur, which I think is the right framing. I think the answer is yes. So will it happen? You know, how does value accrue to Ether versus Solana? Dot, you know, all these other networks. And by the way, the other layer ones, or sorry, the other layer twos. Because like each of these other, you know, layer twos, they're going to have their own financial incentive, you know, frameworks across the board, because someone's going to need to like actually process transactions on any blockchain, whether it's a shard, whether it's another network, whether it's the main chain, and they're going to need to be incentivized to do so. So, you know, we'll see.

• 1:15:34Speaker 02

  But like I said, I'm bullish on both. And right now, the growth in the Bitcoin story is still

• 1:15:44Speaker 02

  all about like government debt deficits, monetary defacement, and that trend is not decelerating. For Ethereum, it continues to be all about decentralized finance, permissionless, you know, kind of innovative marketplace infrastructure. And that is only accelerating. And we see the KPIs for Ethereum and all the applications that are running on it. And the KPIs just keep getting crazier and crazier, and more applications keep getting built, you know, on that infrastructure. So I think, I think both are still very healthy. It's a little bit of a, an unfair comparison from a fundamental evaluation standpoint, though,

• 1:16:28Speaker 02

  because if you think about Bitcoin as money and then the medic around money, and you think about Ethereum as ultimately being priced as a financial internet, and like the underlying stock or asset that secures the financial internet.

• 1:16:43Speaker 02

  Then one is going to have only memetics behind it because you know, all currencies are memes. And then the other one is going to have some like actual KPIs behind it. So again, I think to synopsize overweight Ethereum, but not more ETH than BTC. I definitely think that flipping is possible. Maybe not likely, but you know, certainly maybe like my probability is up from 0.1% to 20%. So you got a 200X return on that, which is not too bad.

• 1:17:17Ryan Sean Adams?

  I'll take a 200X anytime.

• 1:17:19Speaker 02

  Yeah, exactly. And then, you know, ultimately speaking, it's going to be entertaining for me to watch from the sidelines as people argue about semantics for the next 15 years.

• 1:17:30Ryan Sean Adams?

  Oh, the arguments will be unceasing. Hopefully we can come together on the regulatory issues, but we know that there will still be arguments. The last question on this is what one comment you made was about institutional demand in our last conversation. And at the time Bitcoin was getting a lot of institutional demand. I think Sailor had just made some of his, you know, earlier purchases. Institutions were talking about adding into the balance sheet. But that time you said institutional demand for ETH is a mirage. I think you're kind of right, like there wasn't a lot at the time. I mean, we made the argument that, well, you know, Ether is kind of a cycle behind, but it will play that cycle a little bit quicker than Bitcoin because Big Brother helped Ether out and like created the channel.

• 1:18:13Ryan Sean Adams?

  Now Ether just has to follow that trail as an asset. Are you starting to see more institutional demand interest for ETH as an asset as well?

• 1:18:25Speaker 02

  I mean, I'm not really at the at the front lines of this. I'd say anecdotally, yes. For me, the thing that matters, I want to see more institutional adoption of ETH for sure. Because our business at Pensari is market intelligence for cryptos and asset class. You don't need a market intelligence platform if it's just one or two assets that you care about. So for us, like, It's it's critical to have institutions actually interested in supporting ETH, because that's going to help lead them down the rabbit hole for DeFi, and ultimately like the the the universe of of potentially interesting applications and assets.

• 1:19:04Speaker 02

  So I I think

• 1:19:07Speaker 02

  the the half-life is um is what we look at. I think the half-life to get someone from like interested in Bitcoin or not interested versus that what it takes to get someone who's already bought Bitcoin to buy ETH, to get to go from I have Bitcoin and ETH now like what's DeFi? And then, you know, all the way down, you know, into actually being like an active participant in these ecosystems or, you know, NFTs are probably their own complete, you know, wildcard, because it's a more, you know, kind of consumer-friendly and like retail-driven phenomenon. But for but for everything else, I think

• 1:19:46Speaker 02

  if you like Bitcoin, you're probably going to look at ETH at some point. If you like ETH, you're going to look at DeFi, and that's going to be kind of the natural progression of things over time.

• 1:19:54Ryan Sean Adams?

  Can I ask, Ryan? So at at Messari, I've definitely seen a kind of a an increase in focus on like DeFi tokens and like the metaverse and some really fantastic research and analysis on these topics. I think a lot of this like didn't exist a year ago in general as kind of, you know, asset classes. But what are the the sectors, I guess, within crypto that you are most excited about and that Messari is most excited about providing analytics and and research for? Is is DeFi a key sector? Is kind of NFTs in the metaverse a key sector? What are the what are the hot things we should be looking for out of Messari?

• 1:20:35Speaker 02

  So, I mean, we've been covering these assets on a sector-by-sector basis. I think we're one of the earlier ones to kind of come up with these designations for for on a per-asset basis and and have that, you know, on our homepage. We've had that on our homepage for for a year, being able to toggle between DeFi and Web3 assets and privacy coins and stable coins so that you're not just kind of comparing everything, you know, apples, oranges and bananas across the across the ecosystem. I think there's probably more hard data on DeFi and and those financial applications like.

• 1:21:14Speaker 02

  How much capital is locked, what the, what the interest rates are, what the exchange rates are. And, and there's just, I think, more infrastructure, like open infrastructure, like subgraphs have been developed for, for all these different markets. NFT is definitely interesting, but I, I, there's no real like price discovery on, on like individual NFTs, right? So like, how that factors into like a market intelligence platform for institutions, I don't really know. I'm sure we'll probably have like rare rocks, like digital J, like rock JPEGs on the slide at some point.

• 1:21:53Speaker 02

  If like the market continues to be insane, but right now I think we're, we're just taking a wait and see approach on like how NFTs get incorporated. In the meantime, we, we definitely have a bunch of research on the NFT space. And I've been keeping a close eye on that and Dow infrastructure and, and you know, other bits of that infrastructure stack myself. Because we know that there are going to be, you know, additional plugins over time. So, um, you know, we'll, we'll see. And stay tuned. We got mainnet coming up. Just a few weeks. You guys are going to be there, right? I'll be there. Your comps. Good. Your comps. Mainnet, September 20th through 22nd, we'll be talking about all these things.

• 1:22:36Speaker 02

  And the general theme of the event is, uh, you know, basically our, our interoperable future and the multi-chain future. So we'll be kind of going through the basics, uh, obviously for, for Bitcoin, Ethereum, um, but a lot of focus on DeFi. Decentralized web applications, NFT infrastructure, DAO infrastructure. And then interoperability between other layer ones and layer twos, probably the kind of core themes of the event.

• 1:23:04David Hoffman?

  I'm about to submit my speaker application to mainnet right after this, Ryan. So maybe you can help me get that one processed.

• 1:23:10Ryan Sean Adams?

  It better be good, David.

• 1:23:11David Hoffman?

  Yeah.

• 1:23:13Speaker 02

  It better be good because I'm not even involved, so.

• 1:23:17David Hoffman?

  Fair enough.

• 1:23:18Ryan Sean Adams?

  Can't pull any strings for you, dude. Sorry. You're on your own, man.

• 1:23:21David Hoffman?

  Ryan.

• 1:23:22Speaker 02

  We'll find a way.

• 1:23:24David Hoffman?

  Every single year, Ryan, you put out a famously gargantuan report titled something along the lines of crypto theses for the following year, right? So big predictions about, it's also a summary about crypto over the last year, but also predictions over the next year as well. And in the crypto theses for 2021, you kind of finished off with this section that you titled exiting to the network's state. And I think this conversation actually becomes relevant once again, as if it never, it always was, but really becomes relevant with the earlier conversation we were having with the regulators and how they are pushing us into compliance, pushing us into regulation, pushing us into capture.

• 1:24:06David Hoffman?

  So I want to pick your brain a little bit on what does it mean to exit to the network's state? And how is this conversation becoming relevant once again?

• 1:24:18Speaker 02

  Um, I think the network state, a lot of the writing and a lot of the thinking there has been centered around what Balaji has been talking about for quite some time. And basically, COVID has accelerated a bunch of tech trends and crypto is kind of the intersection of a lot of them. So I think, um, I can't speak as intelligibly and with quite the crystal ball that he has.

• 1:24:51Speaker 02

  But I do think that because of how incompatible some of our legacy institutions and kind of legacy laws are with kind of the current reality of where we are with the tech, that there's going to be some real friction points and issues to resolve that are going to require some political resolutions. And the very best thing that we can do right now, so that's, there's just plenty of kind of channeled fury, channeled assertive response to make sure that.

• 1:25:28Speaker 02

  People don't unintentionally regulate us out of existence or to oblivion because ironically, that would be the very worst thing when you're talking about protecting investors. The very worst thing in terms of promoting economic growth in the country, very worst thing for civil liberties and privacy because the folks that are building in crypto are the ones that are taking those values seriously. So I think the network state is, I like the real world. I don't want to just live in the cloud. So I think the network state is more about the future of the economy and the future of kind of like individual responsibility and kind of sovereignty and how we kind of plug in and cooperate since more work is

• 1:26:13Speaker 02

  crossing borders and more economic activity and social activity is happening online. Stay tuned for my 2022 thesis, which there's no way I'll be able to write this year because I can't afford to take time off to write a 500-page book.

• 1:26:29Ryan Sean Adams?

  I think you will find a way, Ryan. You've never let us down before.

• 1:26:33Speaker 02

  It's gonna be a tweet storm.

• 1:26:36Ryan Sean Adams?

  There you go. We'll take it.

• 1:26:37Speaker 02

  One of 1179, yeah.

• 1:26:40Ryan Sean Adams?

  Yeah. Ryan, it's been fantastic to have you on Bankless. We've really appreciated your voice in the space all along, especially recently. Really appreciated everything that Messari has put out and continues to put out as well. Thanks for joining us today.

• 1:26:57Speaker 02

  Thank you. Always a pleasure, guys.

• 1:26:59Ryan Sean Adams?

  Guys, action items for you, a couple of them. Ryan alluded to it, but Messari's Mainnet conference is happening September 20th to 22nd. Make sure you check that out. David's going to be there. I think some other folks from Bankless. Unfortunately, I can't make it myself. It's gonna be a fantastic conference. You can find more info in the show notes or at mainnet/events. Also, check out messari.io if you already haven't. This is something I check on a regular basis, just fantastic crypto analytics. In fact...

• 1:27:29David Hoffman?

  You see it every single week on the weekly rollup when we check the prices?

• 1:27:33Ryan Sean Adams?

  And when I'm feeling particularly unhealthy about crypto prices, I'm checking this frequently. Throughout the day. So anyway, great analytics there. Make sure you check that out as an action item. Of course, guys, risks and disclaimers. Bitcoin is risky. ETH is risky. Will the flipping happen? We don't know. DeFi is risky. All of this stuff, you should know. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

• 1:28:03David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders,

• 1:28:44David Hoffman?

  Ask Me Anythings, and weekly rollups where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless Nation.