ROLLUP: Genesis Bankruptcy | SEC Crypto Crackdown | Kevin Rose NFTs Hacked | Aptos Token | BAYC Sewer Pass

4th Week of January, 2023 ------ Crypto Tax Calculator | Free Crypto Tax Calculator https://bankless.cc/CTCpodcast ------ JOIN BANKLESS PREMIUM: https://newsletter.banklesshq.com/subscribe ------ BANKLESS SPONSOR TOOLS: KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi ----- Resources: 0:00 Intro 4:20 MARKETS 9:00 Inflation https://twitter.com/NorthRockLP/status/1617593771222519811 11:00 Crypto Revenue https://cryptofees.info/ 15:50 Aptos Mooning https://decrypt.co/120009/whats-going-on-aptos-price 18:20 dYdX Rally https://thedefiant.io/dydx-rallies-18 19:00 Optimism All-Time High https://www.coingecko.com/en/coins/optimism 24:00 Genesis Chapter 11 https://www.theblock.co/post/204035/genesis-owes-more-than-3-6-billion-to-top-50-creditors 27:00 Gemini Earn Users https://twitter.com/cameron/status/1616298056097624064 29:00 SEC Ban Hammer FTX: https://www.sec.gov/litigation/litreleases/2023/lr25617.htm Avi: https://twitter.com/secgov/status/1616531972020469781 Nexo: https://www.theblock.co/post/203983/nexo-pays-45-million-to-settle-sec-and-state-charges-for-failing-to-register-lending-product 34:55 Hester Peirce https://www.sec.gov/news/speech/peirce-remarks-duke-conference-012023 40:20 Kevin Rose NFTs Stolen https://www.coindesk.com/web3/2023/01/25/kevin-rose-says-nft-wallet-with-dozens-of-high-value-collectibles-hacked/ Bad UX: https://twitter.com/RyanSAdams/status/1618329248275795968 Behaviors: https://twitter.com/iamDCinvestor/status/1618351192358408194 48:30 Shanghai Shadow Fork https://decrypt.co/119851/ethereum-shanghai-mainnet-shadow-fork-goes-live 49:30 Uniswap v3 on Binance Chain https://www.coindesk.com/tech/2023/01/23/uniswap-poll-shows-80-support-decentralized-crypto-exchanges-move-to-bnb-chain/ 50:30 Wormhole Hacker https://cointelegraph.com/news/wormhole-hacker-moves-155m-in-biggest-shift-of-stolen-funds-in-months https://twitter.com/0x_Osprey/status/1617603687702224897 53:00 Doodles on Flow https://twitter.com/poopie/status/1618271090459160577 https://twitter.com/doodles/status/1618262941287211009 55:10 Pudgy Penguins https://twitter.com/pudgypenguins/status/1618288231552004100 https://twitter.com/cyounessi1/status/1618273523671396354 56:05 Sewer Pass NFT https://www.coindesk.com/web3/2023/01/12/bored-ape-collections-pump-ahead-of-upcoming-sewer-pass-nft-mint/ 58:00 Yuga Arbitration https://twitter.com/flyabstractart/status/1616179578224926721 1:00:30 Porsche NFT Fail https://twitter.com/BcSmithHere/status/1617524649700757511 1:03:00 The Rug https://therug.mirror.xyz/biX_10PO0yD8nN_lN6ctr3tOa2X5CtFonDOtzl80dAY 1:04:05 Peter Thiel Sold BTC https://archive.ph/8XLr6#selection-1985.281-1985.356 1:05:20 Proof of Innocence https://twitter.com/RyanSAdams/status/1617999327867338753 1:08:15 Robinhood Wallet https://decrypt.co/119594/robinhood-wallet-metamask 1:10:00 QuickNode https://www.theblock.co/post/205028/quicknode-reaches-800-million-valuation-in-series-b-round 1:10:30 Questions from the Nation https://newsletter.banklesshq.com/subscribe 1:19:00 TAKES of the Week 1:20:00 RAI Mistake https://twitter.com/ameensol/status/1617582677833699330 1:24:50 No Bailouts https://twitter.com/RyanSAdams/status/1616536164621774849 1:26:10 Omnidimensional https://twitter.com/trustlessstate/status/1617734657759670276 1:28:00 What David’s Bullish On 1:30:00 What Ryan’s Bullish On 1:32:00 MEME of the Week https://twitter.com/icebergy_/status/1611153750432825350 MOMENT OF ZEN https://twitter.com/Xofee3/status/1618406659659038720 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://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?

  Kevin Rose has gotten his multimillion dollar NFT collection swiped, drained. So that's unfortunate news. We'll talk about that and we'll also talk about how you can protect your NFTs from getting fished, because if Kevin Rose can get fished, you can too.

• 0:19Ryan Sean Adams?

  Bankless Nation, it is the 4th Friday of January. David, what time is it?

• 0:23David Hoffman?

  It's the Friday Bankless Weekly Roll-Up, Ryan, where we cover the entire weekly news in crypto, which is always an ambitious endeavor, yet we persevere nonetheless into the frontier with coffee. I've already had two cups. How many are you at?

• 0:37Ryan Sean Adams?

  Uh, four, five. You know, you know, they answer this. It's always the same. I'm pretty regular, you know, like a regular coffee drinking old chap is what I am.

• 0:47David Hoffman?

  How's your Ember mug?

• 0:49Ryan Sean Adams?

  It's pretty good. It's retaining the heat. I use it all the time.

• 0:53David Hoffman?

  This is not a, this is not an ad?

• 0:55Ryan Sean Adams?

  It's actually, it's not an ad, no. Actually, so what happened is my office is like right down the hall from my kitchen and I would go from my office to my kitchen like many times a day to heat up my coffee. I mean,

• 1:07David Hoffman?

  The most frequent time you would leave your office is to go do that?

• 1:10Ryan Sean Adams?

  Well, but think about it, right? So like three times, three, three, three different coffee heatings per, you know, cup of coffee times five, it's 15 per day. Anyway, my microwave button broke off, like completely like disintegrated under the pressure of all of the, all the clicks. So I had to order a 3D printer part.

• 1:30David Hoffman?

  I'm just getting this image of this robot not knowing how to like control its own strength and just like snapping off its microwave paddle as it tries to open the door?

• 1:38Ryan Sean Adams?

  No, I was going easy on it. But yeah, it's, it just wasn't built for that kind of, that kind of pressures. Anyway, we're not talking microwaves or coffee today. What are we talking about? Topics of the week, David, what are we covering?

• 1:48David Hoffman?

  Topics of the week, Genesis officially filing for chapter 11. That saga is coming to a close. So we discussed the fallout, of course. Sadly, in other news, Kevin Rose has gotten his multimillion dollar NFT collection swiped. Ryan, what else are we going to talk about?

• 2:06Ryan Sean Adams?

  We're going to talk about the SEC. They came in with a big old ban hammer this week. Ellison, Gary Wang, Nexo, a whole bunch of action by the SEC. And we're also going to be talking about a fire speech from SEC Commissioner Hester Purse. Stay tuned for that. And Doodles migrating to Flow, Pudgy Penguins migrating to Arbitrum, Uniswap migrating to BSC. Is everybody moving from Ethereum, David? We gotta talk about that too. And of course, we gotta remind you to like and subscribe. If you enjoy this episode, if you're on YouTube, hit that like button, subscribe to the channel. If you're listening on the podcast player, then hit subscribe as well. David, before we get into this episode, gotta talk for a minute about taxes. And you know, I've always taken the time to talk about crypto tax calculator during the last few weeks.

• 2:51Ryan Sean Adams?

  This time is your time. I'm gonna hand this to you. What do you want to tell us about taxes and crypto tax calculator, David?

• 2:57David Hoffman?

  Okay, so if you're like me, you majored in a discipline that has nothing to do with money or finance or any, and your parents are same and never taught you about taxes. And so you had to figure it out for yourself because crypto was your first entrance into the world of business and finance and also taxes. And that probably means you need something like the crypto tax calculator that we are showing on the screen right now because you don't know how to do taxes. And so you use something like the crypto tax calculator, which there's a link in the show notes to go use to help you sort out your crypto tax nightmare, especially as crypto is getting more complex. First you have Ether, then you got staked Ether wrapped, staked Ether on Arbitrum that is gonna yield farm. That is brand new.

• 3:40David Hoffman?

  Well, crypto tax calculator can help you out with all of that. It's got all the layer ones, all the layer twos, many, many DeFi apps, 300,000 currencies, which I didn't even know we had that many. And it's as simple as just plugging in your Ethereum wallet, putting in your transactions, and they will do the rest. There's a link in the show notes for 30% off for Bankless listeners. That link, that, that code is bank30, but if you are a Bankless premium subscriber, you get 40% off from a secret code that is in the Bankless Nation Discord. So go there to get your, your, your tax off. How do you, how'd you like that pitch, Ryan?

• 4:13Ryan Sean Adams?

  That was pretty good. Guys, take it from the psych major, not from the business major. I think you pitched it better than me, my friend. Of course.

• 4:20David Hoffman?

  Don't need the tax calculator nearly as much as the

• 4:21Ryan Sean Adams?

  That's right. That's right. And I was too excited about it. That was actually practical advice. Good job, David. All right, let's get to markets then. Bitcoin, as measured by dollars. We still measure Bitcoin in dollars. We don't measure it in Bitcoin.

• 4:35David Hoffman?

  Dollar maxies.

• 4:37Ryan Sean Adams?

  Let's see, where are we at on the week? Up or down?

• 4:39David Hoffman?

  Big up, almost two digits.

• 4:41Ryan Sean Adams?

  Big up again?

• 4:41David Hoffman?

  Big up again. Started the week at $22,200, up 9.2% to where we are now at $23,000.

• 4:50Ryan Sean Adams?

  How are we doing this? This is like three-

• 4:53David Hoffman?

  Things keep going, going up, man.

• 4:55Ryan Sean Adams?

  I mean, I'm gonna start having to say bear market with a question mark at the end of it. Bear market? Like, what's happening?

• 5:01David Hoffman?

  Let's not get ahead of ourselves. It's like four days.

• 5:03Ryan Sean Adams?

  We'll talk about that. Well, I mean, it's been three weeks in a row, almost double-digit ups.

• 5:07David Hoffman?

  You're right, you're right.

• 5:08Ryan Sean Adams?

  Let's talk ETH price, too. Is that up, too?

• 5:10David Hoffman?

  1,530 was where we were last week. We were at $1,600, a hair above, oh, a hair below $1,600. We were above $1,600 a second ago, up 4.5% on the week. So only up half as much as Bitcoin this week.

• 5:23Ryan Sean Adams?

  Does that mean Bitcoin gained some ground on the old ratio?

• 5:26David Hoffman?

  That means we are down below 0.07 on the ratio, 0.069, so-

• 5:31Ryan Sean Adams?

  You mad about that, David?

• 5:32David Hoffman?

  I mean, it's just noise, brother. It's just noise.

• 5:37Ryan Sean Adams?

  Do you still have any bets outstanding on this ratio?

• 5:40David Hoffman?

  Oh, yeah. My BTC ratio is like, that is a multi-year-long, long position I'm holding.

• 5:45Ryan Sean Adams?

  How are you doing that trade? Is it like-

• 5:47David Hoffman?

  It's compound. No, excuse me.

• 5:50Ryan Sean Adams?

  Pave. Okay. Well, cool. Yeah, so you're betting that ratio and holding for the long run, right? What's your time horizon on that? Multi-year, you say?

• 5:57David Hoffman?

  Until, until the lappening, yeah.

• 5:59Ryan Sean Adams?

  Until the, not the flippening, okay? The lappening, which is what, double?

• 6:04David Hoffman?

  2X Bitcoin, yeah.

• 6:06Ryan Sean Adams?

  2X Bitcoin in market cap? So ETH would have to-

• 6:10David Hoffman?

  Maybe even the third lappening, who knows?

• 6:12Ryan Sean Adams?

  Okay, so what does that mean? ETH would have to appreciate by what? Is that 5X?

• 6:16David Hoffman?

  So if we, if Ether doubles versus Bitcoin, that's the flippening. And then it doubles again versus Bitcoin, which is the lapping. So that is up 4X from current Bitcoin prices is when I will perhaps consider to unwind this trade.

• 6:30Ryan Sean Adams?

  Perhaps, but then you'll feel like it's only going to go up from there.

• 6:33David Hoffman?

  Yeah, exactly. Like I said, Ether doesn't stop at the flippening. It starts lapping Bitcoin. That's, that's how it goes.

• 6:40Ryan Sean Adams?

  Can you imagine this industry on the day that that happens, the flippening happens? Can you imagine?

• 6:45David Hoffman?

  It would be the most healthy and progressive thing to ever happen.

• 6:49Ryan Sean Adams?

  I don't think it's going to sound very healthy, like your Twitter feed or my Twitter feed. When that day happens, but I'll be feeling okay about it. All right. Global cryptocurrency market cap, we above a trillion?

• 7:01David Hoffman?

  Above a trillion, 1.08 trillion dollars. Yes, that's right.

• 7:05Ryan Sean Adams?

  That's a lot.

• 7:06David Hoffman?

  That's a, that's a big number.

• 7:07Ryan Sean Adams?

  And it's pretty big for, like, are you hearing anybody saying crypto is dead this cycle?

• 7:13David Hoffman?

  Yeah, Jamie Dimon said it this last week.

• 7:15Ryan Sean Adams?

  Yeah. Oh, okay. Well, Jamie Dimon's been consistently wrong in crypto from the beginning of time.

• 7:19David Hoffman?

  That's right.

• 7:19Ryan Sean Adams?

  There's less of that than there was last time around, I think. I mean, there's fewer people saying crypto is dead.

• 7:25David Hoffman?

  Right. That was one of the best things that died in the 2020 to 20, the 2020 bear market. It was like, no one, after crypto, Ethereum, Bitcoin came back from that bear market. That was the last time I heard, like, it could all go to zero. Like, I'm sorry, Bitcoin cannot go to zero. That won't happen. Same thing, same thing with Ether. Like, it's just not going to go to zero.

• 7:44Ryan Sean Adams?

  I mean, a trillion is definitely not dead. It's very much alive. And yet, it somehow feels like, what did we get to last cycle? 3 trillion?

• 7:51David Hoffman?

  Almost 4 trillion, yeah.

• 7:53Ryan Sean Adams?

  No, just above 3.

• 7:54David Hoffman?

  Oh, just above 3.

• 7:54Ryan Sean Adams?

  Just a hair above 3. It still feels to me like crypto hasn't had its big one yet. Like, its big, big run-up.

• 8:00David Hoffman?

  Oh, God.

• 8:02Ryan Sean Adams?

  What do you think? I mean, like, if you think of the dot com bubble, for instance, and you kind of measure that in, in today's dollars, that was something like 7 to 9 billion? Excuse me, trillion? In terms of the...

• 8:16David Hoffman?

  It puts crypto bubbles to shame, yeah.

• 8:18Ryan Sean Adams?

  It was real big.

• 8:20David Hoffman?

  Yeah, it was the stock market.

• 8:21Ryan Sean Adams?

  Yeah, I don't think I don't think we're there yet.

• 8:24David Hoffman?

  My my mental model for this and you I'm there's nowhere I'm not gonna be able to tell if I'm I'm right on this at all. But just like, okay, so we had the 2013 bubble, we had the 2017 bubble, we had the 2021 bubble. To me, this is like the crypto engine like tumbling over. You know, you know, when you have an old car and it's like the and the cylinders tumble and it doesn't start and it tumbles and it doesn't start. Every single bubble is like a tumble. But these things are getting bigger and also kind of faster a little bit TBD. But the idea is like we just start to tumble and tumble and then the engine starts to rev and then crypto takes over the world.

• 8:58Ryan Sean Adams?

  Yeah, well, that engine feels like it's revering revving anytime it's above a trillion for sure. All right, let's talk about inflation. What is this chart showing us?

• 9:06David Hoffman?

  Yeah, this is a chart from Hal Press, which is just inflation typically goes down as fast as it comes up. So the headline CPI inflation for 1980 peaked at 15% year over year. And then it slowed at the same rate that it went up for the next three years back down to 0.2%. So this I asked Hal for a source on this one and he said it's just like national economic data. So it's like pretty, pretty damn verifiable. The take here is that inflation goes down as fast as it goes up, which is while we're still in the early days of data of declining inflation does seem to track so far.

• 9:41Ryan Sean Adams?

  So basically, we went up last summer all the way to 9%. And if we are kind of on the other side of the of the peak here, then we can expect over the next 12 months to fall back down to what is the question?

• 9:52David Hoffman?

  Two, two percent, two percent.

• 9:55Ryan Sean Adams?

  That's what happened in the early 80s.

• 9:56David Hoffman?

  2023.

• 9:57Ryan Sean Adams?

  Yeah, I don't know. I mean, are we ever going back to 2%?

• 10:00David Hoffman?

  Sure.

• 10:01Ryan Sean Adams?

  The question.

• 10:01David Hoffman?

  Well, it's all it's all relative. So like if we if inflation went down to 2%, it would not mean that prices went back to normal. Like eggs are still going to be high prices.

• 10:12Ryan Sean Adams?

  Just the rate of increase.

• 10:13David Hoffman?

  Just the rate of increase is now stable now, which is fine, because that is what we need. We're what we are doing with inflation is resetting the denominator and resetting the debt. So like debt is too large and so we had to keep on inflating and interest rates makes the debt too hard to pay for. And so what what did we do? We just cut the value of the dollar in like half and now that's so much more manageable.

• 10:35Ryan Sean Adams?

  I some I still somewhat wonder if the new normal is going to be above 2% though. I mean, like, it's been 2% for like, the 90s, right?

• 10:42David Hoffman?

  Sure.

• 10:43Ryan Sean Adams?

  Kind of the existence of most people's adult life.

• 10:46David Hoffman?

  I think that has to be above 2% because we have too much debt.

• 10:48Ryan Sean Adams?

  I think the new normal will be like a 3%, 4%. I think that's very possible, so we might not get back here.

• 10:53David Hoffman?

  Too much debt.

• 10:54Ryan Sean Adams?

  Let's talk about earnings in crypto, crypto revenues.

• 10:57David Hoffman?

  I love this.

• 10:57Ryan Sean Adams?

  David, we haven't pulled up cryptofees.info in a while. That's why I wanted to put it on our weekly agenda. I don't know when the last time you looked at this was, but tell us what we're looking at for somebody on the roll-up who hasn't seen us pull up cryptofees.info. What are we looking at and what does this tell us?

• 11:13David Hoffman?

  So there are two things that we're looking at here. There's pink and there's white lines on this list of things that generate fees. Pink are applications like Uniswap, Aave, GMX, Liquidie. White, non-pink are Ethereum, Binance Smart Chain, Bitcoin, or actually like blockchains. So there's different ways to measure this. The Uniswap fees, which are a seven-day average of $1.4 million generated over a seven-day average. So that's per day, $1.4 million per day over seven-day average, is the fees charged by the Uniswap protocol to traders to go to LPs.

• 11:46Ryan Sean Adams?

  It's like topline revenue, topline revenue.

• 11:48David Hoffman?

  Ethereum and also Bitcoin and also Binance Smart Chain is like basically gas fees, the fees it takes to transact on the network. Ethereum is making $4 million a day over the last seven days on average. Binance Smart Chain is the next closest profitable blockchain at five, half a million dollars a day, followed by Bitcoin at $350,000 a day.

• 12:08Ryan Sean Adams?

  Wow.

• 12:09David Hoffman?

  Yeah. Yeah, I mean, it's not, it's not, it's not zero, it's not zero.

• 12:13Ryan Sean Adams?

  Well, let's pause here. Okay, so when you say topline revenue for Ethereum, how is it generating this revenue?

• 12:20David Hoffman?

  Gas fees.

• 12:21Ryan Sean Adams?

  Refresh us on that.

• 12:21David Hoffman?

  Gas fees, gas fees, yes.

• 12:23Ryan Sean Adams?

  Okay, so what's it selling?

• 12:25David Hoffman?

  Block space.

• 12:26Ryan Sean Adams?

  Block space.

• 12:26David Hoffman?

  It sells you the space for you to put the data into the block so you can do your thing.

• 12:31Ryan Sean Adams?

  Because, guys, blockchains sell.

• 12:34David Hoffman?

  Blocks. It's what they do.

• 12:36Ryan Sean Adams?

  That's the thing that they do. And sometime, somehow every single cycle, we seem to forget this.

• 12:41David Hoffman?

  We forget this, yeah.

• 12:41Ryan Sean Adams?

  So what is the difference between, so, look, Ethereum is about 4 million in sales per day. That's how much block space it's selling per day. Bitcoin, $356,000 worth of block space per day?

• 12:55David Hoffman?

  It's actually way higher than I thought it'd be.

• 12:57Ryan Sean Adams?

  That's higher than you thought?

• 12:58David Hoffman?

  Yeah.

• 12:58Ryan Sean Adams?

  But look at the delta here. I mean, Ethereum's got like a 10x on it.

• 13:01David Hoffman?

  Yeah, it's over 10x, yeah.

• 13:03Ryan Sean Adams?

  Bitcoin looks tiny in comparison.

• 13:05David Hoffman?

  That's the smart contract premium. Like Bitcoin is like, alright, I'll send you Bitcoins. And then I'll also open up a Lightning channel. Ethereum is like, what you want? You want to mint some NFTs? You want to mint some tokens? You want to take some leverage? Like, what you want to do?

• 13:17Ryan Sean Adams?

  Yeah. It's got more to offer. In other words, the utility or the value of its block space is worth more.

• 13:24David Hoffman?

  Yeah.

• 13:24Ryan Sean Adams?

  It's very high. And are there any other layer ones on this? So we talked about B and B, which is, that's always been a little bit weird because it's super centralized. But it is producing revenue. And then what do we have coming in at number four? We have an L2.

• 13:36David Hoffman?

  Yeah, wow, that's the first time I've seen L2s on here. Optimism coming in at $40,000 a day, Polygon $39,000 a day, Arbitrum 1 $28,000 a day. These numbers are super low, but we also have to remember they don't have to pay for security by, in the nature of layer two design. So coming in after Arbitrum, actually, depending on how you measure it, Solana made less money than Arbitrum yesterday, but it's made more money over the last seven days.

• 14:02Ryan Sean Adams?

  I've never thought about it this way, but in a way, like, if you look at a layer two like Optimism, it's kind of like a reseller of Ethereum block space, isn't it?

• 14:09David Hoffman?

  Oh, yeah, that's a good way to put it.

• 14:11Ryan Sean Adams?

  Because it's basically, it's kind of like, it's taking the Ethereum product block space. It's making it more valuable. It's adding its value on top of it. And then it's reselling that to all the consumers.

• 14:21David Hoffman?

  Free arbitrage.

• 14:22Ryan Sean Adams?

  Yeah, that's interesting. But, okay, but the next, the next closest layer one, alternative layer one, is Solana with 45 million per day.

• 14:30David Hoffman?

  Yeah, making over the last 24.

• 14:32Ryan Sean Adams?

  45,000 per day.

• 14:34David Hoffman?

  Yeah, making less money in the last 24 hours, less than Optimism, less than Arbitrum, less than Polygon. Yet it also has to pay for security. So the other website that we also go to is moneyprinters.info, I think. And you'll just see like the absolute rate of inflation on a lot of these monolithic layer ones. We will hammer this into your head. Blockchain sell blocks. They also collect revenue. If they sell, if they issue more currency than they collect in revenue, they are inflating and that's bad for sustainability.

• 15:06Ryan Sean Adams?

  Yeah, that's why it's like, here's the thing. Someone in the, I think it was YouTube chat the other day when we were doing a live stream was like, why don't you guys talk about, why are you guys talking about these other alternative layer ones acting as if they should be valued far less than Ethereum? I'm like, because of this, go to this site.

• 15:20David Hoffman?

  Discrepancy.

• 15:20Ryan Sean Adams?

  Their revenue is down. They are not selling their blocks. Their product is less valuable than even layer twos.

• 15:26David Hoffman?

  By definition, their product is to not charge fees, which makes them fundamentally unsustainable over the long term. Like the product, the structure is broken.

• 15:35Ryan Sean Adams?

  Anyone can sell a product where you're losing money. Like I just, I don't understand why this isn't more widely.

• 15:39David Hoffman?

  I don't know. I don't know, dude.

• 15:41Ryan Sean Adams?

  Okay. All right. Well, we don't.

• 15:43David Hoffman?

  We are like, we're just dumb ETH maxies who don't understand.

• 15:46Ryan Sean Adams?

  It's just economics.

• 15:48David Hoffman?

  It's just basic economics.

• 15:50Ryan Sean Adams?

  It's just science. What's going on with the price of Aptos?

• 15:54David Hoffman?

  That's a really good question.

• 15:55Ryan Sean Adams?

  Well, do you have any answers for me?

• 15:57David Hoffman?

  Did you know the fully diluted valuation of Aptos right now is at $16 billion?

• 16:03Ryan Sean Adams?

  I did know that, David. And did you know, did you further know? The fully diluted valuation of Coinbase, remember that exchange, that little exchange is 12 billion?

• 16:12David Hoffman?

  Aptos, oh my God, it was $16 billion when I looked at it yesterday. It's at 18 and 0.6 billion dollars.

• 16:19Ryan Sean Adams?

  Look at this chart.

• 16:20David Hoffman?

  Coinbase, the exchange from 2011 or whenever it got started is at $12 billion. Who the hell is buying this? I think, I actually think it's, I think the inflows are actually coming from Korea for some reason.

• 16:32Ryan Sean Adams?

  This is a 6X from January 8th.

• 16:34David Hoffman?

  Unreal. It is an empty blockchain. There's nothing going on there.

• 16:40Ryan Sean Adams?

  There's some stats here for you, David. The TVL, total locked value, vanity metric, sure. For Aptos is $58 million.

• 16:50David Hoffman?

  $58 million.

• 16:52Ryan Sean Adams?

  That's with an M.

• 16:53David Hoffman?

  That's less than most DeFi apps on Ethereum.

• 16:55Ryan Sean Adams?

  The valuation is 18 billion. The total locked value on Ethereum is 32 billion. That's with a B. The valuation of Ethereum is 196. If you do that math of total locked value divided by fully diluted valuation, which you can do, that means Aptos is 53X.

• 17:19Ryan Sean Adams?

  More in terms of its value in the market than Ethereum. It seems like quite a hefty premium. I'm having trouble understanding why.

• 17:30David Hoffman?

  Yeah, I'm, I'm not one to be so foolish to short anything in crypto because why would you ever short something where there are just apes involved? But man, is that really an enticing short.

• 17:42Ryan Sean Adams?

  You're gonna do it?

• 17:43David Hoffman?

  No, I don't even know how because it's not a token. If it was a token on Ethereum, it'd be easy. I don't know, I would have to go do it in some centralized exchange.

• 17:49Ryan Sean Adams?

  But like, would you do it if you could?

• 17:51David Hoffman?

  If it was trivial for me, uh, yeah, I'd probably throw some pocket change at an apto short.

• 17:55Ryan Sean Adams?

  Yeah, just for fun, just for the economy.

• 17:56David Hoffman?

  Just to say, just to say I did it.

• 17:58Ryan Sean Adams?

  Yeah, I just never like, never short things because.

• 18:00David Hoffman?

  Yeah, it's always, it doesn't matter if it's the most obvious short in crypto history because apes will liquidate you.

• 18:06Ryan Sean Adams?

  Have you ever seen people do like these angry shorts? They're like, the market's wrong, apto shouldn't be this high. And they just like angry short it and they're just like freaking wrong and they bleed money.

• 18:16David Hoffman?

  But they're, but it doesn't matter because the volatility still liquidates them.

• 18:19Ryan Sean Adams?

  They might be right like two or three years later, right? But like, anyway, uh, DYDX is also rallying. The reason why is because they postponed an unlock of tokens. That's basically it.

• 18:31David Hoffman?

  That's the dumbest reason to rally.

• 18:33Ryan Sean Adams?

  Tokens is a pretty dumb reason.

• 18:35David Hoffman?

  Well, do we know that this is true? Because sometimes people just like to ascribe things.

• 18:39Ryan Sean Adams?

  Sure, it does seem like it's true because the news came out where they were like, the unlock will now begin December 1st. Rather than, I don't know, some other date. Uh, the details are in this article. Anyway, when that happened, then the price rose, so.

• 18:54David Hoffman?

  Yeah, alright.

• 18:55Ryan Sean Adams?

  That's what we're trading right now.

• 18:56David Hoffman?

  Cool, cool.

• 18:57Ryan Sean Adams?

  An unlock, we could just kick that can down the road. But, um, optimism is up too. Do you want to?

• 19:02David Hoffman?

  Yeah, optimism is at all time highs. OP token, uh, I'm sure if Arbitrum had a token, it would probably also be, I'm assuming these things will, will trade in, in parallel with each other. Optimism coming in at, uh, almost a $10 billion network, uh, which is pretty damn crazy.

• 19:19David Hoffman?

  It's hard to value these things because like optimism is still so new.

• 19:22Ryan Sean Adams?

  What am I looking at here? This is CoinGecko. This is just, this is not fully diluted valuation.

• 19:26David Hoffman?

  That's, that's market cap valuation. Yeah. So market cap is the discrepancy between the supply of OP tokens.

• 19:32Ryan Sean Adams?

  Not much supply on the market.

• 19:33David Hoffman?

  Not much supply on the market, but that's just a function of like how they're just slowly airdropping out their tokens, slowly releasing it, right? So like, there's a lot of locked tokens. Market cap is something like half a billion, but fully diluted valuation is at 10 billion. So it's actually technically not unlike Aptos in that there's a very small float and a very high fully diluted valuation. But when you buy these things, you need to look at the fully diluted valuation because that is the valuation that you are buying these things at.

• 19:59Ryan Sean Adams?

  If you're a long-term holder, at least, which I hope you are.

• 20:02David Hoffman?

  Yeah. Yes. Yeah. Yeah. But, but at least there's a real, actual innovation and activity. Like Velodrome on optimism is hitting volume all time highs. Uh, so there's actually like justifiable. Uh, it is kinda, it's like in a much more advanced AMM. Uh, it's a little bit, it's kind of a hybrid between um, Curve and Uniswap a little bit. But for any token, like Curve specializes in like to like assets. Uh, but Barvelodrome is a little bit like Uniswap where it's not like A to B assets. Price assets aren't supposed to be priced on parity. Um, I did, we did an episode with um, a few months ago. And then after we did the episode, the price absolutely mooned. I'm like, why didn't I buy it?

• 20:41Ryan Sean Adams?

  Yeah. Why didn't you, David?

• 20:42David Hoffman?

  I died.

• 20:42Ryan Sean Adams?

  Because it's tradition. That's why.

• 20:44David Hoffman?

  Yes, it's tradition. The, the number of times I've done a show on something and it's like, hmm, that's kind of bullish. And then I don't buy it. And then the show goes out and then the token price goes up is, that's happened a handful of times.

• 20:53Ryan Sean Adams?

  Uh, definitely it would be, by the way, guys, in case you're listening, um, if there was a purchase of anything that David made prior to doing a show, that would be listed in the disclosures on our website.

• 21:04David Hoffman?

  And also mentioned in the show.

• 21:06Ryan Sean Adams?

  And also mentioned at the beginning of the show.

• 21:08David Hoffman?

  Yeah.

• 21:09Ryan Sean Adams?

  So, um, even if David tried to fake pump and dump us, he actually couldn't.

• 21:14David Hoffman?

  Yeah.

• 21:14Ryan Sean Adams?

  Because we have that in place.

• 21:16David Hoffman?

  Yeah. Also, that's like not what I'm interested in doing. I don't need to do that.

• 21:20Ryan Sean Adams?

  You don't want to pump and dump. You just want to hold for the long term and be boring?

• 21:23David Hoffman?

  Yeah.

• 21:24Ryan Sean Adams?

  How boring.

• 21:24David Hoffman?

  Exactly.

• 21:25Ryan Sean Adams?

  All right, what's coming up next? We got some non-boring stuff?

• 21:27David Hoffman?

  I got some non-boring stuff, yeah. So Genesis filing for Chapter 11, so that is finally wrapping up. We'll talk about that. SEC coming in a hot. Ali Iceberg, the Mango Market manipulator, got charged by the SEC. Gary Wang and Caroline Ellison charged by the SEC. Nexo charged by the SEC. Lots of things to talk about. And then Hester Peirce of the SEC comes and delivers a fantastic speech, which Ryan and I just absolutely gushed over. We'll talk about that. And then also a bunch of NFTs migrating, Uniswap migrating to Binance, everyone on the move, lots to talk about. Oh, and we'll also talk about how to make sure that you don't get your NFTs fished, all that, and so much more. It's going to be a big roll up after we talk to some of these fantastic sponsors that

• 22:10David Hoffman?

  make this episode possible, especially Kraken, who is our strategic sponsor of 2023. Cheers. Kraken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Kraken puts an emphasis on security, transparency, and client support, which is why over 9 million clients have come to love Kraken's products. Whether you're a beginner or a pro, the Kraken UX is simple, intuitive, and frictionless, making the Kraken app a great place for all to get involved and learn about crypto. For those with experience, the redesigned Kraken Pro app and web experience is completely customizable to your trading needs, integrating key trading features into one seamless interface. Kraken has a 24/7 365 client support team that is globally recognized.

• 22:52David Hoffman?

  Kraken support is available wherever, whenever you need them, by phone, chat, or email. And for all of you NFTers out there, the brand-new Kraken NFT beta platform gives you the best NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers the way that Kraken does? And if not, sign up with Kraken at kraken.com/bankless. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all? Maybe you missed one. So here's what you should do. Go to Earnify and plug in your Ethereum wallet, and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does PoApps and mintable NFTs, any kind of money that your wallet can claim. will tell you about it and you should probably do it now because some airdrops expire

• 23:37David Hoffman?

  and if you sign up for earnify they'll email you anytime one of your wallets has a new airdrop for it to make sure that you never lose an airdrop ever again you can also upgrade to earnify premium to unlock access to airdrops that are beyond the basics and are able to set reminders for more wallets and for just under $21 a month it probably pays for itself with just one airdrop so plug in your wallets at earnify and see what you get that's E A R N I dot F I and make sure you never lose another airdrop

• 24:03Ryan Sean Adams?

  we said it would happen last week and now it happened genesis filing for chapter 11 here's the story genesis owes more than 3.6 billion to top 50 creditors the papers were released we got some more data on this David Phyllis and what's happening with genesis

• 24:20David Hoffman?

  yeah genesis global files for bankruptcy protection in the US bankruptcy court for the southern district of New York in the filing there the company published a list of its top 50 unsecured claims so if you are curious of that it's a whopping 3.6 billion dollars to it's just its top 50 creditors 3.6 billion dollars it's owed

• 24:40Ryan Sean Adams?

  are you on that list anywhere David

• 24:41David Hoffman?

  no I'm not

• 24:42Ryan Sean Adams?

  okay I think I am by proxy

• 24:45David Hoffman?

  yeah well I think I think you are joined by many, many, many people who are who are owed that because like again it turns out yield is just this gravitational black hole and so all the yield that was created in the last few years ended up flowing back into genesis it was the keystone of contagion so the list of creditors is going to be large 3.6 billion dollars is owed does not say how much they have assets under management that is not a 3.6 dollar hole as a 3.6 dollar amount owed they have some amount of money and they're on their balance sheet that they do have so it's not the whole size but

• 25:22Ryan Sean Adams?

  where's some of the big ones morana corp 151 million owed

• 25:26David Hoffman?

  I don't know what that is

• 25:27Ryan Sean Adams?

  babel finance I've heard of them 150 million van eck you know van eck

• 25:30David Hoffman?

  I went to their yeah I went to their talk not too long ago

• 25:34Ryan Sean Adams?

  Well, they're out of lock 53 million dollars. It's a, it's a whole big list here and a lot of people affected by this. Genesis is literally at the end of the, end of the row here, but okay. So Genesis goes bankrupt, but not DCG. Interestingly, which is kind of the parent company of all of this.

• 25:50David Hoffman?

  Yes. So DCG is letting Genesis go into bankruptcy without coming to save it because the hole is probably too big to, for that to be, for that to be saved.

• 26:00Ryan Sean Adams?

  For them to want to do that.

• 26:01David Hoffman?

  And so that's also, that's also why they are selling CoinDesk. They are, did you hear they're selling CoinDesk because they need to raise capital and like a parent.

• 26:09Ryan Sean Adams?

  I heard like prices on Twitter of like 25 to 30 million.

• 26:13David Hoffman?

  I would like that be really corroborated. I think that's just a rumor, but the price, the speculation on Twitter was like the prices that are being offered for CoinDesk is 25 to 50 million dollars, which is extremely low.

• 26:27Ryan Sean Adams?

  I think that's low too, but who knows how much it's hemorrhaging.

• 26:29David Hoffman?

  Right. Yeah. They, I know CoinDesk has a ton of employees.

• 26:33Ryan Sean Adams?

  And not be profitable.

• 26:34David Hoffman?

  Yeah. Well, it turns out, we all thought the block, I thought, I thought everyone was like, oh, the block, great company. Like, turns out they're not profitable.

• 26:41Ryan Sean Adams?

  Yeah.

• 26:41David Hoffman?

  Like, anyway.

• 26:43Ryan Sean Adams?

  Guys should. Imagine having an unprofitable media company.

• 26:48Ryan Sean Adams?

  All right. Will Earn get their money, their users' money back? That's the big question. And I know Cameron Winklevoss and the Winklevoss twins have been all up in this. This is Cameron Winklevoss with an update on Earn. This is the big question. It means like 900 million dollars, almost a billion dollars of retail funds in Gemini Earn. Will investors, well, I guess investors, will people get their money back, David?

• 27:13David Hoffman?

  So TBD. So quote from Cameron Winklevoss is that Genesis bankruptcy does not insulate Barry, DCG, or any other wrongdoers from accountability, said Cameron Winklevoss. Gemini is preparing to take legal action against Barry, DCG, and others for the fraud. So the idea here is that they are saying that fraudulent activity happened. It's outside of Genesis. It's Barry and all of DCG. And so if, even if Genesis can't make Gemini Earn customers whole, we are going to sue DCG and Barry Silbert for fraud to get the rest of the money back. So the Winklevoss twins continue to be coming in very hot with accusations of fraud. And we will only be able to tell what the truth is after everyone has their day in court.

• 27:57David Hoffman?

  But Gemini twins coming in very hot.

• 28:00Ryan Sean Adams?

  This is interesting. I just ran the math here. So $900 million divided by 340,000 earn users, according to Cameron Winklevoss. It's about an average of 2,600 per user. So, I mean, these are smaller retail types of accounts, and that could be somebody's, like, savings. Their crypto savings. Hopefully not their life savings. Don't invest more than you can afford to lose, and certainly don't lend it out to a crypto lender. Gemini laid off 10% of staff amid troubles, which, by the way, is not a lot compared to, like, Kraken just did 25%.

• 28:38David Hoffman?

  It's their third round of layoffs in the last eight months, but like 10% is relatively normal, especially when like other, like, Web2 companies are laying off similar amounts.

• 28:48Ryan Sean Adams?

  Yeah, totally. Like, Google just did a massive layoff. Coinbase has done layoffs. All right, well, we're going to continue to talk about this as it comes up, but we got more. The SEC ban hammer, what are they doing?

• 28:58David Hoffman?

  SEC charges Caroline Ellison and Gary Wang with defrauding investors in FTX. Absolutely no surprise there. In the press release, it's charged that Caroline Ellison manipulated the price of FTT by purchasing large quantities on the open market to prop up the price, again, which was the collateral that much of Alameda and FTX used to borrow with. Overstated the value of the collateral on the balance sheet led to all of this explosion at FTX and over a crazy amount of risk exposure. The complaint stated that Wang created the FTX backdoor, allowing Alameda to divert FTX customers' funds, and Ellison used misappropriate FTX customer funds for Alameda's trading strategy. I think as these people go through

• 29:42David Hoffman?

  the process of being in court, we're going to find out how much did SBF actually know? Because he claims that he had no idea that Gary Wang had the backdoor between Alameda and FTX.

• 29:53Ryan Sean Adams?

  How could he have known?

• 29:54David Hoffman?

  How could he have known that? His, his exchange and his prop trading desk having a backdoor with each other? How could he have known?

• 30:02Ryan Sean Adams?

  Yeah, I just, impossible to know, really. You gotta feel for the guy. Caroline Ellison was the former CEO of Alameda, right?

• 30:09David Hoffman?

  Yes.

• 30:10Ryan Sean Adams?

  And then Gary Wang was the CTO of FTX.

• 30:13David Hoffman?

  Correct.

• 30:13Ryan Sean Adams?

  Basically operating as the same.

• 30:14David Hoffman?

  Very incestuous, yes.

• 30:16Ryan Sean Adams?

  All right, so that's hit number one from the SEC. What about number two?

• 30:19David Hoffman?

  Ali Elsberg, the guy that manipulated the Mango markets on Solana and then took that money over to AVE to try and do a short squeeze on Curve or something, but then he got liquidated, blah, blah, blah, blah. I think the AC FTC is going after him too, but the SEC charged AVE with market manipulation, which is what he definitely did. Elsberg is, Eisenberg, excuse me, is in federal prison awaiting transport to New York City. And the SEC labeled Mango token as a governance token offered and sold as a security on the crypto platform Mango Markets. So this is perhaps setting a precedent.

• 30:54Ryan Sean Adams?

  What is the Mango? You said Mango Markets. What are we talking about?

• 30:57David Hoffman?

  I think it's like an AVE.

• 30:58Ryan Sean Adams?

  Solana DeFi?

• 30:59David Hoffman?

  It's a Solana DeFi thing, yes. I think it's like a borrowing lending protocol.

• 31:02Ryan Sean Adams?

  You know what's funny to me is, I'm like, the headline is that this guy apparently stole 116 million of crypto assets. I'm like, oh, that's not that much. Holy crap, it's 116 million? What has happened to me?

• 31:14David Hoffman?

  Yeah.

• 31:15Ryan Sean Adams?

  I'm like measuring things in the billions for the frauds of 2022.

• 31:18David Hoffman?

  He was the guy that tweeted out, "We just engaged in an extremely profitable trading strategy." And everyone was like, "Bro, you stole that money."

• 31:26Ryan Sean Adams?

  It's called stealing. It's called market manipulation and theft. And he tweets about it.

• 31:31David Hoffman?

  He tweets it. Well, he had to.

• 31:33Ryan Sean Adams?

  This reminds me of like.

• 31:33David Hoffman?

  He did it out in the open. It's like, it was a very profitable trading strategy. Yeah, like market manipulation is profitable.

• 31:38Ryan Sean Adams?

  Do you know like when, when YouTube influencers and stuff and like TikTok influencers like will literally film? The crimes that they're doing. And like post it for clout. This is what this guy was doing. Advertising his big wins. And it was in the form of market manipulation. So that's number two. Was this, yeah, same thing. How about they hit someone else? Nexo.

• 31:58David Hoffman?

  Nexo.

• 31:58Ryan Sean Adams?

  Forty-five million dollars settlement.

• 31:59David Hoffman?

  SEC charged Nexo for failing to register the offer and sale of its crypto asset lending product, its interest product. Nexo has agreed to pay the SEC forty-five million dollars and have ceased the sale of the earned product to US investors. This is why Nexo said that they were leaving the US market last December, citing a dead end in talks with US regulators, which is kind of on par with conversations we've already had. SEC charged Gemini Earn and Genesis last week for the same thing. Also told Coinbase it would sue them if they released Coinbase's earned product as well. And so this is kind of far in line with all the other things that the SEC is doing to.

• 32:37Ryan Sean Adams?

  David, so I feel like, you know, lots of times Bankless has a lot of scolding for the SEC.

• 32:43David Hoffman?

  Yeah.

• 32:43Ryan Sean Adams?

  Like, we're like, what are you guys doing? Stop doing, like, what are you doing? Can we be mad about some of these actions? I mean, the SEC taking on a market manipulator for the Mango token, the SEC taking on the FTC, FTX executives and doing that. I don't know about Nexo, but like, even though she's those two, isn't the thing we want the SEC to do is come after like the clear scammers and grifters?

• 33:07David Hoffman?

  Yes.

• 33:07Ryan Sean Adams?

  Like the Bitconnect guy from 2017?

• 33:10David Hoffman?

  Yep.

• 33:10Ryan Sean Adams?

  Isn't that where crypto is basically, hey, we could use some help in these areas? So I almost feel like I want to praise them for this or like say thank you for some of these things. And yet, David, I'm like, I'm worried to say that because I don't know what the lines of demarcation actually are.

• 33:28David Hoffman?

  Right.

• 33:29Ryan Sean Adams?

  And like, it's kind of like, oh, you give them an inch and they'll take a mile sort of thing. And so I'm just, I don't know how to really address this or how to talk about it. I don't know if you have any takes on that, but yeah, what do you think?

• 33:41David Hoffman?

  My take has been what it's always been, which is if it can be regulated, then it ought to be regulated. If there is a central Loki of power that the SEC has the ability to apply pressure to, and that works, that means that that thing that they're applying pressure to is sufficiently centralized to the point where there is a discrepancy between public market information and private actors. That means there is a principal agent problem. And so it's a little bit kind of judging after the fact, like if the SEC can apply pressure, then they ought to. But that's just what the nature of decentralization is.

• 34:14Ryan Sean Adams?

  No, so I agree with that line, right? I agree with that line. However, like, so I think you almost have to get even more detailed there.

• 34:22David Hoffman?

  Sure.

• 34:23Ryan Sean Adams?

  Because that's a guiding principle, but like.

• 34:25David Hoffman?

  How do we know?

• 34:26Ryan Sean Adams?

  Yeah. EtherScan can be regulated. It is a centralized company.

• 34:30David Hoffman?

  Right.

• 34:30Ryan Sean Adams?

  Could be regulated as a broker dealer. If we, or like in Fura, for instance, are we going to make, remember that was actual legislation material from SBF. We should regulate all of the D5 front ends. Do you remember this?

• 34:43David Hoffman?

  Fair. I understand that. Yeah, that's a good point.

• 34:46Ryan Sean Adams?

  So, so how do we do this? I guess one of my takeaways last week was like a breath of fresh air. Hester Peirce, who is a commissioner of the SEC, gave a speech at a digital assets conference at University of Duke. And this is just exactly, like, I don't know how to articulate it the way Hester does, but the way Hester articulates the role of the SEC with respect to regulation crypto is exactly.

• 35:15David Hoffman?

  It's so good.

• 35:15Ryan Sean Adams?

  What we want.

• 35:16David Hoffman?

  It's a.

• 35:17Ryan Sean Adams?

  We should read some quotes from this.

• 35:18David Hoffman?

  Fresh reminder of how things ought to be done by the nature of why they were created in the first place.

• 35:26Ryan Sean Adams?

  Here's a, here's a quote. Hester says, "Crypto's value proposition depends primarily on the builders of this technology, not on the regulators like me, who lack technical expertise and stand on the periphery looking in."

• 35:39Ryan Sean Adams?

  What a great posture to the space.

• 35:41David Hoffman?

  Some of these lines are so great.

• 35:43Ryan Sean Adams?

  What else you got?

• 35:44David Hoffman?

  My favorite line here was privately designed and voluntarily implemented solutions can be both more effective and more tailored because the people driving them better understand the technology and what they are trying to achieve with it. Iterating and experimenting with private solutions is easier than it is with regulatory ones. Moreover, private solutions avoid the systemic risk that comes from an industry homogenizing because everyone has to fit into the same regulatory parameters. Like, mic drop. Oh, my God. It's such a powerful, like, line. It's so good. It's just also the principles of just like frontier innovation always happens when you let the free market do its best. And this is what I've seen, not necessarily the SEC at large, but Gary Gensler really

• 36:28David Hoffman?

  getting in the way of is just like really pushing back the freedom of the frontier to explore and innovate. Like, yes, we find trouble on the frontier and then we route around it and you're not going to do that, Gary.

• 36:40Ryan Sean Adams?

  She also says this, "Regulatory solutions which tend to be inflexible should be a last resort, not a first resort." I also appreciated, David, how this speech was also directed to people in crypto.

• 36:53David Hoffman?

  Yeah.

• 36:53Ryan Sean Adams?

  It said this, "To us, to the bankless audience, I think, people who believe in crypto's future should not wait for regulators to fix the problems."

• 37:01David Hoffman?

  Right.

• 37:02Ryan Sean Adams?

  "Regulatory solutions which tend to be inflexible should be a last resort, not a first resort." I said that already. "Privately designed and voluntarily implemented solutions are much better at fixing things than regulators using their inherently coercive power to impose mandatory solutions." She says later, "Crypto is about solving a trust problem. How can you interact and transact safely with people you do not know?" That is the core of it. Anyway, this whole speech is fantastic, and I just like the posture of a regulator really taking the time to understand our industry. What's up? If you go to the footnotes, David, look at these footnotes here, okay?

• 37:39David Hoffman?

  Are you gonna bring out... Oh, sorry, go ahead.

• 37:42Ryan Sean Adams?

  Multiple bankless podcasts.

• 37:44David Hoffman?

  Oh, yeah, right, yeah. Three bankless podcasts. What's up, Hester? Shout out. Thanks for listening.

• 37:49Ryan Sean Adams?

  Taylor Monahan, YouTube video, "On the Brink" episode.

• 37:54David Hoffman?

  Yeah. She listens to all the same podcasts we do. That's great.

• 37:58Ryan Sean Adams?

  I mean, she's... This is what we've asked the SEC and our regulators to do, is like, "We don't bite. Engage with the crypto community. We want the scammers out, too. Like, we want your help to do that, so can you take some time to understand, to talk to us?" Anyway, this speech made us, once again, so excited and so bullish. We reached out to Hester Purse's office and asked if she'd want to come to the show, and I think that's in progress, right?

• 38:23David Hoffman?

  She said, "I'd absolutely love to." So, Hester Purse, round two. People don't know that the crypto industry have warmly dubbed Hester Purse "Crypto Mom" way back when for offering the stances that she's been put forth in here. Also, you know she's a regular listener because she cited our "Is Everything a Security?" episode with Brian Fry. So, you know she's paying attention.

• 38:47Ryan Sean Adams?

  Yeah, yeah. She actually mentioned the fifth prong of the Howie test in the speech. Did you read that?

• 38:52David Hoffman?

  Oh, no, I missed that part.

• 38:53Ryan Sean Adams?

  Yeah, she did. She said, "And, yeah, fifth prong of the Howie test, some people have observed, is does the SEC want to regulate this?"

• 39:01David Hoffman?

  Right.

• 39:01Ryan Sean Adams?

  Which is exactly from Brian.

• 39:03David Hoffman?

  I mean, the only prong of the Howie test.

• 39:07Ryan Sean Adams?

  Anyway, I'm just beg this listeners know, we give regulators a hard time sometimes. And I think a lot of that's justified, but we want to call out when they're right and when they're trying to do the right thing. And let's keep in mind regulators are just people, they're citizens. This is a layer zero type of thing. And when they're, when they're fulfilling their mandate in like for the people, then I think that's a much healthier place to be. So just hats off to this particular regulator doing this work. And we hope more of them step up and do this and SEC, CFTC, all the government agencies in every jurisdiction around the world.

• 39:39David Hoffman?

  And just to really drive this point home, the reason why we spent time to talk about this is like, we talked about, okay, the SEC charged Caroline Ellison and Gary Wang with defrauding investors in FTX. Uh, yeah, that's good. Uh, charging Ali Ellisburg with market manipulation, like, yep, that's good. Uh, Nexo for failing to register, like the facts and circumstances, it's a black box. We don't really know. Um, but like the point is, is like the SEC, Hester in this article said, hey, crypto is not a monolith and we need to judge crypto individually by facts and circumstances. And I think that's how we should approach the SEC. Facts and circumstances for every single decision they make. And that is what we are trying to do here.

• 40:19Ryan Sean Adams?

  That's right. David, Kevin Rose had a real bad day earlier this week. Here's the headline, Kevin Rose's NFT wallet with 40 high value collectibles was hacked. This was a phishing scam, David, that drained millions of dollars worth of rare tokens, a lot of very valuable NFTs on this list. Uh, what did, what did Kevin lose in this hack?

• 40:40David Hoffman?

  Yeah, so 40 NFTs, like you said, one autoglyph, which hurts my soul. Autoglyphs are such a, such a treasure. There's not that many of them. 25 chromie squiggles, which is the first.

• 40:50Ryan Sean Adams?

  You lost this one?

• 40:51David Hoffman?

  Uh, that's a chromie squiggle. Yeah.

• 40:52Ryan Sean Adams?

  Yeah.

• 40:53David Hoffman?

  Uh, 25 of them, uh, which is the first art block ever created. Uh, one QQL mint pass, which I don't know what that is. One admit one pass from G money. I've got one of those. Uh, a cool cat NFT, the currency NFT by Damian Hurst, oof, quantum key, several on-chain monkeys. But, uh, it was nice to see that, uh, he owned a zombie CryptoPunk, extremely rare, extremely valuable, and that one was saved. But all the other ones were sadly lost to a phishing scam. The way that this worked is a fraudulent website. He proved a transaction, that transaction bundled up all the, all the NFTs that it was preparing to bundle up and then sent them outbound from Kevin Rose's wallet all in one go.

• 41:35David Hoffman?

  So quite unfortunate. Sorry, Kevin. That is terrible news. And this is just part of, part of the early days of crypto where we still need to work out some of these kinks. This is a problem that only we as an industry can solve.

• 41:48Ryan Sean Adams?

  Do you know that line we say at the end of every show, which is you could lose everything? Basically, this sort of thing can happen. This was a phishing attempt that got Kevin. This was my take on it, David, shortly after it happened. I said, it looks like Kevin Rose just had millions of dollars in assets stolen because he clicked the wrong transaction. And how brutal is that? You just clicked the wrong transaction. Imagine if swiping your credit card at the coffee shop put you at risk for getting your entire bank account drained. I think, David, this is really bad UX, honestly. It's something that crypto has to fix before it goes mainstream. Some people say there's ways Kevin could have protected himself for this. 100% agree. Yet if he was a bit more careful, and yet he's a seasoned veteran.

• 42:32Ryan Sean Adams?

  He's probably kicking himself now. But like, this could happen to anybody we know in crypto. Like a simple mistake of I'm signing a transaction that I think is legit from a wallet where I have a lot of different tokens or assets. This type of thing can happen. So how do we solve this? Do you, do you agree with me that this is up to the crypto industry to solve it? Like, it's a big UX problem.

• 42:56David Hoffman?

  There are things that you can do today to make sure that you never fall victim to this. And it's just a matter of taking the extra time and energy to do the thing. DC put out this, this wallet best practice, which I thought was very, very valuable. And also it's really the first two points that I think everyone can do. If you are engaging with a wallet that has a ton of value in it, you should consider that when you do something, the rest of the things in your wallet might be at risk. And so what? DC Investor is advocating for and which is a great system is that have people, people in the NFT world do this quite frequently. You can see people's like vault address in their name on OpenSea, have a vault address. And what that means is like you put all of your high value NFTs into that vault address.

• 43:41David Hoffman?

  You send it from your hot wallet to your vault address.

• 43:44Ryan Sean Adams?

  Like cold storage.

• 43:45David Hoffman?

  Cold storage, yes. You never ever approve any NFT for sale from the vault address. If you would like to sell that NFT, you send that NFT away from the vault address to a wallet that doesn't have much money in it. And then you approve it for sale from the that wallet. And what this does is that it only approves things to be sold from that hot wallet. So like this is how like, if you ever want to sell something on OpenSea or any other NFT marketplace, you have to give a smart contract approval to access that specific NFT set. This is how Kevin got Phished. He said, I'll sell this NFT. I approve. What he actually was doing is-

• 44:23Ryan Sean Adams?

  Not on OpenSea, right?

• 44:24David Hoffman?

  Not on OpenSea, some other phishing website, right?

• 44:26Ryan Sean Adams?

  It's probably somebody was like, hey, Kevin, here's something for free, or it could have been something like this.

• 44:31David Hoffman?

  And so he approved an in bulk, all NFT outbound transfers from that wallet. And then that smart contract did that. So what you do is that you only transfer one NFT into your wallet that you plan on selling. And then you just sell that one NFT. And then, once you're done, you send the NFT back into the vault wallet. So the vault wallet never ever approves any smart contract ever permissions to move your NFT. And so one is literally Fort Knox. And then this hot wallet is the one that you can collect all of your, you know, smart contract STDs. It's kind of what some people call them.

• 45:05Ryan Sean Adams?

  STDs?

• 45:06David Hoffman?

  Yeah. Uh huh. Yeah. So like, have you ever gone to like delegate.cash? For example, this website that DC's got, it'll show you. Sometimes like you load up your wallet and like, I've allowed all of these smart contracts to access my money. Like most, most of the time, smart contracts are safe because they're not owned by anyone. But if you approve a smart contract to access your money, and that smart contract is controlled by someone, they can remove all your money.

• 45:30Ryan Sean Adams?

  All right. Well, so let's double click on this. What is delegate.cash? Should people go do this right now?

• 45:34David Hoffman?

  Delegate.cash is a way to delegate a specific authority to have some sort of access to a hot wallet. There's also revoke, try revoke.cash, I think that's the one I was talking about. Yeah, and that can show you all the permissions that you've enabled for a specific wallet. And then you can unenable, unrevoke those. Yeah.

• 45:53Ryan Sean Adams?

  Yeah, definitely, definitely some things that you need to do as an early crypto native. We're settlers on the frontier here, right? We're basically beta testing all of these things for the rest of the world. And so we get the upside from that. We also get the pain when this sort of thing happens. So you need to protect yourself. It really is the Wild West right now. And I think DC has some valuable ways to fix this. Also, though, David, back to kind of the point, it's still really bad UX.

• 46:17David Hoffman?

  It's bad UX. Smart contract wallets, you need smart contract wallets, need smart contract wallets.

• 46:22Ryan Sean Adams?

  And I do think that this will be solved over time, but we're not ready yet. All right, David, what do we got coming up next?

• 46:28David Hoffman?

  Coming up next for the rest of the weekly roll up, when withdrawals, when withdrawals, Ryan. I would like to withdraw my Ether Psycho, I'm mistaken forever, but other people might. Wormhole Hacker is now the fifth biggest owner of staked Ether. And Ethereum NFTs are going multi-chain, as well as Uniswap going on to Binance. Crazy. All of this and more as soon as we get to some of these fantastic sponsors that make this episode possible. Uniswap is the largest on-chain marketplace for self-custody digital assets. Uniswap is, of course, a decentralized exchange, but you know this because you've been listening to Bankless. But did you know that the Uniswap web app has a shiny new fiat on-ramp? Now you could go directly from fiat in your bank to tokens in DeFi inside of Uniswap.

• 47:11David Hoffman?

  Not only that, but Polygon, Arbitrum, and Optimism Layer 2s are supported right out of the gate. But that's just DeFi. Uniswap is also an NFT aggregator, letting you find more listings for the best prices across the NFT world. With Uniswap, you can sweep floors on multiple NFTs and Uniswap's universal router will optimize your gas fees for you. Uniswap is making it as easy as possible to go from bank account to bankless assets across Ethereum. And we couldn't be more thankful for having them as a sponsor. So go to app.uniswap.org today to buy, sell, or swap tokens and NFTs.

• 47:49David Hoffman?

  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 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,

• 48:34David Hoffman?

  and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be: secure, fast, cheap, and friction-free.

• 48:42Ryan Sean Adams?

  All right, David, when withdrawals, when are people going to be able to withdraw their ETH from the Beacon Chain?

• 48:48David Hoffman?

  Still don't know, but we are one step closer. A mainnet shadow fork are in full dress rehearsal for system upgrades, which has allowed developers to test for flaws of the withdrawal contract. And so we have done a successful shadow fork of the withdrawals contract for Shanghai. And so this is like one of the last big things that we needed to get done in order to actually do withdrawals on mainnet. So this means that we are still on track for a March, perhaps, delivery of the Shanghai hard fork. That is not official, do not quote me, but we're looking good.

• 49:21Ryan Sean Adams?

  David said March. You can quote me quoting David. Hey, quoting David. Uniswap poll just shows 80% support for going to Binance, BNB Chain, that is. What is this?

• 49:33David Hoffman?

  I can't wait for the headline to come out. It's like Uniswap abandons Ethereum. We're getting a Uniswap on Binance. So Binance is not a Layer 2 on Ethereum, but it is an EVM clone, an EVM fork, which means it's relatively trivial to deploy Uniswap V3 there. Since Binance actually has real adoption, Uniswap is like, yo, let's go to Binance. And so 20 million uni token holders voted yes. 6,500 uni token holders.

• 50:01Ryan Sean Adams?

  So they're doing it.

• 50:02David Hoffman?

  Yeah, voted no, and so they're doing it. Yep.

• 50:04Ryan Sean Adams?

  Do you care about this?

• 50:06David Hoffman?

  It's not bearish for uni token. I think the only thing that's really relevant is for the uni token here.

• 50:12Ryan Sean Adams?

  It doesn't put Ethereum under any threat as well. It's not, they're not migrating and leaving. They're just adding.

• 50:19David Hoffman?

  It's adding more. It's like uni swap is on Arbitrum, it's on Optimism, it's on Polygon, and now it's also on Binance.

• 50:25Ryan Sean Adams?

  A story on Coinbase, of course, with a uni swap floaty here. I don't understand this image, David.

• 50:31David Hoffman?

  It's hard to get images for crypto headlines, man.

• 50:33Ryan Sean Adams?

  True, true. Wormhole hacker moved $155 million in biggest shift of stolen funds in months moved it. And then also staked a portion of this with Lido, started doing some things with it. So refresh us on the wormhole hacker. It made up with, made out with like hundreds of millions of dollars in hacking this, this bridge protocol. It's still live on chain and we could track it, of course, moving from, from place to place. And now they're active again.

• 50:58David Hoffman?

  Yeah, so wormhole hack, third largest crypto hack in 2022. Wormhole is the bridge between Ethereum and Solana backed by Jump. And so Jump actually filled that hole in wormhole. So they took it, they took the hit there to make people whole again. 120,000 Ether was stolen in February 2022 during the hack. So the hacker has now transferred $155 million onto some exchange. Then went on to swap that around in various DeFi protocols. The latest on-chain activity has a 95,000 Ether sent to OpenOcean? I don't know that text. And then converted into ETH-pegged assets like staked ETH and wrapped staked ETH. And then what they did with all of their staked ETH is they used it as collateral to borrow 13 million DAI,

• 51:43David Hoffman?

  which they then swapped it for more staked ETH, wrapped it and then wrapped that staked ETH again, and then borrowed more DAI. So they are leveraging long on their staked ETH. They stole a bunch of ETH and now they're leveraging it up.

• 51:55Ryan Sean Adams?

  So they are now the fifth largest holder of stake ETH?

• 51:59David Hoffman?

  Yes.

• 51:59Ryan Sean Adams?

  According to this tweet right here, which is pretty crazy. Is this threatening at all to eat a protocol like Lido? So let's say the authorities say, hey, you can no longer interact. Protocol can no longer interact with this specific ETH address. Why? Because it's a criminal. See, we find out the hacker is like North Korea or something like this. And it gets, makes its way on an OFAC sanction list, this specific address. Is this threatening to Maker? Or is this threatening to Lido at all?

• 52:26David Hoffman?

  Yeah, so I put out a tweet. Can Lido confiscate this ETH, this stake ETH? Turns out the answer is no. And I'll go back to what I was saying earlier. If it can be regulated, then it ought to be regulated. And if it cannot be regulated, then it's fine. And so hackers, like Ethereum doesn't know the difference between a normal, good person and a hacker. It's just everyone's treated equally. And if no protocol has the ability to do anything about that, that's just the way that it is.

• 52:50Ryan Sean Adams?

  And you can bet authorities are watching these funds move and waiting for this person to slip up. So they can nail them in real life, which is fine with me. NFT stuff, okay. Did Doodles just move to the Flow blockchain? I think so. Here is a tweet from, I think, one of the founders of the Doodles NFT project. So why did we choose Flow for Doodles 2? And he goes on, he states why. What's the TLDR of why Doodles is moving to Flow?

• 53:21David Hoffman?

  They think that they can get better customer user onboarding using the Flow blockchain. They think the UX is easier. And so newcomers can just get better access to Flow by all the various differences of the Flow blockchain. My critique of this is always that like, yeah, of course, things like Flow are better, are more like Web 2. And therefore easier for new users because they are Web 2, because it's centralized. But that's just my.

• 53:46Ryan Sean Adams?

  Last time I heard about Flow is in the context of Top Shots. And even Top Shots was kind of named in this tweet. In fact, the Flow founder says, this is how Top Shots got to 400,000 people.

• 53:56David Hoffman?

  Newcomers can create a wallet by signing into Gmail and then buy an NFT with a credit card. It's like, yeah, it's like, doesn't, okay.

• 54:05Ryan Sean Adams?

  So that, I mean, that is interesting, right? And you kind of wonder if other NFT projects are going to migrate. I've, you know, we've long known that they would migrate off of Ethereum main chain, of course. But the big question is, where do they go next?

• 54:17David Hoffman?

  Right.

• 54:18Ryan Sean Adams?

  And it seems like. The answer for doodles was flow. I also somewhat wonder, David, if this was subsidized. I know many blockchains, even layer twos, but certainly alternative layer ones, essentially subsidized projects in order to kind of move to their chain. So I wonder if some of that was involved. Here's a full letter to the community. Is there any takeaways from this?

• 54:38David Hoffman?

  Yeah, it's just like the doodles community knows that they're going to offend a certain set of their cohort of their community because I mean, flow is just, it's just not crypto aligned. It's not crypto native. Yet at the same time, as an Ethereum person, we should take this as a signal that our layer twos are not ready to do the things that they will eventually be able to do. And so other layer, other systems, ones that are more centralized and have compromised have been able to adopt protocols like this because they can just have better onboarding experience.

• 55:08Ryan Sean Adams?

  I think it's great. Bring on the competition, right?

• 55:10David Hoffman?

  Sure, sure.

• 55:11Ryan Sean Adams?

  Pudgy Penguins is doing something too. What are they up to?

• 55:14David Hoffman?

  Migrating to other ecosystems such as Arbitrum, Polygon and BNB. So Pudgy Penguins using Layer Zero, which is a cross-protocol into a communications protocol, has allowed for cross-chain bridging for Lil Pudgies, one of the derivative projects, so that you can find Lil Pudgies across more blockchains.

• 55:36Ryan Sean Adams?

  This is a take on all of these happenings from Cyrus Unesi. What's he say?

• 55:40David Hoffman?

  Yeah, he goes, "As an ETH maxi, I'm disappointed by this." I love the facetious self-lavelling of ETH maxis, by the way. "As an ETH maxi, I'm disappointed by this, but every Layer 2 builder needs to read this thread and figure out what type of onboarding and user experience they need to provide if they want to scale to the masses." It's just a fair, reasonable take. It's like, hey, our Layer 2s are not as polished as compromised Layer 1s, but they need to be. So.

• 56:04Ryan Sean Adams?

  Absolutely. David, you told me this was big news, but I wasn't following it. Board Ape community launched a new collection, apparently, an upcoming sewer NFT pass. What is this?

• 56:14David Hoffman?

  No, it's not no longer upcoming. It is released. Sewer NFT pass. It's a game called Dookie Dash, released by Yuga Labs. And in order to access this game, users had to hold a sewer pass NFT that was free for all Board Ape or Mutant Ape. Holders. So a new NFT that was created that was claimable by Board Ape and Mutant Ape holders that I can't remember what the the price for one of these NFTs started trading on the secondary market and was definitely trivial, definitely non-zero, was definitely a good price. And so the game instructs holders to reach a score above zero to validate the sewer pass and then transforms them into a mysterious power source, blah, blah, blah, blah. Like, okay, the wealth effect from Board Apes and Yuga Labs is absolutely insane. Because if you are a Board Ape holder, you got to mint a mutant ape.

• 56:59David Hoffman?

  You got to mint Board Ape Kennel Club. You got access to like the other side mint. You got the coin, the ape token drop. Now you got this NFT. So like, a lot of people who are outside, like me, like looking in at the Board Apes are like, why are those floor prices so high? How is the ape coin so high? Well, it's because of the wealth effect. Like, Yuga Labs keeps on airdropping like so much value to the ape ecosystem.

• 57:25Ryan Sean Adams?

  The community is really sticking around. It doesn't seem like some of these communities that...

• 57:28David Hoffman?

  Well, yeah, because they're making them rich, dude.

• 57:30Ryan Sean Adams?

  But we're in the bear market. And if everybody was leaving, if everybody was pressing the sell button, they would no longer be rich. It seems like this community is here to stay.

• 57:40David Hoffman?

  Right, because like the dividends you get from holding an ape has been, it's like paid for the ape like five times over.

• 57:45Ryan Sean Adams?

  Yeah, I'm saying like, I'm bullish on any community that is surviving and thriving in this bear market. And if that's what this community is doing, then it sort of makes me bullish. Not enough to buy an ape, but you know. What else are they doing? This is a tweet. The Board Ape Yacht Club organization sets a huge legal precedent yesterday for the whole NFT space. What is this huge legal precedent? This kind of went unnoticed, but you brought it to our attention.

• 58:12David Hoffman?

  Yeah, so in the terms for this Sewer Pass Dookie Dash game, there was in the fine print by minting this NFT, I believe, that says, "By accepting these terms, you are agreeing to resolve any dispute between you and Yuga Labs through binding individual arbitration rather than in court." So if I'm reading this, I'm not a lawyer, but they're saying, hey, by participating this, you remove your ability to take Yuga Labs to court for any dispute. And then they also finish saying, "You also waive any right to participate in a class action lawsuit or class-wide arbitration against Yuga Labs." So that's new out of the NFT industry.

• 58:52David Hoffman?

  What's your reaction to this, Rand?

• 58:53Ryan Sean Adams?

  I, you know, the reaction is obviously before minting, you're going to get hit with one of these gigantic terms of service agreements from here moving, moving on.

• 59:01David Hoffman?

  Yeah.

• 59:02Ryan Sean Adams?

  Like every, every project's going to have one of these to cover themselves. And that makes sense, but it's also just like, okay, well, that's back to the legal system. How many terms of services have you ever read before like clicking your iPhone update? Or, you know, whatever it is. Yeah, I mean, I, cool, I guess.

• 59:21David Hoffman?

  This, to me, this is the private market filling in the holes that things like the SEC and the CFTC has left. It's like they haven't given us any clarity. So teams like Yuga Labs are saying like, hey, in order to participate, you can't sue us.

• 59:34Ryan Sean Adams?

  Maybe, or maybe it's just.

• 59:36David Hoffman?

  Fine, that's fine for me.

• 59:37Ryan Sean Adams?

  But do you think it's just them covering their ass? I mean, it's not like we've created a new governance structure for like board ape holders to settle their disputes amongst one another. They're just saying, if you click, if you mint this thing, then you can't sue Yuga, which covers them, but.

• 59:52David Hoffman?

  Right. I mean, it's like you, it doesn't matter what asset, one NFT, what NFT, if it, if people buy it and then it goes down in price, if it goes down enough, people sue. It doesn't matter like what the precedent is or like what the grounds are. There's like, oh, I lost money. I'm going to sue. And so like this is just Yuga Labs finding a mechanism to protect themselves from that. And this is the private market saying, like figuring out when there's lack of clarity or a lack of investor protections, the people issuing the tokens get to, get to determine what the protections are.

• 1:00:22Ryan Sean Adams?

  Yeah, well, my only take here is I don't know whether it's good or bad, but I know it's going to be omnipresent from here on out in all NFTs, I'm sure. The Porsche NFT collection failed to gain traction. Man, what happened? People not into Porsche NFTs, David?

• 1:00:38David Hoffman?

  Yeah, so Porsche NFT Porsche, or is it Porsche? Porsche, uh, release an NFT collection, I think like 10,000 of them for selling a whopping 0.911 Ether permit. And what does the NFT look like? It is a JPEG of a Porsche, Porsche, it's a JPEG.

• 1:00:56Ryan Sean Adams?

  Porsche, I love that David and I don't know for sure. Because of course. I'm not a car guy. I don't know if you are. Are you a car guy, David?

• 1:01:03David Hoffman?

  I've got, oh, I would love to tell you about my car.

• 1:01:06Ryan Sean Adams?

  I know, because I, people, Bankless listeners know, we're huge sports guys, but we've never had the car conversation, actually.

• 1:01:14David Hoffman?

  Oh, I'm not a modern car guy. I'm an old car guy.

• 1:01:18Ryan Sean Adams?

  Just like, it's like your music, right? You listen to like a lot of old rock and stuff.

• 1:01:21David Hoffman?

  Well, since we're talking about it, I'm gonna go send you a photo and we're gonna talk about my car real quick.

• 1:01:26Ryan Sean Adams?

  Do I have to do this right now?

• 1:01:27David Hoffman?

  Yes, you do, because you brought it up.

• 1:01:29Ryan Sean Adams?

  David, I drive a 2015 Honda Odyssey, okay? I'm not a car guy.

• 1:01:34David Hoffman?

  Honda Odyssey was the car that I was riding in when I was being driven to soccer practice.

• 1:01:41Ryan Sean Adams?

  There's no shame in that, all right? It's a good car.

• 1:01:43David Hoffman?

  I'm sending this to you on Discord.

• 1:01:44Ryan Sean Adams?

  It'll take you from A to B. Guys, I'm anxiously awaiting, sorry for the interruption in this roll-up, I'm anxiously awaiting David's car picture. Wow, this looks slick, man. This looks like something old James Bond would ride here.

• 1:01:57David Hoffman?

  Right?

• 1:01:58Ryan Sean Adams?

  Can I find this? Let me.

• 1:01:59David Hoffman?

  Yeah, right-click it and there you go.

• 1:02:01Ryan Sean Adams?

  Let me show the Bankless Nation.

• 1:02:01David Hoffman?

  Look at that!

• 1:02:02Ryan Sean Adams?

  What is this?

• 1:02:03David Hoffman?

  That is a 1972 Volvo P1800.

• 1:02:07Ryan Sean Adams?

  You still own this?

• 1:02:08David Hoffman?

  Oh, yeah. Yeah, it's sitting in the garage of my house back in Seattle.

• 1:02:11Ryan Sean Adams?

  In real life, NFT guys, David owns one. I didn't know this.

• 1:02:14David Hoffman?

  That car has been in my family longer than I have.

• 1:02:16Ryan Sean Adams?

  No way!

• 1:02:17David Hoffman?

  Yeah.

• 1:02:17Ryan Sean Adams?

  So this is a family, not a family, family car. I have a family car. It's called a Honda Odyssey. I don't know what this is.

• 1:02:24David Hoffman?

  This is not a family car.

• 1:02:26Ryan Sean Adams?

  It's an heirloom. That's awesome. All right, guys, well, that was our car talk, so expect to hear more car talk from Bankless in the upcoming episodes. Actually, that'll never happen. What do we got next, David? Back on track. The NFT didn't work out. Anything else to cover?

• 1:02:44David Hoffman?

  There was a supply of 7,500 of them. I think they sold 900 total. Yeah, so it did not flop, or did flop, excuse me.

• 1:02:53Ryan Sean Adams?

  Did flop, huh?

• 1:02:54David Hoffman?

  It did a big flop.

• 1:02:55Ryan Sean Adams?

  Well, moving on.

• 1:02:57David Hoffman?

  It still made about 1,000 ease.

• 1:02:58Ryan Sean Adams?

  David, some interesting news here, too. I think you're gonna have to tell us.

• 1:03:02David Hoffman?

  Brand-new headline, Trump NFT holders have been airdropped classified intel by Donald Trump himself.

• 1:03:10David Hoffman?

  Actually, no, that's a rug. That headline brought to you by The Rug, which is a product out of the Dow. It's something I think we're going to try and experiment with. But The Rug is a weekly issue of a, it's like the onion of crypto. Aliens invented Bitcoin. Canadian government sends Ukraine $45 billion of Shib. Chat BT can't write satire for shit. It is, it's, there, some of the headlines are pretty damn funny. Gemini suspected of being run by one or more evil twins. If you are not paying attention to The Rug, there's a link in the show notes. You can collect this post on Mirror, by the way. And so, moving forward, the idea is that we are going to slip in a rug every single weekly roll-up. And we're going to read that, that headline at some point in the time.

• 1:03:52Ryan Sean Adams?

  This was The Rug this week, huh?

• 1:03:53David Hoffman?

  This is The Rug. Y'all just got rugged.

• 1:03:56Ryan Sean Adams?

  Trump NFT holders airdrop classified intel.

• 1:03:58David Hoffman?

  I think that's pretty funny. I think that was funny.

• 1:04:01Ryan Sean Adams?

  Intel's a disease, man. Everyone's getting classified intel. Alright, what do we got next?

• 1:04:07David Hoffman?

  Peter Thiel wound down his eight-year-long Bitcoin bet in March of 2022. So he sold pretty damn close to the top and a very early supporter of Bitcoin cashed out in March of 2022. Not long after being crazy on the Bitcoin 2022 stage, but that's a topic for a different day.

• 1:04:26Ryan Sean Adams?

  He, he held his Bitcoin for eight years, though. That's a long-term holder. He made about 1.8 billion. He bought his Bitcoin in 2014 and then just sold it in March. Good timing. March 2022. And then went on a Bitcoin stage and talked about how bullish he was on Bitcoin later that year.

• 1:04:43David Hoffman?

  Was it later that year? Was it, was it actually after he sold?

• 1:04:46Ryan Sean Adams?

  Might have been at the same time. When was Bitcoin Miami? It's March 2022. Maybe he went, David, you think he went to that conference and was like, these people are crazy?

• 1:04:55David Hoffman?

  Oh my God, it was in April. It was in April. He sold in March and started chilling in April. What was he doing?

• 1:05:03Ryan Sean Adams?

  I'd be a little mad at that if I'm more.

• 1:05:04David Hoffman?

  I mean, if he's, if he's gonna buy back in at the bottom, that's fine. Like, you can't, guy held for eight years. He's held longer than most people.

• 1:05:10Ryan Sean Adams?

  Yeah, sure.

• 1:05:11David Hoffman?

  But like, sold in March and then went to the conference in April?

• 1:05:16Ryan Sean Adams?

  Oh whales, what are you gonna do? All right, on releases this week, so somebody built a really cool protocol, I would guess, a protocol kind of extension. It's called proof of innocence. It's built on tornado cash. I think the best way to think about this is it basically enables a tornado cash user, which of course David and I are not, because we're US citizens. No longer. And that would be illegal. David once was. And what it does is it essentially allows you to cryptographically prove that you or your ETH address is not on an OFAC sanction list, even though you've interacted with tornado cash. So the builders are calling this a proof of innocence protocol. It uses cryptography to do this.

• 1:06:00Ryan Sean Adams?

  I think it's brilliant, David, because Of course it is. Basically OFAC and Treasury, of course, kind of OFAC is an organization under Treasury. There's a sanctions list and what they did was they blanket banned everyone from using tornado cash. That is, if you're a US citizen, you couldn't use it. And a whole bunch of people said, including us, what about the legitimate uses of tornado cash? Are you saying no one who is an American citizen can have access to on-chain privacy? Are you saying all of us are criminals? And OFAC's response was like, yeah, basically, that's what we're saying. Not only that, is that probably unconstitutional and possibly on its way to the Supreme Court. There are multiple lawsuits, one which includes my co-host David going on right now.

• 1:06:44Ryan Sean Adams?

  Now we have a tool that we can use to cryptographically prove that we are not criminals using tornado cash. I think this is magic. You can view the details if you're interested in this. There's a Medium post in the show notes, but my question that the Treasury is basically this, all right, can you unsanction the code now? Right. Because if we run this tool and basically prove that we are not, some of the addresses that you suspect are North Korea or other sanctioned type of addresses, that we are just average Americans looking for crypto privacy. Or, maybe or, the question to Treasury is,

• 1:07:20Ryan Sean Adams?

  Was this really not about protecting us from criminals and terrorists all along? Were you trying to do something else?

• 1:07:25David Hoffman?

  That's the beauty about this whole thing. This is like a, this is a statement of speech. It's not, I don't think it's really about the actual implementation of this code. It's about making a point, which is that now users can access privacy tools while proving that they're not North Korea or any other illicit actor, still have their privacy, which is their constitutional right, prove that they're, and then prove that they're not a criminal. And if OFAC doesn't remove this tornado cash now from sanction code, it just proves that it wasn't about North Korea in the first place. It was about making sure that, that they can spy on us.

• 1:08:02Ryan Sean Adams?

  Thanks to the builders for building this.

• 1:08:03David Hoffman?

  Thank you.

• 1:08:04Ryan Sean Adams?

  This is why we love cryptography.

• 1:08:05David Hoffman?

  See, cryptographic, cryptography is both the solution, the problem and the solution to all problems.

• 1:08:10Ryan Sean Adams?

  100%. Yeah. We are cryptography maximalists around here.

• 1:08:14David Hoffman?

  Oh, God, yes.

• 1:08:15Ryan Sean Adams?

  Robinhood has just rolled out a, a new wallet, a new crypto wallet. This, they say, is going to be a competitor to MetaMask, and they plan to onboard a million users this way. David, I think we've got a beta access to this. I haven't had a chance to, to test it out. But Robinhood is very much known for their design. And I know we talked to the Robinhood's founder back in the summer and told us this was coming. Well, now it's, now it's finally here. I'm excited to have new wallet entrance on the scene because I think crypt, I think competition will drive better solutions to, to the market. So this is great to see.

• 1:08:49David Hoffman?

  And you know those Robinhood users are going to be super picky. So like, they're not going to accept gas fees or anything like that. So like, this wallet has to solve that. Yeah.

• 1:08:57Ryan Sean Adams?

  Yeah. So this is built on Polygon right now. So they're also going to add support for Ethereum. And there's probably a way to get into some beta access. And then I think that will release to everyone later in the year. David, this is a new product from Index Co-op. What's this?

• 1:09:15David Hoffman?

  A diversified staked ETH index. It's just basically all of the staked ETH tokens inside of an index. That's that. Well done.

• 1:09:22Ryan Sean Adams?

  Some of them are risky, some of them are less risky. We've got some racist.

• 1:09:26David Hoffman?

  And now they're all together.

• 1:09:27Ryan Sean Adams?

  Now they're all together in one. Kind of packaged risk model for you.

• 1:09:30David Hoffman?

  Diversified portfolio.

• 1:09:32Ryan Sean Adams?

  That is DeFi for you. David, some raises this week. What's this first one?

• 1:09:36David Hoffman?

  Centrifuge raised $252 million to add more power to the real world asset revolution, which is a revolution I'm a big fan of. Centrifuge is the system that helps put debt products on-chain, loans, et cetera. Been around for a while, long-term cooperation with both Maker and AVE to help take real-world assets and put that value of real-world assets into DeFi, allowing Maker DOW to not just be the central bank of Ethereum, but the central bank of the whole entire world, which is why I'm bullish on it.

• 1:10:07Ryan Sean Adams?

  We got this as well from Quicknode. Tell us about this.

• 1:10:10David Hoffman?

  Quicknode, $800 million valuation in their Series B. Series B raised $60 million. Basically crypto infrastructure firm providing blockchain development tools. Two record quarters in 2022 and revenue grew over 300% last year, which is, wow, 300% in 2022? Jesus.

• 1:10:29Ryan Sean Adams?

  I know, pretty amazing. Good to see more blockchain infrastructure funding for sure. Quicknode's a good company doing great work. Guys, we have some questions from Bankless Citizens this week. The first one, let's see, who is this from? This is from?

• 1:10:42David Hoffman?

  Danton.

• 1:10:44Ryan Sean Adams?

  Danton, okay, Danton in Discord. I think we're looking at the question. A question on the staking derivative tokens, David. I'm gonna throw this one to you. Why is there a premium on our ETH that is a staking derivative for Rocketpool and a discount on ST ETH, which is a staking derivative for Lido? That's the question. Is it purely that our ETH is currently the most decentralized option and less reliant on a single point of failure? If all liquid staking derivatives, LSDs, are eventually one-to-one with ETH, then what is the benefit of buying or holding our ETH? Essentially, what's the benefit of one over the other? And is there a benefit to our ETH when the gains and staking rewards are essentially cancelled out by the premium pay? Help us understand these staking derivatives and why they trade with different market prices.

• 1:11:30David Hoffman?

  Yeah, so Danton's intuition was correct. RETH has a premium because the costs of decentralization are always higher. Lido doesn't have a cap on the supply of staked Ether because you just come in, there's no bond from the stakers. So the Lido validators, the 29 of them, you can come in and you give them your Ether and they don't have to put up any sort of bond. That's what the role of the Lido DAO is. With Rocketpool, the far more decentralized option, Rocketpool stakers do have to put up a 16 ETH bond. So there is a constraint on the supply of Rocketpool staking nodes, which limits how much external ETH can come into the system. And that is just the cost of decentralization.

• 1:12:11David Hoffman?

  Decentralization tends to be costly, it tends to be slow, and that is why the constraint on RETH supply shows up as a premium on the secondary market and the unconstrained supply of staked Ether from Lido shows up as a discount.

• 1:12:24Ryan Sean Adams?

  So it's a little bit like the difference between DAI,

• 1:12:28David Hoffman?

  Yes.

• 1:12:28Ryan Sean Adams?

  which is a little bit harder to scale in USDC, which is Coinbase can mint that to infinity.

• 1:12:33David Hoffman?

  Right, that's exactly right.

• 1:12:35Ryan Sean Adams?

  But what about this kind of follow-up question? So what if someone buys RETH? Is that a good idea? Or like, how does RETH equalize to the price of ETH? Is there some arbitrage opportunity here?

• 1:12:47David Hoffman?

  Right, so if one RETH is like 1.01 Ether, one Ether will net you like 0.99 RETH. So you kind of lose 1% ish at that rate. And so what Danton is asking is like, okay, well, you lose 1% right off the bat and at, you know, 5%.

• 1:13:05Ryan Sean Adams?

  Why would I do this?

• 1:13:05David Hoffman?

  5, 6, 7% returns a year, I'm backwards, like I'm back like 6 weeks or something. I have to pay 6 weeks of my time in order to make up for that. So why would I do that? Well, if you want to go and mint RETH by providing a node, you actually get that 1% premium.

• 1:13:21Ryan Sean Adams?

  Rather than buy it, mint it.

• 1:13:23David Hoffman?

  Mint it, yes. And so you mint RETH by, instead of buying RETH on the secondary market, you go to Rocketpool, deposit your Ether, and then you get RETH in return. And then you can sell that RETH for a 1% arbitrage. Now that 1% is not that much, so you kind of have to do this at scale. But that's how you can do that. And same thing with with staked ETH, if you want to wait until withdrawals, which are coming in March in theory, you'll say staked ETH is at 0.98 Ether. You buy one Ether worth of staked ETH, you get 1.202 ETH worth when you can later withdraw. But you are right that essentially the discrepancies between premiums and discounts and also APIs will eventually net out because of arbitrage.

• 1:14:04Ryan Sean Adams?

  Here's our second question, David, from Danube. And of course, this question is in the Bankless Discord, which is where Bankless citizens hang out these days. A question about Layer 2s. The question starts this way. It seems that every Layer 2 starts to create an ecosystem with a different value proposition. So you have DeFi on Arbitrum and NFT community on Polygon is strong and Optimism has its thing. Here's the question from Danube. Do you think that L2s would differentiate themselves in the future based on the value of ecosystem rather than technology? So what is it? Is the differentiator between these L2s, is it more on the technical side? Or is it more in kind of the community and the set of applications that are on top of them?

• 1:14:47David Hoffman?

  I absolutely love this question because this question is talking about, Ryan, the relationship between culture and code. And that is the thing that I think is the coolest thing about this whole entire industry. So Danube, he's on to something. They're on to something that like Arbitrum is super DeFi focused, Polygon's got this NFT community. Our Optimism is really focused on this governance model. And each one of these things has downstream effects as to who chooses to do what on each Layer 2. So the culture behind the teams and what the teams decide to build their Layer 2 as actually shows up in the communities that come to be built on these things. So like, Optimism is working on this Optimism Collective dual token model for governance,

• 1:15:27David Hoffman?

  which I think is like the longest term, most bullish time horizon for what we can do in this space is like, how can we re-architect human governance? And so you'll get a lot of like the regenerative finance, like public goods focused communities on Optimism. Like the DeFi ecosystem on Arbitrum is super hot, so you get a lot of the DeFi people. And a lot of this ultimately comes back down to like how these different Layer 2s are constructed. And so that's one of the bullish like cases for Layer 2s is that we have like The idea that every single chain is its own city, right? Like, some people like LA, some people hate New York, some people want to live in Seattle. Like, Layer 2s all have their own culture to all facilitate any sort of demand for any

• 1:16:10David Hoffman?

  sort of niche that needs to be, that needs to be expressed by the people that live on these things. And so that is how I see Layer 2s differentiating themselves based on values rather than technology, even though these things have a synergistic relationship.

• 1:16:22Ryan Sean Adams?

  It's, it's a little bit of both, right? But I do think you're right. Over time, the technology itself will become the commodity, right? All Layer 2s, like, just in the way that all cities in the real world adopted similar kind of standards around roads and kind of their transportation system and all of these things, not really that much different from like Chicago versus New York. But there were some subtle, there are some subtle things that are different, that are different. I, I do think all of these Layer 2s will kind of collapse on the same best set of technologies. You could even see some of that now with some of the optimistic rollups being like, ah, that ZK stuff, yeah, we'll implement that when the time is right. Not yet, but, but soon. And I do think it'll all just collapse. And what you have left is kind of the culture.

• 1:17:04Ryan Sean Adams?

  That's what makes Chicago different from San Diego, different from New York City, different from Austin, different from any, like, you know, that's the differentiator. So I do think that will become more true over time.

• 1:17:15David Hoffman?

  And this is, this is why, sorry, finish, finish your thought.

• 1:17:18Ryan Sean Adams?

  I was just gonna say, I think in the short run, technology does matter.

• 1:17:22David Hoffman?

  Sure.

• 1:17:22Ryan Sean Adams?

  A good bit.

• 1:17:23David Hoffman?

  Yeah.

• 1:17:23Ryan Sean Adams?

  And probably more than it will matter in the long, long term.

• 1:17:25David Hoffman?

  Yeah. What, and this, I'll take this moment to chill. The OP stack, this is something that optimism is building. The OP stack is this skeleton, it's like a build a Layer 2 workshop. And so they have all these modules that you can come and combine into a Layer 2. And so it takes the best of any Layer 2, turns it into a module, and you can build a Layer 2 on it. And so the OP stack is allowing for the expression of any type of Layer 2. And if you build it on the OP stack, any sort of Layer 2 that is built on the OP stack actually has synergies and composability benefits and just second order positive consequences that allow these OP stack chains to work together, which is what optimism is building for. Like, this massive Cambrian explosion of interoperable Layer 2s, Layer 3s that are

• 1:18:07David Hoffman?

  all built on the OP stack that allow for different technology to come together to allow for some sort of expression on top. I'm so bullish. It's so awesome. It's so sci-fi.

• 1:18:16Ryan Sean Adams?

  It's pretty exciting. By the way, I'm speaking of awesome things going on in the community. What you're seeing now on screen is the Bankless Nation Discord. This is where we hang out. We talk about heading west. This is where we head west with bankless citizens, bankless community members as a group. Questions like this get asked all of the time. David, you are doing something, I believe, this Friday, a special event in the Bankless Nation Discord. Tell them about that. And how can people who are not part of this community join?

• 1:18:45David Hoffman?

  So at the time of me speaking, newsletters going out on the Bankless newsletter that I wrote is called Ethereum, the Economic Engine, the Economic Machine. I'm super excited about this article. And tomorrow, which is actually today for the time of listening, if you are listening on Friday, at 3:00 PM Eastern, we're doing a little Q and A session. So everyone that's watched the video or read the article that has questions about the article, at 3:00 PM Eastern, we're all gonna be, all the Bankless Premium subscribers, all the Bankless Nation are gonna be in the stage in Discord. And I'll give a short little monologue about the article and unpack it a little bit. And then we're gonna do a Q and A session. And so for anyone that's got extra questions about the article or anything else, I'm sure we'll start talking about whatever, that is happening at 3:00 PM Eastern for every Bankless citizen. The other cool thing, Ryan, that happened in the Discord

• 1:19:30David Hoffman?

  this week, we made this channel called RSA/DavidTracking, if you want to click on that. How do we come up with all of the topics for the Bankless Weekly Rollup? Well, we put them into this channel inside of the Bankless HQ Discord, the centralized media company Discord. And then we've created this relaying channel into the Bankless Nation. So the Bankless Nation can keep tabs on what we're up to and making sure we're still working.

• 1:19:53Ryan Sean Adams?

  And so somebody can get our information and fork our rollup and come up with a different one, a better one with better hosts.

• 1:19:59David Hoffman?

  Exactly right. And so everything that we talk about, we just take the link from Twitter, from CoinDesk, wherever it is, we put it into our Discord, and then that bot relays it into the Bankless Nation Discord. And then you can like comment on that and see what we're gonna talk about. It's like you can see what we're gonna talk about seven days ahead of time, just because we have this carbon cloned copy of these two different Discord channels that goes. It's like a window into HQ. That's what we're up to.

• 1:20:23Ryan Sean Adams?

  A lot of cool stuff going on here. And if you want to become a, we're calling them Bankless Citizen, upgrade to Bankless Premium, there's a link in the show notes. And what happens is, when you join, You get a link to this Discord and you can catch David's talk tomorrow that's happening in the Bankless Discord. All right, David, we've got some takes of the week. Here's the first one from Amin Soleimani. ETH-only RAI, that's R-A-I, RAI, was a mistake. The ETH-staking yield means that borrowing RAI against pure ETH will always have some percentage opportunity cost. The RAI redemption rate should almost always be negative to reflect this opportunity cost. Decentralization is expensive. People don't want to pay. All right, there's some context, I think, people should understand before reading this tweet. The context from

• 1:21:05Ryan Sean Adams?

  my perspective is RAI was too much to call it a stablecoin. It's not tracking the dollar, but we'll call it a stablecoin, kind of a crypto-native stablecoin that doesn't have any off-chain value. So it's completely collateralized and backed by ETH. It uses some control theory to do this. It's sort of the original single collateral DAI model, only fully realized. Amin is, he's been in the Ethereum space for a long time. He's kind of a co-father of this RAI protocol, right? Which has been kind of exciting for crypto natives who want like, we want our crypto-only money, right? This is him kind of waving the white flag and saying like, hey, this method didn't work out. And I think

• 1:21:46Ryan Sean Adams?

  that's a big deal because he's been very bullish on RAI prior to this. So that's the context. I guess my question here is twofold. Why do you think Amin is waving the red flag, the white flag on this RAI project? And what does this mean for the future of crypto-native stablecoins? Does this mean we'll never get here? Because RAI was one of the most promising projects there. And it's just like, look at the market cap, David. It's down to like 8 million or so.

• 1:22:12David Hoffman?

  So this is like the supply of DAI going down from like almost 100,000, 100 million down to 8 million. And so like, man, this isn't working.

• 1:22:20Ryan Sean Adams?

  People aren't using it.

• 1:22:22David Hoffman?

  He actually follows up with a second tweet that has some elaboration. He goes, "I tried to do some casual interest rate manipulation to the set the redemption rate for positive." Basically, basically, he's saying that like RAI doesn't work when there's only one collateral, and no one wants to take the opportunity costs of using that their ether collateral to mint RAI when ether is just going up and up and up and up and up. And so maybe RAI works.

• 1:22:46Ryan Sean Adams?

  Wasn't he saying that maybe it works if you have staked derivatives in there instead? Like if you have STE in it or like RE, maybe it works better?

• 1:22:54David Hoffman?

  Yeah, so he said that the RAI team has always been doubling, tripling, quadrupling down on ungovernance, as in no governance mechanisms, just pure raw cryptography that makes this system work, which is admirable and very something that we should always aspire to. But he's saying that they went so far down the ungovernance route that they were never able to swap out ether for something like staked ether or anything else because they made their system so rigid. And so I think the lesson here is like, if you like, there is some benefit to having human governance, like going so far down the ungovernance.

• 1:23:30Ryan Sean Adams?

  You can't ungovern too soon until you like are ready for homeostasis.

• 1:23:34David Hoffman?

  Right.

• 1:23:35Ryan Sean Adams?

  Or also vacation.

• 1:23:36David Hoffman?

  Yeah.

• 1:23:36Ryan Sean Adams?

  And that's what happened here. And so basically, there's a massive opportunity cost for people depositing ETH to back RAI because it means they can't stake it.

• 1:23:45David Hoffman?

  Or do anything else, yeah.

• 1:23:47Ryan Sean Adams?

  Or do anything else. So it's a much higher cost of capital and it's just the economics don't make sense.

• 1:23:51David Hoffman?

  It's also just like, tip of the hat, it's hard to admit you're wrong. So props to Amin for waving the red flag and say, like, the project I'm working on, we made a mistake.

• 1:24:01Ryan Sean Adams?

  Do you ever admit you're wrong, David? When was the last time you admitted you're wrong?

• 1:24:04David Hoffman?

  Oh, no. It depends on the context. I've admitted that we were wrong about the alt layer one trade, but I only admitted it in the short term. I still write in the long term. I need to reflect on that one a little bit more.

• 1:24:20Ryan Sean Adams?

  I got one. We admitted recently that we shouldn't have had Nexo as a Q4 sponsor for six weeks.

• 1:24:25David Hoffman?

  Yeah. Yeah. But okay, but also I'll say like, we should be able to have centralized sponsors because centralized products, yeah, okay, blah, blah, blah, blah, blah. There's always like, I would always like to justify it in some particular way.

• 1:24:36Ryan Sean Adams?

  What I'm, look, the big takeaway here is I'm kind of worried we will never get sort of a

• 1:24:42Ryan Sean Adams?

  Crypto native backed stablecoin, that's my worry. I guess Frax is some combo of, maybe it's just our hybrid options are the only things remaining for us, but.

• 1:24:50David Hoffman?

  I think the decentralized enough approach is underrated.

• 1:24:53Ryan Sean Adams?

  Here's my take, David. I'll read it out. In crypto, when our banks fail, we don't bail them out. It's more painful in the short run, yet more healthy in the long run.

• 1:25:01David Hoffman?

  Free market.

• 1:25:02Ryan Sean Adams?

  This is kind of hard to just say, coming out of 2022, right? Because a lot of people got hit by 2022, including us, including many Bankless listeners. And yet, there's an element of like, that is short run pain. But what it did was it detoxified a bunch of the things that were destined to fail anyway. And it's strengthening our market rather than the other method that we use in traditional finance is bailout.

• 1:25:28David Hoffman?

  Right.

• 1:25:28Ryan Sean Adams?

  We didn't have to bail anybody out. The companies that were taking undue risk died.

• 1:25:34David Hoffman?

  Paid for that risk.

• 1:25:35Ryan Sean Adams?

  They paid for it. Isn't that the way it should be? I think that's good. And I'm hopeful crypto can preserve this sort of thing in the future. We'll be much smarter next time around. And the appropriate people largely got hit with the penalty for the risk that they took. It's not perfect. Let me just say it's not perfect. But I think bailouts would be far worse.

• 1:25:58David Hoffman?

  I totally agree. Yeah. The comfort that is a bailout is toxic towards maturation and growth. If you just, if you don't have to deal with your consequences, you don't ever mature.

• 1:26:10Ryan Sean Adams?

  Here's, here's your take, David. The bull case for ETH staking is no longer that Ethereum will be the settlement layer for the internet. That's now the base case. The new bull case for ETH is that it's the security layer for the entire internet. ETH staking goes from one dimensional to omnidimensional. I think you're talking about Eigenlayer here? Am I guessing that correctly?

• 1:26:29David Hoffman?

  I, well, not specifically Eigenlayer, but Eigenlayer is the one that's pioneering this field of restaking, or what I kind of have called omnidimensional staking, where you can take your Ether and stake it to Ethereum to secure Ethereum, but you can also take on additional slashing penalties to secure other things as well. And also get a yield for that, too. And so like, what do you want to secure? An oracle? You can restake your ETH. What do you want to secure? A prediction market? You can restake your ETH. So Ether, people think like, oh, yeah, Ethereum is going to be the settlement layer for the internet. The yield on Ether is going to be great. I'm going to stake and retire for the rest of my life. That's now the bait. I'm claiming that Ethereum is winning that and is going to win that. And so that's now the base case for ETH.

• 1:27:10David Hoffman?

  The new bull case for ETH is that you also get additional yields for other things that you want to use your Ethereum staking for. That gives you additional yields. And so it's just, it's rather than just being Ether is only meant for Ether staking. Ether, you can stake for anything. Omni directional staking.

• 1:27:27Ryan Sean Adams?

  I think this could be, and this should be honestly a bankless article at some point in time, because I don't think people fully understand this.

• 1:27:34David Hoffman?

  Probably.

• 1:27:35Ryan Sean Adams?

  Is the idea, I mean, it kind of transitions ETH into kind of the ultimate store of value.

• 1:27:42David Hoffman?

  The asset, yes.

• 1:27:42Ryan Sean Adams?

  In some ways, because.

• 1:27:44David Hoffman?

  It's the asset.

• 1:27:44Ryan Sean Adams?

  Yeah, you can use it to bond other entire networks as well. I mean, that's what we're talking about. It's like the secure, the unit of security for the entire internet. And I haven't fully walked through what all that means, but I think it's pretty cool.

• 1:27:59David Hoffman?

  This is why this Eigenlayer thing has captured the imaginations of many, many, many people.

• 1:28:05Ryan Sean Adams?

  All right, David, what are you bullish on this week?

• 1:28:06David Hoffman?

  I'm bullish on this concept, which is the subject of my article, which is economic equilibrium. So Ryan, the history of steam engines was that we figured out that steam has a lot of power. And so we tried to harness it for a while, and then it would just blow up because we couldn't figure out how to harness it. And then we figured out this mechanism called a centrifugal governor, which allowed a too hot engine to cool down and a too cooled engine to heat up. And then that was this mechanism that allowed this steam power to go into actual productive output, created this, the industrial revolution that we know today. I am claiming that that same mechanism of control theory, the controlling of power, is what the combination of EIP 1559 and proof of stake is for Ethereum.

• 1:28:52David Hoffman?

  Where when Gassies, remember when Gassies were like 600 Gwei? Like, all of that value went into. Proof of work and we actually just lost that value expended outwards out of Ethereum. With proof of stake in the IP 1559, the Ethereum economic machine can recapture that value, put it back into the Ethereum economy and actually like move forward as an engine. And so this is the subject matter of my article and it came out yesterday for you Friday listeners. And it's also why I'm just so bullish on what I'm calling Ethereum triggering the industrial revolution of the internet. Because all of this energy recapture Ethereum block space goes into the value of Ether. Ether is the dominant collateral on DeFi.

• 1:29:34David Hoffman?

  When the value of Ether and DeFi goes up, the downstream wealth effect for all tokens and supply of stablecoins also goes up. And it's just this recirculating loop of economic activity that makes the internet industrial revolution on its way. That's what I'm bullish on.

• 1:29:50Ryan Sean Adams?

  Yeah, that's cool, David. David bullish on steam engines.

• 1:29:52David Hoffman?

  Steam engines.

• 1:29:53Ryan Sean Adams?

  From internet steam engines. Cypherpunk to steampunk.

• 1:29:57David Hoffman?

  Ryan, what are you bullish on?

• 1:29:59Ryan Sean Adams?

  I'm really bullish on this proof of innocence thing. Just code that we were talking about that earlier in the show. All right. And just to recap, OFAC banned tornado cash. So, and they said, anyone who uses tornado cash is obviously a criminal. We have to assume. And so what did builders do? They developed a way to cryptographically prove that people using tornado cash are not criminals. And that's just badass.

• 1:30:23David Hoffman?

  It's so badass.

• 1:30:24Ryan Sean Adams?

  That is like jujitsu against authoritarians. I think the authoritarian move is like, you can't ban it because bad people will do bad things with privacy. Right? And the crypto builders are out there saying like, well, no, we can use our math and our cryptography to prove without divulging our privacy that we are not the criminals you think we are. That's why I'm bullish on. I just think that cryptography and builders and a community with shared values is always going to be able to fight back using the internet against authoritarians and against this, this further encroachment of our freedom. And the reason I'm bullish on that is both because I see it happening. That's what the crypto movement is all about.

• 1:31:08Ryan Sean Adams?

  And also, David, because honestly, it's our only hope as we transition to this digital era, we have to stay one step ahead of the surveillance state, surveillance corporations, and those that would seek to kind of encroach and control. So yeah, it's so cool when when we see that sort of thing. And then you can kind of put the acid test, you can throw it back to them and say like, yeah, was this really about what you say it was about protecting us from criminals and terrorists? Or was it about actually you controlling things? Right? And then that's where the the strong community and the social layer kicks in. And it's like, yeah, tell us, like, show us. Like, that's why that's why we've always thought of bankless and crypto as more of a social movement than

• 1:31:50Ryan Sean Adams?

  anything else. Anyway, that that kind of thing just makes me bullish because I had no idea this sort of thing was feasible. And then just somebody spins it out and is like, Yep, we release this open source code, go ahead and use it, extend it if you want. And then I could tweet like something to, you know, Janet Yellen, the Treasury, like, hey, can we can we use tornado again? Because we could prove that we're not criminals. Anyway, it's cool.

• 1:32:12David Hoffman?

  Builders always like four steps ahead of, you know, archaic institutions. And for all the people that are suing the Department of Treasury, myself included, this is just a huge piece of evidence that we get to take to the court and be like,

• 1:32:24Ryan Sean Adams?

  I think so.

• 1:32:25David Hoffman?

  Look at this. Look, look, what we can do. And so like, it's a huge boon to all the people that are suing the Department of Treasury.

• 1:32:32Ryan Sean Adams?

  Yeah, very cool.

• 1:32:33David Hoffman?

  So thank you.

• 1:32:34Ryan Sean Adams?

  All right, David, meme of the week.

• 1:32:34David Hoffman?

  Meme of the week.

• 1:32:36Ryan Sean Adams?

  Boom. Casino roulette table.

• 1:32:39David Hoffman?

  Where this is the scene out of The Hangover, except all the faces are have been replaced. All the the Wolfpack faces have been replaced by Kyle Davies of Three Arrows Capital. We got Sam Trubuco in the bottom left. We got Sam Bankman Fried rolling the dice. We got Do Kwon. Who is that in the back? Barry Silber. Oh, of course, Su Zuo. And then in the top right corner, we got Arthur Hayes.

• 1:33:01Ryan Sean Adams?

  Wait, what happened to Arthur? He's doing OK.

• 1:33:03David Hoffman?

  Well, I mean, after after fighting the CFTC and paying a fine, I don't think the guy, the guy's in Singapore, guy's not coming back to America. Each one of these things, each one of these people have an X over their face. They did not make it.

• 1:33:16Ryan Sean Adams?

  Yeah, RIP Wolfpack of 2022. That's it for you guys.

• 1:33:22David Hoffman?

  We got a moment of Zen. Okay.

• 1:33:23Ryan Sean Adams?

  Oh, yeah.

• 1:33:23David Hoffman?

  We have a moment of Zen. This is for YouTube only because it is only visual. And this is about the KZG ceremony that is currently going on. If you do not know what the KZG ceremony is, there is a YouTube video interview that I did with. Trent Van Eppen, Carl of the Ethereum Foundation. Basically, everyone needs to contribute entropy to this KZG Foundation. And then there's this like period of time where really fun and cool mechanisms of creating entropy are like kind of art, artful ways, tasteful ways of creating entropy are also being added into Ethereum to unlock EIP 4844. If you didn't understand that, go watch the video. But here is a very fun and creative way of creating entropy to add to Ethereum.

• 1:34:05David Hoffman?

  And that will come after, right after Ryan tells you all about how risky crypto is.

• 1:34:09Ryan Sean Adams?

  Yeah. Yeah, guys, it's super risky. Okay, 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.