ROLLUP: Genesis, Grayscale, DCG Failure? | FTX Contagion Continues | Mango Solana Exploit

Thanksgiving 2022 ------ 📣 Infura | Join the New Decentralized Infrastructure Network www.bankless.cc/infura ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/?utm_source=banklessshowsyt 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 👯 DESO | DECENTRALIZED SOCIAL BLOCKCHAIN https://bankless.cc/Deso 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave 📡 TRUEFI | CRYPTO FINANCIAL HUB https://bankless.cc/TrueFi 👾 SEQUENCE | ALL-IN-ONE PLATFORM https://bankless.cc/Sequence ⚡️FUEL | THE MODULAR EXECUTION LAYER https://bankless.cc/fuel ------ 0:00 Intro 4:45 MARKETS 8:30 Down From ATH https://messari.io/screener 12:55 Calling the Bottom Cobie - https://twitter.com/cobie/status/1594635144207699969 14:10 Going Bankless https://www.coingecko.com/research/publications/exchange-withdrawal-ftx-collapse 15:10 Uniswap Polygon ATH https://twitter.com/sandeepnailwal/status/1594147481709080576 16:15 Profitable Ethereum https://twitter.com/tokenterminal/status/1594818145402978304 20:20 Black Friday https://newsletter.banklesshq.com/p/0d234f3f-792b-4d65-ab51-2841b16bbb14 25:00 Will Genesis Fail? Barry’s Tweet - https://twitter.com/BarrySilbert/status/1408191462324441092 7 Million - https://twitter.com/GenesisTrading/status/1590391027214725120 FTX Exposure - https://twitter.com/GenesisTrading/status/1590836594382032896 Genesis Loan - https://twitter.com/AP_ArchPublic/status/1594386225200234496 Timeline - https://twitter.com/CryptoCred/status/1594818326282534912 Emergency - https://twitter.com/fintechfrank/status/1594820487582023680 Letter - https://twitter.com/tier10k/status/1595140018871631873 Summary - https://twitter.com/TradFiWhale/status/1595235835431075842 34:25 Genesis Summary https://twitter.com/TradFiWhale/status/1595235835431075842 41:05 Gemini Earn Update https://decrypt.co/115270/gemini-still-working-genesis-digital-currency-group-unlock-user-withdrawals 42:05 SEC Role https://twitter.com/mikebelshe/status/1594368875482607617 45:45 Grayscale Revenue https://twitter.com/fintechfrank/status/1595205526127771648 49:20 FTX Update SBF Letter - https://twitter.com/lizrhoffman/status/1595183732989779970 Contagion - https://research-assets.cbinsights.com/2022/11/17113850/FTX-Infographic-1117_2022-1.png 54:00 FTX Hacker On The Move - https://www.coindesk.com/tech/2022/11/20/ftx-exploiter-converts-millions-in-ether-to-alameda-linked-ren-bitcoin-tokens/ RenBTC - https://twitter.com/lawmaster/status/1594730133591662598 58:40 SEC Scrutiny https://www.theblock.co/post/189351/sec-facing-rising-scrutiny-after-ftxs-epic-implosion 1:00:00 Mango Attack Statement - https://twitter.com/avi_eisen/status/1581326197241180160 Returned - https://twitter.com/mangomarkets/status/1581351549644591104 Aave - https://twitter.com/AaveAave/status/1595168980993556480 Curve Stable - https://twitter.com/0xAlunara/status/1595056270683377664 Gauntlet - https://twitter.com/gauntletnetwork/status/1595174743891709953 1:09:30 Staking Withdrawals https://twitter.com/vdWijden/status/1595386746786779137 1:10:45 Flashbots Open Source - https://twitter.com/bertcmiller/status/1593668480951373827 Censorship - https://twitter.com/VitalikButerin/status/1595198944623165448 1:13:15 Polygon x Magic Eden https://twitter.com/0xpolygon/status/1595056828538564609 1:13:40 rETH in Maker https://twitter.com/MakerDAO/status/1594700128920682503 1:14:10 Arbitrum Decentralization https://twitter.com/bkiepuszewski/status/1594754717330309120 1:15:15 Bankless Collectible https://twitter.com/BanklessHQ/status/1595104542428839936 1:16:55 Alexey Prison https://www.theblock.co/post/189086/tornado-cash-developer-alexey-pertsev-to-be-detained-another-three-months-in-amsterdam 1:18:45 JPMorgan Trademark https://twitter.com/Blockworks_/status/1594676000000212992 1:19:20 OP Coinbase Withdrawals https://twitter.com/MSilb7/status/1595384920322482184 1:19:48 New York BTC https://www.cnbc.com/2022/11/23/new-york-governor-signs-law-cracking-down-on-bitcoin-mining.html 1:21:00 Across https://twitter.com/AcrossProtocol/status/1595466083913199616 1:21:20 Jobs https://pallet.xyz/list/bankless/jobs 1:24:00 Talking to Family https://newsletter.banklesshq.com/p/fcaac3a4-5905-47ab-a580-1af82f1255af TAKES 1:31:45 Genesis Chapter 11 https://twitter.com/RyanSAdams/status/1594820199806631936 1:33:10 8 Year Winter https://twitter.com/CryptoHayes/status/1594996079015116806 1:33:50 Bull Ponzi https://twitter.com/TrustlessState/status/1595170691917041664 1:35:50 What David’s Thankful For 1:37:45 What Ryan’s Thankful For 1:41:50 MEME of the Week https://twitter.com/TheFutureisDAO1/status/1594680888767422465 ---- 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?

  Is Genesis going to take the entire crypto industry down?

• 0:06Ryan Sean Adams?

  Bankless Nation, happy 3rd, not Friday, Thursday of November. Happy Thanksgiving to you if you are in the US and enjoying the holiday. David, what time is it?

• 0:16David Hoffman?

  Oh, Ryan, it's the Thursday, Bankless Weekly rollup, where we cover the entire, well, not the entire week, four days in crypto, which is still an ambitious endeavor, even though we're missing a day. Yet, so we persevere into the frontier nonetheless with coffee, among other things.

• 0:33Ryan Sean Adams?

  Great modifications, David. People are really gonna appreciate that.

• 0:36David Hoffman?

  I had to do that on the seat of my pants.

• 0:38Ryan Sean Adams?

  Maybe, maybe Turkey too. I don't know. Look, if you think anyone's actually listened to this on Thanksgiving, maybe they're on their way

• 0:44David Hoffman?

  I do think they are, yeah.

• 0:45Ryan Sean Adams?

  to a Thanksgiving, like, meal with their, with their family, and they're wondering what the heck they're going to say when their friends and family ask them about crypto.

• 0:56David Hoffman?

  That Sam Bankman-Fried, that complex, controversial Sam Bankman-Fried character, yeah.

• 1:02Ryan Sean Adams?

  So, how's it, how's it going in crypto these days? We know you love it. We know you're into it. What's happening? I bet that's gonna be a question that most of you

• 1:10David Hoffman?

  We're gonna prepare you for that question too. We're going to, I'm gonna ask Ryan how he's going to prepare for that question, and I'm sure he's gonna ask me the same.

• 1:16Ryan Sean Adams?

  David, what are your Thanksgiving plans? You going somewhere? I know you are, but tell me more.

• 1:20David Hoffman?

  After, after we record this rollup, go take a long cab to Newark, fly home. Get to see my one and a half year old nephew, see how much he's, he's turned into a chatterbox, apparently. I keep on joking with my family, I'm gonna turn him into a podcaster.

• 1:34Ryan Sean Adams?

  Do you know what's awesome, though, is like, being able to spend some time with normal people for a while, right?

• 1:39David Hoffman?

  It's rare. It's rare for me, let me tell you.

• 1:41Ryan Sean Adams?

  I know, I know. I know you moved to New York to hang out with crypto friends and such. And like, I hang out with, I guess virtually, a lot of crypto people as well. It's just like crypto talk, blah, blah, blah, blah, blah, right? Just to talk about regular things for a while, especially after the month that was November so far. That's actually gonna feel pretty refreshing to me. Anyway, what do we got this week coming up?

• 2:03David Hoffman?

  Oh my God, so we of course have to talk about the Genesis contagion. Is Genesis going to take the entire crypto industry down? We'll talk about that.

• 2:13David Hoffman?

  FTX, of course, there's still plenty to talk about FTX there. This news has, of course, gone on to Capitol Hill, where there is a bankruptcy hearing going on. And third, a Dex hack on Solana leads to an explorer shorting Curve using Aave, and then that explorer getting liquidated because of a short squeeze, leaving bad debt in Aave. What the hell are we going to do about that? We'll get into that story and more. But first, please, like and subscribe, because Ryan and I, like we always say at the beginning of the show, persevere into the frontier nonetheless. And sometimes, it really just helps to get those likes and reviews and those subscriptions. So if you are watching on YouTube, please subscribe. If you are listening to the podcast, please give us a five-star review, so we can get to the top of the charts and make it through this bear market.

• 2:58Ryan Sean Adams?

  Absolutely. We're thankful for you, Bankless Nation, for tuning in. We have a lot in store in 2023. We're not going anywhere. In fact, we are doubling down, tripling down on content. In fact, there will be a few ways to get involved with that, some alpha that we'll drop in the episode today, some deals coming up, coming out of Bankless too. But before we get there, David, got to talk about our friends and sponsors over at Infura. Infura, of course, they run archival nodes for Ethereum, among other smart contract networks. If you've ever used something like MetaMask, for example, they are an RPC client. That means they provide some of the historical data node architecture

• 3:40Ryan Sean Adams?

  that serves up your MetaMask transactions and the cool things that you're doing in DeFi. You probably, maybe you know about Infura, maybe you don't. What you might not know is they are taking steps moving forward to decentralize their infrastructure. Okay, previously, this has been quite centralized, including a centralization vector. But if we're going to rebuild on the other side of this bear market and during the bear market, we need to rebuild it on decentralized rails. So how can folks get involved in what Infura is doing? And how should they tap in, David?

• 4:12David Hoffman?

  Oh, I think they should just go ahead and click the link in the show notes, Ryan, where you can join the early access program for Infura's new decentralized infrastructure network. So how do we take? The service and products that Infira has and makes that may and turn them into a network, a protocol, a permissionless system that anyone can join. That is the frontier that Infira is taking on. And if you want to join in that journey into the frontier, man, I'm really milking this metaphor today. You can click the link in the show notes to sign up and get your your expertise and your information over to Infira so they can coordinate.

• 4:48Ryan Sean Adams?

  All right, David, speaking of coordination, I guess price markets, what is that? It's just a coordination game. So let's get to the markets. All right. Let's talk about Bitcoin and the price. And I was told, by the way, our editors might throw in some music here and it's gonna be sad music. If we manage to do that, it's gonna be sad music this week because what, David? Are we up or we down?

• 5:06David Hoffman?

  We are down. We are down. Well, actually, I would say Bitcoin is inside of the flat range, down 1.3%. So started at 16,500, ending at 16,300. Like, that's just like, you're just kind of flattish at that point.

• 5:21Ryan Sean Adams?

  Some green candles toward the end of this.

• 5:23David Hoffman?

  Some recovery candles at the very end to make it not so bad. But I mean, we're still, we're still like at the whole year levels.

• 5:30Ryan Sean Adams?

  Yeah, look at this clip. Look at November.

• 5:33David Hoffman?

  November is still a bad month.

• 5:34Ryan Sean Adams?

  This is the FTX drop, right? Sam Bankman, thank you very much for that one. Appreciate you. Okay, how about ETH, up or down?

• 5:43David Hoffman?

  Down, actually down. Started the week at 1,210. Currently at 1,150, down about 4.8%. So oof.

• 5:51Ryan Sean Adams?

  Okay, so still above, still above in the four digit mode, actually. In fact, like fairly, fairly well.

• 6:00David Hoffman?

  So you haven't bought yet then, huh?

• 6:02Ryan Sean Adams?

  I am planning some buys.

• 6:06Ryan Sean Adams?

  But I'm tempted just a little bit, okay? But like, I'm still also waiting for triple digit. I think triple digit is coming, David. I could be wrong, but.

• 6:14David Hoffman?

  I mean, you said, last time you said it, I was like, get the hell out of here. And, and, and then you turned out to be right. And this time I'm like, get the hell out of here. I don't know. I think we're done with triple digits. I think it's over.

• 6:24Ryan Sean Adams?

  You think we're done with triple digits?

• 6:26David Hoffman?

  If it wasn't just, if it didn't happen just now, like yesterday with the DCG news, then I don't know how it's gonna happen.

• 6:33Ryan Sean Adams?

  Here's the thing, you're talking local crypto though. All right, we still got macro ahead. We haven't talked about macro and I think we've got some tailwinds on the macro front that could send us down. Also, we're still getting attention. I mean, even though bad things are happening, we've got eyeballs on the space. Anytime you get eyeballs on the space, you get some price action. Sometimes it's negative, sometimes it's positive. But the worst possible time for markets is the doldrum period.

• 6:58David Hoffman?

  When no one cares.

• 6:59Ryan Sean Adams?

  No one cares.

• 7:00David Hoffman?

  So you could be waiting for triple digits at like, you know, Q3 or Q4 2023.

• 7:05Ryan Sean Adams?

  Triple digits is not a spike down. Triple digits is apathy, my friend.

• 7:09David Hoffman?

  Yeah.

• 7:09Ryan Sean Adams?

  And, um, yeah, look, I think, I think we're gonna hit there.

• 7:13David Hoffman?

  Yeah.

• 7:14Ryan Sean Adams?

  But, uh, call us, all right? The David versus Ryan bet, it's on. We headed to triple digits or not? How long can David last? We will see. To be continued.

• 7:22David Hoffman?

  David, David makes another bottom call. Great. Fantastic.

• 7:27Ryan Sean Adams?

  The contra indicator.

• 7:29David Hoffman?

  Add another one to the closet.

• 7:30Ryan Sean Adams?

  We'll see. You might be right on this one though, but.

• 7:32David Hoffman?

  If I keep on calling them, eventually I'll be right.

• 7:34Ryan Sean Adams?

  I for one am thankful for David bottom calls because, um, you know, they give us some historical perspective here. What's, what's this one? ETH Bitcoin ratio? Any bottoms you wanna call here?

• 7:43David Hoffman?

  Yeah. Ignoring that, uh, 3.5% down on the week to 0.0706. Uh, so, yeah, down.

• 7:52Ryan Sean Adams?

  All right, total crypto market cap, give us the numbers.

• 7:55David Hoffman?

  We lost $10 billion. We are down to 850 billion in total crypto market cap.

• 8:00Ryan Sean Adams?

  All right, still, well, decently below a trillion. Um, all right, you know what? Let's, let's zoom out for a minute because there are some other people that are like my friend David here and they're calling the bottom right now. The approximate bottom.

• 8:13David Hoffman?

  There are other bottom callers, not just me, yes.

• 8:15Ryan Sean Adams?

  Not the other. And by the way, I am. Calling a bottom-ish. See, David, I like to hedge. I like to be in all camps at once.

• 8:22David Hoffman?

  You're saying we're close to the bottom?

• 8:23Ryan Sean Adams?

  I'm saying, please also call me a bottom caller, but approximate bottom caller. I'm not going to put a number on it. I still think it's triple digits, but like, we're in the zone, my friends.

• 8:32David Hoffman?

  Plus or minus 10% or something?

• 8:33Ryan Sean Adams?

  That's what I think. And this is one of my favorite charts to look at. It's sad, but it's the chart that I was like, it's not a chart. It's a percentage. It's a metric that I was glued to in like 2018, 2019, previous bear cycles. And this is percentage down from all time high. I really like this as a metric during the bear market. It's a painful metric, but you can also see like the precedent that we've set before. So just some context. I remember these numbers are burned into my brain. Bitcoin last bear market down from all time high about 83%. Something around this range. Ethereum down 94% into 95. I think you got like, if you round it, it's like 95%. I thought we were stopping last cycle at 90%.

• 9:18Ryan Sean Adams?

  And I was like, there's no way we're going to 95. And we did.

• 9:21David Hoffman?

  Okay. And also to drive that point home, the difference between going down 90% and 95% is another 50% drop. It is not five more percent. It is 50 more percent.

• 9:33Ryan Sean Adams?

  And boy, that last 50 hits you.

• 9:34David Hoffman?

  It really hurts. That one, that one is the knife to the heart, man.

• 9:37Ryan Sean Adams?

  All right. So let's, let's look at where we are right now in like the percentage down from all time high is a proxy for pain to me. It's like, how much pain are we in? Duration is another one because that brings the apathy, but like raw pain that you're feeling in the pit of your stomach. Right now Bitcoin is 76% down from all time high. Compare that to 83% last time bottom. Ethereum down 76% as well.

• 10:00David Hoffman?

  Yeah, that's unprecedented.

• 10:01Ryan Sean Adams?

  Crazy. Crazy that these two assets are down like, because Bitcoin was supposed to be the, the king asset. When there's a bear market, there's a flight to safety. There's a flight to stablecoins, a flight to Bitcoin. And we're seeing Ethereum hold up the same.

• 10:18David Hoffman?

  That is after Ryan, the FTX exploiter hacker sells a bunch of Ether for Bitcoin, which you know is a one-time sell event and not systemic. And so like, this is.

• 10:30Ryan Sean Adams?

  That's locally, that's true.

• 10:31David Hoffman?

  That's locally, yes. Uh huh.

• 10:33Ryan Sean Adams?

  So like, not a ton of pain in these two ecosystems, to be honest, compared to what we've seen. Certainly Ethereum, we've had it much worse.

• 10:41David Hoffman?

  Only 76%, like, whatever.

• 10:42Ryan Sean Adams?

  That's just a flesh wound, my friend. Why is Tether down 20% from all time?

• 10:47David Hoffman?

  That's gotta be an anomaly.

• 10:49Ryan Sean Adams?

  BNB, look how the CZ Empire is holding up. 57% down from all time high.

• 10:55David Hoffman?

  And this is because of the buyback and burn mechanism in BNB, which I will remind listeners, is the same similar mechanism as EIP1559 and Ethereum.

• 11:03Ryan Sean Adams?

  It's also because the CZ Empire has held very steady during this so far. And he's just knocked out a few competitors. But other decentralized networks, let's talk about Cardano, for instance. 90% off.

• 11:18David Hoffman?

  90%.

• 11:19Ryan Sean Adams?

  Last time they went to like 98, 99% from all time high. Dogecoin, 90%, Polygon, 71%, Layer 2 token hanging in there.

• 11:29David Hoffman?

  That beat both Bitcoin and Ethereum, didn't it?

• 11:31Ryan Sean Adams?

  Polkadot, 90%. This is also the proving ground of like, how many holders do you have? You see this in the numbers. Like, people don't have faith in Polkadot right now in comparison to Polygon. Litecoin, 81%. God only knows what that means. Who's holding Litecoin? I don't know. Solana, David, look at this. 95%.

• 11:50David Hoffman?

  And this is what I've been saying, like, the Solana community, from what I've seen on Twitter, is still around. And they are still pretty bullish on their ecosystem.

• 11:59Ryan Sean Adams?

  That's impressive.

• 12:00David Hoffman?

  I am not necessarily like interested in Solana, the technology, but I am impressed that the community around Solana is still holding out. And they are down as bad as we were, Ryan, back in 2018. And so that interests me.

• 12:15Ryan Sean Adams?

  That is interesting. If a community can survive this, that is an interesting thing. Like, the Cardano community survived this. And regardless, we think of the network, the community survived, and that led to a more bullish return. Maybe the last one I'll read out is Avalanche, that's down 91% from all time high. But Adams, on the other hand, way down.

• 12:35David Hoffman?

  I don't know where the Avalanche community is. I haven't heard a peep out of any AVAX person in my Twitter mentions in a while.

• 12:39Ryan Sean Adams?

  It's been real quiet. Like, their equivalent ICO...

• 12:44Ryan Sean Adams?

  You know, they're having kind of their ICO exit. You know, all the unlocked coins get, you know, all the locked coins get unlocked.

• 12:52David Hoffman?

  All of the three hours capital locked AFX tokens.

• 12:55Ryan Sean Adams?

  Yes. So that's where we are. All right. Who's calling the bottom, though? Bottom caller number one, who's this, David?

• 13:01David Hoffman?

  Kathy Wood goes on Coinbase and GBTC buying spree. I'm not sure if you're calling the bottom with that, but it's just implied. Kathy Wood of Arc Invest, she buys, well, Arc, excuse me, buys 1.3 million shares of Coin coming in at $56 million. And she also bought 315,000 shares of GBTC, basically the Grayscale Bitcoin Trust, at $2.5 million. So Kathy Wood going to the market.

• 13:26Ryan Sean Adams?

  There you go. Not afraid to call the bottom. Kathy's also not afraid to buy the top as well, as we've seen a little bit.

• 13:33David Hoffman?

  Kathy's just a buyer, and that's why we like her.

• 13:35Ryan Sean Adams?

  There you go. Dollar cost averaging.

• 13:36David Hoffman?

  Here's Kobe. Kobe is calling the bottom in fantastic Kobe fashion. Kobe tweets out, "The way I see it, it's up to us now. Probs can't sit around on the benches anymore to the arena." This is, for those that don't speak Kobe, this is Kobe calling the bottom.

• 13:52Ryan Sean Adams?

  You think he's called the bottom?

• 13:53David Hoffman?

  He's called, yeah.

• 13:54Ryan Sean Adams?

  I can't sit in the benches anymore to the arena? You have to read a lot into that to be like, that's a bottom call, but that's what you're reading?

• 14:00David Hoffman?

  Yeah.

• 14:02Ryan Sean Adams?

  All right. So that's happening. And of course, we talked about Chris Broninski last time. He's been calling the bottom. We put out a podcast on that last week. Well, let's talk about another thing that's happening in the markets. And this is the journey towards people going bankless.

• 14:19David Hoffman?

  I love those words. We are looking at, Ryan, people going bankless. So this is a chart of the amount of assets, AUM, of all centralized exchanges. And so right before the FTX demise, we were coming in at basically $130 billion of money inside exchanges. Then the FTX happens, and we are now clocking in at just above $100 billion. So we almost have $30 billion of people taking, well, we also lost some capital, so there's that.

• 14:50David Hoffman?

  But also, people have taken a lot of that money off of exchanges into self custody. If it's not on centralized exchange, it's in self custody. So we are watching people in real time take custody over their assets. Cool. We like that.

• 15:02Ryan Sean Adams?

  Is that okay, David? I mean, they're doing it out of fear rather than love. They're going bankrupt.

• 15:05David Hoffman?

  That's fine. It doesn't matter. That's fine.

• 15:08Ryan Sean Adams?

  We'll take them. Fear or love, either whatever the motivation is, we'll take it. This is some interesting motivation, some metrics coming out of Polygon on Uniswap as well. What are we looking at?

• 15:18David Hoffman?

  Yeah, Polygon, the Uniswap implementation on Polygon hit its all time high in volume numbers with 10 days to go in November. So this is monthly volume and November has already beaten all previous months in terms of all time high. And we still have, and at the time of this was tweeted, we still had 10 days to go. So Polygon, Uniswap on Polygon putting in some massive numbers. I think that's a, wow, is that, yeah, $3.3 billion so far in the first 20 days of November. So congrats to the Uniswap implementation on Polygon. I never congratulated a specific implementation of a protocol before, but here we go.

• 15:53Ryan Sean Adams?

  Congrats on the version update to iOS software to Apple. Fantastic. Well, it's cool. I mean, Uniswap on main chain hit all time highs too. I mean, we, not all time highs, excuse me, but we're just crushing it in terms of volume. Last week, we were talking about that. This is though, I think this is my favorite chart right now in all of crypto. It's the only chart that makes me bullish, I guess. What are we looking at here? This is a chart from Token Terminal and it is, I think, something that I hope has been impressed upon regular Bankless listeners heads, a concept that we've been talking about from the very beginning. But why don't you explain the chart and then we can talk about the significance here?

• 16:35David Hoffman?

  Okay, so on this chart, we see two things. We see the purple line, which is the ETH price chart. I'm sure no one really needed that because we all know what the chart looks like, probably. The green area, which largely corresponds with the actual price chart. When there's spikes in the price chart, there's definitely spikes in the green area. The green area, and there's two different axes here. You have, of course, the ETH price or the ETH market cap. And then you also have revenue and that is what the green thing is.

• 17:01Ryan Sean Adams?

  The green thing is profit, I believe, actually. It's earnings.

• 17:05David Hoffman?

  Oh, it's earnings. Excuse me. Okay, so net, net revenue, right? Net earnings.

• 17:09Ryan Sean Adams?

  Yes. And how do we calculate? So the way we calculate earnings is we take.

• 17:15Ryan Sean Adams?

  Revenue minus costs effectively.

• 17:18David Hoffman?

  Fees, transaction fees.

• 17:20Ryan Sean Adams?

  Yes.

• 17:20David Hoffman?

  Minus block reward issuance. So how much people spend on a transaction aggregated into a block minus how much that block, how much either that block issues.

• 17:32Ryan Sean Adams?

  Yes, and so as we've said, I hope this is nailed into people's heads. What do blockchains sell, David? What do they sell?

• 17:38David Hoffman?

  Blockspace. They spell blockspace, Ryan. That's the only thing that they have.

• 17:41Ryan Sean Adams?

  The only thing that they sell is block space. All right? So blockchain sell blocks. Blockchain sell blocks. This is the profit on the sale of blocks for Ethereum. You're seeing that in green. And by the way, this is an all time history chart.

• 17:54David Hoffman?

  Yes, it goes all the way back.

• 17:55Ryan Sean Adams?

  And so what are we seeing in the green, David? From the early days up until now?

• 17:58David Hoffman?

  Up until now, when the price of Ether goes up, the loss of Ethereum, the negative earnings goes up. And this is the fundamental like problem with proof of work is that as Ether goes up, the size of the block reward goes up, right? So Ether started at like $10 and then in 2017, it got up to $1,400. So the revenue that was coming, the issuance coming out of Ethereum for every single block did a 14x, right? That was just sold. That wasn't captured. That was just sold. That's loss because that is what people, Ethereum is not collecting enough transaction fee revenue to offset the amount of Ether that they are issuing.

• 18:39Ryan Sean Adams?

  Basically selling its product at a loss.

• 18:41David Hoffman?

  Right.

• 18:42Ryan Sean Adams?

  The higher the price goes.

• 18:43David Hoffman?

  And it's worse in bull market.

• 18:44Ryan Sean Adams?

  Yes, it's deeper loss. Exactly.

• 18:46David Hoffman?

  Yes, and so the higher transaction fees under a proof of work paradigm, the higher, the higher the price of Ether, the bit more the loss Ethereum has because the US dollar amount is sold. If you're controlled for Ether, this would be a different story, but this is what we're looking at in dollars. At the very end of this chart, if you zoom all the way into the very end where there's the merge, you can see that all of the lost goes away and there's little bits of profit, little bits of profit. You can see, you can see small little spikes of the upside. But of course, if we went to ultrasound dot money, you would see how much we have been able to recapture via the combination of the IP 1559 and proof of stake.

• 19:23Ryan Sean Adams?

  Okay.

• 19:24David Hoffman?

  Anyways, the point. Is that Ethereum is now profitable.

• 19:27Ryan Sean Adams?

  Profitable.

• 19:27David Hoffman?

  In the green.

• 19:29Ryan Sean Adams?

  For the first time ever.

• 19:30David Hoffman?

  In all of crypto, the entire industry, the first profitable blockchain. That happened with the merge and now we are seeing some data on this.

• 19:38Ryan Sean Adams?

  It's happening in a bear market when people aren't looking. Do you know what this reminds me of a little bit is, um, do you know, uh, Amazon during the, the dot com bust?

• 19:47Ryan Sean Adams?

  People like it's over, dot coms are over, Amazon goes down 95%, okay? During that time, it was absolutely crushing it. Right? In, in terms of market, in terms of the core metrics for people are looking, but no one noticed. Why? Because websites were dead, like dot coms were dead. Amazon was never coming back. These are the sorts of silent metrics we should be looking at here. And only people who are in the space and who haven't left, only the settlers, not the tourists are paying attention. Because the, uh, this is by the way, the first blockchain in history to ever go profitable. And it's not happening during a, a bull run. When it's easy. When it's easy, it's happening during the bear run. And, uh, and I think David, you have some extrapolation on these numbers.

• 20:32Ryan Sean Adams?

  Cause I was looking at the agenda and you somehow slipped this in.

• 20:35David Hoffman?

  I put in my research hat and my data analysis hat and I made an extrapolation for the next bull run. And I put that into this chart here.

• 20:43Ryan Sean Adams?

  Explain to me how you extrapolated the profit in the next bull run.

• 20:49David Hoffman?

  So what I did is you actually might notice that the shape of the green revenue chart on the right is the same shape as the green loss revenue in the 2017. And I flipped it and I made it way bigger.

• 21:04David Hoffman?

  And that is my projection.

• 21:05Ryan Sean Adams?

  David is roughly projecting that, um, all of this loss turns to, uh, to profit on the other side during the, during the bull market. And, um, we all know who are the recipients of, of, of that profit. Who gets that? The upside on this?

• 21:19David Hoffman?

  That's a good question. Uh, is it ether holders?

• 21:22Ryan Sean Adams?

  I think it might be David. I think, I think it might be. Anyway, look, that's happening in the background. It's a chart that makes both David and myself, uh,

• 21:30David Hoffman?

  Optimistic.

• 21:31Ryan Sean Adams?

  Stupid bullish again.

• 21:32David Hoffman?

  God, imagine, Ryan, if like that, if it was going in the opposite direction and it was negative and all this bad news, we'd be like, sweet, there's like literally nothing that's cool about crypto right now.

• 21:40Ryan Sean Adams?

  Guys, I just want to say, this is not the story for, for all chains. This is, this is the other thing, right? It's like, you have to decide if you're going to hold through this spare market, you have to decide what assets you're going to hold, what you have conviction on coming out of this.

• 21:54David Hoffman?

  Perhaps the one that's generating revenue.

• 21:55Ryan Sean Adams?

  You can't see this story in other chains. You won't see this, nothing against other communities and such, but.

• 22:00David Hoffman?

  Except for BNB, except for BNB, because that's what the buyback and burn chain, BNB chain has this similar mechanism. It's, it's, it's manual, but it's fine.

• 22:08Ryan Sean Adams?

  Sure. In bottom line, what does this mean is the block space that we're selling, the product that we're selling is profitable now and it hasn't previously been until now. I think we've beaten that dead horse. Here's something cool though. All right. So this is Thursday when this episode is released, but on Friday, Bankless is doing a Black Friday deal. Okay. And so we have this thing, if you've never gotten into kind of the newsletter side of things or the, the membership side of things, we have this thing we call a Bankless Premium Membership. All sorts of great perks. The newsletter, you get the premium podcast feed. I get all sorts of.

• 22:47David Hoffman?

  Which has no ads.

• 22:48Ryan Sean Adams?

  Yes. And you get, you also get our airdrop reports. You get all kind of our token ratings reports, all sorts of things. And this is actually, because it's been such a crazy bad month and because it's Black Friday, this is the most discounted we've ever offered a Bankless subscription. I'm looking at a draft email here, but it's set to go out tomorrow morning, Friday morning. So if you want to get the 25% discount, the way you do it is you go to newsletter.banklesshq.com and sign up. You will get this email delivered to you and you have the opportunity to upgrade to Bankless Premium for 25% off. This will only be like a Black Friday thing. I think it expires.

• 23:31David Hoffman?

  Have we ever done a discount before, Ryan?

• 23:34Ryan Sean Adams?

  We have done discounts in the past, but never this high. This is a 25% discount. And when we do discounts, it's always a very time limited window. And this is the biggest one, uh, time limited. So anyway, if you've been looking for an excuse to upgrade to Bankless Premium, see what the... Oh, by the way, I didn't even...

• 23:50David Hoffman?

  Yeah, there is a huge excuse to upgrade to Bankless Premium.

• 23:53Ryan Sean Adams?

  Why? What are we doing next year?

• 23:55David Hoffman?

  Because you might notice some, uh, interesting new branding, uh, some new, uh, images going out into a bank, what we are calling Bankless 2.0. Uh, we are migrating from Substack onto our own platform. Got our own website, own designers. It looks so good. Uh, and we now have Bankless's own self-sovereign hub for cooler and neater things. Uh, and so, uh, Bankless during the last bear market went from zero to one, as in we didn't exist, and then we existed. And now we're going from one to 10, it feels like. And this is...

• 24:29Ryan Sean Adams?

  Wait, you said this was 2.0, but it's a 10x improvement.

• 24:32David Hoffman?

  It's always, yeah, it's about a one order of magnitude of growth. Uh, and this is part of that story. Bankless is going to look brand new very, very soon.

• 24:41Ryan Sean Adams?

  It's gonna be great. It's, we're gonna incorporate collectibles. We're gonna incorporate the Poet badges. Anyway, uh, that's not here yet. That's like January-ish, 2023.

• 24:49David Hoffman?

  But you get 25% off if, when it, when it comes.

• 24:52Ryan Sean Adams?

  Yeah, you're not gonna get 25% when everyone wants it.

• 24:55David Hoffman?

  Yes, exactly.

• 24:56Ryan Sean Adams?

  All right. Well, uh, we might be reminding you once or twice, uh, as well about this. Yeah, the course of the show, um, we really want you guys in, into this. Um, I think it'd be cool to kind of grow, grow, uh, the nation this way. All right, we got some stuff coming up next, David. What are we gonna talk about?

• 25:12David Hoffman?

  Uh, is Genesis gonna take down the industry, Ryan? That is what everyone is worried about. Uh, the FTX story continues all the way to Capitol Hill. Uh, and like I said, AVE is left with bad debt after someone tries to short Curve, and then Curve sucker punched that Curve shorter by releasing a new stablecoin product, and they got liquidated. Yeah. Anyways, we're gonna tell those stories and more right after we talk to some of these fantastic sponsors that help you go Bankless. The Brave Wallet is your secure, multi-chain on-ramp into Web3, and it's built directly into the Brave privacy browser. Gone are the days of managing multiple wallet extensions that put you at risk of phishing, spoofs, and tracking. With the Brave Wallet, you can securely manage your crypto assets across more than 100 different chains, including Ethereum, Layer 2s, Solana, and more,

• 25:56David Hoffman?

  all without downloading risky extensions. The Brave Wallet is easy to set up and removes the headache of jumping between wallets and extensions. It's lightweight but packed with great features, like built-in token swaps, buying and holding NFTs with a gallery view, and support for hardware wallets. But also much more than that, because Brave is shipping new features every single month with a mission to make Web3 easier to navigate for its over 55 million users. Wallet extensions are a thing of the past, so get started with Brave's Web3-ready browser today and experience a decentralized web seamlessly without all the clutter. Then download the browser at brave.com/banklist and click the wallet icon to get started. TrueFi is DeFi's largest credit protocol, connecting global lenders with institutional-grade lending opportunities. TrueFi has completed over $1.7 billion in originations

• 26:41David Hoffman?

  and paid out nearly $35 million to lenders, proving that DeFi is ready to take its next big leap into the $8 trillion credit market. TrueFi gives lenders like you access to sustainable, high-yield opportunities backed by real-world investments, usually reserved for high-net-worth individuals. At the same time, fund managers use TrueFi's financial infrastructure to bring their portfolios on-chain, benefiting from the global liquidity, cost savings, and transparency of DeFi. TrueFi is a decentralized financial utility. The protocol is owned and governed by the TrueFi DAO, and TrueFi is here to bring DeFi into the golden age, bridging the power and access of crypto with institutional-grade lending opportunities and portfolio tooling. Explore the diverse financial opportunities available on TrueFi or launch your own portfolio at truefi.io.

• 27:24Ryan Sean Adams?

  The question on everyone's mind going into this Thanksgiving: Will Genesis fail? The Barry Silbert Empire? Grayscale, Genesis? Is this the next point of contagion? David, we've got some things that are developing this week. Can you tell us the story of DCG Group, Genesis, Grayscale, and what we need to know at this point in time?

• 27:47David Hoffman?

  All the way back in June of 2021, Ryan, almost a year and a half ago, Barry Silbert, who's the head guy at Digital Currency Group, who's a very informed, been an OG, been around since like 2012, 2013, he tweets out, and if you remember, June is right after that big, big liquidation candle from like Ether's all like all time high at the time from $4,300 down to like $1,700 Bitcoin goes from I barely remember that, but yes. Right. It was the first big drawdown after the bull market started. And Barry Silbert says, he tweets out, right after that happened, "There's a daisy chain of borrowers and lenders in the crypto space, most well-capitalized, but some are not. Lots of leverage still in the system, including some non-obvious places. Important to understand counterparty risk

• 28:30David Hoffman?

  and where the weak links are in the chain." Wow, does that tweet hit different now? As it turns out, it would take a year for all of that daisy chain of liquidation events to show up. And Ryan, that is the video that you and I made yesterday. So it was an hour and 15 minute long video. This was you? This was me. I was Charlie from All We're Sunny, doing the whole like conspiracy thing, starting with, going all the way back to 2020, when the GBTC trade was on, and how Three Earths Capital leveled up on that. And then they went long on Bitcoin and Ether, and then they went long on Solana AVAX, and then they got liquidated, and that got liquidated on Alameda. It's a riveting tale. It's, it's pretty crazy, honestly, that people are gonna, anyways, Genesis is

• 29:14David Hoffman?

  the final, final piece of that puzzle. We're calling the bottom, we're calling the final domino. We're calling the final domino. And that's, that is why this, everyone is like so worried about Genesis is because it is the foundation of everything. What is Genesis? It is probably the biggest lending desk in all of crypto. It is the only prime brokerage for all of crypto, facilitated so much of the basal levels of yield across the space, the Gemini Earn Program, et cetera. And so the fact that we are, have arrived here at Genesis is indicative of like, this is the last domino. Appropriately named, arrived at Genesis. Right, right. I've been thinking about that. There's almost something biblical about that.

• 29:54Ryan Sean Adams?

  Okay, so just for people who don't know what a prime brokerage is, just think of it as like a regular brokerage, except for big institutions. What I mean by regular brokerage, maybe you've dabbled in stocks and this sort of thing. So maybe you have an E-Trade account or a Fidelity account or a Charles Schwab account. It's like that, only for mega institutions. And in Genesis's case, a mega institution would be like a large hedge fund, like a Theras Capital, for instance. And it also has some advanced features that they don't generally provide to retail, but you know, some brokerage accounts do, like the ability to go margin, long on some sort of collateral. So I've got this stock here, I've got this crypto asset here, and it's worth $100,000, right?

• 30:38Ryan Sean Adams?

  Can I borrow against that? And go do something with that leverage with that bar? And of course, the institution, the brokerage can liquidate them, all sorts of things. Anyway, that's all it is. It's actually pretty simple. It's just not something that regular, average Joe people in crypto can access. It was the big institutional brokerage.

• 30:55David Hoffman?

  Yeah. Anyways, people start to get worried about Genesis, just because how related they are to every other lending desk in this space. And also, on November 9th, they tweet out, "We took a $7 million haircut when we liquidated a bunch of collateral involving some of the contagion involving Alameda." Only $7 million, tiny, not that bad, not that big of a deal. They're just saying that, hey, we took a haircut. Ooh, but the next day, they announced that they actually had $175 million in locked funds on the FTX trading account. But then they said, "This does not impact our market making activities." Six days later, Genesis halts withdrawals in the wake of the FTX collapse.

• 31:36Ryan Sean Adams?

  Not going in a good direction.

• 31:37David Hoffman?

  That's bad. That's a bad trajectory. And then, of course, anyone that's plugged into Genesis, like Gemini Earn, also can no longer facilitate withdrawals. So Gemini Earn has to stop facilitating withdrawals.

• 31:50Ryan Sean Adams?

  And that does have retail exposure, right there.

• 31:52David Hoffman?

  Right. And now people, this is max fear. Crypto Twitter was in a state of max fear all of this week, to the point where Grayscale, which is part of Digital Currency Group, part of the same subsidiary that Genesis is, although these are Separate entities and of themselves. Grayscale felt compelled to tweet out, in the wake of recent events, our investors should know that the safety and security of the holdings underlying Grayscale digital asset products are unaffected. Saying, hey, we still have all the assets under the balance sheet. Just because Genesis is like, has a hole in their wall, doesn't mean that like our assets are affected. These are unrelated. And then, on November 20th, it leaks that there was an undisclosed loan from Genesis to Digital Currency Group. Again, nothing to do with Grayscale, and I'll just plant this flag. Grayscale's totally fine. There is no further news. Grayscale's totally fine.

• 32:37David Hoffman?

  This is just between Genesis and the larger digital currency group, the thing that owns Genesis. There was an undisclosed loan from Genesis to Digital Currency Group. And that perked a bunch of people's ears. It's like, alright, like, well, these are owned by the same umbrella. Why are they like loaning each other money? Anyways.

• 32:55Ryan Sean Adams?

  And given recent events, people are probably harkening back to FTX and Alameda.

• 33:00David Hoffman?

  Exactly.

• 33:00Ryan Sean Adams?

  Self-dealing.

• 33:01David Hoffman?

  Exactly. Yes. Anyways, that was a very fast timeline. Just to recap, November 8th, no material net credit exposure. November 9th, we lost $1 million. Okay, November 10th, we lost $175 million. November 16th, sorry, no new withdrawals. We don't have any money for you. November 17th, okay, we need $1 billion. November 21st, which was two days ago, okay, we'll go bankrupt without the money. So we need to fundraise $1 billion. And so then Frank Chaparro out of the block, he disclosed that he reveals that sources tell the block that Genesis has been struggling to raise emergency capital. They wanted to raise $1 billion, but they are lowering that to $500 million because it faces potential bankruptcy without funding.

• 33:46David Hoffman?

  Oof, not looking good. Everyone's PTSD from the week prior is getting triggered. Barry Silbert, the owner of Digital Currency Group, the guy that like owns everything, the guy that tweeted out the daisy chain of borrowers and lenders.

• 34:00Ryan Sean Adams?

  Basically, the Sam Bankman, sorry, I shouldn't say that Sam Bankman-Fried, because that has negative connotations. Barry Silbert is not Sam Bankman-Fried from a kind of scammer perspective, but he is

• 34:10David Hoffman?

  The leader. He's the leader.

• 34:11Ryan Sean Adams?

  The leader, the godfather, the major owner. Behind Digital Currency Group, which is Genesis and Grayscale and associated companies, right?

• 34:18David Hoffman?

  Yes. Barry writes and sends out a letter to all Digital Currency Group investors to clear up some of the details. And someone, this Twitter account TradFi Whale, put in a nice summary thread, which we will go ahead and read here. Starting with a tweet number one, Barry states that DCG has three loans. A $350 million revolver, a line of credit, to a $1.1 billion loan from Genesis, which is due on June of 23.

• 34:47Ryan Sean Adams?

  32.

• 34:49David Hoffman?

  23, that's a typo. Oh, is it? Is it a 10-year?

• 34:52Ryan Sean Adams?

  I think it's a 10-year.

• 34:53David Hoffman?

  Okay, that's probably a 10-year. That's probably right. And also, another $575 million loan due May of 23. That's the 23 loan I thought. So what does this mean? A revolver is a short-term credit facility that a company generally pays an upfront fee to have to help with cash flow issues. It usually has a high interest rate and restrictive covenants that need to be maintained. Generally, revolvers are used as stopgaps for working capital or as a time in, or as a last resort in times of stress. This is not a great sign that DCG has this revolver, but then again, that's why it is there. The second loan, $1.1 billion, due in June of 2032. This is where it gets very sketchy. Basically, when Three Arrows Capital went under, Genesis had a large hole in its balance sheet.

• 35:33David Hoffman?

  I think like Three Arrows Capital blew something like a 200 or 400 million dollar hole in Genesis.

• 35:39Ryan Sean Adams?

  Of this year.

• 35:39David Hoffman?

  June of this year, yeah.

• 35:40Ryan Sean Adams?

  Yes.

• 35:41David Hoffman?

  They were insolvent and in order, Genesis wasn't solvent. And in order to solve this, they did this a little bit of magic accounting while also putting DCG, the parent company, at risk. So DCG took on the liability of Genesis, the hole in Genesis's balance sheet. But they didn't have the cash to give Genesis for its hole in the balance sheet. So they took out a $1.1 billion 10-year loan from Genesis. And then they gave the money back to Genesis to fill the gap. But up in a hole, hole totally plugged, right, Ryan?

• 36:11Ryan Sean Adams?

  It's totally, it's totally crazy how many people were just swimming with no pants back in June. And we didn't know. And it was all because of the Dogon blow up and Three Arrows Capital blow up. And these were one of them. It was kind of tenuous at that time for DCG.

• 36:26David Hoffman?

  So the $1.1 billion came from the lending book Gemini Earn and other retail yield products that use Genesis. Oof. So retail is paying for this. Essentially Genesis borrowed from their own deposits to fill the hole, but use digital currency group as the go-between to make it legal. Also, there's another $575 million loan due in May of 23. So, you know, that's not that far away. So this explains why investors are balking with DCG. This is clearly not fully above board. What next? Genesis has a liquidity shortfall of $1.675 billion right now to the depositors of the lending book. It needs to file for bankruptcy. I suspect that they were trying to get someone to buy out DCG's 10-year bond at some discount to give liquidity to

• 37:10David Hoffman?

  depositors, but no takers. DCG grayscale business, the grayscale business from DCG is extremely valuable. So here's what they did. Genesis was insolvent. DCG bailed it out. And so the equity holders of DCG are now at stake. The other thing that is in DCG is grayscale. And so since the, it was basically the equity of DCG that plugged the Genesis hole, but the equity of DCG is involved with grayscale. So this is where grayscale.

• 37:41Ryan Sean Adams?

  Grayscale is minting money. By the, I think you have a chart, I think you have a chart early, like later on, that's like what grayscale? And by the way, the grayscale products are what ETH

• 37:52Ryan Sean Adams?

  that you can buy in a trading account to trust and GBDCs. This is where you can kind of buy, you know, proxy trust type ETF product, not ETFs, but those types of products inside of your retirement account. How much was that minting, David?

• 38:07David Hoffman?

  Hundreds of millions of dollars.

• 38:09Ryan Sean Adams?

  Okay. And that's just like this year. I think there's a chart we have about that later. So that is a totally healthy, very profitable business, completely solvent. The problem is that's bundled up with this whole Genesis thing. I guess the problem for DCG is, and so they're using some of that funding to try to bail out DCG.

• 38:24David Hoffman?

  Right.

• 38:24Ryan Sean Adams?

  Or excuse me, to bail out Genesis.

• 38:26David Hoffman?

  Right. So the equity, the value of grayscale, the company is. Is backstopping the value of DCG, the equity and DCG's equity is basically what's plugging the hole in Genesis.

• 38:39Ryan Sean Adams?

  Yikes.

• 38:40David Hoffman?

  Yes.

• 38:40Ryan Sean Adams?

  Okay.

• 38:41David Hoffman?

  Contagion, contagion, yeah. And so to resume, DCG is grayscale company, extremely valuable. DCG does not want to fire sale this, so they will likely let Genesis go under. DCG and DCG probably should have no problem raising 575 million by May of 2023 to pay back that loan. The question is whether they spin off grayscale and sell some equity at a depressed valuation or they fire sale, bury crypto tokens and raise equity or long-term debt at the DCG entity. It looks like to me that DCG will not file for bankruptcy. Grayscale is easily worth over a billion dollars. So TLDR, Genesis borrowed from depositors to fill the hole in their balance sheet. Damn, I've heard that one before. By using DCG as a go-between entity, Genesis likely filing for bankruptcy.

• 39:26David Hoffman?

  I think creditors will eventually get most of their money back and DCG will survive with a black eye and a marred reputation. And that is the story.

• 39:33Ryan Sean Adams?

  Wow. You know what this looks like, David, is not quite SBF level.

• 39:39David Hoffman?

  No. This is no, there's no fraudulence here, I don't think at all.

• 39:44Ryan Sean Adams?

  Well, question mark. This kind of thing is sketchy. Borrowing, filling holes, go-between to make it legal from DCG grayscale. This is some questionable thing, some sketchiness here.

• 39:56David Hoffman?

  Okay, it's questionable in contrast to FTX, which was just an absolute fraud show. There's no question.

• 40:03Ryan Sean Adams?

  Could there be a bigger fraud?

• 40:04David Hoffman?

  This is all like, you could probably take them to court and but like you could definitely argue that this is above board.

• 40:10Ryan Sean Adams?

  Maybe, yes. So but but what's going to happen from this is like this, this person predicts that DCG will survive with a black eye and a marred reputation. And Genesis will probably get some of its money back in some way. So people aren't like creditors to Genesis are completely sunk. I don't know how all of this resolves, but what comes out of this-

• 40:33David Hoffman?

  The market liked it. So the market, when this news came out-

• 40:36Ryan Sean Adams?

  It's not as bad as FTX, not even close.

• 40:40David Hoffman?

  Ether went up $100, Bitcoin went up like almost $1,000. So when this news came out, the market was like, "Okay, this isn't so bad."

• 40:45Ryan Sean Adams?

  This is a huge black eye to the Barry Silbert empire, though. One of the OGs was just taking down a whole bunch of notches after this.

• 40:52David Hoffman?

  For those that don't know, DCG also owns CoinDesk. So that is also part of the DCG group.

• 40:59Ryan Sean Adams?

  A fire sale of CoinDesk, maybe. I don't know.

• 41:02David Hoffman?

  No, I don't think so.

• 41:03Ryan Sean Adams?

  It's all part of the same. You could sell anything if you feel like you have to. Okay, so that's what's happening. Do you have any update for people, like retail has money stuck in Gemini? For me, David, do you have any updates for me? Any good news, please?

• 41:18David Hoffman?

  Well, I'm happy to let you know, Ryan, that Gemini put out a tweet thread updating their earn customers with what's going on, and they said that there is no update.

• 41:27Ryan Sean Adams?

  Okay.

• 41:28David Hoffman?

  Sorry.

• 41:29Ryan Sean Adams?

  I have heard through back channels that maybe some people are getting their GUSD out. Not quite sure about this, but just the GUSD?

• 41:37David Hoffman?

  Just GUSD?

• 41:39Ryan Sean Adams?

  I don't know if that, that hasn't been totally confirmed, but, so I don't know about that. All I know is any crypto that I had in Gemini earn is still stuck. I do know this, and they're not really updating.

• 41:51David Hoffman?

  They reissue POAPs for every instance of Ryan lost money in his crypto pay this year.

• 41:56Ryan Sean Adams?

  Only if we issue a POAP for David's bottom calls, then we'll, then it will call it EBIT.

• 42:04Ryan Sean Adams?

  Big secondary market for bankless bad call POAPs here. What's this, this take on the SEC? So if you're to summarize-

• 42:10David Hoffman?

  I thought this was, this was useful. A lot of the, a lot of the contagion of 2022 is underpinned by the GBTC negative premium. So in theory, one GBTC is backed by one Bitcoin, yet there's a discount, there's a discount of 42%, as in the GBTC asset is actually priced 42%.

• 42:31David Hoffman?

  Below what is the net asset value of all Bitcoin in grayscale? And that is because they can't turn the damn thing into an ETF because the SEC won't let them.

• 42:40Ryan Sean Adams?

  I'm gonna look at a chart real quick while you're talking, just explain that.

• 42:42David Hoffman?

  That's bad.

• 42:43Ryan Sean Adams?

  If you want to see the chart, it is basically if you buy GBDC in your brokerage account and buy this GBDC trust, you're getting it at a 43% discount.

• 42:54David Hoffman?

  Right, it's cheap Bitcoin. It is cheap Bitcoin, but there's no assurances that that discount is gonna go back to zero.

• 43:00Ryan Sean Adams?

  Yes, and it's also, it's, yeah, that's why it's Bitcoin, like, you know, Bitcoin TM?

• 43:06David Hoffman?

  Bitcoin TM, yeah.

• 43:07Ryan Sean Adams?

  Like Ben Hunt, our friend said Bitcoin, it's very much Bitcoin TM. It's some Bitcoin covered, wrapped in a trust, wrapped in a like proxy price thing. It's not a real Bitcoin spot ETF, is it?

• 43:18David Hoffman?

  Yes. Okay, so back to the tweet. This, I just thought this tweet was great. By failing to create an ETF for Bitcoin, the SEC allowed the grayscale to GBDC trade to rip retail for five plus years. That's the reason why the discount is there is because like other people are able to milk retail out of their holdings because they're diluting retail and selling it into the market.

• 43:40Ryan Sean Adams?

  Also the reason.

• 43:40David Hoffman?

  Also charging 2% for just holding Bitcoins, which is insane.

• 43:44Ryan Sean Adams?

  So profitable.

• 43:45David Hoffman?

  That's why grayscale is so profitable. All big, all the net value of all assets under grayscale, grayscale charges 2%. That is an absurd fee if compared to an ETF, but we can't have that ETF because Gary Gensler doesn't let us. Anyways, it also, the SEC also forced most trading outside of US jurisdiction, which allowed for the contagion to go rampant, and also let FTX's fraud hit millions of Americans. It couldn't. Ah, anyway, so I just thought that was a good tweet.

• 44:10Ryan Sean Adams?

  Yeah, protecting retail, question mark? That, that discount, by the way, is the record discount, 43%.

• 44:17David Hoffman?

  42% off.

• 44:18Ryan Sean Adams?

  I wonder if this is kind of a like bottom call. It's like,

• 44:21David Hoffman?

  Yes.

• 44:21Ryan Sean Adams?

  I mean, are you bullish GBDC?

• 44:24David Hoffman?

  I think this is not necessarily bullish.

• 44:27Ryan Sean Adams?

  Well, that would cause you to be bullish Bitcoin. How about?

• 44:29David Hoffman?

  I am bullish Bitcoin, just I'm bullish on Ethermore.

• 44:32Ryan Sean Adams?

  Okay.

• 44:32David Hoffman?

  The point, the, the, this bull market, Ryan, the 2020 bull market, the start of 2020, it was indicated by a premium in GBDC, as in, People were buying Bitcoin more than people were supplying Bitcoin to the trust. So people were buying Bitcoin at a premium because that's they wanted demand for Bitcoin. And so this, the, the coming 2020 and 2021 bull market was marked by external outside demand for GBTC. It's been negative ever since. And so we are so low, we have 42.7% off of the premium and that is, that is a new low. And to me, that is just indicative of kind of another bottom signal, a bunch of sea of other bottom signals.

• 45:13Ryan Sean Adams?

  And you could solve this very easily if you're the SEC by just converting this sucker into an ETF. And then it basically trades for something that is much more proximate to spot price of Bitcoin.

• 45:25David Hoffman?

  So it would unlock, there's, there's something like 800,000 Bitcoins in grayscale. It would unlock 42% of the capital of all of the assets that's, that's available.

• 45:37Ryan Sean Adams?

  And the reason it's going down is what? People are fire selling?

• 45:40David Hoffman?

  People are fires, yeah, they need liquidity. They're saying, I'm not going to wait for my, for it to turn into one Bitcoin. I'm just going to sell at a 42% loss.

• 45:47Ryan Sean Adams?

  Brutal. Oh, this was the chart. Read this.

• 45:50David Hoffman?

  Uh, this is a, a chart from Shankar Paro. Grayscale bought, brought in 477 million in estimated revenue since the beginning of this year.

• 45:58Ryan Sean Adams?

  Wow.

• 45:58David Hoffman?

  For its combined GBTC and EE products. Wow. Almost half a billion a year.

• 46:04Ryan Sean Adams?

  For doing what? $500 million?

• 46:07David Hoffman?

  Producing that product for retail.

• 46:09Ryan Sean Adams?

  And what is the product? You hold custody in Coinbase custody, Coinbase custody gets a cut. What is the product beyond this? You could, I, I don't know how many people that have a grayscale, but like, that's a lot, that's a very healthy margin. Does it take 20 people to run this? 30 people? And $500 million? Yeah. I mean, the last Twitter thread said that this thing was worth a billion dollars. That is way underplaying it. Just do a revenue multiple on 500 million. You know what? Like a 5X revenue multiple or 10X, something like that? You're already like $5 billion, 2.5 billion. Like this thing's worth a lot because of this stupid arbitrage, because of the.

• 46:47Ryan Sean Adams?

  That's how, another way to say this. Retail spent, in addition to getting destroyed in all sorts of other ways in crypto, retail spent $500 million in fees on these subpar products this year.

• 47:02David Hoffman?

  Sick.

• 47:03Ryan Sean Adams?

  And it's not Grayscale's fault, they're trying to get an ETF, I mean, this piece of it wasn't. But yeah, it's waste. Okay, so why do you think this is the last domino to fall? David is just, we'll get this out of our system, contagion, Genesis the last piece, and then it's over?

• 47:19David Hoffman?

  So, the contagion of 2022 started with Three Arrows Capital. Where did Three Arrows Capital get all their money? They got all their money by milking the GBTC premium. Retail and like, you know, traditional people would buy GBTC on the stock market that would create the premium. What would Three Arrows Capital do? They would take Bitcoins, which, by the way, they borrowed from Genesis, and then they would get that into the Grayscale trust, so they could park it at that arbitrage. And that was Three Arrows Capital's first big, like, profit. And then they just levered up all the way, and through, and through, and through. And so, and so many people followed them into this trade. They borrowed more with Genesis, they went long Bitcoin and Ether, which worked well

• 48:01David Hoffman?

  for them, then they went long Solana AVAX, which went well for them. Then the Fed raised interest rates, Terra collapsed, all the illiquid altcoins, like, went down 80%, Bitcoin and Ether went down 50%. Three Arrows Capital gets liquidated, Alameda gets liquidated. Then Alameda plugs the hole with their fake FTT funny money from FTX, and also a bunch of customer deposits. That plugs the hole for like, four or five months, six months, but that hole finally opens up again. FTX has collapsed, that's gone. And now we are at the final place where it all started, which is GBTC and Grayscale. So we've come full circle. So there's no, that's the whole thing. And so we are, the bull market started with the GBTC premium, and it will end with the

• 48:46David Hoffman?

  GBTC discount. That just makes sense to me. And also Grayscale going under.

• 48:51Ryan Sean Adams?

  There was a pile of dominos, but it was just in a circle, not a straight line and last one to collapse. I think, by the way, you just gave the explanation of what just happened over the last two years in about 90 seconds. And we were calling this the, you know, everything from 2021 onwards at some level has kind of been Ponzi, funny money economics in crypto, right?

• 49:13David Hoffman?

  Yeah, hate to see it.

• 49:15Ryan Sean Adams?

  No, no surprise then that we are resetting the clock and going back to 2021 January prices, which is about where we are. So in a way, not surprising, given what's happened. All right, let's go check in on FTX and Sam. Some stuff happened this week. Let's burn through this quick. FTX bankruptcy hearing. What are the takeaways from this?

• 49:34David Hoffman?

  Yeah, so I got some notes here. So there was a bankruptcy hearing. You could have been into the Zoom to watch, but basically the TLDR is that FTX is being investigated by state and federal regulators. It's still unclear what exactly FTX has in terms of assets and liabilities, because they didn't do accounting. So they're trying to figure that out. The lawyers representing FTX told the judge, "You have witnessed probably one of the most abrupt and difficult collapses in the history of corporate America, calling the FTX worldwide organization Sam Bankman-Fried's personal fiefdom and alleged gross mismanagement." Kind of like the Celsius bankruptcy issue, customer privacy is also going to be a big question. The parties are going to try and find a way to balance publishing the names,

• 50:19David Hoffman?

  addresses and email addresses of all creditors, including FTX's customers and not doing that. So like, how do we do this? I don't know. They're going to try to figure that out.

• 50:28Ryan Sean Adams?

  Just don't do that.

• 50:29David Hoffman?

  Also, the jurisdiction, there's a jurisdictional fight between the US and the Bahamas, who has the assets, right? That is at a ceasefire, at least for now, a Bahama-appointed judge. Joint provisional liquidators have agreed to allow for the FTX's Digital Markets Chapter 15 bankruptcy in the Southern District of New York to be transferred to Delaware to join the other 101 Chapter 11 bankruptcy cases.

• 50:52Ryan Sean Adams?

  Chapter 11, baby.

• 50:53David Hoffman?

  Sweet. So that was the TLDR of the FTX bankruptcy hearing. Meanwhile,

• 50:58Ryan Sean Adams?

  What a mess. That'll take years.

• 51:00David Hoffman?

  That'll take years. Sam Bankman-Fried sends an email to employees. Did you read this, Ryan?

• 51:06Ryan Sean Adams?

  No, I'm reading it now.

• 51:07David Hoffman?

  Well, he would like, he would like to tell the employees that he's really sorry and that none of this was their fault. He said that like five times. And I'm sure as an employee I'm being like, I never thought it was my fault, bro. This is your fault.

• 51:23Ryan Sean Adams?

  But what do you say? I don't know what you say. I just would stop talking at this point. But Sam seems unable to do that. I don't know if there's anything you could say.

• 51:33David Hoffman?

  I read this whole thing. There was nothing. The only thing that really stuck out to me, this slide was kind of interesting, where he just did some back of the napkin math about like what happened. And he's, this guy has no clue what assets or liabilities they have. He's just like, okay, so number one, a crash in the market led, this last spring led to a 50% reduction in value of the collateral in FTX. 50 billion in collateral, 60 billion in collateral with only 2 billion in liabilities.

• 52:02Ryan Sean Adams?

  No one cares, Sam.

• 52:02David Hoffman?

  Turns into 30 billion of collateral and 2 billion of liabilities. He's just doing a napkin math. Also, he's just like aggregating all assets and collateral. Be like, yeah, this is our balance sheet.

• 52:13Ryan Sean Adams?

  You got this information on Twitter.

• 52:16David Hoffman?

  Never mind how this is customer deposits and should not be considered like collateral. Anyways, if you are interested in reading Sam's letter to employees, there's a link in the show notes.

• 52:25Ryan Sean Adams?

  Yeah, why not? Make an NFT out of it. I don't know. Sad. What are we looking at here? This is a really cool chart.

• 52:31David Hoffman?

  Yeah, it's a really cool chart. Yeah. So this just shows the FTX SBF empire between Alameda Research, FTX US, FTX and FTX Ventures and all of these things and that they have invested in, that they're owners of. There's a lot of investments. There's a lot of investments.

• 52:46Ryan Sean Adams?

  I can't believe Sam did all of this in four short years, David.

• 52:49David Hoffman?

  Yeah.

• 52:49Ryan Sean Adams?

  All of this.

• 52:50David Hoffman?

  Yeah.

• 52:51Ryan Sean Adams?

  Like, the guy came on the scene in 2018. You know what? You know what's kind of weird to me is like, we should have probably popped our heads out and been like, how does somebody go from like, nothing to 30 billion dollars in crypto in one cycle?

• 53:07David Hoffman?

  Isn't that the story of crypto? Isn't that why people come here, though? Like, that is the story.

• 53:11Ryan Sean Adams?

  Not in one cycle. I think like the Voorhees's of the like the people who've been here, you have to do if you're doing this the right way, you have to do it over multiple cycles, like the Brian Armstrong.

• 53:22David Hoffman?

  I'm just saying it's like not really crazy to make a bunch of wealth. That level of magnitude was unheard of. But like, I don't know, I think it's, I think that's a hindsight 2020 kind of thing.

• 53:31Ryan Sean Adams?

  Probably, but my antennas are going to be forever up about this kind of thing. It's like we like, how did that happen? How do you go from zero to 30 billion is your first cycle?

• 53:40David Hoffman?

  Well, everyone that's made a made a ton of money too quickly, also lost it really quickly in 2022. So that definitely tracks. Meanwhile, in unrelated news, Elizabeth Holmes just got sentenced for 11 and a quarter years in prison. Completely unrelated.

• 53:56Ryan Sean Adams?

  All she did was scam investors. She didn't steal deposit money.

• 53:58David Hoffman?

  Yeah, right. Okay, but then the hacker, the FTX exploiter has converted millions of Ether into ren Bitcoin tokens.

• 54:07Ryan Sean Adams?

  Well, that's a background story. There's a hacker who's managed to get FTX some FTX funds while their security was down, I guess, right?

• 54:15David Hoffman?

  Yes, right.

• 54:15Ryan Sean Adams?

  They're tracking this hacker on chain.

• 54:17David Hoffman?

  And this was what I was alluding to earlier in the market section about why the Ether Bitcoin ratio is down this week. The hacker is selling Ether for Bitcoin, which is actually confusing a lot of people in crypto Twitter because Ether is generally the more censorship resistant capable asset out of the two, because you can do things with Ether. So on Sunday, hacker moved over 5,000 Ether of the stolen funds to a new wallet and then later an additional 35,000 Ether was also moved over to that wallet into three separate transactions. That new wallet started to convert Ether to ren Bitcoin using one inch. If you aren't familiar with what ren Bitcoin is, ren is like this inter blockchain protocol network. So if you have ren Bitcoin on Ethereum, you can transfer that Bitcoin over to the Bitcoin network. First transactions had 4,000 Ether being converted to wrapped BTC and then

• 55:02David Hoffman?

  traded into ren BTC. And the ren bridge has also previously been used to launder stolen funds, at least $540 million of it in other instances. And so maybe that's what's going on here. I don't really know.

• 55:16Ryan Sean Adams?

  David, the hacker is a Bitcoin maximalist. I think that explains it. Good luck with that.

• 55:22David Hoffman?

  Yeah, right. Okay. And so there's, moving on to different stories in the SBF verse, Forrest put out this article that says, really, the SBF, he wasn't really as lucrative as he was made out to be. His 2021 tax returns shows a net operating loss of $3.7 billion. They lost $3.7 billion in 2021. Oh, that would have been nice to know a year ago. Yeah, I would have loved to have known that. How did you lose $3.7 billion in 2021? That was the most lucrative year of all time.

• 55:57Ryan Sean Adams?

  No, how would you do that? I mean, I don't even know how you do that. Leverage margin?

• 56:02David Hoffman?

  I don't know.

• 56:02Ryan Sean Adams?

  Yeah, that's really, that takes skill.

• 56:04David Hoffman?

  It takes skill.

• 56:06Ryan Sean Adams?

  To lose in 2021.

• 56:07David Hoffman?

  There's a regulator response in Capitol Hill. I thought that was a really useful thread, but I'm going to try and speedrun this as much as possible. So Ron Hammond says, this week in Congress and crypto, last week, the Blockchain Association hosted our first annual policy summit with industry leaders, regulators, members of Congress and staff. The timing couldn't have been better with the FTX fiasco playing out in real time. Here is what DC is saying. Number one, they are shell shocked. That is the word mainly used by policymakers when describing the FTX fallout. Many of them met with SBF personally, asked questions of various hearings, or at least knew how often he was in DC meeting with colleagues. As more reports about FTX came in, the anger in DC rose. Number two, the Hill is still

• 56:50David Hoffman?

  largely in fact finding mode, and that is important. Congress tends to have a knee jerk reaction to a crisis. Paparazzi calls from Maxine Waters and Patrick McHenry for a hearing in 2022 show the desire to learn, hear from various parties, and then engage. The Senate Housing and Financial Services Committee, light hearing, which is going to happen, likely won't be the only one this year. The Senate Banking, House and Senate Agricultural Committees have hosted SBF several times in hearings and meetings, and likely will want to host a meeting to hear what happened and what can be done to prevent this. Number four, what could have been done? What were the regulators? Why did FTX domicile in the Bahamas? And many other questions are top of mind. I like that last question. These are some great questions. And many other questions are top of mind in the Hill.

• 57:35David Hoffman?

  Many still don't know, and thus a large reason to suspect both FTX execs and the regulators will be called in for these hearings. Number five, the episode will easily bleed over into 2023 when the Republicans have the House and the Democrats have the Senate. The fact finding will still continue and both chambers will likely find a bipartisan regulatory solution. Could be bills introduced previously or brand new.

• 58:00Ryan Sean Adams?

  Stablecoin bill still in play, maybe. Looks like DCCPA is dead. That's what he says. Largely dead, but it could reappear in a different form. This is interesting. And by the way, this, I think this is the Ron Hammond Twitter account. I don't, I don't know who this is, but I think he was the one that tweeted out about, you know, after SBF Eric Voorhees debate, like everyone in DC was talking about this.

• 58:24David Hoffman?

  Yes, yeah.

• 58:26Ryan Sean Adams?

  So it's interesting that that still happened like 11 days before. People in DC, that was the conversation. And then the next week, the weeks that follow, it's this.

• 58:34David Hoffman?

  Yep.

• 58:35Ryan Sean Adams?

  I wonder how that changed things.

• 58:37David Hoffman?

  Damn, Bankless is on their radar. That's great.

• 58:39Ryan Sean Adams?

  S, yeah.

• 58:40David Hoffman?

  In a good way, in a good way.

• 58:43Ryan Sean Adams?

  Come on, guys. Right? We're doing the right thing here. SEC facing rising scrutiny after FTX's explicit implosion. I don't know how they're going to respond to all of this.

• 58:52David Hoffman?

  Yeah. So Bob Menendez, a senior Democrat on the Senate Banking Committee, was asked if the SEC could have been more aggressive in investigating FTX prior to bankruptcy. Guess what his answer was, Ryan?

• 59:05Ryan Sean Adams?

  Who's answer?

• 59:06David Hoffman?

  Bob Menendez, the senior Democrat on the Senate Banking Committee.

• 59:09Ryan Sean Adams?

  Oh.

• 59:10David Hoffman?

  He was, he was asked, could the SEC have been more aggressive in FTX and investigating FTX prior to bankruptcy?

• 59:16Ryan Sean Adams?

  I bet he said, oh, hell yeah on that one.

• 59:18David Hoffman?

  He said, he, the article says, he replied simply, yes. And asked if he planned to question SEC Gary Gensler about that. Menendez replied, I am.

• 59:30Ryan Sean Adams?

  Great. I wonder what the, the tone of that speech pattern was. Yes, I will be doing that.

• 59:38David Hoffman?

  Yeah.

• 59:38Ryan Sean Adams?

  All right. What's this? Binance taking its shot?

• 59:41David Hoffman?

  Unrelated but related. Binance US steps into national politics with new campaign pack. So Binance filling the void of FTX lobbying. I wonder how that's going to sit. With Capitol Hill.

• 59:54Ryan Sean Adams?

  Oh, boy. More crypto bankers. Woo.

• 59:56David Hoffman?

  Yeah.

• 59:57Ryan Sean Adams?

  Very excited.

• 59:58David Hoffman?

  This one from a different part of the economy.

• 59:59Ryan Sean Adams?

  Fight for our values, guys. Please don't make the same mistakes. All right. Tell us about this crazy story. Here's the context for the next story.

• 1:00:05David Hoffman?

  Third big story of the week.

• 1:00:05Ryan Sean Adams?

  Can I just say this? So in the midst of this chaos, almost like, you know, the little finger chaos is a ladder thing. It's like the Joker from Batman. It's just, I mean, he's like chaos. In the midst of this, a DeFi attacker starts attacking DeFi. And he had been previously, but now it's like, there's weakness in the industry. I'm gonna go attack it. So give us the context here. It involves a few different exchanges, a few different chains. But try to tell us the story and then like, let's get to what happened.

• 1:00:33David Hoffman?

  Okay. So back in October, the end of October, there is this Mango Market on Solana was exploited for $114 million.

• 1:00:41Ryan Sean Adams?

  It's a DEX, right?

• 1:00:42David Hoffman?

  It's a DEX, yeah. It was not a hack. It was an economic exploit. It was like an oracle attack. It was basically market manipulation. So he used the exchange as intended. He was, they were just able to manipulate the markets in a way that extracted $114 million in an economic exploit. That person is Avram Eisenberg. And he declared that he thought that this was just a, simply a profitable trading strategy and that everything was legal when open market operations. Technically true. Good luck defending that in court. Anyways, he returned $67 million, defended his actions. And then later, fast forward a few weeks, also now on the Ethereum chain instead of

• 1:01:25David Hoffman?

  Solana, Eisenberg would put 40 million of USDC inside of AVE to borrow $20 million of Curve, the CRV token from the Curve Exchange. He then sent that 40 million Curve tokens, $20 million, to OKX with his short position on AVE. And the idea was that he was just going to dump the Curve to short it and then buy back the Curve later at a cheaper price and be able to park it, the arbitrage. Same thing, economic exploit, market manipulation, trying to, trying to like, you know, eke out some money, right? This time with a, on a bigger network with some bigger players like Curve is much bigger than Yes. The last target. Exactly. It just so happens that while this individual had his Curve short open,

• 1:02:10David Hoffman?

  Curve releases the white paper and the code for their stablecoin, which was very hyped, which caused the Curve price to be, to stop going down and instead go up. And he got short squeezed and liquidated. And so you can actually see the liquidations on chain because this is DeFi. And we are all, Crypto Twitter is watching this all happen in real time. And so we are, we are watching the liquidations roll in in ways that we could not have seen. Liquidations from AVE? AVE is liquidating this guy Eisenberg because of his short position. And so we are watching this in real time in stark contrast to what was going on with FTX and Alameda. And so that is always nice to see. You live by the sword, you die by the sword. That's what happens playing this game.

• 1:02:54David Hoffman?

  That's exactly right. So AVE tweets out about some bad debt. So as a result of the illiquidity of CRV, actually AVE was left with a whopping $1.6 million. Million with an M? With an M, yes. After, after this fierce attack? After this fierce, fierce attack, which represents, Ryan, a whopping less than 0.1% of total volume on AVE. Gotta be much less. I can't remember the, I can't remember the, I saw. It's less than 0.1%. Excuse me? Much less than 1%. Yes, that's what I meant. That's what I meant. 0.1%, yes. I saw, I can't remember where the numbers were. I saw a tweet, but it was something like, I don't know, eight weeks of AVE revenue, I think at worst.

• 1:03:37David Hoffman?

  And so DeFi, even on its worst, is still okay. Robust, right? I mean, all of this happened transparently. All of this happened on chain. People were watching this happening. People liquidated. Again, Genesis had a hole in its balance sheet last May and we didn't find out until November. We watched AVE grow a $1.6 million teedy little hole in its pocket, which is totally gonna plug up. And anyways, so that's that story. But also Curve, the other big news is that Curve released their stablecoin.

• 1:04:09Ryan Sean Adams?

  Good time, boys.

• 1:04:11David Hoffman?

  Wow. And so this stablecoin is kind of like Maker Dow, but more governance minimized with an algorithmic liquidation engine. So you can put your collateral into Curve. You can mint their Curve stablecoin. If you get liquidated, it will liquidate you in the most modest amount of increments possible. And then as the price goes back up, it will recapitalize you. And so it's kind of like Maker Dow. You're still taking leverage. You're still like minting this new stablecoin. But it is a new decentralized, perhaps more decentralized.

• 1:04:40Ryan Sean Adams?

  What's collateralized by, David?

• 1:04:41David Hoffman?

  Curve deposits, whatever's in Curve.

• 1:04:43Ryan Sean Adams?

  Whatever's in Curve. And what kind of things are in Curve right now?

• 1:04:46David Hoffman?

  Like kind assets. So stablecoins are the big one, but like you have our ETH.

• 1:04:50Ryan Sean Adams?

  That's cool.

• 1:04:51David Hoffman?

  Staked ETH. I wonder, I don't know, I don't think that you can make the stablecoin out of the ETH pairs, but you can imagine that Curve makes the meta staking token.

• 1:04:59Ryan Sean Adams?

  Well, this is the kind of thing I want to have some more time to dig into, to be honest. Get us back to our old like kind of DeFi building cool stuff rather than talking about FTX all the time.

• 1:05:08David Hoffman?

  This is, yeah, a white paper. It's been a while since I've read a good white paper.

• 1:05:11Ryan Sean Adams?

  Good old fashioned white paper.

• 1:05:13David Hoffman?

  Good old fashioned white paper.

• 1:05:14Ryan Sean Adams?

  They're coming back.

• 1:05:15David Hoffman?

  Yeah. Gauntlet Network put out a tweet and Gauntlet, for those of you who don't know, that is Tarun Chitra's organization that they do these economic simulations. They made, as they did the analysis and they made some recommendations. They said, "The attempt to squeeze Curve on AVE has been unsuccessful and unprofitable. Despite this, AVE has accrued a much smaller insolvent position. Our immediate recommendation is to freeze a number of tail assets on V2 to mitigate the risk of smaller, likely unprofitable squeezes."

• 1:05:42Ryan Sean Adams?

  DeFi, all of this, these attacks happen in the open. The learnings happen in the open as well. The defense all happens in the open. This is how DeFi levels up. And this is why I think what we can build at the end of the day here is a much more resilient financial system, right? We get the attacks and we adapt, right? We get stronger. The shield increases for every attack, reharnessing the energy of the attack.

• 1:06:08David Hoffman?

  I love that that's your take, Ryan, because the next tweet is exactly this.

• 1:06:11Ryan Sean Adams?

  Oh, really?

• 1:06:11David Hoffman?

  This poor, dark Twitter account says, "I think Avi, the liquidator, the curve short seller, the guy who's trying to economically exploit all the protocols." He goes, "I think Avi is good for DeFi. We need people to stress..."

• 1:06:23Ryan Sean Adams?

  That's Avi the guy, not Avi, right?

• 1:06:24David Hoffman?

  Avi, yes. Avi the guy. It's good for DeFi. We need people to stress test these protocols. As in, if they can be exploited, then they should be exploited. If they can't be exploited, then they're robust. And as a result, unlike FTX, which is now gone and destroyed, unlike Genesis, which might file for bankruptcy, unlike Alameda, which is gone, when all of those things fail, they don't come back. Avi failed, lost $1.6 million, has to pay that, that's fine. But we can learn in real time, and now we are going to build back better.

• 1:06:52Ryan Sean Adams?

  Ooh, I build back better.

• 1:06:54David Hoffman?

  I don't. David's running for office.

• 1:06:56Ryan Sean Adams?

  We're not gonna cut it. Editors do not cut that. David wants to build back better. Um, read this follow-up tweet, though.

• 1:07:03David Hoffman?

  I'm also really glad the dipshit lost a lot of money.

• 1:07:08Ryan Sean Adams?

  All right, I kind of feel good about that, too. Um, guys, we've got more to cover, as always, but before we get to sponsors, we want to remind you that tomorrow is 25% off Bankless Premium.

• 1:07:18David Hoffman?

  25% Black Friday sale!

• 1:07:20Ryan Sean Adams?

  It's gonna be amazing.

• 1:07:21David Hoffman?

  For Bankless 2.0, which is not yet released, but is totally coming. It's gonna be sick.

• 1:07:24Ryan Sean Adams?

  Totally not a rug, totally not a scam.

• 1:07:26David Hoffman?

  Totally not a rug. We do not take in customer deposits.

• 1:07:29Ryan Sean Adams?

  Seriously, you guys will love this. We've got a lot in store for the community. So now is your opportunity. Don't say we didn't warn you. What have we got coming up next, though, David?

• 1:07:36David Hoffman?

  Coming up next, we got Questions of the Nation, and I know everyone is going to be asking, "How the hell do I talk to my family at Thanksgiving about crypto?"

• 1:07:44Ryan Sean Adams?

  Yes, please.

• 1:07:45David Hoffman?

  We're gonna, we're gonna try to simulate that conversation between me and Ryan.

• 1:07:48Ryan Sean Adams?

  Really? I'll be grandpa.

• 1:07:50David Hoffman?

  Yeah, exactly. But then also, of course, the takes of the week, which, of course, were some good ones. And also, what Ryan and I are grateful for. So all of that and more, right after some of these fantastic sponsors to help you go Bankless. But if you're on the Premium feed, I'll see you on the other side. The reality today is that five corporations control the entire world of social media. They own our names, they restrict our content, they monitor our every move. And their time is up, thanks to our sponsor, DSO. DSO is a Layer 1 blockchain built from the ground up to decentralize and scale social networks. With DSO, you can own your own identity, content, and social graph, and take it with you across hundreds of applications already built on the censorship-resistant DSO blockchain. DSO's storage advantages make it finally possible to build infinite state applications

• 1:08:34David Hoffman?

  that can efficiently store and index large amounts of content and data fully on-chain. DSO also offers multiple crypto-native monetization primitives for developers and creators, including social NFTs, social DAOs, social tokens, and social tipping. So in order to experience the social layer of Web3, go to deso.com and claim your username. That's D-E-S-O dot com. Sequence is the all-in-one developer platform you need to build Web3 games and applications. For your users, Sequence is a smart wallet, and it's the easiest, most intuitive onboarding your users will ever experience, and comes with all the features users need to feel empowered in the Web3 world: multi-chain support, NFT display, and users can buy SFTs, NFTs, and crypto

• 1:09:18David Hoffman?

  directly with a credit or debit card. For developers, Sequence is the plug-and-play platform for Web3 games and apps. Their APIs let you bring NFTs, SFTs, and tokens into your game or application. And a Sequence relayer enables GAS transactions for your users. Sequence already powers some of the best Web3 games, like Skyweaver, NFT projects like Cool Cats, and marketplaces like NiftySwap. And Sequence is compatible with all the EVM chains, including Ethereum, Polygon, Binance Smart Chain, Arbitrum, Optimism, and Avalanche. So go to sequence.xyz/banklist to start building, or speak with the Sequence team today.

• 1:09:52Ryan Sean Adams?

  We're gonna get to what we're thankful for a little bit later. There's actually another sponsor cut before we do that, David.

• 1:09:57David Hoffman?

  Yeah, I jumped the gun on that one, my bad.

• 1:09:58Ryan Sean Adams?

  But gotta get through a few things. Withdrawals are coming soon. So if you are staking ETH, you have your ETH locked as a one-way ticket. We all know this. Withdrawals, there's some updates on that. There's a lot of fun out there saying withdrawals will never happen, that the Ethereum Foundation deleted it from the roadmap, blah, blah, blah, blah, blah. They're happening in 2023. But what's the update here?

• 1:10:18David Hoffman?

  So in order to unlock withdrawals, we need all of the clients to have that enabled. And so there is a new dev net with all the clients, Lozart, Teku, Lighthouse, Nethermind, Geth, that is up and running. So there's a successful dev net with withdrawals up and running. It's basically what you need to be able to test this thing and then next step, main net. Rumors that it will be in the next Hard Fork, we do not know. We do not know.

• 1:10:43Ryan Sean Adams?

  I just don't listen to the Twitter accounts. Look at what the devs are doing. Look at how great a post and the progress is being made. Okay, speaking of devs, Flashbots, they've just open sourced their block builder, which was big in and of itself. So that brings more competition in the space. And also, they have a new short-term censorship resistance strategy. So here's Vitalik saying there is a new short-term censorship resistance strategy, dropping courtesy of Flashbots, and he recommends that any staker using MEV boost, which many are, take advantage of this new option. David, what does this new option give us? And what problem does it solve for the Ethereum protocol?

• 1:11:16David Hoffman?

  Yeah, the problem that it solves is that block building is a pretty damn specialized expert level activity. And also, block building, whoever can be the best block builder will build the most profitable block. What we're worried about is that activity becoming highly centralized. So with Vitalik and this new Flashbots blog post and this new thing that you can now plug into, we are trying to do a best of both worlds thing. You always want to choose the most profitable block, but we also want to be resilient, not have centralization, and also be able to construct our own blocks. So this is really this new update that allows for an optimization function. So when a block builder produces an extremely lucrative block that passes some level that you set in your node, you can accept that block builder's

• 1:12:01David Hoffman?

  block. And if it doesn't cross a certain threshold of profitability, you, as the node operator, can just build your own block from home. And if you do that, if you build your own block from home when there's not an extremely profitable block, when there's just like normal DeFi things, not crazy DeFi things, if you just build it at home, you're going to get 99.9% of the value that you otherwise would have gotten if you had to use a block builder. If a block builder sees some crazy MEV and they capture that and they build you a block, and your block was going to earn you 2 ETH and that block builder's block is going to earn you 5 ETH because of this optimization function, which is what this release is, you can opt in to the occasional high-value block when it is produced by a centralized block builder. And that, Ryan, is how you get the best of both worlds.

• 1:12:41Ryan Sean Adams?

  That's cool. Yeah, my TLDR in this, because my brain was kind of full this week when reading this, is like... They're trying to make doing the right thing for the network more profitable.

• 1:12:51David Hoffman?

  Yes.

• 1:12:52Ryan Sean Adams?

  And decreasing the costs of doing the right thing. So basically you opt into this and you still get 90% of the, maybe 99% of the profit and you're doing the right thing for the network, which is you're decreasing centralization. You can still run staking from home, your own validators, and you don't have to centralize. And that is a good thing for decreasing the centralization of Ethereum and increasing decentralization, of course, increasing the censorship resistance of the network. David, this is cool too. Matic, Magic Eden, match made in heaven. Magic Eden is a Solana NFT ecosystem and they are moving to Matic? Not exclusively, but they're deploying now on Matic. What's the update here?

• 1:13:33David Hoffman?

  Yeah, that's basically the update. They deployed on Ethereum not too long ago and now they are also on an Ethereum Layer 2. Is this the Layer 2 thesis playing out? I will leave that up for the listener to decide.

• 1:13:44Ryan Sean Adams?

  Tantalizing, tantalizing. How about this?

• 1:13:46David Hoffman?

  Oh, I love this one. Our ETH as collateral in MakerDAO. Our ETH out of Rocketpool, the staked ETH token out of Rocketpool, the friendly neighborhood decentralized staking as a service protocol, is now collateral inside of MakerDAO. This is huge for our ETH liquidity. This is one of the big things that Rocketpool really needed to be competitive with Lido. There is a $5 million die debt ceiling, but that's just like the first rodeo.

• 1:14:09Ryan Sean Adams?

  That's where it starts.

• 1:14:10David Hoffman?

  It's where it starts. Yeah.

• 1:14:12Ryan Sean Adams?

  Very good, very good on that. Okay. Also Arbitrum is...

• 1:14:15David Hoffman?

  New Arbitrum feature. This is, this is actually really sick and it's interesting that Arbitrum didn't actually really like be like loud about this. So basically, there's, we all know that our Layer 2s are more centralized than we would like them to be. Becoming a validator for a Layer 2, for optimism, Arbitrum is a permission thing. You can't just go do that. But Arbitrum recently did this upgrade where if the centralized Arbitrum-run validator sequencer goes down for a sufficiently long, a period of time, the network becomes permissionless and anyone can spin up a new Arbitrum validator and join the network to start processing withdrawals. That is crazy and that is something that is impl... Today, that is

• 1:14:58Ryan Sean Adams?

  This is good. This is

• 1:14:59David Hoffman?

  This is good. This is like that. We like this.

• 1:15:01Ryan Sean Adams?

  This is decentralizing our layer twos, which was always going to come, but it's happening faster than I thought. So great job in Arbitrum. This is from Bartek too, who really keeps track of this stuff.

• 1:15:10David Hoffman?

  Yes.

• 1:15:11Ryan Sean Adams?

  So if you want to read the whole tweet thread and what they're doing, you can do that. And you're right. They didn't get loud on this. It's because so much going on. Speaking of getting loud. We talked about collectibles last week. Bankless launched its first NFT collectible project. A high level is, I didn't know that 100 were going to sell and I didn't get one, David.

• 1:15:32David Hoffman?

  I also did not get one.

• 1:15:34Ryan Sean Adams?

  I sold out in the first minute and I spent $50 or something on ETH gas fees. And I was there. I was clicking refresh. I was doing the thing that you told me to do with NFTs, which is get there first. And I still didn't get one.

• 1:15:48David Hoffman?

  Yeah. So I did not expect there to be this level of demand.

• 1:15:51Ryan Sean Adams?

  I guess the good news around that is more are coming, including, I think, not, not, not tomorrow. So don't worry about it. Take that off the holidays, but the Friday after. And so you can get the next in a series of Genesis collectibles. The first one is

• 1:16:07David Hoffman?

  Really quick back up though.

• 1:16:08Ryan Sean Adams?

  Yeah.

• 1:16:08David Hoffman?

  What the hell did we drop? It was the SBF Eric Voorhees. We are now, we are now turning our podcast into collectibles. That's what's going on.

• 1:16:15Ryan Sean Adams?

  That's what's going on.

• 1:16:16David Hoffman?

  So we, we turned the SBF versus Eric Voorhees into a one of 100 collectible, which we sold for 0.05 Ether. All revenue went to Coin Center. Also, all royalties also go to Coin Center. 100% is going to Coin Center. And we sold it for 0.05 ETH. The floor is now 1.9 Ether. That is insane. I did not see that coming. There have been three sales at 1 Ether. Turns out collectible podcasts are a real thing.

• 1:16:43Ryan Sean Adams?

  Also turns out I will never make money on this NFT thing, David, because I always miss the great opportunities.

• 1:16:48David Hoffman?

  You can't even make money on your own NFT, bro.

• 1:16:50Ryan Sean Adams?

  That's how bad it is. I would have had one on the back on this monitor here and it's just dark.

• 1:16:56David Hoffman?

  That would have been cool.

• 1:16:57Ryan Sean Adams?

  Yeah, would have been cool. I could have been cool.

• 1:16:59David Hoffman?

  Great NFT for that monitor.

• 1:17:01Ryan Sean Adams?

  Anyway, what else we got? Tornado Cash. This is sad. Alexei Pertsev is detained. Still in Amsterdam for another three months. That was a renewal. He was in there for 90 days. So this again is the developer, one of the developers responsible for creating tornado cash, the privacy tool on Ethereum that US citizens can no longer use. And Alexei Pertseff finds himself in prison as a result of this. No charges have been laid. So another 90 days in prison. That's the reports that we're getting out. Look, man, unfortunate. People like, I can't believe this. People like Alexei.

• 1:17:37David Hoffman?

  Sam Bankman Reed is running around with his cargo shorts and backpack in the Bahamas.

• 1:17:41Ryan Sean Adams?

  Sending I'm sorry letters to his staff, right? Like Alexei Pertseff is in prison right now. And why? Because he put together a public, open source privacy tool for the entire world. Okay. It's like coming up with SSL or some kind of like, you know, encryption technology.

• 1:18:01David Hoffman?

  Well, do you know, do you know why they cited this as like what they're doing? Like not detaining him for another three months? They cited it's the governance token because he was an owner of the governance token. He is like an operator of the business.

• 1:18:12Ryan Sean Adams?

  This is so, this is, this cannot stand. We've said this before. You guys have heard us talk about this, but it's, it's just really sad that injustices like this go on, especially when you see actually who the threats are to crypto and to actual retailers. So someone building real code here. So very unfortunate. We're doing what we can here, including one of my good friends and a co-host of this, this podcast is actually suing Secretary Yellen as we speak. So we're doing what we can, but just, just keep Alexei on your mind. As you hear about the scammers like SBF, remember we've got, we've got some folks that, that need help. JP Morgan, a crypto wallet, now a registered trademark in the US.

• 1:18:55Ryan Sean Adams?

  I saw this headline go forward. Anything else that we should say about this?

• 1:19:00David Hoffman?

  That's, I mean, patents are kind of a no news kind of news.

• 1:19:03Ryan Sean Adams?

  It was a trademark.

• 1:19:04David Hoffman?

  It's like an indication of like, okay, in three years, we'll like see a JP Morgan like products.

• 1:19:08Ryan Sean Adams?

  It's a trademark.

• 1:19:09David Hoffman?

  It's a trademark.

• 1:19:10Ryan Sean Adams?

  The JP Morgan wallet.

• 1:19:12David Hoffman?

  It's something.

• 1:19:12Ryan Sean Adams?

  I don't think I would ever put money in a JP Morgan wallet.

• 1:19:16David Hoffman?

  I hope you wouldn't, but actually I kind of think you would. Could you put it in all your other

• 1:19:20Ryan Sean Adams?

  Shut up. No more, never again. All right. I told you guys, it's an experiment. It's not something I was, man, issue the PoAP, whatever.

• 1:19:28David Hoffman?

  Anyways, okay, coming out of Coinbase and Optimism, you can now transfer from Coinbase to Optimism. Hey, cool. Great. I mean, it was a long time coming. Glad it's finally here. We asked for this and Brian Armstrong delivered.

• 1:19:42Ryan Sean Adams?

  Great. We asked for it. David and I went to Brian. We're like, yo, the one thing we need is this. And he just did it.

• 1:19:47David Hoffman?

  We literally did that. It was on the podcast.

• 1:19:49Ryan Sean Adams?

  Oh, yeah, we did. True story. Bitcoin, bad news, New York governor, what's this?

• 1:19:55David Hoffman?

  Yep. New York governor signs first of his kind law cracking down on Bitcoin mining. Governor Kathy Hochul signed a law on Tuesday, that's my governor, banning certain Bitcoin mining operations that run on carbon-based power sources. For the next two years, unless a proof of work mining company uses 100% renewable energy, will not be allowed to expand or renew permits. And new entrants will also not allow to become online. There's a quote from the Chamber of Digital Commerce here that says, "This approval will set a dangerous precedent in determining who may or may not use power in New York State." And that is a take that I 100% agree with. Let's not get political about what we think is good or not and who can have access to energy.

• 1:20:40David Hoffman?

  That is bad.

• 1:20:41Ryan Sean Adams?

  I totally agree because I like Christmas lights and I will continue to put Christmas lights up in my house.

• 1:20:47David Hoffman?

  And Christmas lights and Bitcoin mining is probably the same amount of net global energy.

• 1:20:52Ryan Sean Adams?

  It's less, my friend. Bitcoin mining is less.

• 1:20:54David Hoffman?

  Less than Christmas lights?

• 1:20:55Ryan Sean Adams?

  Yeah, but yeah, this is a thing. I mean, it doesn't affect Ethereum and other ecosystems we care about. And like, we knew this political pressure was coming, but that doesn't necessarily make it right.

• 1:21:04David Hoffman?

  Yes.

• 1:21:05Ryan Sean Adams?

  All right, raises. So one big raise this week across Protocol, they just raised $10 million to $200 million valuation. This is of course is a bridging protocol. We've told you guys about a number of times. Maybe you're using it. Maybe it's on our airdrop guide. Maybe you get that if you become a premium member. Oh, are they? Yes, they are. The good news there is when companies are raising, and they still are, there's still some money in crypto. It means you can get a job in crypto. That's what we got to tell them about on the Crypto Jobs Board. Developer relations at Uniswap, a front-end engineer at Uniswap. Earnify, coming in hot, coming in new. Looking for a full-stack engineer at Earnify. Looking for a senior backend TypeScript engineer.

• 1:21:48Ryan Sean Adams?

  I like that Earnify company, think they're doing big things. Uniswap Labs, NFT engineers, a lot of engineers on here. You can tell it's the bear market, now we got no non-technical jobs. It's all technical, David, because we're building. We got to build.

• 1:22:01David Hoffman?

  Because we're building, yeah.

• 1:22:02Ryan Sean Adams?

  Anyway, you want access to those, go to the Bankless Job Boards, bankless.pallet.com, and you can find that, of course. Black Friday shout-out, 25% off coming to you tomorrow. Get your Bankless Premium. And what do we have coming up next, David, after the break?

• 1:22:16David Hoffman?

  This time, we'll talk about how the hell do I talk to my family about crypto?

• 1:22:19Ryan Sean Adams?

  Yeah, you rugged us last time.

• 1:22:20David Hoffman?

  Yeah, I did, big rug. People just don't care about Ethereum withdrawal, I swear. How do I talk to my family about crypto? Followed by the Takes of the Week, followed by what Ryan and I are thankful for. So stay tuned for all of that and more, right after we talk to some of these fantastic sponsors to help you go Bankless, because you need it. Arbitrum One is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web3 landscape. Hundreds of projects have already deployed on Arbitrum One, producing flourishing DeFi and NFT ecosystems. With the recent addition of Arbitrum Nova, gaming and social dApps like Reddit are also now calling Arbitrum home. Both Arbitrum One and Nova leverage the security and decentralization of Ethereum

• 1:23:01David Hoffman?

  and provide a builder experience that's intuitive, familiar, and fully EVM-compatible. On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitrum Nitro, it's also now 10 times faster than before. Visit arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be: secure, fast, cheap, and friction-free. If you've been listening to Bankless, you know that we're fans of the modular blockchain thesis. The idea that blockchains will separate execution from data availability and consensus, allowing all three to become the best versions of themselves. Fuel has built the fastest modular execution layer in the industry.

• 1:23:46David Hoffman?

  By supporting parallel transaction execution, Fuel unlocks significantly faster throughput for the web3 world. Fuel also goes beyond the limitations of the EVM with its own Fuel VM, which is more efficient and optimized, opening up the design space for developers. And lastly, Fuel brings a powerful developer experience with its own domain-specific language, Sway, and a supportive tool chain called Fork. With Fuel, you can have the benefits of smart contract languages like Solidity, while adopting the improvements made by the REST tooling ecosystem, letting the Fuel development environment go beyond the limitations of the EVM. If you want to learn more, there's a link in the show notes to see how you can get involved with a Fuel network.

• 1:24:22Ryan Sean Adams?

  Questions from the nation, David. I think in the US it's Thanksgiving morning. So the one thing that happens, tradition in the US, is you get together with friends and family. And these could be relatives you haven't seen for maybe an entire year. You haven't seen in a very long time. They probably know that you're in crypto, right? Because like, it's that weird thing that you do on the side.

• 1:24:43David Hoffman?

  And you can't stop talking about it?

• 1:24:44Ryan Sean Adams?

  Yeah, maybe it's because you can't stop talking about it. Maybe, you know, they've asked you questions. They've texted you about like buys. Anyway, your family knows that you're in crypto. So what do you say to them when they ask you questions? How do you talk to your family about crypto this Thanksgiving? Some real practical advice here. I think this is the question from the nation today.

• 1:25:06Ryan Sean Adams?

  Actually, we're putting together a post on this from Michael Wong, who's one of our writers. And there's a number of questions here we could get to. But let me, before we get in here, David, just the high level, all right? What are you, do you have, do you have family members like this? Who are kind of distant relations? They know like, oh, David's got some podcasts. I think your family calls you Dave, right?

• 1:25:28David Hoffman?

  Oh, yeah, some of them, yeah.

• 1:25:29Ryan Sean Adams?

  All right, so it's like, Dave's got this podcast and he knows he's in crypto. What's going to be on the top of mind? What questions are you expecting to be asked?

• 1:25:38David Hoffman?

  So this year, they're not going to be bothered to answer because they've, I've been in crypto long enough. So I'll go backwards to like 2018 Thanksgiving.

• 1:25:47David Hoffman?

  What did I do back then? And so they were like, oh, like David, like, are you gonna like, leave crypto now that everything's on fire and like the whole industry is like collapsing? There, there's two answers to this. What are the words that you say? But also, I think that's less important than how you say it, because humans respond to emotion. So if you come into Thanksgiving and people are like, is your conviction shaking about crypto? Like, how, how's your job going? Like, you still doing that crypto thing? You just gotta come in hot and be like, damn straight, I'm still doing that crypto thing. Like, Sam Bankman-Fried, a banker, told, showed all of the industry exactly why we need to not have banks. And

• 1:26:28David Hoffman?

  now I'm fired the F up. And I'm doubling down. And you should totally buy Ether right now, because it's so cheap.

• 1:26:34Ryan Sean Adams?

  Wow, that's what you'd say to them? Is this what you said in 2018?

• 1:26:39David Hoffman?

  Uh, so like, there was like, oh, the ICO mania is over. I'm like, uh, yeah, it turns out it's a bunch of hot air. Turns out our DeFi yield farms were like, not really all that sustainable. Uh, but like, it's still gonna be the global, like, foundation of all future finance. And like, NFTs are still gonna unlock a ton of human culture. It's really just about like, is your conviction shaking? Are your convictions, conviction shaking? And you just need to be a stoic individual because of how you understand that this is a 20-

• 1:27:06Ryan Sean Adams?

  You come at them hard, though. You're not only being stoic, you're like, and also, Grant, but you should buy, you should have some ETH.

• 1:27:12David Hoffman?

  That part, that part, you would be excused to say if you, don't give your family members financial advice. Don't do that. But it's about the conviction, right? Because people, because people are like, going to be like, oh, like, like, some of them, especially people, people, some people love to be like, ha, ha, ha, crypto broke. Uh, now I don't-

• 1:27:30Ryan Sean Adams?

  That one cousin that you have?

• 1:27:31David Hoffman?

  Right. The people that don't want to have to deal with the cognitive dissonance of 2021, when they're like, all the crypto people were making money. And now it's on the flip side of this. Now they're gonna be twisting the knife. But hey, remember when you, remember when you told me to buy $4,000 ETH? Well, so glad I didn't.

• 1:27:43Ryan Sean Adams?

  Yeah. Remember when you said it was going to 10K? You idiot.

• 1:27:47David Hoffman?

  Yeah, and then you say like, it's still going to 10K.

• 1:27:49Ryan Sean Adams?

  Yeah.

• 1:27:49David Hoffman?

  It's still happening, so I'm buying more.

• 1:27:52Ryan Sean Adams?

  Yeah, like I, yes, um, yes.

• 1:27:55David Hoffman?

  It's about the conviction and it's about like, hey, like, there's a mission here. If you can show that you believe in this, that there's a mission. That's actually how Ryan, um, my first company in 2017 that blew up, uh, is an ICO advisory company destined to blow up.

• 1:28:08Ryan Sean Adams?

  Yeah.

• 1:28:09David Hoffman?

  I got a like a 130% person company. I think five or six or seven of those people got jobs in crypto after that. I was one of them. One of the reasons why I, I survived through the 2018 to 2020 bear market.

• 1:28:23Ryan Sean Adams?

  Conviction, you still believe.

• 1:28:24David Hoffman?

  Because I was enthusiastic.

• 1:28:25Ryan Sean Adams?

  Yeah.

• 1:28:26David Hoffman?

  And people saw it, like I was very clearly about the tech. And that's what like kept me a very hireable person when there was literally no jobs left.

• 1:28:36Ryan Sean Adams?

  So it's just, it's just like, I, is it kind of an answer of like, I don't look at price at times like this. I look at the fundamentals and you look at what went wrong.

• 1:28:42David Hoffman?

  That's a great, that's a great way to do it.

• 1:28:44Ryan Sean Adams?

  Yeah, a banker blew up the, the financial system, used posing as something he wasn't. And we're glad I'm, we're detoxed, we're a comeback stronger. That's if you even want to engage in that conversation, it depends who you're with. I don't know, family relationships are, you know.

• 1:28:56David Hoffman?

  You also don't have to bring it up. You can also relax and not talk about crypto.

• 1:29:00Ryan Sean Adams?

  Uh, yeah, you could just smile and be like, yeah, it's been rough lately. And then change, that's, that's more like my, my mode is I just try to not talk about it, honestly. Because if they want to hear what I really think, I mean, oh my God, how many hours of content do we actually have, right? Like, it's almost like you can opt into it. Um, but okay, so here's grandpa saying, how are you doing job wise, right? And you got an answer for that. Uh, mom is asking, what happened to Nexo, Celsius Voyager? My friends used it and lost it all. Sorry, mom, you gotta have an answer for that.

• 1:29:33David Hoffman?

  Ryan, here's a, here's a hard one. Uh, and this is one that's in the actual newsletter. Somebody says, hey, I have my money on Coinbase or Gemini. I'm worried about like Gemini earn or something. I would just like to take self custody of your assets. Like, where do you start with that?

• 1:29:46Ryan Sean Adams?

  Yeah, I think so. There's difference between like Gemini earn and like crypto lending thing and like just having your your assets on account. So first of all, you want to make sure it's a reputable account, right? Like a Coinbase, maybe a Kraken. I put there still Gemini, even though their their earn program is going through some struggles. And then you kind of have to weigh it, David, because you have to weigh the risk of one of these exchanges going under versus your relatives' risk of losing their own keys if they if they mess up a setup. And this is really important. It's just I kind of, I actually don't love going through the the process of of teaching like friends and family about it too much unless they are kind of coming to the table with with their knowledge and their learning

• 1:30:30Ryan Sean Adams?

  and they're asking you more specific questions, right? Because if you kind of do the work for them, then they weren't really ready to hold on to their own keys and self custody. You kind of have to just like, hey, you can leave on exchange until you're ready to move it off. And then go figure out what you think are some of the best. And then I'm happy to give you some help or pointers or that sort of thing. But like making them do it themselves is kind of a key because that's like an acid test of are you ready or not, right? That's what I generally do, but it's important. Are you going to be single forever? That's grandma asking. Wow, there's a lot of, there's a lot of good questions that come up in Thanksgiving. You have anything else to to to end it with? What else can people expect to be asked?

• 1:31:15David Hoffman?

  Oh, what else can people expect to be asked?

• 1:31:19Ryan Sean Adams?

  Is price going, when is, is price going down to zero? Is crypto dead? Yeah, I feel like we've we've tackled that.

• 1:31:26David Hoffman?

  I think I think really the main point is is like Celsius, FTX, three hours capital. Like there's all these buzzwords that people have heard. And I think all you really need, if you are going to talk about this, all you really have to say is like, yes, this proves exactly what crypto is here for and and teach them the delineation between FTX and crypto. Like that's really the point to drive home.

• 1:31:46Ryan Sean Adams?

  There you go. There you go. And then tell them the listening back list if they're really curious. Takes of the week. What do we got here?

• 1:31:51David Hoffman?

  This is a fantastic automated take from this guy, Ryan Shon Adams. He tweets out, "The Tower of Babel is a story about mankind getting too full of themselves and trying to build a tower to reach up to the heavens and become gods. So God foiled them by confusing their language and scattering them all over the earth." Where is this written? Genesis, chapter 11. Wow.

• 1:32:12Ryan Sean Adams?

  Dude, that is no lie. All right. I looked this up because I was like, Genesis, huh? That's in, I wonder what's in chapter 11 of Genesis.

• 1:32:21David Hoffman?

  Wow.

• 1:32:22Ryan Sean Adams?

  No, this is real. Okay. Genesis, chapter 11. Look this up. I'm Googling it now.

• 1:32:26David Hoffman?

  Wow, that's great.

• 1:32:28Ryan Sean Adams?

  This is the Tower of Babel. This is the whole thing. And it was really about mankind's hubris. It's kind of like an Icarus type story of like you're trying to be bigger than God. And then what, what happens, David? God foils their languages. They all start speaking in different languages and they scatter all over the earth so that they can't complete the centralized project. They decentralize, David.

• 1:32:52David Hoffman?

  Wow.

• 1:32:52Ryan Sean Adams?

  Centralization.

• 1:32:53David Hoffman?

  That's crazy.

• 1:32:54Ryan Sean Adams?

  Tower of Babel goes to decentralization afterwards. And this is all Genesis, chapter 11.

• 1:33:00David Hoffman?

  Let me tell you, the scripting in 2022 is just like off the charts, man. I just Googled, "Why is it called chapter 11?" And turns out it has nothing to do with the Bible. So that's just completely.

• 1:33:11Ryan Sean Adams?

  No, that would be too much. All right. That would be too, too many hints in the simulation there. All right. What do we got? Arthur Hayes? No, this is.

• 1:33:18David Hoffman?

  Takes of the week.

• 1:33:19Ryan Sean Adams?

  Take.

• 1:33:19David Hoffman?

  Takes of the week.

• 1:33:20Ryan Sean Adams?

  Yeah. What's this take?

• 1:33:22David Hoffman?

  Arthur Hayes is retweeting a SuZu quote. SuZu, founder of 3R's Capital, says, "FTX set crypto back years." Arthur Hayes says, "The zoo per cycle in reverse. Where's my money, mofo?" Basically saying, "Oh yeah, 3R's Capital says FTX set crypto back to years? So did you, bro."

• 1:33:47Ryan Sean Adams?

  I think there's capital on a mission to be like, this one's worse than us. So can we come back now? No, you can't come back.

• 1:33:54David Hoffman?

  Okay, this one, this one was my take. I want to look through it.

• 1:33:56Ryan Sean Adams?

  I'm gonna read it, though.

• 1:33:57David Hoffman?

  You want to read?

• 1:33:57Ryan Sean Adams?

  Yeah, because or else it'll, you'll seem too self-aggrandizing if you read your tweets on this show.

• 1:34:02David Hoffman?

  People already think that I'm too self-aggrandizing.

• 1:34:03Ryan Sean Adams?

  All right. 2013, this is David. Proof of work fork and fair launch. We printed proof of work coins in 2013. 2017 ICO mania, we minted ICO tokens. 2021 yield farming, we issued governance tokens. Every bull market is a Ponzi scheme under the guise of new token distribution models and the emoji of slapping hand on forehead. It concludes this tweet.

• 1:34:29David Hoffman?

  The Bitcoiners really like this one because they're like, oh, David's finally figuring out that anything outside of Bitcoin is just a big Ponzi scheme. But then I would actually like to go to Exhibit A, my next tweet. Which is, a platform that is for finance is synonymous with a platform for Ponzi's. And so, like, we've talked about this before. Money, money is real, finance is perceived. Ponzi's are just the, like, extrapolation of the, that on steroids, right? Perceived money, hot air money. And so this is really how bull markets in crypto starts. We create something cool. In 2013, it was like, oh, we can fork Bitcoin a bajillion times, let's do it. And then in ICO, the ICO mania was like, oh, we can just mint a token, let's do it. And then in DeFi yield farming, it's like, oh, we can just like, have these governance

• 1:35:14David Hoffman?

  tokens and do yield farming to produce yield and attract investment. And they said, oh, let's do it. And then it just gets, you know, mutilated, right? So starts with a core primitive that adds a tool to the tool belt of this crypto economic future. And then we like, eke out all possible hype and value out of it over the next year. And then that's when people get hurt. It's a little bit frustrating, but that's how this industry proceeds forward.

• 1:35:36Ryan Sean Adams?

  It's frustrating, but like, it collapses back down to like, it's true utility value and the cycle resets again. There was no super cycle. It was just always the human cycle of like, it's just basically the hype cycle, right? All the way you go up to the point of, I almost said euthanasia, euphoria. And then you come back down and like, the, the cycle resets every single time. I think that's what we're seeing here. What are you thankful for, David? This Thanksgiving, November?

• 1:36:05Ryan Sean Adams?

  2022, November 24th, people are listening to this. What is David Hoffman thankful for this year?

• 1:36:14David Hoffman?

  There's a lot to be thankful for. I am excited. It's going to be practice for me to like go home with my family. And like, for the first time, I actually don't really want to talk about crypto things. I just like, you know, want to cook food and hang out with my one and a half year old super adorable nephew. And so I'm definitely thankful for that. I know I'm, I'm also thankful that it appears to be that we're like at the basement. You said, you just said just now that like, we are back to our like actual value of these networks, like nothing is hot air, these are now real. And so I know it's corny, but like, we're going to build our way out of it. And now the amount of signal that we're going to have over what's being built over the next six to 18 months is going to be so high. It's not, there's not going to be any fluff.

• 1:36:58David Hoffman?

  And so all of the hot air is out of the industry, which just lets everyone progress forward faster. And I remember in 2021, I remember you and I talked about this is like, as soon as the bull market got frothy and manic, you and I were like, this is tiring. Like, we need to wash this stuff out.

• 1:37:15Ryan Sean Adams?

  I didn't like it.

• 1:37:16David Hoffman?

  Right. We got our wish. Everything's washed out.

• 1:37:20Ryan Sean Adams?

  Too much, though.

• 1:37:21David Hoffman?

  And a little bit too much.

• 1:37:24David Hoffman?

  I was talking with some friends giving, it's like, so we lost some of the baby, but the bathwater is definitely all gone.

• 1:37:31David Hoffman?

  And so, I mean, we're on the other side. And so like now there's only signal. And so I am thankful for that.

• 1:37:38Ryan Sean Adams?

  Yeah, I think that's a great thing to be thankful for. And, you know, look, David and I met during a bear market, right? It's really fantastic time to be in the industry, be a settler, you meet some of the best people. And I guess that goes to what I'm thankful for, David.

• 1:37:53Ryan Sean Adams?

  I'm thankful that, makeless listener, that you're still here. If you're listening to this right now, it means you are a settler and not a tourist. All right? Because the tourists, the last few weeks, the last six months, 2022, they left, or they're in the process of leaving, but you're still here. I tweeted this out earlier. If you didn't make it this time, make sure you make it next time. Crypto is not dead.

• 1:38:19David Hoffman?

  Yep.

• 1:38:19Ryan Sean Adams?

  This is a multi-year, multi-cycle, multi-decade experience, right? And we've always said this, it's long-term. It's not about overnight gains. But you're still here. That means I'm confident you'll be here for the next cycle. And you'll be maybe a veteran the next cycle. You know who responded to that tweet, David?

• 1:38:39David Hoffman?

  Who?

• 1:38:40Ryan Sean Adams?

  Our friend Anthony Sisano. And he said this. He said, "I didn't make it in 2013, 2014. I didn't make it in 2017, 2018. I made it in 2020 and 2021. My overnight success was seven to eight years in the making." That is the opposite of SBF's story.

• 1:39:02David Hoffman?

  Right.

• 1:39:02Ryan Sean Adams?

  Of make it rich in one cycle, crash and burn. All right? This is actually all of the people that I've seen in crypto who've quote-unquote "made it." And when Anthony says he made it, he clarified that he's talking about like he's now financially independent and he can do what he wants and work on the projects he cares about, right? That is part of, you know, we say at Bankless, like, in order to make you healthy, we have to make you wealthy, right? But like, wealth doesn't come overnight. All right? And so this is a multi-year, multi-cycle thing. And the bottom line is, you're still here. So I'm optimistic about your future because you are still here. And this is where everyone I know in crypto who's quote-unquote "made it to the other side" has been here for multiple cycles.

• 1:39:44Ryan Sean Adams?

  And it goes back to like, the quick shortcuts often just like crash and burn. Like, you can't, it's, it's not about the things that are easy, right? You gotta find the things that are hard but still worth doing. And for, for me, that's what crypto is. Like, sometimes, David, in the euphoric cycles, I felt like, oh my God, like, we don't deserve this. I don't deserve this. What did I do? I just helped. Here's where you earn it. Here's where you earn the upside in a way that you don't, you shouldn't feel bad about it. You shouldn't feel bad about a 10x or like a 50x on the last cycle because you were here during, during the bear market. And I know you resonate with this story too, because, you know, like, quote-unquote,

• 1:40:23David Hoffman?

  It's the same story, yeah.

• 1:40:24Ryan Sean Adams?

  You made, like, it's Anthony's story, right? Of like, you, you made it because you persisted during the last bear market.

• 1:40:32David Hoffman?

  Yeah. And just to drive that point home one more time. The people that stuck around after 2017 to 2018 and stuck around during the bear market, the very long, hard bear market of 2018 to 2020. Everyone talks about the most lucrative time was DeFi summer. That's when all of the money was made without, without much of the risk, without much of the degeneracy. And people that were around for DeFi summer saw the 2021 bull market coming a year ahead of time. And so if you want that level of front-running the opportunity, you gotta stick around.

• 1:41:04Ryan Sean Adams?

  That's right. Stick around and we're going to continue to be putting out content for you. Look, 99% of everything that we do is completely 100% free. So I know we've been talking about the, like, the Bankless Black Friday sale that's on throughout this podcast. That's if you want to take another step on the journey. That's if you want to get some extra type of thing. But if you can't afford that, okay, just know that there is a place for you in the Bankless Nation. By the way, it's only $13 a month, but still, I know, like, if you have to choose between Netflix or Bankless subscription, I'd still do Bankless, but maybe there are some other choices you have to, have to forsake.

• 1:41:44Ryan Sean Adams?

  So we're still going to be putting out content. The vast majority is going to be free and we hope you stick with us. Be a settler. I think you'll, you'll appreciate it on the other side.

• 1:41:54David Hoffman?

  100%.

• 1:41:55Ryan Sean Adams?

  All right. Let's talk about meme of the week, David. I hope we got a Thanksgiving meme today.

• 1:41:59David Hoffman?

  I think we do. This was Perchi out of Bankless Dow. This is in classic Perchi artistic fashion. And it's four people around a dinner table. One person's talking. One of them has a very furrowed look on his face and the person that's talking says, "I read an article about SPF." It sounds like he was a complicated and somewhat controversial figure. And clearly the crypto person is just angry because he's actually a fraudster.

• 1:42:25Ryan Sean Adams?

  Yeah. At that point, you have to choose whether you want to say something at the Thanksgiving dinner table or not.

• 1:42:30David Hoffman?

  I think the response to that one is like, "He had bank in his name, Dad. Come on."

• 1:42:36Ryan Sean Adams?

  All right, guys. I hope you enjoy some time with your family if you're in the US. If not, thanks for humoring us during this American Thanksgiving episode. Risks and disclaimers, got to tell you, of course, as always, crypto is risky. So is DeFi. So is E. So is Bitcoin. As we've seen this year so many times. 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.

• 1:43:02David 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, Ask Me Anythings, and weekly rollups where we summarize the week in crypto and other

• 1:43:47David Hoffman?

  fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless Nation.