ROLLUP: Gary Gensler Grilled at Congress Committee Hearing

Bankless Weekly Rollup 2nd Week of April 2023 ------ 🚀 TOKEN HUB 🚀 https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 ------ BANKLESS SPONSOR TOOLS: 📣 SAFE (Gnosis) | ACCOUNT ABSTRACTION https://bankless.cc/AA ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken 🧠 AMBIRE | SMART CONTRACT WALLET https://bankless.cc/Ambire 👻 PHANTOM | FRIENDLY MULTICHAIN WALLET https://bankless.cc/phantom-waitlist 🦊METAMASK LEARN | HELPFUL WEB3 RESOURCE https://bankless.cc/MetaMask ------ Topics Covered 0:00 Intro 4:10 MARKETS 10:00 ETH Staking https://www.rated.network/overview https://imgur.com/JyEFP6j 24:00 Gary Gensler https://financialservices.house.gov/news/documentsingle.aspx? DocumentID=408708 27:15 Patrick McHenry https://twitter.com/BanklessHQ/status/1648359230179782656 29:50 Tom Emmer https://twitter.com/TylerSCrypto/status/1648360838544203777?s=20 35:30 Warren Davidson https://twitter.com/WarrenDavidson/status/1648379560122105882?s=20 37:20 Gary Fans https://twitter.com/BanklessHQ/status/1648365096413052928?s=20 42:20 Missing SBF https://twitter.com/sassal0x/status/1648135965456863236?s=46 43:50 ETH is Not a Security https://twitter.com/lay2000lbs/status/1648356295622422529?s=20 44:40 Republicans vs Democrats https://twitter.com/TrustlessState/status/1648365962100367361?s=20 46:30 Gensler vs Bittrex https://www.sec.gov/news/press-release/2023-78 https://twitter.com/MasonVersluis/status/1647987623670218752?s=20 50:50 SEC Crypto Regulations https://twitter.com/TrustlessState/status/1648234719081816064 51:40 Coinbase Bermuda https://fortune.com/crypto/2023/04/19/coinbase-gets-bermuda-license-plans-to-launch-offshore-exchange-in-coming-weeks/ 53:30 SEC Decentralized Exchanges https://www.coindesk.com/layer2/2022/04/05/a-new-sec-definition-for-exchanges-has-big-implications-for-crypto/ 55:30 Opaque Regulation https://www.coincenter.org/a-new-sec-proposal-has-a-serious-change-hidden-within-its-complex-language/ 57:15 Hester Peirce https://www.sec.gov/news/statement/peirce-rendering-inovation-2023-04-12 1:05:00 Rocket Pool Atlas https://twitter.com/Jasper_ETH/status/1647409214027972615?s=20 https://medium.com/rocket-pool/rocket-pool-atlas-upgrade-7c69e39a3d5f https://twitter.com/drworm_eth/status/1648427406259294209?s=20 https://dune.com/drworm/rocketpool 1:09:40 Magi OP Stack Rollup https://twitter.com/NoahCitron/status/1648702968219471875?s=20 1:11:20 Uniswap Wallet https://www.youtube.com/watch?v=C74rHvKgnWU 1:12:20 Unknown Exploit https://twitter.com/tayvano_/status/1648187031468781568 1:16:45 Solana Phone https://twitter.com/solanamobile/status/1646580454768910344 1:18:35 Mattel Crypto https://corporate.mattel.com/news/mattel-creations-launches-digital-collectibles-marketplace 1:19:10 Trump NFTs https://collecttrumpcards.com/ 1:20:30 1inch on zkSync https://twitter.com/1inch/status/1649050974751948800?s=46 1:20:45 Apple Savings Account https://www.apple.com/newsroom/2023/04/apple-cards-new-high-yield-savings-account-is-now-available-offering-a-4-point-15-percent-apy/ 1:22:45 Permissionless II https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 1:27:00 Questions from the Nation https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 https://www.bankless.com/join?utm_source=YouTube&utm_medium=Intro&utm_campaign=Intro_CTA1 TAKES 1:36:30 Mocking Crypto https://twitter.com/_blakewest/status/1646181872194703360?s=46 1:39:00 Backed by the Army https://twitter.com/bendifrancesco/status/1648767224159559701?s=46 1:40:45 What David’s Bullish On 1:42:45 What Ryan’s Bullish On MEME of the Week https://twitter.com/BanklessHQ/status/1648442906301325314 ---- 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.

• 0:00Ryan Sean Adams?

  The grilling of Gary Gensler, that's what happened in front of Congress this week.

• 0:06Ryan Sean Adams?

  Bankless Nation, it is the third Friday of April. Welcome to, what David?

• 0:11David Hoffman?

  The Bankless Friday Weekly Rollup, where we cover the entire weekly news in crypto, which is always an ambitious endeavor, yet we persevere nonetheless, no matter which regulator stands in our way. Here on the Friday Bankless Weekly Rollup.

• 0:24Ryan Sean Adams?

  This week, we know who it is. Gary Gensler became the main character this week, alright? And he's been doing that ever since the beginning of the year. We're going to talk about the Gary Gensler Grill Sesh in front of Congress. That happened. We got a bunch of clips. It's really like a Gary versus the people type thing, isn't it?

• 0:40David Hoffman?

  Gary be the people. Yeah. So if you want to get your catharsis on, we got some clips for you. Of people, people just like yelling at Gary Gensler and Gary Gensler just taking it.

• 0:51Ryan Sean Adams?

  It is cathartic, but it's also like, it was so frustrating. We'll see what you guys think when we get to that section. David, what else are we talking about today?

• 0:58David Hoffman?

  Ethereum Chapella, one week later, we will look at all the stats and the metrics as to the withdrawals. How many people withdrew their Ether from the beacon chain? How many people deposited? Is Ether going, is security going to zero? We're going to talk all about that. As well as some other big announcements and releases of this week. An Ethereum Layer 2 gets its first second client. So that's pretty cool. Rocket Pool gets the biggest protocol upgrade of any LSD protocol ever in existence. So we'll talk about the details about that. Thousands of wallets get their Ether drained and no one really knows why, which is concerning. And I have stuck my head in the sand on that one. All of this and more.

• 1:40David Hoffman?

  So make sure you like and subscribe. If you are listening to this on Apple Podcasts, go and rate and review. So we can get Bankless to the top of the iTunes charts. If you're on YouTube, hit that subscribe button and the like button. And overall, do things that help us.

• 1:53Ryan Sean Adams?

  Like and subscribe. Yeah. Bring us up the charts. I mean, crypto needs it right now, right? Or do we? I don't know. Are we in a bear market? Are we in a bull market? I don't know. We're in this midpoint. We're in this in-between phase. Not really sure what to call that. We'll talk about that when we get to the markets. Before we get into the markets though, we got to tell you about our friends and sponsors over at. Safe, formerly called Gnosis Safe. This is a multi-sig of multi-sigs. It is the multi-sig that everybody in crypto uses, secures many billions of dollars on Ethereum. Bankless uses it. This is all our multi-sig of choice. It's a bankless wallet. Okay, there's no bank in between it. You've also heard us talking about account abstraction. This is the future of wallets. This gives Ethereum wallets that FinTech-like

• 2:38Ryan Sean Adams?

  experience with very smooth user interface. So we've got the Safe wallet. We've got account abstraction. What does Gnosis want Bankless listeners to know today? David?

• 2:49David Hoffman?

  So Gnosis, now Safe, is dropping Safe Core, which is an account abstraction toolkit of sorts to make it easier for you, builder, to build account abstraction tools. So this makes it easier to hook in things like fiat on and off ramps for gasless transactions. Like, that means like paying for your transaction with stablecoins and all the other things that really make account abstraction super powerful. So in addition to this dev toolkit to help make account abstraction the status quo for all Ethereum wallets, there is also a hackathon, a new kind of hackathon where they are calling an "anything goes" hackathon.

• 3:26Ryan Sean Adams?

  I like that.

• 3:27David Hoffman?

  And "anything," "a anything," "a" in front of "anything," starts on May 1st. So it's coming up very soon, 2023. There is a non-technical hackathon. So everyone's invited. You can make memes. You can make product ideas, MVPs. A lot more stuff is fair game. So if you've never participated in a hackathon before, this is a great opportunity to get your foot in the door into the ecosystem to build something. You can also make a team and have team members if you are looking to find some friends in this space, which is always useful. So there is a link in the show notes for any of these announcements that might have interested you, whether it's the hackathon or the Safe Core account abstraction dev package. All of that stuff is just a click away in the show notes.

• 4:05Ryan Sean Adams?

  That is safe.Global/cor for more details. All right, let's get to the markets today with charts from our friends over at Kraken, our favorite exchange, the one we recommend for 2023. David, we're looking at the Bitcoin price now. What's it showing us on the week?

• 4:19David Hoffman?

  It's shown us down, but only a little bit. Actually, a medium amount. Started the week at $33,000, ending the week down 5% at $28,000. And so, kind of top ticked it when we measured it last week. So, 33 was like the local high. We are down now to the low, low price of $28,000. Back down below $30,000. Sad, sad noises.

• 4:40Ryan Sean Adams?

  Below 30K. Above 30K, I'm feeling good. I'm feeling bullish. Below 30K, I'm like, oh, it's the bear zone. And we're oscillating between these, these two points.

• 4:48David Hoffman?

  It's a little bear zone. It's a cute bear.

• 4:50Ryan Sean Adams?

  Little bear zone. Okay. I feel the same way with ETH. What are we looking at in the week?

• 4:55David Hoffman?

  Down 1.5% on the week. Started the week at $2,000, ending the week at 1970. Although, we had some pretty strong price action, both in Bitcoin and in Ether this week. Ether got all the way up to 1,000 or 2150, almost, I'd say. Yeah. And then, but now couldn't, couldn't keep up the, the above 2,000s. We are down 1961, it looks like. So, maybe down 2% in the week.

• 5:17Ryan Sean Adams?

  What's up with these green candles on the 13th and 14th? Is that as a result of kind of staking? Is that what we're seeing? Starting?

• 5:23David Hoffman?

  Yeah, that was post-Chappelle. Yeah, that was post-Chappelle. Then like, yeah, exactly. Yeah, everyone realized that like, people that, all the Chappelle withdrawal FUD was just super FUD. Yeah. And then people like, oh, I'm not allocated anymore. I should probably buy.

• 5:38Ryan Sean Adams?

  Have we retraced that? We, have we retraced?

• 5:40David Hoffman?

  Most of it, yeah. The ratio is up though, which is where we're going to go to next. So, up 4% on the week. So, .069, nice. So, 4% gain on the ratio.

• 5:52Ryan Sean Adams?

  All right, 4% gain on the ratio. And total crypto market cap, got to tell you, is $1.27 trillion. Trillion with a T. So, still in the, still in the bull zone. Above $1 trillion is bull zone for me.

• 6:05David Hoffman?

  That's the first time you've ever gotten, given the number. What compelled you to do that this week? That's my job.

• 6:10Ryan Sean Adams?

  Just because it hasn't really changed. You know, like one point, we've been, it's just like, look at this. Look at this, the last 90 days or so.

• 6:18David Hoffman?

  The crypto, total crypto market cap chart looks yummy. It looked good.

• 6:22Ryan Sean Adams?

  Like on what time scale?

• 6:24David Hoffman?

  Oh, the big ones. The big time.

• 6:26Ryan Sean Adams?

  The max?

• 6:27David Hoffman?

  Yeah.

• 6:28Ryan Sean Adams?

  Zoom out to the max?

• 6:29David Hoffman?

  Well, I mean, just like, it's just been, it's been clearly up and to the right for a while now.

• 6:36Ryan Sean Adams?

  Yeah, it really has.

• 6:37David Hoffman?

  Like, we're gonna start, we're coming in on like, we're starting to zero in, it's a little bit early to say this. We're starting to zero in on 12 months of green, at least for Ether, because Ether bottomed last May. Bitcoin bottomed in November, but Ether is almost at 12 months of green.

• 6:52Ryan Sean Adams?

  This is the point at which you're like, um, is this the early bull market? And you kind of don't know yet. You're kind of left wondering, or is this just more of kind of the crab? And this is going to persist? Like, what's your best guess for 2022?

• 7:05David Hoffman?

  Okay, so if we just, if we just totally extrapolate very rigidly from past bull markets. It was the 2016 and 2020 years that were the years of up only that no one knew were bull markets in that moment. And so like, it was a modest increase of like a 2X over, a modest of 2X, over one year of time. It's like 2016, it was like a 2X in prices. 2020, also a 2X in prices. And I remember, Ryan, like in 2020, we were all like, is this over yet? And then COVID happens, like, oh, we're still in the depths of it. And like, from the Bitcoin and Ether asset prices, it was a strong performance of the year, yet no one knew,

• 7:50David Hoffman?

  no one had realized that we were out of the bear market.

• 7:53Ryan Sean Adams?

  So does it feel like those times? Does it feel like 2016? Or does it feel like 2020 to you right now?

• 8:02David Hoffman?

  So if we go on the four-year cycles, we are still half a year away from that, which is not far off. And also, I'm not going to pretend that, like, why would we rigidly project forward when things are different and change? So, I mean, we are within striking distance of that timing-ish.

• 8:20Ryan Sean Adams?

  You know that argument of why would we rigidly project, but by the way, just finish that thought. So, you know, it could be 2019 rather than 2020, if we were rigidly projecting forward, like right now. But I'm also actually, I'm kind of still a fan of rigidly projecting forward, David.

• 8:36David Hoffman?

  It works last time.

• 8:38Ryan Sean Adams?

  It freaking works almost every time, not just last time, it worked the time before. And it worked the time before that, it seems like.

• 8:44David Hoffman?

  Well, no, but the time before that, we were, that was the first cycle.

• 8:47Ryan Sean Adams?

  I know, but it's just these four-year types of cycles seem about right and has nothing, in my mind, it has nothing to do with the Bitcoin happening. It just has to do with these boom-bust cycles that we see.

• 8:58David Hoffman?

  Appetite. It's investor appetite for tokens.

• 9:00Ryan Sean Adams?

  And I remember people were like, last time in 2021, late 2021, 2022, when the whole super cycle idea sort of took off, it's like, why does it have to be like last time? This time it's different. We have all of this. We're not going down. We'll never see another, you know, above 50% drop from all-time highs. This is a different asset class. We've hit mainstream. Look at, we have Tom Brady. We have, you know, our names on sports arenas. We're here. We made it, right? And what happened? The same exact pattern played out. That's why I think the rigid projection is like my base case still, even though it is the same.

• 9:39David Hoffman?

  Base case, base case ought to be the same until proven otherwise, and it has not been proven otherwise anywhere.

• 9:47Ryan Sean Adams?

  All right. Well, let's go on. Let's talk about Ethereum, okay? Because now we are one week, just over a week past the Chappelle upgrade. So all like ETH withdrawals are in. So tell us about the numbers, David. I want to know if, how many people withdrew, or how much ETH withdrew, how much ETH deposited, and what, are we net gain or net loss? And I'm expecting a net loss as we go into these charts, but tell us the story here.

• 10:12David Hoffman?

  Okay, so I want all the listeners, including you, Ryan, to think of, think of the numbers. We'll start with the number of the number of Ether that was staked to Ethereum the moment that Chappelle happened, which was 19 million and one quarter. So 19,250,000. That was, that was how much Ether was staked when Chappelle went live. How much Ether do you think is left in the beacon chain? How much Ether we got left? How much Ether got withdrawn?

• 10:35Ryan Sean Adams?

  How much did we go down by?

• 10:37David Hoffman?

  Yes, how much did we go down by?

• 10:38Ryan Sean Adams?

  My guess would be...

• 10:39David Hoffman?

  Or up by. It's, we could have gone up. Up is an option.

• 10:42Ryan Sean Adams?

  We definitely went down.

• 10:43David Hoffman?

  Up is wrong. Up is wrong.

• 10:45Ryan Sean Adams?

  Okay. I knew that. My base guess would be about half a million ETH down. Because it didn't, I mean, yeah, I haven't looked, I haven't looked at all of the details here, but, you know, price has been up. My impression is there hasn't been a big flow for the exit, exit queue, and so down half a million. How'd that fare?

• 11:07David Hoffman?

  You are pretty damn, pretty damn close. A little bit shy. You guessed half a million. We were at like 0.6, 0.65 million Ether got withdrawn. So we were at 18,640,000 Ether. There have been two large withdrawal events. It's been down and to the right with some brief periods of more deposits, faster, more faster deposits than withdrawals, but then very large withdrawers have come and just like nuked it, right? And so, and who are these?

• 11:39Ryan Sean Adams?

  That's these blue lines on the chart, right? These blue candles, rather.

• 11:42David Hoffman?

  Exactly. And so these are the large entities. That first big withdrawal is Kraken. And then the second big withdrawal is on the further right on the April 20th, which was, is that today? Yeah, that is like within the last 24 hours are Coinbase and Binance, large other centralized service providers. We were at 19 and a quarter million Ether stake. Now we're at 18,637,000 Ether stake. So there we go.

• 12:07Ryan Sean Adams?

  So the bleed, the bleed is what? Like 60, 70K ETH per day?

• 12:13David Hoffman?

  Yes. Okay. But there's, there's an interesting story here. First Kraken, one of the biggest withdrawers is legally compelled to withdraw, thanks to our good friend, Gare Bear. We'll get to him.

• 12:24Ryan Sean Adams?

  We'll definitely get to him.

• 12:25David Hoffman?

  Yeah. Coinbase and Binance. Okay. So like, why are the other big centralized exchanges withdrawing? And so here is a snapshot in the last 24 hours. So this was recorded Thursday. I'm on C E S T at 5:00 PM. So I'm six hours ahead of Eastern time. So it's, it's Binance has withdrawn a 25% of the last, of the Ether withdrawn in the last 24 hours is Binance, 23% is Kraken, 18% is Coinbase, and then we have 10% others. And so like, why are all the centralized exchanges withdrawing their Ether? What's going on? Well, now remember, this is Coinbase's CBE and Binance's whatever liquid taking derivative they have as well. And then also Kraken is legally compelled to withdraw. What is happening

• 13:09David Hoffman?

  is a reshuffling of people withdrawing their Ether. Doing the thing we like, Ryan, the bankless thing of withdrawing their ether from centralized exchanges. And also, in addition to like while withdrawers are outpacing depositors, depositor rate prior to Chappelle versus now is up bigly as well. And so there is ether going out of centralized exchanges and then also being redeposited into the beacon chain via other mechanisms.

• 13:35Ryan Sean Adams?

  The deposit queue is higher than it was previously to Chappelle.

• 13:40David Hoffman?

  The rate of deposit is about 3X.

• 13:43Ryan Sean Adams?

  Yeah. Oh, wow. Okay. I didn't know that. So the net is still down just because the

• 13:47David Hoffman?

  Net is down bigly. Yeah.

• 13:49Ryan Sean Adams?

  Deposits outweigh the, I'm sorry, the withdrawals outweigh the deposit, but the deposits are still up. So you're calling this a reshuffling. Remember when we talked about this event as being sort of a snow globe, where you just kind of shake the snow globe and then just stake the ether is going to settle in different locations across the staking pools or solo stakers. You're saying that is a possible explanation of what's happening here because we're getting the withdrawals certainly, but we're still getting deposits inbound and it's just settling in a different location, maybe solo staking, maybe, you know, a more decentralized staking pool, something like this.

• 14:23David Hoffman?

  I would say it's more definitive than it's a possible explanation. We watched the largest re-eth mint ever happen. And so we'll get to that when we talk about the Rocket Pool Atlas upgrade, very big upgrade, very excited about that. So we know that Rocket Pool has absorbed a decent chunk of ether. And then also, the supply of solo stakers is also up bigly. So this has, this has moved, this is like one of the, this is like one of the coolest upgrades in a while because we are seeing liquidity leave these large centralized economies of scale exchanges and migrate towards decentralized solo stakers. The whole like

• 15:00Ryan Sean Adams?

  Wait a second. Thanks, Gary? Gary?

• 15:04David Hoffman?

  No, he only because he only forced Kraken out. He didn't do anything about Coinbase. But like, I mean, Kraken, Kraken, yeah, I mean, people who had Ether and Kraken are able to go do stuff with it. And that could be, I mean, technically, yeah.

• 15:17Ryan Sean Adams?

  I think it's just funny. We'll get to Gary, but like, it's just funny. The tighter he squeezes on, you know, centralization, the more it seeps out into decentralization. So we got him, we got him either way.

• 15:26David Hoffman?

  That's the whole case of crypto. That's not, that's not just like an accidental feature. That is the feature of crypto is like the harder people grab it, the faster it decentralizes.

• 15:36Ryan Sean Adams?

  Yep. But, okay, so, so go on. So we're seeing a reshuffling go on here. There's some withdrawal. I, where do you think the bottom is going to be in this withdrawal? Like, like, for, for instance, and by the way, how long are the withdrawal queues at this point? Like, if I want to withdraw.

• 15:52David Hoffman?

  If you want to go back a tab, yeah, we got the answer to that question. So there are, there is 23,000 validators looking to withdraw, which comes to 750,000 Ether, which is currently in the withdrawal queue.

• 16:05Ryan Sean Adams?

  750,000 Ether is in the withdrawal queue?

• 16:09David Hoffman?

  Yes. So that, that is to be withdrawn. Now, remember, that is not all principal. There is both rewards and principal as well. And so I think it's.

• 16:18Ryan Sean Adams?

  But the bulk is going to be principal.

• 16:20David Hoffman?

  About 75% is, is, I think, principal versus with rewards. In the future, that will flip. It will be largely with rewards being withdrawn. Once this whole like equilibrium, once, once this now is finally shuffled, it'll, it'll flip in terms of rewards will be the main withdrawers. And because rewards for your validator rewards are automatically withdrawn. Just, that's just a fun, fun fact.

• 16:45Ryan Sean Adams?

  This withdrawal queue is now 17 days. If I start withdrawing right now, I have to wait 17 days until I get it because.

• 16:52David Hoffman?

  That is correct.

• 16:53Ryan Sean Adams?

  The pipe is small. And it's all trying to fit through. But like at the end of this, if we, if we have the, you know, 600,000 or whatever that we've withdrawn so far, plus another, you said 700,000, so 1.5 million ETH supply approximately, once this withdraw queue drains of outbound, like ETH going out and being redistributed, reshuffled, or actually not restaked potentially.

• 17:15David Hoffman?

  Yes.

• 17:15Ryan Sean Adams?

  We'll hit a bottom at some point.

• 17:16David Hoffman?

  Yeah. And so if we have no large mass exodus from centralized or like centralized service providers or anything like this, it would bottom out maybe at 18 million. Maybe there's another wave. I bet you it does not go below 17 million. I feel pretty safe about that, especially when the rate of solo staking, I think, is going to continue to be healthy, at least in the short term.

• 17:38Ryan Sean Adams?

  So you're predicting this doesn't drop any more than another, you know, 1.5, 1.6 million ETH?

• 17:45David Hoffman?

  I think that's right. Yeah, I think that's right. I don't think we go below. I think it's safe to say we don't go below 17 million staked. We are currently at 18.6. It's very possible that we do not go below 18 million staked, and that would be bullish. That'd be very bullish. That's the bullish outcome, is if we stay above 18 million. And then bullish is not to say like a price bullish, I'm just saying, just like, it's cool to see this. It would be cool to see that.

• 18:11Ryan Sean Adams?

  Do you see some of these charts on the doom board too that we have from Hill Dobby? Shout out Hill Dobby. Are stakers in profits? You know, you could see how many people below when E, well, what is this showing us? The amount of ETH?

• 18:24David Hoffman?

  It's showing you the price of Ether at the time of Ether deposited into the beacon chain. It's not showing you the price that that Ether was bought at. It was only showing you the price at when the Ether was deposited.

• 18:34Ryan Sean Adams?

  And this analysis says about 50% of the stakers are in, in, in the money, since they deposited, and 50% are down from their deposit time, which kind of makes sense, given the timeline of when you could deposit was mostly depositing during the bull run, right? And then partially during the gare.

• 18:51David Hoffman?

  There's a healthy amount of deposits at the very beginning of the beacon chain, which was launched in December of 2020, when the price was $700.

• 19:00Ryan Sean Adams?

  Yeah, that's incredible. That was a while ago now. Well, very good. So what are the takeaways from this, David? It's, you know, Ethereum's not dead. Obviously, there was not a run on Ethereum. This is kind of to be expected. We'll see a bottom point pretty soon. Justin Drake had said, said after we get the bottom on, you know, the amount of ETH stake withdrawn, then we'll probably start to incrementally rise once again. I think we're seeing early signs of that. How much money? And by the way, how much money? Like, what is the reward rate? What is the interest rate when you deposit ETH right now?

• 19:33David Hoffman?

  The ETH stake rate? That is a solid 6.7% because not only are people leaving, which jumps, which increases the ETH stake rate, gas fees have been up lately. And so you are getting just under 4%. You're getting 3.8% in terms of issuance for staking, protocol issuance, and you're also getting another 2.9% for execution layer rewards, which is like MEV and transaction fees.

• 19:58Ryan Sean Adams?

  See, this is attractive. 6.7%.

• 20:00David Hoffman?

  6.7% is big, bro.

• 20:02Ryan Sean Adams?

  Yeah.

• 20:02David Hoffman?

  That's more than treacheries.

• 20:04Ryan Sean Adams?

  I mean, that's why we're gonna, I think, start to see ETH flood back in is because this is a very yummy, you know, APY to make. 6.7% is going to attract more ETH as capital. Where else are you going to park your ETH?

• 20:17David Hoffman?

  You just said yummy.

• 20:18Ryan Sean Adams?

  The risk-free, I said, I said yummy. Yeah. The risk-free, do you say dummy or yummy?

• 20:23David Hoffman?

  Yummy. Well, I said it in the episode, and now you said it.

• 20:26Ryan Sean Adams?

  Okay, yes. Yummy. It is a yummy interest rate. And so like, because this is the risk-free rate for Ethereum. Right. I mean, how long ago, David, did we write those first posts? 2019, 2020, when we talked about Ethereum as an internet bond?

• 20:41David Hoffman?

  Yeah, the risk-free rate of the internet. Finally true. Finally true. You gotta love it when a plan comes together.

• 20:47Ryan Sean Adams?

  And ETH-denominated returns as well, right?

• 20:50David Hoffman?

  I don't think, I don't think, well, I'm sad to say, Ryan, I don't think you and I will ever make a more...

• 20:55Ryan Sean Adams?

  A better prediction.

• 20:56David Hoffman?

  A better prediction in our lives ever than that.

• 20:58Ryan Sean Adams?

  Yo, we peaked in 2020, guys. That was it. It's all marginal improvement from here, if any.

• 21:05David Hoffman?

  Ryan, if you like yummy interest rates, would you like a strategy to increase that interest rate from 6.7% to, I got, let me go down to my notes here.

• 21:14Ryan Sean Adams?

  Oh.

• 21:15David Hoffman?

  To an even, an even yummier 9.7%.

• 21:21Ryan Sean Adams?

  Are you starting a Celsius V2? Are you starting a decentralized lending?

• 21:26David Hoffman?

  I'm talking about a way to increase your yield in a non-custodial, decentralized way that also increases the health of the network. You can get up to 9%.

• 21:35Ryan Sean Adams?

  How do I do this?

• 21:36David Hoffman?

  I'll let, I'll, the listener is gonna have to wait because that is coming up in later on in the news, but if we can get there, well, we can move on.

• 21:43Ryan Sean Adams?

  Yeah. I definitely want to hear that, David. So some yummy interest rates ahead, but in order to do that, we gotta get to the rest of the news. David, what else we covering today?

• 21:52David Hoffman?

  Coming up, we got to talk about how much of a main character Gary was that this last week. So if you want to see your catharsis, if you did not watch Gary Gensler's hearing, remember the whole Gary, Gary going to the principal's office thing? Well, that happened. And so we got to watch certain members of Congress absolutely grill Gary. So we are going to take those clips and play them for you in case you missed it. But there's other things to talk about as well. Coinbase moving offshore and damn it, I kind of just teased it, but Rocket Pool's Atlas upgrade changes the game with their economics. And that's perhaps maybe the source of what I was talking about.

• 22:25Ryan Sean Adams?

  That's where I get my 9%.

• 22:26David Hoffman?

  That's where you perhaps, yeah. 9.7. But well, so in order to get all those things, we're going to talk to some of these fantastic sponsors that make this show possible. Learning about crypto is hard until now. Introducing MetaMask Learn, an open educational platform about crypto, Web3, self custody, wallet management, and all the other topics needed to onboard people into this crazy world of crypto. MetaMask Learn is an interactive platform with each lesson offering a simulation for the task at hand, giving you actual practical experience for navigating Web3. The purpose of MetaMask Learn is to teach people the basics of self custody and wallet security in a safe environment. And while MetaMask Learn always takes the time to define Web3 specific vocabulary, it is still a jargon-free experience for the crypto curious user. Friendly, not scary.

• 23:11David Hoffman?

  MetaMask Learn is available in 10 languages with more to be added soon, and it's meant to cater to a global Web3 audience. So are you tired of having to explain crypto concepts to your friends? Go to learn.meta mask.io and add MetaMask Learn to your guides to get on boarded into the world of Web3. If you haven't yet experienced the superpowers that a smart contract wallet gives you, check out Ambire. Ambire works with all the EVM chains, the layer twos like Arbitrum, Optimism and Polygon, but also the non-Ethereum ecosystems like Avalanche and Phantom. Ambire lets you pay for gas and stablecoins, meaning you'll never have to spend your precious ETH again. And if you like self custody, but you still want training wheels, you can recover a lost Ambire wallet with an email and password, but without giving the Ambire team control over your funds.

• 23:54David Hoffman?

  The Ambire wallet is coming soon for both iOS and Android. And if you want to be a beta tester, Ambire is airdropping their wallet token for simply just using the wallet. You can sign up at ambire.com and while you're there, sign up for the Web App Wallet Experience as well. So thank you, Ambire, for pushing the frontier of smart contract wallets on Ethereum.

• 24:10Ryan Sean Adams?

  The grilling of Gary Gensler, that's what happened in front of Congress this week. It wasn't a full grilling, but I think we're going to talk about some of the Congress members, members of Congress who asked Gary the questions. I think we all wanted him to be asked. We've got some clips coming up, but give us the high level here. What happened this week, David? And what are we looking at on screen?

• 24:33David Hoffman?

  And so there was a hearing for Gary Gensler so that Congress, specifically the House Financial Services Committee called Gary Gensler in so they could ask him questions about a handful of things, including some non-crypto things, but definitely some crypto things. And so interestingly, post the hearing, the committee Republicans out of the Financial Services Committee of the House released this press release and the press release is titled Committee Republicans Grill SEC Chair Gary Gensler Regarding His Disastrous Agenda, which like I agree with, like, thank you for grilling him.

• 25:14Ryan Sean Adams?

  That's also very political.

• 25:15David Hoffman?

  Very political. They are making a very public statement that they would like you to know, perhaps constituent, that the Republicans are grilling Gary Gensler. Like, first off, what's your take on that, Ryan?

• 25:27Ryan Sean Adams?

  I was, I'm surprised. This is the FinancialServices.house.gov. I'm, I don't read these often, these press releases, but it is incredibly, incredibly political, right? Look at, look at the sentence. "Today, the Republicans on the House Financial Services Committee held Gary Gensler accountable for his disastrous agenda that threatens the dominance of US capital markets and our competitiveness." First of all, I wholeheartedly agree.

• 25:50David Hoffman?

  Yeah, this is all right.

• 25:51Ryan Sean Adams?

  Second of all, this is not a neutral kind of press release that you'd read like, "Yeah, today we brought in SEC Chair and we asked him some questions." This is like disastrous agenda threatening dominance of US capital markets. So they're just saying it. They're just coming out and saying it in this press release. And certainly, that was the tone of the questions that many Republicans, specifically Congress members, asked Gary.

• 26:15David Hoffman?

  Yeah, it's in this press release, "The Republicans continued to force him to answer for his reckless rulemaking agenda, regulation by enforcement of the digital asset ecosystem, and disregard for the capital formation piece of the SEC's statutory mission." Digital assets, like, they are protecting digital assets in the first paragraph of this press release. Patrick McHenry, who I believe is like the Chair of the House Finance Committee, he was the guy like doing the, the conducting between like, "Okay, you, you, next House member, you have five minutes to talk." He was doing that job. Also grilled him on whether or not Ether is a security. So we got all of these clips ready to go.

• 26:56David Hoffman?

  So this is going to be called a highlight reel. I think there's four of them. McHenry, Tom Emmer, Warren Davidson, and then another clip about when Gary is given just 30 seconds by another House member to talk about whatever he wants. And he chose to talk about something, and we will talk about all of these things. You ready to get into the clips, Ron?

• 27:13Ryan Sean Adams?

  Here we go. This is who? Patrick McHenry, we were just talking about, asking Gary Gensler whether Ether is a commodity or a security. Let's play it.

• 27:23Speaker 02

  Ether is one of the most popular digital assets and powers Ethereum blockchain. Back in 2018, then SEC Corporation Finance Director Bill Hinman stated that he believed Ether was not a security. Last month, CFTC Chair Benham expressed his view that Ether is a commodity. The state attorney general of New York asserted in a court filing last month that ether is a security. Clearly, an asset cannot be both a commodity and a security. Do you agree?

• 27:57Speaker 03

  Actually, all securities are commodity under the Commodity and Exchange Act. It's that we are excluded commodities. But I would agree that a security cannot be also an excluded commodity and an included commodity. I'm sorry, Chair, just to talk about the Commodity Exchange Act more precisely.

• 28:18Speaker 02

  Okay. So, do you recognize, how would you categorize ether, then?

• 28:23Speaker 03

  I think that the general sweep of what Congress did, not just in the 30s, but as amended a year.

• 28:29Speaker 02

  I'm asking you, sitting in your chair now, to make an assessment, under the laws as exist, is ether a commodity or a security?

• 28:38Speaker 03

  Without speaking to any one.

• 28:41Speaker 02

  I know, you've repeatedly said you're not going to speak to one, except you've spoken to one, Bitcoin. So I'm asking you to speak to a second one, the second-largest market cap here.

• 28:50Speaker 03

  And speaking to the tokens, there's 10,000 to 12,000.

• 28:54Speaker 02

  What?

• 28:54Speaker 03

  If there's a group of entrepreneurs in the middle.

• 28:56Speaker 02

  I'm asking about one.

• 28:57Speaker 03

  The public is anticipating a profit based on the.

• 29:00Speaker 02

  I'm asking you a specific question, Chair Gensler. I said this in private, this should be no shock to you, I'm asking this question.

• 29:07Ryan Sean Adams?

  I told you I was going to do this.

• 29:09Speaker 02

  Is ether a commodity or a security?

• 29:11Speaker 03

  And again, it depends on the facts and the law.

• 29:13Ryan Sean Adams?

  He's not going to, so like, he knows he's not going to answer.

• 29:15Speaker 02

  I'm asking about the facts and the law, sitting in your seat, and the judgment you are making.

• 29:20Speaker 03

  And so, Mr. Chair, I think you would not want me to prejudge, because I'm also.

• 29:25Speaker 02

  But you have prejudged on that.

• 29:26Ryan Sean Adams?

  Thank you. Patrick McHenry, asking the question, is ether a security? And Gensler refuses to answer. That's what that was.

• 29:34David Hoffman?

  Right. And that topic came up a number of times, and like, the consensus of people are like, he doesn't, he thinks they're all securities. He thinks everything is a security.

• 29:45Ryan Sean Adams?

  Except, for some reason, Bitcoin, maybe? Why? We don't really know. Okay, so what is the next clip we're about to watch?

• 29:53David Hoffman?

  This is Tom Emmer, who comes in with an absolute grilling. This is, this was like, awesome to watch. I would not want to be in Gary's position. So here's Tom Emmer.

• 30:04Speaker 04

  Five minutes. Thank you. Chair Gensler, I have a lot of questions and a limited amount of time. So if you could keep your answers to either a yes or a no, that will allow us to get through as many as possible, sir. He's not going to do that. From your perspective, is it more difficult now for the digital asset industry to access financial products and services in the United States than it was, say, two years ago?

• 30:31Speaker 03

  Sir, I'm not running one of those businesses. If they came into compliance, I think that would...

• 30:36Speaker 04

  Reclaiming my time. The answer, sir, is yes. Do you think you and the SEC have had a role to play in that?

• 30:46Speaker 03

  I think we have a role to protect the American investor and the capital markets and the...

• 30:51Speaker 04

  Reclaiming my time, sir. You have played an obvious role in that. During your tenure at the SEC, how many rules has the SEC finalized that actually accommodate the existing regulatory framework and are specifically to the digital asset industry so the crypto market can come into compliance?

• 31:09Speaker 03

  It's our rule books that are on the books for years, so we have not finalized any new rule specifically with regard to crypto. We've proposed some things in best execution. We have also...

• 31:22Speaker 04

  Sir, reclaiming my time, the answer is zero. And how many enforcement actions has the SEC levied against digital asset companies during your tenure, sir?

• 31:32Speaker 03

  I think it's probably 40 or 50.

• 31:34Speaker 04

  The answer, sir, is about 55. My understanding is that the biggest crypto failure in history is probably FTX at $9 billion. Were you the chairman of the SEC when FTX collapsed?

• 31:46Speaker 03

  Yes.

• 31:47Speaker 04

  And how many times did you meet with FTX prior to their collapse?

• 31:52Speaker 03

  I think my public record shows two.

• 31:54Speaker 04

  You met with FTX at least twice. And arguably, the second biggest crypto failure in history was Terra Luna. Who was the chairman of the SEC when Terra Luna collapsed, sir?

• 32:04Speaker 03

  We had brought...

• 32:06Speaker 04

  You were, sir, reclaiming my time. You were. There are five members on the commission. Do you believe your speeches and interviews are to serve as the official position of the SEC?

• 32:18Speaker 03

  There, I can only speak for myself when I'm speaking.

• 32:21Speaker 04

  Again, sir, in a statement on the SEC website, you are quoted saying, "The Kraken staking as a service enforcement action should make clear to the marketplace that staking as a service providers must register." But again, you haven't provided any rules for how that can be done. I must remind you, your public statements are not regulations. It's not responsible to expect the American people to assume your statements are a substitute for rules. Do you agree with this statement regarding the digital asset industry? The SEC needs additional congressional authorities to prevent transactions, products, and platforms from falling between the regulatory cracks.

• 33:02Speaker 03

  I think that it's a largely non-compliant field.

• 33:07Speaker 04

  Sir, again, I asked you to comply with my questions, and I'm asking you if you agree with that quote. And I'm going to tell you, I'm quoting you from an August 3, 2021 article where you --

• 33:20Speaker 03

  Coming to compliance with my questions.

• 33:21Speaker 04

  -- I believe you told Congressman Hill earlier that you need congressional authority to regulate stable coins, and stable coins happen to be a significant percentage of the crypto market. So, the question is, when were you telling the truth to Mr. Hill or to me? You've got to start answering these questions in a more transparent manner, sir. Does it concern you, by the way, that your approach to the digital asset industry is actually driving this industry out of the United States?

• 33:48Speaker 03

  We're trying to drive it to compliance, and if they're not complying with the laws, then they shouldn't be offering their products

• 33:54Speaker 04

  Reclaiming my time. Madam Chair, I would like to enter into the record this Wall Street Journal article from April 14, 2023 detailing China's ploy to open its banking system to crypto firms in an effort to seize an opportunity created by our hostile regulatory environment, which, Mr. Chair, you're a big part of. Without objection. Look, Chair Gensler, "FTX was domiciled abroad, and so is Binance, yet American consumers still had access to both." You can't really think that pushing this industry abroad is going to protect American consumers when it hasn't several times in the past on your watch. You say the crypto market is rife with noncompliance. However, existing SEC rules make no sense for blockchain-based companies, and following them would actually kill these businesses.

• 34:39Speaker 04

  Your regulatory style lacks flexibility and nuance, and as a result, you've been an incompetent op on the beat. Doing nothing to protect everyday Americans and pushing American firms into the hands of the CCP. Your intention to work against SEC mission and put American investors in harms way has been made very apparent, sir. It's been a year and a half since you've appeared before this committee. You need to answer to Congress about the issues that you've had with the SEC staff union, the work environment you've cultivated at the SEC that's led to hemorrhaging of senior staff, the intellectual inconsistency of your regulatory treatment towards Bitcoin spot ETFs, and your politicization of capital formation opportunities for your treatment of certain specs. And that's just a name.

• 35:23David Hoffman?

  Not a wasted word. Every single word he just said was useful.

• 35:27Ryan Sean Adams?

  Well, this is very coordinated quite clearly. Some of the Congress members were just handing the ball off from one to another. You ask this question, I'll ask this question, that sort of thing. Here's the next ball pass to Warren Davidson, who's calling to restructure the SEC and the removal of Chair Gary Gensler. Let's listen to this.

• 35:46Speaker 05

  Chairman Gensler, your record of failures to protect investors and abuses of power make it clear that we need to restructure the Securities and Exchange Commission. The failures are many, but let me cite some of the abuses. You average more than two rules proposals a month. You inappropriately provide inappropriately short comment periods. You have unworkable and unlawful ESG disclosure mandates on the market. You have essentially a Hotel California rule for crypto where you can check in anytime you like, but you can never leave. You have endless discovery with no resolution and no clarity for the captives in the market. You have unworkable proposals for overhauling equity market structure, a de facto ban on crypto through proposed custody rule.

• 36:30Speaker 05

  You have high staff turnover, unhappy people leaving your office, and unhappy companies and capital leaving our country. To correct a long series of abuses, I'm introducing legislation that removes the Chairman of the Securities and Exchange Commission and replaces the role with an executive director that reports to the board where all authority would reside. Former chairs of the SEC will be ineligible under my proposed bill. And this isn't just my take. It resonates across the political spectrum. The American people want democratic access to capital, retail investor participation. You can't just exclude retail investors from markets and claim it's for their own good. Our markets need to function and flourish, and I yield back.

• 37:16Ryan Sean Adams?

  Wow, there, calling for his removal with him on the spot. This was definitely the grilling time that we saw. David, there are some other clips from others that we're not going to play today from the more supportive side of Gary Gensler. But could you tease those out? Because I know you watch this live. I'm thinking of people like Maxine Waters, who blew a kiss to SBF, I believe, at one important time.

• 37:38David Hoffman?

  And also Brad Sherman, yeah.

• 37:40Ryan Sean Adams?

  Brad Sherman, big, big Gensler fans, it seems. So we're playing kind of the grill session side of things. We don't have time to play all of the clips. But what was the Maxine Waters, Sherman take? And some of the, you know, the Gary fans out there? How did that sound?

• 37:56David Hoffman?

  Yeah, it's worth noting that this hearing was like over two hours long. And while like you, this is what we are provided just now is a very concentrated amount of just all of the things that are related to the crypto world that are like the things that we like, right? There are, there was hours of stuff that was kind of just like irrelevant to crypto. There was some like S E G investing and environmental stuff that was just like not related to crypto. And then there were people like Maxine Waters, who was just like throwing underhand pitches to Gary so he could just like knock them out of the park. And also Brad Sherman, who like thanked Gary for reining in the crypto industry, which we all know he didn't actually do.

• 38:39David Hoffman?

  And so like there is, this was not, this is not just like everyone just berating Gary Gensler. These are like four people, four people who are, who are just absolutely grilling Gary Gensler. There was one moment, which we're going to play here, where one of the members of the committee said, hey, Gary, I have 30 seconds of my time left. Do you want them? And so here is what Gary chose to do with those 30 seconds.

• 39:06Speaker 06

  I have about 35 seconds. Is there anything you'd like to share with us to, if I yield my last 30 seconds to you?

• 39:15Speaker 03

  Well, if I could just note something about you, you mentioned your hearing about the recent events in the markets. And I would note, there were three banks that failed in those handful of days, those last, those four or five days. And two of those banks, the first and the third that failed, Silvergate and Signature, were engaged in the crypto business. I mean, some would say they were, you know, crypto banks. And the third, the biggest Silicon Valley bank, actually, when it failed, you saw this country's, the world's second-leading stablecoin, had $3 billion involved there, de-pegged. So it's interesting just how this was all.

• 39:56Ryan Sean Adams?

  Because of the bank.

• 39:57Speaker 03

  Had some crypto narrative as well.

• 40:00Ryan Sean Adams?

  And my time is up. Thank you, Mr. Chair. David, you and I were watching this part live, and this kind of told me everything I needed to know because this Congress member, her questions weren't related to crypto at all. Not at all. It was about some of the other things that you touched upon. He pivoted the conversation. General market. Yep. And then she just asked a question of, hey, you have 30, 30 seconds. What do you want to say? What does Gary want to say? He wants to fud crypto. He wants to blame and associate the recent bank runs with crypto. Say Silicon Valley Bank was crypto. Signature Bank is crypto. Crypto bank. Look at this, you know, the stablecoin. And of course, Bankless listeners, you know the full story of the bank run. We've done many exhaustive episodes on why that happened.

• 40:40Ryan Sean Adams?

  This is not a crypto-related incident. Crypto didn't cause this at all. Actually, the banking system itself, underwater treasuries, all sorts of... It was the banks. It was the banks. It was a problem of the banks. But he is using his time to actually fud crypto, which, which tells me, David, everything I, you kind of, it was the conclusion for me on Gary Gensler. I was, I was just kind of hoping like, well, maybe there's a shred of neutrality. In this individual as a regular in this person, there's not, there's not. He is really anti crypto and I don't know if it's just him. I have a sense, David, this is all part of like Gary is kind of frontline for Operation Choke Point. I don't think it's just Gary inside of administration or inside of DC.

• 41:23Ryan Sean Adams?

  He has been enabled to go do this. At some point, he might be the fall guy for Operation Choke Point, or this might elevate his status. I'm not sure what kind of political games are going on, but it's very clear to me. There is a contingent in DC that wants to choke out crypto. And, uh, you know, Gary Gensler is a frontline operator in that contingent group.

• 41:44David Hoffman?

  We didn't play this clip, but there was a moment, I can't remember who asked him, but the first questions that he asked that this, um, this, uh, House member asked Gary was, did you work with Senator Warren ahead of time to prepare your answers to these?

• 42:01Ryan Sean Adams?

  Are you serious? They asked that?

• 42:02David Hoffman?

  Did you?

• 42:03Ryan Sean Adams?

  Yeah. They know what's up.

• 42:04David Hoffman?

  And so like Gary said, of course, like, no, I'm, I'm here of my independent thought. No, I did not do that.

• 42:10Ryan Sean Adams?

  I would never.

• 42:11David Hoffman?

  What did that, what did that House rep know? Like where, why did he ask that question? Like, where did that, where was the motivation for that question? Where'd that one come from? What's up with that?

• 42:21Ryan Sean Adams?

  I mean, just to emphasize too, this was said, said in one of the, um, the questions, uh, to Chair Gensler. The SEC filed 1,500 enforcement actions, yet Gary still missed FTX, SBF.

• 42:36David Hoffman?

  And this is coming from Anthony Cizano. This is his tweet. He's retweeting Gary Gensler's most recent influencer video tweet where he says, serving at the SEC for two years has been an honor. We filed 1,500 enforcement actions and overseen tens of thousands of registrants. His number one claim to fame, the thing that he's most proud of is the first thing he foot puts, puts first on this tweet is the 1,500 enforcement actions. And then Sazil, Sazil reminds us that like, well, you missed the one that caused the harm though. Like, what about those?

• 43:09Ryan Sean Adams?

  Kim Kardashian, David.

• 43:10David Hoffman?

  You've got Kim Kardashian.

• 43:11Ryan Sean Adams?

  Remember that this is summer, you know, $200,000 fine? Got that one.

• 43:16David Hoffman?

  So that was also a topic in the hearing. One of the House reps was like, um, so you, uh, fined Kim Kardashian for this Ether Max. Did you go after the issuers? And Gary starts responding like, yeah, so we fined Kim Kardashian like $2 million. And the guy goes, so no, no, no, no. Did you, did you go after the issuers? And Gary's like, no, we didn't.

• 43:37Ryan Sean Adams?

  What issuers? They don't have that like, I'm trying to be an influencer here. Kim Kardashian, Gary Gensler.

• 43:43David Hoffman?

  I'm trying to go like, have you seen how many followers he has on Twitter?

• 43:46Ryan Sean Adams?

  Yeah. This is crypto Twitter dug this up too. So remember that line of questioning from Patrick McHenry asking, Gary, is he the security? Is he the security? Is he the security? This is a clip from 2018, not that long ago. Where Gary Gensler, yeah, this is when he was a professor at MIT before he was chair of the Securities and Exchange Committee. And he's talking, he's giving a lecture on cryptocurrency and Ethereum. Let's see what he has to say.

• 44:17Speaker 03

  But that was in 2014 and in 2018, the Securities and Exchange Commission has said, regardless of what it might have been in 14, it's now sufficiently decentralized that we'll consider it not a security. But in essence, they raised $18 million and we're off to the races.

• 44:37David Hoffman?

  Seems pretty chill with it back then.

• 44:41Ryan Sean Adams?

  My how things change. David, this is a take from you after observing the congressional session there. What's your take?

• 44:48David Hoffman?

  Yeah, so Maxine Waters, again, we didn't play that clip, praised Gary Gensler, was teeing him up so he could hit grand slams. And then she's also the one that blew SPF a kiss. Brad Sherman, thanks Gary for reining in crypto. Both of these two people are Democrats. The person that gave Gary Gensler the 35 seconds to talk about whatever he wants, also a Democrat. Patrick McHenry, a Republican, was the one that pressures Gary for clarity on Ether. Tom Emmer, Republican, grills Gary about everything the crypto industry has been saying. And then there's the other clip that we played of the guy saying that you're, the whole SEC is like leaving, they don't like you, you're incompetent, also a Republican. And so like, yo, Democrats, come on.

• 45:34David Hoffman?

  What you guys doing?

• 45:36Ryan Sean Adams?

  I mean, I think we want to get a Democrat on the podcast.

• 45:42David Hoffman?

  Richie Torres, House Rep out of New York, Democrat, pro crypto.

• 45:49Ryan Sean Adams?

  That's one.

• 45:50David Hoffman?

  We got one, maybe.

• 45:50Ryan Sean Adams?

  We got one.

• 45:51David Hoffman?

  We got one.

• 45:52Ryan Sean Adams?

  This is turning into a partisan issue and it really shouldn't be a partisan issue. And it's very unfortunate. It's very disappointing. And, you know, I, Bankless does not skew in one political direction or another. It's not right or it, you know, it's not left, but it is very much anti authoritarianism.

• 46:10David Hoffman?

  Right.

• 46:11Ryan Sean Adams?

  And it's very much pro crypto values.

• 46:12David Hoffman?

  Definitely not top down, definitely bottom up.

• 46:15Ryan Sean Adams?

  Exactly. And so, I mean, I know this is a common part of the Democrat, Democratic platform. We're not hearing from anyone yet. So it's unfortunate. I think that's what you're reacting to here, David.

• 46:26David Hoffman?

  Yeah, exactly.

• 46:27Ryan Sean Adams?

  While this was going on, all right, the same week, Gensler gets grilled. The SEC has charged crypto asset trading platform Bitrex and its former CEO for operating unregistered securities exchange brokerage and clearing agency. And David, what are the details here? What sort of assets, crypto assets is the SEC now alleging are actually securities?

• 46:51David Hoffman?

  Yeah. So this was unique in that they actually named certain crypto assets, which they called securities. So Bitrex, if you haven't heard of that exchange, is a, it was formerly a United States exchange. It has been moving offshore, based in Seattle, actually. This was actually the first call it a shitcoin exchange that I ever traded ICOs on back in 2017. This was my first crypto exchange. So I bought my first unregistered securities on Bitrex. Thank you, Bitrex, I guess. It's been like losing in volume ever since 2017. Omisego, Algorand, Dash, the monolith token, IHT, I don't know what that is. And NGC, also don't know what that is, are securities.

• 47:34David Hoffman?

  Omisego, like a 2017 ICO darling, one of those definitely a bunch of hype and hot air. Algorand is a more relevant crypto asset that apparently Gary has been.

• 47:47David Hoffman?

  A intellectual fan of at his times in MIT. Yeah. And so here is some clips of Gary talking about Algorand.

• 47:56Speaker 03

  On top of a blockchain technology today. Uh, well, maybe in five years you could. It would be have the performance. Uh, Sylvia McCall's Algorand.

• 48:05David Hoffman?

  That was five years ago, by the way.

• 48:07Speaker 03

  Turing Award winner at, at MIT that I work with. Sylvia's got a great technology that has performance. You could create Uber on top of it. The question is then who would update the software?

• 48:19David Hoffman?

  He is now a securities promoter by, by his own degree. And so that's not the only clip. There's like other clips of Gary, like frequently using like Algorand as the example. And like, sure, it was developed at MIT. He was a professor at MIT. No one's really thinking, he knew about it, but just like it's, it's funny. It's kind of gone full circle.

• 48:37Ryan Sean Adams?

  It's funny. Okay. Here's the thing, right? It's just like this assortment of crypto assets. David, what does this have in common to you? Like, does this stick out in any way to you? Like, let me say go Algorand dash. Like, there's no consistency. There's no clarity.

• 48:54David Hoffman?

  The only theme is that these are, this struck, you know, that what year does it mean? Like, these are all 2017 ICO tokens or like.

• 49:01Ryan Sean Adams?

  Is that, is that it? Is that the consistency here?

• 49:04David Hoffman?

  Yeah, but that's also when Bitrex, the exchange was the biggest. And that, that was when it was at its peak. But yeah, these are all like 2017 era tokens. Yeah.

• 49:12Ryan Sean Adams?

  There is no clarity in the U.S. If Gary Gensler can't even tell us if the second largest market cap crypto asset ether is a security or not. And by the way, he doesn't get to decide, but he at least has to provide some clarity on what their future enforcement actions are. If he can't tell us that about ether, we have absolutely no clarity. And that, that was so, that's what was so maddening about his testimony in front of Congress, David, is he kept saying things like, there is clarity. Crypto just needs to come in and comply. They, they're, they're the ones that aren't complying. And yet we clearly see we have no clarity and this just looks like a grab bag of assets.

• 49:45David Hoffman?

  Just to really drill down on like how there's no theme with these tokens. Omisego was an ICO, it was a token, is still a token on Ethereum that raised $25 million in an ICO. Was like one of the biggest airdrops of all time because they airdropped OMG tokens through any and all Ethereum wallets that had at least 0.1 ether in it, if I can remember. So that was an ERC20 token on Ethereum that did an ICO. Dash was a layer one proof of state, proof of work hybrid token that also had privacy involved. It was a layer one, I don't know if it was a Monero code base, it was something Monero adjacent.

• 50:21Ryan Sean Adams?

  Something like that, something privacy.

• 50:23David Hoffman?

  Something like that, yeah, but like layer one, not, not like semi, like semi-expressive contracts, but no tokens. No, I don't think if there, maybe there was an ICO. Algorand, another layer one, TKN, another ERC20 token on Ethereum. So like no coherency, it was across the board.

• 50:40Ryan Sean Adams?

  Yeah, I mean, if these are tokens, then every, or if these are securities, then everything's a security.

• 50:45David Hoffman?

  Yeah, but that is what he thinks.

• 50:47Ryan Sean Adams?

  But I guess.

• 50:48David Hoffman?

  He does think that, yeah.

• 50:50Ryan Sean Adams?

  This is your take on the Bitrex enforcement action.

• 50:53David Hoffman?

  Yeah, so I just tweet out, as this charge against Bitrex is too spineless to go after the major exchanges, who by extension are doing the same thing. Like Omisego, I think it got de-listed from Coinbase, but like once upon a time listed on Coinbase. So like this, this charge against Bitrex basically says that every single crypto exchange, probably your crypto exchange listener, is an unregistered securities exchange.

• 51:17Ryan Sean Adams?

  Well, I mean, you're saying too spineless and I agree with you, he's not like immediately driving Coinbase out, but this is certainly a chilling effect and telling Kraken they can no longer stake. You know, there's a Wells notice out at Coinbase, who knows what that says? He's definitely coming for some of the larger exchanges next, which brings us to Coinbase this week. Coinbase got a Bermuda license and they plan to launch an offshore exchange in the coming weeks. This has got to be for redundancy purposes, a backup option for sure. And Brian Armstrong said as much. The Coinbase CEO won't rule out relocating the company away from the United States. That's what he said in some statements at a conference in the UK.

• 52:02Ryan Sean Adams?

  A few quotes from that. I think the US has the potential to be an important market for crypto. But right now, we are not seeing that regulatory clarity that we need. I think in a number of years, if we don't see that regulatory clarity emerge in the US, we may have to consider investing more elsewhere in the world. Talking about moving Coinbase outside of US borders. The compliant exchange, that's what Coinbase has always tried to be. And from everything I've seen, like they have been sort of the straight A student, front of the classroom, always raising the hand, like the teacher's pet of exchanges.

• 52:34David Hoffman?

  It's an explicit BD strategy for them.

• 52:38Ryan Sean Adams?

  Yeah.

• 52:38David Hoffman?

  Is to be compliant.

• 52:40Ryan Sean Adams?

  If they, and compare them to Binance, for instance, right? We'll compare them to, you know, SBF and FTX and all of that. So if they can't make it in the US, who can is the question. So it's like, thanks a lot, Gary. You are now driving our compliant, honest, good exchanges outside of the borders of the United States. That is what is happening.

• 53:02David Hoffman?

  To be clear, they're not shutting down their main, they're not, this isn't a new exchange. This is like, you know, Binance US to Binance, FTX US to FTX. It's sad that those are the two things that I have to compare Coinbase to, to make the point. I would expect the Coinbase international version would be just as compliant as the United States version, as again, as an explicit strategy. But this is like, this is just the context that, that this is operating under.

• 53:29Ryan Sean Adams?

  And if some of you are thinking, well, that's just centralized exchanges and, you know, centralized exchanges will be regulated by regulators. Guess what? Gary is not satisfied with that either. All right. Gary wants the definition of an exchange to encompass decentralized exchanges as well. This is actually another thing that happened this week. The SEC wants to redefine the definition of exchange to include decentralized exchanges. And so that means if a decentralized exchange, if this rulemaking passes, fails to register as a national securities exchange or a broker dealer in the US, there will be civil penalties. Basically, Gary and team.

• 54:13Ryan Sean Adams?

  Are saying that if you are opening up a Uniswap or a Sushi Swap or any sort of decentralized exchange, you have to get permission in the SEC. Come in for office hours with Gary Gensler first, and then like, maybe we'll let you have it. If what, like, the Uniswap code has to

• 54:30David Hoffman?

  If we don't put you in jail first.

• 54:31Ryan Sean Adams?

  delist all of the securities, which we don't even know which, like, this is, first of all, it's unenforceable because it's a smart contract code. But like, secondly, this is quite the chilling effect for all US entrepreneurs developing on DeFi. What does that mean? If I'm like, developing a DeFi exchange, I have civil penalties, they're gonna charge me with like, five to 10 million dollars if I like, release this code into the wild? This is open source code. This is exactly the point that Coin Center is making, of course, our faithful crypto educators and lobbyists in DC, they put out a post on this. They filed a comment explaining why it's unconstitutional that the SEC is proposing to change the term "exchange" to mean "decentralized exchange",

• 55:15Ryan Sean Adams?

  and they say this, "The effect of the definition on open source software developers is nonetheless clear. Anyone writing or distributing DEX software would be violating the law if they don't register." And, they go on to say, "This is a free speech violation." Gary Gensler, you don't have the authority to regulate free speech, open source code, in the United States of America. Like, what? Why are you reaching into this too? It's absolutely crazy to me. There's some reactions we could talk about, but I want to get yours first. What's your take on this?

• 55:49David Hoffman?

  So when I was going through the agenda, I like, made a comment on this one. I was like, "I don't really get what this is. Let's flag for removal." And you were like, "No, no, no, no, this is a really big deal." And so I want to read the title of this piece, because the title's very intentional. The title is, "A New SEC Proposal Has A Serious Change Hidden Within Its Complex Language." And this didn't really get, there was a lot of fanfare about Gary and the SEC today. This didn't get much attention versus the clips of Gary on Twitter, and also the Bitrex, and the Bitrex thing which led to Gary, the influencer promoting Algrand, which he deemed a security. Perhaps, this is actually the biggest news of the week. The fact

• 56:27David Hoffman?

  that the SEC is now saying that DEXs must come in and register, which is impossible, obviously, and like, the whole "hidden within its complex language" thing. We can only assume is intentional and they were successful in at least like slipping it under the cracks to hide it behind. I mean, even when we organized this roll up, we are talking about it third in the third thing because the other two things were more in people's brains.

• 56:54Ryan Sean Adams?

  Here's the thing, David, is the agenda to me is crystal clear. It's two things. Either I control it or I kill it. Those are the two options that this agenda is pursuing. So this is an effort to control DeFi. And if I can't control it, I kill it. That's what's happening. Hester Purse, of course, dissented. She's got some colorful comments here that maybe we'll, we'll read out just to refresh the palate, let you know that not everyone is, is crazy here. Let me read this. Today's commission aggressively expands its regulatory reach to solve problems that do not exist. Today's commission treats its basic approach to exchange regulation as something that must not, indeed cannot be

• 57:37Ryan Sean Adams?

  altered to allow any room for new technologies or for new ways of doing business. And I love this part. Today's commission tells entrepreneurs trying to do new things in our markets to come in and register. When entrepreneurs find they cannot, the commission dismisses the possibility of making practical adjustments to our regulation framework to help entrepreneurs register and instead rewards their good faith with an enforcement action. Today's commission treats the notice and comment rulemaking process not as a conversation, but as a threat. A hundred percent. That is the posture of this SEC regulatory regime under Gary Gensler. That's why we're giving it so much time and attention is because I think this is the guy on the front lines of Operation Choke Point. And it's getting

• 58:20Ryan Sean Adams?

  the point, David, where we have to resist or else what? We have to like leave the country? Like what? Like this is getting, it's, it's just absolutely crazy.

• 58:29David Hoffman?

  Yeah, we need to move, at some point move on because I know we're like, we're we're having an hour into the show. This is a very big deal. All of this stuff is a very big deal. I think I'll just leave listeners with this. Remember with Elizabeth Warren like one or two weeks ago when she was the main character and she was like, I'm building an anti crypto army. And then there was that, oh, you weren't there. It was me and Anthony for that week because you were out on vacation. One of the big, the news reported that like, and this move by Elizabeth Warren has attracted some positive remarks from bank lobbyists and, and banks in general. And so banks have made a big move. And now we have the whole choke point 2.0 with Treasury and Janet Yellen. And

• 59:10David Hoffman?

  then also we had that one House representative who said to Gary Gensler, did you prepare your questions in advance alongside Elizabeth Warren? So my question is, what axis is operating behind the scenes to coordinate all of this stuff to give Gary the confidence to be so audacious to do all of these things? When like, what, what backstop does he have that somebody will catch him? Yeah.

• 59:38Ryan Sean Adams?

  He's a general in the Elizabeth Warren Army, whatever that army consists of.

• 59:42David Hoffman?

  Well, I think Elizabeth, I mean, Elizabeth Warren definitely like, you know, the Commander Sherman of that army, right? That's a World War II reference, not Brad Sherman.

• 59:54David Hoffman?

  But it fits. But then also just like, it's the banks. The banks are the last line of defense. We are seeing the Gary Gensler, to me, is here's a take, is just a manifestation of the will of the banks.

• 1:00:08Ryan Sean Adams?

  Well, he's certainly funding it, whether it's the banks, the establishment, the institutions in general is certainly what's behind this. And I guess, David, at some level, what did we expect? We're in crypto. We're disrupting power structures. What did we expect? Matt, at some level, I'm surprised this didn't start to happen sooner, but now it's happening. We've got a fight on our hands. And so we got to do our part.

• 1:00:32David Hoffman?

  If that, if it is true that there's like this power axis and Gary Gensler is the front and we have a few other people in the front, Janet Yellen, Elizabeth Warren, but there's like this axis of power and it's like the last line of the, the people in the rear escalons are the banks. I'm, the only thing I'm surprised is like,

• 1:00:51David Hoffman?

  I guess I'm not surprised. Fuck.

• 1:00:54Ryan Sean Adams?

  What? What were you gonna say, though?

• 1:00:56David Hoffman?

  That it's coordinated, that they're able to do this. They're getting into the SEC. They're like, what did the banks like get together and sit down at their table and be like, "All right, how do we do this?" And like, Gary, get him into the SEC, get him to charge crypto. It's like, damn, that took some forethought and some...

• 1:01:10Ryan Sean Adams?

  Yeah, well, here's the thing, and it's not always the case that kind of the best value system wins, or the best thing for the people wins, or anything else. It's only the coordinated survive. And so if they can out-coordinate us, they can win. But I am hopeful, Bankless Nation, that we can out-coordinate them. And we have an asset that they don't have on their side. I'm not talking about a financial asset here. I'm talking about the people. This is a decentralized technology. Anyone should be able to own their own digital property, and we can build this from the ground up. And so that's what I think the crypto movement's all about.

• 1:01:43David Hoffman?

  And also, why we've been talking about coordination the entire time on this podcast, from the beginning of Bankless, because it's all coordination. In the words of good old Kevin Owoke, "It's all coordination, all the way down." Can we out-coordinate the banks?

• 1:01:59Ryan Sean Adams?

  I hope so. And I think so. We got more to talk about. Let's stop with Gary. What's coming up next, David?

• 1:02:06David Hoffman?

  Uniswap Wallet gets out of jail, so you can all go download the Uniswap Wallet, if you so choose. A new OP stack client just dropped, the first ever Layer 2 Ryan, that has a second client. That's pretty cool. The Solana phone is out and about. And also, we're gonna start with this as soon as we get back. Rocketpool's Atlas upgrade is where you can get extra yield on your yield, because yo dog, I heard you like yield. So we'll talk about all of that and more as soon as we get to some of these fantastic sponsors that make the show possible. 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.

• 1:02:48David Hoffman?

  Whether you're a beginner or a pro, the Kraken UX is simple, intuitive, and frictionless, making the Kraken app a great place for all to get involved and learn about crypto. For those with experience, the redesigned Kraken Pro app And web experience is completely customizable to your trading needs, integrating key trading features into one seamless interface. Kraken has a 24/7 365 client support team that is globally recognized. Kraken support is available wherever, whenever you need them, by phone, chat, or email. And for all of you NFTers out there, the brand new Kraken NFT beta platform gives you the best NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers the way that Kraken does?

• 1:03:31David Hoffman?

  And if not, sign up with Kraken at kraken.com/bankless. Bankless is launching the Bankless Token Hub. At Bankless, we've been studying the crypto markets ever since 2017, and all of our research has led us to this: The Token Hub. Your one-stop shop for alpha to help you navigate through the crypto markets. Have you ever wished for a trusted resource that would share their thoughts, ratings, and their opinions about tokens? Boy, do we have the product for you. The Bankless Token Hub is where we provide Bankless citizens with the alpha on the hottest tokens in crypto. We do the research, so you don't have to. The Bankless Token Hub includes the Token Ratings, where our team shares their research and outlook on the hottest tokens in crypto. Also, the Token Hub includes Bankless Bags, our own internal investment club. Bankless Bags is where we put our money where our mouth is.

• 1:04:16David Hoffman?

  And for the Bankless power user out there, you can access the analyst team 24/7 inside the Bankless Nation Discord. You can ask them questions and learn from a group of people deep in the weeds of crypto investing. The last feature of the Token Hub is the ability to upvote or downvote token ratings. The Bankless Token Hub lets you learn from your fellow citizens to rate these tokens yourselves. The Bankless Token Hub is launching right now and has already been beta-tested by your fellow Bankless citizens. So stay tuned in the Bankless Discord for updates. And if you're not a Bankless citizen, well, you better sign up if you want access, because this corner of Bankless is available for citizens only. I'll see you in the Discord.

• 1:04:52Ryan Sean Adams?

  David, you promised us some yummy yields earlier in the show. Is this the part where we get to the yield? What's happening?

• 1:04:57David Hoffman?

  Yeah, this is the third time we've said the word yummy on the show. Okay, so the Rocketpool Atlas upgrade. What is the Atlas upgrade? First off, how does Rocketpool work? Rocketpool, your friendly neighborhood decentralized staking as a service provider. People who want to allow our ETH to be minted, they will come in with 16 Ether, half of what's usually required. They will spin up a validating node and they will deposit their 16 Ether and they will allow 16 other Ether to come in to their node to create one node of 32 Ether. And then 16 our ETH will be minted. And that is the our ETH that you would buy on Balancer or Uniswap. That's how Rocketpool works. The Atlas upgrade reduces the collateral demand for Rocketpool from 16 to 8.

• 1:05:40David Hoffman?

  And so it doubles the capital efficiency because it allows for doubling of the supply of nodes. Also, why, what's the incentive to run a Rocketpool node? For people who want to actually deposit their 16 Ether and allow for 16 other people to come in, they, those people, get to charge the other half of their node 15%. So if the ETH stake rate is 6.7%, which it is, you get, you get that yield. But then you also charge 15% of that 6.7% of the people that backfill your node. Makes sense so far?

• 1:06:14Ryan Sean Adams?

  Yes, so you're saying to get that extra interest boost, I have to run a Rocketpool node?

• 1:06:18David Hoffman?

  Yes, correct. You run a Rocketpool node, you deposit half of a node, and then you get to charge the other half of the Ether 15% of their yield. With the Rocketpool Atlas upgrade, I think you can see where this is going. The collateral requirement goes from 16 down to 8. So if you, let's say you have 32 Ether, just because 32 is the numbers we've been thinking about. With Rocketpool before, you would be able to create two Rocketpool nodes, put 16 Ether in each, and then you would charge 15% of the 6.7% of other people's 32 Ether. So that would net you at a boost of 7.7% yield. So you would go from 6.7 to 7.7, an extra 1%. Great. Rocketpool now, it's an 8 ETH requirement for one node.

• 1:07:02David Hoffman?

  So that 32 ETH, instead of just being divided into two nodes, 16 and 16, actually creates four nodes, because that's how math works. And so you can get to spin up four Rocketpool nodes, and you get to charge 15% on 96 Ether, and you are the remaining 32, to create four nodes. And so that juices the yield, because you are charging 15% of the 6.7% yield that 96 Ether that's not yours is getting. You would ultimately come to about a 9.7% yield if you run four Rocketpool nodes, which you need 32 ETH to do. And so that's the Rocketpool

• 1:07:43David Hoffman?

  upgrade. Everyone's super stoked about it. It is, like I said, doubling the capital efficiency of Rocketpool, as you will. And I mentioned this-

• 1:07:50Ryan Sean Adams?

  In order to get that boost, David, I have to not only run a Rocketpool node, but I also have to have 32 ETH. Is that right?

• 1:07:56David Hoffman?

  Correct. Yes. That's right. Or 16, or 8, although it does cost some gasses to mint one. So like, doing it for 8 is probably not viable, last I checked. And so we've already seen some economics. So there are some charts that we're going to look at as well. The largest re-ETH mint, so here's the upgrade announcement, that's just a link in the show notes. So here is the graph of re-ETH being minted, and you can see the absolutely whopping-

• 1:08:22Ryan Sean Adams?

  It's going up.

• 1:08:23David Hoffman?

  Going big, two big mints. Yeah, so there was one mint of like 12,000 re-ETH in one day, and then one at like 8,000. So re-ETH supply, which has always been the thing that's like constrained Rocketpool the most, is the capital efficiency and the-

• 1:08:36Ryan Sean Adams?

  It's not as capital efficient as, you know, your centralized exchange staking, or even Lido staking, is it? But that's the trade-off. Not as capital efficient, but more decentralized.

• 1:08:45David Hoffman?

  Exactly. Yeah. So the most decentralized staking as a service provider on Ethereum has doubled its capital efficiency. So that's the news. There's some other cool upgrades to Rocketpool Atlas, if you want to learn more about those. There's a link in the show notes. It's really cool, Dune and Link's board. Yeah. And so where is the re-ETH supply these days? There are almost 11,000 minters, and there's almost a quarter million re-ETH out on the market, but that supply has only gone up over time.

• 1:09:14Ryan Sean Adams?

  I really hope it goes up. I would love to see like Rocketpool decentralized staking to be like, you know, a third.

• 1:09:20David Hoffman?

  I think they've self capped themselves to below a third. They've self capped themselves to 20%.

• 1:09:27Ryan Sean Adams?

  There's a ton of other more decentralized, you know, staking pool providers coming on the scene too. So hopefully as part of that.

• 1:09:34David Hoffman?

  That space is about to get very competitive.

• 1:09:37Ryan Sean Adams?

  I'm glad. I'm very glad. Okay, this is another competitive space. This is Layer 2's. Introducing Magi. Is that how you say it? Magi, our brand new OP stack rollup client written in Rust. What is this David? What is Magi?

• 1:09:51David Hoffman?

  Magi, Maggie, Magi is the second client for optimism for the OP stack. Optimism Bedrock is using the OP stack. Therefore, any OP stack chain now has a client. And so this is really important infrastructure for A, the decentralization of Layer 2's because having multiple clients is it's anti fragility, it's resilience, it's uptime.

• 1:10:14Ryan Sean Adams?

  Ethereum has that though, really.

• 1:10:16David Hoffman?

  Solana has one in development, but it looks like a Layer 2 beats Solana to the punch.

• 1:10:24David Hoffman?

  Sorry.

• 1:10:26Ryan Sean Adams?

  Solana has a phone, David. We'll get to that later.

• 1:10:28David Hoffman?

  We'll get to the Solana phone in a second. Anyways, this is the idea of this, the net effect of this is that A, optimism itself can become more decentralized, but we can also produce more OP stack chains. And this has always been and is the bull case for optimism is let 10,000 OP stack chains bloom. This OP stack client is written in Rust for the developers that like Rust, which apparently there are a lot of them. This was also developed by A16Z, which is a investor in optimism.

• 1:10:58Ryan Sean Adams?

  Kind of cool. I mean, a VC, an evil VC, and but also giving back to public goods, giving back to the community. This is open source code. So go for it.

• 1:11:06David Hoffman?

  There's way more evil VCs out there than than A16Z.

• 1:11:09Ryan Sean Adams?

  Let's name them. Let's get, let's get the T right now.

• 1:11:13David Hoffman?

  Try and name names.

• 1:11:15Ryan Sean Adams?

  That's a different show. We'll save that for the premium feed, David. This is Uniswap Labs. Of course, they had their wallet that was coming. That was locked in jail from Apple. This is a non-custodial wallet from Uniswap Labs, and it just went live. Actually, last week, late last week, after we recorded the last roll-up, it went live. And the Uniswap mobile wallet is now out of Apple jail, live in most countries. A fantastic UX. We did an entire episode on this with the lead designer at Uniswap. We'll include a link to the show notes. I think the call to action is, if you're on the bankless journey, go download the Uniswap wallet. Go check it out. It's a non-custodial wallet, okay?

• 1:11:56Ryan Sean Adams?

  This is one of those things we've been waiting for, and very cool that Uniswap is developing tools for the ecosystem as well, not just a decentralized exchange.

• 1:12:06David Hoffman?

  I've got my hands on the Uniswap wallet in test flight. I will absolutely download it in the real world. It is very easy, very intuitive. We love it.

• 1:12:15Ryan Sean Adams?

  Big thanks. NFT support, wallet support.

• 1:12:17David Hoffman?

  I have my crypto covens in there.

• 1:12:20Ryan Sean Adams?

  Very cool. All right, David, we've got this story as well, which is kind of concerning. Exploit targeting crypto OGs of some sort?

• 1:12:30David Hoffman?

  We don't even know if it's an exploit. The thing is, we don't know about this story, which is why it's really hard to report on. What's going on here is uncertain. And so here's Taylor Monahan, formerly of My Crypto Wallet. She tweets out, "For the past 48 hours," and this is a few days ago, "I've been unwinding a massive wallet draining operation." Sad emojis. "I don't know how big it is, but since December of 2022, it's drained over 5,000 ETH and unknown amounts of tokens and NFTs and coins across 11 different chains. It's wrecked my friends and OGs who are all reasonably secure. No one knows how." And then here is a graph of just all of these transactions that she's mapped out. So there is this wallet draining thing, and no one knows how it's happening.

• 1:13:16David Hoffman?

  And so it's happening across different chains. The people have come to consensus that it is a seed phrase exploit. So there is some-

• 1:13:24Ryan Sean Adams?

  That's one guess, right?

• 1:13:25David Hoffman?

  That's one guess, yeah. And so if you've imported your seed phrase manually into MetaMask, you might be at risk. We don't know. I have checked a wallet in which I have done that, and it is fine. There's not that much ether in it. It's like half an ether.

• 1:13:42Ryan Sean Adams?

  Did you check? When's the last time you checked?

• 1:13:44David Hoffman?

  Yesterday, yesterday.

• 1:13:49David Hoffman?

  I, I, people are perplexed by this.

• 1:13:51Ryan Sean Adams?

  It's just weird, right?

• 1:13:52David Hoffman?

  It's just weird.

• 1:13:53Ryan Sean Adams?

  I mean, like, all the circles who bring this up were like, hey, this is very weird. It looks like most of the people, most of the OGs who've been wrecked by this have been very secure, not doing anything silly, like sharing their seed phrase publicly. Or even, there was a theory that, oh, could this be the LastPass hack? Are people keeping seed phrases in LastPass? And that got hacked recently. And maybe the hacker is just kind of like brute force attacking the LastPass passwords and cracking them and then able to do these withdrawals. That's been a theory. But then I've heard that, well, this affected non LastPass users as well. So it's just, right now, it's kind of at the rumor stage.

• 1:14:33Ryan Sean Adams?

  And I've seen these rumors before in crypto, but usually they have explanations at the end of it. You'll get kind of a rumor of like, there's some mysterious draining of wallets. And then like, a couple of days later, or a week later, do you remember the Hugh Carr hack? Where he got hacked for like, we did an episode on this. He got hacked for like, it was like $20 million. He had no idea how. It turned out it was a man in the middle attack from a Microsoft Word document.

• 1:15:00David Hoffman?

  A docx file that he got.

• 1:15:02Ryan Sean Adams?

  Yeah, a docx file.

• 1:15:04David Hoffman?

  And so ever since this story, whenever I've sent Ryan a doc, I don't do this anymore. But like, I'd sent Ryan a docx file. He's like, get that fucking thing away from me.

• 1:15:12Ryan Sean Adams?

  Get it away.

• 1:15:13David Hoffman?

  Excuse my language. I'm not clicking on that.

• 1:15:15Ryan Sean Adams?

  Well, but like, because what it did was it somehow replaced his MetaMask with a man in the middle MetaMask, like a hack version of his MetaMask. And so that was scary, but I haven't heard of that, you know, lately. So we don't know what's going on here.

• 1:15:29David Hoffman?

  So if you, Bankless Nation citizen are concerned about this, the only thing I can really recommend is grab a ledger and spin up a new seed phrase and new hardware wallet and migrate your funds there. And then you can consider yourself fully protected. If you're already on a ledger and you haven't exposed your funds, you're probably fine.

• 1:15:51David Hoffman?

  It's probably the same thing. That's where I have, that's where I keep my money and I haven't moved mine. But I am keeping my eyes on my wallet that I did import the C phrase manually into MetaMask that one time.

• 1:16:03Ryan Sean Adams?

  It's a honey pot.

• 1:16:04David Hoffman?

  If I get, yeah, if I get my point for something you snagged.

• 1:16:07Ryan Sean Adams?

  Then we'll know.

• 1:16:08David Hoffman?

  Then we'll know.

• 1:16:09Ryan Sean Adams?

  Unless the hackers listening, they choose not to, uh, not to.

• 1:16:12David Hoffman?

  They're like, David, tell them, tell them to sell safe. Tell them it's safe.

• 1:16:17Ryan Sean Adams?

  Speaking of that, MetaMask wanted us to let you know as well that the recent reporting on this incident has incorrectly claimed that a massive wallet draining operation is a result of a MetaMask exploit. This is incorrect. This is not a MetaMask specific exploit. So some people were saying, oh, it must be MetaMask. And this is MetaMask saying, no, it's, it's not a MetaMask specific exploit. We're actually not sure what caused it, but like your MetaMask should be safe.

• 1:16:42David Hoffman?

  Right.

• 1:16:42Ryan Sean Adams?

  By default.

• 1:16:43David Hoffman?

  They have found wallets that have been exploited that are not MetaMask wallets. So deducing that it's not a MetaMask issue.

• 1:16:51Ryan Sean Adams?

  There you go. Reminder to get a hardware wallet, protect yourself. Good bankless advice here. David, the Solana phone is now live. Saga, the flagship, security conscious crypto first Android device from Solana Mobile is now available. Here it is. We did an episode with Anatoly on this and now it's out on the market. When are you getting your phone, David? When are you getting your Solana phone?

• 1:17:13David Hoffman?

  I'm waiting at the door.

• 1:17:18Ryan Sean Adams?

  Well, that's cool. I mean, look, the vision is very cool.

• 1:17:21David Hoffman?

  The vision is very cool. I shouldn't belittle it. It's a very big deal.

• 1:17:24Ryan Sean Adams?

  You shouldn't.

• 1:17:24David Hoffman?

  I really shouldn't. It's totally unfair of me, actually.

• 1:17:28Ryan Sean Adams?

  Do you know why, do you know why it's cool? It's because we were just talking about Uniswap being like locked in jail. They couldn't actually.

• 1:17:34David Hoffman?

  Yes.

• 1:17:35Ryan Sean Adams?

  They had the app ready last year and Apple wouldn't allow them to release a Uniswap custodial, non custodial wallet in the marketplace. And so crypto is going like, well, if Apple and Google kind of control our phone interfaces, we need a crypto first alternative. And so this is a Solana's attempt at, at doing that. And I think it's got a good vision. It's open source. There's a lot of good aspects to it. I think the thing that many of us are worried about is, well, it's really hard. To be in the phone business, like it's a cutthroat business. You need a large network effects and can a

• 1:18:07David Hoffman?

  You're going to compete with Apple and Android?

• 1:18:11Ryan Sean Adams?

  Oof, it's tough.

• 1:18:12David Hoffman?

  But like, again, it's an extremely noble effort. Either Android have more faith in Apple, but like either they come to us and serve us as a global

• 1:18:22Ryan Sean Adams?

  Or we have to do this.

• 1:18:22David Hoffman?

  Or community, or we have to do this. And so like tip of the hat to Solana Mobile for pioneering this effort. It's an extremely heavy lift. So yeah, there's that.

• 1:18:33Ryan Sean Adams?

  Yeah. Thanks for funding it. Mattel doing NFT stuff? It's a toy company?

• 1:18:38David Hoffman?

  Do you know what Mattel is? Bankless listener, do you know what Mattel toy company is?

• 1:18:44Ryan Sean Adams?

  Well, do you know what Barbies are? Do you know what Hot Wheels are?

• 1:18:46David Hoffman?

  Hot Wheels, Fisher Price, American Girl. I don't know that one. Thomas and Friends, Thomas, the Tank Engine, Uno and Mega. So that company that owns all of those things has launched a digital collectibles marketplace on the Flow blockchain. That's actually, I would say the appropriate destination for this. I mean, eventually they should do a ZK EVM on a layer two. But for now, Flow makes sense.

• 1:19:10Ryan Sean Adams?

  Yeah, there you go. How about these Trump NFT cards? He sold out the first batch. Now they've been down only since he sold out, but time for Trump to release series two. And they've also sold up of the NFTs. So Trump, really bullish on NFTs, said this in the tweet, "My new Trump digital collection trading card series two is the number one collection in the world. Must be that the people love the art. A great honor." Do you think the people love the art? I don't know, man. I've seen some of this art. It's, I mean, I guess love is, you know, a term some people might use.

• 1:19:44David Hoffman?

  Beauty is in the eye of the beholder, right? So the floor price of these NFTs went, they were previously at point four. They are now at point one, three, because they just inflated the hell out of the supply.

• 1:19:57Ryan Sean Adams?

  That's the problem with NFT issuance, right?

• 1:19:58David Hoffman?

  There was 14,000 of them prior and now there is going to be 47,000 more of these things. The fact that they are still at point one, three is insane.

• 1:20:08Ryan Sean Adams?

  Impressive. It's impressive. I don't know who's buying these, but I think Trump will keep selling them as long as people will buy them.

• 1:20:14David Hoffman?

  Yeah, right.

• 1:20:15Ryan Sean Adams?

  We can be sure of that.

• 1:20:16David Hoffman?

  If you, the last person I would ever put in charge of the money printer is Donald Trump.

• 1:20:23Ryan Sean Adams?

  Well, he kind of was, I guess, but he had a.

• 1:20:26David Hoffman?

  No, no, no. There's a separate, yeah, no, right. Yeah, Powell, that's Powell's job.

• 1:20:30Ryan Sean Adams?

  Separation of powers here. Releases today, 1inch is being deployed on ZK Sync Era. So the new ZK EVM getting 1inch, the DeFi exchange aggregator. Very cool. Welcome to the club. That's what they say in the message.

• 1:20:44David Hoffman?

  And then this is some big news, actually. Apple Card, Apple now has savings accounts at 4.15% APY. I use the Apple Card. I use Apple Cash. So I guess I now have a 4.15% savings account. Not as high as Efield. I will note, but it's conveniently on your phone. And so.

• 1:21:04Ryan Sean Adams?

  It's really cool, honestly.

• 1:21:05David Hoffman?

  Interesting pivot.

• 1:21:06Ryan Sean Adams?

  Yeah, it goes to show that sort of, you know, big banks, so this is all powered by Goldman Sachs. That is the new DeFi yield pool. I remember we were messing with these high yield pools and well, you know, bank accounts were giving yield of like 0.15%, right? Well, now because Fed rate is so high, interest rate is so high, a Goldman Sachs can offer this and they're distributing this 4.15% APY through Apple, which is kind of interesting. But it's on that theme of, remember we were talking about the bank run? This idea of a slow motion crash of like, well, a slow motion bank run of all of the yield, all of the savings and all of the money bleeds out of small, midsize regional banks

• 1:21:50Ryan Sean Adams?

  and goes into the larger banks in search of higher yield, thus making the small regional banks insolvent? That's this, David. All right. So Apple has 50% of the US smartphone population. 45 million people are like you and they have Apple Pay on their new account. And that was 4.15%. I'm getting my money out of my, you know, local credit union and I'm putting it in this new yield pool. It's not going to be so good for the local credit union, is it? So there's another story here, which is like this idea of like all tech companies eventually become a bank.

• 1:22:25David Hoffman?

  Right.

• 1:22:25Ryan Sean Adams?

  And this is not Apple going as far as becoming a bank, but certainly becoming a fintech front end.

• 1:22:31David Hoffman?

  Right.

• 1:22:31Ryan Sean Adams?

  And using Goldman Sachs as its banking layer. So interesting stuff, I think, in the world of TradFi this week with this, this announcement.

• 1:22:41David Hoffman?

  I just checked my phone. I don't have access to this yet.

• 1:22:43Ryan Sean Adams?

  So, ah, okay.

• 1:22:45David Hoffman?

  Well, somebody. I will continue with my 0.01% from Wells Fargo. Thank you.

• 1:22:49Ryan Sean Adams?

  The Permissionless Conference, David. What is this announcement?

• 1:22:53David Hoffman?

  Not Permissionless 2023, Permissionless 2. So here is the teaser reel from Permissionless. It's 45 seconds. Here we go.

• 1:23:03Speaker 07

  2022 was a meme.

• 1:23:07Speaker 08

  The collapse of FTX has sent shockwaves across the cryptocurrency industry.

• 1:23:12Speaker 07

  Skeptics danced, believers believed.

• 1:23:16Speaker 09

  Bitcoin is going to zero. It's just ridiculous that anybody would buy this stuff.

• 1:23:26Speaker 07

  The tide is shifting and it's time to rebuild.

• 1:23:36Ryan Sean Adams?

  There it is.

• 1:23:37David Hoffman?

  How do you like the vaporwave vibe?

• 1:23:41Ryan Sean Adams?

  I love that.

• 1:23:42David Hoffman?

  90s vaporwave?

• 1:23:43Ryan Sean Adams?

  Yeah, this is great. So what is this, David? What is this conference about?

• 1:23:47David Hoffman?

  This is Permissionless number two. If you didn't go to Permissionless one, it was held in West Palm Beach, Florida. This is going to be held in Austin, Texas. It'll be my first time in Texas. And it is going to be the second Permissionless. The first Permissionless, I will say, it was like the unique point about Permissionless is if it was a ton of crypto natives, like Bankless listeners, like Bankless, the Bankless Nation showed up absolutely in force. Bankless DAO was there, like all the people that we've had on the podcast were there. And so it was like a bunch of crypto natives in this like very well manicured and orchestrated venue managed by like just seamlessly operated by the Blockworks team. And so that unique, there was that unique vibe of just like a ton of crypto natives, which are usually associated with like.

• 1:24:32David Hoffman?

  Coordination failures and indie-ness and just like clunkiness. But instead of that part, it was like this super smooth and operated conference because the Blockworks team are absolute jazz at this. So Permissionless 2 in Austin, Texas is going to be about 10 to 20% bigger than last year, even though we are twice as more into the bear market than we were at the last time. And I'm pretty stoked. So I'll see you all in September in Austin.

• 1:24:57Ryan Sean Adams?

  This is the only conference I go to every year.

• 1:25:00David Hoffman?

  This is the only time I ever see Ryan.

• 1:25:02Ryan Sean Adams?

  This is, this is the one to go to if you have to pick one. And by the way, bankless citizens get a 30% discount on the tickets, which more than pays for itself.

• 1:25:11David Hoffman?

  If you are a bankless citizen and you pay for bankless, the ticket discount that you get pays for your bankless citizenship automatically.

• 1:25:20Ryan Sean Adams?

  There you go. Instant ROI. David, what do we have coming up next?

• 1:25:23David Hoffman?

  Coming up next, we got questions from the nation, two hot questions and also two takes of the week and also two people on this podcast tell you what they're bullish on. So we're going to get to all of that and more as soon as we get to some of these fantastic sponsors that make this show possible. 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

• 1:26:08David Hoffman?

  from inside the wallet. Phantom is of course 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. 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.

• 1:26:52David Hoffman?

  Both Arbitrum One and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM-compatible. On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitrum Nitro, it's also now 10 times faster than before. Visit arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be: secure, fast, cheap, and friction-free.

• 1:27:28Ryan Sean Adams?

  We're back with some questions from the Bankless Nation. This one from Canis. "Does Bitcoin really have to be sustainable?" is the question. "What if Bitcoin becomes a store of value like gold and the big players have the incentive to keep it secure? Just like gold owners, the rich, government banks, etc., were building fortresses, safes, paying guards, etc.?" Maybe this is the case for Bitcoiners as well. They preserve their wealth by keeping the network secure by buying mining rings and spending power at their own cost because this is their main store of value. I think the question is, David, does Bitcoin actually need to have a sustainable monetary policy? What do you think?

• 1:28:02David Hoffman?

  Yeah, so we're actually conflating a few things here. And I can see how that confusion set in, but it's really important to parse out some of this stuff. First, where does Bitcoin or where does gold get its security from? It's not from like the guns and the armies that protect the gold. This is kind of nuanced, but it's really important. Gold actually gets its security from... Atoms from like energy like gold was made in the explosion of stars. And so gold does not fall apart because it's extremely atomically stable. And also it does not fall apart monetarily because the amount of energy it takes to create gold molecules is insane like it's it's cost you more of energy costs to produce gold atoms

• 1:28:47David Hoffman?

  than it does to than than you would be able to net out a result of that yield of gold.

• 1:28:52Ryan Sean Adams?

  Yeah, I mean, this is why.

• 1:28:53David Hoffman?

  Economic security comes from, that's why gold is valuable.

• 1:28:56Ryan Sean Adams?

  This is why alchemy has never worked, right? You can't turn straw into gold, you can't turn anything into gold. It's another way to say that David is like gold already paid its proof of work energy cost.

• 1:29:05David Hoffman?

  Right.

• 1:29:05Ryan Sean Adams?

  In the form of a supernova. Yeah, until until we can blow up stars, we have that sort of energy possibility, we actually can't create gold.

• 1:29:16David Hoffman?

  Right.

• 1:29:16Ryan Sean Adams?

  In a cost effective way, but go on.

• 1:29:19David Hoffman?

  And then there's the incentive to protect your gold, right? Like the guns, the, you know, the fortresses, all of that stuff. And that would be like your cost of buying a ledger or the cost of like storing a seed phrase somewhere, which by the way, cryptography makes extremely cheap and accessible to all. And so these are actually different things. The where it breaks down with Bitcoin is that the reason why this doesn't work with Bitcoin, why Bitcoin is not sustainable is because proof of work in the Bitcoin blockchain, you as a gold holder, you don't actually care about protecting other people's gold. So there is a tragedy of the commons problem here where like you as a gold holder, you want other people to pay for security to protect your gold, but you don't want to pay

• 1:30:03David Hoffman?

  for the protection of other people's gold. And so that is the transaction cost, right? The P is the transactors that are paying the transaction fees in Bitcoin that pay for the security of everyone else. But in the gold model, like the I need to keep my gold safe, you pay for the custody and care of your own gold, but in the Bitcoin model, you are just hoping that other people pay for your security, not you. And so that's where it falls apart.

• 1:30:28Ryan Sean Adams?

  Yeah, I think sometimes the the strong Bitcoin statement misses this hidden.

• 1:30:36Ryan Sean Adams?

  I guess hidden virtue about gold and that is gold has already paid its security budget. Nature has paid it in the supernova of a star, whereas Bitcoin has to pay its security budget every single block.

• 1:30:50David Hoffman?

  Every single year on an ongoing basis for now until forever.

• 1:30:54Ryan Sean Adams?

  If you want that unforgivable costliness, which is baked into gold at the periodic table level on Bitcoin, you actually have to issue more Bitcoin to pay for it or make up for it in transaction fees. And the problem is if everyone's holding their Bitcoin and the transaction fees are low. And by the way, this is kind of timely. Did you see David Arbitrum layer two transaction fees revenue actually?

• 1:31:20David Hoffman?

  Past Bitcoins.

• 1:31:22Ryan Sean Adams?

  Past Bitcoins transaction fee revenue past basically it's, you know, the more sustainable part of its way of paying for, for security. Anyway, that aside Bitcoin has to keep paying this over and over and over. And the only way it can pay for it is issuing new Bitcoin, which is going to run out. It's going to go to zero in time or transaction fees. You know, that, that's why this won't work. That's why we have said for a very long time before I think this was more widely known. And I think many maximalists still don't accept this, that Bitcoin has a major security budget problem in the future. The only way for Bitcoin to solve this is really to like, I mean, can migrate to proof of state. We've talked about this.

• 1:32:05David Hoffman?

  It can do a lot of things that are very untenable to the core Bitcoin community.

• 1:32:10Ryan Sean Adams?

  Exactly. So it's going to be a problem at some point and it's just a matter of how long they can kick the can down the road. And I think they will, they'll have another like good five years.

• 1:32:18David Hoffman?

  Yeah, they got, no, five years. I'd say they got like four to five more havenings. So they got like 20, 20 years.

• 1:32:26Ryan Sean Adams?

  Before transactions start getting reversed, but it's already becoming embarrassing because we can see now a layer two has outstripped it. Like Arbitrum is more secure than Bitcoin. How is that? Like, how is that possible from an economic security perspective?

• 1:32:41David Hoffman?

  Bitcoiners will say that was an overly like reductive way, like Arbitrum versus Bitcoin. And there's like, you could debate this.

• 1:32:47Ryan Sean Adams?

  I'd be happy to debate any of them on that. Like it's just.

• 1:32:51David Hoffman?

  This is, this is what a lot of bankless, I think modern listeners don't realize is that POV crypto, my, my first podcast before bankless. Hey, most bankless sisters don't realize I had that podcast and it was me and a Bitcoiner yelling at each other. It's my like really good friend from college. Like, we've had all of these conversations. What's ad nauseam?

• 1:33:10Ryan Sean Adams?

  Ad nauseam.

• 1:33:10David Hoffman?

  Oh, my God. Like, over and over and over again. Yeah. And this is why we like have moved on from it as like a community. This is like, we've done this before.

• 1:33:19Ryan Sean Adams?

  We have. The archive is full of it. Uh, let's get to takes of the week. So takes of the week. Here we go. Here's a take from Blake West. It's pretty frustrating to hear people mock crypto. Like, it's been 10 years and it's still just speculation. Where's the value? When in reality, it's basically illegal to use crypto for meaningful stuff. I want to yell at regulators. Let us try. And he goes through these examples. Are these examples worth reading, David? There's a lot of examples here.

• 1:33:44David Hoffman?

  There's only, no, there's only six examples. It's definitely worth reading.

• 1:33:46Ryan Sean Adams?

  Okay.

• 1:33:47David Hoffman?

  Instant stock trade settlements plus eliminating clearinghouse fees, except it's illegal to list securities natively on chain. That's one. Uh, two, liquid transparent exchanges that perfectly comply with regulations for alternative assets like loans, real estate, etc., with lower no fees, except creating exchanges of any kind is highly regulated in the United States and crypto exchanges can't register anywhere. See Coinbase versus SEC. Three, we could eliminate the possibility of exchange taking users' funds if we ran them non-custodial, non-custodialy. But again, it's effectively legal to run an exchange on-chain non-custodial with actual bonds and stocks. Next, we could have had instant 24/7 transactions among banks years ago instead of the two to five days with ACH, except it's illegal for banks to hold crypto or put deposits on chain. Next, we could

• 1:34:30David Hoffman?

  use stablecoins to make payments directly to merchants with no card fees, bank fees, or chargebacks. But remember DM? Yep, declared illegal. Also, transacting in crypto, even a stablecoin is taxable event, making it operationally prohibitive. Last, regulatory reporting burden for funds exchanges would be much cheaper if they were on-chain because it's automated and public and regulators wouldn't have to subpoena records, except there's no clear path for funds and exchanges to run on-chain. Really, that's clear and concise use cases that would glow up the TradFi world in a zero-to-one moment for all of these things and they're all illegal.

• 1:35:05Ryan Sean Adams?

  Wow. Yeah, that's a great point. I do think the worst, uh, the, the big user experience problem for crypto is actually government. Like, one of the, one of the worst, uh... Like, one of the biggest hassle things I have to do in crypto, I know I talk about it all the time, so it's become a meme, is taxes, is freaking taxes. Every time you do anything, you pay some gas, well, it's capital gains on that gas, like, from ETH purchase. So you have to track that somewhere, like...

• 1:35:34David Hoffman?

  You make one transaction on Ethereum, you set off like a Rube Goldberg machine of compliance that like 17 people have to touch?

• 1:35:41Ryan Sean Adams?

  Totally, and it doesn't have to be this way. Anyway, great take from Lake West. What's this one from Ben DeFrancesco?

• 1:35:49David Hoffman?

  So Ben DeFrancesco is retweeting a tweet of somebody saying, making fun of the line, "The United States dollar is backed by nothing." So, you know, "The line says dollars backed by nothing," and then the "nothing," and we are watching a clip of like naval armada plus fighter jets flying overhead, and like, it's the thing, it's like, no, if you violate the dollar, we're gonna send this like massive army after you. So yes, this is what we say on Bankless quite a lot, the United States is backed by the military. And so Ben's take, getting to Ben's take, is like, even if this is correct, it's pretty grim, morally speaking, because what are these things?

• 1:36:28David Hoffman?

  What is the dollar backed by? Bombs, and guns, and violence, and oppression. Hmm. Thanks, Gary.

• 1:36:38Ryan Sean Adams?

  I think that's, I think that's an element of it. It's also, I would say, you know,

• 1:36:43Ryan Sean Adams?

  economic competition is a big piece of this that might be missing. But yeah, it is somewhat disturbing when you kind of like peel back all of the settlement layers for humanity, and even like civilization, and you find at the bottom settlement layer is, can I bash my head, like, can I bash this club on your head and take what you have? It's like violence as the final settlement layer, and that's just what nation-states have mechanized, and we call them militaries, and we call it defense. I'm not saying that's a good or a bad thing, I'm just saying it's a thing. And, I mean, that, that, there's an element of truth to this, and yeah, there's, I think Ben is also right, it is pretty grim morally speaking. I don't know what to do about that, though.

• 1:37:25David Hoffman?

  Yeah, it reminds me of that quote from Dalio, is like, "Above the nation-state is the rule of the jungle. Below the nation-state, order, you know, you stop at stop signs, you pay your taxes, you know, you don't steal. Above the nation-state, you club people on heads."

• 1:37:40Ryan Sean Adams?

  Yeah, you just have to have the bigger club. David, what are you bullish on this week?

• 1:37:46David Hoffman?

  Something completely different, like I've said at Montenegro. There's this huge longevity and wellness cohort of people. And it's been like waking up this very dormant part of my brain, which is like the wellness part. And so like every, every morning, 7:00 AM, go on a run. 8:00 AM, cold plunge with like 20 other people who are like cold plunging in the Adriatic Sea. Like then I go to the gym and do some weightlifting and then I go eat like the most insanely large breakfast that you'll ever see. And it's just like waking up this like lifestyle that I had pre crypto. And I'm sad to say, actually, that like I kind of like jettisoned it in the getting into crypto.

• 1:38:31David Hoffman?

  But I'm getting it back and I've been very thankful. And this is kind of what this whole like Zuzalu experiment has been able to do for many people, not just me, is to see what your life could be like if you can figure out how to prioritize everything and have this maximum serendipity and be able to focus on what you want to focus on. And so I, Ryan, and also I'm producing content on longevity. If you want to learn more about longevity and the intersection of crypto and longevity and like D sign and all this stuff. So Ryan, I am bullish on longevity and crypto people going down that rabbit hole. So that's what I'm bullish on.

• 1:39:06Ryan Sean Adams?

  See, the foodless podcast was not an April Fool's joke. That's actually something David is pursuing. That's what it sounds like. That's cool, man. Yeah, it's a lot of great topics and I do think it's important. I think crypto people can get too plugged into the digital, too plugged into the metaverse. We've called it before like crypto brain or Ethereum brain. And you're getting a taste of like grass and real life and health and things that are important, you know, away from screens. It's important stuff. I feel like I need more of that in my life.

• 1:39:34David Hoffman?

  Yes, so Ryan, speaking of the person who's back home.

• 1:39:38Ryan Sean Adams?

  Well, okay, so every week we ask this question and we're always bullish on something. We can always find something to be bullish on. And this is a very, I would say our tone at Bankless is super optimistic and it always has been.

• 1:39:53David Hoffman?

  Even in the darkest of times, yeah.

• 1:39:55Ryan Sean Adams?

  Yeah. And don't get me wrong, I'm very bullish on crypto right now. Like I'm just, this technology is beyond where I ever thought it would be. And like the impacts it's had and like its success in the future is, you know, all but certain, all but guaranteed to me. Like it's tremendous. I'm so glad we're in this industry.

• 1:40:15Ryan Sean Adams?

  But I'm finding like this week in particular, I don't know, it's hard for me to be bullish on the rest of things, like outside of crypto, David. So like, maybe this is part of the Eliezer Yudkowsky existential crisis where I sort of like, you know, you dip in and out of these things. Like some weeks it's hard for me to be bullish on things. Like I've been listening to you a bit more of Nick Bolstrom, an old episode on Sam Harris. You ever hear his analogy of the urn? Like humanity is pulling marbles balls out of an urn. Like every time it plucks a new technology up and like, oh, we just, we just figured out the wheel. We just figured out, you know, the industrial revolution and like, oh, you know, atomic bombs.

• 1:40:59Ryan Sean Adams?

  Most technologies are like white, right? In that like, they, they don't have the capacity to destroy humanity and aren't widely distributed. But every once in a while, we pull out something that is like a black ball. And we don't know what we're going to pull out because we're just so focused on getting as many things out as possible, right? And so we already have this with nuclear proliferation. Thank God, people can't build nukes. And like as Nick Bolstrom says, by baking sand in a microwave, by putting sand in a microwave, right? It's not, it takes a lot. It takes nation state level ability to do a nuke. And even that, David, we've got the US, we've got Russia.

• 1:41:41Ryan Sean Adams?

  I was just reading this morning that, that China is set to quadruple its nuclear arsenal by 2035, right? That's great. Like China's always been there, but like another new power and they all have like guns at each other's heads. And then we've been talking so much about AI alignment and not just L. E. Z. or Yudkowsky, but you know, people like I think Bankless listeners will hear on Monday, Paul Christiano, who are like very reasoned working AI safety, trying to make sure AI doesn't kill us. And yet he gives our odds like, I mean, maybe 50/50, kind of a dice roll and whether we get this thing right or not. And there's a very real chance that

• 1:42:24Ryan Sean Adams?

  we get it wrong and it goes back to the L. E. Z. or Yudkowsky thing. And then we've got like the meta crisis and you know, the big enemy of Ethereum and cryptos and the big enemy of Bankless is really like these Moloch traps. You were talking about coordination earlier. It's like when we get in this discoordinated mode, when we have these game theoretical failures where we get in arms races and we're all doing the thing that we don't want to do, but we have to because we're just on this Moloch trap, this treadmill that kind of makes us all invest in nuclear weapons, for example, nobody can stop. That's like, man, how do, these are very thorny problems to solve and they keep getting more and more

• 1:43:06Ryan Sean Adams?

  thorny as we get increased power and higher technology. So I'm just like, I don't know, maybe I'm just in a mood, but I'm just like, I kind of like this whole humanity thing. Like I kind of, there's people in my life that I like, I love very much. It's good here. Like this, this whole modern life, but we are living in this, man, modern life is so great in so many ways. And yet we have this sword of Damocles over our heads. Like a madman can just end it, end it all completely with like, not very much effort. And that could happen at any time. And it's just a bizarre existence. So I think, again, I go in these like fits and starts with this, where sometimes I'll be thinking about this and then I'll just be, well, whatever, I'll get busy. So this is, I'm like, I'm almost

• 1:43:51Ryan Sean Adams?

  like, okay, well, what do I do about this? So I know this information, but I've known this kind of information more generally before. So what do you do? You like distract yourself? Like just plug into work and not think about it? Do you like, are you aware of it in the background, but you just treasure the moments that you have? Is that the strategy for coping with this? Do you just like, I think we're doing this on a debrief one time, just laugh at the absurdity? Like it is so freaking ridiculous that we have to live like this, right? And yet that is the fact. So what do you do? Just do the, throw up your hands and just laugh about it? Exactly. So, but at the end of the day, all of these are coping mechanisms. I'm just like, why can't we just solve this? Wouldn't it be great if?

• 1:44:33Ryan Sean Adams?

  And so I'm bullish on crypto, but it's everything else that I'm feeling not bullish about this week.

• 1:44:40David Hoffman?

  Right.

• 1:44:41Ryan Sean Adams?

  Do you know what I mean? And yeah, I'm just, I guess I'm in a mood, but I couldn't find a thing where I was like, hey, I am so excited about this because that's what I've been thinking about.

• 1:44:52David Hoffman?

  I feel you. It's, it's, there was one line you said at the, when we were talking about, I think maybe it's at the end of the Paul Christiano episode. I mean, it was, I can't remember when it was something about like, hey, why, why is bank, why are we doing AI content? And you were, we joke jokingly, absurdly said like, well, we need to solve the AI alignment thing so that

• 1:45:14Ryan Sean Adams?

  So crypto goes up.

• 1:45:16David Hoffman?

  So crypto goes up. So crypto goes up. Cause like if AIs come, then we, we just hand over our blockchain technology to them and they take it from us. And so like, it's one of these things where like you and I are just like these intrinsically curious people who find important things that we think that we are really important to, to talk about and at very least educate and broadcast. And so like, the only thing I have to tell you, dude, is like, all we've got is this podcast and this newsletter and this company. And if it's, if this is concerning to you, humans derive purpose from solving problems.

• 1:45:59David Hoffman?

  And I think we actually did, we've solved a lot of the problems that we set out at Bankless to solve. There's still a lot more work that crypto has to do, but it feels like it would get there anyways at this point in time. And it didn't, crypto didn't feel like that when we first started Bankless. There's another problem out there, which we're labeling like AI alignment, the democratization of destructive technologies. That we, is a new problem. And I don't think you and I, neither of us signed up to solve that problem when we started Bankless. But it's intellectually stimulating, pays the bills, it's fun to talk about.

• 1:46:39David Hoffman?

  And so I suggest that we put one foot in front of another and make podcasts about it.

• 1:46:47Ryan Sean Adams?

  Well, there's time left. We just make a podcast about it.

• 1:46:50David Hoffman?

  Well, there's time left.

• 1:46:50Ryan Sean Adams?

  I mean, look, I guess what you're saying is what more can we do, right? That's the thing. We just got our little slice. And I think that's maybe, I don't know. Look, I don't know if that was helpful, Bankless listener, or if it brought you down. I didn't mean to bring you guys down. I didn't mean to, you know, kill the mood here. But like, I guess what I would say is what I was just hearing from you, David, is all you can do is your part, your one small part to like, making the world a better place, solving some of these problems, being there, you know, for the people you love in your life. That's the small part you could take. And I think where I fall into a trap is when I think about all of the problems that need to be solved all at once, and then I get overwhelmed. And that's a, that's kind of a failure mode for me personally. But when I, when I bring it down to like, kind of the daily, okay, what are you going to do about this today?

• 1:47:34Ryan Sean Adams?

  What are you going to do about all this stuff tomorrow? That's where I start to get out of that, that failing mood cycle. There you go. Hey, Bankless and Therapy, thank you, David, for that little session. Let's talk about the meme of the week. This is fantastic. What are we looking at right here?

• 1:47:48David Hoffman?

  This is the first just mic drop meme from our new designer. Crypto Wars, Bankless Edition. So if you, you must be watching the YouTube for this to make sense. But this is, what is this? An Empire Strikes Back movie poster rendition, but now done instead with us. It's so good. Elizabeth Warren is Darth Vader. Gary Gensler is the Sith Lord.

• 1:48:13David Hoffman?

  Is that, who's Vitalik?

• 1:48:15Ryan Sean Adams?

  That's Vitalik up the top left. He's like, I think he's the Yoda character here right here.

• 1:48:20David Hoffman?

  He's Yoda? Okay.

• 1:48:21Ryan Sean Adams?

  Yeah.

• 1:48:22David Hoffman?

  We got Brian Armstrong as Han Solo. We got me and Ryan as Obi-Wan. And who are we actually?

• 1:48:28Ryan Sean Adams?

  You got to be Qui-Gon. You got to be Qui-Gon because you have the beard, I think. Even though he dies and he's also the master and I'm the apprentice, but at least I get to live. So that's great. And I don't know who this is. It's like a job of the hut.

• 1:48:40David Hoffman?

  I don't know who that is. I don't know whose face that is, actually.

• 1:48:42Ryan Sean Adams?

  I don't know either. It's great. I, and then there's this random bird up here. I don't know what that's about. That's Twitter. I just love that I don't know who all of these characters actually are.

• 1:48:52David Hoffman?

  Yeah, I think you might be the more of a Star Wars fan than I am, but you're still stumped. Anyway, so this is an open mint. This is coming, this is ending in 19 hours from the time of recording, which means it's probably already ended, but it's being priced at point 0042 ETH. Uh, and so the secondary market, if you desire this new NFT, this is an NFT. Uh, if you desire this, the, I'm sure the price is with extremely reasonable, or you can just enjoy it as the meme.

• 1:49:16Ryan Sean Adams?

  Just right click, save.

• 1:49:18David Hoffman?

  Yeah, just right click, save.

• 1:49:19Ryan Sean Adams?

  Enjoy it without collecting.

• 1:49:20David Hoffman?

  Put it as your phone wallpaper. That's fine.

• 1:49:22Ryan Sean Adams?

  Yeah, that's free. All right. Awesome. Uh, David, we got a hot moment of zen. It is on theme for this episode. Okay?

• 1:49:29David Hoffman?

  It's so good. Thank you, Jonathan Mann. We appreciate it. Song of Day Mann wrote a great song today.

• 1:49:35Ryan Sean Adams?

  Here it is. Is ETH a security? We'll get to that, but first gotta let you know, risks and disclaimers, of course. Crypto is risky. You definitely 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.

• 1:49:50Speaker 10

  Chairman Gensler, is ETH a security? Is ETH a security?

• 1:49:57Speaker 10

  Is ETH a security?

• 1:49:59Speaker 03

  Uh, under the laws, if you're.

• 1:50:01Speaker 10

  Is ETH a security? Is ETH a security? Is ETH a security?

• 1:50:08Speaker 03

  It's not a matter of lack of clarity. Ethereum started with a pre-sale. Whether that was really a securities offering in 2014. I said, I think so. 2018, the securities in exchange said, regardless of what it might have been in 14. It's now sufficiently decentralized that it's not a security, not a security, not a, not a, not a, not a, not a security.

• 1:50:30Speaker 10

  Is ETH a security? So is ETH a security? Is ETH a security?

• 1:50:37Speaker 03

  Uh, under the laws, if you're.

• 1:50:40Speaker 10

  Is it a security? Is ETH a security? Is ETH a security?

• 1:50:47Speaker 03

  It's not a matter of lack of clarity.