ROLLUP: SEC Staking Krakdown | $BLUR Airdrop | SBF’s Bailout Money Source | Ordinals Still Growing

Bankless Weekly Rollup 3rd Week of February 2023 ------ 🚀 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 👻 PHANTOM | CROSS-CHAIN WALLET https://bankless.cc/phantom ------ Topics Covered 0:00 Intro 4:00 Markets 7:35 Inflation https://www.cnbc.com/2023/02/14/consumer-price-index-january-2023-.html https://eu.usatoday.com/story/money/economy/2023/02/14/cpi-january-inflation-data-today-live-updates/11247836002/ 11:45 ETH Supply https://ultrasound.money/ 15:54 BTC Halving Timelines https://twitter.com/DU09BTC/status/1626118062360469505 23:40 U. S. Ban Hammer https://www.sec.gov/news/press-release/2023-25 https://twitter.com/GaryGensler/status/1623777842000539648 https://blog.kraken.com/post/17619/settlement/ 28:15 Commissioner Hester M. Peirce Dissent https://www.sec.gov/news/statement/peirce-statement-kraken-020923 31:55 Coinbase Reactions https://twitter.com/brian_armstrong/status/1623860170404286464 https://twitter.com/brian_armstrong/status/1624829368915890176 33:00 Reactions & Takes https://twitter.com/ohaiom/status/1624534998069006337 https://twitter.com/milesjennings/status/1623850932860784641 38:30 SEC & NYDFS Hammering on Paxos https://paxos.com/2023/02/13/paxos-issues-statement/ 40:10 PayPal Pauses Stablecoin Work https://www.bloomberg.com/news/articles/2023-02-10/paypal-pauses-stablecoin-work-amid-regulatory-scrutiny-of-crypto 42:10 New SEC Rule restricts Which U. S. Companies Can Custody Crypto https://www.coindesk.com/policy/2023/02/15/sec-proposal-could-bar-investment-advisers-from-keeping-assets-at-crypto-firms/ 48:22 Hester Take https://www.sec.gov/news/statement/peirce-statement-custody-021523 49:45 Blur Drop https://twitter.com/blur_io/status/1625566146241114112 https://www.coingecko.com/en/coins/blur https://twitter.com/MannionNFT/status/1625602378106908673 https://twitter.com/BanklessHQ/status/1625620810902675457 53:45 ETH https://twitter.com/ultrasoundmoney/status/1625209951944642581 https://nerolation.github.io/mevflow.html 55:38 Polygon zkEVM Mainnet Launched on March 27th! https://twitter.com/MihailoBjelic/status/1625532387235971076 56:50 zkSync Era Mainnet https://twitter.com/zksync/status/1626235292268240902 https://forms.gle/KBreznP3g8aJYTJS7 1:01:30 NFTs https://twitter.com/cozomomedici/status/1625206526800703488 1:01:52 BTC NFTS https://dune.com/dataalways/ordinals https://www.coindesk.com/web3/2023/02/09/bitcoin-punks-ordinal-nft-collection-soars-in-value/ 1:06:40 SBF https://www.cnbc.com/2023/02/15/sam-bankman-frieds-two-bond-guarantors-revealed-after-unsealing-.html https://twitter.com/AutismCapital/status/1625930741367595008 1:07:57 Celsius https://twitter.com/CelsiusUcc/status/1625854272561889281 https://twitter.com/CelsiansNetwork/status/1625600427696717825 1:10:30 Releases Sign-In with Ethereum on Shopify https://twitter.com/sadaf_eth/status/1624086599486283776 1:11:55 Token Terminal Financial statements for DAOs https://twitter.com/tokenterminal/status/1625838112218677250 1:16:25 Questions from the Nation Takes of the Week 1:23:40 Balaji https://twitter.com/balajis/status/1625720725645692928 1:25:40 6529 https://twitter.com/punk6529/status/1625619140705656847 1:26:15 Ryan Question https://twitter.com/RyanSAdams/status/1625832853056417792 1:30:00 What David’s Bullish On 1:32:45 What Ryan’s Bullish On https://twitter.com/RyanSAdams/status/1626249830191321089 1:37:22 MEME of the Week https://twitter.com/ColinLieb/status/1623815237425106948 Risks & Disclaimers ---- 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?

  Sign up for the ETH meetup. Free beer, free beer. I get, I get pretty loose about 1.5 IPAs in. And so

• 0:09Ryan Sean Adams?

  It doesn't take much, huh?

• 0:10David Hoffman?

  It doesn't take much.

• 0:11Ryan Sean Adams?

  When you've been fasted for 36 hours.

• 0:16Ryan Sean Adams?

  Bankless Nation, it is the third Friday of February. We're after Valentine's Day now. And David, what are we getting ready to do? Gary Gensler not showing us any love, is he this week?

• 0:26David Hoffman?

  No, not this week, not this week at all. But there's so much other cool stuff apart from the SEC ban hammer that came to, to hit us on the head this last week. So we're going to cover all of that weekly news and more because, Ryan, like you asked, it's the Friday weekly roll up where we cover all the weekly news and more, which is always an ambitious endeavor, yet we persevere nonetheless.

• 0:46Ryan Sean Adams?

  It is. Okay, the SEC versus crypto. Right after we recorded last week, Gary smacks us upside the head like three times, I think.

• 0:54David Hoffman?

  Literally one hour after we were done recording, the biggest news of the week dropped. I was like, ah.

• 0:58Ryan Sean Adams?

  He was waiting.

• 0:59David Hoffman?

  He was, he was afraid. Waiting for us to finish.

• 1:02Ryan Sean Adams?

  Yeah, he was afraid that the roll up was going to capture all of this. And he waited until after. Yeah, it's not gonna work, Gary.

• 1:08David Hoffman?

  Sneaky Gary.

• 1:09Ryan Sean Adams?

  Let's talk about that. Sneaky Gary. The SEC versus crypto. We'll talk about that. Also, David, the Blur token dropped?

• 1:15David Hoffman?

  Yep.

• 1:15Ryan Sean Adams?

  We've got some details on that, don't we?

• 1:17David Hoffman?

  Big drop, yep.

• 1:18Ryan Sean Adams?

  What else are we doing?

• 1:18David Hoffman?

  A bunch of numbers. We also found the source of SPF's bailout money.

• 1:22Ryan Sean Adams?

  Really?

• 1:23David Hoffman?

  So we're going to talk, yeah, we're going to talk about who actually paid for SPF's bailout. The name Stanford comes to mind. Ordinals, Bitcoin ordinals, not dead yet, still growing in energy. Third week in a row where we can still talk about Bitcoin ordinals. So glad that that's not turning into a fad.

• 1:39Ryan Sean Adams?

  This is the most Bitcoin content in years from Bankless.

• 1:42David Hoffman?

  We have this section in the weekly roll up called Bitcoin stuff. It's empty 90% of the time, but like the last three weeks in a row, it's all been ordinals. So more ordinal, ordinal stuff continues. Celsius customers might get their money back, kind of. Some of it, maybe. Maybe, Ryan.

• 1:59Ryan Sean Adams?

  You tell me there's hope, David. You tell me there's hope for me, huh?

• 2:02David Hoffman?

  There's a little bit of hope. And then also the ZK EVM wars are heating up once again. So we'll cover all this and more.

• 2:08Ryan Sean Adams?

  David, before we get in, we got to talk about something we don't usually talk about or shill. And that is a bankless citizenship. We call this bankless premium. We're rebranding.

• 2:18David Hoffman?

  Rebrand.

• 2:19Ryan Sean Adams?

  A citizen of the bankless nation. And what is a bankless citizenship? And by the way, what are we looking at here? Because this looks like an event for the bankless nation at a conference that's coming up. What are we looking at?

• 2:31David Hoffman?

  Yeah, exactly. So bankless citizens get all of the extras that comes in the bankless ecosystem. There's an extra free podcast. There are in real life events.

• 2:41Ryan Sean Adams?

  Weekly podcasts.

• 2:42David Hoffman?

  Weekly podcasts, yeah. Exactly, debriefs, yeah. There's just a bunch of extra perks and we've hired out like two quarters ago and continued to hire out. And now a lot of this stuff is coming into fruition. So the perks of being a bankless citizen are up only. One of these perks is the bankless nation meetup. We so much of the bankless team, I think nine of us, not including me, are showing up to ETH Denver. Not Ryan. And so we're hosting a meetup. And so for the premium members, for the bankless citizens, there is a meetup. We are at two thirds capacity. So this is your final reminder that if you are a bankless citizen and you are also going to ETH Denver to sign up for the ETH Denver meetup. Free beer, free beer.

• 3:25David Hoffman?

  I get, I get pretty loose about 1.5 IPAs in. And so

• 3:29Ryan Sean Adams?

  It doesn't take much, huh?

• 3:31David Hoffman?

  It doesn't take much.

• 3:31Ryan Sean Adams?

  Especially when you've been fasted for 36 hours before.

• 3:36David Hoffman?

  So there's a link in the show notes. If you are not a premium member, but you do, well, excuse me. If you are not a bankless citizen and you would like to go to the in real life event, sign up for, sign up. We're going to be doing this at ECC. We're going to be doing this at Permissionless in September. Your bankless citizenship also gets you 30% off of Permissionless tickets, which pays for itself, by the way. And will also give you access to all the future things that we do as well.

• 4:00Ryan Sean Adams?

  You're gonna love it.

• 4:00David Hoffman?

  Link in the show notes.

• 4:01Ryan Sean Adams?

  All right, David, let's flip to markets. What's Bitcoin doing for us this week?

• 4:05David Hoffman?

  Bitcoin, very happy this week. Chad, Chad, levels of happiness. Started the week at 22,600, ending the week just shy of $25,000. We did touch $25,000. We are currently at $24,800. So

• 4:19Ryan Sean Adams?

  Is that a 10%?

• 4:20David Hoffman?

  10%. Nice job, Bitcoin.

• 4:22Ryan Sean Adams?

  Dang, crushing it. Is this ordinals?

• 4:24David Hoffman?

  Shaking off the rest, yeah.

• 4:25Ryan Sean Adams?

  Is this NFT fervor?

• 4:26David Hoffman?

  I don't think this is NFT fervor.

• 4:28Ryan Sean Adams?

  Can we say it is though? Can we just make up?

• 4:31David Hoffman?

  It would, it happened in the same week. So yes, it is absolutely NFT fervor on Bitcoin. That's why this happened. Yeah.

• 4:36Ryan Sean Adams?

  Okay. Yeah. And we called it too. We predicted it. We knew it would be 10%.

• 4:40David Hoffman?

  Never miss a call.

• 4:41Ryan Sean Adams?

  ETH, how's ETH doing?

• 4:42David Hoffman?

  ETH, started the week at 1630, up 6% to 1710. We're breaking through that $1,700 mark. If we can keep our head there's a resistance line, a meme line at $1,700 and we are currently $10 above that. If we can hold that and we be above the meme line, that means we have broken through some resistance. And hopefully that means you get continuation if you believe in this kind of thing, this voodoo chart magic.

• 5:09Ryan Sean Adams?

  Pop quiz. So when Bitcoin price goes up more than ETH price, what happens to the ratio, David?

• 5:15David Hoffman?

  The ratio between Ether and Bitcoin goes down from an Ethereum perspective. So we are down 4.5%, which is a big move for the ratio on the week. So Bitcoin definitely won the week this week.

• 5:25Ryan Sean Adams?

  Definitely won the week. And David, what would we do without Kraken, who provided us these glorious charts? Allows us to, on a weekly basis, tell you the price of ETH, tell you the price of Bitcoin. Otherwise, how would you know? It's not like you check the prices.

• 5:39David Hoffman?

  Yeah, you can still, you can still tell that Ryan's still using his old tabs method, even though that these Kraken charts have tabs inside of the tabs. You don't have to use your browser tabs. You can just use Kraken.

• 5:50Ryan Sean Adams?

  Look at this. I created a.

• 5:51David Hoffman?

  Soul BTC up. Yeah, Ryan's looking at the Soul BTC ratio. How's that doing? Can you zoom out on that? Over on the top left, you can go to the four hour candles instead of the one hour candles. Yeah. How's Soul BTC doing? Ooh, not great.

• 6:06Ryan Sean Adams?

  Yeah. Total market cap for crypto. I know we're above a trillion, right? What's the number?

• 6:10David Hoffman?

  We are almost at 1.2 trillion. We got 1.17 trillion dollars in total crypto market cap. Bullish, bullish.

• 6:18Ryan Sean Adams?

  I'm not feeling bearish right now.

• 6:20David Hoffman?

  I'm not bearish at all.

• 6:21Ryan Sean Adams?

  Does, should that concern me? I mean, it's been like, what, 260 some days, 250 days or something since all time lows on Ether. It's not that long in the scheme of things.

• 6:34David Hoffman?

  Yeah, well, so Ether bottomed back in last like April or May in dollar terms. Bitcoin bottomed recently in November. So Ether in the FTX crash, Bitcoin hit a new low. Ether's did not hit a new low. So Ether's been like having higher lows for a long time now. It's actually because like, no one really expected the 2022 bear market to be as bad as it was. And so we were like halfway through 2022 and was like, oh, is this bear market happening or not? And then all the way through 2022, like, oh, this is definitely happening. Now we're into February, we're like almost a year and a half into a bear market. And that's not a short amount of time. So like people are like, oh, how this bear market is going to be so brutal. We're a year and a half into it.

• 7:13Ryan Sean Adams?

  It hasn't been brutal, has it? Like, I just.

• 7:16David Hoffman?

  From an Ether has had a better time this bear market than.

• 7:20Ryan Sean Adams?

  Okay.

• 7:20David Hoffman?

  Ether and Bitcoin has had a better time this bear market than every other asset.

• 7:24Ryan Sean Adams?

  We'll talk about why that might be true when we get to the ultrasound money charts a little bit later. But first, we got to do our inflation watch, David. So the inflation report came out this week. And how are we doing? I'll read the headline and you tell me what this means, David. Inflation rose 0.5% in January, more than expected and up 6.4% from a year ago. That's up 6.4%, but overall down in annualized inflation numbers. But it rose 0.5% in January, which as I understand, it was a bit higher than most people in the market was expecting. So what do you take from this?

• 7:59David Hoffman?

  Yeah, so the markets really liked this. So I think even though it's higher than expectations, I think the downtrend, the market is starting to believe in this downtrend.

• 8:11David Hoffman?

  It's interesting. It's like it kind of counterintuitive, but the markets are liking it. And I think people are, the market is overall accounting for the fact that inflation has definitely peaked.

• 8:20Ryan Sean Adams?

  It's funny to me because I don't like, this is a little higher than I expected, right? So just to give you a context, in just January alone is 0.5% increase in inflation. December was only a 0.1% increase in inflation. So the annualized number covers a lot because it's a trailing 12 months, even though that was down on the month. We were like 5X up. I don't know if that makes sense. I do think that this means we're guaranteed to get more rate increases from the Fed. At least another 0.25% increase.

• 8:50David Hoffman?

  I think that was already on the table, but yes.

• 8:51Ryan Sean Adams?

  That was already on the table and this just guarantees it. I saw some headlines from the New York Times. One of the subtitles was "Evidence is mounting that it could be a long road back to normal." Which also begs the question, David, of what is normal?

• 9:07David Hoffman?

  Yeah.

• 9:08Ryan Sean Adams?

  I don't think-

• 9:08David Hoffman?

  2% is no longer the normal number anymore.

• 9:10Ryan Sean Adams?

  I don't think, well, like, I don't think that should be considered the new normal. And I'm not kind of making excuses for the Fed, obviously. I mean, we talk a lot about the problem of money printing here. But for everyone to just expect inflation to go back to 2% and for it to reset after we kind of get through this, you know, COVID supply chain thing that we've gone through over the past 24 months, I think that is fantasy land. I don't think we're going quite there. And maybe this proves that inflation's can be a bit more pernicious than some people thought.

• 9:45David Hoffman?

  Yeah, well, inflation conspiracy theorists, which I don't think is an actual conspiracy, but has, is, you know, is only reported to be at this level. The actual real inflation is likely always going to be higher than was reported. And people who are familiar with this are the citizens of Argentina. And this is a tweet that we're looking at from Dylan Leclerc, where "Annualized Argentine Inflation Hits 99%." Basically 100% inflation level, which means that the value of the Argentine peso loses 50% of its value over an annualized basis at the current monthly inflation levels measured in January. Highest since 1991.

• 10:24Ryan Sean Adams?

  Can you imagine that? So think about that. So you're making $100,000 last year, right? Your salary, let's say. Now it's only worth $50,000. So you hadn't gotten a pay raise at all. You just cut in half your-

• 10:39Ryan Sean Adams?

  Price-adjusted earnings.

• 10:41David Hoffman?

  Right, but then you'll go to your employer and be like, well, because of inflation, you have to pay me more. And the employer is like, yeah, I have to pay you more. And so rages go up, which means spending goes up, which means inflation furthers, which is why this spirals out of control. So like we talked about, like, I wanted to put this in the agenda because we always talk about like, oh, inflation's at 7%. Oh, it's going down to 6.5%. We are so privileged in America to be talking about single-digit inflation. Argentina and many, many other countries have been dealing with 20, 30% inflation for like decades now. And so like the difference between what is the official reported inflation numbers, which is always suppressed because it makes governments look better, versus what actual real inflation is, like this is, this is like new to a lot of American listeners.

• 11:25David Hoffman?

  This is a part of life and culture in so many countries around the world.

• 11:29Ryan Sean Adams?

  Yeah, you look at this chart, in 2019, Argentina was hitting over 50% inflation, almost 60% inflation some months, right? This is increased, but it's not like 50% is the easy road here. Speaking of inflation, David, this is about the opposite of inflation. This is called

• 11:49David Hoffman?

  I think that might be called deflation.

• 11:49Ryan Sean Adams?

  Deflation, my friend. This is ETH supply, and it's a dip, a chart that's only going one direction. That direction is down. We talked about this the last couple of times in the rollup, but I can't believe it. We are down almost a full

• 12:06David Hoffman?

  25,000 ether.

• 12:07Ryan Sean Adams?

  Yeah, down 25,000 ether since the merge happened.

• 12:11David Hoffman?

  Yep.

• 12:12Ryan Sean Adams?

  Which is pretty crazy. That was 154 days ago. This must mean that gas fees are up. This must mean that block space demand is being demanded. And yeah, I guess maybe, tell us what this means. Gas, gas is the new oil.

• 12:30David Hoffman?

  We've hit a new 24-hour ETH burn record, 3,800. This was a result of the Blur token airdrop. Gas prices hit something like 5, it sustained 500 Gwei for almost an hour, dude. And we haven't seen that since DeFi summer days. It peaked out at 750 Gwei. 24 hour burn record, it's about 3,800 ether burned inside of 24 hours. I think we almost burned 1,000 ether inside of one hour at the very, very peak. The monthly inflation rate for ether is negative 1/4 of 1%, which is pretty cool. It's pretty cool. Gas fees are back.

• 13:07Ryan Sean Adams?

  Can I ask you, so I mean, this is incredible and it's incredible to see this during in a bear market so called, right? Of block space demand being so off the charts. Why isn't somebody like a Michael Saylor all over ether as an asset? Like, why are some of these people so fixated?

• 13:23David Hoffman?

  If you can answer that question, you get like a Nobel Prize. I don't know.

• 13:25Ryan Sean Adams?

  I mean, but I, this is, is this not sound money? I mean, is this is deflationary? I know Bitcoiners will define sound money a little bit differently and they'll say consistency.

• 13:36David Hoffman?

  They don't like tinkering with the monetary supply.

• 13:37Ryan Sean Adams?

  Right.

• 13:38David Hoffman?

  Human control over the monetary supply.

• 13:39Ryan Sean Adams?

  This is not human control. This is all like code driven at this point.

• 13:43David Hoffman?

  Right, but humans tinkered with it too recently.

• 13:46Ryan Sean Adams?

  So you have to wait 10 years until you buy your ether?

• 13:49David Hoffman?

  Some of the hardest hardcore Bitcoiners were like, well, they, humans tinkered with it once, therefore it's tainted for forever.

• 13:56Ryan Sean Adams?

  But this is an argument.

• 13:57David Hoffman?

  Some will never accept it as legitimate.

• 13:58Ryan Sean Adams?

  This is an argument we made going back as, as far as 2018, which is like, there's really no incentive to tinker it in the inflationary direction, is there?

• 14:06David Hoffman?

  Right, right. Everyone only wants it to become more deflationary.

• 14:09Ryan Sean Adams?

  Yeah, if you think about all the evil eth people, like, and they have the dials of the monetary, even if you think that, which is, which is totally not true. But like, even if you think that, yeah, well, all the evil people probably hold a lot of ether, don't they?

• 14:23David Hoffman?

  Right.

• 14:24Ryan Sean Adams?

  And so why in the world would they be incented to increase the supply of ether? I guess you could.

• 14:29David Hoffman?

  It's just two different philosophies. Bitcoiners are like, if you never ever touch the monetary policy, people will, will grow to trust it. And then the Ethereum philosophy is like, if you only make changes that benefit the holder base, then people become, start to trust it. And like, if you see every single Ethereum monetary policy change ever, it has always been towards the more scarce direction. And now recently with the combination of EIP 1559 and Proof of Stake, the supply of ether is becoming more. More scarce than Bitcoin judged by inflationary issuance. And so it's just a matter of what do you, what are your values and what do you appreciate? Do you appreciate something that never ever ever changes ever, but still perhaps inflates more?

• 15:10David Hoffman?

  Or do you appreciate something that even while there is human input, that human input is always into the more scarce direction? Like, what do you want? What do you want?

• 15:20Ryan Sean Adams?

  And also, I think the human input into the monetary policy of ethers is kind of almost fully ossified. I mean, there might be some other changes to gas fee consumption, but we're kind of there yet.

• 15:31David Hoffman?

  And also, the conversation is like, well, okay, Bitcoiners and the Bitcoin philosophy is never ever touch it. But then you run yourself into the dead end of like, well, then your security budget runs out. And then you're forced to change it later after you've already like created this culture of never ever touching it. And so you run into a dead end. That's the Ethereum perspective on it.

• 15:49Ryan Sean Adams?

  Yeah, exactly. Well, let's talk about some Bitcoin stuff because Bitcoin block space revenue is up as well.

• 15:56David Hoffman?

  It's also up.

• 15:57Ryan Sean Adams?

  Yeah. What are we looking at though? This is the Bitcoin halving cycles?

• 16:00David Hoffman?

  Yeah. So this is an arbitrary chart that is four years in length, days since halving. And then they're inside of this four years of time, there's this arbitrary lines of hype, disillusionment, enlightenment. But it's pretty obvious that the first one-ish year, one and a half years after a halving, Bitcoin has only gone up three out of three times. How many halvings have we had? Three, either three or four. And Bitcoin has only gone up in the one and a half years post halving. In the second half, after that, one and a half to like two and a half years after a halving, Bitcoin only has gone down and we have continued that pattern. And then in the, what is the last phase, the perhaps one to one and a half years before the next halving,

• 16:44David Hoffman?

  Bitcoin is flat to up-ish, flat to up-ish, more on the upside, I'd say. And so we are now in that last phase. And the idea here is that if this trend continues, the approach to the halving, the one to one and a half years up to the halving is definitely a upwards trend in Bitcoin price. That is what this chart shows.

• 17:04Ryan Sean Adams?

  This is three halvings over time and the red line is the most recent, right? So we're getting ready to enter in the fourth. And so it does predict this enlightenment period where Bitcoin is just going to go, go on a tear, go on a run. David.

• 17:16David Hoffman?

  I know, I would say it goes up and then it hits the halving and then it goes on a tear.

• 17:21Ryan Sean Adams?

  Exactly. That's right. Then, then it goes into after enlightenment, then we get into this hype phase again.

• 17:25David Hoffman?

  You have height, yeah. And then that's when it overreaches.

• 17:27Ryan Sean Adams?

  It restarts. Let me ask you though, I mean, this has been true of previous cycles, but do you still think King Bitcoin controls the crypto markets in such a way? Do you, do you think that it has, I mean, first of all, the halvings are much smaller than previously. So in terms of like Bitcoin denominated.

• 17:46David Hoffman?

  We're at 6.25 Bitcoins issued per block now. In about a year and a half, it'll be 1, 3.125.

• 17:54Ryan Sean Adams?

  Yeah. And, and so that's one argument I'd make. The, the second argument I'd make is like, well, I, I don't think the Bitcoin has the narrative any longer in crypto. I mean, I, I think that Ethereum, for example, or Web 3 in general, or other crypto assets, has more of the narrative capture than, than Bitcoin at this point. And that, that wasn't true in previous halving cycles, but I think it is true now. Do you think Bitcoin still can control the market in this way?

• 18:23David Hoffman?

  Yeah, I think that might be an Ethereum, like inside of the Ethereum world perspective. I think from the outside perspective, Bitcoin is still Bitcoin and still dominates. I, I think what you are saying will be true when the flipping happens, almost by definition.

• 18:40David Hoffman?

  I think that like what is culturally, Web 3 is far more culturally relevant than Bitcoin, but Bitcoin is like a financial asset and it's also the biggest financial asset. So it's still is in the driver's seat, but every single, how, every single year that this goes on, I think that that is less and less true as time goes on.

• 18:58Ryan Sean Adams?

  Yeah, well, we will see what happens this time. I do think directionally, this will prove to be correct. One other thing that we'll leave folks with in the market section, David, is Chainalysis came out with their annual report on illicit cryptocurrency activity. David, do you want to guess the percentage of crypto transactions that are so-called illicit? As reported by Chainalysis.

• 19:19David Hoffman?

  Well, the last time this report came out from Chainalysis, it was something like 1% ish. I think it was less than 1%. I think it was something like 0.8 or 0.9%. What is it now?

• 19:29Ryan Sean Adams?

  I, by the way, I appreciate you not looking at the answer and actually doing a good faith guess because it is on screen right now, 0.24%.

• 19:39David Hoffman?

  That's really low.

• 19:41Ryan Sean Adams?

  Really low.

• 19:42David Hoffman?

  That's really low.

• 19:43Ryan Sean Adams?

  That's percent of illicit activity. And these guys capture-

• 19:44David Hoffman?

  Pretty close to zero, Ryan.

• 19:45Ryan Sean Adams?

  These guys capture it all. It's not just like, you know, terrorist financing, although that is one category. This includes ransomware, this includes scams, this includes cybercriminal administrators, this includes fraud shops and darknet markets and stolen funds and everything that OFAC has sanctioned. It includes all of that and it comes in at a whopping 0.24%. What do you think the illicit activity of like cash money, real life, physical cash is?

• 20:16David Hoffman?

  Approaching 100%.

• 20:19Ryan Sean Adams?

  I'm guessing it's a lot more than 0.24%.

• 20:22David Hoffman?

  Yeah.

• 20:22Ryan Sean Adams?

  And by the way, these are the guys who have known.

• 20:24David Hoffman?

  I joke with my friends, like the only time I use cash nowadays is to, for drugs and laundry and not even drugs these days.

• 20:34Ryan Sean Adams?

  That's great. Yeah, so look at this, man. I, anyway, point this stat out. Next time someone tells you that all cryptocurrency is just like for criminals and drug lords, you'd think that meme would die, you know, back 10 years ago when it stopped being true, but it's still alive somehow in our halls of Congress. David, what do we got coming up next?

• 20:54David Hoffman?

  Coming up next, the SEC comes with a ban hammer on Kraken, on Paxos, on all the things. So we're going to cover the news that dropped right after we recorded the weekly roll up last week. There's also plenty of cool stuff to talk about. The Blur airdrop. We also found out the source of SBS bailout money. Bitcoin ordinals alive more than ever. The ZK EVM wars, lots of cool stuff. So stick around. But first, I'm going to talk about some of these fantastic sponsors, especially Kraken, who's helping Ryan become a charter these days. Here we go. 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,

• 21:39David Hoffman?

  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. Kraken support is available wherever, whenever you need them, by phone, chat, or email. And for all of you NFT-ers 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.

• 22:24David Hoffman?

  Hey, Bankless Nation! If you're listening to this, it's because you're on the free Bankless RSS feed. Did you know that there's an ad-free version of Bankless that comes with the Bankless Premium subscription? No ads, just straight to the content. But that's just one of many things that a premium subscription gets you. There's also the Token Report, a monthly bullish, bearish, neutral report on the hottest tokens of the month. And the regular updates from the Token Report go into the Token Bible, your first-stop shop for every token worth investigating in crypto. Bankless Premium also gets you a 30% discount to the Permissionless Conference, which means it basically just pays for itself. There's also the Airdrop Guide to make sure you don't miss a drop in 2023. But really, the best part about Bankless Premium is hanging out with me, Ryan, and the rest of the Bankless team

• 23:08David Hoffman?

  in the Inner Circle Discord, only for premium members. Want the alpha? Check out Ben the Analyst's DGEN pit, where you can ask him questions about the Token Report. Got a question? I've got my own Q&A room for any questions that you might have. At Bankless, we have huge things planned for 2023, including a new website with login with your Ethereum address capabilities, and we're super excited to ship what we are calling Bankless 2.0 Soon TM. So, if you want extra help exploring the frontier, subscribe to Bankless Premium. It's under 50 cents a day and provides a wealth of knowledge and support on your journey west. I'll see you in the Discord.

• 23:41Ryan Sean Adams?

  Here we go, David. The SEC ban hammer. Tell us, where is Gary Gensler swinging his hammer this time?

• 23:48David Hoffman?

  Kraken has agreed to shutter its crypto staking services to settle with the SEC. They've paid a $30 million fine to settle out of court. The SEC has accused Kraken of offering unregistered securities in their staking products. So the SEC claims that Kraken sold staking services to the public. They pooled crypto assets and staked them on their behalf, but did some extra things as well beyond just simply staking that created a unregistered security. And so Kraken has agreed to shutter that service and wind down that program. Yeah. What's your take on this, Ryan?

• 24:25Ryan Sean Adams?

  Oh, that is, of course, when you said stake, you mean S.T.A.K.E., not S.T.E.A.K.

• 24:33David Hoffman?

  This is going to be a reoccurring theme. Every enforcement action that we get, first with Kraken, then with Paxos and one other, we get this influencer video from Gary Gensler, which is extremely infantilizing. It's like talking about proof of stake and Gary Gensler goes, "That's S.T.A.K.A.E., not S.T.E.A.K."

• 24:52Ryan Sean Adams?

  Who is the target market for this?

• 24:54David Hoffman?

  Apparently, children.

• 24:56Ryan Sean Adams?

  Children? What kind of child?

• 24:59David Hoffman?

  That's what he's talking like, should we play this? Let's play this line.

• 25:02Ryan Sean Adams?

  All right, let's play a clip of this.

• 25:04Speaker 02

  What does stake have to do with our securities laws? That's S.T.A.K.E., not S.T.E.A.K.

• 25:19David Hoffman?

  Thanks, Gary.

• 25:22Ryan Sean Adams?

  God, the music. Office hours. You ready?

• 25:28Speaker 02

  In the crypto markets, there are various ways to validate data stored on crypto.

• 25:33Ryan Sean Adams?

  There we go.

• 25:34David Hoffman?

  My god.

• 25:35Ryan Sean Adams?

  I mean, we could go on with this. Yeah.

• 25:36David Hoffman?

  Thanks, Gary.

• 25:37Ryan Sean Adams?

  That's what we're dealing with right now.

• 25:38David Hoffman?

  Thanks, Gary.

• 25:38Ryan Sean Adams?

  Okay, so why? I'm sure Gary had a justifiable reason for ending staking at Kraken, did he not?

• 25:45David Hoffman?

  So, there is, there are differences between like just taking customers' ether, staking it on their behalf, and passing along their rewards. So Kraken actually advertised a fixed yield, not a dynamic yield. And so, of course, the yield that you get from staking your assets is dynamic, but Kraken advertised like you will get this percentage. And then they did some other things that they could do because of economies of scale to make the product a better product. But because they were doing some extra things, they were finessing this, if you will, that went from just being like a software as a security provider, I guess, to being an unregistered security. So like technically, I'm not a securities lawyer.

• 26:27David Hoffman?

  Technically, what they did changed their product from just being a service provider to being an unregistered security. But I'll ask the question, to what risk was there? Right? And so like, yeah, they're doing some extra things that changed the nature of the product, but is, what's the risk?

• 26:44Ryan Sean Adams?

  Well, I mean,

• 26:45David Hoffman?

  I'm confused.

• 26:46Ryan Sean Adams?

  My argument is this, right? Like, all of the things that you mentioned are pretty freaking easy tweaks to make.

• 26:52David Hoffman?

  Right.

• 26:52Ryan Sean Adams?

  If Gensler and the SEC, if they had a problem, like, this product has existed for a very, very long time. And suddenly now the SEC is giving it the ban hammer? Why not just have a conversation with Kraken? I mean, they could have done something like tighter mandates around proof of reserves, which I think the entire industry supports with respect to staking. More transparency into where the funds are going, like lots of detail there.

• 27:19David Hoffman?

  This could have been a productive conversation.

• 27:21Ryan Sean Adams?

  Yeah.

• 27:22David Hoffman?

  But it wasn't.

• 27:23Ryan Sean Adams?

  They could have also said something about decentralized staking options, and maybe that being another path. But instead, we just got the Gary G ban hammer

• 27:31David Hoffman?

  Ban hammer.

• 27:31Ryan Sean Adams?

  smacked across our head. And by the way, Kraken in the EU, they're still offering staking services, of course.

• 27:39David Hoffman?

  Yep.

• 27:39Ryan Sean Adams?

  Because-

• 27:39David Hoffman?

  This is only for US citizens.

• 27:40Ryan Sean Adams?

  Europe apparently-

• 27:41David Hoffman?

  So Kraken staking is still up and running, totally fine, except for US citizens.

• 27:45Ryan Sean Adams?

  Yeah. But, but why is this being banned in the US then? I mean, like, maybe because Gary Gensler wants to trap us in his financial prison?

• 27:52David Hoffman?

  Exactly, because of Garber.

• 27:54Ryan Sean Adams?

  I, so, I don't- Understand exactly why they went with the approach of pay us $30 million and you know, there's no remediation around this.

• 28:03David Hoffman?

  And shut down your service. Pay us money and shut down your service.

• 28:05Ryan Sean Adams?

  Yeah. It's absolutely like, it's almost like extortion. I'm like, it's, um, it's brutal, the way that this is playing out. Now, our friend, Commissioner Hester Purce, had something to say about it. So of course she dissented. Is this like the, the second week in a row? We've talked about one of Hester Purce's dissents because I think we have two dissents, Hester Purce's dissents in today's agenda, but this is the first one on the SEC Kraken shutdown. What does she say?

• 28:31David Hoffman?

  Uh, I'm going to skip to my favorite quote. Hester Purce says, "A paternalistic and lazy regulator settles on a solution like the one in this settlement. Do not initiate a public process to develop a workable registration process that provides valuable information to investors." Just, they just shut it down. The SEC just shut it down. Like it's, I have to, you have to give a tip of the hat to Hester Purce, who's operating inside of an agency that is not doing things that are aligned with what she personally believes, yet she's still there fighting the fight that she believes in. Like, that's hard.

• 29:06Ryan Sean Adams?

  Calling the agency that she works in a paternalistic and lazy regulator. That is badass, man.

• 29:13David Hoffman?

  She's basically calling her boss there. Like, Gary Gensler is not her boss.

• 29:16Ryan Sean Adams?

  I guess not, right?

• 29:17David Hoffman?

  But he's like in the bigger chair and she's calling him a paternalistic and lazy regulator.

• 29:23Ryan Sean Adams?

  I am so impressed. I'm just so impressed by this.

• 29:26David Hoffman?

  It's awesome.

• 29:26Ryan Sean Adams?

  It is incredible. And look, she, it's not, it's not just the words she's using, which are impressive, but like she's raising lots of substance here. We've known about crypto staking programs for a long time. She also says, "Although it may not have made a difference in this case, I should have called for us to put out guidance on staking long before now." This is what a leader does too, is, is take some accountability in this. Like, it's just so refreshing. And look, this is, this is a model for how all regulators should approach this space and approach their jobs in general. I'm told we say first principles too often on the podcast.

• 30:00David Hoffman?

  We do not say first principles. You cannot say the word first principles.

• 30:02Ryan Sean Adams?

  This is a first principles regulator. I'm gonna say it.

• 30:05David Hoffman?

  Yes.

• 30:05Ryan Sean Adams?

  She's doing her job right here and it's incredible to watch in the, in the contrast of those that aren't doing their job.

• 30:12David Hoffman?

  Yeah, this is also coming out. So Hester is not the only person who's identified this. This is Representative Bill Huizenga, pretty sick last name.

• 30:21Ryan Sean Adams?

  Huizenga.

• 30:21David Hoffman?

  Huizenga, yeah, who tweets out, "Since Gary Gensler won't abide by his own policies to, quote, 'come in and talk,' the House GOP will hold him accountable. Today, as promised, our oversight of the SEC begins with a request for documents surrounding their interactions with SBF, FTX, and the Justice Department." Kind of adjacent to the topic at hand being staking, but definitely relevant to the topic of what the hell is Gary's deal. And so looking forward to this progress.

• 30:49Ryan Sean Adams?

  I guess maybe Kraken made the mistake of not, like, bribing the right people, not scratching Gary Gensler's back enough. I mean, is that the contrast here? Like, maybe Jesse Powell should have been sucking up to Gary a bit more and he wouldn't be in this position. Is that what this implication is? It's like-

• 31:08David Hoffman?

  You mean Jesse Powell should have succumbed to SEC extortion?

• 31:12Ryan Sean Adams?

  Well, this is, this is kind of what it feels like because we know already that Chairman Gensler was meeting behind closed doors with FTX and a very cozy relationship with them.

• 31:21David Hoffman?

  Multiple times.

• 31:22Ryan Sean Adams?

  These meetings are on public record. Didn't try to shut down any, like, Kraken has been servicing this industry for a very long time, number of years.

• 31:30David Hoffman?

  12 years.

• 31:31Ryan Sean Adams?

  Gary was meeting with somebody and an entire exchange that was actively-

• 31:36David Hoffman?

  Was 29 years old.

• 31:37Ryan Sean Adams?

  -stealing billions of dollars from depositors.

• 31:40David Hoffman?

  SBF was 17 when the time Jesse Powell created Kraken.

• 31:43Ryan Sean Adams?

  I just, it's stupid, David. And yeah, I'm glad that somebody in government, hopefully this is more than talk, is trying to hold some accountability for what's going on here. So that is not the only voice of dissent as well. Here's another one. David, what are we looking at?

• 31:58David Hoffman?

  This is Brian Armstrong, tweets out, "Coinbase's staking services are not securities. We will happily defend this in court if needed." Translation, come at me, bro, that Brian says to the SEC.

• 32:08Ryan Sean Adams?

  Well, how come Coinbase gets a pass right now and Kraken doesn't?

• 32:13David Hoffman?

  Right. So Coinbase does less things with their staking products than Kraken did. So like I said, Kraken used economies of scale to finesse some extra- Cool features about the product to bolster the value of the product. Coinbase is doing a much more bare bones simplified, we stake your ether and then we pass you back the yield that you get. And so it's just much more simple. And so there's less, there's less like, they're touching the product less and they're just passing along the stake. And so because it's more simplified and there's less like agency that Coinbase is in putting into the service.

• 32:48Ryan Sean Adams?

  Then Gensler had more of an argument, basically, right? And Kraken for whatever reason decided to settle rather than fight this in court.

• 32:54David Hoffman?

  Right.

• 32:55Ryan Sean Adams?

  But Brian here implying that they're happy to fight this in court.

• 33:01David Hoffman?

  This is a tweet from Jason Gottlieb who says, I find the SEC's all crypto projects have to do is come in and register line unbelievably insulting. It assumes that there's this vast quantity of sophisticated securities lawyers advising their clients. Nah, man, screw the SEC, YOLO, baby, do whatever you want, which is a really good take. Crypto has some fantastic lawyers and all of them implying that the fact that judging by the fact that none of these projects really come in to talk to the SEC. The whole line out of Gary Gensler is like, just come in and talk to us.

• 33:30Ryan Sean Adams?

  It's a trap.

• 33:31David Hoffman?

  It's a, well, it's a trap, but it's also, I think, the SEC doing propaganda to the rest of the non crypto world saying like, hey, like, are you confused about the crypto world? We just want them to come in and talk to us. And then like the average American is like, oh, those crypto lawyers are so naughty. When that's not at all what's true.

• 33:48Ryan Sean Adams?

  That's what the office hours with Gary influencer video is about. That's why he spelled out steak and thought it was like really funny and it's not meat. Ha ha, it's actually like a steak in your asset. And like, he wasn't talking to anyone in crypto. We all know this.

• 34:01David Hoffman?

  He's not talking to us. That's why we always are like writing, we always go like, but Gary, come on bankless. He's not coming on bankless, dude. Like, he doesn't want to talk to us.

• 34:08Ryan Sean Adams?

  But seriously, Gary, come on bankless.

• 34:10David Hoffman?

  But seriously, Gary, come on bankless.

• 34:12Ryan Sean Adams?

  I've like, we've asked him, I don't know how many times and.

• 34:15David Hoffman?

  A handful of times. He doesn't care to interface with us. He is on his own agenda.

• 34:20Ryan Sean Adams?

  It's like, but people are listening and be like, but that's because you guys talk smack about Gary all the time. It's like, first, if he ever came on, we would be very cordial.

• 34:28David Hoffman?

  We have never, ever been antagonists to a guest, ever, nor would we.

• 34:32Ryan Sean Adams?

  No, we would love to talk to you. I think it would be a, you know, productive conversation. We're not going to sit here and kind of like, get you in gotchas, that sort of thing. That's not what we do. And then secondly,

• 34:45Ryan Sean Adams?

  he. Won't come on any crypto podcast whatsoever. He won't even talk to the crypto community. The closest he comes is like the CNBC TradFi type space. So I don't know why he won't just collaborate, like have a conversation with us. We're not shadowy super coders like Lizard Warren told you.

• 35:01David Hoffman?

  Which brings us to this Miles Jennings tweet, who is the counsel over at A16Z. So perfect leeway into this. Miles tweets out, "It has now been four years since the last crypto-related guidance from the SEC, whose chairman continues to focus on headlines rather than a legitimate effort to protect investors in accordance with the SEC's core mission." Four years since the SEC has given crypto any sort of guidance and only enforcement actions. So like you, we know he doesn't care to talk to us. It's been four years since he's given us any guidance.

• 35:32Ryan Sean Adams?

  Yeah, all we've been asking for the entire time is clarity.

• 35:36David Hoffman?

  Guidance.

• 35:37Ryan Sean Adams?

  Clarity.

• 35:38David Hoffman?

  Do your job.

• 35:38Ryan Sean Adams?

  Instead, it's regulation via enforcement. Okay, here's a, here's a flip on this, though. It's a lot of what I've heard this week when we were talking about this. But David, Brian, isn't this good for decentralized staking? So basically Gary and others, regulators coming after the centralized exchanges and saying, "No, that shall not stake." Well, doesn't all of this staking liquidity go to decentralized staking providers? I have a take on this. What's your take, though?

• 36:08David Hoffman?

  Well, I think you can look at the market and agree that the market totally agrees with that take because both RPL is at all-time highs in ether terms, almost all-time highs in dollar terms. Lido is at a very strong price performance. So the market agrees with that take.

• 36:23Ryan Sean Adams?

  Here's the thing I would say to everyone arguing that, and I agree with elements of that, too. We have no confidence that Gary Gensler isn't going to come for decentralized staking protocols next.

• 36:35David Hoffman?

  Whatever he wants. He is trying to increase his scope of influence.

• 36:39Ryan Sean Adams?

  Our ETH, is that a security? Under Gensler's regime, who knows? That is Rockapool's staked ETH. We'd call it a derivative, but it's a token, staking token. S ETH. Is that a security? I mean, there are all sorts of ways he could begin to-

• 36:56David Hoffman?

  Where's the line?

• 36:57Ryan Sean Adams?

  Yeah.

• 36:57David Hoffman?

  I'm sure everyone is like, "No, of course not." Are you sure that-

• 37:00Ryan Sean Adams?

  This man has no line.

• 37:01David Hoffman?

  ... agrees with you? This man has no line. He will go as far as we let him.

• 37:05Ryan Sean Adams?

  Right, and so that's why we have to try to stop it at every opportunity, so it doesn't encroach into decentralized staking as well. Now, it has to be a bridge too far for him to try to outlaw validating in your own freaking home.

• 37:19David Hoffman?

  Right.

• 37:20Ryan Sean Adams?

  Uh, it seems like that could be fought in court, but who knows? That wasn't the only SEC action this week, though. What's this, David?

• 37:27David Hoffman?

  No, crypto firm Paxos, which issues stablecoins, is to face SEC charges about the BUSD, the Binance stablecoin. Now, the relationship between Paxos and Binance is interesting. Paxos is kind of like this white label service, so BUSD Binance Dollar is offered and minted by and managed by Paxos. So it's kind of like putting the Binance brand on a Paxos stablecoin, and there's like synergies there.

• 37:52Ryan Sean Adams?

  It's kind of like Binance wants an American bank to help them with this, right?

• 37:56David Hoffman?

  Yeah, exactly. Yeah, yeah, yeah. So the SEC has ordered Paxos to stop issuing Binance US Dollar, and the regulator cited that it is as a result of unresolved issues relating to Paxos's oversight of its relationship with Binance. So I think if you read between the lines here, the regulators believe that BUSD and Binance are doing illicit things that they don't like, perhaps money laundering, wash trading, like a bunch of illicit stuff that probably offends them. And so they're going after Paxos, who's issuing BUSD, and say, "Hey, stop doing that." The SEC is bringing a lawsuit to Paxos as a result of this.

• 38:33Ryan Sean Adams?

  David, I don't understand why this isn't the scope of the SEC at all.

• 38:36David Hoffman?

  Yeah. Well, so this is all about like the whole coordinated effort, right? And so, again, if you read between the lines, we have the New York Financial Services, like regulatory body, Department of Financial Services, excuse me, the SEC. We have Treasury, like every, like all of these, I'm guessing all of these agencies are like, you know, in whatever communication channels that they have with each other, and they're like, "Hey, we want that to end." SEC, go, you go after Paxos. What can you do?

• 39:06Ryan Sean Adams?

  Make it hard for him.

• 39:06David Hoffman?

  Make it, yeah, like, "Go get him." And so like, this is like the government acting as kind of a monolith, which they don't usually do, in order to like-

• 39:15Ryan Sean Adams?

  You're coordinating.

• 39:16David Hoffman?

  Yeah, they're coordinating. Yeah, exactly, yeah.

• 39:18Ryan Sean Adams?

  Yeah, it's interesting to me that they're picking on Binance in this way. I think now they're picking on Binance through Paxos, but it's really, you could tell this is kind of targeted at Binance. I think it's harder for them to come at like Coinbase, USDC. But do you think they could be coming after Circle and the USDC product next?

• 39:39David Hoffman?

  I don't think that there's a line. I don't think there's a line. There is no line.

• 39:45Ryan Sean Adams?

  And so David, they're not banning BUSD, just Paxos is no longer able to issue new supply of BUSD. So it's basically going into legacy mode.

• 39:56David Hoffman?

  And the supply of BUSD is down only.

• 39:59Ryan Sean Adams?

  Is Paxos gonna fight this? Do they have a way to fight this?

• 40:02David Hoffman?

  I don't know, man. I don't, I don't, I haven't heard anything like that. I don't know if they intend to fight it or not.

• 40:06Ryan Sean Adams?

  It's a well's notice. It's really hard to fight the government, isn't it? One other byproduct of this is an article in Bloomberg that PayPal is pausing stablecoin work amid the regulatory scrutiny. Remember all that good news of PayPal and Venmo doing like a stablecoin adoption? Well, they've had to pause. One of their partners was actually Paxos for the stablecoin product. And they're like, well, now what do we do?

• 40:30David Hoffman?

  Well, they got scared. They got scared. And this is, this is like a success indicator for the SEC and all of those like regulators that don't want.

• 40:38Ryan Sean Adams?

  They're slowing it down.

• 40:39David Hoffman?

  They're like, oh yeah, this is what we wanted. Yeah. This is a positive second order effect for them.

• 40:43Ryan Sean Adams?

  Yeah, yeah. You know, some crypto people are like, well, regulators don't matter and like, we'll be fine without them and none of this matters.

• 40:51David Hoffman?

  Crypto anarchists, you mean?

• 40:52Ryan Sean Adams?

  I agree that's true over the long run, right? But over the short run, they do have the ability to slow it down. Just slow adoption velocity, specifically in the jurisdiction where they have some power. And it looks like that's what they're doing, unfortunately with PayPal. So David, question of how do we fight this? There's all sorts of ways for people to get involved. One of which is we depend on actually people with some power to go to Washington and fight the fight. Not the way that Sam Bankman Fried did with bribing all the politicians, at least I hope that's not the case. What's this a picture of? What are we looking at?

• 41:23David Hoffman?

  This is Brian Armstrong and what I'm assuming is the Coinbase legal team, perhaps some others as well, they were in Washington, they're in Washington DC fighting this fight. And so this is just the way that regulation and innovation and technology works. New technology offends the status quo, tries to get regulated, then these representatives who are aligned with the technology come and fight for it. And so Brian Armstrong and other lawyers at Coinbase are in Washington DC doing the trench warfare of fighting this stuff case by case by case. So, thank you for everyone who's in Washington DC fighting that fight. It's really important.

• 41:57Ryan Sean Adams?

  You gotta put your suit on if you want to do that. Well, I ever see you testifying in front of Congress, David?

• 42:03David Hoffman?

  I would put on a suit. If I was called upon to do it, I would put on a suit and I'd go do it. But thankfully, I can just sit at home and talk about it.

• 42:13Ryan Sean Adams?

  That was only the second smack across the face this week from the SEC. There's a third too, and this was even more recent. There's an SEC proposal that could bar investment advisors from keeping assets at crypto firms. This is registered investment advisors who would have no ability to essentially custody their assets. And so if you want to give quote unquote "real financial advice," remember, everything on bank lists is just for entertainment purposes. We do not give financial advice around here. We are not registered investment advisors, we'll never pretend to be. But if you are a registered investment advisor, well, Gary has just made it a bit more difficult to keep assets on behalf of your clients at crypto firms.

• 42:56David Hoffman?

  He's also made another influencer video to help explain it to you.

• 42:59Ryan Sean Adams?

  No way, did he really?

• 43:00David Hoffman?

  Yeah, uh huh, yeah.

• 43:01Ryan Sean Adams?

  Ah, Gary's explaining it.

• 43:02David Hoffman?

  Let's watch it, dude.

• 43:03Ryan Sean Adams?

  Are we watching this one too?

• 43:04David Hoffman?

  Oh yeah, we're watching this one.

• 43:05Ryan Sean Adams?

  Okay, here we go.

• 43:06Speaker 02

  What is a qualified custodian?

• 43:08David Hoffman?

  I don't know, Gary.

• 43:09Speaker 02

  What does it have to do with the securities?

• 43:11David Hoffman?

  I don't know, tell me.

• 43:15David Hoffman?

  I'm so excited to hear about this.

• 43:19Speaker 02

  A qualified custodian. No, no, not groundskeeper Willie from a sense of

• 43:26David Hoffman?

  Oh, that's what I was thinking.

• 43:30Ryan Sean Adams?

  I can't watch anymore, dude.

• 43:33David Hoffman?

  Okay, so like, okay, what is the, what is the net effect of this? And so actually, this is something I hear out of Matt Walsh from the On The Brink podcast. His take is that exchanges in the future will not also be the custodians of their customers' deposits, because that's how it's structured already in trad world. So this is actually a take-

• 43:55Ryan Sean Adams?

  You have to like spin that off, kind of thing?

• 43:56David Hoffman?

  This is a take I've heard before, is yeah. So like, exchanges will just do exchanging stuff, and then they will have a third-party service provider to do the custodian stuff. So separation of that-

• 44:06Ryan Sean Adams?

  Like keeping the private keys? Somebody else does that?

• 44:07David Hoffman?

  Yes, exactly, yeah.

• 44:08Ryan Sean Adams?

  That's kind of interesting that he would say that. I think that's true, but that's not necessarily true for bearer assets, is it? You ever go to the, like, old banks, and they have these ginormous bank vaults, where like, they keep safe deposit boxes and that sort of thing? And previously, they'd kept other valuables, like actual cash money and gold and that kind of thing?

• 44:26David Hoffman?

  Right, but they, but those banks aren't also doing, facilitating the swapping and exchanging and trading of those things, though. And so it's the combination of the exchange and the custodian that I think is what is being targeted here. So a quote from Gary here, "Rather than properly segregating investors' crypto, these platforms have co-mingled those assets with their own crypto or others' investors' crypto." This is how Coinbase, I'm assuming Kraken, and all of these exchanges work. It's like Binance, too. When you send your Ether, they spin up a temporary address, so you deposit your Ether into that temporary address, and then that temporary address forwards it off to Coinbase cold storage or whatever. And that's co-mingled with everyone's deposits. They just mark on their ledger that this one person sent us this amount of Ether, but then everything does get co-mingled.

• 45:10David Hoffman?

  And so the Gary Gensler claim is that when these platforms go bankrupt, something that we've seen time and time again recently, FTX is what they're going after, what they're setting, investors' assets often become the property of the failed company, leaving investors in line at the bankruptcy court.

• 45:27David Hoffman?

  So-

• 45:29David Hoffman?

  You can see the logic. Also, is this what the SEC is for? How is this related to securities, though? That is a good question.

• 45:36Ryan Sean Adams?

  Yeah, David, so here's really the problem is Gary Gensler is trying to completely delegitimize this asset class for registered investment advisors, which again, provide the bulk of financial advice to Americans in the US. And here's a quote from an article we read about this. If the agency, that is the SEC, is trying to force advisors to go to banks with their clients' crypto assets, so they can only go to banks rather than exchanges with clients' crypto assets, and the bank regulators are cautioning banks against crypto activity. Is it making crypto investing impossible through the advisors? Yes, of course. This is the operation choke point. This is how it gets...

• 46:14David Hoffman?

  Right.

• 46:14Ryan Sean Adams?

  So Gary is coming in and it's like, they're sort of encircling the crypto movement. And so he's going in and he's being like, ah, here's a weak point. Registered investment advisors, you know what we'll do? We'll just make it so that they can't keep clients' funds on crypto exchanges.

• 46:31David Hoffman?

  They have to go to banks.

• 46:32Ryan Sean Adams?

  Yeah. And then over here, you guys, over here, like OCC or whoever else, like make it really difficult for the banks to actually work with crypto because it's a super risky asset. We've seen that in the recent months. So you sort of encircle the industry and like squeeze it off, like choke it out slowly over time.

• 46:50David Hoffman?

  So this is the intergovernmental agency coordination. The SEC is pushing all registered investment advisors to like, don't store your crypto asset with exchanges.

• 47:00Ryan Sean Adams?

  Has to be banks.

• 47:01David Hoffman?

  Crypto native exchanges, exchanges like Kraken and Coinbase, etc. The people that are aligned with the crypto industry. Instead, you have to store your crypto assets with banks. And maybe in silo, you can accept that, maybe. But then on the other side of things, you have all of the other banking regulators who are saying, hey, banks, you can't store crypto assets.

• 47:19Ryan Sean Adams?

  That's the play, right? Okay, but here's the thing. Here's why it's so stupid and short sighted. So if that's the game, that's cool. Guess what happens?

• 47:27David Hoffman?

  People go bankrupt.

• 47:28Ryan Sean Adams?

  Completely, yes. And it completely delegitimizes not only the SEC, we said that before, but registered investment advisors.

• 47:37Ryan Sean Adams?

  It eliminates them from being able to talk about

• 47:40David Hoffman?

  They can't even, right.

• 47:41Ryan Sean Adams?

  An entire asset class. So if I'm a millennial, and by the way, did you know that for millennial millionaires, the vast, like, a lot of them, a majority of them, actually own 50% or greater of their assets in crypto? That's a stat I read recently. I'll have to pull up the source for that. It's like, you are making it so that a registered investment advisor can't actually help you with this entire asset class called crypto called crypto assets, which is like, the biggest, most wealth generating, highest potential growth asset class on the planet. So what do you do? You just completely neuter registered investment advisors? Like, why work with a registered investment advisor if they can't even talk about crypto? You don't have an incentive here.

• 48:25Ryan Sean Adams?

  So that's the byproduct of this. And of course, our friend Hester Purse wrote another statement about this, or we, what we might call a dissent on this as well. We'll include a link to that in the show notes. I think this take from Jake Chivinsky really takes it home for us, David, on all of the actions from the SEC over the past week. Do you want to read this out?

• 48:44David Hoffman?

  Yeah, Jake says, "This proposal would flagrantly violate the SEC's mission by making investors less safe and by discouraging capital formation. It wouldn't directly invest, affect investments in crypto companies since it only targets digital assets, not company equity. That's a small comfort, though, since it would cover many non-securities that the SEC shouldn't regulate." So this is just Jake saying, this is a huge overstep by the SEC, which we already know.

• 49:07Ryan Sean Adams?

  David, what are we looking at here?

• 49:08David Hoffman?

  We got some memes. We got some memes. We are 55 minutes into this roll up and we've talked about one subject matter, beyond markets. So we're going to end this with meme and move on. Here's the SEC protecting us, protecting a sleeping child from Kraken. Meanwhile, Celsius, Terra Luna, FTX, whatever, oh, Voyager, just raining bullets down on this sleeping child. Again, nice job. This, I love this meme format. This is the dog that wants you to play fetch with it, but it won't give you the ball at the same time. So the dog is, "Please comply." And then you reach for the ball and the dog goes, "No regulatory guidance, only compliance."

• 49:42David Hoffman?

  I love this new format.

• 49:43Ryan Sean Adams?

  Yeah, it's so good. David, all right, on to brighter subjects. Blur did an airdrop this week. How much did people make? How did it go? Do you have any details for us?

• 49:52David Hoffman?

  Yeah, so trading, the trading price of Blur at the time of recording, it's moving around a lot, but is something like $2 to $2.5 billion on day one of the Blur drop. 12%, yeah, so at $1, what is that fully diluted market cap? $3 billion, Blur. What is Blur, by the way? It is a tokenized attempt at the decentralized version of OpenSea, basically. It is a NFT trading platform that's optimized for NFT traders, people who are doing the speculation, all that kind of stuff. And so it is just a new tokenized NFT trading platform, $3 billion market cap. 12% of the total supply was airdropped to Blur, people who went through the gamut of qualifying for the airdrop.

• 50:35David Hoffman?

  Interesting choice to make the airdrop qualification criteria explicit. They tried to make a non-gamable mechanism for airdropping the token. So that means that they gave away $250 to $300 million of airdrop to their, to their, I can't remember the number of individuals I got, the token is quite a lot, but pretty successful token airdrop, I would say. I did a show with them, I did a show with Pac-Man, this is an Anon team. So if you are looking to learn about Blur and the details of the airdrop, we already did a show with them. If you are looking to learn more.

• 51:12Ryan Sean Adams?

  There's also, of course, you can go to Earnify, which is earn.fi, and get alerts when airdrops like this are happening. Just type your ETH address, email address, you won't miss an airdrop. David, we got a lot more coming up. What's happening?

• 51:25David Hoffman?

  Coming up next, Polygon's ZK EVM mainnet is set to launch in March. Are they going to beat ZK Sync's ZK EVM, which is also announced this week? Coincidence? That happened on the same week? I don't know, but at least the ZK EVM wars are heating up. We gotta love that. SBF's, whoever paid for SBF's bail money, well, we know who they are, so we're gonna talk about that. Celsius issues a recovery plan. You're gonna get your money back, Ryan, maybe. And three weeks later, ordinals are still a thing, more alive than ever. But first, before we get to all of that super hot stuff, I want to talk about some of these fantastic sponsors that make this show 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.

• 52:10David Hoffman?

  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. 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.

• 52:50David Hoffman?

  So, go to app.uniswap.org today to buy, sell, or swap tokens and NFTs. 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, Earnify will tell you about it. And you should probably do it now because some airdrops expire. 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.

• 53:34David Hoffman?

  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. And we are back. Ryan, you know what has set new lows recently is non-OFAC compliant blocks on Ethereum. Wow. This was, once upon a time, a big concern. You and I were never really concerned about this because, basically because of the Layer 0 of Ethereum. Why is there an increase of non-OFAC compliant blocks on Ethereum? Because there is a culture of censorship resistance built into the Layer 0 around Ethereum. I was never really in doubt that this was going to happen, but the ratio between non-OFAC compliant blocks to OFAC compliant blocks is up only.

• 54:19David Hoffman?

  So Ethereum increasingly ignoring OFAC compliance, which is tight. As the protocol should, at the protocol level. Yeah. And this is, I saw this graphic. I thought this was pretty cool.

• 54:30Ryan Sean Adams?

  This is so cool.

• 54:31David Hoffman?

  This is an illustration of how a block is built. So on the left, you have block builders. On the middle, you have block relayers.

• 54:38Ryan Sean Adams?

  I love this.

• 54:39David Hoffman?

  And then on the right, you have stakers, people who are actually proposing blocks, block stakers.

• 54:42Ryan Sean Adams?

  Celsius over there.

• 54:45David Hoffman?

  And so it's just a pretty cool distribution of all of the supply chain of how you make a block. This was the topic of a podcast topic that we had with Matt Cutler. And so this is now, we knew, this was before, we had that podcast before this was even a thing, because Matt knew that this was coming. And so Bangless listeners got to front.

• 55:04Ryan Sean Adams?

  Okay, so, so on the left is what? Is, that's block builders?

• 55:07David Hoffman?

  Block builders.

• 55:07Ryan Sean Adams?

  And in the middle is relayers?

• 55:09David Hoffman?

  Relayers.

• 55:09Ryan Sean Adams?

  Sorry, sir?

• 55:10David Hoffman?

  Yeah.

• 55:10Ryan Sean Adams?

  Relayers, okay. And then on the right are some of the big staking providers.

• 55:13David Hoffman?

  Exactly.

• 55:13Ryan Sean Adams?

  And you would be on the right as well, if you're running your own.

• 55:15David Hoffman?

  If you're an individual staker, yeah.

• 55:16Ryan Sean Adams?

  Yeah. It's just maybe not depicted here?

• 55:18David Hoffman?

  It might also be the gaps between, between the, yeah, it's just not depicted.

• 55:23Ryan Sean Adams?

  Very cool. Look at the flows here. And ultrasound is an up and coming, that is, that is, that's an up and coming relayer. And that is.

• 55:31David Hoffman?

  Ultrasound.money and it's also OFAC non-compliant.

• 55:35Ryan Sean Adams?

  Not OFAC compliant, yeah. Or OFAC non-compliant, I don't know.

• 55:38David Hoffman?

  I love the word non-compliant.

• 55:40Ryan Sean Adams?

  Let's talk about ZK, okay? Because the ZK wars are heating up. This is a tweet from hollow. Did you know, David, it's official? The Polygon ZK EVM mainnet will be launched on March 27th. After more than a year of intense and inspiring research, development and testing, we're incredibly proud to launch the first ever ZK EVM mainnet. A lot of people claim first.

• 56:03David Hoffman?

  Everyone wants you to know that they have the first ever ZK EVM.

• 56:07Ryan Sean Adams?

  Well, who knows? Who's gonna be first? I don't know who officially gets that title. But Polygon has a date here of March 27th, so that seems pretty compelling. A few things, like when people say that their thing is going to mainnet, it's always a question of like, well, what is actually going to mainnet? Are you like mainnetting a testnet version? Is that what you mean by mainnet? Or is it sort of a half version? I believe this is indeed mainnet as defined by real assets and real users and.

• 56:37Ryan Sean Adams?

  Open to everyone. So there you go. There's lots of other technical stats behind this. And for me, I can't wait to to use something like this the day it comes out. So stay tuned, Bankless Nation, for more ZK EVM content so we can explore this new world. But David, they are not the only ones that are getting close to mainnet. This is ZK Sync.

• 57:00David Hoffman?

  ZK Sync, yeah, also announcing the ZK Sync Era mainnet. So for Bankless listeners that don't know, there's actually two ZK Syncs. There's ZK Sync 1.0, which was the very, very early implementation of a ZK rollup, which just did token transfers and payments. And then ZK Sync 2.0 came around, and that was launched. A ZK EVM was launched on Ethereum months ago, except it was closed to only the ZK Sync protocol devs. So they could only be the ones to stress test this thing. They would shut down the network, restart it, like do an operating system upgrade, basically restart it. And so they claimed back then first, except it was closed. And so like, everyone's claiming first over and over and over again.

• 57:44David Hoffman?

  But this is the same thing as the Polygon announcement, where the ZK EVM is open to builders. And so they are doing a, where they're calling a fair onboarding. So teams can sign up to get onboarded onto the ZK Sync Era.

• 57:59Ryan Sean Adams?

  To start building the rides for users, right?

• 58:01David Hoffman?

  Exactly, yeah. And so that, I've talked to the ZK Sync team. Six to eight weeks of that, of this fair onboarding time period, where everyone gets to have peace and quiet while they build their applications. And that starts today. That started today, Thursday. So yesterday, for the time of listeners. So six to eight weeks later-ish, give or take, whenever the protocol devs of ZK Sync say that it's ready and secure, they will open it up to true, actual, real mainnet for everyone else to come. But we have this fair onboarding period where projects can deploy and test their dApps on ZK Sync Era. Also has token bridges, and they are also going through finishing up their security audits as well.

• 58:41Ryan Sean Adams?

  If one of them technically beats the other to mainnet, it's only going to be by a few weeks.

• 58:45David Hoffman?

  Yeah. It doesn't matter.

• 58:48Ryan Sean Adams?

  But I love the fact that everyone's competing and that this is a race. Now, got to make sure you get security right. Obviously, this is some new, more complicated technology. So that's something we won't be able to know until after the fact. But yeah, it's exciting to see for sure. I should mention too, both David and I are advisors for Matter Labs, ZK Sync. And also I'm an advisor for Polygon. We love and support the ZK EVM ecosystem for sure. We also own some ETH, David. Disclose that.

• 59:18David Hoffman?

  I don't think we need to disclose that.

• 59:20Ryan Sean Adams?

  Tornado Cash developer to stay in jail as the Dutch trial continues. This is Alexey Pertsev. We talked about him so often when this happened in August earlier this year. This is just a heartbreaking title for the story. And it's like, this guy has been in jail for developing open source code. As far as we know, more serious charges have not been put forward. He put open, he helped develop Tornado Cash, which is OFAC sanctioned. And now he's in jail for it. And there's a trial going on, so hopefully this is not permanent. But the fact that he's been in jail for, I don't know, how long is this, David?

• 59:59David Hoffman?

  Months, like almost a half a year now.

• 1:00:01Ryan Sean Adams?

  What?

• 1:00:02David Hoffman?

  So I know you said like, this is a disheartening title. So let me run this by you. Pertsev's lawyer said that they had a good beginning in educating the court about how decentralized finance works. The lawyer quoted said, "We had the opportunity to explain what the basis is for Tornado Cash and why it is not money laundering. It is our opinion that the lack of knowledge is what's keeping him here." Dutch public prosecutors allege that Pertsev, rather than merely publishing code, said that he accepted piles of suspicious cash without question. So there are two very different realities being talked about here.

• 1:00:38Ryan Sean Adams?

  We will see.

• 1:00:39David Hoffman?

  Yeah, we will see. And so like, is this such a misunderstanding? And like, we have to just educate that Tornado Cash is what it is?

• 1:00:47Ryan Sean Adams?

  He went to jail for six months because we didn't know about DeFi, really?

• 1:00:50David Hoffman?

  Sorry. Or was Pertsev actually helping money laundering? Maybe there's much more to the story that we don't know. We'll find out.

• 1:00:59Ryan Sean Adams?

  Yes, it's true that we don't have all of the evidence, but the serious charges haven't been laid. I guess that's what the court case is for. One other thing I'll say is, look at the contrast. Alexei Pertsev is in jail and not able to be released on bail. Who's out on bail, David?

• 1:01:17David Hoffman?

  Oh, this guy named SPF, who's out on bail on like something like a quarter billion dollars or something.

• 1:01:23Ryan Sean Adams?

  Like, it's so crazy, the contrast here.

• 1:01:26David Hoffman?

  Before we get to that, though, Cosmo Day Medici, who's of course known as being Snoop Dogg's Twitter account for the NFT world. 22 pieces of works, NFTs from the Cosmo Day Medici collection has been added to the permanent collection of the Los Angeles County Museum of Art. The first donation of on-chain art from a collector to a museum and also the largest digital art collection to ever enter a museum. Cool.

• 1:01:49Ryan Sean Adams?

  It's just on loan, right? That's what collectors do? You just load it to a museum?

• 1:01:52David Hoffman?

  I'm assuming so, yeah.

• 1:01:53Ryan Sean Adams?

  In this case?

• 1:01:54David Hoffman?

  So more NFT stuff, ordinals, getting into the ordinal section. Ordinal is, ordinals are up only. We are almost, Ryan, passing $1 million in transaction fees paid to Bitcoin miners from inscribing ordinals. We have passed over 100,000 ordinals inscripted into Bitcoin, so there's over 100,000 NFTs on Bitcoin.

• 1:02:17Ryan Sean Adams?

  That's so cool, you can have Dune boards about Bitcoin. I'm not used to seeing Dune boards on Bitcoin and ordinals, so people know, are basically NFTs on Bitcoin. Are these being sold on like OpenSea and other marketplaces?

• 1:02:28David Hoffman?

  Yeah, dude, they are.

• 1:02:29Ryan Sean Adams?

  That's crazy.

• 1:02:30David Hoffman?

  Well, when they are sold on OpenSea, they're actually sold as like a wrapped ordinal on Ethereum, which is kind of weird. It's, it's, it's, this is getting very, very, because Bitcoin doesn't have like on-chain infrastructure to support some of this stuff. So like, people were like trading OTC, like OTC ordinals with each other through this like public Google sheet. It's like all a mess.

• 1:02:49Ryan Sean Adams?

  See, guys, it's still a TI83 calculator.

• 1:02:52David Hoffman?

  They're trying, they're trying their best. Anyways, Bitcoin punks are a brand new NFT collection on Bitcoin. Somebody bought a Bitcoin Crypto Punk, which are like, much like the Crypto Punks that you all know, except with some mutations, some, some changes to make them unique. One, one Bitcoin Punk was sold for 9.5 Bitcoins, dude.

• 1:03:14Ryan Sean Adams?

  Wow. It's funny that they're following in the footsteps of Ethereum.

• 1:03:18David Hoffman?

  Yeah, well, don't tell the Bitcoiners that.

• 1:03:20Ryan Sean Adams?

  This is like CryptoPunks but for Bitcoin, you know? I'm hopeful that the NFT community in Bitcoin starts to establish its own independent culture as well. Are we starting to see any of that?

• 1:03:32David Hoffman?

  I think, yeah, I think so. So, yeah, there is now a, like I said a couple of rollups ago, like ordinals are a place for different flavors of Bitcoiners other than the fundamentalist extremist camp to latch on to and use Bitcoin in a way that's not necessarily aligned with the maximalist flavor of Bitcoiners. So now there's like different, we can actually talk about different flavors of Bitcoiners with more fidelity, which is great.

• 1:03:54Ryan Sean Adams?

  Well, here's something that you'll never see on Ethereum, and that is the constitution of El Salvador being minted as an ordinal NFT. So that just happened. The reason you'll never see it on Ethereum, David, is Bukele is a notorious Bitcoin maximalist, I would say.

• 1:04:10David Hoffman?

  Yeah, he's a laser-eyed maxi, for sure.

• 1:04:12Ryan Sean Adams?

  Laser-eyed maximalist, and apparently they are cool with blocks having NFT data in them, at least Bukele is, and so minted the El Salvador's constitution here.

• 1:04:23David Hoffman?

  Yeah, this definitely ruffled some feathers. So here's a quote from President Nayib Bukele. "Someday Bitcoin will host a distinct global culture that will rival Ethereum. We think that that culture should be El Salvadoran." Michael Saylor responded, "This isn't how Bitcoin should be used."

• 1:04:38Ryan Sean Adams?

  Oh, no, there was infighting?

• 1:04:38David Hoffman?

  "We don't like NFTs or smart contracts or any of this artsy-fartsy stuff. Bitcoin is a currency that citizens of the world need to quit finding arsycic and profitable ways to use our blockchain. They can take that nonsense somewhere else."

• 1:04:49Ryan Sean Adams?

  Oh, no, trouble in maximalist paradise. You're using the blocks wrong, Bukele.

• 1:04:55David Hoffman?

  Okay, yeah, that was a rug.

• 1:04:57Ryan Sean Adams?

  Take your nonsense somewhere else, that's what he said?

• 1:05:00David Hoffman?

  Is it fair for us to just like put words in other people's mouths under the vibe of the rug? So this is a rug.

• 1:05:07Ryan Sean Adams?

  No, that was a rug again?

• 1:05:08David Hoffman?

  Oh, I got rugged! Yes!

• 1:05:11Ryan Sean Adams?

  Dude, I didn't even look up!

• 1:05:12David Hoffman?

  Yes! You probably got rugged! That was a rug. I got rugged so hard!

• 1:05:19David Hoffman?

  I love the fact that you opened up these links and you don't even know.

• 1:05:22Ryan Sean Adams?

  I didn't even look. This is so dumb. I... Oh, my God!

• 1:05:27David Hoffman?

  You 100% believed it.

• 1:05:28Ryan Sean Adams?

  That was even more than the last, I got rugged harder than last time.

• 1:05:32David Hoffman?

  So hard!

• 1:05:34Ryan Sean Adams?

  So, you know, I was gonna ask you, when we got to the end of our agenda, when we were talking about things, it's like, oh, you didn't put in a rug link. There must not have been anything good this week.

• 1:05:44Ryan Sean Adams?

  I can't believe I missed this.

• 1:05:45David Hoffman?

  When the rug team passed this link to me, I was like, oh my God, this is so good. And so I pass it to Chrissy, who makes the agenda. And I'm like, all right, sneak this one in here in a way that doesn't like trigger Ryan and see if he can just get into.

• 1:05:55Ryan Sean Adams?

  Okay, okay, so reset. None of that happened.

• 1:05:58David Hoffman?

  None of that happened. No.

• 1:05:58Ryan Sean Adams?

  Michael Saylor's quotes, it's all wrong.

• 1:06:00David Hoffman?

  This is the third, the third rug that we've put into the weekly roll up. What is the rug? The rug dot mirror dot X Y Z. It is the onion of crypto. Last week I was not able to rug Ryan, but the week before I was. And the fact that I was actually able to rug Ryan a second time is awesome.

• 1:06:15Ryan Sean Adams?

  Last time.

• 1:06:16David Hoffman?

  So nice job rug team. The, again, the onion of crypto. You can collect this rug. I thought that only the first rug ever would be the rug that rugged Ryan because I thought he would learn. But I guess AIs don't learn.

• 1:06:27Ryan Sean Adams?

  This is so stupid.

• 1:06:28David Hoffman?

  Yeah.

• 1:06:28Ryan Sean Adams?

  I can't believe it says it right here.

• 1:06:29David Hoffman?

  Yeah, it's, it's the same website every time, dude.

• 1:06:32Ryan Sean Adams?

  I'm gonna, I'm gonna message Luke and get him to clip this.

• 1:06:37David Hoffman?

  I'm the one with the recording.

• 1:06:38Ryan Sean Adams?

  Aw, man.

• 1:06:40David Hoffman?

  All right, Ryan got rugged. All right.

• 1:06:41Ryan Sean Adams?

  Ignore that happening, guys. It's never happening, guys.

• 1:06:43David Hoffman?

  Two, two marks, two rugs for Ryan. All right, moving on. FTX founder Sam Bankman-Fried's two bond guarantors unsealed, both with ties to Stanford. And so the names of who paid for SBF's bail money has now been released.

• 1:06:56Ryan Sean Adams?

  That was a big question.

• 1:06:57David Hoffman?

  These people are Larry Kramer, the president of the William and Flora Hewitt Foundation, and Dean Emeritus. Emeritus, how do you pronounce that name? Dean Emeritus at Stanford Law and Andreas Pekape. God, these names. A senior research scientist also at Stanford. Why Stanford? Well, that's because that's where Bankman-Fried's parents, Joe and Barbara, are their faculty at Stanford and close friends with these people. I mean, $250 million in bond money is a lot of bond, a lot of money.

• 1:07:27Ryan Sean Adams?

  That's gross.

• 1:07:27David Hoffman?

  I have a lot of respect for Stanford professors, but they don't make that kind of money. I'm guessing that the parents are just like, hey, guys, help support our child and pay for some of the bond money. Also, here's the money to do that. I'm guessing that's how that happened.

• 1:07:42Ryan Sean Adams?

  That's gross. And definitely selling the name of the Stanford name, bringing it down with them.

• 1:07:47David Hoffman?

  Yeah, my mom went to Stanford and now I feel like this is personal, even though I didn't even go to Stanford.

• 1:07:52Ryan Sean Adams?

  Don't be, don't be angry at your mom, though. It wasn't her fault, even.

• 1:07:55David Hoffman?

  It wasn't, yeah, my mom would have done that.

• 1:07:58Ryan Sean Adams?

  Celsius. Okay. Is there some good news for us?

• 1:08:01David Hoffman?

  Yes. So Celsius, there is a new plan, a new plan to resolve all of the debt that Celsius owes. So TLD of this plan, small customers, small creditors to Celsius, people that have less than $5,000 are getting about 70 cents on the dollar in cash back, which is a lot of, that's most people. That's more than 50%. Other customers with bigger balances, it's kind of hard to tell. 30 to 40% in cash of, you're getting cash back. You also are getting equity in this new company that is being spun out of Celsius that someone else plans to manage.

• 1:08:43Ryan Sean Adams?

  Not Alex Mashinsky?

• 1:08:44David Hoffman?

  Not Alex Mashinsky, zero founders. And so a brand new company is being built to, out of the decimation of Celsius. And customers with bigger account balances than $5,000 are getting equity in this new company. And so that is that.

• 1:08:59Ryan Sean Adams?

  I mean, I guess could have been worse, right? 30, 40% is better than 0%. For those with 5K or less, they get 70% potentially. So that's all okay. I'm guessing the people with a lot of money in Celsius are not too pleased about this because they're, you know, maybe that's unfair from their perspective. But look, man, it's higher than like the 10 or 20% I was mentally thinking. So that's something. That's something. They're also doing clawbacks too.

• 1:09:26David Hoffman?

  Clawbacks. Yes. Yeah. So Alex Mashinsky, a bunch of basically Celsius insiders are being asked to return the money and also it at one point will not become a request.

• 1:09:40Ryan Sean Adams?

  Can they like seize their property and stuff? How deep does this go? How deep does a clawback go? Like, can you pierce the shield of?

• 1:09:47David Hoffman?

  That is up to a lawyer, a court to decide.

• 1:09:51Ryan Sean Adams?

  Jeez.

• 1:09:52David Hoffman?

  But we all know that both Christine Mihand Mashinsky, or I'm assuming it's Alexander Mashinsky's wife. Also, like, we all know that Alex Mashinsky withdrew millions and millions of dollars from Celsius right before it got frozen.

• 1:10:04Ryan Sean Adams?

  Yeah.

• 1:10:06Ryan Sean Adams?

  This is cool, David. Shopify has integrated with Sign In with Ethereum. Shopify has been a huge supporter of crypto on kind of the cutting edge here. So this means you can now log in with Ethereum using the best wallet on the planet, MetaMask.

• 1:10:22David Hoffman?

  Most used, most popular.

• 1:10:24Ryan Sean Adams?

  And you can

• 1:10:24David Hoffman?

  Also the sponsor of Bankless, MetaMask.

• 1:10:26Ryan Sean Adams?

  Thank you, MetaMask. And you can actually like buy things?

• 1:10:30David Hoffman?

  Yeah, yeah, yeah. So not just, it's not just Sign In with Ethereum. I'm assuming Shopify, using your Sign In with Ethereum properties, you can like stick your address if you want to. It's up for your control or not. Stick your address and perhaps payment information into your Sign In with Ethereum experience. So you never have to redo that over and over and over again. And Ryan, the cool part is that you can also, they're, they're releasing token gated products. So when you sign in to Shopify with Sign In with Ethereum using your favorite wallet ever, MetaMask, your Sign In with Ethereum, the service will look into your favorite wallet ever, MetaMask and see like, oh, are you an owner of a particular asset? Well, then we will

• 1:11:10Ryan Sean Adams?

  A Bankless Po app.

• 1:11:11David Hoffman?

  A Bankless Po app, for example. Other Bankless type assets, you can go to the Bankless merch store, sign in with the best wallet ever, MetaMask, and get other products, token gated products unlocked to you. And this is all in Shopify.

• 1:11:25Ryan Sean Adams?

  Yeah, that, that's super cool. So the idea of having like specialty merch that only specific token holders can actually select from, that can be integrated with Shopify. It's really cool to see that.

• 1:11:37David Hoffman?

  So I don't know, maybe Bankless decides to do an NFT one day and then that opens the door up for all of our NFT holders to access some really cool merch. Perhaps we'll talk to MetaFactory about building some cool merch. But it'll happen through Sign In with Ethereum plugged into Shopify. And when you do that, make sure to use the best wallet ever. He's also a sponsor of Bankless.

• 1:11:57Ryan Sean Adams?

  Thank you for sponsoring MetaMask. Token Terminal, they introduced financial statements for DAOs. David, this is just cool. Thought experiment badass. Look, you know, the SEC requires that companies, publicly traded companies, release their financial statements, their 10Ks and such. Guess what? We can generate that automatically on chain with crypto protocols. More transparent than any regulated crypto publicly traded, publicly traded company could be. Crypto is, is better regulated and more transparent.

• 1:12:31Ryan Sean Adams?

  Like, I mean, look at this. This is 0X. View their quarterly financials here.

• 1:12:37David Hoffman?

  There's even a download CSV button.

• 1:12:39Ryan Sean Adams?

  Yeah, one inch. Update in real time. You don't have to wait on the quarter, right? Where'd the revenue go? It's all on chain. Anyone, anyone can produce these reports. Token Terminal made it really easy, friendly, user-friendly to do this. Like, name, name something.

• 1:12:53David Hoffman?

  How any regulator can, doesn't see the value in this is insane.

• 1:12:58Ryan Sean Adams?

  This is a regulator's best friend. This is the hypocrisy. I just want to emphasize, we spent a lot of time talking about SEC and Gary Gensler. There's such hypocrisy in the approach that they're taking because if you are a regulator, you actually care about the mission of protecting retail investors and, you know, fair and orderly capital markets and capital formation, then you should be supportive of an open, transparent financial system, one that allows you to generate financial reports in a second automatically from anywhere in the world. That is like unparalleled transparency. And here it is. You could just see it very clearly.

• 1:13:34David Hoffman?

  There's a long history of corrupt companies reveling in the black box that they get between quarter end to quarter end, doing a bunch of illicit shuffling and moving around debt and doing a bunch of black box things, and it only becomes transparent at one snapshot four times a year. You can, there is a financial statement for every single DeFi protocol that happens every 12 seconds, which is how long one Ethereum block is.

• 1:13:59Ryan Sean Adams?

  That's so cool, guys. This is why we're in this space. David, we got some more to talk about in this episode. What do we have coming up?

• 1:14:05David Hoffman?

  Coming up next, we got some questions from the nation. We got a question about Canto as a result of the recent podcast, as well as Cosmos, the Cosmos chain versus Optimism's bedrock. So we're going to talk about that. And then, of course, we got three takes from the week. Ryan brings up the subject matter that's not about crypto, so stay tuned for that take of the week. And also, what are we bullish on?

• 1:14:24Ryan Sean Adams?

  And the meme of the week. So all of this and more. But first, a moment to talk about some of these fantastic sponsors that make this show possible.

• 1:14:29David 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,

• 1:15:11David Hoffman?

  where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be: secure, fast, cheap, and friction-free. The Phantom Wallet is coming to Ethereum. The number one wallet on Solana is bringing its millions of users and beloved UX to Ethereum and Polygon. If you haven't used Phantom before, you've been missing out. Phantom was one of the first wallets to pioneer Solana staking inside the wallet and will be offering similar staking features for Ethereum and Polygon. But that's just staking. Phantom is also the best home for your NFTs. Phantom has a complete set of features to optimize your NFT experience: pin your favorites, hide your uglies, burn the spam, and also manage your NFT sale listings from inside the wallet. Phantom is, of course,

• 1:15:56David Hoffman?

  a multi-chain wallet, but it makes chain management easy, displaying your transactions in a human-readable format with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked. So get on the Phantom waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes, or you can go to phantom.app waitlist to get access in late February.

• 1:16:18Ryan Sean Adams?

  Questions from the Bankless Nation Discord. Let's get to them, David. The first one is from WestonEstateFan. "Given the recent Canto podcast, how do you think Canto will hold up against established L1s and L2s? Are the public good infrastructure incentives through contract shared revenue sufficient to differentiate the chain?" That is the question. Give us a refresh on what Canto is for folks that missed the podcast episode on it, and then if you could answer this question.

• 1:16:46David Hoffman?

  Yeah, Kanto is an EVM-compatible Cosmos IBC chain, which is a mouthful. So it's a chain on the Cosmos ecosystem that is EVM-compatible. And its main differentiator is this thing called CSR, Contract Secured Revenue. And we had a podcast with Zach Cole, who's one of the core contributors of Kanto over a week ago. And so the question again is, how is Kanto differentiated enough to hold its way up against other Layer 1s or Layer 2s? Interestingly, Kanto did not create or invent Contract Secured Revenue. Near, as a blockchain, also has CSR, and it's already been around for a very long time.

• 1:17:21Ryan Sean Adams?

  On the Layer 1 level, anyway.

• 1:17:22David Hoffman?

  Layer 1 level, yeah. So there's already other chains out there that have Contract Secured Revenue. Near never really seems to have taken off. So at least Kanto has found a way to bootstrap itself in ways that Near hasn't. I am not convinced at all that this short-term price movement in Kanto is indicative of its long-term health. That is, needs to be proven out with proof and time over the long term, which is the take we had last week. So while Kanto is at the beginning of what could be that, it is still very, very early. And so I'm still in the camp that this is just a short-term rotational trade, a little bit of momentum play. We will see how well Kanto can hold itself up to other, like I said, other Layer 1s or Layer 2s.

• 1:18:07David Hoffman?

  The, I mean, you, we bankless people will know that I kind of think that anything of value ultimately becomes built on Ethereum. That's kind of the point of Ethereum. And so if it's proving to work at the Kanto level, it is only a matter of time for an Ethereum Layer 2 to copy that and run with it. And then you have what differentiated Kanto in a positive way, plus all of the network effects of all the other things that benefit you from being on Ethereum. And so I think the jury is definitely still out that Kanto has sticking power.

• 1:18:38Ryan Sean Adams?

  You know, one thing it has that Near didn't is, you know, Near was kind of like mostly a VC-backed kind of coin, right? And so who had all the coins, a bunch of VCs? Kanto had a bunch of builders with the initial seed of their coins. So that's why we're seeing more early activity, I think, because there's, it's more ground-up or Organic, community-oriented sentiment. Now, whether it can sustain that is another question. But there's also, I mean, Zach Cole, we had the podcast, also mentioned the possibility of like, maybe at some stage, Canto converts into a layer two. And he said that the reason they use the Cosmos app chain model is because those were the best tools available for launching a blockchain at the time they launched it, which was like, what, last year, at the end of last year.

• 1:19:22David Hoffman?

  It's the same logic as DYDX. Like, why is DYDX going from Stark X layer two onto Cosmos? It's because of the same reason why they started Canto as a Cosmos chain. But it's all, it's in the design roadmap of all these layer twos to not have the problem that Canto cited as to why they became independent in the first place.

• 1:19:40Ryan Sean Adams?

  And I think that goes into the next question, which is really a question of Cosmos versus Bedrock. So here's a question from Kyle Kaplan. "Hi, I had a question about Cosmos versus Bedrock. Cosmos has IBC, that's Inner Blockchain Communication. That's a protocol for interoperability between chains. And I think Bedrock will support interoperability between other Bedrock chains. Correct me if I'm wrong. Do you see a feature where projects use Bedrock for app chains similar to the Cosmos model?" So first, I feel like you have to explain a term, the term app chain, and then you need to explain maybe like Bedrock for us in order to answer this question.

• 1:20:16David Hoffman?

  Yeah, okay. Thanks for the question, Kyle Kaplan. I love this subject. So actually, one thing, one thing of clarification, it's not Cosmos versus Bedrock. It's Cosmos versus the OP stack. The OP stack is the generalizable app chain infrastructure for Optimism. Optimism mainnet is upgrading to Bedrock, which is the first time that Optimism will use the OP stack. So Bedrock is one specific flavor of the OP stack. So it's the OP stack that is like the bare bone scaffolding that creates many, many, many different app chains on top of Bedrock, which is Optimism mainnet. And so, like you say, Cosmos has IBC for interoperability between chains. And so Cosmos is like this mesh network of chains.

• 1:21:01David Hoffman?

  There is no central mainnet. It uses IBC to connect all of these Cosmos chains. Into this mesh network that doesn't have a center. And you are correct in your saying that Bedrock, actually OP stack, will support interoperability between other OP stack chains. And so because all of these chains are being built on the OP stack standard, there becomes additional surface area for cross-chain composability inside of the OP stack standard. And so many, many, many app chains can come to be built on the optimism OP stack. And as more, as the OP stack becomes the standard, it becomes so much easier to abstract away the boundaries between these chains. And so you can get things like cross-chain synchronization of transactions,

• 1:21:46David Hoffman?

  atomic transactions. And so just the walls between OP stack chains start to blur. And so do you see a future where projects use OP stack for app chains, similar to the Cosmos model? That is the whole entire point of the OP stack is to create more chains that you can count and to have all of those boundaries between all of those chains completely abstracted away from the end user. And so that's why the optimism team has called this the vision the super chain, because it's like a fractal root system of chains. And you don't have to be worried about where you are on the OP stack.

• 1:22:21Ryan Sean Adams?

  It's hugely bullish.

• 1:22:22David Hoffman?

  One thing I'll say- It's extremely bullish.

• 1:22:24Ryan Sean Adams?

  One thing that's different between kind of like the whole Bedrock approach and the OP stack approach versus Cosmos is shared security is native. So everything in Bedrock, it's a layer two of Ethereum. So ultimately it inherits the security of Ethereum. And so it all settles that. That is not true with Cosmos app chains. They have kind of unique validator sets and some of these can sort of mesh together and provide some shared security, but there's not shared security across the entire Cosmos ecosystem. And so I think that is a significant difference too. But this is an example, David, of the Ethereum ecosystem really catching up on app chains, because Cosmos has been far ahead of Ethereum in app chains. I mean, it was kind of built for this purpose.

• 1:23:09Ryan Sean Adams?

  And Ethereum has not caught up yet, but I think it's going to start to with these layer twos and these kind of- Frameworks and codebases like Bedrock that allow anyone to basically spin up their own layer two secured app chain. So it's pretty cool to see. Another, another war in progress between chains that only benefits the users and the developers.

• 1:23:30David Hoffman?

  So while Cosmos is definitely further ahead on the app chain world than Ethereum, remember like they are so far behind on the shared security and native money of Cosmos.

• 1:23:40Ryan Sean Adams?

  It's the hard thing.

• 1:23:41David Hoffman?

  Sorry?

• 1:23:42Ryan Sean Adams?

  That's the hard thing.

• 1:23:43David Hoffman?

  It's way harder thing.

• 1:23:44Ryan Sean Adams?

  Let's talk about some takes the week. This one was from Balaji. So I think I prompted this tweet a little bit because I said, okay, crypto, what's the best way to fight this rogue SEC? It was kind of on my mind, given last week's event. And I feel like Balaji gave the best answer to this. David, you want to read this?

• 1:24:02David Hoffman?

  Balaji says, "You need a state to fight a state. United States like Wyoming, Tennessee, Mississippi, Montana are passing bills in support of DAOs and Bitcoin mining. Meanwhile, foreign states like El Salvador or the UAE are recruiting crypto founders. Sanctuary states for innovation, both inside and outside." Interesting.

• 1:24:21Ryan Sean Adams?

  Yeah.

• 1:24:21David Hoffman?

  Interesting.

• 1:24:22Ryan Sean Adams?

  He's totally right. I think this is the ultimate answer to like, what do we do about the rogue SEC? Is you compete with them. You disrupt them.

• 1:24:30David Hoffman?

  Yeah.

• 1:24:30Ryan Sean Adams?

  He goes on, by the way, which is, I think, even, almost even better than the parent tweet. He said, "The other part, we need to build a better financial regulator than the SEC. Free, open source, on-chain, star ratings for crypto projects, eventually adopted by US states and foreign states in lieu of the SEC, which didn't catch FTX. Guess what? The SEC ain't the only regulator in town. The US ain't the only country in town either. And the SEC isn't even the only regulator necessarily in the US. We were just showing you on Token Terminal, click of a button and you can generate audited, chain audited financial reports, right? Well, that is on-chain regulation in and of itself. That is using

• 1:25:14Ryan Sean Adams?

  code to enforce transparency in crypto. And so Balaji's other point is, we can build a better financial regulator than the SEC. That's ultimately what is going to shift SEC policy is you disrupt them, you outcompete them, right? They are the blockbuster of regulators and you've just come out with Netflix. I really like his take here and of course, you know, Balaji is very bullish on the network state ideas and that kind of is the lens through which he sees all of crypto.

• 1:25:44David Hoffman?

  Yep. Punk6529 moving on says, "If cash were proposed today, it would absolutely not be approved." Yeah, this is like a consensus take by now in the crypto world.

• 1:25:55Ryan Sean Adams?

  Yeah. And what does he mean by that? Just like physical cash money if Congress said, "Hey, we've got this idea."

• 1:26:00David Hoffman?

  You mean a form of cash that we can't trace and people are free to transact without permission? God, we can't have that.

• 1:26:08Ryan Sean Adams?

  It's peer-to-peer.

• 1:26:09David Hoffman?

  It's peer-to-peer?

• 1:26:10Ryan Sean Adams?

  It's private.

• 1:26:11David Hoffman?

  How do we regulate it?

• 1:26:12Ryan Sean Adams?

  Exactly.

• 1:26:14David Hoffman?

  I can't make an influencer video about cash.

• 1:26:18David Hoffman?

  Ryan Sean Adams tweets out, "How old were you when you realized the adults have no idea what they were doing?" Ryan, I feel like there's a backstory to this.

• 1:26:25Ryan Sean Adams?

  There's actually, I was just thinking about it of, okay, well, I'll maybe give my answer to this question. It's like, I actually think that, how old were you when you realized the adults have no idea what they're doing? I think that is the point, when you realize that, at which you actually become an adult.

• 1:26:42David Hoffman?

  And, oh, when you have to take on responsibility because you realize that if you don't, no one else will?

• 1:26:46Ryan Sean Adams?

  Yes. That is actually the marker. Like, that's kind of for me, it was almost like the meta-answer to this question. It's gonna be a different age for everyone, but that is what marks adulthood. And some people reach that at different times. For me, it was probably like gradual over time. It wasn't just suddenly like, I woke up and I'm 15 years old. I'm like, what the hell, these adults? It was just like gradual data collection, being like, and then getting in places where it was sort of cohorts of groups where I was like, "Well, of course, these adults don't know what they're doing, but there's smarter adults out there that have more influence and power, and surely they know what they're doing." No, it's adults not knowing what they're doing all the way down, right? Like, everywhere you go, you see this.

• 1:27:26Ryan Sean Adams?

  And so I guess maybe for me, it's been a journey of gradually coming to that realization and becoming an adult over time as a result, and taking on that responsibility, being like, "Okay, well, I don't really know what I'm doing either, but I'm gonna give it a shot, and if not me, these other adults don't know. And so I'm gonna band together with others that also want to take on these types of adult responsibilities and make the world a better place." But same question to you, like, when did you realize that the adults just don't know?

• 1:27:55David Hoffman?

  Yeah, I think for me it was crypto. I didn't, I woke up to this kind of ideas like, wait, most people don't know shit about most things. We're all just as humanity, just making this up as we go. And it was really crypto that using crypto as a lens for viewing the rest of the world that allowed me to kind of see that like so many other people don't know what they're doing and they're just making things up. And it was like, oh, if you can portray confidence, a lot of people will just start listening to you no matter what, which is terrible because that is not the right thing to optimize for. The optimized, the optimized thing to optimize for is like being correct and responsible. I'm a firm believer that responsibility is

• 1:28:39David Hoffman?

  the meaning and purpose of life to take responsibility and put responsibility on your shoulders. And so that's the realization I had once again in the end of 2022, after like three hours, capital went to zero and Terra Luna was dumb and bad and we knew it, yet people still follow Terra Luna and FTX and SBF. Like a lot of people just posture and a lot of other people just follow those people. And meanwhile, the responsible adults kind of get drowned out, at least in that particular phase of the market. And so like, once again, it's like, god damn it, you have to fix all this.

• 1:29:12Ryan Sean Adams?

  That, I, I, I hope that's the bankless call. That's why we call, you know, people who are in the crypto journey for the long run, settlers, right? It's, you're taking on adult responsibilities in crypto because we actually want to grow this community and this movement for the long run. And we're going to make long-term decisions here, not, not short-term shortcuts.

• 1:29:31David Hoffman?

  Remember, remember the subject of my talk at Eat Thunder or at Shelling Point?

• 1:29:34Ryan Sean Adams?

  A psychology, oh, Shelling Point was last year?

• 1:29:37David Hoffman?

  No, this year. No, yeah.

• 1:29:38Ryan Sean Adams?

  Yeah, you said psychology, right? It's like how crypto grows you up and matures.

• 1:29:43David Hoffman?

  Exactly. Yeah, that's part of the subtext. It's like, when you have self-sovereign money and finance and self-custody and influence over your protocols, you are given a lot more responsibility. So I think the advent, I'm just teasing bit by bit by bit, I talk over the last few weeks, the advent of crypto protocols will help society grow up faster because it gives us more things to have ownership over.

• 1:30:03Ryan Sean Adams?

  Yeah.

• 1:30:03David Hoffman?

  And be responsible for.

• 1:30:04Ryan Sean Adams?

  I certainly hope so.

• 1:30:07Ryan Sean Adams?

  David, let me ask you the question I ask you every week. What are you bullish about?

• 1:30:10David Hoffman?

  So all of this clamoring about the ZK EVM, Ryan, taking what I learned from Starkware, the Starkware sessions that I was at a week and a half ago. So much more can go on-chain with a ZK EVM than even with an optimistic roll-up. So there's just like this untapped playing field. Obviously, like some things come to mind, like on-chain gaming. We can put more of our game logic on-chain and make that composable and people will use that as a playground. But that's just like one thing. More and more things that go on-chain are more and more surface area for more and more things to get built. And so like, there is this world out there called the ZK EVMs that are going to have more things, more logic on-chain and allow for more composability. And we have these teams that are racing to produce this new real estate.

• 1:30:56David Hoffman?

  There is going to be so much innovation as a result of the ZK EVM world.

• 1:30:59Ryan Sean Adams?

  This really is-

• 1:31:00David Hoffman?

  People are not accounted for.

• 1:31:01Ryan Sean Adams?

  This really is like crypto's broadband moment, isn't it?

• 1:31:05David Hoffman?

  Yeah, yeah, exactly.

• 1:31:07Ryan Sean Adams?

  And that's when the internet got really good.

• 1:31:09David Hoffman?

  We could not have had, in dial-up land, we could not have had Netflix.

• 1:31:12Ryan Sean Adams?

  Yeah.

• 1:31:12David Hoffman?

  This is going to be the same thing. We're going to be able to get like all of the use cases of the internet that require high throughput. We're going to apply that same logic to ZK EVMs. We're going to untap this massive new field of what can be done because we can put so much stuff on-chain.

• 1:31:27Ryan Sean Adams?

  Yeah. I don't know if you ever saw that clip, it was from like 1993 or something. And it was like Bill Gates being interviewed by David Letterman. And he was asking like, like, Bill, like, explain the internet or something. And Bill Gates was like, well, you know, you'll be able to kind of listen to broadcasts online and music. And Letterman's like, what, you mean like the radio?

• 1:31:49David Hoffman?

  Yeah.

• 1:31:49Ryan Sean Adams?

  Right? And-

• 1:31:50David Hoffman?

  And everyone, and everyone laughs.

• 1:31:52Ryan Sean Adams?

  Right, everyone laughs, like, yeah, what a joke. But like, it's just, back in 1993, that was beyond, like, it was impossible. You couldn't even stream, I didn't even know if we had MP3 compression format back then. But you certainly couldn't stream sound, let alone video. And 10 years later, we had broadband and everything changed. So all of the crypto use cases that people have said are on the horizon and they are coming and like crypto gaming and all these things that we haven't seen yet. I think a lot of that's just been waiting for broadband. And this is the beginning of that.

• 1:32:25David Hoffman?

  I will say that is definitely true, like all these crypto use cases, like streaming payments, like stuff like that. But also importantly, we just, there's so much, there's more stuff than the stuff that we know about in the world that we don't know about. Like there's new stuff that we do not know about, that we cannot imagine. And we just need one creative developer to do something. And then all of a sudden, people are like, oh, I didn't know you could do that. And then all of a sudden, a new world happens. And that's what I'm bullish on.

• 1:32:48Ryan Sean Adams?

  Yeah, very cool.

• 1:32:50David Hoffman?

  What do you bullish on, Ryan?

• 1:32:51Ryan Sean Adams?

  More AI content on bankless, David. I feel like we gotta do it now. So we recorded a podcast with Ellie Zierkowsky earlier this week. It comes out Monday. If you are a bankless citizen, you already have that episode. And it was the first podcast, David, where I feel like I was prepared for a completely different podcast than it turned out to be. And I'm like, I'm almost like doubting myself. I'm like, maybe like, did I do kind of a shitty job on that? Like, I mean, you were there. It was just a very hard conversation.

• 1:33:27David Hoffman?

  It was a difficult interview.

• 1:33:28Ryan Sean Adams?

  It was a difficult interview.

• 1:33:29David Hoffman?

  We accidentally stumbled into like 400 level AI content.

• 1:33:32Ryan Sean Adams?

  Yes. I was telling you, David, before, like when we were recapping that that episode, where it felt like we wanted to get some, not necessarily light AI topic, but just like an overview of AI. And let's learn a little bit about AI and how it intersects with crypto. And like, rather than like doing the level one boss, we went all the way to the final boss. And like genius level AI guy who is very doomerist about the entire project.

• 1:33:58David Hoffman?

  AI doomer, yeah.

• 1:33:59Ryan Sean Adams?

  Basically, I mean, we titled the episode, We're All Gonna Die, because

• 1:34:02David Hoffman?

  That is the conclusion.

• 1:34:04Ryan Sean Adams?

  The entire, it was the start, it was the conclusion, it was the middle, it was all of it, was we're all gonna die. And that, the debrief of that episode, I actually might go back and listen to it again, because I was in a pretty bad mental state, like after that episode, almost like existential dread type of stuff, which I don't know that I've been hit like that in a while. Like, obviously, we all, you know, when we first realized there's nuclear weapons that can blow up the world, right? That's, that's kind of a moment in your existence. You're like, wow, this is like, we're on a knife's edge of success or failure as a species. And this was another one for me, not that I hadn't heard the kind of the case for artificial general intelligence and how it could spell doom for anyone.

• 1:34:48Ryan Sean Adams?

  But it's just to see someone in, not in the flesh, I guess, across the screen. But like to be with someone who has clearly thought about this, tried his hardest against it and almost like, I don't want to say given up, but like is just, he's reached this inevitable conclusion that we're all going to die. It was, it was very, I don't know, it was, it was a moment for me, a memorable moment. And there might be some like failings on that podcast too. I feel like, like maybe there are different directions we could have asked him. And so I'd love the bankless community's kind of feedback on what we could have done differently. But all of this means is I, we can't let that be the last episode on bankless about AI.

• 1:35:29Ryan Sean Adams?

  All right. Because if it is, I don't think we've told the full story. There's got to be someone much more optimistic about things that are going into artificial intelligence. I'm looking for like another doctor to give me a second opinion on that terminal diagnosis that Eliezer just gave us. That aside, Eliezer's brilliant. I think it's a really interesting episode. If you want to see two crypto guys try to like, not to get dragged down, like going in too deep in the deep end with this subject. Then this is the episode they like to, to, to watch. But yeah, I've been thinking about this episode the entire week. So it's, I don't know if I'm really bullish about it. I just wanted to fit this in. I wanted to tell that to you right now.

• 1:36:10David Hoffman?

  Well, I hopefully have good news for you, Ryan, because Vitalik put me into DMs with Sam Altman. And so I got a response from Sam Altman, TBD, so whether I can get him to say yes to come on to the show. But this would be the first ever, Sam Altman is the guy behind ChatGPT and OpenAI.

• 1:36:27Ryan Sean Adams?

  Oh, yeah.

• 1:36:28David Hoffman?

  And I don't, I don't think he's done a podcast since the rise of ChatGPT. So if we could land that interview, that would be awesome. And also that would be the, the more optimistic, typical, happy flavor of bankless content that we would be able to make.

• 1:36:44Ryan Sean Adams?

  Really got me down this week, yeah.

• 1:36:45David Hoffman?

  Yeah, you know, you did. But I'm also bullish on AI content. And this, and like, this isn't just bankless, like, oh, bankless is doing AI stuff. We talk about front-running the opportunity. That's one of the main themes of this show. Eventually, AI and the crypto worlds will collide, and we want to equip the Bankless community with the ability to understand that inevitable conclusion, which is why we're doing AI stuff.

• 1:37:08Ryan Sean Adams?

  David, we also talk about coordination failures. And if we can't protect ourselves from artificial general intelligence, like, that is the mother of all coordination failures. If we screw that one up, isn't it?

• 1:37:18David Hoffman?

  Right, yeah. Bankless is much more of a coordination podcast than it is a crypto podcast, I'd say.

• 1:37:23Ryan Sean Adams?

  So is Ethereum. Coordination technology. That's really the hope here. All right, meme of the week, David, what do we got?

• 1:37:30David Hoffman?

  Meme of the week? What do we have as meme of the week? Sell me this Satoshi. What movie is this?

• 1:37:36Ryan Sean Adams?

  Wolf of Wall Street.

• 1:37:37David Hoffman?

  Wolf of Wall Street, yeah. Sell me this Satoshi. And this is Leonardo DiCaprio holding up a pen. And he's like, "Sell me this pen." So the response to "Sell me this Satoshi" is, "It's an ordinal."

• 1:37:49Ryan Sean Adams?

  That's awesome.

• 1:37:50David Hoffman?

  For those that don't know, an ordinal is, and it's basically data that's appended to a single Satoshi. So all of a sudden, a single Satoshi can have the value of an NFT. That's the meme.

• 1:38:01Ryan Sean Adams?

  Very cool. All right, guys, risks and disclaimers, of course. None of this has been financial advice. Neither David and myself are registered investment advisors. We never will be, at least, maybe David will someday. I won't, I can promise you that.

• 1:38:12David Hoffman?

  Nope.

• 1:38:13Ryan Sean Adams?

  Crypto is risky. You gotta know this by now. We tell you every week, you could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:38:24David Hoffman?

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

• 1:39:08David Hoffman?

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